Scottish Court of Session Decisions

FIRST DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 57

Lord President

Lady Smith

Lord Brodie

OPINION OF THE COURT

delivered by LORD CARLOWAY, the LORD PRESIDENT

in the reclaiming motion

RENFREW GOLF CLUB

Pursuers and Reclaimers;

against

MOTOCADDY LIMITED

Defenders and Respondents:

Act: Sheldon QC; bto

Alt: Ellis QC; BLM

20 July 2016

Introduction

[1]        The pursuers seek reparation for loss and damage sustained during a fire at their clubhouse on 24 July 2010.  The action is based both at common law and under the Consumer Protection Act 1987.   The principal issue under the 1987 Act is whether the clubhouse was property “ordinarily intended for private use”.  At common law, it is whether the defenders owed the pursuers a duty of care.  By interlocutor of 17 December 2015 the Lord Ordinary dismissed the action as irrelevant.  This is a reclaiming motion (appeal) against that finding. 

Background

[2]        The pursuers are a golf club, represented by a quorum of its officials and members, of whom there were 786.  They operated from a clubhouse, although it transpired during the appeal hearing that the clubhouse was owned not by the members but by the office bearers as ex officio trustees on behalf of the members.  No point was taken in that regard by the defenders.  Members paid an annual subscription; the total amounting to in excess of £400,000.   So far as can be gathered from the pursuers’ pleadings, the clubhouse consisted of a lounge, dining area, locker rooms, a bar and catering facilities.  The locker room, with which the action is concerned, was for the exclusive use of members.  The pursuers allowed non-members to play the course upon payment of a green fee.  Such fees totalled about £12,000 annually.  Visitors could use the bar and other facilities at the invitation of a member or if they had been playing golf.  The catering was operated by a private company under contract with the pursuers.  Both the lounge and dining areas could be hired by members for private functions.  Most, but not all, of these would be related to the pursuers’ activities.  Events included children’s parties and Hogmanay celebrations.  Any profits would be reinvested in the course or clubhouse facilities rather than redistributed to the members.   It is averred that, apart from subscriptions, the pursuers’ total “income” was only £15,000.  This is presumably a net figure.

[3]        The defenders were the suppliers of the Motocaddy S1.  This was an electric, front wheel drive, motorised golf trolley.  It was used by golfers to carry clubs and associated equipment around the course.  The defenders imported the trolley from China, branded it with their own label, and sold it to customers in the United Kingdom.  The defenders had sold the trolley, with which this action is concerned, in or about 2007.  It was bought by a member of the pursuers (later described as the pursuers’ professional’s son) some time thereafter.  The date of this is unclear, although it is averred that the user had owned it for in excess of 2 years at the relevant date.

[4]        The member had changed the trolley’s original 12 volt battery some 3 weeks prior to that date. Otherwise, the trolley was in its manufactured state.  That state included a “rocker” on/off switch attached to the handle.  When “on”, a red light would show.  There was a “rotary dial”, which regulated the trolley’s speed.  The battery, which was presumably located on the base of the trolley, was wired to a “control module”, which was in turn connected to both the switch and the motor.  The pursuers aver that certain wiring was partially exposed; that is to say not covered.  Upon enquiry, this ought to be a reference to cabling rather than wiring.  The cabling, however, was thus said to be vulnerable both to wear and tear and accidental damage.

[5]        On 23 July 2010, the member had used the trolley.  At about 6pm he had left it at the entrance to the men’s locker room.  There is an admission that it was in that room.  There is an averment by the defenders that it was not normal to leave such a trolley in a locker room.  Despite it being a fact within their knowledge, this is met with a bare denial, although there is a later averment that, as may seem rather obvious, the trolley was “likely to be used on and in Golf Club property”.  At about 1.20am on 24 July 2010, a serious fire broke out in the clubhouse, causing about half a million pounds worth of damage to the building and its contents.  The pursuers offer to prove that the trolley was the source of the fire.  Many of the averments about how the trolley came to be on fire appear irrelevant.  Some aver evidence rather than fact.  Others aver alternatives, which the pursuers then expressly disavow.  Ultimately, what the pursuers maintain is that the trolley was “energised” at the material time; meaning that it was switched on.  There was an “incendive (sic) electrical fault in the wiring or wired connections … proximate to the battery”.  This is explained as involving a short circuit in the “supply lead”; meaning, presumably, between the wires within the cabling.

