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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Hunting Oilfield Services (UK) Ltd v. Precision Powertrain (UK) Ltd [2005] ScotCS CSOH_86 (01 July 2005)
URL: http://www.bailii.org/scot/cases/ScotCS/2005/2005CSOH86.html
Cite as: [2005] CSOH 86, [2005] ScotCS CSOH_86
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OUTER HOUSE, COURT OF SESSION [2005] CSOH 86 |
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A4379/01
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OPINION OF C J MacAULAY, Q.C. (Sitting as a Temporary Judge) in the cause COLIN EWEN Pursuer; against HUNTING OILFIELD SERVICES (UK) LIMITED Defenders; and PRECISION POWERTRAIN (UK) LIMITED Third party: ________________ |
Pursuer: No appearance
Defenders: Hodge, QC, Johnston; Simpson & Marwick
Third party: A Smith QC, Milligan; HBM Sayers
1 July 2005
Introduction
[1] On 13 March 2001, the pursuer suffered injuries while acting in the course of his employment with the defenders as a machine shop operator. He brought the present action against the defenders. The defenders brought the third party into that action. The pursuer has settled his action with the defenders and the defenders have agreed to pay the pursuer a net sum of £180,000. The Defenders contend that the pursuer's loss, injury and damage was also caused or at least materially contributed to by fault on the part of the third party. The defenders seek an apportionment of the sum of £180,000 that they are liable to pay to the pursuer. The third party does not challenge the reasonableness of the settlement.
[2] The defenders are oilfield suppliers to major companies engaged in the oil industry. In particular the defenders supply casing and tubing for the construction of oil wells. The pipework used for casing and tubing is not manufactured by the defenders but they do create the thread in the pipework that allows joints of pipe to be connected. The third party is engaged in the business of the manufacturing of gearboxes and gearshafts for heavy industry, and for that purpose it has a heat treatment plant. A small percentage (less than 5 per cent) of its business involves carrying out the heat treatment of steel for other businesses.
[3] Part of the defenders' manufacturing process involves a process known as swaging. Swaging is a process in which the end of a pipe is deformed, usually by squeezing. This is done by the use of a swaging die. A swaging die was involved in the pursuer's accident. Swaging dies are cylindrical in shape. The die involved in the accident measured approximately 10.5 inches in length with a 14 inch external diameter and a maximum internal diameter of 11.5 inches. The internal diameter was sunk 8 inches in from the chambered end. In the swaging process the die is forced over the end of the pipe by a swaging machine. Pressure is then applied to the die and in this way the pipe is deformed. The intention behind the process is to create an end of a pipe that can be threaded onto a larger pipe. The die used in this process has to be hard enough to deform the pipe without it itself becoming deformed. At the time of the accident, the pursuer was engaged in this swaging process. However, the die suddenly split into two halves, one of which struck the pursuer's right hand causing a traumatic amputation around the level of the distal interphalangeal joint of four fingers of that hand. The dispute in this case centres upon the die. The essential issue that arose during the proof which took place was whether the third party was in breach of a duty of care to the pursuer and accordingly liable to contribute along with the defenders.
[4] The defenders led evidence from three witnesses namely, Martin Jamieson, Chris Lawson, and Ian Stott. The evidence of another witness for the defenders, Martin Craig Arnold, had been taken earlier on commission and a transcript of that was available. The third party led evidence from two witnesses, Charles Watt and Ian Fraser.
The Evidence
[5] Martin Jamieson deponed that he was now fifty years old and employed by the defenders as their Operations Manager. He provided the information about the defenders' business already summarised in paragraph [2]. He also described the swaging process already summarised in paragraph [3]. Mr Jamieson explained that the dies used by the defenders were manufactured by them from a medium carbon, chromium-molipolenum low alloy steel of the AISI 4145H type (hereinafter "type 4145 steel"). In the original swaging process the dies were then used without any further treatment. However, the defenders discovered that the dies wore out very quickly and in about 1998 the defenders decided to surface harden the dies. The defenders themselves had no experience of, or expertise in, the surface hardening process. Mr Jamieson explained that the defenders only wanted to harden the surface of the dies because they wanted to maintain the internal structure. From about 1998 the defenders employed the services of the third party for the surface hardening process. Mr Jamieson spoke to a number of purchase orders, advice notes, certificates of conformity and delivery notes (Nos. 7/7-7/11 and 22 of Process) to show that from March 1998 to about the date of the pursuer's accident, the defenders and the third party had engaged in a course of dealing in connection with the hardening of swaging dies. Chronologically, the first document in that course of dealing was a Purchase Order dated 26 March 1998 sent from the defenders to the third party. In that Purchase Order the third party was asked to "Surface Hardening (Carburize ...)".
[6] Mr Jamieson explained the background to the third party's involvement with the die involved in the pursuer's accident. By a Material Requisition dated 13 February 2001 (No. 7/2 of Process) the defenders invited the third party to surface harden two swaging dies. The request was in the follow terms:
"To surface harden off swaging dies for 9⅝" and 113/4" SLIJ pipe. Harden surface for a depth of 0.04"-0.05" deep".
Mr Jamieson explained that the die involved in the accident was one of the two dies covered by that requisition document. It had been returned to the defenders shortly before the accident. Following the accident, a 'Certificate of Conformity' dated 15 March 2001 was sent by the third party to the defenders. It contained an error in relation to the type of heat treatment to which the die had been subjected and an amended Certificate of Conformity bearing the same date was sent to the defenders setting out the correct heat treatment process used. The incorrect certificate had suggested that the heat treatment process used had been "Gas Nitride" whereas, in fact, as the amended Certificate showed, the process used had been C/H/T which meant carburising, hardening and tempering. Mr Jamieson said he did not understand what the difference was between carburising and gas nitriding, but since the accident he had discovered the die had been heated to some 950ºC. He now understood that the heat treatment to which the die had been subjected meant that the structure of the die had been hardened all the way through. After the accident another ten dies that had been treated by the third party were found to be in a similar condition and were disposed of. So far as Mr Jamieson was concerned the third party was a specialist in the heat treatment of steel. He said he would have expected the third party to advise the defenders that the carburising process was inappropriate as a heat treatment for the surface hardening of the dies sent to it. So far as he was concerned, no such advice had ever been tendered.
