REUTERS | Issei Kato

Latent Damage Act 1986: know your limitations

When the Latent Damage Act 1986 was introduced, many thought it was a sensible compromise between the need for a long-stop date and the need to protect those unaware of a latent defect. In essence it gives a claimant three years from the date when he knew or should have known of a problem to issue proceedings. However, it has not quite proved the panacea many had hoped. It was soon held to be confined to claims in tort, which are now relatively unusual in the construction field following the seminal decision of Murphy v Brentwood in 1990.

Renwick v Simon and Michael Brooke Architects

In Renwick v Simon and Michael Brooke Architects, the Latent Damage Act 1986 might have been expected to assist the claimants, who became aware of a defect some time after completion of the construction of a large basement room beneath their garden (described in the judgment as the “garden room”, although it sounds more like a swimming pool from the judge’s description).

The works to the garden room were concluded by November 2001, and water ingress began soon afterwards. The initial construction works had been designed and inspected by structural engineers, but failed to keep the basement watertight. Crucially, the claimants wrote to their architect in February 2002 and said:

“I returned to site yesterday afternoon and the underground room having been pumped dry was rapidly filling up with water again. You could see quite clearly where the water was gushing in. At this stage, before the joints are covered over, we require the structural engineer to visit the site and give us a considered report, failing this we will have no option to take legal action against him to have the whole job re-done”.

In fact, a remedial scheme kept the waters at bay for some five years, but the problem reappeared in 2007 and proceedings were finally issued in July 2010. The engineers applied for summary judgment to have the action struck out, arguing that the claimants were not entitled to rely on section 14A of the Limitation Act 1980.

When does time start running?

The problem for the claimants was that their February 2002 letter was damning. The Latent Damage Act 1986 provides that time runs from the date on which the claimant had both the knowledge required to bring an action for damages and the right to bring such action. In fact these ingredients were complete when that letter was written.

The House of Lords’ judgment in the leading case of Haward v Fawcetts in 2006 was interpreted to mean that the claimants must have taken action within three years of knowing essential facts and matters to either institute a claim, take advice or collate evidence. Mere suspicion will not do, but if the claimants know that the damage is attributable to the acts or omissions said ultimately to constitute negligence, as well as the identity of the defendant (who is alleged to have been negligent), time will begin to run. The claimants’ February 2002 letter effectively complied with these requirements and therefore time had begun to run against them.

What about the remedial scheme?

The claimants also pleaded a separate act of negligence based on the failure of the remedial scheme. They alleged that advice in 2001 and 2002 on the type of remedial scheme to adopt was negligent, and the damage from that breach of duty arose when harm flowing from it occurred, namely when the remedial solution failed in 2007. If that was the case, there would be no limitation issue.

The court held that this aspect of the claim had a “sufficiently arguable prospect of succeeding, subject to proof” and so did not grant summary judgment.

and the moral is?

The moral of this case must be that once a serious problem is suspected and some potential culpability on the part of an identified defendant is established (here the structural engineer), it should be assumed that time for limitation purposes will begin to run. The purpose of the Latent Damage Act 1986 is to give a claimant a reasonable period to conduct investigations, in particular by obtaining an expert’s report, but that period is not open-ended. The claimants here may have been lulled into a false sense of security as the remedial scheme appeared to work for a while but, when the problem reoccurred, it was too late to claim for the original act of negligence.

3 thoughts on “Latent Damage Act 1986: know your limitations

  1. This is helpful, although is there more redress the (E)mployer will be able to do, ( claim for) in terms of claims for Latent damages limitations???

  2. A friend of mine has a similar defect and may be able to take action under the Act however the contractors went bankrupt a few years ago so am I correct in thinking that no action is possible?

Leave a Reply

Your email address will not be published. Required fields are marked *