Have you ever wondered how Products Liability developed as an Insurance cover? Well it started from the case Donoghue v Stevenson ( A.C. 562, 1932 S.C. (H.L.) 31, All ER Rep 1). It is one of the most famous cases in British legal history. The decision of the House of Lords founded the modern tort of negligence. It is often referred to as the “Paisley snail” or the “snail in the bottle” case.
So what happened?
On the evening of Sunday 26 August1928, Mrs May Donoghue, in the Wellmeadow Cafe in the town’s Wellmeadow Place. Donoghue’s friend ordered and paid for a pear and ice and an iced drink. The owner brought the order and poured part of a bottle of ginger beerinto a tumbler containing ice cream. Donoghue drank some of the contents and her friend lifted the bottle to pour the remainder of the ginger beer into the tumbler. On doing so, it was claimed that the remains of a snailin a state of decomposition plopped out of the bottle into the tumbler. Donoghue later complained of stomach pain, and her doctor diagnosed her as having gastroenteritis. She also claimed to have suffered emotional distress as a result of the incident.
On 9th April 1929, Donoghue brought an action against David Stevenson, aerated water manufacturer Paisley, in which she claimed Â£500 as damages for injuries sustained by her through drinking ginger beer which had been manufactured by the defender.
So how did the decision become relevant?
Donoghue is an extension of a principle articulated earlier case, MacPherson v. Buick Motor Co. It pioneered the tortious principle of a general dutyofcare, the starting point for any action in negligence, and abolished the common law requirement of privity of contract. However, MacPherson was an American case, and until Donoghue, the duty of care was still limited in English law to a narrow number of relationships. The duty of care is the first of three parts that have to be established in order to prove liabilityin negligence, the other two being a breach of that duty by the defendant, and causation – linking the damage suffered by the claimant to the defendant’s breach of duty.
The case is perhaps most well known for the speech of Lord Atkin and his “neighbour” or “neighbourhood” principle, where an established duty of care does not already exist, a person will owe a duty of care not to injure those who it can be reasonably foreseen would be affected by their acts or omissions.
Donoghue had not ordered or paid for the drink herself, so there was no contractualrelationship between Donoghue and the cafe owner. Tort law at this time did not allow for Donoghue to sue the cafe owner. There was a contractual relationship between the cafe owner and the friend, but the friend had not drunk the ginger beer. Ginger beer was not a dangerous product, and the manufacturer had not fraudulently misrepresentedit. At that time, those were the only two grounds for claiming negligence against a manufacturer. On the face of it, the law did not provide a remedy for Donoghue.
Counsel for the manufacturer naturally denied liability or that any such duty was owed. It was not until June 1930 that the judge opined that there was a case to answer. Stevenson’s legal team appealed Lord Moncrieff’s ruling on a number of legal grounds, and the judges of the Inner House granted the appeal in November 1930, dismissing her claim as having no legal basis.
It would not have been very surprising if May Donoghue had given up after this judgment. The Court of Session had now ruled twice that there was no legal authority allowing a claim for damages against a manufacturer where no contract existed, unless the product was dangerous or fraudulently represented.
Lord Atkin’s “neighbour” principle
On 26 May 1932, Lord Atkin rose to deliver his speech to the House of Lords and reveal his “neighbour” principle to the rest of the world, derived from the Christian principle of loving your neighbourin Luke 10:
There must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances. … The rule that you are to love your neighbour becomes in law you must not injure your neighbour; and the lawyer’s question: Who is my neighbour? Received a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law, is my neighbour? The answer seems to be persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions that are called in question.
So David Stevenson should have been thinking about those who would drink his ginger beer when he was bottling it, whether they were his customers or not. A manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with knowledge that the absence of reasonable care in the preparation or putting up of products will result in an injury to the consumer’s life or property, owes a duty to the consumer to take that reasonable care.
Lords Thankerton and MacMillan supported his opinion, but Lords Buckmaster and Tomlin were vigorously opposed. Buckmaster said it was impossible to accept such a wide proposition and (anticipating later “floodgates” arguments) it was difficult to see how trade could be carried on if it were the law. He also opined, as did Lord Tomlin, that there was no logical reason why such a law would be restricted to manufacturers of food. If a duty of care existed it seemed to Buckmaster that it must cover the construction of every article: “If one step, why not fifty?” Tomlin agreed and referred to a “recent” (1842) disaster on the Versailles Railway caused by a defective axle which, if Lord Atkin’s principle were to be law, he feared, would allow every injured party to sue the axle manufacturer.
Despite such opposition Donoghue’s legal team had won, albeit by the smallest of margins – three to two. The case was returned to Scotland for the Court of Session to apply the ruling to the facts of the case. In the event, this didn’t happen. David Stevenson died within a year of the decision and his executors settled out of court, not for the original claim of £500 but £200.
But it had set a precedent. As a result the Insurance Industry could see that while a duty of care existed, it was not caused by a deliberate act. It was a negligent act, and just like the creation of public liability and the duty of care owed to members of the public, it meets the criteria of insurability. It led to the development of Products Liability. It also indirectly led to other insurance covers such as Product Recall and Malicious Tamper Insurance.
So to May Donogue, thanks for perservering with the case all the way to the House of Lords. An injured party from a faulty product now can sue for their loss and manufacturers can protect themselves accordingly with Products Liability.
Have to keep the lawyers happy!