Humber Oil Terminal Trustee Ltd v Owners of the ship 'Sivand'
| Jurisdiction | England & Wales |
| Judge | Evans,Hobhouse,Pill L JJ |
| Judgment Date | 29 January 1998 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 January 1998 |
Court of Appeal (Civil Division).
Evans,Hobhouse and Pill L JJ.
Mark Cran QC and Neil Calver (instructed by Ince & Co) for the shipowners.
Nicholas Hamblen QC (instructed by Sinclair Roche & Temperley) for Humber Oil.
The following cases were referred to in the judgments:
Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310
British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London LtdELR [1912] AC 673
Carslogie Steamship Co Ltd v Royal Norwegian GovernmentELR [1952] AC 292
City of Lincoln [1890] P 15
Galoo Ltd v Bright Grahame MurrayUNK [1994] BCC 319; [1994] 1 WLR 1360
Hogan v Bentinck West Hartley Collieries (Owners) LtdUNK [1949] 1 All ER 588
Island Archon, TheUNK [1994] 2 L1 Rep 227
Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society LtdELR [1918] AC 350
Liesbosch Dredger v SS EdisonELR [1933] AC 449
March v E & M H Stramare Pty LtdUNK (1991) 171 CLR 506
Metagama, The 1928 SC(HL) 21
Monarch Steamship Co Ltd v Karlshamns Oljefabriker A/BELR [1949] AC 196
Oropesa, TheELR [1943] P 32
Polemnis, ReELR [1921] 3 KB 560
Quinn v Burch Bros (Builders) LtdELR [1966] 2 QB 370
Rich (Marc) & Co AG v Bishop Rock Marine Co Ltd (“The Nicholas H”) [1995] CLC 934; [1996] AC 211
Robinson v Post OfficeWLR [1974] 1 WLR 1176
Royal Greek Government v Minister of Transport (1949) 83 L1 L Rep 228
Smith v Leech Brain & Co LtdELR [1962] 2 QB 405
Total Transport Corporation v Arcadia Petroleum Ltd (“The Eurus”) [1998] CLC 90
Wagon Mound, The (No. 1)ELR [1961] AC 388
Wagon Mound, The (No. 2)ELR [1967] AC 617
World Beauty, TheELR [1970] P 144
Tort — Damages — Foreseeability — Causation — Remoteness — Shipowners' vessel damaged harbour installations — Harbour owners engaged contractors to carry out repairs — Barge used by contractors capsized because of condition of seabed — Contractor recovered extra payment on ground that physical condition of sea-bed could not reasonably have been foreseen — Whether shipowners liable for extra payment — Whether damage and loss reasonably foreseeable or too remote — Whether condition of sea-bed intervening cause.
This was an appeal by shipowners from a decision of Longmore J that they were liable for certain repair costs incurred by harbour owners after the appellant's ship damaged harbour installations as a result of negligent handling.
The appellant's vessel “Sivand” damaged harbour installations owned by the respondent, as the result of negligent handling. The respondent engaged contractors to carry out the repairs under a standard form of contract on ICE conditions. In the course of the works, the contractors used a jack-up barge, which was supported when in position by extending legs which rested on the sea bed. The correct procedures were carried out, but the sea-bed and its sub-soil proved unable to support the weight of one of the legs and the barge capsized and became a total loss. The contractors claimed an extra payment under cl. 12 of the ICE conditions for the consequences of loss of the barge on the basis that that was due to physical conditions which could not reasonably have been foreseen. The Court of Appeal upheld that claim and the respondent then sought to recover that extra amount from the appellants. There was no dispute as to the cost of repairs apart from that item, and those costs had already been paid.
The appellant said that the sum in question became due to the contractors only because of an unforeseen event. That meant that the extra loss suffered by the respondent could not properly be regarded as having been caused by the negligent handling of the ship. Alternatively if it was so caused, then it was too remote a consequence of the negligence to enable the respondents to recover damages, because it was not due to negligence and was not reasonably foreseeable. Longmore J held that there was no new cause operating and that the physical conditions and their consequences were intrinsic to the original damage negligently caused and that the respondent was entitled to recover. The shipowners appealed.
