HL Deb 28 April 1986 vol 474 cc8-35

2.59 p.m.

Report received.

Clause 1 [Time limits for negligence actions in respect of latent damage not involving personal injuries]:

Lord Hacking moved Amendment No. 1: Page 2, line 14, leave out ("any potential") and insert ("the")

The noble Lord said: My Lords, as those Members of your Lordships' House who were present at the Committee stage may remember, the noble and learned Lord cast me—I do not think that we got our biblical roles quite right—as Esau when I moved a similar amendment. Before inviting your Lordships to join the noble and learned Lord and myself again in the Book of Genesis, with the noble and learned Lord, I assume, playing the role of Isaac and myself again cast in the role of Esau, I should like to make some general observations concerning all the amendments that I have tabled for the Report stage.

My amendments, for discussion by your Lordships, are tabled for two principal reasons. The first is an attempt, possibly a forlorn one, to shorten the drafting of the Bill in certain parts in order to increase its clarity. It has been my submission on earlier occasions with earlier Bills that Bills are not improved through being written at too great a length and in too great complexity. While supporting the principle of the Bill and its main effect, I am critical of certain parts of its drafting. For that reason I have tabled the first three amendments.

The second reason for my amendments is to draw attention to the problems of the building and construction industry and, indeed, the professions at large as they face these proposals which will become law when the Bill is passed. There were few Members of your Lordships' House who spoke in support of my amendments or indeed in support of the building and construction industry at Committee stage. The noble Lord, Lord Howie, and myself almost alone carried the banner on behalf of these interests. I therefore hope that at this Report stage there will be more support for the amendments that I am moving.

Before the start of the Report stage I considered where I might find support. We are fortunate in having upon the Woolsack the noble and learned Lord, who has had a long career as a lawyer and as a public speaker and paper writer. It was not difficult, therefore, to discover an example, during the noble and learned Lord's illustrious career, of his espousing the cause of the professions. In 1977, if my information is correct, the noble and learned Lord delivered a powerful speech on behalf of the professions recommending, among other things, that they should be represented by a confederation of British professional associations. The noble and learned Lord then said that the professions should be: more united and self-conscious of their separate interests in putting forward their distinctive point of view". I can do no more than echo and endorse those words of the noble and learned Lord. That is what I have attempted to do at Second Reading, in Committee and now on Report. In doing so I have tried particularly to focus upon the problems of the building and construction industry.

Despite my efforts to gain more support at this stage of the Bill, it is unfortunately the case that several noble Lords with deep experience of the building and construction industry are not able to be present. However, the noble Viscount, Lord Caldecote, the noble Earl, Lord Lloyd-George, and the noble Lords, Lord Mais, Lord McAlpine of Moffat, Lord Kimball and Lord Taylor of Hadfield, all with deep experience within the building and construction industry, have kindly agreed that I should mention their names in support of my amendments. This concludes my introductory remarks upon the amendments that I have tabled on Report.

I turn to the particular amendment under discussion. There are, in fact, two amendments concerning which the noble and learned Lord detected at an earlier stage the voice of Jacob behind Esau. The amendments were suggested to me by the Law Society. They concern the identification of the party who has the knowledge for the purpose of the "knowledge tests". In case that sounds a little technical, I should like to explain it in simple terms. One of the major provisions of the Bill is to allow plaintiffs an extended period of time in which to bring their actions, a period based upon the time when the plaintiff knew or should have known that he suffered the latent damage. The counter-balance is the long-stop provision (contained in the proposed Section 14B) which is designed to provide a complete cut-off point after 15 years stemming from the breach of duty. We shall come to that point later. Instead of referring in subsection (5) to the earliest date on which "the plaintiff" first had knowledge—there are then a number of tests upon which I shall later be commenting—the Bill uses the phraseology -any potential plaintiff". This is dissimilar to the Limitation Act. Section 11(4)(b) of the Limitation Act—the equivalent provision concerning personal injury—contains direct reference—

Lord Lloyd of Kilgerran

My Lords, I am sorry to interrupt the noble Lord and I must apologise also because I missed the first three minutes of his speech. The noble Lord mentioned the name of the noble Lord, Lord Howie of Troon, with whom I have been associated in some building activities through the Institution of Consulting Engineers. Is the noble Lord now speaking to Amendment No. 6?

Lord Hacking

My Lords, the answer is simple. I am speaking to Amendments Nos. 1 and 2. I am sorry if I did not make that plain. I regret that the noble Lord missed the first three minutes. I shall not, however, repeat what the House has already heard. I do not intend to have a second run.

I was making the point that the Limitation Act 1980 directed its attention, in an equivalent provision concerning persons who suffer personal injuries that they know not of at the time, to the actual plaintiff. Section 14 of that Act therefore contains an extended period for those persons to bring their actions. This was not the law until 1963. In 1963, however, following the sad case of Cartledge and Jopling, where a number of miners were found to be statute barred and unable to bring an action for damages for severe injuries, Parliament came to the rescue. What was not dealt with by Parliament in 1963 was latent damage—the matter that we are now discussing.

The simple and straightforward point is that this Bill, instead of identifying the actual plaintiff—the only person who is, in the end, concerned—who has brought the proceedings, uses the wider language of "any potential plaintiff". It is true that the noble and learned Lord made plain in Committee that it was the intention of this provision only to identify the plaintiff who subsequently brings the action. Thus the noble and learned Lord sought to persuade me that the amendment was not necessary and that the meaning was clear enough from the face of the statute. That is the point of issue between the noble and learned Lord and myself. I would respectfully ask him whether he will be so kind to consider again this drafting matter—it is nothing more—and to consider whether it would not be simpler and easier to refer to "the plaintiff" and to remove altogether the descriptive passage that lies between lines 19 and 23 on page 2 of the Bill. I beg to move.

Lord Denning

My Lords, I should like to support this amendment. As I see it, this is a matter of drafting. Amendments Nos. 1 and 2 put the matter in simple, clear, intelligible language, whereas the Bill, in the proposed Section 14A, seems to me to be obscure and to give rise to many points on which lawyers may disagree.

Let me give noble Lords an illustration from subsection 7: The other facts referred to …above are"— and this is the paragraph which I find difficult— (c) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant". That takes an awful lot of understanding, if I may say so.

The same applies to a lot of this Bill. It seems to me, from reading it, that the amendment put forward by my noble friend Lord Hacking makes it quite clear that it has to be, of such facts about the damage … as would lead a reasonable person … to consider it sufficiently serious to justify his instituting proceedings". In other words, I prefer the simple language of the amendment rather than the complicated language of the original draft although they both come to the same thing. I therefore support the amendment.

Lord Elwyn-Jones

My Lords, was the noble and learned Lord not dealing with the third amendment in his most interesting observation?

Lord Denning

My Lords, I have been trying to speak to all of them.

Baroness Phillips

My Lords, as one who is a layman in these matters, who has tried rather hard to follow this discussion, I wonder whether the noble Lord, Lord Hacking, when he replies can enlighten me about the reference to Esau and Jacob. So far as I can recall, neither was a legislator or a lawyer. I am waiting to learn the erudite connection in his introduction of the amendment.

The Lord Chancellor

My Lords, I am afraid that I am responsible originally for the reference to Genesis. Perhaps I may enlighten the noble Baroness. There is a story in Genesis about when Jacob led his rather blind old father Isaac to believe that he was Esau by tying a goat's skin on to his hands. Isaac was slightly puzzled and said, "The voice is the voice of Jacob but the hand is the hand of Esau", who was a hairy man. I am sorry to see that the right reverend Prelate was driven out by that. But, with respect, I think that the noble Lord, Lord Hacking, had the roles wrong; or perhaps I did at the Committee stage. The original purpose of my reference in Committee was to point out that he was speaking in the part of the Law Society rather than in his own character. I believe that clears that matter up.

