Failure of a poorly-installed product: J Murphy v Johnston Precast

Summing up

The Judgment:

J Murphy & Sons Ltd -v- Johnston Precast Ltd (formerly Johnston Pipes Ltd) [2008] EWHC 3024 (TCC)

The issue:

Obligations concerning fitness for purpose and the duty to warn.

The implication:

Knowledge is vital to the existence/operation of these obligations. Generally, a fitness for purpose obligation will only arise where the particular purpose is stated with sufficient particularity. Similarly, a breach of the duty to warn will only arise where a party has either actual knowledge of a problem or where it is determined that it should reasonably have known about a problem.

Obligations concerning fitness for purpose and the duty to warn can be a major cause of concern for contractors, sub-contractors and suppliers parties due to the potentially extensive financial liabilities which may accompany them. These obligations were considered in the case of J Murphy & Sons Ltd -v- Johnston Precast Ltd.

Murphy engaged Johnston to make and supply a length of glass reinforced plastic pipe for the supply of potable water. Murphy laid the pipe in a tunnel and surrounded it with foam concrete. The pipe burst.

The subsequent investigation identified a void in the foam concrete around the top third of the pipe and the point of failure was in the middle of that void.

Expert evidence identified that owing to alkaline attack the pipe in the void area was unable to withstand the pressure criterion required by the contract.

Amongst others the issues to be decided were whether: (i) the contract contained an implied term that the pipe would be fit for its purpose - i.e. for use in a foam concrete environment; (ii) Johnston owed to Murphy a duty to warn about the suitability of the pipe for use in a foam concrete environment.

Fitness for purpose

Murphy considered that, by virtue of section 14(3) of the Sale of Goods Act 1979, the contract contained an implied term that the pipe would be fit for use with foam concrete. The judge decided that no such term was to be implied because when the contract had been made Murphy had not identified that the pipe was to be surrounded by foam concrete.

The judge noted that a clear statement of the required purpose was needed to enable Johnston to exercise its skill and judgement in making or selecting appropriate goods before such a term could be implied via section 14(3).

Additionally, the judge decided that Murphy had not relied on the skill and judgment of Johnston in relation to the decision to use foam concrete, noting that, in the circumstances, section 14(3) did not allow the implication of such a term where Murphy did not rely on Johnston's skill and judgement.

Duty to warn

The judge decided that it was an implied term of the contract that if Johnston knew or should have known that the pipe might not be suitable for use in foam concrete it was obliged to warn Murphy.

The judge decided this matter by: (i) considering Johnston's knowledge of the effect of ordinary concrete and whether it believed there was a significant difference between other kinds of concrete and foam concrete; (ii) whether Johnston should have known about any significant differences between other kinds of concrete and foam concrete.

On the first point: the evidence identified that Johnston's pipes had been surrounded by concrete or grout on many occasions without failure due to alkaline attack. Thus, Johnston had no reason to be concerned about the interaction between its pipes and any concrete, or for having to regard foam concrete as being any different to any other concrete or grout which had surrounded its pipes for years.

Accordingly, the Judge decided that no breach occurred on this point as Johnston did not have actual knowledge or belief that foam concrete was any different to any other type of concrete that had been used successfully with its pipes.

On the second point: there was no evidence to suggest that foam concrete had radically different properties and/or would create conditions for an alkaline attack on the pipe which would not have existed with concrete or grout. Accordingly, the Judge decided that no breach occurred on this point as Johnston had acted reasonably in treating foam concrete as being no different to concrete or grout, as there was no reason for it to suspect otherwise.

In summary, the judge decided that the pipe burst owing to defects in the installation method used by Murphy, as the void in the concrete had vastly increased loading on the pipe in that location and the water in the void had caused alkaline to attack the pipe reducing its strength.

Accordingly, Johnston was not liable for the burst pipe and would not have been liable even if there had been a fitness for purpose obligation, as the pipe had burst due to defects in Murphy's installation method.