Goodlife Foods Ltd v Hall Fire Protection Ltd

A wide exclusion clause in a commercial contract may satisfy the reasonableness requirement under the Unfair Contract Terms Act 1977 where the parties have broadly equal bargaining power, the customer can obtain insurance, and the clause is sufficiently drawn to its attention. A clause purporting to exclude liability for death or personal injury is ineffective to that extent, but the remaining exclusion may be upheld if reasonable. A fire suppression system comprising electrical and mechanical components is not necessarily one item of electrical equipment. The court may determine that issue on an amendment application where the material facts are established and no fuller trial would assist. A claim under statutory safety regulations is not necessarily subject to the product-liability longstop period.

Goodlife claimed losses exceeding £6 million after a fire in an industrial fryer. It alleged that a fire suppression system supplied and installed by Hall Fire in 2002 had failed because of a defective compression joint.

The contractual claim was statute-barred. Hall Fire relied on clause 11 of its standard terms to exclude negligence liability. Goodlife also sought permission to amend to plead breach of statutory duty under section 41(1) of the Consumer Protection Act 1987 and the Electrical Equipment (Safety) Regulations 1994. The issues were whether clause 11 was incorporated and reasonable, whether the system was electrical equipment, and what limitation period applied.

1. Clause 11 was incorporated. Hall Fire had sent its quotation with the standard terms and conditions. The terms were therefore incorporated as a whole. Clause 11 was not, on the facts, an unusual or onerous term requiring further notice. Even if it had been, the reference to the terms, the introductory warning that they provided for no damages, and the opportunity to consider them were sufficient.
2. Construction. Clause 11 excluded liability for negligence and specified contractual liabilities. The words referring to damage to persons purported to exclude liability for death or personal injury, but that exclusion was ineffective under section 2(1) of the Unfair Contract Terms Act 1977. The clause did not exclude civil liability for fraud. Part 3 offered insurance at additional cost but imposed no obligation to insure.
3. Severance and reasonableness. Following Trolex Products Limited v Merrol Fire Protection Engineers Ltd, the ineffective exclusion of death or personal injury could be disregarded and the remaining exclusion assessed for reasonableness. Hall Fire discharged the burden under section 11(5) of the 1977 Act. The parties were of broadly equal bargaining strength, both could insure, and the allocation of catastrophic fire risk to the customer was commercially sensible.
4. Statutory claim. The fire suppression system as a whole was not electrical equipment within the 1994 Regulations. Its electrically operated control box and gas generator did not make the mechanically operated pipework and nozzles electrical equipment. The proposed claim based on the defective compression joint therefore had no real prospect of success. A more focused claim concerning a design flaw in an electrical component was not wholly excluded.
5. Limitation. It was reasonably arguable that a section 41(1) claim was subject to the ordinary six-year limitation period running from actionable damage, rather than the ten-year longstop applicable to Part 1 product-liability claims.
6. The existing claim was dismissed. Permission to amend the existing draft was refused, subject to Goodlife being permitted to consider a properly particularised substituted claim.