„(…) Mr Justice COOKE:
1. There are three applications for determination by the Court in this
action where the claimants AWSL, who were bareboat chartered owners of
the ship Baltic Eider claim against the second defendants (WFI), a Finnish
company which designed and manufactured the engines for the vessel
and the first defendants (WUK), an English registered company which
supplies spare parts, service engineers and technical data to owners of
those engines in this country. Baltic Eider had two W. 46 engines installed
when the vessel was built by Hyundai in 1989 and which were subject
to a three-year guarantee for which WFI was responsible. In 1993 WFI
updated the engines...
2. On Aug. 5, 2001, a serious fire occurred in the port engine. It is AWSL's
case that this originated at unit 4 of the port engine and resulted from
the loosening of an erosion plug on the fuel injection pump of that unit …
AWSL contends that WFI and WUK were or should have been well aware
of this, because of previous experience on a similar engine, the W. 32,
where they had issued advice or warnings to customers. No such advice
or warnings were given to W. 46 owners. The sum claimed is in excess of
U.S.$5 m.
3. … The first application is WFI's challenge to the jurisdiction of the Court
to hear the claim against it on the basis that it is domiciled in Finland
and is therefore entitled to insist on being sued there under art. 2 of
Council Regulation 44/2001. WFI maintains that, because there is no
real issue that AWSL may reasonably ask the Court to try on its claims
against WUK, there is no basis for bringing WFI into the jurisdiction under
art. 6(1). WFI also maintains that there is no other basis, whether under
art. 5 or otherwise whereby it can be brought into the jurisdiction. The
second application is that of WUK which has applied for reverse summary
judgment under Part 24 on the basis that AWSL has no realistic prospect
of success in pursuing it. The third application is an application by AWSL
for permission to amend its particulars of claim which is opposed on the
basis that the new pleas also have no realistic prospect of success.
4. In practice therefore, the main issue between the parties is whether
or not the claim, whether as originally formulated or as subsequently
formulated, has any realistic prospect of success against WUK, although
other issues arise in relation to WFI's jurisdictional challenge should it
succeed on this point.
5. The following undisputed facts are relied on by AWSL:
i) AWSL has an existing and long-standing relationship with WUK as a
distributor and supplier of spare parts for a variety of engines (including
but not limited to W. 46's). WUK has also supplied engineers, who have
provided services and participated in work on engines fitted to AWSL
vessels.
ii) The local W. companies (here WUK) support the operations of the W.
Group in their respective countries, and WUK is the local company in the
U.K.
iii) WUK is responsible for servicing W. engines sold by the relevant
factory to WUK's customers including AWSL, on request, as evidenced
by the WFI document entitled "WFI Responsibility List/Engines and
Installations".
iv) Generally WUK's business concerns the supply of spare parts to WUK's
customers and the provision of servicing to such customers including
AWSL, on request. In carrying out the latter function, WUK's service
engineers will endeavour to use their skill, experience and training.
v) In terms of after sales service, the system has been for engines sold to
be part of the responsibility of the local network company and WUK has
aimed to liaise directly with U.K. customers for the servicing of the
engines and the supply of spare parts, in particular since 1998.
vi) Each local service network company (here WUK) has specially
appointed fully dedicated contact people to handle technical inquiries.
vii) In 1997 WUK started a "Key Account Manager" system where each
customer was assigned to a manager within WUK. The Key Account
Manager requested that all orders be placed through WUK. In practice
AWSL had always ordered 95 per cent. of its spares requirements through
WUK.
viii) WUK knew which of its customers had W. 46 engines including
AWSL.
ix) The local network service company (here WUK) sent any bulletins or
service letters prepared by a W. factory to its (WUK's) customers and all
technical bulletins and service letters were also copied to WUK's service
department for the attention of the WUK Service Superintendent and
WUK's service engineers. Furthermore WUK issued directly technical
information that was within the guidelines of the product factories. (WUK
maintain that all design issues are matters for WFI alone).
x) Such bulletins and service letters commonly contained statements such
as "for more details and for supply of packages please contact your local
W. Service Station" (i.e. in the present case WUK).
xi) The Operation & Maintenance Support section of the W. 46 engine
spare parts catalogue includes guidance notes on the "Structure and
usage of the Spare Part Catalogue", it being stated, "About prospective
modifications and changes in the specifications the customer will get the
information through Spare part notices, Service letters and After Sales
Information if needed".
xii) Between the beginning of 1998 and Aug. 5, 2001, 14 technical
documents were provided by WUK to AWSL consisting of one maintenance
instruction, six service letters, three technical bulletins, one data and
specification document, one operating instruction document and two
spare parts notices. (These documents were, according to WUK all
documents into which they had no input and which were produced entirely
by WFI).
xiii) WDSL received, and would have sent to all applicable W. 32
customers based in the U.K., the Technical Bulletin dated Aug. 1, 1995
(the 1995 Warning Bulletin) entitled, "Safety aspects on and maintenance
of fuel supply system of VASA 32" (the W. 32 Engine). WUK admits that
from January, 1997 it must be taken as having known matters set out in
the 1995 Warning Bulletin, and specifically admits that it must be taken to
have known that:
a) serious fuel leakage had occurred in the low pressure fuel supply
system of W. 32 engines and that a few such leakages had led to a fire;
b) experience of use of a copper washer with the erosion plugs on the fuel
injection pumps used on W. 32 engines indicated that it was preferable to
use a steel washer;
c) the recommended tightening torque of erosion plugs was increased to
250 NM for L'O. fuel injection pumps used on the W. 32 engines.
(The existence of any link between a. b. and c. however is very much in
issue).
xiv) WUK did not send the 1995 Warning Bulletin to AWSL.
xv) …
xxv) The spare parts kits were described as follows "sealing set for pump
overhaul".
xvi) The spare parts kits were not supplied with any instructions as to
their use.
