§ 6.42 p.m.
§ LORD STOW HILL
My Lords, I beg to move that this Bill be now read a 1361 second time. I should at the outset apologise for, at the very end of the day, inflicting upon the House a technical Bill. I would be hardly candid if I told the House that it was a Bill without importance. If your Lordships pass it, it will affect a great many purchasers of houses and lessees of premises generally, and it may have quite wide application. It is a Bill which is perhaps peculiarly susceptible to further examination on Committee, and therefore I hope that I may be able to discharge my duty of explaining its general purpose to the House on Second Reading a little more expeditiously than might otherwise be feasible.
My Lords, it is a Bill which is designed to give effect to recommendations made by the Law Commission in their Fortieth Report, in which they examine the law of the civil liability of vendors and lessors of defective premises. It is a Private Member's Bill which comes from the other place, and there it had a slightly unusual history in this sense, that my honourable and learned friend Mr. Ivor Richard introduced it on Second Reading in a very succinct and reasonably brief speech; there was only one other speech, from the Solicitor General, who welcomed it; and no other speech was made at all during the passage of the Bill through the House—not on Committee or on Report, or on Third Reading. So it comes to this House having been the subject of two addresses only.
The Bill is designed, in effect, to bring up to date and to make more consonant with reality some aspects of the law relating to the sale of houses and the lease of premises. I think I should at the outset call the attention of the House to three broad principles of law which, as matters stand at the moment, affect the sale of private houses and the letting of premises. Those three principles are these. First, in the case of the sale of private houses there is the principle known by the Latin tag caveat emptor, under the terms of which, if you buy a house, unless you have insisted upon the vendor of the house to you undertaking responsibility for defects in the house that you buy, you yourself have to bear the consequences. If you buy an elderly, Victorian mansion and the day after you move into it the ceiling collapses on your head and on that of your wife, you 1362 have no remedy against the vendor of the house unless you have insisted, and he has agreed in the documents of sale to you, that he should undertake a contractual responsibility in respect of that. The house can collapse, and in the absence of some specific contractual liability accepted by the landlord you have no remedy against him. That is the first matter with which this Bill seeks to deal.
The second principle of law is that which affects the liability of lessors of premises. Certainly until Section 4 of the Occupiers' Liability Act 1957 was passed, a lessor was not liable for defects in premises which he let. He was under no liability to the lessee, and he was under no liability to the lessee's friends or family who might be injured as the result of a defect in the premises let. Again, it was the lessee who had to hear the burden of any defect. This was of course subject to any specific contractual liability that the lessor might, by agreement with the lessee, undertake. For the sake of accuracy, I think I should also say that some slight limitations of that general doctrine had been introduced in the case of small dwellings by Section 6 of the Housing Act 1957 and by Section 32 of the Housing Act 1961, but these exceptions were limited in scope and it is broadly true to say that up to 1957 the law was as it had been stated in 1863 by Chief Justice Earle in a famous case called Robins v. Jones; that is, that there was "no law against letting a tumbledown house". That was the position of lessors and lessees.
The third principle of law to which the Law Commission addressed itself was more general in character, and it was this. We are all of us, everybody, under a general duty to take care in order not by our negligent, thoughtless act to cause injury to persons who might be affected by our want of thought and carelessness. That was a general principle that was reasserted by this House in a famous case called Donoghue v. Stevenson in 1932, and the doctrine is known as formulated in a very famous judgment by the late Lord Atkin. That doctrine, in the case of negligent acts generally, imposed, as I have said, a general duty on all of us. We must ask ourselves: If we are careless in what we do, may we by so doing cause injury to persons who are, as it were, in sufficient proximate relationships with as 1363 to be affected by our carelessness? That was the general principle: but in the case of land it was subject to an exception, again in favour of persons who disposed by sale or otherwise of the land. If you were an occupier of land and you negligently did something on that land which caused injury to somebody coming upon it, you were liable in damages to that person. For example, if you carried out dilapidations and left a dangerous wall standing and it collapsed on somebody, then, if you could be said to have been negligent in leaving that wall and injury was caused to the person upon whom it collapsed, you were liable in damages to that person. But the odd exception to that general principle that was incorporated in the general law related to this situation: the situation in which you had done something negligent on your land but then disposed of the land—you sold it; you sold premises on the land. As from the moment you sold those premises your liability towards a person who might be injured through your negligent act came to an end. That was the third principle of law which the Law Commission felt could be changed and to which it addressed itself.
