Liability and the risks of supply chain

Recent news stories in the UK have once again raised concerns over large supply chains and food safety standards. In June, it was reported that traces of listeria bacterium were discovered in pre-packaged sandwiches at eight different NHS hospitals around the country. As a result, several patients suffered listeriosis illness and the outbreak was responsible for the unfortunate deaths of five people.

The BBC reported that the food service company responsible for the outbreak had a distribution network to 43 different NHS Trusts alone. Following the incident, the Health Secretary, Matt Hancock, ordered an immediate review with some newspapers and social media posts campaigning for the return to localised in-house catering production.

The commercial pressures faced by private enterprise and public organisations has led to ever increasing numbers of outsourced services, centralised production and lengthening supply chains of both raw ingredients and prepared food goods. A company may prepare snacks and meals for dozens of retailers and thousands of stores from a single location, or a vendor may source their entire stock of a specific ingredient from a preferred single supplier. Whilst the cost/benefit of such practice remains favourable to profit margins, the associated risk of a single point of failure can cause catastrophic effects country-wide. This can be demonstrated in incidents such as the infamous ‘horse meat scandal’ of 2013 which affected not only hospital catering but hotel chains, schools, public houses and thousands of retail outlets.

Non-compliance with legislation regulating food safety can lead to both criminal and civil liability. EU Regulation 178/2002, which sets out the general principles of food safety law, is primarily enforced in England by the Food Safety and Hygiene (England) Regulations 2013. In summary, all food business operators (“FBOs”) have a duty to ensure: (a) food safety and hygiene (i.e. food must be fit for human consumption and not injurious to health); and (b) that communication about food must be accurate (not false or misleading). Failure to comply with such principles (i.e. by placing food which is unsafe and injurious to health on the market) is an offence, which is punishable by an unlimited fine. Pursuant to the new sentencing guidelines for food safety and hygiene offences (effective in England and Wales since February 2016), such fines can be significant.

In the event that the incident arose as a result of an issue with the external supply chain, the FBO may seek to rely on the due diligence defence. In order to use this defence, the FBO must “prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence by himself or by a person under his control”. Whether an FBO can successfully argue that it has taken all reasonable precautions and exercised all due diligence is primarily a question of fact.

The regulator may also pursue others in the supply chain, and the FBO may consider whether there is any scope to bring in a co-defendant. The Regulations provide that where the commission by any person of an offence under the Regulations is due to an act or default of some other person, that other person shall be guilty of the offence; and a person may be convicted of the offence whether or not proceedings are taken against the first-mentioned person.

Where an offence for breaching food safety requirements has been alleged, if the FBO neither prepared the food or imported the food into the UK, it can establish the defence if it can show that:

1. the commission of the offence was due to an act or default of another person who was not under its control or to reliance on information supplied by such a person;
2. it carried out all such checks as were reasonable in the circumstances; or
3. it was reasonable to rely on the checks of the person who supplied the food to him; and
4. it did not know and had no reason to suspect (at the time the offence was committed) that the act or omission would amount to an offence.

Claimants seeking redress as a result of food related illness may try to bring claims for personal injury and/or breach of contract claims over the supply or retailing of defective product. The Consumer Rights Act 2015 provides an implied condition that goods supplied under the contract are of “satisfactory quality” which is enforced by ss.19 - 24 of the Act, which set out consumer rights and remedies against traders (meaning a person acting for purposes relating to that person's trade, business, craft or profession, whether acting personally or through another person acting in the trader's name or on the trader's behalf) in breach of the implied term. Whilst on the face of it, these provisions appear to create strict liability against a defendant, the burden of proof is with the claimant who not only has to demonstrate that there has been a breach of the Act, but also establish that there was a causal link between the products consumed and the illness suffered.

Defences can be raised where a claimant shows inconsistencies in the time frame between consumption and illness or where there are contradictions with their medical evidence. This can include: raising challenges and placing the claimant to strict proof as to other food/drink consumed within the same time period; evidence of medical attention sought/medication taken as a direct result of the illness; consideration of the relevant ‘incubation period’ and whether it matches the alleged infection suffered; and seeking specific details of the symptoms suffered during the alleged illness.

When attempting to re-direct a claim or introduce a co-defendant, further evidence will be required from a defendant to demonstrate that the source of the claimant’s illness was from the product of the alternative supplier. Defences can be strengthened where it is demonstrated that a company has a robust system of control, inspection and documentation to show their correct handling, storage, transportation and sourcing of their supplier goods.

With the ever increasing number of gastric illness related claims being pursued by claimants and the ever increasing number of global supply chains, it is important for companies to robustly monitor their own, and their suppliers’ operations to ensure compliance with local laws and standards. This can include undertaking sufficient risk assessments to cover even the most minimal safety concerns, consideration of the reasonable expectations of a consumer that a product is safe, and the keeping of records of any inspections and follow-ups. Failure to do so may not only lead to adverse impacts on company’s bottom line and insurance costs, but also to its brand image, and ultimately to criminal sanctions being brought against the business or responsible directors.