Scottish Court of Session Decisions

 

OUTER HOUSE, COURT OF SESSION

[2015] CSOH 173

 

A423/13

OPINION OF LORD PHILIP

In the cause

RENFREW GOLF CLUB

Pursuers;

against

MOTOCADDY LIMITED

Defenders:

Pursuer:  Ellis QC;  bto

Defender:  Sheldon QC;  BLM

17 December 2015

[1]        In this case, the pursuers, Renfrew Golf Club, a voluntary association suing through their office bearers and a representative number of members, seek damages against Motocaddy Limited, the importers and suppliers of electric golf trolleys which they market under their own name in the United Kingdom.  The pursuers seek reparation for loss arising from extensive damage caused to their club house in the early hours of 24 July 2010 when a Motocaddy S1 golf trolley, which had been left overnight in the male locker room, caught fire.  

[2]        The pursuers seek damages on two grounds.  First they aver that the defenders, having held themselves out as producers of the trolley, and in their capacity as importers of the trolley, are liable to them in terms of section 2(2)(b) and (c) of the Consumer Protection Act 1987.  Secondly, they aver that the defenders are liable to them in negligence.  They seek damages of £558,811.77 in respect of building reinstatement and related costs.  That sum includes a number of items of financial loss, namely £20,571.51 in respect of business interruption, £5,180.00 in respect of lost green fees from parties whose bookings to use the golf course had to be cancelled, and loss of profit from bar takings to the extent of £13,275.56.

[3]        The defenders have tabled a plea to the relevancy of the pursuers’ pleadings in respect of both branches of their case and the matter came before me for debate on the procedure roll when Mr Ellis, QC for the defenders, moved for dismissal of the action.

[4]        The relevant provisions of the Consumer Protection Act are as follows: 

“2. - Liability for defective products.

(1) Subject to the following provisions of this Part, where any damage is caused wholly or partly by a defect in a product, every person to whom subsection (2) below applies shall be liable for the damage.

(2) This subsection applies to—

(a) the producer of the product;

(b) any person who, by putting his name on the product or using a trade mark or other distinguishing mark in relation to the product, has held himself out to be the producer of the product;

(c) any person who has imported the product into a member State from a place outside the member States in order, in the course of any business of his, to supply it to another.

 

3. - Meaning of “defect”.

(1) Subject to the following provisions of this section, there is a defect in a product for the purposes of this Part if the safety of the product is not such as persons generally are entitled to expect; and for those purposes “safety”, in relation to a product, shall include safety with respect to products comprised in that product and safety in the context of risks of damage to property, as well as in the context of risks of death or personal injury.

(2) In determining for the purposes of subsection (1) above what persons generally are entitled to expect in relation to a product all the circumstances shall be taken into account, including—

(a) the manner in which, and purposes for which, the product has been marketed, its get-up, the use of any mark in relation to the product and any instructions for, or warnings with respect to, doing or refraining from doing anything with or in relation to the product;

(b) what might reasonably be expected to be done with or in relation to the product;  and

(c) the time when the product was supplied by its producer to another; and nothing in this section shall require a defect to be inferred from the fact alone that the safety of a product which is supplied after that time is greater than the safety of the product in question.

 

5. - Damage giving rise to liability.

(1) Subject to the following provisions of this section, in this Part “damage” means death or personal injury or any loss of or damage to any property (including land).

(2) A person shall not be liable under section 2 above in respect of any defect in a product for the loss of or any damage to the product itself or for the loss of or any damage to the whole or any part of any product which has been supplied with the product in question comprised in it.

(3) A person shall not be liable under section 2 above for any loss of or damage to any property which, at the time it is lost or damaged, is not—

(a) of a description of property ordinarily intended for private use, occupation or consumption; and

(b) intended by the person suffering the loss or damage mainly for his own private use, occupation or consumption.”