xxvii) The spare parts kits did not include an erosion plug nor a washer.
xxviii) At the time that WUK supplied the spare parts kits, WUK knew of
the 1995 Warning Bulletin and the 1999 Warning Bulletin, but neither
provided the Bulletins to AWSL nor provided any warning to AWSL, nor
told AWSL that: (…)
6. The following facts are relied on by WUK (and WFI):
i) WUK did not design or supply to Hyundai the original engines of Baltic
Eider or their fuel pumps.
ii) WUK did not write, or have any responsibility for or input towards, the
Operations and Maintenance Manual, the Spare Part Book or any updates.
iii) WUK did not write, or have any responsibility for or input towards
technical documents except to distribute them under the WFI imprint.
iv) WUK had staff engineers who sent service reports to WFI in case of
need but WUK had no responsibility for what use WFI made of them. [It is
however accepted by WUK that they also sent direct reports to AWSL].
v) WUK was hardly ever responsible for engineers attending on Baltic
Eider, without representatives from WFI also being present. They attended
on their own only twice in the 13 years before the fire. (WUK arranged
the provision of engineers in September, 1998 and August, 1999 for work
on camshaft and main bearings respectively, but it is accepted that WUK
engineers attended with and under the supervision of WFI engineers on
other occasions).
vi) WUK did not provide any engineering services to AWSL for Baltic Eider
in relation to fuel pumps.
vii) WUK did not supply any parts or services to Baltic Eider in Finland.
That was effected by WFI.
viii) WUK was not responsible for the R & D tests that took place between
1989 and 1998, which were arranged by WFI.
ix) WUK did supply, but did not design or test, engine parts in the U.K.
x) AWSL obtained parts and services for Baltic Eider from third parties
other than WFI and WUK.
xi) WUK did not supply spare parts to AWSL in the years 1993 to 1996
when this was effected by another U.K. company, connected to the W.
Group.
AWSL's claim
7. In its draft re-amended particulars of claim AWSL makes a series of
allegations against WFI and WUK without, in many instances, drawing any
distinction between the two. WUK makes much of this, pointing out that
it was not the designer or manufacturer of the engines and that it did not
itself produce the technical information which was circulated to engine
owners. It denies any special relationship of any kind beyond the usual
arms length relationship of a spare parts supplier and supplier of service
engineers, contending that there is no basis for the tortious duties alleged
by AWSL. Furthermore it maintains there is no basis for any alleged
breach of contractual duty. On the basis of the undisputed facts and the
current state of the law which, it says, is well settled, there is no case to
be made against it and the only reason for its presence in this action is to
enable AWSL to seek to bring WFI within the jurisdiction on the basis of
art. 6 of the Regulation. The case against it must be scrutinized carefully,
in particular because of the jurisdictional implications for WFI, whereupon
it will be seen, according to WUK, that there is no seriously arguable case
against it.
8. In par. 11 of its proposed statement of case, AWSL alleges a special
relationship between itself and both WUK and WFI. A series of factors are
relied on in this context, including the nature of relationships between
ship owners and their engine builders who continue to monitor the
progress of those engines and provide for the owners. Reliance is placed
upon the provision of spare parts, the co-operation in research and
development, and the reliance of AWSL upon WUK and WFI for technical
assistance in the shape of technical bulletins and updating information.
It is pleaded that numerous contracts were entered into with WUK and
WFI for the sale and supply of spare parts for the engines and their
associated fuel injection pumps and for the supply of services by the
personal attendance of W. service engineers to the vessel for servicing
and/or maintenance and/or repair of the W. 46 engines and associated
parts, including the fuel injection pumps. In pars. 12 to 14 AWSL alleges
that its reliance was reasonably foreseeable in relation to information,
recommended alterations to the engine or associated parts and warnings
of any matters which might affect the safe operation of these items or
might present a hazard to property or life. It is alleged that WUK and WFI
assumed direct responsibility to AWSL to give such advice, information
and warning as a result of their relationship and that this was fair, just
and reasonable. The duties alleged are threefold:
i) To take reasonable care in the design and/or manufacture and/or sale
and/or supply of safe and suitable parts for the W. 46 engines and fuel
injection pumps, including the washers for the erosion plugs and spare
part kits for fuel injection pump overhaul, together with the provision of
appropriate associated instructions.
ii) To provide proper advice and instructions as to the operation of these
items and to take reasonable care in relation to the provision of such
advice and instructions.
iii) To warn AWSL of any dangers to property or life presented by the
items when operated, maintained or serviced in accordance with the
recommendations with supply parts or spare parts kits provided by WFI
and/or WUK.
9. In support of these allegations AWSL also alleges that WFI and WUK
knew by 1995 at the latest that the use of copper washers on erosion
plugs on W. 32 engines was inappropriate and hazardous, that the torque
setting recommended was insufficient, that the position which obtained
on W. 32 engines applied equally to W. 46 engines and that the spare
parts kits for fuel injection pumps on W. 46 engines did not contain all
the parts necessary for their servicing and overhaul because they did not
contain steel washers and were therefore inappropriate and hazardous
in themselves. Reliance was placed upon the 1995 Warning Bulletin and
the 1999 Warning Bulletin already referred to earlier in this judgment.
It is said that the changes recommended to owners of the W. 32 fuel
injection pumps should also have been recommended to owners of the
W. 46 engines and that had this occurred the casualty in 2001 would not
have happened. AWSL points to the change from copper to steel washers
made by WFI in September, 1990 and by L'O. the pump manufacturers in
1992 for the W. 46 engine but the absence of any information given to the
engine owners of this.
10. In addition to the tortious pleas in par. 14 of the proposed statement
of case, par. 19 sets out a separate tortious duty to take reasonable steps
to warn about the matters referred to.
