Consultants’ Liability to Future Tenants – Patent or Latent Defects?

1 March, 2002
by: Cripps

Consultants’ Liability to Future Tenants – Patent or Latent Defects? The Court of Appeal has decided that, in certain circumstances, a consultant will owe a duty of care to a future occupier or owner of a building.

Baxall Securities Ltd – v – Sheard Walshaw Partnership 2002 WL 45300 (CA). The architect, SWP, was appointed by the developer of an industrial unit. The architect specified the roof drainage system and also inspected and approved the work of the specialist sub-contractor who designed and supplied the roof and guttering. In fact, the specification was of insufficient capacity and the overflows which should have been installed were missing.

In the late spring and again in the autumn of 1995, the unit suffered from flooding and the occupier incurred financial losses due to damaged stock.

Had the developer suffered loss as a result, he would have been able to claim against the architect for breach of contract.

But the occupier of the industrial unit was a tenant, Baxall Securities. The tenant had no contract with the architect. It probably had collateral warranties from the main contractor and the specialist sub- contractor but in this instance, the contractor was protected by the Final Certificate and the sub-contractor was insolvent. So the tenant looked for someone else to recover its losses from. It claimed a duty of care in tort was owed by the architect who had designed the building and supervised its construction.

Reminder

For a claim in negligence to succeed the Claimant has to prove that:

  • he is owed a duty of care
  • that there has been a breach of that duty
  • that the breach has caused loss or damage (other than damage to the building itself)
  • foreseeability that the conduct was likely to cause the damage in question.

 

The difficulty in this case was whether the architect owed the occupier a duty of care. This depends upon proximity, foreseeability of damage and whether it is fair, just and reasonable to impose a duty of the scope contended for. If the tenant was given a reasonable opportunity to inspect and discover the defects before the floods then no duty of care would have been owed by the landlord’s architect to the tenant. The tenant had instructed its own surveyors to inspect the building prior to entering into the lease and those surveyors had also failed to notice that the overflows were missing.

If the defects should have been discovered by the tenant’s own surveyors, then the claim against the landlord’s architect would not succeed.

Thus the crucial question became whether the defects were .patent. (obvious) or .latent. (hidden). The judge at first instance found that the architect was responsible for the under- design of the drainage system, and moreover that the tenant and its surveyors could not reasonably have been expected to discover such defects.

However, the Court of Appeal held that the effective cause of the floods was the absence of overflows, which was a patent defect and should have been noticed by the tenant and its surveyors. The claim against the architect therefore failed.

Theoretically, a tenant will look to its own surveyor if a patent defect has been overlooked but to the landlord’s consultant if the defect is latent. On the basis that the tenant’s surveyor would not be liable for the loss caused by a latent defect, it follows that the landlord’s consultant cannot claim a contribution from the tenant’s surveyor (Royal Brompton Hospital NHS Trust – v – Hammond & Others and Taylor Woodrow HL [2002] 2 All ER 801).

Similarly, if the defect is patent then the tenant’s surveyor will not be able to claim a contribution from the landlord’s consultant. We can therefore expect arguments as to whether defects are patent or latent, or as in this case, which defect was the effective cause of the damage.

Two other points to mention:- had the tenant had a contract or collateral warranty from the architect, he could have claimed damages for breach of contract. The contract between the developer and the architect in this case predated the Contracts (Rights of Third Parties) Act 1999. If the Act is not excluded from the contract, a tenant now may have a contractual right under the developer’s contract by virtue of the Act.

In the event that a developer’s consultant has negligently caused loss to the tenant, he may well find himself sued in both contract and tort. This raises considerations such as different limitation periods, the fact that the contract may contain restrictions on the amount recoverable, and the ability under contract to recover the cost of remedying the defect, which is not available in tort.

Advice should be sought on the nature and amount of recoverable damages, as well as whether the defect is likely to be patent or latent.

Reviewed in 2015

Reviewed in 2015

Reviewed in 2015

Reviewed in 2015

Reviewed in 2015

Reviewed in 2015