Colour Quest Ltd & Ors v Total Downstream UK Plc & Ors (Rev 1)

Vicarious liability for a borrowed employee depends principally on who had the right to control the manner of the relevant work. Contractual labels are relevant but not determinative. The general employer bears a heavy burden when seeking to establish a transfer of liability to a temporary employer, and any transfer requires the employee’s consent, which may be implied.

An isolated escape may found liability in private nuisance as well as under the rule in Rylands v Fletcher. Consent to the accumulation of a dangerous substance is ineffective where negligence causes or contributes to the escape. Public nuisance may support recovery for common injury, including loss of trade caused by obstruction of customers’ access to business premises.

The proceedings arose from the explosions and fire at the Buncefield oil storage depot on 11 December 2005. Numerous claims were brought by businesses and individuals outside and inside the site, together with contribution and indemnity claims between Total, HOSL, Chevron and others.

Total and HOSL admitted negligence in the operation of Tank 912, subject to issues including vicarious liability, consent, recoverability of economic loss, nuisance, indemnities and quantum. The principal dispute was whether Total or HOSL was vicariously liable for the negligence of Total employee Mr Nash, who had worked for many years at the HOSL site.

1. Vicarious liability. The decisive question was who had authority to direct the manner in which tank-filling operations were performed. Relevant factors included engagement, payment, dismissal, duration of service, equipment, reporting lines and training, but control of the method of work remained the most telling factor. The burden on Total, as general employer, was heavy.
2. The joint venture agreements and contractual descriptions of HOSL as operator were not determinative. The evidence showed that Total employed all relevant site staff, controlled recruitment and discipline, appointed and supervised the general manager, imposed its safety-management system, and exercised operational control through its head office. HOSL’s board met only intermittently and was not involved in day-to-day control. Total therefore failed to establish that responsibility for Mr Nash’s negligence had transferred to HOSL.
3. Total was also responsible for a systemic failure to institute adequate written procedures for tank filling. Tank filling should have been risk-assessed as a critical task, with procedures for planning and monitoring receipt of product. The absence of such procedures, notwithstanding the safety-management system and earlier near-misses, was causative.
4. Total was not entitled to an indemnity from Chevron under the joint venture agreement or from HOSL under the operating regulations for its own negligence. The indemnity provisions did not expressly refer to negligence, and the operating-regulations indemnity deliberately differed from the provision which expressly addressed negligence.
5. Consent did not provide a defence to the inside-the-fence claims. Negligent conduct causing or contributing to the escape vitiated any consent to the ordinary accumulation of petroleum products.
6. Private and public nuisance were not mutually exclusive with liability under Rylands v Fletcher. A single or isolated escape could constitute private nuisance where the relevant requirements were established. Public nuisance could include common injury to a substantial section of the public and loss of trade resulting from obstruction of customers’ access.
7. Shell’s claims for economic loss arising from loss of use of the WLPS and UKOP systems failed. Beneficial ownership alone was insufficient, Shell had no immediate right to possession, and neither the maritime common-adventure exception nor Caltex supplied a basis for recovery.