Flooding – Damage to building – Respondent liable for loss under section 6(1) of the Water Act 1981 – Whether compensation to include additional costs of installing tanking system – Judge refusing claim for additional costs – Appeal dismissed
In October 1991 the appellants’ property at 2/4 Cockspur Street, London SW1, was damaged as a result of flooding from a burst pipe vested in the respondent (Thames). It was common ground that Thames was liable to compensate the appellants (Skandia) for the damage caused to the building under section 6(1) of the Water Act 1981, which provided: “Where an escape of water, however caused, from any pipe vested in any statutory water undertaker causes loss or damage, the undertakers shall be liable… for the loss or damage.” The judge awarded damages to compensate Skandia in the sum of £37,500. They appealed contending that the sum awarded should have been £297,954.74. It was submitted that Skandia were advised by experts that the flood had damaged the effectiveness of the waterproofing system in the building, and that a proposed tanking system was the only practical solution for repairing the water damage to the building and eliminating the risk of further damage. On that basis, it was argued that the cost of installing the tanking system was recoverable. Thames contended that the waterproofing system had not been damaged.
Held: The appeal was dismissed.
1. The judge’s conclusion that Skandia should not be entitled to recover was correct because Skanida and their experts had made an assumption that the damage had been caused to a comprehensive waterproofing system. That had not been a reasonable assumption to make and it was thus not reasonable to replace what was there with such a system. There had been an escape of water that caused some physical damage and prima facie it was only the cost of reinstatement of that physical damage that was recoverable.
2. If a claimant were to recover damages for something beyond the cost of reinstatement of physical damage, then he had to show that it was reasonable to incur expenditure beyond that quantifiable figure. It might in certain circumstances be reasonable to assume that damage had been incurred where a full investigation was not reasonably possible. Simple reliance by a claimant on an expert could not be the test as to whether a claimant had acted reasonably in making an assumption, albeit that the claimant had provided the expert with all material facts and the expert had made all reasonable investigations.
David Allen (instructed by Ince & Co) appeared for the applicants; Robert Akenhead QC (instructed by Beale & Co) appeared for the respondents.
Thomas Elliott, barrister