House built on unstable hillside land ‘doomed’ from outset–Actions by purchasers against vendors (a development company), builders and local authority–No appeal from judge’s dismissal of action against local authority–Liability of vendors and builders affirmed on appeal–Vendors liable both in contract for breach of warranty and in tort for negligence–Builders liable in tort for negligence on Donoghue v Stevenson principle–Important analysis of duties and review of case law
These were
appeals by Metropolitan Property Realisations Ltd (developers) and Trippier
Construction Ltd (builders) from a judgment of Crichton J, who found the former
liable in contract and the latter liable in tort in respect of a house at Rawtenstall,
in Rossendale, North-East Lancashire, which the judge held to be ‘doomed’ as a
result of movement of the strata on the hillside adjacent to the house. Mr and
Mrs R Batty had acquired from the developers a 999-year lease of the house,
which had been built by the builders. The judge dismissed the claim, based on
alleged negligence or breach of statutory duty in inspecting the foundations,
against Rossendale District Council. There was no appeal against the dismissal
of this claim, but Mr and Mrs Batty cross-appealed against the refusal of the
judge to find the developers liable in tort as well as in contract.
Douglas Brown
QC and Andrew Gilbert (instructed by Tobin & Co) appeared on behalf of the
appellants (Metropolitan Property Realisations Ltd); J M Collins QC and John
Hoggett (instructed by Bannister, Preston and Ormerod) appeared for the
appellants (Trippier Construction Ltd); Benet Hytner QC and A C Jolly
(instructed by Gregory Rowcliffe & Co, agents for Whiteside & Lord, of
Rawtenstall) represented the respondents (Mr and Mrs Batty).
Giving
judgment, MEGAW LJ said: In August 1971 the two plaintiffs, Raymond Batty and
his wife, Helga Batty, took from the first defendants, Metropolitan Property
Realisations Ltd, on a 999-year lease, a house and garden. The house had just
been built, being one of a number of houses on the same estate, at Rawtenstall,
in the district of Rossendale, in North-East Lancashire. They paid £5,250 as
consideration for what was in all respects other than a legal technicality a
purchase by them of the house. The house became known as 33 Redwood Drive.
The house had
been built by the second defendants, Trippier Construction Ltd, under
arrangements made by them with the first defendants, who are a development
company. The land on which the house was built, along with neighbouring land on
which other houses were built at about the same time, was sold by the second
defendants, who had earlier bought it from the local authority, the third
defendants, the Rossendale District Council. It was sold by the second
defendants to the first defendants. Under their contract with the first
defendants, the second defendants proceeded to build this house and other
houses. When this house had been completed and leased to the plaintiffs on a
999-year lease, the first defendants sold the reversion to the second
defendants. Thus, in effect the building of the house and its disposition was a
co-operative effort by the first defendants and the second defendants, the
second defendants doing the building, the first defendants providing the
finance and being the party with whom the purchasers of the house, the
plaintiffs, entered into contractual relations. Both the first defendants and
the second defendants, through their representatives, had inspected the site,
and also had walked over the surrounding territory in 1969 and 1970, before the
decision to build was taken and, therefore, before the building had started.
The object of such inspection was to decide, by reference to various
considerations, including the safety and suitability of the site for
housebuilding, whether or not they or either of them would undertake, or become
involved in, housebuilding in that area. They decided to build, on the basis,
as between them, which I have just very summarily outlined.
The house was
built on a sort of plateau, as it has been described, at the top of a steep
slope which fell down at a gradient of about 1:3 to a stream, called the
Balladen Brook, which ran in the bottom of the valley below the house. The
front of 33 Redwood Drive faced on Redwood Drive, with a small front garden
between the house and the road. At the back of 33 there was a piece of land,
bought by the plaintiffs along with the house, which was intended to provide a
garden at the back. It was somewhere down that garden that the relatively level
area (it was only relatively level) which I have called ‘the plateau’ changed
its inclination to the 1:3 slope which was the general inclination of the slope
falling from there towards the stream. The total area covered by the house 33
Redwood Drive and the land sold with it was about 100 ft from front to
back–from Redwood Drive to the bottom of the back garden–and about 40 ft from
side to side in width. Coloured photographs which we have seen give a reasonably
clear impression of the general nature of the ground in and about the house and
its neighbourhood. They show the steepness and roughness of the hillside on
both sides of the valley. I shall not attempt to describe the topography
further, as it is unnecessary to do so for the purpose of this appeal.
