Pearson Education Ltd v The Charter Partnership Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 21 February 2007 |
| Neutral Citation | [2007] EWCA Civ 130 |
| Docket Number | Case No: A1/2005/2549/QBENF |
| Date | 2007 |
| Court | Court of Appeal (Civil Division) |
[2007] EWCA Civ 130
the Lord Chief Justice of England and Wales
the Right Honourable Lord Justice May and
the Right Honourable Lord Justice Keene
Case No: A1/2005/2549/QBENF
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
The High Court of Justice Queen's Bench Division
Technology and Construction Court
His Honour Judge Thornton
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr N. Dennys QC and Mr M. Chennells (instructed by Messrs Mills & Reeve) for the Appellant
Mr Edelman QC (instructed by Messrs Barlow Lyde & Gilbert) for the Respondent
Hearing dates: 22nd, 23rd and 24th January 2007
Lord Phillips of Worth Matravers, CJ:
This is the judgment of the court.
Introduction
This is an appeal against the order of His Honour Judge Thornton dated 28 October 2005 by which he awarded the Respondents ('PEL') agreed damages of £2.1 million together with interest. The damages were in respect of damage done to a stock of books owned by PEL when the guttering of the warehouse in which they were stored overflowed in a heavy rainstorm on 30 July 2002. PEL were the lessees of the warehouse. The guttering overflowed because the drainage system had not been designed to cope with the intensity of the rainfall experienced in that storm. It should have been. The appellants ('CPL') are architects who had overall responsibility for the design of the rainwater system when the warehouse was designed in 1988 and 1989. They specified that the system should be designed to cope with a rainfall intensity of 75mm per hour. Had they exercised reasonable skill and care they should have specified that the system should be designed to cope with a rainfall intensity of 150mm per hour.
There was a previous similar incident of damage to books stored in the warehouse. The warehouse was then leased to a company called International Book Distributors Limited ('IBD(1)'). A stock of books that they owned was damaged by flooding as a result of a severe rainstorm on 24 July 1994. Loss adjusters instructed by the insurers of the books discovered that the capacity of the rainwater system was inadequate, but did not convey this information to IBD(1). The first issue raised by this appeal is whether, having regard to these intervening events, the damage caused to PEL's books was caused by breach of duty of care owed by CPL to PEL.
The second issue raised by this appeal is whether, if the damage to PEL's books was caused by a breach of a duty of care owed to them by CPL, the negligent act or omission on the part of CPL that caused the damage occurred outside the 15 year limitation period imposed by section 14B of the Limitation Act 1980 ('the Limitation Act').
Judge Thornton's judgment extends to 62 pages. It includes a very detailed account of the circumstances in which the rainwater system of the warehouse was designed, the nature of the design of the system and the subsequent history of the warehouse. Although issues of primary fact were raised by CPL's skeleton argument, these have not, ultimately, been pursued. In these circumstances we are able to deal shortly with the material facts. We propose to deal separately with the two issues raised on this appeal.
Negligence
The facts
The warehouse was built on the Magna Park Industrial Estate in Lutterworth, Leicestershire. The developers, McLagan Investments Limited appointed CPL as architect with effect from 1 June 1988. Their services were to include completion of a detailed design and specification, including coordination of any design work by subcontractors, and application for Building Regulation approval.
The warehouse roof contained three valleys, with a gutter in each valley. If the gutters overflowed the water would flood into the warehouse. It was thus important that the system for draining the gutters should be capable of coping with the intensity of any rainfall that could reasonably be anticipated during the life of the warehouse.
CPL originally designed a gravity rainwater drainage system under which the water from the gutters in the valleys would be drained through drainpipes running within the warehouse. These pipes were of a size designed to have a flow rate that would accommodate an intensity of rainfall of 75mm per hour, described by way of shorthand as 'having a capacity of 75mm'. These were to be installed by a nominated roofing sub-contractor called Sharkey Dowd Limited.