[7] In cross-examination, Mr Jamieson agreed that in the course of dealing that had taken place between the parties the defenders had asked the third party to apply heat treatment to the dies by carburising. He agreed that in the swaging process a significant amount of pressure had to be applied in order to deform heavy pipes. He also accepted that the defenders had never asked the third party for advice on the appropriateness of carburising. It was suggested to him that if the third party did not know that the dies were to be subjected to high pressure, it would have no reason to contradict the customer's instructions. However, Mr Jamieson said that he thought someone should have told them about the change in the structure of the die. In relation to the ten dies that had been examined after the accident and found to be in a similar condition in relation to hardness as the die involved in the accident, Mr Jamieson explained that those dies had been in use for swaging possibly for four years. None had failed during that period. He was asked about a particular feature of the failed die raised in the Report (No 7/6 of Process) prepared on behalf of the defenders in connection with the failure of the die, and in particular the suggestion that the bore of the die had been remachined after it had been manufactured. Mr Jamieson's position was that the bore had not been remachined but that in the original machining of the bore the radius had not been fully completed.
[8] Martin Craig Arnold had his evidence taken on commission on 15 October 2003. He was aged forty two at the time. He was employed by the defenders as their Group General Manager for Quality Assurance, and had held that position for almost seven years. He also gave evidence as to the business of the defenders that has already been summarised in paragraph [2]. He too explained the rationale behind the surface hardening process as being one of extending the working life of the dies. He maintained, under reference to the Material Requisition document dated 13 February 2001 (No. 7/2 of Process) that they would only want the surface of the die heat treated. He explained that the gas nitriding process would have been appropriate for the type 4145 steel used in the dies since it involved heat treatment at a temperature that did not alter the core properties of the die. Under reference to the Purchase Order dated 26 March 1998 and the origin of the reference there to "Carburize" Mr Arnold said that there was "a lot of abbreviations in the oil industry ... and that's where I suspect it has come from" (p. 20E-F).
[9] Mr Arnold explained that after the accident he had spoken to the Quality Assurance Supervisor employed by the third party, Mark Jackson. In the course of that conversation it transpired that the initial Certificate of Conformity issued in relation to the failed die incorrectly referred to the gas nitriding process.
[10] Mr Arnold also suggested that Mr Jackson told him that the third party could not carry out the gas nitriding process. Having considered the documentation covering the period of the course of dealing Mr Arnold indicated that it was clear that the defenders did not have a "settled style" (p. 40C-D) for raising the purchase orders and that there was information missing from the purchase orders. However, his view was that since the third party was the specialist supplier "and we didn't know exactly what we were buying" the defenders were relying upon the third party for "clarification". In short Mr Arnold's position was that he would have expected the third party as the specialist to raise with the defenders any matter of which it was unsure (42A-D). He contrasted the position of the third party to the stance adopted by the company the defenders have used post accident in connection with the heat treatment of their dies. That company informed the third party that having regard to the material involved the process would be gas nitriding and not carburising.
[11] Mr Arnold knew nothing about dies failing prior to the accident. Here, he was being asked to address certain evidence it was anticipated would be given by Mr Fraser. Generally, his position was he knew nothing about it but that Mr Fraser could have spoken to someone else.
[12] Mr Arnold agreed in cross-examination that in the first purchase order of 26 March 1998 it was the carburisation process that was specified and that that is what happened. He agreed that the third party did exactly as it was asked (53C).
[13] As to the cause of the failure of the die involved in the accident, Chris Lawson and Ian Stott were relied upon by the defenders. Mr Lawson deponed that he was now thirty two years old and was a Metallurgist employed by the OIS International Inspection plc Group of Companies. That organisation acts as an inspection body for the oil industry. Mr Lawson carried out an examination of the die involved in the accident and prepared a Report of his findings (No. 7/6 of Process). He measured the die and provided the undisputed measurements set out in paragraph [3]. He explained that surface hardening involved hardening the case of the die so that the outside surface was harder than the core. He said that surface or case hardening by carburising was usually carried out on material with a relatively low carbon content. This allowed the desired case hardening to be achieved without affecting the core properties. He explained that type 4145 steel had a high carbon content and, if subjected to temperatures in excess of 723ºC, will form a very hard and brittle structure. The very process of carburising involved subjecting materials to high temperatures in excess of the critical point for type 4145 steel. He concluded that the swaging die had been subjected to a carburising case hardening treatment which had resulted in a very hard low toughness core microstructure. His position was that carburising was not suitable for the surface hardening of type 4145 steel.
[14] Mr Lawson concluded that the die had failed in a brittle manner. Failure had occurred by a single event in what was described as "fast fracture overload". Mr Lawson's examination of the die also showed that the fracture had emanated from the area of an inclusion filled fissure defect in the die material. This inclusion material was aluminium oxide and had become embedded in the die material during the manufacturing process. There was nothing unusual about that. Also, he considered that the bore diameter of the die had been increased since the original machining of the die. He came to this view because a step had been formed between what he took to be the original internal radius and the bore of the cylindrical section of the die. In his evidence in chief, Mr Lawson was of the view that the brittle nature of the structure of the die had made a significant contribution to the failure of the die but that these other factors were also relevant in considering why the die may have failed.
