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

At about 0600 on Sunday 11 December 2005, a num ber of explosions occurred at the Buncefield Oil Storage Depot at Hemel Hempstead, Hertfordshire. At least one of the initial explosions was of m assive proportions. Indeed it is thought to have been the largest peacetime explosion in Europe ever to have occurred. It m easured 2.4 on the Richter scale and could be heard 200 km away.

The cause of the explosion was the ignition of an enorm ous vapour cloud that had developed from the spillage of some 300 tons of petrol from a storage tank. There ensued a large fire which engulfed a further 20 fuel storage tanks. The fire burned for a considerable period emitting large volumes of black smoke which remained visible over Southern England for several days. Some 2000 people were evacuated from their homes and the nearby M1 m otorway was closed. Mercifully the tim ing of the explosion (and the day of the week) m eant that only 43 people were injured in the incident, none of them seriously. There were no fatalities.

Apart from damage to a large proportion of the Buncefield site, significant dam age was also caused to both commercial and residential properties outside the perimeter of the depot. In particular there was a substantial im pact on the adjacent industrial estate. This was hom e to over 600 businesses employing about 16,500 people. All these businesses suffered disruption. The pre mises of 20 businesses employing 600 people were destroyed and the prem ises of another 60 businesses employing 3800 people were heavily dam aged and unusable. The incident also dam aged a great amount of housing throughout the St. Albans district. The claim s are said to total in excess of £750 million. Little imagination is required to envisage the likely outcome if the explosion had occurred on the Monday morning with people at or on their way

The Buncefield depot was a large an d strategically important fuel storage site or tank farm used by a num ber of oil companies. Th ere was a throughput o f 2.5 m illion tonnes per year. The depot received petrol, aviation fuel, diesel and other fuels by pipeline. These fuels were stored in tanks and distributed by pipeline or road tanker to London and South East England. It was handling a large proportion of the total supply to consumers in the South East. In addition the term inal acted as the m ain pipeline transit point m eeting much of Heathrow’s and Gatwick’s dem and for aviation fuel. On the day of the explosion, the site contained over 35 m illion litres of petrol, diesel and aviation fuel.

The depot contained various sites including (see attached plan at Appendix 1):

The fuels arrived at the site through a system of three pipelines:

Motor fuel departed from the site by road tanke rs from dedicated loading facilities or “racks” at HOSL West, BP and BPA. Howeve r in the case of aviation jet fuel it left by road from a loading gantry or via two pipelines from the UKOP/BPA sites into the West London Pipeline System owned by WLPS and operated by BPA.

In the lead up to the explosion, the site was importing unleaded petrol through the

The HOSL control room was continuously m anned by one or m ore pipeline and terminal supervisors on two watches: 0700 to 1900 and 1900 to 0700.

At the tim e of the exp losions the weather was calm , cold, and hum id. There was a very light westerly wind, the temperature was about 0° centigrade and the relative humidity was 99%.

The sequence of events was in summary as follows:

A re markable feature of the story is the developm ent of the m ist cloud. The explanation is as follows. By 0600 some 300 tonnes of petrol would have overflowed through the breather holes at the top of the tank. Contact with the deflector plate on the tank roof and with the wind girder on the tank side would have had the result of a free cascade of liquid being naturally divided into droplets. These conditions would have promoted the evaporation of the lighter chemical compounds in the petrol.

The free fall of droplets would also have led to entrainment and mixing with air. With the ambient air tem perature at 0°C and full saturation w ith water vapour, the fuel evaporation would have led to cooling to about -7 to -8°C. As a result much of the initial water content would have precipitated as ice m ist. It is this m ist which was, as already noted, observed on the CCTV ca meras on site and dem onstrated the scale of the fuel/air vapour cloud created. S ubsequent calculations reveal that it m ust have amounted to over 100,000m² in area with a volume in the region of 200,000 m3.

There were a number of potential ignition sources within the area of the mist cloud. In particular there is evidence of an in ternal explosion having occurred in a fire pump house located on the East side of the la goon on the HOSL West site. T hese pumps were activated from the control room just before the explosion. There is also evidence of an internal explosion in an em ergency generator cabin located on the south side of the Northgate buildings. Both would have constituted a powerful ignition source. As for further alternatives, witn esses spoke of car engines continuing to run even after their engines had been turned off.

There were an enorm ous num ber of claim ants. They sensibly jo ined together in groups to bring proceedings. A list of all the B uncefield actions is at Appendix 2. For case management purposes they were divided into two groups - those outside th e perimeter o f the Buncefield site and those within. This dem arcation reflected disparities revealed at an early stag e as to the defendants’ treatm ent of the issues of foreseeability and liability in Rylands v. Fletcher.

It is convenient to start with a short description of the defendants:

Many claim ants were content to await the ou tcome of the trial. In the event th e following claimants participated in the hearing in one form or another:

The Part 20 defendants were:

Chevron .

TAV Engineering – this com pany was the m anufacturer of the

Motherwell – this com pany was responsible for installing and

The early stages of the various actions were case m anaged by the Senior Master. The actions were all transferred to the Commercial Court in early 2007. At this time it was agreed between Total and Chevron that claims should be met on a 60/40 basis without prejudice to any arguments as to the final apportionm ent of responsibility for the claims.

A Case Ma nagement Conference to ok place in the Comm ercial Court in June 2007 which made provision for a trial of prelim inary issues in O ctober 2008. The order called for an exchange of lists of proposed issues for approval by the court at a restored C MC in October. By th is stage the Report and Recomm endations of the Commercial Court Long Trials W orking Party was available in d raft. As nom inated judge for these proceedings I sought to implem ent m any of the proposed

At the restored CMC in October, a provisional list of issues was prepared, with disclosure o rdered to take place in stages between December 2007 and February 2008. Witness statements were to be served by 25 April 2008. In the meantim e there were to be s teps taken to agree a lis t of expert issues. It was further o rdered that all findings of fact or rulings of law were to be binding on all parties in the Buncefield actions.

The CMC was again restored in March 2008 . The list of issues was settled and approved by the court. Short extensions of time for the service of witness evidence were granted. Leave to call expert evidence was given within four disciplines with a timetable for exchange between May a nd June 2008 against the background of an agreed form of instructions to the relevant experts.

The CMC was further restored in May 2008 at which leave was granted to the claimants to plead a case in public nuisa nce. More significantly, summ ary judgment

Such admissions were subject to the questio ns of the foreseeability of any loss, the

By the tim e of the trial this p roposition had been refined to the rather rem arkable contention, based on expert evidence (the admissibility of which was challenged), that overpressure damage to buildings more than 451 metres from the pump pad at close to Tank 912 was unforeseeable (with overpressure dam age to tanks and associated structures only foreseeable within a much smaller radius).

In the event this proposition was abandoned very early in the trial and the claim ants’ participation in these preliminary issue proceedings thereafter was largely confined to

Thereafter in June further admissions were made by both Total and HOSL. It was accepted on the same basis that one or the other, subject to questions of consent in regard to claimants within the perimeter, was also liable to the claimants under the rule in Rylands v. Fletcher.

More astonishing might be thought to be the absence of fatal injury to those in the control room or even to those lorry drivers who were at the loading racks.

Accordingly I propose to deal with these issues first. Of them the issue which attracted the greatest volume of material and submission was the question as to which of HOSL and Total was vicariously responsible for the negligence of the supervisors. It was Chevron’s case that Total was liable. In this they received active support from HOSL. It was Total’s case that HOSL was liable. No party suggested that both were liable or that any other person was liable.

It is a m atter of great credit to the p arties, their solicito rs and their cou nsel that the trial and th e preparatio ns for it, w hich on any view were on a grand scale, were conducted with such efficiency. Of particular note was the fact that, the trial havin g started in early October 2008, the oral eviden ce was completed within 20 days. Final speeches co mmenced at the begin ning of Decem ber and were completed on 16 December. Indeed th is progres s is in som ewhat stark con trast to the notification received by the Court on 1 Dece mber 2008 from solicitors acting for the Health and Safety Executive and the Environment Agency giving notice of criminal proceedings commenced against To tal, HOSL, Motherwell, TAV and BPA in respect of th e explosion. Even committal proceedings are now not expected before May 2009.

There were a large number of agreements relating to the joint venture. In due course I shall have to feed that contractual history into the overall chronology. But it was very much at the heart of Total’s case th at the identity of the “operator” of the HOSL site and thus, it was subm itted, the person in c ontrol of the tasks being undertaken by Mr Nash and Mr Forde on the night in question was to be derived from the content of the contractual arrangements. It is acco rdingly helpful to get a bird ’s eye view of the agreements at an early stage.

On 18 March 1988, Fina and Texaco entered into a Joint Venture Agreement (‘JVA’). The background was as follows. During the 1980’s Texaco outgrew its storage facilities at Avonm outh and was looking for an opportunity to participate in Fina’s much larger facility next door. At the sam e time Fina was planning the construction of the Fina-line from Humberside to Buncefield. This was a substantial en terprise involving an investment in the region of £50 m illion and requiring a su itable storage depot at its Southern end. Fina’s th en site at HOSL East was too small by itself bu t Texaco owned what became HOSL West which if added provided adequate space.

The parties initially agreed to enter into a joint venture to develop and operate the site at Avonmouth. Among other things it was agreed (i) that all property and other assets held for use in connection with join t operations at Avonmouth would be held by the Participants in equal shares (Clause 2.2.1); and (ii) that the Participants would incorporate a com pany, Bristol Oil Storage Ltd. (‘BOSL’) to ‘undertake on their behalf the... operation and maintenance’ of the facility as ‘Operator’ (Clause 2.8.1).

BOSL’s duties were set out in Clause 2.9:

“2.9

Authority and Duties of Operator

A number of functions were then set out in Clauses 2.9.1 (a)-(g). These contem plated the creation of an Accounting P rocedure and Operating Regulations, and included at (a) – (d):

“(a)

the develop ment and im plementation with in three cale ndar months after the date of this Agreem ent of an accounting procedure to regulate actions in relation to all expenditures made and all co mmitments incurred in connection with its [i.e. BOSL’s] duties hereunder ("the Accounting Procedure");

(b)

the develop ment and im plementation with in three calendar months after the date of this Agreem ent of procedures and regulations to govern [BOSL’s] operation and maintenance of the

Facilities ("the Operating Regulations");

(c)

the receipt from the Constructo r of the F acilities an d the subsequent operation and m aintenance thereo f in accord ance with the Operating Regulations and the Accounting Procedure.

(d)

the provision of all technical and advisory services required for the safe and efficient operation of the Facilities.”

A “management agreement” for the Avonm outh Terminal (and, by reason of clause 3.1.5 (below) the Buncefield Term inal) was foreshadowed in clause 2.10 of the JVA, which was headed “Allocation of Costs.” That provided for som e costs incurred by BOSL as operato r to b e borne eq ually by Chevron and Fina and other costs in proportion to their respective usage of the facilities in the relevant calendar year. Those costs to be borne equally were to include a “management fee” to be charged to BOSL as operator by either Fina or Texaco.

Clause 9 of the JVA, headed “Relationship of the Parties” included, at Clause 9.2, an agreement by each of Texaco and Fina, the then 50/50 joint venture participants:

“to indemnify the other as to one half of any claim by or liability to (including any costs and expenses necessarily incurred in respect of s uch claim or liability ) any party not being a party hereto, arising from the Joint Operations.”

With regard to the Bu ncefield s ite, the situation was com plicated by delays in obtaining approval for the pro ject from Fina’s head office. The ag reement was therefore framed as a mutual option , entitling each party to require the other to enter into a new joint venture to develop and operate the HOSL sites (Clause 3.1.1), on terms ‘substantially sim ilar in all m aterial respects’ to those governing Avonm outh (Clause 3.1.5).

The option was duly exercised by Fina and in due cours e the parties entered into a Supplemental Agreement dated 21 May 1990. The Supplem ental Agreement designated HOSL as the company which was to ‘operate and maintain on their behalf’ the facilities at Buncefield (Recitals C and D).

Clause 3 provided:

“As contemplated by C lause 3.1.5 of the JVA, the term s and conditions set forth in clause 2 of the JVA in relation to the development at Avonmouth will ap ply mutatis mutandis to the joint development and subseque nt operation of the petroleu m storage and distribution facilities … situate at Buncefield…”

Clause 3.5 introduced a new provision (Clause 2.8.1) into the JVA which provided for

On 31 January 1991 Fina entered into an agreem ent with BPA for the provision of manpower services for em ployment in the Buncefield con trol room “relating to th e operation of” the HOSL term inal. It did so e xpressly as “owner of the Fina Pipeline and as operator for and on behalf of HOSL and the HOSL participan ts”. The salient features of the agreement were as follows:

The relevant services to be provided by BPA we re set out in Exhibit A. They called for the provision of manpower for the “control and operation” of the Fina-line and the HOSL terminal by way of a continuous double m anned shift of the control centre and co-ordination with the UKOP fa cilities. The services were to be provided “in accordance with the op erating m anuals and procedures provided by [Fina]”. As regards HOSL Terminal Operation these were to include:

“4.2

- Operation of the term inal control system to monitor product receipt into tankage and dispatch to UKOP West London or terminal loading racks

-

Tankage management - Aviation fuel handling

-

….

-

Liaison with UKOP Ki ngsbury control centre and HOSL terminal personnel…

-

…

-

Monitor work carried o ut within th e Terminal that affects the equipment … in accordance with Fina operating and safety procedures

-

Day to day liaison with the nom inated HOSL management Representative”

Paragraph 5 of the exhibit provided that “Procedures” covering all operations were to be provided by “the Company” (i.e. Fina) to cover the Fina-line and HOSL Terminal.

Thereafter a Supplem ental Operating Agreem ent was executed on 6 January 1992.

Both the procedure and the regulations were ap pended to the agreem ent. The m ore significant features of them were as follows:

On the same date a Managem ent Agreement between Fina and HOSL was executed although expressly effective from 1 June 1990. Its salient features were as follows:

On 29 January 1993 Fina (“the Company”) entered into a new agreement with BPA in regard to the provision of services at the Buncefield Term inal, once again contracting “as owner of the Fina P ipeline and as operator for and on behalf of HOSL and the HOSL Participants”. The services set out in Exhibit A were as follows:

“The Contractor shall provide one controller on a 24 hour shift basis whose prime duties will in clude the day to day operation of the autom ated control system s located within the HOSL Control Room….

The services shall…be undertaken in accordance with the operating manuals and procedures provided by [Fina] from time to time….

PURPOSE OF JOB

Day to day operation of the contro l systems located within the HOSL Cont rol Room for the control of Fina-line, the HOSL tank farm and loading racks.

All duties to conform to procedures and work instructions in compliance with [Fina’s] policy on Health, Safety and the Environment….

MAIN DUTIES

1.0

Fina-Line Control

1.1 Operation of the Fina-Line SCADA system for the remote/automatic operation of pipeline equipm ent in accordance with operating procedures and work instructions.

1.2 Com pilation of run-sheets for charting of product movements through the pipeline.

1.3 Production and distribution of pum ping programmes in accordance with schedule and off-take requirements.

1.4 Liaison with HOSL and LOR personnel for general operational matters and fault rectification…..

2.0

HOSL Terminal Operation

2.1 operation of the Motherwell tank gauging system to control and monitor product receipts into HOSL storage.

….

2.3 Operation of the Motherwell tank gauging system for general tankage management.

2.7

Liaison with Duty Supervisor to maintain adequate tank rotation and any identified movement amendments to rectify stock situations.

2.8 Liaison with Kingsbury Control Centre with respect to receipts from the UKOP system.

….

2.15 Control and operation of [Fina’s] Aviation facilities via the Motherwell control system.”

The contractual story as between Fina, Texaco and HOSL now m oves on som e two

Clause 5.02 dealt with the period up to the com pletion of the Sale and Purchase Agreement (referred to as the ‘Buncefield Interim Period’). It provided:

“In its capacity as m anager of the Buncefield Term inal, Fina shall during the Buncefield Interim Period conduct all ordinary business in relation to th e Buncefield Terminal in a proper and workmanlike m anner and shall conduct operations in accordance with m ethods and practices custo marily used in good and prudent oil storage practice with that degree of diligence and prudence reasonably and ordinarily exercis ed by experienced m anagers engaged in a sim ilar activ ity un der similar circumstances and conditions.”

The parties envisaged that the JVA would be superseded b y a new agreem ent the terms of which would depend on w hether it was decided to continue with HOSL as a corporate vehicle for the join t venture or whether to liqui date it. Clause 4.01 of the Sale and Purchase Agreement accordingly required Fina and Texaco to notify Elf of their decision whether to liquidate HOSL (and BOSL) by 30 June 1994.

Under Clause 4.03(i) of the Sale and Purchase Agreem ent, if no decision about the fate of HOSL was notified by that date or if the decision was to retain it, Texaco and Fina were required to prepare a new JVA by 31 Dece mber 1994, to be known as t he Consolidated Shareholder Agreement (or ‘B uncefield CSA’). This instrum ent was defined in Clause 1.01 as

“a consolidating shareholders agreem ent relating to the

Buncefield Term inal, substantially in the form of the Buncefield JVA but am ended to reflect the existence of an operating company.”

The ‘Buncefield JVA’ for this purp ose was defined as the JVA annexed to the Joint Venture Agreement Execution Agreement. This latter agreement was dated 1 January 1994. This was a conditional agreem ent which was to take effect if the decision was taken to liq uidate HOSL. In that e vent, all three Participants were to execute a n ew JVA in a form which had been neg otiated in detail between the three companies and was set out in an annexe. This form designated Fina as Manager of the term inal. Appended to it were a new Accounting Pr ocedure and Operat ing Regul ations, t o replace those introduced by the Supplemental Operating Agreem ent of 1992. These provided for Fina to operate the term inal under the supervision of a Managem ent Committee comprising representatives of the Participants.

There was also a Novation Agreem ent dated 1 January 1994. It provided for Elf to assume the rights and obligations under the existing JVA, with som e amendments. In the event, since no revised JVA (or CSA) has been executed, it has continued to govern the Participants’ relationship to this day.

