Negligence — Whether duty of care owed by local authority — Failure by authority to exercise due care in the approval of drawings, failure to reject drawings not complying with building regulations, failure to reject faulty foundations and failure to stop construction when excavated material indicated unsuitable nature of the ground — Plaintiffs were owners of site containing a number of industrial units affected by structural damage, but had purchased the freehold only after the construction of the units was completed and had never been in occupation of the units — It was also material that the plaintiffs were under no obligation to the lessees in occupation to repair the units — In the action before the judge, sitting as official referee, there were several defendants in addition to the local authority, namely, architects, building contractors and developers — The judge, however, decided a preliminary issue against the plaintiffs and in favour of the local authority, who were the fourth defendants — The consequence was that the local authority were the sole respondents to the present appeal by the plaintiffs — The issue was whether the local authority, in carrying out their statutory functions under the Public Health Acts and building regulations, owed any duty of care in tort to the appellants — After considering the decisions in Anns v Merton London Borough Council, Governors of Peabody Donation Fund v Sir Lindsay Parkinson & Co Ltd and Curran v Northern Ireland Co-Ownership Housing Association Ltd, the Court of Appeal upheld the judge’s decision — There were two answers to the appellants’ claim — The first was that the appellants were themselves under no legal duty to make good the damage to the units as the leases did not impose on them any covenant to repair; in so far as they did make good the damage they were acting from enlightened self-interest — The second, more fundamental answer, was that, as they were owners who had never been in occupation, they were not, according to the cases on the subject, owed any duty of care by the local authority — The appellants were under no risk to health or safety themselves; they were not part of the section of the public to whom the duty was owed — Appeal dismissed
The following
cases are referred to in this report.
Acrecrest
Ltd v W S Hattrell & Partners [1983] QB
260; [1982] 3 WLR 1076; [1983] 1 All ER 17; (1982) 81 LGR 169; [1982] EGD 1095;
264 EG 245, [1982] 2 EGLR 138, CA
Anns v Merton London Borough Council [1978] AC 728; [1977] 2 WLR
1024; [1977] 2 All ER 492; [1977] EGD 604; (1977) 243 EG 523 & 591, HL,
[1977] 2 EGLR 94
Curran v Northern Co-ownership Housing Association Ltd [1987] 2 WLR
1043; [1987] 2 All ER 13, HL
Peabody
Donation Fund (Governors of) v Sir Lindsay Parkinson
& Co Ltd [1985] AC 210; [1984] 3 WLR 953; [1984] 3 All ER 529, HL
This was an
appeal by Hambro Life Assurance plc, plaintiffs in an action before Judge Smout
QC, sitting to deal with official referees’ business, in which the judge
decided a preliminary issue against the plaintiffs and in favour of Salisbury
District Council, the fourth defendant. In the present appeal the council were
the sole respondents.
A decision of
the Court of Appeal on earlier proceedings between the parties is reported at [1985]
2 EGLR 165; (1985) 275 EG 1127.
Desmond G
Wright QC and Andrew White (instructed by Nabarro Nathanson) appeared on behalf
of the appellants; John A Dyson QC and Richard J C Wilmot-Smith (instructed by
White Brooks & Gilman, of Eastleigh) represented the respondents.
Giving
judgment, DILLON LJ said: This is an appeal by the plaintiffs in the action,
Hambro Life Assurance plc, which is apparently concerned as a pension trust,
against a decision of His Honour Judge David Smout QC, sitting as an official
referee on April 15 1986, whereby he decided a preliminary issue against the
plaintiffs and in favour of the fourth defendants, the Salisbury District
Council, and consequently held that judgment in the action be entered for the
council. The council is the sole respondent to this appeal.
The council is
concerned partly in its own direct right and partly as the statutory successor
of the Salisbury City Council. Those two councils have been successively
responsible for discharging administrative functions in relation to their area
under the Public Health Acts and the building regulations made under those
Acts. The action is concerned with the extent to which a local authority may be
liable for failure adequately to discharge those statutory functions. It is the
territory which has been much considered in the cases of Anns v Merton
London Borough Council [1978] AC 728 and Governors of the Peabody
Donation Fund v Sir Lindsay Parkinson & Co Ltd [1985] AC 210.
The plaintiffs
in this case came on the scene only in October 1979. The building works in
question had taken place some years before that. It appears from an agreed
statement of facts that, in or about 1973, a company called Dolphin Property
Developments Ltd, who are the third defendants in the action, instructed a firm
called White Young & Partners, who are the first defendants in the action,
to prepare detailed drawings and a specification for the construction of eight
industrial warehouse units, together with associated buildings and car-parking
facilities, on a site known as the Dolphin Industrial Estate in Southampton
Road, Salisbury, The first defendants were also instructed to apply for and
obtain building regulation approval for the construction of those units from
the council. The plans were prepared, and in December 1973 and January 1974 one
or other council approved the drawings and calculations submitted to them for
approval. It was then known that the land upon which the units were to be
constructed was, in part, made ground and clayey sand, silt and peat overlaying
a deep layer of gravel founded on chalk.
