England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		2/12/2013

MRS JUSTICE ANDREWS:

1. This is a claim for losses suffered by the Claimant, Tradebe Solvent Recycling Ltd., formerly known as Solvent Resource Management Ltd. ("SRM") as a result of damage to storage tanks and associated plant and equipment caused by a crane collapse during a lifting operation being carried out by the Defendant ("Coussens") at SRM's premises at Lime Kiln Works, Rye Harbour, East Sussex on 16 March 2010. The crane driver failed to extend the hydraulic feet from the mobile crane, and thus when he extended the crane arm, the crane toppled over, falling onto storage tanks and other equipment below. The physical damage that this occasioned was serious and extensive.
2. SRM is one of Europe's largest solvent handling companies, specialising in the waste processing of chemicals used in the pharmaceutical and other industries. SRM is involved in taking delivery of the products from the customer and processing them at its plant. Unsurprisingly, given the toxicity and flammability of the chemical products on site, this business is highly regulated, with SRM receiving regular visits from the Environment Agency and Health and Safety Executive ("HSE"). Every stage of the process has to be authorised and monitored.
3. SRM's premises cover a large expanse of land and incorporate a multitude of metal structures, pipes, and tanks which are used for storage and in the distillation process. The process building, containing the distillation plant, is completely separate from the area where the accident took place, which is known as "the H-bund". The layout of the H-bund and the configuration of the tanks in it, as well as the approximate line of the damage caused by the fallen crane, are best illustrated by a diagram which was appended to the Claimant's Opening Submissions and which is appended to this judgment.
4. It was common ground that the aim of the award of damages is to put SRM back, so far as possible, into the position in which it would have been but for the accident.
5. In consequence of the accident, the tanks numbered H6 and H8 were damaged beyond economic repair. The tanks numbered H2 and H4 were also damaged, though the damage to them was less extensive, and it is possible that they could have been repaired. In the event, they were replaced. SRM's case is that it was intending to replace H6 and H8 with two larger (60,000 litre or 60m³) tanks configured to enable the safe storage of acetic acid solution, in order to meet its contractual obligations to a specific customer, Ajinomoto Sweeteners Europe SAS ("Ajinomoto"). This project was designated "Project 1363" and an internal budget of £100,000 within the company's CAPEX plan had been set for its implementation. The replacement tanks had already been delivered and paid for.
6. In the aftermath of the crane incident, because of the extensive damage caused to the area of the H-bund around H6 and H8, SRM maintains that it was impracticable to install the acetic acid tanks there, at least so as to ensure that they could meet the first deliveries. Accordingly, in order to maintain continuity of operations and to ensure that the Ajinomoto contract was fulfilled, the tanks designated to replace H6 and H8 were used to replace H2 and H4 instead. SRM says that this was a step taken in reasonable mitigation of SRM's losses, because the financial consequences of an inability to service Ajinomoto would have been disastrous. Subsequently, H6 and H8 were themselves replaced, again by second-hand 60m³ tanks, because that turned out to be cheaper than buying smaller new tanks. However those tanks were not modified for storage of acetic acid.
7. Since it had always been intended to carry out Project 1363, the costs associated with that project have not been claimed from Coussens. Instead, SRM has claimed the costs of the tanks that in fact replaced the written-off H6 and H8, the costs of clearing up the site, and of temporary and permanent repairs to the physical damage, and any costs incurred over and above the original budget for Project 1363 which SRM says were caused by the relocation of the acetic acid tanks to H2 and H4. Thus, although SRM in fact replaced 4 tanks, it has only claimed the cost of replacing the two tanks that were damaged beyond economic repair.
8. The diagram indicates that there are two so-called "walkways", more accurately described as access platforms, running from East to West down the middle of each group of four tanks (i.e. in between H6 and H8 to the north of the bund, and in between H2 and H4 to the south.) These walkways are spurs from a walkway running from North to South along the whole length of the H-bund. What the diagram does not show is that at the time of the accident, the walkways were balanced on and supported by the sides of the tanks. When they came to be replaced, it was necessary to build wholly independent structural support systems in order to meet current regulatory requirements. The walkway to H2 and H4 was rendered unsound when the crane collapsed.
9. Another feature that is not shown on the diagram, but which is of some considerable importance, is the "tundish" (also referred to as the "trough") which was the main pipework interchange located between tanks H6 and H8. Mr James Stevenson, who was SRM's Technical and Engineering Manager at the time of the accident, described this as the "lifeblood" not only to the H-bund but to the K-bund and to the A, B and C tanks as well. He explained that most of the pipes that were coming from SRM's process building out to that area of the plant would have double-valved interconnections at the tundish, so as to enable a flexible hose to be used to connect a pipe or pipes to a particular tank or tanks. There were also hard pipes essentially following the same route. Although they did not come out at the tundish, they moved through the same pipe bridge. The pipes that went through the interchange included steam lines and water lines - the service lines for cleaning the tanks.
10. The crane hit this interchange and caused severe damage to the pipework, as well as to the structure itself. This explains why, in a report by the loss adjusters, SLS, to Coussens' insurers on 21 April 2010, it was stated that "approximately 18 storage tanks, their process lines, access platforms, pipe supports and utilities have been seriously affected." A similar assessment appears in reports within SRM shortly after the date of the accident. The damage to the tundish could have caused a significant period of business interruption if steps had not been taken to maintain the necessary connections, involving the use of temporary pipelines. Those steps proved to be successful, for in the event, SRM has only claimed for the four hours' business interruption that occurred when the whole plant shut down in the immediate aftermath of the crane incident.
11. One of SRM's employees, Mr Lawrence Wright, who was one of the fitters on site, suffered a blow to the head, a broken ankle and various other injuries of a relatively minor nature whilst taking evasive action when the crane fell. Although he was fortunate to have escaped more serious injury, he had to take time off work to recover, and on his return he started on light duties until he was fit enough to resume his usual job. I am not concerned with any claim for personal injury, but one head of SRM's claim relates to the cost of labour to replace Mr Wright.
