Latent Damage Act 1986 Latent damage is damage which is not patent or immediately apparent and an indeterminate period

of time may elapse before the damage becomes manifest. It is not unique to the construction industry but can give rise to negligent professional advice. The Latent Damage Act 1986 amended the Limitation Act 1980 concerning limitation of actions for negligence not involving personal injuries and provided for a person taking an interest in property to have, in certain circumstances, a cause of action in respect of negligent damage to the property before taking that interest. The Act amends the law as follows:S.1 of the 1986 Act gives the plaintiff a choice of the longer of the following two limitation periods: (i) Six years from the date when the cause of action arises i.e. when the damage actually took place. In cases where negligent advice is given, or a negligent misstatement is made, time begins to run as soon as the client (receives and) acts on that advice; or (ii) Three years from the date when the plaintiff discovers (or would discover) any significant damage, i.e. where the plaintiff has let more than three years elapse since reasonably acquiring knowledge of all material facts of the damage, such facts being serious enough to lead a reasonable person to take legal proceedings. They may therefore take legal proceedings under this Act, providing one of the periods in (i) and (ii) above is still running; (iii) the section also imposes a longstop period of fifteen years from the date of the defendant's breach of duty which gave rise to the damage. Once this period has expired all actions are barred even though the periods in (i) and (ii) above may not have commenced. S.3 of the 1986 Act covers the accrual of action to a successive owner in respect of latent damage to property, provided that the successive owner acquired it in ignorance of the fact that it was already damaged. The possibility of a purchaser bringing successful legal proceedings under the Limitation Act 1980 as amended by the Latent Damage Act 1986 is a factor that should be taken into account during valuations where difficulties with structural damage, defects or negligent construction are present. It would not seem likely that the market would make an enhanced bid on account of the speculative prospect of a successful litigation; however, DVs will be required to decide any cases based upon the relevant facts. In cases where difficulties are experienced a brief report should be forwarded to CEO via the RD/CV(S).

11-22 This is a difficult area. The time limit for claims may in some cases be extended under the Latent Damage Act 1986, the maximum being 15 years. But there may be no remedy in relation to structural defects: see the case of Murphy v Brentwood Borough Council [1991] AC 398. Do architects, or other professionals entering into appointments in building projects, appreciate how many others might come to have rights against them beyond their immediate client? Some might think only their client, many know there will be others, but will they appreciate the extent to which they may become liable to those who are strangers to their appointment? There are many legal provisions bringing in such strangers. Over time English common law developed a law of torts; different and parallel to the common law of contracts. The activities arising from an appointment also gives rise to duties in tort to both the client and to third parties. With respect to these latter strangers; the duty in tort would only normally give rise to liability where physical damage or injury arose to other property or persons. Whilst tortious liability can exist to a limited extent to a large number of strangers, it is not so limited in the case of architects and other professionals in respect of those they advise. They have rights in tort more similar to those in contract. The Latent Damage Act 1986 contained provisions which meant subsequent occupiers of a property obtained similar rights to the original occupier as against such as the architect up to 15 years after the first liability arose. The limitation of liability in tort also led to the practice of warranties being required. These set up contractual liabilities which are not limited to physical damage or injury to other property or persons. They can instead give contractual rights to a very wide class of persons. Commonly architects are required to give these to funders, purchasers and/or tenants in a project. These warranties may often be assigned without the architect’s consent, as indeed may the appointment itself, so that the architect may face claims from a number of people with similar rights to his original client. The increasing popularity over the years of design and build contracting means many architects find themselves working for the contractor having begun with the employer, having had their appointment novated. The Defective Premises Act 1972 made those instrumental in a housing development, most likely including the architect, liable to an occupier of the dwelling if it proved to be unfit for habitation. Whilst this means the defects must be relatively serious it may give liability on large schemes to large number of people. More recently the Contracts (Rights of Third Parties) Act 1999, in direct contradiction of the English doctrine of Privity of Contract, provided that a third party could acquire rights in an agreement between another two parties as if it were a contractual party itself. This applies where the third party can be clearly identified as a person or class of persons and the contract can be seen as intended to benefit them. The provisions

are very generally stated and have potential for extending liability to for example, purchasers or tenants. The good news is the operation of the Act can be excluded. Even where a project has led to claims being made, but not against the architect, the Civil Liability and Contribution Act 1978 allows a Defendant to involve others even up to 2 years after the proceedings to attempt to reclaim money for which the Defendant may be liable. There need not exist any other direct legal relationship between the two parties. We encounter cases where contractors bring in designers under these provisions and vice versa, or members of a design team bringing in each other. Thus an architect may find himself liable to others engaged in a project well after the event. Whilst some of the above risks can be excluded, e.g. third party rights, and others cannot, e.g. defective premises rights, architects and other professionals should pay particular attention to the obligations they enter into in order to manage risks in so far as possible. Unfortunately many appointments are begun on an extremely informal basis which can lead to difficulties subsequently. They would be well advised to consult their insurers on their appointments and also their legal advisers so that even what cannot be avoided can be identified and managed as effectively as possible.