..17. The breaches alleged then consist of failure to give warnings and
failure to give instructions and advice and failure to take reasonable care
to provide such warnings, instructions or advice (see pars. 23, 26, 27, 28
and 28A) as well as failure to provide washers and spare parts kits that
were of satisfactory quality, safe and fit for purpose. The test under Part
24
18. CPR Part 24.2 provides that the Court may give summary judgment
against a claimant on the whole of a claim or on a particular issue if it
considers that the claimant has no realistic prospect of succeeding on the
claim or issue and there is no other compelling reason why the case or
issue should be disposed of at trial. I was referred to Swain v. Hillman,
[2001] 1 All E.R. 91, Three Rivers District Council v. Bank of England
(No. 3), [2001] 2 All E.R. 513 and to E.D. & F. Man Liquid Products Ltd. v.
Patel and Another, [2003] EWCA Civ 472. A real prospect of succeeding
on a claim must carry some degree of conviction and represent more
than a fanciful prospect. The Court is not to conduct a mini trial but does
not have to accept without analysis everything said by a party in his
statements to the Court. If there is no real substance in factual assertions
made or there is no room in law for the claim to succeed on the basis
of the facts alleged, the Court should take the step of disposing of the
matter on a summary basis so as to save the cost and delay of trying an
issue the outcome of which is inevitable.
19. Where there are complex factual issues to be resolved, it is likely
that a case cannot be appropriately disposed of under Part 24. Where
there are significant disputes of fact between the parties which go to the
existence and scope of an alleged duty of care, the summary disposal of
an action is again inappropriate. Moreover if there is an area of law which
is uncertain and developing such as the extension of a situation in which
a duty of care may be found, as compared with existing authorities, it is
once again inappropriate for the Court to make decisions on the basis of
a set of facts which has not been fully determined, even if the parties are
prepared to agree some undisputed facts or to proceed on the basis of
certain assumptions of facts.
20. It is common ground between the parties for the purpose of the
Part 24 application that a copper washer was in place at the time of the
fire on one of the No. 4 P fuel pump erosion plugs. The particulars of
claim, supported by a statement of truth, plead that the claimant has
only ever used genuine W. parts on the engine and fuel injection pumps,
all being supplied by or purchased from W. Group companies, including
WUK and WFI. The schedule compiled by the parties shows six agreed
occasions where the parties' records show the supply of washers between
1991 and 2001, six occasions when AWSL alleges there must have been
additional washer changes and three other occasions when AWSL suggest
that such changes may have taken place. There is dispute about all of
these additional occasions save for two such events, in July, 1995 and
February, 1996 where WFI and WUK accept that all the washers and
pump elements must have been changed. The occasions where WUK were
involved are however limited, being Oct. 13, 1993, Mar. 5, 1996 and Mar.
7, 2001 where, in each case, WUK supplied washers for the chief engineer
of the vessel and was not involved in their installation. Only the last of
those occasions would give rise to a claim which was not time barred in
contract, as a matter of English law, but the documents clearly show that
this delivery involved the supply of steel washers.
21. The evidence from WFI and WUK is that every erosion plug washer
sold or supplied, if any were provided free of charge by WFI and WUK,
was made of steel and that neither WFI or WUK has ever held a stock of
copper washers as spare parts from 1990 onwards. WFI and WUK say
that the schedule is comprehensive and that the disclosure given by the
parties is complete or as full as it will ever be. Thus the Court can be
confident that there never was any supply of copper washers by WFI or
WUK and there is no realistic prospect that AWSL could succeed on this
allegation at trial.
22. In answer to this, AWSL suggest that the evidential picture is less
than satisfactory and that pending disclosure, assertions made on behalf
of WFI and WUK cannot be taken at face value. What was originally put
forward as a complete record has been amended as a result of further
investigation (now constituting the schedule to which I have referred)
and there are disputed matters as between Mr. J. and Mr. Brunila in
relation to the occasions when washers would have been changed. In
Mr. B.'s second statement at par. 17 he states that it is not necessary
to change washers on each of the occasions when erosion plugs are
changed because existing fitted washers could be cleaned and checked
for cavitation and distortion and reused, following annealing if required.
Equally, he would expect that on each occasion when erosion plugs were
to be checked, new washers would be taken on board and those would be
used whilst any old washers, if in good condition, might be retained and
put in the ship stores for future use (absent any warning that they were
not to be so used).
23. Whilst it is therefore possible that copper washers which were
originally on the vessel may have been reused or put to one side in the
stores for future use and subsequently utilized, on the material before
the Court it is hard to see how AWSL can have any realistic prospect of
succeeding in establishing the plea in par. 20 of its statement of case
where it alleges that it agreed to buy and WUK and/or WFI agreed to sell
and supply and did sell and supply copper washers for use in the vessel's
fuel injection pumps, including the washer which was actually used on
pump 4P on the vessel.
24. AWSL concedes that the allegation is speculative in that it cannot
point to any supply of copper washers to it by WUK (or indeed by WFI).
Nonetheless, Mr. Bernard Eder, Q.C. for AWSL contends that the Court
should not accept the evidence of WUK and WFI at face value.
25. AWSL argues that it has indirect evidence of the use of copper
washers on a vessel with a W. 46 engine which was built either in 1994
or 2001, which means that copper washers were still being supplied
by WFI after 1990 or by L'O. (the pump manufacturers) after 1992,
contrary to the evidence given by WFI and WUK. There is evidence in
the form of a statement from AWSL's expert, without clear identification
of the ship in question, which refers to the chief engineer of that vessel
saying that copper washers were in use with erosion plugs on that vessel
in 2000-2001. There is also evidence of a letter from WFI to L'O. in
April, 1993 complaining of the continued use of copper washers on a
pump which appears to be a smaller version of the usual pump used
on the W. 32 engine. This evidence and the evidence of the expert of
finding copper washers in store on the Lagan Viking in 2003 (of different
dimensions to those specified for the erosion plugs) does not assist AWSL
in showing that any copper washers were supplied to Baltic Eider by the
W. companies at any time, let alone at a time when no limitation problems
arise.