12. Coussens admitted liability in June 2010, fairly shortly after the incident occurred; the trial was therefore limited to issues of causation and quantification of SRM's alleged losses. SRM claimed damages of £633,424.98. This was a slight reduction from the pleaded figure, to take account of concessions made before the trial that credit should be given for the scrap value of H6 and H8 and for certain other works that SRM accepted were not attributable to the damage caused by the accident. In Mr Denis-Smith's closing submissions it was also conceded that a deduction should be made for the claim for storage tanks (£37,674) and "arguably" also for three invoices relating to SRM's planned replacement of mesh in the walkways, amounting to £7,796. In the light of the evidence of two of SRM's witnesses, Mr Palmer and Mr Plawecki, I agree that a deduction should be made for those items. That reduces the claim to £587,954.98.
13. Somewhat unusually, the Defendant has not run any positive case. In paragraph 22 of its Counter-Schedule it did plead a positive case that "at the time of the incident the H-bund was already in the process of being upgraded and the Claimant's project plans included the replacement of at least 4 tanks located within the H-bund. There were specific plans to replace tanks H1, H2, H6 and H8 with larger tanks… constructed of stainless steel so as to be suitable for storing acetic acid". However, at trial, the Defendant expressly abandoned any positive case in this regard (whilst, as I shall explain, still trying to maintain that allegation). Instead, it has chosen to put SRM to proof of all its alleged losses.
14. The explanation for this stance given by Mr Miller was that Coussens (or to be more realistic, their insurers) believe that SRM have taken advantage of a business opportunity caused by the accident and its aftermath to carry out an enhancement of the H-bund. Mr Miller submitted that whilst this may have been an understandable and sensible commercial decision, SRM was not entitled to improve its plant at the expense of his client. Coussens is only liable if and to the extent that the loss and damage SRM incurred and is claiming was caused by the accident; though of course that may include the expense of steps taken in reasonable mitigation, even if those steps led to an increase in the amount of the claim.
15. Moreover, as Mr Denis-Smith very fairly acknowledged, SRM is not entitled to charge Coussens with the cost of work that it would have carried out in the H-bund even if there had been no accident, or any other expenses that it would have borne in any event, for this expenditure would not be causatively linked to the Defendants' negligence or breach of contractual duty. That is why SRM has credited the amount of money it says it would have expended on Project 1363. SRM's case is that, in the aftermath of the accident, it took appropriate steps to ensure that any such expenditure was separately costed and excluded from the claim.
16. Coussens' case is that it has not been established on the evidence to the requisite standard (the balance of probabilities) that the invoices relied upon by SRM are indeed in respect of works that were undertaken by reason of the Defendant's tortious act or breach of contract. Mr Miller submitted that the basis on which SRM had pleaded its claim changed dramatically, and that the way in which it was put at trial was pleaded for the first time on 13 November, a week before trial; that the invoices relied upon by SRM were largely wholly unparticularised and could never be properly explained, and that the amounts claimed from Coussens kept changing – but only in one direction (upwards). Mr Miller was at pains to stress that his point about the pleading was not just a technical one. He relied upon the alleged late change as a reason why the Court should approach SRM's claims with a healthy degree of scepticism and subject each item to close scrutiny.
17. In April 2010, SLS, who were appointed as loss adjusters by Coussens' insurers on the day of the crane incident, set a reserve of £500,000 in relation to an estimated cost of £250,000-£500,000 for "potential rectification works and all associated costs". This estimate excluded any costs arising out of the need to pay for a replacement for Mr Wright. It is not clear on the evidence to what extent the figures were dependent upon what the loss adjusters were told by SRM or their sub-contractors, and to what extent, if any, they were based upon any independent assessment. After SRM sent SLS (in July 2010) a schedule of invoices said to relate to Phases 1 and 2 of the project of repair following the crane incident, together with copies of all the invoices referred to in the schedule, Coussens made an interim payment of £250,000 in two instalments of £125,000, on 25 August 2010 and 8 September 2010 respectively.
18. Of course, as Mr Miller pointed out, SRM cannot prove its loss by reference to what his clients or their insurers did or said. I have mentioned the interim payment for a different reason. Although Mr Miller conceded that SRM had suffered some loss and damage in consequence of the accident, he was unable to state that his client accepted liability to pay any particular amount. However, there is no counterclaim for the return of any part of the interim payment and it has never been suggested by Coussens or their insurers that they have overpaid, though Mr Miller submitted that if I were to find that the loss was less than £250,000 his instructing solicitors would have to consider what to do about it. Fortunately, that is not a problem which need trouble them.
19. Realistically, therefore, the amount in issue is a little over £300,000, and less than £100,000 above the reserve set by the insurers. Yet I have been presented with 17 lever arch files full of documents (excluding the bundles containing counsel's opening and closing submissions, various spreadsheets, the transcripts, and the authorities), many of which are duplicates and to many of which I was never referred. The hearing, scheduled to last three days, took five, most of which were devoted to the evidence of the witnesses called by SRM. The costs incurred by the parties are bound to be well in excess of the amount at stake, and that is something that would have been apparent to both sides at an early stage.
20. Another thing that would (or should) have been apparent is that this is not a claim that depends solely on invoices. It is supported by the evidence of SRM's witnesses, who were directly involved in the project to deal with the aftermath of the accident, including Mr Stevenson (who no longer works for them) and also, as I shall demonstrate, by the contemporaneous documents, including those which were passing between the parties themselves at the time. The witnesses explained why the tanks designated for H6 and H8 were installed in the place of H2 and H4, what work was carried out, and what costs were being laid to Coussens' account, and why. Whilst it was possible to chip away at certain of the items of claimed expenditure by demonstrating that they were mistaken or that their memories were at fault, the Court would have had to have reached the conclusion that their evidence was to be disbelieved in many material respects in order to form the view that SRM had failed to discharge the burden of proof. In these circumstances it ought to have been possible for the parties to have reached a sensible commercial settlement.
21. Sadly, it would appear that the matter has occupied valuable court time because of a suspicion by Coussens' insurers, fuelled by a small handful of documents among the thousands in these bundles, which has turned out to be wholly without foundation.
22. SRM caters for any business that wants to dispose of waste chemicals and solvents; however, it has an established long term relationship with a number of its customers. Some of these customers require dedicated pipelines for their products to avoid contamination or other hazards. For example, pipes conveying acetic acid solution to and from the tanks must be lagged to stop it from freezing.
