UK: Architect’s Responsibility For Latent Defects

Originally published in The Insurance Law Quarterly: Winter 2005

Pearson concerned a warehouse constructed in the late 1980s with a siphonic drainage system which, as it subsequently transpired, had been designed with an inadequately low capacity. As a result, the valley gutters to the warehouse overflowed during heavy rain in 2002, and the claimant suffered in excess of £2 million of damage to its stock of educational books.

Pearson was not itself the original owner or occupier of the building, and so, following Baxall v Sheard Walshaw Partnership (2002) (a case also concerned with the under-capacity of siphonic drainage systems), Pearson could only claim against the architects responsible for negligently specifying the capacity of the drainage system insofar as the defect was latent. As established in Baxall, in the construction context a defect will not be latent where " in the normal course of events, a surveyor would be engaged in a survey of a building for a purchaser, and, with the exercise of due diligence, that surveyor would have discovered a defect ". This test represents a fairly straightforward development of the intermediate inspection point which arose in Donoghue v Stevenson (1932) because of the opacity of the infamous ginger beer bottle.

Unbeknownst to Pearson, however, the previous occupiers of the warehouse had also suffered a flood as a result of the inadequate capacity of the siphonic drainage system, and an engineer appointed by the previous occupiers’ insurers had in fact discovered that the capacity of the drainage system was inadequate. The previous occupiers, however, did not themselves know of the defect as their insurers, having apparently decided not to pursue a subrogated recovery action, did not pass to them a copy of the engineers’ report or communicate its substance.

Thus, although Pearson itself did not know about the latent defect at the time of the loss, somebody else (i.e. the previous owners’ insurers) did. This immediately raises questions as to whether the defect ceased to be latent in these circumstances even if it was not reasonably detectable by a third-party surveyor.

The Court decided this issue in Pearson’s favour by reference to Lambert v Lewis (1982), where claimants, injured when their vehicle was hit by a runaway trailer, successfully sued the manufacturer of the defective coupling that caused the accident, notwithstanding that the driver of the vehicle towing the trailer had had ample opportunity to inspect the defective coupling prior to the accident. The mere fact of the possibility of intermediate inspection by one member of a class to whom a duty of care is owed does not necessarily preclude that duty of care from continuing to exist for the benefit of other members of that class who have not themselves had the opportunity to inspect. Furthermore, if the possibility of intermediate inspection does not necessarily prevent the duty of care from continuing to exist, then logically the actual discovery of the defect by one person should not necessarily prevent the duty of care from continuing to exist for the benefit of other members of the class.

Applying the Baxall test, the Court held that the under-capacity of the siphonic drainage system was a latent defect, on the basis of expert evidence as to the state of knowledge of the surveying profession at the time. Pearson were therefore able to recover damages from Charter Partnership in respect of a defect which had already caused damage to the previous occupiers, and had been identified as the cause of that damage by the previous occupiers’ insurers. Although this result might seem surprising, it is important to bear in mind that these insurers were not ‘agents to know’ on behalf of the previous owners, and in their own right, not a member of the class of people to whom a duty of care is owed in respect of latent defects in buildings.

Effectively, Pearson has clarified that latency is not " [a] quality inherent in the defect so that, if one person discovers the defect, that defect thereafter ceases to be latent to any other person," (HHJ Thornton QC) but instead a quality defined by the reasonable foreseeability of the discoverability of the defect. Accordingly, just because a defect has been discovered by one person, this does not necessarily mean that it must have been reasonably discoverable by all others; the discovery might have been an outrageous fluke of fortune and, in those circumstances, it can seem harsh to deprive an injured party of a remedy simply because someone else, wholly unconnected with the injured party, stumbles on the defect.

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