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Cite as: [2004] EWHC 1284 (Comm)

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		Neutral Citation Number: [2004] EWHC 1284 (Comm)
		Case No: 2003/600

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

11/06/2004

B e f o r e :

THE HONOURABLE MR JUSTICE COOKE
____________________

Between:

	ANDREW WEIR SHIPPING LIMITED	Claimant
	- and -
	WARTSILA UK LIMITED & ANOR.	Defendants

____________________

Mr Bernard Eder QC and Mr Simon Bryan (instructed by Mills & Co, Solicitors, Newcastle upon Tyne) for the Claimant
Mr Richard King and Ms Angela Hall (instructed by Messrs Rawlinson Butler, Solicitors, Crawley, West Sussex) for the Defendants
Hearing dates: 25th and 26th May 2004
____________________

HTML VERSION OF JUDGMENT
____________________

Mr Justice Cooke :

Introduction

There are three applications for determination by the Court in this action where the claimants AWSL, who were bareboat chartered Owners of the ship "Baltic Eider" claim against the Second Defendants (WFI), a Finnish company which designed and manufactured the engines for the vessel and the First Defendants (WUK), an English registered company which supplies spare parts, service engineers and technical data to Owners of those engines in this country. The Baltic Eider had two Wartsila 46 engines installed when the vessel was built by Hyundai in 1989 and which were subject to a three-year guarantee for which WFI was responsible. In 1993 WFI updated the engines to the latest specification and various field tests were carried out by WFI on those engines by specific agreement with AWSL, as part of a voluntary research and development programme.

On 5^th August 2001, a serious fire occurred in the Port engine. It is AWSL's case that this originated at unit 4 of the Port engine and resulted from the loosening of an erosion plug on the fuel injection pump of that unit which occurred because a copper (as opposed to a steel) washer was used under the head of the erosion plug, because the manual supplied for use with the engine specified a torque setting that was insufficient and because no locking device was provided for use with the erosion plug. AWSL contends that WFI and WUK were or should have been well aware of this, because of previous experience on a similar engine, the Wartsila 32, where they had issued advice or warnings to customers. No such advice or warnings were given to Wartsila 46 Owners. The sum claimed is in excess of $5M.

The claim form was issued and served in June 2003 upon WUK and upon WFI in Finland. Particulars of claim have also been served, a draft amended version of the Particulars of Claim has been produced and WUK have provided a draft Defence. The first application is WFI's challenge to the jurisdiction of the Court to hear the claim against it on the basis that it is domiciled in Finland and is therefore entitled to insist on being sued there under Article 2 of Council Regulation 44/2001. WFI maintains that, because there is no real issue that AWSL may reasonably ask the Court to try on its claims against WUK, there is no basis for bringing WFI into the jurisdiction under Article 6(1). WFI also maintains that there is no other basis, whether under Article 5 or otherwise whereby it can be brought into the jurisdiction. The second application is that of WUK which has applied for reverse Summary Judgment under Part 24 on the basis that AWSL has no realistic prospect of success in pursuing it. The third application is an application by AWSL for permission to amend its Particulars of Claim which is opposed on the basis that the new pleas also have no realistic prospect of success.

In practice therefore, the main issue between the parties is whether or not the claim, whether as originally formulated or as subsequently formulated has any realistic prospect of success against WUK, although other issues arise in relation to WFI's jurisdictional challenge should it succeed on this point.

The Undisputed Facts

The following undisputed facts are relied on by AWSL:-

i) AWSL has an existing and long-standing relationship with WUK as a distributor and supplier of spare parts for a variety of engines (including but not limited to Wartsila 46's). WUK has also supplied engineers, who have provided services and participated in work on engines fitted to AWSL vessels.

ii) The local Wartsila companies (here WUK) support the operations of the Wartsila Group in their respective countries, and WUK is the local company in the UK.

iii) WUK is responsible for servicing Wartsila engines sold by the relevant factory to WUK's customers including AWSL, on request, as evidenced by the WFI document entitled "WFI Responsibility List/Engines and Installations".

iv) Generally WUK's business concerns the supply of spare parts to WUK's customers and the provision of servicing to such customers including AWSL, on request. In carrying out the latter function, WUK's service engineers will endeavour to use their skill, experience and training.

v) In terms of after sales service, the system has been for engines sold to be part of the responsibility of the local network company and WUK has aimed to liaise directly with UK customers for the servicing of the engines and the supply of spare parts, in particular since 1998.

vi) Each local service network company (here WUK) has specially appointed fully dedicated contact people to handle technical inquiries.

vii) In 1997 WUK started a "Key Account Manager" system where each customer was assigned to a manager within WUK. The Key Account Manager requested that all orders be placed through WUK. In practice AWSL had always ordered 95% of its spares requirements through WUK.

viii) WUK knew which of its customers had Wartsila 46 engines including AWSL.

ix) The local network service company (here WUK) sent any bulletins or service letters prepared by a Wartsila factory to its (WUK's) customers and all technical bulletins and service letters were also copied to WUK's service department for the attention of the WUK Service Superintendent and WUK's service engineers. Furthermore WUK issued directly technical information that was within the guidelines of the product factories. (WUK maintain that all design issues are matters for WFI alone).

x) Such bulletins and service letters commonly contained statements such as "for more details and for supply of packages please contact your local Wartsila Service Station" (ie in the present case WUK).

xi) The Operation & Maintenance Support section of the Wartsila 46 engine spare parts catalogue includes guidance notes on the "Structure and usage of the Spare Part Catalogue", it being stated, "About prospective modifications and changes in the specifications the customer will get the information through Spare part notices, Service letters and After Sales Information if needed".

xii) Between the beginning of 1998 and 5th August 2001, 14 technical documents were provided by WUK to AWSL consisting of 1 maintenance instruction, 6 service letters, 3 technical bulletins, 1 data and specification document, 1 operating instruction document and 2 spare parts notices. (These documents were, according to WUK all documents into which they had no input and which were produced entirely by WFI).

