Two recent cases mean that concealed defects can still come back to haunt builders, even if they are found many years after the building is completed
One of the few compensations of age is that it brings with it an added perspective on current legal developments. Many construction lawyers will remember the cases relating to limitation of action in the early 1980s, culminating with the Latent Damage Act 1986. Was all this fuss and concern misconceived?

Most lawyers recognise that legal proceedings must be commenced within the primary period of limitation. It is public policy that parties need to be protected against stale claims. Documents are destroyed and memories of potential witnesses become blurred. Thus claims based upon breach of contract must be commenced within either six or 12 years (if the contract is signed as a deed) calculated from the date of

the breach. Actions based upon the tort of negligence must be commenced within six years assessed from the date when the damage occurs.

In building cases, however, there is potential iniquity on the basis that the defect or damage may be undetected for many years. By the time the defect or damage is discovered, the claim may be statute-barred. It was as a consequence of this perceived unfairness that the Latent Damage Act 1986 was passed. The act only applies to cases involving the tort of negligence but extends the six-year period by up to three years from the date when the damage is spotted. This is, however, subject to a “long stop” of 15 years as from the date of the negligent act itself.

Since then, cases of latent defects have popped up from time to time and the act has been interpreted by the courts. The act did not change the substantive law relating to limitation, but sought in some instances to remedy some of its iniquities. However, in two recent cases, the Court of Appeal has had to interpret the meaning of Section 32(1)(b) of the Limitation Act 1980, and in so doing has called into question whether the Latent Damage Act serves any practical purpose. The decisions are those of Brocklesby vs Armitage & Guest and Cave vs Rolf, and deal with the meaning of deliberate concealment.

Neither of these cases involve building disputes. However, they deal with the interpretation of section 32(1)(b) of the Limitation Act 1980, which postpones the limitation period if “any fact relevant to the plaintiff’s right of action has

been deliberately concealed from him by the defendant”. The cases involve the interpretation of what deliberate concealment means in practical terms. Ultimately, both decisions were

to the effect that “deliberate” concealment did not necessitate proving that the commission

of the act was deliberate in the sense of being intentional. Thus the act or omission did involve

a breach of duty, whether or not the actor appreciated the consequences. So the argument advanced that the term “deliberate” had to connote intention or awareness as opposed to mere negligence or inadvertence “was rejected”. The court concluded that “the deliberate commission of a breach of duty must be read as the deliberate commission or omission of an act amounting to a breach of duty”. In other words, it is not a prerequisite to have to prove intent.

These two cases are surprising. Establishing “intention” on the part of the responsible party

is tricky enough. But to remove the element

of intention altogether as motive for the concealment, and to interpret it only within the contract of the commission of the act itself, means that all concealed defects within a building can be the subject of an action. The limitation period will not start to run until the defect is discovered or could, with reasonable diligence, have been discovered. The test is whether or not you intended to perform the act – not whether you intended, in performing the act, to conceal it.

Designers will be placed in the same situation when giving advice. In contract the cause of action accrues at the date of breach. In tort the cause of action accrues when damage occurs in the case of reliance on the bad advice.

If the effect is to provide that the limitation period does not commence until the defect or damage is discovered the Latent Damage Act 1986 ceases to have much or any impact. This fact was tacitly accepted in Brocklesby itself.

The downside for builders is that old claims for design deficiencies can still be brought. Watch out for the increase in insurance premiums!

Postscript

Jeffrey Brown is a partner in solicitor Lee Crowder. He can be contacted on 0121-236 4477.