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The limits of the law - when are you out of danger from liability?

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The law of limitation determines how long a claimant has to bring a claim. It is a bit of a minefield, particularly for design professionals. The problem lies in the various limitation periods which may apply to the common enough arrangement between and employer and architect for the design of a building and the administration of the construction contract.

A disgruntled client may have three, six, 12 or 15 years in which to start proceedings. Various law reform bodies have suggested that there should be a single limitation period of 10 years from practical completion and that, as everyone would know the extent of their liability, they could obtain decennial insurance to cover it. The jury is still out on that one and in the meantime we must grapple, not just with the different periods, but with the real conundrum - the date from when they start to run or, as we lawyers say, when the cause of action accrues.

The difference depends upon whether the claim is brought in contract or tort.

For claims in contract the cause of action accrues when the contract is breached. With building contracts different breaches may occur at various stages throughout the construction period. Rather than spend time arguing over this, the courts have held that a designer is under a continuing duty to review the design and to rectify any apparent faults in the construction up to the date of practical completion. In the University Court of Glasgow v William Whitfield and John Laing (Construction) Ltd case (1988) the court went further and said that this duty continued up to 'actual completion' but in that case there was no final certificate which would have been the obvious cut-off date. So the architect is potentially liable for six years from the date of completion if the contract of engagement is executed under hand and 12 years if it is executed under seal.

I have heard, no doubt apocryphally, that it usually takes about six years for most latent construction defects to manifest themselves. This highlights the problem of applying a cut-off date for liability in a case where the client may have no idea that he has anything to complain about.

In the old days, it did not matter if the limitation period for a claim in contract had expired - you could make a claim in tort. The building owner would then have six years from when the damage actually occurred in which to bring a claim.

This seemed fairer to some but not, perhaps to the architect I was obliged to track down in retirement in Canada in respect of a building completed some 20 years earlier.

The Latent Damage Act dealt with this problem by introducing a long stop of 15 years from breach (that is 'actual completion') beyond which no professional can be liable and also introduced a shorter three-year period to run from the date when the signs of damage actually appeared, which could be some time after the time when damage actually occurred. For a while, after Junior Books v Veitchi contractual and tortious liability were synonymous.

Then the appellate courts started to redefine 'recoverable damage' and finally held in Murphy v Brentwood that the cost of repairing a defective building was economic loss and irrecoverable in an action in tort.

Where did this leave the employer and designer? Contractual liability reasserted itself as the main route to recovery, and designers were obliged to execute their contracts under seal, to extend limitation to 12 years. Where the ordinary six-year period applied, however, building owners could find out, too late, that the Latent Damage Act would not help them as it does not apply to claims in contract. Furthermore for a while it was argued that if you had a contract there could be no liability in tort. The House of Lords decided otherwise in the Lloyds syndicate litigation and now designers, being people possessed of special skills are liable both in contract and in tort for three, six, 12 or 15 years from when the damage appeared, when the damage occurred or date of breach. Like I said a bit of a minefield.

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