[6]        The essence of the case is that the unprotected cabling had suffered wear and tear, whereby the wires within were themselves exposed, resulting in a short circuit in the wires leading from the battery to the module.  The sparks or heat of this set fire to the trolley and thence to the clubhouse.  The defenders aver, and the pursuers admit, that a fire would have needed not only the trolley to have been switched on but also the speed regulator to have been turned to a “relatively high” position, whilst the front wheel was prevented from turning.  The latter averments and admissions may be intended to relate only to an “unlikely” alternative involving a high speed “motor stall”, although they do not so restrict themselves.   

[7]        The fault averred is that the defenders had failed to incorporate a temperature cut off (ie a thermostat) or short circuit protection (ie a fuse) within the trolley.  This meant that the module could catch fire if the trolley was left on accidentally with the speed at high (which the pursuers do not offer to prove) or if there was a short circuit caused by wear and tear or other damage to the cabling, exposing the wires between the battery and module.  In short, the pursuers offer to prove that the trolley was defective at the point of supply, as the design did not include adequate protection from predictable electrical faults.  The exposed cabling was susceptible to wear and tear or accidental damage, which could lead to the trolley setting itself on fire.

[8]        The Consumer Protection Act 1987 implemented the provisions of EU Directive 85/374/EEC on product liability. Section 2 of the 1987 Act imposes strict liability on manufacturers and suppliers of defective products for resultant damage to certain property.  The injured party does not have to establish fault on the part of the supplier, if the product is defective.  Section 3(1) provides that a product is defective if its safety is not such as persons are generally entitled to expect.  The imposition of strict liability is limited to certain types of damage.  In particular, the Act provides that:

“5(3)    A person shall not be liable … for any loss or damage to any property which, at the time it is lost or damaged, is not-

(a)        of a description of property ordinarily intended for private use, occupation or consumption; and

(b)        intended by the person suffering the loss or damage mainly for his own private use, occupation or consumption.”

Lord Ordinary’s Opinion

[9]        The Lord Ordinary considered that he was able to determine the issue of whether the property was of a type protected by the 1987 Act on the written record, without the necessity of proof.  Both of the two limbs of section 5(3) required to be satisfied, if the pursuers were to succeed.  The key was the word “private”.  It was not necessary to decide whether the section limited protection to the property of individuals.  However, it was equally not sufficient to conclude that a clubhouse was private simply because it was owned by individuals.  The actual use of the clubhouse required to be examined.

[10]      The club was a typical one, in which members were entitled to use the course and facilities on payment of an annual subscription.  The members could introduce guests to play golf and to use the facilities.  The public could do so to upon payment of a fee.  The pursuers derived an income from the bar.  The catering was franchised to a local business.  The pursuers hired out their premises for private functions, some of which were not related to their activities.  The pursuers claimed damages for, amongst other things, business interruption, loss of green fees and loss of profits from the bar.  In these circumstances, it was clear that the clubhouse was used for a material amount of commercial or economic activity.

[11]      The Lord Ordinary did not accept that Parliament had intended a clubhouse, which was used by over 700 members and others, to be classified as “ordinarily intended for private use”.   The pursuers had therefore failed on the first limb of the section.  It was not necessary to determine whether the second limb was satisfied.

[12]      In relation to the common law case, the issue was the extent of the defenders’ duty of care to the pursuers.  The matter fell to be determined by the application of the tripartite test in Caparo Industries v Dickman [1990] 2 AC 605.  The foreseeability of a trolley being on club premises and catching fire was a matter for proof.  However, the proximity of the parties posed a problem.  Whilst the pursuers offered to prove that the trolley had been left switched on, the mechanics of the fire were, according to the pleadings, uncertain.  The defenders had had no control over: the use or maintenance of the trolley in the three years after its purchase; the replacement of the battery; or where the trolley might be left overnight.  

