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Fosse Motor Engineers Ltd & Ors v (1) Conde Nast and National Magazine Distributors Ltd (2) Phoenix Industrial Recruitment Ltd [2008] EWHC 2037 (TCC)

Andrew Bartlett QC and Rebecca Taylor appeared for the successful First Defendants in this case arising out of a fire that broke out in the First Claimant’s warehouse in December 2002, instructed by Reynolds Porter Chamberlain. Issues raised in this case included the application of the burden of proof where there were a number of possible causes of the fire and whether an employee is acting in the course of their employment.

The Claimants sought damages of over £4m and alleged that one of the First Defendant’s workers caused the fire by smoking a cigarette inside the warehouse and negligently discarding it amongst the racking. Alternatively it was alleged that the workers had left a door open after 6pm allowing an intruder to enter the warehouse and start the fire. The claims were brought in negligence and for breach of contract.

The First Defendant denied the Claimants’ claims on a number of grounds, including:

  • The workers did not smoke inside warehouse as alleged;
  • The available evidence did not establish on the balance of probabilities that the fire was caused by a cigarette discarded by the workers or by an intruder entering through a door left open after 6pm. The evidence was also consistent with a number of other causes;
  • The First Defendant was not liable for the acts of the workers in any event as they were the employees of the Second Defendant, an employment agency;
  • If the workers were smoking in the warehouse they were carrying out a forbidden act in a forbidden place and their acts were therefore not in the course of their employment;

After a seven day trial in the TCC, Akenhead J accepted the evidence of the workers that they had not smoked in the warehouse. Although he was not in a position to form a view as to what was the probable cause of the fire, he was able to find on the basis of the evidence that, on the balance of probabilities it was not caused in the way alleged by the Claimants and the claim therefore failed. He went on to hold, obiter, that the workers would have been considered the employees of the First Defendant for the purposes of vicarious liability, however, if they had been smoking in the warehouse they would not have been acting in the course of their employment as they had been told not to do so.

During the course of the judgment, Akenhead J considered Rhesa Shipping v Edmunds [1985] 1 WLR 948 and Ide v ATB Sales [2008] EWCA Civ 424 on the balance of probabilities and Gravil v Carroll [2008] EWCA Civ 689 with regard to the question of whether the workers were acting in the course of their employment.

The First Defendant was awarded its costs and interest on those costs from the date of payment by the First Defendant’s insurers as the case progressed at 1% above base rate until judgment and at 8% thereafter until payment under CPR 44.3(6)(g). The Claimants had argued against the award of interest on the basis that the costs had been funded by the First Defendant’s insurers and not by the First Defendant himself. It was submitted that the principle set out in Bim Kemi AB v Blackburn Chemicals Ltd [2003] EWCA Civ 889 was compensatory and was aimed at the situation where the defendant himself had funded the litigation. It was also submitted that there was insufficient evidence that the First Defendant’s insurers had been put out of pocket by funding the litigation. Akenhead J held that it was open to the courts to apply CPR 44.3(6)(g) where insurers had funded the litigation and the court should take into account the commercial reality where insurers were involved. He held that the award of interest does not require a minute examination of how litigation was funded and accepted that the money to fund the litigation was likely to have come from a fund which would have been earning some interest.

Date of judgment 20/8/08.

Date of judgment on costs 29/9/08.

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