Country:

Germany

Court:

OLG München, 21 June 2002, Az: 21 U 4952/01 (This case note is based on my article in the 11 (2003) European Product Liability Review).

Topics:

Proof of defect; defect at time of circulation

Articles:

Art. 6, 7 (b) PLD

§§ 1 II Nr 2; 3 PLA

Facts:

The claimant, an insurer, sought redress from a producer of tumble dryers. In September 1992, the claimant's insured bought one of the defendant's tumble dryers. On 13 October 1999, the tumble dryer caught fire and set alight the insured's house. The claimant paid for the damage. The expert witness in the case said the fire originated either inside the control unit of the tumble dryer or near the junction. The cause of the fire had therefore been a loose connection in the dryer or flawed isolation of its wires.

The claimant averred that, given the expert's opinion, the tumble dryer was defective under the Product Liability Act. The defendant argued that it was virtually impossible that the tumble dryer contained a defect, as it exercised strict quality controls which included manual checks by its mechanics. One of its mechanics indeed testified to this.

The Court of first instance dismissed the claim. Taking into account that the tumble dryer had been in use for seven years, it held that if it was defective, it must be assumed that the defect came into being after the tumble dryer had been put into circulation, and was the result of wear and tear.

The claimant appealed, arguing that the defendant had not shown that the defect was not present at the time of circulation. If, however, wear and tear of the tumble dryer was the cause of the defect, then the producer should have warned against dangers relating to deterioration of the tumble dryer.

Legal issues:

1. Is the fact that a tumble dryer catches fire 7 years after it had been purchased indicative of the fact that any possible defect came into existence post-marketing?

2. Deterioration of a product and proof of defect at time of marketing.

Decision:

1. The Court of Appeal dismissed the appeal, holding that even if the fire was caused by a defect in the tumble dryer, it was likely that the defect was not present at the time when the tumble dryer had been put into circulation. The defendant could therefore rely on the defence under article 7(b) of the Directive (or rather its equivalent under the German Product Liability Act). The Court of Appeal initially held that to rely on the defence, the producer only needed to prove that it was "plausible" that the defect came into being after the product had been put into circulation. However, the Court later stated that the likelihood required was actually a "high probability", which, the Court held, the defendant had met in this instance.

The Court of Appeal confirmed that the length of time during which the product had been in circulation was important. After seven years in use, it was indeed very unlikely that the dryer had a loose connection or a flawed isolation, given that the product had performed without any problems for that whole period.

What finally convinced the Court of the fact that the defect came into being post-marketing was that the defendant had also exercised strict quality controls. Every single tumble dryer had been checked manually by one of the mechanics before it left the factory.

2. The Court of Appeal then considered whether the capacity of the tumble dryer to deteriorate could constitute a defect. The Court of Appeal concluded that there were simply no signs of deterioration (OLG Koblenz, 24 June 1999 - 5 U 166/98, MDR 2000 p30 f.). Thus, the claim had to be dismissed.

Comment

Determining whether the product was defective in the first place or became defective after it was put into circulation, for example, because it was tampered with, is a matter of evidence. Article 7(b) describes the standard of proof which the defendant has to meet in order to escape liability, namely that it is "probable" that the defect came into being after circulation. This may not make a great deal of difference in a common law jurisdiction where the standard of proof only requires that facts have to be established on a "balance of probabilities", but it makes a substantial difference in countries like Germany where proving a fact usually requires that the court be fully convinced.

The case bears some resemblance to a decision of the Koblenz Court of Appeal of 24 June 1999, which had a different outcome (However, the court did not explain what evidence supported this conclusion). In that case, a washing machine had caught fire after only six months in use and had set alight the consumer's house. A technical defect in the washing machine had been the likely cause of the fire. The Court held that in that case, considering the short time of use, the defect must have been present at the time the product was put into circulation, and that it was irrelevant that the producer had exercised quality controls. Consideration of such issues, the Court said, would be contrary to the concept of strict liability as set out in the Product Liability Directive.

The period of time for which the washing machine and the tumble dryer had been in use was of course different in the recent case. However, on the question of whether quality controls are relevant to determining whether the defect came into being after the product was put into circulation, the Munich Court's decision would seem to be correct. Quality controls are a relevant factor to determine whether a product was defective at the time of circulation. Quality controls alone can obviously not suffice to prove that the product became defective after it had left the factory; however, there is no doubt that quality controls reduce the possibility of manufacturing defects. That is their purpose. Together with other factors (time, the nature and handling of the product, exposure to detrimental circumstances, storage etc), the existence of objective quality controls is therefore a significant factor to be taken into account when considering the defence under Article 7(b).

Perhaps questionable, however, is the Munich Court of Appeal's interpretation of the defence as requiring that there be a "high probability" that the defect came into being post-marketing. This is not the language contained in the German Product Liability Act, or indeed the Directive. The most sensible interpretation, having regard to the three official languages of the Directive (English ("if it is probable"), French ("il y a lieu d'estimer") and German ("wenn anzunehmen ist") would appear to set a standard of "more likely than not". There is also no reason why a German producer should find it more difficult to raise this defence than his counterparts in the UK, France or elsewhere in the EU.

Stefan Lenze