The Importance of Timing in Latent Defect Claims

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03 February, 2020

A latent defect may not become apparent for many years after practical completion. As a result of this time lapse, limitation becomes a live issue within many construction disputes. It is a central issue to be considered whether you are thinking of bringing a latent defect claim and is also a useful argument to raise when defending a latent defect claim.

It is section 14A of the Limitation Act 1980 that is relevant for the purposes of establishing limitation for latent defect claims. A claim cannot be brought after the expiration of either:

  • Six years from the date on which the cause of action accrued; or
  • Three years from the date on which the Claimant had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.

For the purposes of latent defect claims the crux is the date of knowledge.

The Courts in UK Insurance Limited v (1) Carillion Specialist Services ltd and (2) Construction Auditing Services Ltd [2019] EWCA 1588 (TCC) have provided us with helpful guidance to understand what is meant by "knowledge".

Background Facts of the Case:

The Claimant issued insurance policies for latent defects following construction. Prior to issuing the certificate of insurance, the Claimant commissioned the First Defendant to carry out a survey to ensure that the works had been carried out to a good standard. In 2003, the Second Defendant took over certification from the First Defendant.

In 2003 the First Defendant carried out the survey and the Second Defendant issued the certificate to confirm that the works were carried out to a reasonable standard and skill. The Claimant therefore issued the certificate of insurance insuring the building against latent defects until September 2013. Unfortunately, cracks began to appear in the rendering in January 2013 and a firm of engineers were asked to investigate. They wrote to the Claimant in March 2013 to advise that "there was an absence of a suitable frequency of expansion joints" in the building. A more detailed inspection was recommended and took place in August 2013 confirming that the cause of the cracking was movement of various elements. Major refurbishment works were required.

A further report was commissioned in March 2015 confirming that a sub-contractor had failed to comply with the specifications.

The Claimant therefore sought to recover damages from the First and Second Defendant as they had undertaken the original survey and provided certification to prove that the works were carried out with reasonable care and skill and that they should have identified the risk of damage.

The Question to be Determined:

Proceedings were issued in September 2016. The Claimant was statute barred from bringing a claim for a breach of contract as there is a 6 year time limit to bring claims based on contract law (Section 5 Limitation Act 1980). The question then arose as to whether the Claimant was also statute barred for the purposes of a negligence claim.

The Claimant argued that it only had this knowledge in March 2015 when it received the report confirming that the sub-contractor had failed to comply with the specifications.

The Court's decision:

The Court disagreed. The leading case on limitation is Haward and others v Fawcetts (a firm) and another [2006] 1 WLR 682 (HL) in which the Court stated that the date is not when the Claimant knew he might have a claim for damages, but when he had "sufficient confidence to justify embarking on the preliminaries to the issue of a writ." In this case, the Court felt that the Claimant had sufficient confidence to justify embarking on the preliminaries to the issue of a writ in March 2013 when they were aware of the use with the expansion of the joints. The Claimant did not have to know that there was a worthwhile cause of action, simply that there was enough information to warrant further investigation.

Summary Judgment was therefore entered in the Defendant's favour as the claim was wholly time-barred.

Our Advice:

The importance of knowledge cannot be understated. It is important to know what is known and when it is known. As soon as it becomes apparent that there is possibly an issue, investigations need to be undertaken urgently, to ensure that limitation is not missed. The Courts are not afraid to say a Claimant has missed the boat so ensure that you are proactive with investigations and seek legal advice at an early stage.

For more information contact Lucy Bailey in our Dispute Resolution department via email or phone on 0333 207 0677. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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