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Abbott & Anor v Will Gannon & Smith, Court of Appeal, 2 March 2005

16 March 2005
The issues

Murphy v Brentwood, Pirelli v Oscar Faber – Economic Loss – Limitation – Date of Accrual of Action

The facts

The claimants owned a hotel in Torquay. In May 1995 the defendants who were a firm of consulting structural and civil engineers were asked to design the work necessary to remedy structural defects in a large bay window. The contract was oral. Remedial work was completed by a local builder in March 1997. In late 1999 the claimants noticed that the lintel over the window had moved and cracked the surrounding structure. Further remedial works were necessary costing approximately £20,000.00. A claim was brought against the defendant engineer in contract and tort and issued on 15 September 2003. It was common ground that the claimant contract was time barred. There was an issue as to whether the claim in tort was also time barred.

The District Judge found that the cause of action arose in 1999. The defendant appealed.

The decision

This case was on all fours of the facts in Pirelli v Oscar Faber. That case decided that except perhaps where the advice of an architect or consulting engineer led to the erection of a building which was so defective as to be doomed from the start the cause of action accrued only when physical damage occurred to the building. In Pirelli cracks had developed at the top of the chimney that had been designed for the claimant’s factory in 1970. The cracks were not discovered until 1977. The cause of action therefore for the purposes of limitation had accrued in spring 1970 and the claim was therefore time barred.

In Murphy v Brentwood District Council the House of Lords decided that there was a duty of care on the builder of a house to take reasonable care to avoid injury or damage through defects in its construction to the persons or property of those whom he ought to have in contemplation as likely to suffer such injury but that that duty extended only to latent defects; where however a defect was discovered before any injury to personal health or damage to property other than the defective house itself had been done, the expense incurred by a subsequent purchaser of the house in putting the defect right was pure economic loss and was not recoverable in tort in the absence of the special relationship of proximity. It was common ground in this case that there was such a special relationship.

In Murphy, Pirelli has not been obviously overruled. On the other hand in Invercargill City Council v Hamlin Privy Council in another claim against a local authority for negligent inspection of foundations did not follow Pirelli which had also been rejected by the Supreme Court of Canada.

The three House of Lords cases to guide the Court it should be possible to give a clear answer to the question as to what the present state of the law of England was. The Court of Appeal felt unable to do so with any confidence however. Murphy established that in the absence of a special relationship a Claimant could only sue in tort for personal injury or damage to property caused by a latent defect in a building. That it was not clear whether this extended to damage to the building itself before the defect was discovered. Nor was it clear what the position was where there was a special relationship. It was clear that the duty in such a case extended to taking care not to cause economic loss. But it left open the question of when such loss occurred in a case such as the present one and did the duty not to cause physical damage to property constitute a separate cause of action for limitation purposes?

The simple answer to these questions was that the Court was bound by the decision in Pirelli to uphold the decision of the District Judge. On that basis the cause of action in this case had accrued in 1999 so the claim was not time barred.

Appeal dismissed.

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