My belief is that we shall have to deal with Amendment No. 1 now because Amendment No. 2, despite my noble and learned friend Lord Denning's powerful oration, has nothing to do with the point in Amendment No. 1. If Amendment No. 2 were to succeed—I express no opinion as to the probability of that—Amendment No. 3, as a matter of order, could not be called. I think that Amendment No. 3 probably had more connection with Amendment No. 1 than did Amendment No. 2. However, this was discussed at length in Committee, when I perhaps gave too short and cursory a reply because at that stage we had present my noble and learned friend Lord Scarman who was responsible for the report and who spoke against this particular amendment for reasons which I then thought saved me the trouble—

Lord Hacking

My Lords, I apologise for interrupting the noble and learned Lord. It is entirely my fault. The amendments on which I was addressing the House were Amendments Nos. 1 and 3, which are coupled together and which are the Law Society amendments as the noble and learned Lord detected with the voice of Jacob through Esau. If I may, I shall address your Lordships on Amendment No. 2, which is a separate matter, in a moment.

3.15 p.m.

The Lord Chancellor

My Lords, I think that would be the convenient course. It was perhaps my fault that I did not spell out the reasons in detail as to why I did not accept Amendment No. 1 in Committee. Basically it is a drafting amendment and it is based on a false assumption. Those who were responsible for Amendment No. 1 have made the false assumption that the effect of the reference in Section 14A(5) of the proposed new clause to any potential plaintiff is to cause the starting date for the provision to run at large against all potential plaintiffs as soon as any potential plaintiff has actual knowledge that he has suffered damage. The starting date, they say, is the earliest date upon which any potential plaintiff has knowledge of the facts referred to in subsections (5)(a) and (5)(b).

However, those references are to the material facts about the damage and the other facts relevant to the current action, in both cases as defined in the clause. The intention of these provisions, as applied by the proposed Section 14A(6) and 14A(7), is to cause the period of limitation, to start to run when the plaintiff knows, or might reasonably be expected to know, that he has suffered such damage as would justify a reasonable plaintiff in initiating the proceedings in hand against the defendant who did not dispute liability and was able to satisfy a judgment". I take that from paragraph 4.8 of the Scarman Report.

The Law Society founded its argument on knowledge of the existence at large of the tortious act but the clause is founded on the damage in respect of which damages are claimed. The material facts concern that damage and his damage is unique to each separate potential plaintiff. The true nature of the test can be brought out by considering the case of a negligent act which may cause damage to several plaintiffs, such as the negligent drawing of a will. When such a potential plaintiff is inclined to proceed his statement of claim will allege (a) that the advice was given (for instance, by the will being drawn); (b) that the advice is beyond correction (as when the testator has died); (c) that the will fails in its alleged purpose to benefit the plaintiff; and (d) that the plaintiff only discovered the damage he has suffered on a date within the Section 14A limitation period.

The defendant, for his part, will challenge as a matter of limitation under (d) above on the proposed subsection (6) ground that a reasonable plaintiff would have commenced these proceedings earlier and that the time has run out. He may even show as a matter of evidence that earlier, albeit separate, proceedings were commenced by a different plaintiff affected by the negligent advice. The example also illustrates the need for some expression such as "potential plaintiff" instead of, as is proposed in the amendment put forward, the word "plaintiff" without the adjective "potential" inserted in advance of it.

For example, in the above instance I gave, if the special period of limitation expired before any plaintiff took action there would have been no actual plaintiff to consider but 10 potential plaintiffs. If an action were brought outside the special limitation period the defendant would be able to show, if such were the case, that the starting date had begun when the actual plaintiff was only a potential plaintiff who might reasonably have been expected to know that he had suffered such damage as would justify a reasonable person in instituting proceedings.

Another case which I could cite in support of the text as drafted is where one or more of the potential plaintiffs has special knowledge or expertise; for instance, he may be a structural engineer or a solicitor. While his expertise may allow him to detect the signs of damage in advance of other plaintiffs, the effect of the proposed Section 14A(6) and (9), as drafted, is to ensure that the other potential plaintiffs are not disadvantaged by this fact.

A defendant to an action brought by a second plaintiff cannot simply escape by saying that more than three years have elapsed since a first plaintiff discovered the signs of damage, if it is not reasonable to impute the first plaintiffs knowledge against the second plaintiff under Section 14A(9) and if the material facts about the damage were not such as to lead a reasonable person to institute proceedings. The reference to potential plaintiffs is also necessary in relation to Clause 3.

The Law Society says that it is difficult to understand why that can be so, since a new cause of action is only created by Clause 3(1) of the Bill where the predecessor in title had not discovered the defect. However, that argument overlooks that there may be several concurrent interests in the property and that the holders of each of these interests may have a separate right of action in respect of the same act of negligence. I could give examples of the transfer of freehold land subject to leases or easements, or the mortgaging or chartering of a defectively designed ship. I am afraid that this is not every exciting stuff! However, I must point out that the draftsman, to whom I referred the amendment before, still sticks to her opinion. She is not yet convinced against her will, and I take the same view as she does.

Lord Hacking

My Lords, in moving the amendment it was my purpose to ask the noble and learned Lord whether he would be kind enough to give the matter further consideration. I am not sure whether he has been referring to discussions which have taken place since the Committee stage or whether they took place before the Committee stage. However, I still seek from him the kindness of his offer to give the matter further consideration.

The noble and learned Lord has taken us twice, by a long and complicated journey, through the provisions of the proposed Section 14A, and I shall have much more to say about that when I move the next amendment. However, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hacking moved Amendment No. 2: Page 2, line 14, leave out from ("knowledge") to end of line 41 and insert ("of such facts about the damage that was attributable in whole or in part to the act or omission in respect of which damages are claimed, as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings in which such damages are claimed."). The noble Lord said: My Lords, I shall now be addressing your Lordships—and I feel sure of my ground now I have a numbered Marshalled List in my hand which I did not have earlier—on Amendment No. 2 which stands by itself. I am delighted also that the noble Lord, Lord Lloyd of Kilgerran, is now in the Chamber so that I shall not have to repeat any of my remarks on this amendment.

The amendment is directed to making this part of the statute simpler and shorter. As I have commented, the noble and learned Lord has had to take us twice, by a complicated journey, through these subsections. As I drew attention to your Lordships in Committee—and I do so again briefly for those of your Lordships who were not present in Committee—the Bill sets out to provide a series of tests of the plaintiffs knowledge, or the knowledge that should be impugned upon the plaintiff, for the starting point of this extended period of limitation which will enable him to bring his action three years from the date when he knew or ought to have known that he had suffered latent damage. There are two main tests. The first test appears in subsection (5)(a), which is directed to: the material facts about the damage in respect of which damages are claimed". The second test refers to: other facts relevant to the current action".

Having established those two main tests, the statute then goes on to provide a series of subtests. Subsection (6) sets out the material facts and the tests in that regard. Subsection (7) provides the further tests in respect of "the other facts" which are relevant for the test of the plaintiffs knowledge.

I seek only to establish the principle that these subsections could be reduced in size and usefully brought to a position of greater clarity without in any way moving away from the recommendations of the Law Reform Committee. Indeed, the noble and learned Lord, Lord Scarman, who is not with us today but who was with us in Committee, accepted that this amendment was loyal to his committee's report and to the Bill. He sought only to say that the tests themselves were not difficult. Those of your Lordships who were present in Committee will recall that he then went through each of the individual tests.

My riposte then and my riposte now to the noble and learned Lord, Lord Scarman, is that while the tests individually are not complicated—and it was amply illustrated by the noble and learned Lord just now in the submissions which he made on my earlier amendment—on every occasion that the test of knowledge arises, the plaintiff has to go through this complicated journey. He goes through one gate after another, turning left, turning right and then going forward. It is almost like snakes and ladders.

That is not a satisfactory imposition to place upon plaintiffs; it is not a satisfactory imposition to place upon defendants. In other words, it is not satisfactory to have such an imposition upon any party in litigation. Moreover, as I commented in Committee, statutes are not only used in courts and subject to construction by lawyers and judges; statutes are lifted off the shelves by insurance men and by others who want to know the law and the position of their client, whether their client be a plaintiff or a defendant. Surely it all adds up to this: by having longer and more complicated provisions, litigation is encouraged and the efficiency of the Bill is lost. I beg to move.

