BVHB was a joint venture company set up by BVI and HOOL to buy a drilling rig and operate it off the Newfoundland coast. The rig was built by SJSL for BVHB and incorporated pipe cladding manufactured by Raychem. BVI and HOOL agreed to lease the rig from BVHB; the lease included a term that a reduced rate of hire was payable to BVHB during any period when the rig was out of commission. While drilling for oil, BVHB failed to instal a proper circuit-breaker on the de-icing system attached to the water piping. A fault developed, current continued to flow, an electrical arc ensued, and the pipe cladding caught fire. A great deal of electrical equipment was disabled, and as a result the rig was out of action for some months.

Raychem and SJSL were sued by BVI and HOOL for the hire they had had to pay for an incapacitated rig (plus miscellaneous consequential losses), and also by BVHB for the costs of repair and for the balance of hire that they would otherwise have received from BVI and HOOL. The basis of the action was negligence,2 in particular failure to warn of the flammability of the cladding. The claim against SJSL failed because of the terms of the contract of supply, and nothing more need be said about it. This left three substantial issues before the Supreme Court in respect of Raychem: the extent of Raychem’s duty to warn, the rights of BVI and HOOL to claim in tort, and the effect of BVHB’s contributory negligence on any recovery. In the event, Raychem were held liable to BVHB but not to BVI or HOOL, subject to a reduction of 60% in respect of BVHB’s contributory negligence.3