| OUTER HOUSE, COURT OF SESSION |
| | [2013] CSOH 150 |
| CA20/12 | OPINION OF LORD HODGE in the cause UNITED CENTRAL BAKERIES LIMITED Pursuers; against SPOONER INDUSTRIES LIMITED and FORBO SIEGLING (UK) LIMITED Defenders: ________________ |
Pursuers: A Clark, QC, Sheldon; Ledingham Chalmers LLP
Defenders: A Young, QC, Saunders; DLA Piper Scotland LLP
Second defenders: G Clarke, QC; Simpson & Marwick LLP
5 September 2013
[1] The pursuer ("UCB") is an industrial baker. It owns a factory at Whitehill industrial estate, Bathgate. Late at night on 31 October 2006 a serious fire occurred and destroyed about one-third of the factory. UCB's insurers paid out £6,788,556. The fire started on an item of equipment called a "heliveyor" which I describe below. UCB's insurers in a subrogated claim seek to recover that sum from (i) the manufacturers and sellers of heliveyor ("Spooner") and (ii) the sellers of plastic belting used on the heliveyor ("Siegling"). The belting was produced by an associated company and Siegling marketed and sold the belting in the United Kingdom.
[2] There was no dispute as to the most likely cause of fire. I had the benefit of the expert evidence of Dr Christopher Wareham and Mr Lee Masson. They agreed that the fire was probably caused by small burning pieces of naan bread, which had been trapped in the travelling oven and had caught fire before exiting the oven. The burning piece or pieces had lodged in a gap or gaps between the plastic modules of the heliveyor where they had heated the adjacent modules sufficiently to cause them to melt and ignite. Naan bread debris and oil residue on the heliveyor may have assisted the spread of the fire on the belt but were not a significant cause of the fire.
[3] The defenders, with the benefit of hindsight, did not dispute that the type of plastic belting which had been used on the heliveyor was not suitable to convey the hot naan breads shortly after they came out of the oven because of their propensity to catch fire in the oven. But that concession does not of itself provide an answer to the question whether either of the defenders is liable for the damage caused by the fire.
[4] UCB claims damages against Spooner for (i) breach of implied terms of the contract of sale of the heliveyor under section 14(2) and (3) of the Sale of Goods Act 1979 and (ii) negligence in using plastic belting material which was unsuitable for a production line. UCB also seeks damages from both Spooner and Siegling for an alleged negligent misrepresentation of the suitability of the plastic belting for use on its production line and a negligent failure to warn of its flammability when exposed to flame.
The principal witnesses
[5] Before setting out the facts, I comment briefly on the credibility and reliability of the principal witnesses as counsel challenged some of the evidence which I heard. I found the witnesses to be generally both credible and reliable. I am not persuaded that any disputed issue of fact has much bearing on liability in this case. When I have not accepted as reliable part of the evidence of a witness and have preferred the evidence of another witness, my decision has affected the narrative of the factual background rather than altered the apportionment of liability between the parties because the principal facts upon which liability rests are not seriously in dispute.
[6] Mr Archibald Cunningham, who is managing director of UCB, is an experienced and successful businessman. He is also a determined and forceful man. He has reflected on events since the fire and was clearly aggrieved that the defenders had provided UCB with a belt which he considered unsuitable for its purpose. He was angry that the defenders had "fobbed off" his inquiries by the assurances which they had given him in 2004, which I discuss below. This caused him to give some defensive answers on cross-examination. He overstated the frequency of burning product exiting the ovens. Other witnesses did not support his testimony on this. He also overstated the frequency of the cleaning of the ovens; he stated that the slats of the ovens were cleaned daily when UCB's cleaning sheets suggest that the ovens were cleaned weekly and there was evidence of some build-up of carbon on the slats of the ovens. I do not accept his evidence on cross-examination that he believed that the first serious fire was caused by a piece of red hot metal which had broken off the oven. But his faulty recollection on these matters did not in my view undermine his credibility or seriously compromise his general reliability. In particular, I accept his evidence that he relied on the advice which the defenders gave in 2004 in deciding to keep the heliveyor as part of UCB's production line.
[7] Mr Ronald Stebbings had been general manager at UCB since July 2006 and was previously operations manager with responsibility for production, planning and distribution. He was a credible and generally reliable witness. Mr Derek Thomson had been the general manager before Mr Stebbings and was also commercial manager. Among other things Mr Thomson described the site visits which customers made to check on hygiene and quality control. He was a credible and reliable witness whose evidence was not seriously challenged. Mr Steven Jeffrey was the engineering manager at UCB between 2003 and 2005. He gave his evidence in a straightforward manner and I do not question his credibility. His recollection was sometimes vague and on several occasions, including importantly his reaction to Siegling's letter of 30 June 2004, he qualified in his oral evidence what he had stated in his witness statement.
[8] Mr Alexander Grieve is an engineer in the food industry. In about 1996 he became the managing director of Triphase Ltd, which manufactured heliveyors. In about 2001 Spooner acquired the intellectual property rights of Triphase Ltd and employed Mr Grieve as a chief engineer in its food division. His principal role was to sell Spooner's products to the bakery industry. He was a credible and straightforward witness who tried hard to give an accurate account of his recollection. I had no difficulty in accepting his evidence.
[9] Mr David Alderson was formerly employed as an applications engineer by Triphase Ltd and then by Spooner. He now works as a technical director of a company of which Mr Grieve is the managing director. He gave evidence about the design of the heliveyor for UCB in 2003. He explained that one could not use steel belting on a heliveyor and that he did not consider that there was a risk of fire through using plastic belting. He also spoke of placing the order for the plastic belting with Siegling. He also was a straightforward witness who gave his evidence with care. I accept him as a credible and generally reliable witness.
[10] Mr Dennis Jackson is a retired engineer. He worked for Siegling and its predecessor companies for about 30 years in the manufacture and supply of conveyor belts. He was an honest witness but had a poor recollection of events. He did not recall the number of visits he had made to UCB's factory or the discussions which he had had in 2004 with Mr Grieve or with Mr Steven Jeffrey of UCB. His recollection was wrong in several details. In particular, I do not accept his evidence that there had been a consensus in 2004 that the lack of cleaning of the conveyor belt and proper housekeeping had caused an earlier fire on the heliveyor in December 2003. That recollection was contradicted by contemporary documents.
[11] UCB also led the evidence of Mr Paul Tucker. He is a commissioning and production engineer with expertise on the commissioning and design of bakery ovens. He was not an expert on fire propagation. He gave expert evidence on the responsibilities of a design engineer. He criticised Spooner's design of the heliveyor and in particular its failure to assess the risk that the conveyor would carry bakery product which was on fire. He also criticised both Spooner and Siegling for failing to give written warnings of the flammability of the plastic belting. While I have had regard to his report in the context of the common law cases which UCB advances against Spooner and Siegling, its value is considerably diminished by the dependence of its analysis on the Supply of Machinery (Safety) Regulations 1992. UCB pleaded no case against Spooner under those regulations.
The factual background
[12] Until late 2006 UCB's factory included facilities for producing naan bread. In 2003 production of naan bread amounted to about two-thirds of the factory's turnover. As a result of increasing price competition, Mr Cunningham decided to move UCB's production to more profitable products, such as gluten-free bread. Thus when the fire occurred in late 2006, UCB's production of naan bread was coming to an end. The ovens which produced naan bread were heated to about 400˚ C in order to create the desired scorching and brown bubbles on the surface of the bread and thus resemble the effect of a tandoor oven. Most bakery products do not require such high temperatures. It was thus very unfortunate that UCB suffered the serious fire as it was ending its production of naan bread.
[13] The production process may be summarised as follows. Dough was first mixed in a hopper before being placed in moulds. The moulded dough then passed through a proving chamber where the dough rested for about 20 minutes. The operatives standing between the proving chamber and the mouth of the oven would hand stretch each naan bread into its familiar tear-drop shape. Rapeseed oil was then applied to the surface of the naan breads. By 2003 UCB had introduced an automated spray chamber which sprayed the rapeseed oil onto the naan breads before they entered the oven. A slatted steel conveyor moved the naan breads through the oven. They remained in the oven for only about 20 to 40 seconds before exiting onto a steel wire conveyor. Because the product passed through the oven on the conveyor, the oven was known as a travelling oven. At the exit of the oven there was a scraper bar or "nodding donkey" which was designed to assist the naan breads to move on to the steel wire conveyor at the exit without breaking and to prevent naan breads remaining stuck to the internal conveyor of the oven and being recycled within the oven. On exiting the oven the cooked naan breads were carried on the steel wire conveyor for approximately one metre. Before UCB purchased the heliveyor, the cooked naan breads were then deposited on a conveyor with a white plastic belt which placed them on a steel wire conveyor that conveyed them to the attic of the factory in which they then travelled on a horizontal steel mesh conveyor to cool before descending on a conveyor for packing.
[14] In 2001 a fire occurred in the flue of one of the naan bread ovens. At the request of its insurers UCB obtained a report on fire safety from Burgoyne Consultants Ltd. Burgoyne recommended the installation of a fire suppression system in UCB's ovens. UCB implemented Burgoyne's recommendations. Burgoyne did not identify burning naan bread on a conveyor as fire risk. But that does not surprise as, at that time, the conveyors which carried the cooked naan breads were almost exclusively made of steel wire.
The purchase and installation of the heliveyor
[15] In about 2003 UCB decided to address a problem of wastage of the cooked product. On the naan bread production line ("the production line") the conveyor at the exit of the ovens took the product up a sharp incline and at an acute angle. As a result it was common for a naan bread to fall backwards, damaging itself and other naan breads. UCB decided to commission Spooner to design and construct a helical conveyor called a heliveyor.
[16] Mr Matthew Buckley, an employee of Triphase Ltd, had designed the heliveyor. It had a fixed central drum. A plastic belt or belts rose in a helical shape around the drum to carry product to a higher level. Triphase Ltd purchased the plastic belt from Siegling and fitted a bearing to the outside of the plastic belt. Siegling made a special mould to allow the manufacture of a belt with a housing for this bearing. Spooner adapted the initial design of the heliveyor to take account of its customers' needs, including the height of the in-feed to the heliveyor, the height of the out-feed, and the width of the belt or belts.
[17] In 2003 Mr Cunningham asked Mr Grieve of Spooner to address the problem of wastage and ultimately to design and build a heliveyor system. Mr Grieve visited UCB's factory on several occasions and invited Mr Cunningham to view a heliveyor in other commercial premises.
