ARDMAIR BAY HOLDINGS LTD AGAINST JAMES DOUGLAS CRAIG [2019] ScotCS CSOH

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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> ARDMAIR BAY HOLDINGS LTD AGAINST JAMES DOUGLAS CRAIG [2019] ScotCS CSOH_58 (31 July 2019) URL: http://www.bailii.org/scot/cases/ScotCS/2019/2019_CSOH_58.html Cite as: 2019 SLT 1011, [2019] ScotCS CSOH_58, 2019 GWD 25-403, [2019] CSOH 58

The cause of the dispute between the parties: non-disclosure of the ITT

[1] The pursuer entered into a share sale and purchase agreement (“the Agreement”)

with the defender and others to buy the whole share capital of the Craig Group Limited

(“the Company”) on 14 October 2017 (“the Signing Date”) for the price of £82,570,677. The

defender was a substantial shareholder in the Company. On the eve of the signing of the

Agreement, one of the subsidiary companies of the Company (“North Star”, as after-

defined) received an email with an invitation to treat (“ the ITT”) appended to it. The email

and the ITT related to North Star’s two most lucrative contracts. The defender did not

disclose either the receipt of the email or the terms of the attached ITT to the pursuer at that

[2] After the loss, a few months later, of the contracts to which that ITT related (ie the

options were not exercised, as expected), and after the pursuer subsequently become aware

of the email (and its timing) and the ITT (and its contents), the pursuer raised the present

proceedings. The pursuer alleges that the defender breached a number of warranties in the

Agreement and/or engaged in wilful concealment of a material matter, or failed to correct a

representation prior to conclusion of the Agreement when that representation became

untrue (as the pursuer contends) upon North Star’s receipt of the ITT. As a consequence, the

pursuer sustained a loss in the form of paying substantially more than it otherwise would

have for the shares in the Company. It estimates its loss at about £16,800,000.

[3] The defender denies all of the grounds of liability advanced by the pursuer and

advanced alternative interpretations of the warranties. In respect of the claims based on the

Agreement, the defender also relies an entire agreement clause. I heard a preliminary proof

confined to these liability issues. Issues of quantum were reserved.

The events giving rise to the pursuer’s claims under the Agreement

The receipt of the Repsol email, the attached ITT and the cover letter

The sell side’s actions consequent upon receipt of the email and the ITT

The sell side’s subsequent communication of the Repsol email and ITT to the

The roles of those attending the meeting at Brodies and the purpose of the

The meeting at Brodies: what the sell side management team told Douglas

What the sell side did in relation to the ITT after the Signing Date

Causation: The buy side and the impact of the ITT (paras [120] to [131])

No disclosure of the date of receipt of the ITT until after completion

Consequence if the buy side had known of the ITT before the Signing Date

Warranty 26.6 considered against the background known to the parties

Parties’ submissions on issue 3: clause 8.1.3 (paras [202] to [212])

Parties’ submissions on issue 4: misrepresentation and the entire agreements

Parties’ submissions on issue 5: wilful concealment (paras [251] to [254])

[5] Four of the pursuer’s five grounds of liability are founded on in terms of the

Agreement. Before setting out those terms, it is first necessary to note a number of the

2) “Subsidiaries” includes North Star (there is no need to repeat the more

3) “Business” means the business of the Company and its subsidiaries and

which included “(i) offshore support operations (including platforms supply)

and … (iii) emergency response and rescue services to the offshore industry

2) The “Completion Date” was defined 6 November 2017. (The Completion

3) A “Material Contract” was defined as meaning “(i) all charter agreements to

which the Company or any of the Subsidiaries is party; and / or (ii) all other

agreements to which the Company or any of the Subsidiaries is party which

are of material or fundamental importance to the operation of the Business”.

One of the warranties at issue covered the short period between the Signing Date (as

I have defined it) and the Completion Date, which period I shall refer to as “the pre-

[7] The parties referred to the clauses 8.1.3, 10.2, 11.9 and 18.3 of the Agreement, which

8.1 The Warrantor shall ensure that during the period beginning on the signing

the Warrantor shall, as soon as reasonably practicable, notify the Buyer in

writing of any matter which becomes known to him after the date of this

Agreement and before Completion which constitutes, or might be reasonably

be expected to constitute, a material event in respect of the Business.

10.2 The Warrantor warrants to the Buyer that each Warranty (other than the Title

Warranties and the Warranties set out in paragraph 27 of Section B of Part 4

of the Schedule) is true and accurate as at the date of this Agreement. […]

11.9 Nothing in this clause or Part 8 of the Schedule (Sellers’ limitation of liability

and conduct of claims) applies to a Claim that arises or is delayed as a result of

dishonesty, fraud, wilful misconduct or wilful concealment by the Sellers or any of

18.3 Each party acknowledges that, in entering into this Agreement, it does not

rely on any statement, representation, warranty, undertaking or other assurance

given or made by any person (whether a party to this Agreement or not) other than

as expressly set out or referred to in this Agreement. Each party waives all rights

and remedies howsoever arising which, but for this clause, might otherwise be

available to it in respect of any such representation, warranty, undertaking or other

assurance. The only remedy available to any party in respect of any warranty,

undertaking or other assurance expressly set out or referred to in this Agreement is

[8] The warranties are contained in Part 4 of the Schedule to the Agreement. The

pursuer maintains that the defender breached the terms of warranties 11 and 26, the relevant

11.2 Complete and accurate copies of all Material Contracts have been Disclosed.

11.3 There are no outstanding or ongoing negotiations of material importance to

the business, profits or assets of the Company or any of the Subsidiaries, or

any outstanding quotations or tenders for a contract that, if accepted, would

26.6 Documents 6.1.1 of the Disclosure Bundle (“Current Contracts Summary”)

sets out complete and accurate details of all of the charter arrangements that

are in place as at the date of this Agreement in relation to all of the Vessels.”

I shall refer to the claims in respect of warranties 11 and 26 collectively as “the warranty

(1) breach of warranty 26.6 (completeness and accuracy of the CSS);

(2) breach of warranty 11..3 (failure to disclose “…ongoing negotiation”;

(3) breach of clause 8.1.3 (failure during the pre-Completion Window to disclose

The pursuer also has a common law case (ie not predicated on the Agreement),

(5) that the receipt of the ITT rendered a representation made in an email of

[10] I had the benefit of very full witness statements from the parties’ witnesses. Having

heard the proof, it is clear that to a very large degree the background was undisputed,

though parties might differ as to the significance and relevance of some of that evidence.

Elements of the background were frequently spoken to by more than one witness. For the

sake of brevity, I record these chapters of background evidence without the need to attribute

passages to specific witnesses. Before doing so, it will assist to identify the individuals and

[11] In presenting their cases, parties did not feel it necessary to differentiate strictly

between the actings of the Company and of North Star. They referred by way of short hand

to the “sell side” and the “buy side”. I shall also adopt that usage. For similar ease of

reference, I shall simply refer to “the business” as encompassing the activities of North Star

[12] James Douglas Craig: The defender, a chartered accountant, is the third generation of

his family to be involved in the family business, originally George Craig and Sons Limited.

When the defender joined the family business in about 1977, it was then principally

involved in deep sea trawler fishing in the North Sea and was based in Aberdeen. The

defender’s father and uncles ran the family business at that time. The defender joined

initially to assist on the accountancy side and became financial controller. Upon his uncle’s

retirement the defender and his father ran the Craig Group for about 25 years. The defender

was Managing Director of the group but, upon his father’s death in 2010, the defender

became chairman. During the period of the defender’s involvement, the business was

developed significantly by the creation of a number of new companies, with a marine or

offshore focus, and in the development of international bases in Singapore, Houston and

[13] At the time of the Agreement the defender was the largest single shareholder in the

Company, holding 46.73% of its shares. In terms of the Agreement, he received

around £33.5 million of the consideration paid for the Company’s shares. He was one of the

directors of North Star. The defender was not actively involved in the operation of North

Star or the Company; nor was he actively involved in the exchange of information between

the pursuers and the ‘sell side’ in the period prior to the Signing Date. The defender lives

aboard, in Barbados. He was on a cruise at the time the ITT was received and the

[14] Callum Bruce: He had worked in the oil and gas industry since the 1970s. He joined

North Star in 1986 initially as a ship runner, subsequently becoming an operations manager,

operations director, and deputy managing director before becoming Managing Director. He

was the Managing Director of the Company at the time the Agreement was entered into and

was retained after the Completion Date as Chief Executive. He was also a director of North

[15] Insofar as there was a chain of communication, Callum Bruce explained that it was

Graham Payton who reported back to the defender as and when required. Callum Bruce

explained that Gordon Payton was also the “prime conduit” of information from the

management team to Simmons, who were consultants instructed to assist by the sell side.

Gordon Wallace’s responsibility was to look at contractual status whereas Graham Payton

[16] Callum Bruce spoke to the defender “infrequently”. There was little day-to-day

contact between the defender and any members of the management team. Callum Bruce

readily agreed that he was not “the numbers man” and that this was Alan Holden’s role

(Alan Holden did not give evidence). In relation to the sale of the Company, he described

his role, and that of Graham Payton, as providing information to Simmons on request. It

was not their role to make decisions. So far as he was concerned, Simmons were the ones

advising the defender. Their role, ie Callum Bruce and Graham Payton, was to channel

information to Simmons, when this was sought, about North Star or the shipping industry.

This was because Simmons were not market analysists and they did not know the shipping

industry. Calum Bruce and Gordon Wallace provided information on the vessels.

[17] He had not seen earlier versions of the Agreement and did not regard it as his role to

scrutinise it. He was not sure if Gordon Wallace or Alan Holden ever saw it. Callum Bruce

was aware of the warranties and disclosures in it, as Brodies and Simmons consulted him

and Graham Payton in relation to these. However, he did not read these- that was a matter

for the lawyers. He was not asked to go through the Agreement or the warranties. In his

view the defender and Brodies “took ownership of the warranties”, although he accepted

that it was he and Gordon Wallace primarily who provided the information on which they

were based. He was there when disclosure under the warranties was discussed.

[18] Graham Payton: He was the Finance Director of the Company’s group. He joined

the Company and its businesses in about 2006 and was appointed a director in about 2007.

He assisted the defender in running the whole group of companies. He described the

defender as being over the past few years at “arm’s length overseas” and only “periodically

coming to meetings”, whereas Graham Payton was in the UK. Graham Payton took the lead

on banking, audit, legal, human resources and IT matters for all companies within the

group. He did not get involved in the day-to-day operation of businesses. He signed the

Agreement on behalf of the defender under a power of attorney. He described Callum

Bruce and Gordon Wallace as the “local directors” who handled the day-to-day running of

[19] In relation to the sale of the business to the pursuer, Graham Payton was part of the

sellers’ team. He described the detailed work as being led by the local directors who were

more involved in the running of the business and who would meet with the sellers’ advisers

(ie Brodies and Simmons). These local directors liaised with the sellers’ advisers regarding

the description of the business, its financial aspects, the warranties and the disclosure

[20] Gordon Wallace: David Gordon Wallace (referred to in the evidence as

“Gordon Wallace”) began his working life in the Merchant Navy. He held other positions in

other companies before being taken on as a commercial director of North Star about 10 years

or so before the Agreement was entered into. After the sale of the Company to the pursuer,

[21] Gordon Wallace was aware of a first approach made by Basalt in 2016. In October

2016 Graham Payton met with Simmons together with Callum Bruce, Alan Holden and

Graham Payton to provide them with information on the current fleet of the business,

together with the five-year history on clients and rates. He provided a spreadsheet

containing this information, which was discussed at a meeting attended by Basalt (the

principal funders of the purchase of the company), Simmons and North Star. Shortly after

that meeting, he was provided with a copy vessel summary data table, prepared by the buy

side, and was told to go through this in order to provide any missing information. He

described that document as containing each vessel, line by line and North Star management

were asked to confirm the accuracy. This vessel summary data table was the precursor of

[22] In relation to his role during the sale of the Company, Gordon Wallace’s remit was to

provide information to Simmons. He spoke to a number of documents in the Joint Bundle as

illustrating the kind of information he would provide. This included a list of current tenders

and any updates as they came through (this was to enable Simmons to track a live list). He

also provided updated contract status and summaries of outstanding ERRV tenders. He

also provided the latest version of the “workload” document, which was a document

internal to North Star containing details of every contract it held). He was not involved in

the negotiation of the Agreement and, indeed, was unaware that he was designated as a

[23] Douglas Crawford: Douglas Crawford was the solicitor from Brodies advising the

defender in respect of the Agreement. He also provided advice at a meeting called on the

[24] Simmons and Co: After it was resolved to sell the Company, the services of

Simmons and Co (“Simmons”) were enlisted as the vendor’s agents. Two individuals from

Simmons gave evidence at the proof, namely Ross Andrew Atkinson and Fraser Robert

[25] Callum Bruce, Graham Payton, Alan Holden and Gordon Wallace were defined

collectively as “the management team” in the Agreement. I shall also refer to any two or

[26] The entity funding the acquisition of the shares in the Company was Basalt,

Infrastructure Partners (“Basalt”). The pursuer led evidence of two individuals from Basalt,

[27] Steven Lowry: Steven Lowry was one of the founders of Basalt, a midmarket

infrastructure fund focusing on equity investment in Europe and in North America. He is

on one of the Investment Committees for Basalt. He was involved in Basalt’s first approach

in May 2016 and the renewed contact in mid-2017 which lead to the Agreement. He also

spoke to the information exchange between the buy and sell side and the buyer’s approach

[28] Wood MacKenzie: Wood MacKenzie (“WoodMac”) is a business that conducts due

diligence. Basalt engaged them to provide background to the North Sea oil and gas market

and to assist in the analysis of the commercial data provided in relation to the Company.

