Vinci case highlights limitation periods

A recent judgment in the Technology & Construction Court (TCC) has highlighted the importance of being aware of limitation periods, in particular, those that fall under section 14A of the Limitation Act 1980.

Judgment was handed down on 24th July in the case of Vinci Construction UK Ltd v (1) Eastwood & Partners (Consulting Engineers) Ltd (2) Snowden Seamless Floors Ltd v GHW Consulting Engineers Ltd [2023] EWHC 1899 (TCC).

In 2012, Vinci (the contractor) was engaged under an amended NEC3 contract. In 2013, Snowden was engaged by Vinci under a subcontract. The contract and subcontract were both executed as deeds. Snowden then engaged GHW (to carry out design, supply and installation works) but crucially, not by way of a deed.

Works were completed in August 2013 but by September defects had appeared. Remediation attempts were made during 2014 and 2015.

In May 2018, Vinci wrote to Snowden regarding the defects and suggested a claim may be brought in that respect. In 2020, Vinci was found to be liable for the defects following an adjudication brought by the employer and as a result Vinci served a pre-action letter on Snowden, who in turn issued a preliminary notice of claim against GHW. It was not until February 2022 that Vinci commenced proceedings. Snowden denied liability while serving an additional claim on GHW seeking an indemnity and/or contribution in respect of the claim from Vinci. 

GHW denied liability and raised the following limitation defences:

• the contractual claim was issued more than six years after the cause of action accrued; and
• in relation to the tortious claim, Snowden would have had knowledge of the defects by April 2014 at the latest.

This would have rendered both claims time-barred, and GHW applied to the TCC for summary judgment on the basis that the claim had no real prospect of success.

It was agreed that the contractual claim was time-barred. Section 5 of the Limitation Act makes it clear that the liability period for breach of a contract is six years where the contract is not signed as a deed.

What was unclear was the application of s14A of the Act in relation to the claim in tort. Standard limitation periods for tortious claims are six years from the date on which the cause of action accrued (s2 of the Act), but s14A extends this so that a claim can be brought up to three years from the date of the ‘knowledge required’ for bringing such a claim (and the right to bring the claim), if such knowledge is outside of that original six-year period.  Such knowledge must include the material facts of the damage and that the damage was attributable (in whole or in part) to the defendant’s alleged negligence.

The court concluded that the parties were aware that ‘sufficiently serious damage’ had occurred by April 2015, leaving the question of whether Snowden could succeed on the aspect of attribution.

Snowden argued that it only had the relevant knowledge that the claim was attributable to GHW when it received Vinci’s letter in May 2018. This, combined with two standstill agreements that had previously been entered into between Snowden and GMH, would mean the claim was not time-barred.

GHW, however, argued that Snowden had the required knowledge much earlier than that, since there had been discussions about, and attempts to remedy, the defects since 2013. GHW’s position was that Snowden had actual or constructive knowledge that the defects were attributable to GHW long before the date of the letter, resulting in Snowden’s case of attributability having no real prospect of success.

The court decided that it was not able to conclude whether Snowden was aware or not, or should have been aware, that the relevant damage was attributable to GHW’s alleged defective design, without carrying out a mini trial of the documents (which would be contrary to the principles of summary judgment). The court therefore concluded that Snowden did have a real prospect of success in respect of the claim in tort and GHW’s application for summary judgment was rejected.

This case serves as a reminder for a number of reasons. First, wherever a main contract is signed as a deed, any key subcontract or sub-subcontract should also be signed as a deed. Maintaining a consistent period of liability across all parties – especially those with design responsibility – will allow fault to be correctly passed down the chain and this is just as important for subcontractors as well as the main contractors and employer.

Second, be aware of limitation periods from the outset, as they may come around faster than you think. Section 14A does not provide a guaranteed extension of the limitation period for negligence claims. Where claims can be passed down the chain, these should be put into effect as soon as possible, and all relevant facts established, so as to avoid any limitation periods expiring.

• Natalie Cane is a solicitor in Irwin Mitchell’s Construction & Engineering Team

Got a story? Email news@theconstructionindex.co.uk