Reclaiming Motion - Landcatch Limited V. International Oil Pollution Compensation Fund
| Jurisdiction | Scotland |
| Judge | Lord McCluskey,Lord Cowie,Lord Justice Clerk |
| Docket Number | CA155/9 |
| Date | 19 May 1999 |
| Court | Court of Session |
| Published date | 19 May 1999 |
SECOND DIVISION, INNER HOUSE, COURT OF SESSION
| Lord Justice Clerk Lord McCluskey Lord Cowie | CA155/9/95 OPINION OF THE LORD JUSTICE CLERK in RECLAIMING MOTION in the cause LANDCATCH LIMITED Pursuer and Reclaimer; against THE INTERNATIONAL OIL POLLUTION COMPENSATION FUND Defenders and Respondents: _______
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Act: McNeill, Q.C., Weir; Maclay Murray & Spens
Alt: Dean of Faculty, Tyre, Q.C.; Morton Fraser & Milligan, W.S.
19 May 1999
This action arises from the grounding of the MT Braer at Garths Ness, Shetland on 5 January 1993 and the consequent escape or discharge of oil from that vessel. The action was raised against the defenders, to which I will refer as "the Fund", for payment of compensation under section 4 of the Merchant Shipping Act 1974. The pursuer (to which I will refer as "Landcatch") raised a second action against the Braer Corporation, the owners of the vessel, and her insurers. That action claimed compensation under section 1 of the Merchant Shipping (Oil Pollution) Act 1971 and, in regard to the insurers, under Norwegian law. The Fund were sisted as minuters in that action and tabled a full defence. In respect that certain common issues of fact and law arose in both actions the debate on the procedure roll in the second action was appointed to proceed at the same time as the debate in the first action. Following that debate the Lord Ordinary dismissed both actions. Landcatch reclaimed, but has not challenged the decision of the Lord Ordinary in the second action so far as concerned the vessel's insurers. The reclaiming motions were the subject of single discussion before this court.
The main issue with which that discussion was concerned was whether Landcatch had set out a case for compensation against the vessel's owners which was relevant for enquiry. That issue was common to both actions, subject to the fact that Landcatch did not dispute that, even if its averments warranted enquiry, the present action was premature and accordingly would require to be sisted to await the outcome of the action against the vessel owners. The subsidiary issue in the discussion was whether, as the vessel owners and the Fund maintained in their cross-appeal, the Lord Ordinary was in error in taking the view that, if Landcatch had made a relevant case for statutory compensation, the item for "expenses in pursuing claim", should form part of the subject of enquiry.
At this point it is convenient for me to refer to Landcatch's pleadings. Although I will refer, for the most part, to the pleadings in the present action, I will also mention certain passages in Landcatch's pleadings in the second action. The discussion proceeded before this court without any distinction being drawn between the pleadings in the two actions.
Following the grounding of the vessel 84,700 tonnes of crude oil, together with 1,600 tonnes of bulk fuel oil, escaped or were discharged from the grounded vessel. On 8 and 27 January 1993 the Secretary of State for Scotland, in exercise of powers conferred by the Food and Environment Protection Act 1985 issued certain emergency orders for the protection of food, whereby it was provided that within an exclusion zone no person could:
"(a)use any fish taken out of the designated area after the relevant time in the
preparation or processing for supply of food and anything from which food could be derived;
(b)land any fish which were taken from waters in the designated area after
the relevant time;
(c)supply, or have in possession for supply, any fish which were in the
designated area after the relevant time;
(d)supply, or have in possession for supply, any food or anything from
which food could be derived in the preparation or processing of which anything was used in contravention of paragraph (a) of this article".
As a result of the escape or discharge high concentrations of pollutant hydrocarbons were found on certain inshore waters in Shetland within the exclusion zone. Local inshore fisheries and salmon farms were at risk from pollution. In due course the exclusion restrictions were lifted.
