Courts will continue to shape building safety law in 2024

That is one of the lessons industry can learn from case law on building safety that was developed in 2023, which also highlights how the issue remains a central feature of construction law more than six years on from the Grenfell fire tragedy.

Building safety cases in 2023 and the lessons to learn from them

The question of building safety in high rise, residential buildings was at the heart of the case between URS Corporation and BDW Trading that was ruled on by the Court of Appeal in July. The case arose following a post-Grenfell inspection, which revealed dangerous structural defects in the relevant buildings.

One of the issues considered by the Court of Appeal was when time starts to run for limitation periods for bringing negligence claims against parties with whom the claimant does not have a direct contractual relationship.

An unusual feature of this ‘limitation’ case was that the developers, BDW, argued for the earliest date for the accrual of the cause of action. That was essentially so that they could claim a loss before they had sold the properties to long leaseholders. URS argued, unusually, that the cause of action did not accrue until the discovery of the defects via the post-Grenfell inspection.

The Court of Appeal  rejected URS’ case and held that the High Court judge had been right to find that the cause of action accrued, at the latest, on practical completion, endorsing the view that a finding that no developer can suffer loss for a negligently designed structure until they discover the building constructed is structurally unsafe runs contrary to “fundamental principles in terms of accrual of causes of action in negligence”.

As well as this limitation issue, the Court of Appeal found that URS owed BDW a duty, as structural designer, to prevent economic loss that would be caused by construction of a structure using a negligent design such that it was built containing structural deficiencies or defects.

The Court of Appeal also dismissed URS’ argument that the developer had no legal liability to rectify the structural defects, because it had sold the flats by the time it paid for the rectification works.

The judges held that a developer in BDW’s position was owed a duty under section 135 of the new Building Safety Act (BSA) 2022. That section relates to claims settled or finally determined by a court or arbitration before the new limitation provisions in the BSA took effect. In my practical experience, that clarification is helpful, because other potential defendants in a similar position have also sought to raise such defences to the BSA.

The Court of Appeal’s ruling in the case is, however, not the end of the matter, as URS has been granted permission to appeal before the UK’s highest court, the Supreme Court. Pinsent Masons understands that a panel of seven judges will hear the appeal, in what is a clear indication of the importance that the courts attribute to building safety law.

One building safety-relevant case that came before the Supreme Court in 2023 was the case of Canada Square Operations Ltd v Potter. In that case, the Supreme Court reinterpreted how the Limitation Act 1980 should be construed.

The Limitation Act postpones the commencement of the ordinary limitation period where “any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant”. It further provides that “deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty”. The Supreme Court had to consider the meaning of the phrases “deliberately concealed” and “deliberate commission of a breach of duty”.

The Supreme Court decided that it is clear that “deliberate” has an ordinary meaning that is different from the meaning of “reckless” – meaning demonstrating recklessness alone is now insufficient for parties seeking to argue postponement of the commencement of the limitation period.

What is now required by the Supreme Court decision is evidence of:

• a fact relevant to the claimant’s right of action;
• the concealment of that fact from the claimant by the defendant, either by a positive act of concealment or by a withholding of the relevant information, and;
• an intention on the part of the defendant to conceal the fact or facts in question.

On 1 November, another ruling dealing with building safety issues was handed down by the High Court in the case of Lendlease Construction (Europe) Ltd v Aecom Ltd. Among the issues the court considered was the extent to which Aecom was obliged to achieve a particular outcome or attain a particular standard as opposed to exercising reasonable care and skill. It also considered whether Aecom had a continuing duty to review matters and/or to advise and/or warn Lendlease – whether after having provided its design originally or upon being asked to provide a revision. This led to the associated issue of whether and if so to what extent the claim was statute-barred.

The rulings on the application of the new limitation rules under the Building Safety Act 2022 make it clear that many claims which had expired due to limitation are now firmly back in play. Those responsible for the provision of dwellings should be in no doubt that the new limitation rules do have retrospective effect – even in circumstances where proceedings have already commenced on other grounds.

The rulings also have implications for developers that have signed the developer remediation contract, which converts an industry pledge to address historic failings in building safety post-Grenfell. The circumstances in the URS v BDW case – where defects were identified in one development and prompted a proactive review of BDW’s whole portfolio of properties despite the fact the company had not received claims – is analogous to similar exercises developers subject to the developer remediation contract may be undertaking in respect of fire safety assessments and potential remediation regardless of the existence of claims. In this regard, for signatories to the building safety pledge, this will be a welcome decision and give some comfort around the prospects of securing third party recoveries where developers have proactively remediated buildings due to their obligations to the government but without actually having received a claim.

The rulings also indicate that the courts in England and Wales will be at some pains to find a way to impose liability and a route to recovery for building safety related claims. That policy driven approach is in my view made plain by the judge in the URS v BDW case where he quoted from a previous case in which a judge said: "Within the bounds of sense and reasonableness the policy of the law should be to advance, rather than retard, the accrual of a cause of action.”

As a result, in 2024 we can expect to see not only more building safety cases coming before the courts but a continuation of that policy driven approach.