Defective houses — Liabilities of builders, architects and local authority — Limitation of actions — Familiar problems in a case where decision of court on the merits and the statements of principle are somewhat obscured by rulings on procedural questions — Appeals against decisions of Judge Hayman, sitting as a deputy official referee — The main points of interest are the following — (1) The dates when the causes of action of the plaintiffs, purchasers of houses which were built with faulty foundations and too near trees, accrued were the dates when damage had occurred, not when it was discovered or discoverable: Pirelli case, overruling Sparham-Souter — (2) The third and fourth parties (the local authority and the architects) became defendants as from the date of joinder, but, as a result of the doctrine of ‘relation back’, the action against them was deemed to have started when the writ against the builders was issued, with the result that the plaintiffs’ claims against them were not statute-barred — (3) The plaintiffs’ claim against the local authority, based on negligence, required proof of ‘present or imminent danger to the health or safety of persons occupying’ the houses, but these words of Lord Wilberforce in the Anns case were not to be too restrictively interpreted: having regard to the extent of the cracks and the probability of progressive damage, there was imminent danger to the occupiers in the present case — (4) The suggestion made obiter by Lord Fraser in the Pirelli case that a cause of action might accrue, before damage actually occurred, if the defect was so gross that the house was ‘doomed from the start’ was described by Lawton LJ ‘as a cautionary dictum so as to leave for future consideration problems which might arise in exceptional cases’ — (5) An argument on behalf of one of the defendants, that claims were statute-barred because economic loss had in fact been suffered when the faulty foundations were laid, was rejected: a person could not recover on the ground of the diminution in the value of a building because of defective foundations which had not yet resulted in physical damage — The result of the appeals was that none of the plaintiffs was found to be statute-barred
These were various
appeals against orders of Judge Hayman, sitting as a deputy official referee.
The third defendants, Jamieson Greene Associates, architects, appealed against
part of the judgment which found them liable in damages to three sets of
plaintiffs, Mr and Mrs Ketteman, Mr and Mrs Hollebon and Mr and Mrs Grover. The
third and fourth plaintiffs, Mr and Mrs Griffin and Mr and Mrs Shepherd,
appealed against the judge’s decision that their claims were statute-barred
against the third defendants. All the plaintiffs appealed against the decision
that their claims against the second defendants, Mid-Sussex District Council,
were statute-barred. The litigation concerned five houses in Marle Avenue,
Burgess Hill, Sussex. The first defendants, who were the builders, took no part
in these appeals.
Michael Ogden
QC and Mark V Smith (instructed by Hewitt Woolacott & Chown) appeared on
behalf of the architects, Jamieson Greene Associates; JAD Owen QC and AJN
Brunner (instructed by Barlow Lyde & Gilbert) represented Mid-Sussex District
Council; and RE Auld QC and CJM Symons (instructed by Herbert Smith & Co)
all the plaintiffs.
Giving
judgment, LAWTON LJ said: These appeals are from judgments of His Honour Judge
Hayman, sitting as a deputy official referee, given on January 18 1983 and
February 14 1983 whereby he adjudged, inter alia, that all the
plaintiffs should have judgment against the first defendants; that the first,
second and fifth plaintiffs should have judgment against the third defendants
for varying sums, together with interest thereon; and that the claims of the
third and fourth plaintiffs against the third defendants should be dismissed,
as should be the claims of all the plaintiffs against the second defendants.
The third defendants, who are architects, have appealed against that part of
the judgment which was in favour of the first, second and fifth plaintiffs. The
third and fourth plaintiffs have appealed against that part of the judgment
which dismissed their claims against the third defendants. All the plaintiffs
have appealed against that part of the judgment which dismissed their claims
against the second defendants, who are the Mid-Sussex District Council. Both
the plaintiffs and the second defendants have given notice that they seek to
support such parts of the judgment as were in their favour on grounds
additional to those given by the judge.
The issues
The following
were the main issues raised in these appeals:
(1) When a building has
faulty foundations due to negligence, giving rise either to subsequent structural
damage or the need to take remedial action to avoid such damage, when does the
cause of action accrue?
(2) When a building has
faulty foundations due to negligence, so that its value as a building is
diminished, does a cause of action in tort arise and, if so, when?
(3) When after action brought
a new party is added as a defendant, is the date of joinder the material date
for deciding whether a claim is statute-barred for the purposes of the
Limitation Acts or is it the date of the issue of the writ?
(4) When, if a local
authority negligently fails to ensure compliance with building regulations so
that a building has faulty foundations causing subsequent structural damage, is
damage proved by evidence of a potential danger to health or safety?
