Claimants purchasing dwelling-house from vendor – Parties not knowing of designation of property as defective – Claimants discovering defects after purchase – Whether local authority owing statutory duty to claimants by virtue of section 562(3) of Housing Act 1985 – Claim dismissed – Appeal dismissed
In April 1972 the defendant council sold a house at 88 Ringwood Hill, Newport, to P, who subsequently sold it to V. In March 1987 the claimants purchased the house from V for £24,000 with the assistance of a building society loan of £22,800 – 95% of the purchase price – secured by a mortgage over the property. At the time of sale, neither the claimants nor V were aware of the fact that the house, which was of the Schindler and Hawksley SGS type, was one of approximately 200 houses, built in Newport as the Ringwood Estate in 1955 and 1956, that had been designated as defective by the Secretary of State under section 528 of the Housing Act 1985. Under the Act, V would have been a person eligible for assistance had he applied before the cut-off date of April 1985, but the claimants were not eligible.
In 1989 the claimants learnt of the designation. They found themselves caught in a mortgage trap from which they could not escape, since they could not afford to remedy the defects and there was virtually no market for designated property because purchasers could not obtain mortgages on such property. The claimants brought proceedings against the council for damages for breach of a statutory duty that they claimed was owed to them under section 562(3) of the Act. That section provided: “If at any time it becomes apparent to a local housing authority that a person is likely to be eligible for assistance in respect of a defective dwelling within their district, they shall forthwith take such steps as are reasonably practicable to inform him of the fact that assistance is available.” The judge dismissed the claim against the council on the grounds that the duty imposed by the section was not owed to the claimants and that the council were not in breach of that duty in any event.
The claimants appealed, contending that although V was the “person likely to be eligible for assistance”, it did not follow that the council’s duty was owed only to V or that, if the duty were not discharged, only V could sue for loss caused by the failure to discharge it.
Held: The appeal was dismissed.
1. A claim for breach of duty under section 562(3) was not an action based on the common law duty of care arising either from the imposition of a statutory duty or from the performance of it. Consequently, the person to whom the duty was owed was to be identified by construing the statute and not by asking whether the council could have foreseen that the claimants would suffer loss and damage if the council failed to exercise proper skill and care.
2. A reading of the Act and, in particular, section 562 made it clear that duties to give notice and provide information were imposed to enable those eligible for assistance to apply within a 10-year period. Information was not to be given for the purpose of preventing a defective house from being sold on without the vendor or the purchaser knowing of the defects. The Act suggested a belief on the part of parliament that, after the cut-off date, the categories of defective houses would be generally known, or at least generally known to surveyors and valuers, and that this would afford sufficient protection to potential purchasers. Parliament had intended eligibility for assistance to end if there was a sale after the cut-off date. It was clear, therefore, that the duty under section 562 was not owed to persons, such as the claimants, who bought houses after the cut-off date when the houses were already in private hands. Moreover, if such houses were still owned by the local housing authority, then the duties under section 563, and not those under section 562, were applicable.
John MacDonald QC and Sara Hargreaves (instructed by Granville-West Chivers & Morgan, of Risca) appeared for the claimants; Nigel MacLeod QC and Jonathan Karas (instructed by the solicitor to Newport Borough Council) appeared for the defendants.
Thomas Elliott, barrister
