I INTRODUCTION TO THE PRODUCT LIABILITY FRAMEWORK
As a Member State of the European Union, English law relating to product liability changed significantly following the implementation of the legislation emanating from the European Commission. Directive 85/374/EEC was introduced in July 1985 in order to approximate the laws of the Member States in relation to liability of the producer for damage caused by defective products.2 It introduced a system of liability without fault on the part of the producer and was implemented in the United Kingdom through the Consumer Protection Act 1987, adding to the existing rights under the UK law of contract and tort.3
The European Directive seeks to protect victims and promote improvement in product safety. At the same time it aims to strike the correct balance between consumer protection and producers’ interests. This chapter provides an overview of how the English legal system attempts to achieve this, with reference to relevant case law and developments where appropriate.
On 1 October 2015, the long-awaited Consumer Rights Act 2015 (CRA) came into force. The purpose of this new legislation is to clarify, update and consolidate the various pieces of legislation that governed consumer rights including the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982 and the Unfair Terms Act 1977. It is considered to be ‘the biggest overhaul of consumer law for a generation’.4
II REGULATORY OVERSIGHT
The EU has created directives that govern certain products, for example, the Toy Safety Directive 2009/48/EC governs toy safety and the Cosmetics Directive 76/768/EEC ensures that cosmetic products within the EU are safe for consumers.5 For products that are not governed by a specific Directive, the General Product Safety Directive 2001/95/EC (GPSD) applies. Under the GPSD, producers are under an obligation to provide information on risks to consumers, monitor risks, recall dangerous products and respond to emergency safety risks.
RAPEX is the EU rapid alert system for dangerous consumer products with the exception of food, pharmaceutical and medical devices that are covered by other mechanisms. RAPEX allows 31 participating countries and the European Commission to exchange information on products (subject to EU harmonisation) that pose a risk to health and safety of consumers. This system ensures that relevant authorities or businesses are informed quickly so that they can takes measures to reduce the risk, for example, through recalls, warnings or withdrawal of the product.
Within the United Kingdom, there are a number of investigative bodies responsible for overseeing the safety of different consumer products. The Health and Safety Executive regulates workplace products, Trading Standards regulates consumer products, the Environmental Health Department regulates food and the Medicines and Healthcare products Regulatory Agency (MHRA) regulates pharmaceuticals and medicines. If there are concerns regarding the safety of a product, it should be reported to the appropriate body. Each regulatory body has a range of powers; for example, Trading Standards can demand a recall, prosecute or order products not to be sold.
Part 3 of the CRA6 enhances certain investigatory and enforcement powers. It gives powers to the Competition and Markets Authority, which can consider a complaint about a term in a consumer contract.7 The regulator may now take a more proactive approach to traders it considers are less than scrupulous in their dealings with consumers.
III CAUSES OF ACTION
There are three causes of action under which a manufacturer, distributor or retailer may be held liable for injury to persons or property caused by the supply of a defective product:
i Breach of contract
The normal principles of contract law apply to the sale of defective goods. The Sale of Goods Act 1979 continues to apply to business-to-business contracts where there is an implied term that the goods supplied under a contract of sale are of ‘satisfactory quality’. Consumer contracts are now governed by the CRA and the requirement of ‘satisfactory quality’, namely what ‘a reasonable person would regard as satisfactory’8 is a term of the contract.
Under contract law, only the purchaser of the product can bring a claim against the immediate seller or supplier. A third party who has suffered injury or damage as a result of the defective product will be unable to bring a claim under this cause of action (no privity of contract) and will have to turn to the Consumer Protection Act 1987 (CPA) or pursue a claim in negligence.
Strict liability is applicable under the CRA. A seller may be found liable even though there was no fault on its part and the fault in the product could not have been discovered by reasonable inspection. The consumer simply has to show that the product failed to comply with the conditions of sale, and that as a result of this breach injury, loss or damage was suffered.
If a seller is found liable, consideration should be given to the supply chain in order to determine whether an indemnity can be sought from another party. It is important that retailers ensure that any contracts with suppliers include enforceable indemnity provisions that enable them to recover any loss. Furthermore, prudent retailers should have product liability insurance.