[29] Wil Jones: He was the project manager in WoodMac and reported to Malcolm

Forbes-Cable. He spoke in detail to the financial analysis conducted by WoodMac into the

business of the Company and to the several offers that were made prior to the one that was

accepted and leading to the conclusion of the Agreement. He explained that the S-Class

Vessels were a material part of the valuation and all parties understood that these were

material contracts, given that they were North Star’s most lucrative contracts.

[30] Malcolm Forbes-Cable: He is a vice-president within WoodMac, having joined them

in 2007. He had an overview of WoodMac’s involvement and he oversaw WoodMac’s due

diligence and check on the sell side’s management forecasts... Other colleagues within

WoodMac, such as Wei Lui and Wil Jones, had more hands-on roles. Wei Lui was involved

in the financial modelling. This entailed delving into a significant degree of detail including,

for example, the day rates for each vessel and what this meant for the EBITDA (ie earnings

before interest, tax, depreciation and amortization) and the value of the Company. This

enabled WoodMac to build up a revenue model and a financial model.

[31] At proof ten individuals gave evidence. The pursuer led evidence from Steven

Lowry and Wil Jones of Basalt, from Callum Bruce and Gordon Wallace, two members of

the management team of the sell side, and from Malcolm Forbes-Cable of WoodMac. The

defender led Graham Payton, Fraser Dobbie, Ross Atkinson, Douglas Crawford and the

[32] The Company and its subsidiaries owned and operated one of the largest and

youngest wholly-owned British shipping fleets engaged in the UK offshore industry. It

provided emergency and rescue services, assisting tankers, supplying platforms and

operating rescue boats to about 50 offshore installations. In particular, North Star provided

support vessels, known as “emergency response and rescue vessels” (“ERRVs”), and

services to offshore installations inter alia in the North Sea. The ERRV business in the UK is

a highly regulated sector in UK industry, requiring 24/7, 365 days support service to oil and

[33] The pursuer engaged in a significant amount of due diligence into the Company and

which included a consideration of all of the material contracts it held. On the pursuer’s

approach to the valuation of the Company, it regarded the Company’s material contracts as

fundamental to the Company and its value. One of the Company’s subsidiaries, North Star

Shipping (Aberdeen) Limited (“North Star”), operated two specialist “S-Class” vessels, the

Sceptre and the Sovereign (“the S-Class Vessels”). The S-Class Vessels had been purpose-built

to satisfy certain health and safety and operational requirements for an operator of certain

North Sea offshore platforms, namely, Talisman Energy (UK) Limited (“Talisman”) (now

[34] One of the particular design features of the S-Class Vessels was that each vessel had

a maximum displacement of 5000 tonnes with an assigned draft of 5.0 metres (“the

displacement requirement”). As it was explained in evidence, Repsol’s North Sea

installations were “ageing assets”. In order to protect their integrity and to prevent the risk

of significant damage to them, Repsol commissioned the S-Class Vessels with the restriction

of their displacement to this relatively low value. The S-Class Vessels became operational in

2013 and North Star provided these and associated support services under two charter

[35] The Company’s management team (including Callum Bruce and Gordon Wallace)

were confident that, by reason of the bespoke nature of the S-Class Vessels, Repsol would

[36] The original term of each charter party was for five years, with five one-year options

to extend the charter party on the same terms (“the options”). The five-year fixed-term

charter parties in respect of the two S-Class Vessels were due to expire, respectively, in May

and in October 2018. The options were exercisable on 90 days’ notice, if exercised in

The sell side’s expectations that the options for the S-Class Vessels would be exercised

[37] By reason of their ability to comply with Repsol’s displacement requirement, which

the management team on the sell side understood to be unique among service vessels

operating in the North Sea, North Star could charge a premium day rate for the S-Class

Vessels. In broad terms, the day rate in 2013 was about £13,500 for each of the S-Class

Vessels; it increased to about £13,700 in 2015 and dipped slightly in 2016 to £13,400. This

The buy side’s expectation of the options for the S-Class Vessels

[38] Malcolm Forbes-Cable confirmed that the S-Class Vessels were treated separately in

the WoodMac analysis. They were aware that an option was coming up but in their final

analysis assumed that it would be exercised at the current rate. He explained there was an

assumption that “life will continue as normal”; the vessels were still doing their stuff and

[39] Malcolm Forbes-Cable confirmed the significance of the vessel day rates. The

revenues were driven by the day rates each vessel could achieve and so it was necessary to

assess whether or not these were likely to change in the future. Putting it simply, he

explained that if the day rates decline, so does the value of the company. It was for that

reason that, in the weeks before the Agreement was signed, WoodMac were seeking

information from the sell side management team regarding the likelihood of the options

being exercised any potential day rates on any re—negotiations.

[40] Malcolm Forbes-Cable confirmed the centrality of the S-Class Vessels to the

valuation of the business. As she described it, North Star “were making hay” from these

contracts because these vessels were bespoke. It was understood that Repsol’s position was

problematic in that they had a challenging portfolio of North Sea assets. In short, these were

ageing sub- economic assets, with a very high decommissioning bill. Repsol was under

“massive pressure” and, looking at its portfolio globally, much of its activity was to drive

down costs. Nonetheless, in their forecasts of the day rates for the S-Class Vessels, the sell

side management team were confident that these rates could be maintained and should not

be discounted. The buy side viewed the options in the charter parties for the S-Class Vessels

in this context and on the basis that Repsol would in fact exercise these options. There is no

doubt that the sell side was aware of the buy side’s approach to valuation generally and the

[41] Stephen Lowry became aware in around summer 2016 of an Aberdeen-based

business, (ie the Company) looking to sell and which had the desired infrastructure

characteristics. The particular features he identified as according with Basalt’s investment

model included regulatory oversight in the business, high barriers to entry, health and

safety regulation driving the business need, tangible assets and fixed term contracts.

Simmons sent an information pack about the Company and Steven Lowry delegated the

day-to-day management of this potential deal to Wil Jones. WoodMac was engaged to assist

[42] Basalt made an indicative offer for the Company of £152 million on 28 September

2016 (“the Indicative Offer 2016”), subject to due diligence. However, as a consequence of

due diligence undertaken by WoodMac this valuation could not be supported and the offer

was withdrawn on 3 November 2016. In their withdrawal letter, the buy side indicated their

concern about uncertainty in the market and, in particular, whether the contract or day rates

[43] In May 2017 Simmons produced an updated business plan and forecast relating to

the Company and which was provided to the buy side. As a consequence, Basalt submitted

a new offer in the sum of £110.5 million on 16 June 2017 £10 million of the purchase was

deferred against future performance. This reflected the buy side’s view that the decline in

day rates had abated or reached an acceptable level. After the exchange of some further

information the buy side refreshed its offer on 13 June 2017 to £105 million but without any

deferral. The North Star management team provided a market update on 21 August 2017,

via Simmons, the day before Steven Lowry was due to meet North Star’s Managing Director.

The updated information, including a reduction in the day rate for several vessels, resulted

in the buy side revising its offer to £101.5 million on 29 August 2017. This was the final

offer, which the buy side accepted. Steven Lowry explained that prior to each of these

offers, the buy side had spent time with the management going through “contract by

contract, vessel by vessel” to understand the status of each. The current and future contracts

were integral to the buy side’s valuation of the Company. These included the S-Class

Vessels and relative contracts for their supply to Repsol. The Company’s management team

described the S-Class Vessels as “specialist” and “purpose-built” for Repsol; they were on

long-term contracts. As these were specially designed for the Repsol installations, the sell

side’s forecast of day rates remained unchanged, ie without diminution over time, because

[44] As it was explained in Gordon Wallace’s evidence, the CCS had first emerged during

the inconclusive talks between Basalt and the Company in mid-2016. The CCS was very

detailed. It included utilisation figures for the vessels, average day rates, estimated

cessation of production (“CoP”) for the platforms serviced, assumed scrap weights and a

[45] One of the pursuer’s grounds of action is that the ITT should have been disclosed via

the CCS prior to the Signing Date. The pursuer notes that the CCS disclosed on the Signing

Date for the purpose of the Agreement was last updated the day before, on 13 October 2017.

[46] The CCS comprised a two page document with each vessel comprising a separate

entry. In addition to the “comments” column opposite each of the 31 vessels, the other

information recorded against each named vessel included its capabilities and customer. A

separate column recorded each “contract as at 13 October 2017” (and included a contract

reference), an addendum/update reference, the contract rate, the contract period, the

contract and date, the option and date and the contract page. So, for example, in relation to

the “Devotion”, this was described as a vessel having a “Single DC” capability and whose

customer was BP. In addition to the contract reference and contract page, the CCS recorded

the contract rate (at c £6,900), the contract period (1 July 2015 to 13 August 2017), the contract

and date (given as August 2018) and the option and date (given as August 2023). In the

comments section it was recorded that the “Contract Length is 5 years from August 2013-per

Master Contract… Rate valid the same rate as 2017”. Gordon Wallace provided a large

[47] On the evidence, Gordon Wallace was principally responsible for updating this (a

role Callum Bruce took pains in evidence to distance himself from). Callum Bruce

maintained that it was Gordon Wallace’s role to reflect any changes in relation to rates in the

CCS. Steven Lowry confirmed that the CCS was regularly updated by the sell side. Callum

Bruce confirmed in evidence that he understood that the CCS had to be up-to-date as at the

date of signing the Agreement. He also confirmed that the “comments” column was there,

not because the sell side needed it, but to convey information necessary to the buy side. By

contrast, Gordon Wallace believed the CCS “comments” column was a matter for Simmons,

and to whom Gordon Wallace regularly provided information, including, for example, the

three outstanding tenders disclosed in the Disclosure Letter (described at para [71]ff, below).

[48] The entries for the S-Class Vessels, namely the Sceptre and the Sovereign, described

their capabilities as “S-Class” and Repsol as the customer. In addition to the contract

references, contract page, and addendum/update references, the CCS recorded each vessel’s

contract rate (ie the day rate of £13,362 and £13,391, respectively) and which was broadly

double the contract rates for the other vessels. The only matter recorded in the “comment”

section was a note to the effect that the details for the two S-Class Vessels had been reversed

ie information for the for Sceptre had been incorrectly recorded as those for Sovereign and

[49] Steven Lowry explained that as an infrastructure fund, Basalt always used a

“discounted cash flow” (“DCF”) valuation. This was made known to the sell side from the

outset, as it was stated in the Indicative Offer made in 2016. Fraser Dobbie confirmed that

the buy side had sought a significant amount of information about the business, including

vessel by vessel and month by month. He had reason to believe that Basalt would use a

DCF method of valuation of the Company. He accepted, albeit not with a degree of

[50] Steven Lowry emphasised that the buy side undertook a detailed review of the

business. He explained that prior to each offer the buy side spent time with the Company’s

management going through contract by contract and vessel by vessel to understand the

status of each. The CCS was the critical tool for the communication and analysis of

information about the Company and the business. This had developed from a vessel

summary data table prepared in October 2016. It included a column specifically for

“comments” and which contained information which do not fall under any of the other

headings but which was important for the buy side to know and track. The CCS was put

into the “data room”, the secure room in which information was disclosed by the sell side

and available for inspection and interrogation by the buy side. The CCS was separate from

details of the charter arrangements which were also disclosed in the data room.

[51] Steven Lowry also explained that he spent a significant amount of time with the

North Star management team and with Simmons going through the business (“line by line.

… on various occasions during the process”) in order to understand the status of its

contracts. This was because the current and future contracts were integral to the buy side’s

valuation of the business. The contracts the Company held, and would hold in future, were

[52] Prior to acceptance of offer in late August 2017, the buy side met with the sell side

management team on 2 November, 12 and 19 October 2016, 6 June 2017 and 22 August 2017.

From 26 September 2017 there were weekly calls by the buy side with Simmons. Steven

Lowry explained that throughout this process the buy side interrogated the business plan

and the business case the sell side put forward. The particular purpose of these was to

substantiate and build up the body of evidence to support the future growth rates projected

for the Company. By way of illustration, the level of detail included the likelihood of

success of the vessels securing utilisation and the expected day rates.

[53] The pursuer relies on a passage in an email of 5 October 2017 as constituting a

representation of fact – the defender disputes this, contending it was no more than an

expression of belief – and which it said became untrue upon receipt of the ITT.

[54] The buy and sell side exchanged several emails on 5 October 2017. One of the Basalt

team emailed Simmons (at 9:37 am) with two queries, the first of which related to the S-

“For the two S-Class (PSV) vessels we are not clear on the circumstances of the

previous rate reductions for these vessels. If management could provide their

expectation and rationale for the dayrate for these assets in the option period that

The sell side’s internal exchanges regarding how to respond to the buy side’s query

[55] The sell side did not supply a response to the buy side until Fraser Dobbie’s email to

the buy side much later on 5 October 2017 (timed at 16:11). This response was preceded by a

number of emails exchanged internally among the sell side. In particular:

1) At 9:40am Fraser Dobbie forwarded the email to Callum Bruce and Gordon

2) At 12:36pm Gordon Wallace emailed Fraser Dobbie (of Simmons) asking him

to confirm what rate levels he had projected for both of the S-Class Vessels

forward in the projection, wondering whether this was £10k or £12k. This

email was copied to, among others, Graham Payton and Callum Bruce.

