Neutral Citation Number: [2006] EWHC 1299 (TCC)

Case number 4 BM 50130
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT

BIRMINGHAM CIVIL JUSTICE CENTRE
33 BULL STREET
BIRMINGHAM B4 6DS

Date of judgment: 5 June 2006

Before Her Honour Judge Frances Kirkham
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	SANDHU MENSWEAR COMPANY LIMITED	Claimant	
	and		
	WOOLWORTHS PLC	Defendant	
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Mr David Turner of Counsel (instructed by nexus for the Claimant

Mr Simon Clegg of Counsel (instructed by Berrymans Lace Mawer) for the Defendant
Dates of trial:15-17 May  2006
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JUDGMENT
1.	I am obliged to Mr Turner and Mr Clegg for their help with this matter.  

2.	The claimant company (“Sandhu”) is a relatively small menswear retailer.  At material times, pursuant to a lease, dated May 2002, they occupied unit 4, Prime Industrial Park, Shaftesbury Street, Derby.  They used it to hold stock for their retail outlets.  The defendant (“Woolworths”) are a well-known and substantial retail business with stores throughout the UK.  In late 2000, Woolworths planned to open a new store in Derby.  Because the Derby store did not have sufficient capacity, on 2 March 2001 Woolworths took out a lease on unit 3 Prime Industrial Park to use for storage of stock.  At material times Woolworths occupied unit 3.  Units 3 and 4 are part of the same building.  They were originally a single unit which, at some point, was sub-divided. 

3.	On Saturday 26 April 2003 there was a fire at unit 3.  It is common ground that the fire was set by arsonists in combustible waste which Woolworths had accumulated outside unit 3.  Unit 3 itself and a van parked outside the unit were badly damaged in the fire.  

4.	Sandhu claim that, as a consequence of the fire, goods, machinery and plant in unit 4 were damaged.  They claim that the fire was a consequence of a breach of duty on the part of Woolworths, and seek damages in excess of £400,000 in respect of damage to goods, machinery and plant and of business interruption.  Woolworths deny liability.  On 15 December 2005 the court ordered a trial on the issue of liability only.  On the first day of trial Mr Clegg confirmed that causation and damage were not in issue.  In September 2005, the court ordered that Woolworths’ allegation of contributory negligence be struck out.

1.	For many years Wincanton Logistics Limited have provided Woolworths with transport services including the delivery to various Woolworths stores and storage facilities of stillages (also called cages) and collection of stillages containing waste packaging and other items.  Woolworths joined Wincanton as a Part 20 defendant.  However, Woolworths do not pursue their claim against Wincanton who are no longer a party to the proceedings.  

The industrial estate and Woolworths’ use of unit 3
2.	Prime Industrial Park is a small industrial estate.   The evidence indicates that it is situated in a somewhat run-down area of Derby, an area of light industrial businesses.  Very close to the estate are a sports ground, playing field and children’s playground.  After the occupants of the industrial estate have left at night, the estate is essentially unobserved.  There are, for example, no residential properties overlooking the estate.  

3.	The estate itself is surrounded by a spiked metal perimeter fence about 8 feet high.  Unit 3 is situated adjacent to the perimeter fence.  On the other side of the perimeter fence from unit 3 is the car park of Ewart Chain.  It would appear that there is no impediment to access to that car park.

4.	There are two sets of gates in the perimeter fence of the estate.  At material times there would appear to have been satisfactory, informal arrangements in place whereby tenants ensured that the last to leave locked the gates.  However, the evidence indicates that there was a gap under one of the sets of gates, when closed, of sufficient size to allow a child or slim person to slide underneath.  

5.	In addition to witnesses from Sandhu and Woolworths, I heard helpful evidence from a number of those who occupy or, at relevant times occupied, other units on the estate, namely Mr Williams, managing director of Windows Direct Ltd (which is based at unit 6, Prime Industrial Park) Ms Strange, Ms Moran and Ms Titterton of the Association of Teachers of Mathematics (ATM) (which occupies unit 7, directly opposite units 3 and 4) and Mr Foster, director of Hopwell & Foster Car Repairs Ltd (based at unit 5c).  Mr Sandhu and Mr Khakh, of Sandhu, also gave evidence.  Woolworths did not challenge the evidence of Mr Gill of Sandhu.  

6.	It is clear that, prior to the fire, there had been a history of vandalism and thefts on and around the industrial estate.  Ms Titterton described the area is being prone to vandalism and theft.  She and Ms Moran both referred to an incident, about 12 years ago, in which an open skip had been set alight, resulting in serious damage to unit 6 and smoke damage to ATM’s unit.  Ms Moran recalls an incident where a car, which had been left in the industrial park overnight, had been burned out.  Mr Foster recalls that vehicles left in the area around the industrial estate are often set on fire.  Mr Khakh recalled a number of incidents where cars had been burnt out close to the industrial estate.  A Woolworths’ van had been broken into about six months before the fire, and again only about a month before the fire.  

7.	Most occupants, except Woolworths, ensured that any rubbish left overnight was placed in locked containers, or taken inside a building.

8.	A number of occupants said that there was always an open skip outside unit 3.  This skip contained discarded toys and games, and attracted children and adults.  A number of witnesses described having seen people climbing into and rummaging through that skip and taking anything they could find.  

9.	A number of occupants described having seen stillages containing waste packaging left outside unit 3.  The evidence of Mr Williams was that, prior to the fire, there were always stillages containing waste packaging left outside unit 3.  Such stillages were left in front of the building and adjacent to the perimeter fence.  That evidence is supported by Ms Strange, Ms Moran and Mr Foster.  Since the fire, it has been much tidier outside unit 3.

