Biffa Waste Services Ltd v Maschinenfabrik Ernst Hese GmbH
| Jurisdiction | England & Wales |
| Judge | Lord Justice Stanley Burnton |
| Judgment Date | 12 November 2008 |
| Neutral Citation | [2008] EWCA Civ 1257 |
| Docket Number | Case No: A1/2008/0422 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 November 2008 |
[2008] EWCA Civ 1257
The President of The Queen's Bench Division
Lord Justice Rimer and
Lord Justice Stanley Burnton
Case No: A1/2008/0422
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QBD, TECHNOLOGY AND CONSTRUCTION COURT
MR JUSTICE RAMSEY
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr David Allen QC (instructed by Ince & Co) for the Appellant
Mr Ben Patten (instructed by Herbert Smith LLP) for the Respondents
Hearing dates : 29, 30 October 2008
Introduction
This is the judgment of the Court, written by Lord Justice Stanley Burnton.
This is an appeal against the order of Ramsey J, sitting in the Technology and Construction Court, made following his judgment given on 11 January 2008, by which he gave judgment for the Claimants against the Second Defendant for damages to be assessed. The appeal concerns the application of two exceptional bases of liability in negligence, namely the vicarious liability for the negligence of an employee of an independent contractor who becomes the defendant's borrowed employee (described in the authorities as its employee pro hac vice (for an occasion)), and the rule that a defendant is liable for the negligence of his independent contractor where the activities of the independent contractor are ultra hazardous. These bases of liability were applied in this case in the context of construction contracts. They are exceptional because the normal rule is that a defendant is vicariously liable in negligence only for the acts of his officers or employees, and is not liable for the acts of the employees of his independent contractor. Ramsey J held that the Second Defendant, to which we shall refer as OT, was liable to the Claimants on both bases. OT contends that it should not have been held liable on either basis.
The facts in summary
There is no challenge to the primary facts found by the judge, and we can take them almost verbatim from his admirably clear judgment.
This case arises from a fire which occurred on 27 June 2004 at a waste recycling plant in Leicester (“the Plant”) which was under construction at the time. The fire broke out in part of the plant known as the Ball Mill. It resulted from welding carried out in the Ball Mill by employees of Vanguard Industrial Ltd, which traded as Pickfords Vanguard and is referred to as “Pickfords”. A spark from the welding ignited combustible material in the Ball Mill.
On 2 May 2003, Biffa Leicester Limited (“Biffa Leicester”) had entered into a PFI contract with Leicester City Council (“LCC”) for the collection, recycling and disposal of Leicester's domestic waste. The PFI contract necessitated the construction of the recycling plant which was located at Bursom (“the Plant”). A key part of the Plant was the Ball Mill. The Ball Mill is, in essence, a large rotating drum which contains steel balls with a total weight of some 50 tonnes.
The operation of the balls is intended to break down the waste into smaller material which can then be separated. Organic material is used for anaerobic digestion and composting at a plant at Wanlip which generates electricity from methane. Paper and plastics are used as a fuel for cement kilns, such fuel being known as “floc”. Inert material is disposed of in landfill.
Biffa Leicester entered into a back-to-back contract on 2 May 2003 (“the Works Agreement”) with an associated company Biffa Waste Services Limited (“Biffa Waste”), by which Biffa Waste effectively undertook to Biffa Leicester to discharge Biffa Leicester's obligations in respect of the construction of the plant.
Biffa Waste then engaged a German company, Maschinenfabrik Ernst Hese GMBH (“MEH”), to design and build the relevant plant under a contract known as the “Design and Build Deed”, also dated 2 May 2003. It contemplated that MEH would sub-contract the supply of the Ball Mill to a Swedish company, Outokumpu Wenmec AB (“OT”). MEH also entered into a warranty dated 2 May 2003 in favour of Biffa Leicester (“the Direct Agreement”).
MEH, in turn, sub-contracted the work to the Fourth Party, an associated company, Hese Umwelt GMBH (“HU”). As main contractors on the site, HU were generally responsible for safety. Mr Manfred Brix was employed by them to act as the “Richtmeister” or Senior Supervisor. He was permanently on site to oversee the construction of the Plant.