Held dismissing the appeal:
The appellant was liable for the additional costs on the ground that the respondent was entitled to recover the reasonable cost of repairs, as the appropriate measure of damages for the damage to their property, and that the sum which became due under the repair contract established that amount. The occurrence of unforeseen circumstances under cl. 12 was within the ordinary scope of the repair contract, and although the precise circumstances were not reasonably forseeable, no extraneous cause arose, such as to prevent the total cost from being the proper measure of the respondent's loss. It was foreseeable that ground conditions might be encountered which competent contractors could not be expected to foresee. The liability of the appellant was founded on one aspect of the principle that a tortfeasor took his victim as he found him. The damage claimed was within the risk created by the appellant's negligence.
Evans LJ:
The facts of this case are straightforward. They could even come from a text book. The appellant's vessel “Sivand” damaged harbour installations owned by the respondents, as the result of negligent handling. The respondents engaged contractors to carry out the repairs under a standard form of contract on ICE conditions. An unforeseen event occurred in the course of the works. The contractors used a jack-up barge, meaning a barge which is supported when in position by extending legs which rest on the sea bed. The correct procedures were carried out, but the sea-bed and its sub-soil proved unable to support the weight of one of the legs. The barge capsized and became a total loss. The contractors claimed and recovered an extra payment under cl. 12 of the ICE conditions for the consequences of this unforeseen event. The respondents now seek to recover that extra amount from the appellants. There is no dispute as to the cost of repairs apart from this item, and those costs have already been paid.
The appellants say that the sum in question became due to the contractors only because of this untoward and unforeseen event. This means in law, they submit, that the extra loss suffered by the respondents cannot properly be regarded as having been caused by the negligent handling of their ship. Alternatively, they submit, if it was so caused, then it is too remote a consequence of the negligence to enable the respondents to recover damages. This, they say, follows, perhaps inevitably, from the fact that the collapse of the barge and therefore the increased cost of the repairs which resulted from it was not due to negligence and was not reasonably foreseeable or foreseen. In lawyer's language, there was an intervening event which broke the chain of causation flowing from the negligence for which they are responsible, and consequences which are not reasonably foreseeable, even if directly caused, are by definition too remote to give rise to a right to recover compensation in law: The Wagon Mound (No. 1)ELR[1961] AC 388
The respondents on the other hand submit that they are entitled to recover as damages the reasonable cost of repairs to their property which was damaged. They acted reasonably in employing reputable contractors on appropriate standard terms. The fact that the total cost includes a sum which became due under cl. 12, even as the result of an unforeseen event, does not deprive them of their right to recover the actual, reasonable, cost. Causation is a matter of common sense. No sensible person could doubt but that the whole of the cost they incurred was the measure of the loss caused to them by the negligent handling of the ship.
The contractors' claim under cl. 12 of the ICE conditions was referred to arbitration in December 1987. The arbitrator is John Uff QC. By his first interim award dated 3 November 1989 he made detailed findings of fact as to how the collapse of the barge occurred. These include:
“5.7…It is also common ground that, for these two legs to have punched through the soil below the seabed, there must have been a failure in sheer of the soil below the bottom of the leg. In this sense, the immediate cause of the failure was the ground conditions. However, the underlying question was why the soil below spud leg 2 and/or 1 came to be in a condition where failure was possible, having regard to the previous preloading sequence.
5.8 What was the effective cause of the failure? was it due to something which falls within the term ‘conditions’ within the meaning of cl. 12 of the ICE conditions? (pp. 99–100.)
…
6.16 If the continuing settlement cannot be explained by instability or by the theory set out on p. 99 of the expert's bundle, what was the cause? In my opinion, the cause must be taken to be the reaction of the ground to spud leg number 2 being such that its bearing capacity decreased as penetration and titling of the barge occurred. (p. 118.)
Issue E [What, broadly, was the cause of collapse?]
6.17 There are many matters which could be said to be a cause of the collapse, including the fact that the claimant was using the barge to lift a comparatively heavy piece of concrete. However, the legal test of causation excludes matters which would not of themselves rank as a cause. In my opinion, the collapse was caused by whatever phenomenon was responsible for the barge moving from the initial small settlement of around 5 cms to a substantially larger settlement, perhaps 20 or 30 cms, at which point the instability of the barge was such that further and progressive collapse was irresistible and inevitable. In my opinion, and I so find, that cause was as set out under Issue D. (p. 119.)
Issue F
6.19 Does the cause that I have found rank as a ‘physical condition…which…could not reasonably have been...
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