Coal Pension Properties Ltd v Nu-Way Ltd

A manufacturer may owe a duty to warn users of an identified serious danger emerging after manufacture. The warning must make users as safe as reasonably possible, but need not create undue alarm or identify an uncertain technical vulnerability. The claimant must still prove that an adequate warning would probably have been heeded and would have avoided the loss. Where property damage affects a landlord’s reversionary interest, damages are generally measured by the diminution in value of the reversion, not the cost of repairing property belonging to a tenant.

The claimant, the freeholder of premises occupied by BHS, claimed damages in negligence after a gas booster manufactured by the defendant failed and caused an explosion. It alleged that the defendant had failed to warn users, by August 1998, of the risk posed by older, unmodified boosters and inadequate maintenance.

The court considered whether a more specific warning should have been issued, whether such a warning would have prevented the explosion, whether the maintenance regime constituted a novus actus interveniens, and whether the claimant could recover repair costs or only the diminution in value of its reversion.

1. Duty to warn. A manufacturer may owe a duty to take reasonable steps to warn those likely to be affected by a serious danger discovered after manufacture. The warning must make the user as safe as reasonably possible, having regard to the level and obviousness of the danger and the need to avoid undue alarm. The claimant must prove causation in the usual way.
2. By August 1998 the defendant knew of three incidents involving fracture of the fan casing and knew that older, unmodified boosters remained in use. Its existing product information and handbook did not sufficiently focus on the risk arising from inadequate inspection and maintenance. A warning should have stated that boosters manufactured before February 1998 might suffer casing failure if not properly maintained, and stressed the importance of proper inspection and maintenance. It was unnecessary to use the expression catastrophic failure or to identify particular bearing components because the precise vulnerability remained uncertain.
3. The claimant failed to prove that the warning would have been heeded and the loss avoided. The evidence showed poor supervision, inadequate documentation and a low standard of maintenance at the premises. The claim therefore failed on causation.
4. The court considered, obiter, the alternative argument based on intervening conduct. The relevant inquiry required consideration of whether the later conduct made the original wrongdoing merely historical, whether it was deliberate or wholly unreasonable, whether it was foreseeable, and whether it was wholly independent of the defendant’s responsibility. Applying that approach, the court would have found no break in the chain of causation. Allowing worn bearings to continue until obvious noise, vibration and heat appeared could be negligent, but it was not established that the relevant personnel should have foreseen an explosion.
5. The claimant’s damages were confined to the diminution in value of its freehold reversion. The general rule applied because the repairs concerned property leased to BHS, and recovery of the repair costs would have constituted unrecoverable economic loss. The claim was dismissed, with judgment for the defendant.