Applegate v Moss

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE EDMUND DAVIES,LORD JUSTICE MEGAW
Judgment Date11 December 1970
Judgment citation (vLex)[1970] EWCA Civ J1211-2
Date11 December 1970
CourtCourt of Appeal (Civil Division)
Archer
and
Moss
Applegate
and
Moss

[1970] EWCA Civ J1211-2

Before:

The Master of the Rolls (Lord Denning),

Lord Justice Edmund Davies and

Lord Justice Megaw

In The Supreme Court of Judicature

Court of Appeal.

Appeal by defendant from judgment of Mr. Justice Paull on 25th March, 1970.

Mr. T.G. FIELD-FISHER, Q.C., and Mr. STANLEY IBBOTSON (instructed by Messrs. Moss and Coleman) appeared on behalf of the Appellant Defendant.

Mr. HENKY BROOKE (instructed by Messrs. Bradbury & Son) appeared on behalf of the Respondent Plaintiffs.

THE MASTER OF THE ROLLS
1

In the spring of 1957 Mr. Moss was about to develop a building site in Fanshawe Crescent, Hornchurch. There was room for two semi-detached houses to be built on it. He employed a builder, Mr. Piper of Piper Limited., to build the Houses. Two men, Mr. Archer and Mr. Applegate, saw the plots and decided to take one each. Each signed a contract to buy the plot. Each signed a contract with Mr. Moss, the developer, by which Mr. Moss agreed to erect a house for each of them. I will take the one between Mr. Applegate and Mr. Moss. It was drawn up by a solicitor. The material clauses were:

1. "The developer will for the consideration of £1900 erect for the owner a dwellinghouse in accordance with the plans and the specification hereto annexed."

2

The plan showed that the house was to be built on a foundation which was a concrete raft. The reason was because it was on sloping ground of wet day. The specification provided that.

"The excavations and concreting to be carried out in accordance with the local authority's requirements and approved by them."

3

Those requirements required a specified mixture of aggregate and cement.

4

Clause 4 said that "the developer will carry out the said works in a substantial and workmanlike manner."

5

Clause 8 was a very wide exemption clause:

"It is hereby expressly agreed that on going into actual occupation of the said dwelling house the owner shall be deemed to accept the same in all respects in its then present condition and he shall have no cause of action claim or demand against the developer whatsoever in respect of the said dwelling house or any works carried out by the developer under this agreement whether in respect of any default in the design or structure or the workmanship or the materials thereof and therein or variation from the plans and specification or otherwise howsoever."

6

In due course in 1957 the houses were completed. Mr. Applegate and Mr. Archer went into occupation. For Some years all seemed to be well. There were occasional cracks which looked like settlement cracks which did not worry them greatly. But then it turned out that in 1965 one of the purchasers had to move away. He proposed to sell his house. A surveyor looked at it on behalf of the proposed purchaser. He found serious cracks. He called in a local builder and afterwards some experts. They found, the Judge said, "a disgraceful condition of affairs." There was no concrete raft. The foundation was on concrete Footings. But the footings, instead of being 3ft. or 3ft.6ins. deep, were only 2ft. 3ins. deep. Worst of all, the concrete was not the proper mixture at all. Instead of an 8 to 1 aggregate and cement, as it ought to have been, it was 15 to 1; with the result that it was friable and liable to break and crumble, Wide cracks were opening beneath the houses. So much so that they were unsafe and unfit to live in. In January 1966 both houses had to be evacuated. It was quite impossible to repair them at any reasonable cost. They were only fit to be pulled down.

7

Each of these two men brought an action against the developer, Mr. Moss, for breach of contract for not building the houses in accordance with the plans and specification. Mr. Moss relied on two defences in law.

8

In the first instance Mr. Moss prayed in aid the exemption clause. It was wide enough to cover the claim. But in the course of the hearing before the trial Judge, Mr. Moss and his advisers gave up that contention. It was a good instance of a fundamental breach. The case was covered by the rule that an exemption clause should not be construed as applying to a situation created by a fundamental breach of contract. We have had recent examples of this following the Harbutt's Plasticine case (1970 2 W.L.R. 198).

