Some litigation hurdles: limitation (again) and inability to recover for economic loss

A recent case, Sportcity 4 Management (and others) v Countryside Properties (UK) Ltd, illustrates the various difficulties in seeking to hold those responsible for fire safety defects in construction to account. Sportcity involved an attempt to hold the developer responsible for what is described as ‘life-threatening defects in the design and/or construction of the cavity barriers and fire-stopping measures in the properties’. The Sportcity Living complex consists of 350 apartments. Sums sought were over £15 million for the estimated cost of recladding, and £840,000 for cavity barrier and fire stopping works and related items. All of the legal grounds argued failed as the claims were struck out by His Honour Judge Eyre QC.

There were 3 causes of action in the case: under the Defective Premises Act 1972 (DPA); a landlord obligation in the lease; and a tortious duty of care.

The issue in relation to the DPA claim was (again) limitation. The Act provides that ‘a person taking on work for or in connection with the provision of a dwelling … owes a duty … to see that the work … is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed’. By s. 1(4) the duty also extends to anyone arranging for another to take on that work – essentially, developers.

The limitation period is 6 years from when the dwelling is completed (a serious problem for many as noted here) but section 1(5) DPA also provides that ‘if after that time a person who has done work for or in connection with the provision of the dwelling does further work to rectify the work he has already done, any such cause of action in respect of that further work shall be deemed for those purposes to have accrued at the time when the further work was finished.’ At Sportcity the works were completed either in 2007 or 2010, but even the later of these two dates is more than 6 years before the proceedings were commenced in 2019. The claimant argued, however, for an extended limitation period as problems with cladding emerged in 2013 and the defendant had visited the blocks in 2014, carrying out some works, and again visited in August 2017 but did not carry out remedial work. If, therefore, the 2014 works (or 2017 alleged nonfeasance) could restart the clock then limitation would not be a problem.

The question here then was whether the effect is to restart the clock for all works, or only for the works done at the later date. Applying the Court of Appeal decision in Alderson v Beetham Organisation Ltd the judge said that the effect of s1(5) was not to restart the limitation clock in respect of the original works. Judge LJ had made this clear in Alderson when he stated: 'there are two separate causes of action, the first relating to the quality of the original building work, and the second to the quality of the remedial work. For the purposes of the first cause of action, time starts to run when the dwelling is completed, and, for the second, when the remedial work is finished.' In Sportcity the particulars of claims showed that the cause of action related to the original works, not any of the works done (or omitted to be done) in 2014 or 2017. This meant that the DPA claim could not proceed as it was statute-barred.

The claim under the lease was peculiar. It turned on the defendant being the landlord and subject to the landlord’s obligations, but the judge found that the defendant was not the landlord, and so there could be no breach of the lease covenant by them.

The final cause of action was that there had been a breach of the tortious duty of care. Here again, the claim was doomed. The defendant denied that it owed a duty of care, denied breach, and argued that any losses were purely economic and so, relying on the House of Lords decision in Murphy v Brentwood the duty did not extend to covering such losses. Counsel for the claimant made no submissions on this latter point and accepted that the authorities compelled the judge to conclude that the losses were irrecoverable as pure economic loss. It has been argued that this inability to recover for economic loss makes no sense in the context of defective buildings, but as Professor McKendrick points out although it might be possible to get the Supreme Court to reconsider this, litigating the point would be risky. In the meantime, lower courts are bound by the decision in Murphy.

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How to cite this blog post (Harvard style) 

Bright, S. (2020). Some litigation hurdles: limitation (again) and inability to recover for economic loss. Available at: https://www.law.ox.ac.uk/housing-after-grenfell/blog/2020/07/some-litigation-hurdles-limitation-again-and-inability-recover (Accessed [date])