West London Pipeline & Storage Ltd and another v Total UK Ltd and Others

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeTHE HONOURABLE MR JUSTICE BEATSON,MR JUSTICE DAVID STEEL,Mr Justice David Steel,Mr Justice Beatson
Judgment Date22 July 2008
Neutral Citation[2008] EWHC 1729 (Comm),[2008] EWHC 1296 (Comm)
Date22 July 2008
Docket NumberCase No: 2007 FOLIO 1151,In Re the Buncefield Incident

[2008] EWHC 1296 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

MR JUSTICE DAVID STEEL

Case No: 2007 FOLIO 1151

Between:
(1) West London Pipeline And Storage Ltd
(2) United Kingdom Oil Pipelines Ltd
Claimants
and
(1) Total Uk Ltd
(2) Total Downstream Uk Plc
(3) Hertfordshire Oil Storage Ltd
Defendants
and
Tav Engineering Ltd
Third Party
and
Motherwell Control Systems 2003 Ltd
Fourth Party

Anthony Grabiner Q.C., Andrew Bartlett Q.C. & Alan Maclean (instructed by Davies Arnold Cooper) for the Defendants / Applicants

Claire Blanchard (instructed by Halliwells LLP) for the Third Party / Respondent

Hearing dates: 23 May 2008

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

MR JUSTICE DAVID STEEL Mr Justice David Steel
1

This is an application by the First and Second Defendants (“Total”) for information and disclosure in respect of the insurance arrangements of the Third Party (“TAV”). Their application is advanced on two bases:

i) the material is relevant to the issues; and/or

ii) the material is necessary from the perspective of efficient case management.

2

In their claim Total seek a contribution from TAV in respect of any liability that Total may incur to those interests damaged by the Buncefield explosion. It is Total's case that TAV were the designers, manufacturers or suppliers of the TAV F16 switch which failed to operate whereby an overflow of fuel occurred leading to the explosion. The claims total over £700 million.

3

Part of TAV's original defence was a plea of reliance, so far as any level of contribution was concerned, on the modest cost of the switch and on its standard terms and conditions which limited any liability to 5% of the contract price.

4

In its reply Total pleaded that the modest price was immaterial in the light of the potential consequences of failure which could or should have been covered by liability insurance. It was further contended that, if incorporated, the standard terms relied on were unenforceable by reason of the Unfair Contract Terms Act 1977 for which purpose the resources available to TAV to meet any liability would include any (or any available) insurance cover.

5

Concurrently however with the issuance of the present application TAV notified Total that it was proposing to amend its defence to delete the reference to the cost of the switch and to its standard terms and conditions. As was no doubt intended, the impact of the proposed amendment was substantially to undermine the first basis upon which the application was advanced.

6

Nonetheless Total continued to press their contention that the nature and scope of TAV's liability insurance cover was material to the issues and in particular the question of apportionment (although with somewhat less vigour in the face of the amendment to the defence). I can deal with this proposition shortly.

7

The material provisions of the Civil Liability (Contribution) Act 1978 are:

“…the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the person's responsibility for the damage in question.”

This involves consideration of both the blameworthiness of the party and the causative potency of any fault on its part: Madden v. Quirk [1989] 1 WLR 702.

8

However it is now well established that the Act is not expressed exclusively in terms of causative responsibility and thus there may be breaches of duty or other factors relating to the acts or omissions of a party which may be taken account of even if not causative: see Re-source America Int Ltd v. Platt Site Services Constr. Ltd [2004] EWCA (Civ) 665, Warwicker Partnership v. Hok Int. Ltd [2005] EWCA (Civ) 962, but cf. Miraflores (Owners) v. George Livanos (Owners) [1967] 1 AC 826 at 845 per Lord Pearce. Examples would include a non-causative breach of duty ( Warwicker), deliberate breach together with reprehensible conduct of the defence (Re-Source), dishonest profiteering ( Dubai Aluminium v. Salaam [2003] 2 AC 366).

9

However, the circumstances in which non-causative factors can properly be taken into account will be exceptional (and of limited impact). Certainly, in my judgment, there needs to be a close connection between the non-causative factors which it is just and equitable to take into account and the causative activity (or lack of it) which has given rise to the liability.

