The Gazette 1986

APRIL 1986

GAZETTE

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. In Anns v. Merton it was where the defect became a present and imminent danger. In Pirelli v. 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 5 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 6 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 v. 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 7 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

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