Products Liability Comments on the Current Legal Position & Recent Changes. Adrian Foster LLB(Hons)

Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147. Breach of a Claims Condition, such as a delay in notification where the right should be reserved on notification and prior to any investigation. Breach of Claims condition where the breach becomes apparent during investigation and/or handling. Where a limitation or exclusion may apply in respect of policy cover. “election which requires a choice between mutually inconsistent rights”

It is important to recognise the distinction between, Physical damage, Economic loss (directly) flowing from that physical damage, and, Pure economic loss.

Spartan Steel and Alloys Ltd v. Martin & Co. Ltd [1973] 1 QB 27 Contractors damaged an electrical cable to a smelting plant. The damage to the plant was physical and the loss of profit from the smelt in it at the time, economic loss resulting from that physical damage. The loss of profit from future smelts (which had not been damaged or even made) was however pure economic loss.

Physical Damage Economic flowing directly from the physical damage. Pure Economic Loss ContractYes Yes (Financial Loss Ext) TortYesYes (?) No (Financial Loss Ext)

Barclays Bank v Fairclough Building Ltd [1995] 1 ALL ER 289 – Contributory Negligence does not apply to claims in Contract alone. Contribution & Tort.

Damages in Contract = The Contract was performed with losses within the reasonable contemplation of the parties (see Victoria laundry (Windsor) Ltd v Newman Industries Ltd Ltd [1949] 2 KB 528). Damages in Tort = The claimant must show that that “but for” the defendants tortious act he would not, on the balance of probabilities, have suffered the injury or loss. Public Policy.

Contract Terms. Have these been adequately communicated ? Are they appropriate to the circumstances of the supply ? Are the terms and conditions, and any exclusions contained therein, clear ?

“The Underwriters will indemnify the Insured against legal liability for damages in respect of accidental 1) Bodily Injury to any person 2) Damage to Property occurring during the Period of Insurance anywhere in the world and caused by or arising from any Product Supplied.”

Damage. Promet Engineering (Singapore) Pte Ltd v Sturge [1997] CLC 966 – “changed physical state”. “Damage – shall mean loss of or physical damage” or “material damage”. The damage cannot therefore be economic loss.

Pilkington v UK Ltd v CGU [2004] EWCA. Barcardi Martini Beverages Ltd v Thomas Hardy Packaging Ltd [2002] 2 Lloyds Rep 379. James Budgett Sugars v NU [2003] Lloyds Rep 110. Tioxide v CGU [2004] EWHC 2116.

General Product Safety Regulations (GPS) Product Recall Cover & Exclusions. The Need for Risk Assessment. Is the Insured required by the terms of the policy to mitigate whilst considering the available policy cover or without reference to it? Rexodan International (7/11/97) v CU

Design Exclusions. E.g. DE4: Defective part exclusion 'This Policy excludes the costs necessary to replace, repair or rectify any component part or individual item of the Property insured which is defective in design, plan, specification, materials or workmanship, but this Exclusion shall not apply to other parts or items of the Property insured unintentionally damaged as a consequence of such defect.'

Jurisdiction. Effects both, The evidence available to determine how a product was made and thus whether its quality is satisfactory. The jurisdictional issue in pursuing a recovery.

Disclosure of Insurance details maybe required in claims for personal injury via the CPR, see Harcourt v FEF Griffin (2007). With property cases however there is no such requirement – see West London Pipeline and Storage Ltd v Total UK Ltd & TAV Engineering Ltd (9th June 2008).

Firsteel Cold Rolled Products v Anaco Precision Pressings, Times, 21/11/94. Aerospace Publishing Ltd v Thames Water Utilities [2007] EWHC Quantum & What's Reasonable John F Hunt Demolition Ltd v Asme Engineering Ltd [2007] EWHC 1507 (TCC) Draft reports & CCFA’s

Tesco Stores Ltd v Constable & Others [2008] EWCA Civ 362. “physical damage” and also made reference to “all sums which the Insured shall be liable in law... obstruction, loss of amenities, trespass, nuisance or any like cause” – these were tortious liability. Does the policy require that the particular claimant has suffered physical damage to his property for the economic loss to be recovery or does it only require that physical damage has occurred. “ damages in respect of “

Summary. Elephants, and, Luck.  Describing what you are doing is almost impossible but you can see a solution. There is so much to take in and on top of that you need to deal with the personalities of the Insured, the claimants, and your Principals.