The facts
The first
defendants, who have taken no part in these appeals, from 1970 onwards began
building houses on some land at Burgess Hill, Sussex. That land at all material
times came within the jurisdiction of the second defendants. Between June 1973
and June 1975 the first defendants built some semi-detached four-bedroomed
houses in Marle Avenue. Five, numbered 32, 34, 36, 38 and 42, were bought by
the plaintiffs; 32, 34, 36 and 38 in the early part of 1975, 42 in November
1975. They all occupied their houses soon after purchase. The houses had been
designed by the third defendants. The first defendants had laid the foundations
in accordance with the third
those on which the second defendants inspected them:
|
No 32 |
27-6-73 |
|
No 34 |
27-6-73 |
|
No 36 |
9-5-74 |
|
No 38 |
9-5-74 |
|
No 42 |
4-6-75 |
The foundations of all five houses were faulty. They were too
shallow; the in-filling was of the wrong kind; and they had been laid too near
some trees. For the purposes of these appeals it was accepted that the third
defendants had been negligent in siting the houses too near the trees and in
the design of the foundations and that the second defendants had been negligent
in failing to ensure that the first defendants complied with regulation D3 of
the Building Regulations 1972 (SI 1972, no 317) which prescribed standards for
foundations.
The summer of
1976 in Burgess Hill was hot and dry. These conditions were likely to cause
shrinking of ground under and around the foundations of houses. Between August
11 and September 9 1976 cracks in the walls of the houses were noticed on the
following dates:
|
No 32 |
14-8-76 |
|
No 34 |
11-8-76 |
|
No 36 |
11-8-76 |
|
No 38 |
3-9-76 |
|
No 42 |
9-9-76 |
The judge found that the cracks in the walls of nos 32, 34 and 42
had occurred not more than about a week before they were noticed. He said that
he was unable to find when the cracks in the walls of nos 36 and 38 had
occurred and that the third and fourth plaintiffs had not satisfied him that
they had occurred on or after July 30 1976, a date which he regarded as
important for reasons which will be stated later in this judgment. The cracks
in all the walls had been caused by the settling of the faulty foundations.
Expert evidence given by a Dr AG Weeks, on behalf of the plaintiffs, and
accepted by the judge, establish that the houses were at risk from further
growth of the roots of some of the trees and that underpinning would be
necessary to safeguard the houses for the future. While underpinning was being
done, the plaintiffs and their families would have to move out.
All the
plaintiffs decided to sell their houses rather than incur the considerable
expense and the inconvenience of underpinning. On sale they all sustained
substantial losses of about £15,000 each. Between the dates when the cracks
occurred and the sales the plaintiffs sustained inconvenience, some discomfort
and much worry; but there was no evidence of any deleterious effects upon their
health or that of their families.
The
litigation
The plaintiffs
decided to sue the first defendants. They issued their writ, endorsed with the
statement of claim, on May 27 1980. By their statement of claim they alleged
breach of contract and negligence. Both were denied. On April 28 1981 the first
defendants issued a third party notice against the second defendants, asking
for an indemnity or, alternatively, contribution. By their third party
statement of claim the first defendants alleged that the second defendants had
been in breach of duty to them and to each of the plaintiffs in approving plans
which failed to comply with the Building Regulations 1972 and in failing to
ensure that the foundations were properly laid. The third party denied these
allegations. On August 18 1981 they issued a fourth party notice against the
architects. Their fourth party statement of claim alleged that the architects
had been in breach of their duty to the first defendants and to each of the
plaintiffs in failing to use all reasonable care and skill in designing and
siting the houses and ensuring that the building works designed by them
complied with the Building Regulations.
The
plaintiffs’ advisers appreciated that the three parties before the court were
blaming each other for what had happened. Nevertheless, they decided not to add
the third and fourth parties as defendants as they could have done. When the
third and fourth parties were brought in, the plaintiffs had reason to think
that the first defendants were sound financially. Later, they doubted whether
they were. This was in June 1982. They decided to apply to the court for leave
to join the third and fourth parties as defendants. They did not anticipate any
opposition to their application because, as the law was then understood to be,
following the judgment of this court in Sparham-Souter v Town &
Country Developments (Essex) Ltd [1976] QB 858, the plaintiffs’ causes of
action did not accrue until the damage caused by the third and fourth parties’
negligence first manifested itself, and the persons who then had interests in
the houses first discovered it, or should with reasonable diligence have
discovered it. It followed that all the claims were probably within the periods
of limitation. The third and fourth parties’ experienced solicitors were of the
same opinion. The plaintiffs issued a summons which was heard by His Honour
Judge Sir William Stabb on June 25 1982. The third and fourth parties were
represented by counsel who, so we were told, raised no objection to the order
being made, the relevant parts of which were in this form:
It is ordered
that:
(1) The first, third party and the fourth party
be joined as defendants to the action.
(2) A statement of claim to be served on the
first, third party and the fourth party within 21 days.
(3) Defences to be served 14 days thereafter.
(7) The trial date for the 12 July to be vacated
and that the date for the trial to be fixed for the 22 November 1982 with an
estimated length of 10 days.
This order did
not state explicitly that the specially endorsed writ should be amended.