23. In 2007, SRM produced a document entitled "Rye Tank Status and two year improvement programme" which envisaged upgrading various tanks in the plant, and scrapping H1 to H9 by the end of 2008. However that part of the plan (which appears not to envisage replacing the scrapped tanks) was never implemented, and all the tanks in the H-bund remained operative. The records in the stock sheets disclosed by SRM demonstrate that in the months leading up to the accident, H2, H4, H6 and H8 were all in use either for storage or processing of stock. H8 had been decommissioned some time before July 2009 following the development of pitting and leakage after it had been used to store acetic acid. Mr Stevenson explained that "decommissioned" means that it was no longer being deployed for its intended purpose, not that it was not being deployed at all. In fact, the records show that H8 was used to process stock throughout December 2009, and thereafter it was recorded as storing materials. In March 2010 it had been storing methanol.
24. By 2009, SRM had identified from a review of the market that there was an increasing requirement for the processing of acetic acid. With that in mind, in around early 2009 SRM commenced a refurbishment programme on its Rye site, starting with the processing plant. This included the upgrading of its glass-lined reactor to ensure that it was capable of receiving acetic acid, and improvements to the purification procedures so that greater volumes of raw materials could be processed, and to a higher standard.
25. On 17 April 2009, SRM entered into a contract with Ajinomoto for the treatment of the waste acetic acid/water mixture produced as a by-product of Ajinomoto's production of aspartamine. Ajinomoto planned to cease incinerating this waste in 2010, and thereafter to send it to SRM for recycling. SRM was responsible for organizing the haulage of the acetic acid from Ajinomoto's premises in Gravelines, France, to SRM's premises in Rye. The regular deliveries under the contract were to be in 30,000 litre batches.
26. The two tanks at H6 and H8, which were respectively 28m³ and 35m³ in capacity, were already used as storage. They had both been used as storage for acetic acid solution, although they were made of 304 stainless steel, which was unsuitable for that product (as demonstrated by the pitting and leakage that caused SRM to cease using H8 for that purpose). In 2009 they were 25 years old and nearing the end of their useful life. In the period from May to early July 2009, Mr Stevenson prepared and refined a CAPEX proposal document for consideration by SRM's management, containing detailed estimates of the financial costs for a project ("Project 1363") to replace H6 and H8 with two 60m³ tanks made of 316 stainless steel, so as to enable SRM to accommodate the requirements of the Ajinomoto contract. These larger-sized tanks would enable SRM to engage in a rolling programme, so that whilst one tank was being emptied of processed product, the other would be available to receive crude product.
27. The removal of the tanks would necessarily involve removal of the part of the walkway connected to those tanks, and its replacement by a free-standing access platform. The walkway would have to be taken out before the tanks were replaced. The documents disclosed by SRM relating to Project 1363 include quotations from Rutherford-Brown Ltd (the contractors engaged by SRM to do the necessary works on the walkway) which specifically refer to removal of tanks H6 and H8, and access to the replacement tanks.
28. Mr Stevenson based his estimates on his previous experience and by obtaining quotes from various suppliers. His evidence was that he had never exceeded a CAPEX budget by more than 10%. Mr Stevenson's estimate for the total capital expenditure on the project was £99,750, but the final version of his CAPEX proposal document rounded the requested budget up to £100,000. That version was sent by Mr Stevenson by email on 7 July 2009 to Mr Ray Palmer, (SRM's site manager and Mr Stevenson's immediate superior), who also gave evidence, and to Mr Tony Walmsley, the operations director to whom Mr Palmer reported directly. Later that day, Mr Palmer sent Mr Walmsley an "Ajinomoto Sales Revenue Estimate" based on current sales prices, and various other documents (including a further copy of Mr Stevenson's document) to be presented to those within SRM's Management who were responsible for giving approval to the project and the proposed CAPEX budget of £100,000.
29. On 5 August 2009 Mr Palmer made a handwritten list of intended projects which included the replacement of H6/H8. On 21 September, at the very latest, formal approval was given for Project 1363, as well as for another project to replace tanks J13 and J14 (coincidentally the budget for that project was also £100,000). Project 1363 was also given an approval or "AFE" number, 9383, by the accounts department.
30. In early November 2009 Mr Stevenson went about sourcing the replacement tanks for both these approved CAPEX projects from a supplier called Tanks and Vessels Industries Ltd. Mr Stevenson explained that the project to replace H6 and H8 had been put back from 2009 to accommodate other more urgent projects, so it was now envisaged that it would take place in the first quarter of 2010. The tanks replacing H6 and H8 required special modifications, as set out in drawings supplied by SRM's engineers, in order to be capable of use to store acetic acid. The suppliers required a 30% deposit on order, with the balance to be paid before delivery. Mr Stevenson sought and obtained approval to make these payments. By that time, it was anticipated that the modified tanks would be delivered in January 2010. In the event they were delivered on 3 February.
31. On 8 January 2010 Mr Stevenson sent an email to Mr Brownbridge of Tanks and Vessels asking if all the modifications had been completed and whether they would be ready for delivery by the end of January. He then asked "do you have another 2 the same as the 60m³ left, as I have submitted a CAPEX for more tanks to be installed in Q1?" In the course of further correspondence about amendments to the original drawings pertaining to the tank modifications, Mr Brownbridge responded by confirming that he had "4-off 60,000L vessels still available to the same specification as the items you have already purchased".
32. On the morning of 2 February 2010 Mr Stevenson sent a document entitled "CAPEX proposal for replacement of tanks H1 and H2" to Mr Walmsley, copied to Mr Palmer. This project was given the number 1413. The document is virtually identical to the CAPEX proposal document on Project 1363, and so is the budget, £100,000. It appears from the front page that it was compiled in December 2009. The proposal envisages that the replacement tanks would be configured to receive acetic acid. This CAPEX proposal document of 2 February 2010 formed the linchpin of the Defendant's case, in that it became the foundation for Mr Miller's submission that SRM always intended to replace 4 tanks with 60m³ 316 stainless steel tanks for use in the storage of acetic acid solution, or alternatively, if that intention had not crystallised by the time of the crane accident, it was formed afterwards in order to maximise the business opportunity created by the site clearance.
