ARTICLE
14 March 2023

What Developers Need To Know About Limitation Following Grenfell

HC
Herrington Carmichael

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Herrington Carmichael is a full-service law firm offering legal advice to UK and international businesses. We work with corporate entities of all sizes from large PLCs through to start-up businesses.
The objective of the Building Safety Act 2022 (BSA 2022) was to reform building safety legislation and fire safety. It has become one of the most important pieces of legalisation...
UK Litigation, Mediation & Arbitration
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The objective of the Building Safety Act 2022 (BSA 2022) was to reform building safety legislation and fire safety. It has become one of the most important pieces of legalisation in the construction industry. Unfortunately, the catalyst was the tragic Grenfell Tower disaster of 2017. As many in the construction industry will be aware, the subsequent review of building regulations and fire safety in 2018, led by Dame Judith Hackitt, found that the current system was not fit for purpose and needed an overhaul.

The BSA 2022 is a long, complex and wide-ranging piece of legislation that finally came into force on 28 June 2022, and the related Regulations being in force from 20 July 2022. Whilst I do not intend to give a comprehensive overview, there are some key points of interest, especially from the perspective of claims being made against developers.

Limitation

A limitation period is the period of time within which a party can bring a claim against another for damages. The Limitation Act 1980 gives the defendant a defence if Court proceedings are issued after expiry of this period.

The BSA 2022 expands the scope of the Defective Premises Act 1972 (DPA 1972) and now allows homeowners to bring statutory claims concerning properties which require refurbishment and rectification works which then renders the property unfit for human habitation. Previously, this was restricted to new dwellings or conversions.

Historically, claims under the DPA 1972 had to be issued within 6 years from the date that the dwelling was completed.

The BSA 2022 radically changes the limitation period and it is now possible for claims to be made up to 15 years from the date of Practical Completion, in relation to buildings completed after 28 June 2022. Developers should be aware that older sites might need to come back into focus.

Even more controversially, there is now a retrospective 30-year limitation period for buildings completed prior to the BSA 2022 coming into force. So, this applies to all properties with Practical Completion between 28 June 1992 to date. Developers and contractors can still be held liable for projects completed in that timeframe. The silver lining is that this new timeframe does not apply to claims that have been settled or those that have already been determined by the Courts.

Section 38 of the Building Act 1984

Section 38 of the Building Act 1984 gives claimants a statutory right to claim compensation for physical damage caused by a breach of building regulations (at the time of construction). This will apply to all buildings, not just dwellings and dwellings of a certain height.

There is also an extended limitation period for claims of this nature of 15 years from the date of completed building works, but only in respect of buildings completed after 28 June 2022.

Building Liability Orders

The BSA 2022 has also drastically increased a claimant's ability to hold associated companies, such as parent companies, successor companies, or related group companies liable for claims made under the DPA 1972 or Section 38 of the Building Act 1984.

The Court must be satisfied that it is it is "just and equitable" to make such orders. There is no definition of what is just and equitable within the BSA 2022, nor does it define the extent of the Court's discretion. Given that this is still relatively new legislation, it will be interesting to see how the Court implements and interprets these changes.

It may be that the standard use of an SPV for a development project will no longer provide the protection to the primary company it used to.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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