Negligent survey claim was statute-barred

LAW REPORT v 24 July 1996

Hamlin and another v Edwin Evans (a firm); Court of Appeal (Lord Justice Neill, Lord Justice Simon Brown, Lord Justice Waite) 4 July 1996

For the purposes of a negligence action by house-buyers against their surveyors, time began to run under section 14A(4)(b) and (5) of the Limitation Act 1980 as soon as the first of two or more different errors or omissions came to light.

The Court of Appeal dismissed an appeal by the plaintiffs, John Stephen Hamlin and Teresa Helen Hamlin, against the decision of Mr Justice Maurice Kay on 16 February 1995, that their negligence claim against the defendant surveyors, Edwin Evans, was statute-barred.

Section 14A(4) and (5) of the 1980 Act (inserted by the Latent Damage Act 1986) provided that in the case of negligence actions where facts relevant to the cause of action were not known at the date of accrual, the limitation period was either (a) six years from the date on which the cause of action accrued or (b) three years from the earliest date on which the plaintiff had both the knowledge required for bringing the action and a right to bring such an action.

Jonathan Lurie (James & Charles Dodd, Lewisham) for the plaintiffs; Stephen Powles (Cameron Markby Hewitt) for the defendants.

Lord Justice Waite said the plaintiffs had relied on the defendants' survey when purchasing their house. Their claim was based on two heads of negligent omission in the same document, namely a failure to report first on an infestation of dry rot, and second on structural defects in the property.

The consequences of the two failures became apparent at different times. The dry rot was discovered first, and was the subject of a relatively minor claim notified to the defendants and settled. The structural defects were not discovered until some time after the date of that compromise. They cost a great deal more to remedy and were the subject of a writ issued about two years after their discovery. By then, more than eight years had passed from the date of the impugned report, and six years from the discovery of the dry rot.

On the trial of a preliminary issue of limitation, the judge ruled that time ran against the plaintiffs under section 14A from the date of their knowledge of the surveyors' negligence under the first head (the failure to report the dry rot) and the writ had accordingly been issued outside any limitation period authorised by that section.

The note in the 1995 Supreme Court Practice, vol 2, para 6152A (p 1897) cited two decision, neither binding of the judge but rightly considered by him because they were not only relevant but in conflict with one other.

In Horbury v Craig Hall & Rutley [1991] EGCS 81, it was held that the three-year period under section 14A(4)(b) and (5) began to run against a plaintiff when she discovered the first, relatively minor defect which the surveyors had missed, and that her claim in respect of a second, much more serious defect, brought more than three years later, was time-barred. Judge Bowsher QC said:

It is vital to the understanding of this case that if the plaintiff has any cause of action at all, she has one single

cause of action, not a bundle of caus-

es of actions relating to different defects in the house . . . as they arise.

In Felton v Gaskill Osborne & Co [1993] 2 EGLR 176, the plaintiff became aware of two minor defects at or soon after completion but was content not to make any claim at that time. When, years later, he sought to sell the property, he was alerted to much more serious defects. Judge O'Donoghue acceded to a submission that the starting-point for the three-year period under section 14A(4)(b) was the plaintiff's discovery of the more serious defects, holding that Parliament had intended section 14A to refer to the particular head of damage for which the plaintiff claimed damages, not to "damage" in a general sense.

In his Lordship's judgment, section 14A was expressed to apply to cases where the (knowledge-related) starting date introduced by the section occurred at a date subsequent to that on which the cause of action accrued. There was only one cause of action, namely the negligent making of the report; and it accrued when damage (great or small) was suffered for the first time.