Colonia Versicherung A.G. v Amoco Oil Company

JurisdictionEngland & Wales
JudgeHIRST L.J.,PETER GIBSON L.J.,PILL L.J.
Judgment Date20 November 1996
Judgment citation (vLex)[1996] EWCA Civ J1120-5
Docket NumberQBCMF 94/1584/B
CourtCourt of Appeal (Civil Division)
Date20 November 1996
Colonia Versicherung A.G. and Others
Respondents
and
Amoco Oil Company
Appellants

[1996] EWCA Civ J1120-5

Before:

Lord Justice Hirst

Lord Justice Peter Gibson

Lord Jusstice Pill

QBCMF 94/1584/B

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

COMMERCIAL COURT

(Mr. Justice Potter)

Royal Courts of Justice

MISS B. BUCKNALL Q.C. and MR. J. TURNER (Instructed by Messrs Alsop Wilkinson, Liverpool) appeared on behalf of the Appellant/Defendant.

MISS S. COCKERILL (Instructed by Messrs Ince & Co.) appeared on behalf of the Respondents/Plaintiffs.

HIRST L.J.
1

Introduction.

2

This an appeal by the Defendants Amoco Oil Company (Amoco) against the decision of Potter J. (as he then was) in favour of the plaintiff insurer Colonia Versicherung A.G. (Colonia), which is reported at [1995] 1 Lloyds Rep. 570. The judge's succinct statement of the facts at p.572 was adopted by both sides and is as follows:-

"In this case, the plaintiffs, Colonia Versicherung A.G. ('the insurers'), insured a cargo of naphtha, shipped from the refinery of the defendants ('Amoco') in Texas to ICI Chemical & Polymers Ltd. ('ICI') at Teesport in the United Kingdom in November, 199 on the m.t. Wind Star. On arrival at Teesport the cargo was found to have been contaminated with methyl tertiary butyl ether ('MTBE') far in excess of the 25ppm maximum content, as measured in Amoco's shoretanks, provided for in the contract pursuant to which ICI took delivery. It is not in dispute that the cargo became so contaminated in Amoco's shorelines after leaving the shoretanks but prior to shipment on board Wind Star in Texas and that the contamination was due to Amoco's negligence and/or breach of industrial standards.

The cargo had not been purchased by ICI directly from Amoco. It had been sold on f.o.b. terms by Amoco to Astra Oil Co. Inc. ('Astra') on Oct. 11, 1990 on terms confirmed by telex on Oct. 12. It was on-sold by Astra to a Swiss affiliate, AOT Ltd. ('AOT'), again on f.o.b. terms. AOT on-sold the cargo to ICI on c.i.f. terms on Oct. 15, 1990. These terms required insurance—

… according to Institute Cargo Clauses (All Risks) including contamination and leakage from shoretank to shoretank.

The insurance of the cargo was effected by AOT issuing a bearer certificate (No.155) and making an appropriate declaration to its brokers, Henrijean S.A., pursuant to the terms of a floating policy which had incepted on May 1, 1988.

On Nov. 21, 1990, ICI notified the brokers of its intention to make a claim under the policy, submitting the bearer certificate, with which it had been supplied by AOT to the brokers in support of its claim at the end of January, 1991.

When, in that same month, an investigation into the cause of the contamination was carried out by consultants who established Amoco's responsibility, ICI also made a claim against Amoco as the party responsible.

The loss suffered by ICI, as finally quantified, amounted to U.S.$8,097,595.06. That claim was settled in full by Amoco in an agreement recorded in two deeds respectively dated May 3, 1991 ('the first deed') and Sept. 25, 1991 ('the second deed') whereby Amoco agreed to pay all ICI's damages, costs and losses arising out of the 'the Transaction' in consideration of Amoco being granted an unconditional release from any and all claims by ICI as well as an assignment of all ICI's rights under the insurance policy as well as against AOT, Astra, the vessel, the carriers, or anyone else who might be liable to ICI.

On Nov. 11, 1991 Amoco notified the brokers of the assignment and made a claim against the plaintiffs under the insurance policy. The plaintiffs refused to pay the claim.

Amoco brought an action in respect of its claim under the insurance policy in Texas, which proceedings were stayed on grounds of forum non conveniens. In this action, the insurers seek a negative declaration that they are not liable to meet Amoco's claim, while Amoco counterclaim a declaration to the contrary. Thus, despite the form of the proceedings, the Court is in essence concerned with a claim by Amoco under the policy which is resisted by the insurers.

………….

… Amoco puts its claim on two alternative grounds. The first and principal ground is as assignees of ICI who it is not in dispute were entitled to claim under the policy. Second, Amoco claim that they were themselves a co-assured under the contract of insurance."