Counsel for the plaintiffs was instructed to settle an amended statement of
claim. This he did. On or about July 26 1982 a court clerk employed by the
plaintiffs’ solicitors went to the Central Office to get the amended specially
endorsed writ stamped. A clerk there refused to apply the stamp on the ground
that the order of June 25 1982 did not provide for the writ endorsed with the
statement of claim to be amended. It did so by implication because it provided
that the third and fourth parties should be joined as defendants to the action.
It is to be regretted that the clerk decided as he did. By letters dated July
30 1982 the plaintiffs’ solicitors sent the third and fourth parties an amended
specially endorsed writ together with a draft consent order to put right that
which the clerk in the Central Office had said was wrong. The fourth parties’
solicitors returned the draft consent order duly endorsed on August 4 1982. The
third parties did the same on August 9. The plaintiffs’ solicitors returned to
court on September 8 1982. His Honour Judge Newey then made an order in these
terms:
Upon reading
the parties’ agreed terms it is ordered that:
The
plaintiffs have leave to amend the statement of claim in the form annexed
hereto.
On September 9
1982 the writ was reissued. On September 17 1982 the plaintiffs’ solicitors
sent the third and fourth parties a copy of the order dated September 8 but
they did not serve them with a copy of the reissued amended writ, as they
should have done. Thereafter, the third and fourth parties behaved as if they were
the second and third defendants.
The trial
started on November 23 1982 and lasted some days. The second and third
defendants appeared by counsel and contested the claims on their merits. The
third defendants called evidence. The second defendants did not do so. At the
close of the evidence the third defendants’ counsel made his closing
submissions. This was probably on December 9 1982. The plaintiffs’ counsel then
began his. While he was doing so, on December 10, counsel became aware of the
judgment of the House of Lords in Pirelli General Cable Works Ltd v Oscar
Faber & Partners, which had been delivered on December 9 1982. It is
reported in the Law Reports in [1983] 2 AC 1. This judgment disapproved the
judgment of this court in the Sparham-Souter case and held that the date
of accrual of a cause of action in tort for damage caused by the negligent
design or construction of a building is the date when the damage comes into
existence and not the date when the damage is discovered or should with reasonable
diligence have been discovered. The leading speech was delivered by Lord Fraser
of Tullybelton. The other members of the committee agreed with it. At p 16 Lord
Fraser said:
The
plaintiff’s cause of action will not accrue until damage occurs, which
will commonly consist of cracks coming into existence as a result of the defect
even though the cracks or the defect may be undiscovered and undiscoverable.
There may perhaps be cases where the defect is so gross that the building is
doomed from the start, and where the owner’s cause of action will accrue as
soon as it is built, but it seems unlikely that such a defect would not be
discovered within the limitation period. Such cases, if they exist, would be
exceptional.
Counsel for
the second and third defendants appreciated that it might be possible to argue
on the evidence called that the houses had been ‘doomed from the start’. If
this were so, it was arguable that all
so as to add pleas in these terms:
If, which is
denied, the second defendants were guilty of negligence or breach of statutory
or other duty whether as alleged or at all, time for the purposes of the
Limitation Acts began to run on the occurrence of one of the following events:
(a) The submission to and/or approval by the
Local Authority for Building Regulation purposes of the plans drawn by the
third defendant and/or the approval by such authority of the excavations and/or
foundations of the plaintiff’s premises allegedly constructed in reliance upon
the said plans, whereby the homes were negligently designed and/or built as
alleged by the plaintiffs.
(b) The defective construction and/or completion
of the houses and/or their foundations, as alleged by the plaintiffs.
(c) The purchase by the plaintiffs and each of
them of their respective houses designed/or constructed defectively as alleged
by the plaintiffs.
(d) The settlement of the foundations wholly or
in part or other movement or damage at the said houses caused or contributed to
by the defective design and/or construction as alleged by the plaintiffs.
Each of the
second and third defendants will contend that each of the events above
mentioned occurred more than six years prior to the joinder of such defendants.
Paras (a), (b) and (c) of the proposed amendments were intended to raise the
‘doomed from the start’ defence. Para (d) reflected the actual date as fixed by
the Pirelli case; but, on the evidence which had been called, it was
likely that the foundations had settled when, or shortly before, the cracks had
appeared in the walls of the houses, that is to say more than six years before
September 9 1982 when the writ was reissued. After considering the well-known
authorities about the amendment of pleadings (see the Annual Practice
1982 and the notes under Order 20, rules 5 to 8), the judge gave the second and
third defendants leave to amend as they had requested. The plaintiffs’ counsel
had opposed the application for leave to amend, but the plaintiffs did not appeal
forthwith against the order. After judgment the plaintiffs were advised that
the amendments ought not to have been allowed. They have appealed to this court
against the order allowing the amendments and we granted them an extension of
time in which to do so.
When allowing
the amendments the judge asked counsel for all parties whether they wished to
call further evidence. Although, when the amendments were allowed, all the
counsel reserved their positions about calling further evidence, later they
decided not to do so.
