IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

BETWEEN

HC 191/98

A & W HOLDINGS (NZ)

Appellant

AND

R M HOSKING and M A TAYLOR

First Respondents

AND

THE WAREHOUSE LIMITED

Second Respondent

Hearing:

30 March 1999

Counsel:

P Courtney & A Judelson for appellant

D Heaney & M L Thornton for first respondents
M Wharfe on instructions for second respondent

Judgment:

14 April 1999

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RESERVED JUDGMENT OF CARTWRIGHT J
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McElroys, Auckland, for appellant

Heaney & Co, Auckland, for first respondents
Morrison Kent, Wellington, for second respondent

Background
The appellants appeal from the decision of the District Court at Auckland
delivered on 4 October 1998. Following a defended hearing conducted over
three days, the learned Judge found in favour of the first respondents, the
plaintiffs in the District Court.

The first respondents were successful in obtaining judgment for $50,000 for
damage to their house property and chattels consequent upon a fire. General
damages to compensate them for physical inconvenience, discomfort and
mental distress were fixed at $7,500.

Factual background
On 16 June 1996 an electric blanket manufactured by the appellant and supplied
by the second respondent caught fire, igniting bedding and curtains and setting
fire to the interior of the bedroom. The general damages arose from the cost of
repairs and replacement and temporary home rental while the house was
repaired. In their statement of claim the first respondents first cause of action,
against the second respondent as supplier of the electric blanket stated:

10.

When the first defendant [the Warehouse Ltd, Second Respondent]

supplied the blankets to the plaintiffs by virtue of s 6 of the Consumer
Guarantees Act it gave a guarantee that the goods were of acceptable
quality but they were not.

Particulars
(a)

(b)

Blanket A was not fit for the purpose for which an electric blanket is
commonly supplied, namely to heat a bed:
(i)

The plaintiffs followed the operating instructions which came

with the blankets;

(ii)

The first named plaintiff switched on blanket A;

(iii)

Blanket A caught fire;

(iv)

Blanket A set fire to the bed on which it was placed and to the
house and its contents;

Blanket A was not safe:

(i)

Blanket A was manufactured defectively in that the electrical

crimp was spliced incorrectly. This caused the heater element
to fracture at a connection in the terminal box in blanket A
which in turn caused arcing. The arcing ignited the insulating
heat shrink sleeving which caused the blanket to catch on fire.

(ii)

Blanket A set fire to the bed on which it was placed and to the
house and its contents.

Identical particulars were specified in paragraph 23(b)(i) of the claim against the
appellant as manufacturer of the blanket. The first respondents alleged breach
of guarantee of acceptable quality pursuant to the Consumer Guarantees Act.
Given the detailed and specific nature of the allegations contained in paragraph
10(b)(i) and 23(b)(i) the entire focus of the evidence as to the cause of the fire
was on the alleged defective manufacture which gave rise to the fault in the
terminal box. The evidence called by the first respondents as plaintiffs in the
District Court was directed towards a finding consistent with that allegation. In
her evidence during cross-examination Rebecca Hosking (one of the first
respondents) said in response to the question:

Q.

You are claiming this fire started in the terminal box in the electric
blanket?

A.

I am not sure on the correct terminology but it was the point on the
electric blanket, the flat part there not the control switch.

It is accepted that the term the flat part there refers to the terminal box. The
expert witness called by the first respondents to give evidence concerning the
cause of the fire stated his conclusion in terms virtually identical to paragraph
10(b)(i) & (23)(b)(i) of the statement of claim. After considering the evidence of
other experts called by other parties to the proceedings and in crossexamination he remained unshaken as to his theory. The appellants called a Mr
Oust. The day before giving evidence he had conducted a further test which
demonstrated conclusively that there was no defect in the terminal box itself.
Consequently, Mr Knights theory supported to a degree by Ms Hoskings
evidence as to the location of the flame, was destroyed.

During cross-

examination, however, in the following exchange he made certain concessions:

Q.

To summarise for you, its either the children with matches or

something to do with the electric blanket.

A.

Yes.

Q.

But of course what you say is that that if it was something to do with
the electric blanket it wasnt the connector box [terminal box] in the
manner described by Mr Knight.

A.

That would be a fair comment ...

Q.

And weighing all of that up and applying your expertise to the situation,
you are now at the point where you say (1) the fire didnt occur in the
connector box.

A.

Yes.

Q.

(2) The most probable cause of the fire is something to do with the
electric blanket other than the connector box.

A.

It would appear so.

Q.

In your heart of hearts probably the switch, probably the control switch.

A.

Yes [but] its difficult to include the control switch ...

Q.

So for you bearing in mind what Hosking said as to where she saw the
fire when she came into the room, is the likelihood that the fire didnt
start in the connector box but rather started in the switch and spread
up to the top of the bed where she saw it.

A.

I couldnt deny that possibility.

Q.

Thats the likely scenario.

A.

