The appellant, Charter Partnership Ltd (“Charter”), is a firm of architects which designed a warehouse that was leased to the respondent, Pearson Education Ltd (“Pearson”). Pearson suffered financial loss when a number of books it owned which were stored in the warehouse were damaged in a flood at the warehouse. It was agreed that the cause of flooding was inadequate drainage capacity and that in specifying such capacity Charter had failed to exercise reasonable care and skill.

Significantly, eight years before the flood, there had been similar incident of damage to books stored in the warehouse. Shortly after that event, loss adjusters (who were not acting on behalf of the lessee or landlords at the time) found that the warehouse’s drainage system had been inadequately designed. That finding was not passed on to the lessee or the landlords. In addition, Pearson did not carry out any pre-purchase survey in relation to the warehouse before signing the lease.

Charter appealed against a decision of the TCC that it was liable in damages to Pearson for financial loss suffered by Pearson as a result of Charter’s inadequate drainage design. Charter argued that the earlier flood had brought its liability to an end, as it was reasonable to expect that the event would have lead to the identification of the defect. Further, Charter argued that any negligent act or omission it caused fell outside the 15-year limitation period imposed by section 14B of the Limitation Act 1980 (the “act”).

Two main issues arose at trial. The first was whether, having regard to the intervening earlier flood, the damage caused to Pearson’s books was caused by a breach of duty of care by Charter to Pearson. The second was whether, if the damage to Pearson’s books was in fact caused by a breach of a duty of care owed by Charter to Pearson, Charter’s negligent act or omission occurred outside the 15-year limitation period stipulated in the act.