Building Safety Bill provides unexpected limitation wildcard for defective works

Homeowners may soon have up to 15 years in which to bring certain actions against builders and developers.

On 5 July 2021, the Building Safety Bill (Bill 139) (the Bill) was introduced in the House of Commons. The Bill follows a number of government announcements seeking to address perceived issues in the construction industry following the Grenfell Tower tragedy and subsequent inquiry and contains a number of provisions. Here we examine the proposed amendments to the Defective Premises Act 1972 (DPA), seeking to expand available causes of action and extending the limitation period for the time for a person to bring an action in respect of damage or defects in relation to buildings, from six years to 15 years.

Duties relating to work to dwellings

Section 1 of the DPA provides a cause of action for defective work connected with the provision of a dwelling, where the work renders the dwelling not ‘fit for habitation’. The ‘provision’ of a dwelling refers to construction (i.e. new builds), conversion (e.g. offices into flats) or enlargement of a building but does not currently extend to work undertaken on existing dwellings, but that could be about to change.

Clause 125 of the Bill introduces a new Section 2A in the DPA which applies “where a person, in the course of a business, takes on work in relation to any part of a relevant building”.

Section 2A

A relevant building is defined to mean “a building consisting of or containing one or more dwellings”. Section 2A states a duty is owed to both the person for whom the work is done; and each person who holds or acquires an interest (whether legal or equitable) in a dwelling in the building “to see that the work is done in a workmanlike (or as the case may be) professional manner, with proper materials and so that as regards the work the dwelling is fit for habitation when the work is completed.

This amendment addresses a current ‘gap’ in protection for homeowners. This would broaden the application of the DPA to expand the right to claim compensation for works undertaken on a dwelling to now include refurbishment or rectification works; provided that work is done in the course of business. The amendment made by Section 2A would apply in relation to work completed after the Bill comes into force.

Extension of limitation periods

Clause 126 (1) of the Bill inserts a new Section 4B into the Limitation Act 1980 (Limitation Act) extending the time for a person to bring an action in respect of a relevant provision concerning damage or defects in relation to buildings from six years to 15 years from the date on which the right of action accrued.

Relevant provisions

This extended limitation period applies to ‘relevant provisions’ which are defined to mean Sections 1 and 2A of the DPA and Section 38 of the Building Act 1984. Clause 126 (3) states for actions by virtue of Section 1 of the DPA, this amendment is to be treated as always having been in force. A potentially significant limitation to its retrospective operation is where a court “is satisfied that [enforcing it retrospectively would be a] breach of that defendant’s Convention rights”. Such as the right to a fair trial. It is by no means clear how these Convention rights would be interpreted by a court for these purposes; the loss of documents or lack of witnesses by the effluxion of time may though be relevant here.

These amendments do not enable an action to be brought where that action was settled or final determined (whether on the basis of the then current limitation periods or otherwise) before these amendments came into force.

The Explanatory Notes to the Bill provide the following helpful examples of how these changes could impact future claims:

Example 1: Extended limitation period

Work on a new build block of flats is completed in 2024 and, seven years later, the leaseholders of a flat in that block find that, during the building work, there was a breach of a requirement imposed by the building regulations. Under Section 38 of the Building Act 1984 the leaseholders can lodge proceedings to have their claim heard by the court within 15 years of the completion of the work.

Example 2: ‘Revived’ limitation period

Work on a new build block of flats was completed in 2010 and in 2019 leaseholders discovered that there were defects in the original work to the extent that the flat is unfit for habitation, potentially giving rise to a cause of action against the housebuilder under the Defective Premises Act 1972. However, the limitation period had already expired in 2016, so no claim was brought. Due to the extension of the limitation period to 15 years, the leaseholders could now bring proceedings up until 2025.

Comment

The introduction of Section 2A addresses a current ‘gap’ in protection for homeowners by broadening the application of the DPA to expand the right to claim compensation for works undertaken on a dwelling to now include refurbishment or rectification works; provided that work is done in the course of business. The proposed introduction of Section 2A in the DPA however does not have retroactive application and would only apply in relation to work completed once the Bill has come into force and is unlikely to spark an immediate increase in claims.

The proposed amendments to the Limitation Act would operate to more than double the time for a person to bring an action in respect of damage or defects in relation to buildings from six years to 15 years. With retroactive application, claims which had previously been out of time may now have an additional 9 years in which to be brought. In the event these amendments are put in force we expect a rise in both notifications and claims.

The Bill includes a number of additional proposals which have not been considered in this article.

Read other items in Construction and Engineering Brief - July 2021

Related item: Non-compliance with building regulations: claims against approved inspectors