Icl Tech Limited V. Johnston Oils Limited
| Jurisdiction | Scotland |
| Judge | Lord Hodge |
| Neutral Citation | [2013] CSOH 159 |
| Court | Court of Session |
| Published date | 25 September 2013 |
| Year | 2013 |
| Date | 25 September 2013 |
| Docket Number | CA65/11 |
| OUTER HOUSE, COURT OF SESSION | |
| [2013] CSOH 159 | |
| CA65/11 | OPINION OF LORD HODGE in the cause ICL TECH LIMITED, ICL PLASTICS LIMITED AND STOCKLINE PLASTICS LIMITED Pursuers; against JOHNSTON OILS LIMITED Defender: ________________ |
Pursuer: Dean of Faculty, Ms Springham; HBM Sayers
Defender: Gray QC, Pugh: Simpson & Marwick LLP
25 September 2013
[1] On 11 May 2004 at about noon an explosion occurred at Grovepark Mills, Maryhill, Glasgow ("the premises"). It killed nine people. Forty-five people were seriously injured or exposed to the risk of serious injury or death. Lord Gill chaired a public inquiry into the incident in 2008. Injured people and relatives of the deceased ("the injured parties") sued the pursuers and recovered damages from them. The pursuers now seek a contribution from the defender ("JO") under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 on the basis that JO would have been found liable in damages to the injured parties if they had sued it.
[2] This action is a claim to recover a contribution towards the damages of £191,451.88 and expenses of £23,370 which the pursuers paid to Mr Archibald Lindsay, who was seriously injured by the explosion. Parties have agreed that this is a test case for the other actions in which the pursuers seek a contribution from JO.
[3] The second pursuer ("IPL") has owned the premises since 1969. All three pursuers operated a business from the premises on the day of the explosion.
[4] There is no dispute as to the cause of the explosion. There was an oven in the coating shop of the premises which was fired by liquid petroleum gas ("LPG") in its vaporised form. The LPG was stored in a tank in the yard of the premises. The steel pipe which carried the gas from the tank to the premises was buried underground. It entered the premises in an unventilated basement area, where it crossed the area before rising to the ceiling of the ground floor and descending to the oven. The steel pipe, which was galvanised, was not protected by tape or any other protective covering. The backfill around the pipe comprised unsuitable material which created an aggressive environment that may have contributed to the corrosion of the pipe. Corrosion of, leading to a crack in, a bend in the pipe, which was not galvanised, caused a leak of LPG. The gas tracked within the ground along the outside of the pipe towards the premises. Because the pipe had not been sleeved and the hole where the pipe entered the premises had not been sealed, the gas accumulated in the basement area. The LPG mixed with the air to form a flammable gas/air mixture. It ignited and the resulting explosion caused part of the premises to collapse.
[5] Counsel did not make any significant challenge to the credibility or reliability of any of the factual witnesses. Where there were inconsistencies between the evidence which a witness gave to the ICL inquiry and his evidence to me, the Dean of Faculty invited me to prefer the former which was closer in time to the events in question. He also suggested that some witnesses' focus was skewed by their perception that their contractual arrangements, which limited the responsibility of the supplier, restricted their duties under the general law. I have borne those criticisms in mind in my assessment of the evidence.
[6] Between February 1998 and the date of the explosion JO provided LPG to the pursuers. In their written pleadings the pursuers asserted that JO had been in breach of its duties under the Dangerous Substances and Explosive Atmospheres Regulations 2002. But, at the end of the proof, the Dean of Faculty did not argue any breach of statutory duty. Accordingly, the only basis on which JO would be liable in contribution is if it were in breach of its common law duty of care to the injured parties.
Factual background
(i) The nature of LPG
[7] There was no disagreement between the expert witnesses, Dr Cox and Mr Sylvester-Evans, and the factual witnesses: LPG is a hazardous substance. Once vaporised, the gas is 1.5 to 2 times heavier than air. It therefore accumulates at low points. It is flammable when mixed with air in concentrations of between 2% and 10%. This was well known within the LPG supply industry at all material times. Operators within that industry also knew that pipework was susceptible to corrosion, particularly when located underground, and needed to be protected by a coating or wrapped in a suitable material such as wax or tar/bitumen impregnated tape wrapping ("Denso tape"). It was also well known within that industry that suitable backfill material should be used around an underground pipe in order to protect it from damage.