 

[5]        The pursuers’ averments are prolix and discursive but since the defenders seek to have the case determined on the basis of the pleadings, it is necessary to set out the relevant passages in their entirety so that the focus of the parties’ arguments can be properly understood.  The relevant passages are as follows:

“Cond 2

On 23 July 2010 Mr Darryn Grant played a round of golf at the Premises.  Mr Grant utilised an electrically powered golf trolley called a Motocaddy S1.  Mr Grant had owned the trolley for a period in excess of 2 years.  During this period of time Mr Grant exercised care to avoid it from becoming damaged.  Prior to playing golf on 23 July Mr Grant fully charged the battery for the trolley.  When fully charged the battery of the trolley had sufficient charge to operate for 36 holes of golf.  After finishing his round of golf, at or about 6pm, Mr Grant parked the trolley near the entrance of the gents’ locker room in the clubhouse at the Premises.  By this time the trolley had sufficient battery charge left to operate for 18 holes.  At or about 1.20am on 24 July 2010 a serious fire occurred at the Premises…

 

The fire originated close to the notice boards at the entrance to the gents locker room.  The most severe damage within the locker room was to the area close to the notice boards in the east corner of the room.  The damage to this area started close to the floor.  The remains of the trolley were located in the east corner of the locker room....

 

The most probable seat of the fire was the trolley.  The trolley was energised at the time of the fire.  The trolley was powered by a 12 volt battery positioned upon and connected to the trolley.  The connection to the battery on Mr Grant’s trolley did not have a fuse.  Later versions of the trolley did have a fuse.  The power supply to the trolley was controlled by a rocker switch on the handle of the trolley which could be set to ‘on’ or ‘off’.  The rocker switch was in a location and operated such that it could be inadvertently activated.  When the switch was activated, the trolley was energised.  The trolley also incorporated a rotary dial which controlled the speed of the trolley.  Following the fire the rocker switch was found to be in the ‘on’ position...

 

The fire started within the energised trolley.  The most likely cause of a fire within the energised trolley is an incendive electrical fault in the wiring or wired connections to the trolley proximate to the battery.  Proximate to the battery was a wired connection from the battery to the control module.  There was a connection from the control module to the rocker switch.  There was a connection from the control module to the motor.  These wires were partially exposed and therefore vulnerable to accidental damage....

 

The control module was neither protected from, nor adequate to survive motor stalling at high power settings.  There was no over-temperature cut-off to prevent power transistor failure.  There was no short circuit protection.  The unit was accordingly at risk of catching fire in the event of motor stall and severe risk of catching fire in the event of a short circuit.  The unit was dangerous in the event of a failure of the electronic control unit or in the event of damage to the battery cabling.  The most likely failure mode in the present case was a short circuit in the supply lead.  At the time of the fire there was sufficient charge left in the battery to produce current for a short circuit.  Such a short circuit could occur due to hard wear and tear or accidental damage to exposed cables.  Such a short circuit was likely to produce incendive results more rapidly than a high current motor stall….. There was no evidence of a high speed motor stall at the time of the fire.

 

Cond 3

 

