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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> P & O Scottish Ferries Ltd v Braer Corporation & Assuranceforeningen Skuld [1999] ScotCS 3 (7 January 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/3.html Cite as: [1999] 2 Lloyd's Rep 535, [1999] ScotCS 3, [1999] 2 LLR 535

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On 5 January 1993 the tanker Braer ran aground at Garths Ness, Shetland. A large quantity of oil escaped from the wreck. It caused extensive pollution of the sea. The Government designated and later extended an Exclusion Zone off the west coast of Shetland within which the capture, harvest and sale of fish and shellfish were prohibited. This is one of the numerous actions for statutory compensation for the effects of the mishap.

The pursuers are a company whose activities include the operation of passenger and freight ferry services between Shetland and the United Kingdom mainland. They claim compensation under the Merchant Shipping (Oil Pollution) Act 1971 ("the 1971 Act") in the sum of £682,715 for damage caused by oil contamination resulting from the escape of oil from the wreck.

The first and second defenders are respectively the owner and the insurer of the Braer. The minuter is the International Oil Pollution Compensation Fund.

The action has been debated on the Procedure Roll on the preliminary pleas taken by the defenders and the minuter to the relevancy and specification of the pursuers' claim.

In this case the amended conclusions and the averments as to the Braer mishap and the imposition of the Exclusion Zone are in similar form to those in Skerries Salmon Ltd v The Braer Corporation and Others (1 December 1998, unreported).

The pursuers impute liability to the defenders under sections 1 and 12 respectively of the 1971 Act. The minuter intervenes in the present action by virtue of its entitlement to do so under section 6 of the Merchant Shipping Act 1974 (cf. R.C. 46.9). I discussed the relevant statutory provisions in Landcatch Ltd v International Oil Pollution Compensation Fund ([1998] 2 Lloyd's LR 552) and Skerries Salmon Ltd v The Braer Corporation and Others (supra).

The pursuers' averments as to the nature of their losses are as follows:

The claim is presented under seven heads, namely (1) loss of passenger revenue; (2) loss of on-board sales; (3) loss of commercial trailer traffic revenue; (4) loss of revenue on land-based commercial trailer traffic within Shetland; (5) advertising costs; (6) costs of loss assessors in preparation of the claim, and (7) increased costs of agents' commissions. In the calculation of the claim certain savings made by the pursuers and certain off-setting increases in revenue resulting from the mishap are taken into account.

The detailed pleading of the claim is as follows:

Counsel for the defenders and for the minuter submitted that the present case was on all fours with Landcatch v International Oil Pollution Compensation Fund (supra) and Skerries Salmon Ltd v The Braer Corporation and Others (supra). They argued that, as in both of those cases, the present claim was based upon purely relational economic loss. The claim was irrelevant on that account for the reasons that I gave in my decisions in those cases. The losses on which the action was based did not constitute "damage caused ... by contamination resulting from the discharge or escape" of oil within the meaning of section 1(1) of the 1971 Act; the claim was based on the fallacious view that the section created a right to compensation for any loss that would not have been sustained but for the occurrence of the mishap; the damage relied upon was too remote, and the pursuers had failed to aver any circumstance which created a special proximity such as to entitle them to compensation on the principle in Murphy v Brentwood D.C. ([1991] 1 AC 398, Lord Oliver of Aylmerton at pp. 485-487).

Counsel for the pursuers submitted that in both Landcatch Ltd v International Oil Pollution Compensation Fund (supra) and Skerries Salmon Ltd v The Braer Corporation and Others (supra) my construction of section 1 of the 1971 Act was erroneous; that the section, being based on and implementing a convention, namely the International Convention on Civil Liability for Oil Pollution Damage 1969 ("the Liability Convention"), should be given a broad and liberal interpretation, and that on such an interpretation the section created a liability of indeterminate extent, being a liability for all the losses which, but for the mishap, would not have occurred.

Counsel for the pursuers recognised that their primary submission on the scope of section 1 failed in Landcatch Ltd v International Oil Pollution Compensation Fund (supra) and in Skerries Salmon Ltd v The Braer Corporation and Others (supra). They referred me to the decision of the House of Lords in Stag Line Ltd v Foscolo, Mango & Co Ltd and Others ([1932] A.C. 328). They did not cite that case in the debate in Skerries Salmon Ltd v The Braer Corporation and Others (supra); but the case was referred to in James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd ([1978] AC 141) which I discussed in my judgment. In Stag Line Ltd v Foscolo, Mango & Co Ltd and others (supra) Lord Atkin said:

In the same case Lord Macmillan said:

Counsel for the pursuers said that in the present case, guided by these dicta, they were not attempting to give section 1 of the 1971 Act its broadest possible meaning, but to give it its natural meaning unconstrained by the technical definitions of domestic legal concepts. These dicta supported an interpretation of the section that was based on the wording of the Convention (cf preamble, para 3, " ... uniform international rules ... ") rather than the strict wording of the section itself. Counsel for the pursuers accepted that if a broad and liberal approach produced an interpretation that was apparently at odds with the Convention and its purposes, that interpretation fell to be rejected.

