The Irish Supreme Court has unanimously held that the key date for the Statute of Limitations when bringing a claim in tort for property damage is the date of the manifestation of damage from defective work, rather than the date of the defective work itself. The Court of Appeal previously overturned the decision of the High Court in Brandley and WJB Developments Limited –v Hubert Dean T/A Hubert Dean & Associates and John Lohan T/A John Lohan Ground Works and Tractors (High Court 2010/10994P and Appeal 2015/245).
The case concerned two houses in Co Galway. The first defendant was the project engineer who issued certificates of compliance. The second defendant was the grounds work contractor whose work included the foundations of the houses.
As a general rule, proceedings for negligence must be commenced within 6 years from the date on which the cause of action accrued. In this case, the proceedings were commenced over six years after both the laying of the foundations and the engineer’s certification. However, the proceedings were commenced less than six years from the date upon which the damage became apparent to the plaintiffs. Below is a summary of the key dates:
March 2004 The foundations of the houses were completed
September 2004 The engineer issued his certificates of compliance.
December 2005 The Plaintiffs noticed cracks in the houses.
November 2010 The Plaintiffs issued proceedings against the engineer and the contractor.
The parties agreed that the test for when the cause of action accrued was not one based on discoverability but rather the question to be answered was “when did the plaintiffs suffer damage by reason of the negligence of the defendants”. The nub of the Plaintiffs’ case was that although the negligent installation of the foundations and the negligent certification were outside the six year time limit, the damage that came about as a result was within that period.
Mr. Justice Kearns held on 16 April 2015 that the Plaintiffs’ claim was statute barred. The learned Judge cited the Judgment in Murphy –v- McInerney Construction Limited (2008) IEHC 323 which “firmly exclude a discoverability test as being the relevant starting date”. The High Court dismissed the Plaintiffs' claim.
Court of Appeal
The Court of Appeal overturned the High Court decision on 2 February 2016 and held that the Plaintiffs’ proceedings were issued in time and were not statute barred.
The Defendants appealed this decision to the Supreme Court who gave Judgment on 15 November 2017. A unanimous decision of the Supreme Court given by Mr Justice McKechnie (Clarke CJ, MacMenamin, Dunne and O’Malley JJ concurring) ultimately upheld the Court of the Appeal’s decision that the claim was not statute barred.
Mr. Justice McKechnie stated:-
“…I accept that there is a definite distinction between a “defect” and the subsequent damage which it causes. Time runs from the manifestation of damage, rather than of the underlying defect. Thus it is not the latent defect which needs to be capable of discovery: it is subsequent damage caused by that latent defect…”.
The Supreme Court distinguished the word “manifest” from that of a “discoverability test” and was keen to emphasise that a “discoverability test” should not apply, noting that
“…it is not so easy to pin down precisely what is meant by “manifest”, and especially how one might differentiate it from the “discoverability test” as it appears in [case law]. From a reading of the case law, I understand “manifest” to mean the date on which damage is capable of being discovered by a plaintiff…”
Mr. Justice McKechnie found that if no loss or damage arises out of a defect then no cause of action exists. Thus, in this instance, he found that the damage manifested itself in December 2005 and so time runs from that date.
This decision provides important guidance from the highest court in the land regarding the date on which the Statute of Limitations clock begins to tick for property related cases. It re-emphasises the principle that a cause of action in non-personal injury claims accrues when the damage becomes manifest.
The Court pointed out that damage is “manifest” when it is capable of being discovered, regardless of whether it has or has not been discovered or ought to have been discovered. It was careful to distinguish this principle from the “discoverability test” in personal injury actions and expressly re-affirmed the position that a “discoverability test” does not apply in non-personal injury claims in tort and negligence.
In a construction context, there will often be a distinction, or indeed a time gap, between when defective work takes place and when actual damage arising out of that defective work becomes manifest. In reality, the question of when damage was capable of being discovered will now become the new battleground in claims where there is a possible Statute of Limitations defence. In the majority of cases, it is a question that will most likely need to be answered with the assistance of expert evidence.
Generally speaking, this decision will not be welcomed by those employed in the construction industry and/or by their professional indemnity insurers as it opens the door for claims being successfully brought against construction professionals outside of the traditional statutory period of six years after defective work was carried out.