Time to rethink action on defective goods?

The desire of a consumer to bring an action against a company for defective goods is governed by various time limits, says Gaynor Whiter

The Consumer Protection Act 1987 (CPA) was brought into effect on 1 March 1988 to implement Directive 85/374/EC on liability for defective products.The legislation renders producers of a product strictly liable for any damage caused to a consumer wholly or partly by a defect in the product.

That is subject to various defences that can be brought under section 4 of the CPA, and subject to a ten-year long-stop period from the date that the product was put into circulation, after which time all rights under the CPA are extinguished, under section 6(6) of the CPA and section 11A of the Limitation Act 1980.On 18 December 2001, the Court of Appeal gave a landmark ruling in relation to the applicability of section 35 of the Limitation Act to actions brought under the CPA - SmithKline Beecham plc (1) Smith Kline and French Laboratories Limited v Horne-Roberts, CA, 18 December 2001 (Dame Elizabeth Butler-Sloss.P, Lady Justice Hale and Lord Justice Keene).

Section 35 deals with substitution of one party for another in an action which is already proceeding.The ruling relates to the group action involving the measles, mumps and rubella vaccine (MMR).

The claimant had sued one pharmaceutical company (Merck & Co Inc) for personal injuries allegedly caused by administration of the MMR vaccine.

The claimant's solicitors had identified a batch number relating to the vaccine administered and they believed that this batch number related to an MMR vaccine produced by Merck & Co Inc, when in fact such batch number related to a different manufacturer, SmithKline Beecham.

The mistake only came to light a year later, after the ten-year long-stop had expired.

Fresh proceedings against the correct defendant could not be commenced because the right to an action under the CPA had expired.

Instead, the claimant sought to substitute SmithKline Beecham for Merck & Co in the existing action, by way of application to the court.In general, time limits for actions brought under English domestic law (in negligence, for example) may well exceed ten years.

Therefore, to give effect to the directive's ten-year long-stop provision, Parliament added a section to the Limitation Act, section 11A, which imposed the ten-year long-stop period on actions brought under the CPA.

Furthermore, Parliament specifically amended various other sections of the Limitation Act so that the long-stop period still applied in relation to those sections, for the purposes of actions brought under the CPA.

For example, the ten-year long-stop still operates to extinguish a right of action under the CPA where the claimant is a minor (section 28 of the Limitation Act), where there is fraud (section 32 of the Limitation Act), and even where the judge believes it equitable to extend time limits (section 33 of the Limitation Act).

Substitution of a partyParliament did not expressly exclude the operation of the ten-year long-stop from section 35 of the Limitation Act.

This section permits substitution of a party (deemed to be substituted as at the time of issue of the original party), where:l It is necessary for the determination of the action in that there has been a mistake in respect of the party's name, and;l The Civil Procedure Rules (CPR) permit the substitution.

Rules 19.5(2) and 19.5(3) permit substitution only if the claim was initially issued within the relevant limitation period.

For example, within the ten-year long-stop period for actions under the CPA, and within three years of the date of knowledge of damage, and the substitution is necessary as the new party to be substituted is a party who was named in the claim form in mistake for the new party.The appeal raised the following points:l The directive is pre-eminent and UK legislation, including section 35 of the Limitation Act, must be construed so as to give effect to the directive and the long-stop provision.

In fact, should substitution of defendants pursuant to section 35 be considered at all by the court, where rights under the directive and CPA have already been extinguished by the passage of more than ten years from the date that the product had been put into circulation?l Section 35 may only operate when a mistake as to name has been made by the party.

Can a substitution be made if the mistake is of the identity of the party rather than using a name incorrectly (that is, a mistake as to name)?The Court of Appeal held that:l Substitution of a party pursuant to section 35 of the Limitation Act deals only with the situation where a claim is already proceeding, that is to say, it was originally issued within the ten-year long-stop period.

Since the preamble of the directive specifically refers to the extinguishment of the period being 'without prejudice to claims pending at law' and article 11 of the directive refers to the rights being extinguished 'unless the injured person has in the meantime instituted proceedings against the producer', the court ruled that the operation of section 35 does not conflict with the scope of the directive.

l Since Parliament chose repeatedly to amend the Limitation Act so as to ensure that the ten-year long-stop was not affected by the operation of various other sections of the Limitation Act, the ten-year long-stop provision is part and parcel of that legislation and the fact that Parliament decided to leave the substitution provisions under section 35 unchanged was deliberate.l The meaning of 'mistake' in section 35 must go further than a mere misnomer.

The Court of Appeal relied upon the case of The 'Sardinia Sulcis' and 'Al Tawwab' [1991] 1 Lloyds LR 201, ruling that where a party could identify the opposing party by reference to a description specific to the particular case, but gave the wrong name in error, this was a mistake that could be rectified under section 35 of the Limitation Act and (by implication) CPR rule 19.5.l If it was unjust to the potential substituted party who might be unconnected to the previous party and unaware of the claim until after the expiry of the ten-year long-stop, then a judge could exercise his discretion in disallowing substitution under section 35.l In this particular case, the judge at first instance exercised his discretion in favour of the substitution, even though the substituted defendant was both unconnected with the previous defendant and was unaware that the litigation was proceeding.

It was of note that the defendant did not appeal against the exercise of the first-instance judge's discretion.The long-stop period is the subject of controversy and review by the European Commission, with some consumer groups contending that it should be extended to 20 years or abandoned completely.

This latest decision from the Court of Appeal may go some way to placating this lobby, since the decision may permit claimants to substitute one defendant company with another unrelated company at any time, so long as the original intention of the claimant was to sue the producer who had manufactured an identified product, the original claim was issued within the ten-year long-stop period, and the court exercises its discretion in favour of the substitution.Gaynor Whiter is an associate at City-based law firm Davies Arnold Cooper