That was in
1971. The plaintiffs bought their house and moved into it and made it their
home. In 1974 there was a severe slip of the natural strata of the hillside. It
did not directly or immediately damage the plaintiffs’ house or its
foundations, though it did cause direct damage to a part of the back garden. As
a result, urgent investigations were undertaken and legal proceedings were
begun by the plaintiffs against three defendants–the two already mentioned and,
as the third defendant, the Rossendale District Council, the local authority.
The gravity of
that litigation–its seriousness for the parties–will become apparent when I
recount that it was held by Crichton J, from whose judgment this appeal is
brought, that the plaintiffs’ house is doomed; and the finding on that issue,
though it was the subject of much conflicting evidence at the trial, is not now
disputed or challenged. At some time not later than 10 years from the date of
the trial, possibly much earlier, the movement of the strata on the hillside on
the slopes adjacent to the plaintiffs’ house will cause the foundations of that
house to slide down the hill and the house will be in ruins. Already, of
course, in those circumstances, the house is unsaleable. The reason, or at
least the principal reason, as found by the learned judge, for this very grave
and disastrous prognosis is the presence in the boulder clay, which is the
principal constituent of the hillside, of a layer of what is described technically
as varved clay. I do not need to go into the technical or geological details.
They are not relevant for the purposes of the decision of the appeal.
The
plaintiffs’ claim against the first defendants was in tort, for negligence, and
for breach of contract. Against the second defendants the claim was in tort for
negligence, on what I may call Donoghue v Stevenson principles.
Against the third defendants, the local authority, it was for negligence or
breach of statutory duty, in respect of the local authority’s duties with
regard to inspection of the foundations. It was, however, held by the judge–and
it does not appear to have been really in dispute–that the foundations as such
were perfectly properly constructed, as were the bricks and mortar of the house
itself. The only defect–but, in the circumstances, a very grave matter–was the
nature of the land on which the house relied for its support. It was unstable,
and by its instability the house was, from the outset, doomed. Thus, for that
reason, and for that reason alone, the house was unfit for human habitation:
because in a foreseeable, and short, time it would collapse, through the
movement of the hillside. The plaintiffs succeeded before the judge against the
first defendants, though on their claim in contract only, and against the
second defendants on the sole claim against them in tort. They failed against
the third defendants. The judge awarded the plaintiffs, jointly against both
the first and second defendants, £13,000, and he also awarded Mrs Batty £250
for the consequences of her distress–the effect upon her, physical and mental,
of these events. Those sums were agreed by the parties as being the appropriate
sums for damages, subject to liability.
The first and
second defendants both appeal. There is a cross-notice on behalf of the
plaintiffs, asserting that, as against the first defendants, the judge ought to
have entered judgment on the claim in tort, as well as on the claim in
contract. That would not have affected the amount to be awarded in the
judgment, but it may be of practical importance to the plaintiffs none the
less. There is no cross-appeal by the plaintiffs as regards the dismissal of
their claim with costs against the third defendants. Counsel for all the
parties concerned have, if I may say so, presented their submissions in this
court with admirable clarity and conciseness, both on the issues of fact and on
the issues of law which they desire to raise. I shall seek to emulate their
conciseness. In particular, I do not propose to set out or summarise in any
detail the evidence on the various questions of fact which were in issue before
us, for it appears to me that the conclusions of the learned judge on all those
issues, as set out in his judgment, are not only supported by some evidence,
but they are supported by evidence which fully justifies the judge’s
conclusions thereon. If anyone should wish to look in more detail at the
evidence, they will find it summarised, with the judge’s conclusions thereon,
in his judgment.
The first
ground of appeal argued by Mr Brown, on behalf of the first defendants, is
concerned with the terms of the contract of sale–or, rather, the contract
relating to the 999-year lease–between the first defendants and the plaintiffs.