26. There are, in my judgment therefore no realistic prospects of success
for AWSL in this claim against either WUK or WFI and, given the fullness
of disclosure given, I can see no reason why this claim should go to trial.
The Servicing Contract
27. The position under par. 20A of the projected statement of case is
different for WUK and WFI. This plea is a new plea introduced in January,
2004 for which permission is sought. There are a limited number of
possibilities which would account for the presence of the washer on the
erosion plug in question. Since AWSL only purchased W. parts, if WFI and
WUK did not sell AWSL a copper washer, it could only have been installed
out of the original stock on board the vessel on delivery by Hyundai,
taken from stores or reused when work was being done by either WFI
service engineers or the ship's own crew.
28. The plea however is of a contract with WFI or WUK for the supply of
services, but no particulars are given of the contract. Objection is taken
on the basis of the form of the plea and the inadequate particulars of
the Servicing Contract but the schedule to which I have made reference
shows that WFI carried out a number of operations on the fuel pumps
at various stages and that, in particular, in January 1998 there is the
possibility of work done by WFI on both engines which could account
for the presence of the critical washer, without any question of time bar
arising. Moreover, questions of foreign limitation periods could conceivably
be relevant in relation to contracts with WFI where Finnish limitation
periods of ten years may apply.
29. There is however simply no evidence of any contract with WUK
for servicing involving the fuel pumps. That is sufficient to conclude
this issue, in my judgment. Moreover, although AWSL rely on Mr. B.'s
statement that WUK engineers sometimes accompanied WFI engineers
on the vessel in the context of the R & D work, which did concern four
projects relating to fuel pump elements which may well have involved
removal of the erosion plugs and the washers, reports of these visits
were sent to AWSL, which named the engineers present. None have been
produced which show the presence of WUK engineers on board the vessel
for the purpose of work on the fuel pumps and although it might well be
expected that the vessel's log books would record the names of visiting
engineers, AWSL have not adduced any such evidence to support their
case that WUK personnel, as opposed to WFI personnel, worked on the
pumps. The evidence currently shows that WUK never supplied service
engineers who did any work on the fuel pumps at all so that it cannot
be said that WUK could have supplied the washer, utilized it, installed
it, reused it or left it on board for future utilization in the course of work
undertaken on board the vessel, whether under a WFI contract or a WUK
contract with AWSL.
39. AWSL referred to a number of authorities where the absence of
warnings as to the use of the product supplied constituted a breach of
the Sale of Goods Act but none where the use of the item itself would not
give rise to danger per se, but where the danger arose from the failure
to warn of the inadequacy of other elements which were required for use
with the items supplied. It was said that the statements of principle in
those authorities were wide enough to cover the alleged position here,
where the spare parts kit was put forward as a comprehensive package
of what was required, when further items were needed, including a steel
washer. Reference was made to Benjamin's Sale of Goods (6th ed.) at par.
11-051 which includes the following:...It had been said before the reforms
of 1994 (though in a speech dissenting on the general point in connection
with which the words were uttered) that a potentially dangerous article
might be unmerchantable if not accompanied by appropriate instructions
as to use. This seems correct, and indeed there can presumably be goods,
not dangerous, which are unusable, or not efficiently usable, without
adequate instructions, and so not up to the present requirement of
satisfactory quality, unless such instructions are supplied or available. The
specific reference to safety in the new formulation makes this clear....
40. This issue falls into exactly that area of developing law which the
Court should not decide on a Part 24 basis. AWSL's allegation is that
the spare parts kits were inadequate because they were described as
"spare parts for pump overhaul" but were not sufficient for such an
overhaul since they failed to include erosion plugs and steel washers. This
meant that the spare parts kit could be used in conjunction with erosion
plugs and with copper washers remaining on board from the original
supply by Hyundai, without any warning being given in this respect.
Whilst there may be no authority on all fourswith this situation, in my
judgment itcannot be said that AWSL have no real prospect of success
in arguing this point and in contending that there is a breach of contract
in supplying the kits, as so described, in as much as they are said to be
of unsatisfactory quality, not fit for the purposes supplied and unsafe, by
reason of the inadequate instructions given. Moreover, an implied term
is alleged that WUK would exercise reasonable skill and care relating to
the supply of such kits including the giving of advice or instructions about
its use and that there was an implied term that the kit contained all the
parts necessary for proper servicing and overhaul with such necessary
instructions. These points are not capable of being struck out at this stage
as having no realistic prospect of success and the claim on this basis
must therefore be allowed to go forward with permission to amend being
granted.
41. I should add that WUK contends that the contracts are governed by
its own standard terms and conditions which have exclusions of liability.
There is an issue between the parties as to the governing terms for
the last two such contracts and an issue about the applicability of the
Unfair Contract Terms Act. WUK rightly conceded that the latter issue
was not one which was susceptible of determination on a Part 24 basis
involving, as it does, an investigation into the reasonableness of the terms
in the light of the various factors set out in the statute. Moreover, in my
judgment there is also an issue as to the governing terms for the last two
contracts for supplies of the spare parts kits. The claim in tort
42. In my judgment, much the same point arises on the claim in
tort as arises in relation to the implied terms alleged in the Overhaul
Spare Parts Contracts. Whilst Mr. King, for WUK and WIF, contends
that sufficient disclosure has been given for all the relevant facts to
be known so that there could be no change in the essential position
at trial and that on these facts there is no authority which supports
AWSL's case of liability against WUK, there can be no doubt that the
issues of law are not straightforward, that the cases show movement
on an incremental basis and that there is room for further development.
Moreover, notwithstanding all that WUK says, the existence of a duty
depends on a fact sensitive inquiry as to the nature of the relationship
between AWSL and WUK which cannot be determined on the basis of the
"undisputed facts" which I have set out earlier in this judgment.
