Pearson Education Ltd v. Charter Partnership Ltd

[2007] EWCA Civ 130, 21 February 2007. The appellant architects (Charter) appealed against a decision that it was liable to pay damages to the respondent company (Pearson) as a result of a breach of its duty to design an adequate rainwater system in a warehouse leased to Pearson. Pearson had suffered substantial financial loss when books that it owned were damaged in a flood at the warehouse, designed by Charter. It was agreed that the cause of the flooding was the inadequate drainage capacity and that in specifying that capacity Charter had failed to exercise reasonable skill and care. There had been a flood 8 years before which resulted in a financial loss to the previous tenant (IBD) and it was found by loss adjusters that the rainwater drainage system was at fault. This information was not conveyed to IBD. Charter submitted that (1) the first flood brought their potential liability to an end in that it was not reasonably foreseeable that any further damage would flow from the defective design once it had led to a flood, as it was reasonable to expect that this would lead to the identification of the defect. It was not fair, just or reasonable that Charter's duty of care should extend beyond the occurrence of the first flood and the occurrence of the first flood broke the chain of causation; (2) any negligent act or omission on Charter's part that caused the damage had occurred outside the 15-year limitation period in the Limitation Act 1980 s.14B. "Held": it was not considered reasonable that a defendant could claim that they should not be held liable for a defect because the defect was likely to be discovered prior to a claimant being affected. When specifying the capacity of the drainage system, the appellant had had no reason to expect that an inspection would be carried out that would reveal any error. The fact that a third party (the loss adjusters after the first flood) became aware of a latent defect was no reason to dee m the defect to be patent to others who neither knew nor ought to have known of the discover. With reference to Section 14B, the relevant act or omission of the appellant was not its initial mistake in adopting an inadequate drainage capacity, but the later act of specifying to the subcontractor a design capacity that the appellant should have known was inadequate; that had occurred within the limitation period. The appeal was dismissed.