Errors made long ago can still catch you up
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Check your insurance cover, warns Greville Janner, QC, MP, looking at a case of crucial importance in road transport
THE HIGH COURT decision in the case of Dove v Banhams Patent Locks Ltd is of crucial importance to everyone in the world of commercial motoring. By deciding that the plaintiff could succeed in 1983 in a case based on the negligent installation of a security gate in 1967, the judge continued the process of the extension of time limits for claims in a way which should cause as much worry for suppliers and their insurers as it brings comfort to their customers.
In 1967, a Mr Burton engaged Banhams to install a security gate to the basement entrance to his Chelsea premises. In 1976, Mr Dove bought the premises from Mr Burton.
On May 6, 1979, burglars broke in and stole valuable silverware. They climbed by forcing the security gate from the main doorframe.
It was common ground that Banhams "owed a duty of care" in the installation of the security gate. They were obliged by law to carry out their work without negligence. Although Banhams denied a breach of that duty, Mr Dove persuaded the judge that they had been negligent and that as a result of their negligence Mr Dove had suffered loss.
"Anyway," Banhams argued, "it would be unfair and impossible to impose liability upon us for an act, however negligent, committed so long ago." The company relied on the Limitation Acts 1939 and 1980, arguing that the claim was "statute barred".
In general, claims must be brought within specified time limits or they will be "barred". Claims for damages for personal injuries, for instance, must be brought within three years — so if one of your dfivers is injured in a motor accident, then he must bring his cVm within the three-year period. Other claims for negligence and other "torts" (or civil wrongs), within six years; and for breach of contract, also within six years.
In personal injury cases, time runs either from the accident or when the plaintiff knew or ought to have known of the injury. Claims (for instance) that a particular process caused cancer or deafness can rarely be brought within three years because the effects of the hazard only become apparent much later.
In contract cases, the onset of the time limit has also been extended, largely through judicial decisions. For instance: After an unusually hot summer followed by a very cold winter, a building started to subside. Examination of the foundations showed that when they had been laid some 20 years before the job was bodged. It was held that the period of limitation ran not from the date when the premises were built but from the moment when the defect became apparent.
In the 1982 case of Pirelli General Cableworks Ltd v Oscar Faber & Partners, the court considered a case in which cracks had appeared in a chimney, many years after its erection. The period of limitation began when those cracks appeared, not when the defective work was carried out.
Banhams argued that Mr Dove's "cause of action" arose when his predecessor, Mr Burton "was exposed to liability for economic loss in remedying the alleged defective work in 1967." But the judge held that the decision in the Pirelli case "was conclusive against the defendants . .. the analogy between cracks in the chimney in that case and the collapse of the security gate was exact."
Banhams argued that "the security gate was doomed from the start because no loss would have been suffered if it had not been subject to onslaught by a burglar". The judge said that this argument was "impossible". It would not have been "doomed" either from the start or at any other time, had the job been properly done. The claim was not statute barred. He gave judgment for the plaintiff.
So how will this claim affect you?
First: Note that there was no contractual relationship between Mr Dove and Banhams. Their deal had been made with Mr Burton. Had he still owned the premises, he could have brought his claim under the law of contract, so that he would not have had to prove negligence. It would have been enough if the security gate was defective, even without any failure on the part of the security specialist to exercise due care.
However: In that case Banhams might have been able to rely upon exclusion clauses in the contract, designed to free them from all or part of their liability. The Law Report (in The Times, March 5) does not tell us whether such clauses existed. Nor do we know whether they would have been binding, following the restrictions on exclusions created by the Supply of Goods (Implied Terms) Act, 1973, and the Unfair Contract Terms Act, 1977 — which cover contracts for the supply of goods and services respectively.
Mr Dove had no contract with Banhams so he had to bring his claim in negligence. It was not enough for him merely to prove that the security gate was defective. He had to prove to the satisfaction of the judge and "on the balance of probabilities" that the defect was due to a breach by Banhams of their (admitted) duty of care.
That Mr Dove (no doubt at the behest and expense of his insurers) succeeded in his claim — brought after such a vast time lag and against such respected defendants — shows how the law stretches its sinews to prevent people from being driven out of court through passage of time, where they were in no way at fault.
So if you deliver goods or provide other services check now that your insurance cover will protect you against claims arising out of errors made long ago. By all means get your lawyers to look over your exclusion clauses. But realise that their effective limitations are on the decrease, along with the periods of limitation imposed by statute and extended by court decisions such as that in the case of Dove v Banhams.