Alegrete Shipping Company Inc. v International Oil Pollution Compensation Fund (The Sea Empress)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mance,Lord Justice Chadwick,Lord Justice Kennedy |
| Judgment Date | 07 February 2003 |
| Neutral Citation | [2003] EWCA Civ 65 |
| Docket Number | Case No: A3/2002/1256 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 February 2003 |
[2003] EWCA Civ 65
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
DIVISION– ADMIRALTY COURT
(DAVID STEEL J) [2002] EWHC 1095 (Admlty)
ON APPEAL FROM THE QUEEN'S BENCH
Lord Justice Kennedy
Lord Justice Chadwick and
Lord Justice Mance
Case No: A3/2002/1256
David Westcott & David E. Grant (instructed by Clarke, Willmott & Clarke) for the Appellant Julian Flaux QC & David Goldstone (instructed by Clifford Chance) for the Respondent
Introduction
By judgment dated 29 th May 2002 given on the trial of a preliminary issue, David Steel J determined against the appellant claimants that (assuming proof of the facts which they had alleged) their claim for loss of profits did not constitute "damage caused …. by contamination resulting from the discharge or escape" of oil from the Sea Empress within the meaning of section 153 of Schedule 4 to the Merchant Shipping Act 1995. This appeal is brought with his permission.
The Sea Empress grounded at St Ann's Head, Milford Haven on 15 th February 1996, leading to the escape of some 72,000 tonnes of crude oil into the sea. There followed a fishing ban in an area of sea around Wales extending from St David's Head in the west to the Gower Peninsular in the east. The ban was imposed under The Food Protection (Emergency Prohibitions)(Oil and Chemical Pollution of Fish and Plants) Order 1996 (S.I. 1996 No. 448). The Order recited that the Secretary of State for Wales was "of the opinion that there exist or may exist circumstances which are likely to create a hazard to human health through human consumption of food and that in consequence food which is derived or may be in the future derived from fish and plants in the area described in the following Order is, or may be, or may become, unsuitable for human consumption". The Order prohibited anyone from fishing for or taking fish or gathering or picking edible plants or edible seaweed or fish in the designated area. The ban lasted from 28 th February 1996 until, the appellant alleges, 12 th September 1996 (although the respondents plead until only 29 th August 1996). The prohibited area includes whelk fisheries off Tenby and Saundersfoot.
At the material time the appellant had a business which included the processing of whelks in Devon, at Exmouth which is some 200 miles by road from Milford Haven. We were told that processing involved removal of the shells and packing in tins, which were in turn packaged in boxes for export. There was probably also a cleaning process before the packing in tins. The facts to be assumed regarding the impact of the ban on the appellant's activities include the following. The appellant had a long term contract for the supply of Welsh whelks to a Korean buyer, Yusung Mulsan Co. Ltd. Welsh whelks were particularly attractive for Korean buyers, and the appellant was at the forefront of a business that had been fast expanding between March 1995 and January 1996. By the beginning of 1996 almost half of the appellant's business consisted of whelk processing, and of these whelk sales a substantial proportion were Welsh whelks. The appellant had contracted with 8 fishing vessels (based, it would appear, in the South Wales area) to take such whelks as it would catch for the 6 month period ending 31 st July 1996. The ban brought an immediate end to the catching of Welsh whelks, and destroyed the appellant's business with its Korean buyers. The appellant was unable to replace the supplies of Welsh whelks with products from other fishing grounds. The only other potential fishing ground was off Grimsby, but Grimsby whelks were not only smaller with much thicker shells, but also inferior in condition, due to the longer time Grimsby boats spent at sea and the longer road trip from Grimsby to Exmouth; further, the appellant's Korean buyers had stated that they would not accept them. The 8 fishing vessels would, but for the contamination and the ban, have caught some 1655,603.44 kgs of Welsh whelks during the period of the ban. The appellant thus suffered loss of gross profits totalling £746,632, less avoided expenses of £103,075 which it accepts would have been incurred but for the contamination of the fisheries.
