Larkfleet Ltd v Allison Homes Eastern Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fraser |
| Judgment Date | 05 February 2016 |
| Neutral Citation | [2016] EWHC 195 (TCC) |
| Docket Number | Case No: HT-2014000218 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 05 February 2016 |
2016 EWHC 195 (TCC)
IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice Fetter Lane, London EC2A 2NL
Mr Justice Fraser
Case No: HT-2014000218
Simon Hargreaves QC (instructed by Birketts LLP) for the Claimant
James Thompson (instructed by Dentons UKMEA LLP) for the Defendant
Hearing date: 19/01/2016
A: Introduction
This is a judgment of certain preliminary issues concerning limitation, and whether the claims brought by the claimant are time-barred. The action brought by the claimant, Larkfleet Ltd, which is a property development company, concerns residential properties and damage suffered to their foundations. The claimant contracted with Swallow Homes Ltd ("Swallow") on 1 September 2001 on a standard form building contract, namely the JCT Standard Form With Contractor's Design 1998 Edition ("the Building Contract"). As will be explained further below, the Building Contract was subject to certain bespoke amendments, one of which is of central importance to the preliminary issues. The particular amendment in question concerns an unusual arrangement entered into between Swallow and the claimant relating to responsibility under the NHBC Scheme for the newly built residential homes that were the subject of the Building Contract. Under the Building Contract, Swallow was to design and build certain residential properties for the claimant at Market Deeping in Peterborough. The claimant was to sell, and did sell, those new residential properties as a developer would in the usual way.
The involvement of the defendant, Allison Homes Eastern Ltd (formerly known as Kier Residential Eastern Counties Ltd) in these proceedings arises as follows. The defendant acquired the business of Swallow by a contract dated 12 September 2001 which is referred to in paragraph 6 of the Amended Defence as "the Acquisition Agreement". That agreement is not before the court. The defendant admits in its pleadings that it bears the contractual responsibilities that were upon Swallow under the Building Contract. The Claim Form avers that the Building Contract between the claimant and Swallow was assigned to the defendant. At the hearing of the preliminary issues, it was suggested in the claimant's skeleton argument that there must have been an implied novation of the Building Contract to the defendant; it was no longer suggested by the claimant that there had been an assignment. The defendant's counsel Mr Thompson described its own investigations into the legal mechanism by which the defendant itself had acquired the business of Swallow as "ongoing". This was surprisingly vague, given the defendant was a party to the Acquisition Agreement. Mr Thompson also said that the defendant was unable to assist the court in terms of the legal process by which it had acquired Swallow's liabilities; again, this is surprisingly vague. I make no criticism of either counsel, as this information doubtless reflects their instructions, but it is surprising that no cogent answer was available. At this stage of the action, therefore, the court is in the regrettable position that a precise and accurate description of the legal mechanism by which the defendant acquired Swallow's liabilities and contractual obligations is not available. However, and regardless of that precise legal mechanism, in these proceedings the defendant accepts legal responsibility for any claim in contract against Swallow, but not for any claims for breach of duty or negligence. It is now common ground that the Building Contract was not executed by the parties as a deed, although one line of the Claim Form (since deleted) suggested that it was at least part of the claimant's case at one stage that it ought to have been. For limitation purposes therefore, the Building Contract was not executed as a deed.