According to its averments, Landcatch's business
"includes, inter alia, the rearing of salmon from eggs to smolt, i.e. juvenile salmon of up to two years of age and sufficiently developed to be moved from fresh water to sea water for further on-growing to harvestable fish. This activity is carried on principally at Ormsary, Argyll (about 500 kms from Shetland), but also on the islands of Jura and Islay in Argyll and at Gairloch in Wester Ross. As at about January 1993 the pursuer produced about 2 million smolt annually capable of being reared to harvestable salmon. Of that production not retained by themselves for on-growing or brood stock the pursuer sold about 65% to on-growers in Shetland, about half of which annually was sold to one on-grower. Of the remaining 35% some were sold to third parties elsewhere in Scotland and the balance was reared by on-growers acting on behalf of the pursuer. The pursuer's facilities at Ormsary, Jura, Islay and Gairloch were created and developed from about 1980 principally to service the requirements of independent salmon on-growers including Shetland which accounts for about 50%, or 4 million smolt per annum, of the total free United Kingdom market, that is the market other than smolt produced by operators for their own on-growing facilities. Whilst Shetland enjoys significant sea water resources for on-growing smolt to harvestable salmon, it has highly restricted natural fresh water resources of the type able to provide uninterrupted controllable disease-free water at suitable temperatures in sufficiently large volumes to facilitate major production of smolt. 25%-30% of all salmon reared and harvested in Shetland originate from smolt supplied by Landcatch" (6A-7A).
According to Landcatch's averment in the second action: "The sea-water salmon farming industry of Shetland was and is accordingly dependent on supplies of smolt from producers elsewhere such as Landcatch and was Landcatch's principal market" (11A-B) and "The pursuer's business was at the material time and is still closely integrated in and to the sea-water salmon farming industry in Shetland" (10A-B).
Landcatch goes on in the pleadings in the present action to aver that for these reasons
"the pursuer has always sold significant volumes of smolt to Shetland farmers. Whilst some contracts for sale of smolt are finally agreed only in or about the spring of the year of sale, decisions have to be taken some years in advance in order to have appropriate stock available. Typically, (i) decisions on brood stock levels have to be taken about four years in advance of the year of anticipated smolt sales, (ii) decisions on smolt production levels have to be taken about 18 months in advance of that time, and (iii) some 14 months in advance of that time, smolts are specifically earmarked for sales to Shetland and given husbandry appropriate to their anticipated destination. Such decisions are taken upon the basis of and as a result of frequent discussions between the pursuer and its major customers in Shetland. Prior to 1993 no customer failed to take up the quantity of smolt expected to be taken and the pursuer was never left with significant quantities of smolt in respect of which sales had been anticipated but not concluded. In the foregoing circumstances over half of the business activity of the pursuer was bound with the salmon farming industry in Shetland" (8A-D).
The pursuer later avers with reference to the problems caused by the escape or discharge of oil and the consequent imposition of an Exclusion Zone:
"The foregoing circumstances had a serious effect upon the business of the pursuer. It owned significant stocks of fish being reared in Exclusion Zone waters which had to be culled. Compensation for claims arising therefrom was agreed between the pursuer and the defender. In addition, however, the continuance of Exclusion Zone status and the uncertainties surrounding introduction of new fish into Exclusion Zone waters in 1993 affected the pursuer's trade in smolt which it had reared for transfer to sea water in 1993. In accordance with its ordinary practice the pursuer had been rearing smolt for anticipated delivery to Shetland Isles in or about April or May 1993. The numbers reared had been based upon regular and frequent discussion between the pursuer and Shetland salmon farmers in the expectation that final quantities for each farmer would be agreed by about the end of 1992 and contracts for supply be concluded between February and May 1993. In the first place, as a result of the continued imposition of the Exclusion Zone and uncertainties as to what secondary diseases might emanate from 1992 stocks which growers had been obliged to retain, Shetland salmon farmers operating in the Exclusion Zone and with whom the pursuer had anticipated contracting for supply of 1993 smolt, refused to take delivery of smolt in 1993. In the second place, as smolt are transferred from fresh water to sea water sites by wellboats (such a boat being open to surrounding sea water) it was not possible to deliver smolt to non-Exclusion Zone sites in Shetland if such fish would have to pass through Exclusion Zone waters and thereby become subject to Exclusion Zone restrictions. In the third place, as above condescended upon, given the life cycle of salmon, the fish reared for disposal in 1993 could not be retained in fresh water any longer but, also as condescended upon above, there is a limited free market in the United Kingdom for such disposals. Sale outside the U.K. was prohibited. In these circumstances the pursuer experienced extreme difficulty in disposing of the 1993 smolt stocks" (17A-18B).
Landcatch avers that thereby it has suffered certain losses, namely (1) smolts culled due to lack of sales; (2) reduced selling price of smolts sold in 1993; (3) reduced selling price of smolts in 1994 when prices...
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