Neutral Citation Number: [2006] EWHC 1443 (Comm)
Case No:  2002 Folio 4

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL

Date:  16th June 2006 

Before :
MRS JUSTICE GLOSTER, DBE
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Between :

	Petromec Inc	Claimant	
	- and -		
	Petroleo Brasiliero SA Petrobras & Another	Defendants	

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Lionel Persey Esq, QC & Nicholas Vineall Esq
(instructed by Curtis Davis Garrard) for the Claimant
Christopher Hancock Esq, QC & Malcolm Jarvis Esq
(instructed by Linklaters) for the Defendant
Hearing dates:  18th, 19th January 2006;  23rd – 26th January 2006;  
30th January 2006 – 2nd February 2006;  9th, 10th February 2006;
Additional submissions:  21st February 2006;  2nd March 2006;  10th March 2006
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Judgment
Mrs Justice Gloster, DBE :  
Introduction
1.	This trial is the latest instalment in a long-running saga arising out of the provision of upgrade services by the Claimant, Petromec Inc.  (“Petromec”), in relation to the Platform (formerly known as Spirit of Columbus) (“the Platform”).  The Platform was at the relevant time the largest production Platform of its kind in the world.  After the events with which this trial is concerned, the Platform sank, but the circumstances relating to its loss are not relevant to the issues which I have to decide.  Petromec had, pursuant to the agreements which I shall refer to in greater detail below, carried out the conversion and upgrade of the Platform at a yard in Quebec, Canada for the ultimate benefit of the Second Defendant,  Braspetro Oil Services Company (“Brasoil”), a contractual vehicle for the First Defendant, Petroleo Brasileiro S.A. Petrobras (“Petrobras”).  I shall refer to the Defendants collectively as “Petrobras” unless it is necessary to distinguish between them.  
2.	This trial is concerned with claims arising out of what Petromec alleges were false representations made by or on behalf of Petrobras (1) shortly before the Platform was due to leave the conversion yard in Quebec, and (2) again, before she departed from Canadian waters.  These representations are alleged to have been made in two letters from Petrobras to Petromec, respectively dated 11 October 1999 and 25 October 1999 (“the October letters”).  Petromec’s case in summary is as follows.  It alleges that the parties agreed in principle to conclude a global payment agreement on mutually acceptable terms and that this agreement would be finalised prior to the departure of the Platform from Quebec City;  however, Petromec alleges that Petrobras’ Executive Committee (“the Executive Board”) had decided, shortly before the date fixed for departure from Quebec City, to shelve consideration of the proposal that Petrobras should sign a global payment agreement and had put the proposal “on hold”, which in reality amounted to a rejection of it.  However when Petromec pressed for the global payment agreement to be concluded, representations were made by Petrobras (1) in its letter dated 11 October 1999, shortly before the Platform was due to leave the conversion yard in Quebec City, and (2) again, in its letter dated 25 October 1995, before she departed from Canadian waters.  Petromec alleges that these representations were intended to give the impression that the global payment agreement proposal would receive positive consideration by the Executive Board, even though it was by then known by Petrobras that the proposal for a global payment agreement  had  effectively been turned down;  so, it is said, the representations were false.  Petromec contends that, in reliance on the representations, Petromec finalised the practical and legal arrangements necessary for the platform to leave Quebec City (and then Sept Iles, the last port in Canadian waters).  As a result the Platform left Canada before Petrobras had formally confirmed that it was prepared to sign a global payment agreement.  Petrobras, however, never subsequently approved a global payment agreement and, at the time that the representations were made, Petromec alleges there was never any serious intention on the part of the Executive Board to do so.  Petromec alleges that, had the representations not been made, then it would have halted its arrangements for the departure of the Platform and would, if necessary, have taken active steps to prevent her departure from Quebec City and/or from Sept Iles (whether by exercising contractual rights, a possessory lien and/or by arresting the platform).  Had the Platform remained in Quebec City, or Sept Iles, then she would have been trapped there over winter, as the St.  Lawrence seaway freezes, unless Petrobras had taken steps to release her by court proceedings.  That, Petromec, alleges was not a risk that Petrobras would have been prepared to bear.  It was of critical importance to Petrobras for the Platform to depart from Canada by the end of October so that she could be delivered to Brazil for the upgrade to be completed in order for to be put to work in the Roncador Field just as soon as was possible.  In order to secure the Platform’s release from Quebec City or Sept Iles, Petromec alleges that Petrobras would probably have confirmed and concluded the global payment agreement with Petromec.  
3.	Petromec contends that it has suffered significant losses as a result of the false representations allegedly made by Petrobras.  Had the global payment agreement been concluded, it would have received further sums thereunder, would not have had to sue Petrobras for the balance of monies due and owing and would not have been held liable to repay to Brasoil sums advanced under a Deed of Payment and Indemnity concluded between them in May 1999.
4.	If, contrary to its primary case, Petrobras is not liable in deceit to Petromec and the allegedly false representations made by one of Petrobras’ employees, a Mr. Justi, were really made by him on Petrobras’ behalf with an honest belief, based on reasonable grounds, that they were true, then Petromec contends that Petrobras is liable to Petromec in tort for negligent misstatement.  
The previous proceedings
5.	This is the second trial in this action.  The first trial of certain preliminary issues was heard before Moore-Bick J. (as he then was) in October 2003.  He gave judgment on 2 February 2004 (“the Judgment”).  After the oral evidence had closed in the first trial, but before speeches had been delivered, late disclosure provided by Petrobras (including correspondence with Andersen Consulting and relevant board minutes) prompted Petromec to raise by way of amendment and with the leave of Moore-Bick J. the allegations of deceit which are the subject matter of this trial.  A detailed exposition of the facts relating to the P-36 project is set out in paragraphs 1-22 of the Judgment, which I gratefully adopt.  For present purposes I merely set out in summary the factual background to the issues which I have to decide.  
The parties
6.	Petromec is a single-purpose company that was formed in order to conclude and perform the upgrade in the circumstances more fully described below and in the Judgment.  It was incorporated at the request of Maritima Petroleo e Engenharia Ltda (“Maritima”), a Brazilian company that had for many years been involved in the management of projects connected with the offshore oil industry.  Much of Maritima’s work had been undertaken for Petrobras, with which it had had a long and fruitful association.  Maritima was founded by Mr. German Efromovich (“Mr. Efromovich”) and his brother.  At all material times Maritima and Petromec were owned and/or controlled by Mr. Efromovich, and/or his family interests.  So far as the matters with which these proceedings are concerned, all commercial decisions were ultimately made by Mr. Efromovich, although he received advice and support from others, in particular a consultant employed by Maritima, a Mr. Jon Hawksley.  A Mr. Otoniel Reis was employed as project manager by Petromec for the P-36 project, and a Mr. Andres Gierczynski as construction manager.
7.	Petrobras is a semi-public company, owned in the main by the Brazilian state.  At the relevant period it had an Administrative Council (referred to as the “Governing Body”), akin to a Supervisory Board, on which sat representatives of the Brazilian government and other state related entities.  It also had an Executive Board, already referred to, which met more frequently, to take executive decisions in relation to Petrobras’ business.
8.	Brasoil is a Cayman Islands contractual vehicle controlled by Petrobras.  It engaged Petrobras to provide all of the management services necessary to perform its obligations in relation to the project.  These were carried out entirely by Petrobras personnel from SEGEN, Petrobras’ engineering department.  In paragraph 11 of the Judgment, Moore-Bick J. held:
(1)	that all decisions affecting the project were taken by Petrobras both on its own behalf and on behalf of Brasoil;  and 
(2)	that whatever Petrobras said or did was intended to affect its own position and that of Brasoil. 
9.	Key personnel within SEGEN during the period from April 1999 were Director Antonio Menezes, General Superintendent Luiz Carneiro, Deputy Superintendent Nelson Guimaraes, Project Director Antonio Justi and Project Manager Henidio Jorge, all of whom gave evidence before me.  
10.	Petrobras had a complex structure and its internal procedures were formal.  In April 1999 a Mr. Henri Reichstul (who also gave evidence before me) was made president of Petrobras and a new Executive Board was appointed.  Mr. Reichstul gave evidence of the political considerations which Petrobras had to take into account and the somewhat unwieldy nature of its bureaucratic decision making process, such that it did  not at that time operate on a purely commercial basis.  He stressed that Petrobras was a complex environment, where quick decisions could not simply be taken on commercial expediency grounds to compromise contractual disputes by payment of a lump sum.  He emphasised that members of the Supervisory Board of the company included the Minister of Energy, the President of the Brazilian National Development Bank, a general representing the interests of the armed forces, and that there was supervision by the Minister of Energy and the Tribunal de Contas.  He also referred to the criticisms that had been aired in the Press about the relationship between Petrobras, as a public sector company, and Maritima.  He stated that Mr. Efromovich would have been well-aware of all these matters and that, as a result, Petrobras did not have the flexibility in its dealings of a private company.  I accept this evidence.  
11.	By the time of the P-36 project, Maritima, through Mr. Efromovich, had been doing business together with Petrobras for some 20 years and their business relationship was a close one.  Nor was this project to be the last project in which they were involved.  Mr. Efromovich had built up his business from small beginnings, to some extent in reliance on his relationship with Petrobras.  He was a regular visitor to Petrobras.  As he put it himself:
“They used to make jokes that I should have my office inside Petrobras because I used to spend more time in that building than in my own office…..  Certain days when I was there, because I used to travel a lot as well, I could spend two or three hours in that building meeting all the people.”
12.	Mr. Efromovich’s personal knowledge of Petrobras was extensive and, on his own admission, he had known many of the members of the Executive Board and other Petrobras personnel well for many years.  He was in regular contact with many of them and appears to have had almost instantaneous access to inside information in relation to Petrobras decisions and board meetings.  He received confidential internal documents from “anonymous” sources within Petrobras.  In particular, Mr. Efromovich had known Mr. Menezes since 1985 in the days when Mr. Efromovich had been running a small non-destructive testing company.  
The contractual background leading up to the negotiations for a global payment agreement
The South Marlim Agreements.  
13.	In 1996 Maritima was aware that Petrobras had been interested for some time in obtaining the Spirit of Columbus, a production platform that had been built in Italy by her owners Societa Armamento Navi Appoggio S.p.A.  (“SANA”) and which, following the completion of construction in 1995, was unable to find employment.  Petrobras’ intention at that time was to upgrade her for use in its South Marlim oilfield in the Campos Basin.  It initially had given a mandate to two successive parties to secure the purchase of the Platform, but both had failed, because the purchase needed to satisfy both the requirements of the various banks and financial institutions who were interested in the Platform and those of SANA and her parent company Midland and Scottish Resources Plc (“MSR”), whose Managing Director was a Mr. Hawksley.  Both of these companies were saddled with debt.  MSR then gave Maritima the exclusive right to market the Platform.  Maritima was able to broker a deal which satisfied all of the many parties interested in the Platform.  A Memorandum of Agreement (“MOA”) was concluded on 6 November 1996 between Maritima and Petrobras.  (I should interpose to state that this was held by Moore-Bick J. not to have given rise to any legally enforceable obligations between the parties:  Judgment, paragraph 31).  This envisaged that Maritima or a special purpose vehicle was to purchase the Platform with a view to upgrading it and transferring title to Brasoil under a 12 year bareboat charterparty with a purchase option at the end of the period.  Brasoil in its turn would make the Platform available to Petrobras under a bareboat sub-charter.  Petro-Deep Inc was incorporated at the request of Maritima for the purpose of purchasing the Platform from SANA and entering into the relevant contracts for its upgrade.  All parties then started to negotiate the terms of a complex set of agreements that eventually became known as the South Marlim Agreements.  
14.	In October 1996, shortly prior to the conclusion of the MOA, Petrobras discovered a large new oilfield in the Campos Basin – the Roncador field.  Petrobras was anxious to develop this field just as quickly as possible, in circumstances where Brazil was in the process of liberalising the regime under which exploration and production licences were granted with a view to ending the state monopoly.  By January 1997 Petrobras was proposing to put the Platform into service in Roncador instead of South Marlim.  This proposal was approved by the Petrobras Executive Board at the end of February 1997 and Petro-Deep was given authority to begin work on the Roncador specification in March 1997.  In April 1997 Petromec was incorporated for the sole purpose of entering into a contract with Petro-Deep for the upgrade of the Platform and the managing of the work.  This was done in order to meet a requirement by the banks that the company (Petro-Deep) to which hire was payable under the bareboat charters was ring-fenced from any potential liability in respect of the upgrading work.  Petromec subsequently entered into, and managed, all of the contracts for the design and upgrading of the Platform, and its subsequent transportation from Canada to Brazil.  The scope of work required for the Roncador upgrade was developed during the course of 1997.  It was considerably greater than that necessary for South Marlim.  The Platform would be employed in greater water depths and require significantly greater processing and compressor capacity than was necessary for South Marlim.  Three large compressors had to be installed as opposed to one smaller compressor for South Marlim.  The pressure rating of the piping had to be increased and the Platform was now to be anchored with 16 as opposed to 12 mooring lines.
15.	By the time that the change to Roncador was confirmed, the negotiation of the South Marlim Agreements was well advanced, and a preliminary bareboat charter had been signed and a down payment of hire made.  The parties did not want to re-open discussions in order to make those changes that would be required to give effect to the Roncador project (the scope of which was in any event not yet fully defined).  They therefore proceeded to finalise agreements based on the original South Marlim proposal, although were well aware that it would at some point become necessary to enter into further agreements to reflect the change to Roncador.  Mr. Efromovich was assured at the time that the South Marlim agreements were concluded that Petrobras would bear the whole of the costs resulting from the change to Roncador and he was prepared to begin work on the faith of that assurance:  Judgment, paragraph 12.  As the judge held, this was a reflection of the high degree of trust and cooperation that had built up between the Maritima group and Petrobras in over 20 years of business dealings.  
16.	The South Marlim Agreements were signed on 20 June 1997.  They comprised the following:-
i)	the Head Purchase Agreement concluded between the Platform’s owners, SANA, and Petro-Deep, whereby SANA was to sell the Platform over time to Petro-Deep, a special purpose vehicle to be incorporated by Mr. Efromovich;
ii)	the Upgrade Agreement, concluded between Petro-Deep, Petromec and SANA, whereby Petro-Deep was to arrange for the upgrade of the Platform;
iii)	the Bareboat Charter and Purchase Agreement (“the BCPA”), concluded between Petro-Deep and Brasoil, whereby Petro-Deep was to sell the upgraded Platform over time to Brasoil;
iv)	the Bareboat Sub-Charter Agreement (“the BSCA”), concluded between Brasoil and Petrobras, whereby Brasoil bareboat chartered the Platform to Petrobras;  and 
v)	the Quiet Possession Agreement (“the QPA”), concluded between 19 parties, including SANA, Petro-Deep, Petromec, Brasoil, Petrobras, MSR and various financial institutions.
17.	Petro-Deep's obligations in relation to the upgrade were satisfied by its entering into a contract with Petromec, another special purpose vehicle incorporated by Mr. Efromovich:  see clause 20 of the BCPA, and the Upgrade Agreement.  Essentially, Petro-Deep was to drop out of the transaction in all but name, a fact which is reflected in the fact that it was to receive none of the hire at all.  The hire was paid by Petrobras (at the bottom of the contractual chain) to the financing banks’ security agent, and that hire then flowed down a waterfall arrangement to the creditors of SANA, and its associated companies, on the one hand, and to Petromec on the other.  Petromec was the vehicle through which Mr. Efromovich obtained his rewards both for the upgrade work and the other efforts that he had put into the project.  Its responsibility in this regard was simply to enter into upgrade contracts with others, which were to be assignable to Brasoil.  The relevant provisions of the Upgrade Contract provided as follows:
“2		UPGRADE OBLIGATIONS 
2.1	Petromec’s undertakings with regard to upgrade 
Petromec undertakes to Petro-Deep that within twenty-one (21) months of 3 March 1997 it will procure that the Vessel is upgraded in accordance with the Specification to the satisfaction of Petro-Deep, Brasoil and Petrobras.
2.2	Upgrading Contracts 
Petromec is entitled to fulfil its undertaking in Clause 2.1 by entering into one or more Upgrading Contracts provided that:  
(1)	Petromec obtains Petro-Deep’s and Brasoil’s prior written approval of the Contractor selected for such Upgrading Contract;  
(2)	Petromec obtains Petro-Deep’s and Brasoil’s prior written approval of the terms of the Upgrading Contract (other than price);  
(3)	There is express provision in the Upgrading Contract for the rights and obligations under that Upgrading Contract to be transferable from Petromec to Petro-Deep or its nominee.”
18.	The contractual scheme was thus that Petrobras, which was entitled to possession of the Platform, would make the Platform available to be upgraded, and would pay for the upgrade.  The contractual scheme exposed Petrobras to a considerable degree of risk in that hire was payable under the bareboat charter on a hell or high water basis.  The scheme provided that Petromec would make arrangements with others to perform the actual upgrade works, and its responsibilities would be fulfilled by simply entering into the contracts.  As the judge held, Petromec was not liable, or intended to be liable, for any delay in the performance of the Upgrade Works.  Although Petrobras contended in the trial before Moore-Bick J. that Petromec was liable for delay in construction, that submission was rejected by the judge;  Judgment paragraph 51.  
July 1997 to April 1999
19.	 On 14 July 1997 Petromec entered into a contract for the upgrading works (“the Upgrading Contract”) with Davie Industries Inc. (“Davie”), which operated a shipyard in Quebec that was capable of carrying out the high quality of work that was required.  That contract was approved by Petrobras and Brasoil.  It included a provision for assignment of the benefit and burden to Brasoil:  see clause 20.1.1.  It also provided for redelivery to take place in October 1998:  see clause 6.1.  It gave Petromec the right (assignable to Brasoil at Brasoil's election) to require early redelivery in order to ensure redelivery before the onset of winter:  see clauses 6.6 and 6.7.  In other words, Petromec was to be entitled to require redelivery to avoid the winter;  and Brasoil was to be entitled to require an assignment of that right.  The effect of these provisions was that Petromec would have no right to withhold redelivery of the Platform if Petrobras and Brasoil wished to have the Platform back.
20.	This position was reinforced by other agreements, whereby it was made clear that Petromec was not to be entitled to interfere with Petrobras' enjoyment of the Platform.  By virtue of clause 4 of the QPA:-
“… Petromec … covenant[s] to Brasoil and Petrobras that they will, subject only to all payments of Fixed Hire, Supplemental Hire, Loss Payment, Termination Payment, Other Indebtedness and Over-due Interest due under the Bareboat Charter and Purchase Agreement being paid promptly and in full to the Security Agent in accordance with the Participation Agreement and all payments due under the Debt Purchase Agreement being paid promptly and in full to ABC and, only in the case of ABC, SCN, Barclays, Deutsche, HSBC, IBJ, DnB, Petromec, the Tortin Trustee and Devonshire, provided that neither Petrobras nor Brasoil terminates or treats as terminated either the Bareboat Charter and Purchase Agreement or the Bareboat Sub-Charter Agreement whether as a result of any repudiation by the other party thereto or otherwise:
not do or suffer to be done anything, or omit to do anything, the doing or omission of which impairs or affects or might reasonably be expected to impair or affect Brasoil's or Petrobras' quiet use, enjoyment and full possession of the Vessel ….”
21.	The Platform arrived in Quebec on 29 August 1997.  Discussions had been ongoing with Davie since the second half of 1996 and detailed engineering work was being undertaken in London by AMEC, design engineers, Noble Denton, naval architects, MSR and Petromec, with Petrobras engineers (including the project manager, Henidio Jorge) working alongside them.  
