What will this update cover?
Most of the provisions of the Building Safety Bill (‘the Bill’), which ultimately became the Act, did not apply to Scotland; that is still the case with the Act. In light of the Grenfell Disaster and other events which have brought building safety more sharply into focus, and given the issues raised touch upon devolved matters, the Scottish Parliament has undertaken its own review and taken its own legislative action to address building safety concerns. In considering matters post-Grenfell, it’s important to recognise that Scotland started from a position which was different and, arguably, better than that which applied in England and Wales. Accordingly, what might be appropriate for England and Wales going forward was not necessarily appropriate for Scotland.
All that said, however, there were some provisions of the Bill which were to apply to Scotland. Very significant amendments were made to the Bill relatively late in its progress through the UK Parliament and some of those amendments apply to Scotland. Those amended provisions create certain new statutory liabilities and affect the period of time within which claims can be made arising out of those liabilities – what lawyers in Scotland call prescription and limitation (time bar). These are very significant and important matters for those in Scotland who operate in the construction sector or those who have dealings with it. It’s those liabilities and claims, and the periods within which such claims can be made, which are the focus of this update.
What the relevant provisions of the Act do
The Act creates, in certain defined circumstances, an express statutory liability in relation to construction products and it does the same, but separately, for ‘past defaults’ relating to cladding products.
How do the new statutory liabilities arise?
The conditions referred to in the Act as ‘A to D’ have to be satisfied before liability arises. In brief, but using the wording in the Act, these Conditions are:
- a person fails to comply with a construction product requirement in relation to a construction product or a cladding product requirement in relation to a cladding product, or
a person who markets or supplies a construction or cladding product makes a misleading statement in relation to such a product, or
a person manufactures such a product which is inherently defective;
- the product referred to in (A) is installed in, or applied or attached to, a relevant building in the course of the works of the construction of, or otherwise in relation to, the building;
- when those works are completed, the relevant building consists of a dwelling and the dwelling is unfit for habitation or where the relevant building contains one or more dwellings, a dwelling contained in the building is unfit for habitation; and
- the facts in (A) were the cause, or one of the causes, of the building or dwelling being unfit for habitation.
Some of the wording of A to D in the Act is, arguably, not as clear as it could be. This may well lead to understandable arguments and disputes about what the words used actually mean.
What is the new liability and who will be liable?
The Act provides that the relevant person referred to in (A) above is liable to pay damages to a person with a relevant interest in the relevant building for personal injury, damage to property or economic loss suffered by that person as a result of the facts referred to in (C) above.
There are perhaps two main points to note here:
- the nature of the persons set out in (A) liable to pay damages to a person with a relevant interest is wide and, importantly, not restricted to persons who have a contractual relationship with the person making the claim for damages, and
- the extent of the damages payable would be most relevant in seeking to recover the cost of repair or replacement in order to make good but it might be much more far reaching than that including, indirect costs such as the cost of alternative accommodation and other losses.
What are the new time bar (limitation) rules for Scotland relating to these new liabilities?
In Scotland, the time bar of claims is usually governed by the Prescription and Limitation (Scotland) Act 1973 as it has been amended from time to time in the past (‘the 1973 Act’). It’s important to note, however, that the Act just passed by the UK Parliament seeks to make amendments to the 1973 Act and introduces new, specific limitation periods for the making of claims arising out of the new statutory liabilities summarised above.
The Act provides that an action relating to a construction product may not be brought after the expiry of 15 years from the date on which the right of action accrued, essentially, the date the relevant works were completed. ln relation to an action relating to a cladding product, it may not be brought after 30 years from the date on which the right of action accrued (if the right of action accrued before the commencement date) or 15 years (if the right of action accrued on or after the commencement date). The ‘commencement date’ is the day on which the relevant section of the Act comes into force.
Importantly, the Act provides that an obligation to pay damages arising from the liability summarised above is now one of the exemptions from the normal five-year prescriptive period under the 1973 Act.
Many are likely to regard the changes to the 1973 Act as representing a major innovation under Scots law. In Scotland, claims for damages of the type contemplated by the provisions of the Act would traditionally be subject to the regime of prescription under the 1973 Act, not limitation. Prescription and limitation are quite different legal concepts under the 1973 Act.
Why is all of this important?
Crucially, in some cases, certain claims for damages may already have prescribed under our existing law, governed by the five-year prescriptive period in the 1973 Act. However, the new provisions in the Act mean that claims for damages in relation to construction and cladding products may now be pursued if the claims meet the new statutory requirements and they are made within the new limitation periods set out in the Act.
While these provisions for Scotland may be an attempt to make the position the same in England/Wales and Scotland (similar limitation provisions are introduced by the Act for England and Wales in respect of the relevant claims), that ignores the fact that Scotland has a quite separate and distinct prescription/limitation (time bar) regime as set out in the 1973 Act when compared with that applicable in England and Wales. Further, prescription/limitation rules are devolved matters, and it is not currently clear whether or to what extent the Scottish Parliament was consulted upon or consented to these particular changes to the law of Scotland sought to be brought about by the Act. Changes of that nature are usually the subject of careful and detailed consideration, including consultation with interested parties and stakeholders.
Given the entirely new regime sought to be introduced under the Act for liability in connection with construction and cladding products used in relevant buildings and limitation of actions in that connection, some questions come to mind. Why should such claims be treated differently from other types of damages claims when it comes to prescription/ limitation? Why should some claims in relation to cladding products have a limitation period of as much as 30 years? Why should these claims not be dealt with under the 1973 Act as it existed before the changes sought to be made by the Act?
The answer to these questions may be complex and affected by the political environment in a post- Grenfell world. The potential for legal difficulties with the approach of the Act, however, does not seem to have been missed by the UK Government, at least in some respects. A clue is given by one provision of the Act in relation to claims arising out of cladding products. It provides that where an action is brought under the relevant provisions in Scotland and that, but for the amendment to the 1973 Act brought about by the Act, it would have been barred by the 1973 Act, ‘a court hearing the action must dismiss it in relation to any defender if satisfied that it is necessary to do so to avoid a breach of that defender’s Convention rights’. The reference to ‘Convention rights’ is a reference to rights as set out in the Human Rights Act 1998, under which the UK gave effect to the European Convention on Human Rights. This appears to be an explicit recognition by the UK Government that it is possible that a court might hold that some claims under the provisions of the Act could contravene Convention rights and should not be allowed to proceed. If that is the case, some may ask – should the legislation have been drafted in this way in the first place?
It seems highly likely that the relevant provisions of the Act will give rise to some controversy in Scotland as well as arguments in the months and, indeed, years ahead. Watch this space for further developments.
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