Local authority’s duty of care in carrying out their functions in relation to the control of the construction of buildings under the Public Health Act 1936 and building by-laws–Duty to consider whether to inspect, but not absolute duty to inspect in all cases–Liability for lack of reasonable care, however, if inspection is in fact carried out–Authority would be liable for negligent inspection of foundations–Period of limitation for action under Limitation Act 1939–Date when defects first become apparent–Damages recoverable–Authority’s appeal dismissed
This was an
appeal by Merton London Borough Council on preliminary issues, as explained in
the speech by Lord Wilberforce, from a decision of the Court of Appeal, which
had allowed an appeal from Judge Fay on October 24 1975 on the question whether
claims against the council by Michael Ralph Anns and six other plaintiffs in
the action were statute-barred. Leave was, however, given to the council to
argue also before the House the question whether the council was under any duty
of care at all to the plaintiffs, respondents in the present appeal, who were
lessees of seven flats or maisonettes affected by structural defects.
K F Goodfellow
QC and J A Tackaberry (instructed by Barlow, Lyde & Gilbert) appeared for
the appellant council; John Wood QC, Michael H Johnson and P I F Vallance
(instructed by W H Matthews & Co, of Sutton) represented the respondents.
In a speech
dismissing the appeal, LORD WILBERFORCE said: This appeal requires a decision
on two important points of principle as to the liability of local authorities
for defects in dwellings constructed by builders in their area, namely:
1 whether a local
authority is under any duty of care towards owners or occupiers of any such
houses as regards inspection during the building process;
2 what period of
limitation applies to claims by such owners or occupiers against the local
authorities.
Before these
questions are discussed it is necessary to explain at some tedious length the
procedural background which unfortunately complicates the decision-making task.
Procedural
issues
The present
actions were begun on February 21 1972. The plaintiffs are lessees under long
leases of seven flats or maisonettes in a two-storey block at 91 Devonshire
Road, Wimbledon. The owners of the block and also the builders were the first
defendants, Walcroft Property Company Ltd; after its completion in 1962 they
granted long leases of the maisonettes; the fifth and sixth plaintiffs (O’shea)
are original lessees, having acquired their lease in 1962; the other plaintiffs
acquired their leases by assignment at dates in 1967 and 1968. The local
authority at the time of construction was the Mitcham Borough Council. On February
9 1962 they passed building plans for the block, which were deposited under the
by-laws. Later this council was superseded by the London Borough of Merton, the
second defendants, who took over their duties and liabilities.
In February
1970 structural movements began to occur, resulting in cracks in the walls,
sloping of floors, etc. The plaintiffs’ case is that these were due to the
block being built on inadequate foundations, there being a depth of 2 ft 6 in
only instead of 3 ft or deeper as shown on the deposited plans. On February 21
1972 writs were issued against both defendants–the separate proceedings were
later consolidated. As against the first defendants (the builders) the claims
were for damages for breach of contract and also for breach of the implied
undertaking under section 6 of the Housing Act 1957. As against the council the
claims were for damages for negligence by their servants or agents in approving
the foundations upon which the block was erected even though [sic] they had not
been taken down to a sufficient depth and/or in failing to inspect the said
foundations. This claim was expressed as follows:
5. Further or
in the alternative the said damage has been caused by the negligence of the
second defendants in allowing the first defendants to construct the said
dwelling-house upon foundations which were only 2 ft 6 in deep instead of 3 ft
or deeper as required by the said plans, alternatively of failing to carry out
the necessary inspections sufficiently carefully or at all, as a result of
which the said structural movement occurred.
As particulars
given under this paragraph the plaintiffs stated:
Under the
building by-laws the second defendants were under a duty to ensure that the
building was constructed in accordance with the plans, and the building should
have been inspected inter alia before the foundations were covered.
The
plaintiff’s case is that the second defendants should have carried out such
inspections as would have revealed the defective condition of the said
foundations, that if any inspection was made then it was carried out
negligently, and that if no inspection was made that in itself was negligent.
Both the
allegations in the statement of claim and those in the particulars were to some
extent misconceived as I shall show later.
The first
defendants did not put in any defence but undertook to carry out certain work.
They did not appear in the hearings to be mentioned or on this appeal. The
second defendants filed a defence on February 8 1973 and on October 9 1974 the
consolidated actions were transferred to an official referee. On October 16
1975 an order was made "that the issue between the plaintiffs and the
second defendants whether claim is statute barred be tried on October 24 1975." On October 24 1975 this issue was tried by
His Honour Judge Edgar Fay QC, who decided that the claims were statute barred.
In a written judgment His Honour held that time began to run from the date of
the first conveyance of each of the properties concerned: the latest of these
dates was November 5 1965, which was more than six years before the date of the
writ. In so deciding the judge (correctly) followed an observation (obiter)
by Lord Denning MR in Dutton v Bognor Regis UDC [1972] 1 QB 373,
376.
The plaintiffs
appealed to the Court of Appeal from this decision on February 17 1976. Before
the appeal came on, namely on February 10 1976, the Court of Appeal (Lord
Denning MR, Roskill and Geoffrey Lane LJJ) in Sparham-Souter v Town
& Country Developments (Essex) Ltd [1976] QB 858 decided
that the cause of action did not accrue before a person capable of suing
discovered, or ought to have discovered, the damage. Lord Denning MR in his
judgment expressly disavowed his earlier dictum in Dutton’s case. On this
view of the matter none of the present plaintiffs’ claims would be statute
barred. On the appeals in the present case coming before the Court of Appeal on
March 1 1976, that court, without further argument, following Sparham-Souter’s
case, allowed the plaintiffs’ appeal and gave leave to appeal to this
House. That appeal would, of course, have been confined to a preliminary issue
of limitation. However,
presented a petition, asking for leave to argue the question whether the
council was under any duty of care to the plaintiffs at all. This question had
not been considered by Judge Fay, or by the Court of Appeal, because it was
thought, rightly in my opinion, that it was concluded by Dutton’s case.
Thus the council wished to challenge the correctness of the latter decision. In
that case the defendant council of Bognor Regis was held liable for damages in
negligence (viz negligent inspection by one of its officers), consisting of a breach
of a duty at common law to take reasonable care to see that the by-laws were
complied with. On October 21 1976 this House acceded to the petition. The
appellants thus have leave to argue that in the circumstances the council owed
no duty of care to the plaintiffs. This being a preliminary point of law, as
was the argument on limitation, it has to be decided on the assumption that the
facts are as pleaded. There is some difference between those facts and those on
which Dutton’s case was based, and in the present case the plaintiffs
rely not only upon negligent inspection, but, in the alternative, upon a
failure to make any inspections.
