Preliminary issues on points of law–Vendors of restaurant premises can be liable as a matter of law to purchasers for negligence–Alleged faulty construction of building and in particular central-heating and hot-water system–Fact that it was a ‘do-it-yourself’ job by amateurs immaterial–Condition 4(2)(a) of Law Society’s General Conditions of Sale (1970 edition) primarily a conveyancing condition and not a good defence to action for negligence–Must be clear exemption clause with express reference to negligence
These
proceedings consisted of the trial of two preliminary issues ordered to be
tried by the Master in an action brought by Godfrey Thomas Hone and his wife
Bridget Agnes Hone, the purchasers of restaurant premises in Bradford, against
the vendors, Terence Benson and his wife, Betty Marie Benson, for negligence in
the construction of the premises and the installation of the hot-water and
central-heating system. The first issue was whether the claim for negligence as
pleaded was properly founded and the second issue was whether Condition 4(2)(a)
of the Law Society’s General Conditions of Sale (1970 edition) was capable of
excluding the defendants’ liability for negligence.
R McAulay
(instructed by Barlow, Lyde & Gilbert) appeared on behalf of the
plaintiffs; I Davies (instructed by Lieberman, Leigh & Co, agents for Ake
Gould & Stewart, of Bradford) represented the defendants.
Giving
judgment, JUDGE EDGAR FAY said: In this case I am trying two preliminary issues
ordered by the Master to be tried in this case. In order to explain those
issues I must say
husband and wife restaurant premises in Bradford. By the statement of claim the
plaintiffs allege that the defendants, ie the husband and wife who were the
vendors, themselves constructed the premises. Paragraph 1 of the statement of
claim says:
. . . the
defendants designed, constructed and installed in the said restaurant and buildings
a hot-water and central-heating system.
The statement
of claim goes on to allege that the construction of the premises and, in
particular, the water supply and the central-heating supply was negligently
done with the consequence that damage occurred to the plaintiffs after they had
completed the conveyance of the premises. By paragraph 7 of the statement of
claim, they say:
The said
matters were caused by the negligence of the defendants, their servants and
agents.
In the further
and better particulars they allege that the work upon the premises which they
say was negligently done was conducted by the male defendant, Mr Terence
Benson. They say that he conducted the whole of the work. They say that the two
defendants employed one J Hopwood to install the hot-water and central-heating
system. The said Hopwood was the servant of and/or worked to the design of the
defendants. As regards to the second defendant, they say:
Save insofar
as the First Defendant personally did any work, the answers under (1) and (2)
above are repeated, ie that the second defendant did all the work and employed
Hopwood.
There are
further allegations in further particulars as follows:
Further or in
the alternative, at all material times the defendants knew, contemplated or
ought to have had in contemplation that they would sell and convey the said
buildings land and restaurant within a short time (as they in fact did) or
later. They further knew, contemplated or ought to have had in contemplation
that any purchaser, and particularly any one purchasing within a short time,
would know the said buildings to have been recently constructed (which
information was specifically communicated by the defendants to the plaintiffs
prior to the purchase) and would therefore be unlikely to have the same
surveyed before purchase and/or completion. . . .
Those are the
only parts of the statement of claim which I need read. It is thus an unusual
claim; it is a claim in the tort of negligence by purchasers of premises
alleging that the vendors themselves or by their servants for whom they are
vicariously responsible were guilty of negligence in and about the construction
of the building and the installation of the water system.
Now this is an
uncommon cause of action and the Master ordered this as the first issue to be
tried as a preliminary issue:
1. Do
the facts pleaded in the statement of claim and in particulars delivered
thereunder raise a duty of care by the defendants to the plaintiffs so as to
found the claim in negligence pleaded in paragraph 7 thereof, assuming such
facts to be proved?
As I said to
counsel, I am trying a demurrer.
The other
issue I am trying arises out of a claim in the defence added by amendment and
reading as follows:
. . . the
said sale was subject to the Law Society’s General Conditions of sale (1970
Edition) and the defendants will rely on Condition 4(2)(a) thereof.