3) At 12:56pm Ross Dobbie (of Simmons) emailed Gordon Wallace and (copied

to Callum Bruce and Graham Payton (of North Star) and Fraser Dobbie,

“The Sceptre and Sovereign are currently in the financial model on

rates of £13.4k on contracts, we have assumed the option period to go

out to 2023 at these rates and the rate then basically stays the same

4) At 13:31pm Fraser Dobbie (Simmons) applied to (among others) Gordon

Wallace, Callum Bruce and Graham Payton that “these are essentially carried

through at the contract rate throughout the forecast. If [sic; it?] has been

decided the best thing was to keep the external view that the vessels are

unique and Repsol have nowhere else to go, as such why would the rate

5) At 15:23pm Gordon Wallace replied to Fraser Dobbie’s earlier email (timed at

9:40) and copied in Callum Bruce and Graham Payton, with the proposed

“The Grampian S class vessels were purpose-built to satisfy HSE

assets. As far as we are aware these are currently the only vessels in

the North Sea that can satisfy these requirements. As such the rate

current time we have no information on Repsols [sic] Marine strategy

The rates were reduced by a token amount in 2016 as a strategic move to

And after providing information on another matter, he signed off:

6) At 15:26pm Fraser Dobbie (Simmons) replied, with a proposed deletion from

The rates were reduced by a token amount in 2016 as a strategic move

assets. As far as we are aware these are currently the only vessels in

the North Sea that can satisfy these requirements. As such the rate

expectations would be in line with projected expectations. At the

current time we have no information on Repsols [sic] Marine strategy

After providing details of several short term contracts, he ended:

7) At 16:00pm Gordon Wallace emailed a further amendment altering the

second sentence (for ease of comparison, I have shown the altered text in

“The rates were reduced by a token amount in 2016 as a strategic

assets. This followed a Global Tender exercise to identify the specific

consequently, we believe that the Grampian S class vessels are the

only vessels capable of meeting this specific requirement. As such the

rate expectations would be in line with projected expectations.”

[56] After these internal revisions, the text of the email that Simmons of the sell side sent

to the buy side (timed at 16:11pm) (“the Simmons email”) was as follows:

“1) The rates were reduced by a token amount in 2016 as a strategic move to re-

The Grampian S class vessels were purpose built to satisfy HSE requirements whilst

working alongside certain age-ing North Sea assets. This followed a Global Tender

exercise to identify the specific tonnage capable of meeting the charterers

requirements, consequently, we believe that the Grampian S class vessels are the

only vessels capable of meeting this specific requirement. As such the rate

[57] Basalt circulated the sell side response internally, with the comment:

“See responses from Management below. Can you let me know your initial

thoughts - if we can take comfort on the rate option period and possibly beyond,

depending on the COP [ie the cessation of production] of the underlying

[58] WoodMac responded about an hour later, in the following terms:

“For the S-Class vessels the minimum dayrate reduction in the 2016 as part of a

larger contract deal highlights to us the specific nature of the Sceptre and Sovereign

vessels. In light of this it is fair to assume that the options will be exercised at the

current rate. Post the option period we will take into consideration the reduced

operational base of platforms of Repsol Sinopec at that time and assume a utilisation

Comment on the internal drafts preceding the 5 October 2017 email

[59] As just noted, it was Fraser Dobbie who deleted a sentence from Gordon Wallace’s

draft reply. He acknowledged that he had amended the draft of the Simmons email but

emphasised that it was based on information from management. Their assumptions

included the uniqueness of the S-Class vessels. His evidence was a little equivocal as to why

he deleted the sentence Gordon Wallace had included, first saying he deleted this because

Gordon Wallace could not have a valid opinion on the subject matter and, after it was noted

(in cross-examination) it was a statement of fact, his response was that it was best to keep

[60] Malcolm Forbes-Cable explained the impact the assurance in this email had. Prior to

receipt of this email, in its analysis WoodMac had assumed that the options starting in May

and October 2018 would be exercised but that the rates would drop by approximately 35%.

This was in line with the drop in North Sea day rates from their peak in 2013. However,

after receipt of this email, that assumption was changed. The North Star management team

were understood to be confirming that, because of the bespoke nature of the S-Class Vessels,

these were the only vessels capable of meeting the specific requirements of Repsol. For that

reason, the rate expectations were in line with those projected by Simmons (ie the rates

would continue unchanged). In other words, the expectation was that the options would be

exercised at the full contracted day rate, contrary to WoodMac’s initial assumptions. He also

explained that the exchange of emails highlighted that this was a “quite sensitive issue”.

Malcolm Forbes-Cable also explained that he would have found it helpful to see the

sentence which had been deleted before the final draft of the email was sent out. If

WoodMac had not received confirmation from North Star’s management that the day rates

would be maintained at current levels doing the option period, WoodMac would not have

revised its original analysis and which assumed a significant reduction in the rates after the

initial five-year contract period had come to an end. There was no challenge to the pursuer’s

evidence that WoodMac had relied on this information to change its assumptions about day

[61] He stressed the significance of the S-Class Vessels to the overall valuation of the

Company. The S-Class day rates were the highest of all the vessels and so had a

The events giving rise to the pursuer’s claims under the Agreement

The receipt of the Repsol email, the attached ITT and the cover letter

[62] It is not disputed that the Company received an email on 13 October 2017 (it is timed

at 16.23pm) sent on behalf of Repsol (“the Repsol email”) with an attached ITT. While the

Repsol email did not refer specifically to the S-Class Vessels, the commencement dates (of

May and October 2018) matched the expiry of the charter parties for the Sceptre and the

Sovereign. There is no doubt that the sell side management team knew at the time that the

Repsol email related to the S-Class Vessels. (No witnesses suggested otherwise at the proof.)

[63] It is necessary to note the following parts of the Repsol email, and the attached cover

1) The Repsol email (subject line “[Repsol] Long Term Requirement”) noted a

requirement for 2 PSVs commencing late May and late October 2018 for 1, 2, 3

2) It also stated that the earlier commencement will require a methanol capacity.

3) Tenders were required by close of business (“COB”) 31 October 2017.

4) The Repsol cover letter requested “competitive “tenders” for PSV Services

commencing in late May for the first vessel and late October for the second.

Bids were invited for contracts of 1 and 3 years, each with two one-year

5) A methanol capacity was required for the vessel sought from May 2018. The

Repsol letter provided that alternative tenders (as per Annex B) would be

considered “in so far as they are technically compliant and provide a robust

6) Section C of the Form of Tender required to be submitted by 27 October and

7) The technical specifications for the PSVs (in Annex A) did not stipulate any

8) Under the heading “Methanol” at the end of Annex A, the defenders noted

that the passage began “If the vessel is tendered with a methanol capability..”

The absence of the displacement requirement was the most significant feature of the ITT, as

it meant that the S-Class Vessels lost their advantage of being the only vessels capable of

meeting Repsol’s requirements. (It should be noted, that for a person conversant with ITTs,

it would take a matter of mere moments to ascertain the absence of the displacement

requirement.) To a lesser extent, but still significant, was the new stipulation (in the Repsol

email) for methanol capacity for vessels serving the Repsol platforms. Finally, as mentioned

in the cover letter, the fact that the date of commencement for any successful tenderer was

the same as the date of the commencement of the first option was itself significant; it was

inconsistent with the exercise of the options in respect of the S-Class Vessels.

The sell side’s actions consequent upon receipt of the email and ITT

[64] Callum Bruce said normally by 5:00pm on a Friday, everyone was finished at work.

He was in the North Star office. He received Repsol’s email and attached ITT at 17:23. It

was also copied to Gordon Wallace. He didn’t review the attachment (he accessed this only

through his phone, because he was not on his desktop), but “it was clear from the cover

email” that it related to the S-Class Vessels. Gordon Wallace responded a few minutes later

(at 17.42) with the comment, “Shit timing!”. Callum Bruce “wasn’t focused on his emails”,

so he is not clear of the order in which he read them, and may have read them at the same

time. He did read the Repsol email before arriving at Brodies’ offices for the meeting later

that evening. In evidence, Callum Bruce agreed it was “bad timing”, because it was a tender

they were expecting to see much later. Callum Bruce confirmed that it was out of the

ordinary, because it was earlier than expected. In any event, it was Gordon Wallace’s

“responsibility to go through the detail”. Callum Bruce forwarded the Repsol email to

[65] None of the individuals on the sell side opened up the attached ITT on the day it was

received. The earliest point at which anyone on the sell side management team opened the

ITT was four days later, on the following Tuesday, 17 October 2017.

[66] The receipt of the Repsol email was discussed at a meeting at Brodies later in the

[67] I heard a considerable amount of evidence about the meeting at Brodies’ offices, the

advice tendered and the defender’s participation for part of this, via a call from onboard the

cruise ship The World, where he was on holiday. There were differing recollections of how

long the meeting at Brodies lasted, the duration of the call made to the defender and the

scope and basis of advice tendered. (I discuss this, under the heading “Contentious

[68] The significant uncontested matters that emerged from the evidence was that none of

the North Star management team had opened up the ITT attached to the Repsol email. Nor

did they apprise Douglas Crawford of the reference to a methanol capacity or the

anticipated cost (of c £500,000 per vessel) of retrofitting the S-Class Vessels to provide this

capability. In relation to the timing or significance of the Repsol email, this was represented

as a normal business event. This is significant. On the basis of the sell side management

team’s characterisation of the Repsol email, Douglas Crawford considered the warranties

and advised the defender he did not require to disclose the ITT. No reference was made by

any one at the meeting to the representation in the Simmons email of 5 October 2017 or any

The sell side’s subsequent communication of the Repsol email and ITT to the buy side

[69] As noted above, Douglas Crawford recommended that the ITT be disclosed by the

sell side, albeit not against the warranties. In an email sent 9 days later, on 22 October 2017

(“the email of 22 October 2017”), Callum Bruce set out in 10 paragraphs details of seven

matters, the fifth matter referred to was Repsol. That paragraph stated:

“Repsol have issued an RFQ looking for a tender to be submitted mid-November,

awarded likely in Q 1 next year, for the two “S” Class vessels commencing on expiry

of the current contracts in May and October next year. As per our normal approach

as the incumbent but particularly as these are specialist vessels we will wait until

near the submission date to come to a firm decision on the rate to be offered.”

Steven Low circulated this to others with Basalt, with the short comment: “S class gets a

mention but things look relatively solid”. In evidence, Callum Bruce readily accepted that

the ITT wasn’t an RFQ. He sought to minimise the difference between an RFQ and an ITT.

Callum Bruce cavilled when he was asked why the sell side were not told at this time the

date on which the ITT had in fact been received. In his view, it was “not important”.

[70] A further exchange of emails on 30 November 2017 was spoken to in evidence. The

first was a short email from Stephen Lowry (of Basalt) with the subject line “tender” and

asking “… Can you send me the actual date that the tender for the S class was released

please?” Callum Bruce responded about 40 minutes later stating:

“no problem didn’t expect to be dealing with this right now. Thought it would be

after the new year with a better outlook on the market for the PSV’s.

I deal with the email of 22 October 2017 in more detail, below, when I consider the

[71] Lord Davidson elicited evidence about other disclosures. The disclosure letter of 14

October 2017 (“the Disclosure Letter”) did not make reference to the ITT. However,

pursuant to his obligations relative to warranty 11.3, the defender disclosed the existence of

“3 outstanding tenders”. Those “tenders” were said to be with Siemens ABB Germany,

Zennor Petroleum and BP Trinidad. These disclosures consisted of two RFIs and one ITT.

BP Trinidad issued an RFI on 26 July 2017, to which the Company responded on 14 August

2017. BP Trinidad did not then issue an ITT. The Siemens communication was also an RFI,

issued on 19 December 2017, to which the Company responded on 25 January 2018.

Siemens did not then issue an ITT. The Zennor work was a tender, which was issued on 28

August 2017, and to which the Company responded on 13 September 2017.

[72] Gordon Wallace explained (in his witness statement, at para 8.3) that an RFI is

“usually a prequel to an ITT” and that “If you do not respond to an RFI, you will not be

considered for the ITT”. Wil Jones, in his witness statement (at para 6.4), explained that RFIs

“precede an Initiation to Tender”. To Wil Jones, it made sense that the RFIs were disclosed

as Mr Craig knew that Basalt “were interested to know about the opportunities and

challenges facing the business.” In chief, Gordon Wallace supposed it was him who decided

to pass on the Siemens, Zennor and BP Trinidad information for disclosure. He agreed that

two of these pieces (Siemens and BP Trinidad) were RFIs. In chief, Callum Bruce agreed

that the Siemens and BP Trinidad arrangements were not ITTs, but RFIs. They were

disclosed as tenders as “potentially significant work”. He explained that, if one responded

well to an RFI then one may subsequently receive an ITT. Callum Bruce also commented

that an RFI is something that “was likely to turn into future work”. It was not his decision to

disclose the RFIs, but he acknowledged these were disclosable. On the basis that the BP

Trinidad and Siemens work were not outstanding tenders, Callum Bruce considered that the

disclosures the defender chose to give pursuant to clause 11.3 were wider than “outstanding

[73] North Star’s tender for the S-Class Vessels by half was unsuccessful, notwithstanding

The roles of those attending the meeting at Brodies and the purpose of the meeting

[74] Gordon Wallace, the author of the “Shit timing!” email, could not attend the Brodies

meeting because he was at his child’s 21st birthday party. However, he had expected Callum

Bruce to provide information about the ITT to Simmons. (As noted below, in his view the

ITT was “an important tender” and that this should have been provided to the sell side

[75] Callum Bruce was the member of the sell side management team who had had the

greatest experience of the business and the industry in which it operated. However, as he

explained in his parole evidence, his chief purpose in attending at the Brodies meeting was

to sign his personal service contract (ie retaining him as part of the management team under

the new ownership). “That was”, he said, “the only thing I was coming to do that night”. In

this mind-set he was unlikely to consider what, if anything, he required to do in Gordon

Wallace’s absence. His recollection about what transpired at the meeting at Brodies ’offices

was uneven, at best. (I accept Lord Davidson’s submission that Callum Bruce was not an

especially reliable witness in this respect.) His poor recollection was consistent with his

detached view of the matters to be addressed at the Brodies’ meeting and his focus on his

own personal service contract. For example, he regarded the issues of disclosure and the

warranties as something “left to the lawyers”. That comment betrayed a significant failure

of appreciation of his role, as part of the senior management team, to communicate any

matters of any materiality on behalf of the sell side to Douglas Crawford.

