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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Anns v Merton London Borough Council [1977] UKHL 4 (12 May 1977)
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Cite as: [1978] AC 728, [1977] 2 All ER 118, [1977] UKHL 4

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JISCBAILII_CASE_TORT
JISCBAILII_CASE_CONSTITUTIONAL

    Die Jovis, 12° Maii 1977

    Parliamentary Archives,
    HL/PO/JU/4/3/1299

    HOUSE OF LORDS

    ANNS AND OTHERS
    (RESPONDENTS)

    v.

    LONDON BOROUGH OF MERTON
    (APPELLANTS)

    Lord Wilberforcc
    Lord Diplock
    Lord Simon of Glaisdale
    Lord Salmon
    Lord Russell of Killowen


    Lord Wilberforce

    MY LORDS,

    This appeal requires a decision on two important points of principle as to
    the liability of local authorities for defects in dwellings constructed by builders
    in their area namely:

    1. Whether a local authority is under any duty of care towards owners

    or occupiers of any such houses as regards inspection during the
    building process.

    2. What period of limitation applies to claims by such owners or occupiers

    against the local authorities.

    Before these questions are discussed it is necessary to explain at some tedious
    length the procedural background which unfortunately complicates the
    decision-making task.

    Procedural issues

    The present actions were begun on 21st February 1972. The plaintiffs
    are lessees under long leases of seven flats or maisonettes in a two storey block
    at 91, Devonshire Road, Wimbledon. The owners of the block and also the
    builders were the first defendants, Walcroft Property Company Ltd.: after
    its completion in 1962 they granted long leases of the maisonettes: the fifth
    and sixth plaintiffs (O'Shea) are original lessees, having acquired their lease in
    1962; the other plaintiffs acquired their leases by assignment at dates in 1967
    and 1968.

    The local authority at the time of construction was the Mitcham Borough
    Council: on 9th February 1962 they passed building plans for the block,
    which were deposited under the byelaws. Later this council was superseded
    by the London Borough of Merton, the second defendants, which took over
    their duties and liabilities.

    In February 1970 structural movements began to occur resulting in cracks
    in the walls, sloping of floors, etc. The plaintiffs' case is that these were due
    to the block being built on inadequate foundations, there being a depth of
    2' 6" only instead of 3' 0" or deeper as shown on the deposited plans. On
    21st February 1972 writs were issued against both defendants—the separate
    proceedings were later consolidated. As against the first defendants (the
    builders) the claims were for damages for breach of contract and also for
    breach of the implied undertaking under section 6 of the Housing Act 1957.
    As against the council the claims were for damages for negligence by their
    servants or agents in approving the foundations upon which the block was
    erected even though (sic) they had not been taken down to a sufficient depth
    and/or in failing to inspect the said foundations. This claim was expressed
    as follows:

    " 5. Further or in the alternative the said damage has been caused by
    " the negligence of the Second Defandants in allowing the First Defendants
    " to construct the said dwelling house upon foundations which were only
    " 2' 6" deep instead of 3 feet or deeper as required by the said plans,
    " alternatively of failing to carry out the necessary inspections sufficiently
    " carefully or at all, as a result of which the said structural movement
    " occurred."


    2

    As particulars given under this paragraph the plaintiffs stated:

    " Under the Building Byelaws the Second Defendants were under a
    " duty to ensure that the building was constructed in accordance with
    " the plans, and the building should have been inspected inter alia before
    " the foundations were covered.

    " The Plaintiff's case is that the Second Defendants should have carried
    " out such inspections as would have revealed the defective condition of
    " the said foundations, that if any inspection was made then it was carried
    " out negligently, and that if no inspection was made that in itself was
    " negligent."

    Both the allegations in the statement of claim and those in the particulars
    were to some extent misconceived as I shall show later.

    The first defendants did not put in any defence but undertook to carry out
    certain work. They did not appear in the hearings to be mentioned or on
    this appeal.

    The second defendants filed a defence on 8th February 1973 and on 9th
    October 1974 the consolidated actions were transferred to an official referee.
    On 16th October 1975 an order was made,

    " that the issue between the Plaintiffs and the 2nd Defendants whether
    " claim is statute barred be tried on 24th October 1975 ".

    On 24th October 1975 this issue was tried by His Honour Judge Edgar Fay,
    Q.C., who decided that the claims, were statute barred. In a written judgment
    His Honour held that time began to run from the date of the first conveyance
    of each of the properties concerned: the latest of these dates was 5th November
    1965, which was more than six years before the date of the writ. In so deciding
    the judge (correctly) followed an observation (obiter) by Lord Denning,
    M.R. in Button v. Bognor Regis U.D.C. [1972] 1 Q.B. 373, 376.

    The plaintiffs appealed to the Court of Appeal from this decision on 17
    February 1976. Before the appeal came on, namely on 10 February 1976 the
    Court of Appeal (Lord Denning, M.R., Roskill and Geoffrey Lane, L.JJ.) in
    Sparham-Souter v. Town and Country Developments (Essex) Ltd. [1976] 1 Q.B.
    858 decided that the cause of action did not accrue before a person capable of
    suing discovered, or ought to have discovered, the damage. Lord Denning,
    M.R. in his judgment expressly disavowed his earlier dictum in Button's case.
    On this view of the matter none of the present plaintiffs' claims would be
    statute barred. On the appeals in the present case coming before the Court
    of Appeal on 1st March 1976, that court, without further argument, following
    Sparham-Souter's case, allowed the plaintiffs' appeal and gave leave to appeal
    to this House. That appeal would, of course, have been confined to a pre-
    liminary issue of limitation.

    However before the appeal to this House came on, the second defendants
    (the council) presented a petition, asking for leave to argue the question
    whether the council was under any duty of care to the plaintiffs at all.

    This question had not been considered by Judge Fay, or by the Court of
    Appeal, because it was thought, rightly in my opinion, that it was concluded by
    Button's case. Thus the council wished to challenge the correctness of the
    latter decision. In that case the defendant Council of Bognor Regis was held
    liable for damages in negligence (viz., negligent inspection by one of its officers),
    consisting of a breach of a duty at common law to take reasonable care to see
    that the byelaws were complied with. On 21st October 1976 this House
    acceded to the petition. The appellants thus have leave to argue that in the
    circumstances the council owed no duty of care to the plaintiffs.

    This being a preliminary point of law, as was the argument on limitation,
    it has to be decided on the assumption that the facts are as pleaded. There is
    some difference between those facts and those on which Button's case was
    based, and in the present case the plaintiffs rely not only upon negligent
    inspection, but, in the alternative, upon a failure to make any inspections.

    3

    In these circumstances I take the questions in this appeal to be:

    1. Whether the defendant council was under:

    1. a duty of care to the plaintiffs to carry out an inspection of the
      foundations (which did not arise in Button's case

    2. a duty, if any inspection was made, to take reasonable care to
      see that the byelaws were complied with (as held in Dutton's
      case).

    3. any other duty including a duty to ensure that the building was
      constructed in accordance with the plans, or not to allow the
      builder to construct the dwelling house upon foundations which
      were only 2 ft. 6 in. deep instead of 3 ft. or deeper (as pleaded).

