Case study – defending kitchen supplier in a product liability dispute

Scenario

The case concerned a large-scale apartment development where a type of laminate board, used in kitchen manufacture, contained a fault in its UV compounds. Over time, this defect caused all of the kitchens to change colour, creating significant aesthetic and practical issues. Our client, who had supplied and fitted the kitchens, faced liability to the developer for these defects, a risk which threatened the financial stability of the entire business.

The developer had threatened to sue our client and the potential cost was going to be substantial.

Our approach

• Strategy and first steps - the crucial first step was for us to negotiate with the developer to gave our client a reasonable period of time to rectify the defects. This would allow the client to then bring a claim against the supplier of the faulty product. It also preserved the longstanding commercial relationship of over 20 years between the client and the developer and avoided a claim being brought against the client saving further costs.

• The main legal issue - was proving that the change of colour was in fact a manufacturing error and that the UV had failed rather than natural changes due to installation or external components. The opponents denied liability stating that just because there was a colour change, it did not mean that the boards were faulty.

• The client had the benefit of legal expenses insurance attached to their business insurance policy - this was good news but insurance funded claims can be difficult as clients can't just assume that because they've got insurance that they will be covered. You require a lawyer with experience in the way insurers and their policies work so they can guide you through the process from start to finish. Louise has vast experience in acting for insurers and advising clients on how their policy can assist. She was able to secure funding to assist the client in funding the legal action.

• Court proceedings - we had to issue court proceedings to move the matter forward as the opponents were using stalling tactics to delay progression. We then used a combination of court process and negotiation tactics to get the opponent to the table on settlement discussions.

• Negotiating strategy - we pushed for and obtained court directions allowing for an expert in the niche field of UV testing to prove liability. Once a suitable expert was found, we also obtained evidence from a surveyor on the sums claimed so that the client had a good base from which to negotiate. This put a lot of pressure on the opponent, showed the client was serious and ultimately drove them to engage in discussions to settle.

Outcome

A successful settlement based on breach of contract for failing to supply goods that were fit for purpose. Our client settled for damages (the costs that the client would have to incur to rectify the problems) and then separately settled the legal costs element that the client and their insurer had had to pay to bring the claim. This allowed our client to rectify all the defects without incurring any financial loss. This result left both the client and their insurer extremely happy, having avoided any direct costs and safeguarded the company’s reputation and future.