10.	Mr Khakh and Mr Gill complained to Mr Platts (at material times the manager of the warehouse at unit 3) about finding rubbish strewn over the yard in front of the building when they arrived for work on a Monday morning.  On one occasion Mr Platts complained that Sandhu had parked their vans in a way which obstructed Wooloworths’ access.  It was pointed out to Mr Platts that this had come about because Woolworths had left stillages containing waste in the way.  

11.	Ms Strange asked Mr Platts not to park Woolworths’ van outside ATM’s unit because it was attracting children.

12.	Mr Gill’s unchallenged evidence is that the industrial estate and surrounding area were prone to acts of theft and vandalism.  On occasions when he arrived at work in the morning he saw the contents of Woolworths wheelie bin spread over the ground.  He had warned Woolworths’ staff in the warehouse that children had been rummaging through Woolworths’ bin which had been left outside the front of unit 3.  Mr Gill recalls that Woolworths’ van had been broken into about six months before the fire, and again about one month before the fire.

13.	Fire brigade and police records support the evidence of these witnesses.  During the period from 1 March 2001 up to 26 April 2003, the fire brigade’s records show that there were 37 fires involving refuse or refuse containers, of which the great majority were recorded as having been started deliberately.

14.	Police records for the area around unit 3 show that, during the year ended March 2001, 27 crimes were reported, of which three related to arson.  During the year ended March 2002, a total of 62 crimes were reported, of which seven were arson.  For the year ended March 2003, 44 crimes were reported, of which six were arson.

Woolworths’ Landlord
15.	During the negotiations between Woolworths and the landlord for the release of unit 3, the landlord’s solicitors had written, by letter dated 7 February 2001, to say that the landlord would be agreeable to Woolworths’ use of one of the car parking spaces for a skip “provided that it is a skip which is a secure and covered type with a lockable lid with the lid being locked outside normal working hours.”  

16.	The landlord’s agent wrote to Woolworths by letter dated 12 Sep 2002 as follows:  “It has been noted that the amount of external storage has been increasing substantially over recent months.  I would remind you that external storage is expressly not permitted under the terms of the lease.  I would therefore be extremely grateful if you could ensure that these terms are complied with.  We would permit an external skip provided that this is a closed and locked skip, alternatively we are faced with no other choice but to enforce the terms of the lease.”

17.	Mr Bullivant did not know of the landlord’s requirement as to use of a secure and lockable skip or that the landlord had complained that Woolworths were failing to undertake proper house keeping.  It is not suggested that no one in Woolworths knew of these matters.  Mr Bullivant had been left in ignorance of his employers’ obligations to the landlord of the industrial estate.

Cause of fire
18.	It is common ground that the fire was started maliciously by a third party.  The perpetrator has not been found.  The seat of the fire was cardboard contained in stillages left outside unit 3.  The fire spread from there to a van which had been left parked outside unit 3 and to the roofs of both units 3 and 4.  It is not known precisely how the fire was started.  It could have been set by someone who had gained access to the industrial estate itself.  It might have been set from outside the perimeter fence, as the evidence is clear that someone could have reached through the perimeter fence and ignited the combustible waste in the stillages adjacent to the fence.  

19.	This was a serious fire.  A number of fire appliances attended the scene and it was at least five hours before the fire had been brought under control.  There was serious damage to the building and the van.

20.	Mr Walker, Assistant Divisional officer with the Derbyshire Fire and Rescue Service, attended the incident and carried out an investigation.  He prepared a rough sketch of the area in front of unit 3 to help him in preparation of any report which might have been needed in connection with the fire.  Photographs were taken as the fire was being brought under control.  

21.	Mr Crawford, a sub-officer with Derbyshire Fire and Rescue Services, also attended the fire on 26 April 2003.  His evidence is that he could see a number of stillages containing cardboard and paper and a number of plastic crates; some were within 2 to 3 feet of the van; some were right up against a corner of the building and adjacent to the perimeter fence.

22.	It is clear from the evidence of Mr Walker and Mr Crawford (and which I accept) and from the sketch and photographs, that there had been many stillages containing the charred remains of cardboard and plastic wrapping material in the area in front of the building when the fire was being brought under control.  Some open stillages containing waste packaging had been left close to the building itself.  Others had been stored outside unit 3 in such a way that there was a chain of easily combustible materials from the perimeter fence across to the van.  As the van itself was close to the building, there was a path for fire from the fence to the building.  

Volume of waste left outside unit 3 prior to the fire
23.	Sandhu’s case is that Woolworths had allowed a considerable quantity of waste material to accumulate by the end of April 2003.  Woolworths do not accept that proposition.  However, the available evidence indicates that Woolworths had, indeed, allowed a considerable amount of waste to accumulate.  

24.	Mr Taylor-Walster put the number of stillages containing waste card at 15 in his report following investigation of the fire, but the remainder of the evidence on this point indicates that that is an underestimate.  

25.	Woolworths did not call Mr Platts to give evidence, though a summary of his evidence had been prepared and served and he did in fact attend court during the trial.  His witness summary states that, as at 24 April 2003, “he believed that he had approximately 150 empty cages and 40 cages full of waste cardboard to be removed”.  I deal later with other aspects of Mr Platts’ evidence.  That part of the summary of his evidence is in contrast to Mr Taylor-Walster’s estimate, and it supports Sandhu’s contention that there was a substantial number of stillages containing empty cardboard and other waste outside the building prior to the fire.  The stillages containing this combustible material had not been stored inside the warehouse (although the photographs show that there had been room for at least some of the stillages).  All of the stillages containing waste packaging were open.

26.	The record of Wincanton’s transport of stillages to and from Derby during periods prior to the end of April 2003 shows that a substantial number of stillages must have been at the warehouse immediately before the fire.  The fire brigade’s photographs and Mr Walker’s sketch indicate that, immediately before the fire, there had been a build up of a substantial number of stillages and that many had contained cardboard and other waste.  I prefer that evidence to that of Mr Taylor-Walster.

