Citation:
This was a claim brought against United Utilities as statutory undertaker under section 209 of the Water Industry Act 1991. Section 209(1) provides that the statutory undertaker shall be liable for any damage caused by an escape of water from a pipe vested in the undertaker irrespective of fault, subject to certain limited defences. United Utilities accepted liability and the only matter in issue between the two parties at trial was therefore quantum.
The claim concerned damage to property as a result of a flood caused by an escape of water on 25 October 2014. Mortimer Enterprises Ltd (“MEL”) provided training services to the construction industry from the premises which they used as a workshop and the claimant was the principal shareholder. MEL ceased trading in January 2015 and the claimant argued that this had been because of the damage caused by the flood. The claimant therefore sought damages for the loss of the business.
It was agreed that the appropriate method of quantifying the loss was the value of the business at the time of the flood and that the best way of valuing the business was an agreed multiple of annual maintainable earnings. The claimant argued that the annual maintainable earnings, and therefore the value of the business, were considerable, and claimed £1.5 million in compensation for the loss and damage said to be caused by the flood. The defendant argued that the business was in trouble regardless of the flood and that it therefore had a limited value.
The judge accepted the defendant’s forensic accountant’s evidence that the maximum value of the company at the time of the flood was £116,085. He also accepted the defendant’s argument that the diminished profits before the flood were not an anomaly but were rather an indication of a continuing decline.
The judge therefore valued the claim at £116,085 less £107,540 already paid by the defendant, leaving a net liability of £8,545.
Gaynor Chambers represented the defendant.
