Professional negligence – Liability – Loss – Respondent developer alleging appellant structural engineer negligent in carrying out structural design work – Appellant arguing alleged cause of action accrued outside limitation period – Court determining preliminary issues in favour of respondent – Respondent permitted to amend pleadings following coming into force of Building Safety Act 2022 – Court of Appeal dismissing appellant’s appeals – Whether court erring in law – Appeals dismissed
The respondent was a developer. The appellant carried on business as structural engineers. Between about 2005 and 2012, the respondent engaged the appellant to carry out structural design work for the blocks of flats they were building.
In 2019, the respondent noticed signs of structural defects. That led to a review of the structural condition of other blocks for which the appellant had provided engineering designs. The respondent said that the same or similar defects were discovered which were also due to the appellant’s negligent design.
The respondent brought a claim against the appellant in negligence. The appellant argued that any cause of action in tort accrued to the respondent in 2019, when the alleged design defects were discovered. By then the respondent no longer had a proprietary interest in the buildings, had no obligation to rectify the defects and no liability to third parties because of limitation, and the cause of action accrued when no loss could have been suffered. The respondent was not entitled to any compensation because it carried out the repairs voluntarily.
The court decided, as preliminary issues, that the scope of the appellant’s duty of care extended to the alleged losses which were in principle recoverable. The respondent’s cause of action accrued no later than the date of practical completion of each block: [2021] EWHC 2796 (TCC). The appellant appealed.
After the judgment, the Building Safety Act 2022 came into force which increased the limitation periods for claims under the Defective Premises Act 1972. The respondent was permitted to amend its pleadings to take advantage of the longer limitation periods and add claims under the 1972 Act and the Civil Liability (Contribution) Act 1978: [2022] EWHC 2966 (TCC). The Court of Appeal dismissed the appeal: [2023] EWCA Civ 772; [2023] PLSCS 116. The appellant appealed.
Held: The appeal was dismissed.
(1) It was not in dispute that, based on the assumption of responsibility, there was a breach of the duty of care owed by the appellant to the respondent not to cause it pure economic loss. The question was whether there was a “voluntariness” principle that applied, through the concepts of scope of duty or remoteness, to rule out recovery for the cost of repair incurred by the respondent.
The authorities” relied upon by the appellant did not establish a principle of voluntariness that operated as a bright line rule of law rendering loss too remote or outside the scope of the duty of care in the tort of negligence. There was a strong argument that voluntariness most naturally fell to be considered within the concepts of legal causation or mitigation rather than scope of duty and remoteness: Admiralty Comrs v SS Amerika [1907] AC 38, Hambro Life Assurance plc v White, Young & Partners [1987] 2 EGLR 159, Esso Petroleum Co Ltd v Hall, Russell & Co Ltd [1989] AC 643 and Anglian Water Services Ltd v Crawshaw Robbins & Co Ltd [2001] BLR 173 considered.
(2) The enquiry in respect of mitigation was whether the claimant could have avoided its loss by taking reasonable action or whether expenses (or other additional losses) incurred, increasing its loss, were reasonably incurred. That was clearly a fact specific enquiry that would have to await trial. The reasonableness of the claimant’s conduct might also be of importance in determining legal causation and, even if not, a fact-specific enquiry would be needed to decide whether the “chain of causation” between breach of duty and loss had been broken. In respect of neither concept could it be said that voluntariness constituted a rule of law to the effect that there had been no legal causation or a failure to mitigate.
In any event, it was strongly arguable that the assumed facts indicated that the respondent was not, in a true sense, acting voluntarily in paying for the repairs to be carried out by exercising a sufficiently full and free choice. Amongst other things, if the respondent did nothing to effect the repairs, there was a risk that the defects would cause personal injury to, or the death of, homeowners for which the respondent might be legally liable under the 1972 Act or in contract.
(3) The general scheme of section 135 of the 2022 Act was to provide a 15-year limitation period for rights of action under a “relevant provision” (which included, but was not limited to, section 1 of the 1972 Act) which accrued on or after the commencement date (28 June 2022) (section 4B(1)).
In relation to rights of action under section 1 of the 1972 Act which accrued before the commencement date the applicable limitation period was 30 years rather than 15 years (section 4B(4)). That amendment to the Limitation Act was to be treated as always having been in force (section 135(3)).
Section 135(3) was not to be applied if to do so would involve a breach of a defendant’s rights under the European Convention on Human Rights (section 135(5)), or in relation to a claim which was settled or determined before the commencement date (section 135(6)). However, section 135(3) did apply to claims which were dependent on section 1 of the 1972 Act. A central purpose and policy of the 2022 Act in general, and section 135 in particular, was to hold those responsible for building safety defects accountable.
(4) The 1972 Act did not distinguish between those who owed duties and those to whom duties were owed. Applying the words of section 1 in their context, there was no good reason why a person, for example, a developer, could not be both a provider and a person to whom the duty was owed. That would most obviously be the case where the developer who ordered relevant work was the first owner.
The purpose of the 1972 Act in general, and section 1(1) in particular, supported an acceptance that those to whom the duty was owed included the first owner of a dwelling. It was well established that Law Commission Reports might assist in identifying the purpose of (including the mischief addressed by) a statute and that the context thereby disclosed might assist in ascertaining the meaning of the statutory words: Yaxley v Gott [1999] PLSCS 162; [2000] Ch 162 and R (O) v Secretary of State for the Home Department [2023] AC 255 considered.
(5) The 1978 Act addressed the situation where two or more people were liable (whether jointly or individually) in respect of damage suffered by another person (C). C could choose which of those liable (D1, D2 etc) to claim against and could recover compensation for its loss from any of them. The right of D1 to recover contribution from D2 arose when damage had been suffered by C for which D1 and D2 were each liable and D1 had paid or been ordered or agreed to pay compensation in respect of the damage to C.
In this case, the respondent having paid for remedial works, wished to claim contribution from the appellant on the basis that each was liable to the homeowners in respect of the damage remedied. To decide whether the respondent could make such a claim, it was necessary to know when a right to recover contribution arose and, if different, when time started to run for the purpose of calculating the two-year time limit that applied to claims for contribution.
(6) Section 135 of the 2022 Act made it possible for the respondent to bring claims in these proceedings against the appellant for damages for breach of a duty owed to the respondent under section 1 of the 1972 Act and for contribution. But in relation to its claim for damages in the tort of negligence (which the respondent had already begun before the 2022 Act came into force) and the 1972 Act claim, section 135 did not retrospectively affect the answer to the questions of causation, mitigation and remoteness which determined whether the respondent could recover compensation from the appellant for the cost of remedial work carried out before section 135 came into force.
Laurence Rabinowitz KC, Fiona Parkin KC, Patrick Harty, James Goudkamp and James Ruddell (instructed by CMS Cameron McKenna Nabarro Olswang LLP) appeared for the appellant; Mark Howard KC, Simon Hargreaves KC, Thomas Saunders, David Sheard and Tom Pascoe (instructed by Osborne Clarke LLP) appeared for the respondent.
Eileen O’Grady, barrister
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