33. Mr Plawecki, the Group Engineering and Project Manager drafted in to assist Mr Stevenson and Mr Palmer in undertaking the work required in the wake of the crane collapse, who also gave evidence, stated in a "Project Progress and Cost Report" that he compiled in October 2010 that "to minimise the impact on production and any associated customer relation issues, the decision was taken by SRM's engineering and management team to utilise two second-hand 60,000 ltr stainless steel tanks that had been purchased for another project but not yet installed." Mr Miller's original thesis explored in cross-examination was that the "other project" referred to by Mr Plawecki for which the tanks had been purchased was not a project to replace H6 and H8, but rather, a project to replace H1 and H2. In my judgment, as Mr Plawecki confirmed when he came to give evidence about it, this was obviously a reference to the original project to replace H6 and H8, Project 1363, which had been curtailed by the accident. That was also the way in which Mr Stevenson interpreted Mr Plawecki's report when he was asked about it in cross-examination. Project 1363 was a different project from the project to deal with the immediate aftermath of the accident, which was what Mr Plawecki was writing about in his report, and which was given a different project number, 1467. Mr Plawecki confirmed in cross-examination that he had no knowledge of the proposal for H1 and H2 to be used for storing acetic acid.
34. Mr Stevenson's evidence in chief was that the project that had started when the crane incident occurred was replacing H6 and H8, and that replacing H1 and H2 was an alternative idea which went as far as Mr Walmsley because he was always interested in the acetic acid project, but it never got off the ground, because the business case was not made out. Mr Palmer, who was straining to recollect events which took place over three years ago, said that "That could have been another option of… rather than H6 and H8, replacing H1 and H2, I don't know, I can't recall that." Mr Palmer interpreted the CAPEX proposal as an alternative, because he had obtained approval to spend £100,000 on acetic acid tanks and SRM only needed them for the Ajinomoto project. He was adamant that he had no plans at that time to put another two tanks in.
35. Mr Miller submitted that this had to be incorrect, because the email showing that approval was given for Project 1363 on 21 September 2009 plainly demonstrated that what Mr Stevenson had in mind must have been an additional project and not an alternative. That document had not been disclosed at the time when Mr Stevenson gave his evidence, because it was among those found in a file in Mr Palmer's office at the bottom of a filing cabinet that he had never used, (where it had been put by others without his knowledge following an office tidy-up by Mr Palmer's assistant) and disclosed on the third day of the trial.
36. The late disclosure was not something for which SRM should be blamed. Until Mr Stevenson was cross-examined it had appeared to be common ground between the parties that SRM always intended to replace H6 and H8, and that the controversy was over whether they planned to replace two other tanks as well. It was, after all, the Defendant's own pleaded case. For example, in paragraph 25 of the Defendant's counter-schedule it was averred that "as part of the intended lift on 16 March 2010, the access walkway was being lifted off of [sic] tanks H6 and H8 in readiness of their pre-planned removal from the H-bund and replacement." The line of cross-examination adopted by Mr Miller, in direct contrast, involved the proposition that because there were no documents proving that Project 1363 had been approved, the 60m³ tanks that were ordered and paid for were destined to replace H1 and H2 (conveniently ignoring the fact that there were no documents establishing that that proposal had been approved either).
37. It may be that it was the Reply that started this particular hare running, because Mr Denis-Smith had pleaded that at the time of the accident, tanks H6 and H8 had not been replaced (which is factually correct) "and no steps had been taken to order their replacement". That latter statement was plainly a mistake; the replacement tanks had already been ordered and paid for. Yet SRM's solicitor had confirmed that fact in a witness statement served as long ago as July 2012; the documents relating to the purchase of those tanks had long since been disclosed; and the Claimant's witness statements, particularly Mr Stevenson's, put the position beyond doubt. In any event, it is very curious that a Defendant who has pleaded one set of facts should then choose to explore with witnesses who agree with those facts, the precise opposite, especially in the guise of putting the Claimant to proof.
38. In the light of this change of tack, SRM carried out a further search for documents and unearthed, among other matters, Mr Palmer's handwritten diary notes and the emails proving that Project 1363 was indeed approved, and when it was approved.
39. It was put to Mr Stevenson in cross-examination that the CAPEX proposal of 2 February 2010 "had to be" the CAPEX proposal that he was referring to in his email to Mr Brownbridge of 8 January. Mr Stevenson said "no, it doesn't have to be. Possibly, it's reasonable. (Pause) I'll come back to it again, it wasn't approved". He went on to say that he purchased a lot of good tanks, and that he was purchasing tanks all the time. He then commented that he saw an opportunity, he tried to line up to buy the tanks, and he got knocked back by senior management.
40. I agree that if the inquiry for the two extra 60,000 litre tanks was related to the Capex Project proposal of 2 February 2010, it would suggest that Mr Stevenson was floating the idea of replacing H1 and H2 for use in storing acetic acid as well as H6 and H8. However the email inquiring about the availability of further tanks was sent on 8 January, and seems to refer to a CAPEX proposal that Mr Stevenson had already submitted, for tanks to be installed in the first quarter of 2010. The CAPEX project proposal of 2 February post-dates that email by almost a month, and there is no evidence that an earlier version of it had been submitted to anyone.
41. Moreover the February proposal envisages the capital expenditure falling within "the SRM approved budget for 2010", which lends some strength to the idea of this being an alternative project for the use, in a different location, of the existing £100,000 that had already been earmarked and approved for replacing H6 and H8. The February proposal also refers to the work being carried out within 3 months of receipt of approval, not by the end of the first quarter of 2010. It is therefore far from obvious that it was the same CAPEX proposal that Mr Stevenson was referring to in his correspondence with Mr Brownbridge in January. Given that Mr Stevenson was always on the look out for good tanks at a reasonable price, and tanks of that size did not necessarily need to be used to store acetic acid for Ajinomoto or anyone else, because as Mr Plawecki confirmed, SRM always purchased 316 stainless steel tanks at that time, it is just as likely that the tank inquiry in January concerned a different project altogether.
42. It is to the credit of Mr Stevenson that in the exchange to which I have already referred in paragraph 39, he was willing to accept that it was a reasonable inference to draw from the documents that the tank enquiry was linked with the proposal to replace H1 and H2. However, even if Mr Stevenson had been suggesting to management that they should seize the opportunity to buy two large, cheap, good quality second- hand tanks that could be used to replace two more of the old ones in the H-bund, and thus he was initially mistaken in his recollection that the H1/H2 proposal was an alternative to H6/H8, that still falls a long way short of establishing that SRM always intended to replace four acetic acid tanks in this location, not two, and thus that Coussens should be given credit for the cost of replacing four.