27.	On Thursday 24 April 2003, Mr Platts tried to make arrangements for stillages containing waste to be collected from unit 3.  Mrs Salt is a store support advisor in Woolworths’ Distribution Centre.  She deals with Woolworths’ distribution system, including liaising with Wincanton with respect to collection from unit 3 of stillages containing waste packaging.  Mr Platts telephoned Mrs Salt on the morning of Thursday 24 April 2003 to ask that arrangements be made for the collection of empty stillages and of waste cardboard from the warehouse.  Mrs Salt endeavoured to make arrangements for this to be done.  She spoke by telephone to Wincanton, asking them to make that collection.  The log which Mrs Salt kept of the relevant telephone conversations shows that Wincanton agreed to make the collection from outside unit 3 on the Thursday evening after the warehouse staff had left.  In order to reinforce the need for Wincanton to respond to Woolworths’ request, Mrs Salt mentioned to them that Woolworths’ stores in Fleetwood and Goole had suffered arson fires as a result of cardboard waste having been left outside the stores.  She did so because she wanted Wincanton to take her request seriously.  However, whilst Wincanton delivered to unit 3 on 24 April, they did not collect the cardboard waste that day.

28.	No collection was made following Mr Platts’ call to Mrs Salt and before the fire on the Saturday.  It would, of course, have been obvious to those working at unit 3 that there had been no collection.  However, no attempt was made to chase Wincanton.  The waste was simply left in the stillages, in the manner which I have described, after the staff left unit 3 on the evening of Friday 25 April.

29.	In summary, I have no doubt that a substantial amount of waste had been left in open stillages outside unit 3 after the warehouse closed on the evening of Friday25 April 2003.  Open stillages containing waste packaging had been left near the building and in such a way that there was an easy and obvious path for fire from the perimeter fence to the building itself.  The waste packaging was an easy target for anyone who had gained access to the industrial estate or who reached through the perimeter fence from the Ewart Chain car park.  Either way, the waste packaging in open stillages must have been inviting to anyone who enjoyed fire raising.  

The issues
30.	Sandhu’s case is that it was, or should have been, obvious to Woolworths that the presence of a substantial quantity of combustible material outside their unit might result in damage to neighbouring property as a consequence of malicious ignition.  They contend that Woolworths were in breach of that duty by causing the accumulation of combustible material; by failing to store all combustible material and waste in a lockable skip; by failing to heed the contents of their landlord’s letter of 12 September 2002; by failing to heed complaints from other tenants of the industrial park about the accumulation of waste; by failing to have regard to published advice as to the prevention of arson or to have regard to their own document, namely Fire, Standards in Practice dated July 2000 (“Fire SIP”); and by failing to carry out a proper fire risk assessment.  

31.	Sandhu accept that, to establish a duty of care on the part of Woolworths, they must prove the existence of a risk of damage to Sandhu’s property which was more than a mere possibility.  They also accept that, to establish a breach of duty on the part of Woolworths, they must prove that Woolworths failed to exercise the level of care reasonably to be expected in the circumstances.  

32.	Woolworths’ case is that they had made reasonable arrangements with Wincanton for the collection of waste.  There is no evidence of complaint that there was a fire risk from Woolworths themselves or from other tenants on the estate.  There had been no fires at unit 3.  Woolworths had no knowledge of other fires which had occurred on the industrial park or in its environs.  The industrial estate was secure; it had a good fence and was locked when unattended.  This was a well-run estate and indeed quite smart for an industrial estate.    In all the circumstances prevailing at the industrial estate, Woolworths say, a duty of care did not exist.  Alternatively, the circumstances did not bring this case within one of the situations identified by Lord Goff in Smith v Littlewoods Organisation Ltd [1987] 1 AC 241.  

Mr Taylor-Walster’s fire risk assessment
33.	At material times, Mr Carl Taylor-Walster was Woolworths’ Fire Safety Manager.  He has professional qualifications in relation to fire safety and has experience in that field.  

34.	Mr Taylor-Walster carried out a fire risk assessment of unit 3 in January 2003.  He gave detailed evidence about that exercise.  I return to that shortly.  First, I deal with Fire SIP - a significant document.  This document refers to stores, but it is not disputed that the references to stores were applicable to warehouses such as unit 3.  Fire SIP is lengthy and detailed but is worded in a clear and straightforward way, such that the messages it contains would have been easily understood by all.  It is clear from the document that it contained obligations i.e. requirements for action - not simply a voluntary code of conduct.  For example, the front cover of Fire SIP states that this is “a guide to best working practices for all Colleagues” [i.e. all Woolworths’ employees].  The standard practices detailed in the SIP are said to be company policy - “all Colleagues must follow these requirements.  Failure to do so may result in disciplinary action.”  In the early pages of the document it is made clear that “compliance with its contents is mandatory.”

35.	Fire SIP imposes on every employee a responsibility for competence in relation to fire prevention.  There are a number of references to the need to maintain good housekeeping standards and, in particular, not to let uncontrolled rubbish accumulate anywhere.  There is an express warning that combustible materials should not be stored near the external walls of buildings.  Employees were warned to be aware and alert for arsonists.

36.	Fire SIP identified the store manager as the “Principal Responsible/Competent Person”.  In this case, that was Mr Bullivant, the Derby store manager.  Mr Bullivant’s duty was to maintain fire standards in his store, including unit 3.  These duties included making regular fire checks and ensuring that good housekeeping standards were maintained.  The document required a daily check to be made, after closing a store, to ensure that waste bins and combustible materials were not left near the outside of the building.  Mr Platts had similar duties and responsibilities under Fire SIP to those of Mr Bullivant.  Mr Bullivant confirmed that a copy of Fire SIP was available at unit 3.