Clause 2 provided for various am endments to the JVA. Clause 2 of the JVA was replaced by a new clause 2.2.1 which provided:

“Subject as hereinafter provided, all of the property and other assets acquired or held for use in connection with the operation and maintenance of the B uncefield T erminal in acco rdance with this Agreement (as supplemented/amended and/or novated) shall be owned and borne b y [Chevron], Fina and Elf and their perm itted assigns and successors (“the Participants”) in proportion to their undivided participating interests (“Participating Interests”) as follows:-

[Chevron] 40 Fina 40 Elf 20”

Clause 3 provided:

“3.

Subject as expressly provided in this Novation Agreement all other provisions of the Joint Ventu re Agreement shall remain in full force and effect and binding on the parties thereto, insofar as the sam e are in force and effect and binding on those parties immediately prior to the Effective Date.”

It subs tituted a new Accounting P rocedure an d Operating Regulation s for those annexed to the 1992 Supplemental Operating Agreement. These were the same as the corresponding docum ents annexed to th e Joint Venture Agreem ent Execution Agreement. They pro vided for ‘the Ma nager’ to perform substantially the same functions as ‘the Operator’ under th e Accounting P rocedure and Operating Regulations of 1992. However, while the Novation Agreem ent remained in force, it was provided that references to ‘the Manager’ should be read as meaning HOSL and references to the ‘Man agement Committee” as meaning the Board of HOSL: Clause

The Operating Regulations had the following further provisions:

“[HOSL] shall recruit and employ such staff as the [HOSL Board] shall from tim e t o tim e consider necessa ry for the proper conduct of the Terminal Operations and each of the Participants shall (if so requested by the [HOSL Board]) second personnel to [HOSL] on a full tim e basis and otherwise on term s to be agreed by the [HOSL Board].” Section 1 para 2.1

Section III contained indemnities by and to the Participants:

“1.1

Each of the Participants shall indem nify, hold harm less and defend each other from and against any and all liabilities, claim s, demands, proceedings, dam ages, losses, cos ts, charges and expenses whatsoever arising directly or indirectly out of or as a consequence of the death or illness of or injury to any em ployee, servant o r agent of such Participant or the loss of or dam age to any equipm ent or property…of such Participant or any of its employees, servants or agents, wh ether or n ot resu lting from or contributed to by any negligence or default on the part of [HOSL] or any of the other Participants or any of their employees, servants or agents…

1.2

Save as otherwise expressly provided herein, [HOSL] shall indemnify and hold harmless the Participants from and against any and all claims by third parties in respect of the injury to …any person or the damage to or loss or destruction of any property which may arise out of or in the course of or by reason of the Term inal Operations, save and except if and to the extent that [HOSL] is not indem nified in respect of any such personal inju ry, death or illnes s or dam age to or loss or destruction of property by insuranc e taken out by [HOSL] pursuant to paragraph 2.1.2 of these Operating Regulations, then each of the Participants, to the ex tent of its Pa rticipating Interest, shall indem nify and hold harm less [HOSL] from and against any such claim s by third parties (an d from and against any and all actions, proceedings, liabilities, losses, damages, costs, ch arges and expenses wh atsoever in respect thereof or in relation thereto).”

There followed sale agreements from Fina to Total and then Elf to Total. Thus by an agreement dated 1 April 2000 between Fina and TUKL (known at the tim e as TotalFina Great Britain Limited) Fina agreed to sell its business as a going concern to TUKL. In respect of any asset where the cons ent or licence of any third party was required, that agreement provided that Fina would hold such asset upon trust and for the benefit of TUKL absolutely (clause 4.3(a)). By a sim ilar agreement dated 31 December 2000 between Elf and TUKL, Elf a greed to sell its busin ess as a go ing

There was an enormous quantity of documentary evidence before the court relating to the claim by Total against Chevron (although substantially am plified by m aterial relevant only to the claim against T AV which settled durin g the course of the trial). The chronological bundle of documents ran to 110 volumes. In addition there were a large number of other volum es containing al l the relevant contractual docum ents, a transcript of the HSE inquiry, m aterial from the internal Total inquiry, details of insurance arrangements, supporting material exhibited to the expert reports and so on. It was all treated as ad missible at the ins tance of any party but predictably only a small proportion was referred to during the cour se of the trial. That is by no m eans a complaint. A core bundle would have been very difficult to maintain.

The following were called to give oral factual evidence on Total’s behalf:

The following were called to give oral factual evidence on Chevron’s behalf:

By and larg e I felt confident that most of these witnesses were doing their best to assist the Court. My p rimary reservation relates to Mr Lin ley. It is inevitable that witnesses get somewhat imbued with the p arty line of the p erson calling them. But my impression was that Mr Linley was somewhat evasive and unwilling to face up to the difficulties of reconciling his evidence with the contem porary material. But impressions can be very m isleading. Furthermore I have very m uch in mind that the trial was taking place m any years after th e m aterial ev ents occu rred. Indeed the underlying joint venture agreem ent was entered into over 20 year s ago. The actual recollection of witnesses must inevitably have dimmed, giving rise to some gaps in the story and a degree of inconsistency.

In these circumstances I respectfully endorse the observations of Lord Justice Robert Goff in The Ocean Frost [1985] 1 Lloyds Rep. 1 p. 57 to the effect that “where there is a conflict of eviden ce such as there was in the present case, reference to the objective facts and the docum ents, to the witnesses’ m otives and to the overall probabilities can be of very great assistance to a judge in ascertaining the truth.” It is against that background that I propose to set out in due course the broad history of the joint venture as emerges from the contemporary documentary material as a foundation to the resolution of the issues before me.

Before leaving the factual evidence I should record that Total in addition relied upon the following witness statements:

A large number of other factual witness s tatements were served by Total but the makers were not in th e event called and their statem ents were not adm itted in evidence. The more notable were as follows:

The immediate consequence of the absence of these witnesses was as follows:

As might be anticipated, Chevron made som e considerable play as to the absence of all these witnesses many of whom, it was accepted, were in the jurisdiction and ready, willing and able to give evidence. In particular I was invi ted to conclude that M essrs Forde, Ollerhead and Donaldson had been deliberately “pu lled” because, insofar as they were able to speak to the issues, they had no answer to Chevron’s case, or none that would bear exam ination. I will if necessary deal with that subm ission in due course.

There were three areas of expertise on which oral evidence was called:

Having introduced the relevant agreem ents, my purpose in this section, given my approach to the witness evidence, is to set out the chronology of the joint venture as it appears from the contemporary docum ents. This will form a base upon which to assess the argum ents although it will be necessary to consider so me addition al documents as individual issues are considered. I will try to introdu ce the competing arguments as the points of controversy emerge.

As outlined above the jo int venture between Texaco and Fina relating to Buncefield arose out of another joint venture at Avonm outh. Fina and Texaco had adjacent sites in Avonmouth and in the m id 1980’s, shortly after Texaco had acquired Chevron’s business in the UK, Texaco proposed build ing a joint terminal. The response from Fina was to suggest a second joint venture at Buncefield to which site Fina was proposing to build its own pipeline. The concept involved making use of two sites at Buncefield - the “o ld HOSL” site to the North East which was operated by Fina in a joint venture with Texaco and Texaco’s North London Te rminal to the North W est which was at that stage partly undeveloped.

In fact agreement on the Avonmouth joint venture was reached first. It was dated 1 8

The option was duly exercised by Fina on 3 February 1989 following approval of the construction of the Fina-line. A few days later a m eeting took place at Epsom between representatives of Texaco and Fina to discuss the joint d evelopment of the Buncefield site. The minutes do not record all those present (though they included A Mack and D Arney). The m eeting approved the use of HOSL or a new com pany of the same name, HOSL 1989, as the joint vent ure vehicle. Item 11 of the m inutes read:

“11.

It was agreed that Fina would operate and engineer HOSL

89 and provide secretarial service.”

As provided in the JVA the duties of the Operator (see clause 2.9.1) included the operation and maintenance of facilities “in accord with the Operating Regulations and the Accounting Procedure.” These regulations and procedure were them selves to be produced by the “Operator”. Clause 2.10 dealt with the allocation of costs. Some were to be shared equally, others by reference to usage of the term inal. Amongst the former was to be “the m anagement fee to b e charg ed to the Operator by eith er Petrofina or Texaco for administration and support services”.

This latter provision, it can be assum ed, led to one of the item s in t he minutes of HOSL’s first Board meeting on 23 May 1989:

“5.

It was agreed that Petrofina would propose the basis for the management fee…largely based on those already agreed f or BOSL.”

The question of staffing was postponed until the next m eeting on 11 July 1989 where the minutes record:

“8…No decision had yet been taken as to whether the staff would be seconded by the participants or employed by HOSL.”

In the event, although staff at BOSL were in due course all employed by BOSL itself, the arrang ement at HOSL was for all staff (other than su bcontracted staff) to be “seconded” by Fina to HOSL. The re was one exception at the early stages, a Mr Perrin from Texaco. Quite what “secondm ent” entailed was a m atter of controversy. In particular whether it meant a temporary transfer of “employment” (Total’s case) or a temporary transfer of “role or place of employment” (Chevron’s case).

At the board m eeting on 7 September 1989 chaired by Mr Johnson of Fina, Mr Johnson is recorded in the m inutes as having “reported that Mr Parsons was to be appointed Manager of Pipeline Operations and the term inal at Buncefield.” There is no documentation to suggest that this was other than a direct appointm ent by Fina without consultation with the HOSL board.

The first annual report of HOSL to the y ear ended 31 December 1989, albeit not filed at Com panies House until 6 November 1990, spelt out the trading activity of the company. It was Total’s case that the director s’ description of that activity (repeated in every annual report thereafter) was both accurate and revealing:

“The principal activity of th e company became [trading on ly commencing post balance sheet] th e operation of joint venture petroleum product storage facilities.”

At a HOSL board m eeting on 17 January 199 0 there was a detailed discussion of manning levels. The minutes record as follows:

“Manning levels

Mr Parsons tabled an am ended version of the paper outlining a proposal on the manning at Buncefield in 1991.

The integration of terminal and pipeline manpower was agreed to be the m ost econom ic philosophy with ground fuels throughput being equitably shared between Petrofina and Texaco. Avtur [aviation fuel] would be solely for Petrofina’s account as would be Fina-line costs.

The propos ition was o n the basis of a m anagement team comprising a Fina nominated general m anager, two assistant managers and an engineer - the latter predominantly on pipeline work but contributing also to automation needs at the Terminal. The management team would be made up of secondees.

There would be ten shift contro llers provided on a contractual basis by BPA the six technicians and two clerical assistants would be directly employed by HOSL but could be drawn from Petrofina and Texaco staff.”

Mr Parsons duly entered into negotiations with BPA. These were broadly concluded by the end of January 1990 although the final agreement was not executed until a year later. As already noted Fina was the counterparty and was recorded as “contracting for itself as owner of the Fina Pipeline and as operator for and on behalf of HOSL and the HOSL Participants.”

Fina’s position with regard to staffing was emphasised at the HOSL board meeting on 15 March 1990 at which Mr. Parsons is recorded in the minutes to this effect:

“He said that with the exception of Mr Perrin who would be on secondment from Texaco and the BPA shift controllers Petrofina would wish to em ploy all the other staff. To effect the transfer of suitable personnel to Petrofina, Texaco would therefore first need to make them redundant.”

It was Chevron’s cas e that this s tatement of policy, tak en with the nom ination of the general manager, demonstrated Fina’s determination to undertake the operation of the site. Total asserted that the position rem ained consistent with “secondment” of Fina staff to HOSL.

On 21 May 1990, the Supplem ental Agreement relating to the Buncefield joint venture was executed. This recited the es tablishment of HOSL to “operate and maintain” the facilities. Indeed HOSL was defined as “the operato r” in clause 3.5. In Total’s subm ission, this was the clearest possible statement of the nature of the contractual bargain. It was however Chevron’s case that despite that designation, in accord with the previous understanding, such activities were in fact delegated to Fina just as such activities were delegated to Chevron as regards the Avonmouth site.

At a board m eeting on 30 May 1990 it was noted that Messrs Parsons, Perrin and Sinclair were “in situ”. It was agreed by the board that “HOSL should take over the operation at Buncefield Terminal as soon as possible”. It is of perhaps som e passing interest that at the same meeting the secretary of HOSL announced that the registered office of the company needed to be changed in the wake of the change of nam e of the relevant building from Petrofina to Fina House in Epsom, Surrey.

In Septem ber 1990, newspaper advertisem ents were placed in the nam e of HOSL seeking oil term inal technicians. The advertisem ent described HOSL as a joint venture between Fina and Texaco which “op erates at Buncefield Terminal, a fully automated and pipeline fed oil storage and distribu tion facility”. App licants were invited to write to Mr Parsons at HOSL.

One of the successful applicants was Mr Forde who in due course was on duty in the control room on the night of the explosion. His letter of appointm ent dated 4 October 1990 from Fina’s personnel departm ent confirmed his engagem ent “as a technician seconded to” HOSL. A sim ilar letter of enga gement was sent to another applicant, namely, Mr Nash on 29 October 1990. It follow s, and Total place some emphasis on

By now it had become Mr Parsons’ practice to prepare a “General Manager’s Report” for presentation to the board of HOSL at the regular m eetings (although later they came to be lim ited to two a year – one in February and one in July alternately at Buncefield and Avonmouth). It was Total’s ca se that this dem onstrated that he w as responsible to the board for terminal activities whilst Chevron maintained that he was simply making reports on behalf of Fina.

In his report of 10 October 1990, having referred to “personnel placed at Buncefield under the HOSL m antle” he went on to reco rd that as at the tim e of writing HOSL “has yet to assum e a ny direct responsibility as an operator for the Term inal

At the board m eeting at which Mr Parsons tabled this repo rt the minutes record two further matters:

“6 JOINT VENTURE STRUCTURE

Mr Johnson reported that Fina’s Legal Department had raised again the d esirability o f having a joint ventu re ra ther tha n corporate vehicle for operations at Buncefield.

It was agreed that there were good reasons for a corporate operation, not least the perceived independence from the t wo shareholders, but that a final decision should be taken following consideration of written propos als from Fina’s Leg al Department.

7 OPERATING BUDGET 1991

The Operating Budget, previously circulated, was accepted with the exception of the m anning structure appointm ents where it was agreed that costs relating to Operations Managers (pipeline and Term inal) should be m erely split 50/50 rather than subdivided further.”

This latter topic reflected the need to m ake allowance for time spent by staff based at HOSL on the Fina-line and the T otal avia tion tanks as opposed to joint venture activities. Chevron, while accep ting that a ro ugh and ready apportio nment could be made (initially 50 /50 and later 70 /30) for bud getary purp oses, subm itted that th e reality was that the staff were perform ing three tasks at once and they could not be “employed” by different entities for each of th e different tasks. Total su bmitted that the division of costs demonstrated the ability to reflect a division of labour between different employers.

At this stage as heralded in the October m inutes there was som ething of a review of the retention of HOSL a s the joint venture vehicle. It certainly was a live proposition from Fina’s point of view. A letter from Fina’s Legal Departm ent to Texaco dated 2 November 1990 reads as follows:

“I enclose herewith the long aw aited Agreement related to the running of the Buncefield Terminal for your comments.

As discussed at the last HOSL Board meeting this Agreement is based on the upstream Joint Venture Operating Agreem ent and appoints Fina as Operator of th e two joint venture participants, Fina and Texaco, removing the need for a joint venture company. This preferred structure has also been discussed by David Codd and Malcolm Webb and I understand that no fundamental problem s with this proposed structure were foreseen.

Fina’s preference for this joint venture arrangement is based on the cost savings involved and a wish to simplify the structure.”

This agreement which was to become the Supplemental Operating Agreement was not in the event executed until January 1992. It is clear that F ina’s understanding at this early stage was that Fina would be designated the operator and it is for that reason that the need for the continuation of HOSL was questionable. However it is clear from internal emails within Texaco in late 1990 that any proposal to disband the corporate structure would be vigorously opposed.

At the board m eeting on 18 December 1990 Texaco was recorded as b eing “resolute in their wish to maintain the limited company structure”. In Fina’s view there was no justification for the continuance of the joint venture vehicle. But it is apparent from a letter dated 21 Decem ber 1990 from Fina’s Leg al Department that any hope of their

The letter is of som e significance since it purports to outline Fina’s perception and strategy in this respect as laid down by its Chief Executive:

“As I have explained to you Fina wished to remove the lim ited company, HOSL, from the joint venture arrangem ents at Buncefield as part of its management strategy, introduced by its Chief Executive, to remove all unnecessary companies from its corporate structure.”

The letter went on to draw a comparison with the position at Avonmouth:

“I understand that the m ain line of argum ent against our proposals were that Texaco’s m anagement wished the Buncefield agreement to m atch the comm ercial terms in force at Avonmouth. Our docum ent did that. Comm ercially the two are word for word the sam e - the only difference being the

The letter concluded:

“At no point has Texaco actually set out what purpose it believes the joint ven ture company, HOSL, served nor why it felt it had to rem ain. However, notwithstanding the above, which I set out to put the record straight, I am resigned to the fact Texaco will not consider our proposals and therefore revert to the former structure.

Accordingly please find enclosed for your comm ents a further draft Operating Agreement which provides for the continuance of HOSL and a draft m anagement agreement which follow the format of the BOSL agreements.”

In Decem ber 1990 Fin a put in an applic ation for a petroleum licence on HOSL’s behalf. The application described the term inal as being under the m anagement “of

On 31 January 1991 the initial BPA agreement was entered into by Fina. At the board meeting on 5 March 1991 Mr Parsons apologised for the fact that Fina was unable to produce the operating costs due to difficulties with Fina’s new com puting system. He also reported that a draft of the Accounting Procedure and Operating Regulations had been circulated.

At the board m eeting on 9 July 1991 it was noted that the Managem ent Agreement was still not executed although as between the two legal departm ents agreement had been reached on almost all issues.

Following construction of the facilities there was an opening ceremony on 11 September 1991. It appears that a Texaco document describing th e joint venture may have been distributed to those present. This contained the following on the question of responsibility:-

“Responsibility for th e join t ven ture is ves ted in the HO SL Board consisting of four directors, two from each com pany. Management Services together with other central office support services are provided by Fina PLC.”

The next board meeting was on 10 January 1992. The board approved a proposal that

In the meantime the Supplemental Operating Agreement had been executed. Despite the retention of HOSL as the joint venture com pany, the Accounting Procedure scheduled to the agreem ent defines “Operator” as Fina “in its capacity as Operator and not as a Participant”, a definition also adopted for the purpose of the Operating Regulations. Further by virt ue of the Operating Regulat ions, “th e Op erator sh all recruit and employ such staff as the [HOSL] Board shall from time to time consider necessary” although “each of the Participants shall (if so requested by the [HOSL] Board) second personnel to [HOSL].”

