Fortune Favours The Brave
A regular podcast for business leaders exploring how businesses can harness risks and use them to their advantage. In each episode Howden Insurance Brokers will discuss a topical challenge or issue and what business leaders can do to overcome it.
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Fortune Favours The Brave
We need to speak about the Defective Premises Act - Part 1
The Defective Premises Act 1972 has been around for nearly half a century, and yet has become a central focus recently following the Supreme Court’s decision in URS Corporation Ltd v BDW Trading Ltd. The May 2025 judgment has brought renewed attention to previously untested aspects of the legislation, with significant implications for the construction and property sector.
Morgan Taylor, Claims and Technical Executive at Howden, is joined by Jonathan Carrington, Senior Associate at RPC, to explain the Defective Premises Act 1972 (DPA) and its importance, looking at the duty introduced by the Building Safety Act (2022), who is owed this DPA duty, and whether is it a DPA duty of strict or reasonable care.
Welcome to Howden's podcast Fortune Favors the Brave. We all take risks in our everyday life, and business is no different. In this podcast, we're speaking to the experts about a topical challenge or issue and what business leaders can do to overcome it.
Speaker 2:Hi, I'm Morgan Taylor, a claims and technical executive working for Howden. Welcome to the Howden podcast. Fortune Favors the Brave. This is the first part of a two-part mini-series on a defective premises act. I'm joined today by Jonathan Carrington. Jonathan, if you'd like to introduce yourself, yes, hi, I'm Jonathan Carrington.
Speaker 3:I'm a senior associate at RPC, a law firm in London.
Speaker 2:Excellent. Now we know that on Fortune Favors Brave. We love to ask the same question every single time, which is going to be even more meaningful to you because you've been with us before. So, jonathan, tell us about a time that you've taken a risk and whether or not it paid off.
Speaker 3:Well, I'll give you my most, the latest, greatest risk, if you can call it that. I tried a different coffee place. I was quite excited because I'm a bit of a coffee snob and I saw a coffee place. It was a risk, I realized, because there's a coffee place near your offices which I really like. So I thought I would try something different and I'm afraid it didn't work. It didn't. It was too bulky, it wasn't strong enough. I need the caffeine.
Speaker 2:Oh dear, okay, no. Well, it's devastating, but I suppose it has to happen. I mean, you can't have every single risk pay off. And just because I can see that my arm's being twisted into doing my own risk as well, because I know I can't get away without saying at least something personal I spent the first few months of this year training for a half marathon.
Speaker 2:I had this great plan for the day in terms of how fast I needed to go. I was going to go an hour and a half or less and I got there and I did the first kilometer and it was way too fast and I thought but it feels good. And I did another, and another, and another, and it all went spectacularly well and I ended up seven minutes under the time I wanted. So sometimes the risk pays off. You can either have a bit of misfortune with your coffee or going too quickly in your running race can go very well. Now, with all that aside, it's a fun DPA podcast. So we know that there's been some fairly major news in the industry recently, which might give a bit of a clue as to why we want to speak about this. But the DPA itself is a fairly old act it's 53 years old and it's not been used that much, so why do we really want to talk about it today, jonathan?
Speaker 3:Well, I suppose we should start out and say the acronym we'll be using DPA means Defective Premises Act 1972. So, as you say, it's really old 53 years old but it hasn't really been used much in the past and it's suddenly, after Grenfell, the Grenfell Tower disaster, become very important and after the Supreme Court judgment on the 21st of May it's become even more important. So we will be talking about the DPA a lot and I suspect you're going to be seeing a lot more decisions in the courts regarding the interpretation of the DPA a lot. And I suspect you're going to be seeing a lot more decisions in the courts regarding the interpretation of the DPA, because, as we'll discuss and go through, there are lots of parts of the DPA which you think people would have worked out by now but like some fairly critical questions which haven't been answered, and what I suspect you're going to see over the next few years is the courts looking at the DPA very closely.
Speaker 2:And we're here today to discuss the well in part, the recent judgment handed down at the end of May in URS and BDW. Before we do get into sort of the nitty gritty of the DPA, could you perhaps give us a bit of history there? What are our sort of main judgments in the past? What are we wondering about? What have people been discussing?