37.	As Fire SIP pointed out, Woolworths’ packaging is combustible, and controlling waste material and good housekeeping significantly reduce fire risk.  It noted that one of the three main causes of fire within Woolworths was arson and that “bad housekeeping is the major cause of fire spread”.

38.	The document contained the following express requirements: 
“Ensure external waste bins are sited as far from the store as possible……Ensure no uncontrolled rubbish or packaging accumulates in your rear yard.”
It pointed out that Woolworths was most vulnerable in rear yards, where most arson fires had been started “by igniting waste bins, scattered rubbish and cages with redundant packaging materials”.  Areas of “extreme vulnerability” included “areas where redundant packaging is stored”.

39.	Fire SIP required managers to ensure that all Colleagues were trained in fire precaution.  It also required them to liaise with both local traders and the local fire brigade, so that they would know what the risk was in their area.

40.	It is difficult to see how the author of Fire SIP could have made any clearer how fires are started, how fire risk assessment should be approached, the risks to be aware of and the sensible housekeeping measures to be taken to try to avoid fire.

41.	It is extraordinary both that Woolworths did not disclose Fire SIP as part of standard disclosure and that none of Woolworths’ witnesses made reference to it in their witness statements.  This is of particular concern in relation to the evidence of Mr Bullivant and Mr Taylor-Walster.  

42.	Mr Taylor-Walster sought to diminish the importance of Fire SIP.  His evidence upon that point may have reflected some changes of approach introduced within Woolworths after the fire, but is more likely, in my judgment, to reflect Mr Taylor-Walster’s partiality.  He had a significant role in relation to identifying fire risk.  I was concerned by his attitude to a document which contained such clear warnings and practical advice as to routine house keeping and the approach to fire risk awareness and assessment.   Witnesses are under a duty to give all relevant evidence.  Mr Taylor-Walster had made specific reference to Fire SIP in his January 2003 risk assessment.  He dealt with the assessment in his witness statement but made no mention of Fire SIP.  That does him no credit.  Mr Taylor-Walster was willing to accept that Fire SIP imposed obligations on Mr Bullivant.  Yet Mr Taylor-Walster was, and is, the person with particular qualifications and experience in relation to fires and fire risks.  In my judgment, this does not reflect any greater appreciation of the risks here on the part of Mr Taylor-Walster over that of Mr Bullivant; rather, it reflects Mr Taylor-Walster’s unwillingness to bring himself to address properly the approach which should have been taken to risk assessment here.

43.	When he visited in January 2003, Mr Taylor-Walster spent about two hours at the premises and looking at the surrounding area.  He described the main purpose of his visit as to be primarily for life safety.  Accordingly, he considered, for example, exit routes from the building in case of fire.  

44.	Mr Taylor-Walster accepted that the area around the industrial estate was a little run down, but he made only a cursory inspection of that area.  He walked a little way along Shaftesbury Street but did not walk any appreciable distance from the unit.  He did not drive around the area.  Mr Taylor-Walster paid no attention to the fact that very close to the industrial estate are open playing fields, a children’s playground and a sports ground.  

45.	When Mr Taylor-Walster inspected, the gates to the industrial estate were open.  He did not close these to observe the security which those gates actually afforded, so did not see that it was possible to slide under the gates.  He did not go on to Ewart Chain’s car park, which abutted the perimeter fence immediately adjacent to unit 3, and so was not aware how easy it was to access the perimeter fence adjacent to unit 3 from that car park.  

46.	Mr Taylor-Walster made no enquiries of the local fire brigade or of the local police force.  He made no enquiries of the occupants of other units on the industrial estate.  

47.	Fire SIP contains guidance as to how to assess the risk of arson attacks.  Fire SIP identifies as risk factors:  that a rear yard may have an external waste bin, is open to easy access to the public and is not overlooked by other properties; any instances of arson in the community; and if the store is in a troublesome inner city area, near football grounds or similar places where people gather.  However, as I have indicated, Mr Taylor-Walster did not take these factors into account when making his assessment, although these were the standards which Woolworths themselves required.  Had Mr Taylor-Walster paid heed to Fire SIP, he would have contacted the local fire brigade.  The information which the brigade has now provided shows a history of arson in the area prior to Mr Taylor-Walster’s visit to the property and prior to the fire.  Mr Taylor-Walster sought to suggest that it may have been difficult to obtain that information from the fire brigade, because they were generally busy.  That in my judgment was an unacceptable excuse.  Not only was this contrary to the express requirement in Fire SIP, it was also, in my judgment, a failure to take an obvious and sensible step as part of the process of assessing the risk of fire at unit 3.

48.	Mr Taylor-Walster assumed that the industrial estate was secure after the gates had been locked.  But it was not.  There was a history of vandalism and theft in the surrounding area as well as on the industrial estate itself.  He could have ascertained these matters easily by inspecting the gates and speaking to occupants of neighbouring units.

49.	Had Mr Taylor-Walster walked or driven only a short distance form the estate, he would have seen that close by were sports facilities, open playing fields and a children’s playground - areas which attract children and young people.  Again, failure to pay heed to such facilities close to unit 3 was contrary to the clear guidance contained in Fire SIP.  

50.	In his January 2003 fire risk assessment, Mr Taylor-Walster dealt with the checklist of matters which the document assumed the person carrying out the assessment would consider.  That checklist directed the person undertaking the risk assessment to specific matters, including the following question: “Is waste and rubbish collected regularly and placed in safe receptacles outside the premises?”  Mr Taylor-Walster noted, against that question, that card or waste was collected weekly through arrangements made with Woolworths’ Distribution Centre.  He noted that a bin should be used for general waste, and that this should be kept inside.  He added “Other as per Fire SIP”.  He noted that the event probability of fire in paper or card was “probable” and that the loss potential was “medium”.  However, he failed to identify as a fire hazard the presence and accumulation of waste packaging material in stillages outside unit 3 and he made no enquiries about the storage of waste pending collection by Wincanton.