[18] There was a dispute in the evidence of what Mr Grieve saw when he watched the naan bread plant in operation in UCB's factory. Mr Grieve observed the operation of the production line for approximately six hours. Mr Cunningham gave evidence that it was not uncommon for cooked naan breads to come out of the ovens in flames. He stated that charred naan breads came out of the oven on average every 15 minutes and expressed the view that Mr Grieve must have seen burning naan breads coming out of the ovens when he observed the production process. Mr Thomas Pringle, an engineering manager with UCB, also said that it was not uncommon that naan breads would exit the oven with small fires on their surface caused by burning rapeseed oil. But there was conflicting evidence as to the frequency of such fires. Dr Wareham interviewed several of UCB's employees when he investigated the cause of the 31 October 2006 fire. A nightshift worker, Mr Kwiecieú, who worked for several months on the production line, told Dr Wareham that he had never seen a burning naan bread. Another nightshift worker who worked for UCB for over 4 years, Mr Ian Mackay, informed Dr Wareham that he had seen one or two fires on the production line when bread got stuck on the oven plates and went through the oven more than once. He said that the naan bread would come out blackened or in flames and the operative close to the oven would knock the bread onto the floor and stamp on it.
[19] I see no reason to question Mr Grieve's evidence that he did not see burning naan breads exiting the ovens and that he was not told that it was common for naan breads to be on fire when they were conveyed from the ovens. UCB's fire risk assessments did not identify this as a fire hazard. There is no mention of such a problem in Mr Grieve's site visit report dated 8 May 2003. In that report he stated that one of the reasons for the visit was to identify potential problems and risks. In his evidence he accepted that he had not applied his mind to the risk of fire. But he must have observed the naan breads coming out of the oven very hot and smouldering on the patches which were burnt in the oven. He recorded in that report that Spooner would "provide specific recommendations for cooling to reduce naan temperatures from + 90˚C ex-ribbon burner oven down to +26˚C for flow wrapping". But he frankly accepted in his evidence that he had not obtained the temperature of 90˚C from UCB personnel. Siegling's product range brochure suggested that 90˚ C was the top of the temperature range for POM belting. It was not clear from where Mr Grieve obtained the temperature range which he quoted in his report.
[20] On 22 May 2003 Mr Grieve sent a quotation for the supply of a twin-belt heliveyor at a price of £31,420 and on 13 June 2003 Mr Cunningham and Mr Grieve initialled the quotation to create a contract. On the same day Mr Cunningham sent Mr Grieve a letter accepting Spooner's proposal to design and build the heliveyor "under the terms and conditions of the design and build quotation". I discuss in paragraphs [55] - [61] below the question whether the contract incorporated by reference the terms of business on which Spooner founded in its defence. In its technical evaluation of the project dated 16 June 2003 Spooner specified that the belts on the heliveyor would be blue Polyacetal-POM. This was the Ultraform belting which Spooner purchased from Siegling. POM is the thermoplastic polyoxymethylene.
[21] Spooner constructed the heliveyor and then disassembled it for delivery to UCB's factory in September 2003. UCB employed another company, Coral Engineering Ltd, to install it.
The operation of the naan bread plant once the heliveyor was installed
[22] I described the production process before the heliveyor was installed in paragraph [13] above. After the heliveyor was installed, the naan breads left the each of the two ovens and travelled for no more than a metre on the steel wire conveyor before moving onto an "L"-shaped conveyor with a white plastic belt which carried them for about 2 to 3 metres before depositing them at the bottom of the twin-track heliveyor. After depositing the cooked naan breads on the conveyor in the attic, the belts of the heliveyor descended vertically. A sparge pipe was fitted to the heliveyor at this point to provide water to wash debris and rapeseed oil from the belts. The sparge pipe was part of the design of the heliveyor. But UCB fitted it only in about June 2004 after the first serious fire mentioned below. The belts were not washed when the production line was in operation because water on the belts would have reduced the quality of the naan breads. UCB's policy was to wash down the belts with water from the sparge pipe every twelve hours at the end of a shift.
The first fire on the heliveyor
[23] On 23 December 2003 a serious fire occurred during the day shift on the heliveyor which caused parts of both belts to melt and ignite. Operatives put out the fire using water hoses. UCB's engineers used undamaged parts of the belts on each track to restore production by operating only the inner track. When Mr Cunningham asked what had caused the heliveyor belt to catch fire, no one was able to explain how it had happened. Mr Jeffrey of UCB, on Mr Grieve's suggestion, placed an order to purchase 75 metres of replacement POM belting from Siegling on 24 December 2003. The replacement belting was delivered on about 15 January 2004 by Siegling's Scottish agents, Belting and Mechanical Leather Co Ltd. It was used to reinstate the outer track.
UCB's enquiries into the cause of the fire
[24] As the fire had been a serious one which had been put out with difficulty, Mr Cunningham was concerned to investigate its cause. UCB contacted Mr Grieve who came to the factory on either 23 or 24 December. He saw black paste between joints of belt, which he thought was probably rapeseed oil and product debris. Before he visited UCB's factory, Mr Grieve carried out a simple test of setting fire to a rag on a piece of POM belting and discovered that the belt did not ignite. When he was at the factory Mr Grieve witnessed Mr Jeffrey of UCB carry out another test. Mr Jeffrey applied the heat from a blowtorch to a portion of POM belting, which caught fire. Mr Grieve thought that that test was "daft" as the heat created by the blowtorch would have been about 1000˚ C, greatly in excess of any heat which the ovens could have created. In my view there is little to be learned from either of those unsophisticated tests.
[25] There was some uncertainty in the evidence as to when Mr Jackson of Siegling visited UCB's factory. He suggested that he was there at the same time as Mr Grieve in December 2003 but Mr Grieve denied that he had attended at the factory with him. It is not important to the merits of this case whether Mr Jackson visited the factory in December 2003 or later. On balance I think it likely that he visited UCB's factory later as there is a contemporary email that records his visit on 20 January 2004 (paragraph [28] below).
[26] UCB's senior managers had doubts as to the suitability of the POM belting for use in the production line. They therefore sought assurances from Spooner and Siegling. The responses which Spooner and Siegling made to UCB's inquiries about the cause of the fire are an important part of UCB's case against each defender. I must therefore narrate the communications between the parties in more detail.
[27] On 17 January 2004 Mr Jeffrey of UCB emailed Mr Grieve to ask that someone from Spooner visit UCB's factory to answer the question: what caused the fire at the heliveyor? He also requested the specification of the belting material. He copied the message to Mr Cunningham. Mr Grieve replied by email on 19 January. So far as relevant, he stated:
"I further understood that you were getting the full specification of the belt from Dennis. (I'll get the full specification to you today)
When we last spoke I advised that there was no means for the Heliveyor to ignite itself with the only energy at the drive motor [which] is mounted outbound of the frame/belt.
It seemed to me that the most likely cause was flaming debris from the oven."
[28] On 21 January Mr Jeffrey emailed Mr Grieve and copied the message to Mr Cunningham. He stated:
"Sandy to enable us to install the C.I.P. [clean in place] system to the heliveyor can you tell me the flow rate of water required to clean the belting and at what temp the water should be to clean effectively.
Stevie
P.S. I had a visit from Dennis Jackson yesterday to review the belting and to check on delivery of the replacement belt, which arrived Monday morning."
[29] Mr Jeffrey emailed Mr Jackson on 28 January to report on further tests which he had carried out on the belting. He copied his message to Mr Grieve and Mr Cunningham. He stated:
"Dennis thank you for the free sample of modular belting (re: our Heliveyor belting), we conducted the same test on the brand new belt as we did the belt that had been on line during the fire. We found that when we set the belt on fire deliberately the belt continued to stay lit, furthermore it intensified sending the section of belt up completely. We have a sample of modular belting that I showed you when you were on site from another supplier that we conducted the same trials with and this belt seem[ed] to self-extinguish."
[30] There appears then to have been a lull in communications. On 23 February Mr Grieve emailed Mr Cunningham that he would visit UCB's factory on 26 February if Mr Jeffrey were available and explained that a sparge pipe to clean the belt was being manufactured. At the meeting on 26 February Mr Cunningham told Mr Grieve that he remained unhappy about Siegling's explanation of the belt fire in December 2003. He also forwarded to Mr Grieve Mr Jeffrey's email of 28 January, which Mr Grieve had already seen.
[31] Mr Grieve raised those concerns with Mr Jackson in an email dated 1 March 2004. He stated:
"I visited Archy last Thursday regarding a new enquiry and was surprised to learn that U.C.B. are still unhappy and or uncertain regarding your technical explanation about the belt fire they had before Christmas.
They are concerned that the new belt will catch fire if burning product travels on it from the oven.
They insist that the fire was probably caused with burning bread after it had already passed over the plastic bends leading to the heliveyor.
(THE PLASTIC BELT ON THE BENDS DID NOT CATCH FIRE!!)
From the technical specification and our various discussions I was certain that burning bread was highly unlikely to ignite the plastic modules.
Having visited Stevie/Archy and been advised of their "combustion trial" what are your thoughts? What do your technical guru's think?
Archy is a very important client who has a vast network of up and coming decision makers.
It is important to me that I advise him correctly."
Mr Grieve's queries appear to have gone unanswered for several months.
[32] Mr Jeffrey raised the issue again on 22 June 2004 when he emailed Mr Grieve to complain that UCB had heard nothing as regards the fire on the heliveyor. This prompted the following response from Mr Grieve, which he copied to Mr Jackson:
"Modular belt on heliveyor
Dennis Jackson had his technical people look into the fire and I am sure they concluded that the correct materials were used.
The belt should be impossible to set fire to with burning naan bread and the belt itself is unable to feed any fire which may start from say Oven components!
However Dennis did say that he would "close-off" this incident through his Scottish agents.
I agree that you should have a report from Dennis, his technical team or his agents.
We can be available to call-in with Dennis if that moves things forward."
[33] Mr Jeffrey replied next morning in an email which he also sent to Mr Cunningham and Mr Jackson. He asked:
"Sandy, can Dennis explain how when we place a naked flame next to his belt it goes up and also the fire intensifies, while when we done the same test on our white modular belt the fire self extinguished.
We have fitted the spray bar and it cleans reasonably well."
