The recent decision of the Technology and Construction Court provides a helpful reminder of the approach courts will take in applying section 14A of the Limitation Act 1980 (Section 14A), reiterating the need to take care to understand the date upon which the negligence in question was suspected. It also emphasises the importance of considering the potential for summary judgment where limitation is in issue, as ultimately this may result in an early conclusion of the claim and a significant cost saving.
UK Insurance Ltd (the Claimant) is an insurance company that issues latent defect policies in the construction industry. Carillion Specialist Services Ltd (the First Defendant) agreed to undertake surveying services for the Claimant, including site technical audits. The First Defendant would, on the completion of an audit, issue a certificate of approval and – in reliance on that certificate – the Claimant would issue an insurance policy. In 2003, Construction Auditing Services Ltd (the Second Defendant) took over the role of certification from the First Defendant.
The present case concerned a project to apply a rendering system to the external elevations of two blocks of flats in Oldham for Oldham Housing Arms Length Management Organisation Ltd (Oldham HA) and problems that subsequently manifested in that rendering system.
- In 2003, the First Defendant undertook an inspection of the Oldham site and the Second Defendant later provided the certificate (the Certificate).
- The Claimant relied upon the Certificate in issuing a latent defect policy to Oldham HA in 2004 (the Policy), under which the major defects cover was to run until 5 September 2013.
- Cracking in the render of one of the blocks (Summervale House) was noticed in December 2012 to January 2013.
- In March 2013, a firm of engineers (Morley) was asked by the main contractor to inspect the cracking at Summervale House.
- In a letter of 21 March 2013 (received by the Claimant in June 2013), Morley noted, among other things, that there was an “absence of a suitable frequency of expansion joints” in the building and proposed a more detailed inspection (the March Letter).
- On 5 August 2013, the inspection proposed by Morley took place and, in a letter of 22 August 2013 (received by the Claimant on 12 September 2013), Morley suggested that the cause of failure was movement between the various elements and recommended that all southern elevations of the property should be replaced entirely.
- In March 2015, Watts Group plc inspected the property and produced a report on the property (which the Claimant received on 30 May 2015 – the Watts Report). The Watts Report identified that the relevant subcontractor had failed to comply with specifications in a number of respects.
As the terms of the Policy had been fulfilled, the Claimant paid Oldham HA. However, the Claimant subsequently brought a claim in tort against the two defendants on the basis that they should have identified and warned the Claimant that there was a risk of damage occurring during the currency of the Policy.
After the Claimant issued its claim, the First Defendant fell into liquidation. The Second Defendant pleaded a limitation defence and applied for summary judgment on the basis that the Claimant had no real prospect of success in respect of the Second Defendant’s limitation plea.
A claim in tort must be brought within six years from the date of damage. Section 14A, however, provides for an additional period of three years for a claimant to bring a claim, running from the earliest date on which the claimant had “both the knowledge required for bringing an action for damages in respect of the relevant damages and a right to bring such an action”.
The leading case on Section 14A is Haward and others v. Fawcetts (a firm) and another  1 WLR 682 (HL), in which the House of Lords confirmed that the relevant date was not when the claimant first knew he might have a claim for damages, but the date when he knew enough that he had “sufficient confidence to justify embarking on the preliminaries to the issue of a writ”. The knowledge required was knowledge in broad terms of the facts on which the claimant’s complaint was based and knowing that there was a real possibility that the defendant’s acts or omissions had been a cause of the damage.
The Claimant in this case argued that it only acquired the relevant knowledge for the purposes of Section 14A when it received the Watts Report on 30 May 2015, as it was only then that the acts and omissions of the defendants were identified. The Second Defendant, however, saw the relevant date of knowledge as being when the March Letter was received in 2013, which meant the claim was time-barred.
Mr Alexander Nissen QC (sitting as a High Court judge) concluded that the Claimant had the requisite, broad knowledge required under Haward v. Fawcetts in June 2013, when it received the March Letter, which concluded that there was an insufficiency of movement joints. At that point, the Claimant had sufficient information to start asking questions as to why the Certificate had been issued – it did not need to have known it had a worthwhile cause of action against the Second Defendant. The claim was, therefore, wholly time-barred.
This case reiterates, once again, that the burden in seeking to rely on Section 14A is a high one.