In September
1974 construction of the units in accordance with the plans approved by the
council was started by the building contractors, T Holdoway & Sons Ltd, who
are the second defendants. During the course of the building work the council’s
building inspectors inspected the construction of the units at various stages,
and the agreed statement of facts sets out that at the time of making the
inspections the council, their servants or agents could and should have
observed the existence of the unsatisfactory ground conditions of the site.
The
construction of the units was completed in December 1975. Thereafter, another
company, which was by then the freehold owner of the site, granted 25-year
leases of the units to various companies. By a conveyance of October 29 1979
the freehold of the site was
occupation of the various units. The plaintiffs acquired it, of course, as an
investment.
Since the
plaintiffs purchased the site serious structural damage has occurred to the
units which has progressively worsened. The units most affected are units 7 and
8. It is common ground on the statement of facts that each of the units came to
constitute a present or imminent danger to the health and safety of the
occupants and invitees and visitors to the units; and also that the damage to
the units is a consequence of differential settlement of the foundations to the
front walls, causing rotational movement of panels of brickwork, thereby
opening up the vertical expansion joints in the brickwork at lower levels and
movement of the base wall over the damp-proof course of each end of the front
wall. The differential settlement was caused by defectively constructed and
grossly inadequate foundations.
It is further
agreed in the statement of facts that the failure of the units was caused by
the carelessness of the council in approving drawings which failed to comply
with certain of the building regulations; failing to reject those drawings
which did not comply with the building regulations; approving the construction
of the units which also failed to comply with the regulations; failing to
reject the foundations which had been constructed in a manner which failed to
comply with the regulations; and failing to stop the builders from constructing
the foundations when the adverse condition of the excavated material was
observed by the council’s building inspectors.
The history of
the proceedings was that the writ was issued on June 28 1983 by the plaintiffs
against all four defendants. A statement of claim was served and all the
defendants served defences. The council then applied to strike out the
statement of claim against the council pursuant of the Rules of the Supreme
Court Ord 18, r 19. On January 18 1985 His Honour Judge David Smout QC struck
the statement of claim out as against the council; but on March 25 1985 this
court allowed the plaintiffs’ appeal against that decision, taking the view
that, for the purpose of a striking-out application, it was not sufficiently
plain that the plaintiffs’ case was not maintainable against the council.* Thereafter, it seems that the council applied
to the appellate committee of the House of Lords for leave to appeal against
that decision of this court, but that application was rejected. Consequently,
in March 1986 a preliminary issue was agreed between counsel for the plaintiffs
and counsel for the council in the following terms:
Did the
council owe to the Plaintiffs a duty of care in tort in the carrying out of
their functions under the Public Health Acts 1936-61?
*Editor’s
note: The Court of Appeal’s decision is reported at [1985] 2 EGLR 165; (1985)
275 EG 1127.
That
preliminary issue came on for hearing before His Honour Judge David Smout QC,
and by his order of April 15 1986, which I have mentioned, he found that the
council, in carrying out their function under the Public Health Acts, owed no
duty of care in tort to the plaintiffs.
It is common
ground that the plaintiffs have never been in occupation of the units. They
purchased the reversion subject to the existing occupation leases. It is also
common ground that the plaintiffs were not themselves in any way at fault over
the construction of the units, because the plaintiffs only came on the scene
several years afterwards, as I have explained.
The leases do
not impose on the plaintiffs any obligation to repair the units. In the case of
units 1 and 2, which only suffered minor damage, it is clear that the leases
did not impose any relevant obligation to repair on the lessees. In the case of
units 7 and 8, which suffered the greatest damage, it was the view of His Honour
in the judgment under appeal that the leases did impose a duty to repair this
damage on the lessees. However, the plaintiffs, faced with objection on the
part of the lessees to accepting liability to repair defects which were due to
the bad design of the units, did not seek to enforce any repairing liability,
but took the view as a matter of good estate management that the liability was
one which the plaintiffs themselves were well advised to shoulder. There was no
legal obligation on them to do so, but the learned judge found as a fact, in so
far as it be a material fact, that they acted reasonably in so doing.
The case of Anns
broke new ground to some extent in holding the local authority liable for
failure properly to perform its duties under the building regulations. Lord
Wilberforce (at p758 between letters D and F) asked the question: ‘To whom the
duty is owed’. He continued:
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 byelaws, injury to safety or health may be
suffered by owners or occupiers of the house. The duty is owed to them — not of
course to a negligent building owner, the source of his own loss.