[76] In his evidence, Graham Payton portrayed himself as distant from the issues. While

he agreed with Callum Bruce’s characterisation of him as the “numbers man”, he cast Alan

Holden of North Star in the role of the person more familiar with the numbers. Graham

Payton was not responsible for providing information to Simmons: that was for others. In

relation to commercial matters, Graham Payton left this to Callum Bruce and Gordon

Wallace. He was not involved in everything; he would be included in emails but he did not

necessarily read them. He was not involved in revisals to the Simons email. When asked

questions about this in cross, he professed “not to be conversant” with it.

[77] In terms of what Graham Payton’s actual role was as part of the North Star

management team, in his words, he was “floating around with the best intentions”. As for

his attendance at the Brodies’ meeting on 13 October 2017, Mr Payton presented himself as

having a minimal role. He did not ‘lead’ on any matter; Callum Bruce did. He felt that the

matter of the ITT was for others, surmising that this was a shared responsibility between

Gordon Wallace and Callum Bruce. He left the issue of what was to be done in response to

[78] The Simmons team comprised Fraser Dobbie, and the more junior man, Ross

Atkinson. The impression Fraser Dobbie gave was that by that point Simmons’ role had

been discharged. Fraser Dobbie confirmed that the payment of the full fee to Simmons was

contingent on a deal being done. (The defender confirmed that the Simmons fee was

“certainly” a million pounds.) Ross Atkinson understood his role at the meeting was just to

review the financial information and detailed arrangements in the Agreement to ensure that

these reflected what had been agreed between the buyer and the defender. Neither gave the

impression that they understood they had an active role to play other than to check the

numbers (and which Fraser Dobbie delegated to Ross Atkinson). The Simmons’ witnesses’

description of their role is consistent with the evidence of other witnesses about them.

Graham Payton described them as sitting there listening to the lawyers words. Otherwise,

he did not recall that they made any contribution as regards the ITT.

[79] There was a surprising paucity of evidence as to the purpose of the meeting at

Brodies. Most of those who attended were not asked specifically about this in evidence. It

was relatively late in the proof when Douglas Crawford volunteered that he did not know at

the outset what the purpose of the meeting was. There is a ring of truth in this observation.

It is consistent with the impression in the evidence that the meeting was hastily arranged

outwith business hours on the eve of the Signing Date. The fact that Douglas Crawford

thereafter used the occasion (and, in particular, the call to the far-distant defender), to go

through other matters prior to the Signing Date was not inconsistent with this passage of his

evidence. The unplanned nature of the meeting was also consistent with the evidence that

none of the other witness appeared primed or ready to discuss the warranties and that none

had copies of the warranties or the Agreement in front of them. This is consistent with the

What was the sell side’s understanding of the use of ITT’s generally and the significance of ITT?

[80] Having regard to the respective roles of the members of North Star’s management

team, Gordon Wallace was best placed to explain the use of ITTs in the industry. Graham

Payton was relatively new to the industry and was not, as Finance Director, as close to the

commercial operations as Gordon Wallace. Callum Bruce, while notionally part of the

commercial operations, clearly regarded himself as operating a form of oversight at some

[81] In his witness statement Gordon Wallace explained that, generally, ITTs were

considered “outstanding tenders” at the point of their receipt. In cross-examination on

behalf of the defender, he accepted that this was a mistake. However, on the totality of his

evidence it was clear that the North Star management team view was that receipt of an ITT

“indicated” a lowering of the rate was required. He elaborated on the purpose of an ITT,

which was to make an incumbent “as worried as possible” about the chances of retaining the

contract to which it related. It was a way for a counterparty to “generate a competition”.

[82] In relation to the ITT, both Callum Bruce and Gordon Wallace confirmed in evidence

that its timing “surprised” them. Gordon Wallace was surprised it had come out so early.

All of the sell side witnesses (apart from the defender) who were asked about the ITT

confirmed that the timing of the ITT was out of sync with the expectation that any

communication about exercise of the options would be much closer to the date at which they

fell to be exercised. It is clear that the fact of the receipt of an ITT, especially an early ITT,

was not a neutral factor. This is borne out by Gordon Wallace’s description of the timing of

receipt of the ITT as “ironic”. It was “ironic” because “it was [Friday] the 13th and because

we were close to the deal”; “it [ie the ITT] could potentially affect the deal”. As he

explained: the ITT had the potential to “make Basalt think again”. The defender’s evidence

to the contrary, that the ITT was not a surprise to him or to any of the management team, is

not credible and is not consistent with the evidence of these witnesses just described.

[83] Gordon Wallace accepted that the market for PSVs in October 2017 was “soft” and

that there was “downward pressure” on rates at that time. He also understood that Repsol

were looking for ways to save money on the S-Class Vessels. By reason of the low oil price

many ,“if not all”, of the business’ clients were struggling and if they could find a way to

[84] At that time, Repsol were looking “to drive rates for anything as low as they could

go”. He fully understood that the ITT had to be shared with Simmons, because Repsol had

options for chartering ships that did not comply with the displacement requirement. He

regarded it as “important” and so he “thought it should be provided to our lawyers”. When

asked why, he said “I think all contracts are significant; that one [ie the S-Class Vessel

charter parties] in particular is a very important one”. This was because “in terms of the

rates within that contract, they were high performance, high value contracts”. He accepted

that the ITT “might upset the deal- he didn’t know, but it certainly had the potential…you

were looking at a five-year contract with a duration to May 2018 and suddenly the

headlights [were on] and [it] had the potential to make you think again”. His concern was

[85] Callum Bruce also accepted that rates for PSVs had “softened” by October 2017. In

common with Gordon Wallace, Callum Bruce accepted “in hindsight” that receipt of the ITT

signalled that there would be no rollover of the S-Class Vessels. He explained the sell side’s

thinking at the time was that Repsol were “trying to get a price chip”, meaning a reduction

in the day rate for the S-Class Vessels. It must be noted that this answer disclosed

knowledge and understanding on the part of the buy side that Repsol were attempting to

achieve a reduction in S-Class Vessel day rates. It also supports an inference that this would

[86] In relation to the warranties, in his parole evidence Gordon Wallace disavowed the

sentence in his witness statement that Graham Payton “had ownership of the warranties”;

he did not know what this phrase meant. He himself was not involved in the negotiations of

the terms of the Agreement. His, ie Gordon Wallace’s, remit was to provide information as

[87] Graham Payton’s parole evidence about the significance of the ITT was somewhat

guarded, although he acknowledged that he agreed that it signified Repsol were

“reassessing their options.” He described the degree of risk “as an interesting question; they

[Repsol] were reconsidering marketplace to see if [there were] any other vessels”. Repsol

were using the ITT “to reconsider their options”. Not having seen the ITT on the day it was

received, he was unaware that the displacement requirement had been dropped.

[88] The evidence of the Simmons team on this issue is in large measure dependent on

what they were told by the North Star management team. Fraser Dobbie had relatively little

recall about events. He became aware of the ITT in a call from Callum Bruce. Callum Bruce

told him he wasn’t sure whether there was something that needed to be done in relation to

the ITT, but gave him the impression there was a need to disclose it. Fraser Dobbie did not

see either the ITT or the email, nor did he ask to see them. He confirmed that neither the ITT

nor the email was produced at the Brodies meeting. He did not recall that their contents

were communicated. He had no specific recall of what information was provided to

Douglas Crawford by the North Star management team about the ITT or what it might

signify. He volunteered he had “no valid opinion” on what should be done. No one

discussed disclosing the ITT; if it was a question of law, it was a question of deferring to the

lawyers. He did not ask any questions; he did not look at the warranties during the

meeting; he did not really listen to the lawyers. The only warranty he could recall being

discussed had wording about “material events”. While he had no knowledge of what was

normal business in the North Sea industry, he did recall that the North Star management

[89] In response to a question in cross examination, as to what his reaction would have

been to the receipt of the ITT had he been acting for the buyer, he confirmed he would have

had “asked further questions “ of the management team of North Star. He didn’t disagree

with the proposition that that the ITT “kicked off” on the expiry of the S-Class Vessel charter

parties (ie when the options fell to be exercised). Fraser Dobbie did ultimately accept that

the buy side would have known that disclosure of the ITT would have given rise to further

[90] Ross Atkinson was the other Simmons representative present at the Brodies meeting.

In relation to the ITT, he accepted that it could mean the contract would be “re-awarded” or

“renegotiated”, but he did not feel he had a great deal of knowledge or experience. His role

at the meeting was to review the financial information. Nonetheless, it never occurred to

Ross Atkinson that the CCS should be updated to reflect the ITT. This sits uncomfortably

with his acceptance, in cross-examination, that the buy side might have had “an interest” in

knowing that the ITT came in on 13 October 2017. He also accepted that, given the

materiality of the S-Class Vessels, the buy side would have such an interest because of

impact on risk. He candidly accepted as “fair” that the buy side had an interest in learning

“anything that affected” the risk in respect of the S-Class Vessels. This included losing the

[91] All of the sell side management team witnesses (ie excluding the defender) who

spoke to the receipt of the ITT confirmed that the timing of its receipt was itself surprising.

The sell side management team were well aware of the significance of the S-Class Vessels’

contribution to the value of the business, the softening of the North Sea market at this time

and the buy side’s particular focus on factors such as day rates to forecast future

profitability. The latter was demonstrated by Basalt’s withdrawal of the offer in 2016 and

the subsequent intense interest the buy side exhibited in this level of detail during the pre-

Signing Date negotiations. It is difficult to reconcile the sell side’s collective quiescence on

receipt of the ITT with their knowledge of these matters. All of the witnesses on the sell side

accepted in one form or another that the buy side would have wanted to know about the

receipt of the ITT, and that it introduced a risk of the S-Class Vessels charters not being

[92] It is necessary to distinguish between the retrospectivity or justification provided by

the sell side witnesses in their evidence and what the evidence disclosed of their

[93] One striking feature of the evidence from those attending the Brodies meeting on

behalf of the sell side was that not a single one of these witnesses regarded discussion of the

ITT as within his managerial responsibility or professional remit. Rather, there would only

be significant downsides if the sale did not complete. Simmons’ fees would not be paid in

full, and the service contracts to retain members of the North Star senior management team

would not be signed, if the sale of the Company to the pursuers did not complete. The risk

that the sale would not proceed was very real, given that Basalt had backed away in 2016

[94] Callum Bruce accepted at the proof that he was aware that the CCS required to be

up-to-date, that this was generally the responsibility of Gordon Wallace, and that Gordon

Wallace was not available to attend the meeting at Brodies offices on the evening of 13

October 2017. Accordingly, Callum Bruce was the senior member of the North Star

management team in attendance at that meeting. Notwithstanding all of these factors, it is

abundantly clear on the evidence that at the Brodies meeting Callum Bruce adopted what

can only be described as a position of complete complacency. He did not, in Gordon

Wallace’s absence, assume any responsibility in relation to the ITT or its possible

implications. On the evidence, he appeared to give no thought to whether the ITT might be

relevant to the buy side or might fall within the warranties. While he had a copy of the

warranties as Douglas Crawford went through these at the Brodies’ meeting, he was

completely disengaged from that process, focused as he was on his single purpose (to sign

his own service contract). Graham Payton, as Finance Director and with less experience in

the industry, was in no position usefully to comment on the significance of the ITT. The

Simmons’ witnesses, Fraser Dobbie and Ross Atkinson, were dependent on what they were

[95] The sell side knowledge of all of these factors provides a particular context in which

to place their subsequent actions and how they chose to convey the significance (or

otherwise) of the receipt of the ITT to Douglas Crawford. There was, in fact, very little

evidence on this point. This may reflect the fact that there appeared to be so little

consideration of it by the sell side management team at the time. What is clear is that all of

the sell side witnesses understood that the ITT undoubtedly related to the S-Class Vessels

and they all knew the importance of those to the valuation of the business. It is hard to say

whether each member of the sell side management team present at the Brodies meeting was

influenced by the personally adverse financial consequences if the sale did not complete,

but on the whole evidence not a single one of these witnesses appeared to interrogate the

timing or receipt of the ITT from the position of the buy side (and in whose service some of

them were about to be maintained in senior positions). The impression was of a meeting,

hastily convened, whose principal purpose was to get the deal over the imminent finishing

line and then to wait and see what the fallout might be. If Repsol exercised the options then,

potentially, there was no fallout, though the sell side’s general understanding of the use of

an ITT by an incumbent and their knowledge of the difficult market for the North Sea

The Brodies meeting: what the sell side management team told Douglas Crawford

[96] It is important to note what information was not provided to Douglas Crawford

before or at the Brodies meeting. As noted above, apart from Gordon Wallace (who did not

attend the Brodies meeting), the first time anyone else from the sell side opened up the ITT

was four days after its receipt and after the Signing Date. It was necessarily the case,

therefore, that Douglas Crawford was unaware of the terms of the ITT at the Brodies

meeting (a position of ignorance shared by all of the sell side management team in

attendance). He was not told of the removal of the displacement requirement or the

significance of its omission from the ITT. He was not provided with a copy of the cover

email. He was not told about the new requirement for a methanol capacity or the likely cost

of that per vessel. He was not provided with a copy of the Simmons email; nor was he

[97] By the time of the Brodies meeting Callum Bruce and Graham Payton had agreed to

tell Douglas Crawford about the ITT. (On the evidence of both Gordon Wallace and Callum

Bruce, Graham Payton never saw the ITT or email that evening.) Callum Bruce resisted the

proposition that the purpose of the Brodies meeting was to obtain legal advice, so much as

“just to tell” Douglas Crawford that this had come and to take his advice. In general, it was

“we have an ITT, what do you think?” and “Did we need to disclose?”. When pressed on

this, Callum Bruce explained that he had never been in this position before.

