Welcome to the fourth of our RED Alerts of 2023.

Also featuring in this month's update:

• No entry to residential development through the back door
• Know your limit(ation)s
• Alarm bells for landlords! The cost of a waking watch not recoverable

Court of Appeal confirms that parties can rely on the extended Defective Premises Act 1972 limitation period to pursue previously time-barred claims.

URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772

Summary

In its first judgment relating to claims under the Defective Premises Act 1972 (the DPA) since the limitation period was extended to 30 years by s135 of the Building Safety Act 2022 (the BSA), the Court of Appeal has unanimously dismissed a number of appeals brought by URS Corporation Ltd (URS) including a crucial decision relating to the applicability of the extended retrospective limitation period introduced by the BSA for all claims brought under the DPA. 

Facts

The appellant in this case, URS, was a design contractor who had been engaged by the respondent developer, BDW Trading Ltd to provide structural designs of two blocks of flats, one in London and the other in Leicester. The following completion of the development in 2012, BDW sold the flats and, ultimately, its own interests in the properties. 

Prompted by the fallout of the Grenfell disaster and the renewed focus on building safety, BDW undertook extensive inspections of both properties and identified significant structural defects. Despite the inadequate design, the defects had caused no physical damage to either property.   

As the defects were not discovered until some years after practical completion of the two blocks, BDW was time-barred from pursuing a claim under the DPA as well as its contractual arrangements with URS. BDW therefore issued a claim for professional negligence in March 2020 and sought damages to cover the costs of the remedial works required. Following the enactment of the BSA, and the resultant extension to the DPA limitation period, BDW applied to amend its pleadings to include a claim under the DPA as well as a claim under the Civil Liability (Contribution) Act 1978 (the CLCA). 

First Instance Decisions

After the commencement of proceedings, the parties appeared before the High Court a number of times to deal with several preliminary issues relating to the claim. These included the decisions of Fraser J that the claimed losses fell within URS' duty of care and that the damages claimed by BDW were recoverable even though BDW no longer had a proprietary interest in the property at the time the design defects were discovered. URS also sought to appeal the decision of Mr Adrian Williamson KC (sitting as a Deputy High Court Judge) granting BDW permission to amend its pleadings.

Court of Appeal

It was decided by the Court of Appeal that the various appeals brought by URS should be brought together, although they can be divided into the following two categories:

• the decisions of Fraser J regarding the claim for professional negligence (the First Appeal)
• the decision of Mr Williamson KC to permit BDW to amend its pleadings (the Amendment Appeal).

In respect of the First Appeal, the Court of Appeal unanimously upheld the decisions of Fraser J. It concluded that the losses did fall within the scope of URS' duty notwithstanding BDW's lack of proprietary interest in 2019. It further rejected URS' submission that BDW's cause of action arose in 2019 when the defects were uncovered, and losses sustained. Lord Justice Coulson confirmed that that BDW's cause of action against URS was "complete" on the date of practical completion of the developments and therefore it was irrelevant that BDW did not discover the breaches until a later date. 

The Court of Appeal similarly sided with BDW with respect to the Amendment Appeal. URS had argued that, due to its role as developer, BDW was not a person to whom a duty was owed under the DPA. This argument was firmly rejected by the Court on the basis that BDW had a contract with URS and therefore a duty was owed to them under section 1(1)(a) of the DPA.  

Finally, the Court of Appeal also disagreed with URS' submission that the retrospective effect of s135 of the BSA should not apply to the proceedings brought by BDW as they were already ongoing. The Court noted that only claims which fall within the scope of s135(6) BSA (being claims which have already been concluded or otherwise settled at the time of enactment) will avoid the retrospective effect of s135 BSA.

Conclusion 

The outcome of this case has been widely anticipated, not least because the significant extension of the limitation period from 6 to 30 years has been one of the most widely debated changes brought in under the BSA. 

Despite the important clarification on the applicability of s135 BSA, it is important to note that the decision may have limited implications as most ongoing cases which were commenced prior to the BSA coming into force will have already been determined or settled. However, developers will welcome the Court of Appeal's confirmation that they are owed a duty under s1 DPA, especially those who may be now facing increased liability as a result of the provisions of the BSA and will want to investigate any possible means of recovering their losses for remediating any defective buildings.