That contract was made in writing on August 9 1971. It is contained in two
related documents. The relevant term provides as follows, under the heading
‘The Vendor’s Obligations’: ‘(3) The Vendor hereby warrants that the dwelling
has been built or agreed that it will be built (i) in an efficient and
workmanlike manner and of proper materials and so as to be fit for
habitation.’ That the house was not fit
for habitation when the contract was made and when the plaintiffs took
possession cannot, in my judgment, be disputed, on the, now unchallenged, facts
which I have mentioned. How, then, do the first defendants seek to escape
liability for breach of contract under this warranty? On behalf of the plaintiffs it was conceded
that the warranty was not absolute: in this sense, that if there were, for
example, some undetectable geological fault, at some distance away, which,
after the house was built, caused an earth tremor, damaging or destroying the
house, that would not be within the warranty. But if the instability of the
hillside could have been detected by experts, but was not detected, and if as a
result the house was, when handed over, unfit for habitation, that, say the
plaintiffs, is a breach of warranty. For the first defendants it is said that
the obligation imposed by the warranty ‘and so as to be fit for habitation,’
though expressed as a separate warranty, co-ordinate with the two warranties
which precede it in the clause, ought to be read as though it were expressed as
‘and so as to be fit for habitation so far as compliance with the two
preceding warranties can achieve that result.’
I am afraid
that I cannot accept that construction. It is unnecessary, as I see it, in this
appeal to seek to define whether, and, if so, to what extent, the warranty of
fitness for habitation falls short of an absolute warranty. I am satisfied that
on the facts of this case the warranty, on its true meaning, was broken. The
warranty would be broken if the house is unfit for habitation, and is so unfit
by reason of defective support from the adjoining land which a suitably
qualified expert could have discovered before the building of the house was
undertaken. The judge has found, and in my opinion unassailably found, that the
lack of fitness for habitation–the instability of the hillside which spelled the
not-far-distant doom of the house from the outset of its life–could have been
discovered by expert examination. I need do no more than refer to the evidence
of Mr Townsend, the first defendants’ development director, the only witness to
be called on behalf of the first defendants. He, in cross-examination by
counsel on behalf of the plaintiffs, very fairly and very frankly made
admissions as to what he should have realised as a result of his visits to the
site; the need for further investigation. The judge was right to hold that the
warranty was broken, and that the breach of the warranty was the cause of the
house having become valueless, and the cause of Mrs Batty’s personal loss.
For the first
defendants it was further submitted, by reference to the evidence, that, while
the judge held that on the facts known to them the first defendants should have
conducted investigation into the stability of the hillside, the judge failed to
give a clear answer to the question: what sort of investigation were the first defendants
under a duty to carry out, having regard to whatever were the symptoms which
they should have observed and which should have put them on warning. Counsel
has, properly, taken us in particular to those passages in the evidence which
deal with certain slips on the hillside which were regarded by some of the
witnesses as being one of the factors which ought to have led to investigation.
It was stressed by Mr Brown that the judge ought, on the evidence, to have
regarded these factually as having been at the relevant time what he called
‘shallow slips,’ and that, being shallow slips, that meant that the
investigation which ought to have been conducted, having regard to the
symptoms, was not an investigation (to use the modern phrase, which may perhaps
for once be appropriate here) in depth, in order to ascertain what the sub-soil
con
of the learned judge’s conclusions on the evidence.
It was
suggested that this court should look at the evidence and form its own
conclusion. If this court were to agree with the judge on the evidence that
some investigation was required, in accordance with the legal duty resting on
the first defendants under their contract, then this court would have to go on
to consider for itself what sort of investigation was required and what such
investigation would have disclosed. The right conclusion, it was submitted,
having regard to the evidence in relation to the possibly shallow slips and
various other matters, would be that such investigation would not have
disclosed anything relevant. To that argument there appears to me to be one
simple answer, offered on behalf of the plaintiffs. That was, that it was
clear, on evidence accepted by the judge and which he was plainly entitled to
accept, seeing and hearing the witnesses, that, if the defendants had through
that investigation–any investigation–of the stability of the hillside failed to
discover a cause of the symptoms which had led them to investigate they would
not have allowed the building of the house to proceed. So any investigation,
whatever it was and however short it properly went, would, on that basis, have
resulted in the houses not being built. But no investigation was undertaken at
all. I think that is right. But I am further satisfied, as was also submitted
on behalf of the plaintiffs, that on the evidence the judge rightly held that
the investigation which ought to have been undertaken would not, indeed, have
produced merely a negative result of finding no cause for the symptoms, but
would have shown, and shown clearly, that there was no safety margin from the
point of view of the stability of the relevant ground; and, in the absence of a
safety margin, no reasonable builder or developer would erect a building.
