D & F Estates Ltd v Church Commissioners for England

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Bridge of Harwich,Lord Templeman,Lord Ackner,Lord Oliver of Aylmerton,Lord Jauncey of Tullichettle
Judgment Date14 Jul 1988
Judgment citation (vLex)[1988] UKHL J0714-1

[1988] UKHL J0714-1

House of Lords

Lord Bridge of Harwich

Lord Templeman

Lord Ackner

Lord Oliver of Aylmerton

Lord Jauncey of Tullichettle

D. & F. Estates Limited and Others
(Appellants)
and
Church Commissioners for England and Others
(Respondents)
Lord Bridge of Harwich

My Lords,

1

The only parties to the litigation from which this appeal arises who are now concerned in the appeal are D. & F. Estates Ltd. and Mr. and Mrs. Tillman, who were plaintiffs in the action, and Wates Ltd. who were the third defendants in the action. Between 1963 and 1965 Wates were the main contractors employed by a company now in liquidation to build a block of flats on land belonging to the Church Commissioners in Gloucester Square, London W.2. The building was completed in October 1965 and was named Chelwood House. On 15 October 1965 the Church Commissioners granted a lease of flat 37 to D. & F. Estates for a term of 98 years from 25 March 1963. D. & F. Estates is one of a group of companies controlled by Mr. and Mrs. Tillman. From 1965 to 1981 Mr. and Mrs. Tillman occupied flat 37 pursuant to an arrangement with D. & F. Estates, the terms of which we do not know, but which I presume to have been a licence.

2

In August 1980, while Mr. and Mrs. Tillman were away on holiday and the flat was being redecorated, the decorators discovered that the plaster on certain ceilings and on one wall was loose and some of the plaster fell down. All the loose plaster then discovered which had not already fallen was hacked off and the areas affected were replastered and redecorated at a cost of £10,676.70. The present action was commenced in December 1980 advancing claims by D. & F. Estates in respect of that damage and by Mr. and Mrs. Tillman in respect of disturbance caused to them while the works in the flat were being carried out. But following an expert investigation in 1983 further defective plaster to both walls and ceilings was discovered and when the action came for trial before Judge Esyr Lewis Q.C. in June 1985 the damages claimed by D. & F. Estates included the estimated cost of further remedial work and prospective loss of rent which would be suffered while that remedial work was carried out.

3

When Chelwood House was built the plaster-work was carried out not by Wates themselves but by a firm of sub-contractors whom they employed called R. S. Hitchens. The judge found that all the plaster applied to concrete surfaces was defective because the sub-contractors, using a particular plaster then newly on the market called "Gyplite," had failed to follow the manufacturers' instructions. They should have applied one coat of bonding plaster and one coat of finishing plaster, but instead had interposed a coat of browning plaster and it was this that in due course caused plaster, which should have remained sound for the lifetime of the building, to lose its key and require replacement. He said:

"in my judgment, a careful and competent plasterer would not have taken the risk of departing from what I find to be clear and unambiguous instructions to use bonding plaster followed by finishing plaster on concrete surfaces generally. In other words I consider that the plasterers were at fault. It was suggested on behalf of the plaintiffs that a reason why the plasterers did not follow the manufacturers' instructions was because it was more economical and easier to use undercoats of bonding plaster and browning plaster to achieve the desired thickness instead of a single undercoat of bonding plaster. I am not satisfied, having heard the evidence of Mr. Marshall about the cost of applying the different grades of plaster, that this is the correct explanation and it is not necessary for me to come to any conclusion about it. It is sufficient for me to say that in my judgment the plasterers did not exercise due care in that they failed to follow the manufacturers' instruction."