The proposed drainage system was not satisfactory to the developers, who did not want the storage space in the warehouse to be restricted by drainage pipes. In these circumstances it was decided to adopt instead a siphonic drainage system, which relied upon suction rather than gravity to drain the gutters and which enabled the drainage pipes to be routed in a manner that did not invade the warehouse storage space. A sub-contractor, Fullflow, was engaged to design and install the siphonic drainage system. Fullflow were instructed to design a system with a 75mm capacity. CPL were responsible for that specification. The calculations that Fullflow carried out to give effect to the specification were complex and involved special expertise. Not even an architect would be capable of deducing, either from the calculations or from the physical system installed pursuant to them, the capacity of the system.
It was and is common ground that, in specifying a capacity of 75mm, CPL failed to exercise reasonable skill and care. The capacity that they should have specified was 150mm.
Practical completion of the warehouse occurred on 13 April 1990. The freehold of the warehouse was transferred by the developers to the Church Commissioners on 27 April 1990 and, by 1998, had been transferred again to the British Steel pension fund. The head lessees were initially Asda Storage, a company in the same group as the developers. The lease was for 25 years. On 17 July 1991 this lease was transferred to IBD(1), part of a group of companies headed by an American company, Simon & Schuster Inc. Both the lease and other assets of IBD(1) were subsequently transferred to PEL, a company in the Pearson group, by a rather complex series of transactions that it is not necessary to describe. These transactions began in 1998 and were completed by June 2000. No survey of the warehouse was carried out on the occasion of any of these transfers, nor is it suggested that a survey should have taken place in relation to any of them. Had a pre-purchase survey taken place it could not reasonably have been expected to identify the under-capacity of the siphonic drainage system.
We turn to consider the position when the first flood occurred in July 1994. IBD(1) had insurance that covered their stock of books against, inter alia, the water damage that occurred. This insurance was under a block policy taken out by their American holding company. The damage to the premises was covered by a policy taken out by the landlord, whose responsibility it was under the lease to insure against the risk of damage to the premises by 'storm, tempest, flooding or overflowing of water tanks, apparatus and pipes' and to make good such damage.
IBD(1)'s claim for damage to their books was settled promptly by their insurers, after consideration by loss adjusters called McLarens, for a sum of approximately $3 million. After settlement, in May 1995, the insurers instructed McLarens to investigate the cause of the flood. They in their turn instructed a firm of consulting engineers, architects and surveyors, called Pick Everard. Mr Bowler of that firm conducted the investigation. On 22 August 1995 Pick Everard reported to McLarens that the flooding had been caused by an inadequately designed drainage system in that the intensity of rainfall with which it could deal was too low.
The judge found as a fact that this information was never conveyed to IBD(1). In his skeleton argument Mr Nicholas Dennys QC, for CPL, challenged this finding, but he did not pursue that challenge. What he did submit was that, as Mr Martin, the Managing Director of IBD(1) was plainly aware of the fact that the rainfall on 24 July 1994 had exceeded the capacity of the drainage system, IBD(1) could have been expected to ascertain why this was. The judge found, however, that Mr Martin was informed that the design of the system complied with building regulations but that it had been overwhelmed by a rainstorm of exceptionally unusual intensity. There is no reason to doubt this. 'The Bookseller' for 25 November 1994 reported Mr Martin as saying that the flood had been caused by a torrential thunderstorm that produced about 3 inches of rain in 20 minutes.
The judge found that neither McLarens, nor the insurers by whom they had been instructed, were the agents of or had any duty to report their findings to IBD(1). This finding was not challenged. In these circumstances there is no reason to question the judge's finding at paragraph 90 of his judgment that:
“IBD(1)'s officers and employees had no reason to be involved in any investigations, repairs or insurance claims and never learnt of the existence of the design defects inherent in CPL's rainwater system design.”
The flood damage to the warehouse itself was repaired by the landlords, who claimed under their insurance cover. There was no evidence as to what enquiries, if any, were carried out by their insurers into the cause of the flooding.
We turn to the aftermath of the second flood. PEL had a block insurance policy that covered all their stock in the United Kingdom. They claimed...
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