Anns v Merton Overruled. Bridge became a Lord Justice of Appeal in 1975, and was sworn of the Privy Council. That case presentsan interesting parallel, though not a precise one, for the dangerthere was not to the plaintiffs but to their workmen. Batty v. Metropolitan Property Realisations Ltd.  Q.B.554 was a case where a house which suffered no defects ofconstruction had been built on land subject to the danger ofslippage. Stamp L.J., on the other hand, fully understood andappreciated them and his statement of the applicable principles asbetween the building owner and the builder, at p. 414D-H, seemsto me unexceptionable. Lord Bridge, at p. 206, suggested that in thecase of a complex structure such as a building one element of thestructure might be regarded for Donoghue v. Stevenson purposes asdistinct from another element, so that damage to one part of thestructure caused by a hidden defect in another part might qualifyto be treated as damage to "other property." Ishall call this for convenience "the complex structure theory" andit is, so far as I can see, only if and to the extent that thistheory can be affirmed and applied that there can be any escapefrom the conclusions I have indicated above under the rubric"Dangerous defects and defects of quality.". The defendants there had in relation to the designbeen in contractual relations with the plaintiffs, but it was. 692, 715. They issued a "stop work" order to prevent furtherbuilding until proper foundations had been provided. It is arguablethat any such loss or injury should be seen as beingsustained at the time of acquisition when, because ofignorance of the inadequacy of the foundations, a higherprice is paid (or a higher rent is agreed to be paid) than iswarranted by the intrinsic worth of the freehold or leaseholdestate that is being acquired. An appeal by the council to the Court of Appeal wasdismissed by that court (Fox, Ralph Gibson and Nicholls L.JJ. The chattel is eithercapable of repair at economic cost or it is worthless and must bescrapped. Perhaps it is unfortunate that it did notcome sooner, but the House could not, I think, have contemplateddeparting from the decision of an Appellate Committee soeminently constituted unless directly invited to do so. Iwould say the same about the manufacturer of an article.If he makes it negligently, with a latent defect (so that itbreaks to pieces and injures someone), he is undoubtedlyliable. The doctrine, as propounded in the speechof Lord Wilberforce in this House, was, with some modifications,an adoption of principles of law first enunciated by the Court ofAppeal in Dutton v. Bognor Regis Urban District Council  1Q.B. At the same time as setting out the Caparo Three-Stage Test, it is significant that Lord Bridge also endorsed an incremental approach to duty of care, as described by Brennan J in his excerpt judgment above. Further, it would not cover the situation which mightarise through discovery, before any damage had occurred, of adefect likely to give rise to damage in the future. In addition, wet patches appeared in the lawn.The plaintiff dug a hole in front of the house and exposed part ofthe foundation raft. The courts below, relying on Anns v.Merton London Borough Council  AC 728, held that it did.In the 40 years after Donoghue v. Stevenson it was accepted thatthe principles enunciated by Lord Atkin were limited to caseswhere there was physical damage to person or to property otherthan the property which gave rise to the damage and where therewas no reasonable opportunity of discovering the defect whichultimately caused the damage (Grant v. Australian Knitting MillsLtd. That decision was certainly without precedent and was,I think, widely regarded as judicial legislation. It is only the damage for the, house which requires consideration. Murphy v Brentwood District Council (1991): pure economic loss. There is, in my opinion,no difficulty about this. I didnot and do not accept that view. We can leaveaside cases of personal injury or damage to other propertyas presenting no difficulty. Is a danger imminent when it is bound tooccur, albeit not for some time, or is it imminent only if it islikely to occur in the immediate future? 768-769, Lord Salmon was at pains toemphasise that the claim had nothing to do with reliance. But, in anyevent, like my noble and learned friends, I think that theachievement of beneficial social purposes by the creation ofentirely new liabilities is a matter which properly falls within theprovince of the legislature and within that province alone. In both cases the real loss ispecuniary. It is recoverable against anyparty who owes the loser a relevant contractual duty. The speech of my noble and learned friend Lord Keith ofKinkel addresses comprehensively all the issues on which theoutcome of this appeal depends. Lord Wilberforce took the viewthat the principle of Donoghue v. Stevenson  AC 562applied to the builder of defective premises, there being no soundreason why that principle should be limited to defective chattels. My Lords I agree with the views of my noble and learnedfriend, Lord Bridge of Harwich, in this appeal that to apply thecomplex structure theory to a house so that each part of theentire structure is treated as a separate piece of property is quiteunrealistic. 