Limitation of Actions Consultation - Law Commission

7 ACTIONS BY A SUBSEQUENT OWNER OF DAMAGED
PROPERTY
13.71 Property may change hands after the cause of action has accrued to the person
owning the property at the time of the damage. This raises two issues: first,
whether the subsequent owner has a cause of action against the person responsible
for the damage; and, secondly, whether the limitation period in respect of that
cause of action starts running against the subsequent owner when the previous
owner has or ought to have the necessary knowledge, or not until the subsequent
owner has acquired an interest in the property.
13.72 Under section 3 of the Latent Damage Act 1986, a fresh cause of action is treated
as accruing to the subsequent owner on the date he acquires the property, if that
precedes the date when the material facts became known, or ought to have
become known, to a person with an interest in the property. 99
In other words, if the
original owner of the property knew or could reasonably have been expected to
acquire knowledge of the damage, the subsequent owner will not have a cause of
action, unless it has been assigned to him. For limitation purposes, the “new”
action is treated as having accrued on the date when the original action accrued.
This is achieved by a double fiction, first that the cause of action is based on a duty
owed to the original owner, and second that it accrued when the original cause of
action accrued. The subsequent owner then has three years from the date he
learns of the cause of action, or six years from the date the cause of action
accrued, to bring an action.
13.73 The Act has been criticised on the grounds that the “relation back” theory
adopted conflicts with the principle that time cannot run against a plaintiff lacking
a proprietary interest: “It simply should not be possible for a cause of action to
accrue in favour of a person until some interest in the property in question has
been acquired by that person”. 100
It has also been suggested that the purchaser’s
rights should not be determined solely by the state of knowledge of persons
previously interested in the property. 101
13.74 Law reform bodies in other common law jurisdictions have adopted two different
approaches as alternatives to the one followed in England. They both differ from
the English model in that the original owner’s actual or constructive knowledge of
the material facts will not automatically prevent a cause of action from arising in
favour of the successor, although, according to one approach, the original owner’s
knowledge will be relevant to the limitation period. 102
To avoid new limitation
99 See para 3.100 above.
100 See N Mullany, “Reform of the Law of Latent Damage” (1991) 54 MLR 349, 357.
101 “It may prove difficult for a purchaser to show that there was nothing whatsoever to alert a
previous owner that damage had been suffered during his tenure or that any manifestation
of damage that had occurred was so minimal that no reasonable person would have
attempted to seek an uncontested judgment.” N Mullany, “Reform of the Law of Latent
Damage” (1991) 54 MLR 349, 358.
102 It is implicit in both these alternative approaches that the subsequent owner will have a
cause of action in respect of damage that occurred before he or she acquired an interest in
the property, that is, the rule in Perry v Tendring District Council (1984) 3 Con LR 74, which
s 3 of the Latent Damage 1986 was intended to remedy, does not apply. See para 3.100
above.
348