Can the retrospective 30 year limitation period under the Defective Premises Act 1972 be avoided? Court of Appeal to consider
Market Insight 27 February 2023 27 February 2023
UK & Europe
Cladding and Building Safety
In January 2023, we reported on the decision in BDW Trading Ltd v AECOM Infrastructure & Environment UK Ltd  in which the Technology and Construction Court (TCC) granted the claimant’s application to amend its pleadings to add new claims based on changes to the Defective Premises Act 1972 (DPA) that came into force on 28 June 2022.
AECOM/URS have now been given leave to appeal that decision which will be heard at the same time as the appeal of the preliminary issues finding. S135(6) of the Building Safety Act (BSA) 2022 is hugely significant for potential defendants as it provides that the extended limitation periods for certain claims that came into effect on 28 June 2022 do not apply to disputes that have been settled or finally determined prior to that date.
The Court of Appeal has handed down an interlocutory decision by Lord Justice Coulson which relates both to the preliminary issues appeal (the First Appeal) and to the permission to amend the pleadings referenced above (the Second Appeal).
The background to the dispute is set out in our earlier review and here, we focus on the 2 issues considered by Lord Justice Coulson.
Question 1: is the First Appeal academic?
Summarising, the key findings of the TCC on the preliminary issues were that:
- with some exceptions, the scope of URS’ duty did extend to the alleged losses;
- the losses claimed were in principle recoverable;
- BDW’s cause of action accrued not later than the date of practical completion of each of the blocks, and not at a later date.
URS challenged that decision on 3 grounds in the First Appeal.
- The finding that the losses were within the scope of duty was not correct.
- Mr Justice Fraser should have concluded that the cause of action did not arise at practical completion but only when the defects were discovered in 2019.
- Mr Justice Fraser had erred in not striking out the claim as disclosing no reasonable cause of action.
In this interlocutory hearing in the Court of Appeal, BDW contended that the arguments forming the basis of the preliminary issues, and in particular grounds 1 and 2, were now otiose as a result of the extended limitation periods since set out in the BSA (referred to above) that took effect on 28 June 2022.
URS’ position was that the First Appeal was not now academic, as follows. If the unamended claim had been struck out in October 2021, as they say it ought to have been, and as the new/alternative claims are “legally flawed”, the claim would have been finally determined by a court in 2021.
S135(6) of the BSA provides that the extended limitation periods do not apply to a claim which at 28 June 2022 “was settled by agreement between the parties or finally determined by a court or arbitration (whether on the basis of limitation or otherwise)”.
Lord Justice Coulson made it clear that this was an interlocutory hearing at which no substantive matters would be decided. He broadly accepted URS’ submissions that grounds 1 and 2 of the First Appeal may not be redundant and therefore the First Appeal is not necessarily academic and should proceed.
Question 2: Should the Appellants be given permission to appeal the decision allowing the amendments?
URS sought leave to appeal the decision allowing the amendments, arguing that the wrong test had been applied at first instance, none of the new claims had any prospect of success and that the decision brought a potential risk that the s135(6) argument might not be open to URS.
BDW’s position was that there was no detriment to URS in the amendments having been allowed due to a concession made by Counsel for BDW at the preliminary issues hearing that the s135(6) arguments could be run if the points of law in respect of the new claims were held to have no prospect of success.
Lord Justice Coulson declined to say whether or not URS has a real prospect of success in this appeal but did hold that this is one of those “unusual situations” where under r.52.6(1)(b) of the Civil Procedure Rules, “there is some other compelling reason for the appeal to be heard”. He ordered a second appeal (the Second Appeal) and that both appeals be heard together.
He gave 3 reasons for this decision.
- The 2 appeals are “closely entwined”.
- If the amendments are allowed, there is a risk that this would adversely affect URS’ contentions on s135(6) of the BSA. URS should not have to be reliant on the concession (referred to above) which may or may not preserve its position on this point.
- S135 of the BSA has not yet been considered by the court in detail and guidance from the Court of Appeal might be helpful.
The 2 appeals will be heard in April 2023 and will be followed closely.
There will be other parties in an analogous position, with a potential argument under s135(6) that a dispute has been finally settled or determined by a court/arbitration before 28 June 2022. For potential defendants in building safety disputes and their insurers, multi million pound losses may turn on the Court of Appeal decision in April and we will continue to provide updates on substantive developments in this dispute.