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The Defective Premises Act 1972—Defective Law and Defective Law Reform

Published online by Cambridge University Press:  16 January 2009

J. R. Spencer
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The Defective Premises Act 1972—which did not come into force until 1 January 1974—was intended to do three things: first, it was intended to create a new civil remedy against incompetent architects and jerry builders who design or build bad dwelling-houses; secondly, it was intended to abolish the anomalous immunity of vendors and lessors from negligence actions; and thirdly, it was intended to widen the liability of landlords for defects in the premises which they let. The Act is based on the draft Bill annexed to the Law Commission's fortieth report, “Civil Liability of Vendors and Lessors of Defective Premises”—although in the Act the Law Commission's proposals have been considerably watered down. During the passage of the Act through Parliament the Law Commission was congratulated on its “remarkable piece of work,” and comentators have since welcomed it, either without criticism or else with fulsome praise. So excited was everyone by the label “law reform” that no one seems to have pointed out a number of obvious defects in the Law Commission's original proposals, defects which were multiplied when those proposals were heavily watered down. The final measure is open to a number of criticisms. It is, with all due respect to the Law Commission and to the sponsors of the Bill, a measure which adopts excessively cumbrous means to achieve relatively modest ends; which is drafted in terms which are longwinded, ugly and obscure; and which ultimately changes little—a poor show in view of the complications it creates in the process.

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The Cambridge Law Journal , Volume 33 , Issue 2 , November 1974 , pp. 307 - 323
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Copyright © Cambridge Law Journal and Contributors 1974

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References

1 Defective Premises Act 1972, c. 35, s. 7 (2).

2 By Lord Stow Hill; Hansard H.L. 330–1372, 16 May, 1972.

3 Samuel, 116 S.J. 910.

4 North, 36 M.L.R. 628.

5 s. 6 (2).

6 E.g., Clay v. Crump (A. J.) & Sons [1964] 1 Q.B. 533Google Scholar (an architect); Sharpe v. Sweeting (E. T.) & Son Ltd. [1963] 1 W.L.R. 665Google Scholar (a builder).

7 Hancock v. B. W. Brazier (Anerley) Ltd. [1966] 1 W.L.R. 1317, 1332Google Scholarper Lord Denning M.R.

8 Hudson's Building and Engineering Contracts, 10th ed., by Wallace (1970), pp. 273–306.Google Scholar

9 Hudson, op. cit., p. 103 lists a total of 11 duties.

10 Ibid, p. 134; however, a court might find that the architect had warranted the effectiveness of his design if the facts suggested that he had been engaged on a “no cure—no pay” basis: cf. Hydraulic Engineering Co. Ltd. v. Spencer & Sons (1886) 2 T.L.R. 554.

11 Thus in Richards (Builders) Ltd. v. White (1963) 107 S.J. 828Google Scholar a contract provided that approval by the local authority building inspector should be conclusive evidence that the house was properly completed, and this was held to exclude the purchaser's right to complain when, after inspection, the walls let in the rain; and in Lynch v. Thorne [1956] 1 W.L.R. 303Google Scholar, where the victim instructed a builder to build according to inherently defective plans which the builder himself produced, and it was held that the victim's approval of the plans impliedly excluded the builder's common law liability as far as defects inherent in the plans were concerned. See also Kent v. Saltdean Estate Co. Ltd. (1964) 114 L.J. 555Google Scholar, and Dworkin, 28 Conveyancer 276, 285. Of course, freedom of contract may also work in the victim's favour, as where the contract is in a form specified by the N.H.B.R.C., containing duties of good workmanship more stringent than the common law duties; see post, s. (iii).