If a breach of contract is established, under the CRA there is a new hierarchy of remedies available aimed to give clarity and further protection to consumers. In brief, the tiered remedies are (1) a short-term right of a 30-day period when certain faulty products can be rejected; (2) a right to have faulty goods repaired or replaced; and (3) a possible right to a price reduction or refund or a final right to reject.
Damages that result from the natural and probable consequence of the breach can be claimed.
While there is this cause of action, consumers are more likely to bring a claim under the CPA in light of the principle of strict liability afforded under the Act.
A claim in negligence can be brought against anybody in the supply chain who owes a duty of care to the buyer, but a claimant must prove that the manufacturer or supplier owed that duty of care and that there was an act of negligence that caused the injury or loss.9
The duty is to take reasonable care to ensure a product does not cause injury or loss to a consumer.
In contrast to bringing a claim under the CRA, a claimant does not need to be the purchaser of the product. This broadens the scope of potential claimants, but the principle of strict liability does not apply. A claimant has to show that the manufacturer or supplier was at fault, it has failed to take sufficient care and was negligent. This frequently makes bringing a claim in negligence more difficult.
The principle behind the remedies in negligence is to put the claimant in the same position as he or she would have been, had the negligent act not occurred.
iii Claims under the CPA
Part 1 of the CPA implemented the Product Liability Directive 85/374/EEC. In 2004, the Director General for Health and Consumer Protection stated: ‘the safety of products is a high priority for the EU. Our objective is to ensure a consistently high level of protection for each and every citizen.’10 By the introduction of strict liability, the CPA has eased the burden on claimants in proving their case.
Section 2 of the CPA states: ‘where any damage is caused wholly or partly by a defect in a product, every person to whom subsection 2 applies shall be liable for the damage.’
What is a product?
Section 1(2) defines ‘product’ as: ‘any goods or electricity and [...] includes a product which is comprised in another product, whether by virtue of being a component part or raw material or otherwise.’
Who is liable?
Section 2(2) defines the individuals who may be liable. The definition extends far beyond the manufacturer. Essentially, the CPA sets out four groups of individuals who may be liable:
- a the producer11 of the product (importantly, this will include the manufacturer and assembler of a finished product made from brought in components);
- b any person who holds him or herself out to be the producer of the product (through using a trademark or by putting his or her name on the product);
- c the first importer of the product into a Member State (from a place outside the Member State);12 and
- d the supplier may be held liable if the claimant requests the supplier to identify the individuals mentioned above within a reasonable period of time after the damage occurred and the supplier fails to comply with the request.13
There is a wide number of potential parties to sue, affording better protection for consumers.
What is a ‘defective’ product?
Section 3 of the CPA defines ‘defect’. It states that: ‘there is a defect in a product if the safety of the product is not such as persons generally are entitled to expect.’
When determining what individuals are generally entitled to expect a range of circumstances are taken into account, for example the marketing of the product (including packaging, labelling, instructions, warnings and intended use) and the relevant EU or UK standard or code of practice.14 This is an objective test. The question arises over what the public is entitled to expect. ‘The safety is not what is actually expected by the public at large but what they are entitled to expect.’15
The burden lies with the claimant to prove on the balance of probabilities that the product is defective.
In Michelle Buckley v. Henkel Ltd16 the claimant suffered a severe allergic reaction to a hair dye product. The product contained a chemical permitted under the EU Cosmetics Regulation 1223/2009 capable of causing an allergic reaction in some people. It was accepted that certain products carry an inherent risk and that some people generally could not be entitled to expect that certain products would be completely risk-free. The majority of people would not have experienced a reaction using the hair product. This product was accompanied by a leaflet with instructions and a warning that a severe allergic reaction might be experienced.17 The judge concluded the hair dye was not defective. The decision highlights the importance for cosmetic manufacturers to provide clear instructions and warnings to consumers sufficiently informing them of the risks associated with their products.
In the recent case of Boston Scientific18 the European Court of Justice was asked to determine whether a medical device was defective if it was in a group of products with a potential to be defective. Notwithstanding the absence of proof of the individual product in question having a defect, it was held that all the devices in the group could be classified as defective.
Who can bring a claim?
A claim may be brought by any person injured by the defective product, regardless of whether the product was purchased by the injured person.