373, the Court of Appeal purported to apply theprinciple of Donoghue v. Stevenson to a case in which there wasno damage to person or property other than to the property withwhich the duty of care was concerned. The plaintiff's neighbour at 36, Vineway also suffereddamage to his house through the settlement, and made a claim onhis insurers. If the defectcan be repaired at economic cost, that is the measure of the loss.If the building cannot be repaired, it may have to be abandoned asunfit for occupation and therefore valueless. Lord ChancellorLord Keith of KinkelLord Bridge of HarwichLord Brandon of OakbrookLord AcknerLord Oliver of AylmertonLord Jauncey of Tullichettle. Click here to remove this judgment from your profile. Blackmun J. delivering the judgment of the SupremeCourt expressed the opinion, at pp. In the Privy Council case of Yuen Kun Yeu v. Attorney-General of Hong Kong  A.C. 175, 191 that passage wasquoted with approval and it was said, at p. 194: "In view of the direction in which the law has since beendeveloping, their Lordships consider that for the future itshould be recognised that the two-stage test ... is not to, be regarded as in all circumstances a suitable guide to theexistence of a duty of care.". Contains public sector information licensed under the Open Government Licence v3.0. While, in a case where asubsequent purchaser or long term tenant reasonably electsto retain the premises and to reinforce the foundations, onepossible measure of the damages involved in the actualinadequacy would (if such damages were recoverable) be thatsuggested by his Lordship, I respectfully disagree with theclassification of the loss sustained in such circumstances as'material, physical damage.' Thisand other relevant American authorities are extensively reviewedin the illuminating judgment of the British Columbia Court ofAppeal delivered by Tysoe J.A. I frankly doubt whether, in searching for such limits, thecategorisation of the damage as "material," "physical," "pecuniary"or "economic" provides a particularly useful contribution. In Anns v. Merton London BoroughCouncil  AC 728, it was held by the House of Lordsthat a local government authority owed a relevant duty ofcare, in respect of inspection of the foundations of abuilding, to persons who subsequently became long termlessees (either as original lessees or as assignees) of parts ofthe building. In Quackenbush v. Ford Motor Co.,153 N.Y.S. has imposed on the local authority the duty not to pass plansunless they comply with the byelaws or regulations and to passthem if they do. They were entrusted by Parliament with thetask of seeing that houses were properly built. 735. It is at least highly doubtful if the reasoning of thisdecision can now be supported consistently with the unanimousopinion of the United States Supreme Court in East RiverSteamship Corporation v. Transamerica Delaval Inc., (1986) 106 S.Ct. This decision of the Supreme Court is incomplete accord with the decision of the majority of the SupremeCourt of Canada in Rivtow Marine Ltd. v. Washington Iron Works.If Quackenbush v. Ford Motor Co. is no longer good law the onlyremaining support for Richmond. I have had the advantage of reading in draft the speechesprepared by my noble and learned friends, Lord Keith of Kinkeland Lord Bridge of Harwich. Hisexamination of law started with the formulation of the two stagetest of liability in negligence which, though it has since becomevery familiar, I venture to quote again  AC 728, 751-752: 'Through the trilogy of cases in this House - Donoghue v.Stevenson  AC 562, Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd.  AC 465, and Dorset YachtCo. Lord Wilberforce derived support for his conclusion fromtwo Commonwealth cases. 2295, to the effect thatno liability in negligence attached to a manufacturer whoseproduct malfunctioned injuring only the product itself and causingpure economic loss. Then it wouldbe open to question whether there should not also be a right torecovery where the defect renders the article not dangerous butmerely useless. 858it abjured the view that the cause of action aroseimmediately upon delivery, i.e., conveyance of the defectivehouse. There is much to besaid for the view that in what is essentially a consumer protectionfield, as was observed by Lord Bridge of Harwich in D. & F.Estates, at p. 207, the precise extent and limits of the liabilitieswhich in the public interest should be imposed upon builders andlocal authorities are best left to the legislature. 337 and Spartan Steel & Alloys Ltd. v. Martin & Co.(Contractors) Ltd.  