Mr Cunningham added to the pressure later that morning in an email to Mr Jeffrey and Mr Grieve which he copied to Mr Jackson. He stated:
"Am not really happy with the supplier of this belt you and Dennis both seen with your own eyes that the belt caught fire. How can you comment as below when you witnessed Stevie showing you the belt caught fire!
The belt should be impossible to set fire to with burning naan bread and the belt itself is unable to feed any fire which may start from, say Oven components.
I would also like to close this off however at this juncture I feel we are being fobbed off by Dennis and really that's not really acceptable. I would appreciate your help in this matter, I understand that you are a busy man but if you were in my shoes am sure that you would not be happy with the outcome of this report which really has went on too long.
I look forward to hearing from you."
[34] In response Mr Jackson prepared a draft letter which he gave to Mr Grieve for comment. Mr Grieve revised the text and on 30 June 2004 Mr Jackson faxed the following letter to Mr Grieve, knowing that he would pass it and the enclosed data sheet to UCB. Mr Grieve did so. The letter stated:
"With reference to our various telephone calls and e-mails regarding U.C.B. - Scotland.
I have enclosed the data sheet for the material used on the belt supplied to UCB (Polyacetal - POM).
We process this material at a temperature of approximately 190 degrees C, and the data sheet is advising that a temperature of 164 degrees C is required to melt this material.
From the above we would have to assume for a NANN Bread to melt the belt the above would need to be attained, which in my opinion would be very unlikely. Any oil or contaminants on the belt would obviously ignite at lower temperature.
With regard to the test conducted by Steve Jeffery, this was carried out with a blowtorch which would attain a much higher temperature, and ignite the belt.
In conclusion, the belt material is the same as always supplied on this application. The two original belts and the replacement belts were processed from the same thermoplastic granules.
I trust this meets with your requirement and look forward to hearing from you in due course."
[35] There was some uncertainty in the evidence whether Mr Grieve had introduced the word "very" before "unlikely" in the fourth paragraph of the letter when he saw it in draft. A copy of the draft which Mr Jackson sent to Mr Grieve showed the addition of this word in manuscript but it was not clear when it was added. Mr Grieve did not recall adding the word but frankly recognised that he might have done so. He also stated that the addition of that word for emphasis reflected what Mr Jackson had been saying to him. Handwriting evidence suggested that it might be Mr Grieve who had added the word. Mr Jackson said that he had not altered the draft letter after he cleared its terms with his manager. On balance, I am satisfied that Mr Grieve did add the word "very" and that both he and Mr Jackson were content with the representation that that entailed.
[36] Siegling had obtained the data sheet of the POM granules that accompanied the letter from its associated company shortly before sending it to Mr Grieve. It was an A4 sheet of paper containing technical data of the Ultraform polymer which BASF manufactured. So far as relevant it stated:
"Polyacetal (POM)
Ultraform
Ultraform resins are highly crystalline thermoplastics. By virtue of their crystallinity, they have a narrow melting range, i.e. from 164 to 168˚C. The processing temperatures are generally of the order [of] 180 to 220˚ C. At higher temperatures, the polymer melt commences to undergo thermal degradation. This results almost exclusively in the evolution of formaldehyde in ignitable concentrations at temperatures of 350-400˚C.
Ultraform mouldings can be ignited by applying a flame or sufficient heat. They continue to burn after the flame has been removed. In the initial stages, the rate of flame spread at the surface is slight but depends largely on the geometry of the part concerned. Ultraform melts may [form] burning drops.
Ultraform resins containing flame retardants are currently not available."
[37] The reaction of UCB's senior management to the letter and data sheet is contentious. Mr Cunningham and Mr Jeffrey saw both documents. Mr Cunningham said that he took from the letter that the POM belting was fit for purpose and that burning naan breads would not set it on fire. He did not read the data sheet in detail and explained that that was because it was technical. Mr Jeffrey accepted that he could not have read the data sheet thoroughly because he would have understood that the POM could be set alight and remain alight. As UCB senior managers had pressed Spooner to provide the data sheet, their lack of interest in and failure to consider its terms is remarkable. But their response must, in my view, be seen in the context of the prior discussions with Mr Grieve and the email correspondence in which Mr Grieve, relying on information which he obtained from Mr Jackson, sought to reassure UCB that burning naan bread would not have caused the POM belting to catch fire. By June 2004 Mr Cunningham wanted a statement in writing to assure him that the POM belt was fit for use in the production line. He understood that the letter of 30 June was giving that assurance. He acknowledged in his evidence that it was his responsibility to decide what to do in response to the letter.
[38] In support of his view that he was told the POM belt was fit for purpose, Mr Cunningham referred in his evidence to an email dated 17 November 2006 in which Mr Grieve stated that Siegling had confirmed after the first fire that "the belt had been correctly selected".
[39] The senior management of UCB did not achieve any certainty as to the cause of the December 2003 fire. Mr Cunningham and Mr Jeffrey understood that they were being reassured by Spooner and Siegling that it was very unlikely that burning naan breads were the cause. There was, as I have said, no consensus that lack of cleaning was the cause. Mr Grieve suspected that a piece of red hot metal might have broken off from the oven and caused the fire (see his email of 19January 2004, paragraph [27] above). Mr Cunningham gave evidence that he had believed that this was the cause of the fire in 2004. But there is no contemporary documentary evidence that he had such a belief. Mr Jeffrey did not recall anyone advancing such a hypothesis at the time. I conclude that Mr Cunningham's recollection is faulty in this regard. While Mr Grieve raised with him the possibility of red hot metal breaking off the oven, it was not the prime suspect as a cause. In any event, by June 2004 the senior management of UCB did not think that a piece of hot metal was the cause of the December 2003 fire. Doubt as to the cause remained.
[40] UCB's senior managers appear to have accepted the advice of Spooner and Siegling that it was very unlikely that burning naan breads would cause the POM belting to catch fire. None of the parties thought about or investigated the temperatures at which the naan breads exited the ovens and compared those temperatures with those quoted in the letter or in the data sheet. No one investigated how the belt could be exposed to a burning object for a sufficient time to cause it to ignite. But the letter caused Mr Cunningham to doubt whether the 2003 fire had been caused by burning product. He understood that he was being told that the belt was suitable for purpose. While Mr Jeffrey stated in his witness statement that he did not think that he would have been happy with the letter at the time, he stated in his oral evidence that he thought that the letter and the data sheet were telling UCB that the belt was suitable. It was not clear if he saw the data sheet at the time but it is likely that he would have discussed the matter with Mr Cunningham. In the context of the prior communings in the aftermath of the first fire, I consider that both Mr Cunningham and Mr Jeffrey acted reasonably in taking the view that the defenders were suggesting that the belt was suitable. Mr Jeffrey was clear that the decision to retain the heliveyor was taken by Mr Cunningham.
UCB's other knowledge of fires on the heliveyor belts
[41] UCB does not dispute that between 2003 and the second serious fire in October 2006 there were occasional fires on the heliveyor which consisted of burning naan bread or debris from naan bread. The operatives easily extinguished those fires and the belting itself did not catch fire. Mr Stebbings said that he had never seen naan bread burning on the heliveyor. He considered the risk from burning naan breads exiting the ovens to be very low as they normally self-extinguished on exit. He understood that both Mr Cunningham and Mr Jeffreys believed that the belting contained a fire retardant. Mr Thomas Pringle, UCB's engineering manager, recalled smothering several small fires of burning naan debris on the heliveyor. There was some evidence of scorch marks on, or the melting of the surface of, small parts of the POM belt. Small sections of belt had to be replaced from time to time. Such replacements were not routinely recorded in UCB's planned preventative maintenance records. There was also evidence of burn marks on the factory floor close to the exit from the oven which were consistent with the operatives' practice of knocking burning naan breads or parts of such bread onto the floor and stamping out the flames.
[42] I am not persuaded that contamination of the belt by rape seed oil made a major contribution to the risk of fire on the heliveyor. There was undisputed evidence that the belts of the heliveyor were darkened by a combination of flour, carbonised naan particles and rape seed oil and that a black paste could form between the plastic modules of the belt. But I accept Mr Cunningham's evidence that the belts were not seriously contaminated by oil. Significant oil residues would have marked the bottom of the naan breads and made the product unacceptable to the supermarkets which purchased them. After the sparge pipe was placed on the rear of the heliveyor, it provided water at mains pressure to remove debris from the belts but it did not have the power to remove a thin film of oil, flour and crumbs from the belting. It was UCB's policy to use the sparge pipe to clean the heliveyor belts every twelve hours at the end of a shift. But it was not clear from the evidence whether UCB was consistent in doing so.
The second major fire on the heliveyor
[43] The second major fire, which is the subject matter of this action, broke out on the belt of the heliveyor shortly before midnight on the night of 31 October and 1 November 2006. Only one of the two naan bread ovens was working as UCB was running down its production of naan bread. Four operatives were working on the production line. Two, Mr Mackay and Mr Ford, were mixing the dough and two, Mr Kwiecieú and Mr Chetmek, were shaping the naan breads at the tear-drop station before they entered the oven. One or other of them checked the exit of the oven frequently to ensure the quality of the product. The operatives had checked the exit minutes before the fire broke out but did not detect any problem before they saw flames in the upper half of the heliveyor. That is not surprising because, when the POM modules catch fire, the flame is almost invisible in the early stages. The fire spread rapidly on the heliveyor and the operatives were not able to bring it under control with fire extinguishers or hose water. The fire spread from the heliveyor and destroyed about one-third of the factory.
The cause of the second fire
[44] I can narrate briefly the expert evidence on the cause of the second fire as the defenders ultimately did not challenge Dr Christopher Wareham's assessment. He and Dr Lee Masson agreed that the most likely cause of the fire was that a burning fragment or burning fragments of naan bread exited the oven and lodged themselves in the gaps between the plastic modules of the heliveyor belt which was in the form of an open lattice or chain. There they remained on fire for a sufficient time to melt and ignite the POM. Naan bread would normally take less than a minute to travel from the exit of the oven to the attic area beyond the heliveyor. The bread would be on the heliveyor for about 30 seconds. That was not likely to be a sufficient time to ignite the POM belt. But fragments of burning bread stuck between the modules of the belt would remain on the heliveyor. Flames from the burning bread would be in contact with the vertical surfaces of adjacent modules. The POM would decompose on exposure to heat and would produce formaldehyde gas, which would burn with an almost invisible flame and produce no smoke. With time the POM would melt and drop onto the belting of the heliveyor at a lower level, thereby spreading the fire rapidly. The sides of the heliveyor would also create a trench effect as air flow over the moving belt would encourage lateral spread of the fire.