In these
circumstances I take the questions in this appeal to be:
1 whether the defendant council was under
(a) a duty of care to the plaintiffs to carry
out an inspection of the foundations (which did not arise in Dutton’s case);
(b) a duty, if any inspection was made, to take
reasonable care to see that the by-laws were complied with (as held in Dutton’s
case);
(c) any other duty including a duty to ensure
that the building was constructed in accordance with the plans, or not to allow
the builder to construct the dwelling-house upon foundations which were only 2
ft 6 in deep instead of 3 ft or deeper (as pleaded);
2 if the defendant council was under any such
duty as alleged, and committed a breach of it, resulting in damage, at what
date the cause of action of the plaintiffs arose for the purposes of the
Limitation Act 1939. No question arises directly at this stage as to the
damages which the plaintiffs can recover and no doubt there will be issues at
the trial as to causation and quantum which we cannot anticipate. But it will
be necessary to give some general consideration to the kind of damages to
which, if they succeed, the plaintiffs may become entitled. This matter was
discussed in Dutton’s case and is closely connected with that of the
duty which may be owed and and with the arising of the cause of action.
The duty of
care. 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 the 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, loc cit, p 1027 per Lord Reid). Examples of this are Hedley
Byrne 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 (UK) Ltd v W
J Whittall & Son Ltd [1971] 1 QB 337, Spartan Steel & Alloys Ltd
v Martin & Co (Contractors) Ltd [1973] QB 27). The
factual relationship between the council and owners and occupiers of new
dwellings constructed in their area must be considered in the relevant
statutory setting–under which the council acts. That was the Public Health Act
1936. I must refer to the relevant provisions.
Section 1
confers the duty of carrying the Act into execution upon specified authorities
which now include the appellant council. Part II of the Act is headed
"Sanitation and Buildings" and contains provisions in the interest of
the safety and health of occupiers of dwelling-houses and other buildings such
as provisions about sewage, drains and sanitary conveniences. From section 53
onwards, this part of the Act is concerned with such matters as the
construction of buildings (section 53), the use of certain materials,
construction on ground filled up with offensive material (section 54), repair
or removal of dilapidated buildings (section 58) and fire escapes. The emphasis
is throughout on health and safety. The directly relevant provisions start with
section 61. That section provided (subsection (1)) that every local authority
may, and if required by the minister shall, make by-laws for regulating (inter
alia) the construction of buildings, and (subsection (2)) that by-laws made
under the section may include provisions as to the giving of notices, the
deposit of plans and the inspection of work. Section 64 deals in a mandatory
form with the passing or rejection of deposited plans. The authority must pass
plans unless they are defective or show that the proposed work would contravene
any by-laws and in the contrary case must reject them. By section 65, if any
work to which building by-laws are applicable contravenes any by-law, the
authority may require the owner to pull down the work, or, if he so elects, to
effect such alteration as may be necessary to make it comply with the by-laws.
However, if any work though infringing the by-laws, is in accordance with
approved plans, removal or alteration may only be ordered by a court, which
then has power to order the authority to compensate the owner. Building by-laws
were duly made, under these powers, by the Borough of Mitcham in 1953 and
confirmed by the Minister in 1957.
By-law 2
imposes an obligation upon a person who erects any building to comply with the
requirements of the by-laws. It imposes an obligation to submit plans. By-law 6
requires the builder to give to the council not less than 24 hours’ notice in
writing: (a) of the date and time at which an operation will be commenced, and
(b) before the covering up of any drain, private sewer, concrete or other
material laid over a site, foundation or damp-proof course. By-laws 18 and 19
contain requirements as to foundations. The relevant provision (18(1)(b)) is
that the foundations of every building shall be taken down to such a depth, or
be so designed and constructed, as to safeguard the building against damage by
swelling or shrinking of the subsoil. Acting under these by-laws, the builder
owners (first defendants) on January 30 1962 gave notice to the Mitcham Borough
Council of their intention to erect a new building (viz the block of
maisonettes) in accordance with accompanying plans. The plans showed the base
walls and concrete strip foundations of the block and stated, in relation to
the depth from ground level to the underside of the concrete foundations,
"3 ft or deeper to the approval of local authority." These plans were approved on February 8 1962.
The written notice of approval dated February 9 1962 drew attention to the
requirement of the by-laws that notice should be given to the surveyor at each
of the following stages: before the commencement of the work and when the
foundations were ready to be covered up. The builders in fact constructed the
foundations to a depth of only 2 ft 6 in below ground level. It is not, at this
stage, established when or whether any inspection was made.
To summarise
the statutory position. The Public Health Act 1936, in particular Part II, was
enacted in order to provide for the health and safety of owners and occupiers
of buildings, including dwelling-houses, by (inter alia) setting
standards to be complied with in construction, and by enabling local
authorities, through building by-laws, to supervise and control the operations
of builders. One of the particular matters within the area of local authority
supervision is the foundations of buildings–clearly a matter of vital
importance, particularly because this part of the building comes to be covered
up as building proceeds. Thus any weakness or inadequacy will create a hidden
defect which whoever acquires the building has no means of discovering: in
legal parlance there is no opportunity for intermediate inspection. So, by the
by-laws, a definite standard is set for foundation work (see by-law 18(1)(b)
referred to above); the builder is under a statutory (sc by-law) duty to notify
the local authority before covering up the foundations; the local authority has
at this stage the right to inspect and to insist on any correction necessary to
bring the work into conformity with the by-laws. It must be in the reasonable
contemplation not only of the builder but also of the local authority that
failure to comply with the by-laws’ requirement as to foundations may give rise
to a hidden defect which in the future may cause damage to the building
affecting the safety and health of owners and occupiers. And as the building is
intended to last, the class of owners and occupiers likely to be affected
cannot be limited to those who go in immediately after construction. What then
is the extent of the local authority’s duty towards these persons? Although, as I have suggested, a situation of
"proximity" existed between the council and owners and occupiers of
the houses, I do not think that a description of the council’s duty can be
based upon the "neighbourhood" principle alone or upon merely any
such factual relationship as "control" as suggested by the Court of
Appeal. So to base it would be to neglect an essential factor which is that the
local authority is a public body, discharging functions under statute: its
powers and duties are definable in terms of public not private laws. The
problem which this type of action creates is to define the circumstances in
which the law should impose, over and above, or perhaps alongside, those public
law powers and duties, a duty in private law towards individuals such that they
may sue for damages in a civil court. It is in this context that the
distinction sought to be drawn between duties and mere powers has to be
examined.
Most, indeed
probably all, statutes relating to public authorities or public bodies, contain
in them a large area of policy. The courts call this "discretion,"
meaning that the decision is one for the authority or body to make, and not for
the courts. Many statutes, also, prescribe or at least presuppose the practical
execution of policy decisions: a convenient description of this is to say that
in addition to the area of policy or discretion, there is an operational area.
Although this distinction between the policy area and the operational area is
convenient, and illuminating, it is probably a distinction of degree; many
"operational" powers or duties have in them some element of
"discretion." It can safely be
said that the more "operational" a power or duty may be, the easier
it is to superimpose upon it a common law duty of care. I do not think that it
is right to limit this to a duty to avoid causing extra or additional damage
beyond what must be expected to arise from the exercise of the power or duty.