In this
context I refer to two passages in the learned judge’s judgment. The judge, at
the bottom of p 31 of the transcript, had already summarised the evidence as to
what would have been seen on the ground by way of warning symptoms at the time
when the building of the houses was being considered. His findings as to what
those symptoms would be were, in my judgment, fully justified. At the bottom of
p 31/F the judge says:
That is the
state of the evidence. Where does it lead us to? I think it leads us in this direction, that
these cracks
I pause there
to say that the word ‘cracks’ there may not be entirely accurate, or
comprehensive, because I have no doubt that the learned judge intended to
include other symptoms which he had held to exist
on the other
side of the valley and at the toe of the slope on ‘our’ side should have put Mr
Townsend and Mr Trippier on inquiry. If they had been put on inquiry–this is on
the point of the cause of this situation–the probability would be that some
instability would have been found whereby houses would not have been built.
That I will deal with later. But at the moment I merely find that these cracks
which existed, in my judgment, in 1970 and 1971 should have put the only people
who investigated that valley on their inquiry.
Then at p
33/E-G the learned judge said this:
The
evidence–I will come to the question of duty–leads me to the belief that
further steps should have been taken in the sense of consulting either surveyors
or soil mechanics experts and also to the view that had those persons been
consulted, having regard to the situation in that valley, it would be unlikely
and improbable that houses would have been built in the position that the
plaintiffs’ house was built.
Mr Brown in
the course of his argument accepted that, in order to succeed in his appeal, he
had to upset that finding. I do not think that Mr Brown’s careful submissions
on the evidence, with all respect to him, begin to show that that finding was
wrong.
I turn to the
plaintiffs’ cross-notice affecting the first defendants. That is a cross-notice
whereby it is asked that this court should include in the judgment against the
first defendants judgment based on tort–the learned judge having refused to
enter judgment for the plaintiffs other than on the basis of breach of
contract. Crichton J, as I understand his judgment, thought that he was bound
so to hold on his reading of a passage in the judgment of Diplock LJ (as he
then was), sitting as a judge of first instance, in Bagot v Stevens
Scanlan & Co Ltd [1966] 1 QB 197. The learned judge, at p 50/G of the
transcript of his judgment, having cited that case, went on to say: ‘I have
also had regard in that respect to the case of Esso Petroleum Co Ltd v Mardon,
which is reported in [1976] 2 WLR 583. But I do not find that this, case
detracts in any degree from the finding of Diplock LJ, as he then was.’
Esso
Petroleum Co Ltd v Mardon is now reported in
[1976] 1 QB 801. I fear that I feel bound to disagree with the learned judge’s
view that Esso Petroleum Co v Mardon does not affect the
position. We in this court are bound by what was said in Esso Petroleum Co
v Mardon, in so far as what was said was ratio decidendi. There can, I
think, be no doubt, subject to one possible distinction which Mr Brown sought
to persuade us in his reply this morning to be a relevant distinction, that the
ratio decidendi of Esso Petroleum Co v Mardon necessarily
requires that in a case such as the present we should hold that the mere fact
that the plaintiffs have obtained judgment for breach of contract does not
preclude them from the entitlement which would have existed, apart from
contract, to have judgment entered in their favour also in tort. I refer to the
judgment of Lord Denning MR at pp 818 to 820. I do not propose to read it. The
sense of it appears to me to be entirely clear, and, incidentally, to have
included the Master of the Rolls’s view that Bagot v Stevens Scanlan
& Co Ltd had been decided without the learned Lord Justice who decided
it having had cited to him a number of relevant authorities.
The
distinction to which I have referred, which Mr Brown seeks to make, is this:
that the right of a plaintiff who sues in contract, where the facts giving rise
to the breach of contract would also constitute a breach of common law duty
apart from contract, to have the judgment entered on both heads is limited to
cases where the common law duty is owed by one who conducts a common calling
and thus is under a special type of legal liability, and to cases where the
duty is owed by a professional man in respect of his professional skill. Mr
Brown contends that, though there is no affirmative authority for limiting the
right in that way, it ought to be treated as being so limited because there is
no case in the English books, going back over many years, which shows that the
right has been allowed, or possibly even claimed, in cases other than the
special types of case to which he referred, and in particular the professional
skill types of case. In Esso Petroleum Co v Mardon the right was
held to arise in a case where the breach of duty was a breach by an architect
involving his professional skill. I see no reason, in logic or on practical
grounds, for putting any such limitation on the scope of the right. It would, I
think, be an undesirable development in the law if such an artificial
distinction, for which no sound reason can be put forward, were to be held to
exist. In my judgment the plaintiffs were entitled here to have judgment entered
in their favour on the basis of tortious liability as well as on the basis of
breach of contract, assuming that the plaintiffs had established a breach by
the first defendants of their common law duty of care owed to the plaintiffs. I
have no doubt that it was the duty of the first defendants, in the
circumstances of this case, including the fact of the joint responsibility
which they undertook in arranging for erection of this house on this site,
apart altogether from the contractual warranty, to examine with reasonable care
the land, which in this case would
house fit for habitation could safely be built. It was a duty owed to
prospective buyers of the house. How wide or deep the examination had to be, to
comply with the duty, would depend on the facts of the particular case,
including the existence and nature of any symptoms which might give cause for
suspecting the possibility of instability. It is clear from the facts found by
the judge that, if he had thought that a finding of tort was procedurally
permissible, he would have held, on his assessment of the evidence, that the
first defendants were in breach of that duty. Accordingly, I would accept the
cross-notice and would direct that judgment be entered for the plaintiffs
against the first defendants for the tort of negligence as well as for the
breach of contract.