43. I accept the evidence of Mr Stevenson and Mr Palmer that this proposal for the H1/H2 replacement never received the sanction of SRM's management. When ideas were turned down, the practice within SRM was to communicate this verbally. Mr Stevenson's evidence was that he was told there was no business case for it, and that senior management said he could continue using what he had got, so he did. Unlike his evidence about the proposal being an alternative to the H6/H8 plan, that is not something about which Mr Stevenson could have been mistaken. I regarded him as a witness of truth, who was frank in his answers and who had no reason to make up a story to the advantage of his previous employers. Mr Stevenson ceased working for SRM in 2011 to go to work in a senior role for EDF Energy, and he is now employed by Cavendish Nuclear as portfolio business manager of two sites, Sizewell B and Dungeness. Indeed the view I formed of all the other witnesses who still work for SRM was that they, too, were doing their fair and honest best to assist the Court.
44. Mr Stevenson's evidence that the matter went no further is borne out by the contemporaneous documentation. On the afternoon of the same day as the CAPEX proposal was sent off to Mr Walmsley, 2 February 2010, Mr Brownbridge sent an email to Mr Stevenson saying that the remaining 60,000L vessels had been quoted to another existing customer, to which Mr Stevenson responded "Ah, not good, I will take this up with my boss." At the end of the month, Mr Brownbridge sent a chasing email to find out if there was "any news on the two additional 60s?" to which the response was "Piers, no progress." There were no further exchanges on the subject.
45. On 5 February 2010 Mr Palmer made a note referring to "ongoing projects". Item 6 on the list is "H6/H8 start March". There is no reference to any project pertaining to H1 or H2, and no document thereafter shows that Mr Stevenson or anyone else at SRM was following up the purchase of more 60m³ tanks before the accident, for acetic acid or for anything else. Mr Palmer's evidence, which I accept, was that there was no mention at all of H1 or H2 in the rolling CAPEX programme on any of his spreadsheets.
46. Mr Miller submitted in the alternative that it was the intervention of the crane accident that prevented Mr Stevenson's February CAPEX proposal from receiving sanction. That flies in the face of Mr Stevenson's evidence (which he repeated) that he was told that the business case for the replacement was not made out. Even if Mr Stevenson was mistaken about the plan to replace H1 and H2 being an alternative plan, which I doubt, it does not mean his evidence about Mr Walmsley's reaction to it was unreliable. I accept that evidence.
47. Finally, and tellingly, it was Mr Plawecki's and Mr Stevenson's evidence that none of the other tanks in the H-bund (apart from the two used to replace H2 and H4) was in fact configured to receive acetic acid. The fact that they could be so configured is irrelevant. Mr Stevenson said that H2 and H4 were now the dedicated storage tanks for acetic acid and the newly installed H6 and H8 now store other product. I accept his evidence that as a result of the collapse, there has been no doubling of capacity for acetic acid within the H-bund area and that the storage capacity for that product is in keeping with what Project 1363 had been intended to achieve.
48. That puts paid to the Defendant's thesis that SRM ever planned to replace four tanks for acetic acid usage, and not two. I am satisfied on the evidence that they did not. SRM only ever intended to replace H6 and H8, and that was the project for which a budget of £100,000 had been sanctioned. The crane which fell over was indeed lifting the access walkway to H6 and H8 in preparation for their replacement, as the Defendant at one time accepted it was, and as Mr Stevenson confirmed. The evidence that only two of the tanks in the H-bund are used to store acetic acid is also a reason why the "business opportunity" thesis advanced by Mr Miller is fundamentally misconceived. In my judgment there is no substance whatever in the suggestion made by the Defendant that SRM "always intended to reconfigure and rebuild the H-bund".
49. On 17 February 2010, before the work on Project 1363 was due to start, Mr Plawecki and a colleague carried out a completely independent site tour and inspection of all the raised walkways/access platforms at the Rye site. One of Mr Plawecki's observations was that the carbon steel expanded mesh access platform (decking panels) to the "H" Tanks was flimsy and his recommendation was that it should be replaced at the earliest opportunity. Three quotations were obtained from Rutherford-Brown for this work. As Mr Plawecki pointed out, had the panels been replaced before the crane hit the walkways, the damaged walkways would still have had to have been replaced; however, he very fairly accepted that if the cost of work to replace the mesh in the walkway panels was money that SRM intended to expend in any event, regardless of the accident, it falls to be deducted from the claim.
50. It is common ground that SRM must give credit for the costs that it would have expended in any event on Project 1363. I will deal in due course with the question whether they have given sufficient credit for those costs. I now turn to consider what SRM did in the aftermath of the accident and how they went about repairing the damage.
51. Mr Stevenson was on site on 16 March 2010 when the incident occurred. He assisted other members of the management team to ensure that the site was made safe. Mr Palmer rushed to the site after being telephoned with news of the accident by the Group Administration Manager, Keith Gudgion (who also gave evidence). As Rye was a top tier COMAH site, Mr Palmer's initial concern was health and safety and minimising the interruption to production. There is a detailed incident report which sets out what happened during the day. Steps were taken to shut down supply lines and to empty adjacent tanks, in order to reduce potential fire risks. After the fire brigade had attended and SRM had carried out its own safety checks, they declared the site safe around four hours after the incident took place. Rutherford-Brown personnel were already on site to undertake the works to the walkway as part of Project 1363 and thus were able to perform all the urgent make safe/clearing up work.
52. Mr Palmer sent out an email on 18 March to Mr Stevenson and others requiring them to ensure that photos were taken and logged of all damage before any damaged pipework was dismantled, so that there was a record in support of the third party insurance claim. This was done. In that email he said that it would be necessary to devise and document a remediation plan (which he envisaged would be thoroughly scrutinised by the HSE), and look at short to mid-term planning to get the site up and running, but allow for long term plans to make all damage good. On the same day, Mr Stevenson drew up a scope of work for the removal of hazardous pipework and structures and making the H-bund area safe, which he sent to Rutherford-Brown. That was the basis for the work done in what became designated as "Phase 1".
