The recent Technology and Construction Court (TCC) case of BDW Trading Ltd v Ardmore Construction Ltd [2024] EWHC 3235 (TCC) provides important guidance on the interaction between limitation periods, the Defective Premises Act 1972 (DPA), and the significant changes introduced by the Building Safety Act 2022 (BSA). This case is particularly relevant for developers, contractors, and other construction professionals involved in residential projects, especially those concerning higher-risk buildings (HRBs).
Background of the Case
The dispute concerned alleged defects at a large residential development. BDW Trading Ltd (BDW), the developer, brought claims against Ardmore Construction Ltd (Ardmore), the contractor, for breaches of contract and under the DPA. A crucial aspect of the case revolved around the applicable limitation period for claims relating to these defects, particularly in light of the retrospective extension of the limitation period for claims under the DPA introduced by the BSA.
Key Legal Framework: DPA and BSA
The DPA imposes a duty on those involved in the construction of dwellings to ensure that the work is carried out in a workmanlike or professional manner, with proper materials, so that the dwelling is fit for habitation. The BSA significantly amended the DPA, most notably by extending the limitation period for claims brought under section 1 of the DPA:
- For claims accruing before 28 June 2022: The limitation period was extended to 30 years retrospectively.
- For claims accruing on or after 28 June 2022: The limitation period is 15 years.
The Central Issue: Accrual of the Cause of Action
The critical issue in BDW v Ardmore was determining when the cause of action accrued for the purposes of the DPA. This is essential for establishing when the limitation period begins to run. Ardmore argued that the cause of action accrued upon practical completion of the relevant building. BDW, on the other hand, contended that the cause of action accrued later, potentially upon the discovery of the latent defects.
The Court’s Decision
The TCC sided with Ardmore, confirming that the cause of action under the DPA accrues upon practical completion of the dwelling. This is a crucial point, as it clarifies the starting point for calculating the applicable limitation period. The judge emphasised that the DPA is concerned with the state of the dwelling at the time of completion, not the subsequent discovery of defects.
Implications of the Decision
This decision has several significant implications for the construction industry:
- Certainty on Limitation: The ruling provides much-needed clarity on the accrual of the cause of action under the DPA, reducing uncertainty and potential disputes regarding limitation periods. This is particularly important given the retrospective extension introduced by the BSA.
- Impact on Existing and Future Claims: For claims relating to projects completed before 28 June 2022, the 30-year limitation period applies, starting from practical completion. For projects completed after this date, the 15-year period applies, also running from practical completion.
- Importance of Documentation: Accurate and comprehensive record-keeping, especially regarding practical completion dates, is now more critical than ever. This documentation will be essential in determining the applicable limitation period for any potential DPA claims.
- Strategic Considerations: Developers and contractors should carefully review their existing and future projects in light of this decision. Developers need to understand the potential extended liability for defects, while contractors need to ensure they have adequate insurance coverage and robust contractual arrangements in place.
The Impact of the BSA
The BSA’s retrospective extension of the limitation period has significantly increased the potential liability for construction professionals. The BDW v Ardmore case clarifies how this extended period interacts with the established principle of accrual at practical completion.
Conclusion
BDW v Ardmore is a significant decision that provides crucial clarification on the accrual of causes of action under the DPA, particularly in the context of the BSA. It emphasizes the importance of practical completion as the trigger for the limitation period and underscores the need for careful record-keeping and robust contractual arrangements. This case is essential reading for anyone involved in the construction of residential properties, especially HRBs, and highlights the continuing impact of the BSA on the construction landscape. It is recommended that construction professionals seek legal advice to understand the full implications of this decision for their specific circumstances.