Understandably,
on December 10 1982 counsel then appearing had not appreciated all the ways in
which the Pirelli case affected this case, particularly as to the
procedural steps which had been taken on and after June 25 1982. A weekend
intervened after December 10. On December 13 defending counsel told the judge
that they wished to argue that the claims were statute-barred in any event, as
the cracks had appeared over six years before the date of joinder which they
now appreciated had been on September 9 1982. The judge decided to adjourn the
case until after the Christmas vacation. During the adjournment, counsel for
the plaintiffs appreciated the difficulties which faced them if the effective
date for joinder was September 9 1982. He also appreciated that no application
had ever been made to extend the time for the joinder of the second and third
defendants pursuant to the order made on June 25 1982. That order had been made
under RSC Order 15, rule 6. By rule 8 of that order the amendment to the writ
had to be made within 14 days, which it was not, and served on any defendant
who was to be joined. As a result of counsel’s appreciation of the procedural
and limitation problems which arose, a summons was issued on January 7 1983,
returnable before the trial judge, asking for a declaration that proceedings
against the second and third defendants had been commenced, or were deemed to
have been commenced, on or before July 30 1982, and for an order that the time
limited for the joinder of the second and third defendants, pursuant to the
order of His Honour Judge Sir William Stabb, be extended to permit joinder on
September 9 1982. No application was made to extend time for the service of the
amended writ, which was reissued on September 9 1982.
In this court
Mr Ogden, on behalf of the third defendants, submitted that the omission to
serve the amended reissued writ meant that his clients had never been
effectively made parties to the action; and, if they had been, it was not until
after the date of the January 1983 order. There is nothing in that point. By
serving defences and taking part in the trial both the second and third
defendants had waived such rights as they had to have the amended reissued writ
served upon them.
On the hearing
of the summons issued on January 7 1983 the trial judge extended the time for
joinder to September 9 1982 without, as he said, the defendants’ counsel
raising any real objection to his doing so. He went on to consider that part of
the plaintiffs’ application asking for a declaration that the proceedings
against the second and third defendants had been commenced or should be deemed
to have been commenced on July 30 1982. Defending counsel submitted that a
direction in these terms would deprive their clients of their right to plead
that the claims were statute-barred. The plaintiffs’ counsel relied on what has
come to be known as the ‘relation back’ principle, that is to say, when
defendants are properly and unconditionally joined as parties, the action
against them is deemed to have started when the writ was first issued. The
second and third defendants also argued that, as they had been joined at a time
when the claims against them were statute-barred, they should be dismissed
forthwith from the action. After considering a number of authorities, the judge
decided on January 18 1983 to amend the order made on June 25 1982 by providing
that the joinder should have effect as from July 30 1982. The third defendants
submitted to this court that the judge had no jurisdiction to amend the order
and, even if he had, he should not have done so in the terms he did. Judge
Hayman delivered judgment in the action on February 14 1983.
The
procedural issues
It would be
convenient, in my opinion, to start the unravelling of this surprising mish-mash
of legal issues by considering the procedural ones. The first in point of time,
and importance, is that raised by the amendments which were allowed on December
10 1982. On that date the second and third defendants learned that they might
have a limitation defence which they had not known about before, that is to say
the houses might have been ‘doomed from the start’. This is what they wanted to
plead. Nothing more. They told the judge that they did not want to plead that
the claims had been statute-barred when they were joined as defendants. They
could have done so and, as I have already commented, if they had, on the
evidence, they could have argued that the foundations had settled when or
shortly before the cracks appeared. Para (d) of the amendments which were
allowed was in substance nothing more than what could have been put into the
defences served but which was not. In my judgment, an amendment in terms of
para (d) should not have been allowed. The amendments allowed in paras (a), (b)
and (c) were of a different kind. The second and third defendants and their
advisers had had no reason to think before December 10 that a cause of action
could accrue if a house were erected which, due to negligent design or
construction, was ‘doomed from the start’. They wanted that issue tried and, in
my judgment, they were entitled to have it tried, provided that the plaintiffs
were not prejudiced by a late amendment. They were not because they were given
an opportunity of adducing more evidence. They decided not to take advantage of
that opportunity.
The
backdating of the order
The order
joining the second and third defendants was made on June 25 1982. Because the
writ was not amended and re-served within the time required by Order 15, rule
8(4) the order was ineffective to make the third and fourth parties defendants.
It follows that they were not defendants on July 30 1982, the date referred to
in the trial judge’s order of January 18 1983. The reissue of the writ on
September 9 1982 and the subsequent course of events to which I have already
referred made them defendants as from that date but, in my judgment, not before
then. It is pertinent to note that the third defendants’ notice of appeal
assumes that they were parties as from September 9. It follows that the trial
judge had no jurisdiction to declare that the second and third parties were
defendants to the action before they were so under the rules of court. The
judge thought that he had power to make the declaration he did under Order 15,
rule 6(2). That rule cannot be used to declare parties to have been joined as
defendants before they have been. Apart altogether from these general
considerations, a judge at first instance cannot amend another judge’s order,
save by way of appeal or under the slip rule — and the slip rule did not apply
in this case. It follows, in my judgment, that the joinder of the second and
third defendants was effected on September 9 and not before. What are the
consequences in law of fixing this date?
