Extending the Limits – The Defective Premises Act (NI) 2024

The statutory limitation period applicable to claims brought under defective premises legislation in Northern Ireland has been brought into sharp focus in recent months on foot of the judgment of the High Court in Ulster Garden Villages & Ors v Farrans (Construction) Ltd & Ors [2024].[i] The case highlighted the disparity between the limitation period applicable in this jurisdiction and that under the Defective Premises Act in England & Wales, spurring legislative change.

The Ulster Garden Villages (UGV) case entailed a claim arising from extensive defects to the residential portion of the Victoria Square Development, Belfast, which led to the occupants of a total of 91 apartments being evacuated in April 2019. As the owner of 54 of the available apartments which it acquired in September 2011, UGV was the lead plaintiff in these proceedings, alongside some 29 others who had bought apartments in the development.

The first and second defendants were retained as building contractors. The first defendant undertook the main construction obligations, and the second defendant undertook the ‘fit out’; the third defendant was the architect and civil and structural engineer for the residential development.

It should be stated at the outset that the seventh, eighth and ninth defendants did not participate in this action and this judgment does not make any finding in respect of the claims against them. In addition, the plaintiffs discontinued their claim against the fourth, fifth and sixth defendants following the hearing and accordingly, judgment was for the first, second and third defendants only.

The plaintiffs claimed that the defendants were in breach of their statutory duty, in particular, a breach of Article 3 of the Defective Premises (NI) Order 1975 (the DPO) and/or negligence by reason of alleged defective and deficient execution of the construction works. For the purpose of this article, we are concerned only with the limitation point.

The basic rule is that a claim under the DPO for breach of this statutory duty by virtue of Article 4(d) of the Limitation (NI) Order 1989 (the Limitation Order) may not be brought more than six years after the cause of action has accrued – save in certain exceptional circumstances. The defendants asserted that as works were completed in 2011, the plaintiffs’ claim was statute barred and pursued an application to strike out the plaintiffs’ claim either in whole or in part under Order 18 Rule 19 of the Rules of the Court of Judicature (NI) 1980.

Ultimately, in what is a thorough yet concise and reasoned judgment, Huddleston J found in favour of the defendants and the plaintiffs’ claim was stuck out as statute barred. The case served to highlight the disparity between the NI statutory regime and the equivalent in England & Wales.

In the NI jurisdiction, and as well England & Wales, the current defective premises law creates statutory duties relating to residential dwellings that must be fit for habitation at the time of completion. Huddleston J, per his judgment, provides a useful and concise synopsis of the history and rationale behind the enactment of both laws (the DPO and Defective Premises Act 1972 [DPA]) including a need to ensure equality, uniformity and certainty via imposition of the limitation periods therein.

However, in light of the Grenfell tragedy, legislation was enacted amending the Building Safety Act and effectively extending the applicable statutory limitation period to such claims from 6 to 15 years prospectively for claims accruing after 28 June 2022, and from 6 to 30 years retrospectively for claims that accrued before 28 June 2022, the Act applied only to England & Wales. In Northern Ireland, the reality of the absence of a functioning executive in recent years has meant that no equivalent legislation was enacted and as such the applicable limitation period remains six years. The plaintiffs in this case were objectively victims of their postcode as well their own good fortune as the only losses sustained were pure economic losses.

Following the release of this judgment, anticipated press coverage and public sympathy, the Minister for the Department of Communities Gordon Lyons has sponsored the Defective Premises Bill which has become the Defective Premises Act (NI) 2024[ii] and has progressed via the accelerated passage procedure and passed its final stage on 24 September 2024[iii]. The bill will become law once Royal Assent is attained. The explanatory notes accompanying the bill provide:

3. The outcome of a recent court case has highlighted the disparity between Northern Ireland and England & Wales in relation to limitation periods for legal action where a building is shown to be defective. Currently, the statutory limitation period in Northern Ireland remains at six years.