xiii) WDSL received, and would have sent to all applicable Wartsila 32 customers based in the UK, the Technical Bulletin dated 1st August 1995 (The 1995 Warning Bulletin) entitled, "Safety aspects on and maintenance of fuel supply system of VASA 32" (the Wartsila 32 Engine). WUK admits that from January 1997 it must be taken as having known matters set out in the 1995 Warning Bulletin, and specifically admits that it must be taken to have known that:

a) serious fuel leakage had occurred in the low pressure fuel supply system of Wartsila 32 engines and that a few such leakages had led to a fire;

b) experience of use of a copper washer with the erosion plugs on the fuel injection pumps used on Wartsila 32 engines indicated that it was preferable to use a steel washer;

c) the recommended tightening torque of erosion plugs was increased to 250 NM for L'Orange fuel injection pumps used on the Wartsila 32 engines.

(The existence of any link between a. b. and c. however is very much in issue).

xiv) WUK did not send the 1995 Warning Bulletin to AWSL.

xv) WUK received, and would have sent to all applicable Wartsila 32 customers based in the UK, the Technical Bulletin dated 17th August 1999 entitled, "Safety and Maintenance of the Fuel Supply System of Wartsila 32 Engines" (the 1999 Warning Bulletin) which contained similar information to the 1995 Warning Bulletin.

xvi) WUK did not send the 1999 Warning Bulletin to AWSL or otherwise warn AWSL, notwithstanding that a fuel pump fire occurred on a Wartsila 46 engine at a power plant in India in May 2001.

xvii) The increased torque setting of 350 NM for Wartsila 46 fuel pump erosion plugs (from 200 NM) was introduced in or before October 1995. Neither AWSL nor any Wartsila 46 engine owner was told of this increase in torque (or that a steel washer would need to be used). (WUK's case is that it did not know of this increase until after the fire on the Baltic Eider).

xviii) WUK is the distributor of OEM (original manufacture) spare parts to the customers for whom it is responsible including AWSL.

xix) WUK have supplied spare parts to AWSL, passed on technical documentation to AWSL and participated in servicing jobs for AWSL on the Baltic Eider from time to time.

xx) AWSL used WUK service engineers to attend the fire repairs as it had done at the time of the 1999 dry docking after AWSL complained as to the limited knowledge of the local Wartsila service engineer.

xxi) The value of parts purchased by AWSL from WUK is substantial. On orders between 1st January 1997 and 25th June 2002, AWSL paid WUK the sum of £1,396,442.96 for spare parts.

xxii) Part of the role of the local network company is to arrange for the supply of spare parts kits for attending service engineers.

xxiii) WUK had supplied the spare parts kits for the fuel pumps as follows:

Date of Purchase Number of Sets Wartsila UK Office

(1) 24th February 1998 6 Glasgow

(2) 19th March 1999 6 Southampton

(3) 15th July 1999 6 Sevenoaks

(4) 15th December 1999 4 Glasgow

(5) 13th September 2000 4 Glasgow

xxiv) The Wartsila "Safety Spare Parts for Wartsila 46 Engines" letter dated February 2000 (I2/701), identified that two of the kits be carried on board, and that, "This list of spare parts is intended to assist the operators in defining the parts necessary for operations at high reliability. It is advisable to keep the set complete, i.e. always when parts are consumed new ones should be ordered".

xxv) The spare parts kits were described as follows "sealing set for pump overhaul".

xxvi) The spare parts kits were not supplied with any instructions as to their use.

xxvii) The spare parts kits did not include an erosion plug nor a washer.

xxviii) At the time that WUK supplied the spare parts kits, WUK knew of the 1995 Warning Bulletin and the 1999 Warning Bulletin, but neither provided the Bulletins to AWSL nor provided any warning to AWSL, nor told AWSL that:-

a) only steel washers (which were not part of the kit), should be used and that copper washers should not be used or reused;

b) that the recommended torque of erosion plugs had been increased from 200 Nm to 350 Nm on Wartsila 46 engines (having increased to 250 Nm on Wartsila 32 engines)

c) that Wartsila was recommending that erosion plugs be secured on L'Orange pumps on Wartsila 32 engines.

The following facts are relied on by WUK (and WFI):-

i) WUK did not design or supply to Hyundai the original engines of the Baltic Eider or their fuel pumps.

ii) WUK did not write, or have any responsibility for or input towards, the Operations and Maintenance Manual, the Spare Part Book or any updates.

iii) WUK did not write, or have any responsibility for or input towards technical documents except to distribute them under the WFI imprint.

iv) WUK had staff engineers who sent service reports to WFI in case of need but WUK had no responsibility for what use WFI made of them. [It is however accepted by WUK that they also sent direct reports to AWSL].

v) WUK was hardly ever responsible for engineers attending on the Baltic Eider, without representatives from WFI also being present. They attended on their own only twice in the 13 years before the fire. (WUK arranged the provision of engineers in September 1998 and August 1999 for work on camshaft and main bearings respectively, but it is accepted that WUK engineers attended with and under the supervision of WFI engineers on other occasions).

vi) WUK did not provide any engineering services to AWSL for the Baltic Eider in relation to fuel pumps.

vii) WUK did not supply any parts or services to the Baltic Eider in Finland. That was effected by WFI.

viii) WUK was not responsible for the R&D tests that took place between 1989 and 1998, which were arranged by WFI.

ix) WUK did supply, but did not design or test, engine parts in the UK.

x) AWSL obtained parts and services for the Baltic Eider from third parties other than WFI and WUK.

xi) WUK did not supply spare parts to AWSL in the years 1993 – 1996 when this was effected by another UK Company, connected to the Wartsila Group.

