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Valley gutters have ever been the bane of the builder's life – not to mention that of the roofer, architect, engineer and customer. I blame the seagulls, of course; some blame the architect.

Baxhall Securities is the occupier of a great big new shed in Stockport with a great big leak. It blamed not the seagulls but the architect – which ended up paying a whopping £612 000 for the damage caused when the valley gutter dribbled, then leaked, then flooded into the shed. Baxhall claimed the cash because boxes and boxes of its electrical gubbins were ruined.

The architect thought it could be blamed only through the contractual chain: Baxhall as tenant would sue the developer, which would in turn sue the architect. And if the lease was of the type that passed responsibility for a building defect on to the tenant, then no blame could be transferred down the chain. Baxhall ignored the contractual route and sued the architect under the tort of negligence. What irks as well is that a specialist subcontractor did the detailed roof design.

The basic facts are these. The valley gutter running the full length between the twin pitched roofs had a fundamental defect: it had no overflows. Baxhall's surveyor did not spot this. He knew that the valley leaked, but thought it was gunge blocking the downpipes and that regular maintenance was the remedy. The first flood got there before the maintenance blokes, causing £128 000 of stock damage. It was put down to a combination of obstructions in the gutter and absence of overflows. The second flood, four months later, led to the bill for the £612 000.

The cause, said the judge in Baxhall's case against the architect, was underdesign of the gutter – too few outlets and the absence of overflows. It couldn't be blockages because the gutters had been cleaned a few days before.

The law of contract means that if remedial work to a new building for workmanship problems is required, the owner or occupier sues the builder if there is a contract between them. Then the builder sues the subcontractors, and so on. If there is a design defect, that has to be put right, and if that design was by the architect, the owner sues in contract. But if a builder falls into error with faulty workmanship or materials and those faults damage property other than the building itself, the party suffering the loss needs no contract to sue on – the loss can be claimed in negligence. It doesn't matter that the injured party is 50 places removed from the culprit.

A harder-working surveyor might have found the fault, but the architect could not escape liability simply for that reason

The judge in Baxhall Securities vs Sheard Walshaw Partnership explained how this type of liability outside contract arose. A 1932 case about a snail in a ginger beer bottle, Donaghue vs Stevenson, set down a "general duty of care". In 1991, Murphy vs Brentwood ruled that a builder that builds badly and damages other property will be liable to any stranger whose property that is. In the Baxhall case, the judge had to decide if an architect owes a similar duty of care: is it liable if a design error causes loss to other property?

The judge asked whether the architect could have foreseen the kind of loss that occurred. It had no idea who would occupy the warehouse, but it could foresee that occupiers would bring goods of a type that would be damaged by flood.

The judge asked if it was reasonable to impose a liability. He concluded that it was, because there is a close link, if not in contract, then generally between those who build or design buildings and the ultimate occupier. The judge also weighed how easily the occupier might have found the design error. Was there a reasonable opportunity of inspecting the roof drainage system by an independent surveyor before taking on the lease? If so, the architect might escape liability. A surveyor did report on the leaking gutter, but the design error was not discovered. The judge did think that a harder-working surveyor might have revealed the design item, but he could not relieve the architect of liability simply for this reason.

So, architects or designers owe a duty of care to occupiers when there is no opportunity for or possibility of an inspection that would discover a design fault. If that fault is the primary cause of loss to property other than the building, then that loss can be recovered from the designer.