Speaker 3:Well, to date there have been lots of cases and we'll go through them briefly, but to date there've been lots of issues regarding what duties the DPA impose on people, who owes the duty, etc. And basically, the DPA imposes a statutory duty on anyone who takes on work for or in connection with the provision of a dwelling to see that the work which she takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials, and so that, as regards that work, the dwelling will be professional manner, with proper materials, and so that, as regards that work, the dwelling will be fit for habitation when completed. This is section 1.1 of the DPA. So if you break section 1.1, the duty down, you'll see that it is only owed by anyone who takes on work in the provision of a building, the important word being provision.
Speaker 3:The courts have interpreted this quite strictly in the Herons-Lee Herons Court matter to mean it only applies to anyone who takes an active or positive part in the construction or creation of a new dwelling. So in the Herons Court matter, which was a Court of appeal judgment in 2009 by then, lord Justice Hamblin, who actually was one of the judges, there were two judges well, not judges, lords, excuse me in the Supreme Court who gave the judgment on the 21st of May. He was one of of them because we all sort of expected him to be the expert on the DPA because of what he had done in the Herons Court matter in 2019, where he held that an approved inspector performing their statutory functions did not owe a DPA duty because they were not engaged in the positive role of the provision or creation of the relevant building. So the Court of Appeal, or Justice Hamblin as he then was, interpreted the words the provision of a dwelling to mean the creation of a new dwelling, the bringing of a new dwelling into physical existence or its creation, and he said approved inspectors don't do this. Basically, he decided that approved inspectors perform the essentially negative, as opposed to positive, regulatory role of checking for compliance against prescribed criteria.
Speaker 3:Approved inspectors don't build buildings, they don't design buildings. They don't have the statutory power to influence the design or construction of a building. All they can do is certify or refuse to certify whether the building complies with building regulations. So they do not have a positive role in the provisional creation of the building and they do not therefore fall within the provisions of Section 1.1 of the DPA, but obviously architects, engineers and contractors do generally perform a positive or active role in the provision of a dwelling. So they are caught by the DPA and owe the DPA duty, or at least the duty under Section 1.1.
Speaker 2:I think that is relatively clear. So we're purely looking at people who are providing active, positive services. So, as you say, in the Herons Court matter we have approved inspectors not being considered to hold that duty and separately you might have say, a building control professional might be in the same vein. So where we're considering that there's no active involvement in the actual creation but rather a sort of function of checkboxing afterwards, that might be where we have less of a DPA duty to consider and indeed where the DPA might not necessarily be as relevant. But I think that's all really helpful. So we know who might owe a duty under the DPA, but who is owed that duty, jonathan.
Speaker 3:Well, this is why the Supreme Court decision is quite. Before we go on to who is owed the duty, one other thing I think we need to say before, because that is a Section 1-1 duty and Hamblin's judgment in Heron's court was quite strict. It was limiting what we thought provision the word provision meant and that the duty was limited. Not everyone owed this duty. Approved inspectors didn't owe this duty. So a lot of us thought if Hamlin's on the bench deciding this DPA issue again, he's going to be looking at the DPA quite restrictively, if you can put it that way. But one thing that did happen since the Herons Court decision is the Building Safety Act, which came into effect or some or most of the provisions came into effect in June 2022.
Speaker 3:One provision introduced a new duty into the Defective Premises Act, which is Section 2, capital A, and this duty is wider than the original Section 1-1 duty and it applies to anyone who, in the course of business, takes on work in relation to any part of a relevant building.
Speaker 3:So the important words are in relation of a relevant building.
Speaker 3:So the important words are in relation as compared to section one's word was in the provision, so this duty is much wider than the section one duty in that it doesn't only apply to people who take on work in connection with the provision, ie the active, positive role of building or designing a building.
Speaker 3:It also applies to people who do other work, less active, creative work, if you want maintenance, refurbishment work and work that will then become part of the building in the sense that it doesn't have to be the whole building. So the new duty introduced by the Building Safety Act in 2022 is much wider than the Section 1-1 duty and obviously it's fairly recent, so we don't know how wide and we don't know how narrow. But questions have been asked as to whether the Herons Court decision regarding approved inspectors, whether the same reasoning applies now that there's this new duty. Do approved inspectors yes, we know they are not performing a positive role in the provision of a building, but do they in the course of their business, which is probably right do they take on work in relation to any part of a relevant building? Or will the next court who has to decide this issue decide no?