The end purchasers of the residential properties in question, which are numbers 19, 20 and 22 Prestland, Towngate Court, Towngate East, Market Deeping, Peterborough, appear to have been residential occupiers. They each purchased the properties with the benefit of the protection provided by the National Homes Building Council, or NHBC. The NHBC Scheme is integral to these proceedings, and central to the bespoke clause under consideration in the Building Contract. In summary, a contractor who is engaged upon building residential properties will, if registered with the NHBC, offer those properties for sale with the benefit of what is called NHBC Buildmark Cover. This protection lasts for 10 years from completion and enables a purchaser, if certain defects appear within certain periods, the comfort of knowing that the NHBC will investigate any claim, organise any necessary remedial works, and provide resolution of what may (and in this case appear to be) major defects such as inadequate foundations which emerge over time. There is no doubt that NHBC Buildmark Cover is an attractive feature for a developer or builder to be able to offer to a purchaser. Indeed, some (if not all) purchasers of newly built properties are only likely to consider making such a purchase if the newly built property has such cover, or similar cover provided by other organisations. The cover is variously described as insurance, and a warranty, by the NHBC. Purchasers, and their mortgagees if they are buying with a mortgage, take comfort that a property with NHBC Buildmark Cover has been built to certain standards and if something goes wrong, they are protected.
This case concerns the NHBC Scheme, but does not directly concern the NHBC itself which is not a party. Different cover to a property with the benefit of such cover is provided by the NHBC during two periods, namely years 1 and 2, and thereafter in the period years 3 to 10. This cover is provided for an overall period of 10 years which is stated, by reference to precise calendar dates, on a certificate issued by the NHBC. This document is entitled "NHBC Insurance Certificate". Each certificate is given to the home owner and states on its face:
"This certificate brings the Buildmark cover into operation. The protection for the Owner under the Buildmark cover expires on the end date given above. NHBC's liability is set out in the Buildmark booklet. NHBC does not accept any other liability for the Home."
The dates on the relevant certificates for each of the properties 19, 20 and 22 expired on 26 September 2012, 25 April 2012 and 14 March 2012 respectively. On all three certificates "The Builder" was specified as "Larkfleet Ltd" – the claimant – and the NHBC Registration No. was 79003. Practical Completion occurred for each of the properties on three different dates, each 10 years earlier than the date given as the expiry dates of the certificates.
In this case, the building contractor was not the claimant but was Swallow. The registration number used for the NHBC, however, was that of the claimant, and the builder specified on the certificates was the claimant. The claimant had its own registration with the NHBC and I assume the NHBC was content for the claimant to use its registration for these properties. In any event, both the claimant and Swallow agreed and knew that it was the claimant who would register the properties with the NHBC.
Clause 2.5.5 of the Building Contract between the claimant and Swallow was inserted by amendment and stated:
"The Employer [ie the claimant] will register the site with NHBC under the Employers registration and the contractor [ie Swallow] warrants to accept responsibility for any defect and any expense incurred due to defective work for the period of 10 Years for the NHBC warranty."
Essentially, therefore, these plots and the houses built upon them were registered with the NHBC under the NHBC registration of the claimant, and not Swallow, and the parties agreed clause 2.5.5 to deal with this situation.
Put in summary – and given that this is a hearing of preliminary issues this introduction is made without any findings on the facts concerning the damage, in particular when it occurred or why – defects emerged in the foundations of the three properties in question. The three home owners made claims against the NHBC within the 10 year period of the NHBC cover. The NHBC investigated those claims, agreed them with the home owners, organised remedial works, and has incurred expense in so doing. The NHBC notified the claimant of this and holds the claimant responsible. The claimant brings proceedings against the defendant in respect of those claims, both in contract and in tort for negligence in respect of design, and the defendant maintains that both types of claim against it by the claimant are time-barred. Central to resolution of the plea of time-bar by the defendant is the correct construction of clause 2.5.5 set out in paragraph 6 above.
B: Procedural background
The claim was commenced by way of a claim form issued on 14 April 2014. Particulars of Claim were served on 12 August 2014 and a Defence was served on a date which is not apparent from that document, because when it was amended the date of service of the original pleading was omitted from the amended version. In both the original Defence and the amended version, the following was pleaded by the defendant in paragraph 3:
"At the outset, it is [the Defendant's] case that the claims set out in the Particulars of Claim are time barred pursuant to the Limitation Act 1980 for the reasons set out in Section B below. The remainder of this Defence is pleaded without prejudice to this primary...
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