    2. If the defendant council was under any such duty as alleged, and com-

    mitted a breach of it, resulting in damage, at what date the cause of
    action of the plaintiffs arose for the purposes of the Limitation Act
    1939. No question arises directly at this stage as to the damages
    which the plaintiffs can recover and no doubt there will be issues at
    the trial as to causation and quantum which we cannot anticipate.
    But it will be necessary to give some general consideration to the kind
    of damages to which, if they succeed, the plaintiffs may become en-
    titled. This matter was discussed in Button's case and is closely
    connected with that of the duty which may be owed and with the
    arising of the cause of action.

    The duty of care

    Through the trilogy of cases in this House—Donoghue v. Stevenson [1932]
    A.C. 562, Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465,
    and Dorset Yacht Co. Ltd. v. Home 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, loc. cit., p. 1027 per Lord Reid). Examples of this are
    Hedley Byrne where the class of potential plaintiffs was reduced to those shown
    to have relied upon the correctness of statements made, and Weller & Co. v.
    Foot and Mouth Disease Research Institute
    [1966] 1 Q.B. 569; and (I cite
    these merely as illustrations, without discussion) cases about " economic loss "
    where, a duty having been held to exist, the nature of the recoverable damages
    was limited. (See S.C.M. (U.K.) Ltd. v. W. J. Whittall & Son Ltd. [1971]
    1 Q.B. 337, Spartan Steel & Alloys Ltd. v. Martin & Co. (Contractors) Ltd.
    [1973] QB 27.

    The factual relationship between the council and owners and occupiers of
    new dwellings constructed in their area must be considered in the relevant
    statutory setting—under which the council acts. That was the Public Health
    Act 1936. I must refer to the relevant provisions.

    Section 1 confers the duty of carrying the Act into execution upon specified
    authorities which now include the appellant council. Part II of the Act is
    headed " Sanitation and Buildings " and contains provisions in the interest
    of the safety and health of occupiers of dwelling houses and other buildings
    such as provisions about sewage, drains and sanitary conveniences. From
    section 53 onwards, this part of the Act is concerned with such matters as the
    construction of buildings, (section 53), the use of certain materials, construction
    on ground filled up with offensive material (section 54), repair or removal of

    4

    dilapidated buildings (section 58) and fire escapes. The emphasis is throughout
    on health and safety. The directly relevant provisions start with section 61.
    That section provided (subsection (1)) that every local authority may, and if
    required by the Minister, shall make byelaws for regulating (inter alia) the
    construction of buildings, and (subsection (2)) that byelaws made under the
    section may include provisions as to the giving of notices, the deposit of plans
    and the inspection of work. Section 64 deals in a mandatory form with the
    passing or rejection of deposited plans. The authority must pass plans unless
    they are defective or show that the proposed work would contravene any
    byelaws and in the contrary case must reject them. By section 65, if any
    work to which building byelaws are applicable contravenes any byelaw, the
    authority may require the owner to pull down the work, or, if he so elects,
    to effect such alteration as may be necessary to make it comply with the
    byelaws. However, if any work though infringing the byelaws, is in accord-
    ance with approved plans, removal or alteration may only be ordered by a
    court which then has power to order the authority to compensate the owner.

    Building byelaws were duly made, under these powers, by the Borough of
    Mitcham in 1953 and confirmed by the Minister in 1957.

    Byelaw 2 imposes an obligation upon a person who erects any building to
    comply with the requirements of the byelaws. It imposes an obligation
    to submit plans.

    Byelaw 6 requires the builder to give to the council not less than 24 hours
    notice in writing:

    (a) of the date and time at which an operation will be commenced, and

    (b) before the covering up of any drain, private sewer, concrete or other
    material laid over a site, foundation or damp-proof course.

    Byelaws 18 and 19 contain requirements as to foundations. The relevant
    provision (18(1)(b)) is that the foundations of every building shall be taken
    down to such a depth, or be so designed and constructed as to safeguard
    the building against damage by swelling or shrinking of the subsoil.

    Acting under these byelaws, the builder/owners (first defendants) on 30th
    January 1962 gave notice to the Mitcham Borough Council of their intention
    to erect a new building (viz., the block of maisonettes) in accordance with
    accompanying plans. The plans showed the base walls and concrete strip
    foundations of the block and stated, in relation to the depth from ground
    level to the underside of the concrete foundations, " 3' " or deeper to the
    approval " of local authority ". These plans were approved on 8th February
    1962. The written notice of approval dated 9th February 1962 drew attention
    to the requirement of the byelaws that notice should be given to the surveyor
    at each of the following stages: before the commencement of the work and
    when the foundations were ready to be covered up.

    The builders in fact constructed the foundations to a depth of only 2' 6"
    below ground level. It is not, at this stage, established when or whether any
    inspection was made.

    To summarise the statutory position. The Public Health Act 1936, in
    particular Part II, was enacted in order to provide for the health and safety
    of owners and occupiers of buildings, including dwelling houses, by (inter
    alia)
    setting standards to be complied with in construction, and by enabling
    local authorities, through building byelaws, to supervise and control the
    operations of builders. One of the particular matters within the area of local
    authority supervision is the foundations of buildings—clearly a matter of
    vital importance, particularly because this part of the building comes to be
    covered up as building proceeds. Thus any weakness or inadequacy will
    create a hidden defect which whoever acquires the building has no means of
    discovering: in legal parlance there is no opportunity for intermediate inspection.
    So, by the byelaws, a definite standard is set for foundation work (see byelaw
    18(1)(b) referred to above): the builder is under a statutory (sc. byelaw) duty
    to notify the local authority before covering up the foundations: the local
    authority has at this stage the right to inspect and to insist on any correction

    5

    necessary to bring the work into conformity with the byelaws. It must be in
    the reasonable contemplation not only of the builder but also of the local
    authority that failure to comply with the byelaws' requirement as to foun-
    dations may give rise to a hidden defect which in the future may cause damage
    to the building affecting the safety and health of owners and occupiers. And
    as the building is intended to last, the class of owners and occupiers likely to
    be affected cannot be limited to those who go in immediately after construction.

    What then is the extent of the local authority's duty towards these persons?
    Although, as I have suggested, a situation of " proximity " existed between
    the council and owners and occupiers of the houses, I do not think that a
    description of the council's duty can be based upon the " neighbourhood "
    principle alone or upon merely any such factual relationship as " control"
    as suggested by the Court of Appeal. So to base it would be to neglect an
    essential factor which is that the local authority is a public body, discharging
    functions under statute: its powers and duties are definable in terms of public
    not private law. The problem which this type of action creates, is to define
    the circumstances in which the law should impose, over and above, or perhaps
    alongside, these public law powers and duties, a duty in private law towards
    individuals such that they may sue for damages in a civil court. It is in this
    context that the distinction sought to be drawn between duties and mere
    powers has to be examined.

    Most, indeed probably all, statutes relating to public authorities or public
    bodies, contain in them a large area of policy. The courts call this " discretion "
    meaning that the decision is one for the authority or body to make, and not
    for the courts. Many statutes, also prescribe or at least presuppose the
    practical execution of policy decisions: a convenient description of this is to
    say that in addition to the area of policy or discretion, there is an operational
    area. Although this distinction between the policy area and the operational
    area is convenient, and illuminating, it is probably a distinction of degree;
    many " operational" powers or duties have in them some element of " dis-
    cretion ". It can safely be said that the more " operational " a power or duty
    may be, the easier it is to superimpose upon it a common law duty of care.

    I do not think that it is right to limit this to a duty to avoid causing extra
    or additional damage beyond what must be expected to arise from the exercise
    of the power or duty. That may be correct when the act done under the
    statute inherently must adversely affect the interest of individuals. But many
    other acts can be done without causing any harm to anyone—indeed may be
    directed to preventing harm from occuring. In these cases the duty is the
    normal one of taking care to avoid harm to those likely to be affected.

