Cases - Scottish Widows Services Ltd v Building Design Partnership

Record details

Name

Scottish Widows Services Ltd v Building Design Partnership

Date

[2011]

Citation

ScotCS CSIH_35

Keywords

Collateral warranty - physical loss has economic consequences - Scottish law

Summary

Although this was a Scottish case it is likely to be followed in the English courts.

Scottish Widows Services Limited (SWSL) were claiming against BDP under the terms of a collateral warranty. BDP were the appointed architects for the new Scottish Widows headquarters in Edinburgh.

The arrangement of numerous client companies was rather complicated.

BDP were applying for the claim under the collateral warranty to be dismissed on the basis that, whatever the alleged liability, SWSL could not demonstrate that they were the ones who would suffer damages as a result.

The principal argument for BDP began with the proposition that any breach of duty on the part of BDP preceded the date of practical completion. At that point the only party who could claim to have suffered loss by reason of such a breach was the owner of the building, which was not SWSL. BDP asserted that SWSL had suffered no loss; the loss represented by the averred defects in the building resided elsewhere, namely with the building owner.

The court adopted a rather pragmatic approach to this issue and concluded that while the primary physical loss may be sustained by the owner or tenant of the building at the time when the defective work was performed, that physical loss has economic consequences, and any party who suffers those economic consequences, such as a subsequent owner or tenant, may sue for that loss provided that a contractual relationship exists between the party responsible for the defective condition of the building and the person who suffers the economic consequences.