[15] Not surprisingly, in cross-examination Mr Lawson was pressed on the role played by the defect in the die material and the so-called post manufacture change to the bore diameter. He agreed that the aluminium oxide particles had had some significant input into the failure because the fracture had originated at that point. Nor did he disagree that the assumed change in the bore diameter may have played a part in the failure of the die. However, he maintained that these two factors would not have caused the die to fail in a brittle manner. At one point he said that with these two factors present the die would fail in a non brittle manner and it would "shatter". However, he maintained that, on the hypothesis there had only been case or surface hardening, the die would have had greater ductility and would not fail in the brittle manner in which it failed at the time of the accident to the pursuer. When the assumption was put to him that other dies had not failed in use, he agreed that brittleness was only relevant if combined with other defects. When asked how important it was to know the degree of force applied to the die in order to assess the significance of any other defects to failure, his position was that the failure mechanism suggested something about the properties of the material itself. He did not think it was necessary, in order to conclude that failure was brittle failure, to know the forces involved - other than that the die was subjected to a high load.
[16] In re-examination he said that if there was no brittleness then the die would have been able to withstand the type of load which caused it to fail. Also, in his examination of the die he found no deformation, and that in itself confirmed that brittleness played a role in its failure. His position was that if a level of force was exerted on a die that had been case hardened but not rendered brittle, and the case hardened material was not able to withstand the force, the steel may deform but not necessarily result in catastrophic failure. Conversely, with a brittle die in similar circumstances there would be a lack of ductility, and it would fail in a brittle manner.
[17] Ian Stott said he was forty three years old and was a senior metallurgist also employed by the OIS International Inspection plc Group of Companies. He had reviewed Mr Lawson's investigation and had approved Mr Lawson's Report (No. 7/6 of Process). He was satisfied that brittleness was a contributory factor in the failure of the die. If the steel in the die had been ductile then he did not think the die would have failed. A given defect will have a more catastrophic effect if the steel is brittle. He said normally steel would not be expected to fail in a brittle manner - it would bend and tear. He explained that the carburising heat treatment of 950ºC to which the die had been subjected had rendered the core material very brittle. For that reason, in his view, carburising heat treatment was not suitable for the surface hardening of type 4145 steel. The whole point of surface hardening was to produce a hard surface and to retain a soft core. On the other hand, he said the gas nitriding process only involved temperatures of 490º-580ºC, and that process would have been suitable for the surface hardening of type 4145 steel. Mr Stott said that the third party would be expected to know that carburising type 4145 steel would harden the centre and cause brittleness. In his view, if a customer were to ask for type 4145 steel to be surface hardened by the carburising process then he would expect someone in the position of the third party to query such a request and advise the customer what would happen to the steel. However, he went on to say that if the customer insisted, then there would be no reason why the carburising process should not be employed. It would not be good practice for the third party to take an order for carburising type 4145 steel and say nothing at all. It should inform the customer of the position. He was also of the opinion that the overhardening of a die had implications for the safety of the user. Since it had been rendered brittle it could shatter.
[18] In cross-examination Mr Stott agreed that there were three possible contributing factors to the failure of the die - the aluminium oxide inclusion, the assumed change in the radius, and brittleness. He agreed that brittleness might be irrelevant if the force used was not large enough to cause fracture. He also agreed that the fact that a die may be brittle need not mean that it was a bad tool. When the hypothesis was put to him whether the die would have failed if there had not been an aluminium oxide inclusion in the material and if the assumed change in radius had not occurred he said he could not be categoric that it would. When the converse hypothesis was put to him - that there was no brittleness but the other two factors were present he said the die would not have broken but it might have deformed. He also thought that the die could have failed if only the brittleness was present. He was also asked about the stance he had taken in his evidence in chief about what he considered to have been the duty on the third party when faced with a request for the carburising of type 4145 steel. He considered that the third party should have queried the position because of the potential as to what might happen whatever the die was to be used for. He saw the duty as being one to inform the defenders that it was not a standard practice to carburise type 4145 steel. He would have expected the third party to check to see if there was an error in the order. He confirmed that carburising of type 4145 steel was not wrong, simply that it was not standard practice. He himself had never had experience of carburising such material. He was asked to consider the following hypothesis. He was asked to assume a course of dealing, in course of which dies were being carburised. He was also asked to assume that someone from the defenders telephoned the third party and told someone there that some dies had failed and that the third party had responded by suggesting that steel with a lower carbon content should be used and to continue with the carburising process meant that a greater depth of hardness was produced. Finally, he was asked to assume that the defenders continued to use the same type of steel for the same process. In such circumstances Mr Stott's position was that the third party would have done what it should have done.
[19] In re-examination he said there was a duty on the third party to inquire what the dies were being used for and to provide information on the effect of making the steel brittle. He repeated his view that he did not think the die would have failed in the manner in which it did if there had been no brittleness. A more ductile die would have deformed by bending or buckling but it would not have propagated a fast fracture crack. Without the brittleness it would not have split into two parts.
Defenders' evidence
[20] Charles Watt deponed that he was now fifty four years old and employed as the Managing Director of the third party. He had held that position since 1983. In his evidence in chief he provided the information about the business of the third party as set out in paragraph [2]. He confirmed that he had considered the paperwork relating to the third party's dealings with the defenders. When asked if it should have been clear to him that the order documentation indicated a risk of a problem he said the documentation did not suggest anything untoward because it originated from a company, and he would assume from that that their own engineers had been involved in the design and asked for a specific process. On the other hand, if a customer simply came off the street, and had no idea what was involved then the third party would, in such circumstances, give advice.
[21] In cross-examination Mr Watt said he knew that a swaging die was a piece of equipment used to change the form of metal material. He accepted that he was aware that the process involved the die being used to squeeze pipework. He was aware that the defenders were involved in providing services to the oil industry and that strong steel would be used in the pipework involved. When asked to comment on the practice of carburising type 4145 steel he explained that the third party did in fact carburise that type of material.
