Trebor Bassett Holdings Ltd & Anor v ADT Fire and Security Plc

In a commercial “battle of the forms”, the court applies the traditional offer-and-acceptance analysis unless the parties’ documents and conduct establish a clear contrary intention. A fully performed transaction will ordinarily evidence a binding contract.

A specialist supplier undertaking design work is generally required to exercise reasonable skill and care. That obligation is not ordinarily a guarantee of success. A fitness-for-purpose term requires the particular purpose to have been made known and the necessary reliance to be established.

A limitation clause referring to a non-existent annual service charge is incapable of operation and cannot be rewritten by the court. Contributory negligence may reduce damages where the contractual breach is co-extensive with a duty in tort. Here, the claimants’ failure to provide segregation and sprinklers justified a 75% reduction.

The claimants operated a confectionery factory at Pontefract. They engaged the defendant to design, supply, install and commission a carbon-dioxide fire-suppression system for popcorn elevators and hoppers after transferring an oil-pop production process from Leeds.

A fire in June 2005 destroyed most of the factory. The claimants alleged contractual and tortious liability, including breach of design obligations, and sought substantial damages. The defendant relied on its standard terms, including a limitation of liability, and alleged causation, contributory negligence and failures in the factory’s fire protection arrangements.

The principal issues were which contractual terms applied; whether the defendant warranted the system’s effectiveness or owed only duties of reasonable skill and care; whether the system was negligently designed; the cause and spread of the fire; and the effect of the claimants’ own fire-safety failures.

1. Contract formation. The transaction was fully performed and a binding contract existed. Applying Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209; [2010] Lloyd’s Law Rep 357, the defendant’s quotation was an offer and the claimants’ purchase order was a counter-offer accepted by performance. The claimants’ terms therefore governed. There was no proved prior course of dealing.
2. Contractual obligations. The defendant owed an implied obligation under section 13 of the Supply of Goods and Services Act 1982 to exercise reasonable skill and care in designing the system. The specification’s reference to British Standard 5306 Part 4 supplied a general benchmark, not a warranty that all fires would be prevented or extinguished. No fitness-for-purpose term arose because no particular purpose had been communicated and the necessary reliance was absent.
3. Limitation. Even if the defendant’s terms had applied, the limitation clause was incapable of operation. It depended on an annual service charge, whereas this was a supply and installation contract with no such charge. The court could not rewrite the clause.
4. Breach and causation. The hopper contained a developed fire, with smouldering popcorn below and flames across the surface. The defendant failed to design for the risk of a deep-seated fire and failed adequately to consider the type and location of the heat sensor. The fire spread when burning popcorn discharged onto the floor and was scattered while operatives attempted to extinguish it. The defendant’s breach caused the fire in the oil-pop area and the absence of sprinklers and segregation did not break the chain of causation.
5. Contributory negligence. Under section 1 of the Law Reform (Contributory Negligence) Act 1945, the claimants’ failure to provide fire segregation and sprinklers was highly unreasonable and had significant causal consequences. Damages were reduced by 75%. The failure to train operatives in manual activation of the system was negligent but caused no additional reduction.
6. The claimants succeeded on liability, subject to the 75% reduction. Quantum and detailed ownership issues were left for later determination. Counsel were directed to draw up an order.