October 25 2012
On April 24 2012 the Schleswig-Holstein Higher Regional Court(1) held that no prima facie evidence existed to prove that defects in the electrical system of a vehicle with 25,000 kilometres (km) on the odometer were attributable to the manufacturer, and that such defects were present when the vehicle was put on sale.
A complaint was brought in the Kiel District Court by the car owner's insurance company seeking redress for damage resulting from a fire in an Opel Astra. The vehicle was less than one year old at the time of the fire and had an odometer reading of 25,000km. The vehicle had been parked for approximately 30 minutes before the fire broke out.
An expert retained by the plaintiff concluded that the fire was caused by a faulty connection point between two cables.
The court-appointed expert reached a different conclusion during the first instance proceedings. The expert did not follow the analysis of the plaintiff's expert with regard to the alleged origin of the fire, although he did conclude that an electrical fault had caused the fire. Relying on photographs taken by the plaintiff's expert, the court-appointed expert was able to localise what he considered to be three main burn points located in the vehicle's engine compartment. These burn concentrations were all attributed to the vehicle's electrical system. Apart from the area around the starter, there were additional, enhanced areas of burn in the vicinity of the battery and blower motor. The court-appointed expert could not determine which of the three components ultimately caused the fire. The expert was able to rule out both arson and overheating as possible causes.
No actual inspection of the vehicle had been conducted, as the car was no longer in the policy holder's possession.
The plaintiff was successful in the first instance proceedings and was awarded damages by the Kiel District Court based on manufacturer liability (fault-based liability) pursuant to Section 823(1) of the Civil Code. The district court disallowed the plaintiff's claims based on the Product Liability Law (strict liability), as the vehicle had been used during the course of the policy holder's business.
On appeal, the Schleswig-Holstein Higher Regional Court examined the district court's decision that a defect in the electrical system had caused the fire. The court observed that despite the fact that the court-appointed expert in the first instance proceedings could not determine a concrete cause (due to the unavailability of the vehicle), this did not render the district court's conclusions either incorrect or incomplete.
However, this notwithstanding, the appellate court's legal appraisal of the factual basis was contrary to that of the district court in respect to several points.
The appellate court ruled that the plaintiff was unable to recover on the basis of fault-based liability.
After considering the evidence from the first instance proceedings, the appellate court was highly sceptical as to whether the identified product defect could be ascribed to the defendant and whether the defect existed at the time that the vehicle was placed on the market for sale.
The district court had held that since an electrical defect was determined to exist in the vehicle, this defect was necessarily attributable to the defendant. The appellate court found this reasoning to be flawed.
According to the rationale of the appellate court, the cause of the fire could not be ascribed to the manufacturer with the requisite certainty required by law.
After the conclusion of the evidence proceedings, the only undisputed point for the appellate court was that an electrical fault in one of the three components identified by the court-appointed expert had caused the fire. However, that expert could not determine whether the fault was the result of a production defect, a defect in design or whether another cause existed. On account of the remaining ambiguity at the close of the evidence procedure, the appellate court considered the burden of proof to be on the plaintiff. The appellate court refused to reverse the burden of proof (eg, that a product defect existed in the manufacturer's area of responsibility).
The district court's conclusion – that every fault in the electrical system was prima facie attributable to the manufacturer – was held by the appellate court to represent a violation of Section 286 of the Code of Civil Procedure. The appellate court held there was no prima facie evidence to prove that defects in a vehicle's electrical system could always be attributed to either a manufacturing or design defect. The fact that a vehicle catches fire after being parked for a short period could not be used as prima facie evidence for the same proposition.
Furthermore, the appellate court held against the existence of such prima facie evidence because even though the vehicle was less than a year old, it already had an odometer reading of approximately 25,000km before it caught fire. Given this background, the court could not rule out that some sort of work had been carried out in the vehicle's engine compartment at some time before the fire. The court could also not rule out that either intentional or unintentional modifications had been made to the vehicle's electrical system. Thus, the use of such prima facie evidence, as contemplated by the district court, was improper.
In this context, the appellate court considered the Verden(2) and Bielefeld(3) decisions, both addressing vehicle fires, which were submitted by the plaintiff. For the appellate court, the underlying facts in those decisions were inapposite to the facts of this case.
Furthermore, the appellate court could not determine that the defect in the vehicle's electric system had existed at the time that the vehicle was put on sale. It rejected the district court's opinion that the evidence (a vehicle fire breaks out in a relatively new vehicle a mere 30 minutes after being parked) implied the existence of an electrical defect at the time that the vehicle was placed on the market.
The appellate court questioned whether the district court had correctly applied its own rule regarding prima facie evidence to the facts of the case.
The appellate court observed that the elements outlined by the district court for applying said prima facie evidence had not been present. The vehicle was nine months old and had approximately 25,000km on the odometer at the time of the fire. This represents more than the average mileage of a passenger car for two years. The appellate court found the district court's classification of the vehicle as a 'new' vehicle to be incorrect.
The Schleswig-Holstein Court's decision has been welcomed. Whereas the first instance decision would have led to an overflow of manufacturer liability on the basis of premature prima facie evidence, the appellate court decision rightfully points out the legally defined boundaries.
Given this decision, plaintiffs should be careful in preserving the entire body of evidence and not merely limit their reliance on the report of a private expert.
For further information on this topic please contact Michael Hixson or Daniel Schulz at CBM International Lawyers LLP by telephone (+49 7031 439 9600), fax (+49 7031 439 9602) or email (email@example.com or firstname.lastname@example.org).
ILO provides online commentaries as specialist Legal Newsletters. Written in collaboration with over 500 of the world's leading experts and covering more than 100 jurisdictions, it delivers individually requested information via email to an influential global audience of law firm partners and international corporate counsel. Please click here to register for the service.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription. Register at www.iloinfo.com.