[22] Mr Ian Fraser deponed that he was now thirty eight years old and had been employed for some sixteen years by the third party as the heat treatment manager. He had no formal qualifications but had what he described as "on the job" experience. He said he knew the swaging dies were made of type 4145 steel. He knew the dies were used for swaging and he understood that to mean the opening up and the closing of the ends of pipes. He did not know what technical expertise the defenders had. He also said that the third party carburised type 4145 steel in connection with the fishing industry. He gave as an example the rollers used for wire ropes.
[23] There was a chapter of Mr Fraser's evidence that was particularly controversial. In his evidence in chief he said that in 1998 someone from the defenders (he could not say who) had told him that at least two of the dies that had been heat treated by the third party had failed. There were two separate events, and the information had been conveyed to him by telephone on two separate occasions. Although he said he had difficulty in remembering what he had discussed on the telephone, he did say that he had explained that carburising type 4145 steel used in the dies had a through hardening effect. He also said he suggested to them (the defenders) that they use an alternative steel to make the dies. He said he explained to the defenders that by carburising that type of steel there would be a through hardening effect on the die. In giving that evidence in court he said the through hardening would render the die brittle. He said he was not told in what manner the dies had failed but he took the reference to failure to mean broken and cracked.
[24] In cross examination Mr Fraser said that he thought he told solicitors for the first time about the telephone conversations he had with the defenders at the beginning of 2003 and that his recollection about those events was "fairly strong". (It was agreed that in fact he was precognosced on 8 March 2002). He repeated his position that he did suggest to the defenders that they use an alternative material in the dies. He agreed that he was aware that the swaging process was used in connection with large pipes. When it was put to him that he could foresee that the die would be subjected to considerable pressure he responded by saying that he had never been given any instructions as to what pressure would be involved. He agreed that the surface hardening requested by the defenders could have been achieved by gas nitriding but said that the third party had never asked for gas nitriding. Nor did he ever suggest gas nitriding to the defenders. The third party, he claimed, did have the facilities for gas nitriding. However, there was a passage in his cross-examination where he suggested that gas nitriding would not have produced the depth of hardening requested by the defenders.
[25] In re-examination Mr Fraser reiterated his position that the third party had been asked by the defenders to carburise and that is what it did. He explained that the gas nitriding process was a much more lengthy process and would take about four to five days to complete. The carburising process could be completed in a day.
Submissions for the Defenders
[26] Mr Hodge submitted that the issues in this case were whether, and to what extent, the third party was liable to contribute to the damages to which the defenders were liable to pay to the pursuer. He made reference to the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940, Section 3(2). He said that there were two questions to be addressed: firstly, would the third party, if sued, have been found liable to the pursuer; and, secondly, if so, what would be a just contribution.
[27] At the outset of his submissions, Mr Hodge sought to summarise his position under reference to the following four points:
1. The third party was providing a specialist service and the defenders relied upon the third party in respect of that service;
2. The third party knew or ought to have known that dies that were surface hardened would be subjected to great pressure, and if brittle break in use;
3. The third party knew or ought to have known that there was a risk that a person could suffer serious injury if a die fractured in use; and
4. The fact that the defenders admittedly exposed the pursuer to injury by not providing adequate protection did not break the chain of causation.
[28] The conclusion Mr Hodge sought to draw from his propositions was that the Third party's fault materially contributed to the pursuer's injuries so that the third party was obliged to contribute to the pursuer's damages. So far as the amount of the contribution was concerned Mr Hodge accepted that the defenders were at least 50% to blame, and possibly 50% to two-thirds to blame. On that broad basis he seemed to be pitching the third party's contribution at one-third, which neatly converts into the round sum of £60,000.
[29] In addressing me on the evidence Mr Hodge submitted that the defenders were involved in an engineering capacity in the North Sea industry but had no specialist knowledge of the heat treatment of steel. The defenders manufactured dies but had never heat treated them. He submitted that it was apparent from the evidence of Mr Jamieson and Mr Arnold that they did not understand what was involved in carburising. Mr Arnold and Mr Jamieson had made it clear that the defenders were relying on the third party as specialists. Conversely, the third party had expertise in heat treatment, a process which it carried out not only for itself but also for customers. On the basis of that evidence Mr Hodge invited me to conclude that within the customer and supplier relationship that existed between the defenders and the third party, it was the third party who had the wherewithal to provide expertise.
[30] Mr Hodge also invited me to accept that the third party knew that the dies were being treated in connection with the swaging process and that that process involved the deformation of large diameter steel pipes. He submitted that the third party must have known that the dies would be subject to sudden and severe pressures during that process.
[31] Against that background, Mr Hodge submitted that certain duties arose on the part of the third party. Relying on Mr Stott's evidence in particular, Mr Hodge contended that the third party knew or ought to have known that it was not appropriate to carburise type 4145 steel because that process would render it brittle and liable to break. In such circumstances, Mr Hodge submitted that the third party were under a duty to decline to carburise. Only if the third party had warned the defenders that the process was not suitable and the defenders had persuaded the third party it was appropriate because there was no risk, then, and only then, could liability be excluded. In that context Mr Hodge made a number of observations in relation to Mr Fraser's evidence. He contended that even if Mr Fraser's evidence was accepted, it did not go far enough to exclude liability. He also questioned Mr Fraser's reliability, pointing out that in his evidence there were significant pauses between the question posed and the answer, and generally that his evidence lacked clarity. He submitted that not much weight could be placed on his evidence. He said that he was not suggesting that Mr Fraser was untruthful but that there was a questionmark over his recollection. However, Mr Hodge submitted that even if Mr Fraser's evidence was acceptable it did not serve to remove the duty resting upon the third party because Mr Fraser did not in terms say he told the defenders the core would be brittle and liable to shatter. Furthermore, the telephone conversations were informal, and not too much should be made of them. Even if Mr Fraser's evidence amounted to a warning of brittleness, Mr Hodge submitted that it was incumbent upon him to go further and satisfy himself that the process in which the die was to be used was safe.
