In this section we describe an interesting recent case we have been involved in, explaining the issues involved and how we handled it, highlighting points of legal and practical interest.
Although it is understandable why a party does not always want to rush in to commencing litigation, sometimes this is necessary to ensure that the ability to bring a claim is preserved.
We have recently acted on a matter where the owners of a warehouse discovered a crack in the floor a number of years ago. They had a structural engineer have a cursory look at it, and he indicated that it could be either down to the new building settling or a result of an issue with the foundations. The crack had been there since shortly after the owners moved in, but did not cause them any problems. The warehouse had been built approximately eight years ago. The owners did not carry out any investigative work but rather took a ‘wait and see’ approach to see whether it developed into something more serious, on the basis that there was a chance it was just the new building settling.
Unfortunately, and more than three years after first noticing the crack, the crack got significantly larger requiring investigations into the cause of the crack. A structural engineer’s report was obtained which confirmed that the cause of the problem was that unsuitable material had been used for filling in the foundations.
We were asked to look at whether a claim could be brought against the builder for building work carried out negligently.
This claim was time-barred under contract law, as more than six years had elapsed since the cause of action accrued when the warehouse was built. The claim could only proceed in negligence if the owner could rely on section 14A of the Limitation Act 1980 which provides claimants with a three-year ‘extension period’ in claims for negligence, commencing from the date of knowledge that there could be a claim.
What then amounts to ‘knowledge’ for the purposes of section 14A? It is the earliest date when a claimant ‘first 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’. The leading authority on knowledge provides that it is sufficient to know enough for it to be reasonable to begin to investigate further. On the present facts, the factory owner was aware of the crack and that it could be attributable to a defect on the building, but simply decided to wait before investigating further – there was no other explanation. Unfortunately, the claim was statute-barred and the factory owner was unable to recover the significant losses in remedying the builder’s defective work.
- a ‘wait and see’ approach will not always produce the best results
- parties who think there could be an issue with negligent work or advice should be live to the fact that there may be a maximum period of three years from knowledge of any issue within which to bring a claim (particularly if the original negligent act occurred more than six years earlier)
- seeking earlier legal assistance could have meant that a standstill agreement was entered into deferring the time period within which legal proceedings need to be commenced or proceedings could have been issued and subsequently stayed to allow for further investigations
- sometimes action is necessary to protect a party’s position.