Structural defect — Design of remedial works — Negligence claim — Limitation — Date when cause of action accruing — Whether date when physical damage appearing or when economic loss occurring — Appeal dismissed
The respondents owned a hotel that required remedial work to correct structural defects in a bay window. They hired the appellant, a firm of structural and civil engineers, to design the necessary work, which was completed by a local builder in March 1997. In late 1999, the respondents noticed that the lintel above the window had moved, cracking the surrounding structure. As a result, further remedial work, costing £20,000, was required.
In September 2003, the respondents brought a claim against the appellant for negligent design, alleging that the appellant’s breach of duty had caused the defects that appeared in 1999. It was common ground that any contractual claim was time-barred. However, an issue arose as to whether the six-year limitation period for the claim in tort had expired. This depended upon whether the cause of action had accrued when the original remedial work was completed in March 1997 or when the cracking appeared in 1999. The appellant argued that it was the former and that the claim was time-barred. It submitted that the cause of action accrued when the owner of the building suffered economic loss, which occurred when work to the negligent design was completed, leaving the owner with a defective building. The appellant relied upon Murphy v Brentwood District Council [1991] AC 398, which, it argued, had overruled earlier case law.
Determining a preliminary issue, the judge held that the cause of action arose when physical damage to the building first occurred, and that the claim was not time-barred if cracks had appeared within six years of the issue of proceedings. The appellant appealed.
Held: The appeal was dismissed.
The court was bound by authority to uphold the judge’s decision: Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 1 EGLR 135; (1983) 265 EG 979 and Ketteman v Hansel Properties Ltd [1987] 1 EGLR 237 applied; Murphy v Brentwood District Council [1991] AC 398 was held not to be inconsistent. Even supposing that the cause of action accrued at the date upon which the respondents suffered economic loss, that had not occurred in March 1997. Economic loss would occur only when the defective design manifested itself in some way that affected the value of the building, measured either by the cost of repairs or the depreciation in market value. On that view, the occurrence of the loss and its discovery had coincided in the present case: Invercargill City Council v Hamlin [1996] AC 624 applied.
Derek Holwill (instructed by Bond Pearce, of Exeter) appeared for the appellant; Ian Pennock (instructed by Richmond & Co, of Leeds) appeared for the respondents.
Sally Dobson, barrister