Yes.

Dr Gregory, another witness called by the appellants was not prepared to make
a similar concession. He was asked:

Q.

... you and Oust concluded that it didnt start in the connection box
that it probably started in the controller switch.

A.

No thats not true.

Q.

Thats where you get to isnt it.

A.

I dont think so.

The rulings in the District Court

At the close of the evidence counsel for the first respondent sought leave to
amend paragraph 10(b) to include an allegation that the control selector switch
was defectively manufactured, that it malfunctioned and caused the fire, the
allegation being additional or alternative to that concerning the defective crimp.
Alternatively, counsel sought a ruling from the Court that paragraph 10(a) of the
statement of Claim was sufficiently widely framed so as to include the allegation
that pursuant to the Consumers Guarantee Act 1993 the electric blanket was not
fit for the purpose for which it was supplied, namely to heat a bed. In his ruling
the District Court Judge held that paragraph 10(a) was of sufficient breadth.
That in effect would enable him ultimately to rule that some aspect of the
manufacturer led to the electric blanket igniting, even if the evidence had failed to
establish that the cause of the fire was, as pleaded in 10(b)(i), the incorrect
splicing of the electrical crimp. For that reason he found it unnecessary (though
would have been prepared), to amend the pleadings as sought by the first
respondent.

Subsequently in his judgment on the substantive issue the District Court Judge
excluded other possible causes of the fire which had been raised during the
course of the trial, rejecting them in these terms:

Did the electric blanket cause the fire?: I am satisfied on the evidence that it
did. I have the evidence of the plaintiff as to her observations when she entered
the room and the evidence of Mr Merritt as to the likely point of origin of the fire.
I reject as completely untenable the alternative theories put forward by the
second defendant [the appellant] and I note the concession by Mr Oust that
once the other causes referred to have been ruled out, it is a possibility that the
fire started in the control switch and spread to the top of the bed where it was
first seen by Ms Hosking. Without, I hope placing undue weight on that
concession, it does seem to me to be the only inference available to the Court
in the light of the evidence I have accepted. In my view, by far the most likely
and probable scenario is that the blanket caught fire as a result of an electrical
defect in the area of the control switch, the fire having spread from that point to
the top of the blanket where it was observed by the plaintiff [first respondent].

Having made those factual findings the Judge concluded that as the blanket was
the cause of the fire it was not of acceptable quality for the purposes of the
Consumer Guarantees Act 1993 and the appellant was therefore in breach of s 6

of the Act. The Judge then found that the second respondent was entitled to be
indemnified by the appellants as manufacturer of the electric blankets.

The issues
Only the judgment on the substantive issues is the subject of this appeal. The
issues as defined by the appellant are:

1.

Should the first respondents have been entitled to advance as their theory
of the cause of the fire something other than a defect in the terminal box of
the electric blanket. If the appellant is successful on this issue, then its
submission is that the appeal should be allowed and a new trial directed.

2.

If the first respondents were so entitled to advance an alternative theory,

was the trial Judge entitled to find that the electric blanket caused the fire.
If the appellant is successful in this submission then it seeks judgment in
its favour.

The argument in support of the appeal

As I understood the position neither respondent argued against the appellants
submission that the theory as to the cause of the fire developed during the trial
was new. The appellant submits that by reason of the fact that the original,
specifically alleged cause of the fire became untenable as the evidence
emerged, the appellants were seriously prejudiced in their defence of the claim.
As counsel said:

Where a case as finally presented is different from that previously advanced,

the proper course is to set aside the judgment and order a new trial. This is
so, even if (which the appellant says is not the case here) the new theory could
be regarded as falling strictly within the pleadings. The right approach is to ask
whether the appellants preparation for and conduct of the trial would have been
different if new allegations had been clearly made on the pleadings.

In Lloyd v West Midlands Gas Board [1971] 2 All ER 1240 at 1247 Megaw LJ
said:

.. I think that the probability is that if the plaintiffs case as finally presented had
been made clear from the outset, even if only as alternative, the defendants
would have conducted their case differently. Since this was, to a large degree,
not their fault. I think that fairness requires a new trial.

And in Waghorn v George Wimpey & Co Ltd [1970] 1 All ER 474 at 479
Geoffrey Lane J said:

If these allegations had been made on the pleadings in the first place, namely
allegations based on the facts as they have now emerged, would the
defendants conduct of the preparation of the case and of the trial have been
any different? The answer to that is undoubtedly Yes.

