Baxall Securities Ltd and Norbain SDC Ltd v. Sheard Walshaw Partnership

Factual and Procedural Background

The building at the centre of this dispute was developed by Company A, which employed the Defendant architects from 1989 to December 1992 under a written agreement dated 16 February 1990. The Defendants certified practical completion, issued a certificate for making good defects, and later gave the final certificate. In 1995, two floods occurred through the roof of the building, causing damage to the property of the Plaintiff. The floods resulted from the drainage system's inability to cope with heavy rainfall. Initially, multiple parties were defendants, including engineers, contractors, and sub-contractors, but by trial only the architects remained as defendants. There was no contract between the Plaintiff and the Defendants; the claim was brought in tort. The damages claimed, agreed subject to liability, total £740,323.45 for property damage excluding the building itself and economic loss.

Legal Issues Presented

1. Whether the Defendant architects owed a duty of care in tort to the Plaintiff, a subsequent occupier of the building, despite no contractual relationship.
2. Whether the Defendants were negligent in the design and supervision of the roof drainage system, including failure to specify an adequate rainfall intensity and failure to ensure installation of required overflows.
3. Whether the Plaintiff had a reasonable opportunity to inspect and discover the defects before the floods, potentially negating the Defendants' duty.
4. The causative factors of the two floods and the extent of Defendants' liability for each.

Arguments of the Parties

Plaintiff's Arguments

• The Defendants owed a duty of care in tort to subsequent occupiers, including the Plaintiff, based on the principles in Donoghue v. Stevenson and Murphy v. Brentwood District Council.
• The Defendants were negligent in failing to specify a design rainfall intensity of 150 mm per hour as required by British Standard BS6367:1983 and in failing to ensure the installation of overflows in the valley gutter.
• The first flood was caused by blockage of the drainage outlets and absence of overflows, while the second flood was caused by the under design of the drainage system and absence of overflows.
• The Plaintiff had a reasonable opportunity to inspect the building and discover the absence of overflows but not the under design of the system.

Defendants' Arguments

• The Defendants contend that the floods were caused by poor maintenance by the Plaintiff, including blockage of the drainage system.
• It is alleged that the Plaintiff ought reasonably to have discovered the defects, negating the Defendants' duty.
• The Defendants argue that the design rainfall intensity of 75 mm per hour adopted by the specialist sub-contractor was acceptable given the speculative nature of the building and lack of knowledge of future occupiers' needs.
• The Defendants deny responsibility for the absence of overflows as this was the detailed design responsibility of the specialist sub-contractor.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court carefully examined the facts, expert evidence, and legal principles to determine whether the Defendants owed a duty of care and whether they breached that duty. The Court found that the Defendants, as architects, had a responsibility to specify adequate roof drainage design, including specifying an appropriate rainfall intensity and ensuring installation of overflows. The Defendants failed to specify a design rainfall intensity of 150 mm per hour as required by BS6367:1983 and did not ensure the overflows they had specified were installed.

The Court accepted expert evidence that the valley gutter had a fundamental defect due to absence of overflows and under design. The first flood was caused by blockage of outlets and absence of overflows, while the second flood was caused by under design and absence of overflows. The Court rejected the Defendants' argument that poor maintenance by the Plaintiff caused the floods, particularly the second flood, as the gutters had been cleaned shortly before that flood.

On the question of duty, the Court applied the neighbour principle from Donoghue v. Stevenson and subsequent developments, including Murphy v. Brentwood D.C., to hold that architects may owe a duty of care to subsequent occupiers in appropriate circumstances. The Court emphasized the importance of foreseeability of harm and proximity, including the concept of reasonable opportunity of inspection.

The Court found that the Plaintiff had a reasonable opportunity to inspect the building and discover the absence of overflows before the floods, through professional advisers. Because the absence of overflows was discoverable, the Defendants' duty did not extend to that defect in respect of the first flood. However, the under design of the drainage system was not reasonably discoverable by the Plaintiff or their advisers, and the Defendants remained liable for that latent defect.

Accordingly, the Defendants were not liable for the first flood (caused by blockages and absence of overflows) but were liable for the second flood, which was caused by the under design and absence of overflows. The Court held that liability in tort for the second flood extended to the whole loss arising from it on ordinary principles of causation and liability. The Court also rejected contributory negligence claims by the Defendants.

Holding and Implications

The Court's final decision is that the Defendants are liable for damages arising from the second flood but not liable for the first flood.

The Plaintiff is entitled to damages of £612,153.02 plus interest for the second flood. No damages are awarded for the first flood due to the Plaintiff's reasonable opportunity to discover the absence of overflows before suffering damage.

This decision clarifies that architects may owe a duty of care in tort to subsequent occupiers for latent defects not reasonably discoverable before damage occurs, extending principles established for builders to architects. However, where defects are reasonably discoverable by inspection, the duty may be negated. The ruling does not establish new precedent beyond applying existing principles to architects but confirms the application of duty of care and liability for latent defects in building design and supervision.