18/07/2023
In April 2023, we commented on the decision in URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 189 in which the Court of Appeal addressed amendments to pleadings in light of the extended limitation period under the Building Safety Act 2022.
On 5 July 2023, the Court of Appeal handed down Judgment in URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772 which further considers the provisions of the Building Safety Act and its effect on limitation periods.
Background
BDW Trading Ltd appointed URS Corporation Ltd to provide structural design work for several blocks of residential buildings that were owned, and being developed by, BDW.
The individual apartments were sold to purchases on long leases and BDW’s freehold interest were transferred across a time period, the last being transferred in May 2015.
In late 2019, safety investigations were undertaken by BDW following the Grenfell tragedy and these investigations showed serious structural defects in two of the buildings. Although BDW no longer owned the buildings, they felt that as a responsible developer, they could not just ignore the problem. However in carrying out investigations and remedial works, incurred significant costs and therefore commenced proceedings against URS to recover the costs of the works.
URS’s position was that the cause of action arose upon discovery of defects in 2019, by which point BDW had sold its proprietary interest and therefore had no obligation to rectify the defects. Further, there was no liability to any third parties as any claims would be time-barred.
On a trial of the preliminary issues, it was determined that the scope of URS’s duty did extend to the alleged losses and those loses were (in principle) recoverable as ‘it was clear that the cause of action in negligence accrued at the latest at practical completion’. This conclusion that the cause of action accrued at practical completion was also consistent with the Defective Premises Act 1972.
The Appeals
Following URS being granted permission to appeal the decision on preliminary issues, the Building Safety Act 2022 came into force with section 135 extending the limitation period for claims under the Defective Premises Act. In reliance on this extended limitation period, BDW successfully applied to amend their pleadings to instead being a claim under the Defective Premises Act.
URS then launched a second appeal against this application and on 6 March they were given permission to appeal on the basis of ‘the connection between the proposed amendments and the wider importance of the points raised’.
Broadly, the grounds for the second and third appeals were as follows:
- The Judge failed to determine points of law;
- The retrospectivity of S.135 of the Building Safety Act should not apply to proceedings ongoing at the point of enactment;
- BDW were not owed any duty under the Defective Premises Act;
- BDW had not suffered any relevant loss because they did not own the buildings;
- There was no legal right to bring a claim under the Civil Liability (Contribution) Act 1978.
The Court of Appeal dismissed all grounds. The Court found no fault with the Judge’s approach and further found it was clear that the wording of the Building Safety Act was clearly intended to have retrospective effect and “since 1972, there was never a time when those extended periods did not apply”. It is now clear beyond doubt that this retrospective effect applies to parties already in litigation, save for those cases which have already been settled by the parties or decided by a court.
It was noted that, whilst there is an express carve out stating the longer period does not apply to a party who made a claim under the DPA that had been finally determined or settled, there are no references to any other carve outs in the Act. The claim for contribution under the Defective Premises Act was therefore found to be open to BDW.
It was also found that the wording of the Defective Premises Act was clear and under section 1(1), URS owed a duty to BDW because as an engineer, URS was a “a person taking on work for or in connection with the provision of a dwelling”. The section 1(1) duty therefore extends to developers as well as property owners. The recoverability of damages under the Defective Premises Act is not linked to property ownership.
Interestingly, where multiple parties are involved, the Court also noted that the Civil Liability (Contribution) Act 1978 does not require the property owners to commence a primary claim before a third party developer can bring a contribution claim and the retrospective effect mentioned above applies equally to contribution claims.
Comment
In an extensive and important judgment, the Court of Appeal has (for the first time) considered claims brought under the Defective Premises Act and its extended limitation periods introduced by section 135 of the Building Safety Act 2022.
The new limitation rules will bring many more challenge for the Courts and parties that are in proceedings may now rely on the longer limitation periods which may open up potential claims those parties may have considered were previously time-barred.
If you wish to discuss this further, please contact Matthew Phipps, Legal Director.
This article was co-written by Stephanie Atkins, Trainee Solicitor.
