Commercial premises – Units leased for storage – Claimant and defendant occupying neighbouring units – Fire started by unknown third party causing damage to claimant’s property – Whether defendant owing duty of care – Whether standard of proof depending upon specialist knowledge – Whether defendant breaching duty of care – Claim allowed
The claimant was the tenant of a small industrial unit (unit 4), which it used to keep stock for its retail outlets. The defendant, a substantial retail business, took out a lease on the adjoining unit (unit 3) to use for storage.
In April 2003, a fire was started by arsonists in combustible waste that the defendant had accumulated outside unit 3. The unit and a van parked outside it were badly damaged and the claimant alleged that, as a consequence of the fire, goods, machinery and plant in unit 4 had also been damaged.
It claimed that the fire had been caused by the defendant’s breach of duty, and sought damages in excess of £400,000 in respect of that damage and for business interruption. The defendant denied liability, although the questions of causation and damage were not in issue.
The claimant contended that it should have been obvious to the defendant that the presence of a substantial quantity of combustible material outside its unit might result in damage to neighbouring property as a result of malicious ignition, and that it had failed to exercise a reasonable level of care.
The defendant argued that it had made reasonable arrangements for the collection of waste and, in all the circumstances prevailing at the industrial estate, which was secure, had a good fence and was locked when unattended, no duty of care existed. Alternatively, the defendant submitted that the case was not within one of the situations identified by Lord Goff in Smith v Littlewoods Organisation Ltd [1987] AC 241.
The issues were: (i) whether the defendant owed the claimant a duty of care; (ii) if so, what standard should be applied; and (iii) whether the defendant was in breach of any such duty.
Held: The claim was allowed.
(1) The defendant owed a duty of care to the claimant not to leave uncollected combustible material that might result in damage to the claimant’s neighbouring property.
In order to establish a duty of care, it was unnecessary for the claimant to show that the defendant had been given specific warning about the risk of fire at the unit, or that similar fires had occurred at other units on the estate. The defendant had had extensive experience of fires started maliciously in similar circumstances and it could not reasonably contend that the risk of fire and fire spread was not readily foreseeable. The risk of arson and the spread of fire from waste packaging to the building was both obvious and significant: Smith, Goldman v Hargrave [1967] 1 AC 645 and Clark Fixing Ltd v Dudley Metropolitan Borough Council [2001] EWCA Civ 1898 considered.
(2) The test was the standard of the ordinary professional skilled man exercising or professing to have special skills. In this case, the defendant was expected to exercise a degree of care in respect of actual knowledge. The reasonable skill and care required had to be measured by reference to the knowledge that it had, as an organisation, even if such information was not available to those on the ground. The evidence showed that the defendant had known of the landlord’s concerns about the handling of rubbish and its complaints about the defendant’s failure in that regard: Wimpey Construction (UK) Ltd v Poole (DV) [1984] 2 Lloyd’s Rep 499 considered.
(3) It followed that, since the defendant had accepted that the claimant had sustained damage to its property because of the fire, and that the accumulation of waste by the defendant was an effective cause of that damage, it was liable in damages. The defendant had failed to prove that it had made satisfactory arrangements for the collection of waste packaging such as to exclude it from liability.
David Turner (instructed by Nexus, of Manchester) appeared for the claimant; Simon Clegg (instructed by Berrymans Lace Mawer) appeared for the defendant.
Eileen O’Grady, barrister