Much debate was devoted to this agreem ent which Chevron contended was only consistent with delegation of all operational m atters to Fina (HOSL not being a participant). Total submitted that the agreement if properly construed in this way was “mistaken”, was inconsistent with the contem porary Management Agreement and in any event had been fully overtaken by the terms of the later Novation Agreement.

The Management Agreement had indeed also been signed in the week previous to the January meeting although expressly to be in effect as from 1 June 1990. The services expressly required from Fina under the agreem ent were largely (as its title pag e stated) expressed in term s of accounting and adm inistrative services. This demonstrated, on Total’s case, that the scope of any delegation to Fina was very limited. Chevron submitted that if it was necess ary to identify the term s upon which the tasks of operation and m anagement were in fact being undertaken by Fina, and such was outside the terms of the Operating Regulations, then it was within the terms of the Management Agreement either by virtue of its express terms or by virtue of an implicit extension of the same.

The following m onth, on 27 February 1992, Mr Perrin, the Operations Manager seconded to HOSL from Texaco, reported on a visit to Buncefield by HSE inspectors on 13 February 1992. The note described the structure of HOSL as follows:

“There still appears to be some confusion on the part of HSE on the accountability of joint venture operations using seconded and contract staff.

I explained the set-up at HOSL, i.e., that whilst nobody is actually on the HOSL payroll as such, their responsibilities during secondm ent are directly to HOSL and report through HOSL management to the HOSL board.”

These arrangements were the subject of a m emorandum from Mr Par sons dated 24

Total submitted that Mr Perrin’s view was entirely accurate and was supported by the organogram. Chevron subm itted that this propo sition was w holly unworkable giv en the lim ited role and activity of the board and, as regards the organogram s, the

In April / May 1992 a Personnel Safety Training Manual was prepared by Fina for use at and by HOSL. Issued as a “H OSL” docum ent, it nonetheless contained F ina’s policy statem ent with regard to the “P rotection of Health, Safety and the Environment”. Concurrently a “Risk Control Review” of HOSL and the Buncefield site was being prepared by Fina. The authors were Mr Johan Maertens of Petrofina’s Health/Safety/Environment/Quality Departm ent (“HSEQ”) and personnel in Fina’s Environment and Safety Audit Departm ent. A further variation on the overall arrangements was set out in the initial draft as follows:

“Fina PLC is the m anagement company in the Joint Venture Agreement and runs HOSL with Fina plc and contract staf f on behalf of Texaco Ltd and Fina plc and is responsible for the stock and financial operations of the terminal. HOSL is also responsible for Fina plc activities associated with operation and receipt of product from the Fina-line and the storage of aviation fuel for Fina plc only.”

Again at about this time, a Terminal Emergency Procedures Manual was issued on 28 April 1992. It was expressed to be issued under the authority of the General Manager of HOSL. It was described as “the property” of HOSL. Attached to it was another copy of the organogram referred to earlier.

In April 1992 an Environm ental Audit was conducted for HOSL. The relationship between HOSL and the joint venture companies was recorded as follows:

“HOSL relationship with Fina and Texaco

Under the term s of the Joint Venture Agreem ent, Fina plc has been nominated as the Managing Com pany with responsibility for providing the following support and services to HOSL,

-

Engineering

-

Accounting

-

Personnel

-

Administration - Purchasing Legal etc

-

EHS

It was not clear during the Audit that the proper channels of communication are used when Texaco and Fina contact HOSL.

It is recomm ended that the relatio nship between HOSL and Fina/Texaco is clarified by the HOSL Board of Directors. In the case of Fina, points of contact at a workin g level will b e evident when the organisation chart and job descriptions are published. Texaco should follow the proper channels when dealing with an independent Joint Venture Com pany and ensure that the General Manager is kept fully informed.”

Notably, as appears from this docum ent, Fina thus regarded “engineering” and “environment, health and safety” m atters as within their purview as the “m anaging company”.

The draft Risk Control Review was forwarded to Mr Parsons for comment on 22 June 1992 under cover of a m emorandum from Fina’s Environment and Safety Audit. The memorandum m ade it clear that Petrof ina “are attem pting to apply a common approach across the Petrofin a Group.” This demonstrated, on Chevron’s case, that Fina was in the process of im posing their safety requ irements on all term inals regarded as in the group. It was Total’s case th at whilst a common approach was being sought HOSL retained its independence with a right of veto over any proposa l which it was unwilling to implement.

In June 1992, Fina prepared an Operating and Safety Manual under the authority of Fina’s Distribution Manager. This was expressed to be the property of Fina and was signed by Mr Dwan. A copy was sent to Mr W hite then Term inal Distribution Manager but who was shortly due to take ove r from Mr Parsons as General Manager. It was issued “for the infor mation and guidance of all staff responsible for handling products within the company’s terminals.” The distribution list included the managers of, inter alia, Avonmouth, Buncefield and Kingsbury.

There was some dispute as to whether Mr W hite ever in fact saw this docum ent and, if so, in what capacity. I am not sure the point is of any great significance. But given the scope of the docum ent I think it very improbable that it was m erely sent to distribution managers. Indeed attached to the m anual were the Fina group policy

The next HOSL Board meeting was on 24 July 1992. The minutes record as follows:

“5.

PERSONNEL

Mr Parsons reported that BPA had been given notice that their contract for the supply of shift supervisors and controllers

…Local receipt procedures must at all times be adhered to. A check m ust be carried out to ensure that product is capable o f being received into appropriate tanks and periodic checks made on the volumes being received once product pumping commences…”

The final version of the Risk Control Review was published by Fina’s HSEQ in August 1992. The passage cited above was rephrased as follows:

“Fina plc is the m anagement company in the Joint Venture Agreement. HOSL runs with own and contract staff on behalf of Texaco Ltd and Fina plc and is responsible for the stock and financial operations of the term inal. HOSL is also responsible for Fina plc activities associated with operation and receipt of product from the Fina-line and th e storage of aviation fuel for Fina plc only. HOSL also provides certain services to the Fina laboratory built on HOSL land. Accounting procedures have been set up to allo cate costs associated with HOSL operatio ns and also the Fina-line, aviation fuel and Laboratory costs.”

Fina’s Environment and Safety Audit Departm ent issued an audit of the Fina-line on 10 Novem ber 1992. The question of organisa tion was dealt with in the following terms:

“ORGANISATION AND RESPONSIBILITIES

FINA-LINE is part of the integrated m anagement of HOSL. Fina Plc is the m anaging com pany for HOSL and staff are employed by Fina and seconded to HOSL, except for controllers (and supervisors until 31/01/93) who are subcontracted from BPA. HOSL was audited on 7/9 April 1992 (report HSEQ 92/5 issued July 1992). The Audit m ade a number of recomm endations concerning the organisation, reporting responsibilities, interf aces with oth er companies and operating procedures…...

The attached organisation chart for the integ rated management of the HOSL terminal and FINA-LINE is planned to come into effect on 1 ^st February 1993. Draft job descriptions have been produced for the positions above in the organisation chart.”

Attached was an organogram in the form of a revised Integrated Manpower for HOSL & Fina-line which now showed the General Manager reporting to Fina’s Distribution Manager as well as to the HOSL Board.

Mr Parsons produced his last report as General Mana ger on 12 February 1993. He was able to confirm the negotiation of the new agreement between Fina and BPA as reflected in the Services Agreem ent dated 29 January 1993 which again recited that Fina was “contracting for itself as owner of the Fina Pipeline and as operator for and on behalf of HOSL and the HOSL Participants.”

At the HOSL Board meeting that day, the following item was discussed and minuted:

“Control Room

As a result of the m anpower changes outlined in the General

Manager’s report, a proposal was made to rearrange the Control Room to facilitate that Term inal and FINA-LINE controls being in the hands of th e one Con troller. This will enable the Supervisor to be free to attend to m atters specifically requiring his attention out on the Term inal unless two persons are specifically needed in the Control Room at the tim e. The engineers would arrange a detailed estim ate of the costs which would be split on a 50:50 basis with FINA-LINE.”

This sort of m aterial was relied upon by Chevron as dem onstrating the difficulty of separating out work in the control room as regards th e Fina-line from that associated with the HOSL tankage. Total argued that there was no real difficulty: it was sim ply an accounting exercise.

In respect of this last point, Total noted that in June 1993 Texaco conducted its own audit of the various financial features of the joint venture. In the introdu ction to the document (distributed am ongst others to Mr Hum phries, Mr Spittlehouse and Mr Parsons) the terminal is described as “operated” by HOSL albeit Fina operated other costs centres at Buncefield including the F ina-line and Fina-Aviation. The payroll costs, it was recorded, were split between the “joint venture operations and Fina-line operations.” This split varied and was 50/50 as regards the General Manager bu t 80/20 as regards the technicians.

The HOSL Board m et on 18 June 1993. The operating budget was approved and agreement was reached to terminate the BPA contract as at January 1995.

By now discussion was underway to arrange for Elf to becom e a member of the joint venture. As the discussions developed, a document entitled “Management of Health & Safety” at HOSL was authorised by Mr Parsons in August 1993 (revised in December 1993). Under the heading “organisation”, the docum ent asserts that “HOSL ha s responsibility for the storage and loading f acilities and for product stock management and financial operation of the Terminal”. The document went on:

“Fina PLC is currently the Managem ent Company supporting HOSL’s Management in the following areas:

Personnel

Engineering

Legal/Secretarial

Accounting/Purchasing Environment, Health & Safety

Total Quality”.

As in the April 1992 E nvironmental Audit these tasks, as em phasised by Chevron, appear to extend somewhat beyond those specified in the Management Agreement.

Total however contended that the document merely showed that Fina was only acting in a “support role”. This was apparent it was submitted from the role of the General Manager in the context of Health, Safety and the Environment which was spelt out in the document as follows:

“General Manager has overall resp onsibility for all m atters relating to Health and Safety at Work and the Protection of the Environment, and to ensure the satisfactory im plementation of this Policy. He is respo nsible for ensuring that for mal training of personnel is provided.

In carrying out these du ties, he will be supported by specialist staff in Fina plc including the Engineering Saf ety Officer and Manager, Environment and Safety Audit.”

The issue is perhaps summarised by yet another organogram annexed to the document this time showing a reporting line from the General Manager to the HOSL Board with a pecked reporting line from the General Manager to “Fina Epsom”.

The concept of liquidating HOSL (and BOSL) then cam e back into play. In an internal Elf m emorandum dated 20 Septem ber 1993 Miss Ellison fro m Fina’s legal department is reported as explaining that the main problem with the current structu re was that of “two tier decision m aking” with the risk of a conf lict of interest as between a director of HOSL and hi s employer. Pending a decision on the point, a revised JVA was to be prepared in conj unction with the Elf Sale and Purchase

In October, Mr Sinclair issued a H OSL Quality System s Manual incorporating the requirement of ISO9002 (a standard to which Fina was working in respect of all terminals in which it had an operational interes t). That docu ment recorded that Fina “had been appointed as the Managem ent Company” but with the General Manager having direct access to the Board of HOSL and reporting thereto. The m anual also included provisions relating to the preparation of “ manuals, procedures and work instructions” to be issued under the authority of the General Manager. In addition, o n 20 October, a HOSL Term inal Emergency Procedures Manual was issued under the authority of the General Manager.

These documents were relied upon by Total as support for the contention that HOSL retained complete autonomy in the field, an independence that was ne cessary it was submitted to enable it to serve its customers and shareholders in an impartial fashion. To contrary effect Chevron subm itted that they dem onstrated that Fin a’s safety and quality policy was being imposed on the HOSL management. To the extent that some form of veto on HOSL’s behalf was b eing su ggested that, it was su bmitted, was impossible to reconcile with the concurrent responsibility f or both the Fina-line and the aviation tankage.

On 30 December 1993 the Sale and Purchase Agreem ent between Texaco, Fina and Elf was executed. At risk of repetition the pos ition was as follows. It accorded a period up to 30 June for Fina and Total to decide whether to retain or liq uidate HOSL (and BOSL) and thus, if liquidated, to rem ove any reference to HOSL in all the documentation. In the period leading to the com pletion of the sale, Fina was to conduct the business of the Buncefield Terminal “in its capacity as manager”.

In anticipation of the liquidation of HOSL “the current operating company”, the Buncefield Joint Ventu re Executio n Agreem ent was entered into which m ade provision for Fina to b e “designated Manager of the Term inal”, the specific services of the m anager under clause 5 being larg ely the sam e as set out in the 1992 Management Agreement with all engineering work added under clause 6. In clause 9, provision w as m ade for a “Manag ement Comm ittee which shall exercise overall supervision and control of Ter minal Operations”. There were scheduled Accounting Procedures and Operating Regulations consistent with this arrangement.

In the event the decision was taken not to liquidate HOSL under th e terms of the Sale and Purchase Agreement, Fina and Texaco were requ ired to prepare “the Buncefield CSA” incorporating the 1998 JVA and the 1992 Managem ent Agr eement. The Buncefield CSA was to be “substantially in the form of the Buncefield JVA but amended to reflect the existence of an operating company”. The Buncefield JVA was defined as the agreement annexed to the Execution Agreement.

The potential difficulty in these drafting arrangem ents was spotted by Elf’s in-house legal department. In a letter dated 16 December 1993, there is this passage.

“The 1988 Joint Venture Agreem ent (with new page 16) is approved save that there is a typo. Clause 6.1.2 appears twice in the docum ent. The second clause 6.1.2 should of course be clause 6.1.3!

As an aside, I note that the new Accounting Procedure and

Operating Regulation s as referred to in the new Buncefield

Joint Venture Agreem ent are to be annexed to the 1988 Joint Venture Novation Agreem ent. It seem s to me that they w ill need to be doctored slightly to reflect the continued existence of HOSL. Alternatively, paragraph (f) of the Novation Agreement needs to be reworded slightly to m ake it clear that the new Accounting Procedure an d Operating Regulations are to be read against the background of HOSL being in existence.”

The doctoring was duly undertaken but in the form of the Novation Agreement dated 1 January 1994. This m ade Elf a party to the 1988 JVA as am ended. One of the amendments was by wa y of substitution for th e earlier Accounting Procedure and Operating Regulations annexed to the Supplem entary Operating Agreement for those annexed to the Execution Agreem ent but “to be interpreted as if references to the Manager are to HOSL and references to the Management Committee are to the HOSL Board”.

This material was at the heart of the dispute betw een Chevron and Total. Total relied in particular on the substitu tion of the new Accounting Procedure and Operating Regulations to be construed on the basis that HOSL was the m anager. W hatever doubts there m ight be about th e position under the Supplem ental Operatin g Agreement, the new contractual bargain was, it was s ubmitted, entirely clea r. Chevron on the other hand drew attention to the apparent continuation of the earlie r arrangement of management by Fina which had on the face of it already been running for som e three years through until com pletion. The interpretation clause, it was submitted, was the rath er clumsy and hurried consequence of the decis ion to retain HOSL for purely formal reasons. In any ev ent it was contended whatever th e contractual definition of the Operator might be it did not bear on the question whether the tasks had been and remained in fact delegated to Fina.

The next HOSL Board m eeting was on 22 February 1994. It was reported that notice had been given to BPA for term ination of their contract on 31 January 1995. Under “personnel” it was noted that there had been several changes since the last m eeting and “it was agreed that Fina should cl osely supervise the Com pany’s operations whilst the newly appointed personnel were finding their feet”. In his report to the board, Mr Parsons announced that he was taking early retirem ent and (again without any apparent consultation by Fina with the H OSL board) “am being replaced by Robert White”.

At the HOSL Board meeting on 20 June 1994, the term ination of the BPA agreement was confirmed. The in tention was for “4 m ulti-skilled controllers to be employed by Fina and seconded to HOSL”. The 1995 HOSL budget was tabled at the sam e meeting.

Mr Spittlehouse commented on the budget in his m emorandum of 29 June 1994. His particular problem was the additional overtim e that would flow from a change from BPA staff to HOSL staff.

At a HOSL Engineering m eeting on 31 January 1995, representatives of Texaco inquired as to the implementation of COMAH regulations at HOSL. Notably this was thought by the meeting to be the responsibility of Fina HSEQ.

On 14 February 1995, there was a meeting of the HOSL Board at which it was “noted that the partners had agreed to the liquidation of HOSL at an appropriate time”. In the result the draft JVA attached to the Execution A greement was sent to Elf and Texaco by Mr Dwan, a Fina director of HOSL in June 1995.

The draft was further considered by a HOSL Board m eeting on 5 July 1995. The Operations Report of the General Manager was summ arised at paragraph 3 of the minutes:

“OPERATIONS REPORT

The Operations Report January to June 1995 was considered by the Board.

It was noted that 3 ex-BPA controllers had joined the Company as duty supervisors and had undergone extensive training on terminal operations and, following a retirem ent, a new technician with electrical qualifications had been appointed.

There are now 8 duty supervisors and 7 technicians working for the Company. The senior superv isor has been replaced by an operations co-ordinator working 50% of the time for HOSL.”

By March 1996 Fina was having second thoughts about liquidating HOSL. The minutes of a HOSL Board meeting on 27 March include the following item:

“(a)

Possible Liquidation

Mr Mann said that a m eeting had been held in Nove mber to discuss the proposed joint venture agreem ent. Since that meeting Fina has been reassessing the need to liquidate the Company which will prove to be quite com plicated. If it was decided not to liquidate, a new Joint Venture Agreem ent with amendments would be adopted in any case. It was agreed that Fina should recircul ate the JVA with a note explaining its thinking behind retaining the lim ited company status. Texaco and Elf will then discuss the position with their lawyers.”

In fact by the tim e of the next m eeting on 19 July 1996, it had been decided to stick with HOSL.

The next H OSL Board m eeting was on 21 March 1997. The JVA / Novation Agreement had still not been finalised. Yet another m eeting was fixed for July 1997. In his report to the Board the General Manager made this comment as regards “Health and Safety”:

“Petrofina has decided to attem pt accreditation under the International Safety Rating Scheme (ISRS) and will commence in the UK with an audit of HOSL in July 1997.”