On about 12 June 2003, HU entered into a contract with OT to design, supply and install the Ball Mill at the recycling plant. OT employed 4 designers in Oslo and about 4 sales managers in Norway. It designed the Ball Mill, and sub-contracted its manufacture and installation. At no material time were any of its employees on the site of the Plant; indeed, none of them was in this country.
The Ball Mill first ran in March 2004. On 2 April 2004 a Certificate of Practical Completion was issued by Biffa Waste to MEH relating to both Bursom and Wanlip. The Ball Mill was then ready for commissioning tests. Early tests indicated that modifications had to be made to the Ball Mill to increase throughput. These modifications included work to the fixing arrangements to the grates in the Ball Mill by replacing lifter bars with clamping bars.
After some of the modifications had been carried out, further works (“The Welding and Grinding Works”) were necessary to repair and protect fastening bolts to clamping bars to the grate. This work was performed by personnel from Pickfords in the last week of June 2004, and in particular on 26 and 27 June. During the course of a tea break on 27 June 2004 a fire broke out, causing substantial damage to the Ball Mill and to other parts of the Plant.
Biffa Waste and Biffa Leicester, to whom we shall refer to as “Biffa”, (it being unnecessary for the purposes of this appeal to distinguish between them) brought these proceedings against MEH and OT to recover losses suffered as a result of the delay to the operation of the plant caused by the fire. The reinstatement costs have been recovered from an insurance policy taken out by LCC under the PFI Contract which covered the loss. Pickfords took no part in the proceedings. HU admitted liability to indemnify MEH in respect of any liability to Biffa. Both Pickfords and HU are insolvent.
The Welding and Grinding Works
During warm commissioning of the plant at Bursom it had became apparent that the Ball Mill was not achieving the required throughput of material. At a meeting between HU and OT in Gelsenkirchen, Germany on 27 April 2004 modifications were agreed in an attempt to increase the throughput. These modifications included modifications to alter the “lifters” on the grates.
On 30 April 2004 Mr Nygren of OT sent Mr Groeble of HU an email attaching two drawings of the new lifter bars which showed the proposal for the existing bars to be removed and new clamping bars to be substituted. The new clamping bars were to be recessed into a rebate in the face of the gate. The bolts which had fixed the existing lifter bars protruded some 70 to 90 mm above the face of the grate and the drawing showed that these bolt heads were to be cut off. The bolts were then to be welded to the underside of the clamping bar. Later on 30 April 2004 Mr Nygren also sent an email attaching an alternative design.
On 30 April 2004 Mr Nygren also contacted Mr Colin Shore of Pickfords asking whether he could supply the clamping bars shown on the drawing. Pickfords had already been working on the site for some months as sub-contractors to HU.
On 3 May 2004 Mr Groeble of HU said that he accepted Mr Nygren's original proposal of 30 April 2004, rather than the alternative and in his email to Mr Nygren of OT said: “As you are aware, the responsibility of this rebuilding stays in your hand because you are the ball mill experts and suppliers.”
Mr Groeble then prepared a document with the title “Method Statement for works inside of the Ball Mill” dated 3 May 2004 which set out the scope of the works, contained a Risk Assessment for works inside the Ball Mill and a “Briefing Confirmation” to which we shall refer below. It identified the known hazards of those works as sparks, heat and smoke, and it listed the relevant equipment on site. Section 4 was the risk assessment for those works. It stated:
“4 Risk Assessment for works inside of the ball mill
4.1 Grinding and Disc Cutting
Hazard: Fire starting as a result of grinding operations. Flying debris and sparks. Electric shock.
Risk: Medium
At risk: All site personnel and visitors
Action: The work area will be kept free from flammable or combustible materials including oil and greases. An adequate number of appropriate fire extinguishers will be sited adjacent to all hot work areas. Fire extinguishers will be checked prior to the commencement of grinding operations, to ensure they are full and the seal is intact. The ball mill will be vented by the exhaust air system. Only trained competent personnel will change grinding discs. The working place will be monitored 1 hour after finish after hot works. Operators will be provided and will wear Personnel Protective Equipment i.e., protection and dust mask, protective gloves etc.
4.2 Welding
Hazard: Fire starting as a result of welding. Flying sparks. Electric shock. Smoke.
Risk: Medium
At risk: All site personnel and...
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