Flood Claims

The Floods – some of the legal implications for Individuals 

Who has suffered?

Individuals, businesses, local authorities and insurers. Everyone will pay the price for the extensive flood damage caused by the terrible storms, wind, rain and flooding many parts of the country suffered over the 2013/2014 winter. Some will suffer more than others.

So who is at fault?

Is there really anyone to blame?  Well, some may quote climate change and point the finger at those who may be responsible. But putting that thorny issue aside, if we look at the consequences, then could more have been done to stop the catastrophic damage and financial losses suffered by so many?

Local Authorities

The winter’s floods have caused major problems for local authorities as they are now having to deal with a range of claims against them for breach of duty.

Local authorities will be aware that section 41(1) of the Highways Act 1980 imposes on highway authorities a duty to maintain adopted roads. ‘Maintain’ included includes repair. But they have a defence to claims under section 58(1) of the Act which states that: 'In an action against a highway authority in respect of damage resulting from their failure to maintain a highway maintainable at the public expense it is a defence …. to prove that the authority had taken such care as in all the circumstances was reasonably required to secure that the part of the highway to which the action relates was not dangerous for traffic.'

Most claims alleging a breach of the duty to maintain or repair are relatively low value personal injury cases. But where the breach allows damage caused by flood waters, the value can be very considerable.

Can the Council or Local Authority be liable for flood damage?

Certainly. This happened in 2013 in the case of Vernon Knight Associates v Cornwall Council [2013] EWCA Civ 950.

Cornwall Council was responsible for maintaining Honicombe road alongside a holiday village business in the village of Honicombe. Water was known to collect in a dip in this road which if not drained away could flood onto the neighbouring property. So the council had put in gullies, drains and a catchment pit. They also appointed contractors, CORMAC,  to keep the road and its gullies and drains clear of fallen leaves and general rubbish.

However, when a heavy rainfall fell on 24 November 2006, CORMAC waited until nearly 10pm before checking the area even though they knew the dip was a problem. The drain had not in fact collected the rain, and water had run into the holiday park causing £123,000 of damage. Two years later the same thing happened, which resulted in £18,000 of damage.

The holiday village owners sued the council in nuisance and negligence, claiming that the Council had failed to clear the drains and gullies. At the trial, the judge ruled in their favour and they were awarded £141,625, but the County Council appealed. In the Court of Appeal, the judges upheld the earlier ruling because of flaws in the council's maintenance system. Evidence showed that its teams were not asked to flag up particular flood risk areas to their line managers. The council also had no proper standard procedure for checking these areas during storms and times of unusually heavy rainfall. The council was therefore liable for the damage.

In giving judgement for the Court of Appeal, Lord Justice Jackson concluded that

(i) A landowner owes a measured duty in both negligence and nuisance to take reasonable steps to prevent natural occurrences on his land from causing damage to neighbouring properties.

(ii) In determining the content of the measured duty, the court must consider what is fair, just and reasonable as between the two neighbouring landowners. It must have regard to all the circumstances, including the extent of the foreseeable risk, the available preventive measures, the costs of such measures and the resources of both parties.

(iii) Where the defendant is a county council with substantial resources, the court must take into account the competing demands on those resources and the public purposes for which they are held. It may not be fair, just or reasonable in all circumstances to require a public authority to spend those resources on specific infrastructure works just to protect a few individuals against a modest risk of property damage.

So, in order to defeat similar claims against them,  local authorities will need to be able to show that (1) that they have considered what preventative measures are available to safeguard against a known risk of flooding; (2) that they have reasonable allocated their resources balancing the potential damage to neighbouring property against the cost of preventing it and (3) that they have in place a strategy or plan to deal with problem areas liable to flooding.

The cost to insurers

We all hope that by now the rains have subsided. At least for a while. But insurance claims are still ongoing. For this winter’s floods, the damage is already put at over £426m, with insurers receiving more than 174,000 claims between 23 December 2013 and 8 January 2014 alone.

The Association of British Insurers has recently been advertising for a Chief Executive officer for Flood Re, the not-for-profit reinsurance facility being established in partnership by the Government. Perhaps this is a reflection of the seriousness it now places on flood damage and risk.

Will this cover everything and everyone?

Flood Re may not cover all claims (buy-to-let landlords may not be covered for instance) so insurance cover must remain a priority. Insurers will no doubt seek to avoid paying out where they consider the damage is not covered or will argue that the ‘flood’ is not actually a ‘flood’ as defined (or not) in the insurance policy. But this is not new and often legal representation may be necessary to persuade the insurer to promptly and fully settle genuine claims.

Think of our farmers…

However, perhaps a fresh issue is whether some flood damage can be covered at all by existing policies. For instance, traditional insurance for business interruption does not cover damage to fields, only physical damage to buildings. So where does that leave the farming community whose fields have been flooded and crops lost? With no insurance company paying out, their plight is in their own hands. And to add insult to injury, farmers could face fines by their local authorities if their animals are not properly looked after at a time of flood.

And businesses…

Businesses have been affected in many ways by the flooding. Transport delays will affect many businesses and for those in Somerset or the Thames estuary regions, for instance, actual damage to property or an inability to trade through lack of staff or supplies may lead to claims for business interruption loss.

The issue of recovering losses for business interruption was explored in the important l case of Orient-Express Hotels Limited v Assicurazioni General S.p.A (UK Branch) Trading as Generali Global Risk [2010] EWHC 1186 (Comm) where Orient-Express Hotels suffered significant wind and water damage due to Hurricane Katrina and Hurricane Rita in 2005. The English court upheld a tribunal decision that Orient-Express Hotels could only recover those losses ‘which would not have arisen ‘but for’ the damage to the hotel itself.’ This basically meant that the only losses which could be recovered were those due specifically to damage suffered by the hotel itself. This principle may now well feature in claims brought by businesses who have suffered flood damage following our own winter storms.

The message?

Seek legal advice early on.

Seth Lovis & Co has experience in acting for individuals and businesses in claims against insurers, landlords and local authorities arising from flood damage and other insured risks (for instance, riot damage). Contact us early on to ensure you get the expert advice on your claim and what losses you may recover. Our property litigation team would be delighted to speak to you so please call us on 020 7420 7020 or email us at enquiry@sethlovis.co.uk if you would like to discuss a potential claim.