This was a further example on Chevron’s case of the enforcem ent of Fina’s standards of safety across th e board for all term inals in which Fina had an active m anagerial interest, introduced without prior consultation with the HOSL board.

On 2 May 1997 a Term inal Managers’ meeting was held attended by Mr W hite and his opposite num bers at W OSL and Sunderland. The other attendees were all from Fina’s head office (including on this occasion Mr Ollerhead and Mr Coalwood the Operations and Safety Engineer at Fina’s head office later to become the Loss Control Co-ordinator). Such meetings were then held regularly about twice a year.

At the Board meeting on 22 July 1997 the board was simply informed by Mr White of the fact th at International Safety Rati ng Scheme accreditation had been sought. As regards the JVA, the minutes recorded:

“The new Joint Venture Agreement is still in the drafting stage. It was questioned whether the original Agreem ent was still valid and pertinent to the Partners cu rrent operations and liabilities. A decision with regard to the n eed for a new Agreement will be taken prior to the next m eeting after legal opinion has been sought by Fina.”

As promised by Fina at the July 1997 Board meeting, legal advice was sought on the outstanding JVA and the status of HOSL. On 26 February 1998, Fina wrote to Texaco and Elf. Having spelt out the contractual hi story, the letter from Jonathan Bond (a Fina director of HOSL) concluded:

“Whilst there is a legal fram ework in place for HOSL between the parties, this m ay not now strictly reflect the agreed evolution of operating practices at the practical level of the terminal.”

It was reco mmended that each party should review the d ocumentation to identif y

13 “necessary revisions to the JVA for the future.”

In January 1998 Fina adopted the International Sm all Site Safety Rating System (ISSSRS) as a common approach to health and safety at all “Fina operated terminals”. This expressly was to include B uncefield. (This decision was reviewed and confirmed when TotalFina was formed in April 1999.)

In February 1998, Mr White issued two “work instructions” relating to product import, one for the Fina-line (W I10) and one for the UKOP line (W I11). The details of these instructions are not as such material since they were replaced in March 2002. However on Chevron’s subm ission they were indicative of lax supervisor’s practice prior to that tim e. Of particular note was a recomm endation in th e Fina-line work instruction (not repeated in the later version):

“4.

When the tank is app rox 95% full, the ATG activated an alarm which signals to the Supervisor the need to switch to another tank if the batch receipt has not been completed.”

At the HOSL Board m eeting on 3 March 1998, the m inutes also record approval of

We have now reached the tenth anniversary of the establishm ent of the JVA. On 16 September 1998 Mr W hite wrote to the HSE enc losing a draft of the “HOSL Health and Safety Procedures ”. Attached was a “com prehensive organisation sheet” which showed that Mr W hite reported to “Head Office Epsom ”. In the Statem ent of Activities, it was stated that Fina was “the m anagement com pany controlling the activities of the terminal” although HOSL “as appointed m anagement company” was responsible for safety.

On 7 January 1999, Mr Linley wrote to the term inal managers at HOSL, W OSL and Sunderland (together with joint venture board directors):

“Further to our detailed review of Fina plc’s Term inal Operations with respect to Health & Safety Management, it has been decided that a training programme be com piled for all those staff who work within the Term inal or who have line management responsibilities for Term inal Operations within a head office environment…

Fina will advise its Joint Venture Partner of the costs associated with delivering the training programme and seek approval to proceed without delay.”

Chevron relied upon th is letter as only consistent with Fina’s imposition of its safety requirements at all th ree term inals with asso ciated dep th of m anagement being provided by head office. Total’s position was that it begged the question whether HOSL was in a position to exercise independent judgment as to the appropriateness of such requirements in relation to the HOSL site.

At this stage Mr Linley was unhappy about the charges which the HSE was proposing to make in respect of reviewing compliance with COMAH regulations. On 19 January 1999 he wrote to the HSE to com plain. He di d so not simply on the basis that Fina would need in due course to contribute to these costs but also on the basis that, as the first sentence asserts, “F ina plc distributes petroleum products from numerous inland locations and acts as the Operating Com pany for two join t venture terminals located in close proximity to other petroleum storage depots”.

Fina’s HSEQ Department prom ulgated an accident reporting m anual in February 1999 for use at HOSL and elsewhere. It was the manual which was acted on following a “near-miss” at Buncefield in 2003 (see be low). The systems required investigation of serious acciden ts (or inciden ts with such a potential), follow up by on-site management, review by “senior management” and a final review by HSEQ.

At the HOSL Board m eeting on 2 March 1999 Mr W hite reported on the fact that COMAH regulations had just com e into force and explained the procedures and documentation which “the HSE expects the Company to adopt”.

Fina’s Risk Management System Training manual was furnished to supervisors when they were undertaking training (Mr. Doran’s copy was in the bundles dated 23 March 1999). In April, Fina (this was shortly before the m erger with Total) prom ulgated a

“Safety and Health Loss Control Manual” as being a safety m anagement system

(SMS) expressly applicable to HOSL, WOSL and Sunderland as being “Fina managed oil terminals”.

Provisions of note were as follows:

“1.1.4

The Com panies Senior Managers conduct regular safety tours.

The Senior Manager on site conducts a safety tour on a m onthly basis, this is supported by further tours which are carried out by the Managing Director, General Manager and Operations Manager throughout the year at prescribed periods. …

The Senior Manager on site attends at least half of all Safety Meetings….

1.1.6

The objectives are set annually by the Managing Company [Fina] and are sp ecific to the location. These are m easurable, tim e bounded and will often relate to particular elements contained within the Fina Safety Management System.

1.2

LOSS CONTROL CO-ORDINATOR

The Loss Control Co-ordinator is responsible for the development, co-ordination, adm inistration and auditing of the Fina plc m anaged Oil Terminal Safety and Health Loss Control System and will advis e the General Manager on Safety and Health Loss Control.

The Loss Control Co-o rdinator will ensure th at the safety and health lo ss control system and training are developed, im plementation strateg ies identified and that approp riate system auditing is conducted to measure and evaluate the quality and com pliance of the system.

1.2.1

The Managing Companies Operations and Safety Engineer [ Mr Coalwood] has been designated Loss Control Co-ordinator….

4.0

TASK ANALYSIS

Fina plc recognises the need to identify the m ost critical tas ks carried out by its em ployees and contractors. Critical tasks are th ose relativ ely few tasks which have the highest potential for loss (safety, health, environment, quality, fire etc) if they are done incorrectly. All staff carrying out task analysis and

risk as sessment will have rec eived app ropriate training.

4.1.2

It was decid ed that any task which attracted a high rating required imm ediate attention in th e form of a for mal task procedure and work procedures or practic es could cover those attracting medium or low ratings.

4.1.3

Critical tasks, procedures and practices will be reviewed as part of th e accident in vestigation procedure … and in any case every 18 months.”

There followed a table identifying that the Term inal Manager was responsible for appropriate task analysis.

This SMS was potentially an im portant featu re of the d ispute between Total an d Chevron. Its primary significance from Chevron’s perspective was its alleged support for a seamless management/operating system throughout the Fina/Total organisation. But it also had a significant bearing on the s ubsidiary issue as to whether personnel other than Mr Nash were responsible for the explosion. It was Total’s case that the explosion was attributable to a wholesale disregard on the part of Mr Nash to wel l established and understood procedures. Although it was accepted that tank filling was a critical task, it was contended that even if a written work procedure should have been created its absence was not causative. Chevron’s case was that, in line with the SMS, best practice required the preparation of a written task procedure and given the apparent lax m anner in which activities were regularly undertaken in the control room, the absence of any such task procedure (taken with the consequential absence of instruction, supervision and audit) was one of the causes of the explosion.

The SMS was duly adopted by the HOSL Board at its meeting on 27 July 1999. At the same m eeting Total (now being in control of Fina) sought approval “as the management com pany” of a partial pay increase for H OSL staff albeit o ther companies in the Total group would not pay any increase for a further year.

In the wake of the appointm ent of Mr Linley as Manager Term inal Operations a job description was prepared which m ade him responsible for ensuring that “Total Finaline and th e 7 oil storage term inals which TotalFina m anages and engineers are operated and m aintained in a safe and cost effective m anner.” The attached organogram placed him as Mr White’s line manager.

On 25 Novem ber 1999 Mr Baner from Total’s Head Office in Paris sent a memorandum to all Total Fina Term inal Managers (copied to Mr Linley and Mr Coalwood) drawing attention to the need to com ply with the COMAH regulations which im posed a duty on “an operator of an establishm ent to take all m easures necessary to prevent major accidents”. The memorandum concluded:

“It is recommended that we initiate immediately the drafting of MAPP documents for e ach COMAH site identified above but the top priority is to co mplete Safety Management System that has been developed under ISSSRS for the ex-Fina term inal and in particular the risk assessm ents for m ajor hazards under the existing assessm ent system . The next priority m ust be to

develop a common Safety Managem ent System for all

TotalFina terminals. ”

The first draft of the em ergency plan required by chapter 6 of the COMAH regulations was prepared by Messrs Osprey Associates. As regards the section dealing with information to the public the draft identified the operator as HOSL.

In tune with the ambition to introduce a common SMS, Mr Linley wrote in December 1999 to all employees for which his department was responsible including those at the HOSL site:

“As an employer, To talFina GB h as a Duty of Care and is legally obliged to provide a safe working environm ent and to ensure that all ou r activities are carried ou t in a safe m anner. This is achieved by assessing the risks in carrying out our activities, taking action to reduce th e level of risk as far as is reasonably practicable, putting in place system s of work where necessary and training our em ployees. These principles are embodied in what is comm only c alled a Safety Managem ent System (SMS) and the Directo rs have set an objectiv e of ensuring th at an SMS is in pl ace in all operational areas of Total during 2000.

A great deal of effort has been put by all of us within “Operations” throughout 1999 to en sure that our revised SMS which we refer to as “S afety & Health Loss Control Manual”, is adopted at HOSL, Sunderland and W OSL. W e have set ourselves a target of having a common SMS for the term inal that we operate by the end of 2000.”

On 26 January 2000, notification under the COMAH regulations was given in respect of the Buncefield site. Regulation 6(2) provided that prior to 3 F ebruary, the “operator” of such establishments had to give notification of the information specified in schedule 3 of the regulations. An “operato r” was defined as being a reference “to a person who is in control of the operation of the establishm ent” being the person upon whom the respons ibility lay to “pre vent m ajor accidents an d lim it th eir consequences”.

Schedule 3 required written notification of the following:-

“1.

the name and address of the operator;

The letter, on Total notepaper and signed by Mr W hite as “General Man ager” responded as follows:

It was Chevron’s case that this reflected a clear reco gnition by Total that it appreciated that it was in control of all operations at the HOSL site and responsible for avoiding m ajor accidents such as th e December 2005 explosion. Total asserted that the notification was simply another example of Total acting on HOSL’s behalf in supplying support services in the health and safety field.

On 23 February 2000 there was a HOSL Boar d m eeting. The m inutes record Mr

The DNV audit was issued in March 2000 in the context of the International Small Site Safety Rating System (“ISSSRS”). It was expressed in term s of being an audit of “TotalFina UK Ter minal Operations” at HOSL, W OSL and Sunderland. The report stated in terms that “these terminals are all operated by TOTALFINA.”

At the HO SL Board m eeting on 26 July 2000 Mr W hite reported that “the implementation of the Total/Fin a Safety Managem ent System continues which includes m aking im provements to sections of the sys tem as necessary.” The tw o technicians were reported to have been duly recruited as permanent employees.

The same day, in the wake of Total’s takeover of Elf, Mr Ollerhead wrote to Mr Nash to explain his position in the new company:

“… we are pleased to confirm details of your appointment with Totalfina…With eff ect f rom 1 ^st July 2000 you will be employed as Duty Super visor HOSL and be based at H.O.S.L.

Mr W hite’s job description with the Total/Fina organisation was updated in November 2000. It described his job purpose as having “overall responsibility for the safe and economic operation of both Fina-line and the HOSL Joint Venture.”

By now operation at Buncefield had been underway for som e 10 years. On 19

The HOSL Board m et on 23 March 2001. It was agreed that a new technician be recruited to replace the technician recently promoted to supervisor.

In July 2001, Total HSEQ produced (or at least approved) a written procedure for the preparation, control and issue of work inst ructions and such like. The procedure was authorised by Mr Noake.

On 15 October 2001, there was a m eeting at Buncefield between Mr Noake, Mr Tonks and Mr Lund to discuss various aspects of docum entary procedures and records. On 22 October 2001, Mr N oake sent an em ail summarising the outcom e of the meeting. One point was as follows:

“Control room staff to be rem inded of the need to check tank ullages at least once every shif t and log this check (possibly using the daily log sheet). Can you send me a copy of whatever instruction you send out?”

The catalyst for this sug gestion remains obscure. In any event no written instructions appear to have been issued.

On 8 and 9 Nove mber 2001, Total held a E uropean Logistics Conference. The presentation covered the introduction to ISSSRS as follows:

“In January 1998, PetroFina adopted the International Small

Site Safety Rating System (ex Det Norske Veritas - “DNV” ) as the common approach to the Health and Safety Managem ent at Terminals.

Fina plc seconded one of their Operations Engineers to implement the protocol and organise the appropriate training. Work began in February 1998 with the aim of external accreditation for the Health and Safety System s of the Fina plc operated Terminals.

In April 1999, TOTALFINA is for med. The new Group reviews its approach to Health and Safety Managem ent System and chooses ISSSRS as the “Group Standard”.”

The m anual was, it was explained, to be “owned” by the Term inal Operations Department supported by HSEQ. It was written by a m ember of the Operations Team

These principles were duly passed on by Mr White to H OSL staff in a presentation called “Safety Alert”.

On 11 March 2002, Mr Noake sent an em ail to Mr Linley, Mr W hite and Mr Lewis attaching various revised versions of various written procedures and work instructions. Mr Noake required copies of previous versions to be destroyed. Included were new versions of WI10 and WI11. The most notable amendment was the deletion in the Fina-line instruction of any referen ce to the High alarm. In the result the on ly alarm referred to in either set of in structions was the “Cobham switch”. W hile Chevron was highly u nimpressed by the con tent of thes e procedu res, it b ecame

At the HOSL Board m eeting on 23 July 2002, Mr White reported that Level 3 ISSSRS had been achieved in May. As regards budget item s, costs associated with COMAH work were agreed in principle.

It became clear during the course of the autumn of 2002 that Buncefield was a “top tier” establishment within the m eaning of the COMAH regulations and Mr Linley reported as such to the HSE by letter on Total notepaper dated 19 Decem ber 2002 adding that the COMAH safety report for HOSL would be submitted by July 2003.

In a presentation to Total France Board members on 20 December 2002 by Mr White and Mr Linley, the m anagement structure was shown with Mr W hite reporting to Mr Linley in regard to Bu ncefield as one of the “seven TFE operated term inals”. A PowerPoint display at a Logistics meeting in January 2003 was to sim ilar effect and included th e objective of gaining acceptance of the Safety Report for COMAH compliance at HOSL.

In slight contrast, on 8 January 2003, the HSE wrote to Hertfordshire County Council notifying the change from lower tier to top tier and giving the name and address of the operator as HOSL.

DNV contributed a report by way of assistance towards the preparation of the HOSL COMAH report. DNV stated that Total “ran” HOSL. Messrs IKM consultants provided an advisory report on environm ental risk having been appointed by Mr Coalwood of Total.

In March 2003 Mr L inley resigned as a director of HOSL to be replaced by Mr Beedham. At their m eeting on 4 July 2003 the HOSL Board m embers were told by Mr White that the COMAH report was “being compiled by Total and will be read y for submission on its due date.”

The COMAH report was duly filed with the HSE at the end of July. It was an enormous document. Though prescient in som e respects, in the event its predictive aspects failed to cover the concaten ation of circum stances that led to the enorm ous explosion in 2005. This was despite the fact that Tank 912 was identified as presenting the source of the major accident scenario:

“1.

Storage Tank No 912 -this tank contains gasoline which is the substance presen ting the greates t flamm able hazard. Th is

The report gave as the route for communication with the competent authorities contact with Mr White at HOSL.

Attached to the report w as the required M ajor Accident Prevention Policy (MAPP). This was signed on Total headed paper by Mr Ollerhead and Mr W hite as representing senior levels at the “operator’s organisation”.

As regards “Bulk Storage – Overfilling Measu res” the C OMAH report stated as follows:

“Operational procedures.

There are various types of operating procedure used at the terminal. All identified critical tasks have either a task practise or a task procedure. Further to these there are stand ard operating procedures. Staff consultation, inform ation, instruction and training are all given as part of the adoption of any of these procedures. It is a requirem ent that the staff member signs docum entation to demonstrate when he/she is satisfied and has obtained a good level of understanding of the procedures.

…. The task practises and procedures have been based, wherever possible, on recognised published best practise.

…

Operating procedures can only be generated by the Term inal

Manager in conjunction with the Senior Supervisor and Safety Adviser. ….See the attached organogram whi ch details the terminal management and safety structure.

Procedures are required to be re-ex amined at any stage sho uld there be changes to the plant, equipment, staff and in any event at in tervals not exceeding eighteen m onths. Critical task practises and procedures are required as part of the SMS, to be discussed with operators and technicians on annual basis to ensure their continuing relevance and validity.”

We are now in the run up to the explosion in Decem ber 2005. On 8 August 2003, there was a “near-miss” involving Tank 903. The gauge stuck during loading and the level increased 4 metres above the reading. In the result the tank floating roof set of f the Cobham alarm which had been set too high (indeed above the foam pourers). A Total incident report was duly filled in by Mr Tonks. The incident was described as

“As most of you know we experienced a Near Miss situation last week when Tank 903 was alm ost overtopped during a filling from UKOP South.

This resulted in the shearing of one of the foam pourers and damage to others.

However, more serious is the issue o f potential major accident which could have occurred had the tanks been belatedly switched.

Following an investigation, involving m embers of Control Room Staff, we are urgently putting in place m easures to ensure that this does not recur and Jon will be circulating some details in the Incident Report to be published soon.

However, in the interim, we will need to exercis e extreme care when receiving off any pipeline and, during this period at least, we must insist on regular checks via the tank gauging system when receiving into HOSL tanks.

Please en sure that th is is adhe red to strictly and deta ils documented on the log.

We will k eep you up dated as to progress o n changes to procedure in order to avoid a recurrence.”