Limitation
and the doctrine of relation back
The
plaintiffs, both before the judge and in this court, have submitted that, when
a person is joined unconditionally as a defendant in an action, he becomes a
party in that action, the starting date of which is the date when the writ was
issued. The consequence in law, so it was submitted, is that the period of
limitation in actions founded on tort is to be calculated, not from the date of
joinder, but six years back from the date when the action started, that is when
the writ was issued. Mr Auld, on behalf of the plaintiffs, invited our
attention to a long line of authority starting with Weldon v Neal
(1887) 19 QBD 394 and ending with Liptons Cash Registers & Business
Equipment Ltd v Hugin (GB) Ltd [1982] 1 All ER 595.
I do not
consider it necessary to consider this line of cases in detail. It was done by
Stephenson and Brandon LJJ in Liff v Peasley [1980] 1 WLR 781 and
by Judge Hawser, sitting as a judge of the High Court, in the Liptons case.
What these cases clearly establish is that a party who asserts, and on the
known facts correctly asserts, that the plaintiff’s proposed claim against him
is statute-barred ought not, in the absence of fraud or other special
circumstances, to be joined in the action as a defendant. What is not so clear
is the reason why he should not be joined. I have to admit that, until my
attention was invited to these cases, I had assumed that the reason was that no
useful purpose would be served by the joinder because the proposed defendant
could raise a limitation plea. Mr Auld submitted that this was not so,
notwithstanding that Brandon LJ (as he then was) in some comments in the Liff
case was firmly of the opinion that it was.
In Mabro
v Eagle, Star & British Dominions Insurance Co Ltd [1932] 1 KB 485,
which was concerned with an application to join a person as a plaintiff, Greer
LJ at p 489 stated the reason for refusing the application as follows:
The objection
to joining him was that if he were joined and treated as a plaintiff as from
the time the writ was issued the defendants would be deprived of the benefit of
the Statute of Limitations.
In Lucy
v WT Henleys Telegraph Works Co Ltd [1970] 1 QB 393, this court had to
consider a situation not unlike the present. The plaintiff issued a writ in
tort against the defendants (Henleys) who brought in ICI as a third party.
Later, she applied to join ICI as a defendant. By this time ICI could plead
that a claim against them was statute-barred. The court held (Lord Denning MR
dissenting) that ICI should not be added as a defendant, because to do so would
deprive them of a limitation defence. At p 410 Megaw LJ said:
There is,
then, a stark fact which counsel for the plaintiff did not seek to deny. If the
plaintiff were now to seek to issue a writ against the proposed new defendant,
ICI, she would be faced with an unanswerable plea of limitation, and the Act of
1963 would not provide any escape.
She might
escape from that position if the court were able to permit, and did permit, the
amendment of her existing writ against Henleys so as to join ICI as second
defendants. Once new defendants were joined, the action to which they would
then have become parties would be one single action, though against two
different defendants on two different causes of action. It would have been
commenced on the date when the original writ against Henleys was issued,
namely, November 18, 1965. That it would be one single action, and would be
treated as having been commenced at the date of the original writ, is clear in
principle and authority. It is the very reason why this court in Mabro v
Eagle, Star & British Dominions Insurance Co Ltd [1932] 1 KB 485
refused leave to amend a writ by joining an additional plaintiff. So here, if
leave were given to amend the writ and to join ICI as additional defendants,
‘the action’ in section 1(1) and section 1(3)(b) and section 3(4) of the Act of
1963 would be the action commenced in November, 1965; and ‘the relevant action’
for the purposes of section 2 of the Act would be the self-same action, so
commenced; being an action to which the second defendants, by leave of the
court, had been, or had been allowed to be, made parties. If leave were given
to amend the writ and join the proposed new defendants, no recondite argument
or subtlety of construction would be required.
Later at p 411
he said:
I did not
understand counsel for the plaintiff to contend that Mabro’s case was
wrong. Let it be accepted, however, that, since it was a decision of a court
consisting only of two members, Scrutton LJ and Greer LJ, it is not binding on
this court. So far as I am aware, the principle enunciated in that case has
never been challenged; and, with all respect, I think the principle is right,
as much now as it was 37 years ago. In any event, would it be appropriate to
overrule that long-standing authority in an application which is, at least in
some respects, ex parte, and in which the court has not had the advantage of
full argument upon it? With all
deference, I think not.