12 “The general rule is that the common law duty to take care to avoid causing injury to others is restricted to physical injury either to person or to property”: Salmond on the Law of Torts, 16th ed., by Heuston (1973), p. 205.Google Scholar The existence of such a “general rule” was doubted by Lords Hodson, Devlin and Pearce in Hedley Byrne & Co. v. Heller & Partners [1964] A.C. 465, at pp. 509, 518 and 536Google Scholar; but it was strikingly reaffirmed by the Court of Appeal in S.C.M. (U.K.) Ltd. v. W. J. Whittall & Son Ltd. [1971] 1 Q.B. 337Google Scholar, and in Spartan Steel & Alloys Ltd. v. Martin & Co. (Contractors) Ltd. [1973] Q.B. 27.Google Scholar

13 [1972] 1 Q.B. 373.

14 Originally she sued the builder as well, but this claim was settled out of court: [1972] 1 Q.B. at p. 390.

15 Ibid., at p. 396, 403–404.

16 Ibid., loc. cit.

17 First, had Mrs Dutton not repaired the house it would have fallen down, probably injuring her person and damaging her possessions in the process. Thus what she spent on repairs was spent to avert losses of a kind for which the defendant would indisputably have been liable, and so the cost of repair (but not the diminution in value of the property) was properly recoverable on this ground; [1972] 1 Q.B. at p. 396 per Lord Denning M.R.; cf. McGregor on Damages, 13th ed. (1972),Google Scholar s. 236. Secondly, by analogy with Hedley Byrne v. Heller (n. 12 supra) the Council could have been held liable for the purely economic loss resulting from negligent inspection of the site, even though the builder would not have been liable for losses of this type: [1972] 1 Q.B. 414–415 per Stamp L.J.

18 Horton Rogers, 30 C.L.J. 211; Miller, 36 M.L.R. 199.

19 Dworkin, 28 Conv. 276.

20 Emmet on Title, 15th ed., by Smith, and Farrand, (1967), p. 94Google Scholar; Barnsley, Conveyancing Law and Practice (1973), p. 137.

21 The rule in Smith v. Marrable (1843) 11 M. & W. 5 at common law, and the duties imposed by the Housing Act 1957, s. 6 (1) and (2) and the Housing Act 1961, ss. 32 and 33. These are dealt with in Part III, post.

22 Dealt with in detail in Part II, post.

23 See Part II, post.

24 Bottomley v. Bannister [1932] 1 K.B. 458Google Scholar; Hoskins v. Woodman [1938] 1 All E.R. 692.Google Scholar

25 Lawrence v. Cassell [1930] 2 K.B. 83Google Scholar; Miller v. Cannon Hill Estates Ltd. [1931] 2 K.B. 113.Google Scholar

26 Perry v. Sharon Development Co. Ltd. [1937] 4 All E.R. 390Google Scholar; Hudson, op. cit., p. 289; Hancock v. Brazier [1966] 1 W.L.R. 1317Google Scholar; Jennings v. Taverner [1955] 1 W.L.R. 932.Google Scholar

27 [1972] 1 Q.B. at pp. 393–394 per Lord Denning M.R., pp. 401–402 per Sachs L.J.

28 [1972] 1 Q.B. at p. 414.

29 These are explored fully in Part II, post.

30 Dworkin, 28 Conv. 385; Adams, 117 N.L.J. 1206, 1232, 1262; 120 N.L.J. 471, 496; 121 N.L.J. 144; 122 N.L.J. 497; Aldridge, 113 S.J. 863.

31 Rule 26 (reference is to rules of 1 January 1974).

32 The N.H.B.R.C. scheme is principally one for builder-vendors and developers, making good the deficiency of common law duties owed by such persons. However, the scope of the scheme is wider than this, since registered builders who build houses for owner-occupation must give similar express guarantees even where they do not build on land which is owned at the time by them: rule 28 (d). Of course, there would also be liability at common law in such a case. Rules 28 (a) and 28 (b) cover the case where a registered builder builds on land belonging to a developer.

33 Rule 28 (c).

34 Form HB5A, cl. 5.

35 At one time the defects clause (HB5A, cl. 5) imposing the specific duty to remedy defects for two years might have been construed as limiting the builder's liability for all defects: Kent v. Saltdean Estate Co. Ltd. (1964) 114 L.J. 555Google Scholar; but Hancock v. Brazier [1966] 1 W.L.R. 1317Google Scholar rules this construction out. However, where the defect gives the purchaser a valid claim under the N.H.B.R.C.'s ten-year guarantee contained in the Full Certificate, this must be pursued first, and the builder sued after, if at all: HB5A, cl. 8 (b).