Quite what changes in procedure or other rem edial m easures were put in place remains obscure.

Another near m iss involving a sticking gauge occurred on 12 Novem ber 2003. Reports from the supervisor on duty explained that the Cobham alarm for Tank 906

occurred early in his shift m aking “spotting the problem more understandable”. It does not appear that any action was taken by the HOSL managem ent or even that any incident report was made to head office.

At the HOSL board meeting on 2 April 2004 neither of the above matters was brought to the board’s attention. However it was noted that a new joint venture agreement had never been entered into by Chevron. It was thought th at there were “about 10 different agreements which need to be checked for anomalies”.

In August 2004 a response was sent to the HSE in regard to a num ber of m atters which had b een raised with reg ard to the COMAH safety report. In particular m ore detail was sought as to the way in which the SMS fitted into the overall organisational arrangement. The response, in tabular form, reemphasised the chain of command from the hierarchy in Total’s head offic e through to the term inal m anager. Notably in regard to responsibility for such m atters as assessm ent of com pliance with SMS the relevant person was identified as the UK Operations Manager (Mr Beedham) with the Terminal Manager Mr White as his deputy.

In October 2004 Mr Lund of Chevr on asked Mr Beedham to supply a copy of the HOSL COMAH report which had been promised but not delivered.

In Decem ber 2004, th e Hertfordshire Em ergency Services Incid ent Comm ittee (HESMIC) published an off-site Em ergency Plan for the Buncefield Com plex. This was written on the p remise that there were four “site operators” including HOSL, as indeed was the standard form letter to be sent by BPA on behalf of the Buncefield

By now there was concern abou t the level of o vertime being worked by supervisors from the point of view of expense and safety. It was proposed by Total’s Hum an Resources Department that a ninth superv isor be engaged and a lum p sum payment made to the eight existing supervisors to offset the loss of overtime. In February 2005, a technician was made up to supervisor, a payment of £5000 was made to each of the existing supervisors by Total and a replacement technician engaged (but all subject to HOSL Board approval).

At the HOSL Board m eeting on 18 March 2005, the Texaco directors expressed approval of the engagem ent of a ninth supervisor but disapproval of the one-off payment and asked Total to make alternative proposals. However matters were in fact satisfactorily resolved by the time of the next board meeting on 15 July 2005, the last held before the explosion.

On 6 May 2005, Mr White announced that the initial COMAH audit test had been passed.

On 31 October 2005, the job description of Mr White was revised:

Although the organisational chart shows that Mr White as General Manager reported to Total Watford and not the HOSL Board.

“Carries responsibility of m anaging 2.5 m illion tonne/pa terminal an d 2 m illion tonne/pa p ipeline in addition to the management responsibilities of the Colnbrook jet handling facility…

Responsibility for 13 Total staff and 5 contract personnel.

….

Ensuring th at the term inal and pipelines are operated in accordance with leg islation, co mpany requirem ents and industry best practice …

Position is field based at HOSL with line reporting to T erm. Ops. Manager… Liaison and day to day co ntact with most departments in HO [Head Office] …

Accountable to the partner Com panies notably Total in the management role…”

Somewhat ironically on 5 Dece mber both Mr Nash and Mr Forde were recip ients of certificates of competency awarded by PTF Training Ltd.

The events of the night of 10/11 Decem ber are summarised abov e. As regards contemporary documentation the position was as follows. Pum ping schedules were produced for both the Fina-line and the UKOP line. As regards the Fina-line, the initial schedule had been produced by Siobhan Fanning on 1 Decem ber 2005 but was amended a num ber of t imes. The fi nal version (No. 9) probably dated 7 Dece mber scheduled parcel number 562A of 10500m ³ unleaded fuel for receipt by HOSL a s from 21:00 on 9 December at a flo w rate of 240 cu.m/hour. There was also a ‘ru n sheet’ for the Fina-line showing the sequence of parcels within the line.

As regards the UKOP line, the pumping programm e dated 9 Decem ber referred to parcel 123TX7 of which 8400 cu.m was due for delivery from 18:42 on 10 December to 08:14 on 11 December (i.e. a flow rate of 650 cu.m/hour). There was no run sheet.

Data from the Motherwell system reveals that the Fina-line delivery began at 2303 on

Again the Motherwell data reveals that the inlet valve to Tank 912 from the UKOP line was opened at 09:36 although the de livery did not start until 1850. The watch changed again at 1900. The handover sheet was more informative than the earlier one:

“Current batch 562A: PU50:915 (connected from 912)

NOYS [not on your shift]

BPA 912 open for TX7123”

At about 1902 so meone input the fuel properties of the UKOP batch into the Motherwell software. It is not clear whether it was Mr Nash whose watch had just started or Mr Doran or Mr Fitt (who provided the data) whose watch had just finished. During the course of the watch lim ited entries were m ade into a movement “diplog” which duly recorded that 562A was going into Tank 915.

The primary issue between Chevron and Total was which of the two companies, Total or HOSL, was vicariously liable for the faults in the operation of the Buncefield site

Acts or omissions on the part of Mr W hite and Mr Tonks may becom e material. But for present purposes it is sufficient to focus on the adm itted carelessness of Mr Nash in causing or permitting the spillage. It was common ground that Mr Nash’s contrac t of service was with Total. It is accepte d that h is want of care was cau sative of the explosion. The essential ques tion that has arisen is whether Mr Nash, having been seconded to or borrowed by HOSL, i s to be regarded as “pro hac vice” the em ployee of HOSL thus rendering HOSL liable in place of his general employer.

There was little if any dispute as to the releva nt legal principles in this field. This is essentially an issue of fact. It can be pertinent to consider such matters as the manner of selection, the method of payment, the power of dismissal, the length of the service, the degree of training, the em ployment of m achinery and so on. But it is well established that the m ost telling ind icium is the identity of the person who has the right to control the em ployee’s method of work : that is to say not the nature of the work but the manner in which it was to be undertaken.

The leading case in this field remains Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd & Anr [1947] A.C. 1. The harbour authority had hired a mobile crane to a firm of stevedores for loadin g a ship. Th e crane was accompanied by a cranem an who was em ployed, paid and liable to be dism issed by the harbour authority although the hiring conditions stip ulated that the cranem an should be the employee of the hirer.

At the time the stevedores had the immediate direction and control of the operation of picking up and m oving each parcel of cargo but no power to direct h ow the cran e should be worked or the controls m anipulated. In the course of the operation the craneman injured a third party by driving the crane neg ligently. The injured perso n sued the harbour authority and the stevedores. The House of Lords held that the harbour authority was liable:-

Lord Porter at p.17 put the matter this way:

“The expressions used in any individual case must always be considered in regard to the subject m atter under discussion but amongst the m any tests suggested I think that the most satisfactory, by which to ascertain who is the employer at any particular time, is to ask who is entitled to tell the employee the way in which he is to do the work upon which he is engaged. If someone other than his general employer is authorized to do this he will, as a rule, be the person liable for the em ployee's negligence. But it is not enough that the task to be perfor med should be under his control, he must also control the method of performing it. It is true that in most cases no orders as to how a job should be done are given or required: the m an is left to do his own work in his own way. But the ultim ate question is not what specific orders, or whether any specific orders, were given but who is entitled to give the orders as to how the work should be done.”

It should also be noted, as Lord Macmillan pointed out at p.14:

“Servants cannot be transferred from one service to another without their consent and even where consent m ay be im plied there will always rem ain a question as to the ex tent and effect of the transfer.”

It is right that circum stances can arise in which both the general em ployer and what might be termed the temporary employer are vicariously liable. One example is to b e found in Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2005] 4 All E.R. 1181. But this cas e is of course of lim ited assistance to the present proceedings where no party suggests that both Total and HOSL are vicariously liable. Nonetheless there is a helpful passage from the judgment of May LJ on the general approach:

“7.

The opinions m ake clear that decisions of this kind depend on the particular facts and that m any factors may bear on the result (see Lord Porter at p 17). In assess ing the facts, certain considerations will or m ay be relevant. These include: (a) the burden of showing that responsib ility does not remain with the general employer, is on the general em ployer and is a heavy one (Viscount Simon at p 10, Lord Macm illan at p 13, Lord Uthwatt at p 21). (b) By whom is the negligent em ployee engaged? Who pays him? Who has power to dismiss him (Lord Simon at p 10)? In the present case the an swer to these questions is the general em ployer, the third defendants. (c) Who has the immediate direction and control of the relevant work (Lord Si mon at p 10, Lord Porter at p 16)? W ho is entitled to tell the em ployee the way in which he is to do the work upon which he is engaged (Lord Porter at p 16, L ord Uthwatt at p 23: “The proper test is whether or not the hirer had authority to control the m anner of executio n of the act in question. Given the existence of th at authority its exercise or non-exercise on the occasion of the doing the act is irrelevant.”) (d) The inquiry should concentrate on the relevant negligent act, and then ask whose responsibility it was to prevent it (L ord Simon at pp 10, 11). In the Mersey Docks case, the stevedores had no responsibility for the way in which the crane driver drove his crane, and it was this which caused the accident (Lord Simon at p 12, Lord Macmillan at p 13, Lord Simonds at p 18). The ultim ate question m ay be, not what specific orders or whether any specific orders were given, but who is entitled to give the orders as to how the work should be done (Lord Porter at p 17). (e) A transfer of services can only be effected with the employee's consent (Lord Porter at p 15, Lord Uthwatt at p 21). (f) Responsibility should lie with the master in whose act some degree of fault, though remote, may be found (Lord Simonds at p 18).”

May LJ concluded that on the facts both defendants were equally entitled (and in theory obliged) to control the negligent fitter and, there being no rule of law rendering dual vicarious liability impermissible, both defendants were liab le. Rix LJ accepted this approach:

“78 The rem aining question is to attem pt to defin e the circumstances in which the liability should be dual. It is possible that where the right to control the m ethod of performance of the employee's duties lies solely on the one side or the other, then the responsib ility similarly lies on the sam e side. That reflects the significance of Lord Esher MR's doctrine of entire and absolute control. If so, then it will only be where the right of control is shared that vicarious liability can be dual. I would agree that the balance of authority is in favour of this solution. On this basis, I agree with May LJ' s analysis of the facts in this case as demonstrating a situation of shared control. I would go further and say that it is a situation of shared control where it is just for both em ployers to share a dual vicarious liability. The relevant employee, Darren, was both part of the temporary em ployer's team , unde r the supervision of Mr Horsley, and part of the genera l employer's small hired squad, under the supervision of its Mr Megson.”

Rix LJ went on to consider how in subsequent cases the im position of dual vicarious liability might be refined:

“79 However, I am a little sceptical th at the doctrine of dual vicarious liability is to b e wholly equated with the question of control. I can see that, where the assumption is that liability has to fall wholly and solely on the one side or the other, then a test of sole right of control has force to it. Even the Mersey Docks case [1947] AC 1, however, does not m ake the control test wholly determ inative. Once, however, a doctrine of dual responsibility becomes possible, I am less clear that either the existence of sole right of control or the existence of som ething less than entire and absolute control necessarily either excludes or respectively invokes the doctrine. Even in the establishm ent of a for mal em ployer/employee relationship, the right of control has not retained the critical significance it once did. I would prefer to say that I anticipate that subsequent cases may, in various factual circu mstances, refine the circum stances in which dual vicarious liability may be imposed. I would hazard, however, the view that what one is looking for is a situation where the em ployee in question, at any rate for relevant purposes, is so m uch a part of the work, business or organisation of both e mployers that it is just to m ake both employers answer for his negligence…..

80 One is looking therefore for practical and structural considerations. Is the employee, in context, still recognisable as the employee of his general em ployer and, in addition, to be treated as though he was the employee of the tem porary employer as well? Thus in the Mersey Docks situation, it is tempting to think that liability will not be shared: the em ployee is used, for a limited time, in his general employer's own sphere of operations, operating his general em ployer's crane, exercising his own discretion as a crane driver. Even if the right of control were to some extent shared, as in practice it is almost bound to be, one would hesitate to say that it is a case for dual vicarious liability. One could contrast the situation where the employee is contracted-out labour: he is selected and possibly trained by his general employer, hired out by that em ployer as an integral part of his business, but em ployed at the tem porary employer's site or his custom er's site, using the tem porary employer's equipment, and subject to the tem porary employer's directions. In such a situation, responsibility is likely to be shared. A third situation, where an employee is seconded for a substantial period of tim e to the tem porary em ployer, to perform a r ole em bedded in that employer' s organisation, is likely to result in the sole responsibility of that employer.”

Total placed some considerable reliance on the proposition that the issu e could turn on whether the relevant em ployee was “embedded” in the organisation of the temporary employer. In that resp ect it was subm itted that Mr Nas h had been seconded to HOSL for m any years to perform a role which was on any view

“embedded” in the organisation. I do not quarre l with that. But, assuming that this is the proper question, it seems to me that it simply begs the question on the facts of the present case. Mr Nash had worked for m any years at the Buncefield site undertaking work which in large part concerned the jo int venture. But whether he was em bedded in HOSL’s or Total’s organisation is quite another question.

In a subsequent decision of the Court of Appeal ( Hawley v Luminar Leisure Ltd [2006] Lloyd’s Rep. 1 and 112 307) it was not thought that the application of either approach made any m aterial difference. In the event the classical “con trol” test was re-affirmed in Biffa Waste Services Ltd v Maschinenfabrik Ernst Hese GmbH

It was common ground that the general employer of Mr Nash was Total. The question therefore arises whether Total have discharged the burden of proof so as to demonstrate that the manner in which Mr Nash was to conduct his work in the control room had been transferred to or adopted by HOSL.

The relevant activity was tank filling from a pipeline. Mr Nash, as pipeline supervisor, was in im mediate and sole ch arge of that activ ity. He negligen tly overfilled the relevant tank. As regards the identity of th e person with authority to give directions about the manner of tank filling operations, there was som e common ground. His immediate supervisor was Mr Tonks, the Operations M anager for the HOSL site an d the Fina-line. He in turn reported to Mr W hite the General Manager. These two m ade up what co uld be term ed the “m anagement” at Buncefield. It was accepted that, allowing for som e degree of discretion on the part of Mr Nash, between them they were responsible for providing training and in structions to Mr Nash as to how tan k filling operations should be performed by him.

Against that background the issue narrowed down to the question whether the power of direction of this group (together with all others working at the HOSL site) had been transferred from their legal em ployer Total to HOSL. This issue included focus on a number of factors including:

To an extent the answers to th ese sp ecific questions m erely beg the overall controversy. Mr Nash was engaged following an advertising cam paign put in place by the general m anager of HOSL and ther eafter rem ained as a technician o r supervisor for som e 15 years, working throughout in the control room at the HOSL site. In that sense therefore Mr Nash was very much a “HOSL” man. What remained determinative however was whether Total had m ade good a case that control of Mr Nash’s tank filling (an d Mr W hite’s activities as responsible for training and instruction in that regard) had been transferred to the HOSL board.

In the resu lt, much of the evidence and argument was directed to the question as to who was the nominated “operator” of the HOSL sites, Total or HOSL under the terms of the joint venture agreem ents. In one sens e this issu e was not directly in po int. Certainly, if the righ t view is that T otal was and remained the nominated operator of the sites throughout the joint venture, it would afford the strongest possible support for the view that the power of direction was not transferred. However, even if HOSL was to be regarded as the nominated operator by virtue of the terms of the 1988 JVA, the 1990 S upplemental Agreement and the 1994 Novation Agreem ent, it does not follow that it will be established that the power of direction was transferred.

This is for two principal reasons:

Nonetheless it was a dominant feature of Total’s case that the effect of the 1988 JVA and the subsequent agreem ents was that, as between Total and Chevron, the Buncefield site was to be operated by the joint venture company HOSL. This in turn,

It is worthy of comm ent before tu rning to th e agreem ents that th ere is room for confusion in the nomenclature. The words “operator” and “operation” are not terms of art. They elide with other concepts. For in stance an operator, in my view, is involved in “running” the relevant enterprise. But, in turn, in “running” an organisation, the person concerned must, it seems to me, be both “managing” and “controlling” it. The potential overlap between these concepts must be borne in mind.

There can be no doubt th at the 1988 JVA taken with the 1990 S upplemental Agreement nom inated BOSL as operato r of the Avonm outh site and HOSL as operator of the Buncefield site. Thus as be tween Total and Chevron the relevant joint venture vehicle had to undertake the operation and m aintenance of the respective site. In turn, responsibility for the management, direction and control of the ‘operator’ was to be vested in the relevant board. So far as sharehold ers were co ncerned th ey undertook to use their voting powers so as to procure the developm ent and implementation of both an Accounting Procedure and Operating Regulations by the relevant operating company. Any management fees charged to the operating company by Total or Chevron (as m ay be the case) were to be borne in equal shares and other expenditure in proportion to usage.

So far so good from the perspective of Total’s argument. But i mmediately on the commencement of operations at Buncefield in Nove mber 1990, the parties entered into the Su pplemental Operating Agreem ent attached to which were the requ ired Accounting Procedures and Operating Regulations. These specifically identified Total as having two roles, first as a non-operator Participant and second as Operator. Indeed by definition the operator was not HOSL as HOSL was not a participant.

As regards the Accounting Procedure the sole role of the joint venture com pany was to authorise expenditure (if approval by the P articipants was delayed) as m ight be necessary for terminal operations: see Schedule 1, Section V, para. 1.2.

By virtue of the Operating Regulations, Total (as “operator”) was to recru it and employ staff as the board considered necessary (with the Participants being required if so requested to second staff to HOSL: Schedule 2, Section A, para.3.1). As already noted HOSL’s ro le was to p rovide reports to the participants on term inal operations (para 5.1), was responsible for complian ce with statutory obligations (6.1), was required to monitor safety aspects (8.1), was responsible for accepting and contain ing product in the storage tanks (Section B, para. 2.1) and had custody and control (but

It was Total’s subm ission that the content of the Supplem ental Operating Agreement so far as it referred to Total as th e operator w as “mistaken”. This proposition was based in part on activities on the ground to which I will turn later. But the subm ission was said to be supported by three further considerations:-

As regards the first of these points there is nothing which can be viewed as clashing with the designation of Fina as the “operator”. Custody and control of fuel within the HOSL tanks (and only som e of them at that) did not necessa rily involve any coincident responsibility for operational activities. In any event, the activities for which HOSL rem ained responsible could be readily re-allocated or delegated elsewhere, not least to th e designated operator. There was no bar to delegation. Indeed for instance such was in due course to be expressly achieved in regard to reports to participants under the Management Agreement: see below. Further, given that Total in due course employed all the relevant staff, there was no conflict with the position that Total was (or came) to undertake overall operational responsibility.