That may be correct when the act done under the statute inherently must
adversely affect the interest of individuals. But many other acts can be
done without causing any harm to anyone–indeed may be directed to preventing
harm from occurring. In these cases the duty is the normal one of taking care
to avoid harm to those likely to be affected.
Let us examine
the Public Health Act 1936 in the light of this. Undoubtedly it lays out a wide
area of policy. It is for the local authority, a public and elected body, to
decide upon the scale of resources which it can make available in order to
carry out its functions under Part II of the Act–how many inspectors, with what
expert qualifications, it should recruit, how often inspections are to be made,
what tests are to be carried out, must be for its decision. It is no accident
that the Act is drafted in terms of functions and powers rather than in terms
of positive duty. As was well said, public authorities have to strike a balance
between the claims of efficiency and thrift (du Parcq LJ in Kent v East
Suffolk Rivers Catchment Board [1940] 1 KB 319, 338): whether they get the
balance right can only be decided through the ballot box, not in the courts. It
is said–there are reflections of this in the judgments in Dutton’s case–that
the local authority is under no duty to inspect, and this is used as the
foundation for an argument, also found in some of the cases, that if it need
not inspect at all, it cannot be liable for negligent inspection: if it were to
be held so liable, so it is said, councils would simply decide against
inspection. I think that this is too crude an argument. It overlooks the fact
that local authorities are public bodies operating under statute with a clear
responsibility for public health in their area. They must, and in fact do, make
their discretionary decisions responsibly and for reasons which accord with the
statutory purpose: cf Ayr Harbour Trustees v Oswald (1883) 8 App
Cas 623, 639, per Lord Watson:
The powers
which [section 10] confers are discretionary. . . . But it is the plain import
of the clause that the harbour trustees . . . shall be vested with, and shall
avail themselves of, these discretionary powers, whenever and as often as they
may be of opinion that the public interest will be promoted by their exercise.
If they do not
exercise their discretion in this way they can be challenged in the courts.
Thus, to say that councils are under no duty to inspect is not a sufficient
statement of the position. They are under a duty to give proper consideration
to the question whether they should inspect or not. Their immunity from attack,
in the event of failure to inspect, in other words, though great is not
absolute. And because it is not absolute, the necessary premise for the
proposition "if no duty to inspect, then no duty to take care in
inspection" vanishes. Passing, then, to the duty as regards inspection, if
made. On principle there must surely be a duty to exercise reasonable care. The
standard of care must be related to the duty to be performed–namely to ensure
compliance with the by-laws. It must be related to the fact that the person
responsible for construction in accordance with the by-laws is the builder, and
that the inspector’s function is supervisory. It must be related to the fact
that once the inspector has passed the foundations they will be covered up,
with no subsequent opportunity for inspection. But this duty, heavily
operational though it may be, is still a duty arising under the statute. There
may be a discretionary element in its exercise–discretionary as to the time and
manner of inspection, and the techniques to be used. A plaintiff complaining of
negligence must prove, the burden being on him, that action taken was not
within the limits of a discretion bona fide exercised, before he can begin to
rely upon a common law duty of care. But if he can do this, he should, in
principle, be able to sue.
Is there,
then, authority against the existence of any such duty or any reason to
restrict it? It is said that there is an
absolute distinction in the law between statutory duty and statutory power–the
former giving rise to possible liability, the latter not; or at least not doing
so unless the exercise of the power involves some positive act creating some
fresh or additional damage. My Lords, I do not believe that any such absolute
rule exists, or perhaps more accurately, that such
statutes provide sufficient definition of the rights of individuals affected by
their exercise, or indeed their non-exercise, unless they take account of the
possibility that, parallel with public law duties, there may coexist those
duties which persons–private or public–are under at common law to avoid causing
damage to others in sufficient proximity to them. This is, I think, the key to
understanding of the main authority relied upon by the respondents–East
Suffolk Rivers Catchment Board v Kent [1941] AC 74. The statutory
provisions in that case were contained in the Land Drainage Act 1930 and were
in the form of a power to repair drainage works including walls or banks. The facts
are well known: there was a very high tide which burst the banks protecting the
respondent’s land. The catchment board, requested to take action, did so with
an allocation of manpower and resources (graphically described by MacKinnon LJ)
which was hopelessly inadequate and which resulted in the respondent’s land
being flooded for much longer than it need have been. There was a considerable
difference of judicial opinion. Hilbery J who tried the case held the board
liable for the damage caused by the extended flooding and his decision was
upheld by a majority of the Court of Appeal. This House, by majority of 4-1
reached the opposite conclusion. The speeches of their Lordships contain
discussion of earlier authorities, which well illustrate the different types of
statutory enactment under which these cases may arise. There are private Acts
conferring powers–necessarily–to interfere with the rights of individuals: in
such cases, an action in respect of damage caused by the exercise of the powers
generally does not lie, but it may do so "for doing that which the
legislature has authorised, if it be done negligently" (Geddis v Proprietors
of Bann Reservoir (1878) 3 App Cas 430, 455 per Lord Blackburn). Then there
are cases where a statutory power is conferred, but the scale on which it is
exercised is left to a local authority: Sheppard v Glossop
Corporation [1921] 3 KB 132. That concerned a power to light streets and
the corporation decided, for economy reasons to extinguish the lighting on
Christmas night. Clearly this was within the discretion of the authority, but
Scrutton LJ in the Court of Appeal contrasted this situation with one where
"an option is given by statute to an authority to do or not to do a thing
and it elects to do the thing and does it negligently" (ibid
145-6). (Compare Indian Towing Co v United States (1955) 350 US
61, which makes just this distinction between a discretion to provide a lighthouse,
and at operational level, a duty, if one is provided, to use due care to keep
the light in working order.) Other
illustrations are given.
My Lords, a
number of reasons were suggested for distinguishing the East Suffolk case–apart
from the relevant fact that it was concerned with a different Act, indeed type
of Act. It was said to be a decision on causation: I think that this is true of
at least two of their Lordships (Viscount Simon and Lord Thankerton). It was
said that the damage was already there before the board came on the scene: so
it was, but the board’s action or inaction undoubtedly prolonged it, and the
action was in respect of the prolongation. I should not think it right to put
the case aside on such arguments. To me the two significant points about the
case are, first, that it is an example, and good one, where operational
activity–at the breach in the wall–was still well within a discretionary area,
so that the plaintiff’s task in contending for a duty of care was a difficult
one. This is clearly the basis on which Lord Romer, whose speech is often
quoted as a proposition of law, proceeded. Secondly although the case was
decided in 1941, only one of their Lordships considered it in relation to a
duty of care at common law. It need cause no surprise that this was Lord Atkin.
His speech starts with this passage:
On the first
point [sc whether there was a duty owed to the plaintiff and what was its
nature] I cannot help thinking that the argument did not sufficiently
distinguish between two kinds of duties: (1) a statutory duty to do or abstain
from doing something, (2) a common law duty to conduct yourself with reasonable
care so as not to injure persons liable to be affected by your conduct (loc cit
p 88).