(ii) The industrial practices of LPG suppliers
[8] Companies in the Calor group of companies ("Calor") were the largest suppliers in the LPG market at all material times. They were exposed to competition from other suppliers. But the commercial practices of and responsibilities undertaken by the various suppliers in the market to commercial users of LPG were similar. In particular, the supplier of LPG to a commercial customer would frequently provide its own LPG storage tank. It would retain ownership of that tank and the pipework in the immediate vicinity of the tank up to the first stage regulator. The regulator controlled the pressure of the LPG and by reducing the pressure allowed the LPG to vaporise. Some suppliers owned the pipework up to the second stage regulator. But it was a general practice in the LPG supply industry for the customer to own and be responsible for the pipework and the rest of the gas supply system beyond the relevant regulator. The suppliers took responsibility for the tank and the pipework to the regulator. It was general practice for the supplier to inspect the tank and the pipe up to the first stage regulator annually.
[9] I discuss in more detail in paragraphs [42] to [49] below the safety tests which suppliers undertook when they installed their equipment or otherwise interfered with the gas supply system. In brief, they carried out a pressure test of the system to ascertain if there was a leak in the pipe. This involved closing a valve, which was usually located at the outside of the customer's building, releasing gas from the tank into the pipe at a high pressure and monitoring whether the pressure fell. A fall in pressure would indicate a leak in the system. If the supplier discovered a leak in the pipework which was not in its ownership it would switch off the supply and advise the customer. It was also standard practice for the supplier to test the valves and fittings within its ownership by applying a leak detection fluid (which some witnesses described as a soapy liquid) and observing whether there were any leaks. It was also practice for suppliers to carry out such pressure tests when inspecting their tanks every ten years.
[10] The limitations of such tests are obvious. They could demonstrate the integrity of pipe system only at the time it was tested. They did not disclose the condition of the pipework which was not inspected or which was not visible. They did disclose corrosion of such pipework and the possibility of a future or imminent leak.
[11] It was not the practice of suppliers to give their commercial customers advice on the maintenance of the pipework and gas supply system which the customers owned. The central issue in this case is whether the common law duty of care of such suppliers, and in particular JO, for the safety of people in the vicinity of the gas supply system imposed on the suppliers duties to inquire about the condition of the customer's pipework and to give unsolicited advice to the customer to investigate and maintain it.
The installation of the LPG tank and the supply of LPG by Calor
[12] In 1969 IPL entered into a contract with Calor for the bulk supply of LPG to its premises and the hire of a bulk storage tank. IPL employed contractors to install the pipework. The pipe was not protected by a Denso tape wrapping and the materials placed around the pipe were not suitable. The buried pipework was exposed to an aggressive environment which contributed to its corrosion. In 1973 the pursuers raised the ground level of the yard. As a result thereafter the pipe, which had surfaced close to the factory wall to enter the premises above ground through a bricked up window, remained below ground until it entered the building.
[13] The pipe entered the premises through a hole in the wall. The pipe was not sleeved where it passed through the wall and the hole was not sealed around the pipe. Initially the pipe passed through an open pit area. In about 1980 the pursuers extended the ground floor by installing a steel plate floor over the pit area, creating a new basement room. The basement room was not ventilated. It was initially used as a workshop and to store papers in a strong-room. Later it was used to store equipment. There was a safety valve on the pipe on the inside of the wall, where it entered the basement. For some years the pursuers' practice was to isolate the LPG supply at the end of a day shift by switching off this valve. Later they avoided going into the basement and isolated the gas supply by switching off the valve above the pressure regulator adjacent to the gas tank in the yard.
(iii) The safety record of the Pursuers
[14] There was evidence that the pursuers had had a poor record of compliance with the requirements of the Health and Safety Executive ("HSE"). There was historical evidence of concerns recorded by HSE inspectors about fire risks in 1972 and 1973. HSE served an improvement notice in 1975. On a follow-up inspection to check compliance in 1976 the inspector found an unsatisfactory response. This resulted in a prohibition notice. There was also evidence of instances of unsafe practices thereafter. These events however have little bearing on the events with which this case is...
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