    Let us examine the Public Health Act 1936 in the light of this. Undoubtedly
    it lays out a wide area of policy. It is for the local authority, a public and
    elected body, to decide upon the scale of resources which it can make available
    in order to carry out its functions under Part II of the Act—how many
    inspectors, with what expert qualifications, it should recruit, how often
    inspections are to be made, what tests are to be carried out, must be for its
    decision. It is no accident that the Act is drafted in terms of functions and
    powers rather than in terms of positive duty. As was well said, public
    authorities have to strike a balance between the claims of efficiency and thrift
    (du Parcq L.J. in Kent v. East Suffolk Rivera Catchment Board [1940] 1 K.B.
    319, 338): whether they get the balance right can only be decided through the
    ballot box, not in the courts. It is said—there are reflections of this in the
    judgments in Buttons case—that the local authority is under no duty to
    inspect, and this is used as the foundation for an argument, also found in
    some of the cases, that if it need not inspect at all, it cannot be liable for
    negligent inspection: if it were to be held so liable, so it is said, councils
    would simply decide against inspection. I think that this is too crude an
    argument. It overlooks the fact that local authorities are public bodies
    operating under statute with a clear responsibility for public health in their
    area. They must, and in fact do, make their discretionary decisions responsibly
    and for reasons which accord with the statutory purpose; c.f. Ayr Harbour
    Trustees v. Oswald
    8 A.C. 623, 639, per Lord Watson:


    6

    " The powers which [section 10] confers are discretionary . . . But it is
    " the plain import of the clause that the harbour trustees . . . shall be
    " vested with, and shall avail themselves of, these discretionary powers,
    " whenever and as often as they may be of opinion that the public interest
    " will be promoted by their exercise ".

    If they do not exercise their discretion in this way they can be challenged in the
    courts. Thus, to say that councils are under no duty to inspect, is not a
    sufficient statement of the position. They are under a duty to give proper
    consideration to the question whether they should inspect or not. Their
    immunity from attack, in the event of failure to inspect, in other words,
    though great is not absolute. And because it is not absolute, the necessary
    premise for the proposition " if no duty to inspect, then no duty to take
    " care in inspection " vanishes.

    Passing then to the duty as regards inspection, if made. On principle there
    must surely be a duty to exercise reasonable care. The standard of care must
    be related to the duty to be performed—namely to ensure compliance with
    the byelaws. It must be related to the fact that the person responsible for
    construction in accordance with the byelaws is the builder, and that the
    inspector's function is supervisory. It must be related to the fact that once
    the inspector has passed the foundations they will be covered up, with no
    subsequent opportunity for inspection. But this duty, heavily operational
    though it may be, is still a duty arising under the statute. There may be a
    discretionary element in its exercise—discretionary as to the time and manner
    of inspection, and the techniques to be used. A plaintiff complaining of
    negligence must prove, the burden being on him, that action taken was not
    within the limits of a discretion bona fide exercised, before he can begin to
    rely upon a common law duty of care. But if he can do this, he should, in
    principle, be able to sue.

    Is there, then, authority against the existence of any such duty or any
    reason to restrict it? It is said that there is an absolute distinction in the
    law between statutory duty and statutory power—the former giving rise to
    possible liability, the latter not; or at least not doing so unless the exercise
    of the power involves some positive act creating some fresh or additional
    damage.

    My Lords, I do not believe that any such absolute rule exists: or perhaps,
    more accurately, that such rules as exist in relation to powers and duties
    existing under particular statutes, provide sufficient definition of the rights of
    individuals affected by their exercise, or indeed their non-exercise, unless they
    take account of the possibility that, parallel with public law duties there may
    coexist those duties which persons—private or public—are under at common
    law to avoid causing damage to others in sufficient proximity to them. This
    is, I think, the key to understanding of the main authority relied upon by the
    respondents—East Suffolk Rivers Catchment Board v. Kent [1941] AC 74.

    The statutory provisions in that case were contained in the Land Drainage
    Act 1930 and were in the form of a power to repair drainage works including
    walls or banks. The facts are well known: there was a very high tide which
    burst the banks protecting the respondent's land. The Catchment Board,
    requested to take action, did so with an allocation of manpower and resources
    (graphically described by MacKinnon L.J.) which was hopelessly inadequate
    and which resulted in the respondent's land being flooded for much longer
    than it need have been. There was a considerable difference of judicial
    opinion. Hilbery J. who tried the case held the Board liable for the damage
    caused by the extended flooding and his decision was upheld by a majority of
    the Court of Appeal. This House, by majority of 4-1 reached the opposite
    conclusion. The speeches of their Lordships contain discussion of earlier
    authorities, which well illustrate the different types of statutory enactment
    under which these cases may arise. There are private Acts conferring powers—
    necessarily—to interfere with the rights of individuals: in such cases, an
    action in respect of damage caused by the exercise of the powers generally
    does not lie, but it may do so "for doing that which the legislature has
    " authorised, if it be done negligently " (Geddis v. Proprietors of Bann Reservoir
    3 App. Cas. 430, 455 per Lord Blackburn). Then there are cases where a

    7

    statutory power is conferred, but the scale on which it is exercised is left to a
    local authority, Sheppard v. Glossop Corporation [1921] 3 K.B. 132. That
    concerned a power to light streets and the corporation decided, for economy
    reasons, to extinguish the lighting on Christmas night. Clearly this was
    within the discretion of the authority but Scrutton L. J. in the Court of Appeal
    contrasted this situation with one where " an option is given by statute to an
    " authority to do or not to do a thing and it elects to do the thing and does
    " it negligently " (ibid. 145-6). (Compare Indian Towing Co. v. United States
    350 U.S. 61, which makes just this distinction between a discretion to provide
    a lighthouse, and at operational level, a duty, if one is provided, to use due
    care to keep the light in working order). Other illustrations are given.

    My Lords, a number of reasons were suggested for distinguishing the East
    Suffolk
    case—apart from the relevant fact that it was concerned with a different
    Act, indeed type of Act. It was said to be a decision on causation: I think
    that this is true of at least two of their Lordships (Viscount Simon and Lord
    Thankerton). It was said that the damage was already there before the
    Board came on the scene: so it was but the Board's action or inaction un-
    doubtedly prolonged it, and the action was in respect of the prolongation. I
    should not think it right to put the case aside on such arguments. To me the
    two significant points about the case are, first, that it is an example, and a
    good one, where operational activity—at the breach in the wall—was still well
    within a discretionary area, so that the plaintiff's task in contending for a duty
    of care was a difficult one. This is clearly the basis on which Lord Romer,
    whose speech is often quoted as a proposition of law, proceeded. Secondly,
    although the case was decided in 1941, only one of their Lordships considered
    it in relation to a duty of care at common law. It need cause no surprise that
    this was Lord Atkin. His speech starts with this passage:

    " On the first point " [sc. whether there was a duty owed to the Plaintiff
    and v/hat was its nature] " I cannot help thinking that the argument
    " did not sufficiently distinguish between two kinds of duties: (1) A
    " statutory duty to do or abstain from doing something, (2) A common
    " law duty to conduct yourself with reasonable care so as not to injure
    " persons liable to be affected by your conduct " (loc. cit. p. 88).

