REUTERS | Yusuf Ahmad

No smoke without fire

Where there’s smoke, there’s fire. That might be a self-evident feature of a fire, but what can be far harder to establish is what caused the fire in the first place. This is the challenge the courts face in fire disputes, whether on construction projects or otherwise, where the evidence you would normally rely on has, quite literally, gone up in flames.

In Stoke-on-Trent College v Pelican Rouge Coffee Solutions Group Ltd, the court explored the issues around determining causation, which are especially relevant to disputes about the cause of a fire.

The judgment contains an interesting discussion about whether obligations implied into contracts for services are continuing or “once-and-for-all” obligations, and the different tests for causation for breach of statutory duty compared to contract and tort claims. In this blog I will concentrate on the test for causation under breach of contract and/or tortious duty.

Stoke-on-Trent College v Pelican Rouge Coffee Solutions Group Ltd

The case related to a fire in 2009 at the Cauldon campus of Stoke-on-Trent college, causing £265,000 worth of damage. The college alleged that the fire had been caused by a vending drinks machine that it hired from the defendant, Pelican Rouge. Pelican Rouge contended that the fire had started in a closed ceiling void channel directly above the drinks machine.

In common with many fire disputes, there was no “silver bullet piece of evidence” that showed precisely how the fire had started. Instead HHJ Stephen Davies, sitting as a judge of the High Court, had to determine:

On the first point, the court determined that of the two possibilities advanced, it was more likely that the fire originated in the vending machine, relying on its interrogation of the experts’ respective positions and on CCTV footage of the fire. There had also been two reports of water leaks from the vending machine in the preceding week, which the defendant was found to have failed to investigate sufficiently thoroughly.

Causation

It is helpful to consider alternative approaches that the court might take to establish causation. In Rhesa Shipping v Edmunds (The Popi M), the House of Lords considered a well-known phrase from Sir Arthur Conan Doyle’s, The Sign of Four, in which Mr Holmes states:

“… when you have eliminated the impossible, whatever remains, however improbable, must be the truth.”

The House of Lords determined that this approach was inappropriate in the context of the judicial approach to causation for several reasons:

  • The judge is not bound always to make a finding one way or the other with regard to the facts put forward by the parties. It can adopt the third alternative of finding that the party who bears the burden of proof has failed to discharge that burden.
  • The statement only applies when all relevant facts are known, so that all possible explanations, except a single extremely improbable one, can properly be eliminated. This is rarely the case in practice.
  • The legal concept of proving a case on a balance of probabilities must be applied with common sense. Before a court finds that a particular event occurred, it must be satisfied on the evidence that it is more likely to have occurred than not.

The approach in this case

The court noted the college’s difficulty in establishing the exact cause of the fire, and therefore in establishing that the defendant’s breach had caused the loss complained of.
It relied on the entitlement to “draw a common sense conclusion based on the balance of probabilities” in relation to the fire and to any breach of obligations by the defendant. In reaching this conclusion, it drew on the factual and expert evidence and then took a step back to weigh up the possibilities.

In support of this approach, the court referred to Drake v Harbour in which Toulson LJ stated:

“In the absence of any positive evidence of breach of duty, merely to show that a claimant’s loss was consistent with breach of duty by the defendant would not prove breach of duty if it would also be consistent with a credible non-negligent explanation. But where a claimant proves both that a defendant was negligent and that loss ensued which was of a kind likely to have resulted from such negligence, this will ordinarily be enough to enable a court to infer that it was probably so caused, even if the claimant is unable to prove positively the precise mechanism. That is not a principle of law nor does it involve an alteration in the burden of proof; rather, it is a matter of applying common sense.”

Toulson LJ went on to note that if the defendant puts forward alternative causes of causation, the court will consider them, but that if these were improbable, this would reinforce the court’s inference that the loss was caused by the proven negligence.

In Stoke-on-Trent v Pelican Rouge, in making its findings on causation, the court drew on Pelican Rouge’s failure to conduct regular PAT testing of the vending machine and its general light-touch approach to maintenance, together with its failure to investigate several recent water leaks. It also noted Pelican Rouge’s failure to advance a positive defence as an alternative cause of the fire (such as, for example, mice gaining access to the vending machine and attacking the wiring).

Difference in proving causation in breach of statutory duty

The court touched on the different test for proving a breach of statutory duty (on the facts, it was found there was such a breach).

A claimant succeeds in establishing a breach of statutory duty if it:

“… establishes there is a defect in the product and that defect caused the loss unless the defendant can rely on one of the statutory defences.”

This is a lower bar than establishing causation in breach of contract or tort.

So what?

This case demonstrates the difficulty parties face, particularly the claimant, in making a case and discharging the burden of proof, where it is difficult or impossible to pinpoint the exact cause of the loss.

The approach will depend on the facts. However, as a starting point, I would suggest that parties:

  • Ensure that an investigation is arranged early on, so that experts have the benefit of as much contemporaneous information as possible.
  • Keep an open mind as to potential causes. To the extent that there is a compelling case for an alternative cause, they should be prepared to explore it and put it forward.
  • Think critically at the outset whether the common sense position is on their side.

It may be a bad pun, but parties should wake up and smell the coffee!

Berwin Leighton Paisner LLP Philip Hancock

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