I should add
that Mr Hytner, on behalf of the plaintiffs, contended, as an alternative
ground, apart from what I may call the Esso v Mardon ground, that
he should be entitled to such a judgment in this case because on the facts of
this case it would be the proper view to treat the tort and the breach of
contract as being truly independent of one another. Mr Brown in his reply this
morning submitted that that would not be a proper basis. He suggested that if
it were to be upheld it would startle bankers, and also that it would be a
wrong concept of time by reference to which the duty arises. In the
circumstances, I do not propose to offer any view one way or the other on that
dispute. It is unnecessary to do so, because of my view that apart from that
alternative ground the plaintiffs are entitled to their judgment in tort.
I now turn to
the appeal by the second defendants, the builders. Mr Collins very helpfully
and clearly put his argument in the form of six submissions. The first
submission was this: A builder should not be taken to be under any duty of care
in relation to defects in or observable only upon land which is not available
to him in connection with his operations and is not otherwise owned by him or
is in his possession. Mr Collins, properly and as I think inevitably, conceded
that, as he put it, ‘in general terms a duty situation can arise between a builder
and an occupier with whom the builder is not in privity of contract.’ A duty of the Donoghue v Stevenson
type can arise, it is conceded, in relation to reality. But Mr Collins contends
that the duty extends only to defects–to symptoms of possible instability, for
example, affecting properly-built foundations–where those defects are in, or
observable upon, the actual site on which the house is to be built. If defects
exist on neighbouring land which is not in his ownership or possession–or in
respect of which he would require someone else’s permission to go upon it–there
is no duty, it is said, to look for or to observe or to take any action in
relation to such symptoms.
For this
submission, Mr Collins relies upon a passage in Lord Wilberforce’s speech in Anns
v Merton London Borough Council [1977] 2 WLR 1024. The passage on which
Mr Collins relies in this context is at p 1032/A-E. It reads as follows:
Through the
trilogy of cases in this House–Donoghue v Stevenson [1932] AC
562, Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964]
AC 465, and Dorset Yacht Co Ltd v Home Office [1970] AC 1004–the
position has now been reached that in order to establish that a duty of care
arises in a particular situation, it is not necessary to bring the facts of
that situation within those of previous situations in which a duty of care has
been held to exist. Rather the question has to be approached in two stages.
First one has to ask whether, as between the alleged wrongdoer and the person
who has suffered damage, there is a sufficient relationship of proximity or
neighbourhood such that, in the reasonable contemplation of the former,
carelessness on his part may be likely to cause damage to the latter–in which
case a prima facie duty of care arises. Secondly, if the first question is
answered affirmatively, it is necessary to consider whether there are any
considerations which ought to negative, or to reduce or limit the scope of the
duty or the class of person to whom it is owed or the damages to which a breach
of it may give rise: see Dorset Yacht case . . . per Lord Reid at p
1027. Examples of this are Hedley Byrne’s case . . . where the class of
potential plaintiffs was reduced to those shown to have relied upon the
correctness of statements made, and Weller & Co v Foot and Mouth
Disease Research Institute [1966] 1 QB 569; and (I cite these merely as
illustrations, without discussion) cases about ‘economic loss’ where, a duty
having been held to exist, the nature of the recoverable damages was limited:
see SCM (United Kingdom) Ltd v W J Whittall & Son Ltd [1971]
1 QB 337 and Spartan Steel & Alloys Ltd v Martin & Co
(Contractors) Ltd [1973] QB 27.