22.	The parties then turned their minds to the conclusion of an agreement that would formalise, and cater for, the change in specification from the proposed utilisation of the Platform in South Marlim to its utilisation in the newly-discovered Roncador field.  The relevant agreement was the Supervision Agreement, concluded between Brasoil, Petro-Deep, Petromec and Petrobras.  This was negotiated in the latter part of 1997 and early 1998, but not signed off on until 17 August 1998.  It is dated “as of” 20 June 1997 (the same date as the other agreements).  It was intended to be an addition to, and to form an integral part of, the South Marlim agreements;  see the Judgment, paragraph 51.  It provided for the South Marlim Specification to be substituted by the Roncador Specification (cl.11), granted Brasoil general rights of supervision of the works (cl.3), gave Brasoil the right to require an assignment of the rights under the contracts entered into by Petromec upon service of the appropriate notice (cl.4), and provided that Brasoil was to pay an amount equal to the reasonable extra cost of upgrading the Platform to the Roncador specification over and above the cost that it might reasonably have incurred in upgrading her to the original specification (cl.12).  Moore-Bick J. held that “reasonable extra cost” included both direct and indirect costs (such as overheads and additional financing costs):  see the Judgment, paragraph 63.  The important terms in the Supervision Agreement are set out at Judgment paragraph 44.  For present purposes it is sufficient to refer to a few of the provisions.  In summary the Supervision Agreement dealt with two broad categories of matter.  The first was the question of Brasoil and Petrobras's supervision rights;  although Petromec were to contract with the various suppliers of goods and services who were involved in the upgrade, it was to be Brasoil and Petrobras who had final control of the project:  see clauses 3, 4 and 5 of the Supervision Agreement:
“1		Interpretation
…
‘Contracts’ means the contracts entered or to be entered into by Petromec and an Upgrade Contractor, including the Shipyard Contract, for the Work and ‘Contract’ means any of such contracts as the context may require;
…
‘Suppliers’ means the Shipyard and any other supplier, dealer, manufacturer, contractor, consultant, engineer, designer, surveyor or any other person who supplies, constructs, installs or otherwise provides any equipment or services to Petromec under any contract in connection with the Upgrade;
…
‘Upgrade Contractors’ means the Shipyard and other Suppliers approved by Brasoil for the Upgrade of the Vessel;
…
3		General Right of Supervision
Petrobras, Petro-Deep and Petromec hereby grant to Brasoil or its nominee certain rights of supervision and approval in respect of the carrying out of the Work by the Upgrade Contractors upon the terms and conditions set out in this Agreement.  Petromec agrees, where appropriate, to act in accordance with and/or be bound by the exercise of those rights, in accordance with the terms and conditions set out herein.  
For the avoidance of doubt, neither Brasoil nor Petrobras shall assume liability under any Contract by the exercise of these rights of supervision and approval, except as provided by Clause 4 of this Agreement.
4		Assignment of Contracts
4.1	Petromec hereby assign and agree to assign to Brasoil all title, benefit and interest in each and any of the Contracts, such assignment to become effective only on the service of a notice in writing by Brasoil to each party to the relevant Contract(s).
4.2	Petromec shall ensure that no Contract to which they are a party includes a provision prohibiting the assignment referred to in Clause 4.1 above.
5		Specific Rights of Supervision 
5.1 	Brasoil shall be entitled to approve (or otherwise):  
(i)	the Upgrade Contractors;  
(ii)	the Contracts other than price:  
(iii)	any plans, drawings specifications, calculations and other matters required under the terms of the Contracts and changes thereto;  
(iv)	the material, workmanship and manner of construction and installation of the Work;  
(v)	any claim from any of the Upgrade Contractors made prior to the Actual Delivery Date of the Vessel for an extension of time for the completion of the Work.”
23.	The second question was the extra remuneration that Petromec was to receive for the fact that the upgrade was now to the Roncador specification;  and indeed, for the fact that there might need to be further changes to the specification, for which extra payment would be required.  These matters were dealt with by clauses 10 to 12 of the Supervision Agreement, which provided as follows:- 
“10	Change Orders
10.1 	Both for the purposes of this Agreement and on an ongoing basis, Brasoil shall be entitled to instruct Petromec to propose:
10.1.1	any alteration to the Amended Specification;  or
10.1.2	any change to any plan, drawing, specification, calculation or other document submitted to Brasoil pursuant to this Agreement;  or
10.1.3	any alteration to the arrangement for the maintenance and repair of the Vessel prior to the Actual Delivery Date.
10.2	On receipt of an instruction pursuant to Clause 10.1 Petromec shall be obliged to use its best endeavours to agree the alteration(s) or change(s) set out in that instruction with the relevant Upgrade Contractor(s) pursuant to the terms of the relevant Contracts.  If Petromec and the relevant Upgrade Contractors fail to agree on the alteration(s) or change(s) within fourteen (14) days of receipt by Petromec of such proposal, Brasoil shall be entitled to require Petromec to take such steps as may be appropriate enable the alteration or change to be affected including (but without prejudice to the foregoing) replacing the relevant Upgrade Contractor(s).
11		Amendment to Specification
11.1	It is hereby agreed that, pursuant to Clause 10 hereof, the Original Specification is amended by:
(i) 	Substituting for the General Technical Specification for the South Marlin Field in document ET.3010.38-1200-940-PPC-001 the Revision A which contains the requirements for the Roncador Field.
(ii)	Adding the Metocean Data - Roncador - contained in document ET.3010-56-1200-941-PPC-001, Revision 0.
12		Compensation
12.1	In consideration of Petromec’s agreement to upgrade the Vessel in accordance with the Amended Specification Brasoil agrees to pay to Petromec an amount equal to the reasonable extra cost (if any) to Petromec of Upgrading the Vessel in accordance with the Amended Specification over and above the cost that Petromec might reasonably have incurred in Upgrading the Vessel in accordance with the Original Specification.
12.2	In the case of any further alterations or changes instructed by Brasoil pursuant to Clause 10 hereof, Brasoil agrees:
(i) 	to pay to Petromec the reasonable costs (if any) incurred by Petromec and its contractors in progressing the engineering in accordance with such Specification as was agreed before the alteration or change;
(ii)	to pay to Petromec an amount equal to the reasonable extra cost (if any) to Petromec of Upgrading the Vessel in accordance with the Specification as altered or amended;  and
(iii)	to extend the date by which Petromec must complete the Upgrade.
12.3	The additional costs referred to in Clauses 12.1 and 12.2 above will become due and payable on the production by Petromec of evidence of expenditure satisfactory to Brasoil and Brasoil being satisfied that such costs were reasonable and properly incurred.
12.4	Brasoil agrees to negotiate in good faith with Petromec the extra costs referred to in Clauses 12.1 and 12.2 above and the extra time referred to in Clause 12.2 above and upon the determination of the same Brasoil and Petromec agree to enter into one or more addendums to this Agreement specifying the amounts to be paid by Brasoil to Petromec pursuant to this Clause 12 in good time for Petromec to meet its obligations to its contractors and specifying the date by which Petromec must complete the Upgrade of the Vessel in accordance with the Amended Specification.  ...”
24.	As Moore-Bick J. held, the intention of the parties was that Petromec should be entitled to be reimbursed for all the extra cost to it caused by the changes to Roncador and beyond, but should not be entitled to any profit over and above that already obtained in the arrangements for the payment of charter hire.  The Supervision Agreement did not however change anything about the nature of the contractual arrangements referred to above.  Petrobras/Brasoil continued to be entitled to require redelivery from Petromec;  and Petromec remained obliged not to interfere with Petrobras' quiet possession rights.
Events between August 1997 and April 1999
25.	As I have already mentioned, Petromec had contracted with Davie for the actual works to the Platform, a contract which had been approved by Brasoil.  The reason for the choice was that, even though labour costs might be higher in Canada, government subsidies were available, from the Export Development Corporation of Canada (“EDC”).  However, although it had been expected that EDC funding would become available shortly after the Platform’s arrival in Quebec in August 1997, in the event it was not forthcoming until very much later in the project.  Thus, even though Petrobras was paying the quarterly upgrade hire to Petromec of more than US$ 6 million, and Petromec had obtained interim funding from Chase Manhattan of some US$ 45 million in December 1997, Petromec was short of funds.
26.	It was in these circumstances that, pursuant to clauses 10 to 12 of the Supervision Agreement, Petromec started to submit claims for additional works for the Roncador upgrade by way of variation orders (“VOs”).  The first set of VOs was submitted in three tranches in March and April 1998.  As Moore-Bick J. put it:-
“65.	In the event, however, when seeking payment for the additional cost of the Roncador project Petromec did not follow the procedure set out in clause 12.  During the latter part of 1997 it had encountered difficulties in obtaining funds from EDC and although interim arrangements had been made with Chase Manhattan in December 1997, there was considerable pressure on it to obtain additional funds needed to keep the work going.  One way of obtaining those funds was to submit claims for additional costs to Brasoil.  By March 1998 the design changes had been sufficiently identified to enable Petromec to estimate the cost of carrying out the work, although the work itself would not be done until some months later.  In those circumstances Petromec decided to submit variation orders to Brasoil in support of an application for payment, even though a large proportion of the costs associated with them had yet to be incurred.
66.	Petromec submitted its first set of variation orders to Brasoil in three parts under cover of letters dated 27th March, 17th April and 21st April 1998.  These proposed variations which reflected substantial changes in the design of the platform which Petromec considered necessary to accommodate the different characteristics of the Roncador field, particularly the increased water depth, faster current and increased production capacity.  The variation orders contained estimates of the number of hours that would be required for detailed engineering design and procurement, but not the cost of the shipyard work, nor, in most cases, the cost of the additional equipment itself.  A single global figure was put forward by Petromec in relation to each variation order as the additional cost of completing the work described in it.  The total amount claimed in respect of the first set of variation orders was a little over US$80 million.  However, it was impossible to calculate the eventual cost of the work with any precision at that stage and Mr. Efromovich candidly accepted that what Petromec was putting forward was a price for completing the job.  In effect, he regarded each variation order as a quotation and if Brasoil had accepted it, or had been willing to agree an acceptable figure, Petromec would not in his view have been entitled to be paid any more for that work, even if the costs ultimately exceeded its expectation.  The variation orders were left with Brasoil for evaluation.  Although each one was priced, in the sense that a figure was put forward for the work to which it referred, Petromec did not provide any detailed costings or other support for the sums it claimed.  In effect, therefore, Brasoil was left to cost the work for itself and to decide whether to accept Petromec’s figure or propose a different one.”
27.	The upshot of the negotiations that then ensued was the agreement of the first set of VOs at $42.9m, a figure which the Petrobras Executive Board approved on 16 June 1998 and which was duly paid by Petrobras in four instalments between July and October 1998, pursuant to the terms of an agreement contained in a letter dated 9 July 1998.  One of the issues determined at the first trial was the legal status of this agreement.  Petromec asserted that it did not finally settle the variation claims made in circumstances where, as Petromec alleged, Petrobras had given assurances to Mr. Efromovich that the agreement would not preclude further negotiations for an additional payment after the project had been completed.  In the Judgment, at paragraph 84, Moore-Bick J. held that :
“Although I am satisfied that Mr. Justi did seek to reassure Mr. Efromovich that signing the letter would not preclude negotiations for an additional payment after the project had been completed, I am unable to accept that he gave any assurance that Petrobras would not rely on the letter if it came to asserting its strict legal rights. Mr. Justi was not authorised to give an assurance of that kind and I cannot accept either that Mr. Efromovich thought he was or that he understood him to be doing so. Mr. Justi had drafted the proposal to the board and knew that board approval was required for the payment. He also knew that the board had approved the letter setting out the basis on which the payment was to be made. Moreover, he struck me as a person who insisted on doing things by the book. In those circumstances it would be most surprising if he had felt able to give an assurance that directly undermined the board’s decision. For his part Mr. Efromovich had arranged to discuss the claim with Mr. Fonseca because Mr. Padilla had been unable to make any progress with Mr. Justi. That involved taking the matter to a much higher level and if Mr. Efromovich thought that anyone was authorised to give an assurance of that kind on behalf of Petrobras, that person would surely have been Mr. Fonseca. Mr. Efromovich was also aware in a general way, if indeed Mr. Justi did not tell him, that a payment of that size required authorisation by the board, or at any rate by someone much more senior than Mr. Justi. In those circumstances I am unable to accept that he thought that Mr. Justi was authorised to override the effect of a formal document of this kind, or that he was purporting to do so, especially when he had been told that the money would not be forthcoming if Petromec did not counter-sign the letter. Finally, it is not without significance that the assurance, whatever it was, occurred in the course of a telephone conversation. There was ample opportunity for things to be said which could not reasonably be taken as anything more than comments or expressions of personal opinion. Given their knowledge of the way things had been handled under previous projects, it is not difficult to imagine Mr. Justi saying to Mr. Efromovich “They will not hold you to it”, or words to that effect. That is a long way, however, from giving an assurance on behalf of Petrobras that it would not rely on its rights under the letter.”
28.	Moore-Bick J. also rejected an argument that Petrobras was not negotiating in good faith.  It is clear from the passage that I have quoted that, from his previous experience with Petrobras, Mr. Efromovich was well aware of the limitations upon Mr. Justi’s authority.
29.	After the agreement on the first set of VOs, Petromec's financial difficulties continued.  Although on 22 December 1998 Petromec reached agreement in principle with EDC for a loan of US$64.7 million, the EDC loan was still not forthcoming.  Indeed it was not finally obtained until July 1999 when, with the aid of Petrobras' provision of a formal confirmation to Petromec and EDC that Petrobras would abide by its charter hire obligations (owed to Petro-Deep), EDC finally did provide a loan of US$ 64.7m.  Petromec therefore sought a loan of US$ 40 million from Petrobras, which was approved on 10 December 1998 (see the Judgment at paragraph 93).  However Petromec was unwilling to take up this loan because it took the view that the interest rate being asked (14.25%) was too high.  Petromec submitted a further, second, set of VOs under cover of letters dated 10 November, 23 November and 7 December 1998.  These VOs were dealt with in the same way as the first, with Mr. Efromovich putting forward a quote for the work, rather than a detailed costing supported by relevant documentation as required by clause 12 of the Supervision Agreement:  see the Judgment at paragraph 97.
30.	In addition, Petromec's problems were increased by the serious financial difficulties of Davie.  In August 1998, Dominion Bridge Co, Davie’s parent company, filed for bankruptcy protection for itself and its subsidiaries, including Davie.  A trustee was appointed by the Canadian Courts to represent Davie’s creditors.  On 27 August 1998 the Port of Quebec arrested the Platform in respect of claims that it had against Davie for port dues and the like.  Other claimants later also made claims which had to be addressed before the Platform would ultimately be allowed to leave Quebec.  They were not in a position to pay their workforce from week to week unless they received funds from Petromec.  Petromec had appointed KPMG as trustees to control payments to Davie and other contractors in order to ensure that all payments made were used for the construction of the Platform, rather than becoming available to other creditors of Davie.
31.	A short term loan to Petromec of US$ 1.5 million per week, up to a total of US$ 15m, was arranged with Petrobras in January 1999 (see Moore-Bick J’s Judgment at paragraph 95), and this was disbursed between January and April 1999.  Petromec insisted that these were amounts due in respect of VOs;  Petrobras insisted that they were simply instalments of a bridging loan.  This money ran out in April 1999, by which time Petromec was in financial difficulties.
32.	A second set of VOs was submitted by Petromec to Petrobras in early 1999.  The Petrobras managers were prepared to agree and recommend payment of US$12,877,571 in respect of these and submitted a proposal to this effect to the Executive Board, although this was held back in circumstances where the composition of the Executive Board changed.
The new Petrobras Board:  April 1999
33.	Elections are held in Brazil every four or five years.  It was customary for the new president of Brazil to appoint the president of the Petrobras Executive Board.  He in his turn appointed the other members of the Executive Board.  Mr. Reichstul’s appointment was announced in early April 1999, and the new Executive Board was appointed on 23 April 1999.  Mr. Menezes was appointed to be the director of SEGEN (the Engineering Services Department).  The Platform therefore became his direct responsibility.  Mr. Menezes appointed Mr. Carneiro as general superintendent of SEGEN and he, in his turn, appointed Mr. Nelson to be his deputy.  The new chain of command responsible for the Platform was therefore:-
i)	Mr. Menezes, Director of SEGEN
ii)	Mr. Carneiro, General Superintendent of SEGEN
iii)	Mr. Nelson, Deputy Superintendent of SEGEN
iv)	Mr. Justi, Project Director of the Platform and other projects
v)	Mr. Jorge, Project Manager of the Platform project (based in Quebec).
34.	The evidence of all of these witnesses was that there was close liaison between them.  Mr. Jorge reported to Mr. Justi on a daily basis by fax, phone and sometimes email, and all matters of significance were reported up the line by Mr. Justi.
35.	One of the first concerns, among many, which Mr. Reichstul had to address after his appointment, was the extent to which construction projects were concentrated in the hands of entities related to Mr. Efromovich, and Maritima, and the fact that all of these projects (the total value of which was some US$ 2 billion) were experiencing cost and time overruns.  He was subjected to complaints in the Press and elsewhere about the nature of Petrobras’ relationship with the Maritima group.  At that time the Maritima group held contracts for a number of major projects with Petrobras, including contracts for the conversion of P-37, P-38 and P-40 and 6 contracts for the construction of Amethyst class drilling rigs:  drilling was the responsibility of Petrobras’ E&P (exploration and production) department.  A considerable degree of animosity towards Maritima was being generated, some of it by anonymous correspondence.  Mr. Reichstul himself  became concerned about what he perceived to be Petrobras’ excessive exposure to Maritima.  Two of the Amethyst drill rig contracts, to be built by Davie, were cancelled on 18 May 1999.
36.	 Mr. Reichstul’s fellow Executive Board members shared his concerns.  They gave the following accounts in their witness statements, which were not challenged in cross-examination.  Mr. Reichstul said:
“Following my appointment to Petrobras, one of the first issues that came to my attention was the number and value of the contracts German Efromovich and his company Maritima had with Petrobras.  German had won tenders for the contracts for P36, P37, P38 and P40.  Concentrating so much work in the hands of one small company represented a significant risk.  As a business man, it did not make any commercial sense to me that one small company could be working on such a large proportion of Petrobras’ platform contracts.  The reason for this, I learned, was the tendering laws for public companies in force in Brazil.  Once a contractor had fulfilled certain criteria he was eligible to bid for a contact which, by law, was required to be awarded to the lowest bidder.  Although I am not familiar with the tender documents presented by Maritima for these platforms, German was obviously the lowest bidder but, as things developed, it became clear that the Maritima entities he incorporated did not have the capital and assts to support the projects when they ran into difficulty.”
Likewise Mr. Menezes said:
“It was unfortunate that the previous Petrobras Board had awarded so many contracts to Maritima because by the time we were appointed it was clear that Maritima did not have sufficient financial resources to deal with so many contracts at the same time.  This was causing delay and problems with sub-contractors.”
And Mr. Coutinho said:
“From the date the new Executive Committee was appointed, in April 1999, one of my greatest concerns was the delays in the construction of the P36, P37, P38 and P40 production units, which projects were being carried out by companies owned by the business man Mr. German Efromovich, because such delays would seriously jeopardize Petrobras’ oil production goals.”
The events leading to the finalisation of the Deed of Payment and Indemnity
37.	The question of further finance for Petromec was held up whilst the new Petrobras Executive Board familiarised itself with the background and discussed how best to guarantee the continuation of the works.  It was recognised by the Executive Board that this was a project of major importance for Petrobras and for increasing oil production in Brazil.  It was also recognised that the Platform had to leave Canada before the end of October 1999 if it was to escape being trapped by ice over the winter of 1999/2000.  Petrobras was understandably extremely anxious not to delay production for any longer than was necessary.
38.	Because of the financial problems being faced by Petromec, Petrobras was asked to provide assistance in a number of ways:-
i)	by agreeing to confirm to EDC (and Chase Manhattan) that it would continue to comply with its obligations to pay hire under the charter documents;
ii)	by agreeing the second set of VOs, which had already been submitted;  and
iii)	by increasing the amount of the loan over and above the US$15m bridging loan disbursed in the period between January and April 1999.