43. WUK contends that, as matter of law, there can be no duty to advise,
instruct or inform in the absence of a special relationship or special
assumption of responsibility. The law is reluctant to impose a positive duty
to speak or warn and a liability for an omission to do so. I was referred to
the decision of the House of Lords in Stovin v. Wise, [1996] A.C. 923 and
the speech of Lord Hoffman at pp. 943E to 944H in this respect. It is one
thing for the law to say that a person who undertakes some activity shall
take reasonable care not to cause damage to others but it is another thing
for the law to require that a person who is doing nothing in particular shall
take steps to prevent another from suffering harm from the acts of third
parties but there may be a duty where a person has undertaken to do so
or induced a person to rely upon one doing so. Thus in WUK's submissions
it is necessary for a special relationship to exist for a liability to devolve
upon WUK by the assumption by it of responsibility to instruct, advise
or warn and by the reliance of AWSL upon that. Reference was made to
Hamble Fisheries Ltd. v. L. Gardner & Sons Ltd. (The Rebecca Elaine),
[1999] 2 Lloyd's Rep. 1, a decision of the Court of Appeal and in particular
the judgment of Lord Justice Tuckey at pars. 18 to 26. That decision
involved a claim against a manufacturer of engines in a fishing boat for
economic loss when the pistons failed, not one for physical damage as in
the present case (with added economic loss). Nonetheless it was said that
the positive duty of the kind alleged required a similar situation to that
described by Lord Justice Tuckey at par. 26 in relation to a manufacturer
who would be under a duty of care to avoid economic loss "if he assumes
responsibility to his customers in a situation which is akin to contract".
45. When regard is had to the dealings between the parties, it was said
that there was no evidence to show a special relationship of proximity
between AWSL and WUK inasmuch as:
i) WUK became part of the W. Group in 1990 but sold parts only between
1990 and 1992 and from 1997 onwards whilst in the period 1993 to 1996
those parts were sold by a different company which was 25 per cent.
owned by third parties outside the W. Group.
ii) WUK did not design, build or sell the engines fitted in the ship.
iii) The evidence shows that the large majority of attendances on the ship
were by WFI.
iv) On occasions WUK service engineers attended the ship but usually
under WFI supervision.
v) AWSL undoubtedly relied upon WUK to pass on to it any technical
bulletins or other literature promulgated by WFI relating to the ship's
engines which WFI told WUK to pass on but it was not credible to suggest
that AWSL relied upon the skill and knowledge of anyone except WFI in
relation to the contents of those documents.
vi) WUK made only two visits on its own to the ship without WFI's
presence in the 13 years before the fire occurred and never effected any
work in relation to the fuel pumps.
vii) WUK took no part in the R & D tests after 1989.
viii) WUK service engineers never worked on the fuel pumps of a W. 46
engine belonging to anyone except for taking two fuel pumps off a land-
based power station in March, 1999 which were then forwarded to WFI for
examination.
ix) In May, 2001 there was a fire in a landbased W. 46 engine installed
in an Indian power station due to an erosion plug not being properly
tightened but WUK was unaware of this fire until March, 2002 at the
earliest. Moreover that incident occurred only three months before the
fire on Baltic Eider, subsequent to the last overhaul of 4P and was due to
operator error.
x) WUK, although aware of the 1995 and 1999 warning bulletins relating
to W. 32 engines, had no material upon which to draw any analogy with
the W. 46 engine and it was not their business to do so.
46. In these circumstances, it is said that AWSL can present no evidence
that it relied upon WUK to originate technical advice as opposed to
passing on advice from WFI which it duly did. Moreover it is said that
AWSL will never be able to prove any fact showing that WUK knew or
ought to have known of any supposed threat presented by erosion plug
washers whether copper or otherwise.
47. In addition, WUK points to factors which, it says, show a lack of
a special relationship of proximity and show that AWSL, as would be
expected, looked to the manufacturer and designer of the engines for
technical advice and assistance rather than to the network company
in the United Kingdom. A number of other factors are relied on in par.
24 of WUK's skeleton argument but these appeared to me to take the
matter no further. The essential problem with these issues and arguments
is that they are not susceptible of determination upon a Part 24 basis.
Whilst it can be argued that the relationship between AWSL and WUK
involved no more than the ordering of spare parts, the conclusion of spare
parts contracts, the spare parts bonus agreements and the Overhaul
Spare Parts Contracts, the contracts for servicing and the passing on of
information from WFI, that is not an argument which can be concluded in
WUK's favour at this stage of the proceedings. AWSL can say that it relied
upon W., in its various emanations, to give the necessary technical advice,
instructions and warnings relating to the products which it supplied, those
products being supplied both by WFI and WUK. The distinction which is
drawn between WFI and WUK is not one which AWSL would necessarily
have in mind in looking to the W. Group to fulfil its responsibilities. When
the U.K. company is put forward as the network company in the U.K. with
whom AWSL is to deal, it may well be entitled to look to that company
as well as WFI in relation to the matters of which complaint is raised.
It simply is not possible to determine questions of special relationship,
assumption of responsibility, reliance, foreseeability, fairness, justice and
reasonableness or causation at this point.
48. The evidence adduced by AWSL included expert evidence to the effect
that any W. engineer with knowledge of the problems which had been
encountered on the W. 32 engines and the recommended practice for
those engines, including the use of steel washers, increased torque and
securing wire on the erosion plug would have appreciated the likelihood
of the same problems arising on the W. 46 engine. Real questions arise
as to the actual knowledge of WUK personnel about the increased torque
specified by L'O. in October/December, 1995 to 350 NM, sent in a drawing
to WFI, quite apart from the issue of the copper washers. The 1995 and
1999 Warning Bulletins of which WUK was aware also constitute some
evidence that WUK should have been and may actually have been aware
of the potential problem on W. 46 engines as AWSL allege.
