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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Smith v Braer Corporation & Ors [1999] ScotCS 126 (26 May 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/126.html Cite as: [1999] ScotCS 126 |
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O/387/6/95
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OPINION OF LORD GILL
in the cause
MAGNUS GEORGE SMITH
Pursuer;
against
(First) THE BRAER CORPORATION,
Defenders:
________________
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Pursuer: Party
First and Second Defenders: Howie, Henderson Boyd Jackson, W.S.
Third Defenders: Tyre Q.C., Grahame; Morton Fraser, W.S.
26 May 1999
I Introduction
In this action the pursuer sues for £650,000 as compensation for losses sustained by him in consequence of the Braer mishap. I need not repeat the background. The first and second defenders are respectively the owners and the insurers of the Braer. The third defenders are the International Oil Pollution Compensation Fund. The case has been debated on the procedure roll on the preliminary pleas of the defenders. At the hearing the pursuer appeared in person.
Counsel for the first and second defenders has taken two fundamental objections to the pursuer's case, namely that the claim is irrelevant and that in any event the pursuer has discharged any claim that he may have had for the losses complained of.
Counsel for the third defender has taken only the second of these points. The third defender has already given the pursuer a substantial payment to account of his claim.
The first and second defenders also have a plea that the pursuer has subrogated them to his rights and remedies in respect of the loss complained of and therefore has neither title nor interest to sue the present action.
Counsel for all three defenders have taken a point of competency relating to the form of the first conclusion and have argued that the pursuer's pleadings lack specification on certain material points.
II The pleadings
The pursuer's pleadings have been drafted by counsel but have not been adjusted. The pursuer's averments of loss are as follows.
"As a result of the contamination hereinbefore condescended on, the pursuer has sustained loss and damage. The pursuer operated a slaughterhouse in Dunrossness. His business was inter alia in supplying slaughtered lambs to traders, including exporting slaughtered lambs to the Faroe Islands. At the material time the pursuer had entered into a contract for the supply of slaughtered lambs with a firm known as "Skelti" in Faroe. The pursuer had agreed to supply three hundred and twenty tons of lamb per season. The pursuer was to provide slaughtered lambs for four seasons. As a result of the contamination hereinbefore condescended on, the pursuer was unable to provide said Skelti with lambs which had not been born or reared on grazing grounds which had been affected by said contamination. There was contamination to lambs as a result of said oil being carried airborne and affecting grazing grass. The pursuer was unable to fulfil his contractual obligations with said Skelti. Said contract provided for the pursuer achieving profits in the sum of £394,115 per season. Accordingly, the pursuer suffered a loss of profits details of which will be lodged in process to follow hereon. In all the circumstances the sum sued for is a reasonable estimate of the loss and damage sustained by the pursuer ... (Cond. 7)"
The defence that the claim has been discharged is founded on a Receipt and Release dated 19 September 1995 granted by the pursuer to the defenders. The third defenders have produced this document and have held it to be incorporated in their pleadings brevitatis causa. The pursuer has not replied in his pleadings to the defenders' averments on this point; but he accepts that he granted the document and he agreed with counsel that I should refer to it in deciding whether the claim has been discharged. The Receipt and Release is in the following terms:
"I, Mr Magnus Smith acknowledge receipt of £45,530 in full and final settlement and discharge of my claim for compensation for loss of profit on the sale of slaughtered lambs to Shelti (sic) (Saltangara, Faroe Islands) due to oil pollution damage arising out of the Braer incident, whether under common law, statute or International Convention against the Braer Corporation (the registered owner of the Braer), Assuranceforeningen Skuld (the owner's P & I Insurer) and the International Oil Pollution Compensation Fund (IOPC Fund).
In consideration of this payment I hereby irrevocably subrogate all my rights and remedies against any person arising from the Braer incident to Assuranceforeningen Skuld and the IOPC Fund in respect of the above-mentioned claim to the extent of this advance payment. I also understand that this does not prejudice my right to submit a further claim for compensation in respect of loss or damage other than for as claimed above. I agree to give any assistance they may reasonably require in the exercise of such rights and remedies in my or their name and at their own expense.
I agree that the amount mentioned above will be deducted from any amount of compensation for pollution damaged fixed either by an out-of-court settlement or awarded by any court against the owner, Assuranceforeningen Skuld or the IOPC Fund on whatever grounds ... "
III The relevancy of the averments of loss
Counsel for the first and second defenders argued that the claim is fundamentally irrelevant. In this case the pursuer did not aver that any property of his had been damaged in consequence of the escape of oil. He merely averred that he could not fulfil a contract with a third party, because he could not buy in the necessary lambs for slaughter, and had lost profits as a result. This was a claim for purely relational economic loss. It was similar to the claim that I dismissed in Landcatch Ltd v The International Oil Pollution Compensation Fund ([1998] 2 Lloyd's L.R. 552).