    And later he refers to Donoghue v. Stevenson—the only one of their Lordships
    to do so—though I think it fair to say that Lord Thankerton (who decided
    the case on causation) in his formulation of the duty must have been thinking
    in terms of that case. My Lords, I believe that the conception of a general
    duty of care, not limited to particular accepted situations, but extending
    generally over all relations of sufficient proximity, and even pervading the
    sphere of statutory functions of public bodies, had not at that time become
    fully recognised. Indeed it may well be that full recognition of the impact
    of Donog/nie v. Stevenson in the latter sphere only came with the decision of
    this House in Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004.

    In that case the Borstal officers, for whose actions the Home Office was
    vicariously responsible, were acting, in their control of the boys, under statutory
    powers. But it was held that, nevertheless they were under a duty of care as
    regards persons who might suffer damage as the result of their carelessness-
    see per Lord Reid, p. 1030-1, Lord Morris of Borth-y-Gcst, p. 1036, Lord
    Pearson, p. 1055 (" The existence of the statutory duties does not exclude
    " liability at common law for negligence in the performance of the statutory
    " duties "). Lord Diplock in his speech gives this topic extended consideration
    with a view to relating the officers' responsibility under public law to their
    liability in damages to members of the public under private, civil law. (See
    pp. 1064 ff). My noble and learned friend points out that the accepted
    principles which are applicable to powers conferred by a private Act of
    Parliament, as laid down in Geddis v. Proprietors of Bann Reservoirs, cannot
    automatically be applied to public statutes which confer a large measure of
    discretion upon public authorities. As regards the latter, for a civil action
    based on negligence at common law to succeed, there must be acts or omissions
    taken outside the limits of the delegated discretion: in such a case "its
    " actionability falls to be determined by the civil law principles of negligence "
    (I.c. p. 1068).

    8

    It is for this reason that the law, as stated in some of the speeches in the
    East Suffolk case, but not in those of Lord Atkin or Lord Thankerton, requires
    at the present time to be understood and applied with the recognition that,
    quite apart from such consequences as may flow from an examination of the
    duties laid down by the particular statute, there may be room, once one is
    outside the area of legitimate discretion or policy, for a duty of care, at common
    law. It is irrelevant to the existence of this duty of care whether what is
    created by the statute is a duty or a power: the duty of care may exist in
    cither case. The difference between the two lies in this, that, in the case of a
    power, liability cannot exist unless the act complained of lies outside the ambit
    of the power. In the Dorset Yacht Co. case the officers may (on the assumed
    facts) have acted outside any discretion delegated to them and having dis-
    regarded their instructions as to the precautions which they should take to
    prevent the trainees from escaping (see per Lord Diplock, I.c. p. 1069). So in
    the present case, the allegations made are consistent with the council or its
    inspector having acted outside any delegated discretion either as to the making
    of an inspection, or as to the manner in which an inspection was made.
    Whether they did so must be determined at the trial. In the event of a positive
    determination, and only so, can a duty of care arise. I respectfully think that
    Lord Denning, M.R. in Duttons case (p. 392) puts the duty too high.

    To whom the duty is owed. There is, in my opinion, no difficulty about this.
    A reasonable man in the position of the inspector must realise that if the
    foundations arc 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. I would leave open the case of users, who
    might themselves have a remedy against the occupier under the Occupiers
    Liability Act 1957. A right of action can only be conferred upon an owner,
    or occupier, who is such when the damage occurs (see below). This disposes of
    the possible objection that an endless, indeterminate class of potential plaintiffs
    may be called into existence.

    The nature of the duty. This must be related closely to the purpose for
    which powers of inspection are granted namely, to secure compliance with
    the byelaws. The duty is to take reasonable care, no more, no less, to secure
    that the builder docs not cover in foundations which do not comply with
    byelaw requirements. The allegations in the statements of claim, in so far as
    they are based upon non-compliance with the plans, are misconceived.

    The position of the builder. 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 reality, 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) N.I. 26 per Lord
    MacDermott C.J.—a case of personal injury. Similar decisions have been
    given in regard to architects—(Clayton v. Woodman & Son Ltd. [1962] 2 Q.B.
    533, Clay v. A. J. Crump and Sons Ltd. [1964] 1 Q.B. 533). Gallagher's case
    expressly leaves open the question whether the immunity against action of
    builder owners, established by older authorities (e.g. Bottomley v. Bannister
    [1932] 1 K.B. 458) 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
    " that (fraud apart) there is no law against letting a " tumbledown house "
    (Robbins v. Jones (1863) 15 C.B.N.S. 221 per Erie, C.J.). But leaving aside
    such cases as arise between contracting parties, when the terms of the contract
    have to be considered (see Voli v. Inglewood Shire Council 110 C.L.R. 74, 85,
    per Windeyer J.), I am unable to understand why this principle or proposition
    should prevent recovery in a suitable case by a person, who has subsequently

    9

    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, M.R. on this point (Button's case, I.c., p. 392-4). In the alternative,
    since it is the duty of the builder (owner or not) to comply with the byelaws,
    I would be of opinion that an action could be brought against him, in effect,
    for breach of statutory duty by any person for whose benefit or protection the
    byelaw was made. So I do not think that there is any basis here for arguing
    from a supposed immunity of the builder to immunity of the council. Nature
    of the damages recoverable and arising of the cause of action.
    There are many
    questions here which do not directly arise at this stage and which may never
    arise if the actions are tried. But some conclusions are necessary if we are
    to deal with the issue as to limitation. The damages recoverable include all
    those which foreseeably arise from the breach of the duty of care which, as
    regards the council, I have held to be a duty to take reasonable care to secure
    compliance with the byelaws. Subject always to adequate proof of causation,
    these damages may include damages for personal injury and damage to pro-
    perty. In my opinion they may also include damage to the dwelling-house
    itself; for the whole purpose of the byelaws in requiring foundations to be
    of certain standard is to prevent damage arising from weakness of the foun-
    dations which is certain to endanger the health or safety of occupants.

    To allow recovery for such damage to the house follows, in my opinion,
    from normal principle. If classification is required, the relevant damage is in
    my opinion material, physical damage, and what is recoverable is 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.
    On the question of damages generally I have derived much assistance from the
    judgment (dissenting on this point, but of strong persuasive force) of Laskin
    C.J. in the Canadian Supreme Court case of Rivtow Marine Ltd. v. Washington
    Iron Works
    (1973) 6 W.W.R. 692, 715 and from the judgments of the New Zealand
    Court of Appeal (furnished by courtesy of that Court) in Bowen v. Paramount
    Builders (Hamilton) Ltd. and McKay,
    C.A. 69/75.

    When does the cause of action arise? We can leave aside cases of personal
    injury or damage to other property as presenitng no difficulty. It is only the
    damage for the house which requires consideration. In my respectful opinion
    the Court of Appeal was right when, in Sparham-Souter's case it abjured the
    view that the cause of action arose immediately upon delivery, i.e., conveyance
    of the defective house. It 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. We are not concerned at this stage with any issue relating to
    remedial action nor are we called upon to decide upon what the measure of
    the damages should be; such questions, possibly very difficult in some cases,
    will be for the court to decide. It is sufficient to say that a cause of action
    arises at the point I have indicated.

    The Limitation Act 1939. If the fact is that defects to the maisonettes first
    appeared in 1970, then, since the writs were issued in 1972, the consequence
    must be that none of the present actions are barred by the Act.