49. In Mr. J.'s witness statements, evidence appears of the marketing of
the W. Group as a global service network where each of the global service
engineers is capable of providing a full range of technical information
to its customers. AWSL's understanding is said to be that the W. local
service network allocated to it would be able to provide information on
all technical queries and that its expertise was in no way limited to the
contents of the Operation Manuals, Spare Parts Catalogues and Service
Bulletins issued by WFI and circulated by WUK. Whilst it appears that until
1998 Mr. C. of AWSL dealt primarily with Mr. B. it is not possible to say
that in that period and more particularly in the period thereafter the Court
can conclude today that AWSL placed no reliance upon WUK's expertise
and functions.
50. On Dec. 7, 2001, following the casualty, a warning letter was issued
to W. 46 engine owners (although not supplied to AWSL until Apr. 5, 2002
by WUK). This warning letter included the following:
i) "Never use a sealing ring made in copper."
ii) "Make sure that the plugs are properly tightened with a torque of 350
NM plus/minus 5NM."
iii) That a locking wire was being introduced and could be used on existing
pumps. This subsequent warning supports AWSL's case against both WFI
and WUK, both in relation to the copper washers and the torque where
the Operation & Maintenance Manual still provided for 200 NM plus/minus
5NM to be applied to the erosion plug at the time of the incident. Mr. J.
in his first witness statement draws attention to the special position of
engineers provided by engine manufacturers and distributors in relation
to the safety requirements for the engines manufactured and supplied
whether those engineers emanate from the manufacturer itself or from
its locally incorporated company set up to deal with its customers. The
engine owner looks to the group, however structured, for technical and
safety advice and warnings in relation to the operation of the engines.
51. The basis of AWSL's case in tort against WUK is that, by reason of the
relationship between them, WUK assumed responsibility to warn AWSL of
the danger of erosion plugs coming loose by reason of the use of copper
washers, inadequate torque and inadequate securing mechanisms on the
plugs. It is noticeable that the focus of WUK's application as formulated
was directed to the supply of the copper washer on the basis that this
is foundational to the tortious duty alleged. Thus the grounds for WUK's
application for summary judgment are expressed as follows:
because
(1) the claimant has no real prospect of succeeding on its claim against
the first defendant, given that
(a) the first defendant only supplied steel sealing rings to the claimant,
not copper sealing rings as alleged by the claimant;
(b) the first defendant cannot therefore be in breach of any contract with
the claimant;
(c) the first defendant owed no duty to the claimant as a consequence of
the supply of a copper sealing ring;
(d) there was no special relationship between the claimant and the first
defendant pursuant to which the first defendant owed a duty to the
claimant to advise or warn about any danger associated with the use of a
copper sealing ring.
52. WUK thus fails adequately to take account of the fact that the
allegations relating to the supply of copper washers only form the subject
matter of one of AWSL's pleas, and that there are independent allegations
of breach of duty that are causative of the loss and which are of equal (if
not greater) importance.
(1) The duty to warn, if established, would extend to a duty to warn
against using or re-using the existing stock of copper washers on board
the vessel;
(2) The duty to warn would also extend to a duty to advise AWSL of the
correct torque setting for the erosion plugs on the fuel injection pumps;
(3) The duty would further extend to a duty to advise that it was essential
to lock the erosion plugs in place.
53. Since there is clear physical damage to the ship, there can be no
doubt about the arguability of the claim against the manufacturers
WFI and it was not suggested otherwise. The principles giving rise to
liability of the manufacturer of a product, in owing a duty of care to
the end user in respect of physical damage as originally formulated in
Donoghue v. Stevenson, [1932] A.C. 562 have been applied to retailers
and distributors of a product who have been held to be under a duty to
take reasonable care to warn end users of potential dangers of which
they were aware or should have been aware. See by way of example
Watson v. Buckley, Osborne, Garret & Co. Ltd., [1940] 1 All E.R. 174;
Kubach v. Hollands, [1937] 3 All E.R. 907; Holmes v. Ashford, [1950] 2
All E.R. 76; Andrews v. Hopkinson, [1957] 1 Q.B. 229, Fisher v. Harrods
Ltd., [1966] 1 Lloyd's Rep. 500. Furthermore the Courts have recognized
that the vendor of a product can be under a duty to warn purchasers of
its potential dangers. In Clarke v. Army and Navy Co-operative Society
Ltd, [1903] 1 K.B. 155 the Court of Appeal decided that the vendor of a
tin containing disinfectant powder, who knew that it was likely to cause
danger to a person opening it unless special care was taken, was under a
duty to warn the purchaser of the danger. Collins M.R. said (at p. 164):
It seems to me that, independently of any warranty, a relation arises out
of the contract of sale between the vendor and purchaser, which imposes
on the former a duty towards the latter; namely a duty, if there is some
dangerous quality in the goods sold, of which he knows, but of which
the purchaser cannot be expected to be aware, of taking reasonable
precautions in the way of warning the purchaser that special care will be
requisite.
54. Such a duty extends to the situation where the potential danger is
discovered by the supplier after the time of supply, (see E. Hobbs (Farms)
Ltd. v. The Baxenden Chemical Co. Ltd., [1992] 1 Lloyd's Rep. 54.)
55. Additionally, there is a well-established category of liability for
"installers, assemblers and repairers." Such liabilities are summarized in
the Product Liability & Safety Encyclopaedia, Butterworths, at III/33 par.