With that general preface, may I say that the Bill implements three of four recommendations that were made by the Law Commission and in respect of one of the three makes a change which I will indicate later to your Lordships. To address myself to the first principle of law—namely, that which affects the sale of private dwelling houses—the view that the Law Commission took may be stated as being that the law required no alteration in so far as the purchase of dwelling houses in general: the elderly Victorian mansion, the Elizabethan manor and that sort of thing; but where a person was buying a house which had been newly constructed he should be given a remedy which otherwise he would not have had. That remedy is conferred by Clause 1 of the Bill.
Clause 1 of the Bill in effect does this. Where persons have taken on work for the purpose of providing a private dwelling for a purchaser, then a statutory duty is imposed by the clause upon those persons who undertake that work to ensure in the first place that it is carried out in a workmanlike manner or, if an individual such as a surveyor or an architect 1364 has carried out professional services, that the work is carried out in a professional way with professional skill; in so far as the work involves the use of materials, that the materials are proper materials; and, finally, in so far as the particular work carried out by the individual is concerned, that the house shall as a result, and in so far as that work affects it, be fit for human habitation. Clause 1 therefore makes an exception to the general principle of caveat emptor in the case of the sale of a private house in favour of those who buy, in effect, new houses.
As I have said, the duty is imposed upon those who take on work in relation to the provision of that house. But the clause goes rather wider than imposing a duty on the actual person who carried out the work—the architect, the builder, whoever it may be—because it includes among those upon whom a statutory duty is imposed a person who procures the work to be done in the course of business or in the exercise of statutory power. By that I mean a developer-builder, a property developer, who procures building to be done under a contract which he enters into with the builder or a local authority which causes a house to be built for use as a dwelling house by labour engaged by the local authority. All those people are placed under this completely new statutory duty.
This new duty has some other important aspects to which I shall call attention. In the first place, Clause 6 provides that a person cannot contract out of the duty. The vendor of the house cannot, by contract with the purchaser of the house in the case of a new dwelling of that sort, contract with him that he, the vendor, shall be exempt from that new duty. Whether he so contracts or otherwise, he remains under that duty. Secondly, not only is the duty owed to the purchaser of the house; it remains owing to anybody who succeeds the purchaser in title. Your Lordships may ask, "How long? Will it be for ever? If an accident happens one hundred years hence owing to a defect, will the vendor still be liable?" My Lords, the answer to that is that his liability is terminated under the terms of the various Statutes of Limitation at present on the Statute Book. There are three of them. Broadly speaking, the period in question will be 1365 six years. Where there is personal injury, the Statute of Limitations provide a shorter period of three years. That is the remedy which the Law Commission propose and which this Bill adopts for the first of these three principles.
I then go to the second of the principles which relates to lessor's liability. With respect to the lessor's liability, the Bill in Clause 4 makes the following provision. The lessor is placed under a new, completely different liability in respect of defects in premises in cases in which, under the letting, he either has the duty or has the right to go upon the premises for the purpose of carrying out the repairs—a liability he owes not only to the lessee but to all who go upon the premises. I referred earlier to Section 4 of the Occupiers' Liability Act 1957 as inhibiting the general freedom from liability of the lessor. What Clause 4 of the Bill does is, in effect, to annul Section 4 of the 1957 Act and to re-enact its general provision in a way which avoids certain defects in its existing provisions. It avoids those defects and makes it impossible for the provisions of this Bill, if enacted, to be evaded. I will not trouble the House with the nature of the actual defects. That is the change which is made in the position of the lessor. I do not think I need elaborate further.