And later he
refers to Donoghue v Stevenson–the only one of their Lordships to
do so–though I think it fair to say that Lord Thankerton (who decided the case
on causation) in his formulation of the duty must have been thinking in terms
of that case. My Lords, I believe that the conception of a general duty of
care, not limited to particular accepted situations, but extending generally
over all relations of sufficient proximity, and even pervading the sphere of
statutory functions of public bodies, had not at that time become fully recognised.
Indeed it may well be that full recognition of the impact of Donoghue v Stevenson
in the latter sphere only came with the decision of this House in Dorset
Yacht Co Ltd v Home Office [1970] AC 1004. In that case the Borstal
officers, for whose actions the Home Office was vicariously responsible, were
acting, in their control of the boys, under statutory powers. But it was held
that, nevertheless, they were under a duty of care as regards persons who might
suffer damage as the result of their carelessness–see per Lord Reid, pp 1030-1,
Lord Morris of Borth-y-Gest, p 1036, Lord Pearson, p 1055 ("The existence
of the statutory duties does not exclude liability at common law for negligence
in the performance of the statutory duties"). Lord Diplock in his speech
gives this topic extended consideration with a view to relating the officers’
responsibility under public law to their liability in damages to members of the
public under private, civil law. (See pp 1064 ff). My noble and learned friend
points out that the accepted principles which are applicable to powers
conferred by a private Act of Parliament, as laid down in Geddis v Proprietors
of Bann Reservoirs, cannot automatically be applied to public statutes
which confer a large measure of discretion upon public authorities. As regards
the latter, for a civil action based on negligence at common law to succeed,
there must be acts or omissions taken outside the limits of the delegated
discretion: in such a case its "actionability falls to be determined by
the civil law principles of negligence" (lc p 1068). It is for this reason
that the law, as stated in some of the speeches in the East Suffolk case,
but not in those of Lord Atkin or Lord Thankerton, requires at the present time
to be understood and applied with recognition that, quite apart from such
consequences as may flow from an examination of the duties laid down by the
particular statute, there may be room, once one is outside the area of
legitimate discretion or policy, for a duty of care at common law. It is
irrelevant to the existence of this duty of care whether what is created by the
statute is a duty or a power: the duty of care may exist in either case. The
difference between the two lies in this, that, in the case of a power,
liability cannot exist unless the act complained of lies outside the ambit of
the power. In the Dorset Yacht Co case the officers may (on the assumed
facts) have acted outside any discretion delegated to them and having
disregarded their instructions as to the precautions which they should take to
prevent the trainees from escaping (see per Lord Diplock, lc p 1069). So in the
present case, the allegations made are consistent with the council or its
inspector having acted outside any delegated discretion either as to the making
of an inspection, or as to the manner in which an inspection was made. Whether
they did so must be determined at the trial. In the event of a positive
determination, and only so, can a duty of care arise. I respectfully think that
Lord Denning MR in Duttons case (p 392) puts the duty too high.
To whom the
duty is owed. There is, in my opinion, no
difficulty about this. A reasonable man in the position of the inspector must
realise that if the foundations are covered in without adequate depth or
strength as required by the
the house. The duty is owed to them–not of course to a negligent building
owner, the source of his own loss. I would leave open the case of users, who
might themselves have a remedy against the occupier under the Occupiers’
Liability Act 1957. A right of action can only be conferred upon an owner or
occupier, who is such when the damage occurs (see below). This disposes of the
possible objection that an endless, indeterminate class of potential plaintiffs
may be called into existence.
The nature
of the duty. This must be related closely to the
purpose for which powers of inspection are granted, namely, to secure
compliance with the by-laws. The duty is to take reasonable care, no more, no
less, to secure that the builder does not cover in foundations which do not
comply with by-law requirements. The allegations in the statements of claim, in
so far as they are based upon non-compliance with the plans, are misconceived.
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 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. See Gallagher v N McDowell Ltd [1961]
NI 26 per Lord MacDermott CJ–a case of personal injury. Similar decisions have
been given in regard to architects (Clayton v Woodman & Son (Builders)
Ltd [1962] 2 QB 533, Clay v A J Crump & Sons Ltd [1964] 1
QB 533). Gallagher’s case expressly leaves open the question whether the
immunity against action of builder owners, established by older authorities (eg
Bottomley v Bannister [1932] 1 KB 458), still survives. That
immunity, as I understand it, rests partly upon a distinction being made
between chattels and real property, partly upon the principle of caveat
emptor or, in the case where the owner leases the property, on the
proposition "that (fraud apart) there is no law against letting a
‘tumbledown house’" (Robbins v Jones (1863) 15 CBNS 221 per
Erle CJ). But leaving aside such cases as arise between contracting parties,
when the terms of the contract have to be considered (see Voli v Inglewood
Shire Council (1963) 110 CLR 74, 85, per Windeyer J), 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 (Dutton’s
case, lc pp 392-4). 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.
Nature of
the damages recoverable and arising of the cause of action. There are many questions here which do not directly arise at this
stage and which may never arise if the actions are tried. But some conclusions
are necessary if we are to deal with the issue as to limitation. The damages
recoverable include all those which foreseeably arise from the breach of the duty
of care which, as regards the council, I have held to be a duty to take
reasonable care to secure compliance with the by-laws. 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; for the whole purpose of the by-laws in requiring
foundations to be of a certain standard is to prevent damage arising from
weakness of the foundations which is certain to endanger the health or safety
of occupants. To allow recovery for such damage to the house follows, in my
opinion, from normal principle. If classification is required, the relevant
damage is in my opinion material, physical damage, and what is recoverable is
the amount of expenditure necessary to restore the dwelling to a condition in
which it is no longer a danger to the health or safety of persons occupying and
possibly (depending on the circumstances) expenses arising from necessary
displacement. On the question of damages generally I have derived much
assistance from the judgment (dissenting on this point, but of strong
persuasive force) of Laskin CJ in the Canadian Supreme Court case of Rivtow
Marine Ltd v Washington Iron Works (1973) 6 WWR 692, 715 and from
the judgments of the New Zealand Court of Appeal (furnished by courtesy of that
court) in Bowen v Paramount Builders (Hamilton) Ltd and
McKay CA 69/75 (December 22 1976–unreported).
When does
the cause of action arise? We can leave aside cases of personal injury
or damage to other property as presenting no difficulty. It is only the damage
to the house which requires consideration. In my respectful opinion the Court
of Appeal was right when, in Sparham-Souter’s case it abjured the view
that the cause of action arose immediately upon delivery, ie conveyance of the
defective house. It can only arise when the state of the building is such that
there is present imminent danger to the health or safety of persons occupying it.
We are not concerned at this stage with any issue relating to remedial action
nor are we called upon to decide upon what the measure of the damages should
be; such questions, possibly very difficult in some cases, will be for the
court to decide. It is sufficient to say that a cause of action arises at the
point I have indicated.
