The pressurisation unit panel on one of the boilers was switched from automatic to manual mode, causing the pumps to run continuously, discharging pressurised water onto the plant room floor. It eventually cascaded through holes in the floor, causing damage to the floors below. Ten weeks' loss of rent ensued. Rosehaugh's insurers, General Accident, reimbursed Rosehaugh. GA then claimed this sum back from Bovis for breach of the management contract. Bovis settled that claim in April 1998, paying GA £350,000, together with legal costs of £70,000. But it was actually Bovis' public liability insurers, Eagle Star, that paid. In separate proceedings, Eagle Star are pursuing a claim under the joint names insurance policy maintained by Rosehaugh under the management contract. Those proceedings are under appeal. But they also brought these proceedings in Bovis' name to recover contribution from the architects and the services' engineers. Although there were other design faults, the cause of the flood was the holes drilled through the concrete slab floor. The drilling appears to have been authorised by the design team on site. No drawing was issued detailing water-proofing measures at the time authorisation was given.
As the judge stated: "There lies at the heart of these contribution claims a demarcation dispute." Any of the four parties might in principal have a responsibility, and the precise allocation of responsibility would depend on the terms of each of the relevant contracts and on "custom and practice" in the industry. The architect was negligent, since it had primary responsibility for the waterproofing detail of the plant room. The services' engineer should have checked that the cables were free from the danger of water ingress. Had either of these consultants carried out their services with skill and care, the damage would not have occurred.
Any of the four parties might have a responsibility, and its precise allocation would depend on the terms of each of the contracts
The judge then had to assess what proportion of Bovis' liability each party should contribute. He seems to have taken a simple and pragmatic view: "The fair… way of allocating the responsibility for the damage is by way of a notional equal four-way split between Bovis, Crown House, SFP and WPP… It is not possible, if a broad approach is taken to causation and culpability, to do other than allocate responsibility equally."
The complexities (resulting in an 80-page judgment) were introduced because of the involvement of insurers. The architect and the services' engineer (which were defended by their insurers) raised a number of very technical arguments about the fact that the "loss" was not in fact Bovis' loss at all but was Rosehaugh's insurer's loss – so Bovis could not claim contribution. They alleged that Bovis should have claimed under the joint-names project insurance. Finally, there were "legal black hole" arguments because of the sale of the development from Rosehaugh to Rosehaugh SC Limited. The judge concluded that these arguments were wrong, adding: "When I stand back from the technical and legal detail of the contribution claim, I can see that this result is fair and reasonable … The technicalities arose because of an assignment of the development to a sister company by the developer, its subsequent claim on its property insurance, its liquidation, its assignment of its claims to its insurer, the use of joint-names insurance and a further claim on that insurance. Each of these occurrences are commercially commonplace and none of them should, in fairness, lead to a failure by Bovis to recover contribution in a situation which the Contribution Act was clearly meant to provide for."
Ann Minogue is a partner in solicitor Linklaters.