A fundamental difference between a claimant bringing a claim under the CPA and in negligence is the principle of strict liability. In common with a claim under the CRA, there is no need for the individual to prove fault on the part of the producer. The claimant simply has to show that the product was defective and that the defect caused the damage suffered.
iv Criminal action
Under the General Product Safety Regulations 2005,19 no producer shall place on the market, supply or offer or agree to be placed on the market a product unless it is safe (Regulation 5). Definitions of ‘safe product’, ‘producer’, and ‘product’ are defined within the Regulations.
Criminal action may be brought either against an individual or a corporation if these Regulations are breached; the burden of proof is beyond all reasonable doubt. The power to investigate and prosecute for an alleged contravention falls to a number of authorities stated in Regulation 10(4). In England, this includes county councils, district councils and London borough councils. The maximum penalty is 12 months’ imprisonment or a fine of £20,000 (or both).
The Product Safety and Market Surveillance Package (PSMS) continues to be considered in the European Parliament, which will replace the GPSD. The PSMS comprises the Consumer Product Safety Regulations (CPSR) and the Market Surveillance of Products Regulations. The CPSR will incorporate the GPSD but also impose greater obligations, for example, detailed documentation and notification requirements to ensure consumer products are more traceable and easily identifiable. There will be extended and additional powers given to market surveillance authorities in order to enforce the Regulations. The Regulations do not govern civil liability; breach of the CPSR occurs when a ‘dangerous product’ is placed on the market whereas under the CPA the product has to be ‘defective’; however, a breach of the Regulations will be useful evidence in a civil claim. Deadlock remains over the wording of the Regulations, and while the EU Parliament adopted the proposals in 2014, the European Council has blocked them. The main area of disagreement is in relation to the issue of the country of origin marking (i.e., ‘made in’) of consumer products.
Many product liability claims in the UK are determined without going to trial. Notwithstanding issues in respect of liability, the defendant will often take into account customer relationships, supplier relationships and business responsibilities; the producer will be keen to minimise publicity and avoid reputational harm.
Who can bring a claim?
In the event that a matter proceeds to trial then the issues are determined by the judge in the light of the evidence presented to the court.
The English legal system encourages parties to engage in early neutral evaluation, mediation or joint settlement meetings to explore the possibility of settlement in preference to a trial.
ii Burden of proof
Generally, the burden of proof is on the claimant to show on the balance of probabilities that the product is defective and that there is a causal relationship between the defect and the damage suffered.
Earlier cases of Ide v. ATB Sales20 and Lexus Financial Services v. Russell21 suggested that it was not an onerous task for claimants to overcome this burden. On occasion, the court may accept proof by inference. It is open to a judge to find a product defective if it failed in its use and no other plausible explanation is available.
In Ide v. ATB Sales, where the handlebars on a bike fractured, the claimant was unable to identify the particular nature of the defect; however, the judge was willing to accept that a manufacturing or design defect was ‘not improbable’ and therefore found for the claimant.
Claimants frequently argue that the complexities of products make it almost impossible to prove a specific defect. It can also be extremely costly for claimants to obtain expert evidence. Producers believe it is essential for the burden to remain with the claimant in order to strike a balance between the producers’ and consumer interests.
More recent cases arguably go some way to demonstrating that the burden does remain with the claimant to prove that the product is defective, albeit on the balance of probabilities.
In Love v. Halford22 the claimant brought a claim against a supplier on the basis that the steerer tube of the bike had fractured causing the claimant to fall. The judge considered that there was no evidence of any type of failure of the steerer tube and therefore dismissed the claim. He felt that there must have been a prior event in which the steerer was damaged and not repaired properly and that the probable cause of the final fracture was the result of a second accident – notwithstanding that the judge could not reach a conclusion as to how it happened.
Meanwhile, in Hufford v. Samsung Electronics,23 a case involving a fridge freezer that caught fire, the claimant argued that the fire originated inside the appliance. The defendant argued that it was combustible material outside of the fridge freezer that caught fire, which subsequently spread to the appliance. The court accepted the opinion of the defendant’s expert. The judge held that the claimant had failed to discharge the burden of proof, which required evidence that (1) there was a defect in the product or (2) the fire had started in the appliance.
The judge in Hufford clarified that the burden of proof remains on the claimant throughout. However, the claimant does not have to identify the precise defect in the product and it is enough to prove that there was a defect in broad or general terms.
