The Gazette 1986

GAZETTE

APRIL 1986

Building Defects and Latent Damage

John V. O'Connor, B.L.,

M.Sc.

, F.I. Struct. E., F.I.E.I.

A he 1982 Law Reform Commission (LRC) Report on

Defective Premises was a response to shortcomings which

the LRC noted originally in their 1977 Working Paper

No. 1, "The law relating to the liability of builders,

vendors and lessors for the quality and fitness of

premises".

It appears that the Department of the Environment are

considering the LRC proposals at this time. The LRC

Report and the Defective Premises Bill it contains suggest

many ideas which would affect the building industry in

a radical way. But two proposals in particular are causing

nervous spasms throughout the construction scene. These

would affect (1) the accrual of the cause of action in

negligence for the purposes of the Statute of Limitations

1957, which is arguably the most complex question to be

resolved regarding liability for negligence by the

construction industry as a whole and (2) the higher

standard of care required of the building team which

would result from the proposal that all premises should

be built with a statutory warranty of reasonable fitness

for purpose.

The LRC proposal to give a statutory definition of the

accrual of the cause of action when premises are not built

properly attempts to tidy up the various common law

formulae possible. In essence the question is from which

point in time the sue year limitation period for torts should

run in accordance with S ll (2)(a) of the Statute of

Limitations 1957. Should it be from when it was known

or ought reasonably to have been known there was

damage arising from a defect in the building (the

"discoverability" test) per

Sparham-Souter

Town and

Country Developments (Essex) Ltd.

or should it be

measured from the time when the damage caused by a

latent defect becomes a "present and imminent danger"

as suggested by a majority opinion of the House of Lords

Anns v. Merton London Borough Council

whether the correct test should be that time begins to run

from the date when the damage actually "occurs",

whether discoverable or not, as in the

Pirelli General

Cable Works Ltd.

Oscar Faber and Partners,

which

represents current English law on the point.

The 1982 LRC Bill adapts a "discoverability" formula

similar in effect to the

Sparham-Souter

test and was akin

to the formula later adopted in the Irish High Court

decision of Carroll J. in

Morgan

Park

Developments

Ltd.

(This case, although reported as being on appeal,

did not and is not now going to the Supreme Court).

Here it was held that the date of accrual in an action

for negligence in the building of a house is the date the

defect either was discovered or should have reasonably

been discovered. This represents the latest statement of

unsettled law in the High Court in regard to houses at

least but there can be no certainty that it represents an

accurate last word on the subject. The building industry

has said it hopes not in many voices. Doubts arise because

the test adopted by the learned judge rests on the

enunciation of a constitutional point of questionable

general validity, and one that was apparently not argued

in the case. This relates to a plaintiff losing his right to

sue before he knew he had one.

The 1977 LRC Working Paper was the forerunner of

their 1982 Report and the original general scheme of a

Bill in the 1977 Working Paper made no mention

whatever of the question of latent damage and the

associated problem of accrual of the cause of action in

those circumstances. The cause of action in negligence

and breach of statutory duty to build properly per the

LRC Bill can be taken as synonymous for the purposes

of this article.

The outline Defective Premises Bill in the 1977 LRC

Working Paper provided that S. 11(5) of the Statute of

Limitations 1957 would be extended to include a new

action for breach of duty to build properly. It did not

say so expressly in the Bill but the affect of the section

is that such an action shall not be brought after the

expiration of 12 years from the date on which the cause

of action accrued. There was no attempt made then to

deal with latent damage expressly but the notion of a 12

year limitation period did not appear to meet direct

opposition from the building industry. This was

apparently because the 12 years was understood th mean

a long stop beyond which it would not be possible to sue.

The LRC Bill being presently considered by the Dept.

of the Environment states that the.cause of action should

be deemed to have accrued from the later of the following

2 events, (a) on the date on which the premises were

completed or (b) on the date when any person entitled

... knew or ought reasonably to have known of any defect

in the building work attributable to a breach of the duty

to build properly.

A resume of the position for an Irish builder or designer

with regard to negligence (or breach of the proposed LRC

Bill duty to build properly) is therefore as follows: The

Statute of Limitations 1957 si 1 (2)(a) states that an action

founded on tort (which would include negligence and the

breach of the proposed new statutory duty to build

properly) shall not be brought after the expiration of six

years from the date on which the cause of action accured.

(Note the reference to 6 years).

The 1977 LRC Working Paper No. 1 proposed to

extend the limitation period from 6 years to 12 years, but

did not define the date or event to denote the accrual of

the cause of action in latent damage cases.

The 1982 Bill in the LRC Report changed all that by

proposing the later of 2 new tests for fixing the date of

accrual of the cause of action. The first date is that of

completion of the premises and the alternative is that the

test for the accrual of the cause of action should be

deemed to be (rather like the "discoverability" test in

Sparham-Souter)

the date when the entitled to occupy the

premises knew, or ought reasonably to have known of

any defect caused by a breach of duty. The 1982 LRC

Report has therefore dropped the 12 year limitation time

envisaged in the 1977 outline Bill and the new period of

time proposed for limitation purposes is the 6 year period

applicable to tort per sll(2)(a) of the Statute of

Limitations 1957. However, this 6 year period could now

run from the point in future time when an owner/tenant

ought reasonably to know of a latent defect causing

damage.