Howmet Ltd v Economy Devices Ltd  EWCA Civ 847
The decision in this case demonstrates that a negligent manufacturer may be able to escape liability where the innocent party becomes aware of the defect before damage occurs and voluntarily continues to use the product.
The key facts
The owner of a factory which suffered damage in a fire appealed against the dismissal of its action against the manufacturer of a device which, it maintained, should have prevented the fire from occurring.
The factory owner, Howmet Ltd (“Claimant”), made precision components for the aerospace industry. In 2005, devices known as thermolevels were installed in tanks in the Claimant’s factory to avert fire risk. Economy Devices Ltd (“Defendant”) manufactured the thermolevels. One particular thermolevel failed on two separate occasions (December 2006 and January 2007) causing fires which were both extinguished before any harm was done. Employees of the Claimant realised that the sensor was not working and ordered a new part. They ceased to rely on the thermolevel and introduced a new system based on operator vigilance instead.
On 12 February 2007, when the new part had arrived but not been installed, the same thermolevel failed and fire destroyed the factory. The Claimant claimed damages in negligence and under the Electrical Equipment (Safety) Regulations 1994. The judge at first instance found that although the thermolevels were flawed and unsafe, the Claimant had had knowledge of the malfunction and had not been relying on the thermolevel to act as a reliable safety device; instead, it relied upon operator vigilance and the new operating procedure which had been put in place. The judge held that the claim failed for lack of proof of causation.
The issue was whether, at the date of the fire, the Defendant owed a continuing duty to the Claimant, and, if so, whether the fire had been caused by a breach of that duty.
On appeal, the Claimant submitted that the judge had erred in (1) attributing to it the knowledge of relatively junior employees concerning the thermolevel's malfunction; (2) his treatment of reliance on the thermolevel in relation to (i) negligence and (ii) breach of statutory duty.
The Court of Appeal unanimously dismissed the appeal. Jackson LJ held that the Defendant was not liable in negligence, as its breach of duty had not caused the loss. The effective cause of the fire had not been the defective thermolevel, but the failure of the system which the Claimant had put in place to protect the tank following the malfunction of the thermolevel.
The case serves as a cautionary reminder that once an end user has been alerted to a dangerous condition of a product, if it voluntarily continues to use it, thereby causing injury or damage, it normally does so entirely at its own risk (Donoghue v Stevenson and Taylor v Rover).
The court made it clear that the principle expressed by Baker J in Taylor v Rover remained good law (namely, that if one person in the corporate hierarchy becomes aware of a dangerous situation in the workplace, which in breach of duty he fails to report up the line, in subsequent litigation, the company cannot rely upon the ignorance of its more senior managers).
Allen Tod Architecture Ltd v Capita Property and Infrastructure Ltd  EWHC 2171 (TCC)
This case considers whether the court’s permission to appoint and rely upon the opinion of a new expert is to be conditional upon disclosing any document or correspondence containing the substance of the opinion of the original expert.
The key facts
This dispute concerned a professional negligence claim against a structural engineer, Capita Property and Infrastructure Ltd (“Defendant”), in relation to the redevelopment of a property.
The parties had been given permission to call an expert structural engineer. The Claimant instructed an expert (“Original Expert”) but lost confidence in him after delays in the production of his report. Under the relevant case management order, the Claimant did not need the permission of the court to change experts, but did require permission to call an expert to give oral evidence at trial (which was the Claimant’s intention). Accordingly, the Claimant instructed a new expert and the court granted permission to call the new expert to give evidence at trial. However, as a consequence of granting the permission, the court had the power to impose conditions upon the appointment at its discretion.
The Defendant applied for an order that permission for the Claimant to rely on the evidence of the new expert was to be conditional upon the Claimant disclosing: (i) its letters of instruction to both the Original Expert and to the new expert; and (ii) all other documents and/or correspondence setting out the substance of the Original Expert's opinion, be it in draft or final form. The Claimant disclosed both letters of instruction and the Original Expert’s report, but declined to disclose any further material on the basis that it was privileged. It further argued that it had already disclosed sufficient material, and it had not been guilty of "expert shopping".
HHJ David Grant ordered that the Claimant was permitted to call the new expert witness at trial on condition that it disclosed the documents sought by the Defendant.
