Landfill gas explosion not covered by insurance; LAW REPORT 31 August 1995

Middleton v Wiggins and others; Court of Appeal (Lord Justice McCowan, Lord Justice Aldous and Lord Justice Hutchison) 14 July 1995

The escape of gas from a landfill waste deposit site may have been a consequence of the method of waste disposal, but it was not an "accident in the method of disposal" within the terms of an endorsement in the landowner's insurance policy. The insurers were therefore not liable to indemnify the landowner in respect of claims made by a neighbour whose house was destroyed when an accumulation of landfill gas exploded beneath it.

The Court of Appeal by a majority (Lord Justice McCowan dissenting) allowed an appeal by the insurers, Commercial Union, against a decision that they were liable under an insurance policy to indemnify the respondents, Hargreaves Clearwaste Ltd, in respect of damage caused to the plaintiff's house.

Between 1979 and 1982, the respondents had used the landfill site to deposit waste in cells which were then covered with earth. The natural processes of putrefaction and degradation produced landfill gas from the waste deposited. The geological structure of the surrounding area enabled some of the landfill gas, instead of seeping out as intended, to migrate laterally underground in the direction of the plaintiff's house. In March 1986, a quantity of this gas, which had accumulated in a void beneath the plaintiff's house, mixed with the air drawn into the plaintiff's central heating boiler and exploded, destroying the house.

The plaintiff began proceedings (initially against Mr and Mrs Wiggins, who had bought the landfill site in 1984) in which the respondents were in due course held liable. The respondents then sought, in third-party proceedings, indemnity from the insurers under a policy providing public liability cover. But the insurers relied on endorsement 14 of that policy, which provided: "the [insurers] shall not be liable in respect of injury, illness, disease, loss, or damage arising from the disposal of waste materials in the way the insured or their servants or agents intended to dispose of them unless such claim arises from an accident in the method of disposal".

The respondents contended, and the judge accepted, that the escape of gas was "an accident in the method of disposal" so as to exempt them from the limitation otherwise imposed on their claim against the insurers. The insurers appealed, contending that the escape of gas, though accidental, was not part and parcel of, so as to the "in", the method of disposal, and the exemption therefore did not apply.

Philip Vallance QC (Kennedys) for the insurers; Stephen Tomlinson QC and David Hart (Clifford Chance) for the respondents.

Lord Justice Hutchison said that if one approached the case on the basis that the disposal of the waste was the act of putting it in the cell and covering it with earth, then the respondents' arguments must be rejected.

Their method of disposal was to put the waste in the place where they did put it: they did so in precisely the manner intended and without mishap. True, it turned out the place they had chosen was unsafe, but that was not an accident in the method of disposal. On the contrary, the disposal had gone according to plan and been completed without mishap. The escape of gas and what followed arose out of the method of disposal and was an unintended and unforeseen consequence of it. However, it was not "in" the method of disposal and his Lordship could see no warrant for treating the words "in the method of disposal" as meaning "in or arising out of the method of disposal".

His Lordship's understanding of the relevant part of the endorsement was that by it the insurers were stipulating that, while not liable to indemnify the insured in respect of claims for injury etc resulting from the disposal of waste in the intended manner, they accepted liability to indemnify the insured in respect of such claims resulting from an accidental departure from the intended method of disposal.

His Lordship did not accept the respondents' argument that disposal was a continuing process. Giving the word "disposal" its ordinary and natural meaning, it meant in this context "putting way", "getting rid of" or "definitely dealing with". The waste, the decomposition of which caused the accident, had been disposed of by the respondents when they buried it and left it; and there was no accident in the method of disposal.

Paul Magrath, Barrister