Total facing £750m damages bill following Buncefield ruling

London - Total is solely liable for damages - said to be as high as £750 million - caused by the incident at the Buncefield oil depot in December 2005, the High Court has ruled. The case concerned the dispute between Total and Chevron over who was reponsible for the negligence that led to the explosion and fires that devastated the site and local buildings in the Hemel Hemstead area. The depot was being run at the time by Hertfordshire Oil Storage Ltd (HOSL) - a 60/40 joint venture between Total - as majority owner - and Chevron.

In a judgment handed down 20 March in the Commercial Court, Mr Justice David Steel dealt with a range of issues concerning claims arising from the incident. The main focus of the hearing was the dispute between Total and Chevron as to which of HOSL and Total was liable to the claimants. Chevron claimed that Total was liable, while it was Total argued that HOSL was liable.

Around 6am on Sunday 11 Dec 2005, a massive explosion occurred at the Buncefield Depot in Hertfordshire, is thought to have been the largest ever explosion in peacetime Europe, measuring 2.4 on the Richter scale and could be heard 200 km away. Apart from damage to a large proportion of the Buncefield site, significant damage and disruption was also caused to both commercial businesses and residential properties outside the perimeter of the depot. The claims that have arisen are said to amount to over £750 million.

The Buncefield site was a large fuel tank farm used by a number of oil companies including Total, Chevron, BP and Shell. The depot received petrol, aviation fuel and diesel by pipeline. In the lead up to the explosion, the site was importing unleaded petrol. The cause of the explosion was the ignition of a vapour cloud that had developed from the spillage of some 300 tonnes of petrol from a storage tank.

The explosion occurred in a part of the Buncefield site which had been developed by the JV. There was a control room on the site from which tank and pipeline operations were conducted. At 1900 on 10 Dec two supervisors took over duty in the control room. An important part of that duty was to monitor the level in the tank which was being filled with the petrol.

At about 3am the tank gauge became stuck and from then onwards the control system recorded an unchanged reading notwithstanding that filling of the tank continued. Neither supervisor responsible for receipt of the consignment of oil into the tank noticed that the reading remained unchanged, let alone appreciated that the gauge had become stuck.

The level in the tank went past a High level alarm and then past a High High level alarm. But since these were connected to the stuck tank gauge no alarm sounded. The level continued to an independent TAV safety switch and alarm set at the “ultimate high” level. The mechanism was designed, if such a level was reached, to activate a trip function to close valves on the incoming pipes but this did not operate because it had not been padlocked in its operating position following a recent test by Motherwell.

By about 5.20am the tank began to overflow and a low-lying white mist containing petrol vapour began to develop in and around the site. At 5.50am a tanker driver contacted the supervisors and informed them that there was a strong smell of petrol vapour at the tanker loading bays. A supervisor went to investigate. He contacted the control room at 0559 hours to report that a tank seemed to have split.

The supervisor in the control room immediately tried to divert the delivery to another tank. But as a result of a misunderstanding as to which pipeline was connected, the supervisor shut off the wrong pipeline. Accordingly the overflow continued up and until the explosion.

Admission of liability

In the summer of 2008 summary judgment was given for the claimants in the light of admissions made by Total and HOSL that either one or the other was vicariously liable for various acts of negligence by the relevant supervisor on duty at Buncefield on the night of 10/11 December 2005. During the course of the trial which began in October 2008 it was conceded by Total and HOSL that the physical damage sustained by the claimants and their property was all a foreseeable consequence of the explosion.

The resolution of this issue was dependent on identifying whether it was Total or HOSL which had the right to control the manner in which the supervisors undertook their work. Analysis of contract agreements between Total and Chevron did not resolve this issue due to the way in which the Buncefield site was operated and managed.

Therefore the court found that all those working at the Buncefield site had employment contracts with Total. The most senior on-site employee was the terminal manager. Any instruction to the supervisors had to be channelled through the this person, who had been appointed as manager by Total and retained his reporting line to the terminal operations manager at Total’s head office with whom he was in regular contact. All instructions relating to the safe operation of the Buncefield site were promulgated by Total in accord with standards adopted by Total for all terminals which it operated, including Buncefield.

And while HOSL was the nominated operator of the Buncefield site in some of the agreements, it had no employees and its board met for two hours every six months primarily to receive a report from the terminal manager and to discuss budgetary matters. It was not capable of being concerned with day-to-day operations, the court decided.

The court, therefore, concluded that Total had failed to establish that HOSL was responsible for the negligence of the supervisor and also found that there was a further contributory fault consequent on the failure of Total¹s head office staff to promulgate an adequate system for preventing the overfilling of a tank. This reflected the absence of any written tank filling procedures for use in the control room even following a “near miss” in August 2003. In the result there was a lack of careful monitoring of filling operations and an improper reliance on alarms.

In its response to the judgement, Total UK stressed that it had never sought to avoid its responsibilities as a partner in the joint venture at Buncefield, adding that: “We will continue to make every effort to ensure that significant progress is made to settle outstanding claims and find practical ways to support the local community.

There are a huge number of claimants who joined together in groups to bring proceedings, including many claimants awaiting the outcome of the High Court trial. Claimants that participated in the hearing included a group of companies which were situated in the local industrial estate, individual claimants from the Hemel Hempstead area, BP - the legal owner of another site at Buncefield - Shell - one of the oil companies with an interest in and with aviation fuel stored on the WLPS/UKOP site.

TAV Engineering this company was the manufacturer of the ultimate high level alarm fitted to the tank. During the course of the hearing the claim against TAV was settled and TAV took no further part in the proceedings. Another company Motherwell, which was responsible for installing and maintaining the tank level equipment went into liquidation prior to the trial and did not participate in the procedings.