3

The judge found in Colonia's favour on both these issues, and they now form the main subject matter of the present appeal. The former (Issue 1), turns on the construction of the two Deeds in the light of the relevant authorities; the latter( Issue 2) is of very much narrower compass, and turns on scrutiny of the evidence before the judge as to whether the persons who effected the policy had Amoco in contemplation.

4

ISSUE 1.

5

The Two Deeds.

6

The first Deed was entered into at a time prior to any payment by Amoco when Amoco intended only to compensate ICI for its uninsured losses.

7

The second Deed, which for present purposes is by far the more important, was entered into after Amoco had made payment and at a time when Colonia had made an offer of partial indemnity which ICI had rejected.

8

In the first Deed the preamble recited the chain of contracts and the finding that the cargo was defective after arrival at Teesport and ended with a recital:-

"WHEREAS, Amoco and [ICI] desire to resolve any disputes that exist or may arise between them as a result of the transactions stated above."

9

By Article 1 ICI agreed to pursue its claim under the policy. By Article 2 Amoco agreed without admitting liability to reimburse ICI for its uninsured losses. Article 5 provided for a release similar to that in clause 1.2 of the second Deed (see below). Article 6 provided:-

"Upon payment by Amoco to [ICI] of the amount determined in accordance with Article 4 above and except to the extent of the insurance underwriters subrogation rights under the Insurance, [ICI] hereby assigns to Amoco all of [ICI's] rights, title and interest in any and all claims which it may have against AOT, Astra, the carrier, and any other person or firm that may be liable, responsible or obligated to [ICI] in any manner arising directly or indirectly, or relating in any way to the Transaction or [ICI's] losses, expenses or payments incurred or to be incurred by virtue of its having received off-specification Naphtha. Amoco shall have the absolute right to settle, compromise or dismiss at any time any or all of such claims."

10

Article 8 provided:-

"This Deed represents a compromise of disputed claims and is not an admission of liability upon the part of either party, such liability being expressly denied."

11

The second Deed was headed "Deed of Assignment" and contained similar recitals to those in the first Deed, culminating in a reference to the execution of that Deed. Its terms so far as relevant were as follows retaining the original numbers:-

"1.1 In consideration for the assignment and related warranties and representations made hereon to [ICI], Amoco has paid to [ICI] and [ICI] has received from Amoco the sum of Eight Million Ninety-seven Thousand Five Hundred Ninety-five and 06/100 U.S. Dollars ($8,097,595.06), being the full consideration due [ICI] from Amoco pursuant to Deed dated May 3, 1991 between the parties ('May 3, 1991 Deed').

1.2 [ICI] does hereby release and discharge Amoco, its shareholders, directors, officers, and employees from any and all claims, liabilities, obligations, and causes of action whatsoever, contingent or not contingent, known or unknown, which it now has, had or may have in the future arising out of or relating to the Transaction referred to in the May 3, 1991 Deed, including all claims asserted against it or them, or which could have been asserted by [ICI] because of said Transaction, it being understood that this release shall not affect the subrogation rights of the insurance underwriters of the Insurance, which such underwriters have or by virtue of any payment to any person, firm or corporation shall acquire.

2. Except to the extent of the insurance underwriter's subrogation rights, if any, as specified above, [ICI] hereby assigns and transfers to Amoco the following:

2.1 All rights, title and interest of [ICI] under the Insurance policies, and related insurance documents, and/or the right to the proceeds of the Insurance and/or claim covering the Naphtha referred to in the May 3, 1991 Deed, including the right to make any claims and to take any action under or with respect to the insurance and/or proceeds of the Insurance, to cancel them upon default, and to receive payment of, and endorse any instrument in payment of loss or return premium, authorizing Amoco but at Amoco's own cost and expense, to enforce in Amoco's own name the Insurance documents and proceeds of the Insurance and/or claim and take all legal measures that may be necessary for the complete recovery and enjoyment of all rights, title and interest incident to, under and pursuant to the Insurance and/or the right to the proceeds of the Insurance and/or any claim."

12

By clauses 2.2 and 2.3 all ICI's claims against AOT and Astra respectively were also assigned. By clause 3.1 ICI agreed to co-operate in any reasonable manner with Amoco's claims as assigned. By clause 4.1 ICI represented and warranted that it had full power and authority to enter into and perform the terms of the agreement, adding " but no warranty is given, express or implied, that Amoco will be able to pursue all or any claims."

13

The Authorities.

14

In Burnand v. Rodocanachi (1882) 7 App Cas 333, the respondents had effected with underwriters...

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