The trolley was approximately 2.5 – 3 years old at the time of the fire.  The battery at the time of the fire was not original.  The battery originally supplied with the trolley by the Defenders had stopped working.  The original battery would no longer hold an adequate charge.  The original battery had been replaced by Darryn Grant with a YUASA 36 hole battery.  The replacement battery had been acquired approximately three weeks prior to the fire from a golf pro shop.  Darryn Grant used the charger and connections originally supplied with the trolley when charging the replacement YUASA 36 hole battery during that period.  Prior to the fire Mr Darryn Grant had experienced no issues with the trolley.  Aside from the battery, the trolley comprised parts originally supplied with the trolley.  The trolley had not required repair.  Darryn Grant took care to avoid damaging the trolley.  The Defenders’ brand name is clearly marked on the trolley in such a way as to create an impression that they were the producer of it.  The Defenders imported the trolley to the EU in the course of their business.  Their business involved the supply of their own brand trolleys to golfers.  The Defenders are liable for damage caused by the trolley in terms of section 2(2)(b) and 2(2)(c) of the Consumer Protection Act 1987 (‘the 1987 Act’).  The trolley was defective.  The control module was neither protected from, nor adequate to survive motor stalling at high power settings.  There was no over-temperature cut-off to prevent power transistor failure.  There was no short circuit protection.  The unit was accordingly at risk of catching fire in the event of motor stall and severe risk of catching fire in the event of a short circuit.  The unit was dangerous in the event of a failure of the electronic control unit or in the event of damage to the battery cabling.  It did not comply with the applicable British Standard (BS EN 60950-1:2006).  It did not comply with the Machinery Directive 98/37/EC (compliance with which was mandatory from 1^st January 1995).  Specifically it did not comply with Annex 1 paras 1.5.1 or 1.5.6.  The defenders did not obtain, examine, or create the necessary Technical File or Declaration of Conformity in terms of the Machinery Directive prior to marketing the trolley.  In spite of the absence of confirmatory documentation they did not take any steps to ensure that the CE mark had been properly applied.  They did not take any steps or carry out any tests to ensure that the trolley was safe.  In particular they did not take any steps or carry out any tests to ensure that the trolley included short circuit or motor stall protection and was not liable to catch fire in the event of a short circuit or a motor stall.  The defects with the trolley were discoverable upon reasonable examination.  It would have been obvious on a visual inspection of the trolley that there were exposed wires.  A reasonable examination would have included (at least) such a visual inspection and an electrical inspection to ensure that the trolley incorporated adequate protection against incendive electrical faults.  Had the defenders complied with the Machinery Directive, or carried out a reasonable examination of the trolley prior to marketing it they would have established that the trolley was unsafe, for the reasons condescended upon above.  The defective trolley caused damage to the clubhouse.  A golf clubhouse is property of a description ordinarily intended for private use.  The members of the club intended the clubhouse to be mainly for their private use.  The total of green fees paid to the club in the year to 31^st October 2010 was £12,083.  The club’s total income from members’ subscriptions during that period was £401,051.  The club’s total income from other sources, including visitors’ green fees was £15,213.  Non-members were allowed within the clubhouse but were not allowed to use the bar and consume alcohol on club premises unless on the invitation of and accompanied by a member or they had been playing golf.  There were 786 members of the club in 2010.  No profits or surpluses were to be distributed to members.  Any profits or surpluses generated by club activities required to be devoted solely to the maintenance or improvement of club facilities.  Catering facilities within the clubhouse were run by a franchise business namely Stewart C Smith Esq., under an agreement with the pursuers dated 20^th June 2006.  No SGU or R&A events were held at the club in 2010. The lounge and dining areas were available for private functions, but such functions could be booked only by members.  The fee payable to the club in respect of such functions was £50 in 2010.  Many of the functions taking place in the clubhouse were specifically club functions…..

 

The trolley was defective because it was not as safe as persons were generally entitled to expect.  The trolley caught fire whilst parked and unattended in an energised state.  The trolley was CE marked.  The CE mark upon the trolley creates an impression that the trolley has been designed to be safe and that it was warranted to be so by the supplier and manufacturer.  For a product to bear a CE mark it ought to comply with all relevant EU safety standards.  Whilst the trolley bore a CE mark the trolley was not as safe as a person was reasonably entitled to expect.  The trolley was inadequately designed to prevent it causing a fire.  Further, the trolley instructions in issue at the time of the fire contained no warnings to the extent that the trolley may catch fire if it was left energised and when not in use.  The instructions contained no warning that damage to the caddy through wear and tear had not been adequately controlled.  There are no warnings to the extent that a combination of these factors may result in fire.  The instructions in issue at the time of the fire do not contain a declaration from the defenders that the product complies with all the relevant standards of the EC directives as subsequent ones do.  There are no warnings to the extent that use of a non Motocaddy battery may cause a fire.  On the basis of the CE mark and the instructions it was reasonable to assume that the design of the trolley therefore mitigated against such a risk of fire.  The trolley had been used throughout its life for its ordinary purpose viz. use on golf courses such as Renfrew Golf Club and on and in Golf Club property.   It was reasonably foreseeable that if the trolley caught fire it could cause damage such property.  On the evening of the fire it was being stored in the clubhouse overnight.  The clubhouse locker room was for the private use of the members of the club.  Whilst the caddy was ‘on’, it should not have been reasonably expected that it would catch fire.  The trolley was defective having regard to the reasonable expectation of the safety of the machine created by the branding, the instructions and the CE marking.  The trolley was defective for the purposes of the act.  In consequence of this defect the pursuers sustained loss and damage.