51.	Mr Taylor-Walster asked on 2 May 2003 (ie after the fire)  that a bulletin be distributed to all stores.  The bulletin referred to the fire at unit 3 on 26 April.  It asked stores to ensure that, where possible, all waste, bins and stillages containing card awaiting collection were stored in a safe and neat manner, inside, until collected.  If that were not possible, then bins should be moved as far away from buildings as possible and chained to something to prevent their being moved.  Stillages containing card awaiting collection were to be moved as far away from buildings if possible and chained to each other or to an immovable object.  Although at trial Mr Taylor-Walster sought to downplay the significance of the Fire SIP, it is noteworthy that he ended his own bulletin with a direct quotation from Fire SIP, the very graphic: “All the arsonist brought was the match. We supplied the rest!”.

52.	Mr Taylor-Walster failed to have regard to the guidance in publications by various bodies as to prevention of arson, although he confirmed that he was aware of most of these publications.  The Arson Prevention Bureau published a guide dated September 2000 entitled Prevention and Control of Arson in Industrial and Commercial Premises.  That document contains the following warnings:  “As arson attacks often follow acts of petty theft and vandalism, security staff should be vigilant and take note of such crimes in the neighbourhood.  Keeping a log of such incidents may help in assessing the likelihood of a deliberate fire occurring.    Control of Combustible materials:  Staff should be aware of the reasons for waste materials to be removed to a safe storage area regularly and be encouraged to act responsibly in this respect themselves.  Similarly, staff should be made aware of the flammability or combustibility of the materials with which they work…”  The document advised that all staff needed to be given instruction as to the hazards and consequences of an arson attack.  It advised that close liaison should be maintained with the fire brigade, police and insurers so that all practical measures could be taken to reduce the likelihood of an arson attack.  A key element of a risk assessment was to identify, and reduce so far as practicable, the sources of ignition and combustible materials available to the opportunist arsonist.

53.	The Fire Protection Association published Prevention and control of arson in warehouse and storage buildings.  This document notes the very large increase in the incidence of arson attacks in industrial and commercial premises in recent times.  It warns that no waste materials should be allowed to accumulate, for example, at a perimeter fence.  

54.	BS 8220: Part 3:1990 is the British Standard guide for security of buildings against crime, with specific reference to warehouses and distribution units.  It points out that the potential financial and consequential cost of a fire started deliberately can be disastrous to a business.  “What is important is the ease of access for the intruder and the availability of materials with or in which a fire can be started…...Fires started externally may….penetrate a building.”   It highlights the need for a “high standard of housekeeping and the implementation of good fire management” to frustrate a fire raiser’s attempts to cause a rapidly developing fire and to restrict fire spread and consequent damage.  “The risk of an external fire (involving, for example, combustible waste) spreading into the building should not be overlooked.”  

55.	Mr Taylor-Walster agreed with the propositions and guidance set out in these publications.  However, he failed, himself, to follow the guidance or heed the advice when carrying out his risk assessment. 

Mr Platts’ evidence
56.	The witness summary prepared for Mr Platts contains matters which are relevant to the issues.  Following  Wisniewski v Central Manchester Health Authority CA 1998 , Mr Turner submits that I should draw an adverse inference from Woolworths’ failure to call Mr Platts to give evidence.  Mr Clegg, however, submits that, because Sandhu have not led any evidence in relation to the matters covered by Mr Platts’ witness summary, then it is not open to this court to draw any adverse inference.  I am referred to Walker International Holdings Limited v Republique Populaire du Congo [2005] EWHC 2813 (Comm).  As in the circumstances in the that case, so here.  In Walker, Morison J concluded that a party’s failure to call witnesses “was deliberate so as to avoid the court having a full and comprehensive picture of the truth”.  Woolworths’ decision not to call Mr Platts prevented my having a full and comprehensive picture of the truth.  Mr Platts could, for example, have assisted the court with respect to the foreseeability of the risk of arson and with the question whether stillages could have been stored inside the building.  It seems to me that, in those circumstances, I am entitled to draw an adverse inference.  However, there is no real need here to rely on such adverse inference.  The evidence which has been tested in court and that which has been agreed are sufficient to enable me confidently to reach conclusions as to factual matters.

Did Woolworths owe Sandhu a duty of care?
57.	It is common ground that the leading case in this area is Smith v Littlewoods.  I have been taken to the speeches of Lord Brandon, Lord Griffiths, Lord Mackay and Lord Goff.  I note that I should approach the question of liability for the acts of a third party with caution.  Much will depend on the circumstances of each case.

58.	Lord Mackay said: 
 “In summary I conclude, in agreement with both counsel, that what the reasonable man is bound to foresee in a case involving injury or damage by independent human agency, just as in cases where such agency plays no part, is the probable consequences of his own act or omission, but that, in such a case, a clear basis will be required on which to assert that the injury or damage is more than a mere possibility.”