The effective respondent to this appeal is The International Oil Pollution Compensation Fund 1971 ("The Fund"), which was joined as third defendant in the proceedings. S.153 of Schedule 4 to the Merchant Shipping Act 1995 provides as follows:
"(1) Where, as a result of any occurrence taking place while a ship is carrying a cargo of persistent oil in bulk, any persistent oil carried by the ship (whether as part of the cargo or otherwise) is discharged or escapes from the ship, the owner of the ship shall be liable, (except as otherwise provided by this Chapter), -
(a) for any damage caused in the territory of the United Kingdom by contamination resulting from the discharge or escape; and
(b) for the cost of any measures reasonably taken after the discharge or escape for the purpose of preventing or reducing any such damage in the territory of the United Kingdom; and
(c) for any damage caused in the territory of the United Kingdom by any measures so taken.
……..
(4) For the purposes of this Chapter, where more than one discharge or escape results from the same occurrence or from a series of occurrences having the same origin, they shall be treated as one; but any measures taken after the first of them shall be deemed to have been taken after the discharge or escape.
(5) The Law Reform (Contributory Negligence) Act 1945 and, in Northern Ireland, the Law Reform ( Miscellaneous Provisions) Act (Northern Ireland) 1948 shall apply in relation to any damage or cost for which a person is liable under this section, but which is not due to his fault, as if it were due to his fault."
S.170 of Schedule 4 to the 1995 Act contains the following definitions:
"(1) "damage" includes loss; …".
S.157 enables the shipowner to limit liability under s.153, in the absence of actual fault or privity, and s.175 makes the Fund liable for pollution damage in the territory of the United Kingdom if the person suffering the damage has been unable to recover full compensation because the damage exceeds the shipowner's liability under s.153 as limited by s.157. The present proceedings have been brought against the Fund accordingly.
The appeal has been argued on a carefully limited basis, having regard to the Scottish authority of Landcatch Ltd. v. International Oil Pollution Compensation Fund [1998] 2 Ll.R. 552 (Lord Gill); [1999] 2 Ll.R. 316 (Inner House). The appellant accepts that case as correctly decided against the pursuers on its facts. However, they seek to explain and distinguish it in ways which leave the present claim on the other side of the line. It is clear that the facts in Landcatch were not in all respects on all fours with those of the present case. However, the Fund submits that the principles to be derived from Landcatch embrace the present facts.
Landcatch was concerned with the contamination caused by the grounding of the Braer off Shetland on 5 th January 1993 with consequent escape of some 84,700 tonnes of crude oil and 1,600 tonnes of bulk fuel oil. Statutory instruments were issued on 8 th and 17 th January 1993 banning fishing in an area around Shetland of about 400 square miles, which included salmon rearing and harvesting areas. The pursuers' business, carried on at Ormsary Argyll, about 500 kilometres from Shetland, was to rear salmon from eggs to smolt in freshwater conditions, and then to sell them for ongrowing to maturity in seawater conditions such as those off Shetland, which was their principal market. Yearly contracts were normally concluded in about February, and performed in about April or May. So the pursuers' loss arose from inability to make and perform the usual yearly contracts. The losses claimed by the pursuers consisted of (a) smolt which they had to cull because of lack of sales; (2) reduced selling prices of smolt sold in 1993 and 1994 when prices had not resumed their normal level; (3) additional rearing costs incurred in making special arrangements for ongrowing 260,000 smolt; and (4) "expenses in pursuing claim".
The claims were made in Landcatch under predecessor legislation consolidated in the 1995 Act, namely the Merchant Shipping (Oil Pollution) Act 1971 and the Merchant Shipping Act 1974. Ss.1(1) and 20(1) of the 1971 Act were the predecessors of ss.153 and 170(4) of Schedule 4 to the 1995 Act. Bearing in mind that the 1995 Act was a consolidating Act, and aimed in this respect at consolidating the same international conventions, it has not been not suggested that the change in legislation is material when considering the relevance of Landcatch to the present case.
The issues came before the Scottish courts in Landcatch on the procedure roll. They were considered, as the present case has been, on the basis of the pursuers' averments. Both Lord Gill and the Inner House rejected the pursuers' claims. Lord Gill emphasised that the issue was one...
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