[13]      A duty of care should be imposed when there were “close and direct relations” between the parties or a direct effect between the act and its consequence, such that the actor would anticipate that effect (ICL Tech v Johnston Oils 2013 SLT 1090, Lord Hodge at para [67]).  The person on whom a duty was to be imposed required to have “a measure of control over, and responsibility for, the potentially dangerous situation” and a “proximate relationship with a source of danger” (ibid, citing Sutradhar v Natural Environment Research Council [2006] 4 All ER 490, Lord Hoffman at para 38).  There was a “great distance” between the defenders’ alleged failure and the fire.  There was thus insufficient proximity between the parties.  Taking a general view of the whole circumstances, it was not fair, just and reasonable to impose a duty of care on the defenders.

Submissions
Pursuers
[14]      The pursuers’ overarching contention was that the Lord Ordinary had gone too far, too fast.  He ought to have allowed a proof before answer.  Only in rare and exceptional cases ought the court to dismiss an action on the grounds of relevancy (Jamieson v Jamieson 1952 SC (HL) 44, Lord Normand at 534).

[15]      The Lord Ordinary had applied the wrong test in relation to the application of the 1987 Act.  The fact that there was a material amount of economic activity in the clubhouse did not take it outwith the ambit of the Act.  The clubhouse was covered by the Act because it was not property of a description ordinarily intended for business or professional use.  Section 5(3) did not require the property to be used only for private purposes.  The actual use of the property was irrelevant to the application of the first leg of the subsection.  The clubhouse was property belonging to the members of a private club to which access was restricted.  It was, judged objectively, ordinarily intended for private use.  In any event, proof was required in order to ascertain the nature of the use of the property.  The second leg of the subsection referred to the subjective intentions of the pursuers.  That was also a matter for proof.

[16]      The 1987 Act required to be construed in light of the terms of the Directive, notably Article 9, which referred to damage to property “of a type ordinarily intended for private use or consumption” and which “was used by the injured party mainly for his own private use or consumption”.  The Lord Ordinary had failed to consider the emphasised words in the context of both the Directive and the Act.   In any event, he had not applied the test according to the particular circumstances.  Property did not cease to be private just because others were invited onto it or because a certain amount of economic activity took place in it.  That activity did not mean that the use was predominantly professional or commercial (see Moteurs Leroy Somers v Dalkia France [2009] ECR I-4733, para 28; Joint Law Commission Report: Liability for Defective Products (SLC No 45, 1977) App B “Proposals for a Council Directive” (9 September 1976) Explanatory Memorandum, article 19).  The pursuers’ income came overwhelmingly from subscriptions.  Other sources produced only 1 per cent of the total.  The clubhouse had a domestic, rather than a commercial, character (cf Charter v Race Relations Board [1972] 1 QB 545, Lord Simon at 901).

[17]      In relation to the common law case, the Lord Ordinary had erred in his application of the tripartite test in Caparo Industries v Dickman (supra).  There was no need to apply that test as the circumstances were closely analogous to other cases in which a duty of care had been held to arise (ibid, Lord Bridge at 618, following Sutherland Shire Council v Heyman (1985) 60 ALR 1, Brennan LJ At 43-44).  The trolley was where it might have been expected to be.  There was clear foreseeability of damage and proximity was “clearly satisfied”.  Product liability was a well-trodden territory and Donoghue v Stevenson 1932 SC (HL) 31 was closely analogous to the pursuers’ case.  The later cases were even more so in establishing that there may be a duty to bystanders as well as to consumers or purchasers (Stennett v Hancock & Peters [1939] 2 All ER 578; Farrugia v Great Western Railway [1947] 2 All ER 565; Clerk & Lindsell: Torts (21^st ed) para 11-18).

[18]      There was nothing unusual about seeking to impose a duty upon the defenders as the distributers of a defective product, intended for a particular use, going wrong at the location where that use was intended.  The purpose of a golf club locker room was to store golf equipment and clothing.  Matters might have been different if the trolley had caught fire in a supermarket or car park.  Cases of personal injury and physical damage were indistinguishable (Marc Rich v Bishop Rock Marine [1996] AC 211, Lord Scott at 230).