59.	Lord Goff foresaw two particular circumstances in which a landowner might be liable for property damage suffered by his neighbour as the consequence of the actions of a third party.  The first was where the landowner negligently allowed the creation of a source of danger on his land, and it was reasonably foreseeable that a third party might interfere with that source of danger thus causing damage to people or property in the vicinity.  “…..there is a more general circumstance in which a defender may be held liable in negligence to the pursuer, although the immediate cause of the damage suffered by the pursuer is the deliberate wrongdoing of another.  This may occur where the defender negligently causes or permits to be created a source of danger, and it is reasonably foreseeable that third parties may interfere with it and, sparking off the danger, thereby cause damage to persons in the position of the pursuer……….“It is, in my opinion, consistent with the existence of such liability that an occupier who negligently causes or permits a source of danger to be created on his land and can reasonably foresee that third parties may trespass on his land and, interfering with the source of danger, may spark it off, thereby causing damage to the person or property of those in the vicinity, should be held liable to such a person for damage so caused to him.  It is useful to take the example of a fire hazard, not only because that is the relevant hazard which is alleged to have existed in the present case, but also because of the intrinsically dangerous nature of fire hazards as regards neighbouring property.  Let me give an example of circumstances in which an occupier of land might be held liable for damage so caused.  Suppose that a person is deputed to buy a substantial quantity of fireworks for a village firework display on Guy Fawkes night.  He stores them, as usual, in an unlocked garden shed abutting onto a neighbouring house.  It is well known that he does this.  Mischievous boys from the village enter as trespassers and playing the fireworks, cause a serious fire which spreads to and burns down the neighbouring house.  Liability might well be imposed in such a case; for, having regard to the dangerous and tempting nature of fireworks, interference by naughty children was the very thing which, in the circumstances, the purchaser of the fireworks ought to have guarded against……..“I cannot help thinking that cases where liability will be so imposed are likely to be very rare”.

So far as the situation where a defendant knows or has the means of knowledge that intruders may trespass on to his land and create a risk of danger to others, Lord Goff said:
“There is another basis upon which a defender may be held liable for damage to neighbouring property caused by a fire started on his (the defender’s) property by the deliberate wrongdoing of a third party.  This arises where he has knowledge or means of knowledge that a third party has created or is creating a risk of fire, or indeed has started a fire, on his premise, and then fails to take such steps as are reasonably open to him (in the limited sense explained by Lord Wilberforce in Goldman v Hargrave [1967] 1 AC 645 to prevent any such fire from damaging neighbouring property.  If, for example, an occupier of property has knowledge, or means of knowledge, that intruders are in the habit of trespassing upon his property and starting fires there, thereby creating a risk that fire may spread to and damage neighbouring property, a duty to take reasonable steps to prevent such damage may be held to fall upon him.”

60.	Mr Clegg submits that this is not a case where “the needle that measures the probability of a particular result following from the conduct of a human agent is near the top of the scale” and therefore it has not risen sufficiently from the bottom of the duty reasonably to foresee it, as Lord Mackay observed in Smith v Littlewoods.  

61.	Mr Clegg relies on Lord Griffiths’ observation in Smith v Littlewoods that “it is rare circumstances in which the law will require an occupier of premises to take special precautions against such a contingency but they would surely have to be extreme indeed.”  This, he submits, is similar to the approach taken by Lord Mackay and Lord Goff.  

Conclusions
62.	Mr Clegg, properly, warns the court not to consider the fire and its causes with the benefit of hindsight.  I endeavour to avoid that danger.  The benefit of hindsight can be seen, for example, in the bulletin to stores which Mr Taylor-Walster distributed to stores after the fire.  Mr Clegg submits that Mr Bullivant’s evidence, in particular, clearly reflected the benefit he had gained from the hindsight of the fire having occurred.  That was not the impression I formed.  I found Mr Bullivant to have been a fair witness.  Generally, he gave his evidence in a straightforward way.  In my judgment, Mr Bullivant’s evidence does not amount to an appreciation of matters with the benefit of hindsight.  He gave honest answers to pertinent questions.  

63.	Mr Bullivant had received a copy of Fire SIP.  He said that there was a copy of Fire SIP at the warehouse (so the inference must be that Mr Platts was aware of this document.)  Mr Bullivant recognised the importance of Fire SIP.  Had he considered the various risk factors identified in Fire SIP, he would have appreciated that these indicated a risk of arson in relation to unit 3.  Mr Bullivant accepted that it was possible for someone to have gained access to the industrial estate by sliding under the gates or by getting over the perimeter fence from Ewart Chain’s car park.  

64.	He accepted that he could have contacted the fire brigade and police to find out about the area.  Had he known of other incidents of arson in the area, he would have considered these to be an indicator of fire risk.  

65.	Mr Bullivant accepted that, if he had known of the landlord’s requirement as to disposal of rubbish and the landlord’s complaints, it was obvious that the landlord’s concern was that an unlocked skip would represent a fire risk.  

66.	As Henry LJ said in Clark Fixing Limited v Dudley Section Benders Limited [2001] EWCA Civ 1898, “timber is combustible and fire is notoriously unpredictable”.  No hindsight was involved in that proposition.  Here, we are concerned with cardboard and plastic packaging, which are at least as combustible as timber.  

67.	Mr Clegg relies on Clark Fixing, a case in which liability was held to exist where there was knowledge of the fact that fires had been caused on the defendant’s property.  Here, he submits, there is no evidence of fire previously at unit 3.  He relies on the fact that no complaint about the risk of fire had been made by others on the industrial estate.  Ms Strange, for example, did not complain to Mr Platts of the risk of fire, only of untidiness.  In my judgment that does not assist Woolworths.  In order to be able to reach a conclusion that a duty of care existed, it is not, in my judgment, necessary for Sandhu to show that Woolworths had been given specific warning about the risk of fire at the unit or that there had been a previous similar fire at unit 3 or at another unit on the estate.  As Mr Bullivant accepted, there is a blurred line between opportunistic theft, vandalism and arson;  vandalism often migrates into arson.  There had been many instances of vandalism, theft and arson both on the industrial estate itself and in the area immediately surrounding the estate.  Woolworths’ own property had been affected.  As Mr Platts had been warned, Woolworths’ own skip was a source of attraction to children and adults.  There were clear signs of trespass on the estate at night and weekends.  Woolworths must have known all this.  It was obvious that young people would be attracted to the area: an industrial estate, to which access was possible, not overlooked after hours and close to playing fields, playground and sports area.  