Counsel for the pursuers raised a second point in this case. They argued that the strict approach to statutory interpretation followed by Diplock LJ in Salomon v CCE ([1967] 2 QB 116), to which I referred in Skerries Salmon Ltd v The Braer Corporation and Others (supra), had been overtaken by a subsequent decision. They relied upon the statement of Lord President Hope in T, Petitioner (1997 S.L.T. 724) to the effect that if the court has to construe a statute by reference to a convention, it is to be assumed that the legislation is in accordance with the convention rather than in conflict with it (ibid, at p. 733L).

Lastly, counsel for the pursuers submitted that, in any event, the present case could be distinguished from both Landcatch Ltd v International Oil Pollution Compensation Fund (supra) and Skerries Salmon Ltd v The Braer Corporation and Others (supra) because the pursuers had averred sufficient to entitle them to enquiry on the question whether there was such proximity between themselves and the defenders as to establish liability on the basis of Murphy v Brentwood D.C. (supra). This proximity was said to arise from the fact that the pursuers, according to their averments, provided the only passenger ferry service between Shetland and the mainland and that they operated a freight transport service within Shetland for the conveyance of goods to the ferry terminal at Lerwick.

Counsel for the defenders and for the minuter took objection to three of the heads of claim on the ground that they were so unspecific as not to give fair notice of the pursuers' case. I shall deal with these points at the end of this Opinion.

It is obvious from the pleadings that I have quoted that the pursuers' case closely resembles that of the pursuers in Skerries Salmon Ltd v The Braer Corporation and Others (supra).

Counsel for the pursuers accepted at the outset that the claim is for purely relational economic loss. For the reasons that I gave in Landcatch Ltd v International Oil Pollution Compensation Fund (supra) and in Skerries Salmon Ltd v The Braer Corporation and Others (supra), I consider that section 1 of the 1971 Act does not extend a right to compensation to a claimant whose loss is of that nature.

I am further of the view, for the reasons that I gave in those cases, that in interpreting section 1 the court should apply the common law principles on which liability for a wrongful act is not limitless but is instead circumscribed within pragmatic limits.

In this case counsel for the pursuers have raised two new points on the approach to statutory interpretation. The first is to suggest that the dicta of Lord Atkin and of Lord Macmillan in Stag Line Ltd v Foscolo, Mango & Co Ltd and others (supra) support the broad and liberal approach to the interpretation of section 1 for which counsel have contended. In my view, these dicta do not strengthen the argument for the pursuers. In the Stag Line case the rules set out in the Schedule to the Carriage of Goods by Sea Act 1924 had been established by an International Conference. They were directly enacted in the 1924 Act; but they fell to be interpreted in both United Kingdom and foreign courts (cf. Lord Macmillan, at p. 350). That, I think, explains the concern of Lord Atkin and of Lord Macmillan that there should be consistency in the interpretation of the rules unaffected by any specialties of meaning in the domestic law.

James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd (supra), in which the Stag Line case was referred to, was a similar case. The relevant convention was incorporated in the statute by means of a schedule. There were parallel texts of the convention in English and French, both equally authentic, but only the English text was incorporated in the statute (ibid., Lord Wilberforce at p. 152 C-D). The process of statutory interpretation required the court directly to interpret the English text of the convention while recognising that another authentic text existed. It is understandable that in such a case the court considered that it should interpret the statute on broad principles of general acceptation, assisted if need be by reference to the French text, without the need for a preliminary test of ambiguity (ibid., at p. 152F-G).

In my view, the dicta in both of these cases were directed to the construction of legislation in which a convention was enacted directly in its authentic English text. In the present case, although the English and French texts of the Convention are authentic (Liability Convention, art. XXI), neither is incorporated in the United Kingdom legislation. Instead, the 1971 Act gives effect to the Convention by enacting the substance of it in normal statutory language. In that context, in my opinion, the dicta on which counsel for the pursuers rely are of no assistance.

Counsel for the pursuers argued that it was apparent that section 1(1) of the 1971 Act simply transposed the words of the Liability Convention into United Kingdom law (cp. art. I.6). Therefore the position was as if the Convention had been set out in a schedule to the Act itself. In my opinion this argument is flawed. Since the Liability Convention does not appear in the 1971 Act, the primary task of the court is simply to take section 1 and construe it by the normal principles of statutory interpretation. For the reasons that I gave in Skerries Salmon Ltd v The Braer Corporation and Others (supra), I consider that if the section yields a clear and comprehensible meaning, that is the meaning that is to be given to it, whether or not it accurately reflects the Convention. The court should turn to the Convention for assistance only if, at that first stage of interpretation, the section appears to be obscure or ambiguous. In short, even the broad and liberal approach does not carry the court beyond the meaning that the words of the statute can properly bear.