In coming to the decision, the judge considered the relevant authorities and determined:
- When granting permission to adduce expert evidence, the court has a wide and general power to exercise its discretion to impose conditions (CPR 35.4(1), CPR 3.1(2)(m) and CPR 3.1(3)(a)).
- In exercising its discretion, the court may give permission to rely on a second replacement expert, but usually on condition that the report of the first expert is disclosed.
- Once an expert has prepared a report in the context of a relevant pre-action protocol process, that expert owes a duty to the court irrespective of his instruction by one of the parties. Accordingly, there is no justification for not disclosing the report.
- The court's power to exercise its discretion whether to impose terms, when giving permission to adduce expert evidence, arises irrespective of the occurrence of any expert shopping. It is a power to be exercised reasonably on a case-by-case basis, having regard to all the circumstances of that particular case.
The judge concluded that the fact that the documents sought by the Defendant were or may be "cloaked with the cover of privilege" was not a reason to refuse their disclosure as part of the price which the Claimant had to pay in order to call the new expert as its expert witness at trial.
The decision is a reminder that, although the nature of the conditions imposed by the court will turn on the facts of the particular case, parties must bear in mind that any communications with experts and any documents produced by experts must be treated as potentially disclosable. In the view of the judge, the price a claimant has to pay for relying on the evidence of a new expert is the waiver of privilege in any final or draft reports and other documents setting out the expert's opinion, even in instances where there is no expert shopping.
Beumer Group UK Ltd v Vinci Construction UK Ltd  EWHC 2283 (TCC)
This case demonstrates that an adjudicator's failure to disclose his involvement in a simultaneous adjudication involving one of the parties is likely to be a breach of the rules of natural justice.
The key facts
Vinci Construction UK Ltd (“Main Contractor“) entered into a building contract with Gatwick Airport Ltd to carry out substantial works at the airport. The Main Contractor thereafter entered into a sub-contract with Beumer Group UK Ltd (“Sub-Contractor”) to carry out works to the baggage handling system. There was also a sub-sub-contract between the Sub-Contractor and Daifuku Logan Ltd (“Sub-Sub-Contractor”).
Two disputes arose and were referred by the Sub-Contractor to adjudication:
- A dispute over the Main Contractor's instructions (adjudication BVII).
- A dispute with the Sub-Sub-Contractor related to its failure to complete its works by particular dates and the Sub-Contractor’s claim for liquidated damages (adjudication BLII).
Dr Chern was appointed as the adjudicator in both instances. Neither Dr Chern nor the Sub-Contractor advised the Main Contractor of his involvement in adjudication BLII.
The adjudicator granted declaratory relief at adjudication BVII and ordered that the Main Contractor reimburse the Sub-Contractor for his fees. The Main Contractor refused to pay and enforcement proceedings were commenced, pursuant to which the Main Contractor argued that there was a breach of the rules of natural justice on the following grounds:
- Through his involvement in adjudication BLII, the adjudicator acquired background knowledge concerning the subject matter of adjudication BVII. As the Main Contractor did not know about the adjudication, it was unable to consider this information and make submissions about it.
- The Sub-Contractor should have disclosed to the Main Contractor material from adjudication BLII, which was relevant to the dispute in adjudication BVII.
The key issue was that the Sub-Contractor had advanced factually inconsistent cases in the two adjudications regarding dates for completion. This subsequently led to an extension of time in one case (BVII) and a payment of LDs in the other (BLII).
Fraser J held that the adjudicator’s failure to disclose his involvement in simultaneous adjudications was a material breach of the rules of natural justice. The Main Contractor should have been informed and provided with material from adjudication BLII on the basis that the disputes were closely connected and the issues were similar. This was especially relevant given the sub-contractor was advancing factually inconsistent cases in the two adjudications.
The court noted that not only is it important that adjudicators act fairly, but they are seen to act fairly. It then went on to add that if one party does not know the other adjudication is taking place, then there was a risk that a fair-minded and informed observer would conclude that there was a real possibility of bias. This could be avoided by disclosing the existence of the appointment at the earliest opportunity. (Paragraphs 27-31, judgment).
What this judgment demonstrates is that when there are simultaneous adjudications running that involve the same adjudicator, the adjudicator should inform all parties about his involvement in the other adjudications "at the earliest opportunity". The adjudicator’s decisions in this case would have been held to be enforceable were it not for his failure to inform the Main Contractor about adjudication BLII.