Speaker 2:no, their role is still essentially negative and therefore not even within the wider duty in section 2, capital a I see it does always feel as though there's a spectacular amount of crystal ball gazing, uh, in these discussions really. But it is a an interesting point and one which I'm certain will come before the courts. As you say, despite the fact that the DPA has been sat around for 53 years, it feels as though there's still a substantial number of unanswered questions, and this is yet another one of them which certainly, I'm sure, will be discussed further. But no, I'm sorry for jumping the gun previously. So we now have a slightly better idea of who might owe a duty under the DPA, so both under 1-1 and 2 capital A, but who is owed that duty?
Speaker 3:Okay, well, this is one of the big questions which came up in the Supreme Court. But if you just look at the Act itself, section 1A of the DPA says it is owed to the person who orders the work, and Section 1B of the DPA says it's also owed to anyone who acquires an interest in the dwelling. So obviously the duty is owed to freehold owners, leaseholders, etc. There are questions as to whether, for instance, students and student accommodation are they? Are they owed the duty? And it really depends on the terms of their lease short-term lease. Those issues haven't been decided yet. Questions are even asked, having come to the courts, as to whether someone in an Airbnb is owed a duty. Probably not, but it's still to be decided. But then there's also Section 1.4 of the DPA, which says the duty is also owed to anyone who, in the course of a business which consists of or includes providing or arranging the provision of dwellings. So it's not only those who actually do the work, it's people who arrange the work that may have to owe the duty as well. So people like commercial property developers who don't do the work themselves but arrange for someone else to do the work.
Speaker 3:Now, as you know, one of the major issues in the Supreme Court in the URS versus BDW appeal was whether URS, a structural engineering consultancy, owed BDW, a commercial property developer, a duty under section 11A of the DPA. Urs accepted that BDW was owed the DPA duty by virtue of section 14, but they argued that BDW was not owed the DPO duty under Section 1.1a, that is, they were not a person who ordered the dwelling to be built, because they said they, being URS, that the original purpose of that section. If you look at the background to the Defective Premises Act, you'll see that the original purpose of it was to protect first-time homeowners they use this expression in the Supreme Court ordinary citizens, consumers or ordinary citizens, as they said, who actually inhabit the dwellings and not commercial property developers like BDW. Obviously, the Supreme Court looked at this and they did not accept the ORIS's interpretation of the DPA. So they interpreted the duty quite widely and decided that Section 1.1 of the DPA applies to any person, including a commercial developer like BDW, to whose order a dwelling is built.
Speaker 2:I mean that does in and of itself raise an interesting question. I see, I mean that does in and of itself raise an interesting question. So you have URS accepting that BDW was owed the DP duty under Section 1.4, but then saying that Section 1.1a won't apply and the courts have said actually, the argument you've put forward there doesn't really stand up to any scrutiny. Yes, we might recognise the original purpose. However, section 1.1 of the DPA can apply to any person, including that commercial developer. So, jonathan, can you both owe the DPA duty and be owed the duty?
Speaker 3:Well, urs argued that you can't. And they tried to make this distinction in the Supreme Court between someone who provides a dwelling and someone who orders a dwelling. And they argued you cannot be both a provider of a dwelling and someone to whom the duty is owed. They said the two categories are mutually exclusive. Again, the Supreme Court did not agree and it said there is no good reason why a person, for example a developer like BDW, cannot be both a provider of a dwelling and a person to whom the duty is owed.
Speaker 2:I think that's all really helpful insight with regards to who owes the duty and indeed who is owed the duty, and indeed the middle ground of both that we've seen just there.
Speaker 3:I think the important point there is, and it's going to come up, is if you can both owe a duty. Come up is if you can both owe a duty, a dpa duty, and be owed a dpa duty. And this was one of the arguments. Urs tried to say, uh, try to argue, rather, is that there's no. They urs argue, there's no chain of liability down the supply chain in a construction project. You can't have owed owed owed all the way down to your subcontractor.