[45] There was no evidence of any malfunction of the oven as the naan breads on the conveyor in the attic after the fire were found to be normal. Nor was there evidence of any failure of the electrical motors and cabling of the conveyors. It is very unlikely that flames on top of a naan bread would have ignited the POM belt. This is because the charred bread itself would have shielded the belt beneath it from the flames and as the bread would not be on the heliveyor for a sufficient time to ignite the POM belt. Thus the most convincing explanation for the fire, which I accept, is the lodging of a fragment or fragments of burning naan bread in a gap or gaps between the modules where the flames could operate on the belt for a sufficient time to cause it to catch fire.
[46] On the night of the fire the scraper or "nodding donkey" at the exit of the oven had been removed. This was contrary to UCB's policy which was to have it in position when producing normal naan breads but remove it when producing folded naan breads. But I am not persuaded that its absence contributed to the fire. It did not actually scrape the metal plates of the conveyor within the oven but operated as a deflection plate to guide the naan breads onto the metal conveyor at the exit of the oven. It was intended to reduce the possibility of bread sticking to the slatted oven conveyor and being re-circulated into the oven chamber. But there is no reliable evidence that the absence of the scraper made it more likely that a naan bread or part of it would be stuck on the oven conveyor, causing it to burn when recycled through the oven.
[47] I am also not persuaded that poor housekeeping by UCB contributed materially to the fire. Unsurprisingly, employee witnesses expressed differing views about the standard of hygiene and cleanliness in the factory. The production of naan bread was a messy business as there could be flour particles and droplets of oil in the air which contaminated machinery. But UCB operated a strict housekeeping regime involving regular cleaning in order to satisfy its customers' requirements. Several witnesses spoke of the strict hygiene regime which Ms Liz Paton, UCB's production supervisor, maintained and enforced. While some of UCB's records were destroyed in the second serious fire, records of UCB's planned preventative maintenance programme and hygiene cleaning checks supported UCB's assertion that it had an established system of maintaining good standards of hygiene. Production standards and hygiene were enforced by "figure of eight tours" round the factory. Ms Paton, who carried out these tours, was known to be particularly strict. She recorded critical comments about the standards of hygiene around the naan ovens on the morning of 31 October 2006. But Mr Cunningham suggested that it was likely that the operatives would have addressed her criticisms during that day so that they would not be criticised on the figure of eight tour on the following day. In any event, her criticisms did not relate to matters which were likely to have contributed to the second fire.
[48] Supermarkets which bought UCB's products conducted unannounced quality control inspections. The factory passed the "major" standard which entitled it to supply them. The supermarkets also required UCB to submit to inspections from the European Food Standards Inspection Service (EFSIS). EFSIS gave the factory an "A" grading for the year to July 2007 after an inspection on 24 May 2006. Similarly, UCB passed its insurers' fire inspections and the Lothian and Borders fire brigade factory inspector gave UCB a clean bill of health after inspecting its risk assessments, fire equipment and procedures in August 2005.
[49] Mr Grieve said that UCB's factory looked "tired" and that Mr Cunningham was investing in improvements when resources permitted. The factory was not the most modern of facilities. But Mr Grieve expressed the view that in terms of cleanliness it was in the middle of the range of the many bakeries which he had visited. As I have said, I do not accept Mr Jackson's view that there was a consensus that poor housekeeping caused the 2003 fire.
[50] Mr Young criticised UCB for not leading the evidence of the senior managers such as Ms Paton, who was responsible for the figure of eight tour, and Mr Orme, who was in charge of hygiene. He pointed out that the one recovered figure of eight tour sheet for the morning before the fire was very critical of the operatives on the production line. While that is so, the report did not comment adversely on the state of the heliveyor. There was some doubt whether the heliveyor belts were cleaned in situ every day as was planned and whether the interval between each deep cleaning of the belts in a jet wash was six weeks or six months. But those criticisms do not alter my view, which is supported by the third party observations mentioned above, that UCB maintained a reasonable standard of hygiene on, among others, the production line.
[51] I conclude that UCB operated a responsible regime to maintain hygiene standards but residues of rapeseed oil, flour dust and fragments of naan bread remained on the POM belts and discoloured them permanently. One of Dr Wareham's tests suggested that, on a heavily contaminated belt, the debris could be ignited by fragments of burning naan bread and thereby ignite the POM belting. But it needed gross contamination to achieve that means of igniting the belting. He did not consider that test to be a realistic portrayal of circumstances in UCB's factory as "hygiene would not allow it". In tests involving lighter contamination, all but one of the fragments of burning naan bread did not ignite the belting. It is likely therefore that the contamination of the POM belts in UCB's factory by rapeseed oil, flour and fragments of naan bread made some, albeit minimal, contribution to the second serious fire.
The defenders' knowledge of other bakery fires
[52] There had been a serious fire in about 1995 which destroyed the bakery operated by Pride Valley Ltd in County Durham. The bakery produced pitta bread and naan bread. But the evidence on the precise cause of that fire was not clear. Among the authorities produced by counsel was a Court of Appeal decision ([2001] EWCA Civ. 1001) concerning that fire. The judgment disclosed that the fire started in an oven flue and not on a POM conveyor. Dr Wareham gave evidence about various serious fires which had occurred in bakeries. He referred to a fire that destroyed the bakery of Mayur Foods in Leicester in March 2001 when a burning chapatti ignited the polymer (POM) belt of a multi-deck cooling conveyor. In September 2002 the Rathbones bakery in Trafford Park, Manchester, suffered a major fire after a burning muffin ignited a polymer conveyor belt. Dr Wareham had investigated a major fire which occurred in November 2004 in a bakery in Aylesbury that had been caused by a burning tortilla igniting the polymers in a multi-deck cooling conveyor. He also provided a list of bakery fires in North America between 1990 and 2012 that involved polymer conveyor materials. He expressed the view that there was a particular risk from burning product when travelling ovens baked flat breads such as naan breads, chapattis and tortillas at high temperatures.
[53] There was only limited evidence as to the defenders' awareness of fires in other bakeries before 2003 or 2006. Mr Grieve was aware of the Pride Valley fire and another bakery fire at Able Foods Ltd before 2003. There was no evidence that he or other representatives of either of the defenders had detailed knowledge of such fires. But they must have been aware of some risk of fire from the burning products of and debris from ovens. More importantly, both Spooner and Siegling were aware of the December 2003 fire at UCB's factory. They knew of the concerns of UCB's senior management to identify the cause of that fire and be assured as to the suitability of the POM belting. In this case therefore I am not concerned so much with the general knowledge of the defenders of the risk of fires from burning product as with their specific knowledge of the 2003 fire at UCB's factory and the questions which UCB then posed to them.
[54] Dr Wareham also recorded in his second report that most manufacturers of polymer conveyor belts still (in 2012) advertised their product as suitable for use close to working ovens to carry away and cool cooked product. He ascertained that one manufacturer of polymer belting, Ashworth Bros Inc., recommended that its belting should not be used in that context. But it appears to be a common industrial practice to use polymer conveyer belts in this way.
Legal issues:
(i) The incorporation of Orgalime conditions in the contract between UCB and Spooner
[55] Spooner submitted that the contract between it and UCB for the purchase of the heliveyor in 2003 included the contractual conditions set out in a document called Orgalime SE 94. Orgalime is the name of the European Engineering Industries Association, a federation of engineering trade associations in Europe. It is based in Brussels. It has produced various standard terms which can be incorporated into contracts.
[56] Mr Michael Brook, who has been the managing director of Spooner since 1998, explained the procedures that Spooner adopted for incorporating the Orgalime conditions into its contracts. He gave his evidence in a straightforward and direct manner and I accept it as credible and reliable. The problem for Spooner is that, in this case, it has not established that those procedures were followed.
[57] The legal test for incorporation is whether the party seeking to incorporate standard terms and conditions into a contract has given reasonably sufficient notice of those terms to the other party (Hood v Anchor Line (Henderson Bros) Ltd 1918 SC (HL) 143, Lord Finlay LC at 145 and Lord Dunedin at 149; Gray v LNER 1930 SC 989, Lord Justice Clerk Alness at 999). This is a question of fact which depends on all of the circumstances of the case, including the nature of the business and the position of the parties to the transaction (Keeton Sons & Co Ltd v Carl Prior Ltd [1985] BTLC 30, Ackner LJ at 32 j - 33 a).
[58] Mr Young for Spooner invited me to infer that it had given UCB reasonable notice of the incorporation of the relevant Orgalime terms on two bases. First in the quotation of 22 May 2003 it was stated "Terms of Business - Orgalime 94 Conditions apply". Both Mr Cunningham and Mr Grieve had placed their initials on the second page of the quotation close to that phrase after they had discussed the quotation line by line. Mr Cunningham's letter of 13 June referred to his acceptance of "the terms and conditions of the design and build quotation" (paragraph [20] above). Secondly, while Mr Young accepted that the evidence is not very clear, his position was that it was more likely than not that Mr Grieve had handed over a copy of the Orgalime conditions to Mr Cunningham when they discussed the quotation. It was consistent with Spooner's written sales procedure for its employees to hand over a copy of the relevant conditions. It was also Mr Grieve's normal practice. Mr Cunningham was a careful businessman and it was likely that he would have insisted on seeing a copy of the relevant conditions.
[59] I am not persuaded that Spooner gave UCB reasonable notice of the relevant Orgalime conditions. I have reached this view for the following reasons. First, I am not persuaded that, on balance of probability, Mr Grieve handed over a copy of the relevant conditions. Neither he nor Mr Cunningham remembered him doing so. Mr Grieve frankly spoke only to his general practice. He did not follow the procedures set out in an internal memorandum by Mr Haisman, Spooner's finance director, dated 20 February 2002, which required him to record in the enquiry file the date on which he handed over the conditions. The memorandum instructed the use of Orgalime S 2000 general conditions in contracts for the supply of mechanical products. The UCB agreement was such a contract. For contracts for the supply and erection of such products the memorandum instructed the use of Orgalime SE 94. Mr Grieve had not printed out a Word version of the conditions to give to Mr Cunningham. There was no trace of any initialled copy of the conditions in either UCB's or Spooner's records.