Lord Denning

My Lords, I was really speaking to this amendment previously. My plea was that we should have the simple language of the amendment instead of the complicated language of the Bill. The language of the Bill is still obscure and it is only matched by the obscurity of the language used by my noble and learned friend the Lord Chancellor on the last occasion. I support the amendment on the ground that, for goodness sake, let us have our legislation in simple, clear language!

Lord Edmund-Davies

My Lords, I should like to identify myself with that view. The proposed language seems to me to be far clearer than that at present embodied in the Bill.

Viscount Esher

My Lords, I am glad to hear that the noble and learned Lord, Lord Denning, supports the amendment. I am sorry that I have been unable to attend earlier debates on the Bill, but I have read them with great care having myself, as a young architect many years ago, been through this mill, and wishing to do what I could to support the position taken by the professional people in the building industry and people speaking for the industry itself.

3.30 p.m.

In the instance I mentioned just now the plaintiff was a government supported development corporation, the contractor was a famous international building firm and the defendants were three young architects, one of whom was myself, paid 10 per house—this was a housing project—in the way of fees, on which we could not possibly carry the insurance needed, nor afford the cost of representation of the quality available to the other parties.

It was the plaintiff and the contractors who had—and I think I quote—"the powerful organisation and articulacy" flatteringly credited to the building professions by noble and learned Lords. In the event we met our half share of the liability by selling my family silver. For those not so fortunate it would have meant bankruptcy and the end of our practice.

I mention this ancient tale because we now have a new generaton of young architects widely admired, I think I am right in saying, not just by architects themselves but by the public in general, yet almost to a man they are what the Victorians used, rather brutally, to call "men of straw". At the other end of the age spectrum, with increasingly early retirement, we are going to have a number of pensioners vulnerable to what are called "stale claims" which the RIBA has shown could be as much as 30 years old even with the long stop proposed in the Bill.

Much has been heard in these debates of discoverability; too little, I would suggest, of insurability. I support this amendment, and in particular its reference to the building industry as a special case, because insurability depends on a clear definition of risks. This is particularly difficult in our industry. The Law Reform Committee referred to the time-consuming, expensive and sometimes impossible task of ascertaining exactly when damage occurred".

Lord Broxbourne

My Lords, where does the noble Viscount find in this amendment a reference to the special characteristics of the construction industry? Surely those references come in Amendment No. 6, an important amendment which is awaiting discussion.

Viscount Esher

My Lords, perhaps the noble Lord, Lord Hacking, could make this plain. I hope I am speaking to his Amendment No. 2.

Lord Hacking

My Lords, I hesitate to intervene. It is not for me to decide issues between two noble Lords. However, my amendment particularly directed to the construction industry is indeed Amendment No. 6 and the collateral amendments to it.

Viscount Esher

My Lords, the Law Reform Committee referred to the difficulty of ascertaining exactly when damage occurs, which is critical in this Bill. Noble and learned Lords will be familiar with the Latin maxim "Interest respublicam ut sit finis litium", which although the Latin is a little odd, could be translated as "It is in the interests of society that there should be an end to litigation".

However, it is no good defining the end if you cannot trace the beginning. In all other countries about which I have been able to obtain information, the limitation period runs from the date of completion. Only thus can the building team be properly insured and only thus can the claimant be sure of getting the two things he must have—certainty of compensation and speed of payment—so as to limit the risk he carries.

In the view of the industry the committee's report, and the Bill itself based upon it, contain two fatal flaws. The first is the failure to meet the special needs of the building industry, when on its own admission latent damage concerns the building industry probably more than any other section of society. The second is the neglect of the problem of insurability.

If Ministers in another place insist on having this Bill as it stands, unamended, new legislation is inevitable if we are to protect this country from the insurance famine which has become a major threat to American society. In the event of that legislation, I would suggest that it must contain two components. First, it must be fully compatible with the practices of the European Community, which are, outside the United Kingdom, closely comparable; and, secondly, it must look towards what many of us in the industry see as the only sensible way ahead; the collective responsibility and the collective insurance of the whole building team, consultants, contractors and developers (often in any case one organisation now in the case of design and build contracts) so that we can at last work as a team and not face the expense of spirit and the waste of the time of the courts fighting one another. In other words, in line with modern practice we should move the long stop around to fine leg and get a better wicket keeper.

Lord Elwyn-Jones

My Lords, it is no doubt due to my lack of understanding, but it appeared to me that the noble Viscount was addressing himself to the final amendments, to which we shall come in the fullness of time, and at this rate I do not know when that will be. When two noble and learned Lords find obscurity in the drafting, the provision merits, putting it at its lowest, the most careful examination again by the noble and learned Lord.

I was greatly impressed by the assistance given to us by the noble and learned Lord, Lord Scarman. He reminded us that a committee of very experienced characters considered these problems over the course of four years, went into them carefully and gave their conclusion in paragraph 4.7 that: although the proposed amendment has the advantage of simplicity the more complicated formula for which the committee opted gives more guidance to a plaintiff uncertain as to his position than does the simple advantage". I rather liked his peroration: In this case, brevity may be the soul of wit but it is not the soul of explanation".—[Official Report, 8/4/86; cols. 99–100.] For my part, I am reasonably content with the Bill as it stands.

The Lord Chancellor

My Lords, the Bill contains two principal proposals. One has to do with the principle of discoverability, which provides potential plaintiffs with an "esprit de l'escalier" after the six years is over. The other is the long stop which is for the benefit of architects and others. I must tell the noble Viscount, Lord Esher, that his speech was directed solely to the latter, whereas this amendment is concerned entirely with the former. I promise to deal with some of his points when the latter come into consideration on the later amendments.

My noble friend Lord Broxbourne was quite right in sounding a minute gun warning in the earlier parts of his speech. But having said that, and after having had the advantage in Committee of the noble and learned Lord, Lord Scarman, and at this stage of the noble and learned Lord, Lord Elwyn-Jones, I must range myself unequivocally on their side in spite of the battery of heavy artillery coming from the Cross-Benches at the other end of the Chamber.

This point was considered very carefully indeed by the Scarman Committee at paragraph 4.5 and going to and including paragraph 4.8 of its report. Broadly speaking, it had to decide as to the application of the discoverability test to a potential plaintiff in one of three alternative ways. One, which it enumerated as three and which it rejected in its entirety, was to disregard constructive knowledge altogether. This amendment follows the Committee's report at least to that extent. That leaves the first two.

The first, it is said, would be to define knowledge fairly generally. That is what this amendment seeks to do. It follows a Scottish model. If my noble and learned friend on the Government Front Bench will forgive me, that is neither an advantage nor a disadvantage in discussing possible changes to the English law.

The second was to adapt the words already present—a factor to which none of the noble and learned Lords on the Cross-Benches referred—in the consolidation Act of 1980. It was after careful consideration that the Scarman Committee in its report and the noble and learned Lord, Lord Scarman, at the Committee stage came down firmly on the side of that second alternative. They gave their reasons at length. My noble and learned friend Lord Denning spoke of cumbersome and complicated language and said that my exposition of the position under Amendment No. 1 came within that definition, to which I willingly plead guilty. I did not know any other way to say what I wanted to say.

The noble and learned Lord, Lord Edmund-Davies, said the same thing, but I remain rather firmly of the same opinion that the noble and learned Lord, Lord Scarman, expressed in Committee (at col. 100 of the Official Report) and the noble and learned Lord, Lord Elwyn-Jones, gave us in his speech this afternoon. The noble and learned Lord, Lord Scarman, observed that there was a balance of advantage and disadvantage to be considered in defining knowlege for the purpose of the potential plaintiff's extended period of limitation.