Mr Collins
contends that there is a consideration which ought to reduce the scope of the
builder’s Donoghue v Stevenson duty to a potential occupier of
the house which he builds. That is on the basis of Lord Wilberforce’s ‘Secondly
. . . whether there are any considerations which ought to negative, or to
reduce or limit the scope of the duty. . . .’
The scope, says Mr Collins, ought to be limited by reference to the
builder’s statutory duty under the building regulations. If he builds
foundations which comply in all respects with those regulations and any other
statutory provisions, and the defects are outside the area of the foundations
themselves, then the builder has no further duty. With all respect to Mr
Collins’s argument, I do not accept it. Of course, the question whether or not
there has been a breach of the duty will depend on all relevant considerations
going to the question: Did the builder act as a competent and careful builder
would have acted in what he did or did not do by way of examination and
investigation? But I see no reason why,
as a matter of law, or by reference to any question of policy considerations,
as a matter of the existence of the duty, it should depend on whether or not
the symptoms, the observable defects, are on land of which the builder has
ownership or in respect of which he has a legal right of entry without
requiring some other person’s permission.
I would reject
that first submission.
The second
submission made by Mr Collins was this: If a builder is under any such duty, it
should be limited to defects which are discoverable without subsoil
investigation. The way that Mr Collins put his submission was: If there is a
duty on the builder, it is not a very heavy one. It would not include subsoil
investigation. If a builder knows that what he sees would endanger the
stability of the house, it is difficult to say there is not a duty. Mr Collins,
on being asked by a member of the court why should that not apply also if he
ought to have known, submitted that that would put too high a burden on a
builder, and that it is undesirable that the law should put such a duty on him.
Mr Collins accepted, as I understood it, that this submission of his must mean
that he is submitting that a builder is under no duty to look at adjoining
land: if, however, he does know, though he had no duty to look, of something on
the adjoining land which indicates a danger without further investigation, he
might be under a duty. I see no reason for limiting the duty as a matter of law
in the manner in which it is suggested by that submission.
The third
submission was: The second defendants were not under any higher duty than that attaching
to any other builder who builds for a development company under a building
contract. The argument as developed by Mr Collins was that the second
defendants here were under no higher obligation than if they had been retained
as builders by contractors at arm’s-length. That is, their duty is no higher
because of the particular circumstances here of the relationship between the
developers and the builders, and what happened between them in relation to the
inspection of the site before the building started, and their arrangement in
regard to the building and what was to happen in relation to it. It may well be
that on certain facts a builder would be entitled to rely upon an examination
which he knew or
could properly and reasonably rely. But in this case, on the evidence, the true
view is that the decision to build on this site was a joint decision of the
builders and the developers, the second defendants and the first defendants. In
my judgment, if one is a party to the decision to build on the particular site
in circumstances such as were shown in the evidence to exist in this case, the Donoghue
v Stevenson duty applies. Indeed, I have difficulty in seeing how, as
was a part of Mr Collins’s argument at one stage, the fact that there was here
an intervening contract–the contract for the 999-year lease between the first
defendants and the plaintiffs–can affect the question whether the second
defendants are under a Donoghue v Stevenson type of liability.
For in Donoghue v Stevenson itself the whole question of the
manufacturer’s liability was considered, and decided to exist, despite the
existence of an intervening contract between the retailer and the purchaser of
the goods. I would reject the third submission, on the facts of this case.
Again, in my view, it is not a question of the existence of the duty. It is a
question whether, in a particular case, on the facts of that case, it has been
broken.
The fourth
submission was this: If a builder is to be taken to be under any such duty,
then no cause for action for breach of it arises (a) in respect of damage to
the house itself or (b) alternatively until the house itself is damaged or is
in such a state as to present present or imminent danger to the health or
safety of the occupier. This submission, essentially, as I see it, is founded
on a question which was raised and the view which was expressed by Stamp LJ in Dutton
v Bognor Regis Urban District Council [1972] 1 QB 373. At p 415/C Stamp
LJ said:
What causes
the difficulty–and it is I think at this point that the court is asked to apply
the law of negligence to a new situation–is that whereas the builder had, as I
will assume, no duty to the plaintiff not carelessly to build a house with a
concealed defect, yet it is sought to impute a not dissimilar duty to the
defendant council. At this point I repeat and emphasise the difference between
the position of a local authority clothed with the authority of an Act of
Parliament to perform the function of making sure that the foundations of a
house are secure for the benefit of the subsequent owners of the house, and a
builder who is concerned to make a profit. So approaching the matter, there is
in my judgment nothing illogical or anomalous in fixing the former with a duty
to which the latter is not subject. The former by undertaking the task is in my
judgment undertaking a responsibility at least as high as that which the
defendant in the Hedley Byrne case would, in the opinion of the majority
in the House of Lords, have undertaken had he not excluded responsibility.