[32] In anticipation of any argument that the third party were entitled to carry out what they were asked to do on the basis that the defenders knew what they wanted, Mr Hodge submitted the third party were not entitled to assume the defenders had the necessary expertise.
[33] Turning to the law, Mr Hodge submitted that the defenders' case in law was a simple one. He referred to Donoghue v Stevenson 1932 S.C.(H.L.) 31 and in particular the well known passage in the speech of Lord Aitken (p. 44):
"Who, then, in law, is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts and omissions which are called in question".
Here, Mr Hodge argued, the pursuer was "the neighbour" and the third party was involved in the manufacture of a product that was not safe.
[34] In relation to causation Mr Hodge relied upon the evidence of Mr Lawson and Mr Stott. He submitted that that evidence showed the die had failed in a brittle manner. It would not have failed in that manner if the core had retained its ductility. The fact that there may have been other contributing factors did not affect the conclusion that the brittleness of the die made a material contribution to the mode of failure at the time of failure.
[35] Mr Hodge invited me to sustain the defenders' fifth plea-in-law.
Submissions for the Third party
[36] Mr Smith invited me to sustain the fourth plea-in-law for the third party, to repel the fourth and fifth pleas for the defenders and to assoilzie the third party.
[37] He made a number of submissions on what was necessary to create a duty of care. Under reference to Caparo Industries plc v Dickman [1990] 2 AC 605, he submitted that three elements were needed for a duty of care to exist: there must be reasonable foreseeability; there had to be a relationship of proximity between the parties, and it must be fair, just and reasonable to impose liability. Mr Smith referred to the Scottish cases of Gibson v Orr 1999 SC 420 and Coleridge v Miller Construction Ltd 1997 S.L.T. 485. Mr Smith submitted that the defenders failed on each of these three elements individually.
[38] In developing his submissions Mr Smith began by comparing the defenders' case on Record to their present position. He maintained that the defenders' pleadings did not develop a case based upon a duty not to carburise at all. There was no mention on Record to the fact that the type of steel involved, type 4145 steel, was relevant. He submitted that objections taken by him to evidence led under reservation were well founded. The case on Record, he submitted, focused only on the question of temperature.
[39] Mr Smith went on to consider in the light of the evidence, the three elements necessary for the creation of a duty of care.
[40] In developing his submissions on the issue of foreseeability, Mr Smith submitted that there were three points to be satisfied. Firstly, the defenders had to prove that the third party knew or ought to have known what the die was to be used for. Mr Smith contended that it was important for the defenders to prove that the third party knew or ought to have known the die was to be used in a high pressure or high force exercise. Secondly, Mr Smith submitted that the defenders had to prove that the third party knew or ought to have known that there was a risk of the die failing in a catastrophic way, and thirdly, that in the event of such failure that there was a risk of injury to a workman.
[41] In elaborating upon the first of his three foreseeability issues, Mr Smith focused, in particular, on the evidence of Mr Fraser. Mr Fraser had assumed that the defenders had an engineer involved. According to Mr Smith, he was entitled to assume that the defenders knew what they were doing. In essence, Mr Smith's point was that Mr Fraser needed to know more than he did. So far as his second point was concerned, Mr Smith submitted that there was no evidence that Mr Fraser knew there would be a catastrophic failure. The track record of the course of dealing between the parties indicated that the dies subjected to the third party's heat treatment process generally worked satisfactorily. Finally, in relation to his third point relating to the foreseeability of the risk of injury, Mr Smith submitted that the defenders had failed to prove that the third party knew or ought to have known a person such as the pursuer would be injured. He submitted that there had been very little evidence led about the circumstances of the accident. The third party would have to know that there could be an instantaneous failure and that a workman might be in close proximity to that failure and unprotected.
[42] In dealing with the second part of the Caparo approach, proximity, Mr Smith submitted that, for the same reasons that there was a lack of foreseeability, there was not sufficient proximity. He stressed that this was not an advice case. The defenders had asked for a service and that request had been complied with. There was no assumption of responsibility on the part of the third party.
[43] Mr Smith also submitted that the fair, just and reasonable test was not satisfied. He submitted it would not be fair, just and reasonable to place a duty on a supplier who complied with a particular request to inquire as to what the item of equipment was to be used for.
[44] In relation to causation, Mr Smith submitted that the defenders had failed to prove as a matter of fact a causal link between the hypothetical wrong and the accident. He argued that there were three possible causes of failure, and two of these were not the responsibility of the third party. The evidence disclosed that after the accident a number of dies were examined and found to be brittle, but, apart from the two failures in 1998, the rest had not failed in service. The die involved in the accident had two other defects, and that was an important distinction.
[45] Furthermore, in assessing what responsibility, if any, lay with third party, Mr Smith submitted that the effect of Mr Fraser's evidence was that the third party had fulfilled any duty incumbent upon it. Mr Smith invited me to find Mr Fraser's evidence credible and reliable. If Mr Fraser's evidence was accepted then he has told the customer all he needed to know and it was for the customer to choose what action to take.
[46] Finally, in relation to the issue of contribution, Mr Smith submitted that there was insufficient evidence upon which a judgement could be made. He argued that without some more evidence, no finding on apportionment could be made.
Reply for Defenders
[47] Mr Hodge dealt first with the question of apportionment. He drew attention to the pleadings, and under reference to the averments relating to the accident, he suggested that the agreed facts in the pleadings provided an adequate basis for a finding on apportionment.