53. In the days following the incident, Mr Stevenson, Mr Palmer, and Mr Plawecki (who had been drafted in to help them) worked together to manage the remedial works. It was agreed that they would be split into three phases; Phase 1 comprising initial repairs, making safe and general clear-up (for which it made sense to continue to use Rutherford-Brown, as they were already on site); Phase 2, comprising the installation of temporary lines and access platforms and other steps to ensure that the site remained fully operational, and Phase 3, comprising the design, commissioning and installation of replacement tanks and associated pipework, etc. In practice there were no clear demarcation lines between the end of one phase and the start of another. It was agreed that Phases 2 and 3 would be competitively tendered. A key objective was to ensure that SRM's contracts and reputation were not compromised.
54. Mr Stevenson assumed the primary responsibility for Phases 1-3, whilst Mr Plawecki took over responsibility for the Ajinomoto contract delivery and gave technical advice and assistance on Phases 1-2 as and when required. During Phase 1 there was no other work being done in the H-bund. Mr Stevenson was there on site for almost the entire period of the remedial work. He knew all the work that was going on, and he regularly walked the site. He signed off many of the invoices, especially the earlier ones from Rutherford-Brown submitted during Phase 1. In the course of his evidence, whenever Mr Stevenson was asked to explain what work an individual invoice related to, he always gave a cogent explanation of why it related to labour or materials pertaining to the remedial work.
55. SRM considered it preferable to engage an independent project management company in order to be able to demonstrate to Coussens, their insurers and SLS that decisions about the work to be done and the cost of doing it were truly taken at arms' length. SRM engaged engineering contractors named RB Plant Construction Ltd to carry out that role. The designated Project Manager in RB Plant was Frank Helm. Mr Helm gave a witness statement which I admitted into evidence under the Civil Evidence Act, it being common ground that Mr Helm was too ill to attend court. Mr Helm was responsible for putting items out to competitive tender and then liaising with Mr Stevenson about the works that were being carried out.
56. On 19 March 2010 Mr Palmer reported by email to his superiors (including Mr Walmsley) that approximately eighteen tanks, process lines, access platforms, pipe supports and utilities had been seriously affected. That was in keeping with his handwritten note of the same date which indicated that all the H tanks were out of action because of damaged pipework and no access to the trough covering all tanks [i.e. the tundish]. Mr Palmer also noted under the heading "Critical Tanks" that H6 and H8 were "dead". Mr Palmer also reported that the crane had now been removed and the affected area "continues to be assessed." He referred to the three point plan for remediation.
57. On 22 March Mr Stevenson received by email costings from Rutherford-Brown for their labour and materials used during the week ending 21 March, amounting to £4,063.06. The email supplies the detail to support the items on the purchase order. This process was repeated by Rutherford-Brown in subsequent weeks. Mr Stevenson, who had seen the work that was being done on site, reviewed the invoices presented to him by Mr Ken Brown of Rutherford-Brown for that work, assessed if they were reasonable and if they were, he signed them off.
58. On 24 March RB Plant sent their initial tender to Mr Stevenson. They envisaged that Phase 3 would follow Phase 1 in parallel to Phase 2. After RB Plant were engaged, Rutherford-Brown were appointed as the contractors for the works, with all the instructions being issued to them by Mr Helm.
59. On 1^st April Mr Stevenson reported to Mr Palmer that the current "make safe" work was going well but it would probably take another four weeks of work to remove all damaged pipe and make it safe, (but not all debris) and that two additional lines had been installed to keep the plant running, but more would be required the longer this work took.
60. Meanwhile, on 22 March 2010 Ajinomoto had taken steps to obtain the necessary permissions from the French Authorities to commence exporting the batches of acetic acid solution to SRM for processing in the period from 1 April 2010 to the end of the year. Permission was obtained on 14 April and the formal documentation was received by Ajinomoto on 22 April. Deliveries of the acetic acid were scheduled to commence in May.
61. Mr Plawecki, who was now in charge of the Ajinomoto contract, perceived that the project was at risk if SRM did not have the storage capacity to receive the consignment of acetic acid solution. As the area in which H6 and H8 were located was out of use due to a combination of damaged tanks and mangled pipework, he felt it made sense to install the already purchased 60,000 ltr tanks in place of H2 and H4 instead. Less work was required to remove H2 and H4, and their location was closer to the main feed lines and the tanker loading point and associated feed and delivery lines. The damage was greater to the surrounding pipework in the vicinity of H6 and H8 particularly at high level and in the vicinity of the tundish. Mr Stevenson explained in evidence, and by reference to the photographs, why the scaffolding used to support the damaged pipework in that area made it impossible to take out H6 and H8 at that time. I found his explanation convincing and persuasive.
62. Mr Plawecki's evidence about what happened to the tanks originally destined for H6 and H8 is consistent with the contemporaneous documents. For example, in an email he sent to Mr Stevenson on 21 April he said "A second part of the work – and one that has had to be started to have any chance of allowing the Ajinomoto contracts to be met is the removal of H2 and H4". H2 and H4 were removed on 30 April, and replaced by 6 May. Mr Plawecki's evidence about the need to save the Ajinomoto project is also consistent with what Mr Plawecki said he did and why he did it, in his report of October 2010 – a document created long before the Defendant served a Defence pleading that H6 and H8 would have been replaced in any event.
63. I find that SRM has proved on the balance of probabilities that H2 and H4 were replaced with the two tanks intended for H6 and H8 and configured to receive acetic acid solution and that this was a reasonable and proportionate step for it to have taken in mitigation of the potentially huge economic loss that would otherwise have flowed from the physical damage to the site in consequence of SRM's inability to service the Ajinomoto project. It is clear that putting the two tanks at H2 and H4 was the only sensible option at that time. SRM could not afford to take the risk of waiting for the damaged piping around the tundish to be repaired, since the timing was an unknown quantity. In consequence of moving the acetic acid tanks to this new location, changes to the piping systems and the configuration of that area of the H-bund were inevitable. All of this was bound to cost more than Project 1363 for the reasons explained by Mr Stevenson.
