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D & F Estates v. Church Commissioners for England
Smart Summary
Factual and Procedural Background
Between 1963 and 1965 Company B acted as main contractor for the construction of a block of flats (“the Building”) on land owned by a third party. Plastering was sub-contracted to an independent firm. In 1980 extensive plaster detachment was discovered in Flat 37, a unit held on a long lease by Company A, whose controllers (“the Individual Appellants”) occupied the premises.
The Appellants sued in negligence for the cost of immediate and anticipated remedial works, loss of rent and disturbance. A trial judge (Judge Lewis QC) held that Company B owed a non-delegable duty to supervise its sub-contractor and awarded substantial damages. The Court of Appeal (Judge Fox LJ, Judge Glidewell LJ and Sir Roualeyn Cumming-Bruce) reversed, ruling that: (a) Company B had fulfilled its duty by engaging competent sub-contractors, and (b) the cost of replacing defective plaster was pure economic loss, irrecoverable in tort. The Appellants appealed to the House of Lords. The appeal concerning another original respondent was withdrawn.
Legal Issues Presented
- Whether a main contractor owes a non-delegable duty (or is vicariously liable) for negligent work performed by an apparently competent sub-contractor.
- Whether the cost of removing and replacing defective plaster, discovered before it harmed persons or other property, constitutes recoverable damage in tort or impermissible pure economic loss.
Arguments of the Parties
Appellants' Arguments
- Company B was vicariously liable for, or owed a non-delegable duty in respect of, the sub-contractor’s negligent plastering.
- Even if not vicariously liable, Company B had a duty to supervise the plastering adequately and breached that duty.
- The expenditures on past and future plaster replacement, together with consequential rent loss and disturbance, were recoverable because the latent defect created a continuing risk of personal injury.
Respondent's Arguments
- Its duty was discharged by selecting competent sub-contractors; no further non-delegable duty arose.
- The claimed sums represented purely economic loss, not compensable in tort absent damage to persons or to property other than the plaster itself.
- No direct authority extended Donoghue v Stevenson–type liability to such quality-defect claims.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Donoghue v Stevenson [1932] AC 562 |
Manufacturer (or builder) liable in negligence for latent defects causing physical injury or damage to other property. |
Used as starting point; their Lordships emphasised that liability is triggered by damage, not by mere defect. |
| Dutton v Bognor Regis UDC [1972] 1 QB 373 |
Suggested builder liability for dangerous foundations and recovery of repair costs. |
Reviewed but treated with caution; Lords distinguished its economic-loss passages. |
| Anns v Merton LBC [1978] AC 728 |
Two-stage duty test; recognition of damages for danger-creating defects in dwellings. |
Court regarded parts of Anns as confined to statutory-duty contexts and not determinative of pure economic-loss claims against builders. |
| Junior Books v Veitchi [1983] AC 520 |
Exceptional proximity allowing recovery of economic loss. |
Held to be unique and not laying down a general rule applicable here. |
| Batty v Metropolitan Property Realisations [1978] QB 554 |
Damages for economic loss where house stood on dangerous land. |
Lords expressed doubt about its correctness and distinguished it on facts. |
| Hedley Byrne v Heller [1964] AC 465 |
Economic loss recoverable where reliance on negligent misstatement. |
Confirmed not applicable; no assumption of responsibility or reliance here. |
| Gallagher v McDowell [1961] NI 26 |
Builder’s liability for personal injury from dangerous defects. |
Cited to show orthodox limits of liability to physical damage. |
| Bottomley v Bannister [1932] 1 KB 458 |
Traditional immunity of builder-owners in older case law. |
Discussed to illustrate historical evolution; not followed. |
| Rivtow Marine v Washington Iron Works [1973] 6 WWR 692 |
Scope of recoverable prevention costs where dangerous defect discovered. |
Lords noted majority limited recovery; relied on to confine damages. |
| East River Steamship v Transamerica Delaval (US Sup Ct 1986) |
Economic loss to product itself not recoverable in tort. |
Quoted extensively as persuasive authority supporting rejection of claim for plaster replacement. |
Court's Reasoning and Analysis
Judge Bridge (for the majority) delivered the principal speech. The House approached the appeal on two independent bases:
- Pure economic loss. The plaster constituted part of the Building itself. Once the loose plaster was removed no danger to persons or other property remained; the only remaining loss was the cost of neutralising a defect in quality. Drawing on East River, Hedley Byrne, Donoghue and numerous comparative decisions, the House held that tort law does not convert builders into warrantors of quality for subsequent purchasers. The Defective Premises Act 1972, which imposes a limited statutory duty for dwellings, underlined that any wider obligation should come from legislation, not judge-made law.
- Liability for sub-contractors. The general rule is that an employer of an independent contractor is not vicariously liable for that contractor’s torts. None of the recognised exceptions applied, and there was no separate principle by which a main contractor assumes an indelible, non-delegable duty to all future occupiers. Company B had exercised reasonable care in selecting competent plasterers; absent actual knowledge of the misapplication of plaster, it bore no further duty.
Because both lines of reasoning defeated the claim, the Court of Appeal’s order was affirmed.
Holding and Implications
Holding: APPEAL DISMISSED; COURT OF APPEAL ORDER AFFIRMED.
Implications: The decision re-asserts clear limits on builders’ tortious liability. Main contractors are not automatically responsible for competent sub-contractors’ negligence, and the cost of remedying latent defects that have caused no injury is treated as pure economic loss outside the scope of negligence. The ruling confines any broader protection for subsequent purchasers to statutory mechanisms such as the Defective Premises Act 1972, thereby preserving a distinction between contract and tort in construction disputes.
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