Condition
4(2)(a) in fact reads:
The purchaser
shall buy with full notice of the actual state and condition of the property
and shall take it as it stands save where it is to be constructed or converted
by the vendor.
The second
issue ordered is this:
If the
plaintiffs’ claim for negligence is properly founded on the basis aforesaid . .
. does condition 4(2)(a) of the Law Society’s Conditions of Sale (1970 Edition)
operate so as to exclude the defendants’ liability for such negligence?
These are two
issues within a narrow compass and I must now refer to the arguments advanced
for and against the findings which I am asked to make.
Mr McAulay,
for the plaintiffs, rests his case upon the major issue, ie whether or not the
pleadings disclose negligence, upon the dicta of two distinguished
courts in well-known cases of recent origin and concerned primarily with the
liability of local authorities for defects in buildings. The first in this case
which originated that doctrine is Dutton v Bognor Regis Urban
District Council [1972] 1 QB 373 and the other is Anns and Others v Merton
London Borough Council [1977] 2 WLR 1024 in the House of Lords. It is
clear, and there is no question about it, that the observations in those cases
touching upon the present matter are all obiter, but they are strong
obiter and I must pay full attention to them. In Dutton v Bognor
Regis Lord Denning MR, as part of the consideration of the case against the
urban district council, considered the position of the builder of property and
he referred to this at p 392 and succeeding pages. He said:
Mr Tapp
submitted that the inspector . . .
(ie the local
authority’s inspector)
. . . owed no
duty to a purchaser of the house. He said that on the authorities the builder,
Mr Holroyd, owed no duty to a purchaser of the house. The builder was not
liable for his negligence in the construction of the house. So also the
council’s inspector should not be liable for passing the bad work. I would
agree that if the builder is not liable for the bad work the council ought not
to be liable for passing it. So I will consider whether or not the builder is
liable. Mr Tapp relied on Bottomley v Bannister [1932] 1 KB 458.
That certainly supports his submission. But I do not think it is good law
today.
Then the
learned Master of the Rolls considered the cases and the way in which they had
developed and the impact upon the early 19th-century cases of Donoghue v
Stevenson [1932] AC 562. He referred to the decision in the Northern
Ireland case of Gallagher v N McDowel Ltd [1961] NI 26 where the
Northern Ireland Court of Appeal held that the contractor who built the house
negligently was liable to a person injured by his negligence and he then
pointed to the conflict between a decision of that sort and the case of Bottomley
v Bannister. He went on:
There is no
sense in maintaining this distinction. It would mean that a contractor who
builds a house on another’s land is liable for negligence in constructing it,
but that a speculative builder, who buys land and himself builds houses on it
for sale, and is just as negligent as the contractor, is not liable. That
cannot be right. Each must be under the same duty of care and to the same
persons. If a visitor is injured by the negligent construction, the injured
person is entitled to sue the builder alleging that he built the house
negligently. The builder cannot defend himself by saying ‘True I was the
builder; but I was the owner as well. . . .’
I hold
therefore . . .
he says, a
little further down, p 394
. . . that a
builder is liable for negligence in constructing a house–whereby a visitor is
injured–and it is no excuse for him to say that he was the owner of it. In my
opinion, Bottomley v Bannister is no longer authority.
That was part
of the reasoning which led the learned Master of the Rolls to his decision
against the local authority. That reasoning was accepted in the House of Lords
when the case of Anns came before them recently. (They were hearing it
exactly a year ago today, I see.) In Anns
there was a similar claim against a local authority in respect of failure to
make a proper inspection of foundations; it was a case of subsidence and not of
damage to persons but of damage to the actual property concerned as, indeed,
was Dutton v Bognor Regis. In considering the liability of the
local authority, Lord Wilber-
duty of care’ said this, at p 1032:
Through a
trilogy of cases in this house–Donoghue v Stevenson [1932] AC
562, Hedley Byrne and Co Ltd v Heller & Partners Ltd [1964]
AC 465 and Dorset Yacht Co Ltd v Hone 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
that 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 per Lord Reid at p 1027.