The Law Reform Committee's recommendation at paragraph 4.8 of its report, to which subsections (6) to (9) inclusive give effect, provide the plaintiff with more guidance than the amendment now proposed by the noble Lord, Lord Hacking. The noble and learned Lord, Lord Scarman, considered that it was a necessary safeguard for the potential plaintiff, before time had run against him, to be able to establish, first, factual causation, found in subsection (7)(a) of the Bill; the identity of the defendant, found in subsection (7)(b) of the Bill; and, if the breach of duty was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant". found in subsection (7)(c) of the Bill.

Then he said—and I would respectfully adopt these words from his Committee speech: those details are not difficult and they are not legal jargon; they are indicating to a plaintiff and his adviser the sort of matters which they have to consider in making up their minds as to whether the damage is sufficiently serious".—[Official Report, 8/4/86; cols. 99–100.] I respectfully suggest to the House that Lord Scarman and his Committee were right. They gave the matter careful attention.

That simplicity, as I think the noble and learned Lord, Lord Elwyn-Jones said, is not necessarily a safeguard against litigation. Rather than the spurious simplicity contained in general words in a sentence or two, the spelling out of guidelines is, in our system—although not, I think, in some Continental systems—a safeguard against litigation. The whole law of negligence in the French civil code is contained, I believe, in a single sentence, but is has not led to any diminution of litigation in French courts.

This is a clear indication of where we should follow the committee and not follow the rather spurious simplicity of the proposed amendment. I am not saying that the world would come to an end if the amendment were passed (except that Amendment No. 3 could not be called, of which it is my duty to remind the House), but I think that the text is better. For that reason, I am unable to accept the amendment.

3.45 p.m.

Lord Hacking

My Lords, I feel a little hurt that the noble and learned Lord referred to my amendment in terms of "spurious simplicity". I should make it quite plain, although I would be more than happy to be associated with Scotland and Scottish law, that the drafting of my amendment does not come from Scotland; it comes from the Bill that your Lordships are considering. It is an attempt, no more and no less, to extract the essential provisions out of these series of texts without inviting plaintiffs or defendants to go through these complicated journeys which were so well illustrated by the noble and learned Lord when he was addressing this House on Amendments Nos. 1 and 3.

Having said that, it is not my intention to press this to a Division. In a moment or two, if no other noble Lords wish to address this House, I shall be withdrawing this amendment, but before I do so I should like to thank noble Lords who have spoken in support of my amendment, and I should particularly like to thank both the noble and learned Lords who spoke from these Benches in favour of this amendment. At least I feel I have a little more support than I had in Committee, and I am very grateful for that.

I am also grateful to the noble Viscount, Lord Esher, for his comments. As was pointed out by the noble Lord, Lord Broxbourne, the weight of Amendments Nos. 4, 5 and 6 is directed towards the problem of the construction industry, but the words that the noble Viscount spoke are also applicable in a more general sense to this amendment, because it is in the interests of the building and construction industries and in the interests of all plaintiffs and defendants that there should be greater clarity to this Bill. Without naming those distinguished bodies in the building and construction industries that have viewed this amendment and commented favourably upon it, I should like to record that it has the support of some most distinguished bodies and institutions within the industries.

Having made those comments and having at this stage not obtained the willingness of the noble and learned Lord to give further consideration to the drafting of this part of the Bill, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hacking had given notice of his intention to move Amendment No. 3: Page 2, leave out lines 19 to 23. The noble Lord said: I shall not formally move this amendment because now we have the numbering right this was considered when I addressed your Lordships on Amendment No. 1. Therefore, I do not intend to move Amendment No. 3.

[Amendment No. 3. not moved.]

Lord Hacking moved Amendment No. 4: Page 3, line 14, leave out ("An") and insert ("Notwithstanding section 14A of this Act no") The noble Lord said: My Lords, Amendment No. 4 should be considered with Amendments Nos. 5 and 6. They are all directed to the drafting of Section 14B. The proposed Section 14B is the section setting up the proposed long-stop provision. This amendment seeks to place an alternative starting event for the long-stop period. As drafted, although the words are not precisely used in the Bill, the starting period for the long-stop is 15 years from breach of duty. This amendment seeks to give an alternative starting date based upon completion.

In Committee both myself and the noble Lord, Lord Howie, tabled different amendments which were discussed together. The noble Lord, Lord Howie, and I have now joined to move one amendment—not that we were apart before; we were simply examining the problem slightly differently. We were making exactly the same proposal; namely, that there should be an alternative starting date based upon completion, but the time periods were different and the noble Lord, Lord Howie, spread his amendment wider than I did. My amendment was directed just at the building and construction industries, as is this one, but the noble Lord, Lord Howie, based his amendment rather wider.

I should draw to your Lordships' attention that my amendment also seeks to give greater clarity to Section 14A. It seeks to remove some of the longer phraseology contained in the proposed Section 14B. Thus another feature of my amendment is another attempt to give greater clarity to the Bill.

There seems to be a certain activity in the House. I do not know whether any noble Lord wishes to intervene. However, if no noble Lord wishes to intervene, I shall continue with my comments.

This amendment singles out the building and construction industry. It does so for two reasons. The first reason is that the building and construction industry is an industry whose activities are dissimilar to other activities also covered by the Latent Damage Bill; such activities as the provision of services and the manufacture of products. Your Lordships may remember this point from Committee. Because of the wide base of this proposed measure, covering all activities, definition is lost. I have tabled and moved this amendment because in those circumstances it seems logical in the construction and building of structures, when it is possible to have greater definition, that that definition should sensibly be included in the Bill.

The other point is that although this Bill, as I pointed out earlier, covers the full range of activities from the provision of services and the making of products, the truth is that it will be used on the great majority of occasions just in the building and construction industries. For that second reason it seems to me particularly important properly to focus on that area of activity in which the Bill has its main concern.

I am still conscious that there is a certain amount of movement in the House.

Lord Mishcon

In your favour.

Lord Hacking

My Lords, if your Lordships wish me to continue, I shall do so, but if I am wanted to give way to more important matters, I should wish to do that.

The problem therefore, when one applies the test of breach of duty as the starting event in the building and construction industry, is that that breach of duty concerning the same defect can occur on a number of different occasions. For example, it can occur when the building was incorrectly designed; when the building although correctly designed was incorrectly drawn on the relevant plans; when plans, either incorrectly designed or drawn, were submitted for the contractor's tender; when the defect was constructed or assembled; when the premises or that part of the premises containing the defect were improperly inspected or when the building is handed over for completion. I have set out six—I could have identified more—different points in time relating to the same defect when the limitation period under the long-stop provision might be activated. It is for that reason that it seems sensible—which is why I am urging this on the House—that, for the building and construction industries, the completion date should be the starting point. When this matter was considered previously Parliament decided that the limitation period should begin in the building industries unequivocally and clearly at the completion date. I refer to the Defective Premises Act 1972 and in Section 1(5) the test for the date for breach of duty is when the building or part of the building has been completed. Thus Parliament has already decided that an action should start in reference to a building on completion.

There is also relevance to what other jurisdictions do. I have carried out a survey and I shall briefly summarise my investigations concerning other jurisdictions, particularly in the EC. The result of my inquiries reveals that while their statutes of limitation are not entirely similar—there are different concept sinvolved—they all have a long-stop period, which may be new to English law but not new to European law, based on completion. In Italy it is 11 years from completion. In France, it is 10 years from acceptance. In Germany, depending whether it involves injury to people or things, it is 30 or eight years from acceptance. In the Netherlands it is a long time—30 years from delivery. In Spain it is 15 years from completion. As a matter of interest in the United States of America, in that highly litigious country, I can quote from two states. In Georgia it is eight or five years from substantial completion and under the laws of Massachusetts there is a statute called the Statute of Repose, which operates after the limitation period, within which a plaintiff is entitled to bring an action—in this case three years. The Statute of Repose—the equivalent of our long-stop period—then sets six years from substantial completion. When, therefore, other jurisdictions have considered what should be the appropriate starting date, they come to completion.

