H Parsons (Livestock) Ltd v Uttley Ingham & Company Ltd [1977] EWCA Civ 13 (18 May 1977)

Pig farmers purchased a bulk food storage hopper from manufacturers who failed to open the ventilator when installing it. This caused pig-nuts to become mouldy, leading to E. coli infection killing 254 pigs. The Court of Appeal held the manufacturers liable, establishing that in physical damage cases, liability extends to the type of damage foreseeable even if the precise extent was not.

Facts

The plaintiffs, H. Parsons (Livestock) Ltd, operated an intensive pig farm in Derbyshire with approximately 700 pigs classified as a top grade herd. In 1971, they purchased a second bulk food storage hopper from the defendants, Uttley Ingham & Co Ltd, sheet metal manufacturers specialising in such equipment. The contract specified the hopper would be fitted with a ventilated top, exactly as the successful first hopper supplied in 1968.

When the defendants’ delivery man installed the hopper on 2nd August 1971, he failed to adjust the ventilator cowl to its open position, leaving it closed with tape that had been applied to prevent rattling during transport. The ventilator was 28 feet above ground and the defect was not discoverable by the plaintiffs.

Due to inadequate ventilation, pig-nuts stored in the hopper became mouldy. The plaintiffs fed these nuts to their pigs, initially unconcerned as mouldy nuts do not usually harm pigs. By October 1971, pigs began showing signs of illness. An outbreak of E. coli infection was triggered by consuming the toxic food, ultimately killing 254 pigs and causing substantial financial losses claimed at over £36,000.

Issues

Primary Legal Issue

Whether the illness and death of the pigs was too remote a consequence of the breach of contract to be recoverable as damages.

Secondary Issues

Whether there was one contract (sale and installation) or two separate contracts, and what test of remoteness should apply to physical damage caused by breach of contract.

Judgment

The Court of Appeal unanimously dismissed the appeal, upholding the trial judge’s decision in favour of the plaintiffs.

Lord Denning MR

Lord Denning distinguished between cases involving loss of profit (where the stricter contemplation test from Hadley v Baxendale and Czarnikow v Koufos applies) and cases involving physical damage (where the tort foreseeability test applies). He held that in physical damage cases, the defendant is liable for any damage reasonably foreseeable as a possible consequence, even if only a slight possibility. The makers ought reasonably to have foreseen that mouldy pig-nuts might cause illness to pigs, making them liable for the consequences including the E. coli outbreak.

Lord Justice Orr

Lord Justice Orr agreed that the appeal should be dismissed but preferred the reasoning of Lord Justice Scarman, declining to endorse a distinction between loss of profit and physical injury cases as insufficiently supported by authority.

Lord Justice Scarman

Lord Justice Scarman held that the correct approach was to apply the first rule in Hadley v Baxendale. The parties must have contemplated that if the hopper was unfit for storing pig-nuts suitable for feeding to pigs, there was a serious possibility the pigs would become ill. While the specific disease (E. coli) was not foreseeable, physical injury to the pigs was clearly within contemplation. He emphasised that it suffices if the type of consequence, not the specific consequence, was within contemplation as a serious possibility.

Key Legal Principles

The case established important principles regarding remoteness of damage in contract:

• In cases of physical damage, once the type of damage is within contemplation, the defendant is liable even if the extent or precise nature of the damage was not foreseeable
• The court assumes the parties had the breach in mind when contracting, even for latent defects
• Section 53(2) of the Sale of Goods Act 1893 codifies the first rule in Hadley v Baxendale regarding damages directly and naturally resulting from breach
• There should be consistency between contract and tort where parties have the same knowledge and the contract contains no term limiting damages

Implications

This case is significant for clarifying the remoteness test in contract cases involving physical damage. It suggests that the gap between contract and tort remoteness tests may be narrower than previously thought, particularly in physical damage cases. The decision provides important guidance for product liability claims where breach of warranty causes physical harm, confirming that manufacturers cannot escape liability merely because the precise medical consequence was unforeseeable if some form of physical injury was contemplated as a serious possibility.

Verdict: Appeal dismissed. The defendants were held liable for the plaintiffs’ losses arising from the death and illness of pigs caused by the unventilated hopper. Leave to appeal to the House of Lords was granted subject to conditions regarding costs.

Source: H Parsons (Livestock) Ltd v Uttley Ingham & Company Ltd [1977] EWCA Civ 13 (18 May 1977)