As regards the second point, namely that the confusion was occasioned by the proposal to dispense with the corporate structure of the join t venture, this proposal as recorded above had been put forward and foundered over a year earlier. By December 1990 the draft Supplemental Operating Agreem ent already reflected the decision to retain the corporate structure. Thus there is no m aterial support for the proposition that Total’s description as “operator” was in som e respects, as suggested by Total, a “rogue definition”.

As regards the third point, this has m ore apparent substance. The Managem ent Agreement was executed on the sam e day as the Supplemental Operating Agreement although ef fective as from 1 June 1990 (shortly after the execution of the Supplemental Agreem ent). The Managem ent Agreem ent was envisaged by clause 2.10.1 of t he 1988 JVA as relating to “adm inistration and support services”. It expressly recorded the estab lishment of tw o “separate an d distin ct o perations” at Buncefield of which one was to be the terminal “operated” by HOSL.

Clause 3 of the Managem ent Agreement provided for the services sp ecified to b e provided by Total to HOSL. It was Total’s cas e that these services were solely in the field of accounting and administration. It follo wed, it was subm itted, that, giv en the entire agreem ent provision, the role of Total could not concurrently involve responsibility for “operation” of the term inal as such would have expressly been included in the services to be provided.

Chevron’s response was that som e of the functions as were expressly assigned under clause 3.2 were “operating” functions, including personnel m anagement, preparation

It was accepted by Chevron that difficulties m ight arise as to the basis on which such additional services (if any) were provided if outside the scope of the Operating Regulations. Four possibilities were proposed:

I will, if necessary, tu rn to these options if the point arises. Suffice it for the m oment to say that, although the term s of the Managem ent Agreem ent m ay involve som e degree of inconsistency with the designatio n of Total as the “o perator” in the Supplemental Operating Agreement, the point falls well short of establishing that such designation was mistaken. In this respect it is helpful to have regard to the agreement between Total and BP A m ade in January 1991 a year before the Managem ent Agreement and the Supplemental Agreement.

As already noted, this agreem ent provided for the m anning of the Buncefield control centre by BPA supervis ors. The agreem ent expressly recited the fact that Total was entering into it as “operator for and on behalf of HOSL and the HOSL participan ts”. Indeed it is m ade clear by Clause 14.3 of the agreem ent that Fina w as acting as principal to the exclusion of HOSL:

“Notwithstanding the foregoing, for the purpose of all liabilities, claims, actions, demands and proceedings arising out of or in connection with this Agreement (i) the Company agrees to assum e itself the entire obligations, respo nsibilities and liabilities of itself, HOSL and each of the HOSL Participants; and (ii) the Contractor shall look only to the Company for the due perform ance of the obligations, responsibilities and liabilities assumed by the Com pany under this Agreem ent and nothing herein contained shall im pose any liability upon or entitle the Contractor to m ake or bring any action, claim or

proceedings on or ag ainst HOSL or any of the HOSL participants.”

The obligations of Fina under the agreem ent included affording access to the “HOSL terminal” and com pliance with “all health an d safety leg islation” applicable to the Terminal. Clause 4.3 provided as follows:

“The Company shall provide the Contractor with all m anuals, drawings, procedures and other technical inform ation relating

These are all activities which Fina could only perform as opera tor. The services prescribed in Exhibit A covered th e entirety o f operations in the control room at Buncefield including the Fina-line, the UKOP fa cilities, and the aviation tanks on the HOSL East site. These had to be provided “in accordance with the op erating manuals and procedures provided by the Com pany [i.e. Fina]”. In short th is agreem ent is entirely consistent with Total acting as operator of the terminal and indeed delegating front line terminal operations to a third party. If that is righ t the organisation in which Mr Nash’s role was embedded as from the time of his engagement in 1991 was Fina.

Notably the agreement with BPA was rep laced in 1993 with an agreement, so far as

We can now m ove on to the accession of Elf in late 1993. By now the proposal to liquidate HOSL was also back on the table. Th e Sale and P urchase Agreement made express provision for Fina diligently to conduct “all the ordinary business” and the operations of the Buncefield Term inal du ring the period between th e date of th e agreement (30 December 1993) and the date of completion of the sale and purchase (in the event 1 January 1994). This activity was undertaken in Fina’s “capacity as Manager”.

It was Total’s subm ission that the period during which Fina acted as op erator of the Terminal was confined to tho se two days. At any earlier stage, H OSL was the operator and indeed was so defined in the agreement. Whilst the position is somewhat confused, it has to be observed:

The Sale and Purchase Agreem ent required Fina and Chevron to decide whether to liquidate HOSL. In anticipation of a decision to do just tha t the Execution Agreement was made on the day of com pletion. Annexed to it were replacem ent Accounting Procedure and Operating Regulations which designated Fina this tim e as “Manager”, in contradiction to its status as a P articipant, to work under the supervision of a management committee made up of representatives of the Participants.

Pending the decision (which was to be taken within 6 m onths) the Novation

Not surprisingly this provision was put to the forefront of Total’s case. Total recognised that there had been no change on the ground but considered that the impact of the Novation Agreement eith er continued the legal responsibility of HOSL for the activities of the operatio nal staff at the site o r transferred such responsibility as from January 1994.

Chevron’s response was that in reality HOSL both as operator under the 1988 JVA and as Manager under the 1994 Novation Agreem ent discharged its obligations throughout by delegating the functions to F ina, such functions being perform ed by employees of Fina both on and off site. Construed in its context, the Novation Agreement, it was added, far from being intended to introduce a sea change as regards operational responsibility was intended to maintain the status quo. If Fina had been in fact operating the Terminal, either directly or by way of delegation by HOSL, up to 1994, it continued to do so thereafter and remained responsible.

Into this debate must be added Total’s reliance on Schedule 2, Section 1, para. 2.1 of the Operating Regulations:

“The Manager shall recruit a nd em ploy suc h staff as the Management Comm ittee shall fro m tim e to tim e consider necessary for the proper conduct of the Term inal Operations and each o f the Participants shall (if so req uested by the Management Committee) second personnel to the Manager on a full tim e basis and otherwise on term s to be agreed by the Management Committee.”

But the difficulty from Total’s perspective is as follows:

The outcom e of this review of the Joint Venture Agreem ents and the associated contracts can be summarised as follows:

I turn now to the manner in which the Buncefield site was run. It was Chevron’s case that, whatever the contractual position, th e HOSL site was operated and m anaged by Total. In contrast, it was Total’s case that the s ite was operated and m anaged by the board of HOSL.

It was Mr S pittlehouse’s evidence that even before the JVAs were entered into, at a meeting between him self and David Arney of Texaco and Peter Johnson and John Bond of Fina it was m ade plain on Fina’s behalf that any joint venture should be on the basis that day to day control and management of the facilities at Buncefield would be in Fina’s hands. As a quid pro quo, Texaco would control and manage Avonmouth (BOSL).

I see no reason to reject that evidence:

Of course the m ere fact that Fin a was anxious for such an arrangem ent does not achieve that end. But it provides significant background colour to the parties’ attitudes thereafter.

HOSL was the join t venture corpo rate vehicle (but it is a m atter very m uch to be borne in m ind when considering the contem porary material that HOSL is both an

There were only 16 persons on site, all employed by Fina. The most senior member of staff was the General Manager, Mr W hite, who had been in place for som e 12 years and who was concerned not just with joint venture operations but also with the Fina-

Total relied heavily on the description of HOSL’s activity as contained in the annual directors’ reports namely the “operation of joint venture petroleum storage facilities”. Against that background it was Total’s posi tion that the general m anager of HOSL was primarily if not solely responsible to the HOSL Board. This in turn was entirely consistent, it was submitted, with HOSL having undertaken full responsibility for the management of the tank storage facilities as from 1 Novem ber 1990 as announced by Mr Parsons in h is rep ort to th e Board. The status of the board was said to be exemplified by Mr Perrin’s m emorandum dated 27 February 1992 re lating to a visit by HSE inspectors.

It was Chevron’s submission:

Given that on this basis the Board was not in a position to exercise managerial control of the site and to direct day to day operat ions, it was Chevron’s ca se that all residual managerial functions could not be left to the d iscretion of the General Manager given the scale and im portance of the operations being conducted at Buncefield. This view

I agree with Chevron. In m y judgment the upstream managerial functions could only be satisfactorily exercised by the hierarchy within Total’s head office as employers of the HOSL management team. In this regard Chevron placed justifiable em phasis on part of the oral evidence of Mr Humphries:

“But my point is that you cannot simply responsibly m anage a terminal, particularly on e which is storing g asoline, which is hazardous, by having a site m anager taking all the decisions that are necessary to manage that site. Some of those decisions, in my opinion, if it is to be operated responsibly, and efficiently come to that, sin ce th e inform ation can be shared across different terminals, need to be referred up into a m anagement hierarchy, and I think -- health and safety is a prim e example. We wouldn't want to go and write a health and safety system for one terminal, shall we say BOSL for the sake of argument, when in practice we cou ld write a health and safety system for all of Texaco' s terminals, with some tweaks for each term inal depending on the particular characteristics of that term inal. That wouldn't be an efficient way to do it.

Similarly, if we had com plex decisions which the term inal manager didn't feel capable or we didn' t think was capable of taking, then we would want a structure to deal with those decisions, namely, having higher managers, m ore experienced managers in place to handle them.

That is what I believ e we set up in the case of HOSL and BOSL, with Fina providing those sorts of management services in the case of HOSL and Texaco providing those sorts of management services in the case of BOSL. It was a nice sort of arrangement for us to enter into because it was 50/50.

As far as your earlier question about the board meetings, yes, as far as HOSL was concerned we w ould see that as a chance to catch up on what was going on at HOSL, an operation which we weren't in day-to-day contact with. Sim ilarly, I imagine at least, that Fina would think exactly the s ame of the board meeting at BOSL, they would have a chance to find out what Texaco had been doing in the intervening six months.”

The on-site staff at Buncefield were all em ployed by Fina save for an initial perio d when Mr Perrin was seconded from Texaco a nd the control room wa s manned by BPA supervisors sub -contracted by Fina. In due course all becam e Fina em ployees, subject to Fina’s pay scales, disciplinary procedures and promotion arrangem ents. It follows that, subject to transfer of control, with the employee’s agreement, to a third party, Fina had a right to direct each employee in his duties.

Leaving aside sub-contracted staff and focusing on the General Manager, it is important not to lose sight of the fact that Mr Parsons was a Fina em ployee. In th at capacity it was common ground that he owed responsibility to Total/Fina for the operation of the Fina-line (which term inated in and furnished supply to the HOSL site) and for the Total/Fina aviation tanks (which were within the HOSL W est site). More significantly his appointm ent as General Manager of HOSL was sim ply

Much was m ade by Total in subm ission that staff at the Buncefield site had been seconded to HOSL. There are some difficulties about that:

Fina’s grip on the engagement of staff at the Buncefield site is further exemplified by the reaction to the prop osal that, apart from the three Fina em ployees directing the BPA shift controllers, other staff would be em ployed by HOSL. This was rejected by Fina. Fina insisted on all other employees being Fina staff thus elim inating the possibility of any staff being seconded from Texaco. Indeed Fina required Texaco to make any em ployee who was to be transf erred to be m ade redundant first. Furthermore this decision was simply reported to the HOSL Board in March 1990.

Consistent with this p erception o f Fina as the operator, Mr Parso ns assum ed responsibility for staffing albeit needing to get Fina’s approval. My own reading of the Board minutes is that staffing issues were only raised with the HOSL board whe n there were budgetary implications. A substantial num ber of documents illustrate the practice followed in relation to the recruitment or transfer of Mr. White’s subordinates at Buncefield. The practice was substantially the sam e as it had been in Mr. Parsons’ day. Mr. White was req uired to co mplete a ‘Justification Sheet’ before hiring staff, which was subm itted to the Term inal Operations Manager for approv al. He in turn was required to get the approval of the Director of Logistics (although there may have

There was a plethora of organogram s in the documentation. Some, particularly in the early years, showed the General Manager reporting to the B oard. Others, particularly in the later years, showed the General Manager reporting to Fina/Total.

Mr Parsons explained that he reported to the Directo r of Distribu tion at Epsom in regard to both the terminal and the Fina-line.

“A. My im mediate line m anager would have been Mr Bond, reporting to Mr Johnson.

Q. Mr Bond, I think, was the di rector of distribution at the Epsom head office of Fina, wasn't he? A. Yes, he was.

Q. And Mr Johnson, what title did he have?

A. General Manager Operations, and one of his functions was distribution.

Q. Yes. Did the appraisals that Mr Bond conducted cover both the Fina-Line work and the terminal work?

A. It would have involved m y total work -- sorry, it is a word that is difficult in some circumstances – my overall work. Q. At Buncefield?

A. At Buncefield.

Q. That was presumably because he was your line manager for your overall work at Buncefield?

A. Yes, he was.”

Mr White took office as General Manager in February 1993. In his witness statem ent he said that he understood the HOSL board to have “overall strategic control” of the terminal. He explained the disparity b etween his responsibilities for the Fina-line on the one hand and the joint venture facilities on the other as follows:

“13.

As Ge neral Manager of HOSL I was answerable to the HOSL Board, whereas, as General Manager of the Fina-line, I was answerable to To tal/Fina. In other words , I h ad tw o separate lines of upward reporting: directly to the HOSL Board in respect of the HOSL Term inal and directly to the Total/Fina "Manager Operations", with respect to the Fina-line.

14.

In respect of m y role as General Manager of HOSL, t he Organisation Structure chart s et out below accurately reflects the reporting lines in place when I was appoin ted to the ro le. The fact that I repo rted to the HOSL Board did not ch ange during m y tim e as General Manager, but by the tim e of the Incident the reporting lines below m e had changed som ewhat, such that each of the Operations Manager, O perations Coordinator and Adm inistration Co ntroller rep orted to me directly.”

However, in his interv iew by the HSE inspecto rs there was this exchange to very different effect:

“CHRISTINE MARSHALL: Right. So, the day-to-day thin gs; getting the product th rough, getting the tanker drivers thro ugh, any running repairs to property or anything like that, all of that would go through you at the Total line, through Nigel?

ROBERT WHITE: Yes. Providin g it was within the bu dget which we mentioned a moment ago.

JOHN WILKINSON: Sort of operational control then with Total, if that's a fair way to summarise it.

ROBERT WHITE: Yes.”

In his oral evidence g iven in cross exam ination he also presented a dif ferent picture from his witness statem ent which, absent any contradictory evidence from Mr Beedham, Mr Ollerhead or Ms Donaldson can be regarded, in m y judgment, as more reliable. I summarise his evidence as follows:

I have no doubt that Mr W hite was accord ed a considerable degree of autonom y in terms of his management activities. Whilst in accord with his managerial discretion Mr W hite m ay have insisted fro m tim e to tim e on stricter safety standard s th an required by Total, no example was forthcoming in the evidence of Mr White refusing to apply Total requirements at the terminal by way of some independent stance being adopted by HOSL.

It is right that Mr Linley also sought to suggest that there was some form of bifurcated line management. A good example is his evidence at Day 8, pages 113 - 124:

“Q. Mr White reported to you in his cap acity as the gen eral manager of HOSL as well as in his capacity as the gen eral manager of the Fina-Line, didn't he?

A. If I can qualify the word "report" by saying that Mr White would have been in co ntact with me, in m y capacity as Total terminal operations manager, to report to m e any m atters that he felt appropriate, but not to receive direction.”

“Q. That is com pletely untrue. You were his boss, weren' t you?

A. It was certainly true I was his boss for the Fina-Line and it is certainly true I was a member of the HOSL board.

Q. You were his boss for HOSL matters as well, were you not?

A. My def inition of "boss", m y Lord, wouldn' t be the most appropriate response to say yes to counsel' s question. I didn' t consider myself as th e sole person who directed Mr W hite in respect of HOSL operation.”(page 114-115)

“Q. You were not carrying out this exercise in your capacity as director of HOSL, you were carrying it out as term inal operations manager or, as is explained in the first page, as Mr White's immediate manager. That is right, isn't it?

A. I was carrying out the appraisal as Robert's line manager for Fina-Line operations. I was al so reviewing his perform ance and agreeing his objectives with respect to terminal operations, mindful of what the HOSL board' s requirem ents for the terminal were.” (pages 121 -122)

As already explained I felt uneasy with Mr Linley ’s evid ence, not least where it departed from adm issions m ade by Mr W hite. Furthermore the contem porary documents are at variance with Mr Linley’s suggestion:

It was Chevron’s case that Mr Nash was by no m eans alone in having responsibility for the explosion. It was submitted that failings on the part of Total’s head office staff in es tablishing a p roper sys tem for tank filling operations was a significant contributory cause. I will turn to th at issue in due course but for the mom ent will concentrate on the question whether Head Office staff were responsible for safety issues at the terminal and, if so, whether this is material to the question whether Total were the operators and in control of the activities of the supervisors.

It is of note that the specifically identified services to be provided under the

By that time Fina’s HSEQ had embarked on a risk control review which was the first stage in the creation of a safety managem ent system . Significantly this was to be applied across all F ina’s UK Term inals. These were perceived as including Buncefield. The first draft was in April 1992. It was prom ulgated as Issue 5 in December 1992. It en compassed a whole range of term inal operations in cluding product receipt and tank filling.

Moving on, in 1997, Fina adopted ISSSRS. Th is was for application to all of “its” terminals, whether wholly owned or managed. These included Buncefield. There was no prior consultation with the board of HOSL. It was sim ply notified to the Board at its July 1997 meeting.

Mr Linley’s oral evidence in relation to this furnishes a good example of its somewhat evasive nature.

“Q. "Petrofina has decided to attempt accreditation under the

ISSSRS scheme and will commence in the UK with an audit of HOSL in July 1997." The board was sim ply told that the decision had already been made and that the first steps towards implementing it were being taken at the very mo ment that this report was being prepared. That is what happened, isn't it?