For all those reasons I would submit that this should be the appropriate starting point. It is a matter which concerns the building construction industry. Again, I tell your Lordships that a great number of very substantial bodies (and when I say "substantial", I mean substantial in their experience) and worthy institutions in the building industry—and the Royal Institute of British Architecture is one, and the Institution of Civil Engineers, is another; indeed, all the leading institutes—support this amendment and through me they urge your Lordships that this is an important amendment, important for clarity and important for the execution of this Bill. For all those reasons I move this amendment. So that your Lordships are not in any doubt, my arguments are directed to Amendments Nos. 4, 5 and 6.

4 p.m.

The Lord Chancellor

My Lords, I have ascertained that the Statement has been cleared but from what inquiries I have been able to make the consensus, I gather, is that we should continue with this amendment until the end of the debate and take the Statement afterwards. If that is the will of the House, and only if it is the will of the House, I now say that the Question is, That Amendment No. 4 be agreed to.

Lord Howie of Troon

My Lords, as your Lordships will recall, I was associated with the noble Lord, Lord Hacking, in somewhat similar amendments at the Committee stage of the Bill. My amendments were alternatives to his but, as he said a moment ago, we sought the same end ultimately. We have now reached a compromise where we are putting forward and speaking to the same amendment. These amendments really try to seek certainty in the application of the long stop, which is a new matter for English law although, as the noble Lord, Lord Hacking, said a little while ago, it is not unknown elsewhere.

It is fair to say that our compromise amendment does not give the kind of total certainty that I should have liked to see. That could only have been achieved, as the noble Viscount, Lord Esher, said in an earlier debate, by using the time of completion, and that alone, as the beginning of the long stop period. But that has proved to be unattainable. We discussed this earlier on with the Government and the Government have been unyielding. We have reached a half-way house in which there are two dates for the long stop. The long stop will reach 15 years from the breach of duty or 12 years from the time of completion.

I think it is fair to say that that is somewhat rough justice but I believe it to be rather less rough justice than the Bill gives us. The point about certainty was touched upon earlier by the noble Viscount, Lord Esher, when he remarked that uncertainty throws undue burdens of insurance on the industry and hence, through that, on to the costs of building in general. It has a further ill-effect on the building industry: that uncertainty on the part of the designer leads him to overdesign and to add further cost to the industry in that way. It also leads him to be somewhat sparing in innovation.

The search for certainty interested the Law Reform Committee as well. In Part 2 of the report the committee was dealing with the present state of the law and with the question of causes of action accruing when damage occurs—no sooner and no later, as the committee says in paragraph 2.1 of the report. After considering that question, the committee gave its view in general terms of the existing law in paragraph 2.12. So far as defendants were concerned, they were faced with great uncertainty and the committee went on to say: The courts are now being required to perform the time-consuming, expensive and sometimes impossible task of ascertaining exactly when the damage occurred. We do not think that this situation can be justified". That is what the committee said. The committee then went on to recommend some changes in the law, including the introduction of the long stop of 15 years, which is included in the Bill. But the weakness of the long stop, as I see it, is that it is measured in the Bill from the breach of duty. Ascertaining when the breach of duty occurs in respect of the long stop is no more certain than ascertaining the time the damage occurred under the present legal conditions. I outlined this problem in some detail in committee, and I shall not go over it again. Noble Lords will remember that I used the example of the foundation of a power station. I demonstrated how there were a number of occasions when the breach of duty could occur and indicated how those occasions could be spread over a considerable number of years. My arguments are to be found in col. 114 of the Official Report for 8th April last. As I have said, I shall not repeat them today.

In fact, the breach of duty can only be determined if the courts are asked to perform time-consuming, expensive and sometimes impossible tasks of ascertaining exactly when it occurred. I suggest to your Lordships that if that could not be justified in connection with the time of actual damage, I do not see how it can be justified in terms of the breach of duty. The committee criticised the uncertainty in one case but the Bill keeps it in the other. I am sure that is not the kind of inconsistency that we should like to see continued.

There is one point that I should like to touch upon briefly. In the course of the Committee stage, in arguing against the amendments put down by the noble Lord, Lord Hacking and by me, the noble and learned Lord, the Lord Chancellor listed what he called a formidable list of supporters of the Bill in this connection. It was a formidable list, but who were they? There was of course the committee itself, which deliberated for four years on this matter, as I discovered earlier this afternoon. Four years was either too long or too short: who can tell? The list included the Official Referees, who are a learned and formidable body—learned perhaps more in law than they are in actual construction, though they know a good deal about the law on construction. The rest of the list consisted of other lawyers, accountants, property people, landowners and the Consumers Association.

Out of the 15 or 20 on that list, there were only two who were connected in any close way with the construction industry itself. One of them, I can say without appearing dismissive, was a somewhat small organisation and the other was a somewhat large organisation. I should say that since then the large organisation which featured on the list of the noble and learned Lord the Lord Chancellor has now changed sides and is today supporting the amendment of the noble Lord, Lord Hacking.

During our exchanges in the Committee stage, the noble and learned Lord the Lord Chancellor suggested that we did not want to swap lists of names. I think it was just as well that he suggested that because if your Lordships look through the list of people providing evidence to the committee, you will find that 30 or more were closely connected with the construction industry and they submitted evidence of one kind or another, but there were only two of them that he was able to bring to his aid during the earlier debate, and as I say, one of them has deserted him since then.

The compromise that we suggest has one major difficulty for the plaintiffs. There is no point in glossing over the difficulty—that is, if we have to choose between 15 years from the breach of duty and 12 years from the time of completion, there is the problem of something that occurs right at the end of a contract, where some plaintiffs might feel that in this compromise they were being shortchanged.

I ask your Lordships again to think back to the kind of contract which is really imporant, and that concerns the kind of example I have mentioned and also the kind of example mentioned earlier today by the noble Viscount, Lord Esher, where the likely plaintiff is somebody such as an electricity board or the Department of the Environment—that is, some quite substantial body, and where the project itself is quite substantial. In the kind of substantial project I am thinking about the dangerous period for structural faults—which are the important ones that should worry people, rather than minor ones—is the earlier part of the construction period and not the late part, where this overlap occurs. As I say, there is an element of rough justice but, taking one thing with another, it seems to me that the balance is reasonable.

My last point is this. I ask your Lordships to turn your attention to what 15 years actually means, and to think back to what you were doing 15 years ago. Can you say, hand on heart, that you can actually remember what happened and that there would be good witnesses? Would 15 years add staleness to the memory? I can remember that 15 years ago I was involved in a construction project on the Firth of Forth; but without looking back at ancient records I cannot remember whether the project was in the design stage, whether the tenders had been sent out, whether the contract had been let or whether it was actually started. Somebody may remember, but I cannot do so. What is more interesting is that the senior people who were involved with me in that contract have all now departed from the scene: they have all retired and they are all gone. Fifteen years is a very long time, and some weight should be given to that aspect in our deliberations.

I said earlier that a compromise was rough justice. It is not exactly what the consulting engineers or the architects would want; it is not what the builders or the contractors would exactly want, and it is not what the plaintiffs would want; but it is fairer to everybody than what is provided in the Bill, and it should be supported.

4.15 p.m.

Lord Broxbourne

My Lords, this amendment provides an option which the Bill does not and it takes into account the special characteristics of the construction industry, which the Bill does not. Prima facie, it is therefore an attractive proposition. Of course it is not an open and shut case. Nobody acquainted with the intricacies of building and civil engineering law would expect it to be. For myself, I have spent many interesting, if not exactly hilarious, hours in my forensic capacity on these matters, and even in an editorial capacity, seeking to explain the mysteries of these matters. I refer to what for many years was known by the cold and impersonal title of The Annotation of the Standard Forms of Building Contract. For the new edition, the publishers very kindly renamed it Walker-Smith on the Standard Forms of Building Contract—but your Lordships will note that they waited until I changed my name before they gave it that pleasing description!