I go on to deal with the third principle, the principle which I referred to as laid down by the general case of Donoghue v. Stevenson. I should say that there is some doubt as to how far that principle (which I stated as being not applicable in the case of the owner of land who disposed of it) is still part of the law. Some doubt was thrown on it by the case of Dutton v. Bognor Regis Urban District Council which was decided in 1972. The noble and learned Lord, the Master of the Rolls, thought that the doctrine was really different and not so rigid as I have formulated it. In that view he was supported by one other learned Lord Justice, but the third learned Lord Justice did not agree and thought the law remained in the rigid uncompromising form in which I sought to state it. At any rate, what Clause 3 does is to provide that an owner of land who does some negligent act upon it remains liable in respect of the consequences of that 1366 negligent act (subject always to the periods stated in the Limitation Acts), notwithstanding that he may sell the land or otherwise dispose of it. In other words, it negatives that exception which is thought to exist under the existing law in favour of the owner of land who disposes of it. That is the third provision.
The fourth recommendation which is contained in the Report is not given effect to in the Bill, and therefore I will not trouble your Lordships with it. Again it deals with liability of vendors and lessors of premises. But I intimated earlier that one of the recommendations enacted was subject to a change, and it is about that change that I should now like to say something to your Lordships.
The change is included in Clause 2 which provides that the general duty created by Clause 1, about which I have told your Lordships, is not to be applicable in cases where the Secretary of State approves a scheme which gives protection to the purchaser of the house. The object of that exception is to protect a scheme which has been operated since 1965 by the National House Builders' Registration Council. The scheme is elaborate. The Law Commission Report says that the benefits of the scheme will in general exceed those which can be created by a change in the law; namely, the change which now appears in Clause 1. For example, the scheme provides that the whole resources of the Council shall be behind any builder who is sued, and who cannot himself, out of his own resources, pay the damages which may be awarded to the house purchaser. And there are other respects in which the scheme gives the purchaser greater protection than the change proposed by the Law Commission which now finds its place in Clause 1. Broadly speaking, what the scheme does is to require the registration of builders; and a builder who is registered is expected to enter into an approved form of contract which gives certain guarantees both to the purchaser and also to his successors in title. Those guarantees as stated in the approved contract are more generous than those conferred by Clause I. The purchaser has the advantage of being able to avail himself of all those rights in the case of a registered builder and in relation to premises for which a certificate is issued 1367 by the Council stating in effect that the provisions of the approved contract are available to the purchaser. Those I think are the main provisions of the Bill and it will be apparent that they make very substantial changes in the law in so far as they cover it.
I think I may deal with the other clauses quite briefly. Clause 5 enacts that the Crown is bound, subject to the various limitations contained in the 1947 Crown Proceedings Act. Clause 6 I have already referred to; it is the clause which prevents contracting out. Clause 7 provides that the Bill shall come into force on January 1, 1974. The object of that provision is to enable insurance companies, who will of course be greatly affected by these changes, to make the necessary changes in the insurance that they are prepared to provide to vendors, purchasers and builders, and to the premiums that they will expect to receive in relation to the new liabilities covered. My Lords, that is the general scope of the Bill. I hope that your Lordships may feel that it is acceptable to both sides and all Parties in this House, as was the case in the other place, and that your Lordships will think fit to give the Bill a Second Reading; I move accordingly.
§ Moved, That the Bill be now read 2a.— (Lord Stow Hill.)
§ 7.5 p.m.