A. My Lord, m y interpretation of this m inute is that this audit was going to be a benchm ark audit to understand what Safety Management System HOSL had in place and what poten tial gaps there m ay be with respect to the ISSSRS protocol. I believe in July 1997 there was not a Safety Managem ent System that would have been recognised as ISSSRS.

Q. Indeed. So the first stage in im plementing ISSSRS would be to conduct such an audit, and that was already in hand, wasn't it?

A. Yes, I would agree.

Q. Yes, and it is saying: the decision has already been m ade and we are getting on with it, isn't it?

A. My interpretation of this m inute is that Petrofina, so Fina for the U K, was going to have ISSSRS as its Safety Management System and it wanted to understand the variances that the HOSL system had at that time to ISSSRS.

Q. Mr Linley, you are trying to divert attention from the point of my question and you know you are doing that, don' t you? Have a look at what it says: "P etrofina has decided to attempt accreditation ..." Had they already decided it or not?

A. Yes, Petrofina had decided.”

The true picture, in m y judgment, is to be derived from Mr White’s evidence to the HSE:

“CHRISTINE MARSHALL: The safety m anagement system. How were you aware that it was a change?

ROBERT WHITE: There was quite a transformation from what we previously had to what we were now introducing.

CHRISTINE MARSHALL: What changed?

ROBERT WHITE: A huge docum ented system . There was

quite a significant amount of retraining at that point, or training. It was brought in with a bit of a fanfare, reco gnised system, international small site safety rating system (inaudible). It is all there, anyway. It was quite a significant move, I think.

CHRISTINE MARSHALL: When you say there was a fanfare, are there any particu lar ind ividuals associated with that process?

ROBERT WHITE: The sponsor of it was Steve Ollerhead, who was the director of HOSL at the time.

CHRISTINE MARSHALL: The way we do things like that in our organisation is the person at the top of it will usually send out a global email or something of that sort saying, "This is the change that we are m aking. This is how we are going to phase it in. This is a training plan" and so on. Is that the sort of process Steve Ollerhead -

ROBERT WHITE: Yes, plus we had one or two -- I certainly attended one major meeting with a lot of people. Maybe there were 20 people th ere, seem ed to be key players in this who needed to be brought on board in the introduction of it, in terms of managers. The sessions were lead and driven by Steve.

CHRISTINE MARSHALL: Would they all be Total people, as far as you know?

ROBERT WHITE: Yes.

JOHN WILKINSON: So, the installation of the system was out with your role in HOSL. In other words, the system was introduced to you. There was no consultation period beforehand. It was announced that this was going to happen?

ROBERT WHITE: Yes.

JOHN WILKINSON: Then there was a rollout, as you have described it in meetings and so on?

ROBERT WHITE: Yes.

JOHN WILKINSON: Are you aware of what system Texaco were operating at that time and subsequently?

ROBERT WHITE: No: I know they had a system but I do not know what it was. I think it was m entioned at one of the board meetings.

JOHN WILKINSON: Was there any decision process by the board on this? I should perhaps have asked that question as well, as to whether to adopt the system or that --

ROBERT WHITE: Not to m y knowledge. It was an

introduction by Total Fina Elf as part of the way that the

management company managed or a part of the m anagement system for one of their terminals.”

The first edition of the Loss Control Manual was issued in April 1999. It applied to HOSL, WOSL (another joint venture) and Sunderland (a w holly owned terminal). It expressly provides for its enforcement by the “Loss Control Co-ordinator” to be

The on-site staff at Buncefield (including Mr White) had no authority to m ake any changes to the Loss Control Manual. There was however a body known as OHSET set up by Head Office, form ed by th e Head Offic e safety m anagers and

By the end of 1999 Total had taken over Fina. Mr Linley thereafter sent out a circular to all terminal managers (including Mr White) to report that the directors of Total had set an objective of ensuring that a Safety Management System (SMS) was put in place during 2000.

This was duly achieved and in December 2002 Mr Linl ey and Mr White were able to make a presentation to senior m embers of the French group m anagement of the “top down” safety structure showing Mr White, as Terminal Manager, reporting to Mr Linley with Mr Linley in turn reporting to Mr Ollerhead. The diagrammatic structure showed both the Logistics and HSEQ Departm ents reporting direct to the UK Managing Director.

This was in accord with Mr Linley’s letter of May 2002 accom panying the summary version of the manual:

“The manual demonstrates that TotalFinaElf intends to m anage health, safety and the environm ent with the sam e degree of expertise and to exactin g standards as per other core business

It follows that, if this material is taken at face value, Total was (and intended to be) in control of safety. The manual did not simply contain advice which HOSL was entitled to accept or reject as so minded. It was indeed, as Mr Sumption QC described it, a “top down command system”. It follows that I found the concept summarised by Mr Tonks in the phrase “fortress HOSL” unconvincing as a reflection of the proposition that HOSL was able to exercise, if it wished, autonom y and independence from all or any part of the Total safety regime.

Before going further, I should em phasise that the question as to the identity of the “Operator” for the purposes of the COMAH regulations does not arise f or decision in the present proceedings. During the course of final submissions, the court was notified by the HSE of criminal informations laid against inter alia Total and HOSL. The HSE seek to invoke a breach of COM AH regulations vis-à-vis HOSL and not Total. Nothing in this judgm ent can be treated as touching on the legitim acy of that approach. The present discussion focuses on the factual circum stances of the notification and its significance as regards vicarious liability. I am not directly concerned with the proper construction of the regulations let alone m aking any finding as to the identity of the “operator” for regulatory purposes.

The Control of Major Accident Hazards Regulation [SI1999/743] ca me into force in

The basic obligation under th e regulation was f or the opera tor to “take all m easures necessary to prevent major accidents and limit their consequences”. Unsurprisingly a “major accident” expressly included fire or explosion.

The critical docum ent under the regulations was the “Major Accident Prevention

It was a significant feature of the regula tions that m uch em phasis was placed o n general management including organisational structure and procedures at “all levels of the organisation”.

On 26 January 2000 Mr W hite sent the required Regulation 6 notice on TotalFina notepaper. The letter and its attachment were drafted by Mr Pedar B aner, a safety engineer at Term inal Operations D epartment at W atford and sent to Mr W hite for signature. T he covering letter referred to the enclosure as containing the required notification in respect o f “our petro leum product sto rage site at Buncefield”. The ‘operator’ was identified as TotalFina Great Britain Ltd with Mr White identified as the person in charge of the establishment. The address of the establishment was given as “Hertfordshire Oil Storage Lim ited, Buncefield Terminal” providing one of the myriad of exam ples where HOSL was used to identify the place rather than th e company.

I am unable to accept Mr Linley’s evidence to the effect that this was an inaccurate statement sent without h is knowledge. As to its accuracy, it was consistent with Mr Linley’s protests in 1999 on Total’s behalf about the proposal to m ake the operator liable for the HSE costs in applying the regulations. As for his knowledge, Mr Baner reported to him on all matters relating to COMAH compliance and it was Mr White’s recollection that the con tent of the letter had been discussed between Mr Baner, Mr Linley and Mr White. I accept that evidence.

By way of com pliance with the regulations, Total head office then produced Is sue 4 of the Loss Control Manual in Septem ber 2003. In addition, Mr Baner prepared the MAPP which was finalised in October 2002. These documents formed the basis of the Safety Report being prepared by Mr Coalwood.

When the question arose as to whether Bun cefield was a to p tier site (it had in itially been thought by the HSE not to be so) it was Mr Linley as Manager Term inal Operations who confirm ed as m uch by letter on TotalFina notepaper dated 1 9 December 2002.

Again Mr Linley’s evidence on the capacity in which he wrote the letter was, it struck me, unconvincing if not lacking in frankness:

“Q. The giving of that notice invo lved formally recognising to HSE, didn't it, that the operato r was going to have the much more onerous obligations imposed on operators of top tier sites by COMAH?

A. Yes, that is correct.

Q. You told us on Thursday that you wrote that letter in your capacity as a director of HOSL. A. Yes, that is right.

Q. And I suggested to you at the tim e that, since it was on Total notepaper and signed by you as term inal operations manager, you in fact wrote it on behalf of Total, and you didn' t accept that.

A. No, that is correct.

Q. If you wrote it as a director of HOSL, by what authority did you do that?

A. I was a director of HOSL.

Q. Did you take the view, Mr L inley, that a director of a company has authority to do anything on its behalf?

A. No, I think the H OSL board had given clear direction to Total to sup port the co mpany HOSL in its preparation of any information necessary to comply with the COMAH regulations.

Q. Did you think that all directors were entitled to deal with HSE about COMAH or was it just you?

A. I would say any director would have had that authority.”

“Q. Did you think that it was appropriate for you to give that notice?

A. Yes, on behalf of HOSL, I did.

Q. If it was being given on behalf of HOSL, why did you think it was appropriate for you as opposed to Mr Tonks to reply ? After all, th is was an answer to a letter which the HSE had actually addressed to Mr Tonks, wasn't it? A. Yes, that is right.

Q. They had addressed a letter to Mr Tonks, it was taken out of Mr Tonks' hand by him and you in combination, and you wrote the answer.

A. Yes, that is correct.

Q. Why was that necessary?

A. It probably wasn't necessary but it's what I did.

Q. Yes. The only capacity in which you could have written that letter, Mr Linley, was the capacity in which you actually signed it, nam ely, as term inal operations m anager. That is right, isn't it?

A.

I did sign it as term inal operations manager, but that wasn't my intent when I was writing the letter.”

The Safety Report was submitted on 29 July 2003. Vast though it was, it had been prepared alm ost single-handedly by Mr C oalwood (with support from various

For the purposes of considering the questi on of vicarious liability any study of the safety report demonstrates the integration of the Buncefield on-site staff into the Total management of the UK group. This was exem plified by the detailed table of responsibilities of a number of head office departm ent personnel. The most striking example is the characterisa tion of the General Manager as deputy to the Term inal Operations Manager at Watford.

The position was neatly summarised by Mr White in his evidence to the HSE inquiry:

“CHRISTINE MARSHALL: You have said to us that T otal was the management company for the HOSL site.

ROBERT WHITE: That is correct, yes.

CHRISTINE MARSHALL: Can you just go into a bit more detail about how that works?

ROBERT WHITE: I c annot actually tell you what their rem it was to the joint ven ture because if I did have sight of the management agreement or -- again, whichever version of that it may be, or the initial set up, I do not recall it. So I am not sure of the sort of terms of reference to the joint venture.

CHRISTINE MARSHALL: But in practical terms how does it work?

ROBERT WHITE: Well, I guess the best place to start is that everyone - all of the people who are em ployed at HOSL are Total employees. So we all have line responsibilities going up into Total. As you have seen from the folder you have there, one of our principal documents in managing safety is the safety management system or loss control m anual, which is a Total managed, edited, scripted, driv en docum ent. Therefore the system is driven by the management company.”

It rem ains necessary to have regard to the sp ecific and n ot just th e general. Th e specific question remains: who had authority to give directions as to how the work of tank filling by Mr Nash was to be done? Up to this stage regard has been had as to

The Total system was for all operations to be exposed to a risk assessm ent. If the outcome was classification as a critical task an appropriate task procedure would be prepared which would be reviewed every eighteen m onths or after any “serious or high potential accident”. All this was the responsibility of the terminal managers with the advice of OHSET and overseen by HSEQ. A critical task was defined in the Total Loss Control Manual as one which had “the highest potential for loss (safety, health, environment, quality, fire etc) if they are not done correctly.”

One of the m ajor accident scen arios discuss ed in the S afety Report was a fire generated by an overfill of Tank 912. It was accordingly common ground that Total:

This is further supported by the section of the Safety Report expressly concerned with tank filling. This proclaim ed once again that identified critical tasks should have an associated task practice or procedure which the staff concerned must sign to “demonstrate when he/she is satisfied and has obtained a good level of understanding of the procedures”. The Report goes on to say that “all task procedures and practices are controlled documents and form part of the quality control system for the company [i.e. Total].”

By the same token, the Safety Report sp elt out Total’s policy with regards to accidents and near m isses. This involved a stan dard accident inv estigation form for use at all term inals (in cluding Buncefield). T his was to be transm itted not to the HOSL Board but to Total Head Offi ce, both to Mr Coalwood or his successor and to the Terminal Operations Manager (Mr. Beedham ). The latter was to review every reported accident and discuss with HSEQ with a view to ensuring that “all necessary steps have been taken to prevent the incident happening again”.

As Mr W hite recognised, only Total could give directions as to the lessons to be drawn from such an in cident. The inevitable conclusion is that To tal, as the bod y responsible for ensuring appropriate modification of the procedure, must equally have the authority as to the m anner in which operations should be carried out in the first place.

The issue is the n eed to establish the identity of the p erson with authority to instruct

Although there are a number of contem porary documents which suggest that HOSL was operating Buncefield, this is by no m eans surprising. Many of them contain a potentially confusing want of distinction between HOSL the com pany and HOSL the place. There was th e added complication of the different status of the Fina-line an d the aviation tanks. In fact most of the documents in the later stages of the chronology are written on the basis that Fina was the operator/manager.

As regards the agreem ents them selves, in the three year period leading up to the Novation Agreement, Total was the designated operato r. Its role is exe mplified by the BPA agreement. Even after January 2004, Total would have rem ained so in the event that HOSL was liquidated. In fact the whole debate in the interim about amendment of the Management Agreement to allow for an indemnity of Fina even in the event of negligent management (dealt with in detail hereafter) only makes sense if Fina was the operator: negligent accounting or administration would seem an unlikely source of liability requiring special provision.

The re-designation of HOSL as ope rator in the Novation Agreem ent appears to have been a temporary arrangem ent pending th e execution of a new joint venture agreement without any intention on the part of the parties to alter the existing arrangements for operation and m anagement. In short, the creation and retention of HOSL as the joint ven ture operating company was consistent with it rem aining the neutral forum for budgetary purposes without necessarily being involved in the day to day operations.

Another important feature of the arrangem ents was the continuing responsibility on Total for operation of the Fina-line and the flow into and out of the aviation tanks on the HOSL West site. It is true that the part icipants felt able to assess the cost of work undertaken with regard to m atters associated with the joint venture and those which were not. But the concept of a supervisor be ing responsible to Total for, say, opening the Fina-line manifold but responsible to the HOSL board for the coincident flow into the chosen tank is difficult to accept.

The iden tity of the p erson v icariously responsible for the careless tank fillin g activities of Mr Nash is a question of fact. The most senior on-site employee was the Terminal Manager. Any instruction to Mr Nash had to be channelled through the Terminal Manager. Mr White had been appointed as m anager by Total and retaine d his reporting line to th e Terminal Operations Manager at Total’ s Head Office with whom he was in regular contact. In contrast, the HOSL Board m et for two hours

All the staff at the HOSL site were engaged and paid by Total. They were all subject to Total’s prom otion and disciplinary ar rangements. Their p lace of work was allocated by Total. All these matters were undertaken without any discussion with let alone approval of the HOSL board.

All instructions relating to the safe o peration of the Buncefield site were prom ulgated by Total in accord with standards adopted by Total for all terminals which it regarded as being operated by Total. It was Mr White who was responsible for identifying tank filling as a critical task and creating any necessary work procedure. These were to be audited every 18 m onths by Total head office staff. I am satisfied th at Total had control of tank filling operations.

Total’s perception of it being the de facto operator of the whole site is ex emplified by the statutory notice dispatched to the HSE under the COMAH regulations. The Safety Report was prepared by Total. It was sent in without notice to the HOSL boar d. Indeed a copy was not furnished to the directors.

I conclude that Total has failed to discharge the burden of establishing that HOSL was responsible for the negligence of Mr Nash.

That conclusion is sufficient to dispose of this issue. But as alread y noted, a number of witnesses that Total was proposing to call were withdrawn either shortly before or shortly after the trial began. I sh all revert later to dis cuss the pos ition of th e supervisors thus withdrawn. For the m oment I want to deal with the significance, if any, of the withdrawal of Mrs Donaldson, Mr Ollerhead, and Mr Beedham.

I have already accepted the submission that the relationship between on-site staff and the head office staff is a critical part of the inquiry into the identity of the party vicariously responsible for Mr Nash. But the consequence of the withdrawal of these witnesses is that only Mr Linley was called by Total from off-site m anagement

As explained, in my judgment Chevron have, by reference to the documentation taken with the oral evidence, more than made out a prima facie case that the activities of the on-site staff were under the control of Tota l and not the board of HOSL. Mr Linley’s evidence, if taken at face value, sou ght to contradict that case. The question aris es as to whether Chevron could properly invite the court to con clude that, if called, those witnesses would have had no answer to the prim a facie case or none that would bear examination and thereby fortify the conclusi on as regards the id entity of the party vicariously responsible for Mr Nash.

There was no suggestio n that the th ree witnesses concerned were not ready, willing and able to give evidence. Each would unquestionably have spoken with some authority on the issues as to the nature of the relationship between Total employees at Buncefield and the Total em ployees at head office, the identity of the op erator of the Buncefield site and the scope and nature of services provided by the head office staff.

The leading case in th is field is Wizniewski v Central Manchester Health Authority [1998] Lloyd’s Rep. Med 223. The principles were summarised as follows:

“(1)

In certain circum stances a cou rt may be entitled to d raw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.

(2)

If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.

(3)

There m ust, however, have been som e evidence, however weak, adduced by the form er on the m atter in question before the court is entitled to draw the desired inference : in other words, there must be a case to answer on that issue.

(4)

If the reason for the witness's absence or silence satisfies the court, then no such adverse inference m ay be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the poten tially detrimental effect of his/her absence or silence may be reduced or nullified.” (p240)

The point was put characteristically clearly by Lord Diplock in Herrington v British Railways Board [1972] AC. 877 at p 930:

“The appellants, who are a public corporation, elected to call no witnesses, thus depriving the court of any positive eviden ce as to whether the condition of th e fence and the adjacen t terrain had been noticed by any particular servant of theirs or as to what he or any other of their servants either thought or did about it. This is a legitimate tactical move under our adversarial system of litig ation. But a defend ant who ad opts it can not complain if the court d raws from t he facts which have been disclosed all reasonable inferences as to what are th e facts which the defendant has chosen to withhold.”

Of course this is not a case in which no witness has been called. But no T otal director of HOSL at the tim e of the explosion has been called or even one who was on the board at the time of the presentation of the COMAH report. The burden of proof on the issue of vicarious liability rests on Total. I have no doubt at all that it is proper to draw an ad verse inference in the p resent case. There is, p ut at its lo west, a stro ng prima facie case to answer and no reason (let alone a satisfactory reason) has been given for their absence.