9

In the next place Mr. Moss prayed in aid the Statute of Limitations. The breach of contract, he said, was in 1957; the period of limitation was six years; more than six years had elapsed, and therefore the action was barred by lapse of time. To which Mr. Applegate and Mr. Archer replied that there was concealed fraud within section 26(b) of the Limitation Act, 1939, which says that "where the right of action is concealed by the fraud of the" defendant or his agent "the period of limitation shall not begin to run until the plaintiff has discovered the fraud or could with reasonable diligence have discovered it."

10

It has long been settled that "fraud" in this context does not necessarily involve any moral turpitude. See Beaman v. A.B.T.S. Limited. (1949 1 K.B. 550). It is sufficient if what was done was unconscionable: see Kitchen T. Royal Air Force Association (1958 1 W.L.R. 563): a test which was applied in the case of a building contract in Clark v. Woor (1965 1 W.L.R. 650). Those oases show that "fraud" is not used in the common law sense. It is used in the equitable sense to denote conduct by the defendant or his Agent such that it would be "against conscience" for him to avail himself of the lapse of time. The section applies whenever the conduct of the defendant or his agent has been such as to hide from the plaintiff the existence of his right of action, in such circumstances that it would be inequitable to allow the defendant to rely on the lapde of time as a bar to the claim. Applied to a building contract, it means that if a builder does his work badly, so that it is likely to give rise to trouble thereafter, and then covers up his bad work so that it is not discovered for some years, then he cannot rely on the Statute as a bar to the claim. The right of action is concealed by "fraud" in the sense in which "fraud" is used in this section.

11

It is plain that the right of action here was concealed bythe fraud of someone. The builder put in rubbishy foundations and then covered then up. But was it the fraud of "the defendant or his agent"?

12

Mr. Moss says that it was not his fraud; and that the builder was not his "agent" for the purpose. The Judge found that it was both. So far as Mr. Moss himself was concerned, the Judge felt that Mr. Moss must have indicated to Mr. Piper at some stage before the foundations were laid that he did not mind what was the nature of the foundations, provided that the houses were saleable. That would have been a most disgraceful thing to do. I do not myself think that the evidence warrants so harsh a finding against Mr. Moss. But I do think that Mr. Moss must have permitted Mr. Piper to depart from the plan. Mr. Piper said that he would not have ommited the concrete raft and put in footings unless he had specific instructions from Mr. Moss. If Mr. Moss did give Mr. Piper instructions to omit the concrete raft, knowing the work would be afterwards covered up, without a word to Mr. Archer or Mr. Applegate, that would be conduct which would amount to concealed fraud.

13

But even if there had been no such conduct by Mr. Moss, nevertheless it Is quite plain that Mr. Piper, the builder, was the "agent" of Mr. Moss. Mr. Moss employed Mr. Piper to carry out the building work. Mr. Piper did the work extremely badly. He was guilty of gross neglect in mixing the concrete. He covered up his disgraceful work. Even if Mr. Moss knew nothing about it, nevertheless he oust take responsibility for the conduct of Mr. Piper.

14

I would hold, therefore, in agreement with the Judge, that Mr. Moss cannot rely on the Statute of Limitations.

15

The only remaining question is damages. The Judge held that the cause of action arose in 1957. At that time the building was worth £1,900. He awarded £1,900 plus interest on that sumat 7¼% from that time onwards. That interest comes to £1,800, making a total of £3,700. Mr. Field-Fisher for Mr. Moss argues that that measure is wrong, because Mr. Archer and Mr. Applegate were in occupation of the houses from 1957 to 1966. They should not recover both interest on the £1,900 and also the benefit of occupation; for that would be having it both ways. I think that criticism is to some extent justified. But the right method gives about the same total. It is this: if the defects had not been so serious, and the house could have been repaired at reasonable cost, the damages would be the cost of repair at the date when in 1965 the breach was discovered. That is clear from the decision in East Ham Corporation v. Bernard Sunley & Sons Limited. (1966 A.C. 406). But in 1965 it was not an economical proposition to repair the house. It would have cost too much to underpin it. The...

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