AWSL's claim

In its draft Re-Amended Particulars of Claim, AWSL makes a series of allegations against WFI and WUK without, in many instances, drawing any distinction between the two. WUK makes much of this, pointing out that it was not the designer or manufacturer of the engines and that it did not itself produce the technical information which was circulated to engine Owners. It denies any special relationship of any kind beyond the usual arms length relationship of a spare parts supplier and supplier of service engineers, contending that there is no basis for the tortious duties alleged by AWSL. Furthermore it maintains there is no basis for any alleged breach of contractual duty. On the basis of the undisputed facts and the current state of the law which, it says, is well settled, there is no case to be made against it and the only reason for its presence in this action is to enable AWSL to seek to bring WFI within the jurisdiction on the basis of Article 6 of the Convention. The case against it must be scrutinised carefully, in particular because of the jurisdictional implications for WFI, whereupon it will be seen, according to WUK, that there is no seriously arguable case against it.

In paragraph 11 of its proposed Statement of Case, AWSL alleges a special relationship between itself and both WUK and WFI. A series of factors are relied on in this context, including the nature of relationships between ship owners and their engine builders who continue to monitor the progress of those engines and provide for the Owners. Reliance is placed upon the provision of spare parts, the cooperation in research and development, the reliance of AWSL upon WUK and WFI for technical assistance in the shape of technical bulletins and updating information. It is pleaded that numerous contracts were entered into with WUK and WFI for the sale and supply of spare parts for the engines and their associated fuel injection pumps and for the supply of services by the personal attendance of Wartsila service engineers to the vessel for servicing and/or maintenance and/or repair of the Wartsila 46 engines and associated parts, including the fuel injection pumps. In paragraphs 12 – 14 AWSL alleges that its reliance was reasonably foreseeable in relation to information, recommended alterations to the engine or associated parts and warnings of any matters which might affect the safe operation of these items or might present a hazard to property or life. It is alleged that WUK and WFI assumed direct responsibility to AWSL to give such advice, information and warning as a result of their relationship and that this was fair, just and reasonable. The duties alleged are threefold:

i) To take reasonable care in the design and/or manufacture and/or sale and/or supply of safe and suitable parts for the Wartsila 46 engines and fuel injection pumps, including the washers for the erosion plugs and spare part kits for fuel injection pump overhaul, together with the provision of appropriate associated instructions.

ii) To provide proper advice and instructions as to the operation of these items and to take reasonable care in relation to the provision of such advice and instructions.

iii) To warn AWSL of any dangers to property or life presented by the items when operated, maintained or serviced in accordance with the recommendations with supply parts or spare parts kits provided by WFI and/or WUK.

In support of these allegations AWSL also alleges that WFI and WUK knew by 1995 at the latest that the use of copper washers on erosion plugs on Wartsila 32 engines was inappropriate and hazardous, that the torque setting recommended was insufficient, that the position which obtained on Wartsila 32 engines applied equally to Wartsila 46 engines and that the spare parts kits for fuel injection pumps on Wartsila 46 engines did not contain all the parts necessary for their servicing and overhaul because they did not contain steel washers and were therefore inappropriate and hazardous in themselves. Reliance was placed upon the 1995 Warning Bulletin and the 1999 Warning Bulletin already referred to earlier in this Judgment. It is said that the changes recommended to Owners of the Wartsila 32 fuel injection pumps should also have been recommended to Owners of the Wartsila 46 engines and that had this occurred the casualty in 2001 would not have happened. AWSL points to the change from copper to steel washers made by WFI in September 1990 and by L'Orange the pump manufacturers in 1992 for the Wartsila 46 engine but the absence of any information given to the engine Owners of this.

In addition to the tortious pleas in paragraph 14 of the proposed Statement of Case, paragraph 19 sets out a separate tortious duty to take reasonable steps to warn about the matters referred to.

Put shortly, WUK's case is that there was never any supply of copper washers by WFI, let alone by WUK, and that none of the parts ever supplied were hazardous in themselves. The crux of AWSL's case, in its allegation of breach of tortious duty, as well as the breaches of contract to which reference is made later, lies in the alleged duty to advise, instruct or warn about the use of copper washers, appropriate torque and securing mechanisms. These it was said simply cannot arise for a non-manufacturer in the absence of a special relationship.

So far as the contractual claims are concerned, these appear to rest on three different types of contract. The first type is the Supply Contract which is referred to in paragraph 20 of AWSL's projected Statement of Case in which it is alleged that both WUK and WFI supplied copper washers for use in the fuel injection pumps. WUK and WFI maintain that this is unsustainable because no such copper washers were ever supplied. The second type of contract referred to is in paragraph 20A where reference is made to the Servicing Contract - a contract of sale and/or contract for services between AWSL and WUK and/or WFI under which service engineers employed by WUK and/or WFI supplied the copper washer, alternatively utilised and installed it, alternatively reused it, alternatively left it on board for future utilisation in the course of work undertaken on board by them as part of the Servicing Contract. Once again WUK and WFI say that there was no supply of any copper washer by them and that it is entirely speculative to suggest that there had been some reuse by their service engineers of a copper washer which was provided by Hyundai with the original fuel pumps, which at that time did have copper washers. WFI had supplied Hyundai with fuel pumps and the vessel had left Hyundai's yard with 15 fitted and 7 spare fuel pumps where the washers were copper, which are not always changed when the erosion plug is changed but may be annealed and reused. WUK and WFI suggest that the evidence shows that there was total replacement of the fuel pumps at various stages by WFI with steel washers and that it cannot be established that they bear any responsibility for the copper washer finding its way on to the erosion plug of the number 4 port engine where the fire occurred.

The third type of contract referred to is set out in paragraph 22A of AWSL's projected Statement of Case and is referred to as the Overhaul Spare Parts Contract. 6 of these are alleged between 17^th February 1998 and 12^th September 2000 under which WUK agreed to sell and supply to AWSL spare parts kits for pump overhaul which supposedly contained the parts necessary for proper servicing and overhaul of the fuel injection pumps but which failed to include erosion plugs or steel washers. This was to be contrasted with the spare parts kits for Wartsila 32 L'Orange and Wartsila 20 Bosch fuel injection pumps which did include such items. Once again WUK and WFI maintain that there was nothing wrong with the spare parts kits which were supplied and that this case cannot get off the ground.