[60] Secondly, I do not rely on the initials on page 2 of the quotation close to the reference to the Orgalime terms as evidence that they were discussed or handed over. Mr Cunningham and Mr Grieve placed their initials beside the price on the first page of the quotation and Mr Cunningham's initials on the second page were closer to the provision on the payment instalment dates than they were to the reference to the Orgalime terms. It seems that the discussions may have focussed on the price and when it was to be paid. As Mr Haisman's memorandum showed, Spooner was not seeking to incorporate terms solely by reference but had laid down a procedure of giving its customer the terms for its consideration. In this case it has not been established that Mr Grieve followed the procedure set out in the memorandum.
[61] Thirdly, I am not satisfied that the Orgalime SE 94 terms, which Spooner produced in this action, are the relevant terms to which the quotation referred. As I have said, those terms applied to a supply and erect contract. Mr Haisman's memorandum envisaged that they would be replaced by an updated 2001 text. The appropriate conditions for the supply only contract were the Orgalime S 2000 terms, which had replaced prior conditions. It is not clear that the conditions for a supply-only contract were called Orgalime 94. Those conditions have not been produced. Spooner had had no prior dealings with UCB which would have caused the latter to be familiar with those terms. I do not doubt that Mr Cunningham as an experienced businessman would have been aware that suppliers often seek to impose their terms of contract on their customers. But I am not persuaded that Spooner gave UCB reasonably sufficient notice of the application of the particular set of terms on which it now seeks to rely.
[62] Having held that the Orgalime conditions were not incorporated into Spooner's contract with UCB, I do not have to consider those conditions in detail. But in case another court were to reach a different conclusion on incorporation, I summarise my views on the term on which Spooner founded. If Orgalime SE 94 had been incorporated into the contract, it would not have assisted Spooner.
[63] Orgalime SE 94 provided that a contractor's liability for damage to property was subject to strict time limitation provisions, was limited to 15% of the contract price, and was excluded in relation to damage caused after completion (clauses 52, 65 and 66) unless the contractor had been guilty of gross negligence. But the definition of "gross negligence" in clause 2 is:
"an act or omission implying .. a failure to pay due regard to serious consequences, which a conscientious contracting party would normally foresee as likely to ensue, or deliberate disregard of the consequences of an act or omission."
In my view the first of the alternatives requires far less than culpa lata. It is consistent with the common law test of negligence. It does not limit Spooner's liability for a failure to take reasonable care in accordance with the neighbourhood principle by requiring a significantly greater degree of fault. Mr Alastair Clark referred me to the following British cases in which the court discussed the concept of gross negligence: Hinton v Dibber (1842) 2 Cr & M 353, Beal v South Devon Railway (1864) 3 H & C 337, Grill v General Iron Screw Collier Co (1866) 35 LJCP 321, Martin v London County Council [947] KB 628, Pentecost v London District Auditor [1951] 2 All ER 330 and Hunter v Hanley 1955 SC 200. Mr Young referred me to more recent English authority which suggested that gross negligence involved an actual appreciation of a risk (Camerata Property Inc v Credit Suisse Securities (Europe) Ltd [2011] EWHC 479 at paras 160-161 and Tradigrain SA v Interlek Testing Services [2007] EWCA Civ 151 at paras 23-24). But I do not think that the British cases assist as the Orgalime terms are a European document which draws on several legal systems. It is safer to have regard to its definition of the concept of gross negligence than to attempt to shoe horn the text into a framework which is consistent with the rather uncertain use of gross negligence by courts in the United Kingdom.
[64] I do not need to discuss at any length UCB's contention that Spooner was in breach of contract by failing to remedy a defect in a timely manner under clauses 51 and 55 of Orgalime. The defects which those provisions cover are defects resulting from faulty design, materials or workmanship. In this case UCB's complaint relates to faulty design. I am not persuaded that Spooner was guilty of faulty design. See paragraphs [80] - [83] below.
[65] Mr Alastair Clark also submitted that special notice was required of onerous conditions. He also submitted that exclusion clauses were to be interpreted contra proferentem (Ailsa Craig Fishing Co v Malvern Fishing Co 1982 SC (HL) 14). Finally, he submitted that it was not fair and reasonable to allow Spooner to rely on the limitations of liability in clauses 65, 66 and 71 of the Orgalime conditions because UCB did not know and could not reasonably have known of the existence and extent of those terms (Unfair Contract Terms Act 1977, section 24 and Schedule 2 para (c)). He accepted that the parties were of broadly equal bargaining power. But he submitted, correctly, that there was no evidence that the conditions were widely used in the baking industry and that UCB would have considerable difficulty in identifying what were the relevant set of conditions and obtaining a copy of them, unless Spooner provided them.
[66] Having held that Spooner failed to incorporate the relevant conditions into the contract, I do not need to comment further on those submissions.
(ii) The incorporation of terms into Spooner's contract with Siegling
[67] The other dispute about incorporation of contractual terms in this case concerns Spooner's contract with Siegling in its purchase order 2 July 2003 number 091525, in which it ordered the original POM belting for the heliveyor which it supplied to UCB.
[68] Spooner's purchase order stated immediately beneath Siegling's name and address:
"Please supply subject to the terms and conditions stated overleaf."
Siegling then described the 75 metres of modular belting and twelve sprockets which it required. The conditions of purchase on the reverse of the purchase order included as clause 6(a) the following:
"In performing the order you, as the person supplying goods in the course of your business or being familiar with the goods you are supplying through the course of your business, shall exercise your skill and judgement to ensure that the goods shall be fit for our purposes and we will be entitled to rely thereon. You will satisfy yourself that you understand our requirements."
Clause 14 of the conditions of purchase provided:
"(i) You shall indemnify us against all action suits claims and demands against us howsoever arising which are due either directly or indirectly to any breach of your obligations hereunder or to your negligence or to the negligence of your servants or agents.
(ii) Without prejudice to the generality of sub-clause (i) of this clause where we have contracted to sell the goods to a third party in the same condition as we receive the goods from you you shall indemnify us against all actions claims costs charges or expenses made by such a third party against us in relation to the goods and in particular without prejudice to the generality of the foregoing against all actions claims costs charges or expenses relating to the description condition quality standard or performance or fitness for purpose of the goods."
[69] The contract between Spooner and Siegling followed telephone conversations between Mr David Alderson of Spooner and Mr Jackson of Siegling. Mr Alderson informed Mr Jackson of the length and width of the belt required. That is vouched in Siegling's letter of quotation dated 1 July 2003. Spooner's purchase order, which was prepared by Mr Charles Easton, followed that quotation. Mr Alderson did not recall the discussions. He thought that he would have informed Mr Jackson that the belt would carry naan bread but explained that he had not thought of the possibility that naan breads might emerge from the oven on fire. He said that he normally told Siegling of the temperature at which the belt would be used. But Mr Jackson denied that he had been told that the belt would carry naan breads or the temperature at which the belt would be operated. I think that it is likely that Mr Alderson mentioned that the belt would carry bakery products but I do not think that he discussed temperatures as there was no evidence that anyone from Spooner investigated the temperatures of the product that emerged from the ovens. There is no evidence that anyone in Spooner or Siegling addressed the possibility that the belt might be exposed to temperatures greater than 90˚C, which was the top of the appropriate temperature range shown in Siegling's brochure and was the figure that Mr Grieve mentioned in his report of his site visit on 8 May 2003 (paragraph [19] above).
[70] There was no evidence that any terms other than Spooner's applied to the contract for the purchase of the POM belting. There was a suggestion by Mr Geoffrey Clarke for Siegling that the purchase order might have been faxed to Siegling but there was no clear evidence that it was. I conclude therefore that it was sent by post and that Siegling received the document with the contractual conditions on its reverse side. In my view Spooner gave reasonably sufficient notice of its contractual terms in the purchase order. They govern the contract between Spooner and Siegling. I discuss the effect of those terms in paragraphs [109] and [110] below.
UCB's legal cases against the defenders
(i) The first defenders: Sale of Goods Act 1979 s. 14(2) & (3)
[71] UCB claim that Spooner was in breach of contract because it breached the implied terms of contract under section 14(2) and (3) of the Sale of Goods Act 1979 (as amended) ("the 1979 Act"). Section 14(2) provides:
"Where a seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality."
Section 14(2A) provides:
"For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances."
[72] Mr Alastair Clark for UCB submitted that the belt was not of satisfactory quality because it was liable to ignite if exposed to flame. It was not appropriate to use such a belt in close proximity to an oven to carry newly-baked product from that oven. Section 14(2B) included within the "quality" of goods both their "fitness for all the purposes for which goods of the kind in question are commonly supplied" and "safety". He submitted that section 14(2) was breached because Spooner had not given adequate warnings of the danger of fire (Benjamin's Sale of Goods (8th ed.) paras 11.038 - 11.039).
[73] The test of satisfactory quality is an objective test. The court puts itself in the position of the objective reasonable buyer with knowledge of all the relevant facts (1979 Act s. 14(2A); Bramhill v Edwards [2004] EWCA Civ. 403, Auld LJ at para 39). As Dr Wareham explained, POM belts are commonly used to this day to transport bakery products from an oven to allow them to cool before they are packaged. Thus "quality" under section 14(2) extends to the fitness of such belts for such transfer of cooked bakery products. I am not persuaded that the criterion of safety adds anything as the belt was not of itself unsafe; but safety may nonetheless be an element in the assessment of fitness.
[74] I do not think that in 2003 the objective reasonable buyer would have considered that a POM belt was unsatisfactory to carry cooked bakery products. Most baked products are produced at a lower temperature and do not have the propensity to catch fire which certain flat breads, such as naan breads, have. Further, UCB's problems with naan breads did not stem from the relatively frequent occurrence of patches of oil burning on the upper surface of a whole bread but from particles of burning naan bread being trapped in the interstices of the belting. It is not clear in the evidence that POM belting was commonly used to carry naan breads. In Jewson Ltd v Boyhan [2003] EWCA Civ 1030, Sedley LJ (at para 77) suggested that section 14(2) was directed principally to the sale of substandard goods and that the court looked principally at their intrinsic quality. I agree. Under this section the court is not concerned with the specific use which a particular buyer has made of the goods. Accordingly, I do not think that Spooner was in breach of the implied term under section 14(2) of the 1979 Act.
[75] Section 14(3) of the 1979 Act provides:
"Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known -
(a) to the seller, ...
any particular purpose for which the goods are being bought, there is an implied term that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is the purpose for which such goods are commonly supplied, except where the circumstances show that the buyer did not rely, or that in the circumstances it is unreasonable for him to rely, on the skill or judgment of the seller..."