The pursuer argued that Landcatch Ltd v The International Oil Pollution Compensation Fund (supra) was distinguishable because in that case the pursuers had been unable to sell any of their product into Shetland, whereas in the present case the pursuer had been unable to sell any of his product out of Shetland. He accepted that no property of his had been damaged and that the damage to other parties' pastures had prevented him from buying lambs in order to fulfil his contract with Skelti.
In my opinion the action is based on a purely relational economic loss and as such is irrelevant. Since I heard the debate in this case, a reclaiming motion against my decision on the point in Landcatch Ltd v The International Oil Pollution Compensation Fund (supra) has been refused by the Second Division (19 May 1999, unrepd.). The pursuer in this case had no proprietary or possessory interest in the pastures or livestock that were contaminated. He was merely a potential buyer of lambs. His loss arose because the Braer mishap prevented him from buying uncontaminated lambs with which to fulfil a contract with a third party. In my view this case is not materially distinguishable from Landcatch Ltd v The International Oil Pollution Compensation Fund (supra). On the basis of the decision of the Second Division in that case and the authorities on which that decision is founded, I consider that this action falls to be dismissed.
IV The effect of the Receipt and Release
Counsel for the defenders argued that the Receipt and Release effected a valid discharge in favour of the defenders of all of the pursuer's rights to sue this action. The wording was clear and unambiguous. The reference in the Receipt and Release to the reservation of the pursuer's right "to submit a further claim for compensation ... " was a reference to a claim under some other head of loss. That provision did not derogate from the outright discharge that had been granted in the preceding paragraph in relation to the claim for compensation for loss of profit on the contract with Skelti.
The pursuer accepted that on the face of it the Receipt and Release bore to be an outright discharge of the present claim. He also accepted that the discharge was not restricted to the claim for the 1993 season. He said that when he signed the Receipt and Release he had suffered severe business losses and was within a few days of being sequestrated. He asked the third defenders to restrict the discharge to his loss of profits for the 1993 season. However, the defenders were "overbearing and overpowering" and refused to alter the terms of the discharge. To avoid sequestration he had no choice but to sign the discharge in the terms stipulated by the defenders.
In my view the pursuer has irrevocably discharged the present claim. The Receipt and Release is unambiguously to that effect. The pursuer has no foundation in his pleadings for the defence that he has put forward at the bar; but even if he did, I think that that would not be a defence at all. In any event, that defence would be irrelevant so long as the Receipt and Release stood unreduced. The pursuer has not sought reduction of the discharge ope exceptionis. For these reasons I can see no answer to the argument that he has discharged this claim.
V Subrogation
Counsel for the defenders have argued that the subrogation in favour of the second and third defenders provided for in the Receipt and Release deprives the pursuer of title and interest to sue the action. I have doubts as to whether this plea adds anything of substance to the plea that the pursuer has discharged his claim; and there may be a question whether the contractual subrogation in favour of the third defenders is of any significance since the third defenders are statutorily subrogated to the pursuer's rights by section 8(1) of the Merchant Shipping Act 1974 (as substituted by the Merchant Shipping (Salvage and Pollution) Act 1994).
The pursuer submitted no argument on this question as he was not familiar with the law on the matter.
Counsel for the defenders urged me to sustain their argument on subrogation as a separate point since it is important to them in several actions that have yet to be heard; but since the pursuer is a party litigant and since it is unnecessary for me to decide the point, I shall leave it to be decided on an occasion when it can be properly argued.
VII Competency and specification
Counsel for the defenders objected to the form of the first conclusion, which seeks decree against all three defenders jointly and severally, and to the specification of the pursuer's alleged contract with Skelti and of its duration. They accepted that these objections might be curable by amendment.
All parties agreed that the best course would be for me to decide the two fundamental questions to which I have referred. If my decision on those questions was favourable to the pursuer I should continue the case to consider whether the pursuer should have the opportunity to amend his pleadings on the competency and specification points. I agreed with this proposal on the view that it might avoid unnecessary trouble and expense.
Since I have decided that the claim must fail for the reasons that I have discussed, the question whether the pursuer should have an opportunity to amend does not arise.
VIII Interlocutor
I shall sustain plea in law 1 for the first and second defenders and plea in law 2 for the third defenders. Plea in law 7 for the first and second defenders and plea in law 5 for the third defenders, which relate to the question of discharge, seek decree of absolvitor. I shall sustain these to the extent of dismissing the action. I shall repel the pursuer's pleas and grant decree of dismissal.