[19]      If the Lord Ordinary had been correct to apply the tripartite test, he had done so wrongly.  Such an application required to focus upon the facts of the particular case (Macdonald v Aberdeenshire Council 2014 SC 114, Lady Paton at 33; Marc Rich (supra), Lord Steyn at 236).  ICL Tech v Johnston Oils (supra) had been decided after proof.  Here, there was damage directly inflicted upon property.  The court should focus closely on foreseeability.  It was fair, just and reasonable to impose a duty of care in the circumstances.  The Lord Ordinary had overlooked the main thrust of the pursuers’ case that, had they carried out proper testing, the defenders would not have marketed the trolley without proper electronic safeguards.  Had they done that, the fire would not have occurred.

Defenders
[20]      The question under the 1987 Act was how the law treated a club.  The pursuers maintained that they were a private members’ club and that therefore their clubhouse was intended for private use.  However, the word “private” in the Act was not intended to be the opposite of “public”.  The Act permitted recovery where property was used by an individual for his own personal purposes, as distinct from commercial ones.  Property used in the context of communal activity over a certain size did not fall into the private category.  The same applied where there was substantial economic or commercial activity involved.  Once property was owned by an organisation, it was no longer private.  Private meant personal.  The use of “own” in subsection 5(3)(b) was significant.  Moteurs Leroy Somers v Dalkia France (supra) made it clear that the Directive did not apply to property intended for professional use.

[21]      The purpose of the Directive was to achieve an even level of consumer protection across the single market.  It had done so not by defining “consumer” but by limiting liability to an individual’s private property.  The original intention had been to protect all consumers, not only those buying the goods, but to limit liability to a fixed sum (see Joint Law Commission Memorandum: Liability for Defective Products (SLC 20 (1975), EEC Draft Directive attached at p 167, art 5)).  This intention had not been realised.  Rather, a revised text excluded damage to property “acquired or used for the purpose of [the individual’s] trade, business or profession” (Joint Law Commission Report (supra) p 79, App B, Proposals for a Council Directive (1976) art 6, p 88, art 19).  A wider concept was adopted in the final Directive.  The intention had been to exclude large scale damages claims, such as those to economic interests in the commercial sphere.  The Law Commissions had in mind a consumer as a natural person and not a collective group or organisation.  The paradigm consumer was a natural person (see Council Directive 85/577/EEC, Art 2).

[22]      The description “clubhouse” by itself suggested a use which was not by a natural person.  The pursuers were a club and not a natural person.  They were not a consumer as envisaged in the Directive.  A clubhouse was not intended for private use, but as something to share with others.  No individual could exclude any other member.  The clubhouse was open to hundreds of people.  The pursuers were a business or economic entity, whether or not they intended to make a profit.  The Directive was not intended to cover liability to organisations. 

[23]      On the common law case, this was not an extension of Donoghue v Stevenson (supra).  There the liability was to the consumer.  That was thought to be the extent of the duty at the time of the Law Commissions’ Joint Memorandum (supra, para 18).  There was no previous case instructing liability for damage to a third party’s property.  Those cases cited by the pursuers were of a different nature.  The pursuers’ proposed change involved the creation of a whole new area of liability not previously recognised.  Extension of liability in this general area had been at the instance of Parliament and the EU Institutions.  The court should be slow to expand liability further where Parliament had already legislated (Mitchell v Glasgow City Council 2009 SC (HL) 21, Lord Rodger at paras [51] and [63]).  Where there was no existing category of liability, application of the tripartite test was not sufficient (Caparo Industries v Dickman (supra), Lord Bridge at 618).

[24]      Even if the tripartite test required to be applied, the necessary elements were not present.  In Marc Rich v Bishop Rock Marine (supra), ICL Tech v Johnston Oils (supra) and Sutradhar v National Environmental Research Council (supra), emphasis had been placed on proximity in the sense of control over, or responsibility for, the situation.  In this case the involvement of the defenders was very small.  Their fault had been in failing to spot the exposed cabling.  The pursuers were seeking to impose a duty on the defenders to everyone, wherever the trolley went and in any year of its life.  There was no relationship with the consumer at all.  Neither proximity nor foreseeability was present.

