Murphy v Brentwood District Council

A local authority exercising building-control functions does not, merely by approving plans or inspecting construction, owe a later owner a duty to protect against the cost of repairing defects in the building itself or its resulting diminution in value. Once a dangerous defect becomes apparent before causing personal injury or damage to other property, that loss is pure economic loss. It is recoverable in tort only where a special relationship of proximity extends the duty to economic loss.

A builder may remain liable for personal injury or damage to other property caused by a latent defect. The building itself is ordinarily one integrated unit and cannot artificially be divided into separate parts to create damage to “other property”. Anns v Merton London Borough Council [1978] AC 728 was departed from and Dutton v Bognor Regis Urban District Council [1972] 1 Q.B. 373 was overruled.

The respondent bought a house whose concrete raft foundation had been negligently designed and approved under section 64 of the Public Health Act 1936. Cracking, differential settlement and fractured pipes later appeared. The trial judge found an imminent danger to occupants and awarded damages principally representing the house’s diminution in value.

The judge held the council liable under Anns v Merton London Borough Council [1978] AC 728. The Court of Appeal dismissed the council’s appeal in [1990] 2 W.L.R. 944. The central questions before the House were whether Anns should be departed from and whether a local authority’s building-control duty extended to economic loss caused by defects in the building itself.

1. Disposition. The House unanimously allowed the council’s appeal. Lord Keith of Kinkel delivered the principal speech. Lord Bridge of Harwich agreed fully and gave additional reasons. The Lord Chancellor, Lord Brandon, Lord Ackner, Lord Oliver and Lord Jauncey also agreed that the appeal should be allowed.

2. Nature of the loss. Per Lord Keith, Lord Bridge, Lord Oliver and Lord Jauncey, the cost of remedying a defect in a building, or the diminution in its value, is pure economic loss where the defect becomes apparent before causing personal injury or damage to other property. Describing cracking or similar symptoms as material physical damage does not alter the essential nature of the loss.

3. Builder’s duty. A builder or manufacturer may be liable under ordinary negligence principles where a latent defect causes personal injury or damage to other property. Once the defect is known, however, the defective building or product is unusable or deficient in quality. Repair or replacement costs are then recoverable under a relevant contractual duty or a special relationship of proximity, but not through an ordinary duty in tort.

4. Integrated structures. Per Lord Bridge, Lord Oliver and Lord Jauncey, a building erected as one structure is ordinarily a single integrated unit. It is artificial to treat defective foundations and the superstructure as separate items of property. A distinct component supplied or installed separately may stand differently if it positively malfunctions and damages the rest of the building, but that issue did not determine this appeal.

5. Local-authority liability. The building-control function of a local authority is directed to securing the builder’s compliance with byelaws or regulations. Its potential liability cannot extend beyond that of the builder whose conduct caused the defect. Approval or inspection does not itself create reliance or a special relationship protecting a later owner against pure economic loss. The relevant provisions of the Public Health Act 1936 were directed to health and safety, not to protecting owners’ economic interests.

6. Departure from precedent. The House departed from Anns v Merton London Borough Council [1978] AC 728 so far as it imposed a private-law duty concerning damage to the defective property itself. Dutton v Bognor Regis Urban District Council [1972] 1 Q.B. 373, and subsequent decisions dependent on Anns, were overruled. The limited obligations enacted by section 1 of the Defective Premises Act 1972 reinforced the conclusion that wider consumer-protection liabilities were for Parliament.

7. The House left open whether a local authority might be liable for personal injury caused by a latent defect. Lord Bridge also suggested, without deciding, that necessary expenditure protecting neighbours or highway users from a dangerous building might be recoverable. Lord Oliver reserved his opinion on that possibility. The Court of Appeal’s order and the trial judge’s order were set aside, and the cause was remitted to the Queen’s Bench Division.

1. House of Lords: In Murphy v Brentwood District Council [1991] 1 AC 398, the House unanimously allowed the council’s appeal, set aside the orders below and remitted the cause to the Queen’s Bench Division.

2. Court of Appeal: Fox, Ralph Gibson and Nicholls L.JJ. dismissed the council’s appeal on 21 December 1989: [1990] 2 W.L.R. 944.

3. Official Referee: Judge Esyr Lewis Q.C. held the council liable under Anns v Merton London Borough Council [1978] AC 728 and awarded the claimant £38,777.25 plus interest. The House set aside that order.