The Court of Appeal has rejected arguments that a designer and supplier of equipment should bear full responsibility for damage caused by a fire. The right to damages had correctly been reduced by 75% for contributory negligence.
ADT designed, supplied, installed and commissioned a fire suppression system for a factory owned and operated by Trebor Bassett and Cadbury. In June 2005 a catastrophic fire developed which ADT’s system failed to extinguish. Trebor and Cadbury sued ADT for damages in the sum of £100 million.
In July 2011, the High Court found that ADT had failed to design the system with reasonable skill and care, and was accordingly in breach of contractual and tortious duties to Cadbury. However there was a sting in the tail for Cadbury. The Judge also found that Cadbury shared in the responsibility for the damage, and reduced the damages owed to Cadbury by a sizeable 75%. Unsurprisingly Cadbury sought to overturn the High Court’s decision.
Cadbury argued the judge should have found that ADT was in breach of contractual duties that went beyond an obligation to use reasonable skill and care in the design of the system (and as such there was no co-extensive tortious duty). If successful, this would preclude the application of the Law Reform (Contributory Negligence) Act 1945, and the court would have no power to reduce the damages recoverable by Cadbury to reflect any fault on Cadbury’s part.
Cadbury used two lines of argument to expand the scope of ADT’s contractual duties:
- Cadbury argued that the design and supply of the system constituted a supply of “goods” and so under the Supply of Goods and Services Act 1982 was subject to express and implied terms of satisfactory quality and fitness for purpose. The court rejected this argument. ADT was agreeing to supply design skills, and reasonable care in exercising them, not mere goods. ADT was not supplying an off-the-shelf product, but a bespoke system; the flaws in the system were matters of design and did not concern the inherent quality, or fitness for purpose, of the goods.
- Cadbury also alleged that the Specification amounted to a warranty or guarantee of the success of the system. The Court of Appeal agreed with the High Court judge that imposing an absolute obligation was an implausible construction of the Specification. Very clear words would be required to bring about the result that a designer and supplier of fire suppression systems had contracted to extinguish all fires, as it would be highly unusual for a professional to accept that type of liability.
The Court of Appeal dismissed the appeal; the High Court judge was right to conclude that Cadbury’s damages should be reduced to reflect its responsibility for the damage caused by the fire.
This decision will be welcomed by professionals (and their insurers) who undertake to perform contractual obligations with reasonable care and skill. Professionals are selected based on reputation and experience in the expectation that they will perform their obligations with reasonable skill and care. Extremely clear words would be required to extend this obligation to a point at which the professional undertakes to bring about a certain result. This case should also, however, remind professionals that they will also owe tortious duties in addition to contractual duties.