36 Contractual force is given to the guarantee by the device of making the builder the agent of the N.H.B.R.C. to effect the guarantee on its behalf: HB5A, cl. 8 (a).

37 Written answer to a Parliamentary question, Hansard H.C. 754–73, 14 November, 1967.

38 L.C., No. 40, s. 23.

39 Holt v. Heatherfield Trust Ltd. [1942] 2 K.B. 1.Google Scholar

40 Barnsley, op. cit., p. 148.

41 Whether or not this amounts to an equitable assignment is a very difficult question. The cases on equitable assignment of a legal chose seem to fall into three clear groups: (i) where the assignor has contracted with the assignee to transfer the chose to him; (ii) where the assignor has done all that need be done by him to make the assignee owner of the chose; (iii) where the assignor has either transferred the chose to trustees on trust for the assignee, or made himself trustee for him. Merely banding the documents over clearly fails (i). It presumably fails (ii) as there is more which P1 can do—he still needs to execute a written assignment, even if he does not himself need to give notice (cf. Treitel, The Law of Contract, 3rd ed. (1970), p. 594). And it fails (iii) if, as Milroy v. Lord (1862) 4 De G.F. & J. 264 suggests, an express declaration of trust is needed; though, as Hall points out, the courts might extend this type of equitable assignment to the case where the assignor is constructive trustee of the chose for the assignee—which he would be more or less wherever the courts wanted him to be; see Hall, “The Gift of Part of a Debt” (1959) 17 C.L.J. 99, at p. 115, and generally pp. 105–117. Alternatively the courts might be prepared to invent a new type of equitable assignment consisting of the intention to assign coupled with some overt act, although none of the cases really support such a wide interpretation of equitable assignment.

42 Beswick v. Beswick [1968]Google Scholar A.C. 58 establishes that this is the case notwithstanding s. 56 of the Law of Property Act 1925: “the section does not say that a person may take the benefit of an agreement although he was not a party to it: it says that he may do so although he was not named as a party in the instrument which embodied the agreement” per Lord Reid at p. 76. The case also appears to limit the application of s. 56 to deeds: Ibid., p. 106 per Lord Upjohn. Cf. Barnsley, op. cit., p. 148. See also Aldridge, 113 S.J. 863, and correspondence, Ibid., pp. 907 and 925.

43 But although “it is highly unlikely … that the Council would seek to resile from the spirit of the undertaking … one wonders whether in the direst of circumstances its insurers might feel constrained to stick to the letter of it.” Adams, 121 N.L.J. 144, 147.

44 Rule 29 (b).

45 The worst the N.H.B.R.C. can do is to expel a builder; but since expulsion does not stop his continuing to build for a living if he so wishes, this is not a particularly effective sanction. Alternatively under r. 17 the N.H.B.R.C. can require a recalcitrant builder to remedy a defect, and on his failure or refusal have the defect remedied by another builder and recover the cost; this would be of more immediate value to P2.

46 Gore v. Van Der Lann [1967] 2 Q.B. 31Google Scholar on the one hand, and Snelling v. John G. Snelling Ltd. [1973] Q.B. 87Google Scholar on the other.

47 [1956] 1 W.L.R. 303.

48 See n. 11 above.

49 House Building Standards (Approved Scheme etc.) Order 1973, No. 1843.

50 s. 1 (1) provides that the duty is owed “if the dwelling is provided to the order of any person, to that person [inferring that the duty may be owed in cases where the dwelling is not built to order, when it would presumably be built with a view to later sale]; and (b) without prejudice to paragraph (a) above [obscure, but probably meaning ‘whether or not the dwelling is so provided’], to every person who acquires an interest … in the dwelling.” The inclusion of developers in subs. (4) makes little sense unless “taking on work” includes doing work on one's own land with a view to later resale. And the exclusion of houses to which the N.H.B.R.C. scheme applies in section 2 makes little sense unless section 1 applies to those who build and later sell, since it was chiefly for this situation that the N.H.B.R.C. scheme was designed.