[98] Callum Bruce simply told Douglas Crawford that the ITT had come in. Douglas

Crawford asked if this was “ongoing” or material. Callum Bruce said he and Graham

Payton affirmed that it was not an issue because they would retain the Repsol charter

parties: “it was an ITT and we [ie North Star] will get the work going ahead [ie forward]”.

He indicated to Douglas Crawford that he had” no doubt” that the Repsol charter parties of

[99] Douglas Crawford accepted that he had seen neither the ITT nor the covering email

at the meeting at Brodies’ offices. So far as he could recall, the cover email was not

discussed at all. He recalled that there was no discussion of the details of the ITT. Douglas

Crawford’s evidence was unclear as to what precisely he was told by the sell side

management team about the ITT. (No file note of the meeting was spoken to in evidence.)

On the one hand, he recalled that everyone was “surprised” because there was no “pre-

warning”. At other points in his evidence, he did not think that Callum Bruce had told him

he was surprised to see the ITT early. Douglas Crawford explained he had no personal

knowledge of how the industry operated in relation to ITTs or their receipt.

[100] He emphasised that the conversation about the ITT was led by Callum Bruce and

Graham Payton (though this is not borne out by their evidence). As Douglas Crawford

presented it, the view of the meeting on this matter was a discussion “led by others”

(specifically Callum Bruce and Graham Payton) rather than by him, because this was a

commercial rather than a legal issue. As he understood the view expressed by Messrs Bruce

and Peyton it was that the ITT was a “normal” event for the business; that all charters were

renewed by ITT and that the S-Class Vessels were coming up for renewal at some point. He

was not told that the ITT suggested a risk that the options for the S-Class Vessels might not

[101] The foregoing is the context in which to place the evidence about the call made to the

[102] Callum Bruce’s evidence about the discussion of the ITT during the call with the

defender was that it was brief. The purpose of the call was not confined to receipt of the

ITT; it was “a general call”. So far as Callum Bruce could remember of Douglas Crawford’s

call to the defender, during the call with the defender Douglas Crawford did not go through

the warranties; he referred to the ITT “as ‘ongoing business’ and not ‘negotiations’;’ we

hadn’t commenced any negotiations’ and that was about it. It was not a long conversation”.

[103] As for the length of the discussion of the ITT at the Brodies meeting, Graham

Payton’s recollection was that this lasted between 15 and 30 minutes. The ITT was “a

relatively small part” (“no more than 10 minutes”) of the discussions. Douglas Crawford

asked questions mainly of Malcom Bruce. All he could recall about the discussion was

really just whether there were “negotiations” or “active negotiations” or not. The only

warranty Fraser Dobbie could recall being discussed was that in clause 11.3. He did not

regard himself as under a duty to update the CCS as a consequence of, or to reflect, receipt

of the ITT. In Ross Atkinson’s estimate, the call with the defender lasted about one hour and

most of the call was devoted to the subject matter of the ITT. He could recall the defender

saying something about the “ordinary course of business” and being comfortable with

Douglas Crawford’s advice, which he himself could not remember. I discount Ross

Atkinson’s evidence as to the length of the call with the defender, as this was unsupported

by the evidence of the others present. His impression of the length of the meeting may be

explained by the fact that this was a meeting imposed on him at short notice, held into a

Friday evening and where, seemingly, nothing was expected of the Simmons team other

than to “sit and listen” to the lawyers. The defender said the purpose of the call was to

cover 10 to 20 issues, “normal SPA things”, and that the subject matter of the ITT consumed

[104] In relation to the defender’s participation in the meeting by telephone call, Douglas

Crawford’s recollection was that the purpose of the call was to talk about the ITT. (No other

witness supports this evidence.) He said the call lasted 10 to 15 minutes and was, after the

opening pleasantries, devoted to the issue of the ITT. He explained that his advice centred

solely on the warranties and his advice was not to disclose. The context was that everything

was moving quickly towards signing. Douglas Crawford’s description that everyone was

concerned with the ITT at the meeting is inconsistent with the evidence of all the other

witnesses present at the Brodies meeting. While Douglas Crawford suggested there was

active input from Ross Atkinson and Fraser Dobbie, this is not consistent with their

evidence, or with Ross Atkinson’s description of their passivity. Douglas Crawford’s

recollection of a meeting convened specifically to discuss the ITT was not reflected in the

[105] In relation to the scope of the discussion at the Brodies meeting, Douglas Crawford

stated, in response to a question in cross-examination, that consideration had been given to

the impact of the ITT on the buyers. (However, this is unsupported by the evidence of any

of the other witnesses in attendance.) He also confirmed that he was solely concerned with

the warranties and gave no consideration to any other duty to inform the buy side of the ITT

in the circumstances. He emphasised that his practice was not to disclose beyond the

warranties. The defender’s evidence contradicts Douglas Crawford’s evidence on the

subject matter of the call. The defender’s evidence was that it lasted 30 minutes and that it

was to “drill down” on the main issues before the Agreement was signed. In my view,

Douglas Crawford’s evidence on what he said was focus of the call may reflect the

unconscious desire of a lawyer to protect his client and to present his own actions in the

most favourable light. However, this chapter of his evidence is contradicted by the weight

of the evidence of the others present, and which on this matter I prefer.

Comment on the credibility and reliability of the defender’s evidence

[106] The defender had little direct evidence of relevance to the issues. There is a certain

tension in the defender’s case, which requires the contention that the defender (or the sell

side management team) knew enough to disclose for the purposes of the pre-Completion

window warranty (eg of a material event), but that what was known was otherwise outwith

the pre-signing warranties (of “ongoing negotiations … of material importance …”).

Portions of the defender’s written witness statement appear crafted to negotiate that tension

while providing scant detail. So, for example, in the section dealing with notification of the

“Callum Bruce gave Steve Lowry an operational report within around a week of [the

Agreement] being signed. I understand that the report made Basalt aware of the

Repsol ITT. I checked this with Callum at the time and received confirmation that

Pausing there, it is not correct that the “operational report” was sent in that short a

timescale; nor (more tellingly) was Basalt made aware it was an “ITT”. (For the reasons

provided below, I find that the terms of the email of 22 October 2017 were misleading.) If

the defender had checked with Callum Bruce at the time, as stated in the third sentence, he

was either potentially aware of the misleading nature of that communication or he was blasé

about compliance with the pre-Completion window warranty. In turn that calls into

question the genuineness of the defender’s earnest assertion in the next statement in his

witness statement: “These operational updates were important in terms of enabling Basalt to

have input on operational issues and decisions in the gap between the signing and the

closing of the transaction”. The apparent interest the defender says he took, such as to lead

him to check with Callum Bruce, does not sit comfortably with the evidence of others about

the defender’s complete detachment from the affairs of the Company.

[107] Considering the totality of his evidence and the manner in which he gave it, the

defender did not give the impression of one trying to do his best to remember or to assist the

court. He was often guarded in his exchanges with Senior Counsel in the course of his cross

examination. At other points, the defender cavilled in his evidence. One small example was

his reluctance to accept (as all of the other witness readily had done) the uncontroversial

proposition that the S-Class Vessels were important to the business.

[108] His evidence that the ITT was “not a surprise” to him or to anyone on the sell side is

(or his later statement that it was “not unexpected”) is not credible. It is not consistent with

the evidence of the witnesses from sell side management team, nor, even, with the

defender’s description at an earlier point in his evidence of the Brodies meeting being

convened because the ITT had come in “at the 11th hour”. Accordingly, it is necessary to

treat the defender’s evidence with a degree of circumspection, especially if unsupported by

[109] The impression the defender gave was that in very large measure he left things to the

North Star management team. This was consistent with the evidence of others that, by this

stage in his life, he had little direct involvement in the affairs of the Company. He was

abroad at this time. This is also consistent with how he presented in the witness box, which

[110] The defender confirmed that he was aware no one at the meeting had opened up the

ITT by that point. So far as he could recall Douglas Crawford’s advice, it was that ”the ITT

was not an outstanding tender, nor an ongoing negotiation which could lead to the

acceptance a material contract”. (On reviewing the defender’s evidence, this is one of the

rare instances when he provided an answer with a degree of detail. There is force in

Lord Davidson’s observation that this answer appeared to reflect a rote repetition of the

exact words of the warranty.) Douglas Crawford’s short advice was that the ITT not

[111] In relation to the advice tendered to the defender, Douglas Crawford could only

provide advice on the receipt of the ITT based on how this was presented to him by the sell

side management team. It is clear that, by the time of their attendance at the meeting (and in

contrast to the candour of Gordon Wallace’s “shit timing!” response and the concerned

terms of Callum Bruce’s call to Fraser Dobbie), the significance of the ITT, even its timing,

was significantly downplayed. On that basis, the nature of the advice Douglas Crawford

[112] I find on the balance of probabilities that the insofar as it concerned warranty issues,

the discussion at the Brodies meeting was confined to warranty 11.3 and that Douglas

Crawford’s advice was predicated on the bland presentation of the ITT by Callum Bruce and

Graham Payton (either because they downplayed the ITT or failed to appreciate its

significance). The ITT was presented essentially as an unremarkable, normal business event.

[113] There was no discussion of the terms of the ITT or email (whose contents were

unknown to all in attendance). There was no discussion of the CCS. There was no

discussion of the Simmons email. It is likely, therefore, that the duration of the call was

relatively brief, ie 10 to 30 minutes, which included finalising the usual details prior to a

[114] Douglas Crawford appeared to have a weak recollection of looking at or advising on

clause 8.1.3. However, this was unsupported by any of the other witnesses and may reflect a

degree of retrospective reconstruction. No other witness spoke to Douglas Crawford giving

advice on clause 8.1.3. No other witness supported his description of everyone having a

copy of the Agreement and going through each of the warranties in turn. At most, and

consistently with Graham Payton’s recollection, there was a suggestion that the ITT be

disclosed the next time the sell side communicated with the buy side. This was not framed

as advice for the purpose of complying with the Agreement (eg clause 8.1.3). In any event,

even if this advice were tendered, it was not followed by anyone on the sell side.

[115] All that Graham Payton could recall of Douglas Crawford’s advice was that the ITT

did not fall specifically into any clauses requiring disclosure, but that it would be a “good

idea” to disclose it the next time they had contact with the buy side. The reasoning process

for that was that the Repsol contract was “a significant contract”; that the ITT was part of

“the normal process” and that there was no harm in disclosing it. The defender’s evidence

was that he understood that the ITT would be disclosed “in the normal course of business”.

If he had been told it needed to be disclosed, he would have done so. As he explained it:

“he [ie Douglas Crawford] believed we had received something we didn’t need to disclose

at that time, but would prior to the sale of the Company”. He (ie the defender) had taken

legal advice on this. On the defender’s evidence there wasn’t really advice about any post—

Signing Date disclosure (ie under clause 8.1.3), because “this didn’t come into play”. He did

not recall receiving advice at any point after the signing about this either. At other points in

his evidence in relation to the issue of disclosure under clause 11.3, the defender appeared

simply to rely on Callum Bruce and the terms of the email of 22 October 2017. While the

defender conceded, when pressed, that he had was “keen” to know the buy side’s reaction

to Callum Bruce’s email of 22 October 2017, he was distinctly unwilling otherwise to answer

What the sell side did in relation to the ITT after the Signing Date

[116] There is an unexplained dissonance between the sell side’s reaction to the ITT upon

its receipt and their subsequent conduct in the period following the Signing Date. While a

meeting with Douglas Crawford would always be necessary pre-completion, such evidence

as there was indicated that the receipt of the ITT prompted the urgent calling of the Brodies’

meeting at very short notice after business hours on the eve before the Signing Date. The

alacrity of that response must be contrasted with the casualness thereafter of the sell side’s

disclosure of the ITT to the buy side. (This reinforces the impression that there really was no

firm or focused advice by Douglas Crawford of what the sell side should do in relation to

the ITT after the meeting, which itself is consistent with its import being presented to him as

an ordinary business event.) Callum Bruce accepted that Douglas Crawford told him to tell

the buy side about the ITT when he next spoke to or updated them, although this was not

framed as necessary to ensure compliance with any warranty or clause in the Agreement.

[117] I have already set out the terms of the email of 22 October 2017. In relation to that

email, Fraser Dobbie accepted that from its terms a reader might assume that what had been

The defender’s evidence about the email of 22 October 2017 and his knowledge of the ITT

[118] The defender was cross-examined under reference to the email of 22 October 2017.

In his answers the defender presented as cagey and, at times, he cavilled in his evidence.

For example, the simple question was put to him that the description of the ITT as an “RFQ”

was not correct. After a long pause, he queried that “it could be interpreted as such?” He

was pressed: if it was an ITT, it would say “ITT”. He quibbled: “it may or may not” say that.

