Construction | Disputes, Document Retention Policy And Limitation Periods

• Published date: 08 June 2021
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Privacy, Contracts and Commercial Law, Data Protection, Construction & Planning
• Law Firm: Shakespeare Martineau
• Author: Ms Kate Onions

Document retention (or record keeping) is a key part of any business, particularly for those operating in the construction industry where claims can be common. Having those relevant documents to hand is vital if a claim needs to be made or defended.

In our experience, businesses operating in the construction industry tend to retain documents in line with the contractual limitation period for each project, which is understandable given that the vast majority of construction projects are procured based on written contracts which expressly provide for a set limitation period.

However, it is worth being aware that the contractual limitation period can be only half the story. The limitation period in respect of tort (i.e. negligence) claims is different - and potentially quite a bit longer and as such, it is important that documentation retention policies take this into account.

Claims in tort

We have recently seen an increase in the number of claims being pursued in tort, rather than contract. This is often more common in the context of historic construction projects where latent defects have come to light after the contractual limitation period has expired.

The problem we often find is that relevant documents have been destroyed or deleted shortly after the contractual limitation period has expired, despite the fact that it is still possible for a claim to be pursued for a longer period in tort. Businesses are therefore jeopardising their ability to effectively defend (or pursue) claims due a lack of supporting documentation or evidence being available.

Put simply, if you have no paperwork to prove your position in a claim brought against you, you are putting your ability to mount an effective defence in jeopardy.

Limitation periods - what do we mean?

When we talk about 'limitation periods', we mean the time in which a claiming party must bring a claim before it is out of time. Limitation periods vary depending on the basis of the claim i.e. whether it is a claim in contract or tort.

We provide a summary of the position below.

Contract

The general position is that limitation runs from the date on which the cause of action accrues, typically the date of practical completion of the works.

A simple contract allows a claim to be brought up to six years after practical completion of the works. A contract executed as a deed (common in construction contracts) allows a claim to be brought up to 12 years after practical completion of the works.

It is worth noting that the parties to a contract can agree to alter the limitation period i.e. so that it is different to the general six or 12 year...