4. Following a meeting of the Communities, Finance and DAERA Ministers on 19 March, a joint statement was issued recognising that the current provisions place Northern Ireland citizens at a disadvantage when compared with England & Wales, and agreeing to introduce legislation to address this disparity at the earliest possible opportunity, subject to Executive and Assembly approval.

7. The bill has four substantive clauses, the main thrust of which is to replicate for Northern Ireland the effects of sections 134 and 135 of the Building Safety Act 2022 (the 2022 Act).

8. This involves the amendment of the Defective Premises (NI) Order 1975 (the DPO) and the Limitation (NI) Order 1989 (the Limitation Order).

9. The DPO is a very close replication of the Defective Premises Act 1972 for England & Wales, and the necessary amendments to DPO in the bill are likewise a close replication of the amendments in section 134 of the 2022 Act.

10. The Limitation Order is structured and worded somewhat differently from the Limitation Act 1980. While the new provisions reflect the purpose of s.135 of the 2022 Act, the wording has changed to reflect the content of the Limitation Order.

The effect of this bill once enacted will be to place parties in litigation in NI on the same statutory footing as litigants across the water.

But what of the plaintiffs in Ulster Garden Villages? We understand that a date for appeal has been secured and the matter listed for mid-December and, with the likelihood being that the bill will have obtained Royal Assent by then, practitioners will be watching with keen interest. In comments to the committee during the passage of the Act, Mr Lyons stated: “The proposed legislation is intended to capture cases brought using the Defective Premises Order that are ongoing, including those under appeal.” It is noted that the new Act provides a 15-year limitation period and will apply retrospectively. At para 61 of the judgment Huddleston J states:

“On the principal claim, again taking things at their height, it seems clear that the Residential Development was completed, at the latest, in 2008. The parties seem to agree on the fact that the Certificate of Practical Completion confirms that fact but, irrespective, that is the date upon which I am satisfied that completion was then achieved – as evidenced by the Certificate of Practical Completion. The plaintiff’s writs were issued in the period April 2020 to March 2021, i.e. 12 years after practical completion of the works and clearly, in my view, outside the six-year time limit provided for in Article 4(d) of the Limitation Order.”

As such the order would appear to offer a lifeline to the plaintiffs in the Ulster Garden Villages case and potentially permit a host of claims that would previously have been statute barred.

While the extended time limit may understandably cause concern for those involved in the construction industry, there is perhaps some comfort to be drawn from the Ulster Garden Villages case which also serves to demonstrate that despite the complexity of proceedings, structures and issues involved and innovative arguments cited, terra firma can be found in established principles and application of the rules. The new Act does not create a new cause of action.

While it is appreciated that with the passage of time and the multitude of parties involved in these undertakings, clarity can be elusive, the judgment also serves to highlight the importance of a clear chronology, in essence, who did what and when, or conversely the impact of the absence of clarity in asserting limitation arguments and defence of these claims.

We also note the minister’s comments during the passage of the final stage that “this legislation is only a small part of a much wider suite of legislation that my officials are working on that will further match the protection provided to citizens in England & Wales under the Building Safety Act 2022. That will reduce even further the disparity between here and other jurisdictions with regard to residential safety and will ultimately strengthen and support the protections available to Northern Ireland’s citizens.”

It remains to be seen whether the legislative momentum inspired by the Ulster Garden Villages case will be maintained in respect of additional measures; it certainly appears that further changes are on the horizon.

For further information please contact Catherine Martin, Associate in our Northern Ireland Property Risks and Coverage Team and Regional SIG Co-Lead. As multi-jurisdictional specialists we are available to assist with any queries you may have.

For more information, please contact: Catherine Martin - cimartin@keoghs.co.uk or Lenin Osama-Osadolor - losamaosadolor@keoghs.co.uk

[i] [2024] NIKB 15 | Judiciary NI
[ii] Defective Premises Act (Northern Ireland) 2024 (legislation.gov.uk)
[iii] Defective Premises Bill (niassembly.gov.uk)