    Conclusion. I would hold:

    1. that Dutton v. Bognor Regis was in the result rightly decided. The

    correct legal basis for the decision must be taken to be that established
    by your Lordships in this appeal.

    2. that the question whether the defendant council by itself or its officers

    came under a duty of care toward the plaintiffs must be considered
    in relation to the powers, duties and discretions arising under the
    Public Health Act 1936;

    3. that the defendant council would not be guilty of a breach of duty in

    not carrying out inspection of the foundations of the block unless it
    were shown (a) not properly to have exercised its discretion as to
    the making of inspections, and (b) to have failed to exercise reasonable
    care in its acts or omissions to secure that the byelaws applicable to
    the foundations of the block were complied with;


    310530 A3

    10

    4. that the defendant council would be liable to the respondents for breach

    of duty if it were proved that its inspector, having assumed the duty
    of inspecting the foundations, and acting otherwise thanin the bona fide
    exercise of any discretion under the statute, did not exercise reasonable
    care to ensure that the byelaws applicable to the foundations were
    complied with;

    5. that on the facts as pleaded none of the actions are barred by the

    Limitation Act 1939.


    And consequently that the appeal should be dismissed with costs.

    Lord Diplock

    MY LORDS,

    I have had the advantage of reading in draft the speech of my noble and
    learned friend Lord Wilberforce. I agree with it and the order that he proposes.

    Lord Simon of Glaisdale

    MY LORDS,

    I have had the privilege of reading in draft the speech delivered by my
    noble and learned friend on the Woolsack. I agree with it, and I would
    therefore dismiss the appeal.

    Lord Salmon

    MY LORDS,

    The procedural issues, the undisputed facts, the relevant statutory provisions
    and the byelaws made under them are fully and lucidly expounded in Part I
    of the speech of my noble and learned friend Lord Wilberforce which I
    gratefully adopt and need not repeat.

    The one fact which is at present unknown and which may be of vital
    importance at the trial is whether or not the foundations of the block of
    maisonettes in question were ever examined by the council through one of its
    building inspectors prior to their being covered up.

    As I understand paragraph 5 of the statement of claim and the particulars
    delivered under it, the gist of the claim is that it was the council's duty through
    one of its building inspectors to inspect the foundations of the building before
    they were covered; that in breach of this duty the council negligently failed
    to carry out any inspection of the foundations; alternatively that if it did so,
    the inspection was carried out negligently; that as a result, the inspection failed
    to reveal that the foundations did not comply with byelaw 18(1)(b) nor with the
    deposited and approved plans in that they were only 2 ft. 6 deep instead of
    3 ft. or deeper as shown on the plans; that if these defects in the foundations
    had been detected by the council's inspector (as they should have been) the
    council would have been under a duty to insist that the foundations should
    be taken down to a sufficient depth to give the building a sound base and that
    if this had been done the structural movements and their resulting damage
    to the building which began to occur in February 1970 would have been
    avoided.

    Since this appeal is being decided on preliminary points of law, all the facts
    in the statement of claim, including those pleaded in the alternative, must be
    assumed to be true. Accordingly, at least two different hypotheses need to be
    examined:—

    1. That no inspections of the foundations by the council took place.

    11

    2. That such an inspection did take place but because of the building
    inspector's failure to use reasonable care and skill, the inspection
    failed to reveal the inadequacy of the foundations to which I have
    referred.

    As to 1. This hypothesis raises the question as to whether or not the
    council owed a duty to the plaintiffs to inspect the foundations before the
    building was erected. Obviously if no such duty existed, the failure to inspect
    could not found a cause of action.

    The Public Health Act 1936 and the building byelaws made under it confer
    ample powers on the council for the purpose, amongst other things, of enabling
    it to protect the health and safety of the public in its locality against what is
    popularly known as jerry-building. We are concerned particularly with the
    safeguards relating to building foundations; these foundations are clearly
    of the greatest importance because the stability of the building depends upon
    them and they are covered up at a very early stage.

    Powers are undoubtedly conferred on the council in order to enable it to
    inspect the foundations and ensure that any defects which the inspection may
    reveal are remedied before the erection of the building begins. There is,
    however, nothing in the Act of 1936 nor in the byelaws which explicitly provides
    how the council shall exercise these powers. This, in my view, is left to the
    council's discretion—but I do not think that this is an absolute discretion.
    It is a discretion which must be responsibly exercised.

    The council could resolve to inspect the foundations of all buildings in its
    locality before they are covered but certainly, in my view, it is under no
    obligation to do so. It could e.g. resolve to inspect the foundations of a
    proportion of all buildings or of all buildings of certain types in its locality.

    During the course of argument it was suggested on behalf of the council
    that if it were held to owe any duty to use reasonable care in carrying out an
    inspection of foundations and could therefore be liable in damages for any
    such inspections carried out negligently, it might well resolve to make no such
    inspections at all. I find it impossible to conceive that any council could be
    so irresponsible as to pass any such resolution. If it did, this would, in my
    view, amount to an improper exercise of discretion which, I am inclined to
    think, might be corrected by certlorari or mandamus. I doubt however whether
    this would confer a right on any individual to sue the council for damages in
    respect of its failure to have carried out an inspection.

    This point has however little bearing on this appeal because the corres-
    pondence makes it plain that the council had certainly not decided against
    exercising its statutory powers of inspection. On 19th March 1971, we find
    the Borough Surveyor writing to the tenants' solicitors:

    " I regret that I am unable to trace any record of statutory inspections . ..
    " by officers of the former Borough of Mitcham, but do not doubt, for a
    " moment, that all the proper inspections were made."

    On the 24th June 1971 the Borough Surveyor again wrote:—

    " I have been unable to trace details of all inspections made to the
    " above premises but have been assured that all statutory inspections have
    " been carried out."

    If there was no inspection of the foundations before they were covered up,
    the tenants' claims would fail because the statute imposed no obligation upon
    the council to inspect the foundations of these maisonettes nor of any other
    particular building. It will be for the tenants, with the help of interrogatories,
    discovery of documents and a search for fresh witnesses to establish, on a
    balance of probabilities, that such an inspection did take place. The extracts
    from the letters I have just read do not suggest that this is likely to impose any
    insuperable difficulties upon them.

    As to two. I now propose to examine the second hypothesis, namely that
    an inspection of the foundations before they were covered up was carried out

    12

    by the council through one of its building inspectors. This immediately raises
    the important question. Did the inspector, acting on behalf of the council,
    owe a duty to future tenants to use reasonable care and skill in order to discover
    whether the foundations conformed with the approved plans and with the
    byelaws. Precisely the same point was raised in Dutton v. Bognor Regis
    U.D.C.
    [1972] 1 Q.B. (C.A.) 373 and was answered in the affirmative. I agree
    with that decision.

    In Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004 Lord Reid at
    p. 1027 said:—

    " Donoghue v. Stevenson [1932] AC 562 may be regarded as a mile-
    " stone, and the well-known passage in Lord Atkin's speech should I think
    " be regarded as a statement of principle. It is not to be treated as if it
    " were a statutory definition. It will require qualification in new circum-
    " stances. But I think that the time has come when we can and should
    " say that it ought to apply unless there is some justification or valid
    " explanation for its exclusion."

    He then set out some of the circumstances in which such a justification or
    explanation would exist. He added:—

    " But where negligence is involved the tendency has been to apply
    " principles analogous to those stated by Lord Atkin: cf. Hedley Byrne
    " and Company Ltd. v. Heller & Partners Ltd. [1964] AC 465 ... I can see
    " nothing to prevent our approaching the present case with Lord Atkin's
    " principles in mind."