§ LORD GREENWOOD OF ROSSENDALE
My Lords, I apologise for speaking when I have not put down my name beforehand, but I think it would be a pity if in your Lordships' House we did not pay a rather greater tribute to the National Housebuilders Registration Council than my noble and learned friend Lord Stow Hill has paid. I have on previous occasions declared my interest in building and in building societies, but I admired the work of the National Housebuilders' Registration Council long before I developed those interests. It is I think a peculiarly British form of consumer protection. As your Lordships will know, it is a scheme by which, at present, almost 100 per cent. of private houses are built with the guarantee of the National Housebuilders' Registration Council. That means that the purchaser of the house, caveat emptor or not, has a firm guarantee that the 1368 house is of good workmanship for a stated period. A builder who falls foul, and does not provide a good house can be struck off the register of the National Housebuilders' Registration Council; and the sanction against that is that if a builder is not on the Council's register it is almost impossible to get a mortgage from a building society. So this very strong sanction has been introduced, and I think that your Lordships' House should pay a special tribute to this scheme.
It is a scheme which initiated from the industry itself. It is operated largely by the industry and by the building societies, and, under the direction of Mr. Tate it has, I think, done a remarkably good job in virtually putting an end to jerry-building in this country. Only a week or two ago there was a report that a further eight builders had been struck off the register for had workmanship. So although I welcome the Bill, I do so because it will fill in a few loopholes left by the Housebuilders' Registration Council, and I know that your Lordships will join me in expressing our appreciation of the work that the Council has done.
§ 7.7 p.m.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS)
My Lords, this afternoon the House has regaled itself with a varied and rich diet, and I am sorry that a few more of your Lordships have not remained to enjoy the "savoury course". Perhaps the Title of it is not one of the most attractive, but nevertheless I endorse what the noble and learned Lord, Lord Stow Hill, has said about the importance and the width of application of this Bill. The noble and learned Lord is quite right. It could have a very wide significance and it is quite an important change in the law. If your Lordships thought while listening to the noble Lord, Lord Greenwood of Rossendale, and the very well-deserved tribute that he gave to the National Housebuilders' Registration Council, that there are not some loop-holes that Clause 1 will fill in, your Lordships would have been mistaken, because, of course, there are still some houses not built under this insurance guarantee scheme, and the people who buy them—particularly if they are not the original purchasers—may not, as the 1369 law stands at the moment, have any recourse at all. So I think that Clause 1 is very necessary.
My Lords, I am speaking from this Box in place of my noble and learned friend the Lord Chancellor, who is abroad on an important engagement. It is a general change of role. It was yesterday that the noble and learned Lord, Lord Stow Hill, made a thoughtful speech from the Opposition Front Bench on the Civil Evidence Bill and was comlimented by my noble and learned friend. My noble and learned friend said a good deal about the public spirit of Private Members of both Houses who introduce these law reform measures. Now I can say the same thing to the noble and learned Lord, Lord Stow Hill and to his honourable and learned friend the Member for Barons Court, in another place. The other change is that instead of it being as it was yesterday, the Law Reform Committee who are congratulated on their work, it is the Law Commission. Having heard the speech of the noble and learned Lord, Lord Stow Hill, if noble Lords wish to till in the details which the noble and learned Lord did not have time to explain, they should look at the full Report of the Law Commission which, in the usual way, sets out the full argument and follows it with profound and detailed explanatory notes on every clause. I do not think that any further explanation is necessary from me.
§ LORD GREENWOOD OF ROSSENDALE
My Lords, I wonder whether the noble Viscount would give way? I appreciate what he has said, but I am informed by the Printed Paper Office that the Report is out of print and I had to get the only copy available which was in the Library. Perhaps the noble Viscount can remedy that defect.
VISCOUNT COLVILLE OF CULROSS
I am sorry to hear that. I have in the past had difficulty in getting Law Commission Papers. For some reason they are not printed as Command Papers, and there has always been difficulty in getting them in the Printed Paper Office of your Lordships' House. I remember that when I sat on the other side of your Lordships' House and had to undertake arguments with the noble and learned 1370 Lord, Lord Gardiner, I had the same difficulty. I will see whether I can do anything about this one. Nevertheless, if one can get hold of a copy it is very well set out.