[76] In contrast to section 14(2), this sub-section addresses the fitness of goods for a particular purpose of the buyer which he has made known to the seller. For a seller to incur liability under this sub-section the buyer must sufficiently communicate his purpose. In Slater v Finning Ltd 1997 SC (HL) 8, Lord Keith of Kinkel stated (at 14-15):
"There is no breach of the implied warranty of fitness where the failure of the goods to meet the intended purpose arises from an abnormal feature or idiosyncrasy, not made known by the seller to the buyer."
Lord Steyn stated (at 17):
"If the buyer's purpose is insufficiently communicated, the buyer cannot reasonably rely on the seller's skill and judgement to ensure that the goods answer that purpose."
[77] In this case Mr Grieve from his visits to UCB's factory in mid-2003 knew that the proposed conveyor would carry hot naan breads from a conveyor close to the ovens up to the conveyors in the attic of its factory. I have held (in paragraph [19] above) that Mr Grieve in making his site visits in 2003 did not see burning naan breads on the conveyors which UCB then used, but that he must have observed hot and smouldering naan breads on those conveyors. UCB's senior managers did not inform him that naan breads were frequently on fire when they exited the ovens and were transported to the attic. In my view it is not sufficient to impose liability on Spooner under section 14(3) for UCB to have shown Mr Grieve that the heliveyor would carry hot naan breads shortly after they had emerged from its ovens. The test of reasonable fitness for purpose is a relative concept; and the presence of a flame in prolonged contact with the POM was necessary to cause ignition of the belt. Further, in my view, the court should not have regard to any undisclosed knowledge of UCB's senior managers or hindsight in relation to UCB's two serious fires when assessing the case under section 14(3).
[78] UCB's managers relied on Spooner's judgement that the heliveyor with POM belts was a suitable means of transporting the cooked naan breads. But they did not identify in their discussions with Mr Grieve the presence of burning product on the conveyors from the oven or rely, at that time, on Spooner's judgement about the suitability of a POM belt in those circumstances. In my view UCB's case against Spooner under section 14(3) of the 1979 Act also fails.
[79] UCB also pleaded a case that Spooner had broken an implied term of contract that it would exercise reasonable care and skill in selecting a heliveyor to carry the naan breads. This breach was averred to arise because Spooner knew that the conveyor would carry burning product from time to time. I am satisfied that this case also fails as it has not been shown that Spooner had that knowledge. Circumstances were very different after the first serious fire, when UCB clearly alerted both Spooner and Siegling to the presence of burning product on the heliveyor and to the occurrence of the fire. That knowledge is relevant to the cases of negligent misstatement and negligent advice to which I will shortly turn.
(ii) Breach of delictual duties
(a) The first defenders: negligent design
[80] UCB argues that Spooner, when it manufactured and supplied the heliveyor, was under a delictual duty to UCB to take reasonable care to design a conveyor which had belting which would not ignite if it came into contact with burning material.
[81] With the benefit of hindsight, it is striking that Mr Grieve did not apply his mind to the possibility that the product of the ovens might exceed 90˚ C, which was Siegling's maximum recommended temperature, and that Mr Alderson, when designing the heliveyor for UCB, did not consider the risk of fire. Spooner did not obtain the data sheet for the POM when it designed the heliveyor for UCB. Mr Alastair Clark for UCB invited me to adopt a calculus of risk approach and hold that Spooner had failed in its duty of care. First, the magnitude of harm was great: bakeries do burn down. The heliveyor was to be used downstream of a travelling oven. There was therefore some risk of burning product emerging. The POM was capable of ignition and would continue to burn. Further, the helical conveyor did not have steel casing beneath the belting so that melting or burning plastic from a higher level would fall to lower levels and spread a fire. There was the possibility of an uncontrollable fire within minutes. Secondly, it was possible to take effective and inexpensive precautions which would have removed or at least materially reduced the risk. Spooner could have recommended the use of a product other than a heliveyor which had a steel belt or it could have given a clear warning of the risk of fire and advised UCB to take steps to ensure that burning material did not reach the heliveyor.
[82] UCB led the evidence of Mr Tucker in support of this faulty design case. I have expressed my reservations about his evidence in paragraph [11] above as much of his reasoning depended on statutory regulations. I do not think that one can use the provisions of such regulations as a guide to the scope of a common law duty of care. By 2005 the Fire Protection Association in its "recommendations for fire prevention measures for bakery ovens" had identified the need for the industry to address the possibility of flames from burning product igniting plastic conveyors used to provide cooling runs. It recommended the use of metal cooling trays in place of the plastic conveyor, which failing the installation of facilities to divert burning product from the conveyor. But there was no earlier version of this publication. Dr Wareham described the use of POM belting as "unwise" but accepted that he approached the matter as a fire investigator with special knowledge of fire risks. His review of current industrial practice in 2013 showed the continued use of POM belts to carry newly-baked products from industrial ovens.
[83] It is not in doubt that Spooner would have known that products baked in travelling ovens in commercial bakeries could emerge from those ovens at high temperatures, that fires can occur in ovens, and that on occasion product, which had been sprayed with rapeseed oil, might come out of an oven on fire. But there was no reliable evidence that it was a frequent occurrence at UCB's factory that naan breads emerged from the ovens on fire and remained on fire when they reached the conveyor which was replaced by the heliveyor. Nor was there evidence that naan breads transported on the heliveyor and deposited in the conveyor on the attic would remain on the heliveyor long enough to ignite the belting. There was also Dr Wareham's evidence that many bakeries used POM belts to carry products after they had been baked in ovens and that manufacturers of such belts continued to advertise their products as suitable for such use. Having regard to the information available to Spooner when it supplied the heliveyor, I am not persuaded that it was under the delictual duty set out in paragraph [81] above.
(b) Both defenders: negligent misstatement and negligent failure to advise
[84] The circumstances were very different once the first serious fire had occurred in December 2003 and UCB had asked Spooner and Siegling to assist both in identifying its cause and ascertaining whether it was suitable to use the POM belting on the production line.
[85] UCB asserted that both Spooner and Siegling breached their duty to take reasonable care not to represent to and assure UCB that the belting was suitable for use on the naan production line. In article 7 of condescendence UCB also averred:
"... the first and second defenders each had a duty to take reasonable care to advise the pursuers that the belting material was unsuitable for use on the naan bread production line because of the risk that it could be ignited by naked flame from burning product."
In my view this averment provided a basis for UCB's case, which Mr Clark advanced, of a failure by the defenders to take reasonable care to give proper advice. Accordingly I have to consider both delictual cases, namely negligent misrepresentation and negligent advice.
[86] In the procedure roll debate in this case in 2012 I set out my views on the relevant law on negligent misrepresentation, which counsel did not challenge in their submissions on the evidence. I stated:
"[35] Whether a negligent misrepresentation causes physical damage or pure financial loss, several issues are common to both circumstances because both share the mechanism by which the harm results. It appears to me that it is these common issues, rather than questions about whether it is fair, just and reasonable to impose a duty of care which are central in this case.
[36] I consider that there are three common issues in cases involving negligent misstatement, whatever harm results.
[37] First, in assessing whether a duty of care exists, the context in which a statement is made is important. The maker of a casual statement in a social or other informal context may not owe a duty of care in relation to its accuracy while a person making the same statement in a business or professional context may. See Hedley Byrne, Lord Reid at pp.482-3, Lord Morris of Borth-y-Gest at p.494. The relationship between A and B differs in those contexts. Both proximity and foreseeability may depend on context.
[38] Secondly, A's ability to foresee that harm may result from a careless statement will depend on his awareness that B is likely to act on the statement. B's reliance on A's statement is relevant to causation as the statement must induce B to act or refrain from acting and so suffer the injury or damage to his property. But the objective likelihood of that reliance is relevant to the existence and ambit of A's duty of care because it affects both proximity and reasonable foresight. In my view the reasonableness of B's reliance is a factor which should be taken into consideration in assessing that objective likelihood. It is a question of mixed fact and law.
[39] Thirdly, where A knows or ought to know that B is trusting him or relying on his skill and judgement, he has the three courses open to him that Lord Reid set out in Hedley Byrne at p.486, namely
'He could keep silent or decline to give the information or advice sought: or he could give an answer with a clear qualification that he accepted no responsibility for it or that it was given without that reflection or inquiry which a careful answer would require: or he could simply answer without any such qualification.'
If A adopts the last course the law will impose on him a duty to take reasonable care in making his statement to B. Thus we must examine the statement in its context to ascertain its meaning and whether it is qualified in any way.
[40] In summary, the court in determining the existence and ambit of a duty of care has to assess (i) the context in which A made the statement or statements, (ii) the foreseeability of B's reliance on the statements and (iii) the meaning of any representation."
[87] In relation to the duty to advise, Mr Clark for UCB referred me to the following cases: Vacwell Engineering Ltd v BDH Chemicals Ltd [1971] 1 QB 88, E Hobbs (Farms) Ltd v The Baxenden Chemical Co [1992] 1 Ll L Rep 54, Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd [1997] 3 SCR 1210, and Andrew Weir Shipping Ltd v Wartsila (UK) Ltd [2004] EWHC 1284 (Comm). From those cases Mr Clark derived the following four propositions:
(i) A supplier and manufacturer of a product each owe a duty of reasonable care to the purchaser, which includes a duty to warn as to risks and dangers of using the product of which the supplier and manufacturer were aware or ought to have been aware;
(ii) The supplier's duty to warn arises both in contract and in delict;
(iii) The duty extends to the situation where the potential danger is discovered after the time of supply; and
(iv) In order to be an adequate warning, the warning must be clear and unequivocal.
[88] Subject to the possibility of contractual provisions which exclude such a duty, I have no difficulty with Mr Clark's propositions in the context of those cases, which were concerned with products which had hazardous properties. In Vacwell the industrial chemical reacted violently with water and could explode. In E Hobbs the polyurethane foam which was used to insulate buildings was presented to the purchaser as "self-extinguishing" when it was liable to ignite on exposure to flame and a violent flash-over effect occurred when the flames took hold. Bow Valley concerned, among other points, a duty to warn about the flammability of a Thermaclad wrap which was used on an oil rig to keep moisture from wiring. In Weir the manufacturer used the wrong type of washer on an erosion plug on the fuel injection pump into a marine engine, specified an insufficient torque setting, and provided no locking device. The loosening of the plug caused an engine fire. As Mr Clark submitted (in point (iii) above) the duty can arise where the supplier discovers the potential danger after the time of supply (E Hobbs at 65 and Weir at para 54).