39.	These matters were considered by the Executive Board in May 1999, and various decisions were made by the Executive Board.  First the Executive Board agreed to give the necessary confirmation to EDC and Chase Manhattan;  this was formalised in the Deed of Confirmation and Indemnity (“the DCI”) considered by Moore-Bick J. in his Judgment at paragraphs 118ff.  Second, the Executive Board agreed to pay the amount approved in relation to the second set of VOs, (a sum of US$ 12.8m) leaving only one of the VOs (that relating to the costs of delay) open for further negotiation.  As Moore-Bick J. found, this agreement was final.  At the first trial, Petromec also sought to suggest that Mr. Efromovich was given assurances (this time by Mr. Dias of the Petrobras legal department) to the effect that this agreement would not be treated as binding, and that further sums might be claimed;  again Moore-Bick J. rejected these arguments.  Third, the Executive Board agreed to loan money to Petromec on terms that that money could only be used to finance the Platform.  The Executive Board was concerned lest Mr. Efromovich seek to use the money advanced for other purposes (as he had in fact done on other occasions).  The terms of this loan were set out in an agreement referred to as the Deed of Payment and Indemnity ("the DOPI"), made between Petrobras and Petromec and dated 21 May 1999.  The arrangement, as set out in the DOPI, was that Petrobras, through Brasoil, would lend money to Petromec by making payments direct on its behalf to Davie, sub-contractors and suppliers.  Petrobras would recover the loans by setting them off against future amounts due to Petromec by way of variation orders.  Under the terms of a further agreement of the same date, referred to as the Keepwell Agreement, Maritima guaranteed the performance of Petromec under the DOPI.
40.	Immediately after the conclusion of the DOPI Petrobras issued a Press Release in which it represented that it had intervened in the contract for the upgrading of the Platform.  In fact, contractually Petromec continued to be a party to, and directly responsible for, the day-to-day management of, all contracts for the upgrading of the Platform and its transportation to Brazil.  This remained the case throughout the balance of the project.  Petromec had during early 1999 investigated various options for transporting the Platform to Brazil, either by a wet tow (a tow under taken by tugs with the Platform afloat) or a dry tow to be carried out by a heavy lift vessel in which the Platform would be loaded as deck cargo on board the carrying vessel.  By the end of May 1999 a preference for a dry tow had emerged and Dockwise, owners of the heavy lift vessel Mighty Servant 1 (“the Mighty Servant”), had been identified as potential carriers.  On 31 May 1999 Petromec informed Brasoil of the likely costs involved and that, if the Platform were to leave by the autumn of 1999, some items would need to be deleted from the upgrade scope of work and completed in Brazil.  On 28 June Petrobras authorised Petromec to contract with Dockwise.  Petromec did so on the following day.  Petrobras was not a party to the contract.
41.	That was the position as at the end of May 1999, when what became known as the global payment approach was first mooted on behalf of Petromec by Mr. Hawksley, who had been employed as a consultant by Petromec from March 1998.
The negotiations for a global payment approach:  May to October 1999
42.	Once again, much of the material in this regard has already been considered by Moore-Bick J, in his Judgment at paragraphs 125 to 139 and 143 to 144.  The relevant facts for present purposes may be summarised as follows.
i)	Mr. Hawksley was the first to suggest a global payment approach.  In May 1999 he suggested to Mr. Justi that, rather than embark upon the time-consuming and expensive exercise of assessing the additional costs of the Roncador upgrade by reference to individual items of work, it would be in the interests of both parties to approach the matter on a global basis, by deducting, from the actual costs incurred by Petromec, an agreed amount representing the costs of the original South Marlim project.
ii)	That approach was discussed in outline on 21 June 1999 by Mr. Menezes and Mr. Efromovich at a meeting in Quebec.  In principle both sides thought that such a proposal was the sensible way to proceed.  At the first meeting, Petromec suggested a figure for $120m for South Marlim;  it offered an audit;  but no mention was made of an uplift.  Following the meeting, negotiations started between Mr. Reis, Mr. Justi and Mr. Jorge with a view to resolving the matter in this way.  I should interpose to say that Moore-Bick J. rejected a submission by the Claimant that the parties had actually agreed that the matter would be disposed of by way of a global payment agreement at the end of June or in early July 1999:  Judgment paragraphs 127-132.
iii)	By fax of 24 June 1999, Mr. Hawksley suggested to Mr. Efromovich that Mr. Justi would agree US$120m for South Marlim.  He suggested to Mr. Efromovich that he should introduce other figures which Mr. Menezes would find it easier to agree rather than reducing the $120m further.  Following Mr. Hawksley’s suggestion, a figure for uplift was duly introduced on 15 July 1999 at a meeting between Mr. Efromovich (and a Mr. Padilla) and Mr. Nelson and Mr. Justi to pursue the negotiations for a global payment approach.  Mr. Nelson had by now effectively taken over the negotiations on behalf of Petrobras, although Mr. Justi attended the meetings.  Mr. Nelson and Mr. Justi kept Mr. Menezes fully up to date with the negotiations both at this stage and thereafter.  Mr. Menezes agreed in evidence that Messrs.  Nelson, Justi and Carneiro continued to report to him about the status of the negotiations, that he continued to be involved where necessary and that he always discussed things with the engineering group.  At this meeting there were discussions about the amount that was to be allowed in respect of South Marlim (Petromec’s initial allowance for this was US$96 million, although it was prepared to negotiate this upwards to U$ 120 million to reach agreement) and Petromec agreed to permit an audit by Petrobras or independent auditors into all of the costs incurred by the former.  Petromec also sought to negotiate an uplift on the difference between the actual cost spent on the Roncador upgrade and the South Marlim allowance, of 10% for administration costs and 15% for profit.  But the suggested total of 25% was not agreed to by Petrobras.  There were no further discussions between the parties with regard to VO claims after this time (although Petromec had submitted their 3rd, 4th and 5th set of VO claims).  It appeared that from this stage both parties were concentrating all of their efforts upon concluding a global payment agreement.
iv)	 Mr. Nelson and Mr. Justi met Mr. Reis in Quebec on 31 July 1999 and confirmed that the audit would take place.  Petromec also agreed to enter into agreements with third parties required to complete the work in Brazil and to move the project team to Brazil to oversee the completion of all works that were not completed before the vessel’s departure.  As is clear from their Travel Report prepared on 5 August 1999  Mr. Nelson and Mr. Justi fully supported the global payment approach, authorised the travel of the Audin team to Quebec and concluded that
“… It is necessary to submit immediately to the Executive Board, for  approval, the proposal submitted by Maritima … under the philosophy of the account conciliation between the Roncador cost, as calculated by the audit, and the amount of US$120 million, as proposed for Marlim Sul …”
Mr. Nelson and Mr. Justi also reported on the scope of the work that would be remaining upon the departure of the platform from Quebec.  This was essentially commissioning work, and its scope would be precisely defined before the departure of the platform for Brazil.
v)	A Petrobras audit team (run by their auditing department, Audin) carried out an audit of Petromec’s books between 6 -12 August 1999.  They were given unrestricted access to the books and, as found by Moore-Bick J., (save for two matters in respect of which they requested further information) the auditors were satisfied that the costs had all been reasonably incurred:  Judgment, paragraph 131.  The auditors reported on 24 August 1999.  The Audin team in fact stayed active until the end of the project and reviewed all subsequent costs that were incurred.
vi)	Mr. Justi then dropped out of the negotiations, although there was a dispute as to whether he was present at the next meeting between Mr. Nelson and Mr. Efromovich, on 17 September 1999.  Contrary to the evidence of Mr. Nelson and the Petromec witnesses, Mr. Justi denied that he was at this meeting, but Moore-Bick J. found that he probably was at the meeting:  Judgment, paragraph 133.  This was the final meeting between the parties on the subject, and it was the subject of specific findings by Moore-Bick J.  Moore-Bick J. had to consider whether there was a binding agreement on the terms of the global payment proposal, or the "negotiated proposal" as it was referred to by Petromec.  He found that there was no such agreement:  see paragraphs 125 to 139 of the Judgment.  He also had to consider a plea of estoppel, based on the October letters, which, of course, are the basis of Petromec's current claim for misrepresentation.  He found that these letters did not give rise to any estoppel:  see paragraphs 145 to 171 of the Judgment.  It is useful to quote at this stage in the narrative Moore-Bick J’s findings in relation to this meeting.  He held as follows:-
“134.	Although there were disagreements about the date of the meeting and the participants, it was common ground that agreement was reached on the amount to be allowed for the cost of the South Marlim upgrade in the sum of US$112 million.  Mr. Nelson knew he could agree that figure and did not mind saying as much to Mr. Efromovich.  It was also common ground that Mr. Efromovich raised the question of an uplift.  He said that he asked for 25% but that Mr. Nelson had suggested he drop it altogether.  His response was that he had to have something, but would settle for 10% to bring the matter to a speedy conclusion.  He said that Mr. Nelson said he would do his best, but would have to check with his superiors and did not agree to the figure there and then.  Mr. Efromovich said that he believed that Mr. Nelson would not have been willing to handle the matter in that way if he did not already have authority to agree to 10%;  he thought he just wanted to preserve some negotiating face.  Mr. Nelson for his part accepted that he had agreed the US$112 million for South Marlim, but not in a way that would have suggested that he had authority to commit Petrobras there and then.  He also accepted in cross-examination that he had expressed his personal opinion that a 10% uplift would be acceptable to reach a conclusion and had agreed to include it in the proposal that he would be making to the board, provided Mr. Carneiro and Mr. Menezes were happy with it.  Mr. Efromovich confirmed that he had heard nothing further from Mr. Nelson or anyone else at Petrobras as to whether the 10% uplift had been agreed or not.
135.	I have no doubt that when he left the meeting Mr. Efromovich was confident that a settlement based on the global payment approach was in his grasp on the basis of allowing US$112 million for the costs of South Marlim and a 10% uplift on the difference in costs to cover administration and profit.  However, I do not think that any binding agreement had been reached at that stage.  First, although Mr. Nelson said that he had expressed the view that a 10% uplift would be acceptable, Mr. Efromovich was quite clear in his evidence that he had not done so, but had simply said that he would refer back.  Although I prefer Mr. Nelson’s evidence on this point, I am satisfied that Mr. Efromovich was, as he said, insisting on an uplift as part of the deal.  Until that was accepted, there was no agreement, even in principle.  The fact that Mr. Nelson said he was willing to recommend both elements to his superiors and to the board enabled a degree of consensus to be reached, but both Mr. Efromovich and Mr. Nelson in their different ways made it clear that agreement on an uplift was not reached at the meeting.
136.	Secondly, the way in which the uplift was handled supports the conclusion that Mr. Nelson did make it clear to Mr. Efromovich that his own agreement was not sufficient;  whatever he agreed would form the subject of a recommendation which had to be approved by others within Petrobras.  Mr. Efromovich had long experience of working with Petrobras and must have been reasonably well-informed about its methods.  One can see from this case alone that it operated in a formal way and was much more rigid in its procedures than, for example, the Maritima group.  Although his experience led Mr. Efromovich to be confident that any reasonable agreement he reached with Mr. Nelson would be approved, I am satisfied that he was aware that on a matter of this importance the formal approval of Petrobras was required before it became legally bound.  However, having heard his evidence and that of Mr. Nelson, I am satisfied that the tenor of their discussions made it clear that that was so in this case.  Some additional support for that conclusion is to be found in subsequent correspondence between the parties in which Petromec demanded payment from Brasoil based on allowing only US$96 million for the costs of the South Marlim upgrade.  It is difficult to see how a letter in those terms could have been written if Mr. Efromovich had thought that a legally binding agreement, as opposed to an agreement in principle, had already been reached.  His explanation that it was intended to put pressure on Petrobras to remit the funds did not strike me as very plausible.
Inter-relationship between the decision on the preliminary issues and the current claim
43.	It is against the background of these findings by Moore-Bick J. that the current fraud claim arises.  It is perhaps of assistance at this juncture to summarise the factual position in the light of the Judgment and identify the issues that have to be determined for resolution of Petromec’s current claim in misrepresentation.  The Judgment established that:-
i)	Petromec had failed to show that there was a global payment agreement on the terms of the alleged negotiated proposal;  and 
ii)	Petromec had failed to establish any estoppel based on the October Letters.
Thus, because there was no binding agreement in relation to a global payment agreement, Petromec's rights remained those which the Supervision Agreement gave it.  It is entitled to claim on the basis of the agreed variation order mechanism, and it does indeed make such a claim.  That claim ("the costs claim") is also currently before the Court, but has been stayed pending the resolution of this fraud claim;  see the order of Moore-Bick J. dated 11 February 2005, at paragraph 1.  A stay of the costs claim was necessary, because, in the current trial, Petromec claims that it would have succeeded in forcing the Executive Board to agree to the negotiated proposal and to sign a global payment agreement, had it not been misled by the statements of fact made in the October Letters.  It alleges that it has suffered loss because of the misrepresentations, because the amount it would have recovered under the negotiated proposal (had it been agreed) is more than it would be entitled to recover under the Supervision Agreement pursuant to the costs claim.  Thus, its claim in this trial is that, had it been able to exert pressure by arresting the Platform, or taking other steps designed to make it more difficult to get the Platform out of Canada before the ice set in, it would have been able to procure a global payment agreement in the terms of the negotiated proposal.
Other events which occurred in the period during May to October 1999
44.	It is relevant to summarise other events which occurred during the period during May to October 1999, before returning to deal with the attitude of the Executive Board to the proposal for a global payment agreement.
The other Maritima projects and the TCU investigations
45.	Mr. Efromovich and Maritima had a number of projects ongoing with Petrobras at this time.  This was partly because, at the relevant time, the only criterion that a public company such as Petrobras was permitted to take into consideration in deciding to whom to award business to was price.  Maritima was always the lowest bidder;  therefore Maritima got the contract.  The projects included contracts to construct other platforms or rigs, (namely P-37, P-38, P-40) and various “Amethyst” class vessels.  However, questions were raised about the relationship between Petrobras and Maritima and as to whether such relationship was entirely above board.  There were rumours in the press and a complaint was made to the Tribunal de Contas da Uniao ("the TCU”).  The TCU was an auditing type Court that oversaw public bodies such as Petrobras, in order to ensure that it was complying with the administrative and legal regulations by which, as a public body, it was bound.  The complaints to the TCU related to the Amethyst contracts and the Platform.  Between May and October 1999, the TCU asked for clarification of various matters in connection with the Maritima projects.  It was clear that the relationship with Maritima was one which was creating problems for Petrobras in this respect.  However Mr. Reichstul’s response to the TCU’s enquiries made it clear, that so far as Petrobras was concerned (and as the TCU subsequently found) there was nothing untoward in the parties’ dealings.  Petrobras made it clear that the delays in the Platform’s contract were “basically the result of alterations introduced into the work by Petrobras as a result of the analysis of data obtained from the subsequent drilling of the exploratory wells in the Roncador field …”.  However there was clearly sensitivity on the part of Petrobras with regard to the TCU audit (which continued beyond October 1999), and personnel below board level were aware of this.  Mr. Reichstul described it thus in his evidence:
“But I am most concerned about the fact that you mentioned rumours in the press.  In fact, I had -- the Maritima issue was a very, very well-known issue, not only in the Brazilian press.  I had received -- although the monopoly of Petrobras was finished, Petrobras was still a public sector enterprise and had the strong control by a special audit body called the Tribunal de Contas which was the authority regarding the accounts of Petrobras, and all the board was liable to the Tribunal de Contas, that was the immediate supervisory body Petrobras had apart from the ministry.  It had to do with accounting and legal matters, and not regarding the direction of the company or -- but it was a very powerful and very important body that we had to look at.  I had received -- I do not -- before that meeting with Mr. Efromovich, I had received the formal letter by the head of the Tribunal de Contas asking a series of questions of the relationship between Petrobras and Maritima and clarifications.  And in fact, I had received an audit.  It is like an audit, based on the Tribunal de Contas' suspicion of the relationship between Petrobras and Maritima.  So, it is not only rumours, it was a very clear sign from the Tribunal de Contas that all the relationship between Petrobras and Maritima were very -- had to be very clear, and I had to be very careful regarding that.”
Mr. Nelson was also aware at the time that the Executive Board had general concerns about the relationship between Petrobras and Maritima.
46.	The P-37, P-38 and P-40 projects were ongoing during this period.  However, by October 1999, Maritima were in difficulties on these projects too.  It is not necessary to describe these problems in any detail, but they included problems in relation to cost overruns, delays, delivery dates, non-payment of suppliers, disputes about alterations to the scope of certain contracts and related matters.
47.	There was also concern within Petrobras about the Amethyst contracts.  It  commissioned and received a report into the Amethyst contracts and, following an internal report dated 27 August 1999, Petrobras was actively considering the cancellation of the contracts for Amethysts 4, 5, 6 and 7.  
The approach to Andersen Consulting
48.	Concerned about the cost overruns and delays being experienced on the various Maritima projects, Mr. Reichstul turned to Andersen Consulting, management consultants, for assistance.  He contacted Mr. Etienne Deffarges of Andersen Consulting and had a meeting with him on or about 30 September 1999 (something about which Petromec only became aware after the evidence had closed in the 2003 trial).  At that meeting, Mr Reichstul gave a general account of the problems which Petrobras were having in relation to the various projects then ongoing.  Most, but not all, of these were Maritima projects.  Andersen Consulting were asked to give an indication as to what assistance they would be able to provide to Petrobras, but there was no detailed discussion of any precise workscope.  Mr. Deffarges said that the first meeting lasted about an hour, and that he had been invited to discuss a possible review about five Petrobras platforms although the particular projects that Mr. Reichstul had in mind were not mentioned by name and few details were given.  He said that the meeting involved a general discussion and related to the difficulties Petrobras was having with all five platforms and not any platform in particular.  The difficulties concerned cost overruns and scope extensions and Mr. Reichstul wanted to get a better understanding of Petrobras' position.
49.	There was then a second meeting on 30th September 1999 between Messrs Reichstul, Menezes and Coutinho for Petrobras and Messrs.  Deffarges and Warren for Andersen at which there was a general discussion about the various platforms and problems being experienced with their upgrades.  Mr. Deffarges then sent out an internal email in which he referred to the meetings and problems with 5 platforms with significant cost overruns.
50.	Mr. Warren then started to prepare a draft letter to Petrobras in which he set out his understanding of the proposed scope of work that Andersen were being asked to undertake.  He worked on this draft on 4 and 5 October, and then visited Petrobras on 6 and 7 October 1999.  He met with Messrs Coutinho and Menezes.  Following this meeting he then prepared a draft letter of instruction on 8 October, although this was not in fact sent out by Mr. Deffarges until 13 October.  The letter makes explicit reference to 5 projects, including one in Canada and Andersen’s understanding that the workscope would include ascertaining “the facts underlying these five contracts”.  Andersen set out the base objectives for “these five contracts”.  It appears from this letter, prepared after relatively detailed discussions between the parties that Petrobras’s intention as at early October was to include all five projects within Andersen’s workscope – including the Platform.  There was then another meeting between Mr. Deffarges and Mr. Reichstul on or about 13 October after he had faxed the letter over to the latter.  The scope of the engagement at that stage still related to 5 platforms and there was no discussion of reducing the scope.
51.	At some stage after this meeting and before 27 October 1999 (when a presentation was made in which no mention of the Platform appears) the proposed workscope was reduced to four units, excluding the Platform.  It may be that the reduction in scope came during the course of a meeting with Mr. Coutinho between 12 and 21 October 1999.  Mr. Menezes and Mr. Coutinho sought to suggest that there had been no or very little  discussion with Andersen about the Platform.  The latter maintained the line that the Platform only featured in the early discussions as an example of problems that Petrobras was allegedly having.  Mr. Reichstul, on the other hand accepted that the early discussions could have focussed on the Platform as well, although he was not sure why she then faded from the picture.
