Kingspan Environmental Ltd and Others v Borealis A/s and Another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 01 May 2012 |
| Neutral Citation | [2012] EWHC 1147 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2009 FOLIO 871 |
| Date | 01 May 2012 |
[2012] EWHC 1147 (Comm)
Mr Justice Christopher Clarke
Case No: 2009 FOLIO 871
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justin Fenwick QC, Ben Elkington, Brendan McGurk and Katie Powell (instructed by Arthur Cox) for the Claimants
Mr David Allen QC, James Brocklebank, Sushma Ananda and Elizabeth Lindesay (instructed by Kennedys) for the Defendants
Hearing dates: May 9th, 12th, 13th, 16th, 17th, 18th, 19th, 20th, 23rd, 24th, 25th, 26th, 27th; June 7th, 8th, 9th, 10th, 13th, 14th, 15, 16, 17th, 21st, 22nd, 23rd, 24th, 27th, 28th, 29th, 30th; July 4th, 5th, 6th, 7th, 8th, 11th, 12th, 13th, 14th, 15th, 19th 20th, 21st, 22nd, 25th, 27th, 28th and 29th 2011
| Section | Paragraphs |
| Introduction | 1–7 |
| The Parties | 8–20 |
| Polyethylene, irradiance and related terms, concepts and standards | 21–161 |
| The Structure of this Judgment | 162–163 |
| The Representations Relied on | 164–168 |
| History | 169–412 |
| The Claim in Misrepresentation | 413–516 |
| The Contractual Arrangements | 517–669 |
| Breach | 670–882 |
| Kingspan's Conduct and Alleged Failings | 883–972 |
| Conclusions | 973–1048 |
| Appendices | Appendices |
Introduction
1. In this action the claimant companies claim damages of the order of £ 40 million, originally put at around £ 100 million, in respect of the supply to them by the defendants of a polymer known as Borecene. The claimants used Borecene as the raw material with which to rotomould static tanks to hold bulk liquids, in particular kerosene. The tanks come in five basic styles—Bunded, Horizontal, Rectangular (Slimline), Low Profile and Vertical—with different designs in each style. A bunded tank is a single skin tank housed in an outer tank to prevent leakage into the ground.
2. A substantial proportion of the oil tanks manufactured from Borecene supplied to the claimants in 2002–3 have failed. From late 2003 onwards complaints began to come in that oil tanks made from Borecene were cracking (a few had begun to deform) and leaking. These failures were in much greater numbers and at a higher rate than had been the case in respect of the type of resin previously used.
3. The claimants contend that the failures of their tanks made from Borecene are the consequence of breaches of the contracts for the sale of that product to them, and that their losses are also attributable to misrepresentations which were made to them about its characteristics. In essence they say that the Borecene supplied was not fit for the purpose of making static oil tanks because it had inadequate resistance to ultra violet light (“UV”) either because of its intrinsic characteristics or its inadequate stabilisation package or a combination of the two.
4. The defendants say that Borecene is neither unsuitable nor unfit for purpose and has certainly not been shown to be so. The tank failures arose from the claimants' inability or failure properly to use Borecene and to ensure that it could make satisfactory tanks taking account of Borecene's different rotomoulding properties of which they were aware. They also contend that the issues in this case are to be determined by the law of Denmark and that any liability they may have is severely limited by the terms of the relevant contracts.
5. The parties have swamped the court with a vast amount of material, which they have been preparing over several years. The factual statements are many and long. Experts' reports have been filed of considerable complexity and inordinate length, with voluminous appendices and considerable repetition or overlap. A large number of experiments have been carried out. The claim for misrepresentation as pleaded appears to cover practically everything said by Borealis to the claimants about Borecene over an extended period. Much of the misrepresentation case has been abandoned.
6. The inordinate size of the material and the scatter gun approach adopted, particularly by the claimants, is an enemy to understanding. In order not to make what will be a long judgment interminable, I propose to confine it to the critical areas. I shall not attempt a summary of all the evidence. What follows are my conclusions from the totality of the material, factual and expert, adduced by each side. I have been much assisted by the final submissions of both parties, which have helpfully directed me to the matters that in the end the parties regarded as significant. I have reconsidered all the evidence to which those submissions make reference whether or not I have expressly referred to it in this judgment.