    I respectfully agree with and adopt that passage in Lord Reid's speech
    which, to my mind, is just as apt in the instant case as it was in the Dorset
    Yacht Ltd. Co.
    case.

    The seven maisonettes which comprise the building were to be let on 999 year
    leases at nominal rents and acquired for substantial capital sums. The building
    inspector and the council who sent him to inspect the foundations must have
    realised that the inspection was of great importance for the protection of
    future occupants of the maisonettes who indeed might suffer serious damage
    if the inspection was carried out negligently. The inspection should have
    revealed that this block of maisonettes was about to be erected on insecure
    foundations, that is to say, foundations which failed to comply with the
    approved plans and the byelaws, and that therefore there was a serious risk
    that within a decade the whole structure would suffer damage and might
    indeed collapse. Nor was there any likelihood that any survey on behalf of
    the original tenants or their assignees would include an inspection of the
    foundations since they would be concealed by the building. The whole
    purpose of the inspection on behalf of the council before the foundations
    were covered up was to discover whether the foundations were secure and to
    ensure that if they were not, they should be made so for the protection of
    future tenants before the building was erected. It is impossible to think of
    anyone more closely and directly affected by the inspection than the original
    tenants of the maisonettes and their assignees. I have therefore come to the
    clear conclusion that the council acting through their building inspector when
    he inspected the foundations owed a duty to the plaintiffs to carry out the
    inspection with reasonable care and skill. There can, I think, be no doubt
    but that the building inspector failed to use reasonable care and skill because
    the underside of the concrete foundations was only 2' 6" below ground level,
    whereas the plans delivered to the Council showed the foundations as being
    3 feet below ground level or deeper if required. A surveyor's report on page
    106 of the Record states that " 3 feet is the accepted minimum depth for
    " foundation excavations, always provided a reasonable bottom is found at
    " that level and in this case we have found the sub-soil beneath the concrete
    " to be of very doubtful and variable quality, consisting of a mixture of sand
    " and gravel with traces of soft clay. We are therefore of the opinion that
    " the defects in this property arise from inadequate foundation depth having
    " regard to the site conditions, and that movement has probably been
    " accentuated by all or any of the following factors ". These factors are then

    13

    enumerated and the report continues " Whilst we are in some difficult in
    " arriving at the most likely of the above causes, all of them could have been
    " avoided had the foundations been taken down to an adequate depth
    " according to site conditions, and in our view this is where the fault lies ".
    At the trial, it will be for the court to decide, having heard the evidence,
    whether if the foundations had been down to 3 feet instead of only to 2 feet
    6 inches the damage would have been avoided, and if not whether the building
    inspector, had he used reasonable care and skill, should have recognised that
    the soil conditions required the foundations to have been taken down lower
    than 3 feet in order to achieve security.

    I must now refer to the East Suffolk Rivers Catchment Board v. Kent [1941]
    A.C. 74 upon which the Council strongly relied in an attempt to negative
    any duty of care on their part if and when they inspected the foundations.
    The East Suffolk case, which is not very satisfactory, is certainly a very different
    case from the present. Here, at the time the council elected to inspect the
    foundations in the exercise of its statutory powers, no damage had occurred
    nor could thereafter have occurred if the building inspector had noticed the
    inadequacy of the foundations. It seems to me to be a fair inference that
    probably he must have indicated to the builder by word or gesture that he
    approved them. At any rate he could have made no report to the council as
    to their inadequacy; otherwise the council would or certainly should have
    ensured that the builders made the foundations conform with the bye-laws
    before the council allowed the building to be erected upon them.

    Even if the inspector did not give the builders any intimation as to his view
    of the foundations, the builders would have naturally assumed from the
    council's silence after the inspection that they (the builders) had the council's
    blessing to build on the existing foundations.

    " It is undoubtedly a well-settled principle of law that when statutory
    " powers are conferred they must be exercised with reasonable care, so
    " that if those who exercise them could by reasonable precaution have
    " prevented an injury which has been occasioned ... by their exercise,
    " damage for negligence may be recovered." Great Central Railway
    Company b. Hewlett
    [1916] 2 A.C. 511 per Lord Parker at p. 519.

    In my opinion a negligent inspection for which the council is vicariously
    liable coupled with subsequent inaction by the council would amount to an
    implicit approval of the foundations by the council and would have occasioned
    the damage which ensued.

    In the East Suffolk case, the damage had already occurred before the Catch-
    ment Board arrived upon the scene and purported to carry out the work of
    repairing a river wall under its statutory powers. The river close to its estuary
    had burst through a breach it had made in the wall at high tide and swamped
    about 50 acres of adjoining pasture which was below the level of the river bed.
    At each high tide more salt water came into the pasture and the longer this
    went on the greater was the risk of pasture being permanently ruined. The
    Catchment Board attempted to repair the breach in the wall with one
    man who had been in their employment for 18 months and was totally in-
    experienced in this kind of work and four labourers from the Employment
    Exchange and with practically no equipment. It took one hundred and seventy
    eight days to close the breach which could have been closed in fourteen days
    had the work been carried out with reasonable care and skill. It would
    appear that there had been exceptionally high tides as well as gales and that
    the Catchment Board had to cope with a number of similar problems with
    limited funds and insufficient experienced men at their disposal.

    In the instant case, as far as we know, the council was not faced, as was the
    Catchment Board, with a task of any difficulty, nor with any damage because
    nothing had been built on the foundations, nor with the lack of a reasonably
    competent building inspector well able to measure the depth of the foundations
    and, if necessary, assess whether they were deep enough, having regard to the
    soil on which they rested.


    14

    It is, in my view, impossible to say that because in one set of circumstances
    a body acting under statutory powers may not owe any duty to exercise
    reasonable care and skill, therefore another body acting under statutory
    powers in totally different circumstances cannot owe such a duty. I confess
    that I am not at all sure what point of law the East Suffolk case is said to
    decide. Viscount Simon L.C. seems to have based his decision against the
    plaintiff on the ground that the Catchment Board did not cause the damage.
    See his speech at pp. 87, 88. Lord Thankerton undoubtedly based his decision
    on that ground alone. See his speech at page 96. He also stresses the
    importance of the special circumstances of each case in deciding what amounts
    to a failure to exercise reasonable care and skill by a body acting under a
    statutory power and adds, having referred to the circumstances of the Catch-
    ment Board " I am unable to find that Hilbery J. was not entitled to hold
    " that the appellants committed a breach of their duty to the respondents in
    " adopting a method of repair which no reasonable man would have adopted ".

    Lords Romer and Porter seem to have considered that, on the facts of the
    case which they were deciding, no negligence could be attributed to the Catch-
    ment Board. Lord Romer, however, observed at p. 97,

    "... it has been laid down time and again that, in exercising a power which
    " has been conferred upon it, a statutory authority is under an obligation
    " not thereby (i.e., by the exercise of the power) to inflict upon others any
    " damage that may be avoided by reasonable care."

    Lord Porter refers with approval to a passage from Scrutton L.J's. judgment
    in Sheppard v. Glossop Corporation [1921] 3 K.B. 132 at p. 145:

    " But it is going far beyond Lord Blackburn's dictum to say that because,
    " when an option is given by statute to an authority to do or not to do a
    " thing and it elects to do the thing and does it negligently, it is liable,
    " therefore it is liable if it elects not to do the thing, which by the statute
    " it is not bound to do at all."

