Product liability insurers will welcome this decision, which demarcates manufacturers’ liability in negligence and breach of statutory duty regarding the design and manufacture of defective products.
A device (a thermolevel) was supposed to switch off the claimant’s heating equipment if liquid held in a rinse tank fell below a certain level, and thus control fire risk. The Court of Appeal considered whether the knowledge of certain of the claimant’s employees, that the product was defective, acquired through previous manifestations of the fault, was sufficient to bring the manufacturer’s duty of care to end and/or to hold that there was no sufficient chain of causation between design and supply, and subsequent loss.
Howmet manufactures precision components for the aerospace industry. The defective device resulted in a fire in its factory which caused damage of £20 million. Howmet brought a claim against EDL alleging that the fire had been caused by a faulty thermolevel supplied by EDL.
Before the relevant fire, there had been two other incidents with the same thermolevel, where it had failed to switch off the heater in the same tank and the tank caught fire. Howmet’s employees managed to extinguish the fires quickly and instigated a new procedure requiring increased operator vigilance and ensuring that the problematic tank was left drained with the heaters switched off over the weekend. A float switch was also ordered to switch off the heater if the liquid level fell (although this had not been installed at the time of the relevant fire). The plant engineering technician and the facilities manager were aware of the problems with the thermolevel and the solutions which had been adopted.
The fire started when a Howmet employee switched on the heater in the relevant tank in error while it was empty. The level sensor failed to operate, a fire started and the flames spread.
At first instance, the claim was dismissed. The judge held that:
- Although EDL was in breach of its duty of care to Howmet, there was no proof of causation.
- After the previous incidents, Howmet employees were aware of the issues with the thermolevel and this knowledge was to be attributed to Howmet.
- Howmet had not been relying on the thermolevel but instead had introduced a new operating procedure and were relying on operator vigilance to avoid fire.
- Applying the Popi M, Howmet had not proved that the thermolevel was defective because of EDL’s negligence.
The judge also found that even if he was wrong in his findings on liability, he would hold that Howmet was liable for contributory negligence to the extent of 75%.
Howmet appealed, but the Court of Appeal unanimously dismissed the appeal, agreeing with the trial judge that there was no proof of causation. Howmet had been aware of the issues with the thermolevel, but continued to use it regardless, so the effective cause of the fire was not the defective thermolevel but rather the failure of the system put in place by Howden to address the known problem. The knowledge of individual employees about the defect was attributable to Howmet because they were the employees entrusted by the directors with maintaining and operating the tank safely.