It remains to be seen what impact the decision in the Boston Scientific case will have on claims under the CPA in relation to the burden of proof.
The recent Court of Appeal judgment in Howmet24 is a useful reminder of the clear principle – already stated in earlier cases but reaffirmed – that if a user of a product knows it is defective but continues to use it, then the manufacturer may no longer be liable if a claim for compensation for injury or loss follows as there has been a break in causation. As Jackson LJ stated, ‘[o]nce the end user is alerted to the dangerous condition of a chattel, if he voluntarily continues to use it thereby causing personal injury or damage, he normally does so at his own risk’.
If the claimant proves there is a defect in the product that caused damage there are some limited defences.
It was considered by the European Commission that such defences should be available to give balance to the producers’ interests. They can be found in Section 4(1) of the CPA and cover the following:
- a The development risk or state-of-the-art defence: ‘the state of scientific and technical knowledge at the relevant time was not such that a producer […] might be expected to have discovered the defect […] in his products’. This defence is the subject of fierce debate especially in the pharmaceutical industry.
- b The defect did not exist in the product when supplied. Some products suffer wear and tear, need servicing or are misused. As long as the defendant has provided appropriate instructions and warnings and can prove that the product was not defective when it was supplied, they can successfully defend the claim.
- c The product was neither supplied in the course of business nor with a view to profit.
- d The producer did not at any time supply the product to another, for example, the product was stolen or was a counterfeit.
- e The defect was owing to compliance with any requirement under any enactment or with any Community obligation.
- f If a supplier produced only a component of the product it will have a defence if the defect was in the subsequent product and was owing to the design of the subsequent product.
What is clear is that it is no defence to say that the manufacturer took all reasonable care to ensure there was no defect in the product.
Under the CPA, claims for personal injury and property damage should be brought within three years of the date from which the cause of action arises (under the Limitation Act 1980).25 If the damage was not discoverable at the time that it happened, the three-year limitation period will run from the date that the claimant discovered or should reasonably have discovered that the harm was attributable to the defective product. The court has discretion to extend this period when they consider it is equitable for them to do so.26
Under Section 4 of the CPA, a 10-year long stop applies (i.e., an individual loses the right to bring a claim 10 years from when the product was first put into circulation, if proceedings have not been started). It is, however, not always possible to know when the product was put into circulation. If the product has a life expectancy of less than 10 years, provided the producer gives instructions on the need to service/renew/dispose within that period, they may not be liable for a product that develops a fault beyond its life expectancy.
The time limit for contractual claims for property damage (i.e., claims under the Sale of Goods Act 1979 or CRA) is six years from the breach of contract.
iv Personal jurisdiction
A first importer into a Member State may be found liable under Section 2(2)(c) of the CPA. The purpose of this is to ensure that consumers are not disadvantaged by having to bring a claim in another jurisdiction that may have more difficult barriers to satisfy. This will not prevent the manufacturer from bringing a claim for an indemnity from the manufacturer abroad.
A significant development is the decision in Allen and Ors v. DePuy International Ltd,27 which concerned a group of 10 claimants from countries outside the EU. The claim arose out of alleged personal injuries from prosthetic hip implants manufactured in the UK. The claimants had their implants in New Zealand, Australia and South Africa. The court determined that Private International Law (Miscellaneous Provisions) Act 1995 (PILA) should be used to determine the applicable law. Under Section 11 of PILA, the general rule is that the relevant law is the law in country where the injury was sustained. Section 11(2) can be displaced in exceptional cases under Section 12(2), but this is only in rare circumstances. In this case it was held that Section 11(2) had not been displaced and therefore the relevant law was that of New Zealand and South Africa.
The court has also considered whether the CPA extended to injuries caused outside the UK in situations where English law did apply. The judge held that even in cases where English law did apply, the claims fell outside of the territorial scope of the CPA where injuries were sustained outside the UK.28 There is nothing in the statute that suggests it applies outside of the UK/EEA.
v Expert witnesses
The UK allows evidence from expert witnesses. The role of an expert is to explain industry requirements and evolving safety considerations and to inform the judge of the state of the art in relation to product safety. Product liability cases can involve highly complex products and decisions are often determined based upon which expert gives more convincing evidence. The cases of Love and Hufford demonstrate the importance of obtaining robust expert evidence.