68.	Further, the evidence is clear that Woolworths themselves had extensive experience of fires started maliciously in waste bins, skips and stillages ie in circumstances very similar to those with which we are concerned.  So it is puzzling how Woolworths feel able to contend, as they do, that the risk of fire and fire spread was not readily foreseeable.  

69.	In my judgment, the following were reasonably foreseeable: that those who enjoy setting fire, particularly children and young people, would be attracted to and be able to gain access to the industrial estate; that such persons would be able to gain access to stillages left close to the perimeter fence adjacent to unit 3; that, if such persons gained access to waste packaging in stillages either close to the fence or by gaining access to the industrial estate itself, they were likely to be tempted to set fire to waste; that, if fire were so set, it was likely to damage property including buildings.  The risk of arson here was not “merely foreseeable” or “merely possible”.  In my judgment, the risk here was obvious and significant.  Similarly, the risk of the spread of fire from waste packaging to the building was obvious and significant.  These were so obvious and significant that Woolworths’ own document contained clear warnings about this.  

70.	I conclude that Woolworths owed Sandhu a duty of care not to leave a source of combustible material in such a way as might result in damage to Sandhu’s neighbouring property.  

If Woolworths did owe Sandhu a duty of care, what standard should be applied?
71.	Mr Clegg submits that the court should not assess Woolworths by different standards from those applicable to others.  The court should make no distinction between an entity like Woolworths and an entity like Sandhu.  He submits that the court should not take into account the evidence concerning Woolworths’ particular knowledge as to the risks of fire.  Instead, the court should have regard only to the knowledge of those on the ground in the locality.  Mr Clegg accepted that, it followed from that submission, that Woolworths’ case is that the court should ignore all of the evidence of what Woolworths as an organisation knew or should have known.  Mr Clegg submits that this is the correct approach here, namely in circumstances where Sandhu are seeking to hold Woolworths liable for the actions of a third party, and in the light of the approach taken in Smith v Littlewoods where there had been no suggestion that any different standard was to be applied to Littlewoods, at that time a substantial retailer.  Mr Clegg relies on no authority in support of that proposition.  

72.	Mr Turner submits that that approach is untenable.  He has referred me to the passage in Clerk & Lindsell at paragraph 8-16 and to Wimpey Construction Ltd v D V  Poole. [1984] 2 Lloyd’s Reports 499.  In that case Webster J was concerned with circumstances where a professional person possessed particular knowledge.  He noted that the authorities indicated that the test as to whether there had been negligence or not was not the test of the man on top of the Clapham omnibus, because he did not have that special skill.  The test was the standard of the ordinary skilled man exercising or professing to have that special skill.  Webster J said: “The second gloss which Mr Phillips sought to put upon the test was that it is the duty of a professional man to exercise reasonable skill and care in the light of his actual knowledge and that the question whether he exercised reasonable care cannot be answered by reference to a lesser degree of knowledge than he had, on the grounds that the ordinary competent practitioner would only have had that lesser degree of knowledge.  I accept Mr Phillips' submission; but I do not regard it as a gloss upon the test of negligence as applied to a professional man.  As it seems to me that test is only to be applied where the professional man causes damage because he lacks some knowledge or awareness. The test establishes the degree of knowledge or awareness which he ought to have in that context.  Where, however, a professional man has knowledge, and acts or fails to act in way which, having that knowledge he ought reasonably to foresee would cause damage, then, if the other aspects of duty are present, he would be liable in negligence by virtue of the direct application of Lord Atkins' original test in Donoghue v Stevenson.”  I follow the guidance in that judgment.

73.	Fire SIP shows a depth of knowledge within Woolworths about fire risk.  Woolworths knew of the landlord’s concerns with respect to the handling of rubbish and the landlord’s complaints about Woolworths’ failures in this regard.  In my judgment, Woolworths should be expected to exercise a degree of care in relation to that actual knowledge.  The reasonable skill and care required of Woolworths should be measured by reference to the knowledge which they, as an organisation, had, and not by any lesser knowledge of those on the ground.  It would in my judgment be wrong to ignore the information which Woolworths themselves, as an organisation had, but which was not available to those on the ground.  However, even if I am wrong on that, much of that information was available to Mr Taylor-Walster and others on the ground.  Mr Clegg accepted in submissions that Mr Taylor-Walster was one of those on the ground.  Mr Taylor-Walster, Mr Bullivant and , it must be inferred, Mr Platts, were aware of Fire SIP.  Mr Taylor-Walster accepted that he was aware of most of the authoritative publications concerning fire safety to which he was taken.  The only information which was not available to Mr Bullivant or Mr Taylor-Walster was that relating to the landlord’s requirement and complaint.  That information is only one small piece of the jigsaw.  Even if that piece were removed, a clear picture remains.  I therefore remain of the view that Woolworths owed Sandhu a duty of care as I have set out earlier.  

Was Woolworths in breach of the duty of care it owed to Sandhu by allowing the accumulation of waste outside unit 3?
74.	In Gabriel v. Kirklees MBC [2004] EWCA Civ 345 Moses J noted the potential circularity in Lord Goff’s formulation in Smith v. Littlewoods but held that he considered that Lord Goff’s formulation meant no more than that “it must be proved that the creation of a source of danger resulted from the failure of the defendant to exercise the care reasonably to be expected of him in all the circumstances”. 

75.	There was no evidence from Woolworths to the effect that no alternative means to avoid or reduce the risk were reasonably practicable. 

