Building Safety Act - the first case.docx

The ‘clarification’ brought about by this decision, that commercial developers can

now make use of the longer period under the DPA, is potentially another matter

entirely. There is little doubt that it could have a significant impact on the answer to

our previously posed question.

Insurers’ wariness is likely to be that the DPA route becomes increasingly familiar in

the sector as developers seek to recover costs incurred as a result of righting the

wrongs of the last 30-years. The question of whether there will be a fair and

equitable distribution across industry of the costs associated with those potential

liabilities is one that remains to be answered.

For the moment, little has changed since July 2021, when we first wrote about the

changes to the DPA. Insurers will continue to monitor the effect of the changes to

the DPA. There is as yet no significant reaction from the PI market to the URS case.

For insureds concerned by the case, our advice remains consistent:

• The potentially ‘strict’ nature of liability under the DPA makes a ‘legal liability’

policy essential. Any firm operating with a ‘negligence only’ policy would

need to determine if a suitable extension to cover can be arranged.

• This was not a ‘fire safety matter’ as such, but a structural engineering matter.

The focus of recent advice in relation to the DPA has been because of its

potential to drive ‘fire safety’ claims. This case shows that the effect of the

changes to DPA have the potential to impact all types of PI claim – fire

related and otherwise. As ever, firms need to keep their PI limit under review

to ensure that its levels of protection are adequate.

• Record retention will be vital. The defence of any claim is only as good as its

evidence base and firms who have not purged ‘old’ files ought now to

consider the appropriate time to maintain them. A cautious approach would

see firms retain records from 1992 where the limitation period for DPA claims

expired only earlier this year (by virtue of the year’s grace given). Bear in

mind that any projects which were practically complete prior to 28 June 2022

carry a 30-year limitation too. In the case of a building completed on 1 June

2022, that would potentially take limitation to 2052. For all projects practically

complete from 28 June 2022, a 15-year period is consistent with the new

liability period and that must again be the place to start.