The
Limitation Act 1939. If the fact is that defects to
the maisonettes first appeared in 1970, then, since the writs were issued in
1972, the consequence must be that none of the present actions are barred by
the Act.
Conclusion. I would hold:
1. that Dutton v Bognor Regis was
in the result rightly decided; the correct legal basis for the decision must be
taken to be that established by your Lordships in this appeal;
2. that the question whether the defendant
council by itself or its officers came under a duty of care toward the
plaintiffs must be considered in relation to the powers, duties and discretions
arising under the Public Health Act 1936;
3. that the defendant council would not be
guilty of a breach of duty in not carrying out inspection of the foundations of
the block unless it were shown (a) not properly to have exercised its
discretion as to the making of inspections, and (b) to have failed to exercise
reasonable care in its acts or omissions to secure that the by-laws applicable
to the foundations of the block were complied with;
4. that the defendant council would be liable
to the respondents for breach of duty if it were proved that its inspector,
having assumed the duty of inspecting the foundations, and acting otherwise
than in the bona fide exercise of any discretion under the statute, did not
exercise reasonable care to ensure that the by-laws applicable to the
foundations were complied with;
5. that on the facts as pleaded none of the
actions are barred by the Limitation Act 1939;
and
consequently that the appeal should be dismissed with costs.
LORD DIPLOCK
and LORD SIMON OF GLAISDALE agreed with the speech of Lord Wilberforce and with
the order proposed by him.
Also agreeing
that the appeal be dismissed, LORD SALMON said: The procedural issues, the
undisputed facts, the relevant statutory provisions and the by-laws made under
them are fully and lucidly expounded in the first part of the speech of my noble
and learned friend Lord Wilberforce, which I gratefully adopt and need not
repeat.
The one fact
which is at present unknown and which may be of vital importance at the trial
is whether or not the foundations of the block of maisonettes in question were
ever examined by the council through one of its building inspectors prior to
their being covered up. As I understand paragraph 5 of the statement of claim
and the particulars delivered under it, the gist of the claim is that it was
the council’s duty through one of its building inspectors to inspect the
foundations of the building before they were covered; that in breach of this
duty the council negligently failed to carry out any inspection of the
foundations; alternatively that if it did so, the inspection was carried out
negligently; that as a result, the inspection failed to reveal that the
foundations did not comply with by-law 18(1)(b) nor with the deposited
and approved plans in that they were only 2 ft 6 in deep instead of 3 ft or
deeper as shown on the plans; that if these defects in the foundations had been
detected by the council’s inspector (as they should have been) the council
would have been under a duty to insist that the foundations should be taken
down to a sufficient depth to give the building a sound base, and that if this
had been done the structural movements and their resulting damage to the
building which began to occur in February 1970 would have been avoided.
Since this
appeal is being decided on preliminary points of law, all the facts in the
statement of claim, including those pleaded in the alternative, must be assumed
to be true. Accordingly, at least two different hypotheses need to be examined:
1 that no inspection of
the foundations by the council took place;
2 that such an inspection
did take place but because of the building inspector’s failure to use
reasonable care and skill, the inspection failed to reveal the inadequacy of
the foundations to which I have referred.
As to 1, this
hypothesis raises the question as to whether or not the council owed a duty to
the plaintiffs to inspect the foundations before the building was erected.
Obviously if no such duty existed, the failure to inspect could not found a
cause of action.
The Public
Health Act 1936 and the building by-laws made under it confer ample powers on
the council for the purpose, amongst other things, of enabling it to protect
the health and safety of the public in its locality against what is popularly
known as jerry-building. We are concerned particularly with the safeguards
relating to building foundations; these foundations are clearly of the greatest
importance because the stability of the building depends upon them and they are
covered up at a very early stage. Powers are undoubtedly conferred on the
council in order to enable it to inspect the foundations and ensure that any
defects which the inspection may reveal are remedied before the erection of the
building begins. There is, however, nothing in the Act of 1936 or in the
by-laws which explicitly provides how the council shall exercise these powers.
This, in my view, is left to the council’s discretion–but I do not think that
this is an absolute discretion. It is a discretion which must be responsibly
exercised. The council could resolve to inspect the foundations of all
buildings in its locality before they are covered, but certainly, in my view,
it is under no obligation to do so. It could, for example, resolve to inspect
the foundations of a proportion of all buildings or of all buildings of certain
types in its locality. During the course of argument it was suggested on behalf
of the council that if it were held to owe any duty to use reasonable care in
carrying out an inspection of foundations and could therefore be liable in
damages for any such inspections carried out negligently, it might well resolve
to make no such inspections at all. I find it impossible to conceive that any
council could be so irresponsible as to pass any such resolution. If it did,
this would, in my view, amount to an improper exercise of discretion which, I
am inclined to think, might be corrected by certiorari or mandamus. I
doubt, however, whether this would confer a right on any individual to sue the
council for damages in respect of its failure to have carried out an
inspection. This point has, however, little bearing on this appeal because the
correspondence makes it plain that the council had certainly not decided
against exercising its statutory powers of inspection. On March 19 1971 we find
the borough surveyor writing to the tenants’ solicitors:
I regret that
I am unable to trace any record of statutory inspections . . . by officers of
the former Borough of Mitcham, but do not doubt, for a moment, that all the
proper inspections were made.
On June 24
1971 the borough surveyor again wrote:
I have been
unable to trace details of all inspections made to the above premises but have
been assured that all statutory inspections have been carried out.
If there was
no inspection of the foundations before they were covered up, the tenants’ claims
would fail because the statute imposed no obligation upon the council to
inspect the foundations of these maisonettes or of any other particular
building. It will be for the tenants, with the help of interrogatories,
discovery of documents and a search for fresh witnesses to establish, on a
balance of probabilities, that such an inspection did take place. The extracts
from the letters I have just read do not suggest that this is likely to impose
any insuperable difficulties upon them.
As to 2, I now
propose to examine the second hypothesis, namely, that an inspection of the
foundations before they were covered up was carried out by the council through
one of its building inspectors. This immediately raises the important question:
did the inspector, acting on behalf of the council, owe a duty to future
tenants to use reasonable care and skill in order to discover whether the
foundations conformed with the approved plans and with the by-laws? Precisely the same point was raised in Dutton
v Bognor Regis UDC [1972] 1 QB (CA) 373 and was answered in the
affirmative. I agree with that decision. In Dorset Yacht Co Ltd v Home
Office [1970] AC 1004 Lord Reid at p 1027 said:
Donoghue v Stevenson [1932] AC 562 may be regarded as a milestone, and
the well-known passage in Lord Atkin’s speech should I think be regarded as a
statement of principle. It is not to be treated as if it were a statutory
definition. It will require qualification in new circumstances. But I think
that the time has come when we can and should say that it ought to apply unless
there is some justification or valid explanation for its exclusion.
