Insurers will benefit from a judgment that forces owners and occupiers to share the cost of breakdowns in services, writes Sonja Dale
The Court of Appeal has given an important ruling that will help property insurers reduce their exposure in claims involving "shared services" such as drains and walls.
Warfield Park Homes v Warfield Park Residents' Association concerned the situation where two groups benefited from a service. The issue was who should pay when problems arose with the service.
The appellant was the owner of a mobile home site (the owner). The respondents were the occupiers of 110 mobile homes (the occupiers) who, at first instance, complained that they were bearing the cost of leakages from eight miles of water-pipes (exacerbated by the owner's lack of maintenance).
Although the owner produced expert evidence that the leakage rate was within acceptable limits, the judge found against it, saying "It seems to me that both sides...enjoy the benefits that come from this supply of water...I think that both sides should share the cost of leakages."
The owner appealed on two grounds: first, the judge did not find it in breach of contract, and second, the leakages were within reasonable limits.
The Court of Appeal rejected those submissions. Lord Justice Carnwath said: "I cannot accept that finding such a breach was an essential step in the reasoning. He was entitled to take the view that this was a shared problem, and that the [owner] had an equal interest in seeking to reduce it."
In discussing a "shared problem", the decision is of real importance for property insurers.
Subject to contractual provisions between neighbours, this could affect claims for costly repairs to shared drains, walls and roofs.
Insurers can now attempt to obtain contributions from anyone benefiting from these, potentially reducing their own exposure greatly. IT
' Sonja Dale is a solicitor in the insurance group of DLA Piper Rudnick Gray Cary UK