[79]:
A wide range of other persons may incur responsibility where injury or
damage is caused through contact with a defective product. In Haseldine
v. Daw & Son Ltd. for example, a firm of engineers was held liable for
negligence in repairing a hydraulic lift which fell, injuring a visitor in
a block of flats. A representative selection of other modern cases has
involved negligence in repairing the steering of a motor car and a fork
lift truck; reconditioning a motor car; repairing and reassembling the
wheel of a lorry; fitting a sidecar to a motorcycle; a valve to a ships boiler
and an outlet pipe to discharge gasses from a boiler; and in installing an
electric meter in a factory, a gas heating system in a house and a juke
box in a restaurant. The negligence in such cases may take a variety
of forms. For example a source of danger may have been created in a
positive sense, as through mis-assembly, or the defendant may have
failed to remedy a defect where this was reasonably to be expected.
56. WUK is not simply a supplier of parts but is part of the same group
as the manufacturer WFI and passed on technical advice. Its position
is therefore closer to that of the manufacturer than a mere distributor,
supplier or vendor of goods. They shared at least one common director
during the period when the 1999 warning was given.
57. The incremental approach which the Court adopts to the imposition to
a duty of care is shown in Caparo Industries Plc v. Dickman and Others,
[1990] 2 A.C. 605 and more recently by Lord Justice Phillips (as he then
was) in Reeman v. Department of Transport, [1997] P.N.L.R. 618 at p.
625. AWSL maintains that there is no need for any extension of principle
to cover the existing situation but that if there is an extension, it is a
small one. Either way, the full factual situation and the exact nature of the
relationship between AWSL and WUK and WFI has to be comprehensively
explored.
58. If regard is had to the threefold test of foreseeability, proximity and
fairness, the nature of the relationship between AWSL and WUK over
a period of years is crucial. The fact that AWSL forms part of a limited
and defined category of W. 46 engine users is of significance as is WUK's
particular position and the functions in which it is engaged. The way in
which it marketed itself is also of importance in that connection. If regard
is had to "assumption of responsibility" as per Henderson v. Merrett
Syndicates Ltd., [1995] 2 A.C. 145 and the objective test as to such
assumption, investigation is needed into things said or done by WUK in
its dealings with AWSL and what crossed the line between them – see
Williams v. Natural Life Foods Ltd., [1998] 1 W.L.R. 830. In the more
limited context of economic loss, two categories of case in which a special
relationship is imposed were identified in White v. Jones, [1995] 2 A.C.
207 including the situation where "the defendant has voluntarily answered
a question or tendered skilled advice or services in circumstances where
he knows or ought to know that an identified plaintiff will rely on his
answers or advice... This special relationship is created by the defendant
assuming to act in the matter by involving himself in the plaintiff's affairs
or by choosing to speak. If he does so assume to act or speak he is said
to have assumed responsibility for carrying through the matter he has
entered into."
59. This is not a case of economic loss but is a case where it is alleged
that there is a positive duty to speak rather than a case where it is
alleged that something has been said which was inaccurate. The special
relationship appropriate for economic loss may represent the same type of
relationship which is required for the imposition of a duty to speak but for
this, the full factual situation must be determined.
60. Whilst therefore the claim may involve an extension of existing
principles, although AWSL maintains that it does not, it cannot be said
that AWSL has no realistic prospects of success on the tortious claims
against both WFI and WUK, though it may be easier to establish these
matters as against WFI. Whilst AWSL's primary dealings concerning the
engines may have been with WFI, particularly in the period prior to 1998,
as WUK maintains, the idea that any reliance was exclusively upon WFI
and not upon WUK is not one which can be established without a full
investigation of the facts. Conclusions on realistic prospects of success/
proper issues to be tried
61. I conclude therefore that AWSL does have realistic prospects of
success in its claims against WUK in tort and in relation to the Overhaul
Spare Parts Contracts andthat these represent proper issues to be
triedbetween them but that in respect of the Supply Contract and the
Servicing Contract, it does not have such prospects and there are
therefore no real issues to be tried between them. I proceed to determine
the implications of this upon the Court's jurisdiction over WFI.
62. WFI's seat is Finland and therefore unless jurisdiction exists under
arts. 5 or 6 of the Regulation, it must be sued in the Finnish Courts
under art. 2. Article 5 provides for a person domiciled in a member state
to be sued in another member state in contract and tort cases in the
circumstances there set out, including, in relation to tort, the courts of
the place where the harmful event occurred or may occur. AWSL relied
primarily however upon art. 6 which provides as follows:
A person domiciled in a member state may also be sued:
i) where he is one of a number of defendants, in the courts for the place
where any one of them is domiciled.
63. As a result of the decision in Kalfelis v. Bankhaus Schroder
Munchmeyer Hengst & Co., [1988] E.C.R. 5565, art. 6(1) requires
the claims against the defendants to be so closely connected that it
is expedient to hear and determine them together to avoid the risk of
irreconcilable judgments resulting from separate proceedings.
64. It is accepted by WFI that if there is a claim in tort against WUK which
is a "valid claim", a "real claim", a "proper claim" or a "good arguable
claim" as set out in The Rewia, [1991] 2 Lloyd's Rep. 325, the claim in
tort against WFI is so closely connected to the claim against WUK that it
satisfies the terms of art.6(1).
65. It is not however accepted by WFI that if there is a claim against WUK
in tort which passes the Part 24 threshold, it also passes the test to be
a "valid claim", a "real claim", a "proper claim", a "good arguable claim"
or a claim which the party in question "may reasonably ask the Court to
try" for the purpose of founding jurisdiction against WFI but I find that
the case made by AWSL against WUK does satisfy all of these criteria and
the Part 24 test, if there is any difference between any of them, for the
reasons given earlier in this judgment.
