Supershield Ltd v Siemens Building Technologies FE Ltd [2010]

Supershield Ltd v Siemens Building Technologies FE Ltd [2010] EWCA Civ 7 provided significant insights into the relationship between the remoteness rules outlined in Hadley v Baxendale [1854] and The Achilleas [2008]. The central issue was whether the damage to the building was recoverable in a breach of contract claim brought by Supershield against Siemens.

The case involved a contractor, Siemens Building Technologies FE Ltd, responsible for installing a water tank for a fire sprinkler system in a building owned by Supershield Ltd. Due to a faulty float valve installed by Siemens, the water tank overflowed, leading to extensive damage to the building. The typical drainage system that would carry away excess water was ineffective in this case due to a clogged drain.

The Court of Appeal held that the damage to the building was indeed recoverable, asserting that Siemens had assumed responsibility for it to Supershield. Toulson LJ discussed the relationship between Hadley v Baxendale and The Achilleas. While Hadley remains the standard rule for determining recoverable losses in contract law, Toulson LJ emphasised that the test of assumption of responsibility introduced in The Achilleas could extend the scope of recoverable losses beyond what is reasonably foreseeable. The approach in The Achilleas may override the standard Hadley rule, either making losses that would be recoverable under Hadley too remote or deeming losses that would be non-recoverable not too remote. Toulson LJ highlighted that if, upon a proper analysis of the contract against its commercial background, the loss was within the scope of the contractual duty, it would not be too remote to be recovered, even if such a loss would not have occurred in ordinary circumstances.

In the context of the current case, Toulson LJ noted that while flooding was unlikely, it fell within the scope of Siemens's duty as an installer. He argued that the responsibility of Siemens should not be diminished, even with additional protection measures, as these measures were intended to act as a backup. This ruling solidified the reasonable intentions of the parties against the commercial background as a crucial element in determining the law of remoteness.

This case clarified the application of The Achilleas in extending the scope of recoverable losses based on assumptions of responsibility. It emphasised the importance of analysing the contractual duty within its commercial context to determine the recoverability of a particular loss, even if such loss would not be foreseeable under ordinary circumstances.
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