In the context of the Supply Contracts, the Servicing Contracts and the Overhaul Spare Parts Contracts, AWSL allege implied term – that the supplies were of satisfactory quality, fit for purpose, safe, reasonably fit for the particular purpose for which it was known they were required and that the supplier would in each case exercise reasonable skill and care in and about any associated services relating to supply, including but not limited to the supply of information and/or advice and/or instructions in relation to the use and operation of the parts or kit supplied. Furthermore it was alleged that it was an implied terms of the Overhaul Spare Parts Contracts that each kit contained everything necessary for the proper servicing and overhaul of the fuel injection pumps and that all necessary and appropriate instructions for the use of the kit had been provided.

Quite apart from these implied terms, AWSL allege that the fourth and fifth Overhaul Spare Parts Contracts were governed by their own standard conditions of purchase.

It can be seen from the draft pleading that the focus of the claim as originally put was on the tortious claims and that the Servicing Contract claim and the Overhaul Spare Parts Contract claim are new additions. Both the tortious duties alleged and the implied contractual duties however centre on the alleged failure to give appropriate advice, instructions or warning relating to the use of copper washers and appropriate torque.

The breaches alleged then consist of failure to give warnings and failure to give instructions and advice and failure to take reasonable care to provide such warnings, instructions or advice (see paragraphs 23, 26, 27, 28 and 28A) as well as failure to provide washers and spare parts kits that were of satisfactory quality, safe and fit for purpose.

The test under Part 24

CPR Part 24.2 provides that the Court may give Summary Judgment against a claimant on the whole of a claim or on a particular issue if it considers that the claimant has no realistic prospect of succeeding on the claim or issue and there is no other compelling reason why the case or issue should be disposed of at trial. I was referred to Swain v Hillman [2001] 1 AER 91, Three Rivers DC v Bank of England [2001] 2 AER 513 and to ED & F Man Liquid Products Limited v Patel [2003] EWCA Civ 472. A real prospect of succeeding on a claim must carry some degree of conviction and represent more than a fanciful prospect. The Court is not to conduct a mini trial but does not have to accept without analysis everything said by a party in his statements to the Court. If there is no real substance in factual assertions made or there is no room in law for the claim to succeed on the basis of the facts alleged, the Court should take the step of disposing of the matter on a summary basis so as to save the cost and delay of trying an issue the outcome of which is inevitable.

Where there are complex factual issues to be resolved, it is likely that a case cannot be appropriately disposed of under part 24. Where there are significant disputes of fact between the parties which go to the existence and scope of an alleged duty of care, the summary disposal of an action is again inappropriate. Moreover if there is an area of law which is uncertain and developing such as the extension of a situation in which a duty of care may be found, as compared with existing authorities, it is once again inappropriate for the Court to make decisions on the basis of a set of facts which has not been fully determined, even if the parties are prepared to agree some undisputed facts or to proceed on the basis of certain assumptions of facts.

The Supply Contract – the copper washer

It is common ground between the parties for the purpose of the Part 24 application that a copper washer was in place at the time of the fire on one of the no 4 P fuel pump erosion plugs. The Particulars of Claim, supported by a Statement of Truth, plead that the claimant has only ever used genuine Wartsila parts on the engine and fuel injection pumps, all being supplied by or purchased from Wartsila Group companies, including WUK and WFI. The Schedule compiled by the parties shows six agreed occasions where the parties' records show the supply of washers between 1991 and 2001, six occasions when AWSL alleges there must have been additional washer changes and three other occasions when AWSL suggest that such changes may have taken place. There is dispute about all of these additional occasions save for two such events, in July 1995 and February 1996 where WFI and WUK accept that all the washers and pump elements must have been changed. The occasions where WUK were involved are however limited, being 13^th October 1993, 5^th March 1996 and 7^th March 2001 where, in each case, WUK supplied washers for the chief engineer of the vessel and was not involved in their installation. Only the last of those occasions would give rise to a claim which was not time barred in contract, as a matter of English law, but the documents clearly show that this delivery involved the supply of steel washers.

The evidence from WFI and WUK is that every erosion plug washer sold or supplied, if any were provided free of charge by WFI and WUK, was made of steel and that neither WFI or WUK has ever held a stock of copper washers as spare parts from 1990 onwards. WFI and WUK say that the Schedule is comprehensive and that the disclosure given by the parties is complete or as full as it will ever be. Thus the Court can be confident that there never was any supply of copper washers by WFI or WUK and there is no realistic prospect that AWSL could succeed on this allegation at trial.

In answer to this, AWSL suggest that the evidential picture is less than satisfactory and that pending disclosure, assertions made on behalf of WFI and WUK cannot be taken at face value. What was originally put forward as a complete record has been amended as a result of further investigation (now constituting the Schedule to which I have referred) and there are disputed matters as between Mr Jewson and Mr Brunila in relation to the occasions when washers would have been changed. In Mr Brunila's second statement at paragraph 17 he states that it is not necessary to change washers on each of the occasions when erosion plugs are changed because existing fitted washers could be cleaned and checked for cavitation and distortion and reused, following annealing if required. Equally, he would expect that on each occasion when erosion plugs were to be checked, new washers would be taken on board and those would be used whilst any old washers, if in good condition, might be retained and put in the ship stores for future use (absent any warning that they were not to be so used).

Whilst it is therefore possible that copper washers which were originally on the vessel may have been reused or put to one side in the stores for future use and subsequently utilised, on the material before the Court it is hard to see how AWSL can have any realistic prospect of succeeding in establishing the plea in paragraph 20 of its Statement of Case where it alleges that it agreed to buy and WUK and/or WFI agreed to sell and supply and did sell and supply copper washers for use in the vessel's fuel injection pumps, including the washer which was actually used on pump 4P on the vessel.