If a defendant denies liability prior to proceedings, it should disclose documents in its possession that are material to the issues between the parties in order for the claimant to assess whether there is sufficient evidence to progress a claim. If necessary, the claimant may apply to the court to seek an order for the proposed defendant to disclose documents with a view to assisting the dispute to be resolved without proceedings.
Once proceedings have been commenced, the parties will be obliged to disclose all documents upon which they rely, which must include those that may adversely affect their own case, another party’s case or indeed support another party’s case. Parties are under an obligation to carry out a reasonable and proportionate search for these documents. Each party is entitled to have copies or inspect the documents that are not subject to legal professional privilege.
Section 2(5) of the CPA makes it clear that where two or more persons are liable, their liability is joint and several. A party is entitled to bring a claim against another party if it is felt that another party has contributed to the defect. It is important that when a claim is brought, the defendant considers its relationship with other parties in the supply chain. Contracts should be considered, and, where there are no contracts in place, it is necessary for parties to consider whether an indemnity can be obtained from another party.
viii Mass tort actions
Group actions are permitted in the UK. There are two main types of collective redress mechanisms: group litigation orders (GLOs)29 and representative actions.30 GLOs are made by the court where numerous claims give rise to common issues of law or facts. A GLO is an order by the court for the claims to be managed together. Individual claimants must enter themselves on a group register. It is not necessary for the same solicitor or law firm to conduct the case for all the individual claimants.
Representative actions are made where there is more than one person bringing a similar claim against the same defendants. Each claimant has to opt-in to be considered as part of the action. Any court order made binds the persons represented as a party.
Collective redress mechanisms for consumers have been increasingly considered by policymakers. The European Commission adopted a 2013 Recommendation setting out common principles to be applied by Member States to be implemented by July 2015. However, they are not binding and it is clear that Member States have differing views.
Section 5 of the CPA entitles consumers to sue for compensation, death, personal injury and damage to private property (not business) if the amount of the damage to property is valued in excess of £275. It is not possible to recover for pure economic loss. The damages awarded fall into two main categories: general and special damages.
This seeks to compensate claimants for pain, suffering and loss of amenity. In order to make an assessment, the court will wish to consider medical evidence to support this claim.
The appropriate award of damages is determined by the judge. The Judicial College Guidelines are now a well-known source of information for both judges and practitioners when considering the level of awards. The Guidelines set out a wide variety of types of injury within monetary brackets. Their purpose is to achieve consistency between awards; however, review of previous reported cases remains an important tool to assist in the exercise.
This covers financial loss and expenses (past and future) arising from the injury. It covers areas such as loss of earnings, the cost of care, travel and miscellaneous items. The claimant is under a duty to mitigate his or her loss.
The claimant is not allowed to recover losses that are considered to be too remote. It must be a consequential loss that is within the reasonable contemplation of the parties.
Under the CPA, in contrast with the CRA, there is no entitlement to recover the cost of the defective product itself; for example, if a kettle has an electrical fault and catches fire causing damage to the kitchen – there can be no claim for the kettle but a claim does lie in respect of the damage to the kitchen.
V YEAR IN REVIEW
English product liability law has been heavily shaped by a myriad of European Regulations and Directives, and following the 2016 vote in the UK to exit the European Union, much has been written about the status of existing English law that has been derived from Europe. While the position will fall to be finalised as part of the withdrawal process, it appears that the intention behind the Great Repeal Bill (which is to be introduced in the next Queen’s Speech in spring 2017) will be to encompass all EU laws that are in force as of the moment the UK leaves the EU within domestic legislation, and, therefore, the status quo will be preserved in relation to product liability law in England and Wales. Thereafter, it will be for Parliament to determine which laws governing product liability will remain, be amended or be repealed.
The PIP breast implant ‘scandal’31 has continued to be in the news, having been the subject of a preliminary ruling by the Court of Justice of the European Union (CJEU) in February 2017 in the case of Elisabeth Schmitt v TÜV Rheinland LGA Products GmbH.32 The CJEU has confirmed that the purpose of notified bodies under the Medical Products Directive is to protect end users. However, it has been left up to national courts to decide if this creates a direct liability.
