| Date | 29 August 1996 |
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| Judgment | British Steel Plc -v- Wyvern Structures Ltd: 17 June 1996 |
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| The Issue | Application of the 1986 Latent Damage Act |
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| Implication |
The exception of deliberate concealment to the long stop limitation periods for bringing actions in negligence in practice will prove extremely difficult to apply. |
printSection 2 of the Limitation Act 1980 lays down the period within which the victim of an act of negligence, if he has not suffered personal injuries, must bring an action to recover his loss, namely six years from the date when the cause of action accrues. The question of when the cause of action accrues in the case of latent defects, where no damage becomes apparent until perhaps many years after the commission of the negligent act, had largely been left to the courts until the advent of the 1986 Latent Damage Act. The Act brought two main changes into the law: firstly, it introduced the concept of discoverability in cases of latent defects by permitting an action to be commenced after the end of the basic six year limitation period providing that it is brought within three years after the Plaintiff's date of knowledge as defined in the Act. Secondly, it provided an overriding fifteen years long stop limitation period after which, subject to certain exceptions, all negligence actions would be statute barred. These exceptions include deliberate concealment and fraud. It must be remembered that the Act applies only to negligence actions and not to actions for breach of contract or to cases of personal injury. The intervening years since 1986 have seen enormous upheaval in the law of negligence and the ensuing uncertainty as to the type of damages which might be recovered in negligence has brought about a war of collateral warranties. Consequently the provisions of the Latent Damage Act seemed likely to be consigned to a footnote of limited interest. However the longer periods of limitation applicable in cases of latent damage are often critical to the mounting of an action in the first place. These issues have been examined in the case of British Steel -v- Wyvern Structures decided on 17 June 1996. British Steel owned and operated a power station, blast furnace and steel works at Redcar. The power station supplied compressed air to the blast furnace through supply lines which passed through bellows units, which are in effect expansion chambers to take up movement in the pipes as a consequence of the variable temperatures and pressures. The construction of the power station was completed in 1979 and on 14 April 1990, following a history of technical problems, there was an explosion caused by the failure of one of the bellow units operating on the cold blast main (so-called because it carried gases at a temperature of up to 290° centigrade which was cooler than the hot blast main) causing considerable damage to surrounding buildings and equipment. The whole incident had much in common with the 1974 disaster at Flixborough where a pipeline and bellows unit had failed causing considerable loss of life. By very great good fortune there was no injury to anyone working on the site at Redcar. British Steel emphasised that they were not claiming compensation for damage to the bellows unit itself. They accepted that that would be a pure economic loss and irrecoverable in tort. Their claim was therefore limited to damage to other parts of their property and loss of profits consequential upon the damage to that other property. They claimed that the explosion was caused by failure of a weld on a hinge unit to the bellows, a massive steel structure, which had occurred months and possibly years before the explosion in 1990. The bellows unit itself had been supplied in 1976 and installed in 1978. A writ was first issued on 18 March 1993. Counsel for British Steel conceded in his opening address that in order to succeed in this action he would have to prove that there was deliberate concealment on the part of Wyvern within the meaning of Section 32 of the Limitation Act 1980. The acts or omissions alleged to constitute negligence, and to which the damage was alleged to be attributable, occurred at the latest in August 1976. British Steel's claim therefore was by virtue of Section 14B (the Latent Damage Act) time barred by August 1991, some sixteen months after the incident in April 1990, and some nineteen months before the writ was issued. British Steel could have started this action within the long stop period but they did not. Their case therefore hung by the slender thread that the welding processes were not only shoddy and incompetent, but that these had been covered up in an act of deliberate concealment in the course of manufacture. Reference was made to the 1982 case of William Hill Organisation -v- Bernard Sunley where the test for deliberate concealment was described to be "in all the circumstances were the facts such that the conscience of the defendant ...... should have been so affected that it was unconscionable to proceed with the works so as to cover up the defect without putting it right" Having regard to all the evidence put before him, and particularly swayed by the quality assurance procedures that were apparently to have been put in place by both British Steel and its contractor, His Honour Judge Bowsher held that it had not been proved to his satisfaction that there had been any deliberate concealment. Accordingly he found that the action was statute barred and gave judgement for the defendants.
CJ-9628
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