Limitation periods – Construction’s ticking time bomb
RG Securities (No2) Ltd v (1) Allianz Global Corporate & Speciality CE (2) Building Lifeplans Ltd (3) R Maskell Ltd  EWHC 1646 (TCC)
A residential tower block in Ipswich was undergoing a major face lift in or about 2009. Around the same time, the 16-story property was also having a cladding system fitted to it. It was to be alleged later in court that the cladding system was unsafe and more flammable than that installed at Grenfell Tower. The estimated cost of the remedial works was stated to be £3.6 million.
In an application for summary judgment to have the case against them struck out, the contractor who undertook the work argued that the developer was too late in bringing the claim as the matter was now statute barred under the Limitation Act 1980. The contractor stated that the refurbishment works were concluded in 2009 and therefore the limitation period expired some 6 years later in 2015.
As the developer had not issued proceedings until December 2019, their claim, the contractor argued, was simply too late and should be struck out. In response to this application, the developer argued that when they acquired the property in 2015, the refurbishments works did not have the requisite Building Regulation approval and this information had been concealed from them by the contractor.
The court found in favour of the developer, dismissing the contractor’s application for summary judgment and allowing the matter to proceed to trial.
The court found in the summary application hearing that time did not start running for limitation purposes until the developer had discovered the concealed information regarding the lack of Building Regulation approval in May 2018. The date upon which the works were finished was therefore irrelevant. The developer could breathe a sigh of relief. The court had effectively said that deliberately concealing information can effectively reset the limitation clock.
This stroke of good fortune for the developer however is not always the case and many developers can fall foul of the strict limitation periods and find that they are simply too late to pursue a claim for their latent defects.
A latent defect may not show itself for many years. A latent defect is one which is “concealed” and which may not present itself or fully materialise until after the end of the defects period. An example of a latent defect may be the alleged defective cladding on the Ipswich tower block or a retaining wall which begins to move over time, or indeed weak foundations which cause cracking. This is different to a patent defect which manifests itself in an obvious manner (for example a cracked window or a leaking tap).
Time is paramount as is demonstrated in the above case. Had it not been for the concealment of the building regulations approval, the developers claim would have been ‘time barred’ and incapable of being pursued further. Check the contractual provisions if the contract has been executed as a simple contract then you have a period of six years from the date of the breach (which is usually deemed to be the date of practical completion) to pursue a claim. If the contract has been executed as a deed, then you have 12 years. These dates are vitally important because if the claim is not pursued by way of court or arbitration proceedings during the allotted time frame (6 or 12 years) then the other side will have the benefit of a limitation defence. This may well result in a developer not being able to pursue the claim at all. It is important to note that adjudication proceedings do not stop time running for the purpose of any court claim which you may be entitled to commence.