66. Recent decisions in this country have recommended a broad approach
to the determination of the risk of irreconcilable decisions including
inconsistent findings of fact or law, but issues arise out of the decision
of the European Court in Reunion Europeene S.A. v. Splietthoff's
Bevarachtingskantoor B.V., [1998] E.C.R. I-6511. The point raised by
par. 50 of the judgment in the Reunion decision is that claims in contract
and tort are not sufficiently connected to fall within art. 6(1), so that the
existence of a proper claim in tort against WUK does not found jurisdiction
for a claim in contract against WFI. Here, I have held that there is a
proper claim against WUK in contract as well as in tort, namely under the
Overhaul Spare Parts Contract but this is a different contract from those
upon which AWSL seeks to pursue WFI, namely the Supply Contract and
the Servicing Contract, where I have found that there is no proper case to
be made against WUK.
67. It is in my judgment clear, nonetheless, that the claim under the
Servicing Contract against WFI and the claim under the Overhaul Spare
Parts Contract against WUK are closely connected with one another as
well as with the tort claim against WUK and WFI. It is also clear in my
judgment that there would be a risk of irreconcilable decisions if separate
proceedings took place in relation to them. Self-evidently, there would
be a risk of irreconcilable judgments on the causation of the fire and
the impact of a copper washer, 200 NM of torque and the absence of a
securing wire. There could also be inconsistencies in findings as to the
provenance of the copper washer. In my judgment therefore the problem
raised in Reunion does not arise because there are "valid claims" against
WUK in both contract and tort which are sufficient to found jurisdiction
against WFI in contract and tort, albeit that the contract claims are based
upon different contracts.
68. If I had to make any decision about the application of art. 6(1) to
a situation where there was only a "valid claim" against WUK in tort
and AWSL wished also to pursue contract claims against WFI, I would
accept the reasoning of the Irish Court in Daly v. Irish Group Travel Ltd.,
[2003] I.L. Pr. 38. I do not consider that par. 50 of the European Court's
judgment in Reunion can be treated as laying down a broad principle in all
cases properly falling under art. 6(1) since the Court did not so say and
the factual situation in that case involved a primary defendant which was
not domiciled in a Convention country, but over which the national Court
assumed jurisdiction by virtue of its national jurisdictional rules.
69. I am not technically bound by the European Court decision (see
Vaughan & Robertson – Law of the European Union section 2, par.
360) and the only part of the ruling which is even arguably binding is
the answer given to the questions posed by the national Court (See
References to the European Court (2nd ed.) – Anderson & Demetriou
2003 at pp. 334-339), although that has to be understood by reference to
the reasoning given by the Court. I do not consider that par. 50 is part of
the necessary reasoning of the Court for par. 3 of the dispositive rulings,
in answer to the fourth question posed. In my judgment, Briggs & Rees
in Civil Jurisdiction and Judgments (3rd ed.) at p. 175 are right in saying
that if the intention was to lay down a general principle applicable to art.
6.1, it is simply wrong. I am reinforced in these conclusions by the broad
based approach to the question of the risk of irreconcilable decisions
taken in Watson v. First Choice Holidays and Flights Ltd. and Another,
[2001] 2 Lloyd's Rep. 339. and Bank of Tokyo-Mitsubishi Ltd. and Another
v. Baskan Gida Sanayi Pazarlama A.S. and Others, [2004] EWHC 945
(Ch).
70. It was argued that I was bound by the decision of the Court of Appeal
in Watson where the Court of Appeal said that it could not ignore the
decision in Reunion and referred the matter to the ECJ for clarification,
rather than dismissing the appeal. As the matter was withdrawn from the
ECJ before any decision was made it is said that I should treat myself as
bound by Reunion as that is what the Court of Appeal appears to have
done. I do not consider this to be right. The Court refused to make a
decision, preferring to refer the
matter to the ECJ, whilst considering the decision unjustifiable – see pars.
37 to 39. I am not bound by their decision to refer nor by the Reunion
decision and would, if necessary hold that there is so close a connection
that it is expedient to hear and determine the outstanding claims together
to avoid the risk of irreconcilable judgments and that the characterization
of the claim as contractual or tortious is only one element to be taken into
account in assessing that connection.
71. I do not, in these circumstances need to decide whether art. 5 has
any application to the tort claim. I do not therefore determine whether
England was the place of performance of any contractual obligation or the
place
where the harmful event occurred for the purpose of that article, being
either the place where the damage occurred or the place of the event
which gave rise to the damage and was at the origin of the damage.
72. For the reasons given above, WUK's Part 24 application succeeds in
relation to the claim under the Supply Contract and the Servicing Contract
but fails in respect of the tort claim and the claim under the Overhaul
Spare Parts Contracts. Equally, WFI's jurisdiction application fails, save
in respect of the Supply Contract where there is no issue to be tried
between it and AWSL, nor between AWSL and WUK. AWSL's application
for permission to amend succeeds in respect of the Overhaul Spare Parts
Contracts against WUK and in respect of the Servicing Contract as against
WFI, but fails in the latter respectagainst WUK.
73. It appears to me that the order for costs should reflect the relative
success and failures of the parties in their applications. The gravamen
of the claim, as WFI and WUK recognized in argument, always lay in the
tortious claim for failure to instruct, advise or warn as set out in pars. 11
to 19 of the particulars of claim. This tortious claim was framed against
both WFI and WUK. In addition there was originally a Supply Contract
claim against both WUK and WFI to which was added by proposed
amendment, the Servicing Contract claim and the Overhaul Spare Parts
Contracts claim. WUK has failed in its application to have the whole claim
against it dismissed and in its objection to the Overhaul Spare Parts
Contracts amendments against it. WFI has correspondingly failed in
its challenge to this Court's jurisdiction, whilst AWSL has succeeded in
maintaining its claims, save for the originally pleaded Supply Contract
claim and the proposed amended claim against WUK on the Servicing
Contract. The right order therefore appears to me to be one in which
AWSL receives a substantial proportion but not all of its costs of these
applications but I make no final order on this without hearing the parties'
submissions.
74. It would also be appropriate for directions to be given about the
future conduct of this action and it is to be hoped that the parties will
come before the Court with a suggested order which is agreed between
them. (…)“