[89] I am not persuaded that either Spooner or Siegling had sufficient knowledge of the dangers which the flammability of the POM belting posed to UCB at the time of supply of the heliveyor. After the first serious fire and in light of the questions which UCB raised with them, both were put on notice of a potential danger from the use of the belting on UCB's production line.
[90] Mr Young submitted that UCB's negligent misstatement case failed because there was neither a voluntary assumption of responsibility by Spooner nor reasonable reliance by UCB (Williams & Another v Natural Life Health Foods Ltd [1998] 1 WLR. 830, Lord Steyn at 835F-G and 837B). He argued that the emails in the first half of 2004 did not reveal that Spooner had voluntarily assumed responsibility in relation to the issues discussed in that correspondence. Mr Grieve recorded what Mr Jackson had told him and did not express his own opinion. Neither UCB nor Siegling had cause to believe that Mr Grieve had any expertise in the flammability of plastics or in UCB's processes for baking naan breads. Mr Jeffrey and Mr Cunningham recognised this when on 23 June they asked Mr Grieve to obtain an explanation from Mr Jackson. Mr Young also submitted that the email correspondence did not contain any actionable misstatements by either defender because all parties expected "a final close off report which would summarise the position". The letter of 30 June 2004 when read objectively with the data sheet contained no misstatement. It was clear from the data sheet that the POM belt could be ignited by a burning product. The letter was clumsily worded. But, as Dr Wareham's tests revealed that it was difficult to ignite the POM belting, it was not a misstatement to express the view in the letter that it was "very unlikely" that naan bread would attain a temperature of 164˚ C and ignite the belt.
[91] Mr Geoffrey Clarke for Siegling submitted that Mr Jackson did not advise UCB on the likely cause of the fire on the belt except at the initial meeting after the first serious fire and in his letter of 30 June 2004. Mr Clarke took a similar approach to Mr Young in relation to that letter: it contained no misstatement. In any event, Mr Jackson was not negligent in making the statement. He was not an expert on UCB's production methods and was not aware that fragments of naan bread would emerge from the ovens. He had understood that a sparge pipe would be fitted to remove oil and flour from the belt. He knew that his letter would be read by senior managers in UCB who were engineers. He could not reasonably foresee that they would not read the data sheet properly and that they might rely on the letter as confirmation that the POM belt was fit for purpose in the factory. UCB had repeatedly requested sight of the data sheet. Mr Clarke accepted that UCB and Mr Grieve relied on Mr Jackson to provide accurate information and the data sheet. But he submitted that Mr Cunningham in fact did not rely on Mr Jackson's letter; he decided simply to make do with the equipment that he had. If Mr Cunningham had relied on Mr Jackson's letter to reach the view that the belt would not be exposed to temperatures of 164˚ C or more, he was unreasonable in so doing. He should have inquired whether Mr Jackson understood what was going on.
[92] Mr Clarke also questioned whether UCB could reasonably continue to rely on the letter when it had experience that naan breads scorched and melted parts of the belting. He pointed out that it was Mr Grieve, and not Mr Jackson, who gave UCB the advice on flammability which was incorrect in the email of 22 June 2004. Mr Clarke referred to my decision at procedure roll in this case ([2012] CSOH 111) on negligent misstatement, and Berry Taylor v Coleman [1997] PNLR 1 CA, Mutual Life and Citizens' Assurance Co Ltd v Evatt [1971] AC 793 and Williams (above) on the assumption of responsibility and reliance.
[93] I set out the relevant communications in paragraphs [24] - [36] above. In my view it is not correct to look at the letter of 30 June 2004 in isolation because it is the final written communication which UCB sought. It has to be understood in the context of the prior exchanges. Nor is it appropriate to set aside those prior communings and focus solely on the letter of 30 June when deciding whether there has been a negligent misstatement. The nature of the advice which Spooner and Siegling gave to UCB is to be understood by considering the communications as a whole.
[94] I am satisfied that the circumstances are such that the law should treat both Spooner and Siegling as having voluntarily accepted responsibility for the accuracy of their statements. They were respectively the supplier and the manufacturer of the POM belting and were responding to pressing concerns of the purchaser as to the safety of the product after a serious fire had occurred in its factory. While Mr Grieve may have deferred to Mr Jackson's expertise, he was prepared to state his own understanding as a representative of the vendors and ultimately to amend Mr Jackson's draft letter to strengthen the assurance that it sought to give about the product which Spooner had supplied. UCB's senior managers were not aware of the discussions which Mr Grieve had with Mr Jackson and Mr Grieve chose to report those discussions in the terms which he used. Mr Jackson also cannot be distanced from the representations. He had visited UCB's factory in January 2004 and had been copied in on the email correspondence. He was, or should have been, aware that UCB was concerned about the risk of the heliveyor catching fire from contact with burning naan bread.
[95] It is not necessary to set out again the relevant communications. In summary, the written communications start when on 28 January 2004 Mr Jeffrey reported the outcome of his tests and raised his concern about the flammability of the POM belt. After the meeting on 26 February, Mr Grieve in his email of 1 March clearly informed Mr Jackson of UCB's concerns about the effect of burning product on the POM belt. On 22 June, Mr Grieve assured Mr Jeffrey, in an email copied to Mr Jackson, that the correct materials had been used in the belt and that it should be impossible for burning naan breads to set fire to it. Finally, the letter of 30 June was a prompt response to Mr Cunningham's email of 22 June questioning that representation and seeking advice to "close off" the issue. The letter of 30 June referred to the enclosed data sheet and summarised what the authors considered important from it in response to UCB's question.
[96] In the context of a question about the effect of burning naan bread it was a misstatement to say that it was very unlikely that the naan bread would cause the belt to reach 164˚ C. The letter, for which both defenders are responsible, was calculated to assure UCB that the POM belt was suitable for use on its production line. It stated that the belt material is "the same as always supplied on this application". It was calculated to satisfy Mr Cunningham's enquiry and to encourage him to continue to use the heliveyor and its POM belts. Mr Cunningham construed the letter as an assurance that the POM belt was fit for the purpose of the naan production line. I consider that he was correct in so doing.
[97] I accept Mr Cunningham's evidence that he relied on the communications culminating in the letter in deciding to close off the issue and continue to use the heliveyor on the production line. In my view he acted reasonably in doing so as UCB had clearly raised the issue with the suppliers and the manufacturers and had obtained assurance of both that (i) burning naans were very unlikely to cause the belt to catch fire and (ii) that the belting was what was always supplied for this application. I discuss in paragraphs [106] to [108] below the issue of causation. Suffice it to say here that I accept Mr Cunningham's evidence that he would not have been prepared to accept the risk of fire from the heliveyor if he had received accurate advice on the risk of burning naan breads igniting the POM belt.
[98] In my view therefore both Spooner and Siegling were guilty of negligent misstatement in the communications leading up to and including the letter of 30 June 2004.
[99] Further, I consider that both were guilty of negligence in their failure in 2004 to advise UCB of the risk of a serious fire from the presence of burning naan bread or burning fragments of such bread on the POM belt. I accept Dr Masson's evidence that the belt was not suitable for carrying naan breads which were on fire. The defenders appear not to have considered the temperatures to which the belt would be exposed by flames from burning naan breads. They should have, once they knew that UCB was asserting that burning naan bread was the likely cause of the fire. Had they done so, they should have advised UCB either to replace the heliveyor or to take precautions to ensure either that burning product did not reach the heliveyor or that it was extinguished promptly. They failed to do so.
[100] I find therefore that both Spooner and Siegling were guilty of negligent misstatement and negligent failure to warn.
(c) Contributory negligence
[101] The defenders also submitted that in any event UCB was guilty of contributory negligence. They asserted that UCB should have (i) had a scraper in place at the exit of the ovens, (ii) had an operative standing at the exit of the oven to deal with burning naan breads or (iii) had adequate fire suppressant systems (including fire extinguishers) or a means of diverting burning naan breads from the conveyor system. They also averred that UCB failed in its duty to maintain good housekeeping so as to avoid the build-up of oil and fat on the production line. I am satisfied that they have not made out those assertions for the following reasons. First, I am not persuaded that the absence of the scraper caused or contributed to the fire. Secondly, accepting Mr Cunningham's evidence on this point, I do not think that it was economically feasible to employ an operator as a fire watch. I am not persuaded that someone on watch would have been likely to observe and deal with all small fragments of naan bread which were on fire. In any event, in view of the representations which the defenders made as to the suitability of the belt, I do not think UCB was under such a duty. Thirdly, there was no evidence that there were insufficient fire suppressants. Fourthly, given the assurances by the defenders that the belt was suitable, I do not think that UCB was under a duty to install a diverter. In any event, I doubt if a diverter would have assisted as it is likely that fragments of naan bread, rather than a whole naan bread, were the cause of the fire. Fifthly, I have held that UCB had an adequate housekeeping regime and that contamination of the belt did not play a significant causative role.
[102] The defenders also argued that UCB's senior managers knew from their own tests of the propensity of the POM belt to catch fire and failed to consider the terms of the data sheet which accompanied the letter of 30 June 2004 and which they had sought because they knew it was important. Had UCB's senior managers applied their minds to the two paragraphs of the data sheet, which I set out in paragraph [36] above, they ought to have realised that UCB's process of baking naan bread created a risk that the belt would catch fire and stay on fire.
[103] In my view, the senior managers of UCB were to blame for their failure to consider carefully the data sheet which they received with the letter of 30 June 2004. I do not accept as an excuse Mr Cunningham's suggestion that it was technical. He and Mr Jeffrey had been asking to see the data sheet since January 2004. It is striking that none of the parties appears to have considered either (i) the temperatures to which the belting was exposed by burning or smouldering naan breads or (ii) the possibility of burning fragments of naan bread becoming trapped in the interstices of the belting. While I consider that it was not unreasonable for UCB to rely on the communications from Spooner and Siegling as an assurance that the belting was suitable for use on its production line, I think that UCB is to be blamed for not considering more deeply what it was being told.
[104] I do not see any inconsistency in the circumstances between a finding of reasonable reliance on a misstatement and a finding of contributory negligence for a failure to consider the misstatement with sufficient thoroughness. The latter failure cannot absolve the defenders from liability for misstatement and failure to warn.
