United Marine Aggregates Ltd v G M Welding & Engineering Ltd & Ors

The occurrence of a fire does not, without more, establish that contractual or tortious precautions were breached or that the breach caused the damage. Where the trial judge finds that reasonable precautions were taken and that the fire began and developed through an unforeseeable process, an appellate court should not interfere without undermining the essential factual findings. Contractual hot-work precautions may be satisfied by an agreed method, such as continuous water spraying, where it provides adequate protection. A costs judge must not reduce recoverable costs merely because the costs appear excessive; that issue belongs to detailed assessment. A party must also have an opportunity to address any proposed adverse costs order.

United Marine Aggregates Limited claimed damages from G M Welding & Engineering Limited after a fire followed hot works at an aggregate processing plant. GM sought an indemnity from its insurer, Novae Syndicates Limited. The High Court, Edwards-Stuart J, dismissed UMA’s claim, finding no breach of duty and no causative departure from the agreed precautions. The judge held that the fire began and developed in a manner that was not reasonably foreseeable. The insurer’s indemnity claim would also have failed because of a breach of warranty, although Novae was awarded only 50% of its costs.

UMA appealed on liability. Novae appealed against the reduction of its costs. The central issues were whether the contractual precautions had been breached, whether the fire itself supported an inference of breach and causation, and whether the costs order was procedurally and legally sustainable.

UMA’s appeal was dismissed.

1. The Court of Appeal rejected the submission that the fire itself demonstrated either inadequate application of water or failure to maintain a proper fire watch. The trial judge had found that the relevant work was performed carefully, that the area was checked, and that the fire began as a concealed smoulder within combustible material. The agreed expert evidence supported that conclusion. The finding that the fire could remain undetected and later develop into visible flames was open to the judge on the evidence.
2. The contractual hot-work procedure did not require the use of fire blankets or metal sheets where continuous spraying with water provided adequate protection. The court treated that construction as established by the concessions made at trial. The provision requiring extreme care where combustible material could not otherwise be protected was therefore not engaged. The alleged Safe System of Work document was not shown to be contractually incorporated for the relevant work and appeared to have been superseded. In any event, any such breach would not have caused the fire.
3. The court held that the judge’s findings of no breach, lack of reasonable foreseeability and absence of causation could not seriously be challenged. The principle relied on in UMA’s causation ground could not assist where breach had not been established. An appellate court will not lightly overturn factual conclusions about the mechanism of damage or foreseeability unless the essential findings are undermined.

Novae’s appeal was allowed. The judge had erred by reducing the proportion of recoverable costs because he considered Novae’s costs disproportionately high. The level and reasonableness of costs were matters for assessment. It was also irregular to make an adverse costs order on a basis not advanced by the parties without giving Novae an opportunity to address it. Having heard full argument, the Court of Appeal substituted its own order and set aside the costs reduction. Novae was not deprived of any part of its costs.

• Court of Appeal (Civil Division): In [2013] EWCA Civ 516, UMA’s liability appeal was dismissed and Novae’s appeal against the costs reduction was allowed.
• High Court of Justice, Queen’s Bench Division, Technology and Construction Court: Edwards-Stuart J, in [2012] EWHC 779 (TCC), dismissed UMA’s claim, found no breach of duty by GM, and limited Novae’s recoverable costs to 50%.