51 The fee simple, legal and equitable leases and legal and equitable mortgages are obviously included. But what about a statutory tenancy under the Rent Acts, which is difficult to classify?—see Megarry, The Rent Acts, 2nd ed. (1967), p. 196. And what about a wife's right of occupation under the Matrimonial Homes Act 1967, “which fits into no category known to conveyancers before 1967; the phrase sui generis seems apt, but of little help”? Wroth v. Tyler [1974] 1 Ch. 30, at p. 46Google Scholarper Megarry J. Neither of these are strictly legal or equitable interests, yet on the face of it would be odd if the mortgagee were protected and the deserted wife and the statutory tenant were not. Contractual licences as in Binions v. Evans [1972]Google Scholar Ch. 359 and interests in trusts for sale as in Hussey v. Palmer [1972] 1 W.L.R. 1286Google Scholar are just two more rights which may or may not fit the statutory definition.

52 The Law Commission saw a clear distinction between “defects of quality,” a contractual notion, and “dangerous defects,” a tortious notion: L.C., No. 40, ss. 2 and 3. Section 1 was meant to deal with “defects of quality”. See also L.C., No. 40, p. 9, n. 17.

53 Maxwell on the Interpretation of Statutes, 12th ed., by Langan, pp. 51–54.

54 L.C., No. 40, s. 25. The sponsor of the Bill appears to have been “puffing his wares” when he said that his Bill would enact 3 out of 4 of the Law Commission's proposals; 2 1/6 would have been a closer estimate. Hansard H.C. 830–1821, 11 February, 1972.

55 By Lord Stow Hill. Hansard H.L. 330–1366, 16 May, 1972.

56 North, 36 M.L.R. 628, 632.

57 Rule 35 B 2 (b), especially 35 B 2 (b) (vi); form HB5A, cl. 6 and 7.

58 Barnsley, op. cit., p. 149. Barnsley also says that the N.H.B.R.C. scheme excludes liability for personal injury. With respect, this is not entirely correct. It is true that the N.H.B.R.C. does not undertake liability for personal injury, but the builder impliedly does so by virtue of HB5A cl. 3 (1); see n. 35 supra.

59 Rule 35 B 2 (b) (i) (a) and (c); form HB5A, cl. 5.

60 s. 2 (1) says: “Where … in connection with the provision of a dwelling or its first sale or letting for habitation any rights in respect of defects are conferred by an approved scheme to which this section applies on a person having or acquiring an interest in the dwelling … no action shall be brought by any person having or acquiring an interest in the dwelling for breach of the duty imposed by section 1 above in relation to the dwelling.”

61 By Lord Stow Hill, giving the Bill its second reading in the House of Lords: Hansard H.L. 330–1366, 16 May 1972.

62 See his letter, 120 N.L.J. 1211.

63 L.C., No. 40, s. 24; see also the letter referred to in the previous note.

64 The builder is better off in that after the initial 2-year period he is not liable for major structural defects covered by the guarantee given by the N.H.B.R.C. in the Full Certificate: HB5A, cl. 8 (b). The architect, as we have seen, is liable only at common law.

65 Indeed from the purely theoretical point of view the result may be even messier than at first appears. S. 2 limits s. 1 not by preventing liability arising, but by providing that in a certain event “no action shall be brought…for breach of the duty imposed by section 1.…” We shall probably never know what possessed the Parliamentary draftsman to borrow his formula from s. 4 of the Statute of Frauds 1677—he may have been inspired to do so by the drafting of other parts of the Bill he was amending—but whatever his reasons, he appears to have secured that the duty created by s. 1 is not excluded by s. 2, but—gruesome thought—is merely made “unenforceable by action,” continuing to lurk in the limbo, and possibly able to furnish collateral effects when invoked by the skilful pleader!