Guidance from the Court of Appeal
The Court of Appeal dismissed both appeals – the First Appeal, the substantive appeal against Fraser J’s order on the preliminary issues, as well as the subsequent amendments appeal against the orders made by the Deputy High Court Judge (the Second Appeal).
The judgment is good news for any developers who find themselves in situations similar to BDW’s position. It is also represents a very positive step forward for the property owners (and their lenders) in residential blocks. The case clearly shows support for those affected by building defects. Coulson LJ said:
"… in my view, there are many practical reasons why the existence of a claim on behalf of the individual purchasers by a major corporate entity like BDW, which would cover the whole building and not just individual parts, is an important benefit to those purchasers, regardless of the terms of any individual warranties in their favour. The difficulties that defendants can place in the way of individual claimants in large residential blocks can be seen in Manchikalapati v Zurich [2019] …"
Both the TCC and recent Court of Appeal decisions consider a number of important legal points, some which go back to basics. The key points to note are:
The losses which BDW sought to recover from URS
The Court decided that the losses which BDW sought did fall within the scope of URS’ professional duty:
"… they were not (and were not presented as) claims for reputational damage, but as conventional claims for damages measured by reference to the cost of remedial works and the like …" and "… as a matter of law, the possible absence in 2019 of an obligation on the part of BDW to carry out such works is irrelevant to BDW’s ability to recover those costs as damages.".
Coulson LJ distinguished the facts of the case from “a meddling employer who gratuitously incurred costs on works which were unnecessary or unjustified”; finding for BDW, he held that the pleaded case, and Fraser J’s findings, demonstrated that this was a conventional claim for damages.
The date of accrual of the case of action in tort
The Court upheld the earlier decision concerning when BDW’s cause of action in tort accrued. In endorsing the TCC on this point, Coulson replicated the paragraph in Fraser J’s judgment as neatly summarising his own conclusions that
"… the measurable loss, in the case of a negligently designed structure that has been constructed … is the cost of making it structurally safe. That occurs when the structure is constructed in accordance with the negligent design. It cannot be right to say that the developer of a building has no such loss unless and until he discovers that the building he has had constructed is structurally unsafe."
The Court held that BDW’s cause of action in tort against URS accrued no later than the date of practical completion of the blocks and not when the defects were discovered in 2019.
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