Manufacturer may not be liable even if a product is defective

Howmet Limited v Economy Devices Limited and Others [2016] EWCA Civ 847

Summary

Weightmans acted successfully at first instance for the manufacturer of a level-sensing device (a thermolevel), which was alleged to have been the cause of a fire at the claimant’s factory. The thermolevel had been installed on the claimant’s production line. The manufacturer was sued for £20m. Having lost at trial, the claimant appealed to the Court of Appeal but Weightmans successfully resisted the appeal and the original judgment was upheld.

Facts and first instance judgment

The owners of a factory, Howmet Ltd (‘Howmet’) brought a claim in negligence and breach of statutory duty against Economy Devices Ltd (‘EDL’) following a fire at their factory. Howmet manufactured components for the aerospace industry. One stage of the manufacturing process required metal castings to be dipped into a series of tanks (a grain etch line or ‘GEL’) in order to expose the grain. The tanks contained different liquids. Some were heated to high temperatures by electric immersion heaters. The tanks and the heaters were both flammable. The heaters were prone to overheat and ignite if left on and not covered by liquid.

The GEL was replaced in 2005/2006 by Electrochemical Supplies Ltd (‘ECS’) who sub-contracted the electrical works to MJD Supplies Ltd (‘MJD’). ECS and MJD installed thermolevels. The thermolevels were intended first to monitor the temperature of the liquid in the tank and second to switch off automatically the heaters if the liquid level in a tank dropped so that the heaters were exposed. EDL designed and manufactured the thermolevels. MJD made a number of modifications to the thermolevels which included the addition of an alarm and an extension incorporating a plug and socket (the ‘extension’).

The fire forming the subject matter of the litigation (‘the main fire’) started in GEL tank six. In fact, two similar events had occurred previously. In December 2006, the heaters in the same tank caught fire when they were exposed due to low liquid level. The thermolevel had not turned the heaters off. It was thought that corrosion on the extension was to blame. On 29 January 2007, an operator mistakenly drained tank six when the heaters were on; the thermolevel did not switch off the heaters and the tank caught fire again. On both occasions, the fires were quickly extinguished. Following the second fire, a float switch (an alternative device to turn off the heater if the liquid level fell) was ordered and delivered, but never installed.  In the meantime, certain employees of Howmet introduced a system to avoid fires based on operator vigilance and emptying tank six over the weekend. Before the float switch was installed, the main fire occurred when a worker turned on tank six when it was empty.

Proceedings were issued against EDL, ECS and MJD. The claim against MJD was resolved as the company was dormant and had no insurer. The claim against ECS was compromised during the litigation. The matter proceeded to trial against EDL alone on the basis of allegations of negligence and breaches of statutory duty in relation to the thermolevel as the cause of the main fire.

Edwards-Stuart J dismissed Howmet’s claim for two main reasons. First, although he held that the thermolevel was unreliable and unacceptable as a critical safety device, employees of Howmet knew this before the main fire occurred as they knew that the thermolevel was not working either at all or properly. Accordingly, they were not relying or reasonably relying on it as a critical safety device. Second, he found that Howmet had not proven that the fire was caused by any fault in the thermolevel attributable to a breach of duty on the part of EDL. There had been four potential reasons why the thermolevel may have failed. One could be ruled out on the expert evidence. The other three causes were unlikely, but one reason (incorrect setting of the sensitivity control in the thermolevel) was less unlikely than the remaining two. However, it could not be said that the incorrect setting of the sensitivity control (for which EDL would have been responsible) was the probable cause why the level sensor in the thermolevel failed to prevent a fire. The claim for breach of statutory duty also failed for the same reasons. Had the claim succeeded, Edwards-Stuart J considered Howmet were 75% contributorily negligent. Howmet appealed.

Court of Appeal judgment 

The Court of Appeal dismissed Howmet’s appeal. Jackson LJ gave the leading judgment, although Arden LJ and Akenhead J gave their own judgments.

Howmet complained that the knowledge of the employees operating the GEL was insufficient to fix Howmet, the company, with knowledge, and so the trial judge’s argument on reliance/causation could not defeat the claim. This argument was rejected. Jackson LJ was satisfied that the employees tasked with maintaining and operating the GEL in a safe manner were aware that the thermolevel was not working properly, evidenced by the fact that they set up a different system for tank six (increased operator vigilance and emptying the tank at the weekend). The true cause of the main fire was the breakdown in this interim system of work and not the thermolevel. The knowledge of the employees in question could properly be attributed to Howmet.  Jackson LJ noted that the reason the claim failed could be expressed in terms of either duty or causation; by the time of the main fire, EDL did not owe a continuing duty in relation to the thermolevel in tank six or any breaches by EDL were not causative of the loss. 

Likewise, the claim for breach of statutory duty also failed; by the time of the second fire, Howmet could not be described as a person ‘affected by’ the contraventions of the requirements of the applicable Regulations as they were no longer relying on the thermolevel to prevent a fire in tank six.  

Howmet also complained that causation should have been made out and that this was the common-sense answer to the case. This issue prompted a divergence of opinion amongst the Court of Appeal. Jackson LJ had some reservations about the Judge’s findings but did not rule on it given his findings on reliance/causation. Akenhead LJ did not share the same reservations, endorsing the trial judge’s approach of ranking the potential causes and concluding that none were proven on the balance of probabilities. Arden LJ felt that the judge should have taken a step back and found that causation was established.

Comment and impact

This is an important decision for manufacturers faced with potentially large claims for compensation as a result of the failure of their product. On the facts of this case, Howmet knew the product was defective and ceased to rely on it as a safety device. As such, the defective product was not in itself the cause of the fire.

The clear principle — already stated in earlier cases but reaffirmed — is that if a user of a product knows it is defective but continues to use it then the manufacturer may no longer be liable if a claim for compensation for injury or loss follows. As Jackson LJ stated;

“Once the end user is alerted to the dangerous condition of a chattel, if he voluntarily continues to use it thereby causing personal injury or damage, he normally does so at his own risk”.

The judgment serves as a timely reminder that knowledge of employees and those in managerial hierarchy can be attributed to a company.

The diverse comments on causation are a reminder to all that judges can take very different views on matters of fact. The observations of Akenhead LJ reflect that faced with multiple potential causes for the failure of a product they can all be dismissed by the judge.

Weightmans acted for Economy Devices Ltd.