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Anns v. Merton London Borough Council (1978) was a landmark House of Lords case that established the two-stage test for duty of care in negligence. Though later refined by Caparo Industries v. Dickman, this case significantly expanded the scope of negligence liability and introduced important principles for public authority liability.
Anns v. Merton London Borough Council [1978] AC 728, [1977] 2 All ER 492 (HL)
A block of flats was built with foundations that were too shallow, failing to comply with building regulations and approved plans. Merton London Borough Council had statutory powers to inspect the foundations during construction but failed to discover the defective foundations.
Several years after construction, cracks appeared in the building due to the inadequate foundations. The lessees of the flats sued the council, claiming that the council's failure to properly inspect the foundations during construction caused them to suffer economic loss in the form of reduced property values and repair costs.
The council argued that they owed no duty of care to future purchasers of the flats and that their statutory inspection powers did not create a private law duty to individual property owners.
Can a local authority be held liable in negligence to subsequent purchasers of property for failing to properly exercise its statutory building inspection powers, and what is the test for establishing a duty of care?
A duty of care exists if: (1) there is sufficient relationship of proximity or neighborhood such that carelessness on the part of one may reasonably be foreseen to cause damage to the other, and (2) there are no considerations which ought to negative, reduce, or limit the scope of the duty or class of persons to whom it is owed.
Yes. The House of Lords held that the council owed a duty of care to the flat owners. The council's failure to properly inspect the foundations was negligent, and this negligence caused economic loss to the property owners that was recoverable in tort.
Lord Wilberforce established the two-stage test and applied it to expand the scope of negligence liability:
The court distinguished between a public authority's failure to exercise discretionary powers (generally not actionable) and negligent exercise of those powers (potentially actionable). Here, the council had chosen to inspect but did so negligently.
The decision also allowed recovery for pure economic loss in certain circumstances, expanding beyond the traditional requirement that negligence claims involve physical damage to person or property.
Anns v. Merton had significant impact on negligence law, though much of it was later limited:
While Anns itself was later overruled in Murphy v. Brentwood District Council (1991), it remains historically significant for demonstrating how negligence law can expand and contract based on changing judicial attitudes toward liability and policy considerations.
The two-stage test asked: (1) Is there sufficient proximity/neighborhood that carelessness might foreseeably cause damage? (2) Are there any policy considerations that should limit or negative the duty? This was more liberal than later tests.
Anns established that public authorities could be liable for negligent exercise of their statutory powers, even to third parties. This created significant potential liability for councils and other public bodies in their regulatory functions.
The broad approach in Anns led to extensive litigation and was seen as creating too much liability. Later cases like Murphy v. Brentwood District Council and Caparo v. Dickman adopted more restrictive approaches to duty of care and economic loss.
Caparo refined and restricted the Anns test by adding a third stage requiring that imposing a duty be "fair, just and reasonable." This made it harder to establish new duties of care and represented a more conservative approach to negligence liability.
Study more cases to understand how negligence law has evolved from expansive to more restrictive approaches.