England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
(MR JUSTICE COULSON)

		Royal Courts of Justice Strand, London, WC2A 2LL
		1st February 2012

President of the Queen's Bench Division:

1. In 2000 the claimants moved their "oil pop" popcorn facility to premises in Pontefract which were to be part of a large confectionery manufacturing establishment in that city. They engaged the defendants to install a fire protection system. The terms on which they agreed to do so were in dispute. In 2008 there was a fire in the popcorn production line, which developed in such a way the claimant's confectionery factory was entirely burnt down. The claimants brought proceedings against the defendants for the loss. The claimants put the loss at £110 million, which the defendants disputed.
2. The trial of the action was heard by Coulson J in March and April 2011 with judgment given in July 2011. The judge held, in essence, that the design by the defendants of the system was negligent. The system should have suppressed the fire which developed in the hopper. It should have suppressed the flaming popcorn in the hopper both from the top and the bottom. That negligence was the cause of the fire. However, the fire was spread as a result of attempts by the claimant's employees first to open the bottom of the hopper and then to stamp out the burning popcorn on the factory floor in such a way that their actions spread the fire. He did not treat their actions as breaking the chain of causation. The judge found that there was very significant contributory negligence on the part of the claimants in a number of respects and assessed that contributory negligence at 75 per cent.
3. He also held that the defendants were not entitled to limit their liability in one of their standard terms as he found that did not form part of the contract.
4. Both the claimant and defendant sought leave for permission to appeal. The application was considered by Longmore LJ on the papers. Longmore LJ granted leave to appeal on the question of whether the defendant's breach of contract, in failing to comply with the relevant British Standard, had the consequence, as the breach did not depend on negligence, that it defeated the defence of contributory negligence.
5. He also gave permission to appeal on whether the judge should have found there was a breach of the terms of the specification. As to the defendant's appeal, Longmore LJ refused leave to appeal. He made a direction that the hearing of the renewed application should be limited in point of time as to the argument.
6. I turn to the renewed application that has been brought before us today. As to the application by the claimant, it is advanced on three separate grounds. I propose to grant permission to argue each of those grounds on appeal. It seems to me that, apart from one point upon which it is arguable they already had permission to appeal, these are all questions of law.
7. The first, under what is headed grounds 5 to 6, is a question of whether the judge was correct on his decision as to quality. I consider this question of law should be permitted. Secondly, as to grounds 10 to 11, the question of implied terms of satisfactory quality and fitness for purpose, this is a pure question of law. I propose to allow that to be argued. There is also a point, ground 12, arising out of Forsikringsaktieselskapet Vesta v Butcher [1989] AC 852. I think this point already arises out of the leave that has already been given but I in any event think I ought to be express and allow those points to be taken.
8. As regards all those points, that is all the points that are covered in the notice of appeal apart from ground 9, these are all points of law. There is no application before us in respect of those to question the judge's findings of fact or require the court to consider any further material outside the judgment and the contended documents. The issues are all to be decided upon the findings made by the judge. That has been accepted by counsel for the claimants, but I wish to make that abundantly clear.
9. The area of difficulty which arises, arises out of the ground of appeal specified in ground 9. I hope, without disrespect, I may say that that was obtuse. When the skeleton argument is considered in detail, it plainly envisages some limited exploration being made of some of the factual findings. I wish to be very clear that the explanation of those factual findings is to be confined strictly to what is set out in the skeleton argument. I shall give directions at the conclusion of our short judgments to ensure the court is not troubled with an undue investigation into the facts.
10. As to the position of the defendants, their case may be broken down, as traditionally a case of this kind is broken down, into three constituent elements. First, the finding of the judge as to the scope of the contract. It is, I think, important to note that the way in which the judge approached the matter was not one where he has precisely set out in one place what the terms of the contract are but, reading his judgment as a whole, it seems to me apparent that the judge did make sufficient findings as to what the terms of the contract were. It has been argued before us today by Mr Denny QC that the judge was wrong in his finding as to the scope of the contract. He relied upon findings made by the judge at Section D6 as to what was said by the claimants in relation to what they wanted. In effect they were asking for what they had on their production line in Leeds to be replicated in the new production line at Pontefract. Mr Denny has sought to say, on the basis of that evidence, that the judge should have found that the contractual obligation of the defendants was limited in respect of the design of the system by reason of what is said. In particular, he seeks to argue that by reference to the specification that, as a particular sensor had been specified and as the location of that sensor in the factory on the production line at Leeds was in a particular location, the scope of the duty of the defendants in designing was constrained by the selection of that particular sensor at that particular location.
11. This is an important point, because it bears strongly on the next part of the case namely that relating to breach. It seems to me that what Mr Denny is seeking to do is simply to reopen the facts in relation to what the contract is. This is not an argument about a point of law. It is purely an argument about a point of fact. Nothing that has been put forward in the argument to this court today which persuades me that there is any real prospect, given the ambit of judgment allowed to a judge in making findings of fact, that this court is likely, on the hearing of a full appeal, to come to any different conclusion from the judge. I consider on that point there is no real prospect of success and, speaking for myself, I would not grant leave to appeal in relation to the points relating to what I might describe as what is the contract.
12. The second way in which a case of this kind is traditionally analysed is to look then at the breach. The judge's findings in relation to breach are extremely clear. They are set out at paragraphs 537 and 538. In effect, the judge makes a finding the design of the system was negligent. Once it is seen what the nature of the breach was (and in particular the judge's findings in relation to the sensor) the decision to which I have already come that there should be no permission to appeal in relation to the scope of the contract, makes the task of showing that the judge was in error on breach more difficult.
13. But I would not base my view solely on that point. The point being run, as I understand it, is broadly as follows. It is self evident that when popcorn is heated in this production process, it becomes very hot and some smouldering pieces of popcorn reach the hopper on the production line. What, however, must be prevented is those odd smouldering pieces of popcorn developing to cause a fire. As I understand the case being advanced by the defendants, it is that there is no system that can detect a fire that has resulted from a few smouldering pieces of popcorn turning into a fire in the middle of the hopper, until that fire develops into a flaming fire on the surface of the hopper.
14. It seems to me, first of all, taking into account the experience I have of dealing with fires in other contexts, that that is a somewhat surprising proposition, but of course it would not be right to come to a view on that basis. Obviously in a case of this kind where that proposition was being put forward one would expect evidence to have been produced. It is contended by Mr Denny on behalf of the defendants that it was not for them to show that such a system was impossible, but it was for the claimants to show that such a system was possible. It appears to be the position that there is no evidence at all on this subject. In my view, given the immense amount of time this case took before the judge, and the view I have formed of the contract, it seems to me that it was not for the claimants to show that such a system was one that could have been designed. It was sufficient for the claimants to show that such a system was one that should have been designed to prevent such a fire and, if the contention was that it was impossible, then that was for the defendants to prove.
15. It seems to me that there is no realistic prospect of persuading a court that that argument should succeed. I would therefore refuse leave to appeal on the grounds relating to breach.
16. The third area into which a case of this kind is traditionally analysed is to look at whether the breach caused the loss. On this area the argument is advanced on the basis that, taking all the findings of fact of the judge, the judge was wrong on the causation and wrong, alternatively, that the chain of causation was broken. It seems to me on both of those points there is a real prospect of success and, as it involves no opening up of the findings of fact made by a judge, I would grant permission to appeal on that point.