The Liff
case brought forward for consideration, seemingly for the first time in a line
of authority going back over 90 years, a House of Lords case, Byron v Cooper
(1844) 11 Cl & Fin 566. A bill for an account of tithes was filed against
five defendants before the expiration of the time limited by the Act 2 and 3
W4, c 100, s 3. After the expiration of that time four other persons were
introduced as defendants. The House of Lords adjudged that the suit as against
these latter defendants must be taken to have been commenced at the date at
which they were actually introduced into the Bill; and that they could not, by
relation backwards, be treated as defendants to the original Bill and that they
were consequently entitled to the protection of the statute. The only speech
was that of Lord Brougham. I have found difficulty in following his reasoning,
largely because the subject-matter of the case, tithes, and the procedure to
which he referred is outside my professional experience. Brandon LJ thought
this case was inconsistent in principle with the ‘relation back’ theory. The
mystery is why it was never referred to before 1980 and was overlooked when the
‘relation back’ theory was developing. Had there not been a long line of
authority, which includes a number of decisions of this court which are binding
on us, I would have adopted the reasoning of Brandon LJ, albeit it was obiter;
but binding precedents oblige me to accept the ‘relation back’ theory. It
follows that the action against the second and third defendants must be deemed
to have started when the writ was issued.
In the Liff
case Brandon LJ at p 803 invited attention to the difficulties which the
‘relation back’ theory creates when there is an arguable question whether the
claim against the person added, or sought to be added, as a defendant is
statute-barred or not. In September 1982, when the second and third defendants
were added, there could have been an argument as to whether the plaintiffs’
claims against them were statute-barred. This is what Judge Hawser, sitting as
a judge of the High Court, had to consider in the Liptons case (supra).
He adjudged, in my opinion rightly, that the court has a discretion under Order
15, rule 6(2)(b)(ii) to allow a joinder of a new defendant on terms that it
takes effect only from the date of the amendment of the writ.
The
doomed-from-the-start argument
I turn now to
the third defendants’ submission that, notwithstanding the application of the
‘relation back’ theory, all the plaintiffs’ claims were statute-barred because
their houses were ‘doomed from the start’. The plans and siting being faulty,
the foundations were bound to settle, thereby causing structural damage. The
first question to be decided might perhaps be what was the start — the
depositing of the plans with the second defendants? The completion of the foundations? The completion of the houses? I do not find it necessary to decide when the
start was because I am satisfied that this case, on its facts, must be decided
in the same way as the Pirelli case was, namely, that the plaintiffs’
causes of action accrued when the physical damage to their houses occurred. In
the Pirelli case the subject-matter of the dispute was a chimney, 160 ft
high, for which the defendants accepted responsibility for the way it had been
designed. Unsuitable materials had been used in its construction. Damage in the
form of cracks near the top of the chimney must have occurred within about 10
months of the building work being finished and about eight years before a writ
was issued. The damage could, with reasonable diligence, have been discovered
about two years after it occurred, but was not discovered until seven years
later. The issue was, when did Pirelli’s cause of action accrue? The trial judge found that, as a consequence
of the use of unsuitable materials, ‘cracks were . . . bound to occur’. Nevertheless,
it is clear that Lord Fraser did not consider this finding was such as to
justify his adjudging that the chimney was ‘doomed from the start’. In the two
passages in which he referred to buildings which were doomed from the start (p
16 G-H and p 18 H), he used the word ‘perhaps’ in relation to their existence.
At p 16 he said: ‘Such cases, if they exist, would be exceptional’. The facts
out of which the plaintiffs’ claims arise are broadly similar to those in Pirelli’s
case. They are not exceptional — if anything, all too common. Lord Fraser’s
reference to buildings which were doomed from the start was not necessary for
the decision he made. I would regard it as a cautionary dictum so as to leave
for future consideration problems which might arise in exceptional cases.
There remains
a further problem arising out of the plaintiffs’ claims against the third
defendants. The trial judge dismissed the third and fourth plaintiffs’ claims.
He found that they had noticed the cracks when they returned from holiday
which, in the case of the third plaintiff, was on August 11 1976, and in that
of the fourth plaintiff on, or a few days before, September 3 1976. As they had
not said how long they had been away, they had not proved that the
cracks had occurred on or after July 30 1976 which he had, in my judgment
wrongly, fixed as the beginning of the limitation period. Having regard to the
operation of the ‘relation back’ theory, the limitation period began on May 27
1974.
Economic
loss
Mr Ogden
submitted that, even if physical damage to the houses had occurred during the
limitation period, economic loss had been suffered by the first defendants when
the faulty foundations were laid and that the plaintiffs were in no better
position than they were. This meant that all the claims, except that of the
fifth plaintiff, were statute-barred. This submission was based on Junior
Books Ltd v Veitchi Co Ltd [1983] 1 AC 520. There are a number of
answers to this submission: a short one will suffice. The Junior Books
case was cited in Pirelli. It was not a limitation case at all. Their
lordships did not have to consider when a cause of action accrued. Both Lord
Fraser and Lord Brandon (who agreed with Lord Fraser’s speech in Pirelli)
had been members of the Appellate Committee when the Junior Books case
was decided. In Pirelli Lord Fraser at p 16 F-H rejected the notion that
a person could recover from diminution in the value of a building by reason of
defective foundations which had not yet led to physical damage to it, unless possibly
the work could be said to have been doomed from the start. He also considered
inapplicable submissions based on Howell v Young (1826) 5 B &
C 259 and Forster v Outred & Co [1982] 1 WLR 86 that a client
who receives negligent advice suffers damage when he acts on that advice. He
said at p 18H:
It seems to
me that, except perhaps where the advice of an architect or consulting engineer
leads to the erection of a building which is so defective as to be doomed from
the start, the cause of action accrues only when physical damage occurs to the
building.
