The defendant water company, Thames Water admitted liability for loss and damage caused by water escaping from a burst water main. The water from the burst pipe damaged much of the valuable archives of Aerospace, a publishing company. Following the flood, Aerospace wished to restore the archives and asked the court to measure damages based on the cost of restoring the archives. Thames Water claimed that it would be unreasonable to restore the archives and that damages should be measured according to the reduced market value of the archives which in this case was significantly less than the cost of their replacement.

What is the proper measure of damages in tort where flooding causes damage to goods?