Professional indemnity: architects

United Kingdom

In Pearson v Charter Partnership, the Court of Appeal revisited the principles underlying the decision in Baxall which allowed a negligent architect to escape liability in tort due to an intervening event.

In 2002, the Court of Appeal in Baxall v Sheard Walshaw held that architects who had negligently designed a drainage system were not liable to subsequent occupiers because the design defect was patent, not latent and would have been evident to their surveyor at purchase.

Pearson v Charter Partnership contained similar facts:

  • It was not disputed at appeal that the architects had under-designed the drainage system.

  • Pearson were subsequent occupiers who had suffered losses in July 2002. BUT

  • Pearson were not aware of a previous flood in 1994 which revealed the under-design.

At appeal, Charter sought to rely on Baxall, arguing that they were only liable if the defect was latent and, since it had been discovered in 1994, it was no longer latent.

The Court of Appeal extracted two principles from the Baxall decision:

(a) Where it is reasonable to expect that an occupier will inspect a property, no duty of care will arise for any defect such inspection should disclose, and

(b) Where an occupier could reasonably be expected to carry out an inspection that would have revealed the defect, failure to do so (or with reasonable skill and care) will break the chain of causation.

Having questioned whether the authorities fully supported the two BaxallPearson principles, the Court of Appeal nevertheless decided principally on its facts, as follows – It was found that:

(a) There was no reason for the architects to expect at the outset that an inspection would necessarily be carried out that would reveal any error in the drainage system (ie the defect was latent)

(b) Pearson neither knew nor should have known of the previous flood. Knowledge of a latent defect by a third party does not render it patent.

The following comments do, however, shed some light on how Baxall might be restricted in the future. The court indicated that:

(i) Rather than find that an intervening event should break the chain of causation, allowing the original wrongdoer to escape liability completely, a better approach was to treat the failure to inspect as contributory negligence.

(ii) The benefit of the Baxall patent defect defence should be restricted to more obvious examples. The court approved the Australian Voli –v- Inglewood Shire case which found that such a defence should only apply where a defect is so obvious no reasonable person could have failed to identify it or where the property which contained the defect would not usually be supplied without prior testing/examination.

Whilst the court’s comments on BaxallPearson will come as a blow to architects who may find themselves exposed for defects which remain latent for long periods of time, the court’s comments have practical justification. If an architect was negligent, why should he escape all liability simply because of an expectation that a third party would inspect and find the defect? If there was a reasonable expectation of an intervening event and there was some failure by the claimant or his agents (e.g. on purchase of the property) then the more pragmatic solution – clearly favoured by the court of Appeal in but not part of the formal finding – would be for the law to permit the court to recognise contributory negligence and reduce damages payable accordingly. Query, however, whether this result could be achieved if the claimant’s surveyor was negligent – in these circumstances would the claimant really be contributorily negligent and would the surveyor be liable “for the same damage” under the Civil Liability (Contribution) Act?

Further reading:
Pearson Education Limited v. Charter Partnership Limited

[2007] EWCA Civ 130.

Baxall v. Sheard Walshaw Partnership

[2002] BLR 100 (CA).