The company had originally launched a High Court action against its brokers Miles Smith in 2010, after a claim to its insurers following the September 2007 fire which badly damaged the facility was rejected.
During the original hearing, the company’s insurers said they had not been told about the use of high-temperature plasma guns, which can reach temperatures up to 15,000 degrees centigrade, at the plant, and about a previous fire in March 2007.
Mr Justice Steel, who heard the original case, said that documents the brokers relied on to back up their case that they had explained things properly were “seriously inadequate”. But he concluded that, even if the brokers had done all they should have done, the use of the plasma guns would probably not have been disclosed to insurers.
As a result, the companys claim for compensation from the brokers was rejected (see letsrecycle.com story). environCom had already secured £950,000 after reaching an agreement with insurers Woodbrook, but the claim was intended to seek the balance of the overall 6 million in losses it was estimated to have suffered from the fire.
Appeal
The WEEE reprocessing company then appealed this decision, but, in a judgment issued this month (October 13), Lord Justice Rix dismissed this appeal, following a hearing held at Londons High Court on May 25.
In his judgment, Lord Justice Rix referred to the company’s original unsuccessful claim for compensation and said: “The judge found that, in the light of their unfortunate history of fires and in the light of their risk profile, environCom were, upon the basis of proper disclosure, simply uninsurable.”
He explained that the companys insurers, Woodbrook, had only been persuaded against their initial reluctance to renew the policy in May 2007 by EnvironCom’s willingness to agree a greatly enhanced premium of £104,000.
If they had known the full story of the history of environCom’s fires (one of them, in March 2007, shortly before renewal, was undisclosed) and, in particular, of the dangers inherent in environCom’s business practices, they would have been unwilling to insure environCom on any terms, and so would anyone else, he added.
The latest judgement explains that during the appeal hearing, environComs lawyer, Patrick Lawrence QC, argued that if it had addressed its risk profile by eliminating the use of plasma guns and pentane fridge handling, then the fire of 16 September 2007 would not have occurred at all.
Moreover, and this is critical, the fact that it did occur was due to and caused by, and within the scope of the duty to advise (presumably on disclosure) which Miles Smith had breached. So that Miles Smith were directly liable for the fire loss, because without their negligence it would not have occurred, he argued.
However, in his judgment, Lord Justice Rix dismissed the companys attempt to amend its statement of case to take into account this argument, which he said was fundamentally different to its original claim.
Lord Justice Rix’s conclusion was endorsed by Lord Justice Hooper and R Anthony May, who also heard the appeal.
environCom
In response to the judgment, environCom stressed that it was now focused on moving the company forward. environCom opened a new plant in Grantham the UKs largest WEEE reprocessing facility in March 2010, and this month opened a new site in London (see letsrecycle.com story).
The company said in a statement: Following the fire at our original facility in 2007 there has been an ongoing legal debate which has finally been concluded and we can concentrate on moving forward and continuing our growth.
environCom has a new management team who has taken the business into profit, while building a first class recycling company. As a result of this success, we have just opened our new site in London which will focus on reuse.
It added: We are moving on from previous issues and look forward to expanding with our retail and industry partners.
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