DIPT v Sanglier v Apollo: the importance of assessing the evidence, settling reasonably, and understanding the terms on which you contract
Background and precis
Judgment has been handed down in two related claims concerning the supply of an allegedly defective construction glue, PRO-33 NFA (“the product”), which was widely used in the UK and in continental Europe in 2013-14: DIPT & Ors v Sanglier; Sanglier v Apollo [2023] EWHC 426 (TCC).
The product was most often used to adhere decorative laminates to substrates in the construction of high-end bespoke furniture, and the case involved hundreds of instances of ‘delamination’, spread across many fabricators, where the cause of the failure was allegedly a defect in the product being used. Dozens of fabricators were required to carry out remedial works at hundreds of sites and claimed against the sellers of the product (several companies (collectively “DIPT”), represented by Dermot Woolgar). DIPT settled the fabricators’ claims, and claimed against the manufacturer of the product, Sanglier Limited (“Sanglier”).
Apollo Chemicals Limited (“Apollo”) manufactured the liquid adhesive component of the product, A8660-p3 (“the adhesive”), which was supplied to Sanglier in bulk liquid form and which Sanglier aerosolised, by adding propellant and filling this into canisters or aerosols to make the product.
Sanglier sought to pass onto Apollo any liability which it had to DIPT, together with claiming additional sums from Apollo, on the basis that the adhesive was defective or that Apollo’s development of the adhesive was negligent.
Apollo, represented by Carlo Taczalski leading Michael Harper, succeeded in forcing Sanglier to discontinue its claim against Apollo, following a 5 week trial but, unusually, before judgment had been handed down. This was on terms that Sanglier pay a substantial portion of Apollo’s costs of the proceedings.
Notwithstanding the discontinuance, the matter proceeded to judgment on the related claim by DIPT against Sanglier. DIPT was successful in recovering in full against Sanglier.
The judgment of HHJ Pelling KC (sitting as a High Court judge) illustrates that Apollo’s decision to fight the case to trial was correct. In particular, Apollo had assessed the factual position and satisfied itself that (only) Apollo’s expert evidence satisfactorily explained that position, in order to provide a cogent explanation that a Court could accept. By contrast, the Judge found that Sanglier had failed to grapple with a real difficulty with its technical evidence in explaining the factual position, which should have been apparent from an early stage. The case is a salutary reminder of the need properly to scrutinize the expert evidence being relied upon, and also the terms upon which the parties are contracting.
The judgment vis Sanglier and DIPT also includes useful guidance as to the approach to causation to be adopted in cases of settlement being reached down the contractual chain (in what might be considered quite an extreme case, where loss adjusters had been instructed not to require any discount in respect of liability when considering the fabricators’ claims.)
The judgment in more detail
DIPT v Sanglier
DIPT succeeded in full in its claims against Sanglier relating to the product, PRO-33 (as distinct from the adhesive), being defective and causing DIPT to have to enter into settlement agreements down the supply chain.
The judgment sets out a summary of the principles applicable to causation in cases where settlements have been reached down a contractual chain, at [88] – [89] of the judgment.
The conclusion that the settlements were reasonable was reached despite Sanglier considering (1) that there were widespread problems with how the product was being applied by the fabricators, and (2) the potential implication of other glues from different manufacturers in the delaminations allegedly arising from the product. The Court considered that, having obtained some initial expert evidence to the effect that there was a defect within the product, DIPT was justified (and acted reasonably) in taking a very early view of liability and instructing its loss adjusters to assess and pay the quantum of the fabricators’ claims. This was despite Sanglier having raised these issues contemporaneously and also despite a limitation of liability clause in the contracts between the DIPT entities and the fabricators. The case therefore highlights the generous approach to causation that may be taken in an appropriate case. As the Court explained at [91]:
“…in my judgment the multiplicity of small claims that the claimants were faced with was classically the sort of “difficult situation” in which a claimant is placed by a defendant’s breach that justifies a generous approach to settlements. In a case such as this the expense faced by the claimants of litigation at the suit of multiple different claimants based on multiple different customer claims each of which was individually of modest value was almost bound to be disproportionate and thus the benefits of settling the claims rather than disputing them were both obvious and compelling.”
Sanglier v Apollo
By contrast, and as indicated above, following the trial, Sanglier discontinued its claim that there was any defect with the adhesive A8660 (as distinct from Sanglier’s product), and agreed to pay Apollo a substantial portion of Apollo’s costs. There can be little doubt that Sanglier had correctly read the direction of travel by the conclusion of trial, given the Court’s comment at [3], “It is unfortunate that Sanglier chose not to discontinue the 2019 claim [against Apollo] much earlier”.