Lord Justice Aikens:

17. I agree. I just want to add a few sentences about the particular aspects upon which we are granting permission to appeal to each side.
18. With regards to Trebor Bassett we have accepted that they are entitled to run the argument on causation, which concerns paragraphs 550 to 552 of the judgment. It was made plain by Mr Quiney on behalf of Trebor Bassett that the argument concerning those paragraphs raised three issues. First, was the judge wrong to rely on the case in this court of Schering Agrochemicals Ltd v Resibel NV SA & Anr, noted in (1993) 109 LQR 175. That is plainly only a question of law. Secondly, it is sought to challenge the judge's conclusions in relation to the knowledge that would be attributed to Trebor Bassett as a result of the June 2004 fire. It is accepted that that will necessitate looking at a small amount of transcripts and the witness statement of one witness called Mr Norton. There is a small clip of material relating to post-fire investigations and notes that Mr Quiney accepted would have to be looked at in that regard. The third question is one of argument only, namely the degree to which the knowledge which Trebor Bassett did have would enable the judge to come to the conclusion as he did at paragraph 552, viz. that the situation constituted, or would have constituted had he made various findings as to contractual terms, a breach in the chain of causation. That is trespassing into areas of fact. But Longmore LJ did, whether intentionally or not, accept that there could be a permission to appeal on that particular ground. I for my part am happy to accept that provided that it is limited in the way that Mr Quiney made plain in his submissions that it would be.
19. Turning now to ADT, I agree with my Lord that there cannot be any prospects of success in the Court of Appeal on issues of contractual terms and breach, for the reasons that my Lord has given. On the issue of causation it seems to me that there is only a realistic prospect of success on one single causation question. This is raised on the basis of the facts as found by the judge concerning the sequence of events when it was realised that the popcorn was on fire in the hopper. The issue is whether or not that means that the actions of the employees constituted the cause of the loss of the factory; alternatively did it constitute a break in the chain of causation, on the assumption that otherwise it was the breaches of contract of ADT that caused the fire. I, for my part, would not permit any further ground relating to causation to be advanced by ADT.
20. We have been told by Mr Denny that there is also a Respondent's Notice. That has not been the subject of debate before us today. As I understand it, this Notice does not and cannot attempt to challenge findings of fact by the judge; it simply attempts to build upon his findings to make submissions as to why various conclusions that he has reached are to be supported. On that basis those issues raised in the Respondent's Notice can, in my view, be addressed in the full hearing, although, like my Lord, I agree that we have to ensure that there are strict controls upon what materials and indeed what arguments can actually be put before the full court when it hears this appeal.

Order: Appeal allowed