Building Safety: Recent Court of Appeal decision

A recent Court of Appeal case has clarified a number of important construction law points – although the facts arose out of building safety issues, like the Building Safety Act (or ‘BSA”),  the case has much wider application and significance.

The facts are both interesting and important:

• The respondent, BDW, developed two residential blocks of flats, one in London (Capital East) and the other in Leicester (Freemens Meadow).  These were constructed in the early 2000’s and were completed (at the latest) by 2012.
• Apartments were sold, and by 2015 BDW had also transferred its underlying long leasehold/freehold interests in both developments.
• Following the Grenfell fire tragedy, like many developers, BDW undertook investigations into its developments.  What it actually discovered was cracks in one of its other developments (Citiscape) which had been designed by an entity now part of URS. When it checked the Capital East and Freemens Meadow developments, both of which also had URS design, it discovered they too had been negligently designed and were dangerous, albeit not showing the corresponding cracking.
• Despite:
  • no longer owning the developments;
  • no physical damage (e.g. cracks having occurred),

BDW decided that it needed to take action.

• It therefore incurred costs carrying out investigations, temporary works, evacuation of the relevant block and permanent remedial works
• BDW then claimed the costs from URS.

The claim against URS was originally not brought under the contract between URS and BDW. Neither was it brought  under the Defective Premises Act (DPA), which allows for claims where a dwelling is not ‘fit for habitation’. Instead the claim was a  tort (i.e.negligence) claim. Presumably, at the time the claim was commenced, the limitation period for bringing claims in both contract and under the DPA was considered to have expired, and a tort claim offered a potentially longer period to claim.

The BSA then came into force and extended the (limitation) period for bring claims  using the  DPA. BDW sought the Court’s permission to include a claim under the DPA so as to take advantage of the longer period. It also sought to add a claim under the Civil Liability Contribution Act (“Contribution Act”). The Contribution Act allows a party facing a claim for having caused damage, to obtain a contribution from another entity which was also responsible for that same damage.

A number of issues arose, some relating to the Building Safety Act 2022.

The preliminary issues judgment makes 4 key points:

1. Claims under the Defective Premises Act can be brought by developers of dwellings, as well as by the residential purchasers of each dwelling.
2. The extension of  the limitation periods for bring a claim under the DPA was retrospective (provided that judgment has not been entered and there has not been a settlement). This means that an ongoing claim could potentially be amended to include a DPA claim.
3. A claim can potentially be commenced under the Civil Liability Contribution Act 1978  for a contribution from another party, even when no claim has been made against the party seeking a contribution. That was the case here. The leaseholders had not made a claim (BDW had already undertaken remedial work) although importantly the leaseholders could have!
4. In a case where there is a claim in tort  for economic loss  i.e where  no physical damage has actually occurred, as was the situation here - there were defects, but no physical damage to the buildings was evident - the limitation period runs from practical completion at the latest

These are all important points.  The most important is probably point 1.  Remember the extended limitation periods brought about by the Building Safety Act for claims brought under the DPA are not limited to fire or structural issues. They can be brought whenever the dwelling is not fit for habitation, which potentially encompasses many other types of defect and claim. Nor is there any height requirement under the DPA.  It applies to all dwellings of whatever height.

The judgment is important (although do bear in mind that the hearing dealt with preliminary issues) and, unless settled, will need to go to trial for a final resolution.  

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