Speaker 3:Because, they argued, and URS argued, that's one of the reasons why the DPA was never meant to help commercial parties, because commercial parties are assumed to be sophisticated with expensive lawyers and they don't need to be protected by the DPA. It was originally only about people who couldn't protect themselves, who couldn't afford to protect themselves and therefore they needed these statutory rights. And EORS said basically that what you're doing, if you apply, if you say a developer, a large commercial developer like BDW, say a developer, a large commercial developer like BDW, is owed these duties, a DPA duty, then you're basically destroying the freedom of contract because all those contracts suddenly become irrelevant, all the way the parties, the contractual parties, have got together and arranged their affairs and said you're responsible for this, you're responsible for that falls away because they've all got this GPA duty which goes down the chain, the supply chain, and the Supreme Court didn't accept that and it said there's nothing stopping someone both owing the duty and being owed the duty. So I think that's a critical part of the judgment and we're going to see well, we will see more cases on that in particular whether people will start going down the supply chain.
Speaker 3:Does a contractor? Is the contractor in the same position as a developer, et cetera, subcontractor, as you know, you go all the way down and that's going to be interesting.
Speaker 2:No, absolutely, and I mean there's longstanding contractual rules that people will have more confidence with, which I think may very well be turned on their head following this judgment. And indeed we do see plenty of queries come in here at Howden with regards to the DPA and the BSA. So the Building Safety Act I should be really careful of the acronyms here and it's entirely understandable and I think equally in the wake of judgments like we had last week, it provides even more credence to those queries. And why contractors may the dpa?
Speaker 3:it'd be helpful to establish whether the dpa duty is a strict duty or one of reasonable skill and care in some ways it is the million dollar question, and what is so bizarre in an act this old, 53 years, is? We don't really know the answer to that. Well, the courts certainly haven't answered the question. They haven't looked at it closely. However, we have had cases which have suggested an answer and one of them is the recent judgment in the Technology and Construction Court, the TCC, a judgment called Vanka V-A-I-N-K-E-R versus Marbank Construction Limited and others. That's a 2024 decision and there the judge did not have to consider the question whether the DPA duty was strict or one of reasonable skill and care, but she did suggest that the duty was reasonable skill and care when she was looking at what damages you can claim under the dpa. Because, she said there, when she was considering what damages are recoverable, she considered whether the duty was reasonable skill and care, that is, to see that the work was done in a professional manner, and the recoverable damages, which was the issue she was looking at, should therefore be the cost of making the dwelling fit for habitation in the way it would have been had the services been supplied in a professional manner. Now, professional manner, which is the wording in the Act, suggests that the tests may be reasonable skill and care.
Speaker 3:But it's also made difficult by the fact that the Section 1 duty seems to consist of three separate duties.
Speaker 3:One of them is to perform in a professional manner, but the ultimate duty in Section 1 seems to be to provide a dwelling which is fit for habitation.
Speaker 3:And what causes a lot of trouble is the courts have decided that this is in fact one duty. The Section 1 DPA duty is a single duty, it's not three separate duties. So then you start wondering well, do you? And I think at the moment we all accept that what you have to do is tick all three boxes to show that the duty has been complied with or not. So in respect of construction professionals, you would have to. Well, if you're a claimant, you would have to show that the construction professional did not carry out the works in a professional manner, which we will assume to mean the same as with reasonable skill and care. So for the moment, I think the general view is that the test is not a strict duty, it's a reasonable skill and care duty, which for the moment is a relief in the sense that most policies as you know, PI policy would only respond to negligence, not to a strict obligation?
Speaker 2:No, absolutely, and that's clearly going to be a concern for a number of years or really until any sort of more formal decision is reached here. As you say, we have a whiff of a suggestion in the Weinkir case and then, separately, you just have that complex element with regards to three separate obligations in your Section 1 duty, sort of rolling into one. So, yes, there is certainly a professional element there, but equally, are the other two parts now strict. There's certainly more questions to be had. Unfortunately, that's all the time that we have, in part, one of our two-parter on the DPA, jonathan and I got carried away discussing what is an absolute juggernaut of a topic. Join us again next time to discuss even more dpa based goodness. Thank you very much from me and thank you jonathan.
Speaker 1:thank you, that was that was fun thank you for listening to this episode of fortune favors the brave from howden. To hear more episodes and subscribe to our channel search fortune favors the brave on your favorite podcast app. Thank you.