7. In the earlier case of Balmoral Group Ltd v Borealis UK Limited, Borealis AS and Borealis A/S [2006] EWHC 1900 (Comm) Balmoral claimed (unsuccessfully) in respect of the failures of its oil tanks made from Borecene. The claim in those proceedings was that Borecene had inadequate environmental stress cracking resistance (“ESCR”). Environmental Stress Cracking is the cracking of a polyethylene part under stress when in contact with a medium, e.g. kerosene, in the absence of which fracture does not occur under the same conditions of stress. No claim was made in that case in respect of inadequate UV resistance. Nor has any other claim been made against Borealis on that basis.
The parties
8. The claimants (as now named) are:
i) Kingspan Environmental Ltd;
ii) Tyrell Tanks Ltd;
iii) Rom Plastics Ltd; and
iv) Titan Environmental Ltd.
Some of these companies and their holding companies have gone through a series of name changes.
The first claimant—Titan
9. Kingspan Environmental Ltd was previously called Plashapes Ltd (6 July 1984–13 August 1999) and then Titan Environmental Ltd (13 August 1999 to 10 September 2008). For the purposes of this action it is convenient to describe it as “Titan”, the name which it had for most of the time with which this action is concerned. It is the principal UK trading company of, and became part of, the Kingspan Group, of which the ultimate holding company is Kingspan Group Plc, when its then ultimate parent company—then known as S & D Management Ltd (“S & D”) [1]—was acquired by the Kingspan Group on 11 March 1996. At the material times its manufacturing site was at Banbridge, County Down. It is now based in Portadown.
The second claimant—Tyrell
10. The second claimant is, and at all material times has been, named Tyrell Tanks Ltd. It, too, became part of the Kingspan Group upon the acquisition of S & D in March 1996. It manufactured tanks at a site in Portadown, County Armagh. Its business and assets were transferred to the first claimant as from 1 January 2007.
The third claimant—Rom
11. The third claimant is, and always has been, Rom Plastics Ltd. It became part of the Kingspan Group in 1997 [2]. It was a small manufacturing and sales company carrying on business from its site in Glenamaddy, County Galway, ROI. In 2003 its business and assets were transferred to the fourth claimant. Until its business was fully transferred it continued to purchase Borecene for use by itself or the fourth claimant and continued with the manufacture of oil tanks.
The fourth claimant—GSP
12. Titan Environmental Ltd was previously called Kingspan GSP Ltd, its name between 5 December 1989 and 7 June 2005. Before that it was called General Steel Products Ltd. It is convenient to call it GSP. It was acquired by the Kingspan Group in March 1996 on the acquisition of S & D, its then parent. It is the principal ROI trading company in the group. It carries out tank manufacturing from its site at Carrickmacross in the ROI.
13. The relevant details of the claimant companies, all of which have Kingspan Group Plc as their ultimate holding company, and the names which I propose to use in respect of them in this judgment, when it is necessary to distinguish them are, thus, as follows:
| Name | Domicile | Factory Location | Function |
| Titan | N.I. | Banbridge | Principal UK trading company selling to the UK other than NI. |
| Tyrell Tanks | N.I. | Portadown | Tank manufacturing company. |
| ROM | Eire | Glenamaddy | Small manufacturing and sales company. |
| GSP | Eire | Carrickmacross | Principal RoI trading company. |
14. Another member of the Kingspan Group of Companies was Plastics Development Centre (PDC). This company operated as the research and development arm of the Kingspan companies. Its personnel included Dr Julia McDaid (“Dr McDaid”), who had a Ph.D. in the field of rotomoulding and an M.Sc., in Polymer Science and Engineering, and Mr Dessie Gregg.
15. All the above companies form part of what in 2002/3 was the Kingspan Environmental Containers Division, now called the Kingspan Environmental and Renewables (“E & R”) Division, one of the six operating divisions of the Kingspan Group. That division designs, manufactures and markets a large range of containers for oil, waste water, rainwater, oil separation and hot water. All four claimants were at material times manufacturers and suppliers of static oil tanks.
16. Unless it is necessary to distinguish between one claimant and another, or between a claimant and PDC, I shall refer to them generically as “Kingspan”.
17. The E & R Division sells primarily on a wholesale basis, with the UK and Ireland as its primary market, although products are sold and distributed in France, Spain, Germany, Denmark, Poland, Czechoslovakia, Norway, Sweden and the United States.
18. So far as oil tanks are concerned the purchasers fall into two groups:
a) wholesale distributors such as the Wolseley Group, Travis...
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