The Gazette 1986

APRIL 1986

GAZETTE

Building Defects and Latent Damage by 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 v. Town and Country Developments (Essex) Ltd. 1 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 in Anns v. Merton London Borough Council 2 or 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. v. Oscar Faber and Partners, 3 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 v. Park Developments Ltd. 4 (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.

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