52.	I accept the submissions of Mr. Lionel Persey QC, on behalf of Petromec, that the correct conclusion to draw from the evidence relating to Andersen is that:-
i)	until about the middle of October 1999 Petrobras did consider that the Platform should form part of Andersen’s workscope in the event that Petrobras decided to instruct Andersen;  and
ii)	there was a change of view in about mid-October (or a little later) and so when it came to formalise the agreement the Platform was not initially included in the workscope.
The finalisation of the work in Quebec and the preparations for departure
53.	It was common ground that both sides considered it essential that the Platform had to leave Quebec City in October 1999, if she was not to be iced in and her departure delayed until April 2000.  Any delay would have been expensive for Petrobras, but a delay of several months would have been extremely serious financially.  The Platform was capable of earning revenues in excess of US$3 million a day and needed to be brought into production just as soon as it was feasible to do so.  All the Petrobras witnesses in their evidence stressed the critical importance of the Platform departing from Quebec City before the end of October 1999.  
54.	It had become clear during the period May to August 1999 that the upgrade work could not be finished in time for the Platform to leave Quebec to avoid any risk of being caught by the ice and so Petromec proposed that the work should instead be finalised in Brazil.  Although initially resistant to this, Petrobras in due course recognised the inevitable and it was decided that the work should be carried on in Quebec until the end of August, at which point the upgrade work would be stopped, and the vessel would be made ready to travel to Brazil, where work was then to be finalised.  This was a possibility which had been recognised from the outset, when the contract with Davie was concluded:  see clause 6.6 of the Upgrade Contract between Petromec and Davie.  At the end of August 1999, a "delivery" ceremony was held in Quebec.  Then, the parties started to make the necessary preparations for the Platform to depart.
55.	On 16 August 1999 Petromec had confirmed to Dockwise that loading of the platform would take place in the 3-week window from 10-30 October 1999.  The platform would first have to be towed down the St.  Lawrence River to a position where inclining tests could be carried out.  In the event it was decided that the inclining would be undertaken at Sept Iles, Quebec, another port on the St Lawrence River, and that the Platform would be loaded onto the Mighty Servant at Sept Iles.  In order to proceed out to Sept Iles the Platform had first to pass under the hydroelectric cables that cross the St.  Lawrence River at Beaumont to the east of the Port of Quebec.  There were only a very few days each fortnight where there were suitable tide levels in daylight hours to permit her to do so in safety.  
56.	The preparations involved both practical and legal steps.  Apart from the arrangements for the contracting of the Mighty Servant to carry the Platform to Brazil, to which I have already referred, the practical steps included the contracting of tugs for the movement of the Platform from Quebec City to Sept Iles.  Once again, the contract was made by Petromec but was paid for by Petrobras, but the latter was kept informed of all of these arrangements.  The legal steps involved resolving the various claims made which had been made against the Platform by a number of parties.  This was done with the assistance of a Mr. Cullen at Stikeman Elliott, Canadian solicitors, who was instructed on behalf of Petromec and who was keeping Petrobras informed.  In this regard, Petrobras' P & I club had been contacted with a view to the provision of any necessary security.  By 8 October, all of the claims against the platform had been resolved, with the exception of a claim by the Port of Quebec Authority and the possible exception of Davie's own claims.  As regards these outstanding claims:  (i) agreement had been reached with the Port of Quebec Authority as to the sum to be paid on 6 October and a cheque had been drawn on the KPMG account (financed by Petrobras), which simply awaited delivery;  and (ii) although Davie had outstanding but unparticularised claims, it had renounced any lien on the vessel by contract.
57.	Accordingly, in early October, from Petrobras' point of view, all was in order for the platform to leave as scheduled on 12 October, the date to which all of the parties had been working for some time in order to avoid any risk of the Platform being iced in.  
58.	However, I find as a fact that Petrobras appreciated that there was indeed a risk, that, if matters in relation to the global payment proposal were not  sorted out by the date of the Platform’s proposed departure from Quebec, the Platform might be held in Quebec.  The Travel Report dated 5 August referred to above recommended that the global payment agreement should be concluded before the departure of the vessel from Quebec.  Mr. Nelson, Petrobras’ chief negotiator, who accepted in his evidence that it was normal practice of contractors to hold on to platforms until the bills had been agreed, gave the following evidence in this connection:
“Q.	You had a concern that if you did not reach an agreement with Maritima prior to the departure of the platform that the platform might be held in Quebec, did you not?
A.		I would say that it was not a main concern.  Always during a conversion we have this kind of concern but at that time it was not the main one.
Q.		But it was a concern, was it not?
A.		Yes, a concern.
Q.		And it was something that you wished to avoid.
A.		Yes, obviously, yes.
Q.		Any potential difficulty needed to be got out of the way before the departure.
A.		Yes.
Q.		Both you and Petromec at this stage had the same aim in mind.
A.		Yes.
Q.		And there did not seem to be any reason to you and to Petromec why such a deal could not be done?
A.		Yes, I would say so.
Q.		You certainly were not prepared to take the risk that Petromec might hold onto the platform.
A.		Sorry, could you rephrase?
Q.		You yourself were not prepared to take the risk that Petromec might hold onto the platform if no agreement was made?
A.		Yes, sure.  I would not have to take this.  Not me, not even Mr. Carneiro or Menezes.  No-one in Petrobras wanted to take this risk.
…
Q.		Any suggestion that the departure of the platform might be delayed by Petromec is something that would have been of considerable concern to you.
A.		Yes.
Q.		Because you were aiming for a 12th October departure.
A.		Mm-hmm.
Q.		And indeed you were concerned to get the GPA approved before the 12th October so as to avoid any risk of the platform being held.
A.		Yes”
59.	Mr. Carneiro gave evidence to similar effect:
“Q.	Mr. Nelson played the main role in these negotiations, did he not?
A.		Yes.  It was he who sat down with Justi to negotiate.
Q.		And you did not in fact attend any of the meetings where the detailed negotiations were carried out, did you?
A.		I do not remember having participated in any of these.  But Nelson kept me informed of all of this.
Q.		And you kept Mr. Menezes informed?
A.		Yes.
Q.		And Mr. Nelson and Mr. Justi also kept Mr. Menezes informed?
A.		The communication chain was by means of me.  This did not mean that Menezes could not call up one of them to get information.  This could have happened.
Q.		And the intention of all of you was to try and finalise  the GPA before the vessel, the platform, departed Quebec, was it not?
A.		Yes.
Q.		That is because it is usual for parties to a contract like this to seek to agree the extra costs incurred before the departure of a platform?
A.		Yes, I think so.
Q.		And that is what everyone was aiming for?
A.		Yes.”
60.	Mr. Menezes sought to suggest that there was no connection between the need to conclude the global payment agreement and the departure dates fixed for the Platform.  However I did not find his disavowal of this point convincing and it was directly inconsistent with the evidence of Mr. Nelson and Mr. Carneiro.  Accordingly I reject Mr. Menezes’ evidence in this respect.
61.	Petromec clearly regarded it as a matter of some urgency that a settlement of the upgrade costs should be agreed with Petrobras prior to the departure of the Platform as Mr. Efromovich and Mr. Hawksley both said in their evidence.
Petromec's inquiries as to the possibility of detaining the Platform
62.	Unknown to Petrobras, however, Petromec had been making general inquiries about how to detain the Platform.  It would appear that this was first discussed as a possibility on about 30 August, at the time of the “delivery” ceremony.  Mr. Hawksley was instructed to investigate the position, but no mention of this was made to Petrobras.  In fact, however, Mr. Hawksley made no inquiry until 4 October 1999, when he asked Mr. Cullen of Stikeman Elliot for general advice as to the ways in which the Platform might be detained.  Mr. Cullen understood that there was money due and owing from Petrobras to Petromec, though in fact this was not the case.  As subsequently held by Moore-Bick J, no agreement had in fact been reached in relation to the global payment proposal which was about to be submitted to the Petrobras Executive Board, and therefore nothing was owing under this proposal;  Petromec had been paid all the hire due to it;  the VOs that had been agreed had been paid;  and no further evidence had been put forward under the Supervision Agreement to justify any further change order payments.  Mr. Cullen looked at the relevant papers for a few hours over a number of days and, as he said in his witness statement, advised as follows:
“It seemed to me initially that an arguable case might be considered to support an arrest [under s.  22(2)(n) of the Canadian Federal Court Act].  However, I felt this was not necessarily the strongest case to serve Petromec’s interests, particularly as it could expose P36 to further caveats which could complicate her release, and as any arrest could be met with a deposit of security.  In my view there were better remedies available to secure Petromec’s interests.
I therefore looked at what rights Petromec had to exercise a possessory lien over P36.  I have understood from my discussions with Jon Hawksley and from my analysis of the underlying contracts … that Petromec was responsible for and had control over the platform during the upgrade and could for example direct when she left Quebec City.  Given this, I felt that Petromec could reasonabl[y] allege that they had a possessory lien.  I also considered the question of a seizure before judgment, a Quebec civil law remedy which could also serve Petromec’s interests as it would result in the detention of the P36.  I felt there was a sufficient basis to seriously consider this remedy which applies when there is reason to fear that without it recovery of a debt may be put in jeopardy.”
63.	But when Mr. Hawksley discussed Mr. Cullen’s advice with Mr. Efromovich on or about 4 October, and asked Mr. Efromovich whether the vessel should be arrested before 7 October, when the Petrobras Executive Board was to meet to consider the global payment proposal (as he and Mr. Efromovich knew), Mr. Efromovich decided that the vessel should not be arrested.  Mr. Efromovich gave the following explanation in cross-examination:
“MR  HANCOCK:  As I understand it, Mr. Hawksley is suggesting, well, would it not be better to arrest the vessel now, because then it will have an impact on the board when they consider the matter on Thursday.
MR  EFROMOVICH:  Yes, that might be right and I did not want to do that.
…
MR  HANCOCK:  Because, you say that it would have been premature and unnecessary.  Why do you say that?
MR  EFROMOVICH:  Because why should I upset these people before having the chance to see the outcoming of the October 7th board meeting?  There was no reason to do that.  It would not be any different to send it on the 7th or 8th.
MR  HANCOCK:  You knew it would upset the board if you arrested the vessel, did you not?
MR  EFROMOVICH:  I thought so, yes.”
64.	 Although Mr. Cullen in fact drafted documents designed to give effect to an arrest or a lien, these letters were never sent.  Instead, Mr. Hawksley decided (it would seem on or about 6 October) that the better option would be for Petromec simply to rely on a contractual right which he believed that Petromec had to insist on completing the upgrade work in Quebec, rather than exercising any possessory lien or power of arrest.  Whether this was a right which Petromec had despite the fact that Petrobras wanted the Platform to return to Brazil, and whether this suggested course of action would have involved Petromec in a breach of its obligations under the Quiet Possession Agreement, are issues which are only relevant at the later stage, if and when consideration has to be given as to whether any actionable misrepresentations caused any loss to Petromec.
The Petrobras Executive Board’s consideration of the global payment proposal in the period up to 7 October 1999
65.	After the meeting with Mr. Efromovich on 17 September 1999 Mr. Menezes and Mr. Carneiro were happy to recommend to the Executive Board that a global payment agreement be concluded with Petromec on the basis of an agreement to a deduction of US$112 million in respect of South Marlim, with a 10% uplift on the difference between the South Marlim and Roncador costs.  The total costs of the Roncador upgrade were at that stage projected to be US$240 million.  Indeed all of the relevant SEGEN senior management (even Mr. Justi, although he was later to change his mind) regarded the global payment agreement proposal as a wholly satisfactory deal for Petrobras that fell squarely within the terms of the Supervision Agreement.  They gave it their whole-hearted support in the written recommendation to the Executive Board and the presentation made by Mr. Nelson.  Thus Mr. Menezes thought that the global payment agreement proposal was a sensible solution.  Mr. Carneiro described it as a “win-win” in his evidence in 2003 and his witness statement for the current hearing.  He did not have any doubt in recommending this as a fair deal to the Executive Board.  Mr. Nelson also thought that the deal was “very, very fair”.  However Mr. Justi gave a rather more grudging acceptance to its merits, asserting that the proposal was only acceptable because Petromec had not been complying with the previous arrangement on VOs.  He was well aware that it was fully supported by the more senior managers, and that they had invested a lot of time and effort into concluding it.
66.	Mr. Menezes instructed Mr. Carneiro to prepare a DIP (Documento Interno Petrobras) in which the proposed settlement would be explained and recommended to the Executive Board and in which their approval would be sought.  Mr. Carneiro in his turn instructed Mr. Nelson and Mr. Nelson instructed Mr. Justi to prepare the DIP (which he did with the assistance of his assistant, a Ms Leila Gondim).  Petrobras’ legal department, SEJUR, was also instructed to provide confirmation that it was content with the proposal from a legal perspective.  This instruction was given by Mr. Justi on 1 October and SEJUR’s response was received by him on 5 October.
67.	The final version of the DIP was signed off by Mr. Menezes on 5 October 1999.  After setting out the background history of the project, the DIP recommended, provided the Executive Board agreed, that:
i)	the Executive Board approve the payment of additional costs to Petromec based on a figure of US$112 million for South Marlim and an uplift of 10% to be paid after completion of the services:  and
ii)	that SEGEN and AUDIN continue to monitor the costs going forward in the upgrade of the platform.
68.	The DIP showed an order of magnitude of sums that would be due to Petromec of US$45.1 million, assuming that the total estimated expenditure for Roncador was US$240 million as was then predicted.  The SEJUR report and the Audin audit report were both attached to the DIP.  The SEJUR report confirmed its view that there was no problem from a legal standpoint, on the basis that the proposal came within its previous opinions in relation to the Supervision Agreement and the DOPI.  It stated:
“… we have reached the conclusion that the possibility of direct payment to Petromec is set forth in the above-mentioned contractual documents.  Therefore, with respect to the legal aspects involved, we understand that there is no obstacle to payment of the costs resulting from the changes to the specifications of the upgrade …”
69.	It was the practice of the Executive Board under Mr. Reichstul’s presidency to hold daily informal “cafezinho” (espresso, or coffee meetings) at which such directors as were present on the day in question would discuss the business of the company and exchange information.  This also gave them an opportunity to consider matters that were going to be formally addressed at Executive Board meetings in advance of such meetings.  Mr. Reichstul described these meetings as follows:
“… the cafezinho was a ritual every morning by which every director would give a brief outline what was going on in his area so that myself and the other directors that would be present in the house could be informed of what was going on.  So, most -- all the relevant matters of the company were aired and talked about in the cafezinho”
Mr. Reichstul required all Executive Board decisions to be unanimous, so the cafezinho was a useful means of identifying problems and areas of potential difficulty in relation to matters that had to be brought before the Executive Board.  
70.	Mr. Nelson was invited to make a slide presentation to directors at one of these cafezinho in order to explain the proposed global payment agreement.  There is an issue as to the date on which this presentation was made.  Petromec contends that the presentation probably took place on or about 6 October 1999, after the preparation of the DIP.  Petrobras on the other hand contends that the presentation took place at some time after the meeting with Mr. Efromovich on 17 September and before the preparation of the DIP.  I find that, on the balance of probabilities it is likely that the presentation probably took place on or about 6 October 1999, after the preparation of the DIP.  Although Mr. Nelson was adamant in his evidence that his presentation took place at some time before the preparation of the DIP, it is difficult so see how he can be so sure of that fact after the passage of time.  More importantly, there is other contemporaneous material that supports the contrary position.  The presentation slides were prepared by Mr. Justi and Ms Gondim.  Mr. Nelson attended the cafezinho with Mr. Carneiro.  Hard copies of the slides were appended to his first witness statement prepared for the first trial.  It was not until December 2005 that the electronic version of the presentation was disclosed.  The records show that the presentation was saved to Ms Gondim’s computer (presumably when she left work for the day) on the evening of 6 October 1999.  The second version of the presentation and the DIP both use exactly the same figures.  As put to Mr. Nelson in cross-examination by Mr. Persey, it is probable that those figures post-date 28 September.  Moreover the obvious time for the presentation and informal meeting was after the DIP was finalised;  and the DIP was entered into the register of Petrobras’ documents at 16.48 on 5 October.  Security records disclosed by Petrobras show that Menezes, Carneiro and Nelson were all present in the Petrobras main building on the morning of 6 October.  Indeed Mr. Christopher Hancock QC for Petrobras submitted in his final submissions in the 2003 hearing that “Then the slideshow is presented at some stage before the proposal is put to the board.  And if all the figures are actually relevant – if the figures are all ready, then it may well be that there is no particular reason to believe that the gap between the slideshow and the board would be particularly lengthy”.  
71.	Mr. Nelson had originally thought that he was going to be allowed 45 minutes in which to make his presentation.  In the event, however, he was told just before the meeting that he would only be given five minutes because Mr. Reichstul had to be elsewhere for another meeting.  In fact he was allowed 15 minutes to make his presentation.  Mr. Nelson and Mr. Carneiro (who was with him) then left the room, and the directors that were present then discussed the proposal.  
72.	It was suggested by Mr. Persey in cross-examination of the Petrobras witnesses that, because of the concerns about the proposal expressed by some of them at the cafezinho, it was clear that there was little or no prospect of the proposal being approved at the Executive Board meeting that was due to take place on 7 October.  From the evidence which I have heard, I do not consider that the position was nearly as clear cut as Mr. Persey suggested.  I reject the suggestion that the proposal was doomed to failure even before the Executive Board meeting.  I find as a fact that, although those directors present at the cafezinho clearly had various concerns about the proposal, in particular Mr. Reichstul had a concern about the global form of the payment and Petrobras’ relationship with Petromec, and other directors had concerns about the basis for the 10% uplift, nonetheless it was decided that it should go forward for actual consideration by the Executive Board.  That was not only because the proposal clearly had the strong support of SEGEN, but also because, as Mr. Reichstul stated, there was a need to resolve the position with Petromec and the method of doing so had been under discussion for some time.  Thus I find that although, clearly, the proposal had not been approved at the cafezinho, the view was taken that the proposal would nonetheless go forward to the Executive Board meeting to be considered in the light of the DIP.  As Mr. Menezes said in his evidence, the concerns were not about rejecting the proposal, but rather about the manner in which it should be formalised:
“Q.		So, before that meeting of 7th October, you were aware that fellow directors of yours were unhappy and concerned about the proposal?
A.		Yes.
Q.		So there was little or no prospect of that proposal 1 being agreed unless further support or justification for it was provided by SEJUR?
A.		No, this is not a correct conclusion.  The concern was about how we should formalise this global agreement.  The concern was not about rejecting the proposal.  Everyone had concerns.  For me, my concern was to put forward a proposal and the directors should analyse this and we would discuss it.  There was not an exact moment by which we should have approved it, but that was my best proposal.
Q.		It was a proposal in respect of which your directors were unhappy even before it was submitted to a board meeting?
A.		They had concerns, but there was no alternative solution -- and concerns are normal.
Q.		When you say there was no alternative solution, ..what do you mean?
A.		There was no alternative proposal.”
73.	Having heard the oral evidence of the Petrobras witnesses, I also find that, after the cafezinho meeting, those members of SEGEN who had not been at the post-presentation discussion were made aware, at in least general terms, of the concerns expressed by the directors at that meeting, and of the fact that the proposal had not been approved at that meeting, but was going forward for consideration at the proposed Executive Board meeting, on the basis that it would still be supported by the DIP.  Those informed would have included Mr. Nelson, Mr. Carneiro and Mr. Justi.