As to the omission in the email of 22 October 2017 to state when the ITT had been received,

the defender would only concede “it was not specified” on that date. When asked if a

reader of the email of 22 October 2017 would assume the “RFQ” was received after the

Signing Date, the defender again cavilled, answering “it could or it couldn’t”. (This answer

may be contrasted with Fraser Dobbie’s more straightforward answer, noted at para [117],

[119] The defender appeared or affected not to understand the import of a further line of

questions about whether he had notified the buy side about the ITT. His initial answers

were to deflect responsibility for this onto others. In his view, the sell side had “responded

very quickly”. When asked if he had intimated the ITT as a “material event”, his evidence

was, at points, confusing and contradictory. He conceded that the ITT “was material” so far

as the litigation was concerned. However, the thrust of his evidence was that so far as the

sell side were concerned at the time, the ITT was not a “material event”. At the same time as

asserting that the ITT was disclosed via the email of 22 October 2017 (ie for the purposes of

clause 8.1.3), the defender maintained that “we didn’t think it was a material event”. He

accepted that as at 13 October 2017, none of the sell side had opened up the ITT. In re-

examination, the surprising evidence (if accepted) was brought out that the defender had

never opened the ITT and had never been told of its terms until the present dispute

emerged. This last statement is not credible. In addressing the question of when the

defender first became aware of the detail of the ITT, the sentence in his witness statement is

as follows: “I do not recall being aware of the detail and content until this claim was made

against me”. This is carefully crafted. There is no straight denial; the position is left

equivocal. The reference to the “detail and content” of the ITT leaves it unclear what he

might of known of its critical features, such as the abandonment of the displacement

requirement, or of matters also apparent from Repsol’s email and cover letter – namely, the

methanol capacity or proposed commencement at the start of the first option. The lack of

knowledge the defender professes as to the terms of the ITT is also not consistent with the

“keen” interest he had to know from Callum Bruce of the buy side’s reaction to the email of

22 October 2017. That was the single point in the evidence which disclosed an active

concern on the part of the defender. That passage was true, although it does not sit

comfortably with the defender’s statement that he was not aware of the content or detail of

the ITT. If he was ignorant of the terms of the ITT, why would he keenly exhibit interest on

this single occasion during the sale process? On balance, I do not accept the defender’s

evidence that he was not aware of the salient features of the ITT prior to the litigation. On

the whole evidence, I find it more likely than not that he knew of the principal features of

the ITT and Repsol email during the pre-Completion window. Nothing else explains his

following this up with Callum Bruce “at the time” (per his witness statement quoted at

No disclosure of the date of receipt of the ITT until after completion

[120] Steven Lowry explained that upon receipt of the email of 22 October 2017 he was

“disappointed”, not least because he considered the buy side to be on “business risk” in

relation to the S-Class vessels. From the terms of the email of 22 October 2017, he assumed

that the ITT had been received after the Signing Date. This was because the sell side did not

at any point volunteer the date on which the ITT had been received (or, indeed, describe it

accurately as an “ITT”). Indeed, while there was subsequent contact in the form of a

meeting with the North Star management team on 7 November 2017 and a call between

Callum Bruce and Wil Jones on 9 November 2017, there was no mention of the receipt of the

ITT on either of those occasions. Information about the receipt of the ITT was only provided

some weeks later, on 30 November 2017, in reply to a direct question by the buy side.

Steven Lowry explained that the buy side was “very surprised” and believed it should have

been disclosed before the Signing Date. Callum Bruce accepted, ultimately, that it would

have been important to have told Steven Lowry when the ITT had been received. Ross

Atkinson accepted that losing the Repsol contracts for the S-Class vessels was a significant

hit. I accept this evidence. It follows that I reject the defender’s suggestion in his evidence

that the buy side were aware of the ITT prior to completion. The ITT was mischaracterised

as a lesser “RFQ”; the date on which it was received was withheld; minimal detail was

provided (omitting the abandonment of the displacement requirement and adding one for

methanol capacity); and such detail as there was, was buried among many other items in a

low-key email. The manner of the first mention of the ITT was, in my view, intended

materially to underplay its terms and effect and, in that respect, was disingenuous and

Consequence if the buy side had known about the ITT before the Signing Date

[121] Steven Lowry explained that if he had known about the ITT, the sell side would have

been “concerned” about other competitors and would have wondered why Repsol were

issuing the ITT, especially if the S-Class Vessels really were bespoke. It would have led him

to question what this would “mean for the revenue” of the business. If he had known of the

ITT, he explained the buy side would have “paused and investigated the ITT … to query the

broker and [he] would have expected [the sell side] management to engage with Repsol and

find out what was happening.” He expanded on this: “We would have wanted to

understand the risk around these”. He was clear that the buy side would not have signed

the Agreement until it “understood the risk around [the S-Class Vessels]”. Steven Lowry

was also clear that the fact that the ITT was “early” was “another warning sign”.

[122] Collectively, these features would have pushed the transaction “outside the

parameters” that had been approved by Basalt’s investment committee. In other words, if

the S-Class Vessels were “at risk”, then there were concerns about the value of the business

and which may have taken the Agreement outwith Basalt’s delegated approval. Steven

Lowry explained that, even in respect of the methanol capacity, the buy side would have

compared the specification appended to the ITT with the existing contract specifications.

They would have done so to seek “comfort” that the S-Class Vessels were still unique to

meet Repsol’s needs. Steven Lowry confirmed that knowledge of the ITT prior to the

Signing Date would have led him to adjust the price. In particular, this would be a

“substantial downward amount” given the importance of the S-Class Vessels, and which

[123] Malcolm Forbes-Cable explained that WoodMac had initially intended to discount

the day rates for the S-Class Vessels by about 35% but changed that approach upon receipt

of the Simmons email from the sell side. This conveyed to WoodMac the sell side’s

confidence that the charter parties for the S-Class Vessels would be rolled over, ie the

[124] He explained his understanding of the implications of receipt of the ITT as meaning

“were looking to revise the ongoing agreement. So when you see a tender

document, it just means there is a potential change in the terms of that agreement. So

for us that’s significant because the existing contract had some options which would

mean a rollover of the current terms but to us they were looking to break that is were

In Malcolm Forbes-Cable’s view, the ITT affected risk. He explained that this was market-

dependent, because, at that time, there was a strong impetus to reduce costs in the market.

The expectation from anyone in the industry at that time was that an ITT meant the

counterparty was looking to reduce rates. As Malcolm Forbes-Cable understood it, the ITT

meant that Repsol were “looking to renegotiate” and, having regard to market conditions,

were looking for a lower rate. In broad terms, assuming a negative impact of about 3 million

per vessel per year for a 10-year period, he estimated that the effect of the non-exercise of the

options in respect of the S-Class Vessels resulted in a price impact of about £25 million.

[125] In relation to the Simmons email, Malcolm Forbes-Cable rejected the suggestion, put

him in cross examination, which this was only about reduction of the rates as a “token”

gesture; he understood this email to convey the sell side’s certainty about the future exercise

of the options for the S-Class Vessels. In other words, that the rates for those vessels should

be held flat and not reduced as WoodMac had, up to that point, intended to do.

[126] Wil Jones was a more junior member of the buy side team. His evidence was wholly

consistent with that of the other members of the buy side team which I have already

described. He confirmed the importance of the S-Class Vessels, the buy side’s focus on data

to predict the future for the business’ vessels and the use of a DCF valuation method.

[127] In relation to the ITT, had this been disclosed at the time, he described its effect

would have been “confusing”. It would have caused him to ask: “why would the

counterparty issue the ITT if these were the only vessels?. So it meant potentially other

vessels out there, which meant pressure on the rate and assumptions”. While he accepted in

cross that an ITT might mean no contract followed, an ITT could nonetheless mean that

more people would be tendering for the contract in question and it put the exercise of the

[128] If he had known of the ITT this would have been “a major red flag”. He would have

queried the timing of the ITT as well as its significance, because it indicated that Repsol were

not “locked in” to North Star’s S-Class Vessels. It highlighted a risk previously unknown to

the buy side which was that North Start might lose these contracts. The issuing of the ITT in

his view increased the risk of the options not being exercised on the S-Class Vessels at the

same value which had been assumed in the valuation of the business. He went on to explain

that he had authority to sign the deal on behalf of the buy side within certain risk/return

parameters. The receipt of the Repsol ITT “dramatically increased the risk”, and did so

beyond the level at which he was authorised to enter the Agreement. In other words, he

could not have signed the Agreement without considering the ITT further. At the very least,

the buy side would have delayed signing the Agreement to consider the impact of the ITT

on its valuation. The impact of the Simmons email was the same on him as it had been for

Malcolm Forbes-Cable, namely an assurance to persuade the buy side not to discount the

[129] I have no hesitation in accepting the evidence of the buy side witnesses, which in any

event was not challenged in cross, that the buy side was intensely interested in the vessel

contracts, day rates, and other factors relied on to forecast the future profitability of the

business and that this kind of data was central to the DCF valuation method it employed. It

will be recalled that Basalt’s 2016 offer was withdrawn because of concern about the day

rates. Steven Lowry explained that he had gone through the vessels and day rates “line by

[130] Furthermore, on the whole evidence there can have been no doubt that the sell side

management team was fully aware of the buy side’s methodology and approach to the

valuation of the business, the centrality to that of factors such as day rates and vessel usage

in general, and the value generated by the S-Class Vessels in particular. Steven Lowry’s

evidence of what prompted him to send his email of 5 October 2017, wondering about the

reduction in the S-Class Vessel day rates, and the careful orchestration of the sell side’s reply

(in the form of the Simmons email) are eloquent of this knowledge.

[131] The evidence of the buy side witnesses was also consistent as to what they would

have done had they known about the ITT prior to the Signing Date.

[132] While some of the buy side witnesses were cross-examined under reference to certain

“no liability” clauses in the Simmons documentation, this did not cover the defender. In any

event, this evidence was (in my view, rightly) not referred to or relied on in submissions.

There were also lines of questions of some of the sell side witnesses about updating the CCS.

However, the CCS was not mentioned at the Brodies meeting and the evidence of what, in

hindsight, the witness might have done – and which generally prompted ex post facto

justifications or a reasoning process that clearly had not been gone through at the material

[133] The following principles concerning the interpretation of contracts applied:

1. The court must ascertain the intention of the parties by determining what a

reasonable person, having the background knowledge of the parties, would

have understood from the language selected by them (Arnold v Britton

[2015] AC 1619, per Lord Neuberger at para 15; Midlothian Council v Bracewell

Stirling Architects [2018] PNLR 25 (per LP (Carloway) at para 19; Scanmudring

AS v James Fisher MFE Ltd [2019] CSIH 10). In other words, account can be

taken of background knowledge and matrix of fact where that is relevant.

2. The meaning of the words used must be assessed having regard to other

relevant parts of the contract, understood against the factual background.

3. In the event that there are two possible constructions, the court is entitled to

prefer one which is consistent with business common sense (Arnold v Britton

4. In relation to business common sense, courts require to be careful before

attributing too legalistic a meaning to the words of a commercial contract.

The words used will often have been intended to apply principally to a

situation in which the contract is operating satisfactorily rather than one

involving the occurrence of an unanticipated and catastrophic (in contractual

5. Commercial contracts cannot be arranged by what people think in their

inmost minds. Commercial contracts are made according to what people say

(Muirhead & Turnbull v Dickson (1905) 7 F 686 (per Lord Dunedin at p694)).

Neither part suggested that there was any speciality in relation to the construction of

[134] The following principles in relation to non-reliance statements apply:

6. The point and effect of a non-reliance statement is to require the parties to

accept a particular state of affairs as true, even if the actual reality was

different. One cannot, merely by referring to what is asserted to be the

underlying reality, avoid the effect of those provisions (Standard Chartered

Bank v Ceylon Petroleum Corporation [2011] EWHC 1785 per Hamblen J at para

7. The contractual delineation of responsibility and allocation of risk may

preclude a party from founding on the actual reality which eventuates if he

has contracted to accept a particular state of affairs as true. Thus if A and B

agree that B will not advise A and A will not rely on any statement by B as

advice, the contract will bar A from asserting the giving of that advice and his

reliance on it (Grant Estates Ltd (In Liquidation) v The Royal Bank of Scotland

8. English law treats the matter as a species of estoppel in which issues of

unconscionability do not arise, namely contractual estoppel. In Scots law, the

correct analysis is that there is a contractual bar. Issues of inconsistency and

9. The approach in the two preceding paragraphs extends to a retrospective

agreement in relation to past events. A and B may agree that their

relationship will be on the basis of a certain state of affairs in the past which

representations, and A will thereafter be obliged to act on the basis of that

[135] Finally, in respect of pre-contract representation the following principles apply:

10. The law may in appropriate circumstances impose a responsibility upon the

maker of pre-contractual representations in respect of their continuing

accuracy between the making of the representation and the conclusion of the

[136] I have had the benefit of Notes of Arguments in advance of the Preliminary Proof, as

well as full Written Submissions from parties. In addition, three lever arch files containing

33 cases were produced and referred to in parties’ submissions. I have had regard to all of

these materials and do not propose to recapitulate them in detail. I summarise parties’

submissions as I deal with each of the pursuers’ claims in turn.

[137] Pursuant to clause 10.2 of the Agreement, the defender warranted as “true and

accurate” the statement contained in warranty 26.6, that on the Signing Date the CCS set out:

“complete and accurate details of all the charter arrangements that are in place as at

The pursuer emphasises the words on bold; the defender the words underlined.