64. SRM has not charged Coussens with the cost of taking out and replacing H2 and H4. Its claim is, and always has been, for the cost of replacing H6 and H8, the tanks that were written off in the accident. I do not accept Mr Miller's submission that there has been any "U-turn" by SRM or that the case which his clients had to meet has changed in any fundamental respect. Obviously in consequence of the incident, SRM had two tanks fewer than it required in the H Bund. As Mr Plawecki's report of October 2010 indicates, the quotations for direct replacement of H6 and H8 indicated that the new tanks would cost £31,000 each and there would be a lead time of +14 weeks. Mr Gudgion specifically notified SLS of this. Mr Stevenson approached Mr Brownbridge to see if there were any similar tanks available to those that he had already purchased, and was told that there were two second-hand tanks available for £25,000 each, which was less than the cost of tank fabrication. The lead time was also shorter, which helped SRM to restore the plant to normal operation as quickly as it could.
65. I am satisfied that SRM acted reasonably in purchasing those tanks and using them as replacements for H6 and H8, and that if SRM had tried to match like for like by purchasing new tanks of a smaller capacity, they would have spent more money. I am also satisfied that SRM has proved that it was not "maximising a business opportunity" by so doing, because (a) SRM never intended to replace four tanks, (b) SRM reasonably decided to replace the tanks at H2 and H4 with the tanks destined for H6 and H8 in order to make sure that it could satisfy the Ajinomoto contract and (c) having taken that decision, SRM was still left with the problem of replacing H6 and H8 which had been written off in the crane incident. It is true that the facts about the replacement of H2 and H4 could have been pleaded earlier, and that the Reply contains a factual error. But that error was corrected a long time ago, and the Defendant and its insurers have had more than enough evidence since then to demonstrate that the replacement of H2 and H4 was a genuine decision taken in mitigation. SRM are entitled to the £50,000 expended on the replacement tanks.
66. Mr Miller submitted that because there were only two invoices disclosed apportioning work between the Ajinomoto project and the remedial work, the Court could not be satisfied on the balance of probabilities that the other invoices for which claims are made were solely for the remedial work for which Coussens is liable. However this ignores the fact that in early May 2010 a system was put in place by SRM whereby two separate cost streams were created, with different numbers, so that the costs associated with replacing H2/H4 were segregated from the costs of the other remedial work on the computerised accounts system. Therefore one would expect separate purchase orders to have been raised and separate invoices, rather than mixed invoices. Those two invoices were the exception rather than the norm. Mr Gudgion set up the costs streams and Mr Stevenson input the data into the computer allocating items to them, based on his discussions with Mr Helm and Mr Plawecki. Even before the two costs streams were set up, it is clear from Mr Stevenson's evidence that great care was taken by him to ensure the segregation of costs referable to the labour and materials expended on Phases 1 and (to the extent it overlapped) Phase 2 of the remedial plan.
67. Mr Stevenson, the man within SRM who was in charge of the repair project, was fully involved in reviewing the work done and the costs to be incurred or which had been incurred. Mr Stevenson was not fresh to the concept of allocating work to different costs streams. His evidence made it clear that he did not simply rely on the say-so of Mr Helm and Mr Plawecki as to whether the cost of a particular piece of work or of the materials for it should go into the dedicated H2/H4 costs stream, or the "insurance claim" costs stream. Both Mr Stevenson and Mr Plawecki confirmed that only costs incurred for work done over and above the original scope of works under Project 1363 were charged to the insurance claim costs stream. It was also clear from Mr Stevenson's evidence that he was involved in charging unrelated work on other capital projects to other costs streams.
68. I do not intend to burden this already over-long judgment with a detailed analysis of each head of claim. Suffice it to say that having considered all the evidence, which is ample to support the claim, I am satisfied that there has been no overcharging, deliberate or otherwise, and that (with one minor exception referred to in paragraph 71 below) SRM have proved that the items of expenditure in the invoices and purchase orders that form the basis of this claim were incurred as a direct consequence of the accident as the costs of reinstatement or in mitigation of their loss, in order to maintain production and fulfil contracts. I am also satisfied that items were allocated to the correct cost stream, and were paid by SRM.
69. I reject the Defendant's submission that SRM is not entitled to the costs incurred in redesign and replacement of the walkways, gantries and associated metalwork, or the costs in respect of the replacement of H2 and H4 over and above those that would have been incurred in respect of project 1363 on the basis that they were "incurred by reason of a business decision". They were not, or at least not in the sense intended by Mr Miller of an independent decision to maximise a business opportunity to reconfigure the H-Bund. The decision to utilise H2 and H4 for the Ajinomoto project was taken to mitigate loss, it was reasonable, and as I have already indicated, it was inevitable that relocating those tanks would involve a reconfiguration of the walkways and piping to accommodate them. In any event the walkway to H2 and H4 would have had to have been replaced because it suffered a direct hit from the crane and was rendered unsafe. Mr Stevenson's evidence makes it clear that the redesign of the walkways was carried out in a way that minimised costs.
70. Mr Stevenson was able to show, when asked about specific invoices from Rutherford-Brown, that he knew exactly what Rutherford-Brown were doing on site and why it related to the remedial work, whether that was putting up scaffolding, repairing damage to pipelines, or putting in temporary lines to enable water to get to the tanks. He also described and explained the electrical work done by Technical Ex Services UK Ltd, the work on the pipes done by AJF Engineering, the building work carried out by Tollett relating to the support pads for the new pipe bridges, the supply of the steam line by Spirax Sarco Ltd, the use of "Hydraquip" hoses to connect the universal line to the H-Bund, and the thermal insulation work carried out by RB Plant. He also explained why RB Plant were awarded that work (they were cheaper than others who tendered for it). Mr Stevenson also plainly had a good recollection of the personnel at RB Plant who were involved in the remedial works.
71. Among the costs claimed were the costs of a fitter to replace Mr Wright when he was unable to do his normal job by reason of his injuries sustained in the accident. Included under this head were some invoices from European Pump Services. Mr Stevenson's evidence was that Mr Wright was able to dress down a pump and give it a complete overhaul if necessary, but that he would not carry out shot blasting or rewind motors, which SRM would have had to outsource in any event. After the trial, the Defendant submitted two tables challenging part of the costs of outsourcing pump repairs. The Claimant helpfully conceded deductions of £4,512 in the light of Mr Stevenson's evidence. I am satisfied that the reduced claim is recoverable on the basis that SRM would not have incurred those remaining costs if Mr Wright had been available to do those repairs on site.