He then set
out some of the circumstances in which such justification or explanation would
exist. He added:
But where
negligence is involved the tendency has been to apply principles analogous to
those stated by Lord Atkin: cf Hedley Byrne & Co Ltd v Heller
& Partners Ltd [1964] AC 465 . . . I can see nothing to prevent our
approaching the present case with Lord Atkin’s principles in mind.
I respectfully
agree with and adopt that passage in Lord Reid’s speech which, to my mind, is
just as apt in the instant case as it was in the Dorset Yacht Co Ltd case.
The seven
maisonettes which constitute the building were to be let on 999-year leases at
nominal rents and acquired for substantial capital sums. The building inspector
and the council who sent him to inspect the foundations must have realised that
the inspection was of great importance for the protection of future occupants
of the maisonettes, who indeed might suffer serious damage if the inspection
was carried out negligently. The inspection should have revealed that this
block of maisonettes was about to be erected on insecure foundations, that is
to say, foundations which failed to comply with the approved plans and the
by-laws, and that therefore there was a real danger that within a decade the
whole structure would suffer damage and might indeed collapse. Nor was there
any likelihood that any survey on behalf of the original tenants or their
assignees would include an inspection of the foundations since they would be
concealed by the building. The whole purpose of the inspection on behalf of the
council before the foundations were covered up was to discover whether the
foundations were secure and to ensure that if they were not they should be made
so for the protection of future tenants before the building was erected. It is
impossible to think of anyone more closely and directly affected by the
inspection than the original tenants of the maisonettes and their assignees. I
have therefore come to the clear conclusion that the council acting through
their building inspector when he inspected the foundations owed a duty to the
plaintiffs to carry out the inspection with reasonable care and skill. There
can, I think, be no doubt but that the building inspector failed to use
reasonable care and skill, since the underside of the concrete foundations was
only 2 ft 6 in below ground level, whereas the plans delivered to the council
showed the foundations as being 3 ft below ground level or deeper if required.
A surveyor’s report on p 106 of the record states that:
3 ft is the
accepted minimum depth for foundation excavations, always provided a reasonable
bottom is found at that level and in this case we have found the sub-soil
beneath the concrete to be of very doubtful and variable quality, consisting of
a mixture of sand and gravel with traces of soft clay. We are therefore of the
opinion that the defects in this property arise from inadequate foundation
depth having regard to the site conditions, and that movement has probably been
accentuated by all or any of the following factors.
These factors
are then enumerated and the report continues:
Whilst we are
in some difficulty in arriving at the most likely of the above causes, all of
them could have been avoided had the foundations been taken down to an adequate
depth according to site conditions, and in our view this is where the fault
lies.
At the trial,
it will be for the court to decide, having heard the evidence, whether if the
foundations had been down to 3 ft 6 in instead of only to 2 ft 6 in the damage
would have been avoided, and if not whether the building inspector, had he used
reasonable care and skill, should have recognised that the soil conditions
required the foundations to have been taken down lower than 3 ft in order to
achieve security.
I must now
refer to East Suffolk Rivers Catchment Board v Kent [1941] AC 74
upon which the council strongly relied in an attempt to negative any duty of
care on their part if and when they inspected the foundations. The East
Suffolk case, which is not very satisfactory, is certainly a very different
case from the present. Here, at the time the council elected to inspect the
foundations in the exercise of its statutory powers, no damage had occurred nor
could thereafter have occurred if the building inspector had noticed the
inadequacy of the foundations. It seems to me to be a fair inference that
probably he must have indicated to the builder by word or gesture that he
approved them. At any rate he could have made no report to the council as to
their inadequacy; otherwise the council would or certainly should have ensured
that the builders made the foundations conform with the by-laws before the
council allowed the building to be erected upon them. Even if the inspector did
not give the builders any intimation as to his view of the foundations, the
builders would have naturally assumed from the council’s silence after the
inspection that they (the builders) had the council’s blessing to build on the
existing foundations.
It is
undoubtedly a well-settled principle of law that when statutory powers are
conferred they must be exercised with reasonable care, so that if those who
exercise them could by reasonable precaution have prevented an injury which has
been occasioned . . . by their exercise, damage for negligence may be
recovered. (Great Central Railway Co v Hewlett [1916] 2 AC 511
per Lord Parker at p 519.)
In my opinion
a negligent inspection for which the council is vicariously liable coupled with
subsequent inaction by the council would amount to an implicit approval of the
foundations by the council and would have occasioned the damage which ensued.
In the East
Suffolk case the damage had already occurred before the catchment board
arrived upon the scene and purported to carry out the work of repairing a river
wall under its statutory powers. The river close to its estuary had burst
through a breach it had made in the wall at high tide and swamped about 50
acres of adjoining pasture which was below the level of the river bed. At each
high tide more salt water came into the pasture and the longer this went on the
greater was the risk of pasture being permanently ruined. The catchment board
attempted to repair the breach in the wall with one man who had been in their
employment for 18 months and was totally inexperienced in this kind of work and
four labourers from the employment exchange and with practically no equipment.
It took 178 days to close the breach which could have been closed in 14 days
had the work been carried out with reasonable care and skill. It would appear
that there had been exceptionally high tides as well as gales and that the
catchment board had to cope with a number of similar problems with limited
funds and insufficient experienced men at their disposal. In the instant case,
as far as we know, the council was not faced, as was the catchment board, with
a task of any difficulty, nor with any damage because nothing had been built on
the foundations, nor with the lack of a reasonably competent building inspector
well able to measure the depth of the foundations and, if necessary, assess
whether they were deep enough, having regard to the soil on which they rested.
It is, in my view, impossible to say that because in one set of circumstances a
body acting under statutory powers may not owe any duty to exercise reasonable
care and skill therefore another body acting under statutory powers in totally
different circumstances cannot owe such a duty. I confess that I am not at all
sure what point of law the East Suffolk case is said to decide. Viscount
Simon LC seems to have based his decision against the plaintiff on the ground
that the catchment board did not cause the damage. See his speech at pp 87, 88.
Lord Thankerton undoubtedly based his decision on that ground alone. See his
speech at p 96. He also stresses the importance of the special circumstances of
each case in deciding what amounts to a failure to exercise reasonable care and
skill by a body acting under a statutory power and adds, having referred to the
circumstances of the catchment board "I am unable to find that Hilbery J
was not entitled to hold that the appellants committed a breach of their duty
to the respondents in adopting a method of repair which no reasonable man would
have adopted."
Lords Romer
and Porter seem to have considered that, on the facts of the case which they
were deciding, no negligence could be attributed to the catchment board. Lord
Romer, however, observed, at p 97:
. . . it has
been laid down time and again that, in exercising a power which has been
conferred upon it, a statutory authority
upon others any damage that may be avoided by reasonable care.
Lord Porter
refers with approval to a passage from Scrutton LJ’s judgment in Sheppard
v Glossop Corporation [1921] 3 KB 132 at p 145:
But it is
going far beyond Lord Blackburn’s dictum to say that because, when an option is
given by statute to an authority to do or not to do a thing and it elects to do
the thing and does it negligently, it is liable, therefore it is liable if it
elects not to do the thing, which by the statute it is not bound to do at all.