10

I do not regard it as arguable that the existence or scope of any insurance cover can be material to the issue of apportionment. There is nothing exceptional in there being some form of insurance cover. It has no connection whatsoever with the alleged causative conduct. In this regard I should note that it is expressly disclaimed by TAV that it proposes to rely upon the fact of it being an economically small business in assessing blameworthiness.

11

This leads to consideration of the alternative submission that the insurance terms need to be revealed in the interests of sound case management. Total's submission can be summarised as follows:

i) TAV's latest financial statements reveal that it does not trade. Its current assets in 2006 (in common with 2005) amount to only £1500 made up of “amounts owed by group undertakings”.

ii) It follows that both TAV's ability to contest the litigation and its ability to pay any damages are dependent on its liability insurance.

iii) It is clear that such insurance exists. Indeed it is referred to in TAV's accounts in noting the contingent liability in respect of the claim.

iv) It is also clear that it is reasonably substantial. The estimate of TAV's own costs amount to something in excess of £3.7 million.

v) However even a contribution of 5% (probably the lowest possible apportionment that the court would contemplate making) would amount to £35 million.

vi) Disclosure of the insurance position is thus necessary and appropriate to determine whether the continuance of the litigation serves a useful purpose from the perspective of Total and/or the court.

12

In support of those submissions, Total rely on a decision of Irwin J in Harcourt v FEF Griffin [2007] EWHC 1500 (QB). This was a personal injury action in which liability had been settled on the basis of the claimant recovering 75% of the full claim. Even this proportion was said to amount to between £6 and £7.5 million. It was obvious, however, that the defendants were individuals of limited wealth.

13

The claimant accordingly made a CPR Part 18 request for further information as to the insurance cover enjoyed by the defendants. The basis of the application was that it would be wasteful to engage in a contested quantum phase if the result would be that the costs of so doing and the fruit of any success would not be recovered.

14

CPR Part 18 .1 reads as follows:

“18.1

(1) The court may at any time order a party to—

(a) clarify any matter which is in dispute in the proceedings; or

(b) give additional information in relation to any such matter,

whether or not the matter is contained or referred to in a

statement of case.

(2) Paragraph (1) is subject to any rule of law to the contrary.”

15

Irwin J held that, although the nature and content of the defendants' insurance cover was not in itself a matter in dispute between the parties, nevertheless the wording of the rule should be construed “reasonably liberally”:-

“[10]…. The purpose of the jurisdiction must be taken to be to ensure that the Parties have all the information they need to deal efficiently and justly with the matters which are in dispute between them. Moreover, the wording need not be taken to imply that there must be a live disagreement about the relevant issue, since on very many occasions parties are properly required to furnish information pursuant to CPR r 18 precisely to discover whether there is or is not a live disagreement between the parties on a given point. The whole thrust of the new approach to civil litigation enshrined in the Civil Procedure Rules is to avoid waste of time and cost and to ensure swift and, as far as possible, proportionate and economical litigation. Therefore, I have no hesitation in finding that if there is no rule of law or significant rule of practice to the contrary, then the wording of CPR r 18 is broad enough to cover information of this kind.”

16

Having dealt with the issue of jurisdiction, the judge summarised the defendants' arguments on discretion as follows:-

“[15] Stripped to their essentials, the Defendants make five points in reply. Firstly, it is said that it is elementary that an outsider to a contract, in this case any contract of insurance between Defendants and insurers, has no right to know any of the terms of that contract. Secondly, the statutory exceptions to that rule derived from the Third Party (Rights Against Insurers) Act 1930, the Contract (Rights of Third Parties) Act 1999 and/or the legislation relating to the Motor Insurers Bureau all constitute statutory exceptions which prove the rule. If Parliament had intended other exceptions, then further legislation would have followed. Thirdly, if such a request were granted it would hand an unfair advantage to a Claimant in litigation such as this. Fourthly, it is said that were such a request to be granted, it would rapidly become standard practice in every case for a Claimant to request such information and indeed for Defendants to reply in kind, setting up undesirable and wasteful satellite litigation. Fifthly, the Defendants argue that the periodical payments regime and the various obligations of the parties and the court do, taken together, have an effect on what must be disclosed, but the effect is limited in...

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