Decision
[25]      In Mitchell v Glasgow City Council 2008 SC 351, Lord Reed quoted (at para [135]) the dictum of Lord Reid in Jamieson v Jamieson 1952 SC (HL) 44 (at 63) on the value of disposing of suitable cases on relevancy without inquiry into the facts, viz.:

“If it can be shown that, even if the pursuer succeeds in proving all that he avers, still his case must fail, it appears to me to be highly advantageous that time and money should not be spent on fruitless inquiry into the facts” (see also 2009 SC (HL) 21, Lord Hope at para [12]).

The advantage exists even although the power to dismiss should be exercised only in “rare and exceptional cases” (Miller v South of Scotland Electricity Board 1958 SC (HL) 20, Lord Keith at 33).  This is a case where the essential facts are all adequately averred by the pursuers.  No advantage, so far as any legal analysis is concerned, would be gained from sending the cause to a proof and discovering, for example, precisely how the pursuers operated or exactly where, in the vicinity of the locker room, the trolley had been left and why.

[26]      By the use of a double negative, section 5(3) of the Consumer Protection Act 1987 restricts the recovery of damages caused by a defective product to property which is “ordinarily intended for private use, occupation or consumption” and “intended … mainly for … own private use, occupation or consumption” by the person suffering the loss.  It broadly follows the wording in Article 9 of the EU Council Directive (85/374/EEC) dated 25 July 1985, which is expressly aimed at protecting the “consumer”.  It does not define consumer as a “natural person”, although that is done in other Directives (eg 85/577/EEC, Art 2), but its recitals do refer to the need to limit the scope of any liability to “goods for private use or consumption”.

[27]      The first issue is whether the pursuers’ clubhouse falls to be regarded objectively as “ordinarily intended for private use, occupation or consumption”.  As the Lord Ordinary recognised, the use of the word “private” is important.  Applying its ordinary meaning, “private”, as an adjective applied to the “use” made of an object, means use by a person in his private life as distinct from in the context of his public persona, as exemplified by, for example, his work in a profession, business or trade (see eg Shorter Oxford English Dictionary: meaning derived from the Latin).  This is consistent with the approach in Moteurs Leroy Somers v Dalkia France [2009] ECR I-4733 and the apparent intention of the Directive, as contained in the recitals, to limit liability to “goods for private use or consumption”, and in Article 9; the terms of which are reflected in section 5(3).

[28]      The idea is that, whereas there should be liability for damage to property used in a person’s private life, notably, but not exclusively, in a domestic setting and whether that person be a consumer of the product or not, that liability should not extend to property used by what might loosely be described as economic entities (whether private or not).  What is under consideration here is a clubhouse operated for the benefit of a large number of individuals.  That operation involves an economic union of persons, classified as members, in order to run a golf club.  Considerable sums of money are involved.  These include not only the substantial annual subscriptions but also the income derived from bar and catering sales, including those to non-members, even if these do not generate a net profit for the pursuers.  The members will introduce guests to the course and clubhouse.  The public can, and do, use the clubhouse in this way or simply by paying a green fee.

[29]      The pursuers are an economic operation, albeit that they may be, as they are in the pursuers’ particular case, a private club. So far as running a clubhouse is concerned, they may equally have been incorporated as a private limited company.  This is of little moment when applying the objective test.  The short point is that a golf clubhouse is not ordinarily intended for private use, such as that of an individual or perhaps a family or even a small group of friends.  It is for the communal use, based upon financial conditions, of a large number of members of the public who have either paid a subscription, tendered a green fee, happened to be a guest or are simply present at a function.  For similar reasons, approaching the second leg of the section, a clubhouse is not intended for a person’s “own” private use, but the use of many persons.  For these reasons, the case under the 1987 Act must be regarded as irrelevant.