 

Cond 4

 

Separatim, the Defenders took an active involvement in the design of the product.  The Defenders selected the manufacturer, imported and supplied the trolley and applied their own brand to it.  They held themselves out as the manufacturer of the trolley.  The trolley supplied by the defender bore a CE mark.  This represented to the consumer that the product was safe and met EU standards.  The trolley was likely to be used on and in Golf Club property such as Renfrew Golf Club.  It was reasonably foreseeable that if the trolley caught fire it could cause damage to Golf Club property such as that of the Pursuers.  It was the Defenders’ duty to take reasonable care to avoid acts and omissions which are likely to result in damage to the property of others such as the Pursuers.  It was their duty to take reasonable care as the importer of a product which they intended to offer for sale with a CE mark upon it within the EU to be satisfied that such products were safe and would not cause damage to the property.  They had a duty to take reasonable care to ensure that the trolley was not liable to develop an incendive electrical fault and so to cause fire damage to property.  In the execution of such a duty they ought to have taken reasonable care to be satisfied that the trolley appropriately carried a CE mark before putting it on the market.  Such reasonable steps would have included obtaining a declaration of conformity from the manufacturer of the trolley and considering the certifications produced in support of it.  A declaration of conformity would indicate that all relevant EU standards were met by the product.  The Defenders ought to have considered the design of the product for themselves and if appropriate produced a declaration of conformity as they did with subsequent models of the trolley such as the Motocaddy S1 digital.  They had a duty take reasonable care to carry out a reasonable examination of the trolley as condescended upon above.  In the circumstances condescended upon, no supplier in the position of the Defenders acting with ordinary skill and care would have failed to carry out such an examination.  Had they done so, they ought to have identified that the design of the trolley incorporated exposed wires proximate to the battery.  They would have established that there was a risk of damage to such wires in ordinary use.  They would have established that the design of the trolley did not offer protection from such foreseeable damage to the wires or from the consequences of such damage such as a fuse.  In particular they would have established that the trolley did not offer an over-temperature cut off or short circuit protection.  They would have established that damage to such wiring and components in the vicinity of the battery could result in an incendive electrical fault.  Further, testing undertaken on the battery case fabric, the battery shelf material, the motor cable (sheath) and the control box end caps demonstrated that these items were all combustible.  Had the Defenders complied with the duties incumbent upon them, they would have identified the shortcomings in the design of the trolley with regard to safety and in particular the risk of fire.  They would have known that the protections within the trolley design were insufficient to control the risk of fire.  The failures in the design which the defenders ought to have identified either caused or materially contributed to the cause of the fire.  Damage by fire to the Premises in which such a trolley was stored was a foreseeable consequence of the defects in the trolley.  The damage sustained by the Pursuers was therefore of the type which was reasonably foreseeable to the Defenders as a result of their acts/omissions.  The Pursuers were so closely and directly affected by the acts of the Defenders that the Defenders ought to have had them in their contemplation.  The Defenders failed in one or all of the foregoing duties.  The Defenders’ failure to fulfil the duties reasonably incumbent upon them resulted in the fire.  As a result of the fire, the Pursuers suffered the loss and damage herein condescended upon…..”.

 

Submissions

[6]        Mr Ellis began by attacking the pursuers’ case under the Consumer Protection Act.  He argued that, in the light of the provisions of section 5(3)(a) and (b) of the Act, the defenders were not liable for the pursuers’ loss, since the property damaged could not be described as property ordinarily intended for private use, occupation or consumption, nor was it intended by the pursuers mainly for their own private use, occupation or consumption.  Damage to property used by any group wider than the family, or used for economic activity, was not recoverable.  The club house was used for economic activity. 

[7]        The Act put into effect Directive 85/374/EEC and required to be construed purposively.  Article 9 of the Directive limited the damage for which compensation was recoverable to damage to property of a type ordinarily intended for private use or consumption.  The words “private use or consumption” did not refer to use of property to the exclusion of the public, but to personal use by an individual.

[8]        Mr Ellis argued that the pursuers’ common law case was also irrelevant because they had failed to aver sufficient proximity or foreseeability.  Nor would it be fair, just or reasonable to impose a duty of care of the kind averred.  The pursuers’ case represented a very significant extension of previously recognised liability and involved the imposition of liability to anyone whose property happened to be adjacent to the defective product.  On that basis the defenders’ duty would be to check the product for the benefit of the world, creating a risk over which they had no control. 

