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Cladding claims and limitation under the Defective Premises Act 1972

Posted: 18/08/2020

Key takeaways

The decision in Sportcity 4 Management Ltd v Countryside Properties (UK) Ltd [2020] EWHC 1591 (TCC) is a useful confirmation of the limitation position under the Defective Premises Act 1972 when further work is undertaken after completion of the original project. Such further work does not extend the limitation period in respect of claims concerning the original works. It is also a reminder of the problems that often (but not always) prevent owners bringing actions in tort for these kinds of cladding claims.  

On a more general level, it is a salutary warning of the limitation pitfalls that sometimes exist for building owners with unsafe cladding seeking recourse against those involved in the original project. It is crucial to undertake early investigation and assessment to establish if valuable rights exist and, if so, to take steps to ensure those rights are not lost.

Facts of the case

The case concerned a residential development complex in Manchester, known as Sportcity Living. The complex comprises 350 apartments across a number of blocks. The claimants were the management companies for the blocks (referred to in this article as ‘Sportcity’). The defendant, Countryside Properties (UK) Ltd, was the original developer that built the complex.

The long leaseholder owner of the land, AMEC Development Ltd, granted sub-leases (in materially identical terms) in relation to each of the apartments within the blocks. Sportcity and Countryside were parties to these sub-leases. AMEC then subsequently assigned its long leaseholder ownership to Sportcity.

For the purposes of the court hearing, the parties agreed to proceed on the basis that completion of the complex occurred in 2010. It was also agreed that in 2014 and 2017, Countryside attended the complex (and undertook some works in 2014) arising from alleged problems with the buildings’ external cladding.

Sportcity issued court proceedings against Countryside in or around 2019 in relation to alleged defects with the cladding system and other fire related defects. It sought damages of just over £15 million for the estimated costs of the re-cladding works (plus approximately £840,000 in relation to cavity barrier and fire stopping works).

Sportcity’s pleaded case advanced three causes of action: (i) a claim under s1 of the Defective Premises Act 1972 (DPA), (ii) a claim that Countryside owed Sportcity a duty of care in tort (which it breached) in relation to the works, and (iii) a claim that, on the proper construction of the sub-leases, Countryside was the landlord under them. As such, it owed (and had breached) certain obligations to Sportcity or, alternatively, that Countryside was responsible for ensuring compliance with such obligations.

In response, Countryside brought a court application asking for the claim to be ‘struck out’ or (alternatively) for summary judgment to be entered in its favour. This was based on contentions that: (i) any claim under the DPA was out of time, (ii) the losses claimed by Sportcity were irrecoverable in tort from Countryside as a matter of law, and (iii) it could not realistically be argued that Countryside was the landlord under the sub-leases or that it had any of the relevant asserted obligations.

Court’s decision

As this was a summary judgment/‘strike out’ application, the relevant test for the court was (in essence) whether Sportcity’s alleged causes of action had a realistic prospect of success. It was only if they did not that the application should succeed.

Despite this high hurdle, the court concluded that Countryside was correct and the application succeeded. In relation to the claim under the sub-leases, the court found that this was simply untenable and had no real prospect of success. Whilst Countryside was a party to the sub-leases, it was not the landlord under them, and the proper construction of the sub-leases could not bear the conclusion that Countryside owed the relevant obligations.

In relation to the claim under the DPA, it was agreed that, prima facie, the limitation period to bring a claim (being six years since completion of the works) had expired. However, Sportcity argued that, because Countryside had re-attended and undertaken works in April 2014 (and re-attended and failed to undertake works in 2017), the limitation period should recommence in 2014. It sought to rely on s1(5) of the DPA, which states that if, after completion, further work is undertaken to rectify the previous work, any such cause of action in respect of this further work accrues at the time the further work was finished.

However, the court held that, whilst s1(5) may give a fresh cause of action in relation to further work carried out after completion, it does not operate to revive an existing but statute-barred cause of action. In other words, the occurrence of further works does not re-start the limitation clock in respect of the original works. As Sportcity’s pleaded claim under the DPA was only in respect of the original works, it was thus time barred and not saved by events in 2014 or 2017.

Finally, in terms of the claim in tort, the court dealt with this very briefly. The law is clear that the losses being claimed by Sportcity (ie rectifying the defects) are classified as pure economic loss and could not be recovered by Sportcity through a claim in tort. In other words, Countryside did not owe Sportcity a duty of care in tort to prevent Sportcity suffering pure economic loss and, as such, this claim also had no reasonable prospect of success.

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