74.	The Executive Board considered the matter for the first time at its meeting on Thursday 7 October 1999, as Pauta (or docket number) 948.  The meeting took place from 9.30 am to 2.30 pm.  The contemporaneous documents show that Mr. Menezes was not present at that Board meeting, although at the previous hearing he had given evidence that he was there.  The formally recorded decision of the Board (as set out in a Posicao des Pautas dated 14 October produced by Mr. Coelho, the company secretary, just after the meeting) was “Mantida”, that is to say “retained on the agenda”.  In accordance with what was by then the normal procedure, as Mr. Coelho, the Company Secretary stated in evidence, the decision to keep the matter on the agenda was formally recorded in the minutes of the meeting, because it was the first time that such a decision was taken.  There was also a communicado prepared after the meeting by Mr. Coelho which would have been sent out to the interested departments at some point after the meeting, which likewise referred to the matter having been retained on the agenda.  In formal terms this meant that the proposal in the DIP had neither been approved or rejected.  In the normal course, it would have to be considered at the next board meeting, then scheduled for either 14 October (a Thursday) or 15 October (a Friday).  The change in date would be due to the fact that the Tuesday of that week (the 12 October) was a public holiday in Brazil.
75.	Petromec submitted that there was, and cannot have been, any detailed discussion of the global payment agreement proposal at this meeting;  Mr. Menezes was not there and all of the directors were against it.  Mr. Persey submitted that the true position after 7 October was as Mr. Menezes described it in his oral evidence in the trial in 2003:  it “was turned down but it was still on the agenda” and that Mr. Menezes sought to resile from this evidence at the hearing before me.  Mr. Persey further submitted that the true fact of the matter was that there was nothing to discuss at the meeting and that the Executive Board was against the global payment agreement for reasons that had little, if anything, to do with its intrinsic merits.  Moreover, he submitted, that it was common ground that the Executive Board did not at any stage thereafter seek any further information from SEGEN or SEJUR.  Accordingly, the reality, he submitted, was that the proposal had been rejected.
76.	Moore-Bick J. made no positive findings about what happened at the meeting (see paragraph 143 of the Judgment).  All Moore-Bick J. concluded was that, for one reason or another, the proposal was put back for consideration at the next meeting.  In my judgment there is nothing in the additional evidence which I have heard (including the evidence from Andersen Consulting) which supports the contention that there had been an actual rejection by the Executive Board on 7 October of the global payment agreement proposal, although it may well have been, as Mr. Persey submitted, that the discussion of the proposal was cursory, given the absence of Mr. Menezes.  Petromec's case on this issue was not wholly clear, in the light of the ways in which the matter was put to the witnesses in cross-examination.  The second way in which Mr. Persey put the argument was that although not formally rejected, the proposal had been “effectively turned down” so that there would be no further consideration of it.  
77.	In my judgment there is no basis for the suggestion either that the Executive Board had taken the formal decision to reject the proposal at the meeting, or that the proposal had been "effectively turned down” so that there would thereafter be no further consideration of it at all.  Accordingly, I reject Petromec’s pleaded contention that there had been an actual decision by the Executive Board to reject the proposal;  see Amended Particulars of Claim at paragraphs 39, 60.2 and 61.  Moreover, it was not even Mr. Efromovich’s evidence that the proposal had been rejected at the meeting:
“MR HANCOCK:  Let us take it in stages:  did you think it had been rejected by the board [at the meeting on 7 October]?
MR EFROMOVICH:  No, it was not rejected, for sure because I would be told that it was a rejection.”
78.	I accept the evidence of Mr. Reichstul, who was an impressive and highly articulate witness, that the Executive Board had decided “to put on hold the global payment” but nonetheless to retain it on the agenda for further consideration.  A decision to put something on hold is not the same as an outright decision to reject a proposal, nor is it the same as a decision "effectively” to turn down the proposal, so that there would thereafter be no further consideration of it.  As Mr. Reichstul said, the Executive Board had to be very careful, given the audit by the Tribunal de Contas, the press comment, the problems with the other platforms and the concerns expressed by some Executive Board members about the proposed 10% uplift, not to agree to the proposal without proper consideration.
79.	I also reject Mr. Persey’s submission that “the approach of the Board – not to agree to the GPA because of other issues between Petrobras and Maritima, was neither rational nor fair”.  It seems to me that, in all the circumstances outlined above, it was a perfectly sensible and commercial decision for the Executive Board to have taken.  Nor do I see the relevance of the submission in any event.  Petrobras had no obligation to Petromec to give “rational or fair consideration” to the proposal.  The former was entitled to act entirely in what it considered were its best commercial interests.
80.	At the meeting the Executive Board also decided to cancel the Amethyst contracts.  The Executive Board had received advice from SEJUR that it was legal to do so, notwithstanding a 540 day letter of extension agreed between Mr. Carneiro and Maritima.  That advice subsequently turned out to be wrong.  Despite that advice, the Brazilian court has held that the cancellations were wrongful, although this decision is subject to an pending appeal.  But Mr. Persey relies on this matter to demonstrate the fact that the Petrobras Board was prepared to act on the advice of SEJUR, a point that becomes relevant at a later stage of the analysis.
The Reichstul/Efromovich meeting on 7 October 1999
81.	Mr. Reichstul had agreed to meet Mr. Efromovich on the afternoon of 7th October.  This was the first time that they had met, although Mr. Efromovich had requested a meeting on a number of earlier occasions.  Mr. Reichstul told Mr. Efromovich at an early stage in the meeting that the Amethyst contracts were going to be cancelled.  The meeting then got rather heated.  Mr. Hancock did not suggest to Mr. Efromovich in cross-examination that there was any discussion of the Platform at the meeting.  However in his cross-examination Mr. Reichstul said that, although he could not now recall, he thought that he would have told Mr. Efromovich that Petrobras had decided to put the global payment agreement proposal on hold.  He accepted that it would have been very odd if he had not done so.  His evidence included the following passage:
“MR PERSEY:  You did not tell him that you had put on hold the global payment proposal but you did tell him that you had decided to cancel the Amethyst contracts and I understand that the meeting -- Mr. Efromovich has told us that he became rather heated when he heard that.  Do you recall that?
MRS JUSTICE GLOSTER:  There are about three questions there Mr. Persey.  Can you split them up?  The first question that is being put to you is that it is being said that you did not tell Mr. Efromovich that the global payment proposal was being put on hold.  What do you say about that?
A.		Well, I have -- I do not have a recollection of that and I find it would be very odd to have a meeting with this gentleman just after a board meeting, which probably was a very heated meeting because of the cancelling of the Amethyst, the discussion on the P36, and having the cold face to talk about the Amethyst and not tell him something that was a decision of the board would be written down and recorded, I have many doubts about this affirmative.  But as I told you, I do not recollect that I have avoided to touch the issue of the P36 and I think it would be very odd to have an important issue like the global payment proposal not to be discussed on the first meeting I had with Maritima, with the head of Maritima.  I find it very odd.  I do not recollect telling him about this or that.  But I just find it very strange if I would not have mentioned that.  So, I would not agree with this affirmative that you have mentioned, regarding the first question.”
82.	In the absence of any cross-examination of Mr. Efromovich about the matter, I have to proceed on the basis that there was no discussion between him and Mr. Reichstul at their meeting about the Platform or the proposal.  However, even if this had indeed been the case, I suspect that Mr. Efromovich, because of his close contacts with the Petrobras personnel, was aware either by the time of this meeting or shortly thereafter that the Executive Board at that meeting had not made any decision in relation to the proposal.  He certainly was so aware by the evening of 7 October, as he himself admitted.
The letter of 8 October 1999
83.	On 8 October 1999 Petromec, under the hand of Mr. Reis, sent a letter to Brasoil, but addressed to Mr. Jorge in Quebec, in which it requested payment of the outstanding amount due to the end of September 1999, calculated on the basis of a South Marlim figure of US$96 million with an uplift of 25%.  The letter concluded:
“… At present, the schedule for implementing your request [to transport the platform to Brazil on the MIGHTY SERVANT 1] necessitates the P-36 departing Quebec on Tuesday 12 October.  If you wish us to maintain that schedule, please confirm payment details by return …”
Mr. Hawksley had prepared the first draft of the letter;  he sent this to Mr. Efromovich and also to Mr. Cullen, who suggested some amendments.  In the event Mr. Hawksley’s draft was amended to remove references to the negotiated figure under the proposed global payment agreement because Mr. Efromovich wanted to put pressure on Petrobras to pay under the terms of that proposal.  The letter was sent after Mr. Efromovich had discovered on the evening of 7 October that the Executive Board had not authorised payment under the global payment agreement proposal.  As Moore-Bick J. observed, although the letter did not say in terms that the platform would not be allowed to leave Canada if payment were not forthcoming, he doubted that the point was lost on Petrobras.  The evidence shows that the idea of a veiled threat was Mr. Hawksley’s.
84.	As Mr. Hancock submitted, the letter was in many respects somewhat peculiar.  Thus it came completely out of the blue, at a time when the Platform was on the verge of leaving.  No threat had been made by Petromec prior to that date to detain the Platform.  Indeed, Petromec had (in compliance with its obligations under the Quiet Possession Agreement) been occupied in ensuring that third party liens and charges were cleared so as to enable the vessel to leave on time.  It was not addressed to those who, as Mr. Efromovich well knew, were the decision makers, i.e. the members of the Executive Board of Petrobras.  Unlike the position on other occasions, when letters were sent directly to Executive Board members, this was sent to Mr. Jorge in Quebec, who was right at the bottom of the decision making tree.  It made demands which could not be complied with in the time frame.  Although sent on a Friday afternoon, the letter demanded payment before the Platform left on Tuesday, although it was a Bank holiday in Canada on Monday 11 October, it was a public holiday in Brazil on Tuesday 12 October, with employees being given the day off on Monday 11 October and there was no Executive Board meeting scheduled to take place until the end of the following week, i.e.  14 or 15 October.  It did not ask for agreement on the negotiated global payment proposal.  In fact, it did not ask for agreement at all.  It asked for payment, and not payment in accordance with the negotiated proposal, but payment of sums which it was accepted were not “due” – contrary to the assertion in the letter itself – pursuant to any contract between the parties.
85.	Mr. Hancock submits that the letter was a negotiating ploy, and a bluff;  that it was not a request for information, and was not seen as such.  He contends that the letter was seen only by Mr. Jorge and Mr. Justi and regarded by them merely as a bluff.  On the other hand, Mr. Persey, on behalf of Petromec, invites me to find that not only Mr. Jorge and Mr. Justi, but all of those within the management chain – Messrs.  Menezes, Carneiro, Nelson – had seen the letter and were aware of its contents.  In support of this contention, he relies on the fact that all of the SEGEN witnesses, save for Mr. Justi, accepted in cross-examination that the 8 October letter raised matters of considerable importance (i.e.  not day-to-day matters) and that it ought to have been passed up the management line to Mr. Menezes.  He submitted that it was inconceivable that the letter would not have been shown (as opposed to merely mentioned) to those up the management chain;  that the letter completely changed the dynamic of the global payment agreement negotiations;  and that it threatened the departure of this vitally important platform at a critical time.  He submitted that Mr. Justi was a man who considered that it was important for procedural matters to be dealt with properly, and had already had his fingers burned on a previous project.  There was therefore no way that he would not have involved the senior management team.  He submitted that Mr. Justi in his evidence to this court was attempting to protect Petrobras, a company that he has loyally served for many years, from being implicated in the letters that he then sent out.
86.	In my judgment on the balance of probabilities the 8 October letter was not actually shown to Messrs.  Menezes, Carneiro, or Nelson, whether by Mr. Justi or anyone else.  Clearly it should have been, given the implied threat contained in it.  But I accept the evidence of the Petrobras witnesses on this point.  They all readily accepted, save for Mr. Justi, that the 8 October letter raised matters of considerable importance and ought to have been passed up the management line to Mr. Menezes.  But clearly Mr. Justi did not regard it in that light.  He thought it was a bluff.  However both Mr. Nelson and Mr. Justi said that Mr. Justi had informed Mr. Nelson about the subject matter of the letter, and the latter therefore clearly knew that Mr. Efromovich was trying to detain the Platform in Quebec.  Thus, although Mr. Nelson may well have known of the threat to the vessel, his evidence was that he was not actually shown the letter of 8 October from Petromec.  Mr. Nelson referred in his witness statement to Justi having told him “in mid-October” (whilst he was in Mr. Musa’s room in SEGEN’s offices) that Mr. Efromovich might try to keep the vessel in Quebec following which Mr. Nelson telephoned Mr. Efromovich.  Mr. Efromovich and Mr. Musa also recall this conversation, though there is disagreement as to when it took place and precisely what was said.  However in general it is consistent with Mr. Justi’s evidence in that the latter recalls that he told Mr. Nelson of the content of Petromec’s 8 October letter without showing him a copy of it.  Mr. Justi’s evidence was, however, that Mr. Nelson was aware that Mr. Justi proposed replying to Petromec’s letter with the assistance of the legal department.
87.	Mr. Justi referred the letter to SEJUR for their advice.  They did not regard it as something that needed to be formally referred to the Executive Board.  In those circumstances, it is perhaps understandable how the letter did not come to be shown to Menezes, Carneiro, or Nelson.  
88.	Against the background of the above facts, either as found by Moore-Bick J, or by me, I turn now to consider whether the October Letters were fraudulent or negligent misrepresentations.  Before doing so, I summarise the relevant legal principles in relation to the tort of deceit, which were largely common ground as between counsel, subject to different points of emphasis.
Relevant legal principles in relation to the tort of deceit 
89.	As stated in Clerk & Lindsell on Torts (19th Ed.), paragraph 18-01, a claimant may recover damages in the tort of deceit if he can show that:-
i)	a false representation was made to him;  
ii)	the representation was made by or on behalf of the defendant;
iii)	the representation was made fraudulently;
iv)	the defendant intended him to act on it;
v)	the claimant was influenced by the misrepresentation and suffered loss as a result of the deceit.
90.	Some of these constituent elements of the tort merit further discussion.  Thus it was common ground that the more serious the allegation, the higher degree of probability that is required to establish it:  Hornal v Neuberger Products [1957] 1 Q.B.  247 at 258;  Re H.  (Minors) [1996] A.C.  563, at 586-7.  In Goose v Wilson Sandford & Co (No 2) [2001] Lloyd’s Rep PN 189, Morritt LJ, giving the judgment of the court, described the approach at paragraph 39 as follows:
“In considering whether the elements in the tort of deceit had been established the judge correctly directed himself as to the relevant standard of proof by reference to the statement of Lord Nicholls of Birkenhead in Re H (Minors) (Sexual Abuse:  Standard of Proof) [1996] AC 563, 586 that:  
‘...  the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability.  Fraud is usually less likely than negligence.’”
91.	The statement relied upon must be a statement of present or past fact:  see Clerk and Lindsell on Torts, (ibid.) at 18-04.  However a statement as to the future may involve statements of present fact.  Thus, a statement as to a party's present intention is a statement of fact, since it is a statement by that party that it does indeed have that intention.  However, a statement as to another party's intention can only be a statement as to the belief of the maker of the statement in that regard.	By parity of reasoning, a statement as to the hope of a party may be a statement that the party in question does indeed genuinely have that hope, but can go no further.  However a statement of opinion or belief is capable in an appropriate context of being a statement of fact, particularly where the facts are not known to both parties.  As Bowen LJ. said in Smith v Land and House Corporation (1884) 28 Ch D 7 at 15:
“… It is often fallaciously assumed that a statement of opinion cannot involve the statement of a fact.  In a case where the facts are equally well known to both parties, what one of them says to the other is frequently nothing but an expression of opinion.  The statement of such an opinion is in a sense a statement of a fact, about the condition of the man's own mind, but only of an irrelevant fact, for it is of no consequence what the opinion is.  But if the facts are not equally known to both sides, then a statement of opinion by the one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion ....”
92.	It is important to remember, however, that the content of the statement must be viewed in its context, and must be read in the way that a reasonable person in the position of the party receiving the statement would read it, bearing in mind the knowledge that that party has.  In this case, part of the relevant context is that the relevant parties, Petromec and Petrobras, were engaged in a negotiation.  In such circumstances, the case of Walford v Miles [1992] 2 AC 128 emphasises that, whether any reliance can be placed on the statement, whether there can be any legally enforceable duty in relation to what was said, are all matters which are coloured by the fact that the parties are in negotiation.  In such a case, each party is entitled to look to his own interests and neither owes a duty to the other.
93.	As to the requirement that the representation was made by or on behalf of the defendant, Petromec put its case in two ways.  First it contended that Petrobras was vicariously liable for the deceit of its employees, since their misrepresentations were made in the course of their employment and they had actual or ostensible authority to make the statements in relation to the matters in hand;  see Lloyd v Grace, Smith & Co.  [1912] A.C.  716 at page 725;  Armagas Ltd v Mundogas S.A.  [1986] 1 A.C.  717.  In the alternative it contends that Petrobras itself is directly liable for the deceit, as the alleged knowledge of Mr. Menezes as to the alleged falsity of the statements is to be attributed to Petrobras in accordance with the principles articulated in Meridian Global Funds Management Asia Ltd v.  Securities Commission [1995] 2 AC 500.  As Mr. Persey correctly submitted, a deceit can be attributable to the company itself, if someone who is authorized to speak on the company’s behalf makes a false statement and, although he himself was unaware that the statement was false, those who directed him to make the statement, or allowed it to be made, and were identified for this purpose as being the relevant controlling mind and will of the company,  knew it was false:  see Man Nutzfahrzeuge AG and others v.  Freightliner Ltd.  [2005] EWHC 3247 (Comm), unreported, per Moore-Bick J. at paragraph 156.  Again there was no dispute as to the relevant formulation of the legal principles.  The dispute centred upon their application to the facts.
94.	As to the requirement that the party making the statement knew it to be false, the classic statement of the law on this point is the well-known speech of Lord Herschell in Derry v Peek [1889] 14 App.  Cas.  337, at 374.  That case makes it clear that negligence, or a want of reasonable care in the making of the statement, is not sufficient to ground the tort of deceit, and that the party making the representation must have addressed his mind to the falsity, or possible falsity, of the statement which is being made.  Thus there must be knowledge on the part of the maker of the statement that the statement is untrue, but knowledge in this regard includes "blind eye knowledge", i.e.  knowledge that the statement may not be true and a deliberate decision to fail to inform oneself;  see Manifest Shipping Co Ltd v.  Uni-Polaris Insurance Co Ltd (“The Star Sea”) [2003] 1 AC 469.
95.	Because the cause of action is in tort, the issue is what would have happened had the tort not been committed.  In most cases, the question will thus be what would have happened had the statement not been made.  In certain instances, it may be that the question will be more complex, and it will be impossible for a Court to assume that no statement would have been made.  The case of BHP Billiton Ltd v.  Dalmine SpA [2003] B.L.R.  271 is one such case.  There there was a contractual duty to make a statement, so it could not be assumed that no statement would have been made;  but that is not this case.  In all cases, however, it must be shown that the claimant is worse off as a result of the tort than before the tort;  otherwise a claimant has no claim in tort.  Petromec put its case in two ways under this head.  First, it claims that, on the balance of probabilities, had the allegedly false statements not been made, negotiations would have ensued, which would have led to the agreement of the global payment proposal by the Petrobras Board.  Secondly, it claims damages for loss of a chance to enhance its negotiating position.  Petromec contends that it would have had such a chance, but the misrepresentations in the October Letters caused it to act in such a way (i.e.  by releasing the Platform) as to lose the relevant negotiating position;  thus it contends that the enquiry is as to quantification of the value of that chance.  In response to this, Petrobras argues that Petromec is no worse off as a result of any misrepresentation;  it had its rights under the Supervision Agreement, which it still retains and accordingly it has lost nothing.  Further Petrobras contends that the loss of a chance is not an appropriate approach where it is the actions of both claimants and defendants which are in issue.  Mr. Hancock submits that where, as here, the question is what the defendant would have done in a hypothetical situation such as this one, the better view is that the claimant must prove his case on a balance of probabilities, and he relies upon McGregor on Damages, 17th ed at p.331, fn 42 and North Sea Energy Holdings v.  Petroleum Authority of Thailand [1999] 1 Lloyd’s Rep.  483.  Alternatively, Mr. Hancock submits that if the loss of a chance is the appropriate measure, then there was no real or substantial chance, which is a precondition of recovery.  I shall have to address these rival contentions, if it becomes relevant to do so, if I were to conclude that misrepresentations were indeed made and that Petromec relied upon them.
