Court of Appeal’s take on a manufacturer's continuing liability

14 Feb 2017

This case relates to an appeal brought by Howmet Ltd (“Howmet”) following a fire in their factory; the claim having been dismissed at first instance.  Economy Devices Ltd (“EDL”) was the manufacturer of a device which Howmet stated should have prevented the fire.

Facts

Howmet manufactured components for the aerospace industry. Part of its manufacturing process involved dipping metal castings into a series of tanks including acids, hot and cold water and other liquids. The tanks and the heaters were both flammable.

Howmet installed thermolevels designed and manufactured by EDL. The thermolevels were designed to measure the temperature of the liquid and to cut off the heater should the liquid level drop below a pre-determined level.

In December 2006, the water level in one of the tanks dropped and the thermolevel failed.  The tank caught fire but employees were on hand to extinguish it.  In January 2007 another tank suffered from a failed thermolevel and this fire was also quickly extinguished by employees.

In February 2007, a further fire occurred when an employee turned on a tank when it was empty.  No factory personnel were around to extinguish the fire and the factory was destroyed.

The first instance decision saw the claim dismissed.  The High Court found that the thermolevels had shortcomings but that Howmet was already aware of this.  Howmet had relied on operator vigilance and procedures to prevent fire.  There were four possible scenarios, of which one could be discounted on the basis of expert evidence.  Of the remaining three scenarios, only one would place any liability upon EDL and that scenario could be discounted on the basis Howmet had ended its reliance on the device prior to the fire, breaking the chain of causation.  Accordingly, EDL could not be liable for the fire.

The appeal

Howmet appealed citing four grounds, with the primary issue being that the knowledge of junior employees had been attributed to the company.  This argument was rejected on the basis the relevant employees were those to whom Howmet had entrusted the task of operating and maintaining the tanks.  All those employees appreciated that the thermolevel was faulty and Howmet therefore, had knowledge.  The court reaffirmed that if an end user is aware that a product is defective but decides to continue using it, he does so entirely at his own risk.  The manufacturer of the defective product has no continuing duty to the end user. The appeal was dismissed.

What this means for you

This case is important when looking to determine knowledge within a corporate system.  The decision makes clear that a corporate body will have knowledge of a defect when those employees responsible for the defective item become aware of the issue.  Knowledge does not have to reach the highest levels of the corporate hierarchy when employees are entrusted with responsibility.  The case serves as a great tool for manufacturers faced with potentially large claims for compensation as a result of the failure of their product.

Abigail Cross, solicitor

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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