The point that emerges from the judgment is that Apollo had assessed the evidence and the technical expert evidence correctly, and Apollo was correct to focus on whether the expert evidence fitted properly with the observable facts on the ground.
Sanglier’s case, based on the opinion of its expert, Professor Parkin, was that any problem with the product was due to a problem with the adhesive: see [13]. Apollo’s case in response, supported by the expert evidence of Dr West, was that the adhesive itself was satisfactory and any problem arose from impurities on the interior surface of the canisters used for the aerosolised product: see [14].
A key plank of Apollo’s case on experts was that, factually, not all of the laminates glued using the product failed. This was identifiable from the proportion of product that was being complained about, and from an analysis of the batches implicated, and was supported by the lay evidence as it emerged at trial. If that was right, Sanglier / Professor Parkin could not account for this as their theory was based upon universal failure – the adhesive was said by Professor Parkin to be “doomed to fail”. The theory put forward by Apollo / Dr West (alone) could, however, explain this partial failure perfectly, given variable levels of impurities in the canisters: see [15].
The judge, whilst noting at [16] that the issues as between Apollo and Sanglier no longer needed to be decided, recited in the judgment both the premise and the conclusion of Apollo’s case.
At [76]-[78] the judge summarised the key point made by Apollo, Apollo having marshalled the factual evidence to determine that only a proportion of laminates glued together using the product failed.
“Apollo relied on its point that failures occurred in some but not all cases where the product was used to bond laminates to substrates for two logically distinct purposes. … Secondly, it was relied on as undermining the evidence of Professor Parkin … . In essence the point made by Apollo is that if these theories were correct then the product would have failed universally as and when used, and not intermittently as it maintained was the position.”
At [84] the judge then identified the resulting problem with Professor Parkin’s opinion, and therefore Sanglier’s case, and how this arose from a failure to identify the evidential picture:
“In summary however, Professor Parkin was faced with the fact (and had been faced with it from the outset) that his theory (as set out in his written evidence) was absolute in its terms and offered no explanation for why there had not been a statistically universal failure of bonds using the material within the time frame that this claim is concerned with. This led him in the course of his oral evidence to suggest that if the Product had been applied properly, it would form bonds that would last 10 years but that the circa 10% that failed, had failed because of misapplication. With great respect to Professor Parkin, I regarded this as a last-minute attempt to explain away what was a real difficulty with his technical explanation that had or should have been apparent from a very early stage and had been highlighted at least inferentially by Dr West’s evidence.”
Dr West had been cross-examined (extensively) at trial on the basis that he was in some way less expert than Professor Parkin, given the latter’s standing and appointments. The eventual result might be said to vindicate a focus on whether an expert’s theory stands up to forensic analysis, rather than being overawed by the apparent standing of the person giving the evidence alone.
One unfortunate (or fortunate, depending on your point of view) consequence of Sanglier’s discontinuance is that the judgment did not need to grapple with the issue of Apollo’s limit of liability clause, which limited its exposure to the price paid by Sanglier for the adhesive. Apollo’s case was that this was a reasonable limitation, and had the effect of limiting Apollo’s liability to approximately £50,000, as opposed to the millions claimed. This limitation of liability would have represented a further contraction of Sanglier’s claim against Apollo as a consequence of Apollo’s contractual terms, with Sanglier already having withdrawn approximately 25% of its claim against Apollo by amendment at the outset of the case. That followed Apollo identifying that many of the claims were in respect of supplies of adhesive that were subject to an arbitration agreement, with time having run out to commence such an arbitration on any contractual claims, forcing Sanglier to have to leave those out of its claim.
Conclusion
The judgment is a salutary reminder, especially for cases involving technical expert evidence, of the need for parties to assess critically the likely factual findings and whether their expert evidence will satisfactorily account for this. It is also the latest case in a long line which encourages parties to take a pragmatic view to settling claims at an early stage, particularly where the costs of full investigation would be disproportionate.
Apollo was represented by Carlo Taczalski and Michael Harper, instructed by Greg Dawson and Nick Hibbert of Keoghs LLP
DIPT was represented by Dermot Woolgar, instructed by Olu Dansu and Jenni Pateman of DAC Beachcroft LLP.