AWSL concedes that the allegation is speculative in that it cannot point to any supply of copper washers to it by WUK (or indeed by WFI). Nonetheless, Mr Bernard Eder QC for AWSL contends that the Court should not accept the evidence of WUK and WFI at face value.

AWSL argues that it has indirect evidence of the use of copper washers on a vessel with a Wartsila 46 engine which was built either in 1994 or 2001, which means that copper washers were still being supplied by WFI after 1990 or by L'Orange (the pump manufacturers) after 1992, contrary to the evidence given by WFI and WUK. There is evidence in the form of a statement from AWSL's expert, without clear identification of the ship in question, which refers to the Chief Engineer of that vessel saying that copper washers were in use with erosion plugs on that vessel in 2000-2001. There is also evidence of a letter from WFI to L'Orange in April 1993 complaining of the continued use of copper washers on a pump which appears to be a smaller version of the usual pump used on the Wartsila 32 engine. This evidence and the evidence of the expert of finding copper washers in store on the Lagan Viking in 2003 (of different dimensions to those specified for the erosion plugs) does not assist AWSL in showing that any copper washers were supplied to the Baltic Eider by the Wartsila companies at any time, let alone at a time when no limitation problems arise.

There are, in my judgment therefore no realistic prospects of success for AWSL in this claim against either WUK or WFI and, given the fullness of disclosure given I can see no reason why this claim should go to trial.

The Servicing Contract

The position under paragraph 20A of the projected Statement of Case is different for WUK and WFI. This plea is a new plea introduced in January 2004 for which permission is sought. There are a limited number of possibilities which would account for the presence of the washer on the erosion plug in question. Since AWSL only purchased Wartsila parts, if WFI and WUK did not sell AWSL a copper washer, it could only have been installed out of the original stock on board the vessel on delivery by Hyundai, taken from stores or reused when work was being done by either WFI service engineers or the ship's own crew.

The plea however is of a contract with WFI or WUK for the supply of services, but no particulars are given of the contract. Objection is taken on the basis of the form of the plea and the inadequate particulars of the Servicing Contracts but the Schedule to which I have made reference shows that WFI carried out a number of operations on the fuel pumps at various stages and that, in particular, in January 1998 there is the possibility of work done by WFI on both engines which could account for the presence of the critical washer, without any question of time bar arising. Moreover, questions of foreign limitation periods could conceivably be relevant in relation to contracts with WFI where Finnish limitation periods of 10 years may apply.

There is however simply no evidence of any contract with WUK for servicing involving the fuel pumps. That is sufficient to conclude this issue, in my judgment. Moreover, although AWSL rely on Mr Brunila's statement that WUK engineers sometimes accompanied WFI engineers on the vessel in the context of the R &D work, which did concern four projects relating to fuel pump elements which may well have involved removal of the erosion plugs and the washers, reports of these visits were sent to AWSL, which named the engineers present. None have been produced which show the presence of WUK engineers on board the vessel for the purpose of work on the fuel pumps and although it might well be expected that the vessel's log books would record the names of visiting engineers, AWSL have not adduced any such evidence to support their case that WUK personnel, as opposed to WFI personnel, worked on the pumps. The evidence currently shows that WUK never supplied service engineers who did any work on the fuel pumps at all so that it cannot be said that WUK could have supplied the washer, utilised it, installed it, reused it or left it on board for future utilisation in the course of work undertaken on board the vessel, whether under a WFI contract or a WUK contract with AWSL.

If best particulars are given of the contracts with WFI by reference to the servicing visits by WFI personnel in accordance with the Schedule, as AWSL have undertaken to do, the pleading deficiency will be met as against WFI, whilst the evidence makes out a good arguable case under this paragraph in relation to WFI and its service engineers.

There is thus an inferential case to be made against WFI and its service engineers under the Servicing Contract but I cannot see that AWSL has a real prospect of succeeding in showing that WUK could be liable under any such contract for the reasons given. Once again, although there is some disclosure to come, I can see no reason why this claim should go to trial.

As it happens, because of the other issues between the parties, there will be full disclosure of all matters relating to the servicing by WFI engineers and WUK engineers in any event, should these proceedings continue, so that, if material should subsequently emerge to support the case currently made against WUK in this respect, it could then properly be pleaded. The Court would be astute to make a special Order of discovery should any dispute arise in this respect, given the history of the matter, if there remains a case against these parties under the other heads of claim.

Together with the pleas in paragraphs 20 and 20A, the pleas in paragraph 22 of the Particulars of Claim also all fall as against WUK, including the plea that it would exercise reasonable skill and care in relation to information, advice and instructions to be supplied as to the use and operation of the washers since this attaches to a contract for sale and/or services where the critical washer was allegedly supplied or handled by WUK. The same point however rears its head in relation to the Overhaul Spare Parts Contracts, to which I now turn.

The Overhaul Spare Parts Contract

This is a new plea which AWSL wishes to bring in by way of amendment. Each of the contracts alleged falls within the six year period preceding the issuing of the claim form in this action so that no question of limitation arises. This plea is made against WUK alone and it is common ground that WUK made such contracts and delivered the spare parts kits referred to.

There was an Operations and Maintenance Manual on board the ship which informed the engineers that they should change the erosion plugs when overhauling the pump at 16,000 hours. There was also a spare parts manual on board. The kits were listed in the spare parts manual as part number 165178 ("spare parts for pump overhaul") comprising nine listed items with their descriptions. Those nine items did not include the erosion plug or its washer. The same manual did however at the immediately previous page, identify the washer and erosion plug by their separate part numbers so that, WUK contends, any engineer on board who read the two manuals together would see, when overhauling a fuel pump that he had to change the erosion plug after 16,000 hours of operation, that the spare parts kit did not include that and this part had to be separately ordered. When using the spare parts manual to identify the erosion plug to be ordered, he would see the adjacent sealing ring with its part number and he could then order one.