QB 27.". He may have a house which, until repairs are effected, isunfit for habitation, but, subject to the reservation I haveexpressed with respect to ruinous buildings at or near the boundaryof the owner's property, the building no longer represents a sourceof danger and as it deteriorates will only damage itself. Or, to put itanother way, what is it, apart from the foreseeability that thebuilder's failure to observe the regulations may create a situationin which expenditure by a remote owner will be required, thatcreates the relationship of proximity between the authority and theremote purchaser? This is aided by the distinction between consequential and pure Parliament imposed a liability on builders by the DefectivePremises Act 1972 - a liability which falls far short of that whichwould be imposed upon them by Anns. If theplaintiffs had happened to discover the defect before any damagehad occurred there would seem to be no good reason for holdingthat they would not have had a cause of action in tort at thatstage, without having to wait until some damage had occurred.They would have suffered economic loss through having a defectivechimney upon which they required to expend money for thepurpose of removing the defect. Thus in East River Steamship Corporationv. These are available on the site in clear, indexed form. The alternative, and in myview preferable, approach is that any loss or injury involvedin the actual inadequacy of the foundations is sustained onlyat the time when that inadequacy is first known ormanifest. If, then, the law imposes upon the person primarilyresponsible for placing on the market a defective building noliability to a remote purchaser for expenditure incurred in makinggood defects which, ex hypothesi, have injured nobody, upon whatprinciple is liability in tort to be imposed upon a local authorityfor failing to exercise its regulatory powers so as to preventconduct which, on this hypothesis, is not tortious? I accordinglyreach the same conclusion as do my noble and learned friends. the only damage for which compensation was to be awarded andwhich formed the essential foundation of the action was pecuniaryloss and nothing more. with averting danger to health and safety, not danger or damageto property. Where itdoes, I think, serve a useful purpose is in identifying those casesin which it is necessary to search for and find something morethan the mere reasonable foreseeability of damage which hasoccurred as providing the degree of "proximity" necessary tosupport the action. Iagree with it, and for the reasons which he gives I consider thatthe House should depart from its previous decision in Anns v.Merton London Borough Council  AC 728 to the extentproposed by him, and that the appeal should be allowedaccordingly. The present problem isconcerned with the scope of the duty. In the light of these findings Judge Esyr Lewis held that thecouncil were liable to the plaintiff in negligence under theprinciple of Anns v. Merton London Borough Council. I donot think that they act wrongly in so doing: they are onlyadopting the less bad of the only alternatives open to them.But this is bound to add to uncertainty for no one can sayin advance whether in a particular case the court will orwill not feel bound to follow the old unsatisfactory decision.On balance it seems to me that overruling such a decisionwill promote and not impair the certainty of the law. Lord Bridge after stating that whenthe hidden defect in a chattel is discovered before it causesexternal injury or damage there is no room for the application ofthe Donoghue v. Stevenson principle, said, at p. 206: "If the same principle applies in the field of real propertyto the liability of the builder of a permanent structurewhich is dangerously defective, that liability can only ariseif the defect remains hidden until the defective structurecauses personal injury or damage to property other than thestructure itself. (b) Messrs. Mayer were competentengineers and the council were entitled to rely on their skill andexperience. Yet theyfailed to protect them. This, however, can makeno difference in principle and the reasoning of the majority inAnns, which clearly links the liability of the local authority tothat of the builder, must equally apply. So far as I am aware, there has not yetbeen any case of claims against a local authority based on injuryto person or health through a failure to secure compliance withbuilding byelaws. The complex structure theory has, so far as I know, neverbeen subjected to express and detailed examination in any Englishauthority. It is sufficient to say that a cause of actionarises at the point I have indicated.". Lord Wilberforce, in the passage last quoted from his speechin Anns, does not devote precise consideration to the scope of theduty owed by a local authority as regards securing compliance withbuilding byelaws. For the reasons which they have given, I too wouldallow this appeal. Richmond P. goes on to hold that the measure of damageswould include the whole