[138] Lord Davidson QC, who appeared for the pursuer, observed that it was a matter of

agreement that the defender, or those acting on his behalf, did not include details of the ITT

in the CCS. Lord Davidson noted the definitions from the Oxford English Dictionary of

“complete” (as being “entire, full” or “embracing all the requisite items, details, topics, etc )

and “accurate” (as “performed with care, exact” or “exact, precise, careful … in exact

conformity to a standard or to truth”) appearing as the opening words of warranty 26.6. He

submitted that, accordingly, on a common sense approach, and giving the language its

natural and ordinary meaning, the reasonable person would have understood the

Agreement to mean that the CCS was accurate and included all relevant details pertinent to

the charter arrangements. He submitted that the defender’s argument (that warranty 26.6 is

restricted in effect to current contracts, and in particular to charters in place or then in

existence) proposed too narrow an interpretation of the words “complete and accurate

details of all the charter arrangements”. Had that been the meaning intended, he submitted

that the clause would have said “the charters in place”. The Agreement distinguished

between “agreements” and “arrangements” (he referred to the phrase using both,

“agreements or arrangements” in warrant 11.1) and, further, that warranty 26 used the word

“charter” by itself where charter was the intended meaning (eg in warranties 26.1.3, 26.3,

and 26.4). The defender’s approach conflated “arrangements” with “agreements”.

[139] Warranty 11.1.1 warranted that the Company is not subject to any arrangement

“which is not in the ordinary … course of business” - a phrase which Lord Davidson noted

was used by the defender in his testimony and which other witnesses recall Mr Crawford

using - which might apply to the ITT, given the surprise its early appearance generated in

Mr Wallace and Mr Bruce. He submitted that “arrangements” conveys a meaning well

[140] He submitted that a meaning needed to be given to “details”. In context, it meant the

details of the charter arrangements, not merely the terms of the charters. “Arrangements”

means more than “the charters”. “Arrangements” are those aspects additional to the charter

[141] He submitted that the phrase “charter arrangements that are in place” was

sufficiently broad to encompass the scenario found in the present case, whereby the

counterparty to an existing charter agreement issued an ITT to the market in respect of the

services provided under that agreement. This was particularly so, he argued, when the ITT

identified that the new charters would overlap with the extension periods available under

the existing charter arrangements, thus indicating that (as turned out to be the case) the

[142] He submitted that, in context, the ITT was one such matter, in that it was part of the

process to negotiate the terms charters of the S-Class Vessel then in place – in other words, it

is a “detail of the charter arrangements.” Given the significance of the contractual

arrangements of the vessels, he suggested it could be easily understood that what was in

issue went beyond the actual charters in place. He submitted that on the evidence of various

witnesses the arrival of the ITT could, in certain circumstances, foreshadow at least an

attempt by the counterparty to reduce rates. This happened especially when the oil price

was low. The oil price was low at the time of the Agreement. The evidence showed that

[143] Accordingly the declarator sought correctly identified the ITT as covered by the

[144] Mr Howie , who appeared for the defender, submitted that the wording of warranty

26.6 was clear. Disclosure was required of the charters that were in place as at the date of

the agreement (ie as at 14 October 2017). These details were clearly set out in the CCS. In

relation to the Sceptre and the Sovereign, the CCS disclosed charters with Repsol then in

existence. There was no requirement to mention the existence of any ITT.

[145] Mr Howie further submitted that warranty 26.6 sought details of “charter

arrangements”. This, he said, underlined the fact that the ITT did not fall within the ambit

of the warranty. In this context, “arrangements” were bilateral or multi-lateral agreements

or understandings. In the case of the vessels, that meant a bilateral one. In relation to the

“Sovereign” and the “Sceptre”, the only bilateral agreements extant on the critical date to

which the word “charter” could be applied were the charter parties with Repsol to which the

CCS referred in terms. The ITT was a unilateral document which could not amount to an

“arrangement” (still less an arrangement which could be referred to as a “charter

arrangement” or one which could be accurately described as being “in place”) and, indeed,

[146] Warranty 26.6 referred to the date of the Agreement and no other date. In

contending for a narrow construction of the phrase “charter arrangements”, Mr Howie

stressed the importance of the description of the “CCS”, ie that it is a ‘Current Contracts

Summary, and so was restricted to the current contracts of the Company. Accordingly, the

reference to “details” did not, so his argument ran, itself point to any wider scope, as it is

only “details” of existing charter contracts or arrangements “in place” that required to be

[147] The warranty was restricted by its drafting to “details” of only one class of contract,

charters, and then only to those “in place” as at the relevant date. That last phrase,

Mr Howie, submitted, meant concluded and therefore extant charters. It did not extend to

future contract opportunities, or contracts that may be concluded at a future date, for any of

[148] Furthermore, the ITT was not a charter relative to either of the S-Class Vessels. Any

future charter which might have arisen were the invitation to treat constituted by the ITT be

accepted and any negotiation subsequent to the making of a tender to bear fruit, could not

be “in place” on 14 October, 2017. Its receipt was, Mr Howie argued, but a unilateral event,

not a “detail” of any charter extant on or before the critical date.

[149] In relation to warranty 26.6 the overall proposition being warranted was that all the

charters concluded and extant on 14 October 2017 relative to either of those vessels was

accurately and fully set out in the CCS. It followed that any document which was not a

concluded and extant charter relative to one vessel or the other, was not the subject of the

warranty and could not give rise to a breach of that warranty. Whether or not each of the

options to extend to which those charters gave rise was actually exercised, or likely actually

to be exercised, was not a “detail” of the “charter arrangements” in relation to which the

contract called for warranted information to be given. It was not a “detail” of the Charter

arrangements, but rather an extraneous event. He submitted that on a correct appreciation

of the terms of that warranty, the receipt of the ITT was not a disclosable matter, and

whether it was disclosed or not, it could not give rise to breach of the warranty.

[150] It will be apparent from the parties’ submissions that there was an intense focus on a

few words in warranty 26.6. In addressing this issue, I remind myself of the guidance in

Arnold v Britton, cit, supra, which, in short, is that the meaning of the words used is

considered in the context of the contract as a whole (its legal context, as it were) and

[151] Accordingly, I begin with the “legal context” of the words used, that is in the context

of warranty 26.2 itself and, further, that warranty in the context of the Agreement.

[152] It is important to understand the place and purpose of the warranties in question, in

the context of the whole Agreement. This is because all but one of the pursuer’s claims are

based on clauses in the main body of the Agreement (eg clause 8.1.3 concerning the pre-

Completion window obligations, as well as clause 18.3, the entire agreements clause invoked

by the defender) or contained in the general warranties (in Section B of Part 3 of the

[153] The Agreement, which exceeds 120 pages, is detailed and is intended to define

comprehensively the parties’ respective rights and obligations in relation to the pursuer’s

purchase of the shares in the Company. The use of an entire agreement clause reinforces the

intention that the Agreement comprehensively defined parties’ rights. While there is the

usual provision (in clause 10.5) that each warranty is “separate and independent”, this does

not mean that these are divorced from the specific context of the contract as a whole (to

paraphrase principle 2, in para [133],above). It is important to note, too, that clause 10.5

stipulates that the scope of each warranty is not to be “limited or restricted by reference to

any other Warranty or other provision in the Agreement” unless otherwise specifically

provided. (Neither party identified any “specifically provided” limiting provision.)

[154] The schedule to the Agreement is divided into several parts. Part 3 deals with the

mechanics of completion and what the seller is obliged to deliver to the buyer at completion.

Part 4 (“Warranties”) is subdivided into three sections, dealing with title warranties (section

A), general warranties (section B) and tax warranties (section C). Two of the warranties the

pursuer contends were breached are found in the section containing the “General

warranties”. The general warranties govern a wide range of matters. Broadly, many of

these are concerned with the Company’s assets in whatever form they take (eg contracts,

intellectual property, heritable property, assets, vessels) and its liabilities (eg in employment

and pension terms, as well as under third party contracts). There are, of course, other

warranties, including those dealing with the Company’s shares, accounts, constitutional

[155] Warranty 11.2 stipulates that there has been disclosure of all “Material Contracts”

(which includes all charter agreements to which the Company and any subsidiary is a party

and all other agreements “which are of material or fundamental importance to the

operation” of the business). All the existing charter agreements, including those for the S-

Class Vessels, were disclosed in the data room provided to the pursuer. Warranties 11.2 and

11.3 are located under the heading “Contracts”. Warranty 26.2 is found in the section

headed “Vessels”. Prima facie the subject matter of warranties 11.3 and 26.6 should address

[156] Turning to warranty 26.6, this provides that the CCS sets out complete and accurate

details of all of the charter arrangements that were in place as at the Signing Date of the

Agreement in relation to all of the vessels. While the focus of Senior Counsel’s submissions

was the phrase “charter arrangements”, it respectfully seems to me that it is important first

to note that this warranty relates to a document external to the Agreement itself, namely, the

CCS. Mr Howie relies on the title of the CCS, emphasising that the warranty 26.6 relates to a

“Current Contracts Summary” (his emphasis). In my view, there is little force in this point.

First, it should be noted that the warranties in respect of contracts are in part 11 (headed

“CONTRACTS”) of the Schedule containing the warranties. By contrast, warranty 26.6 is

contained in the section headed “VESSELS”. Secondly, it is important to consider the content

of the CCS and not just its description. I have described above the layout and categories of

information the CCS contained. It was presented in table form and contained a large

amount of information which was derived from the charter parties, such as their duration,

the day rates, the contract periods, contract references (and addenda, where applicable) and

[157] Importantly, however, the CCS was not just a summary of the contracts or their

terms; those details are ascertainable from the terms of the charter parties themselves (the

subject of warranty 11.2 requiring disclosure of all Material Contracts). Significantly,

information is provided under the column headed “Contract as at 13 October 2017” about

the options (where these existed). The information provided the option end date, being the

date on which the last exercisable option would expire. So, for example, the Sceptre’s

contract end date is given as October 2018 and the option end date as October 2023. In

terms, therefore, the information provided relative to the contracts invited consideration of

matters beyond the expiry of the particular contract term and necessarily affected by events

external to the charter agreement. In the present context, the data captured in the CCS

included options exercisable in terms of the contract, but only after the contract period had

expired. This raised the prospect that some steps (eg an ITT) or decision (eg to exercise an

option), which were external to the charter arrangements, had effect after the contract end

date. With respect to Mr Howie’s submission that the receipt of an ITT is an “event” and

not a detail, in my view, this is too pat and it is inconsistent with the features of the CCS just

described. The totality of the information captured in the CCS invited consideration of

events extraneous to the contract’s term and which may have an impact on the exercise of

[158] Furthermore, it is clear on the evidence as well as from the terms of the CCS, that

there was a significant use of options in this industry. While fourteen of the 31 vessels did

not have options, this was because those vessels were described as on short term contract, on

rollover contracts from year to year, subject to ad hoc arrangements, or they had no current

contract in place (“the non-optioned vessels” a non-optional character position). However,

the majority of the vessels had options exercisable after their contract end date (“optionable

vessels” or “optionable charter parties”, as the context requires). The use of options was

common and they were highly market-sensitive. There was also evidence about the buy

side’s approach to options, which was to assume a reduction in day rates to reflect the then

downward pressures of market conditions. The buy side’s sensitivity is illustrated by the

statements in the “Comment” column, that the “[r]ate valid is the same as in 2017” (see, eg

Devotion, Talisker, and Talisman) - ie, that the rates were holding steady (and not reducing).

This is also borne out by the exchange of emails on 5 October 2017 and the adjustment the

Warranty 26.2 construed in the context of the relevant factual background

[159] Having set out the legal context of warranty 26.2, I turn to address the evidential

context. The consequence of the defender’s construction, restricting the scope of warranty

26.6 to the four corners of the charter agreements, produces the result that, in effect, the

same matters are warranted twice. The parties cannot have intended this. This is also, in

my view, inimical to the careful drafting reflected in the Agreement. Warranties 26.6 and

11.3 are located in different parts of the schedule (“Contracts” and “Vessels”, respectively)

and which is a further pointer away from their having the same content or purpose. The

pursuer’s approach better respects the relationship between these warranties I have just

[160] In relation to the terms of warranty 26.6 itself, the defender’s approach has the

further disadvantage of essentially conflating “arrangements” with the word “agreements”.

However, as already noted, the CCS contained more information than the terms of specific

charter party agreements. Having regard to the usage of “agreements and arrangements”

elsewhere in the Agreement (eg in warranties 11.2, 11.3 and 26.6), the use of “arrangements”

in warranty 26.2 is not legal superfluity. The general principles of contract construction

militate against an interpretation which does not ascribe a meaning or content to all of the

contractual language the parties employed. I accept as well founded Lord Davidson’s

submission that elsewhere in warranty 26 the word “charter” was used when intended, ie to

[161] In my view, the parties’ use of “charter arrangements” was intended to cover

something broader than the subject matter addressed under warranties 11.2 and 11.3. This is

also evidenced in the use of the “Comments” column in the CCS. All of these features point

to “charter arrangements” meaning something other than, or at least encompassing more

than, charter agreements and that “details of the …arrangements …in place” is not confined

Warranty 26.6 considered against the background knowledge available to the parties

[162] From the evidence I have recorded above, among the matters forming the

background knowledge reasonably available to the parties would include the fact that this

transaction and its commercial rationale depended, in large measure, upon the value to be

ascribed to the Company’s future activities. The Company operates in a service industry in

the North Sea. Its physical assets generate income only if they are chartered. It is in this

[163] Indeed, the evidence I have heard provides a very specific context (indeed, having

heard the evidence, a highly fact-sensitive context), known to both parties, and in which the

Agreement falls to be construed. The following features disclosed in the evidence are

1) The S-Class Vessels were a major contributor to the value of the business;

2) In comparison with other vessels, the S-Class Vessels were materially more

lucrative (enabling North Star to charge approximately double the day rate

3) The S-Class Vessels had been specially commissioned in 2013 to serve the

particular needs of the counterparty, Repsol, and were first provided to them

in 2013 in the form of a five-year contract. By inference, the S-Class vessels

have been contracted exclusively to Repsol since they were commissioned;

and, by further inference, North Star had a de facto monopoly of the ERRVs

capable of servicing Repsol’s assets for so long as it retained the displacement

4) The current contracts with Repsol were for five years, with five one-year

options. The earlier of the two contracts was not due to expire until May

2018. Generally, an option would be exercised about 4 or 6 weeks before that

5) At the material time, the significant drop in the price of oil had a detrimental

effect on the industry. Repsol, in particular, was understood to be under

6) There was a distinction, well understood in the industry, between an RFQ

and an ITT. The latter was indicative of a serious intent to contract and was

more than an exploratory stage (for which an RFQ was more appropriate).