The position as at 11 October 1999
96.	It is relevant at this juncture to set out the position as at 11 October 1999, based not only on the findings of Moore-Bick J. but also on my own findings.  As I have already said, Moore-Bick J. had to consider whether there was a binding agreement on the terms of the global payment proposal;  he found that there was no such agreement:  see paragraphs 125 to 139 of the Judgment.  He also had to consider a plea of estoppel, based on the October letters which are the basis of Petromec's current claim.  He found that these letters did not give rise to any estoppel:  see paragraphs 145 to 171.  As Mr. Hancock submitted, the judge's findings in these paragraphs are of great importance in the context of the current dispute.  He made clear that he was limiting his findings to the minimum necessary to resolve the disputes before him, because of the existence of this fraud dispute which he was not in a position to address.  Nevertheless, he did make certain findings, and these must bind the parties at least to the extent that they were necessary for the decision of Moore-Bick J. To the extent that they were merely incidental or collateral, they are open to challenge:  Spens v.  Inland Revenue Commissioners [1970] 3 All ER 295 at 301.  In particular, this is material in relation to the letters of 11 and 25 October.  I accept Petrobras’ submission that insofar as the judge found that a case based on promise or representation was ill founded, it is not open to Petromec to challenge this.  It is only insofar as the letters contain misrepresentations of fact that the current claim remains viable.
97.	To summarise, therefore, the position as at 11 October 1999 based on the findings of Moore-Bick J. and on my own findings was as follows:-
i)	Both parties had decided, but at Petromec's instigation, that the Platform should be taken from Quebec to Brazil, in order to complete the works there.  The parties had worked together to enable this to happen, and all was in order to allow this to happen.
ii)	The global payment agreement proposal was with the Executive Board of Petrobras.  As Mr. Efromovich knew, whether this proposal (which involved a variation on the arrangements laid down in the Supervision Agreement) was acceptable was entirely a matter for the Petrobras Executive Board.  He knew that important matters had to be approved by the Executive Board of Petrobras and that Executive Board approval was not a mere formality.
iii)	There had been no agreement in relation to the global payment proposal (even as to precisely what proposal was to go to the Executive Board) reached at the meeting of 17 September, because Mr. Nelson told Mr. Efromovich that he had to check on the uplift.  Mr. Efromovich knew that there had been no such agreement as at 17 September.
iv)	No sums were in fact due from Petrobras to Petromec.  The requisite VO procedure had not been gone through.  
v)	Mr. Efromovich had taken the decision not to arrest the vessel before the meeting of 7 October, which he thought, at that time, was the last before the vessel left Quebec.  The first time any implied threat had been made by Petromec was in its letter of 8 October.  That threat was not made in terms;  it was not made by reference to the negotiated proposal;  and it was not made to the Executive Board.
The fraud claim based on the 11 October letter
98.	On 11 October 1999 Petrobras sent a reply to Petromec’s letter 8 October.  It was signed under the hand of Mr. Jorge, as contract manager, and addressed to Mr. Reis.  In so far as material it provided as follows:
“With regard to your numbered paragraphs 1-3 we would remind you that PETROMEC has requested that the works be concluded in Brazil and we have agreed with that request.
To enter into a contract to transport the P-36 from Canada to Brasil at our expense was settled since the first negotiations of the upgrade contract.
With regard to the amount claimed, a recently negociated [sic] proposal has been submitted to the PETROBRAS board which will be considered during the course of this week.  The agreed amount will be paid as determined by that board meeting.  Consequently, we believe that the schedule for the departure of P-36 should be maintained ….”
99.	The 11 October letter was the product of a number of people.  I find that the facts surrounding its production were as follows.  Petromec's letter of Friday, 8 October 1999 had been sent by Petrobras to its English solicitors, Linklaters, in London, on the same day for Mr. Gibbs, a partner, to draft a response.  Mr. Gibbs' first response, sent back to Petrobras at around 19:37 London time that same Friday evening, was modelled on a proforma he had already produced on 4 October.  However, it was clear that this was not what was needed and Mr. Justi spoke to Mr. Gibbs to explain what was happening in relation to the negotiated proposal.  Mr. Gibbs then produced a second draft which was the basis for the letter of 11 October as it finally went out.  That draft was produced at 20:58 London time, which was 17:58 Rio time.  Mr. Justi then amended the draft slightly on either on Friday 8 or Monday 11 October before sending it on to Mr. Jorge in Quebec (at 10:19 Rio time / 08:19 Quebec time) on Monday 11.  Mr. Justi’s main amendment was to amend the last sentence of the fourth paragraph, to make it clear that it was the Executive Board which would determine what would or would not be agreed.  Mr. Jorge added a paragraph in relation to the transport arrangements, as he had been asked to do by Mr. Justi.  This formed the third paragraph of the letter.  The English in that paragraph is noticeably different to that used in the rest of the letter, which is understandable in the light of the fact that the majority of the letter was drafted by an English lawyer.  The letter was also seen by Petrobras' legal department, although the personnel there had no real recollection of the fact.  The letter was then passed on from Mr. Jorge to Mr. Reis in Quebec.  Mr. Reis in turn then passed it on to the various other interested parties.
100.	I turn now to consider whether Petromec has established the requisite constituent elements of the tort in relation to this letter.
Alleged falsity of the representations
101.	Petromec submitted that the 11 October letter impliedly represented that the global payment agreement proposal was being, or would be considered, by the Executive Board and was expressed in positive terms that did not reflect the reality of the situation.  In particular, Mr. Persey submitted that the letter contained the following statements of fact that were untrue:
i)	First it was alleged that the statement that “the recently negotiated proposal will be considered by the Executive Board during the course of this week” was untrue.  Mr. Persey submitted that it had already been considered by the Executive Board on 7 October and “had been effectively rejected and/or shelved and/or held by the Board” on that date.  Accordingly this was an untrue representation that consideration of the global payment proposal was yet to happen.
ii)	Second, it was alleged that the statement that “the agreed amount will be paid as determined by that board meeting” was untrue.  It was submitted that this was a representation that the amount negotiated under the global payment proposal had been agreed, and that there was indeed an amount agreed to by Petrobras.  In fact, Mr. Persey submitted, there was no agreed amount;  the proposal had already been shelved;  and there was no prospect of the agreed amount either being paid or being determined by the Executive Board.
102.	In my judgment, based on (a) my view as to what a reasonable person in the position of Petromec would understand what was being said to it, (b) Moore-Bick J’s findings and (c) my findings as to what had occurred at the Executive Board meeting on 7 October, as set out above, no false representations were made in the 11 October letter.  As to the first alleged series of misrepresentations, relating to the statement that the proposal would be considered at the next board meeting, I have already found as a fact that the Executive Board did not reject, or “effectively reject”, the proposal at the board meeting on 7 October but retained it for further consideration on the agenda.  Nor do I consider that Petromec has established on the evidence that a decision had been made to "park" or "shelve" the proposal in the sense of leaving it for consideration at some uncertain future date, but not for consideration on the 15 October - the date of the next Executive Board meeting.  In my judgment there is every likelihood that, since Mr. Menezes (who was the Executive Board member who supported and was responsible for the DIP) was not present at the meeting on 7 October, the Executive Board took the practical decision that any further discussion should await his presence at the next meeting.
103.	As to the second alleged series of misrepresentations, relating to the statement that “the agreed amount will be paid as determined by that board meeting”, Moore-Bick J. has already held (a) that Mr. Efromovich was not given to understand by the 11 October letter that there was already agreement on the negotiated global payment proposal, because he knew that there had to be Executive Board approval, which was not a mere formality and (b) that the last sentence of the fourth paragraph of the letter of 11 October did not suggest that there was agreement as to payment of a sum;  the Executive Board had to determine what, if anything, would be agreed.  At its highest, therefore, on its true analysis, the statement was no more than a statement that, whatever sum (if any) the Executive Board agreed to, would be paid.  It was not a representation that any sum would be agreed.  Nor, for similar reasons given in the preceding paragraph of this judgment, is there any basis for the assertion that the statement was untrue because there was no prospect of the agreed amount either being paid or being determined by the Executive Board, because the proposal had effectively been shelved.
104.	Finally, on this topic, in my judgment, the fact that at the time of the letter some of the directors were voicing concerns about the acceptability of the global payment proposal, (as the Petrobras directors and Mr. Justi readily accepted) did not render the statements in the letter that the Executive Board was to consider the matter at the next meeting false.  
Knowledge of the alleged false statements in the 11 October letter
105.	In the circumstances it is not strictly necessary to consider the next stage of the argument, namely which of the Petrobras personnel had knowledge as to the contents of the 11 October letter and the statements made in it.  However, in case this matter goes further, I state my findings on this point, as, if I had concluded differently on the falsity issue, knowledge would have been relevant to the question as to whether Petromec were liable on a vicarious and/or direct basis.  
106.	Petromec's pleaded case is that the fact that these statements were being made was known to Mr. Jorge, Mr. Justi, Mr. Nelson, Mr. Carneiro and Mr. Menezes;  and that each of these individuals (with the exception of Mr. Jorge) knew the statements to be false.  Not surprisingly, it was difficult for all the Petrobras witnesses to recall with any degree of precision what was in their minds or had occurred such a long time ago.  Some aspects of their evidence was unsatisfactory, not least because of varying degrees of difficulty arising from language or translation problems, and inconsistencies between their witness statements and evidence in cross-examination, and, in some cases, inconsistencies between the evidence that they had given at the trial before Moore-Bick J. and before me.  On the whole, however, the conclusion I reached was that they gave their evidence honestly and, with certain exceptions at times, in a manner that was not unduly partisan to their employer, Petrobras.
107.	I find as a fact that Mr. Justi clearly knew that the statements were being made, since, with the assistance of his legal department and Linklaters he had produced the letter of 11 October, which had then been sent on to Mr. Jorge to sign and pass on.  However, if contrary to my previous findings, the statements were false, because the Executive Board had effectively rejected or shelved the proposal on 7 October and there was to be no further consideration of the proposal, then I find that he did not know the statements were false.  His evidence was quite clearly that he believed that the matter was still on the agenda of the Executive Board and that accordingly it would be considered at the next board meeting.  He knew this either because he had been told this by Mr. Nelson;  or because he simply assumed this to be the case in the light of the fact that he had not been told that the Executive Board had accepted or rejected the proposal.  Mr. Justi also knew that the Executive Board had expressed some concerns about the proposal in the past.  However, he did not know the nature of the concerns and he certainly did not understand that this meant that the proposal would not be accepted or indeed even considered.  He thought that the proposal would be accepted, although he himself had doubts about the advisability of accepting it.  However, I accept that Mr. Justi was doing his best to give me a truthful account of what he recalled of the matter.
108.	Mr. Nelson may well have known of the threat to the vessel, but I accept the evidence of both Mr. Justi and Mr. Nelson that Mr. Nelson did not see, or have any part in the drafting of, the 11 October reply, so Mr. Nelson did not know what was actually being said.  But I do conclude that he is likely to have known in general terms the thrust (but not the specifics) of what Mr. Justi was going to say, and that Petromec were going to be given some sort of comfort, simply because of the close communication between them.  Mr. Justi’s evidence moreover was that Mr. Nelson was aware that Mr. Justi proposed replying to Petromec’s letter with the assistance of the legal department.  Mr. Nelson referred in his witness statement to Mr. Justi having told him “in mid-October” (whilst he was in Mr. Musa’s room in SEGEN’s offices) that Mr. Efromovich might try to keep the vessel in Quebec following which Mr. Nelson telephoned Mr. Efromovich..  Mr. Efromovich and Mr. Musa also recall this conversation, although there is disagreement as to precisely what was said and when the conversation took place.  Petrobras contends that it took place on Friday 8 October, whereas Petromec contends that it took place on Friday 22 October.  Whatever the date, it is evidence of the sharing of information between Mr. Justi and Mr. Nelson.  However, even if Mr. Nelson did see the 11 October letter before it was sent I conclude that he did not know that what was being said was false (even if, contrary to my previous findings, it was false).  Thus, whilst he was aware that the Executive Board had concerns, I accept his evidence that he believed as at this date that the global payment proposal was before the Executive Board and that there was a real prospect that the Executive Board would consider and approve it at its next meeting.  It was only later that he came to think that it might not.  
109.	I accept Mr. Carneiro’s evidence that he was not shown the letter of 8 October, and was not involved with its drafting.  Moreover, what was said in the letter was wholly consistent with his state of knowledge.  I accept his evidence that he understood the proposal to be before the Executive Board and assumed it was retained on the agenda to be considered by the Executive Board at its next meeting.  Although he was aware that the Executive Board had concerns, he did not understand this to mean that the proposal would not be accepted.
110.	At the previous trial in 2003 Mr. Menezes gave the following evidence in response to a question from the judge:
“Q.	Can I just ask, Mr. Menezes, did you know at the time that this letter was being sent?
A.		I think in this case I have to say yes."
However, his evidence in this trial was that this answer had been a mistake and that
“what I meant was that I had to say “yes” because as the Director who oversaw the operations of SEGEN I felt that I had to take responsibility for the SEGEN staff.  I felt that if anyone was to be criticised for the 11 October letter it should be me.  However, I should make it clear that I did not see or hear anything about the 11 October letter at the time and I was not aware it was being sent.”
Not surprisingly, Mr. Menezes was closely cross-examined about the change in his evidence by Mr. Persey, who suggested to Mr. Menezes that he not only saw this letter at the time, but also was well aware about the response that Petrobras was giving to Petromec.  Although the change in his evidence was  unsatisfactory, having heard extensive cross-examination of Mr. Menezes on this point, and observed his demeanour in the witness box, I came to the conclusion that he was indeed telling the truth and that the explanation for his earlier evidence was genuine.  I conclude that he did not see the letter at the time and was not concerned with its drafting.  But even if this were conclusion were wrong, and he had indeed known about, or seen, the letter before it was sent, there was nothing in the letter which was inconsistent with his understanding of the position.  Thus he had been away at the time of the Executive Board meeting on 7 October when the matter was first before the Executive Board, but his evidence was that he understood that the matter had been maintained on the agenda and that his understanding was that it was thus to be considered on 15 October at the next Executive Board meeting, when he was going to be present.  He too was aware that the Executive Board had concerns, but it was only much later that he was finally persuaded that the proposal should not be agreed.
111.	Accordingly I conclude that, given that Mr. Justi was clearly authorised on behalf of Petrobras to send the 11 October letter, any statements contained in it were clearly statements made by Petrobras and for which, if they were tortious, it was legally responsible, both on a direct and on a vicarious basis.  However, I hold that none of the Petrobras personnel who are alleged to have had knowledge of the alleged falsity of the statements did have any such knowledge, even if, contrary to my earlier finding, the statements were false.
Intention to rely / inducement
112.	If it were relevant, it is clear that Petrobras intended that Petromec should rely on the 11 October letter.  Mr. Justi was clearly concerned, in the light of Petromec’s letter dated 8 October, that Petromec should comply with what he regarded as its contractual obligations to ship the Platform to Brazil, and that Mr. Efromovich should not attempt to delay the Platform leaving Quebec as part of any tactical negotiation.
Was Petromec influenced/induced by the alleged misrepresentation in the 11 October letter?
113.	Again, in the light of my above findings, it is not strictly necessary to consider the next stage of the argument, namely whether Petromec was influenced or induced by, or otherwise relied upon, the alleged misrepresentations in the 11 October letter.  However since I heard a considerable amount of evidence about the matter, and the chronology leads into the facts surrounding the later letter of 25 October, it is right that I should state my conclusions on this point.
114.	Mr. Efromovich contends that Petromec regarded the letter of 11 October as an assurance that the global payment proposal would be considered by the Executive Board during the course of that week and would then be finalised.  He gave evidence to the effect that he and others at Petromec were highly encouraged by the terms of the letter and that, if the 11 October letter had not been received, he would have “pulled the trigger” and Petromec would have held the Platform in Quebec and not have allowed it to proceed under tow for Sept Iles.  In fact the Platform left Quebec on the evening of 12 October and passed under the hydroelectric cables in the early morning of the 13 October.  The Platform arrived at Sept Iles at 0810 on 16 October 1999.
115.	Mr. Efromovich’s evidence both in his witness statement and in his oral evidence was to the effect that, absent a positive reply to his letter of 8 October, he had decided to implement Plan B, namely detain the Platform in Quebec and finish the work there.  He was, however, extremely vague about the detail of such a plan, or the basis of any proposed detention, or when he had made any such decision.  He said he would have left the practicalities of how this should be achieved to Mr. Hawksley and others and that he had simply instructed Mr. Hawksley to make the necessary arrangements against the contingency that Plan B would be adopted.  Mr. Hawskley gave evidence, which I accept, that by 11 October he had given consideration and taken advice in relation to a number of possible methods of detaining the Platform.  These included the exercise of a contractual right to have the upgrade works finished in Quebec;  the exercise of a possessory lien on the Platform;  the arrest of the Platform;  the obtaining of an order of "saisie conservatoire" on the Platform;  and possible refusal to cooperate further, but with no positive steps taken to detain the vessel.  He had taken the advice of Canadian counsel, Mr. Cullen, but it was clear from Mr. Hawksley’s evidence (a) that Mr. Efromovich  would be the decision taker as to whether any such steps should indeed be taken;  and (b) that the exercise of a contractual right to have the upgrade works finished in Quebec became for Mr. Hawksley  the preferred option, as he and Mr. Cullen both appreciated that an arrest, the exercise of a possessory lien, or an order of saisie conservatoire would have had no more than a temporary nuisance value, since, if any of such remedies had been utilised,  Petrobras would have been able to have obtained the release of the Platform against the provision of security, in good enough time to enable it to leave Canadian waters.
116.	Mr. Efromovich probably learnt about the contents of the letter of 11 October some time during the afternoon or evening of that day.  The letter was faxed from Quebec to Rio, to the home of a Mr. Padilla, a Petromec employee.  In Rio, it was the day before a public holiday, and so Mr. Efromovich's evidence was that it was likely that Brazilian employees would be given the day off work.  The fax to Mr. Padilla attaching the 11 October letter was timed at 12:45 Quebec time, or 14:45 Rio time.  Mr. Efromovich could not have seen the letter before this time.  At this time, according to his diary, he was in Rio, with a number of appointments.  From 14:00, Rio time, he was due to be at the Petrobras E&P department;  he was then to meet with Maritima's public relations agency;  and then was due to be back at Petrobras to see Mr. Carneiro at Petrobras from 16:30.  Mr. Efromovich was not clear when or whether he actually saw the letter on 11 October.  He did say that he learnt of its contents  on that day, but he was not sure who told him.  The possibilities, on the evidence are that he saw the letter at Mr. Padilla's home in Rio, but this is unlikely, or that he learnt of the contents from Mr. Padilla.  This is possible;  but the terms in which the contents of the letter would have been relayed are unknown.  The most likely possibility is that he learnt of the letter from Mr. Hawksley, either before or during the conversation that they say they had that evening at some time after six or seven o’clock.  It was Mr. Efromovich’s evidence that by the time that he spoke to Mr. Hawksley on the evening of 11 October, he had still not seen a copy of the 11th October letter.
117.	In his witness statement Mr. Efromovich said that he then had a meeting with Mr. Carneiro at Petrobras’s offices and that the letter was discussed.  But in cross-examination neither he nor Mr. Carneiro could remember anything about this meeting, and I place no reliance on it.  That evening, Rio time, Mr. Efromovich talked to Mr. Hawksley in Quebec.  The letter was discussed.  Mr. Hawksley’s evidence was he regarded the letter as confirming a global payment agreement, not merely confirming that the Executive Board were still considering the matter.  This is of course contrary to the findings of Moore-Bick J. (which are binding on the parties) that the letter did not so confirm.  If, as seems likely, it was Mr. Hawksley who passed on the contents of the letter to Mr. Efromovich, then Mr. Efromovich would have obtained an over- favourable view as to its contents.  
