Home remedies

One can see the pleasure of a brand new house, all modern and pristine. Normally the house will be covered by the National House Builders Contract (NHBC), giving extensive protection against defects for two years and against major damage for the following eight years (all other liabilities are excluded). The contract must be fair and reasonable (Consumer Protection from Unfair Trading Regulations 2008 SI 1277 and Unfair Contract Terms Act (UNCTA) 1977), but no judge is going to say that the long-established, well-understood reputable NHBC is not fair and reasonable '“ although experience has shown that it is not a complete panacea.

Suppose that a major defect in construction is discovered after the expiry of the NHBC and the limitation period. Has the owner a remedy in tort? This was the situation in Robinson v Jones (Contractors) Ltd [2011] EWCA Civ 9. The owner discovered serious defects in the two flues, which necessitated the closure of the gas to two gas fires, and required remedial work costing some £35,000 '“ a serious eco-nomic loss.

So far as the economic loss goes, there is no tortuous liability for a breach of contract as such. The builder would only be liable in tort for personal injury '“ for example, an explosion '“ for failing to take reasonable care for the safety of the inhabitants.

Special relationship

The normal relationship between builder and owner does not give rise to any special assumption of responsibility by the builder. However, a tort liability may arise (subject to the Limitation Act 1980 with an extended period in respect of any latent defect (section 14A) if there is a special relationship between the builder and the owner of the house (Hedley Byrne v Heller [1964] AC 465, and Henderson v Merrett Syndicates [1995] 2 AC 145). A special relationship usually arises where the client particularly relies upon the professional skill of the other party, such as an architect or surveyor, and that other party knows that the client will rely upon that professional skill and therefore may suffer economic loss as a consequence of negligence on the part of the professional. Otherwise there is no duty of care in respect of economic loss, such as defective foundations (Murphy v Brentwood District Council [1991] 1 AC 398).

Indirect remedy

There may be a sort of indirect remedy for the owner of the house in public law, for example, where the building or developer obtained the planning permission and in the event departed from it and also was in breach of the building regulations, and all this caused the problems. Action by the local authority, in its discretion, might lead to some rectification but would be unlikely to yield adequate compensation for the owner.

Survey and insurance

So, it may be better to buy a second-hand house, as any defects are likely to be apparent or discoverable before entering into the contract. Defects in new houses may be concealed and not emerge until much later. A survey by a qualified surveyor, whether the house is new or second-hand, may be worth the fee, and added insurance cover may be worth the premium.

Finally, as the judges emphasised in Robinson, remember that litigation involving technical building issues should go straight to the TCC rather than other courts.