Lord Porter
also referred to the celebrated passage in the speech of Lord Blackburn in the Geddis
case–see (1878) 3 App Cas at p 455–a most lucid passage which has been
explained so often that I fear its true meaning is in some danger of being
explained away. Lord Blackburn said:
. . . it is
now thoroughly well established that no action will lie for doing that which
the legislature has authorised, if it be done without negligence, although it
does occasion damage . . . but an action does lie for doing that which the
legislature has authorised, if it be done negligently.
If, which I
doubt, Lords Romer and Porter intended to lay down that because a local
authority or other body endowed with statutory powers owes no one any duty to
exercise those powers in a particular case, it cannot in circumstances such as
exist in the instant case owe anyone a duty when it does exercise the powers to
exercise them with reasonable care and skill, then I cannot agree with them.
Personally, I respectfully agree with the dissenting decision of Lord Atkin in
the East Suffolk case. His views as to the duty of care owed by anyone
exercising statutory powers did not differ from those of Lord Thankerton nor I
think from those of Viscount Simon LC and I have some doubt whether they
differed from the views of Lords Romer and Porter which seem to have turned
largely on the facts of that particular case. Lord Atkin said at p 89:
Every person,
whether discharging a public duty or not, is under a common law obligation to
some persons in some circumstances to conduct himself with reasonable care so
as not to injure those persons likely to be affected by his want of care. This
duty exists whether a person is performing a public duty, or merely exercising
a power which he possesses either under statutory authority or in pursuance of
his ordinary rights as a citizen.
For the
reasons I have already indicated, I am convinced that if an inspection of the
foundations did take place, the council, through its building inspectors, owed
a duty to the future tenants and occupiers of the maisonettes to exercise
reasonable care and skill in carrying out that examination. The failure to
exercise such care and skill may be shown to have caused the damage which the
plaintiffs have suffered. The fact that the inspection was being carried out
under a statutory power does not exclude the common law duty of those carrying
it out to use reasonable care and skill–for it cannot in any way diminish the
obvious proximity between the inspectors and the prospective tenants and their
assignees.
It has,
however, been argued on the council’s behalf that, since it was under no
obligation to inspect the foundations, had it failed to do so it could not be
liable for the damage caused by the inadequacy of the foundations. Accordingly,
so the argument runs, if the council decided to inspect the foundations in the
exercise of its statutory powers, it owed the prospective tenants and their
assignees no duty to inspect carefully because, even if the inspection was
carried out negligently, the prospective tenants and their assignees would be
no worse off than if there had been no inspection. I reject this argument and
confess that I cannot detect that it has even any superficial attraction. The
council is given these statutory powers to inspect the foundations and
furnished with public funds to enable the powers to be used for the protection
of prospective purchasers of the buildings which are to be built upon them. If,
when the council exercises these powers, it does so negligently, it must be
obvious that those members of the public in the position of the present
plaintiffs are likely to suffer serious damage. The exercise of power without
responsibility is not encouraged by the law. I recognise that it may not be
practical to inspect the foundations of every new building. This, however, is
no excuse for a negligent inspection of such foundations as are inspected. When
a council exercises its powers of inspection, it should be, and I believe is,
responsible in law to those who suffer damage as a result of that negligence. I
do not think that there is any danger that the responsibility which, in my
view, lies upon the council is likely to lead to any flood of litigation. It is
not a common occurrence for foundations to give way, nor for their inspection to
be negligently carried out. If the foundations do give way, there is no
warranty by the council which has inspected them that they are sound. The
council is responsible only if it has exercised its powers to inspect and the
defects in the foundations should have been detected by reasonable care and
skill. It seems to me to be manifestly fair that any damage caused by
negligence should be borne by those responsible for the negligence rather than
by the innocents who suffer from it.
I recognise
that it would be unjust if, in the circumstances of this case, the whole burden
should fall upon the council while the contractor who negligently put in the
faulty foundations remained free from liability. It has, however, been decided
in Gallacher v N McDowell Ltd [1961] NI 26 that a building
contractor owes a duty of care to the lawful user of a house and that
accordingly the contractor is liable for any damage caused to a lawful user by
the contractor’s negligence in constructing the house. I agree with that
decision for the reasons given by Lord MacDermott CJ in delivering the leading
judgment in the Northern Ireland Court of Appeal. I also adopt what Lord
Denning MR said on this topic in Dutton’s case: "The distinction
between chattels and real property is quite unsustainable [in relation to the
principles laid down in Donoghue v Stevenson [1932] AC 562]. If
the manufacturer of an article is liable to a person injured by his negligence,
so should the builder of a house be liable." The contrary view seems to me to be entirely
irreconcilable with logic or commonsense. The instant case differs from Gallagher’s
case in that the contractors were also the owners of the land on which they
built the block of maisonettes. In Bottomley v Bannister [1932] 1
KB 458 [decided just before Donoghue v Stevenson] Scrutton LJ
said at p 468: "Now it is at present well-established English law that, in
the absence of express contract, a landlord of an unfurnished house is not
liable to his tenant, or a vendor of real estate to his purchaser, for defects
in the house or land rendering it dangerous or unfit for occupation, even if he
has constructed the defects himself or is aware of their existence." I certainly do not agree with the words in
that passage "even if he has constructed the defects himself." The immunity of a landlord who sells or lets
his house which is dangerous or unfit for habitation is deeply entrenched in
our law. I cannot, however, accept the proposition that a contractor who has
negligently built a dangerous house can escape liability to pay damages for
negligence to anyone who, for example, falls through a shoddily constructed
floor and is seriously injured, just because the contractor happens to have
been the owner of the land upon which the house stands. If a similar accident
had happened next door in a house which the contractor had also negligently
built on someone else’s land, he would not be immune from liability. This does
not make any sense. In each case the contractor would be sued for his
negligence as a contractor and not in his capacity as a landowner: the fact
that he had owned one plot of land and not the other would be wholly
irrelevant. I would hold that in each case he would be liable to pay damages
for negligence. To the extent that Bottomley v Bannister differs
from this proposition it should, in my view, be overruled. Cavalier v Pope
[1906]
case that I express no opinion about it.
It was also
contended on behalf of the appellants that the plaintiffs do not even allege
that they relied upon the inspection of the foundations by the council. Nor
they did, and I dare say they never even knew about it. This, however, is
irrelevant. I think that the noble lords who decided Hedley Byrne & Co
Ltd v Heller & Partners Ltd [1964] AC 465 would have been very
surprised that what they said about reliance in that case would one day be
cited as relevant to a case such as the present. There are a wide variety of
instances in which a statement is negligently made by a professional man which
he knows will be relied upon by many people besides his client, eg a well-known
firm of accountants certifies in a prospectus the annual profits of the company
issuing it and unfortunately, due to negligence on the part of the accountants,
the profits are seriously overstated. Those persons who invested in the company
in reliance on the accuracy of the accountants’ certificate would have a claim
for damages against the accountants for any money they might have lost as a
result of the accountants’ negligence: see the Hedley Byrne case. In the
present case, however, the loss is caused not by any reliance placed by
the plaintiffs on the council or the building inspector but by the fact that if
the inspection had been carefully made, the defects in the foundations would
have been rectified before the erection of the building was begun. The
categories of negligence, as Lord Macmillan said, are never closed and there
are now a great many of them. In a few "reliance" is of importance.
