Local authority — Approval of plans under building regulations — Inadequate foundations — Defects in building — Economic loss resulting — Whether Anns case decided on established principles — Whether duty of care arising in relation to economic loss beyond negligent misstatements — Whether duty of care owed by local authorities — Anns case wrongly decided and all cases subsequent overruled
Over a period ending in 1969 ABC Homes constructed an estate of 160 houses on a site in Brentwood. Two of the houses were built over filled-in ground upon the same concrete raft; the raft having been designed by Grahame Rudkins Associates. The appellant council approved the design after seeking the advice of independent consulting engineers, S D Mayer & Partners. The respondent purchased one of these houses and from 1981 onwards cracks started appearing in the internal walls. The concrete raft had subsided differentially. Because his neighbour’s insurers refused to accept liability, and his own would not pay for the costs of remedying the whole defect, the respondent sold the house in 1986 for £30,000, some £35,000 less than its market value without defects.
The Court of Appeal ([1990] 2 WLR 944) dismissed the appellants’ appeal against the decision of His Honour Judge Esyr Lewis QC (Official Referee), who held that the appellants owed a duty of care to the respondent which had not been discharged by obtaining and acting on the advice of the consulting engineers; the appellants were in breach of that duty and the respondent was entitled to damages.
Held The appeal was allowed.
The decision of the House of Lords in Anns v Merton London Borough Council [1978] AC 728 was wrongly decided and should be departed from in accordance with Practice Statement (Judicial Precedent) [1966] 1 WLR 1234; Dutton v Bognor Regis Urban District Council [1972] 1 QB 373 and all decisions subsequent to Anns should be overruled. Although the damage in Anns was characterised as physical damage, it was economic loss; on the basis of the law at the time of the Anns decision, the right to recover for pure economic loss, not flowing from physical injury, did not then extend beyond the situation where loss had been sustained through reliance on negligent misstatements. The Anns case did not proceed upon any basis of established principle, but introduced a new species of liability governed by a principle indeterminate in character but having the potentiality of covering a wide range of situations, involving chattels as well as real property, in which it had never before been thought that the law of negligence had any proper place. A local authority discharging their statutory duty in approving plans under the building regulations did not owe a duty of care to avoid damage to property which causes present or imminent danger to the health and safety of owners or occupiers.
Piers Ashworth QC and Adrian Brunner (instructed by Barlow Lyde & Gilbert) appeared for the appellants; and Jonathan Playford QC and Andrew White (instructed by Greenwoods) appeared for the respondent.
