Lalji Bhimji Sanghani and another v Chemilabs [1978] KECA 4 (KLR)

Although the trial judge found the contract was set out in the draft lease and correspondence, and an unregistered lease can operate inter partes and be specifically enforceable, a covenant to repair by a lessor is a covenant on notice. The chamber worked for nine months; the July 1972 stoppage was cleared by a competent plumber who thought no repair was needed, and neither he nor the respondents told the appellants repairs were necessary. Only after the August flood, through Mr Fitzgerald, was any inherent defect suggested - and that flood caused the damage. Absent notice before the flood, there could be no breach.

The court held the building was structurally complete on 30 July 1971, and no implied warranty attaches to the sale of a complete house. Even if it had been under construction, the authorities (Smith v Marrable, Miller v Cannon Hill Estates, Perry v Sharon, Hancock, Jennings v Tavener) all concern dwelling-houses and fitness for human habitation. Lord Coleridge CJ in Manchester Bonded Warehouse had expressly declined to extend the warranty to ordinary leases of lands, houses or warehouses. The social policy protecting home purchasers does not apply to hard-headed businessmen negotiating for storage space.

Absolute liability under Rylands v Fletcher requires that the defendant brought and accumulated on his land the dangerous matter in circumstances involving knowledge and volition and constituting an unnatural or extraordinary user. Drainage of water and sewage is an ordinary and natural user (Ross v Fedden; Rickards v Lothian; Blake v Woolf). Although the chamber became in a sense a reservoir of sewage by August 1972, whether from defective construction or blockage, the appellants had no knowledge of the accumulation until after the escape. Jones v Llanrwst was distinguishable because there the defendants actually collected the sewage.

Negligence in failing to remedy a defect presupposes knowledge of it; the chamber was inspected and approved by the local authority and the appellants only learned of the inherent defects after Mr Fitzgerald's inspection following the August flood. Mr VV Patel was a competent independent contractor, and on the authority of Blake v Woolf a person is not liable for the negligence of an independent contractor in these circumstances. The ground of appeal on negligence therefore succeeded.

Following Lord Atkin's definition in Sedleigh-Denfield v O'Callaghan, liability in nuisance requires some degree of personal responsibility. The trial judge's finding that the appellants 'knew what this faulty chamber would probably lead to' was wrong: the defects were not discovered until after the August flood, and the chamber had been inspected and approved by the local authority. A person can only be said to continue a nuisance if he knows it is operating offensively, is able to prevent it, and omits to prevent it; the appellants did not know, so were not able, and did not omit.

Section 27 provides that costs follow the event unless the judge for good reason otherwise orders. Nesbitt v Meyer was distinguished as laying down no principle of general application and being factually different: here the appellants gave no indication until the very last stages that they would not pursue the counterclaim, whereas in Nesbitt's case it was common ground that specific performance could still be ordered after expiry of the term. The respondents had to be prepared to defend the counterclaim, so the award of costs on its dismissal was justified.