Further exposure inevitable for the residential development industry?

Jonathan Brown and Cathy Moore, Clyde & CoMarch 16, 2022
Construction site of new homes
Credit: Shutterstock/Lichtwolke

Following extensive investigations into building safety following the Grenfell tragedy, the UK government plans for the Building Safety Bill (BSB) to take effect this year. Some of the most significant changes to the risk profile for those involved in residential development are the proposed amendments to the obligations set out in the Defective Premises Act 1972 (DPA).

The current DPA duty

  • S1 of the DPA imposes a duty upon “a person taking on work for or in connection with the provision of a dwelling”, to “see that the work is done in a workmanlike (or as the case may be) a professional manner, with proper materials, so that… the dwelling is fit for habitation when the work is completed”.
  • Liability under S1 of the DPA is currently prospective only and the limitation period runs for six years from the date of completion. That can include defects that were latent at completion, if it can be proved that the property was unfit for habitation at the date of completion.
  • The duty applies to new ‘dwellings’ (through construction or conversion) and works carried out to remedy defects in the original construction, in which case, a new, separate limitation period of six years will run from the date of completion of those remedial works.
  • The S1 DPA duty is owed by contractors and design professionals involved in the design and construction of the dwelling, as well as developers commissioning a project.
  • The duty is owed to the “commissioner” (the building owner, or the employer under a construction contract) and to any person who acquires a legal or equitable interest in the dwelling and their successors in title.
  • Issues with the common parts of a building that directly impact upon the potential safety of a dwelling can in principle also give rise to claims under S1 of the DPA, such as potentially dangerous external cladding or wall insulation, if it can be proven that this prevented the dwelling being fit for habitation at completion.

The proposed extension of the DPA duties

Extension of the works covered under the DPA

  • Where works are undertaken in the course of a business, the BSB will extend the S1 DPA duty to include buildings that are mixed use, where they contain one or more dwelling.
  • Significantly, the new provisions will cover refurbishment and extension works to existing dwellings in the course of a business – this will be provided for in a new S2A duty in the DPA.

Extension to DPA limitation periods

The BSB will extend the limitation period for key claims under the DPA:

  • From six to 15 years for S1 and S2A DPA claims, which are claims that will accrue after the BSB takes effect; and
  • From six to 30 years for S1 claims retrospectively – that is, claims that accrued before the BSB takes effect. (Initially, a 15-year period was proposed but this has been replaced with a 30-year period).

The s1 DPA retrospective claims will not expire until at least one year after the new limitation period comes into force, in order to protect potential claimants who are close to the end of the 30-year retrospective limitation period at the time the BSB comes into effect.

Where a S1 DPA claim is made retrospectively, there are two provisos. The first requires a court to dismiss a newly resurrected retrospective claim if it breaches a defendant’s rights under the Human Rights Act 1998. Secondly, a claim that has previously been settled or finally determined cannot be revived simply because of the extended limitation period.

What will be the effect of the changes to the DPA?

Most buildings affected will have been assessed in the aftermath of the Grenfell tragedy, which is now more than four and half years ago, meaning that some claims will already have been resolved. It is however likely there will be an increased number of claims under the DPA soon after the BSB takes effect, to take advantage of the one-year buffer protecting claimants who are close to the end of the 30-year limitation period.

The 24-year retrospective extension to the limitation period for S1 DPA claims is daunting for potential defendants and their insurers, and an increase in the number of claims must be expected. The ambit of the DPA right remains restrictive however, as it will still only relate to defects that prevent a dwelling being fit for habitation at the time of completion; this may be hard to evidence 25-30 years later.

Contributed by Jonathan Brown, partner, and Cathy Moore, professional support lawyer, Clyde & Co

Jonathan Brown and Cathy Moore, Clyde & CoMarch 16, 2022
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