When is there liability in negligence for defectively constructed buildings?
The recent decisions in the House of Lords in Murphy v Brentwood District Council [0] 2 All ER 908 and Department of the Environment v Thomas Bates & Son Ltd [1990] 2 All ER 943 have changed quite radically what was hitherto thought to be the common law position on liability for defectively constructed premises. They have made it clear that the situations in which there will be liability for defectively constructed buildings are now severely restricted.
In the Murphy case the issue was the scope of the local authority’s liability where they were careless in the exercise of their building inspection functions. In 1970 the plaintiff had purchased a house which had been built over filled-in ground on a concrete-raft foundation. The defendant council had approved the design as adequate for the site after having taken the advice of a firm of consulting engineers. Eleven years later the plaintiff noticed serious cracks in his house, wet patches on the lawn and the cracking of a gas pipe and soil pipe. In 1986 the plaintiff sold the house for £30,000. The value of the house (free from defects) would have been £65,000. The plaintiff commenced an action against the council claiming the reduction in value as a result of the defects and the costs incurred in moving house and replacing the gas pipe.
Judge Esyr Lewis, at first instance, found that the consulting engineers had been competent and that the council had been entitled to rely on their skill and experience. However, he also found that the engineers had been negligent in approving the design and that the council had to accept responsibility for this. The judge further found that there was an imminent danger to the health and safety of the occupant of the house. In the light of this, under the principle of Anns v Merton London Borough Council [8] AC 728, the council was held liable to the plaintiff. In Anns v Merton it was held that local councils were under a duty to owners and occupiers of buildings to ensure they were constructed within building byelaws. A cause of action would accrue against a council when the state of the building became such that there was a present or imminent danger to the health and safety of persons occupying it. The decision in Murphy was upheld in the Court of Appeal. However, leave was given to appeal to the House of Lords.
A seven-member judicial committee of the House of Lords unanimously decided that Anns v Merton had been incorrectly decided as regards the scope of any private law duty of care resting on local authorities in relation to their function of taking steps to secure compliance with building byelaws or regulations. Dutton v Bognor Regis United Building Co Ltd [2] 1 QB 373 was also overruled — as were all decisions subsequent to Anns that had been decided in reliance upon it.
In the Thomas Bates case, the issue related to alleged negligence of a builder. In 1971 the plaintiffs had taken a 42-year underlease of part of a newly constructed two-storey building with a flat roof, and the upper nine floors of an 11-storey office block (both buildings being part of the same complex). The plaintiffs were responsible for keeping the demised premises in good repair.
In 1979 suspicions about the condition of the buildings were aroused following leaks in the flat roof of the two-storey building. Investigations revealed that, owing to an excess of aggregate and a deficiency of cement in the concrete mix, the concrete pillars were too soft and as a result the tower block could not safely support its design load. The plaintiffs carried out works costing £71,016 to strengthen the pillars and then claimed this sum from the defendants, who had constructed the pillars.
Judge Smout QC, as official referee, found, inter alia, that the weakness of the concrete pillars had not posed any imminent danger to health and safety and that the work carried out was not to avoid such a threat but to enable the plaintiffs to make full use of the building to the extent for which it had been designed. The judge felt bound by the authority in Pirelli General Cable Works Ltd v Oscar Faber & Partners [3] 2 AC 1 to dismiss the claim. Pirelli had decided that, in the absence of a threat of imminent danger to health or safety, there was no liability on the part of the council.
The plaintiffs appealed, relying on the decision in Anns, but the Court of Appeal affirmed the judge’s decision.
On appeal to the House of Lords, a five-member judicial committee, consisting of the same Law Lords as in the Murphy case (save for the Lord Chancellor and Lord Bridge), unanimously agreed to follow the obiter opinions in Murphy and to dismiss the plaintiffs’ claim. Reference was made to the principle in Donoghue v Stevenson [2] AC 562 where it was held that if an item was negligently constructed and, without fault on the part of the consumer, it caused damage to the consumer’s person or other property, then the manufacturer of the item would be liable in negligence to the consumer. The view in Thomas Bates was that, while the builder would be liable under the principle of Donoghue v Stevenson in the event of the defect causing physical injury to persons or damage to property (other than the building itself), he was not to be held liable for “pure economic loss” suffered by a purchaser who discovered the defect and was therefore required to expend money to make the building safe and suitable for its intended purpose.
It is clear that the House of Lords were not prepared to allow “economic loss” to be recovered. Latent defects in buildings were said to be no different from latent defects in chattels. To allow liability in such cases would involve the introduction of something in the nature of a transmissible warranty of quality (per Lord Keith in Murphy).
The present state of the law can perhaps best be summarised in the following way:
The position at common law.
Following the decisions in the Murphy and Thomas Bates cases there will be liability in the tort of negligence only if there is injury to a person or to property other than the defective building itself (ie “physical damage”). It is clear that this liability will fall on the builder if the defect is due to his negligent construction. There is no reason to suppose that the architect would be free from liability, if the defect was found to be in the design rather than the actual construction. However, there was a suggestion in the Murphy case that the council might not be liable in negligence for approving defective plans or defective foundations, even if this negligence resulted in personal injury.
As there is still some ambiguity in this area, no doubt further litigation will be needed to clarify the point.
It is clear, however, that there is no longer any liability in negligence where the only damage is to the defective building itself. This is regarded as “pure economic loss” and as such is irrecoverable in tort.
The owner of the defective property may have a contractual right to sue for economic or other loss resulting from a defective building, but this will be the case only if he or she was in direct privity of contract with the developer and there were no exclusion clauses in the contract. (The Unfair Contract Terms Act 1977 does not apply to contracts which transfer or create an interest in land.)
The position under statute.
The Defective Premises Act 1972 imposes a statutory duty on persons who undertake work for or in connection with the provision of a dwelling, to see that the work is done in a workmanlike or professional manner, with proper materials so that the dwelling will be fit for habitation when completed. The duty is owed to every person who acquires an interest in the dwelling. Although potentially very wide ranging, its practical application is restricted by the fact that a limitation period of six years is imposed which runs from the date when the dwelling was completed. Also, the Act does not apply to dwellings built under an approved scheme. As most new houses are built under the National House Builders Council Scheme the Act’s scope is very limited in reality. Moreover, it has no application at all to commercial buildings or to other buildings which are not “dwellings” when completed.
A provision that has yet to come into force is section 38 of the Building Act 1984. This provides that where damage is caused as a result of breach of building regulations, an action for breach of statutory duty exists. “Damage” is stated to include death, injury, or disease or impairment of physical or mental condition. This would not appear to take the position any further than the common law as stated in Murphy.
By section 4 of the Defective Premises Act 1972, it is possible that an unlucky landlord may find himself liable to the tenants, visitors, trespassers or even passers-by if he is responsible for repairs to any building (or if he has the power to enter and do repairs) and he is aware of or ought to be aware of a construction defect in the premises which leads to personal injury or damage to other property. The liability here, however, is not for the negligent construction but for the failure to carry out an obligation to keep the premises in a safe condition.