[48] In response to Mr Smith's invocation of the Caparo approach, Mr Hodge submitted that it could not be suggested that the three stage analysis had cut back the duty of care to avoid personal injury demonstrated by Lord Aitken in Donoghue v Stevenson (p. 44). There was no public policy reason to protect manufacturers in relation to the production of a dangerous product. So far as his case on Record was concerned, Mr Hodge submitted that the averments in Answer 3 focused on a duty not to subject the die to heat treatment above a certain temperature. He submitted that to suggest that that did not constitute a duty not to carburise was a distinction without a difference.
Decision
[49] I shall set out my views on the evidence first and then consider the legal issues that arise in light of the evidence.
[50] I have already summarised the undisputed facts relating to the accident to the pursuer at paragraph [3]. It is also clear from the admitted facts in the pleadings that at the time of the accident the defenders accept that the swaging machine was unfenced and that the control panel was located close to the machine. The accident occurred while the pursuer was operating the machine and in the process of applying the die to the end of a pipe. He sustained his injuries because he required to operate the machine in close proximity to and unprotected from the die. After the accident a steel guard was fitted to the machine and the control panel was relocated to a position some distance away from the machine.
[51] A course of dealing commenced between the defenders and the third party in March 1998. The first document in that course of dealing bears to be a Purchase Order dated 26 March 1998 sent by the defenders to the third party. In part it deals with five dies of different sizes in the following terms:
"Surface hardening (Carburize to 0.03 inches - 0.04 inches depth) of Swaging Dies (4145 Material ...".
This is followed by an Advice Note dated 31 March 1998 from the third party to the defenders making reference inter alia to five swaging dies, and an Invoice dated 1 May 1998 headed "To Heat Treating" and also making reference to the five dies. There is also with the documentation a Certificate of Conformity dated 31 March 1998 bearing to relate to the five dies and confirming that the heat treatment process was C/H/T, in short, carburising. The documents to which I have just referred are but one example in the documentation produced of the defenders making a request of the third party to surface harden dies by carburising. As it happens, the Material Requisition document (7/2 of Process) relating to the die involved in the accident does mention surface hardening but does not mention carburising or the type of steel involved. However, it is perfectly clear that that is what the defenders wanted, and it is clear that the third party understood that it was being asked to surface harden type 4145 steel. The corrected Certificate of Conformity (7/3 of Process) confirms that that is what it purported to do.
[52] So far as the evidence goes to show, the notion that type 4145 steel could be surface hardened by the carburising process originated with the defenders, and in particular in their Purchase Order of 26 March 1998. How that came about was unexplained in the evidence. I consider Mr Arnold's explanation (paragraph [8]) to be pure speculation. I am satisfied on the basis of the evidence of Mr Lawson and Mr Stott that type 4145 steel cannot just be surface hardened by the carburising process. The temperatures involved in that process mean that the core structure of the material is also hardened and loses its ductility. From the commencement of the course of dealing between the parties the third party was not in fact acting in compliance with the defenders' request for surface hardening albeit it was acting in compliance with the defenders' request as to what process was to be involved.
[53] Having regard to the documentation produced relating to the course of dealing between the parties, and to the evidence of Mr Watt and Mr Fraser, I am satisfied that the third party was aware that the swaging process involved the deformation of large diameter pipework by the application of force. The material Requisition document dated 13 February 2001 (7/2 of Process) makes it clear that the size of pipes which the dies were to be used were of diameters of 9⅝ inches and 113/4 inches. Mr Watt agreed that he knew the defenders provided services to the oil industry and that strong steel pipes were used. Mr Fraser knew that the swaging process involved the deformation of large pipes used in the oil industry. He did not know what specific pressure might be involved, but it is a reasonable inference from the evidence that the third party ought to have known that considerable pressure would be necessary to deform the type of pipes involved in the swaging process.
[54] Although the origin of the reference to carburising type 4145 steel in the Purchase Order dated 31 March remained something of a mystery, it set a trend that was consistently followed up to the time of the pursuer's accident. All the dies sent for heat treatment by the defenders to the third party were of type 4145 steel and the heat treatment to which each was subjected was carburising. Whatever the origin of the original instruction to carburise type 4145 steel in March 1998 may have been, I am satisfied that prior to the accident, the defenders did not possess the technical expertise necessary to assess the appropriate heat treatment for the surface hardening of that type of steel. The third party did possess the expertise. However, I accepted the evidence of Mr Watt and Mr Fraser that the third party had no direct knowledge about what engineering expertise the defenders did possess.
[55] I accepted the evidence of Mr Watt, elaborated upon by Mr Fraser, that the third party did carry out the carburising heat treatment process for type 4145 steel in connection, in particular, with the fishing industry. So far as I understood their evidence, they were not relating the carburising of steel in that context to surface hardening. Although Mr Lawson and Mr Stott were both of the view that carburising generally was inappropriate in the treatment of that type of steel, they did not go so far as to suggest it could never happen. Mr Stott said carburising was not wrong but it was not standard practice. However, what is plain from the evidence is that a request to surface harden type 4145 steel by carburising was a contradiction in terms. Carburising that type of steel is not a surface hardening process at all. To take the example of the die involved in the accident, the material Requisition document sent to the third party of 13 February 2001 requested surface hardening "For a Depth of 0.04"-0.05" Deep". The measurements of that die provided by Mr Lawson (paragraph [3]) show that the wall of the die from the outer surface to the inner surface was of the order of 2.5 inches thick. The use of carburising process meant that not just the surface to a depth of 0.04"-0.05" was hardened, but that the whole area of the die wall was hardened.