Examples of this are Hedley Byrne’s case . . . and Weller & Co
v Foot and Mouth Diseases Research Institute [1966] 1 QB 569.
Coming through
the application of those principles to the position of the builder who has been
negligent, at p 1038, Lord Wilberforce said:
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 . . . Gallagher’s case
expressly leaves open the question whether the immunity against action of
builder owners, established by older authorities . . . 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 ‘for, fraud apart, here is no law against letting a tumbledown
house’ . . . But leaving aside such cases as arise between contracting parties,
when the terms of the contract have to be considered . . . 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 in Dutton
v Bognor Regis Urban District Council [1972] 1 QB 373, 392-394.
Lord Salmon,
who gave the other opinion, agreed and I need not cite his words.
Now I find
that those authorities although not strictly binding upon me are authorities
which I should follow. It is clear, I think, that in a case where there has
been building work done by a builder and done negligently he is liable to
persons who have suffered injury in consequence of his work. The peculiarity of
the present case is that, unlike the vast majority of cases, the building work
was not conducted by a building contractor but by building owners who, so far
as we know from the pleadings, were amateurs, although assisted by a skilled
plumber it is said, namely, the person whose name appears on the pleadings.
In the first
place, in response to the suggestion of Mr McAulay that liability is thus
established, Mr Davies, for the defendants, says that I must consider carefully
whether there is a duty of care lying not in a case such as Anns or Dutton
upon the professional builder but upon an amateur who in these do-it-yourself
days does work on his own account. I find myself unable to appreciate any distinction
in law between the two. A person who takes on skilled work holds himself out to
be judged by the standard of skill of those able and qualified to do such work.
I can see no reason in law or justice–indeed, I can see reasons for the
contrary–why those who, it may be unskilfully, do do-it-yourself building work
should be held just as liable as a professional builder. It seems to me that a
purchaser from the defendants in this case is the neighbour (as that word was
used in Donoghue v Stevenson) and to him (or them in this case)
the duty of care was in fact owed.
Coming to Mr
Davies’s arguments, I turn to his initial argument, which is that upon the
pleadings there is no case against the female defendant. That rests upon the
particulars given of the work which first the male defendant and secondly the
female defendant are alleged to have done. It is said that since the
particulars which I have read allege that the whole work was done by Mr Benson
and that Mrs Benson did all the work save in so far as her husband did it,
then, since he is supposed to have done it all, therefore she can have done
none. That is a nice piece of fine arguing; I think the answer to it is that it
is perfectly possible for two people jointly to do the same work. I find that there
is a case on the pleadings as properly construed against Mrs Benson.
Coming back to
the mainstream of the argument, I have found that the plaintiffs were
neighbours within the meaning of the law of negligence and I turn to the second
part of Mr Davies’s argument, which is that I should stop at Lord Wilberforce’s
second point. Lord Wilberforce, it will be recalled from the passage I have
cited, said that first, one has to consider the neighbourhood point, but
secondly, if one answers that in the affirmative, one has to consider whether
there are considerations which ought to negative or limit the scope of the
duty. Mr Davies says that here there are two such matters. One is the
opportunity a purchaser has to survey, which interposes a factor which, as it
were, breaks the chain of causation. I think that one of the answers to that
lies in the allegation which I must take to be proved that it was within the
contemplation of the defendants that the purchaser was unlikely to have a
survey made in the circumstances of the case.