Put bluntly, absent any evidence from Mr Beedham , Mr Ollerhead and Ms

The conclusion that Total was in fact pe rforming all operationa l, m anagerial and maintenance activities at the te rminal may bring with it th e need to determ ine the terms on which th ese services were be ing rendered. I s ay “m ay” because an y difficulty in this regard does little to undermine the clear factual state of affairs.

On the assum ption that Total’s ro le as operator is not within the scope of the

Whilst there is nothin g inconsistent w ith the delegation of addition al operation al functions by HOSL it must be regarded as surprising that, against the background of Fina’s insistence on undertaking responsibility for operating the term inal and recognition of that role in the Supplem ental Operating Agreem ent, the Managem ent Agreement should have been of apparently such restrictive scope. But precisely the same state of affairs prevailed at Avonmouth.

But that said, the following points are worth noting:

Throw in responsibility on the part of Fina for personnel, legal and secretarial matters, accounting, purchasing and quality and there is precious little left for the supposed operator HOSL to undertake. It is perhaps not surprising that by 1997 queries were being raised as to wheth er the agreements truly reflected the “current op erations” of the participants.

The specific services provided for in the Management Agreem ent consisted

I feel unable to accept Chevron’s submission that the generic provisions of Clause 3.1 were wide enough to encom pass the entire range of services rendered by Fina.

But as explained the only real alternative to the implication of an extended agreement between HOSL and Fina is that Texaco and Fina were content to leave all or m ost of

As explained the primary issue between Chevron and Total was whether it was Total or HOSL that was vicariously liable for the negligent acts or omissions that led to the explosion. The adm issions made by Total and HOSL as to what those errors were have already been set out. They all rela te to the activ ities of Mr. Nash who was immediately responsible for the negligent tank filling operations on the night of 10/11 December 2005. It was Chevron’s case that resp onsibility extended not just to o thers working at the HOSL site but also to Tota l’s head office and off-site m anagement personnel who were responsible for the application of the groups’ safety m anagement system at Buncefield.

Given m y conclusion that Total was vicariously responsible for Mr. Nash ’s

In this regard a num ber of additional alle gations of negligence were pleaded but the only one that needs to be considered at this s tage is the contention that the defendants failed to institute or operate any or any adequ ate plan or system to ensure that Tanks receiving fuel in general were (and Tank 912 on the night of 10/11 December 2005 in particular was) not overfilled and did not overtop.

The focus of Chevron’s com plaint is the assertion that Total’s head office staff wer e responsible for the absence of proper tank filling procedures in the control room . This in turn was said to flow from:

It followed, so the su bmission ran, that there was acco rdingly no standard of performance for the superviso rs to follow and against which to train, assess and monitor the control room staff, a fault ex acerbated by the f ailure to conduct a proper review of the topic following the near m isses in 2003. Even if Mr Nash was broadly aware of the need to monitor the filling operation properly, it was submitted that it can be inferred (the more so in the absence of any evidence from any supervisor including Mr Nash, Mr Forde and Mr Doran) both that failure to plan or monitor delivery was a regular feature of control room pr actice and that written instru ctions would have brought hom e the need to do so. Thus the absence of written instructions w as causative of the spill and the subsequent explosion.

Total did not accept that there was any shortf all in prescribed procedures and in any event denied that the absence of any such instructions was causative of the event. However, it was accepted by Total that no risk analysis had been undertaken by Mr White as required by T otal’s SMS. Accordingly there was no written task pro cedure within the meaning of the Safety Report.

For this purpose I conclude (and I am not sure it is controversial) that WI10 and WI11 can be disregarded. These were generated under the ISO9001 Quality Managem ent System and not the Safety Managem ent System. Their purpose would appear to have been to as sist the efficient operatio n of the term inal by maxim ising the available ullage. They were originally issued in 1998. To the extent they touched on the avoidance of an overfill they merely noted:

“Tank overfill is p revented by a roof m ounted Cobham switch which, if actuated, will cause the pipeline manifold to close.”

Although revised versions were prepared in early 2002 and were exposed to Total’s internal audit and duly registered with HSEQ, as before, neither docum ent contained any instructions for planning or monitoring tank filling operations or even for the use of the Motherwell system and its associated alarm s. This situation, it was accepted, had to be contras ted w ith “b est p ractice” as claim ed for the Safety Managem ent System in the Safety Report. In this regard it was common ground that best practice in the relevant field was represen ted by a paper published by the American Petroleum Institute: Overfill Protection for Storage Tanks in Petroleum Facilities (API 2350). It is clear that neither W I10 nor WI11 matched up with the req uirements of this paper. Indeed it seem s to me that they w ere if anything unhelpful, a view shared by the experts.

As regards the near-m iss in August 2003, an incident report in acco rd with the SMS was duly dispatched to HSEQ. It identified “inadequate procedure” as a factor in the near miss. This Chevro n submitted should h ave led to a com plete review which in turn would have provided an appropriate opportunity for rem edying the absence of a risk analysis (and in consequence the production of a task procedure). In Chevron’s submission, both the nature of the incident and the suggestion that BPA should be approached so as to furnish proposed and actual flow rates were m ore than enough to make it clear that the o perators were in fact neither calculating the filling tim es nor monitoring the Motherwell sy stems to assess flow rates. No evidence was called by Total to deal with the absence of any reacti on to the repo rt at HSEQ. It was sim ply submitted that the report of the near-miss would not have caught the attention of head office personnel in the manner which hindsight might suggest.

Further even if written procedures were prom ulgated, it was contended by Total that

I must revert to an issue of fact before tu rning to the question of the adequacy of the procedures and the significance if any of any inadequacy. It was a striking feature of the incident that Mr Nash when warned by Mr Forde that a tank might have split diverted the Fina-line d elivery to T ank 911. It appears that he did so because he thought (a) that it was Tank 912 which was the relevant tank (presumably because the low level alarm s had been sounding and acknowledged regularly on Tank 915) and (b) that the Fina-line was filling it (not, as was the fact, the UKOP line).

Total’s accident investigation team’s conclusion was that throughout his shift from

It is right to say at the outset that whilst the Total Accident Investigation team had the advantage of evidence from Mr Forde, Mr Nash and Mr Doran, the court did not share that advantage. In th e result, the position is very confused. As regard s the available evidence it appears as follows:

This was difficult to reconcile with some of the other evidence. In particular:

It is difficult to resolve the issue without the benefit of witness evidence. On the material available I am not persuaded by Total’s submission that Mr Nash‘s mistaken impression had been cured at the beginning of his last watch but somehow re-emerged later. In my judgment his decision to divert the Fina-line was probably attributable to a wholly muddled understanding about the full picture of term inal operations held throughout the watch.

Much time was spent on the issue of the setting of the alarms and their relationship to the normal, safe and overfill levels designated by API 2350. One of the difficulties was that API 2350 was premised on, at most, a two alarm system with one, the High High alarm, being required to be independent from the gauging system. It follows that the latter could be regarded as equivalent to the Cobha m/TAV alarm on Tank 912. This left at most only one alarm on the API model but left three alarms at Buncefield – the fixed High High alarm , the fixed High alarm and the adjustable user alarm (strikingly the latter was scarcely ever used).

The position as to tank levels on the API standard was not entirely easy to follow but appeared to be as follows:

In my judgment, the assum ption underlying the whole schem e is that the operator should plan not to exceed the normal fill level, and should therefore start to shut down the flow long enough beforehand to ensure that the valve is com pletely closed before the normal fill level is reached. If he inadvertently reaches the normal fill level before taking action to shut down the flow, he m ust then do so at once: see Table 1 to para. 4.6, setting out em ergency responses at each stage. The level m ay then unavoidably

It is im portant not to allow API 2350 (which seeks to establish best practice for a whole range of tank farms - from single unmanned tanks in the middle of nowhere to large manned tank farm s such as Buncefield) to be applied as if it were a s tatute or regulation. It must be approached in a common sense manner. The high level alarm at

As regards procedure, the API sets the following standards:

API practice calls for a proper system to be establish ed to enforce these tank fillin g procedures:

I unhesitatingly accept the need for written instructions. B ut there were in fact no written instructions for tank filling activity (leaving aside W I.10 and W I.11 which were irrelevant) let alone any com pliant with A PI 2350. This was because, despite the requirements of Total’s SMS no risk analysis had been undertaken by Mr W hite (all the m ore remarkable given the scenario cen tring on the overfilling of tank 912 which was at the heart of the Safety Report). This was a failure which rem ained unnoticed or unheeded by head office even after the near misses in 2003. In the result it was never identified as a critical task and no procedures were prepared.

The only written m aterial available to the supervisors was the shift handover

the present live tank or even the present flow rates.

The near miss in August 2003 was justif iably described by Chevron as a dress rehearsal for the incid ent in December 2005. Tank 903 had been filling from the UKOP line when the gauge stuc k. Despite the presence of two shift supervisors (predictably Messrs Nash and Forde) the fuel level ros e some 4 m etres to a level above the High High alarm . Eventually the TAV/Cobha m alarm closed the inlet valve. It is legitim ately sugges ted by Chevron that the only exp lanation of th e incident is that there was no m onitoring of the Motherwell screens. The supervisors

A report was duly prepared by Mr Tonks on the specified HSEQ form . It m ade suggestions for im proving comm unication with Kingsbury (shades of Kingsbury’s readiness to increase th e UKOP flow rate without announcem ent in December 2005) although flow rates should have been readily observable on the Motherwell system. In fact the SMS required a complete review of critical tasks and associated procedures in the event of a near miss. But despite Mr White’s personal expression of concern to on-site staff that there had been a risk of a “major accident” absent a late switch o f tanks, it elicited no response from head office (now Watford).

It appears to be accepted that those in the control room fairly regularly filled tanks so as to g enerate a high level alarm . It was far from an in variable p ractice but th e statistics derived from the Moth erwell system after the explosion demonstrate that such occurred on over 20% of occasions (although it is fair to say that the fact that the process was usually being m onitored was also apparent from the record). There is nothing surprising in this. Mr Tonks’ evidence w as to the effect that he regarded it as perfectly acceptable practice given the fact th at ullage was often tight. Indeed the same picture emerges from the evidence given by the control room staff to the HSE.

But as already indicated API 2350 m akes it plain that all planning and m onitoring should be on the basis that the minim um residual ullage is representative of the normal fill level. API 2 350 further makes it quite clear that alarm s (other than user alarms) are not to be us ed as filling tools. But it is m anifest that on m any occasions the relevant controller must have been deliberately filling to a level at or above the high level alarm. The c onclusion, in my view, has to be that even this proportion is unacceptable: indeed those in the control room should h ave been aim ing to ob tain a nil return (which should not have been difficult to achieve). This vice in the practice is enhanced by the fact that gauges had a prope nsity to stick so that, if one did stick, the supervisor on duty would be left waiting for an alarm which would not sound (aware only if he was watching that the level was increasing above 100%).

I am left with the clearest im pression that practices within the control room were at best sloppy. Handover sheets were lacking in detail, variable alarm s were seldom used, direction indicators on the Motherwell system were alm ost never used,

But would written instruction have m ade any difference? I agree with Chevron that unless there are written procedures, there is no standard to which supervisors can be trained, or by reference to which they can be effectively monitored or disciplined. Modern managem ent techniques call for the drafting of appropriate written instructions which help lim it misunderstanding and inconsistency within the control

Mr White, in m y view realistically, accepted that want of detailed procedures was a contributory factor in the run up to the explosion. There w as no material to support the view that Mr Nash’s approach to tank filling on the night of 10/11 Decem ber was simply an aberration leading to a one off wholesale departure from proper practice. In any event as with the managerial witnesses withdrawn during the trial, Total’s failure to call any supervisors (not least Mr Forde) is a facto r, in m y judgm ent, which Chevron can legitimately pray in aid in support of its case.

My conclusion in this regard also takes account of the diffi culties in relying on Mr Tonks to impose good practice let alone train ing. He accepted that he him self could not actually operate the Motherwell system . His supervisio n was lim ited to m aking occasional visits to the control room simply to observe whatever activity appeared to be taking place.

I conclude that Chevron (and the Claim ants) have m ade good their case that one of the causes of the explosion was the failure to prom ulgate an adequate system to prevent overfilling of a tank. This was a fault which can be laid at the door of head office staff.

I should add a word about the TAV switch which had been the cause of quite a degree of difficulty over the previous two years and w hich failed to operate on the night in question.

The history is as follows:

It was finally serviced in Nove mber 2005 but was left un-padlocked and thus unserviceable. On the face of it, the fault fo r this state of affairs lay either with TAV who designed and supplied the switch or Motherwell who were responsible f or maintenance and testing. As explained th e claim against TAV was settled during the course of the trial and Motherw ell took no part in the trial having gone into liquidation.

It becam e Chevron’s case however during the trial that, whoever Total m ay hav e delegated that task of maintenance to, Total remained responsible for all maintenance (and certainly for routine m aintenance) under the Managem ent Agreem ent. The difficulty with this sub mission was twofold. First Chevron had asserted that the failure of the TAV alarm was not causative. Surprising as that m ight seem I think it inappropriate to allow Chevron to adopt a different stance once TAV and Motherwell disappeared from the litigation. Secondly the issue was for that very reason never studied during the hearing. I say no more on the topic.

Given Total’s vicarious responsibility for the negligence of Mr Nash , it is now necessary to turn to the consequen tial claim made by To tal for an indemnity. Two such claim s are m ade: first against Chevron under clause 9.2 of the 1988 Joint Venture Agreement and against HOSL under Section III p ara.1.2 of the Operatin g Regulations. A number of que stions arise but the principal issue was this: was either clause intended by the parties to indemnify a party in respect of his own negligence?

The starting point here is the classic passage, well known to draftsmen of commercial

Fully conscious of the need to avoid an unduly rigid application of those principles the position remains in my judgment that:

There is in any event an inheren t improbability that a party would agree to indem nify

A similar issue arises in regard to Part III of the Operatin g Regulations: does th e indemnity in favour of a participant in para. 1.2 extend to losses arising from that participant’s own negligence? The same points can be made. Indeed in this regard a further point arises. It is very striking that para 1.1 contains express words extending the indemnity to cover negligence of the indemnified participant whilst para. 1.2 does not. This disparity m ust be taken as intentional. In short the presum ption emerging from Canada Steamship can be taken as all the stronger.

As indicated, there were a num ber of other construction issues but they are now of marginal relevance in the light of my conclusion that Total is vicariously liable for Mr Nash’s negligence and that, as a consequence Total is not entitl ed to an indem nity

There is first the question whether clause 9.2 survived the emergence of the Operating Regulations. This in turn depends in m y judgm ent in part on a threshold issue - namely the proper con struction of para 1.2. It was subm itted by Chevron that p ara. 1.2 should be read in two parts the first constituting an indem nity in favour of the participants up to the level of the insuranc e and the second part an indem nity in favour of HOSL in respect of the uninsured part of the indemnity paid to a participant (if the indemnity under the first part ex tended beyond the insura nce) and for third party claims inclusive of claims based on HOSL’s negligence.

I am unable to accept this construction albeit recognising that this is not an easy clause to construe. In my judgment, the clause should be construed as follows:

See Smith v South Wales Switchgear [1978] 1 WLR 165 per Lord Dilhorne at p.168.

The m anner in which HOSL would be entitled to an indem nity does not arise. Howeve r, it would on Chevron’s case be under para. 1.2 (despite the negligence) or on Total’s case under t he Accounting Procedure (para 8.2). I prefer Total’s submission.

See the definition in clause 1.1. In my judgment Chevron have not made good any allegation of wilful misconduct on the part of Mr Nash: see below.

Yet another witness not called by Total.

See also Clerk & Lindsell 19^th Ed para 21-23

Crown River v Kimbolton [1996] 2 Lloyd’s Rep. 533

Although issues have arisen as regards the recoverability of economic loss.

[1905] 2 K.B. 597

[1969] 1 W.L.R. 959

See Clerk & Lindsell on Torts 19^th Ed para 20-16

again at p. 646: "The same state of affairs may, of course, constitute both torts, a private nuisance in so far as A suffers interf erence with the enjoyment of land and a public nuisance in so far as B suffers some special damage".

As already noted this issue, which might compendiously be called the requirement for special damage, does not arise at this stage.

64 plaintiff.

The Court also made reference to Iveson v Moore (1699) LD.Ray 486 where obstruction to a public highway providing access to the plaintiff’s colliery prevented customer access.

65 overruled in Ricket’s case” Willes J went on to assert th at Baker v. Moore had not suffered the same fate.

See also Martin v. LCC (1899) 14 TLR 575

Lord O’Hagan expressed agreement with Lord Westbury’s dissent in Ricket at p. 265.

Phillimore LJ dissented on the basis that the “queue was nearly as offensive as a queue can be”.

See also Harper v Haden [1933] Ch 298 per Lord Hanworth at p. 306.

Similar issues may arise in regard to the BP claim but I make no specific findings in relation to it.

It appeared to be com mon ground betw een Shell and Total that econom ic loss was not rec overable under Rylands v. Fletcher but was recoverable in public nuisa nce, subject to proof of special dam age and subject to the issues discussed above. As regards private nuisance the position is in m y j udgment the same as for negligence: there must be a n immediate right t o possession of t he land the e njoyment of w hich is i nterfered with. I do not regard Hunter v. Canary Wharf [1997] AC 655 as affording authority for the proposition that beneficial ownership is sufficient in private nuisance.

Appointment and Acknowledgm ent, held on trust by W LPS for BP Oil, Downstream, Shell and Chevron as tenan ts in common in the shares and in th e proportions to which they were entitled under the W est London Pipeline and Storage Participants’ Agreement also dated 31 July 1991. WLPS was itself owned by the same participants in the same proportions. For exam ple it is common ground that as at 11 December 2005, Shell had a 39% beneficial interest.

WLPS on behalf of the Particip ants with regard to the m anagement, operation and maintenance of the W est London Pipeline System. WLPS was obliged to com ply, whenever reasonably practicable, with decisions and recommendations of the WLCC.

Although WLPS had established tariffs for non-Participant users, no third party ever used the West London Pipeline System for storing or transporting fuel.

See also Londonwaste Ltd v. Amec Engineering Ltd 53 Con LR 66

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