Even if this is so, I do not see however how this makes AWSL's allegations unarguable or shows that AWSL has no realistic prospect of success on this plea. The plea is that it was an implied term, arising in part from its description, that the spare parts kit contained all the parts necessary for proper servicing and overhaul of the fuel injection pumps on the vessel and that all necessary and appropriate instructions for the use of the kit had been provided. The Operations Manual and the Spare parts book described these items as "Sealing set for pumps overhaul" or as "Sealing set for injection pump", even if the terms of the orders described them differently. Regardless of the inability of the packages themselves to achieve what they may have described themselves as achieving, if, in or with these packages, there was a failure to give proper instructions and to refer to the need to use steel washers or increase the torque as part of the necessary overhaul, then, unless the implied term is one which cannot be sustained in law or fact, there is a case for breach upon which AWSL does have a realistic prospect of success. I did not understand there to be an outright attack on the implication of this term and in my judgment, any challenge would not be susceptible of determination on a summary basis as extrinsic evidence would have to be investigated to ascertain the perceived function and use of these kits.

WUK says that it has no responsibility for the contents of the manuals and the instructions given but the fact remains that it supplied the spare parts kits so that, if an inadequacy of instructions with those kits gives rise to a breach of contract, it would be liable in respect of it.

WUK rightly say that there can be no complaint about the actual contents of the kits themselves since it is not suggested that any of the parts therein were defective per se. It is suggested that, given the qualification of the ships' engineers and the contents of the manuals, an alleged breach of the implied terms alone is unarguable or insufficiently arguable to satisfy the Part 24 test. Whilst it was accepted that it would be a breach of section 14 of the Sale of Goods Act to supply an item which was hazardous in itself or could be hazardous when combined with another item, without giving adequate instructions in relation to the danger – (see Vacwell v BDH Chemicals [1971] 1 QB 88) it was said that no authority had gone so far as to suggest that where the goods supplied were sound in themselves, the absence of instructions with regards to the use of other goods could make the item supplied unsafe and amount to a breach of the contract terms implied by the Statute. In reality, AWSL's complaint was the inadequacy of manuals and instructions issued by WFI and it was argued that it would be wrong to characterise that complaint as involving unsafety in the supply of goods which were not dangerous in themselves without an appropriate warning. The position was, it was said, that AWSL were trying to get round the difficulty of establishing a duty of care on WUK, when the real complaint was against WFI who had failed to issue a bulletin giving a warning for Wartsila 46 engines in the same manner as it had for Wartsila 32 engines.

AWSL referred to a number of authorities where the absence of warnings as to the use of the product supplied constituted a breach of the Sale of Goods Act but none where the use of the item itself would not give rise to danger per se, but where the danger arose from the failure to warn of the inadequacy of other elements which were required for use with the items supplied. It was said that the statements of principle in those authorities were wide enough to cover the alleged position here, where the spare parts kit was put forward as a comprehensive package of what was required, when further items were needed, including a steel washer. Reference was made to Benjamin – The Sale of Goods Act 6^th Edition at paragraph 11-051 which includes the following:-

"…. It had been said before the reforms of 1994 (though in a speech dissenting on the general point in connection with which the words were uttered) that a potentially dangerous article might be unmerchantable if not accompanied by appropriate instructions as to use. This seems correct, and indeed there can presumably be goods, not dangerous, which are unusable, or not efficiently usable, without adequate instructions, and so not up to the present requirement of satisfactory quality, unless such instructions are supplied or available. The specific reference to safety in the new formulation makes this clear. ……."

This issue falls into exactly that area of developing law which the Court should not decide on a Part 24 basis. AWSL's allegation is that the spare parts kits were inadequate because they were described as "spare parts for pump overhaul" but were not sufficient for such an overhaul since they failed to include erosion plugs and steel washers. This meant that the spare parts kit could be used in conjunction with erosion plugs and with copper washers remaining on board from the original supply by Hyundai, without any warning being given in this respect. Whilst there may be no authority on all fours with this situation, in my judgment it cannot be said that AWSL have no real prospect of success in arguing this point and in contending that there is a breach of contract in supplying the kits, as so described, in as much as they are said to be of unsatisfactory quality, not fit for the purposes supplied and unsafe, by reason of the inadequate instructions given. Moreover, an implied term is alleged that WUK would exercise reasonable skill and care relating to the supply of such kits including the giving of advice or instructions about its use and that there was an implied term that the kit contained all the parts necessary for proper servicing and overhaul with such necessary instructions. These points are not capable of being struck out at this stage as having no realistic prospect of success and the claim on this basis must therefore be allowed to go forward with permission to amend being granted.

I should add that WUK contends that the contracts are governed by its own standard terms and conditions which have exclusions of liability. There is an issue between the parties as to the governing terms for the last two such contracts and an issue about the applicability of the Unfair Contract Terms Act. WUK rightly conceded that the latter issue was not one which was susceptible of determination on a Part 24 basis involving, as it does, an investigation into the reasonableness of the terms in the light of the various factors set out in the statute. Moreover, in my judgment there is also an issue as to the governing terms for the last two contracts for supplies of the spare parts kits.

The claim in tort

In my judgment, much the same point arises on the claim in tort as arises in relation to the implied terms alleged in the Overhaul Spare Parts Contracts. Whilst Mr King, for WUK and WIF, contends that sufficient disclosure has been given for all the relevant facts to be known so that there could be no change in the essential position at trial and that on these facts there is no authority which supports AWSL's case of liability against WUK, there can be no doubt that the issues of law are not straightforward, that the cases show movement on an incremental basis and that there is room for further development. Moreover, notwithstanding all that WUK says, the existence of a duty depends on a fact sensitive inquiry as to the nature of the relationship between AWSL and WUK which cannot be determined on the basis of the "undisputed facts" which I have set out earlier in this Judgment.