[30]      The influence of the tripartite test in Caparo Industries v Dickman [1990] 2 AC 605 was recently explored in some detail, albeit in the context of personal injuries, in Thomson v Scottish Ministers 2013 SC 628.  It was explained (LJC (Carloway) at paras [46] to [49]) that, although the test was proffered in Caparo as one of abstract principle, in practice there was, and is, a need for courts to place greater significance on traditional situations in which it has been established that a duty of care does, or does not, exist (Caparo Industries v Dickman (supra), Lord Bridge at 618, following Sutherland Shire Council v Heyman (1985) 60 ALR 1, Brennan J at 43-44).  Caparo endorsed the idea that the development of the common law should be limited by the imposition of an “incremental test” (ibid, Lord Roskill at 628, Lord Oliver at 633; Customs and Excise Commissioners v Barclays Bank [2007] 1 AC 181, Lord Bingham at para 4).

[31]      Notwithstanding the desire in this jurisdiction to deduce from principle, the fundamental problem with the pursuers’ case, in terms of the reasoning in Caparo, is that there is no category of known liability into which its circumstances might be placed.  It was accepted that there was no case in which the supplier of a defective product had been found liable for damage caused by it to the property of a person who was neither buyer nor consumer and into which it had simply chanced to have been left.  If such liability were to be well founded in law, the world would effectively become the supplier’s neighbour (cf Donoghue v Stevenson 1932 SC (HL) 31, Lord Atkin at 44).  There would then require to be a radical re-adjustment of expectations, and financial arrangements, on the part of both suppliers and property owners.  However, such a proposition would need to be derived by analogy from a relevant line of authority.  There is none. 

[32]      It is not unreasonable, and not intended to be critical, to comment that the results of the pursuers’, no doubt diligent, researches have only produced two cases both from England, from just before and after the Second World War, which have little bearing on the circumstances here.  Stennett v Hancock & Peters [1939] 2 All ER 578 is a single judge case from the King’s Bench about the faulty repair of a lorry.  A wheel flange came off the lorry and injured a pedestrian.  This was a case about the physical injury of a person on the highway as a result of a recent defective vehicle repair.  Proximity was manifest and the case is far removed from the present circumstances.  Farrugia v Great Western Railway [1947] 2 All ER 565 was a decision of the Court of Appeal, but it involved a lorry driver trying to negotiate a bridge which was too low to accommodate the load which he was carrying.  Again it cannot be used as a springboard for extending the liability of suppliers of a defective product to damage caused to property anywhere that the product might have been left by third parties. 

[33]      In the absence of analogous authority, it is not possible to conclude that, at common law, there is a proximate relationship between the supplier of a golf trolley and the owner of a clubhouse, in which the trolley happened to be, three years after the supply, and over which the supplier had no control.  Leaving aside the issue of whether it was foreseeable that an electric trolley would be placed in a locker room or elsewhere inside a clubhouse, especially when switched on, it is certainly foreseeable that it might be in transit at all sorts of public places, including underground hotel car parks, ferries or road side facilities; to each of which it might cause indeterminate damage were it to go on fire.  This serves only to illustrate that the pursuers’ case is one which involves a substantial increase in existing known fields of liability.

[34]      In Mitchell v Glasgow City Council 2009 SC (HL) 21, Lord Rodger remarked (at para [51] that:

“Where the position of the parties is regulated … by a mixture of contract and statute prima facie there is little room for the common law of delict to impose a duty of care…”.

By analogy, the defenders’ liability in respect of defects in its products is regulated, so far as the purchasers are concerned, by the terms of the contract of sale.  In relation to foreseeable future users of the product, liability is, no doubt, governed by the neighbourhood principle in Donoghue v Stevenson (supra).  It is also governed by the terms of the 1987 Act, which apply specifically to damage to property.  The 1987 Act restricts liability to property in private use.  For the reasons already given, that does not cover damage to a clubhouse.  In these circumstances, there is, or ought to be, little room for the common law to be extended, where the legislature has declined to do so.  It is not entirely irrelevant to observe that it would no doubt be difficult for the defenders to obtain limitless product liability insurance, whereas the pursuers, as owners of the clubhouse, could have insured the premises with reasonable ease, given the ability to value the potential extent of any damage ab ante.  Were it necessary to enter into the abstract world of fairness, justice and reasonableness, this would not be a case in which to impose liability.

[35]      The court will therefore refuse the reclaiming motion and adhere to the Lord Ordinary’s interlocutor of 17 December 2015.