HC Deb 23 March 1983 vol 39 cc888-93

'A civil action against any person for a breach of duty on his part in acting as an inspector appointed under this Act shall not be brought more than ten years from the time when the breach of duty occurred, any rule of law or enactment to the contrary notwithstanding.'.—[Mr. Chapman.]

Brought up, and read the First time.

Mr. Sydney Chapman (Chipping Barnet)

I beg to move, That the clause be read a Second time.

The clause relates to part II of the Bill which sets out the building control provisions. It supersedes the new clause that I tabled in Committee, which was disallowed because in part it was outside the scope of the Bill.

The purpose is to limit the period of liability for latent defects, but, to be in order, the new clause can refer only to an approved inspector, appointed under this Act". The objective is to mitigate what will generally be accepted on both sides as an admitted defect in the law of liability.

The public interest in avoiding building defects is safeguarded through the administration of building control. If a defect occurs, an injured party has a remedy in damages that can be awarded by the civil courts. It is necessary that the position of approved inspectors should be made clear, as should be the position of everyone else involved in the building process. There is a need to amend the law as a result of the decision of the House of Lords in the case of Anns v. the London borough of Merton in 1977. Indeed, that point was acknowledged by the Lords of Appeal in the more recent case of the Pirelli General Cable Works Ltd. v. Oscar Faber and Partners in December 1982.

Anns v. Merton made clear the general legal principle for defining the liabilities of public authorities of all kinds for negligence in the performance of their statutory functions. The problem was that in its wisdom the House of Lords decided that the limitation period begins when the defective state of the building first appeared—not, for example, when the breach of duty occurred or from when the property was conveyed to the injured party. The House might have thought that the Pirelli case resolved the position and makes it tenable, at least until Parliament in its wisdom decides to amend the law.

Pirelli stated that the limitation starts when the damage occurs—not when it becomes apparent. However, two difficulties arise. First, as I understand the position, the law is not explicit as to when the damage occurs. Secondly, a careful perusal of the Pirelli case shows that the limitation period for a local authority is different from when the damage occurs, because the local authority's responsibility under Acts of Parliament is from the time when there is danger to the health or safety of occupants. Therefore, local authorities have a longer period of liability.

This matter has caused concern because anyone—or, indeed, every party to the building process—now cannot know whether he has ceased to be at risk for claims unless —I should add, for the sake of legal precision—the building in question has been demolished for a period of at least six years. I forget who built the Tower of London, but he or his successor—according to my interpretation of the law, and under the law as interpreted by the House of Lords and the Lords of Appeal—is, I suppose, still at risk for a claim.

I assert that it is unreasonable to assume that approved inspectors, or a builder or designer of a building, or anyone else, should be expected to have the resources—they would need to be considerable resources—to cover the risk of claims for an indefinite period. It is unjust to expect that, and in my opinion Parliament should acknowledge that. I believe that the present interpretation of the law is an impediment to the administration of justice and defeats the purpose for which the Limitation Acts have been passed.

The new clause that I tabled in Committee need in no way prejudice the long-awaited proposal of the Lord Chancellor's Law Reform Committee looking into this whole matter of the law of liability for latent defects. This new clause, which is more limited, also need not prejudice its proposals. At the very least, I hope that the Minister will tell the House when the Lord Chancellor's Law Reform Committee will report. I know that the Minister is aware, and I am sure that all right hon. and hon. Members are aware, that it is vital and urgent that this matter which affects not only approved inspectors but local authorities and other public authorities, as well as builders, architects and property owners, should be cleared up. At least parts of parts II and III of the Bill are prejudiced and, in all practicality, could not be introduced or implemented until the law of liability is dealt with.

Mr. Robert Litherland (Manchester, Central)

In our Second Reading debate and throughout Committee, the hon. Member for Chipping Barnet (Mr. Chapman) expressed his concern and that of the RIBA about the law of liability. The hon. Gentleman expressed amazement in an earlier debate that there was no time limit to liability in the present law, and he endeavoured to introduce a new clause in Committee.

