PI Brief Update

01 May 2006 - PI Practitioner

CONSUMER PROTECTION ACT 1987: THE TEST

Tesco Stores Ltd. V Pollard [2006] EWCA Civ 393
Section 3 of the Act sets out that a product has a defect if “the safety of the product is not such as persons generally are entitled to expect.” (Section 2, of course, sets out the liability for damage cause by such defects.) In this case, a child was injured by consuming dishwasher powder in a container fitted with a child resistant closure (‘CRC’) which he had nevertheless managed to open. The CRC did not meet the relevant British Standard, although it was found to be more difficult to open than a normal closure.

The Court of Appeal held that the Act did not import any duty on those responsible under the Act to fulfil the British Standard. To do so would effectively mean that a producer warranted that the product would fulfil the relevant standard, when the producer may never have had any contact with the purchaser. Neither would the purchaser be likely to have the faintest idea what safety standard, if any, applied to a product. The Act did not go so far. The only requirement that persons generally would be entitled to expect of a CRC is that it would be harder to open than a normal closure, and that requirement was met.

REASONABLE SECURITY FOR PERIODICAL PAYMENTS – NHS FOUNDATION TRUSTS

YM v Gloucestershire Hospitals NHS Foundation [2006] EWHC 820 (QB)
Under section 2(3) of the Damages Act 1996, a court may not make an order for periodical payments unless it is satisfied that the continuity of payment is reasonably secure. When a normal NHS trust is ordered to make periodical payments, they are reasonably secure because of section 1(1) of the National Health Service Residual Liabilities Act 1996 (‘the 1996 Act’). This requires the Secretary of State to exercise his statutory powers to ensure that all liabilities are dealt with in the event of the trust ceasing to exist.

However, an NHS Foundation Trust is in a different position. Sections 25(3) and 26(1) of the Health and Social Care (Community Health and Standards) Act 2003 give the Secretary of State a discretion to transfer the property and liabilities of a failing foundation trust. Is this sufficient to make the payments reasonably secure?

The court did not decide this; it did not need to. The NHS Litigation Authority (‘NHSLA’) is a body in respect of which, if it is the source of periodical payments, those payments are reasonably secure. If the NHSLA is named in an order for periodical payments as the source of those payments, they are reasonably secure. A framework of agreements was put in place between the foundation trust, the NHSLA, the Secretary of State and the claimant which made the NHSLA the source of the payments. Thus was the difficulty overcome.

If an order for periodical payments is sought against a foundation trust, it is very important that a similar framework of agreements is put in place. Attached to the judgment in this matter was a model form of order to be used in such matters.