WUK contends that, as matter of law, there can be no duty to advise, instruct or inform in the absence of a special relationship or special assumption of responsibility. The law is reluctant to impose a positive duty to speak or warn and a liability for an omission to do so. I was referred to the decision of the House of Lords in Stovin v Wise [1996] AC 923 and the speech of Lord Hoffman at pages 943E to 944H in this respect. It is one thing for the law to say that a person who undertakes some activity shall take reasonable care not to cause damage to others but it is another thing for the law to require that a person who is doing nothing in particular shall take steps to prevent another from suffering harm from the acts of third parties but there may be a duty where a person has undertaken to do so or induced a person to rely upon one doing so. Thus in WUK's submissions it is necessary for a special relationship to exist for a liability to devolve upon WUK by the assumption by it of responsibility to instruct, advise or warn and by the reliance of AWSL upon that. Reference was made to The Rebecca Elaine, [1999] 2 Lloyd's Report 1, a decision of the Court of Appeal and in particular the Judgment of Lord Justice Tuckey at paragraphs 18 – 26. That decision involved a claim against a manufacturer of engines in a fishing boat for economic loss when the pistons failed, not one for physical damage as in the present case (with added economic loss). Nonetheless it was said that the positive duty of the kind alleged required a similar situation to that described by Tuckey LJ at paragraph 26 in relation to a manufacturer who would be under a duty of care to avoid economic loss "if he assumes responsibility to his customers in a situation which is akin to contract".

In reliance upon Clerk & Lindsell Law of Tort, at paragraphs 9–11 and 9-12, it was said that AWSL could not establish a duty of care on a non-manufacturer to warn, even though it was accepted there was physical damage and not just economic loss. Moreover, it was said that there was no evidence of any reliance on WUK as opposed to WFI and that it would not be fair, just and reasonable to impose liability on WUK since it was not the manufacturer or designer and the remedy existed against WFI in any event.

When regard is had to the dealings between the parties, it was said that there was no evidence to show a special relationship of proximity between AWSL and WUK inasmuch as:-

i) WUK became part of the Wartsila Group in 1990 but sold parts only between 1990 and 1992 and from 1997 onwards whilst in the period 1993 to 1996 those parts were sold by a different company which was 25% owned by third parties outside the Wartsila Group.

ii) WUK did not design, build or sell the engines fitted in the ship.

iii) The evidence shows that the large majority of attendances on the ship were by WFI.

iv) On occasions WUK service engineers attended the ship but usually under WFI supervision.

v) AWSL undoubtedly relied upon WUK to pass on to it any technical bulletins or other literature promulgated by WFI relating to the ship's engines which WFI told WUK to pass on but it was not credible to suggest that AWSL relied upon the skill and knowledge of anyone except WFI in relation to the contents of those documents.

vi) WUK made only two visits on its own to the ship without WFI's presence in the 13 years before the fire occurred and never effected any work in relation to the fuel pumps.

vii) WUK took no part in the R&D tests after 1989.

viii) WUK service engineers never worked on the fuel pumps of a Wartsila 46 engine belonging to anyone except for taking two fuel pumps off a land-based power station in March 1999 which were then forwarded to WFI for examination.

ix) In May 2001 there was a fire in a landbased Wartsila 46 engine installed in an Indian power station due to an erosion plug not being properly tightened but WUK was unaware of this fire until March 2002 at the earliest. Moreover that incident occurred only three months before the fire on the Baltic Eider, subsequent to the last overhaul of 4P and was due to operator error.

x) WUK, although aware of the 1995 and 1999 warning bulletins relating to Wartsila 32 engines, had no material upon which to draw any analogy with the Wartsila 46 engine and it was not their business to do so.

In these circumstances, it is said that AWSL can present no evidence that it relied upon WUK to originate technical advice as opposed to passing on advice from WFI which it duly did. Moreover it is said that AWSL will never be able to prove any fact showing that WUK knew or ought to have known of any supposed threat presented by erosion plug washers whether copper or otherwise.

In addition, WUK points to factors which, it says, show a lack of a special relationship of proximity and show that AWSL, as would be expected, looked to the manufacturer and designer of the engines for technical advice and assistance rather than to the network company in the United Kingdom. A number of other factors are relied on in paragraph 24 of WUK's skeleton argument but these appeared to me to take the matter no further. The essential problem with these issues and arguments is that they are not susceptible of determination upon a Part 24 basis. Whilst it can be argued that the relationship between AWSL and WUK involved no more than the ordering of spare parts, the conclusion of spare parts contracts, the spare parts bonus agreements and the Overhaul Spare Parts Contracts, the Contracts for Servicing and the passing on of information from WFI, that is not an argument which can be concluded in WUK's favour at this stage of the proceedings. AWSL can say that it relied upon Wartsila, in its various emanations, to give the necessary technical advice, instructions and warnings relating to the products which it supplied, those products being supplied both by WFI and WUK. The distinction which is drawn between WFI and WUK is not one which AWSL would necessarily have in mind in looking to the Wartsila Group to fulfil its responsibilities. When the UK company is put forward as the network company in the UK with whom AWSL is to deal, it may well be entitled to look to that company as well as WFI in relation to the matters of which complaint is raised. It simply is not possible to determine questions of special relationship, assumption of responsibility, reliance, foreseeability, fairness, justice and reasonableness or causation at this point.

The evidence adduced by AWSL included expert evidence to the effect that any Wartsila engineer with knowledge of the problems which had been encountered on the Wartsila 32 engines and the recommended practice for those engines, including the use of steel washers, increased torque and securing wire on the erosion plug would have appreciated the likelihood of the same problems arising on the Wartsila 46 engine. Real questions arise as to the actual knowledge of WUK personnel about the increased torque specified by L'Orange in October/December 1995 to 350 NM, sent in a drawing to WFI, quite apart from the issue of the copper washers. The 1995 and 1999 Warning Bulletins of which WUK was aware also constitute some evidence that WUK should have been and may actually have been aware of the potential problem on Wartsila 46 engines as AWSL allege.