We are here concerned in this amendment with two related concepts: the length of the long stop and the starting date. As to the length, this is discussed in paragraph 4.13 of the admirable report (as one would expect from its leading author) of the Scarman Committee. As they indicate, of course there is no absolute solution in mathematical terms. As they say, in the final analysis the question of length is one of judgment. In the event, they rejected 10 years, they rejected 12 years and they rejected 20 years. They recommended 15 years as striking the right balance: a good, pragmatic, British compromise approach.

However, the 12-year period proposed by the amendment is also a compromise approach between the periods of 20 years and 10 years recommended by various responsible bodies. The 20-year period, according to the report, would permit some stale claims and expose many defendants to the risk of litigation for an unreasonable length of time.

The 10-year period was also put forward in responsible and authoritative quarters. It is indeed the long stop period specified in that attractive document, the EC directive on product liability, on which I spent many hours years ago as the then chairman of the legal committee of what I suppose we must now call the unreformed European Parliament. Of course, that consideration may not be the only one that leads your Lordships to doubt the validity and correctness of the period there specified. But the 10-year period also suffers from a major defect. It is shorter than the period of limitation under the Limitation Act for contracts under seal, and that covers the great majority of contracts entered into by local authorities. The 12-year period avoids this difficulty and also it much reduces the danger of stale claims.

It has been argued that to shorten the period from 15 to 12 years prejudices the consumer—that is the building owner—but there is this balancing consideration of the insurance factor. The longer the period, the greater the reluctance of the insurer; and indeed there are many cases where claims have not been brought because no effective insurance has been completed. Therefore there is a powerful case. in my submission, for the 12-year period and I come shortly to the related question of the date: completion or date of breach. Here Lord Scarman's report, on page 20, says: A number of those who wrote to us—especially those involved in the construction industry—suggested that the date of completion would be even easier to ascertain than the date of breach t duty". The noble and learned Lord the Lord Chancellor referred to the difficulty of defining the completion date. He referred to that on Second Reading: even in relation to the construction industry … Completion is a contractual concept, essentially difficult to apply, and perhaps wholly inapplicable to the law of tort".—[Official Report, 17/3/86; col. 799.] With great respect and in the presence of so many distinguished noble and learned Lords, I wonder whether the dichotomy is not perhaps overstated. Of course, we are dealing here with tort, but contractual provisions regarding completion would clearly be a help in defining the date of completion. Those are spelt out in some detail and with precision in the main form of contract used—JCT 80—the joint contract tribunal form for those purposes, where clause 1 fixes the date for completion by reference to the date specified in the appendix and later clauses—I shall not weary your Lordships with a recital of them—give effect to that with provisions also covering extension in prescribed cases.

It also prescribes for certification, which reduces the effect of any objection as to imprecision or difficulty of application. The noble Lord, Lord Hacking, rightly drew attention to the importance of certification in an earlier stage of the proceedings. There is then the statutory authority for the completion date contained in Section 1 of the Defective Premises Act 1972 and also, if my recollection serves, in the rating legislation for unoccupied premises. It is not all one way. There can be uncertainty as to the date of breach, as the catalogue of possible dates specified in Committee by the noble Lord, Lord Hacking, showed. Therefore, taking account of all the difficulties and imprecisions of this complex branch of law, there is a case to answer, and possibly a formidable case, on both aspects of the matter—on the starting date and the length of the period.

No doubt further consideration will be given in the light of the observations made at this stage of the Bill and will be communicated to the House on Third Reading, when we come to it. I respectfully request that when reporting the result of this further consideration the noble and learned Lord the Lord Chancellor will give further and better particulars of his list of supporters cited in col. 128 on 8th April and will say whether their support precluded the option of the 12-year period. Those supporters whom he catalogued are, in any event, only a relatively small minority of the 100 to 150 consulted by the Law Reform Committee, as set out in pages 31 to 34 of the Scarman Report. I must respectfully inform the noble and learned Lord that most of those he cited have no direct concern with the construction industry.

We await the Third Reading with interest and anticipation. Meanwhile, to end on a non-controversial note, I think that the House would wish to express appreciation to the noble Lords, Lord Hacking and Lord Howie of Troon, for bringing these important matters to your Lordships' attention. In opening, the noble Lord, Lord Hacking, said he hoped that he would receive more support for this matter than he did in Committee. I hope that he will not, in that context and in regard to the support which I have sought to give him now, be tempted to recall the Virgilian lines, "Non tali auxilio nec defensoribus istis".

Lord Denning

My Lords, I should like to commend to the House and to my noble and learned friend the Lord Chancellor close consideration of this amendment. It is sought by the building and construction industry, which is the one most affected by this legislation. It gives full weight to the report of Lord Scarman's committee. It weighed the two alternatives from where the starting point should be. Should it be the date of the breach of duty or the date of the completion of the work? It came to the date of the breach of duty.

Agreeing so far, I should like to point out that we should remove inconsistencies in our law. In the Defective Premises Act 1972 the statute clearly provides: Any cause of action … shall be deemed … to have accrued at the time when the dwelling was completed", and the 12 years runs from that date. That Act deals with the same question: defects in structure of a dwellinghouse when the dwellinghouse is built in such a way as to be not in a workmanlike manner or impliedly not fit for human habitation. The Defective Premises Act 1972 gives a 12-year limitation from the date of completion.

I hope that at least something will be done before the next stage of this Bill to co-ordinate in law all those provisions. There should not be a different limitation period for cases under that Act or under speciality contracts. Many building contracts come under speciality clauses and the limitation was 20 years, although it is now 12. When sued for breach of contract, those contracts had their own limitation periods. I ask only that this provision be considered with the other statutes so as to make them all equal if need be from date of completion, or let us strike out the date of completion in those matters and bring them into accordance with this Act. I plead for consistency in statutes relating to this matter.

4.30 p.m.

Lord Mishcon

My Lords, of course the noble Lord, Lord Broxbourne, was right when he said that there are arguments for and against any period of limitation or any long stop period that one cares to choose. I join with him in thanking the noble Lord, Lord Hacking, for the consistent way in which with assiduous skill he has tried to bring many amendments before the House at various stages of the Bill. His intention obviously has been to make this a better Bill. That does not necessarily mean that we must agree with the noble Lord's efforts.

Whatever period, as the noble Lord, Lord Broxbourne said, we choose there can be arguments of hardship for the plaintiff or for the defendant. The one thing that the committee did, bearing in mind, with great respect to the noble and learned Lord, Lord Denning, the Defective Buildings Act 1972 which had been passed before the committee sat and deliberated, was to come to the conclusion that, yes, there were arguments for 10 years, arguments for 20 years and arguments for 12 years, not from the breach of duty but from the completion of a building. The committee decided, with that homely, English sense of compromise to which the noble Lord, Lord Broxbourne, referred and which has stood us in good stead over the years, to make it a clear-cut case of 15 years.

The noble Lord, Lord Howie, made what he believed (rightly so) to be an effective point when he dealt with the question of memory. He asked: can you remember what happened 15 years ago? I turn to him and ask: can you equally remember with great accuracy what happened 12 years ago after the completion of a building? I must say that the difference in my mind, at all events, of what I can recollect 12 or 15 years ago is clouded in mistiness and I do not think that I would be able to point out with clarity a difference in my memories between those two periods.

Lord Howie of Troon

My Lords, I wonder whether my noble friend will say not "with clarity" but "with less unclarity".

Lord Mishcon

My Lords, if my noble friend wishes me to use the words "less unclarity", I shall certainly do so, but the point remains the same—

Lord Boyd-Carpenter

It is horrible English, my Lords.

Lord Mishcon

My Lords, it is horrible construction, if I may say so. That is what we are dealing with today, but in a different sense. Unless you have an overwhelming argument to the contrary, it is a little reckless, when you are discussing something—even if you have considered it for a few hours at Committee and Report stages—to throw overboard the deliberations of four years of a pretty high ranking committee. If we are to get this Bill through—and one hopes that this is not deferred till the Third Reading—then let us try to make up our minds and I suggest that we support that committee on this occasion.

