Everyone is liable for everything all of the time: Court of Appeal
Grenfell litigation taught us all one thing: there was not enough liability (or accountability). Limitation dates were easily passed, privity of contract acted as a shield, pure economic loss remained unrecoverable and the Defective Premises Act was insufficient.
Which is why we now have the Building Safety Act. As well as causing nervous breakdowns for insurers, bringing the leasehold conveyancing industry to a standstill and exacerbating the increase in construction costs, the BSA has improved the lines of liability, particularly for high-rise developments.
The Court of Appeal, in a decision handed down a few weeks ago, appears to have got the message loud and clear: lots of liability, lots of the time. This was a claim brought by BDW Trading Limited (Barratt Homes, David Wilson Homes, etc) against URS (now AECOM, though the engineering practices at fault were smaller entities that have since merged) for poor engineering design over a series of residential blocks of flats in London and Leicester. The flats were all completed before Grenfell, and following that disaster BDW conducted a thorough review of its developments, including those that had all been sold. It discovered that, although problems had not yet begun to show, many of the engineering designs were defective. BDW, therefore, sued URS.
URS was therefore faced with a claim against it relating to losses that (a) had happened more than 6 years ago (the usual limitation period), (b) had not caused any physical damage (most of the claim was economic loss only), (c) BDW was not forced to pay because of some claim against it, and (d) related to properties that BDW did not even own anymore. These are all perfectly legitimate bases in principle for defences against a claim in some circumstances, but the Court of Appeal rejected them all, and this is why:
- URS, as an engineering professional, had a duty in tort to protect against the risk of economic loss. Common law imposes such a duty of care in these circumstances (economic loss is not recoverable by default, but usually is when there’s a professional who is likely to be relied upon, like a structural engineer).
- This was not, as URS’s lawyers tried to characterise it, a claim for “reputational damage”. BDW did have a liability, but anyway a builder who rectifies work without being liable to do so can recover that cost from a negligent third party.
- The tort claim accrued either (a) when physical damage occurred, or (b) if it was an economic loss claim only, then when the building was completed (URS was arguing for a later limitation period, because the properties had been sold by then, but lost because the cause of action arose on completion).
- The Defective Premises Act claims could be brought (with its extended 30 year retrospective limitation period), even though proceedings had already been issued by the time that came into effect.
- The Defective Premises Act (which is usually concerned with the protection of residents) could be used by BDW, even though BDW is not a resident or a consumer.
- Finally, part of BDW’s claim was for a contribution (pursuant to the Civil Liability (Contribution) Act 1978), and URS argued that a contribution could not be claimed when no claim had been made against BDW. Again, the Court of Appeal refused that argument and found that a formal claim was not required.
So, for each of URS’s arguments on liability: fail, fail, fail and fail again. The Court of Appeal has imposed significant liability on URS, despite having on the face of them appeared to be relatively good defences. The Building Safety Act has changed the landscape here by imposing such severe retrospective liability, and the common law has moved along with it too.
There remain so very many questions relating to the Building Safety Act, and all of its myriad complexities, and this is very unlikely to be the last appellate decision in relation to it. It should at least come as some small comfort to residential leaseholders in blocks of flats that the law has shifted in their direction.
URS Corporation Limited v DBW Trading Limited [2023) EWCA Civ 772 (https://www.bailii.org/ew/cases/EWCA/Civ/2023/772.html)
