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University University of Auckland (UOA)
Subject LAW131: Legal Method

The following facts have been obtained from our client, Dynamo, and I seek your legal opinion as to the likely outcome if the actions they are concerned about under the Rylands v Fletcher and Donoghue v Stevenson lines of cases went to court.

Dynamo is an inventor. Recently he has been working on a new cellular implant so that the new generation of iPhones can be operated directly from a microchip implanted into a person’s ear.

The Federal Bureau of Investigation (FBI) in the United States has contacted Dynamo and wants to trial some prototypes of the cellular implants. The device would allow FBI agents to communicate with each other instantaneously while keeping both their hands free. This will be a significant advantage when FBI agents carry out operations that require them to carry weapons in both hands. The contract between Dynamo and the FBI is so top secret that not even Jacinda Ardern and the New Zealand Government know about it.

Dynamo is working in an old workshop at the Auckland International Airport, pretending he is running a rental car repair business called Speedy-Fix. Eagle Ears (a company specializing in manufacturing hearing aids) are the suppliers of the microchip that forms part of Dynamo’s cellular implant. Eagle Ears do not know why Dynamo wants the microchips — they think Dynamo will be using them somehow in his rental car business.

Microchips are not inherently dangerous, but they can become dangerous if they are not fully developed and tested. Both Eagle Ears and Dynamo know that microchips can become dangerous if not fully developed and tested.By mistake, though, Eagle Ears supplied microchips to Dynamo without thoroughly testing them. The delivery invoice that accompanies all Eagle Ears products has the following warning printed on it in bold lettering:

“VERY IMPORTANT: When you receive any products from Eagle Ears, please check it is what you ordered and is not damaged in any way before signing the delivery receipt.”

Dynamo had never had problems in the past with Eagle Ears, so he personally did not check the microchips. The microchips were not damaged but were faulty. Dynamo asked one of his employees to check the microchips for damage; however, she was very busy at the time so she only did a brief check and did not find any damage. A proper check to find the actual fault would have been a lengthy and sophisticated process.

When Dynamo began trialing the cellular implants, the radio waves sent out from the faulty microchips caused significant interference with plane instruments at Auckland International Airport. Six planes had to make emergency crash landings, which caused major damage to the planes and injuries to passengers. On the day in question, there were high winds (albeit not uncommon at Auckland Airport) that made it even more difficult for the planes to land.

Air New Zealand discovered that the reason for the crashes was Dynamo’s cellular implants. The damage to the planes is estimated at $35 million. There has also been a 65% reduction in people flying in the last three weeks because of the crashes, which has cost Air New Zealand a further $6 million.

Dynamo seeks our advice. Air New Zealand has brought an action against Dynamo under the principle in Rylands v Fletcher for these damages.

Dynamo wants to defend the Rylands v Fletcher claim and bring in Eagle Ears as a negligent third party under the principle in Donoghue v Stevenson, by not fully testing the microchips and discovering the fault before supplying them to Dynamo.

Writeawell-reasoned legal opinion for the senior partner of your firm that analyses the key issues and comes to justified conclusions as to the likely outcomes.

In order to write your opinion, you are asked to rely on and ONLY USE the following cases that are in your course materials:

Rylands v Fletcher CM 73
Read v Lyons CM 76
RickardsvLothianCM79

CambridgeWaterCompanyvEasternCountiesLeathersCM88

HamiltonvPapakuraDistrictCouncilCM97

Nottingham Forest Trustee Ltd v Unison Networks Ltd CM 100

DonoghuevStevensonCM103

GrantvAustralianKnittingMillsCM108

JullvWilson&HortonLimitedCM118

BowenvParamountBuildersLimitedCM123

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