It is all very well to pass over the question of whether or not completion of a building is a more certain date from which to reckon time than is the breach of duty. I have looked at the wording and I see that it is, the date on which such building or structure, or any separate part thereof, was completed". I must say that I can hear the noble Lord, Lord Broxbourne, with that eloquence to which we became so accustomed in cases of this type and others, delving into the mysteries of a building or any part thereof, or the structure thereof, and making a most uncertain case for when the date of this long-stop provision should apply.

But he quoted quite correctly the noble and learned Lord the Lord Chancellor, who does not need me to aid him in any argument. Indeed, he has remarked in the past that when I have endeavoured to aid him I have had quite the reverse effect on the House. But it so happens that at col. 799, if we are dealing with those who are experienced in these matters, he added a sentence which I hope I heard correctly—and I apologise to the noble and learned Lord if I did not—and which the noble Lord, Lord Broxbourne, did not quote. He said: Furthermore, on consultation the suggestion was firmly rejected by the official referees who are perhaps the specialists best qualified to referee this decision." [Official Report, 17/3/86.] They deal with little else, as the noble Lord, Lord Broxbourne, knows, other than building cases and building disputes and that, we were told, was the definite view of the official referees.

Lord Broxbourne

My Lords, I am much obliged to the noble Lord for his characteristic courtesy. I have great respect for the official referees court, with which I was not wholly unfamiliar. They try many other cases which, I think, loom larger in their calendars—compensation for acquisition of land, landlord and tenant and other such matters. Large building and civil engineering contract cases go normally not to the official referees, because there are built-in arbitration clauses both in the standard forms of building contracts and in civil engineering contracts, as the noble Lord well knows.

Lord Mishcon

My Lords, I am obliged for that intervention. I think the noble Lord, Lord Broxbourne, will be the first to agree with me when I say that they, of all our judges, have the best experience of building cases and if this is the view that they have taken, then I say: so be it.

There is only one observation that I should like to make and I hope that it will be deemed to be a little relevant to what we are talking about on this amendment. In my view when we are dealing with the long-stop provision there is a case for saying, possibly—I underline the word "possibly"—that a plaintiff is the one who is hard dealt by in view of this arbitrary fixing of 15 years, when he might well have a case of hardship which he would want to bring before the court and when the court might be moved with an ultimate long-stop of 20 years.

I mention this only because my noble and learned friend Lord Silkin brought forward such an amendment at Committee stage. But I wanted the House to know, and I know that my noble and learned friend Lord Elwyn-Jones wanted the House to know, that our noble and learned friend Lord Silkin is absent abroad and might well have brought this before the House at Report stage. It is relevant to remember in that context, though it must be for him to decide, that there is a further stage of the Bill when he might have an opportunity of bringing that point again before the House.

Lord Howie of Troon

My Lords, before my noble friend sits down will he reflect that when the amendment refers to, such building or structure, or any separate part thereof' it is referring to the fact that in big building contracts there may be several different dates of completion for different parts of the structure?

Lord Mishcon

My Lords, my noble friend Lord Howie has merely underlined the complexity of the definition.

Lord Hacking

My Lords, before the noble Lord sits down I wonder whether I may draw one other matter to his attention. The reference to separate parts is taken from the Defective Premises Act. I should like to say that it was taken from Scotland, but, in fact, that phraseology is taken straight from the Defective Premises Act.

Lord Mishcon

My Lords, I answer the noble Lord, Lord Hacking, only by saying that the fact that there can be complexity in one Act is no good reason for imposing it upon another.

Lord Lloyd of Kilgerran

My Lords, I intervene in this debate on only three grounds, which may he very briefly stated. First, I shall be speaking in the context of Amendment No. 6 without the advantage of having read that exotic volume known as Walker-Smith on Building Contracts, the title of which is, I understand, now to be changed to Broxbourne on Building Contracts. Next, in order to save time, I adopt wholly the facts put before the House today and also the facts put before the Committee, when the noble Lord, Lord Howie, as an engineer, so explicitly pointed out the problems affecting the building and construction industry.

My second reason for interfering—I beg your Lordships' pardon and I should have said intervening; I dare say that both those words are synonymous in the context of the length of the debate—is that I remember the words of the noble and learned Lord, Lord Wilberforce, at the Committee stage, when he said that the terms of reference of the committee of the noble and learned Lord, Lord Scarman, were too narrow.

In my speech at Second Reading I indicated the problems arising for the construction industry and the insurance industry. The distinguished chairman of Lloyd's the noble Lord, Lord Kimball, also referred to that difficulty, and the noble and learned Lord the Lord Chancellor in the course of his speech at Second Reading was good enough to take up my point about insurance problems. If, as I anticipate, for a variety of reasons, the noble and learned Lord who sits on the Woolsack will be rejecting this amendment, may I respectfully follow the general theme at the end of the speech of the noble Lord, Lord Broxbourne, when he hoped that something more might be said about the problem which has arisen in the construction industry? Certainly it is clear from these debates that the position of a very influential section of the construction industry, which earns so much money from exports and which would have tremendous difficulties in the interpretation of this Bill, should be considered later.

Therefore, I presume that if for any reason the noble and learned Lord the Lord Chancellor were to reject the amendment, he would assist both the House and many Members of the House who have expressed the difficulties that arise for contractors, consultants, builders and all the people involved in the construction industry. With great diffidence and reluctance, but in the interest of what has been said on behalf of the building industry, I ask the noble and learned Lord either to consider the amendment further or to indicate briefly what action could be taken to help deal with the mischief that the building and construction industry find arises from the Bill.

The Lord Chancellor

My Lords, as to one of the remarks made by the noble Lord, Lord Lloyd of Kilgerran, I heard the noble and learned Lord, Lord Wilberforce, say that the terms of reference were too narrow. However, as they took four years on their existing terms of reference, I shudder to think what would have happened if those terms had been enlarged. I believe that, on the whole, the noble and learned Lord, Lord Scarman, was not unduly constrained by those terms of reference. Indeed, he rather says so in the course of his report, so I do not think that I need trouble too much with that particular point.

Let us try to see the wood for the trees. The Bill was introduced to deal with a difficulty that arises out of the law of tort in negligence. The noble and learned Lord, Lord Scarman, said—and I agree with him—that there were two injustices: one to potential plaintiffs and one to potential defendants. The difficulty with potential plaintiffs he dealt with by introducing the period of discoverability in addition to the normal six years.

The injustice to potential defendants the noble and learned Lord dealt with by the so-called long stop. Do not let us forget that the so-called long stop effectively deprives a plaintiff of what would otherwise be his right for a wrong that has been committed against him. The second point that I hope will not be forgotten, despite the numerous and eloquent speeches that have been delivered on behalf of the construction industry, is that the construction industry is extremely well organised, is extremely articulate, and knows what it wants; whereas the unfortunate victims are not an identifiable body at all.

That is something that has governed my own thinking about this particular Bill more than anything else, because I have to defend those who are not, in the nature of things, able to defend themselves. That point was well made by the noble and learned Lord, Lord Elwyn-Jones, at some stage that I seem to remember, and also by the noble Lord, Lord Mishcon. Let me say that I thought that he was right, in view of a remark that fell from the noble Lord a few moments ago.

What is really being said in the amendment is that there is to be one law for the construction industry and one law for everybody else who is a potential defendant. One is first of all depriving an unidentified number of plaintiffs of what would otherwise be their rights. As the noble Lord, Lord Mishcon, reminded the House, the noble and learned Lord, Lord Silkin, told the House on Second Reading of an unfortunate experience of his own after a period of 25 years. Secondly, one is saying that there are to be first-class citizens in the form of the construction industry and second-class citizens in the form of solicitors, accountants and everybody else. One class is to have 12 years and the other is to have 15 years.

To add complexity to that situation of having one law for the construction industry and one law for everybody else, they are to start from different points in time. To add further complexity—and I know that the noble and learned Lord, Lord Denning, is keen on simplicity—not only is there to be a special law for the construction industry as to the date of completion but it is also to be completion not only of the building but also from when, further work to such building or structure, or such separate part of such building or structure, to rectify work already done, was completed". That is not a move in favour of simplicity. I would say to the noble and learned Lord on the Cross-Benches: physician, heal thyself. It was not I who invented that!