The hon. Gentleman and the Government are aware of the grave reservations that architects have about this part of the Bill. They have expressed their opinions in no uncertain terms. It has been said that only an idiot would accept such responsibilities of unlimited liability. The president of the RIBA firmly pointed out that the present state of the law places an indefinite and unreasonable burden on architects, and said that the RIBA could not recommend to its members the changes that are envisaged. That is why the new clause has been introduced by the hon. Member for Chipping Barnet at this stage.

The Government have not convinced the building fraternity that the Bill's provisions will enhance standards of construction. It believes that the standards of health and safety will be lowered if building control becomes a mixture of public bodies, private individuals, professional practices and other organisations.

We have felt throughout the Bill, and it is clear from the correspondence that we have received, that there is no real desire for change. The public want protection and a feeling of security. They want to know that the building that they occupy is safe—not that if it were to fall down around them they would be able to claim on insurance. I agree with NALGO's view that the building control function should remain democratically accountable and certainly independent. The new concept is unwieldy, impractical and intended to destroy the local authority building control service.

The RIBA has advanced arguments for amending the law. It says that, as a matter of public policy, building owners and others should be entitled to reasonable protection against latent defects. It is not satisfied that justice and public interest are adequately served by the law as it stands. Indeed, one might query what is reasonable and what is protection. I am sure that the hon. Member for Chipping Barnet would agree that good design, good workmanship and good materials are the first priority. In his clause he proposes a definite limitation on the period of liability and suggests that a civil action against any person for a breach of duty on his part in acting as an inspector … shall not be brought more than ten years from the time when the breach of duty occurred". In his speech, the hon. Gentleman drew attention to the areas of vagueness.

In Committee and in the Chamber I have referred to a whole estate in my constituency that is now being demolished after only 11 years. There are 1,000 dwellings on the estate. The cost is in millions of pounds. I suggest that that could not be insured privately. The new clause may seek to rectify faults in the law of liability, but I am afraid that they are so complex that they would require a far more detailed reappraisal. I have every sympathy with the hon. Gentleman's intention, but I am afraid that his new clause is outside the scope of the Bill.

Mr. Ted Graham (Edmonton)

The hon. Member for Chipping Barnet (Mr. Chapman) was right when he said that the present state of the law will make parts II and III of the Bill unworkable unless there are major changes in the law of liability. Apparently, the Government have been given advice by people who have assured them that if the Bill becomes law it will work. The hon. Member for Chipping Barnet has been assured by his many contacts in the building construction industry that it will not work. My hon. Friend the Member for Manchester, Central (Mr. Litherland) has given us the views of professional people involved in the construction business. Moreover, in Committee we heard the evidence of many people who are quite happy for the Bill to work, provided changes are made.

We must recognise the enormity of the change that is involved, from a situation that is designed to prevent defects to one that provides compensation once the defects have become apparent.

5 pm

Let me remind the House of what the former Secretary of State for the Environment said when the changes in the building regulations were being considered. At a conference in 1979 he said: Let me trail one in front of you—without, let me stress this, any commitment. Why should local authorities bear this enormous responsibility for all construction put up in their area? If anything goes wrong, years later, and the builder has departed the scene, then the local authority, which can never depart the scene, is required to answer. That is the position that is enjoyed by every consumer, ratepayer, and person who is likely to suffer a hurt or detriment under the present law. If, at the end of the day, the court awards vast sums in damages that are not covered by any insurance the local authority must pick up the pieces.

The Government are seeking to change that. The new clause seeks to bring about a necessary limitation. The Government have a difficult job of marrying that which is impossible to get—a workable insurance arrangement—with their determination to foist upon the House and the British people a situation that will not work.