72. SRM is plainly entitled to the costs of attendance of the HSE. I am also satisfied that it is entitled to Mr Plawecki's travel costs, since he was not based at Rye and he had to travel there in order to assist Mr Palmer and Mr Stevenson in dealing with the remedial project. I am also satisfied on the balance of probabilities that the modest claim for loss of production is made out. There was plainly an interruption to production caused by the initial shut-down and the draining of the storage tanks. It is to the credit of SRM that it managed to get things up and running so quickly that this head of claim is not much greater.
73. I am also satisfied on the balance of probabilities that SRM has correctly isolated and computed the costs it would have incurred on Project 1363 in any event. The evidence shows that the actual expenditure costed by the engineers and reflected in the invoices, £100,215, was only slightly more than the £100,000 initially budgeted, but it was still well within SRM's normal budget tolerance of +/- 10% referred to in evidence. That was consistent with Mr Stevenson's past experience, and it explodes the theory advanced by Mr Miller that all invoices referable to H2 and H4 were automatically diverted into the "insurance" costs stream simply because they had reached the cut-off point under the dedicated costs stream for the Ajinomoto contract. The evidence supports SRM's case that they were put into the "insurance" costs stream because the work was over and above that which was planned and budgeted for under Project 1363.
74. For the avoidance of doubt, I do not accept Mr Miller's submission that because the remediation project cost much more than Mr Helm initially estimated that it would, it is inherently likely that Project 1363 would have done likewise. Nor do I accept that it is "incredible" that the remediation costs were so much more than the initial budgets set by SRM or RB Plant, and that this makes it more likely than not that additional refurbishment work was carried out to improve the H-bund area at his client's expense. SLS had set a reserve of £500,000 for this project in April 2010, and that cannot be ignored. That figure, though a prudent "guesstimate" was not plucked out of thin air, and the actual cost incurred and claimed is not greatly in excess of it.
75. So far as phases 1 and 2 are concerned, Mr Gudgion sent an email to SLS on 14 April 2010 telling him that SRM had "incurred £50k+ of costs to date for phases 1 & 2". That email did not claim that it was the estimated cost of all work within those phases, and indeed it referred to other work within phases 1 and 2 that had yet to be carried out. It is also of importance that Mr Gudgion's updates on costing from time to time were based on the costs already invoiced to SRM, and not on the basis of orders which may have been raised but were not yet the subject of invoices, because those figures would not have been entered on the SRM computer system for accounting purposes. The same point applies to the figures in Mr Plawecki's October 2010 report, which he explained came from the "financial people".
76. Although SLS were informed that Phase 1 and Phase 2 had already been completed on 21 April, the evidence before me clearly pointed to the fact that Phase 2 was continuing in tandem with Phase 3 and there was quite an overlap. Moreover, there is a report in June 2010 by a Mr Duke (an engineer from Curtins Consulting Ltd appointed on behalf of the Defendant) to the effect that "presently it is unclear how extensive the damage may be to some of the adjoining pipework, i.e. pipes that were not physically damaged but "pulled" as a result of the impact of the crane." Mr Stevenson confirmed that this assessment was similar to his assessment of conditions on site at that time. Indeed Mr Helm's evidence was that much more work than was expected had to be done simply to clear away the damaged items of piping.
77. As for Mr Helm's estimated budget for Phase 3 of around £95,000, that estimate was not given by Mr Stevenson, who was responsible for SRM CAPEX budgeting and who had managed to work within a 10% tolerance in the past. It was clearly too low, and Mr Helm himself describes it, with considerable understatement, as "somewhat optimistic". There is no evidence that anyone ever placed any reliance on that figure. It was optimistic not only in terms of price, but in terms of estimating when the job would be complete – July 2010. It is interesting that when Mr Stevenson offered to contract with RB Plant Ltd for Phase 3 on a fixed price basis, Mr Helm declined. In any event, I accept the very fair point made by Mr Stevenson that Mr Helm's estimate made no allowance for the fact that installation of pipework will not cost the same if the pipe has to change direction. Although the cost of the pipe itself may not change, the cost of labour might. All welding had to be done off-site because of fire risks and therefore piecing pipes together and putting them in place was a complex and no doubt time-consuming business. Mr Helm's pricing also omits the acetic acid line, which was key to enabling the tanks installed at H2 and H4 to take in acetic acid, and which cost £20,000 alone. A similar line would not have been required at H6 and H8, which were next to the tundish and closer to the processing plant.
78. This is not a case where the injured party has gone off on a frolic of its own and racked up a huge bill without giving the Defendant or its insurers ample opportunity to become involved in the remediation process and to apply their own checks and balances to it. Mr Gudgion kept SLS informed of progress on the works, and of the orders that SRM was placing with suppliers for Phase 3. On 21 April 2010 he made it clear that he had no problem with the insurers getting involved in the costings of phase 3, in particular the procurement of replacement equipment, so long as they did so quickly. Nothing was done in secret, and Coussens and its insurers chose not to retain any expert to advise them. Mr Stevenson said that this was by no means a remedial job carried out with a "blank chequebook" and I believe him. It is self-evident from the fact that second-hand tanks were purchased as replacements that SRM tried to save costs. In short, there is no justification whatsoever for the suspicions that have led to this matter being fought out over five days at no doubt inordinate expense.
79. In conclusion, I am satisfied on the balance of probabilities that SRM has proved that it suffered the losses that it is claiming and (with the exception of the items properly conceded) that those losses were either incurred as a direct and foreseeable consequence of the crane incident or in reasonable mitigation of SRM's loss. The figures are:

1. Damage assessment, temporary lines and reinstatement costs: £537,847.31 (£542,359.31 less the £4,512 conceded for the pump works);

2. HSE investigation fees: £2,704

3. Replacement of tanks H6 and H8: £50,000

4. Travel expenses incurred by Mr Plawecki: £4,216

5. Lost production: £3,478.

Against this the following sums are to be credited:

1. H-bund extension works: £2,322

2. Scrap value of H6 and H8: £3,648

3. Cost of removal of tank H9: £1,033.33

4. Costs of walkway mesh replacement work £7,796.

80. The total sum recoverable by SRM is therefore £583,445.98 against which credit must be given for the sum of £250,000 already paid by Coussens. The judgment sum is therefore £333,445.98. Interest to the date of judgment has been agreed in the sum of £14,607.67.
Appendix