    Lord Porter also referred to the celebrated passage in the speech of Lord
    Blackburn in the Geddis case—see 3 App. Cas. at p. 455—a most lucid passage
    which has been explained so often that I fear its true meaning is in some danger
    of being explained away. Lord Blackburn said:

    "... it is now thoroughly well established that no action will lie for doing
    " that which the legislature has authorised, if it be done without negilgence,
    " although it does occasion damage . . . but an action does lie for doing
    " that which the legislature has authorised, if it be done negligently."

    If, which I doubt, Lords Romer and Porter intended to lay down that because
    a local authority or other body endowed with statutory powers, owes no one
    any duty to exercise those powers in a particular case, it cannot in circumstances
    such as exist in the instant case, owe anyone a duty when it does exercise the
    powers to exercise them with reasonable care and skill, then I cannot agree
    with them.

    Personally, I respectfully agree with the dissenting decision of Lord Atkin
    in the East Suffolk case. His views as to the duty of care owed by anyone
    exercising statutory powers did not differ from those of Lord Thankerton nor
    I think from those of Viscount Simon L.C. and I have some doubt whether
    they differed from the views of Lords Romer and Porter which seem to have
    turned largely on the facts of that particular case. Lord Atkin said at page 89
    " every person, whether discharging a public duty or not, is under a common
    " law obligation to some persons in some circumstances to conduct himself
    " with reasonable care so as not to injure those persons likely to be affected by
    " his want of care. This duty exists whether a person is performing a public
    " duty, or merely exercising a power which he possesses either under statutory
    " authority or in pursuance of his ordinary rights as a citizen."

    For the reasons I have already indicated, I am convinced that if an inspection
    of the foundations did take place, the council, through its building inspectors,
    owed a duty to the future tenants and occupiers of the maisonettes to exercise
    reasonable care and skill in carrying out that examination. The failure to

    15

    exercise such care and skill may be shown to have caused the damage which the
    plaintiffs have suffered. The fact that the inspection was being carried out
    under a statutory power does not exclude the common law duty of those
    carrying it out to use reasonable care and skill—for it cannot in any way
    diminish the obvious proximity between the inspectors and the prospective
    tenants and their assignees.

    It has, however, been argued on the council's behalf that, since it was under
    no obligation to inspect the foundations, had it failed to do so, it could not
    be liable for the damage caused by the inadequacy of the foundations.
    Accordingly, so the argument runs, if the council decided to inspect the
    foundations in the exercise of its statutory powers, it owed the prospective
    tenants and their assignees no duty to inspect carefully because, even if the
    inspection was carried out negligently, the prospective tenants and their
    assignees would be no worse off than if there had been no inspection. I
    reject this argument and confess that I cannot detect that it has even any
    superficial attraction. The council is given these statutory powers to inspect
    the foundations and furnished with public funds to enable the powers to be
    used for the protection of prospective purchasers of the buildings which are to
    be built upon them. If, when the council exercises these powers, it does so
    negligently, it must be obvious that those members of the public in the position
    of the present plaintiffs are likely to suffer serious damage. The exercise of
    power without responsibility is not encouraged by the law. I recognize that
    it may not be practical to inspect the foundations of every new building.
    This, however, is no excuse for a negligent inspection of such foundations as
    are inspected. When a council exercises its powers of inspection, it should be
    and I believe is responsible in law to those who suffer damage as a result of
    that negligence.

    I do not think that there is any danger that the responsibility which, in my
    view, lies upon the council is likely to lead to any flood of litigation. It is
    not a common occurrence for foundations to give way, nor for their inspection
    to be negligently carried out. If the foundations do give way, there is no
    warranty by the council which has inspected them that they are sound. The
    council is responsible only if it has exercised its powers to inspect and the
    defects in the foundations, should have been detected by reasonable care and
    skill. It seems to me to be manifestly fair that any damage caused by negligence
    should be borne by those responsible for the negligence rather than by the
    innocents who suffer from it.

    L recognise that it would be unjust if, in the circumstances of this case, the
    whole burden should fall upon the council whilst the contractor who negligently
    put in the faulty foundations remained free from liability. It has, however,
    been decided in Gallacher v. N. McDowell Ltd. [1961] N.I. 26 that a building
    contractor owes a duty of care to the lawful user of a house and that accord-
    ingly the contractor is liable for any damage caused to a lawful user by the
    contractor's negligence in constructing the house. I agree with that decision
    for the reasons given by Lord MacDermott C.J. in delivering the leading
    judgment in the Northern Ireland Court of Appeal. I also adopt what Lord
    Denning M.R. said on this topic in Duttons case: " The distinction between
    " chattels and real property is quite unsustainable [in relation to the principles
    " laid down in Donoghue v. Stevenson [1932] AC 562]. If the manufacturer
    " of an article is liable to a person injured by his negligence, so should the
    " builder of a house be liable ". The contrary view seems to me to be entirely
    irreconcilable with logic or common sense.

    The instant case differs from Gallagher's case in that the contractors were
    also the owners of the land on which they built the block of maisonettes.
    In Bottomley v. Bannister (1932) 1 K.B. 458 [decided just before Donoghue v.
    Stevenson
    ] Scrutton L.J. said at page 468 " Now it is at present well established
    " English law that, in the absence of express contract, a landlord of an
    " unfurnished house is not liable to his tenant, or a vendor of real estate to
    " his purchaser, for defects in the house or land rendering it dangerous or
    " unfit for occupation, even if he has constructed the defects himself or is

    16

    " aware of their existence ". I certainly do not agree with the words in that
    passage " even if he has constructed the defects himself ". The immunity of
    a landlord who sells or lets his house which is dangerous or unfit for habitation
    is deeply entrenched in our law. I cannot, however, accept the proposition
    that a contractor who has negligently built a dangerous house can escape
    liability to pay damages for negligence to anyone who e.g. falls through a
    shoddily constructed floor and is seriously injured, just because the contractor
    happens to have been the owner of the land upon which the house stands.
    If a similar accident had happened next door in a house which the contractor
    had also negligently built on someone else's land, he would not be immune from
    liability. This does not make any sense. In each case the contractor would
    be sued for his negligence as a contractor and not in his capacity as a land-
    owner: the fact that he had owned one plot of land and not the other would
    be wholly irrelevant. I would hold that in each case he would be liable to
    pay damages for negligence. To the extent that Bottomley v. Bannister differs
    from this proposition it should, in my view, be overruled. Cavalier v. Pope
    [1906] AC 428, upon which the appellants also relied, is so far away from the
    present case that I express no opinion about it.

    It was also contended on behalf of the appellants that the plaintiffs do not
    even allege that they relied upon the inspection of the foundations by the
    council. Nor they did, and I daresay they never even knew about it. This,
    however, is irrelevant. I think that the noble lords who decided Hedley
    Byrne & Co. Ltd. v. Heller & Partners Ltd.
    [1964] AC 465 would have been
    very surprised that what they said about reliance in that case would one day
    be cited as relevant to a case such as the present. There are a wide variety
    of instances in which a statement is negligently made by a professional man
    which he knows will be relied upon by many people besides his client, e.g. a
    well known firm of accountants certifies in a prospectus the annual profits of
    the company issuing it and unfortunately, due to negligence on the part of the
    accountants, the profits are seriously overstated. Those persons who invested
    in the company in reliance on the accuracy of the accountants' certificate
    would have a claim for damages against the accountants for any money they
    might have lost as a result of the accountants' negligence, see the Hedley Byrne
    case.