In Mr Jewson's witness statements, evidence appears of the marketing of the Wartsila Group as a global service network where each of the global service engineers is capable of providing a full range of technical information to its customers. AWSL's understanding is said to be that the Wartsila local service network allocated to it would be able to provide information on all technical queries and that its expertise was in no way limited to the contents of the Operation Manuals, Spare Parts Catalogues and Service Bulletins issued by WFI and circulated by WUK. Whilst it appears that until 1998 Mr Cole of AWSL dealt primarily with Mr Brunila it is not possible to say that in that period and more particularly in the period thereafter the Court can conclude today that AWSL placed no reliance upon WUK's expertise and functions.

On 7^th December 2001, following the casualty, a warning letter was issued to Wartsila 46 engine Owners (although not supplied to AWSL until 5^th April 2002 by WUK). This warning letter included the following;

i) "Never use a sealing ring made in copper".

ii) "Make sure that the plugs are properly tightened with a torque of 350 NM plus/minus 5NM."

iii) That a locking wire was being introduced and could be used on existing pumps.

This subsequent warning supports AWSL's case against both WFI and WUK, both in relation to the copper washers and the torque where the Operation & Maintenance Manual still provided for 200 NM plus/minus 5NM to be applied to the erosion plug at the time of the incident. Mr Jewson in his first witness statement draws attention to the special position of engineers provided by engine manufacturers and distributors in relation to the safety requirements for the engines manufactured and supplied whether those engineers emanate from the manufacturer itself or from its locally incorporated company set up to deal with its customers. The engine Owner looks to the Group, however structured, for technical and safety advice and warnings in relation to the operation of the engines.

The basis of AWSL's case in tort against WUK is that, by reason of the relationship between them, WUK assumed responsibility to warn AWSL of the danger of erosion plugs coming loose by reason of the use of copper washers, inadequate torque and inadequate securing mechanisms on the plugs. It is noticeable that the focus of WUK's application as formulated was directed to the supply of the copper washer on the basis that this is foundational to the tortious duty alleged. Thus the grounds for WUK's application for Summary Judgment are expressed as follows:-

"because

(1) the Claimant has no real prospect of succeeding on its claim against the First Defendant, given that

(a) the First Defendant only supplied steel sealing rings to the Claimant, not copper sealing rings as alleged by the Claimant;

(b) the First Defendant cannot therefore be in breach of any contract with the Claimant;

(c) the First Defendant owed no duty to the Claimant as a consequence of the supply of a copper sealing ring;

(d) there was no special relationship between the Claimant and the First Defendant pursuant to which the First Defendant owed a duty the Claimant to advise or warn about any danger associated with the use of a copper sealing ring."

WUK thus fails adequately to take account of the fact that the allegations relating to the supply of copper washers, only form the subject matter of one of AWSL's pleas, and that there are independent allegations of breach of duty that are causative of the loss and which are of equal (if not greater) importance.

(1) The duty to warn, if established, would extend to a duty to warn against using or re-using the existing stock of copper washers on board the Vessel;

(2) The duty to warn would also extend to a duty to advise AWSL of the correct torque setting for the erosion plugs on the fuel injection pumps;

(3) The duty would further extend to a duty to advise that it was essential to lock the erosion plugs in place.

Since there is clear physical damage to the ship, there can be no doubt about the arguability of the claim against the manufacturers WFI and it was not suggested otherwise. The principles giving rise to liability of the manufacturer of a product, in owing a duty of care to the end user in respect of physical damage as originally formulated in Donoghue v Stevenson [1932] AC 562 have been applied to retailers and distributors of a product who have been held to be under a duty to take reasonable care to warn end users of potential dangers of which they were aware or should have been aware. See by way of example Watson v. Buckley, Osborne, Garret & Co Ltd [1940] 1 All ER 174; Kubach v. Hollands [1937] 3 All ER 907; Holmes v. Ashford [1950] 2 All ER 76; Andrews v. Hopkinson [1957] 1 QB 229, Fisher v Harrods Ltd [1966] 1 Lloyd's Rep. 500. Furthermore the courts have recognised that the vendor of a product can be under a duty to warn purchasers of its potential dangers. In Clarke v. Army and Navy Co-operative Society Ltd [1903] 1 KB 155 the Court of Appeal decided that the vendor of a tin containing disinfectant powder, who knew that it was likely to cause danger to a person opening it unless special care was taken, was under a duty to warn the purchaser of the danger. Collins MR said (at page 164):

"It seems to me that, independently of any warranty, a relation arises out of the contract of sale between the vendor and purchaser, which imposes on the former a duty towards the latter; namely a duty, if there is some dangerous quality in the goods sold, of which he knows, but of which the purchaser cannot be expected to be aware, of taking reasonable precautions in the way of warning the purchaser that special care will be requisite."

Such a duty extends to the situation where the potential danger is discovered by the supplier after the time of supply, (see E.Hobbs (Farms) Ltd v. Baxenden Chemicals Co Ltd [1992] 1 Lloyd's Rep 54.)

Additionally, there is a well established category of liability for "installers, assemblers and repairers." Such liabilities are summarised in the Product Liability & Safety Encyclopaedia, Butterworths, at III/33 paragraph [79]:

"A wide range of other persons may incur responsibility where injury or damage is caused through contact with a defective product. In Haseldine v. Daw & Son Ltd for example, a firm of engineers was held liable for negligence in repairing a hydraulic lift which fell, injuring a visitor in a block of flats. A representative selection of other modern cases has involved negligence in repairing the steering of a motor car and a fork lift truck; reconditioning a motor car; repairing and reassembling the wheel of a lorry; fitting a sidecar to a motorcycle; a valve to a ships boiler and an outlet pipe to discharge gasses from a boiler; and in installing an electric meter in a factory, a gas heating system in a house and a juke box in a restaurant. The negligence in such cases may take a variety of forms. For example a source of danger may have been created in a positive sense, as through mis-assembly, or the defendant may have failed to remedy a defect where this was reasonably to be expected."