A cause of action in tort, relating to a defective building where there is no physical damage, accrues on the date of practical completion of the building.
In URS Corporation Limited v BDW Trading Ltd [2023] EWCA Civ 772 the Court of Appeal has rejected attempts by URS to overturn decisions on preliminary issues.
The proceedings concerned significant residential developments carried out by BDW to designs by consulting engineering firms who formed part of URS in London and Leicester completed in 2008 and 2015 respectively. Following the Grenfell Tower disaster, BDW undertook investigations into its developments which revealed in 2019 that both had been built to dangerously inadequate structural designs, although the buildings had not suffered physical damage.
BDW incurred significant costs in carrying out permanent remedial works which it sought to recover from URS. The judge, determining preliminary issues, found that URS’s duty extended to the claimed losses and that BDW’s cause of action in tort accrued no later than the date of practical completion of the blocks. URS appealed arguing that the judge was wrong to say that the losses claimed were within URS’s duty of care. The damages claimed by BDW were not recoverable because BDW had no proprietary interest in the developments when the faults were discovered and suffered no actionable damage.
The Court of Appeal considered the judge’s decision on the extent of URS’s duty was entirely correct. URS had the standard duty imposed on a design professional which was co-existent with its contractual obligations. Those obligations did not change when BDW disposed of the buildings. The claims by BDW were not for reputational damage, as submitted by URS, but for conventional damages for costs incurred for which they were liable under the Defective Premises Act 1972.
Where there is physical damage the cause of action accrues when the physical damage occurs regardless of the claimant’s knowledge of the physical damage or its recoverability. However, if there is an inherent design defect which does not cause physical damage the cause of action accrues on completion of the building. This is consistent with the 1972 Act and was the reason for the Latent Damage Act 1986 which extends the limitation period in such circumstances.
BDW’s cause of action arose when the individual buildings comprising the developments were practically completed when it suffered actionable damage because the buildings were structurally deficient.
The correct test had been applied in permitting BDW to make amendments to rely upon the extended limitation periods contained in section 135 of the Building Safety Act 2022 which applies to current proceedings.
Louise Clark is a property law consultant and mediator
