Limitation – what is it and why is it important
One of the most important issues to consider when bringing or defending a claim is what the applicable limitation period is and whether the claim is “in time” or “out of time”. If the limitation period has expired then the defendant will generally have a complete defence to the claim (unless it is one for personal injury or death) regardless of the underlying merits, and the claim will be “time barred”.
The existing law on limitation periods has been settled for a long time. Typically it provides for limitation periods of:
- six years for claims under contracts signed under hand and certain actions in tort
- twelve years for claims under contracts signed as a deed
The time period begins to run from the date on which the cause of action accrued (which is beyond the scope of this note – see our briefing Professionals, continuing duty and limitation).
There are a number of special circumstances in which either a different limitation period applies or where the time period begins on a date later than that on which the cause of action arose. For example, in relation to negligence claims for latent damage the limitation period is the later of six years from the date the cause of action accrued or three years from the date when the claimant knew or ought to have known the material facts about its loss and that it was attributable to the defendant, subject to a 15 year long stop date from the negligent act.
Parties are also free to specify their own limitation periods in their contracts. It is common in construction contracts, for example, for parties to provide that the limitation period will run for 12 years from the date of completion of the works.
The benefit of clear limitation periods is that it provides parties with certainty and knowledge that they can be free of any claims under a contract entered into after a specified and known period of time. It also prevents the court’s time being taken up dealing with historic claims.
A new approach – the Building Safety Bill
The Building Safety Bill was put before parliament on 5 July 2021 in response to significant concerns regarding the safety of buildings arising out of the Grenfell Tower fire and investigations following that tragedy. It is extensive and covers many issues (see the discussion in our briefing Limitations to the Building Safety Bill). One of those issues is an amendment that proposes to retrospectively extend the limitation period for claims under the Defective Premises Act 1972 (the DPA).
The DPA requires that anyone involved in the construction of a dwelling must ensure it is completed in a workmanlike and professional manner and using proper materials to ensure it is fit for habitation. The existing limitation period for a claim under the DPA is six years from completion of the works.
The changes proposed in the Building Safety Bill would extend the limitation period for claims under the DPA from six years to fifteen years, and this will apply retrospectively. It could therefore operate to remove limitation defences that have already arisen. It would not apply to claims that have already been settled or determined.
Whilst the Building Safety Bill is being introduced in response to concerns regarding fire safety, it is important to note that the extended limitation period would apply to all claims under the DPA, whether they relate to fire safety or not, and would therefore include other defects that make a dwelling unfit for habitation such as those causing water ingress. The proposal therefore has a far wider reaching impact beyond claims in relation to fire safety.
The Building Safety Bill is currently at report stage, and amendments are therefore being discussed and the above is subject to change. A further proposal has been put forward by a group of residents in London that would incorporate the Polluter Pays principle from environmental protection legislation into the Building Safety Bill (see our briefing here). It is proposed that would override any limitation periods in the Limitation Act 1980, which would potentially completely change the picture of limitation where there are allegations of defective works affecting the safety of a building.
Limitation is a sometimes tricky beast. It is clear that it is also an area that is likely to change in the near future in the context of construction claims. Perhaps radically so. If you have a potential claim it is imperative that you seek early advice to ensure that any rights of action you may have do not become time barred before you are able to commence proceedings.
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