In those circumstances I do not think I need say a great deal more about the merits of the Bill. Clause 1 does what the Law Commission suggests, subject to the qualification that has been explained, that we do not now need to cover the whole field, because in Clause 2 it has been decided to exclude those cases where there is a reputable scheme such as that mentioned by the noble Lord, Lord Greenwood of Rossendale, to take the place of the statutory duty imposed by Clause 1. The present scheme need not be the only one. My right honourable friend the Secretary of State can approve further schemes if he wishes to and if they come up to the proper standards and the necessary machinery is there in the clause.
Clause 3 has also been explained by the noble Lord, Lord Stow Hill, but for those who do read the Law Commission's Report it is right that he should have referred us to Dutton v. Bognor Regis U.D.C. which is a more recent case than the date of printing of that Report. One is always glad to be reminded of the most notable and famous snail in the history of the world, whether or not it really existed: the one that occurred—or, as the case may be, did not occur—in the case of Donoghue v. Stevenson. The noble and learned Lord, Lord Morris of Borth-y-Gest, will know that the doctrine set down in outline in that case seems to be ever capable of being extended; but the fact remains that as a result of the decision of the Court of Appeal in the Dutton case there are now confirmed the doubts which the Law Commission had in mind about the liability in negligence of the owner of land who builds a house upon it and then sells it. This situation is being put right by the clause. It is a comparatively simple matter, or will be if the Bill is passed, to sue the man who is responsible for the damage.
As to the absence from the Bill of the fourth of the Law Commission's recommendations, this is a matter upon which I think, if any noble Lord wished to debate it on Committee or Report stage, 1371 we would have an open mind. I think that the noble Lord, Lord Stow Hill, is right that it should not be in the Bill, but I would not in any way wish to suppress discussion upon this important matter. There are, however, difficulties about it which have been pointed out by some of the learned professions and others who have been consulted on this Bill, and it is not as straightforward as some of the other provisions which appear in the Bill.
Again I do not think that there is any necessity for me to go into the subsequent clauses except to produce the result of my one piece of personal and profound research: namely that in the rubric to Clause 6 there is a printing error. I think it should read "supplemental" as opposed to "supplement" in order fully to conform with what the Law Commission suggested. That may sound facetious. In principle, the Government welcome this Bill. We are grateful to those who took it through another place. We are particularly grateful to the noble Lord, Lord Stow Hill, for explaining it so carefully to-day. That is no formal statement. His explanation is of real assistance to this House and will assist those who wish to consider it further. I am also grateful to the noble Lord, Lord Greenwood of Rossendale, for what he has said.
§ LORD STOW HILL
My Lords, if I may have the permission of the House to reply shortly I should like to thank the noble Viscount sincerely for his most elegant and kindly speech which I greatly appreciate. May I also thank him for the correction which will have to be made, changing the word "supplement" to "supplemental". I entirely agree. I have been searching for corrections and I have found three, and that will be the fourth. May I repair a grave omission of which the House was 1372 reminded by my noble friend, Lord Greenwood of Rossendale. He speaks with a wealth of experience as a result of the high office he has held in this field. May I associate myself with him in his reference to the National House-builders' Registration Council. It has over the years done admirable work and, as he points out, the Law Commission said that practically all builders, though not all, are registered builders within the scheme.
There is one final omission—and this is an omission we have all made. We have become so used to the admirable work done by the Law Commission that neither I nor my noble friend, Lord Greenwood of Rossendale, nor the noble Viscount thanked them. I apologise—the noble Viscount did thank them. That is another fault on my part. He did thank them and I apologise. We are so used to their brilliantly argued Reports, which give us such great assistance in our efforts to reform the law, that I am afraid I fell into the error of forgetting their work. One takes it for granted. They have done a remarkable piece of work. Their Report is full and informative and I read it with the greatest pleasure, as well as with great advantage, in preparing to present the Bill to your Lordships' House.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.