[56] In relation to the heat treatment to which the die was subjected, there was no dispute that the information contained in the amended Certificate of Conformity dated 15 March 2001 accurately reflected the position. The die had been heated to a temperature of 950°C and then quenched from a temperature of 840°C. As Mr Lawson explained, quenching from above the lower critical temperature of 723°C created a very hard but brittle core structure in type 4145 steel. His examination of the core microstructure and hardness of the die material was consistent with the die having been subjected to that type of treatment. Ultimately, I did not understand the third party to dispute that the carburising treatment to which the die had been subjected did more than surface harden the die.
[57] There was no disagreement that, leaving aside the issue of brittleness, there were two other factors relevant to the failure of the die. The inclusion filled fissure in the die material constituted a latent defect present since the manufacturing process. Such defects are not unusual. The die had, like the other dies, been manufactured by the defenders. I was satisfied on the basis of Mr Lawson's evidence that there had been no additional machining of the bore of the die. However, the fact remained that the machining of the bore had not been adequately carried out. That could only have been by the defenders who manufactured their own dies.
[58] I accepted the evidence of both Mr Lawson and Mr Stott that the gas nitriding heat treatment method would have been suitable for the surface hardening of type 4145 steel. Indeed that was the process adopted by the defenders after the pursuer's accident. I found the chapter in Mr Fraser's evidence that gas nitriding would not produce the type of surface hardening required somewhat confusing. Neither side made anything of it.
[59] I did not understand that anything of significance turned on the fact that in the original Certificate of Conformity dated 15 March 2001, there was a suggestion that the gas nitriding process had been carried out - that Certificate was acknowledged to have contained an error, and an amended Certificate bearing the same date was produced by the third party to the defenders. However, there was a suggestion in the evidence of Mr Arnold that he had learned (second hand) that the third party did not have facilities for gas nitriding. Mr Fraser suggested in his evidence that the contrary was the case. It was not suggested to him that the third party did not have such facilities. Furthermore, he gave evidence as to the difference in timings between the carburising process and the gas nitriding process. Having regard to the secondhand nature of Mr Arnold's evidence and in light of Mr Fraser's unchallenged evidence, I conclude that the third party had the facilities to carry out the gas nitriding process in connection with the dies.
[60] I now turn to consider the evidence of Mr Fraser. Both parties recognised the importance of this evidence, if accepted, although Mr Hodge maintained that even if accepted Mr Fraser's evidence did not exclude liability. Although Mr Fraser did display a degree of hesitancy when giving his evidence, I was entirely satisfied that he was a truthful witness - and indeed Mr Hodge did not suggest otherwise. I accepted his evidence that in 1998 on two occasions he spoke to the defenders in connection with the failure of two of the dies that had been carburised by the third party. I also accepted his evidence that he had explained to the defenders that carburising type 4145 steel had a through hardening effect and that he suggested to the defenders that they use an alternative type of steel to make the dies. Mr Lawson and Mr Arnold had no knowledge of such conversations but they both acknowledged that they could not say such conversations did not take place.
[61] Mr Fraser said in evidence that the through hardening effect resulted in the creation of a hard core, and that the die would be rendered brittle. However, I am not satisfied that at the relevant time Mr Fraser conveyed his thoughts on brittleness to the third party. He did not make it clear in his evidence that he had told the defenders about that.
[62] Mr Fraser's evidence establishes firstly, that the defenders were told that the dies were not just being surface hardened in accordance with their requests, secondly that the defenders are to be taken to be aware that the carburising of the dies resulted in a through hardening of the dies and thirdly, that the defenders were content to continue to have their dies treated by the carburising process. According to Mr Stott, when a hypothesis was put to him along the lines of the anticipated evidence of Mr Fraser, he agreed that in such circumstances the third party had done what it should have done.
[63] I now propose to set out my findings as to the cause of the failure of the die. Failure was as a result of a single event involving a fast fracture overload mechanism. This mechanism caused the die to split into two halves, and unfortunately for the pursuer meant that he was struck by one of the two halves. Furthermore, I am satisfied on the evidence of Mr Lawson and Mr Stott, that the mode of failure was by way of a brittle failure. The die had been rendered brittle by the carburising heat treatment to which it had been subjected by the third party. The fracture originated at the fissure containing aluminium oxide inclusions, a defect in the material. Nevertheless I am satisfied that the predominant cause for the mode of failure being in a brittle manner was the carburising heat treatment applied by the third party. Also, although the inadequate machining to which the die had been subjected may have weakened its strength to external forces, it was the carburising heat treatment that exposed the die to a brittle mode of failure. Mr Lawson did suggest in his cross-examination that even in the absence of brittleness the die would shatter. However, in the context of his evidence and the evidence of Mr Stott, it was the brittle structure of the die caused its failure at the time of the failure. I accepted the evidence of both Mr Lawson and Mr Stott that the lack of ductility was important. A die of ductile steel might deform by bending or tearing, but it would not normally fail in a brittle manner. The material in the die had lost its ductility because of the carburising heat treatment. Mr Lawson found no evidence of deformation when he examined the die, and that confirmed his view that the predominant cause was the brittleness of the material.
[64] Against the background of the findings on the evidence set out at paragraphs [49] to [63] I turn now to consider the legal issues that arise in this case.
[65] In order to succeed in this case the defenders must show that the third party did an act which it was reasonably foreseeable would cause injury to the pursuer, that the relationship between the pursuer and the third party was such as to give rise to a duty of care, and that the act was one which caused injury to the pursuer.
