Wheeldon Brothers Waste Ltd v Millenium Insurance Company Ltd, Court of Appeal - Technology and Construction Court, April 19, 2018, [2018] EWHC 834 (TCC)

Resolution Date:April 19, 2018
Issuing Organization:Technology and Construction Court
Actores:Wheeldon Brothers Waste Ltd v Millenium Insurance Company Ltd

Neutral Citation Number: [2018] EWHC 834 (TCC)

Case No: HT-2016-000303





Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 19/04/2018

Before :


(sitting as a Deputy High Court Judge)

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Between :

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Mr Ben Quiney QC (instructed by Trowers & Hamlins LLP) for the Claimant

Mr Graham Eklund QC (instructed by Mills & Reeve LLP) for the Defendant

Hearing dates: 26th - 28th February, 1st, 8th March and 19th April 2018)

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Judgment Approved

The Deputy Judge:

  1. On 22nd June 2014, a fire (`the Fire'') occurred at a waste processing plant situated at Kenyon Street, Ramsbottom BL0 OAB (``the Plant''), which was owned by the Claimant, Wheeldon Brothers Waste Limited (``Wheeldon''). Wheeldon was then insured against the risk of fire by the Defendant, Millennium Insurance Company Limited (``Millennium''). Millennium has refused to indemnify Wheeldon following the Fire. Wheeldon seeks declaratory relief and an indemnity and/or damages. By an Order made at the CMC on 13th February 2017 [A/63] the Trial was split between liability and quantum. This Judgment is on the issue of liability.

  2. The Plant and the process at the Plant are set out by Mr James Wheeldon in his Witness Statement at paragraphs 3.1 - 4.38 [C/16-21]. Moreover, there is a sketch plan which I found most helpful attached to the Experts' Joint Statement at [B/40]. There was no challenge to that plan. It is relied upon by both Counsel.

  3. The Plant received a variety of wastes and produces fuel. The purpose of the process is to remove non-combustible material from the waste input, such that the output can be used as a fuel in the form of Solid Recovered Fuel (``SRF''). A summary of the process is as follows:

    (i) The waste, which originates from commercial and industrial dustbins and builders' skips comes into the Tana shredder;

    (ii) The waste proceeds along the first conveyor;

    (iii) From that conveyor the waste enters the trommel, which is a large rotating sieve;

    (iv) From the trommel, the materials board a second conveyor which is the M&K conveyor. The M&K conveyor is where the Fire originated;

    (v) The M&K conveyor takes the materials to the density separator;

    (vi) From the density separator, the materials enter the Untha granulator where they are subject to further processing;

    (vii) The Untha granulator discharges the end product into a segregated storage area.

  4. At various stages in the process, the materials are either reduced or sorted. There are magnets at various points to remove ferrous materials. There are stages when non-combustible elements are removed, whether by way of the trommel (sieving) or the density separator or the magnets.

  5. Mr Booker is the Site Manager at the Plant. In that capacity, he has direct knowledge and experience of what occurs there. At paragraphs 3.3 - 3.7 of his Second Witness Statement [C/37] he explains that the waste fed into the process is a mixture of combustible and non-combustible materials. Each load is different but some of the time the material is moist, having been mixed with liquids in the bins or rained upon in the builders' skips. He says that the material at the Plant does not become a fuel until it has been through the various refining processes in the Plant, at which point the end product, Solid Recovered Fuel (``SRF''), is produced which is a fuel. He says that the incoming material is not directly incinerated. It is reduced and refined down into a separate product, namely SRF.

  6. In September 2013, Wheeldon asked M&K Quarry Plant Limited (`the Supplier'') to design, manufacture and install a conveyor. It was to be part of the waste processing machinery at the Plant. The Supplier issued a quotation for the conveyor on 4th November 2013. The order was placed in November 2013. Installation work began on 9th January 2014. Following testing and commissioning, the conveyor was put into use.

  7. In March 2014, through its broker, RBIG, Wheeldon began to renew various insurances. The broker obtained a proposal for property insurance from Direct Insurance, acting as agents for Millennium.

  8. On 28th March 2014, Secon, surveyors for Direct Insurance, inspected the Plant to undertake a risk assessment.

  9. Sarah Woodward of Direct Insurance issued a formal proposal to the broker setting out the proposed terms of cover and a copy of Millennium's Standard Policy Conditions on 3rd April 2014 [D/136-137].

  10. The Policy commenced on 8th April 2014 [D/350-416].

  11. On 11th April 2014, the self-greasing UCP 211 sealed bearing located on the bottom part of the free spinning roller at the bottom end of the M&K conveyor collapsed causing the belt to misalign. That required repair works.