It is therefore necessary to consider in what way the appellants case might have
been conducted differently had the first respondents been less specific in their
allegation as to the cause of the fire, or indeed made a different factual
allegation. While it is undoubtedly so that the appellants concentrated their
expert evidence and the thrust of cross-examination on the theory advanced by
the first respondents, it is also clear from the notes and from the judgment under
appeal that alternative causes of the fire were considered and put to various
witnesses. In this sense then the present set of circumstances differ from those
with which the Court was concerned in Lloyd v West Midlands Gas Board and
Waghorn v George Wimpey & Co Ltd. In short, the appellants would have
taken a similar approach to the first respondents case, namely to challenge the
theory and to advance other scenarios. While the appellant submits that the
Judge did not seriously consider a cause of the fire external to the malfunction of
the electric blanket in fact in the course of his judgment he has been quite
specific as to what he termed the most likely and probable scenario being that
the blanket caught fire as the result of an electrical defect in the area of the
control switch ... and that ... the blanket was the cause of the fire ... rejecting
other possibilities such as the possible use by the first respondents of a double
adapter, or that the fire was started as the result of her children playing with
matches.

The alternative issue advanced, namely whether the trial Judge was entitled to
find that the electric blanket caused the fire, faces an insuperable obstacle. It is
the fundamental submission of counsel for the first respondents that, stripped to
its essentials this is an appeal on the facts. As such, provided the Court of first
instance has had the opportunity of seeing and hearing the witnesses and heard
evidence which might support his factual findings, then the decision of the
District Court Judge ought to be upheld. (OCallaghan v Galt [1961] NZLR 673
at 674; Wright v Powles [1982] 1 NZLR 473 at 475). Counsel for the first
respondent emphasised in particular the judgment of the Court of Appeal in
Ebert Construction (Taranaki) Limited v New Plymouth District Council &
New Zealand Mechanical Limited (CA 292/97) in which Thomas J said:

This Court is all too often required to confirm its reluctance to become
embroiled in questions of fact when, in terms of established principle, there is
no tenable ground for doing so. The point was made with some force in this
Courts decision in Rae and Rae v International Insurance Brokers (Nelson
Marlborough Ltd) and Anor, CA 28595, 11 August 1997. Tipping J, delivering
the judgment of the President and himself, emphasised that any tendency or
wish by appellants to engage in a general factual retrial must be firmly resisted.
He reiterated that it was not for this Court to reverse a factual finding unless
compelling grounds were shown for doing so. In a separate concurring
judgment I also stressed the dangers of demonstrating a willingness to explore
a trial Judges findings of fact and paying too little regard to the advantages
which that Judge enjoys in the area of finding fact.

With some humility Thomas J went on to say:

This approach is not unique to this Court. The Privy Council has more than
once reinstated the trial Judges findings of fact after they have been reversed
by this Court. See Clark Boyce v Mouat [1993] 3 NZLR 641 at 647 ... [and]
Rangatira Ltd v Commissioner of Inland Revenue [1997] 1 NZLR 129 at
138-139.

Counsel for the appellant countered with the submission that the present appeal
is concerned with procedure and what course the District Court Judge ought to
have taken when the proposition advanced by the first respondent became
untenable as the evidence unfolded.

Dealing first with the question of the procedure which ought to have been
followed by the District Court Judge, it is of course of note that no appeal has
been made to the ruling that paragraph 10(a) was sufficiently wide to encompass
an allegation that there was a different technical reason arising out of defective
manufacture that caused the fire. That being so, there was no course of action
open to the Judge other than to weigh the evidence and the legal submissions
and deliver a judgment on the substantive issues. This he has done with care,
traversing the evidence in some detail.

Although in the points on appeal the appellant submitted that the first respondent
ought to have elected non-suit or the Judge exercised his powers to non-suit, that
argument was not advanced on appeal. In my view that was appropriate. The
issue of non-suit in these circumstances could only be a diversion from the
central issue.

In addition to the submission that there was insufficient evidence for the finding
that the electric blanket had caused the fire, it was also the appellants contention
that the factual findings were inconsistent. In the passage already quoted the
District Court Judge found:

... the blanket caught fire as the result of an electrical defect in the area of the
control switch. The fire having spread from that point to the top of the blanket
where it was observed by the plaintiff.

In the submission of the appellant, that finding was inconsistent with Ms

Hoskings evidence, accepted by the Judge, that she saw flames coming out
near the head of the bed where the cord went into the electric blanket. The
appellant is at a disadvantage in making this submission. The District Court
Judge heard the evidence of both lay and expert witnesses over a significant
period of time. He was well placed to reach a view on the evidence. This Court
does not enjoy the same opportunity. In any event, the finding in the District
Court specifically refers to the first respondents evidence of where she

10

observed the flames. The appellants submission of inconsistency is therefore

significantly weakened.

In the judgment under appeal the Judge has focused on all of the relevant factual
and legal issues: the appellant has not challenged the findings on the law and I
am unable to discern any error in the determination of the factual issues which is
so significant as to require this Courts intervention. The appeal must therefore
fail.

Costs
Costs in favour of the first respondent are fixed at $5000 with disbursements, if
any, to be fixed by the Registrar.

Counsel for the second respondent appeared on instructions to abide the

Courts ruling. No substantive submissions or formal application for costs were
made. I make no order for costs in favour of the second respondent.