In the present case reliance is not even remotely relevant.
The remaining
question is whether this action is statute barred, as found by the learned
judge. In my view he had no real option except to find as he did. In Dutton’s
case the Master of the Rolls said, obiter, that "The damage was
done when the foundations were badly constructed. The period of limitation (six
years) then began to run." In Bagot
v Stevens Scanlan & Co Ltd [1966] 1 QB 197, 203, Diplock LJ (as he
then was) said, obiter, that if the drains were not properly designed
and built "The damage from any breach of that duty must have occurred at
the time when the drains were improperly built, because the plaintiff at that
time was landed with property which had bad drains when he ought to have been
provided with property which had good drains, and the damage, accordingly,
occurred on that date." There may
be a difference between the effect of badly-constructed foundations and
improperly-built drains, since badly-constructed foundations may not for some
years cause any damage to the building or its occupiers; on the other hand,
improperly-built drains may cause some damage to the amenities and health of
the occupier from the moment he occupies the building. In Higgins v Arfon
Borough Council [1975] 1 WLR 524 Mars-Jones J, founding his judgment on the
two obiter dicta to which I have referred, held that the erection of a
defective building without proper foundations was caused by the local
authority’s negligence, but the action against the authority was statute barred
because the damage occurred during the construction of the building and time
therefore began to run from March 22 1966 when the property was purchased. In
the light of these authorities I think that it would have been very difficult,
if not impossible, for the learned judge to have held that the instant action
was not statute barred, since the foundations were badly constructed and all
the original conveyances were executed more than six years before the writ was
issued.
In Sparham-Souter
v Town and Country Developments (Essex) Ltd [1976] 1 QB
858, Lord Denning MR reconsidered and handsomely withdrew his obiter dictum
in Dutton’s case to the effect that the period of limitation began to
run from that date when the foundations were badly constructed. He acknowledged
that the true view is that the cause of action in negligence accrued at the
time when damage was sustained as a result of negligence, ie when the building
began to sink and the cracks appeared. He therefore concluded that in Higgins
v Arfon Council and in the instant case it had been wrongly decided that
the action was statute barred, and as I read their judgments, Roskill and
Geoffrey Lane LJJ agreed with that view; and I certainly do. All the
plaintiffs, other than Mrs O’shea, acquired their maisonettes substantially
less than six years before their writs were issued. Accordingly their claims
cannot be affected by the statute since clearly they could suffer no damage
before they became the purchasers of the maisonettes. The duty of care if and
when the inspection of the foundations was carried out was owed to all future
tenants or assignees who might suffer damage as a result of the negligent
inspection. At the time of the inspection it was, of course, readily foreseeable
that if the inspection was carelessly carried out future tenants or assignees
would suffer damage, but their identity was, of course, then unknown, just as
the identity of the plaintiff in Davie v New Merton Board Mills Ltd
[1959] AC 604 was unknown to the defendants at the time when they negligently
manufactured a defective tool seven years before a part of it broke off and
flew into the plaintiff’s eye. The plaintiff, Mrs O’shea, however, acquired her
maisonette on December 12 1962. The writ was issued on February 22 1972. If it
could be proved that the building suffered damage prior to February 22 1966
which endangers the safety-of its occupants or visitors Mrs O’shea’s claim
would be statute barred. It seems to me, however, that since in fact no damage
manifested itself until February 1970 it may be very difficult to prove that
damage had in fact occurred four years previously. In the unlikely event of the
defendants overcoming this difficulty, the fact that the damage went undetected
for four years would not prevent the statute running from the date when the
damage first occurred, see Cartledge v E Jopling & Sons Ltd
[1963] AC 758. In such circumstances Mrs O’shea could not have recovered
damages because her cause of action would have accrued more than six years
before the issue of her writ. Section 2(1) of the Limitation Act 1939 bars any
action in tort after the expiration of the six years (amended by the Law Reform
(Limitation of Actions, etc) Act 1954 to three years in actions for damages for
personal injuries) from the date when the cause of action accrued. Every member
of this House in Jopling v Cartledge expressed the view that it
was unreasonable and unjust that a cause of action should be held to accrue
before it is possible to discover any injury, and, therefore, before it is
possible to raise any action. A strong recommendation was made for the
legislature to remedy this injustice and that recommendation was accepted and
carried into effect by the Limitation Act 1963, but that Act was confined to
actions for damages for personal injury. I do not think that if and when this
action comes to be tried, the defendants should be prevented from attempting to
prove that the claim by Mrs O’shea is statute barred. A building may be able to
stand undamaged on defective foundations for years and then perhaps eight years
or so later damage may occur. Whether it is possible to prove that damage to
the building had occurred four years before it manifested itself is another
matter, but it can only be decided by evidence.
I should
perhaps add a word about the damages to which the plaintiffs would in my view
be entitled should they succeed in the action. Clearly the damage to the
building constitutes a potential danger to the plaintiffs’ safety and the cost of
underpinning the building and making it stable and safe would be recoverable
from the defendants. So would the costs of rectifying any damage to the
individual maisonettes and the reasonable expense incurred by any of the
plaintiffs should it be necessary for them to find alternative accommodation
while any of the structural repairs were being carried out. I express no
opinion as to what the measure of damages should be if it proved impossible to
make the structure safe.
My Lords, for
the reasons I have explained I would dismiss
judgment of His Honour Judge Fay. I would hold that the council was under no
obligation to exercise its power to inspect the foundations before or after the
building now occupied by the plaintiffs was constructed, but that if it did
exercise such powers of inspection before the building was constructed, it was
under a legal duty to the plaintiffs to use reasonable care and skill in making
the inspection. I would order the council to pay the costs of and incidental to
this appeal.
Also agreeing,
LORD RUSSELL OF KILLOWEN said: I was at one time attracted by the simple
proposition that the case of East Suffolk Rivers Catchment Board v Kent
[1941] AC 74 afforded a sufficient shield for the appellant authority, even
upon the assumption that there was an inspection of the foundations which was
so carelessly conducted that it failed to reveal that the proposed depth was
only 2 ft 6 in below ground level (which we are to assume was and should have
been known to be inadequate to cope with swelling or shrinkage of the sub-soil)
and not 3 ft (which we are to assume would have been adequate for that
purpose). Upon reflection I do not adhere to that view. I have, my Lords, had
an opportunity to consider closely in draft the speech delivered by my noble
and learned friend on the Woolsack. I am in agreement with it on all points and
am content to add nothing of my own. Accordingly I also would dismiss this
appeal.
The appeal
was dismissed with costs.
