Clarification of Limitation Periods in Property Damage Claims

Published 22 diciembre 2017

Overview

In the recent decision in Brandley and WJB Developments v Deane and Ors, the Supreme Court ruled that in property damage cases, for the purposes of the Statute of Limitations, the cause of action accrues on the date on which the defect in question commences causing loss, rather than the date on which the defective work was completed.

For the purposes of the law of tort in Ireland, in general terms. where a negligent act occurs, no action may be brought after the expiration of six years from the date on which the cause of action accrued. In negligence cases involving personal injury, the cause of action accrues on the earlier of i) the date of accrual of the cause of action and ii) the date the Plaintiff first had knowledge of it. This "knowledge test" applies strictly to personal injuries actions.

In Brandley, the Defendants (a supervising consulting engineer and a ground works contractor, respectively) were appealing an earlier decision of the Court of Appeal in which the Court overturned the High Court's ruling that the Plaintiffs' claim was statute-barred.

The Plaintiffs (property developers) had instituted proceedings against the Defendants in November 2014 claiming both breach of contract and negligence against the Defendants in relation to the construction of two houses in Co. Galway. Each of the Defendants pleaded that the matter was statute-barred on the basis that the foundations of the houses had been completed by the second named Defendant (the contractor) in March 2004 and the first named Defendant (the consulting engineer) had certified compliance with planning and building regulations in September 2004. The Plaintiffs in turn argued that they had first observed cracks in the houses in December 2005 and that it was at this point that the clock started running for the purposes of the Statute of Limitations.

The key question for consideration in the Supreme Court was, at what point did the Statute of Limitations start running, was it when the foundations of the houses were laid (in which case the Plaintiffs' claim would be statute barred) or was it when the cracks in the houses appeared?

Supreme Court Findings

Ultimately, the Supreme Court, in affirming the Court of Appeal's decision, ruled that mere negligence in itself, without the accompaniment of damage or loss is not actionable.

No damage was suffered by the Plaintiffs at the time the negligent foundations were laid in March 2004. The Court affirmed that at this point, the Plaintiffs would not have been in a position to prove any loss and that the cause of action does not arise until loss or damage has been sustained by the Plaintiffs, i.e., when the damages "becomes manifest".

The ruling will have a particular impact on construction professionals and their professional indemnifiers. It now appears clear that a claim can be brought in excess of six years post completion of a project if the defect does not immediately manifest itself. As a consequence, the period of time in respect of which negligence claims may be pursued has increased and parties involved in the construction industry should take steps to preserve and protect their position for a period in excess of that previously contemplated.