Houses were built on defective foundations. The purchasers sued the builders and later the architects who designed them. The defendants argued that the houses were doomed from the start so that the cause of action accrued, not when the physical damage to the houses occurred, but when the plaintiffs became the owners of the houses with defective foundations, at which time they suffered economic loss because the houses were less valuable than they would have been if the foundations had been sound.
Held: As to the defendant’s argument, a building should not be considered to be ‘doomed from the start’, for purposes of statutes of limitation merely because it had a latent defect which must inevitably result in some damage at some later stage.
Lord Keith: ‘The proposition that a cause of action in tort accrued out of negligence resulting in pure economic loss was thought to be vouched by reference to Junior Books Ltd. v Veitchi Co. Ltd. 1983 1 AC 520. That case was cited in Pirelli in support of the argument that, since in that case there was economic loss when the chimney was built, the cause of action arose then. The argument was clearly rejected in the speech of Lord Fraser concurred in by all the others of their Lordships who participated in the decision. At p.16, he expressed the opinion that a latent defect in the building does not give rise to a cause of action until damage occurs. In the present case there can be no doubt that the defects in the houses were latent. No-one knew of their existence until damage occurred . . this branch of the argument for the architects is in my opinion inconsistent with the decision in Pirelli and must be rejected.’ and ‘Whatever Lord Fraser may have had in mind in uttering the dicta in question, it cannot, in my opinion have been a building with a latent defect which must inevitably result in damage at some stage. That is precisely the kind of building that Pirelli was concerned with, and in relation to which it was held that the cause of action accrued when the damage occurred. This case is indistinguishable from Pirelli and must be decided similarly.’ Lord Brandon: ‘The argument of counsel, as I understand it, proceeded as follows. Where a house was built on defective foundations, a buyer of it might suffer two kinds of damage. The first kind of damage was physical in the form of consequential structural failure or damage. The second kind of damage was economic loss, in the form of diminution in market value. In the case of the first kind of damage, the buyer’s cause of action against any party for negligence in respect of the defective foundations accrued when the consequential structural failure or damage occurred. But in the case of the second kind of damage, the diminution in market value was present from the time of the original construction, and it was at that earlier time that the buyers cause of action in respect of such diminution accrued. The plaintiffs in the present case had sued for the second kind of damage, namely diminution of market value. The causes of action had therefore accrued at the date when the houses were built. In my opinion this contention cannot be supported. I do not know what special cases Lord Fraser had in mind when he referred in his speech in Pirelli to buildings ‘doomed from the start’. It may be that he was only keeping open the possibility of the existence of such special cases out of major caution. Be that as it may, however I am quite sure that he was not seeking to differentiate between causes of action in respect of making good defects or damage on the one hand and the causes of action in respect of diminution in market value on the other . . . In my view there is nothing in the facts of the present case which would take it out of the general principle laid down in Pirelli . . ‘
The House outlined the practice to be followed in deciding whether to allow a statement of claim to be amended: ‘Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lays. Many and diverse factors will bear upon the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. Furthermore to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence.’ The doctrine of relator back was disapporved. As to the addition of a defendant: (Lord Keith) ‘A cause of action is necessarily a cause of action against a particular defendant and the bringing of the action which is referred to must be the bringing of the action against that defendant in respect of that cause of action.’
Lord Griffiths: ‘Whether an amendment should be ganted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lays. Many and diverse factors will bear upon the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. Furthermore to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence.’
Judges:
Lord Keith of Kinkel, Lord Griffiths
Citations:
[1987] 2 WLR 312, [1987] AC 189
Jurisdiction:
England and Wales
Citing:
Cited – Junior Books v Veitchi Co Ltd HL 15-Jul-1982
The defendant was a specialist sub-contractor brought in to lay a floor. In laying the composition floor the defenders used too wet a mixture and applied too thin a top coat and failed to cure the material properly. As a result cracks began to . .
Overruled – Mitchell v Harris Engineering Co Ltd CA 1967
The plaintiff was seeking to claim against his employers for personal injuries. There was correspondence with them before action that did not lead to a settlement. When the writ was issued a junior clerk made a mistake and issued it in the very . .
Approved – Liff v Peasley CA 1980
The court will not add a person as a defendant to an existing action if the claim was already statute-barred and he wished to rely on that defence, and if the court allows such addition ex parte it will not, on objection allow the addition to stand. . .
Cited by:
Cited – Mauthoor v THF Delap and Associates Limited CA 2-Oct-1995
The parties agreed for the transfer of shares. The payment cheque was not honoured. The appellant first claimed an absence of consideration, then sought to amend her defence to say that she had acted under economic duress. Threats had been made as . .
Cited – E I Du Pont de Nemours and Co v S T Dupont (2) ChD 22-Nov-2002
The parties had appeared before a hearing officer at the Trade Marks registry. The opponent of the registration sought leave to argue an additional point which, though unpleaded, could have been argued without any significant adjournment. The . .
Cited – Barings Plc (In Liquidation) and Another, Barings Futures (Singapore) Pte Ltd (In Liquidation) v Coopers and Lybrand (A Firm) and Others, Mattar and 36 Others ChD 17-Oct-2003
BFS was a company incorporated in Singapore which conducted its internal affairs in Singapore Dollars. It was by statute required to render its accounts in that currency. It paid its staff in Singapore Dollars. It sought damages in Singapore . .
Cited – Parsons and Another v George and Another CA 13-Jul-2004
The claimant sought to begin proceedings to renew his business tenancy, but the proceedings were issued in the wrong name. He sought to amend the proceedings to substitute the correct defendant, but that application was out of time.
Held: . .
Cited – Parsons and Another v George and Another CA 13-Jul-2004
The claimant sought to begin proceedings to renew his business tenancy, but the proceedings were issued in the wrong name. He sought to amend the proceedings to substitute the correct defendant, but that application was out of time.
Held: . .
Cited – Abbott and Another v Will Gannon and Smith Ltd CA 2-Mar-2005
The claimant had employed the defendants to design refurbishment works for their hotel. The work was said to be negligent, and the claimant sought damages. The defendant argued as a preliminary point that the claim was time barred. The question was . .
Cited – Smithkline Beecham Plc and others v Apotex Europe Ltd and others PatC 26-Jul-2005
Application was made to join in further parties to support a cross undertaking on being made subject to interim injunctions.
Held: On orders other than asset freezing orders it was not open to the court to impose cross-undertakings against . .
Cited – Les Laboratoires Servier and Another v Apotex Inc and others ChD 9-Oct-2008
The claimant had alleged that the defendant was producing generic drugs which infringed its rights in a new drug. The patentee had given a cross-undertaking in damages, but the patent was later ruled invalid. The court had to assess the damages to . .
Lists of cited by and citing cases may be incomplete.
Litigation Practice, Limitation
Updated: 20 December 2022; Ref: scu.182324