He then left
open the case of users who might themselves have a remedy against an occupier
under the Occupiers’ Liability Act 1957. However, though subsequent decisions
plainly recognise the liability of the local authority in appropriate circumstances
to the occupier, it is by no means clear that it is recognised as fully as Lord
Wilberforce’s words would seem to import, if taken at their face value, in
relation to an owner who is not in occupation.
Peabody
Fund is one of the more important cases. There the
plaintiffs in the action, who were seeking to hold the local authority, among
others, liable, were themselves the owners of the building site and the
undertakers of the development. It was held that the local authority owed no
duty to the plaintiffs to activate their powers under the relevant Act,
notwithstanding that the authority might reasonably have foreseen that failure
to do so would result in economic loss to the plaintiffs, because the purpose
of avoiding such loss was not one of the purposes for which those powers were
vested in the authority. The only speech in their Lordships’ House was given by
Lord Keith of Kinkel, with whom all the rest of their Lordships agreed. He said
(at p 241 between letters F and G):
The purpose
for which the powers contained in paragraph 15 of Part III of Schedule 9 have
been conferred on Lambeth
I interject
that that was the authority in question there
is not to
safeguard building developers against economic loss resulting from their
failure to comply with approved plans. It is in my opinion to safeguard the
occupiers of houses built in the local authority’s area, and also members of
the public generally, against dangers to their health which may arise from
defective drainage installations. The provisions are public health measures.
He then
commented on the passage in Lord Wilberforce’s speech in Anns to which I
have referred and said by way of comment that the decision in Anns
should be restricted to the situation, in so far as owners were concerned,
where they were also occupiers. He added that the solution to the difficulties
which arose from applying Anns to an owner was not necessary to the
determination or the instant appeal; it was sufficient to hold that Lambeth
owed no duty to Peabody to activate their relevant powers, notwithstanding that
they might reasonably have foreseen that failure to do so would result in
economic loss to Peabody because the purpose of avoiding such loss was not one
of the purposes for which those powers were vested in the local authority.
The House of
Lords in the Peabody case overruled a decision to this court in a case
of Acrecrest Ltd v W S Hattrell & Partners [1983] QB 260.
That was the case in which owners had sued architects for damages for
negligence and breach of contract, and the action between the owners and the
architects was compromised; but the architects had joined the local authority
who had approved the plans and supervised the works as third parties, claiming
contribution. This court held, affirming the decision of the trial judge, that
the local authority were liable for breach of a duty of care owed to the
owners, and their contribution had been assessed. But the House of Lords
rejected that view, rejecting in particular the view expressed in this court
that Lord Wilberforce’s speech in the Anns case was intended to lay down
that a local authority, in the exercise of its supervisory functions over
building projects, owed a duty of care to a building developer to see that his
property did not suffer damage even though there was no question of apprehended
injury to the health or safety of the developer.
The law has
been taken a little further in the House of Lords with the decision,
promulgated last week, in Curran v Northern Ireland Co-Ownership
Housing Association Ltd (not yet reported).* In delivering the only speech in the House of
Lords, Lord Bridge of Harwich said that their Lordships were:
entitled to be
wary of effecting any extension of the principle applied in the Anns case
whereby, although under no statutory duty, a statutory body may be held to owe
a common law duty of care to exercise its statutory powers to control the
activities of third parties in such a way as to save harmless those who may be
adversely affected by those activities if they are not effectivelycontrolled.
*Editor’s
note: Since reported at [1987] 2 WLR 1043.
Lord Bridge
also identified three elements which he described as being ‘fundamental to the
ratio’ in Anns. The first of these was this:
The statutory
power which the authority is alleged to have negligently failed to exercise or
to have exercised in a negligent way must be specifically directed to
safeguarding the public, or some section of the public of which the plaintiff
asserting the duty of care is a member, from the particular danger which has
resulted; in the Anns case the danger of buildings being erected on
inadequate foundations.
It seems to
me, therefore, that there are in these circumstances two answers to the plaintiffs’
claim. The first, and short, answer is that the plaintiffs were themselves
under no duty to anyone to make good the damage to the units; in so far as they
did so, they did it from enlightened self-interest in the preservation of their
investment, but not under any duty. Therefore, there is no reason why the local
authority should be regarded as under a duty to the plaintiffs in respect of
the approval of the plans and the supervision of the development. Second, as
the plaintiffs are merely owners who have never been in occupation of the
property, the duty which the local authority did owe was never owed to the
plaintiffs because the plaintiffs were under no risk to health or safety
themselves; they were not part of the section of the public to whom the duty
was owed.
Accordingly,
for my part I agree with the conclusion of His Honour Judge David Smout QC and
I would dismiss this appeal.
STEPHEN BROWN
and NEILL LJJ agreed and did not add anything.
The appeal
was dismissed with costs. Leave to appeal to the House of Lords was refused.