4

When he turned to consider the liability of Wates, the judge, in a key passage, said:

"I have to decide in this case what the scope of Wates' duty of care to the three plaintiffs was and whether the plaintiffs or any of them have suffered loss as a result of its breach by Wates. The duty of care itself is of course not delegable. In the end, [counsel for the plaintiffs'] submission was that Wates owed a duty to the plaintiffs adequately to supervise the work of the plasterers and that they failed to discharge that duty. I consider this to be the correct analysis of the scope and extent of Wates' duty of care. It has never been suggested that Wates acted improperly in sub-contracting the plastering work or that they failed to take care to appoint competent sub-contractors. Clause 17 of the J.C.T. form of contract entitled Wates to sub-contract with a written consent of the architect and the evidence of Mr. Perry showed that great care was taken in the choice of sub-contractors. If, as I find, Wates acted properly in sub-contracting the plastering work, the only way in which they could discharge their duty of care was by taking reasonable steps to see that the plasterers did their work properly. Wates cannot, in my judgment, be held liable to the plaintiffs merely because the plasterers did not in fact do their work properly."

5

Later the judge said:

"should proper supervision by Wates have ascertained that the manufacturers' instructions were not being followed in relation to the plastering of concrete surfaces in flat 37? In my view the critical issue is whether Wates' supervisors knew or ought to have known what the manufacturers' instructions were."

6

The judge then reviewed the evidence of witnesses in relation to the general practice of supervision of sub-contractors by main contractors. He found that Wates' supervisors must have known that three coats of plaster were being applied. He made no finding that they knew that this contravened the manufacturers' instructions, but he held in effect that they ought to have known and added:

"I therefore conclude that Wates were in breach of their duty to provide adequate and proper supervision of the plastering work in relation to the concrete surfaces and that they are liable in negligence to the plaintiffs for this breach of their duty."

7

The judge awarded damages exclusive of interest to D. & F. Estates of £10,676.70 in respect of the cost of the remedial work undertaken in 1980, £53,549 in respect of the estimated cost of future remedial works, and £24,000 in respect of loss of rent while the future remedial works were carried out. To Mr. and Mrs. Tillman he awarded £500 each, exclusive of interest, in respect of loss of amenity during the period when they were occupying the flat while the remedial works were done in 1980.

8

On appeal by Wates the Court of Appeal (Fox and Glidewell L.JJ and Sir Roualeyn Cumming-Bruce) reversed the judge's decision primarily on the ground that Wates, having employed competent sub-contractors to carry out the plastering work owed no further duty of care to the plaintiffs in relation to the execution of the work by the sub-contractors. But the Court of Appeal also considered a submission made on behalf of Wates that the cost of repairing the defective plaster, even if the plaster work had been done by their own employees, was not damage which D. & F. Estates could recover in tort since it represented pure economic loss. The Court of Appeal rejected this submission in relation to the cost of repairs carried out in 1980 on the ground that D. & F. Estates were liable to Mr. and Mrs. Tillman to carry out the repairs, but accepted it in relation to the cost of future remedial works not yet carried out, although they assumed the factual premise, which they did not think it open to Wates to challenge, that the remaining defective plaster represented a continuing risk of personal injury.

9

The plaintiffs now appeal by leave of your Lordships' House.

10

In relation to both issues, it is instructive and, I think, necessary to consider two developments of the law in relation to a builder's liability in tort for defective premises which have been effected on the one hand by statute and on the other by judicial development of the law by the adaptation and application of common law principles to situations to which they had not previously been applied. Both these developments have taken place since 1970. Both have effected far-reaching changes in the law, at all events as it had been supposed to be before 1970. But the two developments have been markedly different in their scope and effect. The statutory development enacted by the Defective Premises Act 1972 effected clear and precise changes in the law imposing certain specific statutory duties subject to carefully defined limitations and exceptions. This change did not, of course, operate retrospectively. The common law developments have effected changes in the law which inevitably lack the kind of precision attainable by statute though limits have had to be and are still being worked out by decisions of the courts in a spate of ensuing litigation, including the instant case, and since our jurisprudence knows nothing of the American doctrine of "prospective overruling" and the law once pronounced authoritatively by the courts here is deemed always to have been the law, the changes have full retrospective operation.

11

The Act of 1972 was enacted following and substantially implementing the recommendations of a Law Commission report on "Civil Liability of Vendors and Lessors for Defective Premises" (Law Commission No. 40) dated 15 December 1970. The report followed the issue of two working papers and extensive consultations thereupon as explained in paragraph 5 to 8. The report makes this clear distinction between different kinds of defects in defective premises:

"2. We have set out, therefore, to examine the liability of a vendor or lessor of defective premises both in contract...

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