  12. After consultation with the Supplier, Wheeldon fitted a replacement bearing. Then they arranged for the Supplier to inspect the conveyor because they regarded that the failure had occurred due to a consequence of undue side loading.

  13. On 20th April 2014, Secon issued a Report [D/285-322] which was provided to Millennium. Under that Report, various risk requirements were identified.

  14. On 30th April 2014, Direct, on behalf of Millennium, issued ``Contract Endorsement'' No. 1 [D/417]. That Endorsement referred to the Secon Report and deleted two memoranda, including Memorandum 6. Memorandum 6 was replaced with the Risk Requirement No. 9.

  15. On 16th May 2014, an engineer from the Supplier attended the site. He inspected the conveyor and confirmed that the forked frame structure on which the bearing sat had spread outwards due to what seemed to be inadequate strength in the forked structure. That pushed the bearing off the roller to the point where it twisted, causing the bearing to collapse and the belt to misalign.

  16. The Supplier suggested a remedial solution. On 16th May 2014, they bolted a 6 inch long metal plate, similar to an angle iron, underneath the bearing. Moreover, they drilled and tapped the end of the roller shaft to 18mm and inserted a bolt with a large washer over the end of the bearing.

  17. On 3rd June 2014, a further collapse of the bearing occurred. The new remedial frame had otherwise seemed to work to prevent the spreading. Mr Booker of Wheeldon replaced the failed bearing with an identical bearing replacement in a standard repair.

  18. It is likely that a further collapse occurred on 21st June 2014, the day immediately preceding the Fire. That failure was not detected until after the Fire.

  19. On Saturday 21st June 2014, at approximately 3.00pm, Wheeldon employees stopped feeding materials into the process. It then ran until all the materials had travelled through the Plant. At around 4.00pm the Plant was cleaned and closed down.

  20. Mr John Wheeldon (Wheeldon's Managing Director) received an emergency telephone call at approximately 2.40am on Sunday 22nd June 2014 concerning the sounding of a fire alarm at the Plant and the arrival of the Fire Brigade.

  21. The Fire Brigade attended site. The Fire was extinguished at around 11.00am on 22nd June 2014.

  22. On 23rd and 24th June 2014, after Millennium were notified of the Fire, its forensic investigator, Mr Stephen Braund of Hawkins Associates Limited, attended the site to investigate the Fire.

  23. On 15th August 2014, Knowles, the loss adjusters for Millennium, informed Wheeldon that indemnity was to be declined on 4 grounds [E/207 - 209]:

    (i) Breach of Clause WA2A (storage of gas cylinders);

    (ii) Breach of Memorandum 6 (storage of combustible materials less than 6m of fixed plant)

    (iii) Breach of Memorandum 9 (storage of baled materials)

    (iv) Breach of Memorandum 11 (removal of combustible stock and/or waste).

  24. By the time of pleading, Millennium's stance had changed in that they relied upon:

    (i) A failure to comply with Risk Requirement 4 of the Secon Report, relating to the storage of combustible waste within 6m of fixed plant/machinery outside operating hours;

    (ii) Breach of Memorandum 6, relating to the storage of combustible materials within less than 6m of fixed plant outside operating hours;

    (iii) Breach of Memorandum 11, relating to the removal of combustible stock and/or waste outside operating hours;

    (iv) Breach of WA6, relating to the maintenance of the machinery;

    (v) Breach of WA7, relating to the standard of the housekeeping;

    (vi) Breach of the requirements under the Secon Report generally.

  25. Counsel agreed a List of Issues of which there are 9. During the course of this Judgment, I will provide answers to each of them.

  26. Millennium say that the Policy comprised the Policy Wording, the Schedule, Appendices and any Endorsements [D/352]. The Schedule, Appendices and Endorsements are at [D/405], are dated 21st April 2014 and were signed on 22nd May 2014.

  27. The Schedule referred to the Endorsements applicable ``as attached hereon'' [D/405] and under Appendix A - Material Damage ``as attached'' [D/406]. The Endorsement attached to the Schedule was Contract Endorsement No. 1 (``CE1'') [D/417], signed on 30th April 2014, following receipt of the Secon Risk Requirements and Recommendations Report dated 20th April 2014 (``the Secon Report'') [D/285]. The Secon Report was a report prepared following a survey of the risks posed by Wheeldon's operations.

  28. CE1 had been forwarded to Wheeldon's broker, David Cooper, on 1st May 2014 (the day after it signature) see [E/257]. David Cooper accepted that CE1 was effective from 30th April 2014, the date when it was signed, see his email to Susan Ward of Wheeldon dated 6th February 2015 [E/252].

  29. CE1 required compliance with the Risk Requirements in the Secon Report, which included Risk Requirement No. 4...

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