I pause here
to say that obviously this fourth proposition cannot be treated as entirely
independent of the first of Mr Collins’s propositions, with which I have
already dealt. The doubt which was raised by that passage in that judgment of
Stamp LJ was, as I see it, put at rest by passages in the speech of Lord
Wilberforce in Anns v Merton London Borough Council [1977] 2 WLR
1024, at pp 1038 and 1039. At p 1038/F Lord Wilberforce said:
The
position of the builder. I agree with the majority
in the Court of Appeal in thinking that it would be unreasonable to impose
liability in respect of defective foundations upon the council, if the builder,
whose primary fault it was, should be immune from liability. So it is necessary
to consider this point, although it does not directly arise in the present
appeal. If there was at one time a supposed rule that the doctrine of Donoghue
v Stevenson [1932] AC 562 did not apply to realty, there is no doubt
under modern authority that a builder of defective premises may be liable in
negligence to persons who thereby suffer injury. . . .’
So far, Lord
Wilberforce has agreed that it would be unreasonable to impose liability for
defective foundations on a council if the builder were immune. Then at the
bottom of p 1038 Lord Wilberforce goes on to say this:
But leaving
aside such cases as arise between contracting parties, when the terms of the
contract have to be considered . . . . I am unable to understand why this
principle or proposition should prevent recovery in a suitable case by a
person, who has subsequently acquired the house, upon the principle of Donoghue
v Stevenson: the same rules should apply to all careless acts of a
builder: whether he happens also to own the land or not. I agree generally with
the conclusions of Lord Denning MR on this point in Dutton v Bognor
Regis Urban District Council [1972] 1 QB 373, 392-394. In the alternative,
since it is the duty of the builder (owner or not) to comply with the by-laws,
I would be of opinion that an action could be brought against him, in effect,
for breach of statutory duty by any person for whose benefit or protection the
by-law was made. So I do not think that there is any basis here for arguing
from a supposed immunity of the builder to immunity of the council.
The argument
that the local authority should not be liable because it would be unreasonable
that it should be held liable when the builder was not held liable was
rejected, because Lord Wilberforce sees no reason why the builder should not be
held liable. True, he specifically refers to a case where there was a breach of
statutory duty–non-compliance with the building regulations. But that was the
particular question arising in that case. I see no logical or practical reason
for so confining it; nor, in my view, did Lord Wilberforce so intend.
As to the
question of the nature of the damage which gives rise to the cause of action,
it seems to me that an answer given by Mr Hytner was a simple and full answer.
If it indeed is necessary that it should be shown that there has been physical
damage to the property before the action will lie against the builder, in the
present case there was physical damage to the property in the landslide, or
landslip, of 1974. True, the foundations of the house for the time being
remained undisturbed. True, the bricks and mortar of the house, as the judge
has found, remained undamaged. But there was physical damage to the garden–a
part of the property conveyed. If physical damage be necessary in order to
found the action, there was physical damage. But, apart from what might be
regarded as that possibly accidental element here, there is, I think, a wider
reason why Mr Collins’s proposition should not succeed on the facts of this
case. Again I refer to the speech of Lord Wilberforce in Anns v Merton
London Borough Council. At p 1039 Lord Wilberforce is dealing with the
question ‘When does the cause of action arise?’; and below letter ‘H’ he uses
this sentence: ‘It can only arise when the state of the building is such that
there is present or imminent danger to the health or safety of persons
occupying it.’ Was there not here
imminent danger to the health or safety of persons occupying this house, at the
time when the action was brought?
Indeed, Mrs Batty, one of the plaintiffs, has been awarded damages for
the consequences to her health and peace of mind of the foreseen disaster. Why
should this not be treated as being a case of imminent danger to the safety and
health of people occupying the house? No
one knows, or can say with certainty–not even the greatest expert–whether the
foundations of the house will move and the house perhaps suddenly tumble
tomorrow, or in a year’s time, or in three years’ time, or in 10 years’ time.
The law, in my judgment, is not so foolish as to say that a cause of action
against the builder does not arise in those circumstances because there is no imminent
danger. I would reject that submission.