    In the present case, however, the loss is caused not by any reliance placed
    by the plaintiffs on the council or the building inspector but by the fact that
    if the inspection had been carefully made, the defects in the foundations would
    have been rectified before the erection of the building was begun. The
    categories of negligence as Lord Macmillan said, are never closed and there are
    now a great many of them. In a few, " reliance " is of importance. In the
    present case reliance is not even remotely relevant.

    The remaining question is whether this action is statute barred, as found by
    the learned judge. In my view he had no real option except to find as he did.
    In Dutton's case the Master of the Rolls said, obiter, that " The damage was
    " done when the foundations were badly constructed. The period of limi-
    " tation (six years) then began to run." In Bagot v. Stevens Scanlan & Co. Ltd.
    [1966] 1 Q.B. 197, 203, Diplock L.J. (as he then was) said, obiter, that if the
    drains were not properly designed and built " The damage from any breach
    " of that duty must have occurred at the time when the drains were improperly
    " built, because the plaintiff at that time was landed with property which had
    " bad drains when he ought to have been provided with property which had
    " good drains, and the damage, accordingly, occurred on that date ". There
    may be a difference between the effect of badly constructed foundations and
    improperly built drains, since badly constructed foundations may not for some
    years cause any damage to the building or its occupiers; on the other hand,
    improperly built drains may cause some damage to the amenities and health
    of the occupier from the moment he occupies the building. In Higgins v.
    Arfon Borough Council [1975] 1 W.L.R. 524 Mars-Jones J., founding his
    judgment on the two obiter dicta to which I have referred, held that the erection
    of a defective building without proper foundations was caused by the local
    authority's negligence, but the action against the authority was statute barred
    because the damage occurred during the construction of the building and


    17

    time therefore began to run from 22nd March 1966 when the proprety was
    purchased." In the light of these authorities I think that it would have been
    very difficult, if not impossible, for the learned Judge to have held that the
    instant action was not Statute barred since the foundations were badly con-
    structed and all the original conveyances were executed more than six years
    before the writ was issued.

    In Sparham-Souter v. Town and Country Developments (Essex) Lid. [1976]
    1 Q.B. 858, Lord Denning, M.R. reconsidered and handsomely withdrew his
    obiter dictum in Button's case to the effect that the period of limitation began
    to run from that date when the foundations were badly constructed. He
    acknowledged that the true view is that the cause of action in negligence
    accrued at the time when damage was sustained as a result of negligence,
    i.e., when the building began to sink and the cracks appeared. He therefore
    concluded that in Higgins v. Arfon Council and in the instant case, it had been
    wrongly decided that the action was statute barred, and as I read their judgments
    Roskill and Geoffrey Lane, L.JJ. agreed with that view; and I certainly do.

    All the plaintiffs, other than Mrs. O'Shea, acquired their maisonettes sub-
    stantially less than six years before their writs were issued. Accordingly their
    claims cannot be affected by the statute since clearly they could suffer no
    damage before they became the purchasers of the maisonettes. The duty of
    care if and when the inspection of the foundations was carried out was owed
    to all future tenants or assignees who might suffer damage as a result of the
    negligent inspection. At the time of the inspection it was, of course, readily
    foreseeable that if the inspection was carelessly carried out future tenants or
    assignees would suffer damage but their identity was, of course, then unknown,
    just as the identity of the plaintiff in Davie v. New Merton Board Mills Ltd. [1959]
    A.C. 604 was unknown to the defendants at the time when they negligently
    manufactured a defective tool seven years before a part of it broke off and
    flew into the plaintiff's eye. The plaintiff, Mrs. O'Shea, however acquired
    her maisonette on 12th December 1962. The writ was issued on 22nd February
    1972. If it could be proved that the building suffered damage prior to 22nd
    February 1966 which endangers the safety of its occupants or visitors Mrs.
    O'Shea's claim would be statute barred. It seems to me, however, that since
    in fact no damage manifested itself until February 1970 it may be very difficult
    to prove that damage had in fact occurred four years previously, to the
    unlikely event of the defendants overcoming this difficulty, the fact that the
    damage went undetected for four years would not prevent the statute running
    from the date when the damage first occurred, see Cartledge v. E. Jopling &
    Sons Ltd.
    [1963] A.C. 758. In such circumstances Mrs. O'Shea could not
    have recovered damages because her cause of action would have accrued more
    than six years before the issue of her writ. Section 2(1) of the Limitation
    Act 1939 bars any action in tort after the expiration of the six years (amended
    by the Law Reform (Limitation of Actions, etc.) Act 1954 to three years in
    actions for damages for personal injuries) from the date when the cause of
    action accrued. Every member of this House in Jopling v. Cartledge expressed
    the view that it was unreasonable and unjust that a cause of action should be
    held to accrue before it is possible to discover any injury, and therefore before it is
    possible to raise any action. A strong recommendation was made for the
    Legislature to remedy this injustice and that recommendation was accepted
    and carried into effect by the Limitation Act 1963: but that Act was confined
    to actions for damages for personal injury. I do not think that if and when
    this action comes to be tried, the defendants should be prevented from
    attempting to prove that the claim by Mrs. O'Shea is statute barred. A
    building may be able to stand undamaged on defective foundations for years
    and then perhaps eight years or so later damage may occur. Whether it is
    possible to prove that damage to the building had occurred four years before
    it manifested itself is another matter, but it can only be decided by evidence.

    I should perhaps add a word about the damages to which the plaintiffs
    would in my view be entitled should they succeed in the action. Clearly the
    damage to the building constitutes a potential danger to the plaintiffs' safely

    18

    and the cost of underpinning the building and making it stable and safe would
    be recoverable from the defendants. So would the costs of rectifying any
    damage to the individual maisonettes and the reasonable expense incurred by
    any of the plaintiffs should it be necessary for them to find alternative
    accommodation whilst any of the structural repairs were being carried out. I
    express no opinion as to what the measure of damages should be, if it proved
    impossible to make the structure safe.

    My Lords, for the reasons I have explained I would dismiss the council's
    appeal from the order of the Court of Appeal setting aside the judgment of
    His Honour Judge Fay.

    1. I would hold that the council was under no obligation to exercise its
      power to inspect the foundations before or after the building now occupied
      by the plaintiffs was constructed, but that if it did exercise such powers of
      inspection before the building was constructed, it was under a legal duty to
      the plaintiffs to use reasonable care and skill in making the inspection.

    2. I would order the council to pay the costs of and incidental to this appeal.

    Lord Russell of Killowcn

    MY LORDS,

    I was at one time attracted by the simple proposition that the case of East
    Suffolk Rivers Catchment Board v. Kent
    [1941] AC 74 afforded a sufficient
    shield for the appellant authority, even upon the assumption that there was
    an inspection of the foundations which was so carelessly conducted that it
    failed to reveal that the proposed depth was only 2' 6" below ground level
    (which we are to assume was and should have been known to be inadequate
    to cope with swelling or shrinkage of the sub-soil) and not 3' (which we are
    to assume would have been adequate for that purpose). Upon reflection I
    do not adhere to that view.

    I have, my Lords, had an opportunity to consider closely in draft the speech
    delivered by my noble and learned friend on the Woolsack. I am in agreement
    with it on all points and am content to add nothing of my own. Accordingly
    I also would dismiss this appeal.

    (310530) 260 5/77 StS



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