Summary of Commercial Court judgment – Buncefield litigation case

(N.B. This news release summarises the judgment handed down in this case but forms no part of the judgment )

1. In a judgment handed down today in the Commercial Court, Mr Justice David Steel dealt with a number of issues concerning claims arising from the explosion at the Buncefield oil storage site at Hemel Hempstead in December 2005.

   
   The incident

2. At about 0600 on Sunday 11 December 2005, a massive explosion occurred at the Buncefield Depot in Hertfordshire. It is thought to have been the largest peacetime explosion in Europe ever to have occurred. It measured 2.4 on the Richter scale and could be heard 200 km away. Apart from damage to a large proportion of the Buncefield site, significant damage and disruption was also caused to both commercial businesses and residential properties outside the perimeter of the depot. The claims that have arisen are said to amount to over £750 million.
3. The Buncefield site was a large fuel tank farm used by a number of oil companies including Total, Chevron, BP and Shell. The depot received petrol, aviation fuel and diesel by pipeline. In the lead up to the explosion, the site was importing unleaded petrol. The cause of the explosion was the ignition of a vapour cloud that had developed from the spillage of some 300 tons of petrol from a storage tank.

   The parties

4. The defendants were Total and a joint venture company established between Total and Chevron (owned by Total as to 60% and Chevron as to 40%) called Hertfordshire Oil Storage Ltd (HOSL). The explosion occurred in a part of the Buncefield site which had been developed by the joint venture
5. There were an enormous number of claimants who joined together in groups to bring proceedings. Many claimants were content to await the outcome of the trial. In the event the following claimants participated in the hearing:
   1. Outside the perimeter:
      1. Colour Quest Ltd & others – mainly a group of companies many of which were situated in the local industrial estate.
      2. Douglas Jessop & others – mainly individual claimants from the Hemel Hempstead area.
   2. Inside the perimeter:
      1. WLPS and UKOP - the legal owners of a neighbouring site at Buncefield – the beneficial ownership being held by Chevron, Total, BP and Shell pursuant to trust deeds.
      2. BP - the legal owner of another site at Buncefield.
      3. Shell - one of the oil companies with an interest in and with aviation fuel stored on the WLPS/UKOP site.
      4. BRE/Hemel 1 Limited -owners of a large warehouse on the site.
6. The third parties joined by Total and HOSL were:
   1. Chevron.
   2. TAV Engineering – this company was the manufacturer of the ultimate high level alarm fitted to the tank. During the course of the hearing the claim against TAV was settled and TAV took no further part in the proceedings.
   3. Motherwell – this company was responsible for installing and maintaining the tank level equipment. Prior to the hearing, Motherwell went into liquidation and did not participate in the trial.

   Events leading up to the explosion

7. There was a control room on the site from which tank and pipeline operations were conducted. At 1900 on 10 December two supervisors took over duty in the control room. An important part of that duty was to monitor the level in the tank which was being filled with the petrol.
8. At about 0300 the tank gauge became stuck and from then onwards the control system recorded an unchanged reading notwithstanding that filling of the tank continued. Neither supervisor responsible for receipt of the consignment of oil into the tank noticed that the reading remained unchanged, let alone appreciated that the gauge had become stuck.
9. The level in the tank went past a High level alarm and then past a High High level alarm. But since these were connected to the stuck tank gauge no alarm sounded.
10. The level continued to an independent TAV safety switch and alarm set at the “ultimate high” level. The mechanism was designed, if such a level was reached, to activate a trip function to close valves on the incoming pipes but this did not operate because it had not been padlocked in its operating position following a recent test by Motherwell.
11. By about 0520 the tank began to overflow and a low-lying white mist containing petrol vapour began to develop in and around the site. At 0550 hours a tanker driver contacted the supervisors and informed them that there was a strong smell of petrol vapour at the tanker loading bays. A supervisor went to investigate. He contacted the control room at 0559 hours to report that a tank seemed to have split.
12. The supervisor in the control room immediately tried to divert the delivery to another tank. But as a result of a misunderstanding as to which pipeline was connected, the supervisor shut off the wrong pipeline. Accordingly the overflow continued up and until the explosion.

    Admission of liability

13. In the summer of 2008 summary judgment was given for the claimants in the light of admissions made by Total and HOSL that either one or the other was vicariously liable for various acts of negligence by the relevant supervisor on duty at Buncefield on the night of 10/11 December 2005. During the course of the trial which began in October 2008 it was conceded by Total and HOSL that the physical damage sustained by the claimants and their property was all a foreseeable consequence of the explosion.
14. The main focus of the hearing thus became the dispute between Total and Chevron as to which of HOSL and Total was liable to the Claimants. It was Chevron’s case that Total was liable. It was Total’s case that HOSL was liable. No party suggested that both were liable or that any other person was liable.
15. The resolution of this issue was dependent on identifying whether it was Total or HOSL which had the right to control the manner in which the supervisors undertook their work. Analysis of the numerous contractual agreements between Total and Chevron did not furnish an answer to this issue. The matter was dependent on the manner in which the Buncefield site was in fact operated and managed.
16. The court found as follows. All those working at the Buncefield site had employment contracts with Total. The most senior on-site employee was the Terminal Manager. Any instruction to the supervisors had to be channelled through the Terminal Manager. He had been appointed as manager by Total and retained his reporting line to the Terminal Operations Manager at Total’s Head Office with whom he was in regular contact. All instructions relating to the safe operation of the Buncefield site were promulgated by Total in accord with standards adopted by Total for all terminals which it operated. Total perceived these terminals to include Buncefield.
17. In contrast, although HOSL was the nominated operator of the Buncefield site in some of the agreements, it had no employees and its board met for two hours every six months primarily to receive a report from the Terminal Manager and to discuss budgetary matters. It was incapable of being concerned with day to day operations.

    The conclusions

18. The conclusion of the court is that Total has failed to discharge the burden of establishing that HOSL was responsible for the negligence of the supervisor.
19. The court has also found there was a further contributory fault consequent on the failure of Total’s head office staff to promulgate an adequate system for preventing the overfilling of a tank. This reflected the absence of any written tank filling procedures for use in the control room even following a “near miss” in August 2003. In the result there was a lack of careful monitoring of filling operations and an improper reliance on alarms.
20. The court also made the following findings:
    1. Total are not entitled to recover a contractual indemnity from HOSL or Chevron in respect of all or any part of the claim.
    2. In regard to the Rylands v. Fletcher claim (which imposes strict liability for the escape of dangerous materials) brought by those claimants who were situated within the perimeter of the Buncefield site, the defence of consent is not available
    3. The claimants have a claim in private nuisance in addition to their claim in Rylands v. Fletcher .
    4. The claimants’ claim in public nuisance includes, subject to proof of special damage, claims in respect of loss of business attributable to interference with customer access.
    5. The claimants’ claim in public nuisance, again subject to proof of special damage, is not limited to those with a proprietary interest in proximity to the explosion.
    6. Some of the claims brought by Shell are not recoverable in negligence or private nuisance as being pure economic loss unconnected with any proprietary or possessory interest in the damaged property.

Notes for Editors

A full copy of the judgment has been placed on the judicial website.

Ends