Appeal court overturns recycling plant judgement

After winning a local authority contract for the collection, recycling and disposal of domestic waste, Biffa commissioned a German company - Maschinenfabrik Ernst Hese GMBH (MEH) to design and build the recycling plant.

A key part of the plant was the 'ball mill' - a large rotating drum which contains steel balls the operation of which is intended to break down waste into small parts to facilitate separation.

MEH subcontracted the work to an associated company - Hese Unwelt GMBH (HU), who then subcontracted the supply of the ball mill to a Swedish company - Outokumpu Wenmac AB (OT). OT designed the ball mill but subcontracted out its manufacture and installation. At no time were any of OT's employees on the site of the plant.

Subsequent to the installation further works - welding and grinding, became necessary. However, due to negligence, on the part of the welders, a fire broke out causing substantial damage to the ball mill and other parts of the plant. Biffa sought to recover its loss, resulting from the delay to its operation, caused by the fire.

The High Court found OT vicariously liable to Biffa for the negligence of the welders, even though they were not directly employed by them. The court considered the welding activities, which caused the fire, to be ultra hazardous and the welders to be borrowed employees. However, OT appealed this decision before the Court of Appeal.

In overturning the judgement of the High Court, the Court of Appeal held that exceptional facts are required for a contractor to be vicariously liable for the negligence of his subcontractors, which were not present in this case. As there was no question of OT exercising any control over the welders, and as the welders were not part of the business or undertaking of OT, the welders had not become borrowed employees.

Furthermore, the Court also found that the principle that a contractor could be held vicariously liable for ultra hazardous activities carried out by a subcontractor should be kept as narrow as possible, and should only be applied to activities that are exceptionally dangerous what ever precautions are taken. As welding, as such, is not ultra hazardous OT could not be held vicariously liable for the negligence of the welders.

The full judgment of the Court of Appeal in this case is available via the following link:-
http://www.bailii.org/ew/cases/EWCA/Civ/2008/1257.html

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