Mr Collins’s
fifth submission is one that goes to the facts. It is this: In any event the
state of the terrain was not such as to render it careless for the second
defendants not to require further investigation prior to the commencement of the
building. Mr Collins has properly taken us to passages in the evidence, in
addition to the passages to which we had
to what would have been seen on the site and the neighbourhood of the site at
the relevant time before building started, and as to the evidence as to what
that ought to have conveyed to a reasonably careful builder observing those
symptoms. Once again, I do not propose to go into the evidence on those
matters, helpful though counsel’s references to it were. I am quite satisfied
that on the evidence the judge was right in his finding that the symptoms were
such that investigation was called for by a reasonably careful builder, and
that if the investigation which was called for by reason of those symptoms had
been made the house would not have been built.
The sixth and
last of Mr Collins’s submissions is this: The plaintiffs’ house has not
suffered damage and is not in such a state as to produce present or imminent danger
to the plaintiffs’ health or safety. Mr Collins made it clear that he was not
challenging the judge’s finding that the house was likely to be engulfed or the
judge’s finding that it is now valueless. This is really related to the fourth
submission, with which I have already dealt, and in that I have said all that I
think it is necessary to say and all that I am minded to say referring to this
proposition.
I would
therefore dismiss the appeals of the first and second defendants; and, by
reference to the plaintiffs’ cross-notice, I would direct that judgment be
entered for the plaintiffs against the first defendants for liability in tort
as well as for liability in contract.
Agreeing,
BRIDGE LJ said: I add only a very short post-script to the passage in my Lord’s
judgment dealing with Mr Collins’s fourth submission. Among the propositions
enunciated by Mr Collins in support of his argument that the damage claimed by
the plaintiffs in this case was of a nature irrecoverable against the second
defendants was the contention that a party liable for negligence of the Donoghue
v Stevenson variety is liable only for damage consequential upon having
put into circulation the dangerous article which foreseeably was likely to
cause injury, and not for the loss of the value of that article itself. He
relied in particular on a passage from the judgment of Stamp LJ in Dutton
v Bognor Regis Urban District Council, from which my Lord has quoted,
where the point is succinctly put at an earlier page, p 414/E-F. Stamp LJ said:
It is pointed
out that in the past a distinction has been drawn between constructing a
dangerous article and constructing one which is defective or of inferior
quality. I may be liable to one who purchases in the market a bottle of ginger
beer which I have carelessly manufactured and which is dangerous and causes
injury to person or property; but it is not the law that I am liable to him for
the loss he suffers because what is found inside the bottle and for which he
has paid money is not ginger beer but water.
So it is
argued here that whilst, if the defective house fell down and physically
injured the plaintiffs, or indeed anyone else, that would impose a Donoghue
v Stevenson liability on the second defendants, the fact that the house
itself has become valueless, and indeed incapable of repair at economic cost,
is not a loss which the plaintiffs can recover from the second defendants. This
argument, to my mind, like the other arguments to which my Lord has adverted,
is really untenable, in the light of the speech of Lord Wilberforce in Anns
v Merton London Borough Council–with which, as I understand it, all the
rest of their Lordships agreed. As my Lord has pointed out, at p 1038 Lord
Wilberforce expresses his agreement with the view which had been indicated by
the Court of Appeal that it would be unreasonable to impose liability upon the
local authority if the builder whose primary fault had caused the defect in the
building was to be immune from liability. At p 1039 he is considering what damages
are recoverable against the local authority. In the context of what he had said
at p 1038, in principle what he says at p 1039 must equally be applicable to
the question what the damages are, in the Donoghue v Stevenson
situation, recoverable from the builder. Lord Wilberforce says in terms, just
above letter ‘E,’ ‘Subject always to adequate proof of causation, these damages
may include damages for personal injury and damage to property. In my opinion
they may also include damage to the dwelling-house itself. . . .’ In my judgment that sets at rest the doubts
raised by the judgment of Stamp LJ in Dutton v Bognor Regts Urban
District Council.
I agree, for
all the reasons given by my Lord, that the appeals should be dismissed, and the
cross-notice allowed as he indicated.
WALLER LJ
agreed with both judgments.
Appeals
dismissed with costs. Cross-notice allowed, with costs against first
defendants. Judgment to be entered for plaintiffs against first defendants for
liability in tort as well as for liability in contract. First defendants
awarded 50/50 contribution as against second defendants. Liberty to apply to
Court of Appeal.
