TCC ruling highlights reach of extended Building Safety Act limitation periods

The Technology and Construction Court (TCC) has recently given judgment in relation to a strike out application in the case of Taylor Wimpey UK Ltd v (1) Taylor Woodrow Construction and (2) Vinci Construction Holding Limited. 

The judgment grappled with difficult issues that arise as a result of the extended limitation periods provided for by the Building Safety Act 2022 (BSA). In particular, the extent to which a final determination might apply to related would-be claimants.  

The judgment is a further example of the continuing claimant-friendly approach of the TCC to building safety issues. 

Here, Helana Gleave and Barnaby Prees from our construction sector team consider the judgment.

Background to the dispute

In 2005, Taylor Wimpey Developments Ltd (TWDL), then part of the Taylor Woodrow group, engaged Taylor Woodrow Construction (Woodrow) to design and build seven high-rise buildings at Victoria Wharf, Cardiff. The last of these blocks was completed in July of 2008.

In 2007, the Taylor Woodrow and George Wimpey groups merged to form Taylor Wimpey plc. At some point, following completion of the above works, Woodrow was sold by the Taylor Wimpey Group to Vinci Construction Holding Limited (Vinci). Further, by way of assignment which purported to be effective on 1 January 2008, TWDL transferred its UK property development business to Taylor Woodrow UK Limited (TWUK).

It’s alleged that fire safety defects were identified in the buildings. In October of 2020, a Letter of Claim was sent to Woodrow on behalf of TWDL, TWUK and Taylor Wimpey Holdings Ltd. Thereafter, the parties entered into a standstill agreement, and TWDL pursued an arbitration against Woodrow pursuant to an arbitration agreement within the building contracts. TWDL pursued claims in contract, tort and pursuant to the Defective Premises Act 1972 (DPA).

At an early stage in the arbitration, it was decided that TWDL’s claims in contract and under the DPA were time-barred. Shortly afterwards, the BSA came into force and extended the limitation period for DPA claims such that TWDL’s claim would no longer have been time-barred. TWDL sought to open the DPA claim back up but the arbitrator refused citing s.135(6) of the BSA, which provides that the limitation period isn’t extended where a claim has already been finally determined. 

TWUK then brought court proceedings against Woodrow and its now parent company, Vinci. By those proceedings, TWUK pursues Woodrow under the DPA and seeks a Building Liability Order against Vinci as a related company. Woodrow and/or Vinci sought to have the claim struck out, arguing that such claim was an abuse of process in the context of the earlier arbitration decision.

The legal principles in focus

The following are important context to the judgment:

1. Section 1 of the DPA provides that those taking on work for the provision of a dwelling owe a duty to every person acquiring a legal or equitable interest in the dwelling to see it’s habitable at completion. 
2. The Limitation Act 1980 creates a procedural defence which means that courts won’t enforce claims once the relevant limitation period has expired. 
3. Prior to the BSA, claims under section 1 of the DPA were subject to a six-year limitation period.
4. Section 135(6) of the BSA provides that — notwithstanding any extended limitation period — claims that were settled by agreement or finally determined by a court or by arbitration before the BSA came into effect can’t be reopened.
5. Parties to litigation are expected to bring their entire case to that litigation. A party can’t pursue an action it could and should have brought in earlier proceedings (the rule in Henderson v Henderson).
6. The rule in Henderson v Henderson has been applied to related parties (for example, to a company and its sole director and shareholder) to prevent such parties from relitigating claims. 
    

Taking into account all of the above, Woodrow argued that TWUK and TWDL were sufficiently interlinked that the instant proceedings were an attempt to relitigate the claim determined by the arbitration. Alternatively, Woodrow argued that the proceedings amounted to a collateral attack on the arbitration award. 

The Court’s decision

The Court dismissed the application. Each of TWUK and TWDL were owed duties and had had an independent right to bring forward proceedings under section 1(1)(b) of the DPA. TWUK couldn’t have pursued its claim within the arbitration and had brought the court proceedings pursuant to its independent right to do so. Mr Justice Pepperall took a narrow view of what had been decided in the arbitration, noting there was no attempt within the court proceedings to challenge the time-barred status of TWDL’s claim. 

Even if there were overlapping issues between the court claim and the earlier arbitration, allowing the claim to continue wouldn’t bring the administration of justice into disrepute. This is for many reasons, including that section 135 of the BSA was intended to extend builders’ liability so that they can be held more accountable.

Furthermore, Mr Justice Pepperall considered that there was little to be gained in refusing to allow TWUK to pursue this claim and instead requiring individual leaseholders to engage in their own claims. 

Key takeaways 

The courts continue to take a robust approach to enforcement of the BSA, the DPA and in holding developers to account for historic defects. There’s an obvious juxtaposition between the courts’ approach to related companies for the purpose of holding them liable under Building Liability Orders on the one hand and in its refusal to strike out claims where a claimant’s related company’s claim has been determined on the other. 

On this, it’s noteworthy that Vinci argued that the Court should grant summary judgment on TWUK’s Building Liability Order claim. Vinci asserted that Taylor Wimpey had withdrawn significant dividends from Woodrow prior to selling that company to Vinci. It argued that it would not be “just and equitable” to allow a company in the Taylor Wimpey group to hold Vinci liable in such circumstances. The Court didn’t decide this issue for procedural reasons but it seems that this litigation might produce further interesting judgments yet. 

In the meantime, defendants to DPA claims that are considering their liability should remember that having one potential claimant’s DPA claim determined doesn’t extinguish claims from other parties to which they do or may in future owe a duty. The courts will continue to expect those who undertook work to bear the cost of correcting defects in it.

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