The Gazette 1986

GAZETTE

APRIL 1986

English Case Law

A series of English cases in the House of Lords dealt

with this particular problem of accrual. Various formulae

were applied to suggest the point from which time should

run. In

Sparham-Souter

it became when the occupier

knew or ought reasonably to have known of the damage.

Anns

Merton

it was where the defect became a

present and imminent danger. In

Pirelli

Faber

it was

adjusted to the point in time where the actual damage

was caused. In the

Pirelli

formula reliance would be

placed on technical evidence to locate the actual point

in time when damage occurred whether discoverable or

not and the limitation period would begin to run from

then. In that case the plaintiff lost his claim because 6

years had expired from the date of actual damage before

a writ was issued and he was held to be statute barred.

If the "discoverability" test had been retained this

problem would not have arisen.

In England, this has led to competing claims for the

plaintiff and the defendant. The balance had to be struck

between the injustice of the plaintiff losing the right to

sue with the unenviable position of a defendant faced with

the mischief of old claims which the Statute of

Limitations was designed to cure. The courts have given

three differing reasons supporting the existence of statutes

of limitations, (1) that long dormant claims have more

of cruelty than justice in them, (2) that a defendant might

have lost the evidence to disprove a stale claim and (3)

that a person with a good cause of action should pursue

it with reasonable diligence, but the dilemma in the latent

damage cases in England since

Pirelli

is that the plaintiff

might lose his chance to sue before he knew he had

suffered loss.

The vexed state of the law in England on the question

of limitation of time and negligence has led to pressure

for corrective legislation. Consideration is being given to

a Report on Latent Damage of the Law Reform

Committee

which was issued to provide recommendat-

ions in this area. This Report proposes that there should

be no change whereby a cause of action in negligence

accrues on the date of damage in the ordinary case where

the damage is obvious form the date of its occurence.

Secondly, if the damage arises from latent defects in

negligence cases then the plaintiff should be given a

limitation period of 3 years from the date of discovery

(or from when discovery could have been reasonably

made) of significant damage. This would be a new

"discoverability" test giving 3 years in which to sue for

significant damage. The "discoverability" test would be

subject to a long stop of 15 years running from the date

of the breach of duty in order to avoid the negligent

designer or builder being available as a mark to sue in

perpetuity. This would mean that there could be no court

action more than 15 years after a breach of duty.

This report has received a poor welcome by the building

industry in England

as being too much in favour of

the plaintiff. But the problem is intractable. On any

objective analysis the proposed legislation is generally

seen as a compromise which could lead to injustice on

either side because occasionally latent damage might not

become obvious until after the 15 year period had expired

so that a Plaintiff could not sue while on the other hand

the prospect of defending a case some 15/20 years after

completion is repellent for reasons already stated.

Morgan v. Park Developments Ltd.

In Ireland, the clearest expression of the law applicable

is in the judgement of Carroll J in

Morgan

Park

Developments Ltd.

Here the plaintiff bought a house

from the defendants - who were builders - in 1962. The

plaintiff noticed defects soon after moving in and these

were repaired by the builders. One large crack was

repaired for a second time in 1965 (the eventual date

chosen by the Court from which time ran) and in 1975

the crack repair was attempted again by a different

builder. It was only in 1979 i.e. 17 years after purchase

that an Architect was consulted who reported a major

structural fault. Proceedings were issued in 1980 and the

judgement was in 1983 or 21 years after the sale of the

house.

It was held that the date of accrual in the action for

negligence was the date the defect either was discovered

or should have reasonably been discovered and that

neither date of accrual would be sufficient to bring the

plaintiffs claim within the six year period allowed by the

Statute of Limitations 1957. Hence the builder was not

liable. The similarity in the test adopted by the learned

Judge to the

Sparham-Souter

test and to the test proposed

by the LRC has been noted.

Although there was no liability on the builder on the

facts of this case, the combined effects of the accrual test

based on "discoverability" adopted by Carroll J and the

earlier LRC proposals to the same effect have caused

noticeable anxiety in the building industry in its various

sectors.

Submissions have been made to the Minister for the

Environment/Justice to highlight the problem of stale

claims for defendants. It is difficult to see how a

completely just compromise can be achieved because of

the conflicting interests of the plaintiff and defendant,

but a solution will have to be found in the legislature.

The absence of any "discoverability" test in the case of

personal injuries is notorious, in circumstances where the

plaintiff has only 3 years in which to sue. Common

wisdom is that a re-appraisal of the whole question of

accrual of the cause of action in all negligence cases is

almost inevitable.

Many people see any possible legislation on latent

defects as raising solutions through compulsory insurance

against damage. A dispassionate analysis of the latent

damage problem together with insurance possibilities has

been propounded in England by a recent Report

prepared by Atkins Planning for the Building Economic

Development Committee (EDC) acting through a non-

binding Insurance Feasibility Steering Committee. The

terms of reference which apply to the Report were to

investigate the feasibility of latent defects protection

insurance for all new building save housing, and to make

recommendations to the Building EDC on their findings.

The Report took four central considerations into

account (a) that "defects have many roots other than

breaches of contract and negligence" i.e. freak storms

for instance, and (b) that liabilities and responsibilities

for latent defects are confused because "English Law on

construction liability is a mess" and (c) that building

producers are liable only to their immediate clients in

contract and they note that actions in tort, which is the

only path open to a subsequent owner, are more