I am fortified in this view by the observations of Diplock LJ (as he then was) in Salomon v CCE (supra). In that case the section under consideration implemented the relevant convention in almost identical words (ibid., at p. 144G-145B). Nevertheless, Diplock LJ considered that in such a case the court must simply interpret the section on its own merits and seek extraneous assistance from the convention only if there appeared to be an obscurity or ambiguity. In this case there is no suggestion that there is any specific ambiguity in the language of the 1971 Act. I therefore reject the first of the additional points raised by counsel for the pursuers in this case.

It appears that the submission for the pursuers simply involves the adoption of whatever interpretation is wide enough to support their claim, and the setting aside of the relevant concepts of the domestic law. In my view, reference to the Convention does not advance the pursuers' case. For the reasons that I gave in Skerries Salmon Ltd v The Braer Corporation and Others (supra, at pp. 12-13), I consider that the interpretation proposed by the pursuers is contradicted by the words of the Convention itself. If it had been the intention of the parties to the Convention to create a liability as wide-ranging as that contended for by the pursuers, the Convention would have said so, in my view, in clear terms. In my view, the preamble to the Convention does not have this effect. This point, however, does not arise if I am right in thinking that the statute itself answers the question satisfactorily.

I do not accept the suggestion of senior counsel for the pursuers that the approach taken by Diplock LJ in Salomon v CCE (supra) is out of date, nor that it is overtaken by the approach of Lord President Hope in T, Petitioner (supra, at p. 733H-L). In my opinion the statement of the Lord President in T, Petitioner (supra) is irrelevant to the present question. As I interpret that decision, the court did not suggest that the approach favoured by Diplock LJ in Salomon v CCE (supra) was incorrect. On the contrary, the court reiterated the principle that in such cases reference to the convention was appropriate where the primary legislation was ambiguous or obscure. T, Petitioner (supra) does not warrant the view that the mere fact that a statute is known to implement a convention is sufficient of itself to justify the court's departing from normal canons of statutory interpretation.

On the third point for the pursuers I consider that there is nothing in their averments that could create the necessary relationship of proximity. On heads 1 to 4 of the claim, the essence of the pursuers' case is that parties who would otherwise have entered into contracts with them failed to do so and that the operation of their business became less profitable than it otherwise would have been.

Moreover, on the pursuers' own averments, these losses were not the direct consequence of the escape of oil. They were no more than an indirect consequence of adverse publicity affecting the image of Shetland as a source of fish and fish products and as a holiday destination. The adverse publicity was in turn a consequence of the contamination of other parties' property. It is obvious that many of those who failed to enter into contracts with the pursuers, for example ferry passengers, had themselves suffered no damage from contamination by oil. In my view, the case for the pursuers on relevancy is no stronger than that which I dismissed in the Skerries Salmon case.

If heads 1 to 4 of the claim are irrelevant in these respects, the ancillary heads of the claim relating to the cost of an attempt to mitigate the loss (head 5), the cost of having the claim prepared (head 6), and the consequential increase in the cost of agents' commissions (head 7) are irrelevant too.

I therefore adhere to my reasoning in Landcatch Ltd v International Oil Pollution Compensation Fund (supra) and Skerries Salmon Ltd v The Braer Corporation and Others (supra).

If the question had arisen I would have held that each of the heads of claim to which counsel for the defenders and the minuter objected was irrelevant for lack of specification.

Counsel for the defenders argued that this head of the claim failed to specify what cost was incurred in the employment of loss assessors or how it was calculated. Counsel for the pursuers scarcely attempted to justify the pursuers' pleadings on this head of the claim.

In my view, it is not relevant to claim a sum of this magnitude on a bare averment that the cost was incurred. There is no specification whatever of the constituent elements of the claim and no specification even of the amount of it. If the question had arisen, I would have excluded this item from probation.

Counsel for the defenders argued that the pursuers had not explained on Record why the change in the mix of agents' and direct sales was a consequence of the incident, nor why the cost of agents' commissions should have risen when passenger numbers were falling. Counsel for the pursuers replied that the pursuers could say no more than that the cost of agents' commissions had risen in consequence of the mishap. There should be proof before answer on the point so that the reasons for this could be established.

In my view, since the pursuers positively aver that the adverse change in the mix of agency and direct sales was a consequence of the incident, they must be in a position to explain why this happened. The pleadings give no indication of the reason. There is no obvious reason that the court can infer from the pleadings. Since the matter remains unexplained, it is apparent that the pursuers have not given fair notice on Record of this head of the claim. If the point had arisen, I would have excluded this item from probation.

Counsel for the defenders argued that the pleadings failed (a) to specify the relationship between Lerwick Haulage and the pursuers, and (b) to quantify the losses allegedly sustained by Lerwick Haulage. Counsel for the pursuers argued that it was reasonably clear that Lerwick Haulage was a business name forming part of the pursuers' own business enterprise. They had no comment to make on the specification of this head of the claim, other than to agree that it was skeletal.

If the only question had been the relationship between Lerwick Haulage and the pursuers, I would have allowed proof before answer. But it is plain that this head of the claim is wholly lacking in specification and is unquantified. For this reason I would have excluded it from probation.

I shall sustain the general pleas to the relevancy, namely plea 1 for the defenders and plea 1 for the minuter, and dismiss the action.