SUMMARY
The Court of Appeal decided (amongst other matters) that:
- developers can both owe and be owed a duty under the DPA;
- developers can be entitled to make a claim for contribution even if no claim is made against them; and
- the 30-year retrospective time period is effective where proceedings are already underway.
View the judgment here >
This litigation stems from developments completed between 2005 and 2012 and alleged defects in those developments found by the developer, BDW, after carrying out extensive safety investigations following the Grenfell Tower disaster in 2017.
The parties had been before the Technology and Construction Court (TCC) on several occasions and in February 2023 Lord Justice Coulson directed that the appeal of three of the TCC's judgments should be heard by the Court of Appeal together in part because "both appeals concern potential issues that arise out of s135 (and possibly other parts) of the Building Safety Act 2022. The section is novel, and the issues to which it gives rise have never been considered before…[and] some appellate guidance may be helpful".
Three key points decided by the Court of Appeal were:
Developers are owed a duty under the DPA
The DPA imposes duties on those taking on work for or in connection with the provision of a dwelling to see that the work is done in a workmanlike or professional manner and so that the dwelling will be fit for habitation when completed. In turn, this provides an opportunity for claims to be brought in respect of defective work where that defective work has ultimately led to the dwelling being unfit for habitation.
Prior to the introduction of the BSA, claims under the DPA were subject to a 6-year limitation period, running from the date that the dwelling was completed. That limitation period had expired at the time BDW initially brought its claim against URS (the structural engineers for the developments).
However, the BSA (via section 135) introduced significant extensions to the limitation periods under the DPA. For rights of action accruing before 28 June 2022 (as in this case), the limitation period was extended retrospectively from 6 years to 30 years. This gave BDW a potential new avenue for its defects claim and it applied to amend its case to add a claim under the DPA.
One of the issues which the Court of Appeal had to decide was whether a developer in a similar position to BDW could be owed a duty under the DPA. BDW's position was that it was owed a duty by URS under the DPA because, pursuant to section 1(1), URS was a person taking on work for or in connection with the provision of a dwelling and that BDW was a person to whose order that dwelling was provided under section 1(1)(a) of the DPA.
URS's position was that BDW's interpretation was not correct because under section 1(4) of the DPA, a person who
"(a) in the course of a business which consists of or includes providing or arranging for the provision of dwellings…or (b) …arranges for another to take on work for or in connection with the provision of a dwelling" shall be treated as included among the persons who have taken on the work, and so URS argued it was illogical that a developer could simultaneously owe and be owed duties under the DPA.
In other words, URS claimed that BDW was a person who owes a duty under the DPA, and not the person to whom a duty is owed.
URS also argued that the legislative intention behind the DPA was not to confer such rights on commercial developers or corporate entities but was to protect individual occupiers.
The Court of Appeal has decided that a developer in a similar position to BDW can both be owed and owe a duty under the DPA. The Court said it was clear from the wording used in the DPA that BDW was owed a duty by URS under section 1(1)(a). Further, (a) there is nothing in the words of the DPA which limits the benefit of the duty to individual purchasers rather than companies or commercial organisations (the Court noting that such a limitation would be impossible to police in practice) and (b) merely because BDW owed a duty by virtue of s1(4) of the DPA, that did not mean it could not also be owed a duty under section 1(1).
Developers can be entitled to contribution even if no claim is made against them
The Contribution Act enables a party to seek contribution from others who are liable for the same damage. Here, BDW remediated the defects and then sought a contribution from URS towards the remediation costs on the basis that both BDW and URS were liable to the owners of the dwellings for the same damage.
The issue which the Court of Appeal had to decide was whether BDW was entitled to bring that contribution claim in circumstances where the owners had not brought or intimated a claim against BDW, nor had there been any settlement between the owners and BDW. This issue had to be decided based on some assumed facts including that the remediation works had been carried out by BDW at a time when (a) BDW had no proprietary interest in the developments and (b) BDW would have had a limitation defence in respect of any claim from the owners (because the BSA and the extended limitation periods it introduced had not been enacted at that point in time).
URS argued, amongst other matters, that a claim or intimation of a claim against BDW (or the settlement of such a claim) was needed before BDW could then bring a claim against URS under the Contribution Act.
The Court of Appeal has decided that a claim is not required, but only that the relevant parties are liable (or would be liable) in respect of the same damage. The Court said that there was nothing in the wording of section 1(1) of the Contribution Act to suggest that the making or intimation of a claim was a condition precedent to the bringing of a contribution claim.
The 30-year retrospective time period is effective where proceedings are already underway
URS argued that section 135 of the BSA (which extends the limitation periods for claims under section 1 of the DPA from 6 years to 30 years for rights of action accruing before 28 June 2022) could not apply to proceedings ongoing at the point the BSA came into force.
The Court of Appeal found that it was clear that the wording in section 135 of the BSA was intended to have retrospective effect, such that the longer limitation periods are to be treated as always having been in force, and there was no carve out for on-going proceedings (in contrast to there being an express carve out for claims finally determined or settled before the BSA came into effect).
Other findings
The judgment also deals with the important issue of the nature and extent of professionals' liability in tort and the date when a cause of action in negligence for economic loss accrues (confirming the general position that such rights accrue at the date(s) of practical completion). We will consider those aspects of the case in a later article.
Impact of Judgment
As well as providing helpful guidance on some thorny issues involved in defects claims, this judgment will provide comfort to developers in similar positions to BDW that they are able to pursue claims both under the DPA and the Contribution Act.
The clarification given by the Court of Appeal offers a potential route for commercial developers to recover losses incurred in remediating defective buildings that were completed since the early 1990's against contractors, sub-contractors, designers, project managers and others in the original supply chain.