[9]        The defenders had no control over how or where the trolley was used, or stored, or over the events leading to the fire.  It had been supplied to the owner by someone other than the defenders and had been used by him for about three years.  He had been responsible for its maintenance and had inserted a new battery.  He had parked the trolley in the club house and left it switched on.  The two possible causes of fire averred, namely short circuit and motor stall, both arose from the use made of the trolley by the owner.  There was no direct connection between the defenders’ alleged failure to inspect and the events leading to the fire.  Reference was made to Donoghue v Stevenson, Caparo Industries Plc v Dickman, Marc Rich v Bishop Rock and ICL Tech Limited v Johnston Oils Limited [2013] SLT 1090.

[10]      In relation to foreseeability, Mr Ellis accepted that it was foreseeable that if the trolley caught fire damage might be caused, but he submitted that it was not foreseeable that damage to any third party would be involved.  In relation to proximity, he submitted that the pursuers’ case took liability for property damage beyond the consumer of the product.  That was a leap the court was not obliged to make.  There was a great distance between the defenders alleged failure and the fire.  For the same reasons it was not fair, just or reasonable to impose the duty contended for by the pursuers. 

[11]      On behalf of the pursuers Mr Sheldon moved me to allow a proof before answer on the ground that it was impossible to determine the issues of liability without hearing evidence.  In relation to the Consumer Protection Act case he submitted that the club house constituted private premises.  It was the equivalent of residential property and so could be described as ordinarily intended for private use and occupation, and intended by the pursuers mainly for their own private use and occupation.  Accordingly, liability was not excluded by section 5(3). This issue raised a mixed question of fact and law which could only be determined by proof.   

[12]      The protection afforded by the Act was not confined to individuals.  The word “private” could be applied to the use of property to the exclusion of others.  The critical issue was the private character of the club and the use to which it was put.  The fact that the club allowed visitors to use their facilities did not make the club an economic entity, but simply indicated a desire to boost club income. 

[13]      In relation to the common law case Mr Sheldon submitted that the liability for which he contended was very restricted and did not extend to the whole world.  Liability of suppliers of goods for defective products was well established.  It might involve an obligation to carry out an examination when an importer applied his own name to goods manufactured in distant countries where the quality of work was uncertain.   The liability contended for in this case was well trodden ground or at least represented only a very small extension beyond that recognised by Lord Bridge in Caparo.  See also Perrett v Collins [1999] PNLR 77. 

[14]      The foreseeability of the trolley catching fire was a matter for evidence.  Proximity was linked to foreseeability.  The following factors pointed to the fairness, justice and reasonableness of the imposition of liability in this case:  (i) it was foreseeable that a golf trolley would be found in the premises of a golf club;  (ii) while the scope of the defenders duty was not unlimited, the pursuers, as a golf club, formed part of a discrete and identifiable class of possible claimants;  (iii) the trolley was being used in a normal way;  (iv) the defenders applied their own trade name to the trolley;  (v) they had some input into the design;  (vi) they obtained the benefit of someone else’s design and cheap manufacture without satisfying themselves of the safety of the product;  (vii) the defenders held out the trolley as good for many years use;  (viii) potential problems with the wiring could easily be discovered by basic examination;  (ix) insurance against product liability was obtainable;  (x) the pursuers had suffered direct physical loss;  (xi) if the pursuers’ insurers were unable to recover their outlays the costs of the pursuers’ insurance cover would go up. 

 

Discussion
[15]      I deal firstly with the arguments advanced in relation to the pursuers’ case under the Consumer Protection Act.  The pursuers will only be entitled to succeed if their pleadings show that the clubhouse can be described as property ordinarily intended for private use or occupation, and that it was intended by them mainly for their own private use and occupation.  The two limbs of the test must be satisfied.  I consider that this question can be determined on the pleadings without the necessity for proof.  The pleadings set out the facts essential to the decision and, while evidence might provide additional detail, I do not consider that it would alter the essential factual matrix on which the issue has to be determined. 

[16]      The parties were at odds in relation to the meaning of “private” in section 5(3).  I do not find it necessary to decide whether section 5(3) has the effect of limiting liability to damage caused to the property of individuals.  I am not however prepared to hold that the use made of the clubhouse was private in terms of the subsection simply because it was owned by the members of a club.  The actual use to which it was put requires to be examined.