I am satisfied
that Pirelli governs this case.
Present or
imminent danger to health or safety
I turn now to
the plaintiffs’ appeal against the dismissal of their claims against the second
defendants. The trial judge found that the plaintiffs had not proved that the
second defendants’ negligence in failing to enforce the building regulations
had caused them or their families any ‘present or imminent danger to their
health or safety’ and that such proof was essential to establish their claims.
He accepted that they had all suffered discomfort, inconvenience and mental
distress. The judge decided, however, that this was not enough. Mr Auld for the
plaintiffs submitted that these findings were wrong and arose from the judge
misdirecting himself as to the effect of Anns v Merton London Borough
Council [1978] AC 728. I find it convenient to go at once to the main point
in these submissions, namely that the judge should have decided that there was
a present or imminent danger to safety, if not health. There was structural
damage to the foundations and walls. This was likely to get progressively worse
and required remedial action to stop it doing so. The facts of this case were
substantially the same as those on which the House of Lords in Anns case
decided that a local authority could be in breach of duty to occupiers of
buildings, the foundations of which had been negligently inspected. The
‘alleged and agreed’ facts in Anns case are set out at p 733 of the
report. There was no allegation that, at any material time, the occupants of
the flats had been in present or imminent danger to their health or safety.
Para (h) of the statement of facts was in these terms:
No remedial
works to the block had as yet been undertaken by the plaintiffs nor had the
damage claimed against the second defendants been specified in the pleadings.
Such damage would apparently include the cost of work to remedy structural
damage to the block, to underpin the foundations to prevent further structural
movement, and the plaintiffs’ expenses in connection with vacating their
maisonettes temporarily while such works were undertaken.
Their
lordships must, so submitted Mr Auld, have decided that the structural damage
alleged was of such a kind as to be likely to cause danger to health or safety
of those occupying the flats if remedial work were not done. One of the items
of damage recoverable was adjudged to be ‘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’ (per Lord
Wilberforce at p 759 H). An absurd situation, said Mr Auld, would arise if the
occupiers of a building which was structurally unsound due to a local
authority’s negligence and which was likely to become a danger to health or
safety unless remedial action were taken had to wait until it was about to
collapse before his right of action against the local authority was accrued. Mr
Owen submitted that the occupier did have to wait until there was a present or
imminent danger to health or safety because that is what Lord Wilberforce had
said at p 760 B-C, viz:
It
the cause of
action
can only
arise when the state of the building is such that there is present or imminent
danger to the health or safety of persons occupying it.
Lord Diplock
and Lord Simon of Glaisdale said that they agreed with his speech. Having
regard to the absurdity to which Mr Auld invited our attention, it seems to me
that Lord Wilberforce’s use of the word ‘imminent’ should be understood to mean
a danger which was likely to arise soon — and how long ‘soon’ was in any case
would depend upon the facts and would be a matter of degree. The trial judge
did not consider the factor of the likelihood of danger arising soon. He should
have done so. Having regard to the nature and extent of the cracks and the
likelihood that the damage would be progressive, I would adjudge that there was
an imminent danger to the safety of the occupiers of all five houses.
Mr Auld also
submitted that Lord Wilberforce’s speech should not be understood in a
restrictive sense based upon the words ‘present or imminent danger’. When
considered as a whole, its true ratio is that a cause of action lies against a
local authority when its breach of duty has failed to prevent harm being caused
to the occupiers of property in accordance with the ordinary principles of
damage in negligence actions. This approach enabled him to submit that danger
to health or safety was only one form of harm. Other forms of harm could be
proved such as the discomfort, inconvenience and mental distress which the
trial judge found had been caused to the plaintiffs. He pointed out that
section 61 of the Public Health Act 1936, as amended by the Public Health Act
1961, empowered the minister to make regulations for purposes which had no
connection with health and little, if any, with safety: for example, he could
make regulations, as regards buildings, relating to the space around them,
their lighting, ventilation and height — see section 61(1)(i)(b) and (c). The
building regulations applicable to these claims were made under these powers.
Since the passing of the Health and Safety at Work etc Act 1974, which by
section 61 substituted a new section 61 in the Public Health Act 1936, building
regulations may be made for the purpose of securing the health, safety, welfare
and convenience of persons in or about buildings. Existing regulations were to
have effect as if made under section 61 of the 1936 Act as substituted by the
1974 Act. The 1974 Act, however, had not come into force when the plaintiffs
first occupied their houses. If the House of Lords in the Anns case had
had the benefit of Mr Auld’s argument as set out above, their lordships might
not have confined their attention to dangers to health or safety. Counsel for
the respondents in that case did suggest that the local authority’s duty
related to health, safety and comfort (see p 744). The fact is, however, that
their lordships decided that the duty owed by the local authority only arises
when the state of the building is such that there is present or imminent danger
to the health or safety of persons occupying it. It is not for this court to alter
the ratio decidendi of Anns case.
