Dolphin Drilling Limited V. Tor Drilling (uk) Limited
| Jurisdiction | Scotland |
| Judge | Lord President,Lady Cosgrove,Lord Mackay of Drumadoon |
| Date | 23 August 2005 |
| Docket Number | XA140/04 |
| Court | Court of Session |
| Published date | 23 August 2005 |
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lady Cosgrove Lord Mackay of Drumadoon
| XA140/04 OPINION OF THE COURT delivered by THE LORD PRESIDENT in APPEAL TO THE COURT OF SESSION under Section 37(1) of the Employment Tribunals Act 1996 by DOLPHIN DRILLING LIMITED Appellants; against TOR DRILLING (U.K.) LIMITED Respondents; _______ |
Act: Brailsford Q.C.; Simpson & Marwck (for Appellants)
Alt: Napier, Q.C.; Tods Murray (for Respondents)
23 August 2005
[1]This appeal concerns the applicability of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("the regulations") to certain former employees of the respondents, Tor Drilling (U.K.) Ltd ("Tor"). The employees, Mr. Michael Gordon and Mr. Victor Rowlands, took no part in the discussion.
[2]The circumstances of this case, which are not in dispute, are set out in the judgment of the employment tribunal, which was affirmed by the Employment Appeal Tribunal. In brief they are as follows. On 14 June 1999 Tor entered into a management agreement with China National Star Petroleum Corporation ("CNSP") under which, in return for a management fee and the reimbursement of expenditure, Tor were, inter alia, to maintain Kan Tan IV, a semi-submersible drilling rig owned by CNSP, in a fully operational condition, ship-shape and seaworthy, and to provide a sufficient qualified crew. Tor were also to undertake the marketing of the rig for hire. As is normally the case with such an arrangement, Tor supplied personnel but not plant and equipment. After an agreed programme of refurbishment had been carried out, the rig was by May 2000 "hot stacked", i.e. it was in a condition in which everything was working, engines were tested daily and the rig could be made ready for operations within a short time. At that time there were normally eight persons on board. Apart from a representative of CNSP they were either employed by, or contracted to, Tor. If the rig had been merely "cold stacked", i.e. when all engines were shut down and only an auxiliary generator used to keep on a few lights, Tor would have had only four personnel on board.
[3]By the end of 1999 no hire contract had been acquired. Relations with CNSP began to deteriorate. In the early part of 2000 CNSP stopped authorising any further major expenditure. Despite further efforts the rig remained unused. By fax dated 14 March 2000 a vice president of CNSP informed Tor that they had decided to terminate the management agreement. In response Tor claimed that CNSP were in breach of contract, and that the purported termination was invalid. A further letter from the vice president on 11 April 2000 stated that he intended giving Tor three months notice of termination, as from the earlier letter of 14 March.
[4]Meanwhile in August 1999 agents for CNSP had contacted the appellants, Dolphin Drilling Limited ("Dolphin"), whose activities include the operation and management of mobile drilling units. CNSP informed Dolphin that they intended to seek a change in the management of the rig. Negotiations between them led to the signing in March 2000, in Beijing, of a management agreement, the terms and scope of which were, in the words of the employment tribunal, "in all salient respects", identical to those of the agreement between CNSP and Tor. It stated: " This agreement will be effective from date of the signing, but will only enter into full force and effect once the owner has notified the current manager that it intends to terminate the existing management agreement and such termination has become effective". None of these events were known to Tor at the time. On 20 April 2000 CNSP wrote to Dolphin referring to the fact that formal notice of termination had been given to Tor, and confirming that CNSP wished to appoint Dolphin initially to supply crew for the rig once the crew supplied by Tor had left. In their reply, on the same day, Dolphin confirmed that they were willing to supply crew on an interim basis while longer term arrangements for the management of the rig were being finalised, and that during the interim Dolphin would not charge any administration fee, but only direct costs. In discussions before this exchange of letters Dolphin had indicated that they wanted there to be " a clean break", lest an unresolved dispute with Tor might make the marketing of the rig impossible. It was anticipated that, after a short period of "watch-keeping", Dolphin would assume full management of the rig, including its marketing.
[5]It may be noted that the employment tribunal concluded that, by reason of their language and typescript, the letters of 11 and 20 April, to which we have referred, had been created in Dolphin's office and with their assistance.
[6]On 19 May 2000 CNSP raised proceedings against Tor in the Court of Session, seeking declarator, interdict and damages based on Tor's alleged breach of contract. On that date the Court interdicted Tor ad interim
"by themselves or by their agents or servants, or by the instruction, procurement or encouragement of anyone else from holding themselves out as having the continuing right to manage or market...the Kan Tan IV... and from boarding or attempting to board or by any means gain access to the Kan Tan IV except with the prior written consent of the pursuers".
[7]Despite that order, it was agreed between Tor and CNSP that Tor would continue to manage, but not to market, the rig until 11 a.m. on 24 May 2000, at which time they would remove all personnel from the rig. Mr Ian Mitchell, a senior vice president of Dolphin, to whom a copy of the interim interdict was supplied on 23 May, gave evidence to the employment tribunal that he understood the order as meaning that Dolphin could not have Tor personnel on the rig, and that all involvement of Tor was terminated. He claimed that for that reason no contact was made with Tor's personnel. Mr William Clelland, Dolphin's personnel manager, also gave evidence that he understood that the interim interdict prevented him from engaging Tor's personnel to remain on the rig. On 24 May a boat took six Dolphin personnel out to the rig where the Tor personnel introduced them to it. The same boat took Tor's personnel off the rig to the shore. The Dolphin personnel were primarily of marine disciplines, and corresponded approximately to the personnel whom Tor had on board.
[8]On the same day Tor arranged for arrestments to be placed on the rig in connection with an action at their instance against CNSP. This prevented the movement of the rig, and hence its immediate hiring. In the event the arrestment remained in place until 23 Mar 2001. As at 24 May 2000 funds provided by CNSP, and amounting to $3.5 million, remained in Tor's control. These funds were arrested by...
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