Apple attempted to silence a father and daughter with a gagging order after the child’s iPod music player exploded and the family sought a refund from the company.

The Times has learnt that the company would offer the family a full refund only if they were willing to sign a settlement form. The proposed agreement left them open to legal action if they ever disclosed the terms of the settlement.

The case echoes previous circumstances in which Apple attempted to hush up incidents when its devices overheated.

Ken Stanborough, 47, from Liverpool, dropped his 11-year-old daughter Ellie’s iPod Touch last month. “It made a hissing noise,” he said. “I could feel it getting hotter in my hand, and I thought I could see vapour”. Mr Stanborough said he threw the device out of his back door, where “within 30 seconds there was a pop, a big puff of smoke and it went 10ft in the air”.

Mr Stanborough contacted Apple and Argos, where he had bought the device for £162. After being passed around several departments, he spoke to an Apple executive on the telephone. As a result of the conversation, Apple sent a letter to Mr Stanborough denying liability but offering a refund.

The letter also stated that, in accepting the money, Mr Stanborough was to “agree that you will keep the terms and existence of this settlement agreement completely confidential”, and that any breach of confidentiality “may result in Apple seeking injunctive relief, damages and legal costs against the defaulting persons or parties”.

“I thought it was a very disturbing letter,” said Mr Stanborough, who is self-employed and works in electronic security. He refused to sign it.

“They’re putting a life sentence on myself, my daughter and Ellie’s mum, not to say anything to anyone. If we inadvertently did say anything, no matter what, they would take litigation against us. I thought that was absolutely appalling.

“We didn’t ask for compensation, we just asked for our money back,” he added.

Last week it emerged that Apple had tried to keep a number of cases where its iPod digital music players had started to smoke, burst into flames and even burned their owners, out of the public eye.

An American reporter obtained 800 pages of documentation on the cases from the Consumer Product Safety Commission (CPSC) following a Freedom of Information Act request in that country. However, she was unable to get hold of the documents for months after “Apple’s lawyers filed exemption after exemption”.

In those cases, CPSC investigators suggested that the iPods’ lithium ion batteries could be the source of the problem.

In 2006 Apple and Dell recalled millions of lithium ion batteries because of overheating problems in laptop computers causing fires — some of the biggest consumer electronics recalls in history. As of September last year, 173,000,000 iPods have been sold worldwide.

A number of bloggers have reported cases where iPods have exploded — usually involving older versions of the digital music players. Last year the Japanese Government warned that iPod Nanos presented a potential fire risk, saying there had been 14 cases in the country where the players had caught alight, with two people suffering minor burns.

In March, a mother in Ohio began court proceedings against Apple, after her son’s iPod Touch allegedly exploded in his pocket, burning his leg.

An Apple spokesman said that, as the company had not looked at the Stanboroughs’ damaged iPod, it could not comment. Argos also refused to comment.

The Trading Standards Institute said that it could not comment on whether such letters were standard across the industry, but that it could understand that Apple would want to protect its reputation by trying to reach a confidential settlement.

Money Central: 50 reasons not to buy an iPhone

Explore Personal Tech

• InGear