International Construction Law Review
It’s Always the First Place You Look: Finding Harm and Completing the Cause of Action in Negligence for a Defective Building
Kevin Touhey*
Associate, White & Case LLP
ABSTRACT
This article identifies the principles that determine when a financial loss arises in negligence, and thus when a cause of action accrues, by reference to decisions of the courts of England and Wales, Australia, New Zealand, Canada and Hong Kong. It applies those principles in the context of a defective building, such as arose in Pirelli v Oscar Faber & Partners, Sutherland Shire Council v Heyman and more recently in URS Corp v BDW Trading. Finally, this article argues that a cause of action must accrue when the defective building is first acquired, and not when the defect causes “physical damage” (Pirelli) or becomes discoverable (Sutherland).
INTRODUCTION
When does a victim of negligence suffer harm, and so accrue a cause of action? In the context of defective buildings, the answer to this question has been sought in a number of different places.
More than six decades ago, while sitting as an Additional Judge in the English High Court, Diplock LJ took the view that harm was suffered once construction was complete, and the building owner acquired a defective building instead of a sound one.1 Since then, in the English courts alone, the point at which harm was thought to occur has shifted to the discovery or discoverability of the defect,2 and again to the onset of “physical damage” caused by the defect,3 before reverting to the date of
* This paper won first prize in the Society of Construction Law's Hudson essay competition and was presented at a meeting of the SCL in London on 5 May 2026. The paper has been published by the SCL at www.scl.org.uk and is published here with the permission of the author and the SCL. Email: kevin.touhey@whitecase.com
1 Bagot v Stevens Scanlan & Co Ltd (QBD) [1966] 1 QB 197 at 203; see also Dutton v Bognor Regis Urban District Council (CA) [1972] 1 QB 373 per Lord Denning MR at 396–397.
2 Sparham-Souter v Town and Country Developments (Essex) Ltd (CA) [1976] QB 858 at 867–868.
3 Anns v Merton London Borough Council (HL) [1978] AC 728 at 759G–H; [1977] 2 All ER 118; Pirelli General Cable Works Ltd v Oscar Faber & Partners (HL) [1983] 2 AC 1 at 18H.
Pt 3] It’s Always the First Place You Look
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