The other and
more substantial point to my mind is that the peculiarity here which ought to
limit the scope of the duty is the existence of a contract of purchase and sale
of the property between the parties. It has been the case over the centuries
that on sales of real property caveat emptor and there is no doubt that
that principle, which is dear to conveyancers, is in collision with this
extension–and it is an extension–of the law of negligence to cases of this
kind. But it seems to me that I can find in that fact no bar to the application
of the principles laid down in the Court of Appeal and the House of Lords which
I follow. They are said, in the judgments and opinions which I have cited, to
apply to the case of the vendor and purchaser where the vendor is a builder and
it seems to me that no valid distinction or no distinction of principle can be
drawn between the case of the vendor who is a professional builder, or for that
matter a professional estate developer, and a vendor who is a private
individual who initially built for his own occupation. It is not in controversy
that this restaurant was built for the occupation of the defendants although
they occupied it for an extremely short time. I am afraid I find no ground
therefore there to accede to Mr Davies’s argument that I should limit the duty,
even if I find it to exist, so as to exclude the plaintiffs from its operation.
The result is
that I find, in the terms of the issue that is put to me, that the facts
pleaded in the statement of claim and in the particulars delivered thereunder
do raise a duty of care by the defendants to the plaintiffs so as to found
their claim in negligence pleaded in paragraph 7.
I turn to the
second matter which relates to the defendants’ plea that Condition 4 (2) (a) of
the Law Society’s General Conditions of Sale (1970 Edition) affords a defence.
On the face of the words, and if a beneficial construction was given to this
particular condition, it would appear that such a defence was afforded because
it is part of the bargain between the parties that the purchaser shall buy with
full notice of the actual state and condition of the property and shall take it
as it stands. But it must be remembered that these are conditions of sale which
govern primarily the conveyancing of the property. The effect of this certainly
would be that, had the defects been found between contract and conveyance, then
the purchaser would not have been entitled by reason thereof to call off the
sale or to ask for an abatement in price. That is the primary object, as it
seems to me, of conditions of this kind and it is an open question whether in
any particular circumstances such a condition survives the date of conveyance.
But I need not decide the rather difficult question whether this condition does
survive conveyance because I find Mr McAulay’s argument, founded upon the
recent case of Smith and Another v South Wales Switchgear Co Ltd
[1978] 1 WLR 165, to carry home his case upon this issue. What he was saying is
that the defendants are seeking to use this condition as an exemptive
condition. And so they are–whether it is or not may be another matter, but if
it is to avail them, it is to avail them as a defence to their prima facie
liability for negligence. It is settled law that if there is to be in a
contract an exemption of liability for negligence this must be set out in clear
words referring expressly to negligence. That seems to have been in a state of
some confusion owing to a recent case of Gillespie Bros & Co Ltd v Roy
Bowles Transport Ltd [1973] QB 400, but the House of Lords have now
pronounced upon this matter in the case of Smith v South Wales
Switchgear Co Ltd and have gone back to the law as it was laid down in Canada
Steamship Lines Ltd v The King [1952] AC 192 and it disapproved of
what was said by the Court of Appeal in Gillespie.
What is said
at the bottom of p 168 in the opinion of Lord Dilhorne is this:
When one
considers clause 23(b) by itself
–that was the
clause under consideration in that case–in relation to the three tests
–those are the
tests laid down in the Canada Steamship Lines case–
I agree with
my noble and learned friend, Lord Fraser, that it did not expressly indemnify
the respondents from the consequences of their or their servants’ negligence,
and so did not satisfy the first test. To satisfy that, there must be a clear
and unmistakable reference to such negligence; that is shown by the words ‘if
there is no express reference to negligence’ with which the second test begins.
Then he refers
to the case of Gillespie Bros v Roy Bowles and says:
With that
conclusion I must express my dissent.
So I take it
that the principle of Canada Steamship Lines is now restored and that if
this is to avail the defendants it is an exemption clause and I hold that it is
not apt in its wording to exempt from liability for negligence.
It follows
that I pronounce upon the second issue by saying that if the plaintiffs’ claim
for negligence is properly founded on the basis aforesaid, Condition 4 (2) (a)
of the Law Society’s Conditions of Sale (1970 Edition) does not operate so as
to exclude the defendants’ liability for such negligence.
Those are my
findings upon the two issues.
Judgment on
the two preliminary issues was given in favour of the plaintiffs with costs.