76.	Mr Clegg submits that there is no reason to suppose that the position on the ground as shown in the photographs was the same as that immediately prior to the fire or that Woolworths had left stillages containing waste close to the building.  Members of the fire brigade had moved some stillages during the fire fighting, but I accept on balance that the location of open and folded stillages shown in the sketch and photographs was not very different from their positions before the fire.  One can see from the photographs evidence that open stillages close to the building had been affected by fire.  The likelihood is that they were fire damaged because waste had been burning inside them.  It is clear to me that a substantial number of open stillages containing cardboard waste had been left outside the building, and that open stillages containing waste had been left close to the building, and close to the perimeter fence.  There was a chain of combustible material stretching across the area in front of the building from the perimeter fence through stillages containing cardboard waste to the parked van.  The van had been parked close to the building.  

77.	There is a clear overlap between the matters on which Sandhu rely in support of their case that Woolworths owed the m a duty of care and the question whether Woolworths were in breach of that duty.  In my judgment Woolworths were in breach of their duty to Sandhu as follows:

78.	 Mr Bullivant failed to carry out the regular checks which Fire SIP required.  Had he checked, he would have noted that waste was too close to the building and the fence.  He accepted, quite properly, that if he had seen stillages close to the building he would have done something about it.  There had been some, albeit limited, space inside the building, and some of the stillages containing waste could have been taken inside the building on the Friday night.  None was.   

79.	No one at Woolworths made enquiries of the other occupants of the industrial estate.  Had they done so, they would have learned of local arson attacks eg cars burnt out close to the industrial estate.

80.	Woolworths made no enquiries of the fire brigade.  Had this been done, it is likely that Woolworths would have learned of the fires in the area around the industrial estate.  

81.	No one at Woolworths made enquiries of the police.  Had they done so, they would have learned of the high incidence of theft, vandalism and arson in the area.

82.	Mr Taylor-Walster’s fire risk assessment was inadequate.  Had Mr Taylor-Walster undertaken the assessment in accordance with Woolworths’ requirement in Fire SIP, he would have appreciated the vulnerability of unit 3 and the fire risk involved in leaving open stillages containing waste packaging adjacent to the perimeter fence and near the building.  

83.	Mr Taylor-Walster’s assessment had identified the risk of fire in paper or card as probable, yet no one paid any heed to that.  Woolworths failed to carry out the checks which Fire SIP required. 

84.	Mr Bullivant did not undertake his duties as Fire SIP required.  Had he done so, he would have appreciated the risks and taken steps to avoid them.  

85.	No one attempted to contact Wincanton to collect waste even though it must have been obvious on the Friday that waste had not been removed.

86.	In my judgment, these failures amount to a breach by Woolworths of the duty of care they owed to Sandhu.  Woolworths are not entitled to rely on an inadequate risk assessment to excuse them from liability to Sandhu.  

87.	Mr Walker’s comment, that this was a classic example of an incident which should not have occurred if waste had been stored as it should, is to the point.  The fire brigade’s file note summarises the position accurately: A competent fire risk assessment would have identified vulnerability of waste packaging material to deliberate ignition as a significant hazard.  Control measures to reduce the risk could then have been easily implemented by ensuring that combustible waste is was managed by either keeping the accumulation of combustible waste to a minimum or by locking waste materials inside the premises when the premises were on occupied; if it were necessary to store waste packaging materials outside, this should have been kept in a covered, locked skip sited in a safe area.

Wincanton
88.	Woolworth rely in these proceedings on the proposition that their arrangements with Wincanton were satisfactory, and sufficient in the circumstances.

89.	On the second day of the trial, Woolworths applied for and were given permission to re-amend their defence.  That re-amendment related to Woolworths’ relationship to Wincanton.  Woolworths’ primary case at the beginning of trial was that they had contracted with Wincanton in June 2001 and that a term of that contract required Wincanton to deliver stillages to and collect stillages from unit 3.  Their alternative case was that there was some arrangement in place between Woolworths and Wincanton whereby Wincanton collected stillages containing cardboard and other waste materials when asked or instructed to do so.  There is, however, no evidence from Woolworths as to the nature of such a relationship.  The re-amendment does not take matters further at all.  The only available evidence is that of Mr  Martin who is Woolworths’ Commercial Manager.  He said that arrangements had been in place with Wincanton for about 10 years.  He was unable to specify what those arrangements were.  All he was able to say was that he observed that, from time to time, Wincanton vehicles did collect stillages containing packaging waste and sometimes they did not.  

90.	I have already explained that Woolworths no longer pursue their part 20 claim against Wincanton.  I understand that Wincanton served a defence in the part 20 proceedings, but I have not seen this nor have I any evidence from Wincanton.  

91.	In closing, Mr Clegg confirmed that Woolworths no longer relied on the existence of a contract with Wincanton pursuant to which Wincanton had an obligation to collect waste.  Instead, they rely on what Mr Clegg described as a loose arrangement.  Plainly there was some informal arrangement in place between the two organisations, as Wincanton did in fact collect waste from time to time, but Woolworths have not provided evidence to enable me to understand what that arrangement was.  

92.	The question here is whether Woolworths have proved, on balance of probabilities, that they had made satisfactory arrangements with Wincanton for the collections of waste packaging such as to excuse them from liability to Sandhu.  In my judgment, Woolworths have not done so.  The apparently loose arrangement with Wincanton does not assist Woolworths in relation to the claim by Sandhu.  Any failure by Wincanton to collect waste packaging did not excuse failure by Woolworths’ employees to keep stillages containing waste packaging away from the building and the perimeter fence.

93.	In any event, it must have been clear to Woolworths’ employees when they arrived at unit 3 on the morning of Friday 25 April that waste had not been collected.  Yet they made no attempt to have this collected by Wincanton.  

Conclusion
94.	Woolworths accept that Sandhu sustained damage to its property in consequence of the fire and that the accumulation of waste by Woolworths was an effective cause of that damage.  It follows that Woolworths are liable in damages to Sandhu.

95.	I invite the parties to suggest directions for steps to be taken leading to trial for damages to be assessed. 

5 June 2006