Building contract – Damage – Causation – Flooding causing damage to flats owned by claimant company – Claimant paying for remedial works and claiming on insurance – Claimant in subrogated action seeking to recover costs caused by flooding against defendants responsible for original design and construction of building – Whether defendants incurring liability for damage – Claim allowed.
Extensive water damage was caused to a block of flats on the Greenwich peninsula in south London as a result of water leaking from two of the cold water riser mains within the cores of the building. The eventual cost of remedial works and other losses was agreed at £4.75 million. At the time of its construction and the subsequent flooding, the claimants owned the building. They paid for the remedial works and resolved the claims made against them by the leaseholders of the individual flats and made a successful claim on their property insurers.
The claimant sought to recover their costs against the defendant mechanical and electrical sub-contractors responsible for the original design and construction of the building in reliance on the individual warranties provided to it by the defendants. There were also alternative claims in negligence against both defendants. In part 20 proceedings, the first defendant passed on the claim against them pursuant to the mechanical sub-sub-contract that they entered into with the third party which in turn passed on the claim to the labour-only mechanical sub-sub-sub-contractor (the sixth party).
It was established that two separate flooding incidents had occurred in the building. The first occurred in core 3, level 2, when an isolation valve on a riser branch failed. As a consequence of the flood in core 3, the water tanks which served both core 3 and core 2 emptied, causing the water in the riser in core 2 to drain down. Once the system equalised, and water began to come back up the riser in core 2, there was a separate problem.
An issue arose as to causation. No single organisation had overall control of the design, installation, supervision, inspection, testing and acceptance of the boosted mains cold water system. Most importantly, there was no specification or design drawing showing the detail of the surge arrestor installation, no record drawing showing what was actually installed and no inspection report saying how and why that which had been installed was satisfactory.
Held: The claim was allowed in part.
The starting point for any consideration of causation in law was the “but for” test and it was important that the court did not depart from that test without clear and proper reasoning. One of the main deficiencies with the straightforward “but for” test arose where there were two concurrent, independent causes of the loss. A distinction had to be drawn between cases where there were two concurrent independent causes of the loss and those cases where there were two co-operating causes, i.e., situations where two causes gave rise to the loss but where each, on its own, would not have done so: Kuwait Airways Corp v Iraqi Airways Co [2002] UKHL 19; [2002] AC 883, Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32, Orient-Express Hotels Ltd v Assucurazioni General SA [2010] EWHC 1186 (Comm); [2010] PLSCS 158 and Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10 considered.
On the facts of the present case, the workmanship allegations in respect of core 3 passed all the way down the contractual chain and rest with the sixth party sub-sub-sub contractor. It was ultimately responsible for both the metallic debris and the over-tightened nut, the twin causes of the first flood in core 3. It was therefore liable to indemnify the third party pursuant to the indemnity in the sub-sub-sub-contract. The causes of the core 2 flooding were the various failures of design and workmanship. The poor workmanship was the principal reason for the failure, but design issues were also of relevance. Both the first and second defendants were jointly and severally liable to the claimant for the relevant failures. Liability would be apportioned between them on the basis that the second defendant was liable for 40% and the first defendant 60%. The first defendant could pass on its liability to the third party in the part 20 proceedings and the third party was entitled to be indemnified by the sixth party: Heskell v Continental Express Ltd [1950] 1 All ER 1033 and Great Eastern Hotel v John Laing Construction [2005] EWHC 181 (TCC) and Carillion JM Ltd v PHI Group Ltd [2011] EWHC 1379 considered.
On the facts, the first defendant was liable to the claimant in relation to both design and workmanship pursuant to the terms of the sub-contract, and thus the warranty. The first defendant’s allegations of contributory negligence against the claimant would be rejected.
Piers Stansfield QC (instructed by Greenwoods Solicitors LLP) appeared for the claimant; Fiona Sinclair QC (instructed by Kennedys Law LLP) appeared for the first defendant/part 20 claimant; Alexander Hickey (instructed by Berrymans Lace Mawer LLP) appeared for the second defendant/fifth party; Simon Hargreaves QC and Karim Ghaly (instructed by Clyde & Co) appeared for the third party; Roger ter Haar QC and Alexander Macpherson (instructed by Fox Hartley) appeared for the sixth party; The fourth party did not appear and was not represented.
Eileen O’Grady, barrister