118.	I have carefully considered Mr. Efromovich’s evidence as to what he says he would have done had the statements in the 11 October letter not been made to Petromec.  I reject Petromec’s contention that, had he not received such a letter, by close of business Rio time, he would have given instructions to detain the vessel in Quebec City.  My reasons can be summarised as follows.
119.	Mr. Efromovich was not confrontational or aggressive in his business dealings with Petrobras, nor indeed in the manner in which he gave his evidence.  He presented as a courteous and accommodating man, both in the contemporaneous documents and in the witness box.  He told me that he was a person who preferred to leave a fight to the last minute and to negotiate and resolve problems in an intelligent manner.  It was clear that Mr. Hawksley had been more concerned about whether Petrobras would agree to the global payment proposal than Mr. Efromovich had been.  Mr. Efromovich had been confident that the Executive Board would agree, and, as he said in his witness statement, he was pleased with the letter of 11 October because Mr. Hawksley had said that it proved that Mr. Efromovich had been right all along and that Mr. Hawksley need not have been so concerned.  It simply would not have been Mr. Efromovich’s style to be aggressive with such an important client as Petrobras.  As he said in his evidence in the earlier trial:
“To end of the day, we could not deliver the vessel because it was some job to finish there that we decided to finish in Brazil.  So we could have just said, ‘Okay, we didn’t finish and we stay in’ you know? You could play that game which is not our culture, anyway, but we did not take it too many seriously, and we did not go deeper in this alternative because we had a deal, and we were getting paid.”
120.	The letter was not, on analysis, that significant, because it told him no more than he already knew.  It told him that the proposal had gone before the Executive Board the previous week:  but he already knew that the proposal had gone before the Executive Board on 7 October and had not been accepted or rejected.  It told him that the matter would be considered again that week, but that was what he already understood to be the case, as he had been told that the proposal remained on the agenda, and would therefore be considered again at the meeting of 15 October.  It told him that the Executive Board would pay what it determined should be agreed.  As Moore-Bick J. has found, he knew that only the Executive Board had the power to approve such a proposal, and accordingly, this was also consistent with his understanding absent the letter.  It is not open in the light of Moore-Bick J’s findings for Petromec to resurrect the argument that the letter was a representation that an agreement had indeed been reached.  Moore-Bick J. rejected the argument that Mr. Efromovich thought that an agreement had been reached as a result of that letter and that Petrobras was estopped from contending to the contrary.  Moreover, Mr. Efromovich was sure that the Executive Board would approve the proposal.  This was because his previous experience of Petrobras, gained over many years, was that once those in the higher ranks of SEGEN were content with a proposal, the Executive Board would approve that proposal:  see the Judgment at paragraph 139.  In those circumstances, I consider that, even absent the letter, as at 11 October, he would not have felt a need to put pressure on the Executive Board by detaining the Platform.  
121.	More importantly, I find that he would have been reluctant to have done so for fear of upsetting Petrobras.  That was clearly his position before the meeting on 7 October, when he told me that he did not wish to risk upsetting the Executive Board, before it considered the proposal and he had had the opportunity to see the outcome of the meeting.  As he himself said, there was no reason to do so.  I have already found:  (a) that the Executive Board did not reject, or “effectively reject”, the proposal at the board meeting on 7 October but retained it for further consideration on the agenda at the next meeting;  and (b) that no decision had been made as at that date to “park” or “shelve” the proposal in the sense of leaving it for consideration at some uncertain future date, but not for consideration on the 15 October.  But even if I were wrong in these conclusions, I do not consider that Petrobras had any contractual obligation positively to inform Petromec of these facts, had they indeed been the actual position.  I therefore accept Mr. Hancock’s submission that the correct way to approach the matter, for the purpose of the reliance issue, is to ask oneself the question, what would have happened if nothing had been said.
122.	In my judgment, if Mr. Efromovich had not received the letter of 11 October, or any reply to Petromec’s letter of 8 October, he would, on the basis of his own knowledge, have thought he was in exactly the same position as on 7 October, and would not have wanted to have rocked the boat at a time when he thought that the Executive Board were still considering the matter.  Mr. Persey submitted that there was clear evidence to the effect that the Platform would have been held in Quebec had the 11 October letter not been received.  I disagree.  Although Mr. Efromovich vehemently asserted in his evidence that by this stage he was not concerned about upsetting the Executive Board, and “would not blink” to hold the Platform, I reject what Mr. Efromovich said on this point as unrealistic and self-serving, and inconsistent with his evidence in the earlier trial.  He was also vague on dates.  In my judgment he would never have carried out the veiled threat, which was in any event Mr. Hawksley's idea.  Mr. Hawksley’s evidence was of no assistance on this point, because as he admitted, at the end of the day, the decision would have been taken by Mr. Efromovich.  Even if (contrary to my findings) the statements had been false, because the Executive Board had effectively rejected or shelved the proposal on 7 October and there was to be no further consideration of it pending a full investigation of the contracts by Andersen Consulting, and Petromec had been told something to that effect, I very much doubt that, as at 11 October, Mr. Efromovich would have given instructions for the Platform to have been held in Quebec.  He knew that it was critical to Petrobras that the Platform left before the winter and that preparations had been made for many months to that end.  Had he done so, he would have been upsetting his most important client, upon whose goodwill most of his business depended.  His need to preserve Petrobras' goodwill was even more acute at this stage than it had ever been before.  That was because he had submitted requests for increases in remuneration and extensions of time to the Executive Board in relation to P-37 and P-40.  Those requests had been before the Executive Board since 30 September, and without the extra money and time Maritima and Mr Efromovich would be in still greater difficulties.  I also find that he was very keen to persuade Petrobras to reconsider its decision to cancel the Amethyst contracts, a decision that had been informally communicated to him by Mr. Reichstul on 7 October, the Thursday before.  He still believed that he could get Petrobras to reconsider and indeed drafted a letter in very conciliatory terms a few days later.  He accepted in evidence that a decision by Petrobras to maintain the cancellation would be financially catastrophic for Maritima.  He was also conscious of the fact that the relationship between Maritima and Petrobras, nurtured over many years, was under great strain because of the allegations made in the Press and to the TCU.  To upset the Executive Board at this stage would have worsened matters still further.
123.	He also must have appreciated that to have detained the Platform could have exposed Petromec to potentially huge liabilities, if it was established that there was no entitlement on Petromec’s behalf to do so.  Moreover, if he had detained the Platform he would have had to pay for winterisation, wharfage, crewing costs and the other expenses of the upgrade.  But it was common ground that Petromec had no resources with which to do so.  All these considerations point to the conclusion that Mr Efromovich was not induced by the letter in his decision not to attempt to detain the Platform.
Damages
124.	In the circumstances it is not necessary for me to consider the next stage of the argument, namely whether Petromec suffered loss as a result of the alleged deceit in the 11 October letter, and, if so what was the quantum of that loss.  I should however identify the arguments and express my general conclusions in certain respects.  As I have already mentioned in paragraph 95 above, Petromec puts its case in two ways under this head.  First, it claims damages based on the balance of probabilities on the basis that, had the allegedly false statements not been made, negotiations would have ensued, which would have led to the agreement of the global payment proposal by the Executive Board.  In the alternative, it claims damages for loss of a chance to enhance its negotiating position with Petrobras.  Again, as I have already mentioned above, Petrobras' response is that the loss of a chance is not an appropriate approach here, and that the better view is that the Claimant must prove his case on a balance of probabilities and Mr Hancock relies upon McGregor on Damages, 17th ed at p.331, at fn 42 and North Sea Energy Holdings v.  Petroleum Authority of Thailand [1999] 1 Lloyd’s Rep.  483.  Alternatively, Mr Hancock submits that, if the loss of a chance were the appropriate measure, then there was, on the evidence, no real or substantial chance of Petromec improving its negotiating position by the threat, or the implementation of a threat, to detain the Platform in Quebec.  The basis for that argument is that, in reality, Petromec had no effective legal rights or remedies under Canadian law, whether contractually or otherwise.  In summary, Mr Hancock submitted, that was because:
i)	It had no contractual right to detain the Platform (Mr. Hawksley’s preferred remedy), and, even if it had purported to have done so, it would have been a breach of Petromec’s obligations under the Quiet Possession Agreement.  Moreover, it was not clear how Petromec envisaged this would in fact work in practice, since if, as Mr. Hawksley seems to have envisaged, the tugs were simply sent away, that would have left it open to Petrobras to reengage them, and to make the necessary arrangements for the trip to Brazil itself.  And, unless Petromec took some positive step to stop Petrobras, it could simply have taken over, as Mr. Loureiro's (unchallenged) evidence shows.
ii)	Petromec had no possessory lien not least because it did not have possession;  but even if it had had such a lien, it would have been a breach of Petromec’s obligations under the Quiet Possession Agreement for Petromec to have exercised such a lien.
iii)	That even if it had purported to exercise an alleged contractual right or possessory lien, it was common ground between the experts on Canadian law that that it would have been possible for Petrobras to have applied for an injunction to require redelivery of the Platform to Petrobras and that the tests that would have been applied by a Canadian Court on such an application were (i) that there was a serious question to be tried that Petromec was not entitled to exercise any such right or lien;  (ii) whether Petrobras would suffer irreparable harm, if the relief were not granted;  and (iii) whether he balance of convenience would favour the grant of relief in favour of Petrobras.  Those tests would all have been determined in Petrobras’ favour because the harm that would be suffered by Petrobras, if the relief were not granted and its claim were correct, would be, possibly, hundreds of millions of dollars caused by Petromec's wrongful interference with its goods and/or breach of contract, which it would have to pursue against Petromec, a special purpose vehicle whose only assets would be the hire accruing over the period of the charter, clearly insufficient to meet the claim.  Accordingly the balance of convenience would clearly favour the grant of relief, since, if Petrobras were wrong, its cross-undertaking in damages or security would be sufficient to meet any claim by Petromec.  
iv)	That so far as remedies such as arrest were concerned, it was common ground between the experts that such an arrest would have been lifted if security had been given in an acceptable form:  and that an application in this regard could have been made in 2-3 days.  There was no dispute that Petrobras would and could have provided the requisite security and Mr. Hawksley accepted that as "nuisance value" went, the threat of the exercise of such a remedy was not great.
125.	In my judgment, in the light of my previous findings as to the absence of any misrepresentation, deceit or reliance, it would be a wholly academic exercise for me to resolve, on a hypothetical basis, these various factual and legal issues in relation to the issue as to what damage (if any) would have been caused by the 11 October letter, and to resolve what is apparently an unresolved issue of law as to the approach to the quantification of that loss.  I do not propose to do so.  However I should say, that had it been necessary, I would have made at least the following findings of fact:
i)	As agreed in the evidence of the navigability experts, as at 11 October, there were a further three windows for the movement of the Platform from Quebec City to Sept Iles which would have involved acceptable risk;  and a fourth which was possible but which would not have been advised.  Accordingly, the Platform could have been moved safely at any time up to 17 November 1999.  Movement from Sept Iles was possible up until the end of November 1999.  Accordingly, Petrobras had at least five weeks in which to apply to the Court, if necessary, to obtain the relevant orders and to make the necessary arrangements for the Platform to be released, and more if the Court had authorised the movement of the Platform to Sept Iles, thus avoiding the problems caused by the need to pass under the hydroelectric cables.  As regards the practical considerations involved in arranging the transit to Sept Iles and dealing with the various outstanding matters, the unchallenged evidence of the Petrobras witnesses, in particular Mr. Loureiro, was that Petrobras could have organised such matters.
ii)	Having reviewed the evidence of the Canadian experts as to the timescale involved, I would have concluded on the balance of probabilities that, in an extremely urgent situation such as would have arisen in the event that Petromec had attempted to detain the Platform in Quebec, the Canadian Court could and would have dealt with the matter in a matter of 2-3 weeks, and certainly in sufficient time to enable the Platform to reach Sept Iles in sufficient time to leave Canadian waters before the end of November.
iii)	Having regard to the unchallenged evidence (on this point) of Mr. Reichstul and Mr. Menezes, I would have concluded that Petrobras would have taken an extremely tough line with Petromec, had the threat been implemented, and would have availed itself of all legal remedies available to it at law, taking account of the timescales involved, to secure the release of the Platform.  This would have included the taking of legal advice, probably from Linklaters and their correspondent firms in Canada.  I accept, on this point, Mr. Menezes’ unchallenged evidence in his witness statement:
“I have been asked what steps Petrobras might have taken if Petromec had tried to detain P-36 in Quebec before the Canadian winter in 1999.  If Petromec had tried to do this it would have been a complete surprise to me, however, I am certain Petrobras would have used all of the means available to it to secure the release of the vessel.  Whether this would have included putting up security in a Canadian Court or other steps I cannot say.  I can say, however, that all legal and practical means would have been used and it would not have been a question of money as Petrobras would have needed to ensure the release of the vessel to avoid any further delays in production.”
iv)	Mr. Reichstul and Mr. Nelson gave evidence to similar effect which I accept.  Mr. Reichstul also expressed the view that he would have had a concern about his potential personal liability for sanctions or penalties if Petrobras entered into a global payment agreement in circumstances of duress.  Mr. Reichstul’s unchallenged evidence was:
“More importantly, I would interpret a threat by Maritima to refuse to allow P36 to leave until it had received payment as blackmail.  It would have been impossible for any director, and particularly a director of a public company such a Petrobras to give in to such threats.  Every board decision and financial transaction comes under close scrutiny by both the Petrobras internal auditors and by the government auditing authority, the Tribunal de Contas da Uniao.  Therefore the board could not have given in to such a threat by Maritima even if we had wanted to.  I understood we would have personally faced criminal penalties for giving in to blackmail.”
v)	As I have already said, Mr. Reichstul was an impressive witness and obviously a very shrewd businessman.  He did not strike me as the type of person, who, in the event that a threat to detain the Platform had been made, would have meekly complied with a request by Mr. Efromovich to negotiate in order to reach a mutually acceptable solution.  In my judgment, given the relative strengths and weaknesses of Petrobras’ and Petromec’s respective positions, it is far more likely that Mr. Reichstul would have taken aggressive legal action to have secured the Platform’s release.  Similarly, Mr. Menezes’ unchallenged evidence was:
“The most serious implication of what German is now saying is that he would not have released P36 unless we, the directors, authorised the payment of money.  To me, this is a threat of blackmail.  German had worked with Petrobras for many years.  He understood that, as a public company, any Board decision approving such a financial transaction would have been subject to close scrutiny by the auditors.  Both the internal Petrobras auditors and the Brazilian National Auditing Authority would have examined these payments.  Payments would have been examined even more closely at that time because the problems with the Maritima platforms were public knowledge and being reported in the newspapers.  We could never, and would never, have approved this kind of payment under a threat of blackmail.  We would have been worried about the personal consequences for ourselves if we had done.”
vi)	Mr. Persey relied upon the fact that the SEJUR opinion attached to the DIP identified no legal impediments to approval of the negotiated proposal.  However, the question of whether SEJUR was content to recommend the global payment agreement proposal, and considered that it was valid, is a different question from that as to whether the directors would have been concerned as to the legal consequences of submitting to blackmail.  The question of duress was not in issue when the SEJUR opinion was produced on 5 October.  
vii)	It follows that I would have found that, if the threat had been implemented, Petrobras would most likely have taken injunction proceedings in the Canadian Courts to obtain the release of the Platform from Quebec, that it would have succeeded in so doing, and that it would not have negotiated the conclusion of a global payment agreement either on the terms negotiated between Mr. Efromovich and Mr. Nelson on 17 September or on the indicative terms set out in the DIP.  
126.	That being so, and whichever is the correct approach to the quantification of damage, (whether on the balance of probabilities or the valuation of a loss of a chance), and whether or not any detention by Petromec would have been in breach of the Quiet Possession Agreement, or constituted a tort, I would have concluded that Petromec had not established that it had suffered the loss claimed in this part of the action based on the alleged misrepresentations in the 11 October letter.  That loss was described in Petromec’s closing submission as follows:  that because Petrobras would have entered into the global payment agreement with Petromec, the latter would have received payment according the formula set out in the DIP, the monies advanced to Petromec under the DOPI would have been set off against sums due to Petromec and none of the claims brought by Petromec in this action would have been brought.  In my judgment, the likely outcome would have been that Petromec would have been left with its rights and obligations under the Supervision Agreement, the DOPI and the other existing agreements, and any chance of its negotiating a better position as claimed would have been speculative in the extreme.  In such circumstances I would have held that Petromec’s claim also failed at this stage of the argument.
The events between 12 and 25 October 1999
127.	I turn now to consider the claim made in relation to the 25 October letter.  It is first necessary to summarise the relevant events leading up to the sending of that letter.
128.	The vessel proceeded to Sept Iles, arriving there on Saturday 16 October.  Inclining tests began on Sunday, 17 October and were successfully completed at 02:00 on Monday, 18 October.  At that point, the Platform was ready to leave Canada, and was waiting only for the arrival of the Mighty Servant.  The Mighty Servant had originally been scheduled to arrive on 21 October, but on 13 October, her ETA was put back to 24 October.  During this week (from Tuesday 12 to Saturday 16 October), Mr. Efromovich was travelling.  He did not take any steps in this week in relation to the Platform, but simply awaited the outcome of the Executive Board meeting.
129.	On Friday 15 October, the Petrobras Executive Board met again.  There is an issue as to whether, and to what extent, the Executive Board considered the global payment agreement proposal at this meeting.  Mr. Persey invites me to find that the matter was not discussed at all;  Mr. Hancock invites me to find that the proposal was discussed, but that, as at the 7 October meeting, the Executive Board did not reach any conclusion one way or another.
130.	The contemporaneous documents show as follows.  
i)	Apparently, Petrobras has not been able to locate the agenda for the 15 October meeting.  However, the agendas for each of the successive Executive Board meetings from 21 October 1999 until 13 April 2000 were disclosed and each such agenda shows clearly that the global payment agreement proposal in relation to the Platform was listed on the agenda as Docket number 948 which was circulated to the Directors before each board meeting.  I accept that the likely inference is that the same was the case in respect of the agenda for 15 October;  i.e.  that it was listed on the agenda as one of the items to be considered.  
ii)	The Minutes for the meeting on 15 October do not record any decision or discussion of the Executive Board in relation to Pauta 938, although the Posicao des Pautas does record that the matter was retained on the agenda.  However I accept Mr. Coelho’s evidence that the practice by this stage was not formally to record in the minutes a decision further to maintain an item on the agenda, if an item had been so maintained at an earlier meeting, and no actual decision to approve or reject the item had been taken at the meeting.  I also accept his evidence that the fact that there was no minute of any discussion in relation to an item that was maintained for the second time, did not mean that there was no discussion of the matter before the decision was taken further to maintain the item on the agenda for the next meeting.  Mr. Coelho, who frankly (and not surprisingly) said that he could not remember what actually was discussed at the meeting, gave his evidence in an entirely honest and straightforward fashion and I have no reason to doubt his account of procedures.
131.	In my judgment, having heard the relevant evidence of the witnesses, it is likely that there was some discussion and consideration of the matter at the meeting on 15 October, since it was the first time that Mr. Menezes was present, after the initial presentation of the proposal at the previous meeting.  I find that the Executive Board did not reach a conclusion one way or the other and that a decision was taken to maintain the matter on the agenda, without addressing the issue whether the proposal should be accepted or rejected, pending further consideration of the whole Maritima situation.  I accept Mr. Reichstul’s and Mr. Menezes’ evidence in this respect and do not find it surprising that there was a discrepancy between the latter’s evidence at the 2003 trial and his evidence before me, because, when he gave his evidence at the earlier trial he had not appreciated that he had not been at the meeting on 7 October.  Likewise Mr. Reichstul’s evidence, which I also accept, was that it was not until January 2000, when the Platform was added to Andersen Consulting’s work scope, that the Executive Board finally came to the conclusion that the global payment solution was not feasible.  Mr. Coelho’s evidence was that it was very unlikely that there would not be any discussion at a board meeting of an item which was on the agenda for that meeting.