[66] In my opinion the critical question in this case is that of foreseeability. The question can be posed as follows: was it reasonably foreseeable on the part of the third party that the through hardening of the die involved in the accident would cause injury to the pursuer? Mr Hodge urged me to proceed on the basis that the third party was in a similar position to the manufacturer who produces a dangerous product. I do not consider that the issue is as simple as that. Although the focus has to be on the die involved in the accident, the context is one of a course of dealing over a period of years during which dies of a similar material had been treated by the third party. At the beginning of that course of dealing, the third party ought to have realised that the request made by the defenders to surface harden by carburising did not make sense. By carrying out the carburising process, the third party failed to surface harden the dies to the depth specified. It did not do what it was being asked to do. It seems to me that at that stage in the relationship the third party ought to have sought clarification of the instructions given to it by the defenders. That was Mr Arnold's view as to what ought to have happened. Mr Stott thought that at least the third party should have checked to see if there was an error. As it happened, the telephone discussions in 1998 spoken to by Mr Fraser did raise the issue as to whether the carburising process was appropriate. The defenders at least from that time were aware, or in any event, are to be taken to have become aware, that type 4145 steel might not be appropriate for heat treatment by the carburising process. However, it appears that the defenders were content to proceed as before. In these circumstances I consider that the third party, albeit somewhat belatedly and perhaps without a great deal of emphasis, did enough to bring to the attention of the defenders the effect of carburising on the dies. At paragraph [18] I have set out the proposition put to Mr Stott in cross-examination based on the anticipated evidence of Mr Fraser. Mr Stott agreed that if that is what happened then the third party had done what it should have done. Mr Hodge submitted that Mr Fraser had to go further and satisfy himself that the process in which the die was to be used was safe. In my view that is taking matters too far. Mr Fraser had no reason to think at that time that there was any risk to safety associated with the defenders' work systems. He had no detailed knowledge of the defenders' work systems and considered that he was dealing with a responsible commercial undertaking. I consider that, after Mr Fraser's telephone conversations, the third party was entitled to proceed on the basis that the treatment to which the dies were subjected was acceptable to the defenders. Furthermore, it appears to be the case that apart from the two early failures, and prior to the failure in service of the die involved in the accident, no other die failed in service. The third party knew that the dies were to be used for the swaging of large pipes and that force would be necessary in that process, but it did not know the precise details involved in that operation. Both Mr Jamieson and Mr Arnold gave evidence to the effect that the purpose behind surface hardening was to extend the working lives of dies. The context of their evidence was that to use the dies in their original condition meant that they wore out much more quickly. During the period of their course of dealing with the third party it was not suggested by either Mr Watt or Mr Arnold that the desired aim was not achieved. There was nothing to alert the third party to the likelihood of the die being used in an unsafe manner. The test of foreseeability is an objective one but regard must be had to the state of knowledge of the third party at the time it carburised the die involved in the accident. In my view, after Mr Fraser's telephone discussions following upon the two die failures in 1998, and having regard to the subsequent history the third party was entitled to conclude that the service it provided to the defenders was adequate for the defenders' purposes and acceptable to them.
[67] Having regard to the circumstances set out in the previous paragraph, I conclude that the defenders have failed to prove that it was reasonably foreseeable the third party's act in carburising type 4145 steel used in the failed die would cause injury to the pursuer.
[68] Had I found that it was reasonably foreseeable the die was likely to cause injury to the pursuer, and the third party was in breach of its duty of care, I would have had little difficulty in concluding that the third party was liable to the pursuer. Mr Smith argued that the three pronged analysis set out in Caparo had to be satisfied but as Lord Oliver points out in Caparo when dealing with a case of personal injury "the existence of the nexus between the careless defendant and the injured plaintiff can rarely give rise to any difficulty" (632F).
[69] I have set out at paragraph [63] my conclusions on the facts on causation. Neither side sought to distinguish factual causation from legal causation, presumably because they considered one followed on from the other. Had I concluded that the accident to the pursuer was reasonably foreseeable and that the third party was in breach of a duty of care then I would have found legal causation established in this case.
[70] Had I found the third party liable, the question of apportionment would have arisen. As Mr Smith submitted, I did not hear any detailed evidence on the circumstances of the accident. However, certain matters are agreed on Record. In particular it is clear that the defenders failed to have in place a protective guard and had located the control panel too close to the die. In this context also I would have had to have regard to the history of the relationship between the defenders and the third party and the fact that the defenders had been told by Mr Fraser that they should consider using some other type of steel for the carburising process. Nor did the third party have any detailed knowledge about the layout of the defenders' plant and to what extent the pursuer would be required to work unprotected in close proximity to the die. In my view the defenders would have had to shoulder by far the greater part of the blame for the accident. In these circumstances, had I found that the liability of the third party had been established, I would have assessed its contribution at twenty per cent.
Objections
[71] Mr Smith objected to evidence being led if the purpose was to set up a duty on the third party to advise the defenders that the carburising process was unsuitable for the purpose for which the die was to be used. He argued that no such case was foreshadowed on Record. On Record the essence of the defenders' case was encapsulated in the averment in Answer 3 to the effect that it was the third party's duty "to take reasonable care not to overharden the die" (17B). I allowed the evidence to be led under reservation. However, in his submissions Mr Hodge did not in terms seek to found upon any case based upon a failure to advise. The essence of his argument was that the third party should not have carburised at all without seeking confirmation that that indeed was what was wanted. The line between seeking confirmation and giving advice may be a fine one, but I consider that Mr Hodge was entitled to make the submissions he made. Mr Smith also objected to evidence being led in developing a line that carburising should not have taken place. His point was that the defenders' complaints on Record focused on temperature and overhardening. Again, I allowed the evidence to be led under reservation. I am satisfied that such evidence was competently led. The essence of the defenders' case was that the third party should not have overhardened the die, and in the context of this case that meant it should not have carburised the die. At worst for the defenders the line was simply a modification of the case on Record.
Conclusion
[72] I shall sustain the fourth plea-in-law for the third party, repel the fourth and fifth pleas-in-law for the defenders, and assoilzie the third party.