[17]      Renfrew Golf Club, like many golf clubs, is a members’ club – an association which has no legal existence apart from its members.  In a members’ club, unless the rules provide otherwise, the property of the club is owned by all the members jointly.  Renfrew Golf Club appears to be a typical club where the members have the right to play golf on the course and to use the clubhouse.  The clubhouse, so far as disclosed by the pleadings, contained a locker room, a lounge, a dining area, a licensed bar and catering facilities.  A member could introduce guests to play golf and to use the clubhouse facilities, and members of the public, either individually or in parties, could play golf for a fee, use the clubhouse, and patronise the bar and the catering facilities.  The catering facilities were franchised to a local business but as I understand it, the club benefitted from the profits from the licensed bar.  The lounge and dining area were available for social functions which were not necessarily related to the club but bookings for such functions required to be made by a member.  A fee was charged for such bookings.  The pursuers’ claim for damages includes items for business interruption, loss of green fees, and loss of profit from bar takings.

[18]      In the light of these facts it is clear from the pursuers’ averments that the clubhouse, in common with many golf clubhouses, was used for a material amount of economic or commercial activity.  Moreover, I am unable to accept that Parliament intended that a building, the use of which was available to seven hundred members as well as others, could be described as being subject only to private use.  In these circumstances I do not consider that the clubhouse was of a description of property ordinarily intended for private use or occupation.  Since both legs of the test require to be satisfied that is sufficient to require me to sustain the defenders’ plea to the relevancy in relation to the pursuers’ Consumer Protection Act case.  It is accordingly unnecessary for me to determine whether the second leg of the test is satisfied, that is, whether the pleadings disclose that the clubhouse was intended by the pursuers mainly for their own private use and occupation.  Suffice it to say that the argument in favour of private use under that part of the test is stronger than it is in relation to the other.

[19]      The pursuer’s common law case raises the issue of the scope of the defenders duty of care to the pursuers.  That issue essentially falls to be determined by the application of the tripartite test set out in Caparo Industries Plc v Dickman [1990] 2 AC 605.  In relation to foreseeability Mr Sheldon argued that it was foreseeable that a golf trolley might be found within golf club premises.  The foreseeability of the trolley catching fire was, he contended, a matter for proof.  Mr Ellis accepted that it was foreseeable that if a trolley caught fire some damage might be caused, but he submitted that in this case it was not foreseeable that damage to any third party would be involved.  The pursuers do not aver that any previous incidents of the kind involved in this case had occurred.   In the light of the view I take on the question of proximity it is not necessary for me to express a concluded view on foreseeability.

[20]      The issue of proximity, in my view, raises greater difficulties for the pursuers since there were a large number of factors leading to the fire over which the defenders had no control.  It is averred that the fire was caused as the result of the rocker switch being left in the “on” position.  The precise mechanics of the cause of the fire are however uncertain.  It is not averred that the wires were actually damaged prior to the fire, merely that they could have been.  The defenders had no control over the maintenance of the trolley, or over the use of the trolley in the three years since it came into the owner’s possession.  The owner had changed the battery to a 36 hole battery.  The capacity of the previous battery is not averred.  The defenders had no control over the place where the trolley was left on the night in question. The pursuers do not aver from whom the owner obtained the trolley.

[21]      As Lord Hodge pointed out in ICL Tech Limited v Johnston Oils Limited [2013] SLT 1090 at 199:

“In Donoghue v Stevenson Lord Atkin famously emphasised the concept of direct effect in his definition of proximity.  He spoke of ‘such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his act.’” 

 

He went on to cite Lord Hoffmann in Sutradhar v Natural Environment Research Council [2006] UKHL 33 where he spoke of the need for the person on whom a duty of care was imposed to have “a measure of control over and responsibility for the potentially dangerous situation” and for “a proximate relationship with a source of danger”.  As Mr Ellis said, there was a great distance between the defenders alleged failure and the fire.  In these circumstances I do not consider that the pursuers have succeeded in averring sufficient proximity between the defenders and pursuers.  For the same reasons, taking a general view of the entire circumstances of the case, it seems to me that it would not be fair, just and reasonable to impose a duty of care on the defenders in this case. 

[22]      In these circumstances I shall sustain the defenders’ plea to the relevancy and grant decree of dismissal.