06 July 2012 #Dispute Resolution
In the recent case of Argos Ltd & Others -v- Leather Trade House Ltd (formerly BLC Leather Technology Centre Ltd)  EWHC 1348 (QB), the High Court has held that Argos and Homebase can reclaim from Leather Trade House millions of pounds of compensation which they paid out to their customers who suffered skin irritation from their products.
The case arose after a number of people who purchased leather furniture from Argos and Homebase several years ago complained that they had suffered skin irritation and respiratory problems as a result of using the furniture, including some who required hospital treatment. The injured customers subsequently commenced a group legal action against Homebase and Argos, who agreed to settle the claims.
In the High Court proceedings, Argos and Homebase sought to recover from Leather Trade House the monies which they had paid out to their customers. Argos and Homebase alleged that Leather Trade House advised them that an anti-mould chemical used in the furniture was not harmful to human health. This turned out to be incorrect and Argos and Homebase claimed this was a breach of contract. Alternatively, they claimed that Leather Trade House failed to advise them over a prolonged period that the chemical was unsafe.
Leather Trade House, a company providing assistance, testing and advice on leather, disputed the claim. It denied that it was negligent, or that it had committed a breach of contract. In particular, it maintained that none its employees had told Argos or Homebase that the chemical was safe. It further argued that any losses suffered by Argos and Homebase were caused by their own negligence as they had, amongst other reasons, failed to confirm the extent of Leather Trade House’s research into the chemical.
At trial, the Court upheld Argos and Homebase’s claims. It held that Leather Trade House owed a “duty of care” to Argos and Homebase, and that it had breached that duty. Amongst other matters, it found that, having carried out “no effective research”, Leather Trade House had led Argos and Homebase to believe that the chemical was “safe or at least not unsafe to use”. It also found that there was no contributory negligence on the part of Argos or Homebase, as they had made plain to Leather Trade House what they wanted to know. There was no obligation on them to check what had been done.
The case is a reminder that parties who provide advice in a business context must exercise reasonable care and skill when doing so. Further, as the Court noted, where the advice sought is on a topic outside the adviser’s area of expertise, they must say so. Otherwise, they will be held to the same standard as those who do have expertise in the area.