132.	Mr. Efromovich learnt very rapidly indeed of the result of the Executive Board meeting from his unknown contacts within Petrobras.  By Sunday 17 October after his return from his travels, he knew of the result of Friday's Executive Board meeting, and that the proposal had not been given what he referred to as the necessary rubber stamp but had been “parked.” He said in answer to a question from the Court:
“What did you think the board had done;  when you said ‘did not address this matter’, did you think the board had considered the proposal and rejected it, or that they had not reached it as an agenda item, or they had parked it for a future day?
MR EFROMOVICH:  Rejected it is not possible because that would be published.  Parked it is more likely but rejected it for sure, not.  Because otherwise there would be a formal –
MRS JUSTICE GLOSTER:  Decision of rejection?
MR EFROMOVICH:  Yes, this is the way it worked.”
133.	Moreover, it was clear from his evidence that he was not interested in whether the matter had actually been discussed or considered at the Executive Board meeting, or in what depth.  What mattered was whether the proposal had been formally approved or rejected.  As he said in cross-examination:
“We did not go into the details…about what they discussed in the board and we would not ask.  It does not matter.  The only thing that mattered to us is;  are they authorising to write the cheque or not;  this was the bottom line.”
That is an important answer when one comes to consider whether misrepresentations were made in the 25 October letter and the issue of reliance.
134.	Mr. Persey suggested that certain matters were inconsistent with the evidence of the Petrobras witnesses that the global payment agreement proposal had in fact been discussed at the meeting on 15 October.  These were;
i)	a telephone conversation which Mr. Reis had with, as he recalled, Mr. Loureiro of Petrobras, in which the latter advised him that the matter had not been discussed at the Executive Board.  Mr. Loureiro disputes this and says that although he was effectively standing in as project manager in the absence of Mr. Jorge on vacation, he was distant from the commercial discussions when at Sept Iles;
ii)	a conversation to the same effect which Mr. Hawksley had with Mr. Reis, which prompted him to prepare the draft response of a letter sent by Petromec on 18 October in the following terms:
“… We have complied with your request to maintain the schedule for the departure of the P-36 to Brazil in reliance on the assurance in your letter that the recently negotiated proposal would be considered by your board during the course of last week and that the agreed amount would be paid as determined by that board.
We had every expectation that the board would instruct that the payment be made in accordance with the agreements between us.
We are naturally concerned to find out that the board did not address this matter and we therefore have no assurance that the amounts due to us will be paid in a timely manner …
We will continue with the trials of the P-36 at Sept Iles but consider it appropriate that all matters are agreed between us in writing before the P‑36 is loaded onto the Mighty Servant for transportation to Brazil.  We trust you will be able to obtain any authority you require for this from your board this week ...  ”
and
iii)	a draft reply to the letter (which in its final form became the 25 October letter) prepared by Mr. Gibbs, of Linklaters, on the basis of information received from Mr. Justi, which stated that the proposal “was submitted to the Petrobras Executive Board last week but did not receive the Executive Board’s attention”.  Mr. Justi, however, altered that wording when he received the draft to “is still being analyzed by the Board”.  This submitted Mr. Persey, was because he appreciated that the original draft risked “giving the game away”.  
135.	I reject these submissions.  First of all the concept of “not addressing” the proposal is apt to describe the state of affairs where the Executive Board discussed the matter, but decided not to address the proposal in the sense of approving it or rejecting it, but rather simply to maintain it on the agenda.  Second I prefer the evidence of Mr. Reichstul and Mr. Menezes, for the reasons already given.  Third, it was in any event clearly an irrelevant consideration for Mr. Efromovich, whether or not there had been discussion or consideration before the proposal was parked.  What mattered to Petromec was whether it had been addressed in the sense of being formally approved or rejected.
136.	Petromec’s 18 October letter was sent to Rio on Tuesday 19 October.  Again, Mr. Justi, as he had done before, passed the letter on to the legal department for a response to be drafted with the assistance of Linklaters.  On Wednesday 20 October, Mr. Hawksley was back in contact with Mr. Cullen, to whom he had not spoken on this subject since 11 October.  In his email of that date Mr. Hawksley said that:-
"We may still need to keep the vessel in Quebec because Brasoil did not make a board decision as promised last week.  I will email you an update for your opening tomorrow in case you need an affidavit from Otoniel"
137.	The position at this point was therefore as follows.  The Mighty Servant was due to arrive at Sept Iles on Friday 22 October.  The next Petrobras Executive Board meeting was due to take place on Thursday 21 October, in Rio.  This would be the last Executive Board meeting before the Platform was loaded on board for transportation to Rio, at which point the die would be cast, as by that stage there would have been no practical possibility of Petromec detaining it.  It is clear (as has been found by Moore-Bick J.) that Mr. Efromovich knew perfectly well that without Executive Board approval there was and could be no agreement.  Other matters were due to be considered at the Executive Board meeting on 21 October.  A DIP submitted by the Exploration and Production department (E&P) proposing authorisation by the Executive Board for continuance of the purchase and contracting processes required to install and begin the Platform, P-47, P-38 and P-40 production was considered and approved.  At this stage Mr. Efromovich still hoped to persuade the Executive Board to change their minds on the question of the Amethyst rigs.  Indeed, on 13 and 22 October, Mr. Efromovich had written personally to Petrobras requesting reconsideration of the decision to cancel Amethyst 4, 5, 6 and 7 (which had been taken on 7 October).  As I have already mentioned, Mr. Efromovich regarded Petrobras’s decision to cancel the Amethyst rigs as “extremely important bad news” which was “catastrophic” for Maritima and which could bankrupt it.
138.	Mr. Cullen was not contacted again on the morning of 21 October.  Mr. Efromovich says that no decision was taken on this day, although I find this somewhat surprising if there had been a real intention to detain the vessel.  Certainly Mr. Cullen’s evidence was that Mr. Hawksley’s e-mail of 20 October took him by surprise, and that his reaction at the time was “there go the next two days”.  Mr. Cullen’s evidence was that if Petromec was going to take steps, he needed a decision by 21 October in order to “gear up really quickly” and rope some more people in to assist.  He clearly envisaged that some sort of court proceedings would be inevitable, if a decision were taken to detain, because he had concerns about whether Petromec could still assert a repairer’s possessory lien by the time the Platform was in Sept Iles, and he was thinking more along the lines of a saisie conservatoire.
139.	On Thursday 21 October, the Petrobras Executive Board met again and considered the global payment agreement proposal.  Once again, although there was no formal minute recording any discussion of the proposal, the Posicao da Pautas recorded that the matter was left on the agenda for the next meeting.  Once again, it seems that Mr. Efromovich rapidly learnt of the decision and the fact that the Executive Board had not approved or rejected the global payment agreement proposal, probably by 22 October.
140.	I find on the balance of probabilities that on Friday 22 October there was a further telephone conversation, between Mr. Nelson and Mr. Efromovich.  Mr. Nelson sought to place this conversation before the departure of the Platform from Quebec City on the 11 October, although he said that he could not really remember.  Until the oral evidence of Mr. Nelson it had been common ground between the parties that the conversation had happened after receipt of Petromec’s letter of 18 October.  This was Petrobras’ pleaded case and Mr. Efromovich was cross-examined on that basis.  It was common ground (a) that Mr. Efromovich, who was at home, was telephoned by Mr. Nelson, who was with Mr. Justi and Mr. Musa (although Mr. Justi asserts that he cannot remember this conversation) and (b) that Mr. Nelson was aware of the threat to detain the Platform and sought to persuade Mr. Efromovich not to do so.  It is clear that Mr. Nelson urged Mr. Efromovich not to detain the vessel.  Mr. Efromovich said that he was told that he would not get paid if he detained the vessel;  Mr. Nelson said that he warned Mr. Efromovich that if he detained the vessel then it would be much more difficult for the Executive Board to look favourably on Maritima's proposals.  The difference of emphasis is perhaps not surprising, given the passage of time and the respective perspectives of each party.  Mr. Efromovich said he was told that he would be paid if he did not detain the vessel, but Mr. Nelson denied that Mr. Efromovich was told this.  But even if Mr. Nelson had made a statement to such effect, Mr. Efromovich would have known, as Moore-Bick J. held, that he needed to hear from the Executive Board in this regard.  It is not necessary for me to resolve these slight differences in recollection.  
141.	On the morning of Sunday 24 October, the Mighty Servant arrived at Sept Iles and all was ready for the departure of the vessel.  Meanwhile, during this period, what was to become the letter of 25 October 1999, was being drafted by Mr. Justi, Mr. Gibbs and the Petrobras legal department.  It was signed off as approved by SEJUR on 22 October and it was received in Quebec by Petromec on the morning of 26 October.  Arrangements for the loading of the vessel on to the Mighty Servant had by that time already begun.  The loading process was a complex one, and was to an extent weather dependent.  On Tuesday 26 October, at 03:00 hours (Quebec time), the decision to start loading had been taken and ballasting commenced immediately.  Loading continued during that morning.  This was how matters stood when the letter of 25 October was sent on to Mr. Efromovich (copied to Mr. Hawksley and Mr. Reis) by a Mr. Chachamovitz of Davie in Quebec at 09:39 Quebec time on Tuesday 26 October.
The fraud claim based on the letter of 25 October
142.	The letter of 25 October was signed Mr. Justi in the absence of Mr. Jorge and was in the following terms;
“… The negotiated proposal was submitted to the Petrobras board last week and is being analyzed by the board.  The matter will hopefully be finalized by the board in the near future
We will pursue the matter of payment with the Petrobras board and look forward to receiving your confirmation that matters will proceed on schedule …”
Falsity of representations
143.	Petromec contends that four statements in the letter were untrue.  It submits 
i)	that the statement that “the negotiated proposal was submitted to the Petrobras Executive Board last week” was false because the proposal had been already been considered by the Executive Board, it had not been submitted to the Executive Board last week (i.e.  on 21 October) and had been effectively rejected and/or shelved ;  
ii)	that the statement that the negotiated proposal “is still being analyzed by the Board” was false because there was no such further analysis;
iii)	that the statement that the matter “will hopefully be finalized by the Board in the near future” was false because there was could be no objectively reasonable hope that the matter would be finalised in the near future;  and
iv)	that the statement that “we will pursue the matter of payment with the Petrobras Board” was false because there was no intention on the part of the SEGEN team to pursue the matter of payment with the Executive Board,  because the Executive Board had already effectively decided to reject and/or shelve the global payment agreement proposal.
144.	In the light of my findings as stated above as to what occurred at the various Petrobras board meetings, and as to Mr. Efromovich’s knowledge of what occurred, I reject Petromec’s contentions as to the alleged falsity of these statements.
145.	As to the first statement that “the negotiated proposal was submitted to the Petrobras Board last week”, the global payment agreement proposal had first been before the Executive Board on 7 October, as Mr. Efromovich knew perfectly well.  But it is also true that it had been before the Executive Board on 15 October and 21 October.  So the statement that it was submitted to the Executive Board the previous week was true, if perhaps not felicitously expressed.  What Mr. Justi meant, as he said in evidence, was that “I refer to meetings that were held previously, since the matter continued on the agenda” and that he was “referring to the previous meetings, not necessarily to one or the other”.  That was not an incorrect statement as Mr. Efromovich knew, and he, and any reasonable man in his position with his knowledge, would have so read the statement.
146.	As to the second statement that “[the global payment agreement proposal] is still being analysed by the Petrobras Board”, it was certainly not correct that the Executive Board had instructed SEGEN or anyone else to conduct any further appraisal of the proposal or to carry out any further research or analysis, and there are no board papers to suggest any such thing.  But the matter was still being analysed by the Executive Board in the sense of being considered by it and, in that sense, was true, if not felicitously expressed.  The Executive Board continued to discuss the proposal, which it found difficult and it was not unusual for decisions to take several weeks.  This was not an easy decision, as Mr. Reichstul explained in evidence and various Executive Board members had various concerns.  So, irrespective of any point as to Mr. Justi’s actual knowledge of Executive Board deliberations, I do not find that, taken in context, the statement was false.
147.	As to the third statement that “[t]he matter will hopefully be finalised by the Board in the near future”, on any view, that was a statement of hope on the part of the person signing the letter, namely Mr. Justi.  He did indeed hope that matters would soon be finalised, as did the rest of SEGEN for various reasons.  Indeed there continued to be hope as long as the Executive Board did not decide to reject the proposal, and, at this stage, as I have already held, it had not made any decision to do so.  On any basis, this statement could not have been regarded as any representation as to the chances of success of the proposal.
148.	As to the fourth statement “We will pursue the matter of payment with the Petrobras Board", this was no more than a vague expression of SEGEN’s intent to follow up or monitor the position and Mr. Efromovich, or any reasonable man in his position, could not have thought otherwise.  As Mr. Justi said in his witness statement, no-one (especially Mr. Efromovich, who knew how Petrobras worked) could ever have imagined that Mr. Justi or anyone else in SEGEN would tell the Executive Board to hurry up and make a decision, because “that would have been impossible”.
149.	Accordingly, in my judgment, none of the statements in the letter were false, whether one regards them as being the statements of Mr. Justi, for whom Petrobras was clearly vicariously liable, or the statements of Petrobras itself, which clearly was the case since, for this purpose, Mr. Justi was the authorised means of communication.  No doubt the letter was attempting to put a highly favourable gloss on the chances of the global payment agreement proposal being approved by the Executive Board, in order to persuade Mr. Efromovich not to detain the Platform.  I find as a fact that such a possibility was clearly a concern at this time to Mr. Justi, Mr. Nelson and Mr. Menezes, and, no doubt, others within Petrobras.  It may well be that others, such as Mr. Menezes or Mr. Carneiro, would have felt uncomfortable about writing a letter in such positive terms.  But in context I reject the contention that the statements must be characterised as fraudulent misrepresentations.
Reliance
150.	In my judgment it was, in any event, clear from a number of passages in Mr. Efromovich’s evidence that he did not rely on any of the allegedly false statements in the 25 October letter at all.  As set out above, the letter of 25 October was sent on by fax to Quebec on 26 October;  it was then sent on by Mr. Chachamovitz in Quebec to Mr. Efromovich in Brazil, Mr. Hawksley in Guernsey and Mr. Reis in Sept Iles.  Mr. Chachamovitz’s forwarding fax was transmitted at 09:39 Quebec time which was 11:39 Rio time (where Mr. Efromovich was) and 14:39 Guernsey time (where Mr. Hawksley was).  There is no evidence as to when on 26 October they received it, in the sense of actually reading it, though they must have read it on the 26 October, since Mr. Hawksley drafted a reply on that date.
151.	 Mr. Efromovich in fact regarded this letter as a disappointment:  he said he had “a somewhat mixed reaction” and that it did not contain “the precise confirmation that I was seeking”.  By the time he got the letter, he must have already decided to let the Platform go, since the loading process had already begun.  His clear evidence was that the "final deadline" so far as he was concerned was when the Platform was being loaded on board the Mighty Servant.  In fact, if he was going to take any steps, then he would have had to set them in train much earlier, and would have to have postponed the loading:  he did neither, and by the time that the letter was seen by him, the loading process was well under way.
152.	Mr. Efromovich’s own evidence was clearly to the effect that he did not really rely on the 25 October letter:
“MR HANCOCK:  Mr. Efromovich, you told me this morning that the deadline for pulling the trigger, implementing plan B, was when the vessel was loaded on to the Mighty Servant.
MR EFROMOVICH:  This was the original idea, yes.
MR HANCOCK:  And by the time you saw this letter, the loading process was almost complete in Quebec?
MR EFROMOVICH:  Yes, you are -- almost complete now?  I do not know.  I do not know even how it was because I did not follow but, with the phone call on the 27th and the document we had, the comfort we had prior to that, we were ready to release the vessel.
MR HANCOCK:  So, so far as you were concerned, what actually mattered was the letter of 11th October.
MR EFROMOVICH:  The letter of 11th October was for me the confirmation that the board knew about it, the board is going to address it in their agreed value, negotiated value was accepted.”
153.	He fairly and frankly said that, in his mind, the 11 October letter was the crucial letter and that he regarded the letter of 25 October as an extra assurance or comfort.  Thus in cross-examination  he said:
“Q.	You were the person who was going to be making the decision, were you not, as to whether to detain the vessel?
A.		The decision to detain the vessel without any comfort was made already.  We only released it on the 12th because we got a confirmation of our deal.  We just wanted to put some more pressure so we send this other letter, in making sure that, you know -- the only reason we send this other letter and want the confirmation is because, although we had the letter, it was not addressed by the board.  I was not that really terribly concerned because I had the confirmation in writing that the deal was done.
Q.		So in your mind it is the 11th October letter which is the crucial letter?
A.		That is an important letter, yes.”
154.	Moreover, the other considerations which I have already held, in relation to the 11 October letter, prevented Mr. Efromovich from relying on it to reach a decision not to retain the Platform, would also have been equally relevant factors operating on his mind in relation to the 25 October letter.  Thus factors such as his view, based on his long experience of Petrobras, that once SEGEN had been converted, the Executive Board would come round in due course;  his dependence on Petrobras;  the risk that any action in relation to the Platform would jeopardise the negotiations which were ongoing in relation to other rigs;  his culture of non-confrontation;  were all factors which in my judgment meant that he did not in any way  rely on the 25 October letter to make his decision not to attempt to detain the Platform in Sept Iles.
Causation, loss and damage
155.	Likewise for similar reasons as those set out in relation to the 11 October letter, had it been necessary for me to have done so, I would have concluded that Petromec had not established that the allegedly false representations in the 25 October letter had caused it any recoverable loss.
The negligent misrepresentation claim 
156.	In the course of the trial, on day 7, as a result of a question from the Court, Petromec applied for leave to amend to introduce a claim for negligent misstatement.  It may well be that English law is not the relevant law in relation to such a claim;  and no evidence of Brazilian law (the likely contender for the relevant law) was before the Court, because of the lateness of the amendment.  In addition, the relevant limitation period might well be a matter for a law other than English law, and there was no evidence on this, given the time.  The Court was nevertheless asked to consider the claim, on the footing that English law was the applicable law, without prejudice to the right of the Defendants to object to leave being given to amend to introduce the claim on the grounds that the Court did not have jurisdiction or that it was time barred.  
157.	Under this head, Petromec contend that, if, contrary to its primary case, Petrobras were not liable in deceit to Petromec and the allegedly false representations made by Mr. Justi were made by him alone on Petrobras’ behalf and with an honest belief, based on reasonable grounds, that they were true, then Petrobras is liable to Petromec in tort for negligent misstatement.  In other words, this alternative case, is based on the factual premise that Mr. Justi was the sole SEGEN manager aware of the details of the October correspondence.  
158.	In the light of my findings in relation to the deceit claim, that false representations were not made and that, in any event, Petromec has not established its case on reliance, causation and loss, it is clear that any case based on negligent misstatement would also fail, irrespective of issues such as duty of care, breach of duty, contributory negligence and remoteness which might additionally arise in the context of a negligence claim.  Accordingly there is no need for me to consider this claim in any detail.  
Conclusion
159.	It follows that Petromec’s claim fails and must be dismissed.
160.	I am grateful to counsel and solicitors on both sides for the extensive and detailed written and oral submissions that were presented to the Court in this case, both during and after the hearing.  They were of valuable assistance in the preparation of this judgment.  The fact that the judgment does not address all of the numerous issues that arose, and all the submissions that were made in relation to them, does not mean that they were not the subject of careful consideration leading to the conclusions reached in this judgment.
161.	I shall address any consequential matters arising from this judgment and the form of the order after hearing submissions from counsel.c