I would
dismiss the third defendant’s appeal against the first, second and fifth
plaintiffs. I would allow the third and fourth plaintiffs’ appeal against the
third defendants and the appeal of all the plaintiffs against the second
defendants. As between the second and third defendants the apportionment of
damage should be that which the trial judge said he would have awarded had he
found against the second defendants.
STEPHEN BROWN
LJ agreed and did not add anything.
Also agreeing,
PARKER LJ said: On the special point raised on the appeal of the plaintiffs
against the second defendants I have nothing to add. For the remainder, I can
express my views shortly.
The date
of joinder
Having regard
to the facts (1) that the writ was reissued on September 9 (2) that the second
and third defendants delivered defences to the amended statement of claim
enclosed thereon, (3) that thereafter they defended the claims made against
them during a trial which occupied several days, (4) that they sought and
obtained leave to amend their defences during closing speeches, (5) that,
during the argument in January, they sought to have the claims against them
dismissed on the basis that they were statute-barred by the time of joinder on
September 9, and finally (6) that in grounds 1,
date of joinder was September 9, it is not, in my judgment, open to them now to
contend either that they have never been joined at all or that, if they have
been joined, joinder did not take place until after the extension of time
granted in January. Whatever technical points might be advanced on the basis of
the Rules of the Supreme Court, it is now much too late to take them. The date
of joinder must be taken to be September 9.
Amendment
of the defences to plead limitation
If, upon
joinder, there is a relation back as, in common with the judgment given by
Lawton LJ and for this reason, I hold that there is, any amendment seeking to
raise limitation in respect of any cause of action accruing after May 26 1974
ought to be and to have been refused, because any such amendment would be
purposeless. It would inevitably fail. Since none of the plaintiffs purchased
until 1975, it follows that subparas (c) and (d) of the amendments should not,
in any event, have been allowed.
On the face of
it, it would appear that no cause of action could arise before purchase, for
until purchase no purchaser can have suffered any damage, physical or economic,
but in Pirelli Lord Fraser at p 18E said that the relevant duty was owed
to owners as a class and that, if time begins to run against one owner, it also
runs against his successors in title. Mr Ogden contends that the cause of
action arises in the original building owner and that time begins to run
against him and all subsequent owners from as early as the submission of plans
for approval or at various later stages down to completion of construction.
This contention is based on the combination of the class duty already
mentioned, the ‘doomed from the start’ references cited by Lawton LJ in his
judgment and the economic damage argument based on the Junior Books
case. Unless driven by authority I would not be prepared to hold that time
would begin to run against anyone other than the original building owner prior
to completion of the building. I am not so driven. Indeed, it follows, in my
judgment, from Pirelli that, on the facts of this case, there was no
cause of action prior to actual damage. Accordingly, none of the plaintiffs are
time-barred.
I desire to
leave open the question whether a defendant should be permitted to amend to set
up limitation where there is ‘a change in the law’ as in the present case, and
thus whether the defendants should or should not have been permitted to rely on
the cause of action arising earlier than the date upon which it had hitherto
been held to arise. In general, a defendant should, no doubt, be given leave to
amend, upon appropriate terms, to rely on the law as it stands up to judgment,
but limitation may be a different case. If, for example, a plaintiff in such a
case as this has, in the course of negotiations, taken care to issue a
protective writ shortly before the limitation period would, on plain Court of
Appeal authority, expire, it is, on the face of it, unjust if, perhaps years
later, and just before judgment, the House of Lords overrules the Court of
Appeal authority and he is then held to be statute-barred. This is no doubt
why, when limitation periods are changed by statute, Parliament takes care to
say that the change shall not affect any existing action. An even more extreme
case would be where the House of Lords overruled a previous decision of its
own. This would, on any view, be a change in the law, not merely the correction
of the Court of Appeal’s understanding as to the state of the law.
As a result of
the foregoing, it is unnecessary for me to deal with any of the other points
advanced. I should, however, add, first, that I agree that the judge had no
jurisdiction to amend the order of June 25 and, secondly, that, even if the
relation back principle is not right and the correct date for the purposes of
limitation is September 9, I would allow the appeal as to subpara (d) of the
amendment. It was clearly granted by the judge upon a mistaken view of the
situation and the fact that leave to amend is discretionary is therefore of no
significance. In the circumstances of the case, no amendment should be allowed.
Accordingly, even if the relation back principle is wrong, I would have reached
the same conclusion.
The court’s
order was in accordance with the last para of Lawton LJ’s judgment. The
plaintiffs’ costs were apportioned as to 25% to the Mid-Sussex District Council
and as to 75% to the architects.