cost of remedial works plus anydiminution in value of the house in so far as it was impossible toeffect a complete remedy. Nodoubt its existence results in local authorities having to payincreased insurance premiums, but to be relieved of that necessitywould be to their advantage, not to their detriment. To overruleit is unlikely to result in significantly incurred insurance premiumsfor householders. As had been demonstrated in the speeches of my noble andlearned friends, the result of applying these qualifications todifferent factual circumstances is to require distinctions to bemade which have no justification on any reasonable principle andcan only be described as capricious. Then there is thequestion whether the remedy is available where the defect isrectified, not in order to avert danger to an inhabitant occupierhimself, but in order to enable an occupier, who may be acorporation, to continue to occupy the building through itsemployees without putting those employees at risk. However, he considered that it was neverthelessnecessary to give some general consideration to the matter in thecontext of the limitation question (p. 759F). This must be relatedclosely to the purpose for which powers of inspection aregranted, namely, to secure compliance with the byelaws.The duty is to take reasonable care, no more, no less, tosecure that the builder does not cover in foundations whichdo not comply with byelaw requirements. It was found that the soil pipe leadingto the main drain had cracked and was leaking into thefoundations. Moreover, the imminent dangerto health or safety which was said to be the essential ground ofthe action was not the result of the physical manifestations whichhad appeared but of the inherently defective nature of thestructure which they revealed. Lord Bridge's test for duty was put into practice in Murphy v Brentwood District Council  2 All ER 908. If the foundations are inadequate the wholehouse is affected. The cost of rectifying thedefect was incurred for the purpose of enabling the crane to beprofitably operated. Those builders had employed civil engineers to design the foundations. towards the owners of yachts moored in the vicinity of theirencampment. 433; 153 N.Y.S. Laskin J., however, in a dissenting judgment, afterconsidering the liability of the manufacturers for injury toconsumers or users of their products resulting from negligencestated, at p. 552: "This rationale embraces, in my opinion, threatened physicalharm from a negligently-designed and manufactured productresulting in economic loss. Murphy v Brentwood District Council  UKHL 2,  1 AC 398 was a judicial decision of the House of Lords in relation to recovery for pure economic loss in tort. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Since, however, this involvesdeparting from a seminal decision of this House which has stoodfor a considerable period and which has had the most profoundinfluence on the development of the law of negligence both in theUnited Kingdom and in other jurisdictions it is, I think, only rightthat I should also state my reasons independently. In either event his loss ispurely economic being the cost of repair or replacement. Thebasis of the decision in Anns is that the common law will imposea duty in the interests of the safety and health of owners andoccupiers of buildings since that was the purpose for which theAct of 1936 was enacted. Engineers made mistake and cracks appeared in houses. On the question of damagesgenerally I have derived much assistance from the judgment(dissenting on this point, but of strong persuasive force) ofLaskin J. in the Canadian Supreme Court case of RivtowMarine Ltd. v. Washington Iron Works  6 W.W.R. The manufacturers and the supplierswere aware of this occurrence but delayed considerably in warningthe plaintiffs so that they were placed under the necessity oftaking the crane out of service for rectification at the height ofthe logging season instead of in the slack season. Nor do I think that it can properly be left to stand asa peculiar doctrine applicable simply to defective buildings, for Ido not think that its logical consequences can be contained withinso confined a compass. Only Stamp L.J. in Rivtow Marine Ltd v.Washington Iron Works  3 W.W.R. In Bowen v. Paramount Builders (Hamilton) Ltd.  1 N.Z.L.R.394, the New Zealand Court of Appeal held that where a latentdefect created by a builder's negligence caused damage to thestructure an action of damages would lie on the ground of it beingphysical damage. 10 Q.B. D&F Estates Limited and Others v Church Commissioners for England and others - Designing Buildings Wiki - Share your construction industry knowledge. And Mouth Disease Research Institute [ 1966 ] 1 K.B three-quarters of an inch at! A whollyartificial exercise ] 3 W.W.R which theoutcome of this proposition he on... And Mouth Disease Research Institute [ 1966 ] 1 AC 398 essay founded by! 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