Let me quote from a letter that was sent to the ubiquitous Mr. Watson. The British Insurance Association said: Professional liability insurance would inevitably be subject to limits of amount and time and some basic policy conditions. That is what the new clause seeks to do. The Government have already said that they are not prepared to make any changes before the Lord Chancellor's report on liability is produced. One of the basic, crucial and stupendous weaknesses of the Bill is that the element upon which it rests—adequate insurance—is being denied support by the insurance industry.

Although the new clause has provided a useful peg upon which to hang the arguments that have been going backwards and forwards, I regret that the Bill is unworkable in the general field. If the Government seek merely to operate the scheme in the low rise, National House Building Council context there will be other problems as well. The National House Building Council is doing a good job within its limits but it is simply yet another insurance company in this context. It provides its warranty and then seeks to meet the defects that arise. However, it is not competent to take on the task that the Minister has said is likely to flow from the Bill. Labour Members remain sceptical, not only of the premises upon which the Bill is based but also upon the ability of the Government, the industry and the British people to make it work.

The Under-Secretary of State for the Environment (Sir George Young)

I assure my hon. Friend the Member for Chipping Barnet (Mr. Chapman) and the other hon. Members who have spoken in the debate that the Government share their concern at the current state of the law on liability and we hope that a solution can be found that is fairer to all parties concerned. I congratulate my hon. Friend on putting his new clause in order on this occasion and on explaining clearly what is a confused position.

I understand how strongly the architectural profession feels about the difficulties with which it is faced by the present law of liability. It seems to it unfair that long after the normal six-year period for actions in negligence has expired it can find itself in court justifying design work that it thought had been successfully finished perhaps as long as 20 years previously. The feeling of unfairness is shared by other professions involved in the design and construction of buildings and also by building contractors. Local authorities, in their role as building control authorities, are also conscious of the burden that the present apparently unlimited liability lays on them as well.

I have much sympathy with what has been said about the new clause. However, three points must be borne in mind as we consider it. First, as has already been touched on, we must remember that the Lord Chancellor's Law Reform Committee is examining the law of liability and its application to cases where damage may have been latent for a considerable time. Latent damage in buildings is obviously an important part of the question, but it is not the whole of it. Latent damage can be found in other areas—for example, in the drafting of wills by solicitors where defects may be undetected for years and are discovered only when the will is proved. Therefore, we must be careful not to pre-empt the conclusions of the Law Reform Committee on the broader front.

I regret that I cannot say when the committee will finish its deliberations and produce its report, but I hope that it will be as soon as possible. As we made clear in Committee, we do not accept the proposition that this section of the Bill cannot be implemented until the Law Reform Committee has completed its work. I shall not weary the House with the details, but on several occasions in Committee we explained on what basis the insurance arrangements outlined in the Bill can proceed.

The second point to bear in mind is that, given the strong likelihood that the Law Reform Committee will recommend some change in the general law of liability, any provision that we might make in this limited area would inevitably be only an interim change, possibly of short duration. It would soon require further changes to bring it into line with whatever general solution may be proposed following the Law Reform Committee's considerations. Such a succession of changes would be confusing and would not be in the best interests of those concerned. After all, we are talking about the need for long term certainty in an area that is at present blighted by uncertainty.

Thirdly, we must consider the potential unfairness of changing the liability for private certification on its own. Not only would the architects and engineers have a different liability for their design work, or even for any work of supervision carried out under their ordinary contracts, not only would contractors have a different liability for their part of the work, but local authorities would be obliged to carry a significantly different burden of liability—indefinite as opposed to confined. The new clause does not affect local authorities and I do not see how one can begin to justify that on grounds of equity.

For those reasons, the Government cannot support the new clause and I hope that my hon. Friend will feel able to withdraw it in the light of my comments.

Mr. Chapman

I have listened with great care to my hon. Friend the Minister and I appreciate his pertinent comments. I have also listened to the hon. Members for Manchester, Central (Mr. Litherland) and for Edmonton (Mr. Graham) and I concede immediately that my new clause has been drawn far too narrowly for the wishes of hon. Members. In the hope that legislation will be put before Parliament in the next Session—whether this or the other side of a general election—I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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