In the latest development in the "Toxic Sofa" litigation (see our blogs of 30 March 2010 and 29 April 2010), the High Court has ruled in (1) Argos Ltd (2) Homebase Ltd and Others v Leather Trade House Ltd (Formerly BLC Leather Technology Centre Ltd)  EWHC 1348 (QB) that Argos and Homebase are able to recover by way of an indemnity from Leather Trade House the sums they had paid out to victims of a harmful anti-fungal chemical used in their leather sofas.
BLC Leather Technology Centre (currently trading as Leather Trade House Ltd) was retained by Argos to provide advice and testing services in respect of Argos' leather goods. Mrs Justice Thirwall held that in breach of contract and negligently, BLC failed to advise Argos that the anti-mould chemical used in the packaging of its leather furniture was harmful to humans. Whilst BLC and Homebase did not have an equivalent contractual relationship, Thirwall J still found that the former owed the latter a common law duty of care arising from BLC's knowledge that Homebase was part of the Argos group of companies, that Homebase would receive BLC's advice, and that it would rely on that advice.
This decision represents a victory for the insurers of Argos and Homebase and will serve to mitigate the losses they incurred in what is considered to be one of Britain's largest ever group damages actions.