Product recalls can result in the destruction of an excellent reputation of a manufacturer. If you are going to do a recall, it is vital to ensure that you have the correct fix and sufficient product to meet the demand of the recall. A proper recall procedure should be in place, and good contacts with suppliers should be maintained, including a dialogue on how recalls will be managed. In 2016, Samsung had to recall the Galaxy Note 7. This particular recall shows the power of social media, as from the launch customers were posting their experiences of overheating batteries on the phone, fires and explosions. An exchange programme was initiated, and newer models of the Note 7 were provided to customers. However, a replacement model caught fire in October 2016, and Samsung launched a product recall; the Note 7 was then permanently discontinued. Several airlines banned the Note 7 on planes, and a number of customers experienced difficulties trying to return their device to Samsung as some postal forces would not deliver them. The recall is likely to cost Samsung a significant sum in financial terms, and the cost of any loss of reputation remains to be seen.
If the PSMS passes through the European Parliament, manufacturers, distributors and importers will find themselves facing greater obligations, for example, the requirement to draw up technical documents containing details of any risk management that was undertaken.33 In contrast to the Product Liability Directive, the Regulations have direct effect, and, therefore, they will not need implementing in the UK. For manufacturers, distributors and importers, it is, therefore, vital to understand the proposed changes now and to take precautionary measures so they are prepared.
In July 2017, the European Commission will assess the practical impact of the Recommendation regarding Collective Redress and determine whether further measures should be proposed.
1 Fiona East is a partner at Weightmans LLP.
2 European Commission – Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee – 8.9.11.
3 Article 13 of Directive 85/374/EEC.
6 Section 70; Schedule 3(1) and (2) and Schedule 5 of the CRA.
8 Section 9(2) of the CRA.
9 Howmet Ltd v. Economy Devices Ltd  EWHC 3933; this case involved a factory fire in which the factory owner brought a claim in negligence and breach of statutory duty. It was held that the manufacturer had breached its duty of care but there was insufficient evidence on causation. The case was upheld on appeal ( EWCA Civ 847). Weightmans LLP acted for Howmet.
11 Section 1(2) defines the producer as the person who manufactured the product; in the case of a substance which has not been manufactured, the person who won or abstracted the product; or if the product has not been manufactured, won or abstracted but essential characteristics of the product are attributable to an industrial, or other process, the person who carried out this process. This means that a claimant can bring a claim against someone who obtained defective raw materials, a person who manufactured the product or a defective component.
12 This must be in the course of business and for the purpose of supplying it to another (Section 2(2)(c) of the CPA).
13 Section 2(3) of the CPA.
14 Section 3(2) of the CPA.
15 A and Others v. The National Blood Authority and Others  3 All E.R. 289.
16 25 November 2013, St Helens County Court, DDJ Ranson.
17 DDJ Ranson said: ‘The detailed instructions for the use of the hair product are contained in the leaflet and it is intended and expected that these would be read by the user. In this case I find the instruction leaflet in the hair product is clear. It is therefore clear from the instructions that there is a risk of an allergic reaction and a number of warnings and precautions are highlighted.’
18 Boston Scientific Medizintechnik GmbH v. AOK Sachsen-Anhalt – Die Gesundheitskasse (C-503/13), March 2015.
19 Implementing the General Product Safety Directive 2001/95/EC.
20  EWCA Civ 424.
21  EWCA Civ 424.
22  EWHC 1057 (QB).
23  EWHC 2956 (TCC).
24  EWCA Civ 847.
25 Section 11A.
26 Section 33 of the Limitation Act 1980.
27  EWHC 753 (QB).
28 ‘In my judgment wherever one draws the line, consumers who suffer damage outside the EEA and who have no connection with the EEA, and where marketing and supply of the defective product was outside the EEA are not within the scope in difficult cases will have to be determined upon the facts of those cases. There will often be difficulties with the territorial limits of any statute/directive.’
29 CPR 19.11.
30 CPR 19.6.
31 http://www.nhs.uk/Conditions/PIP-implants/Pages/Introduction.aspx – PIP breast implant.
32 Preliminary ruling in Case C-219/15.
33 Product Safety and Market Surveillance Package, Com (2013) 78 Final – Brussels, 13 February 2013.