[105] I discuss the elements of blameworthy behaviour and causative potency when I consider the apportionment of responsibility in paragraphs [119] to [123] below.
(d) Causation
[106] I do not need to consider Mr Young's submissions on causation in relation to the cases under section 14 of the 1979 Act as I have held that Spooner is not liable for breach of the implied terms. If I had had to decide the matter, I would have held that UCB's continued use of the POM belt after the December 2003 fire did not break the causal link between a breach of contract and the second fire because its senior management explored the cause of the first fire and received what were in substance assurances as to suitability from Spooner and Siegling. In my view UCB's conduct was the foreseeable and intended result of the representations and was not unreasonable (Hi-Lite Electrical Ltd v Wolseley UK Ltd [2011] EWHC 2153 (TCC)). On that basis I would have distinguished the cases of Schering Agrochemicals Ltd v Resibel NV SA Unreported, Court of Appeal 26 November 1992 and Trebor Bassett Holdings Ltd v ADT Fire & Security plc [2012] EWCA Civ 1158.
[107] Mr Geoffrey Clarke submitted that the evidence supported the view that there was no causal link between any misstatement and the second fire because Mr Cunningham knew that there was a risk that burning naan breads could ignite the belting and chose to keep the heliveyor in use. I disagree.
[108] Had the defenders given UCB proper advice and proper warnings, I am satisfied that Mr Cunningham would have taken steps to minimise the risk of fire in response to those warnings. The correspondence in early 2004 shows UCB's serious concerns. I see no reason to doubt his evidence that he would have taken appropriate steps in response to proper advice and that would, if necessary, have involved the replacement of the heliveyor by another form of conveyor (paragraph [97] above).
(e) The contractual indemnity
[109] I do not think that Spooner can invoke against Siegling the contractual indemnity which I set out in paragraph [68] above. Clause 6 does not apply because it has not been established that the POM belt was defective in any way. Clause 14 in my view also is not engaged. That clause covers claims against Spooner which are due either directly or indirectly to Siegling's negligence. I do not construe it as imposing on Siegling any obligation to indemnify Spooner against claims resulting from Spooner's negligence. In this case I have held that Spooner was itself negligent in its advice to UCB and its failure to warn. That liability was not due to Siegling's negligence, but resulted principally from Mr Grieve's failure to investigate the circumstances in which burning naan breads remained on the heliveyors and the temperatures to which they exposed the belting and Spooner's more general failure properly to address the question of temperature and the risk of fire.
[110] Siegling might have prevented Spooner from incurring liability in negligence if it had not been guilty of negligent misstatement and a failure to advise UCB. If Siegling had pointed out its recommendation that the belt should not carry product with a temperature exceeding 90˚ C and had invited UCB to investigate the temperatures to which burning naan bread exposed the belting, Spooner would probably have supported that advice. Siegling knew more about its belting than Spooner. But that is not enough to bring clause 14 into play in the context of Spooner's own negligence.
[111] Had I decided otherwise, I would have accepted Mr Geoffrey Clarke's submission that the relevant terms and conditions applied only to the belt sold in 2003 because the replacement belt was not sold to Spooner but was supplied directly to UCB. But I do not think that would have assisted Siegling as the negligence in issue arose in the context of an investigation of the cause of the fire which destroyed part of the original belting.
(f) Prescription
[112] Spooner raised a plea of negative prescription in relation to the cases concerned with the original supply of the heliveyor. I have held that Spooner's liability arises only in relation to negligent misstatement and negligent advice in 2004. UCB did not suffer loss resulting from that negligence until 31 October 2006. This action was served on Spooner on 23 December 2009. That is within five years of the concurrence of fault and loss. The plea of prescription therefore was not available and was not argued in relation to the cases in which UCB has succeeded.
[113] In case a higher court comes to consider the grounds of liability, which I have rejected, relating to events before the December 2003 fire, I summarise my views on the issue of prescription in relation to the contractual and delictual claims which arose from the initial supply of the heliveyor.
[114] Three principal issues were debated. First, Mr Alastair Clark submitted that the damage which occurred in 2006 was sufficiently distinct from that which occurred in 2003 to result in a separate cause of action (Mount Albert BC v Johnson [1979] NZLR 234). I am not persuaded that that is correct. If I had upheld UCB's claims under section 14 of the 1979 Act or of negligent design, I would not have treated the second fire as giving rise to a separate cause of action on those grounds.
[115] Secondly, Mr Clark submitted that UCB could found on section 11(3) of the Prescription and Limitation (Scotland) Act 1973 ("the 1973 Act") because a creditor must be aware or be capable of becoming aware through reasonable diligence that he has suffered loss caused by an act, neglect or default giving rise to an obligation to make reparation (Greater Glasgow Health Board v Baxter, Clark and Paul 1990 SC 237, at 251-252; Glasper v Rodger 1996 SLT 44 at 47-48; and ANM Group v Gilcomston North ltd 2008 SLT 835, at paragraphs 61-63). I accept that UCB was not aware that it had a claim against either of the defenders in 2003 and 2004. UCB did not take legal advice and it paid for the replacement belt without question. The difficult questions are whether and when it would have become so aware if it had exercised reasonable diligence on receipt of the letter of 30 June 2004 and the data sheet.
[116] The parties did not address what investigations UCB would have had to undertake to acquire the relevant knowledge. I observe that awareness of the flammability of the POM belt was not sufficient in itself. Nor was knowledge of the terms of the data sheet which addressed the characteristics of the POM granules and not the POM belt. Careful consideration of the data sheet would have led to an awareness that UCB might have a claim under either the 1979 Act or in negligence, but that is not enough (ANM Group (above)). There would have to be some investigation of the cause of the fire, such as Dr Wareham undertook in his second report, as well as an examination of what Spooner knew about UCB's requirements in order to mount a case under section 14(3) of the 1979 Act. I expect that, if UCB had exercised reasonable diligence, this would have taken a considerable time. At first blush I would have thought that it might well take six months to gain the needed information. But I have no proper basis in evidence of judging whether it could reasonably be achieved within six months, before 23 December 2004. As the burden of showing that it could not be achieved rested on UCB, I conclude that section 11(3) would not be available, of itself, to postpone the start of the prescriptive period.
[117] The matter does not stop there because, thirdly, UCB pleaded that it was entitled to rely on section 6(4) of the 1973 Act to postpone the starting point of the prescriptive period because it was induced by Spooner to believe that burning naan bread would not cause the POM belt to ignite. Mr Clark submitted that it was sufficient that UCB refrained from considering the possibility of making a claim because of its error induced by Spooner's representations (BP Exploration Operating Co Ltd v Chevron Shipping Co 2002 SC (HL) 19, paras 28-31, Lord Clyde at para 67). The evidence did not establish that error. Rather, it supported the view that UCB was persuaded by the defenders' representations that the risk of burning naan breads causing a serious fire was so small that the belt was suitable for use on the production line. In my view the representations by the defenders and their failure to warn UCB materially contributed to the delay by UCB's managers to take appropriate steps to ascertain if there had been a breach of section 14 of the 1979 Act or negligence in the design of the heliveyor (ANM Group (above) at paras 75-77). I would not have treated as significant the fact that Siegling played an important role in the representations which were made to UCB. Mr Grieve expressed his own views, communicated Siegling's views and indeed strengthened the representation in the letter of 30 June. The burden of showing, for the purpose of the proviso to section 6(4), when UCB could with reasonable diligence have discovered the error rested on Spooner. In my view, a combination of the delay caused by the error and the time which UCB would have needed to identify that its loss was caused by neglect or breach of contract would probably have taken it beyond 24 December 2004.
[118] Accordingly, I would not have sustained UCB's plea of prescription if I had upheld UCB's claims in relation to the purchase of the heliveyor.
(g) Apportionment of liability
[119] In my view all three parties share responsibility for the loss. UCB expressed doubts about the cause of the December 2003 fire but Mr Cunningham initially thought that burning naan bread was responsible. UCB's senior managers asked for the data sheet but did not consider it properly when they received it. UCB had the best knowledge of the temperature of ovens. It had the most direct opportunity of testing the temperature of the naan breads exiting oven and of observing the frequency of burning naan breads reaching the heliveyor. But the communications from the defenders, including the letter of 30 June 2004, were calculated to reassure UCB that the belt was suitable for its purpose and did so.
[120] Spooner was the vendor of the heliveyor. Having failed to consider the risk of fire at the time of supply, it sought to create the impression that the POM belt was fit for purpose after the first serious fire. As the supplier of the heliveyor Spooner was guilty of both negligent misstatement and negligent failure to warn.
[121] Siegling had a more peripheral role as it was the supplier of the POM belt and initially had no contractual relationship with UCB. But it supplied the replacement belt through its Scottish agents and UCB paid for that belt. Siegling was aware of the issue which UCB had raised after the first serious fire. It was copied in to the emails and knew that Mr Grieve was looking to it to give clear answer. Siegling knew that its brochure recommended a maximum temperature of 90˚ C but did not suggest any tests to ascertain the temperatures to which the Siegling belt was being exposed from burning naan breads. The letter of 30 June 2004 was its response and that was calculated to give reassurance.
[122] In my view the primary responsibility for the second fire rests on the defenders as suppliers and manufacturers of the POM belting. Spooner and Siegling should have emphasised the advice about temperatures and flammability in the data sheet and also Siegling's recommendation in its brochure that the product should not cause the belting to exceed 90˚ C. Further, as they were unaware of the temperatures of the customer's product but were aware of its concerns of the effect of burning naan breads, they should have advised UCB to investigate, or assisted in investigating, the effect of burning naan breads on the POM belting. I see no good basis of distinguishing between Spooner and Siegling in terms of blameworthiness or causative potency.
[123] I have therefore come to the view that the appropriate apportionment of liability between the parties is (i) UCB: 20%, (ii) Spooner: 40% and (iii) Siegling: 40%.
Conclusion
[124] As the parties had agreed to exclude from the scope of the proof the quantification of UCB's claim, I was asked to have the case put out by order to address that issue. Absent agreement between the parties on that issue, it may be necessary to fix a short proof. Because I will not be able to hear that proof, I think it would be appropriate that I issue an interlocutor giving effect to my findings which will be available to the judge who completes this case at first instance. I invite counsel to address me on the terms of the interlocutor, on further procedure and on the expenses of the proof at the by order hearing.