4.45 p.m.

Lord Howie of Troon

My Lords, I am sorry to interrupt the noble and learned Lord, but when he speaks about there being one law for the construction industry and another law for the rest—and he mentions solicitors and others—does he not recollect that the amendments I put down at Committee stage were meant to include everybody, but that he threw them out anyway?

The Lord Chancellor

My Lords, I am dealing now with Amendment No. 4, and not with some other amendment that the noble Lord has not thought fit to repeat at this stage of the Bill. I think that that is enough to say in reply.

The first question, therefore, is whether it is right to have two separate laws with two different starting points for two different kinds of potential defendant. The Law Reform Committee recognised in paragraph 4.20 of its 24th report that the majority of claims for latent damage arose out of building and construction work. Having considered the matter very carefully, it did not recommend that there should be any special provision for that or any other particular sector. Indeed, the committee recommended that there should be no restriction in the areas of activity to which its proposed reforms should apply.

I therefore start from the premise that the burden of proof rather lies on those who want to create first-class and second-class citizens rather than against them. The Law Reform Committee considered various dates, but it considered also the possible objections to the concept of breach of duty, which is the concept down on which the committee eventually came. It is, as a matter of fact, already well established in English law, both in contract and in tort. It lies at the heart of the tort of negligence, which is what we are discussing.

It was recognised by the Law Reform Committee that in the majority of cases the date of the breach of duty is likely to be reasonably certain, and in all cases it will be capable of being made reasonably certain. The existence of now well-established duty situations and accepted standards of care in regulated activities, including the construction sector, suggest that only in hard cases are problems likely to occur. Indeed, at an earlier stage that point was effectively conceded, I am told, by the Royal Institute of British Architects when the Minister for Housing and Construction met representatives of the construction industry on 16th July 1985.

Such problems as there may be in establishing when breach of duty took place are much more likely to arise in cases of omissions. In such cases, the test of breach is when the duty is no longer capable of performance. Those who are interested will find that in the Midland Bank Trust v. Hett, Stubbs and Kemp, to be found in [1979] Chancery Reports at page 384.

On consultation on the Law Reform Committee's report, there were of course a large number of persons who took various views about it. However, among those persons were not only the Official Referees—to whom the noble Lord, Lord Mishcon, most convincingly made reference a few moments ago—but also (and of this I ask the House to take note) the Consumers Association on the same side. If this series of amendments is passed, then the effect might not be altogether favourable to British architects. It could be that my undertaking to my colleagues that this would be Second Reading Committee stuff in another place and would be uncontroversial might lead to the foundering of the whole Bill, and they might lose their long-stop altogether. Therefore, I think they must be a little careful before drumming up a great deal of support for this kind of amendment.

There are, of course, other matters. I think that one noble Lord—it might have been my noble friend Lord Broxbourne—referred to the EC legislation. That is a quite different cup of tea. That is about liability for defective products. It contains a provision for absolute liability, while this Bill is concerned with negligence, and it extinguishes the plaintiff's right after 10 years and has no direct reference to the law of limitation.

Reference was also made by two noble Lords to the Defective Premises Act. My noble and learned friend Lord Denning was one and I think the noble Lord, Lord Hacking, was the other noble Lord who referred to it. With great respect, this analogy is misconceived. I should like to say a few words on this Act because it is important that one should bear it in mind.

Section 1(5) of the Defective Premises Act provides that any cause of action in respect of a breach of duty imposed by Section 1, a duty to build dwellings properly, should be deemed to have been accrued when the dwelling was completed. It is a much simpler formula than that proposed in the amendment. In other words, it merely provides for the postponement of the cause of action for breach of statutory duty under that Act. It does not provide for taking away from someone who has been wronged a right which he already possesses. It emphatically does not provide any precedent whatever for the commencement of the period covered by the long-stop.

Although I think the point I have made is the one I put in the forefront of my argument, I should like to add that the 1972 Act was based on a Law Commission report called Civil Liability of Vendors and Lessors for Defective Premises. The Act was designed to impose on builders of residential property, subject to certain specific exceptions, duties in tort analagous to those in contract. Unfortunately, the Act suffers from serious shortcomings which are gradually coming to light. For a combination of reasons it has never been properly tested in the courts to this day.

As regards the limitation provision to which I have referred in Section 1(5), that essentially contractual provision has now been effectively outmoded by the common law duty of care following the decision of the Court of Appeal in Dutton v. Bognor Regis; secondly, by Section 71 of the Health and Safety At Work Act 1974; and, thirdly, as a result of the decision which has been repeatedly referred to in earlier stages of this debate of Anns v. Merton. Frankly, I should say that this renders the analogy not one upon which it is wise for noble Lords to rely in reaching their conclusion.

I am bound to say that I agree with the conclusion of the Scarman Report at paragraph 4.12. It states: A number of those who wrote to us—especially those involved in the construction industry—suggested that the date of completion would be even easier to ascertain than the date of breach of duty. Section 1(5) of the Defective Premises Act 1972, for instance, provides that for the purposes of proceedings under the Act a cause of action shall be deemed to have accrued at the time the dwelling was completed. We are doubtful though whether this is really a satisfactory alternative and in particular we can see formidable difficulties in adapting the concept of completion to all the types of circumstances (other than personal injury) where latent damage might arise. There is also the possibility of injustice to defendants where completion, on a very large project for instance, takes place many years after the relevant breach of duty". I agree with that. But if the members of the Scarman Committee had been faced with this amendment which has two alternative sets of law—one for the construction industry and one for everybody else—with different termini a quo and with the further complication of the last words of paragraph (b) I have little doubt that they would have rejected the suggestion. That is the conclusion to which I come, and that is the conclusion to which I invite the House to come, too.

Lord Hacking

My Lords, I am grateful to every noble Lord who has participated in this debate. The House has been considering this amendment for just over an hour and I think we have now reached the point in our discussions where it would not be fruitful to go on any further. It would not be fruitful because I doubt whether we will be able to persuade the noble and learned Lord to change his mind and it would not be fruitful because, in any event, we have had a most full discussion. I again therefore thank all noble Lords who have participated.

I shall, therefore, be seeking leave to withdraw the amendment but before I do so I will make two short observations. Once again the noble and learned Lord made a very powerful speech on behalf of the inarticulate plaintiff which, of course, includes big property companies as well as persons of more humble origins and less erudition. The noble and learned Lord also said that my amendment would create first- and second-class citizens. It was not my intention to do that, and nor do I believe that I did so in moving the amendment. I am glad to see the noble Lord, Lord Howie, nod his head in agreement. Nor, indeed, in my extensive discussions with the building and construction industries were they in any way trying to seek special advantage for themselves as defendants or for their industries. They were seeking a law which would have easier and clearer application and which would benefit both plaintiffs and the defendants.

I make one final observation before seeking leave to withdraw the amendment. The noble and learned Lord referred to depriving plaintiffs of their rights. However, some questions must be asked, must there not? What right does the plaintiff have when there is such staleness of an action that the defendant no longer exists or cannot be found? What rights does the plaintiff have when the defendant no longer has the money to pay the compensation ordered by the courts in favour of the plaintiff because the defendant is no longer in the same financial condition or is no longer insured? Those are the realities of life and it is with those realities of life that I moved the amendment.

Although I have had good support from your Lordships' House, including support from the noble and learned Lord, Lord Denning, the noble Lords, Lord Broxbourne and Lord Lloyd of Kilgerran, and others, it is clear that we have not persuaded the noble and learned Lord the Lord Chancellor. For that practical reason alone it is time for me to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor

My Lords, before we have the Statement, does the noble Lord, Lord Hacking, intend to move Amendments Nos. 5 and 6? They have already been spoken to.

Lord Hacking

My Lords, I have already spoken to those amendments which were, of course, linked with Amendment No. 4. I do not intend to move them.

[Amendments Nos. 5 and 6 not moved.]

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