ESU-Essex Court Chambers National Mooting Competition

First Round Problem (Moot of 2001/2002)

Alphington Ltd v Heathfield Systems Ltd
In The Court of Appeal

The claimants, Alphington Ltd, are cigarette wholesalers. In November 1998 they purchased a warehouse on an industrial estate on the outskirts of Exeter from the vendors, Ide plc. At the time of purchase the warehouse was fitted with a sophisticated burglar alarm system which, in the event of unauthorised entry, was configured to alert a security company nearby. The alarm had been manufactured and fitted by Longdown Ltd at the time the warehouse was constructed in 1996.

On January 8, 1999 thieves entered the warehouse. The alarm failed to function, and some £400,000 worth of cigarettes were stolen and never recovered. Subsequent investigation revealed the following facts, which have been agreed for the purpose of this appeal.

  1. In September 1998 a circuit board in the alarm system had misbehaved. Ide plc had purchased and had fitted a replacement board manufactured by the defendants, Heathfield Systems Ltd.
  2. The reason why the alarm had not worked on the night of the break-in was that the replacement circuit board had unexpectedly malfunctioned and caused a switch in the alarm to burn out, rendering the device ineffective.
  3. Had the alarm functioned, the employees of the security company would have been on the scene within minutes and this would, on the balance of probabilities, have thwarted the thieves.
Alphington brought proceedings against Heathfield for negligence, claiming the value of the stolen cigarettes. They alleged that the failure of the circuit board had been due to Heathfield's negligence in failing to manufacture it in sufficiently sterile conditions. As a result, they said, dirt had entered the circuitry and rendered it unreliable and apt to misfunction without warming.

Besides denying negligence, Heathfield argued that in the circumstances they had owed no duty of care to Alphington, since there had been no relevant damage to any physical property of theirs. This point was ordered to be tried as a separate issue under C.P.R., & 3.1(2)(i).

Mr Newton St-Cyres, Q.C., sitting as a Deputy Judge of the Queen's Bench Division, decided this issue in favour of the defendants. He held that:

  1. In so far as the claimants relied on the loss of their cigarettes, deprivation by theft did not amount to physical damage so as to attract negligence liability under the principle in Donoghue v Stevenson [1932] A.C. 562. A manufacturer, he said, owed no duty of care in respect of a product whose negligent manufacture merely failed to prevent another's goods being unlawfully abstracted.
  2. It was true that the claimants had suffered physical damage to their burglar alarm, namely to the switch which had burnt out. However, it was clear from cases such as The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 that the manufacturer of a defective component forming part of a product owed no duty of care in respect of damage to that product, even if such damage affected parts other than the defective component in question. Since the only damage was to the burglar alarm itself, he held that this principle applied, and that the claimants had failed to establish a duty of care.
An appeal to the Court of Appeal was dismissed, the reasons being in essence the same as those advanced by the learned deputy Judge.

The claimants now appeal to the House of Lords.

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