7) There is no doubt that the sell side understood the ITT received to relate to

[164] All of these factors underline the use of options in the industry and which, in light of

the evidence, acquired a particular significance in respect of the company’s most lucrative

vessels. In the light of this evidence, it is in my view artificial to detach the ITT from this

context and to consider it in isolation. It was not an invitation out of the blue, in the sense of

one issuing from a third party with whom there was no existing contract. Rather, the ITT

came from an existing client, and it affected two vessels that were subject to current charter

parties or arrangements. Having regard to these features, I find that the options for the S-

Class Vessels were “details” of current charter arrangements in place. Information raising a

serious doubt about the exercise of those options was also within the scope of this phrase in

the warranty. Stepping back, any indication that the most lucrative contracts might not be

renewed was extremely significant to the S-Class Vessel charter parties and their options.

The terms and timing of the ITT could not but have given rise to the inference that there was

an appreciable risk that Repsol were disinclined to exercise the options in those charter

parties and that they intended to drive down the day rate. The receipt and the terms of the

ITT clearly signalled that the options on the S-Class Vessels were not to be renewed or, at

least, about which a serious doubt was created at the material time.

[165] Two additional features of the tender specification attached to the Repsol email

signalled how significant the risks were that the options would not be exercised in relation

to the S-Class Vessels, namely the abandonment of any displacement requirement (ie the

very quality relied on as constituting the S-Class vessels’ uniqueness) and the positive

stipulation for methanol capacity. The latter requirement entailed a spend of about £500,000

per vessel. These additional features would have materially increased the doubt. At the

very least, if considered by the local management team or the defender at the material time,

it would have caused them to doubt the degree of certainty they attributed to the exercise of

[166] Having set out the relevant legal and factual background, I return to parties’

submissions. In my opinion, the pursuer’s submissions in respect of warranty 26.6 are to be

preferred. The narrow interpretation of warranty 26.6 Mr Howie advances conflates to a

large extent that warranty with warranty 11.2; and it further conflates the words

“arrangements” with “agreements” found in warranty 26.2. Given the context of this

transaction, the defender’s interpretation also sits uncomfortably with commercial common

sense. Having regard to the terms of the other warranties, and how they inter-relate, the

[167] I return to the significance of option end dates being recorded within the CCS. While

there may be dubiety as to whether an option which necessarily operates only after the

expiry of the term of the charter party is within the phrase “charter agreement”, in light of

the foregoing evidence it is readily encompassed within the phrase “charter arrangements”.

In testing the scope of the phrase “complete and accurate details of charter arrangements in

place”, it is helpful to consider several scenarios which might arise on receipt of an ITT.

1) Receipt of an ITT from a third party who is not party to any current charter

2) Receipt of an ITT from an entity with whom there is a current charter party in

3) Receipt of an ITT from an entity with whom there is a current charter party in

place, and which is an optionable charter party. Further, the ITT is either

(i) not inconsistent with the options (eg it relates to a different

(ii) it is potentially inconsistent with the exercise of the option;

4) Receipt of an ITT from an entity with whom there is a current optionable

charter party; the ITT undoubtedly relates to the vessel(s) subject to that

charter party and the ITT is inconsistent with the exercise of the option.

5) Receipt of a communication from a counter party of an optionable charter

[168] Not all of foregoing scenarios require disclosure under warranty 26.6. Certainly the

receipt of an ITT in scenario 1 would not be disclosable; there is no current “charter party or

arrangement …in place” in respect of any vessel to which an ITT could relate. In relation to

scenarios 2 and 3 (i), the receipt of an ITT has the potential to affect an optionable charter

party in a positive way. In the normal course, the sell side would have a keen interest to

communicate an ITT received in those scenarios, not least because it would wish to

communicate any boost of the potential future earning capacity (and hence value) of the

Company. However, the receipt of an ITT in scenarios 2 and 3(i) does not readily fall within

the language of warranty 26.6, because as it does not relate to a current charter party or

[169] The receipt of an ITT falling within scenario 3(ii) is, perhaps, a borderline case. In

relation to scenario 5, it is undoubtedly the case that had a counterparty intimated its

intention to exercise an option, in an optionable charter party in respect of one of the vessels

recorded in the CCS, this would be disclosable under warranty 26.6. It is a “detail” of a

“charter in place” arrangement, even if it is to signify that the optionable charter party in

place will expire without exercise of the options. Certainly, the sell side would be anxious to

convey information that enhanced the value of the company. (The evidence disclosed that

by virtue of the terms of the Simmons email they had successfully dissuaded the buy side

from reducing the assumed day rate for the S-Class Vessels.) There is no commercial

rationale for distinguishing between details which positively affect an optionable charter

[170] What then of scenario 4? That reflects the very particular circumstances in which the

ITT was received in this case. In my view, the ITT was disclosable under warranty 26.6 as a

“detail of a charter arrangement … in place.” It was a communication from an existing

client and related two vessels which were subject to current charter parties. Furthermore,

the timing and terms were inconsistent with, or at least disruptive of the sell side’s

expectations in respect of, the exercise of the options (and which I have held is within the

phrase “details … of … charter arrangements”). This may be contrasted with a charter party

of vessel in the CCS in respect of which there were no exercisable options, (eg because it was

on a rollover arrangement or on a call-off contract, such as Freedom or Cavalier). An ITT in

relation to the vessels subject to those kinds of arrangements is likely not to be disclosable

under the warranty, regardless of whether it came from the counterparty or a third party to

those contracts. This is because the receipt of an ITT could not disrupt or alter any

expectation in respect of the duration of those arrangements in place; they were time-limited

and governed by non-optionable charter parties. Any ITT in respect of the non-optionable

vessels could not, therefore, affect the current arrangements, much less non-existent options,

for those vessels. An ITT received in respect of vessels subject to non-optionable charter

[171] As the foregoing discloses, the interpretation and application of warranty 26.6

cannot be determined solely on the wording or simply by considering, as a generality,

whether the receipt of an ITT was disclosable under this warranty. The position is highly

fact-sensitive. In the instant case, the ITT was from a counterparty to extant optionable

arrangements (ie with Repsol) and was understood by all parties to relate to the S-Class

Vessels, the business’ two most profitable vessels. The commencement dates in the ITT were

necessarily inconsistent with the exercise of the option end dates recorded in the CCS. In

my view, the receipt of the ITT clearly had the potential to affect the charter arrangements,

in the form of the optionable charter parties to which the S-Class Vessels were subject. The

ITT signalled two things: that those arrangements were potentially coming to an end at the

contract end and that there was at least a prospect that exercise of the option was in doubt.

Consistent with the wording of warranty 26.6, and construed in the context of the

Agreement as a whole and in light of the evidence, I find that the ITT was a detail of the

[172] For these reasons, I find that the defender’s failure to include confirmation that the

ITT had been received in the CCS (and in particular, by placing relevant wording in the

“Comments” column) meant that the CCS did not set out “complete and accurate details” of

the “charter arrangements…in place”. He breached warranty 26.6.

[173] For completeness, I record that on the evidence there was no discussion by the sell

side at the Brodies meeting of whether the CCS should be updated to reflect receipt of the

ITT. Of itself, this is of little relevance: the question is not whether they tried or intended to

comply (which some discussion at that meeting might have betokened); it is whether the

defender did comply. I have held that, construing the warranty in its relevant factual and

[174] The pursuer’s second warranty claim was based on clause 10.2 of the Agreement and

on warranty 11.3. The defender had warranted to the pursuer in accordance with clause 10.2

that, inter alia, the following statement (in paragraph 11.3 of Section B, Part 4 of the Schedule

There are no outstanding or ongoing negotiations of material importance to

the business, profits or assets of the Company or any of the Subsidiaries, or

any outstanding quotations or tenders for a contract that, if accepted, would

[175] Lord Davidson noted that all of the witnesses agreed that the pursuer was not

informed about the ITT prior to signing the Agreement. It was undisputed that the defender

did not disclose the ITT to the pursuer on or before the Signing Date. The pursuer was

accordingly unaware of the ITT at the time of signing and in the immediate days that

followed. Accordingly, he submitted that in essence the issue is one of interpretation (save

in respect of some matters around disclosure under the Disclosure Letter: see para [71],

above). In particular, the issue was whether the ITT fell within the language of warranty

11.3. Had the ITT been taken forward to an actual tender it is assumed the defender would

have accepted the “material importance to the business” and that it would “give rise to a

material Contract”. The defender read the clause as referring only to offers or negotiations

where two or more persons were engaged in the process of negotiation. The difference

between the parties was whether the ITT would qualify as “outstanding or ongoing

negotiations”. In Lord Davidson’s submissions, the ITT did so qualify.

[176] The meaning ascribed to warranty 11.3 had to be placed in context. The ITT was the

opening by Repsol of negotiations. It invited North Star, the “incumbent” provider of the S-

Class Vessels (ie a party with whom it is in an existing contractual relationship and where

there was an exercisable option), in effect to step away from that contractual relationship

and create a new one pursuant to the ITT terms. That was, he submitted, the opening of a

[177] He turned to consider the words “outstanding or ongoing”. “Outstanding”

connoted something which was not yet resolved or dealt with. The ITT as at 13 October

2017 had not been responded to or indeed opened. It was accordingly something which had

not been dealt with. The alternative of “ongoing” is not a synonym for “outstanding”. It

connoted something continuing or in progress. Thus the phrase was not confined, as the

defender contended, to “the process undertaken by two or more persons to seek to forge […]

a consensus ad idem”(emphasis added by pursuers). The process the defender identified

[178] Lord Davidson accepted that not every ITT would so qualify but, in the particular

circumstances here, the ITT did, given the existing contractual relationship between Repsol

and North Star. After all, he argued, the negotiation for a vessel contract must begin

somewhere. Typically, this began with a Request for Information (“RFI”), Request for Quote

(“RFQ”) or an ITT (or even a mix, such as an RFI followed by an ITT). The issuing of an ITT

initiated the negotiation process. He submitted that it invited the tendering party to respond;

it is the opening up of a dialogue. The ITT in context represented the opening of a

negotiation by Repsol which was, as a matter of fact, followed up as such: North Star

submitted a bid for the ITT on 14 November 2017. They were unsuccessful.

[179] In his evidence, Mr Lowry told the Court that an ITT is the start of a process to

tender for vessels. Mr Dobbie interpreted an ITT as meaning that the “customer is

providing an opportunity to tender for the contract”. While Mr Dobbie thought a

negotiation had to be a two-way conversation, he accepted in cross-examination that it was

possible to understand an ITT as potentially opening up that negotiation. (Lord Davidson

noted parenthetically that the term “tender” was used by some witnesses as habile to refer

to the ITT. This was slack usage but, to the extent it appeared to be a common usage in the

industry, he suggested that it may be argued the ITT would qualify as an “outstanding […]

tender”. The words “if accepted” suggest otherwise as the ITT could not sensibly be

[180] Accordingly, the passage from McQueen, Contract Law (at para 2.17) and Harmon

Cfem Facades v Corporate Officer (No 2) (2001) 72 Con LR 2 were not germane to parties’

arguments. Furthermore, he argued, the cases adduced by the defender that dealt with LR 5

CP advertisements to the general public Spencer v Harding (1870) LRSCP 561 and Carlill v

Carbolic Smoke Company [1893] 1 QB 256 were also not germane to this issue. Lord Davidson

submitted that the ITT had to be considered in its particular circumstances. The same point

was made in respect of whether the ITT was an offer and the relevance of the defender’s

authorities (Harvela Investments Ltd v Royal Trust Company of Canada (CI) [1986] AC 207;

Muirhead & Turnbull v Dickson (1905) 7F 686; Gloag, The Law of Contract (pages 23, 457-462);

Cartwright, Contract Law (pp 110-113); Stair Memorial Encyclopaedia, “Obligations” (No 15,

section 626; and Professor McNeill, Scots Commercial Law (para 2.25)). The pursuer does

[181] In the light of this evidence Lord Davidson argued that the ITT received on

13 October 2017 was, to paraphrase Callum Bruce’s language, a “potential” piece of work.

Indeed, its potential was more developed even than that of an RFI. Therefore,

Lord Davidson reasoned, if an RFI was disclosed, then the ITT ought to have been disclosed.

He invited the court to find that an ITT was potential outstanding work, and that the matters

the defender considered to be disclosable were not confined solely to the current charters

[182] Lord Davidson then turned to consider the evidence about disclosure discussed

against the warranties (see para [71], above). He noted that in both his witness statement

and in cross-examination, Douglas Crawford provided the Court with an overview of the

purpose of contractual warranties. Douglas Crawford went to some length to explain that,

in negotiating warranties, the sell side expended a great deal of time and effort on

“slimming” the warranties down and making sure the wording was as precise as possible.

Douglas Crawford informed the Court that, having done this, what the vendor categorically

did not do was to “over-disclose”. Douglas Crawford stated that disclosure was strictly

against the precise wording of the warranties, and that approach was followed in this

situation. Douglas Crawford insisted to the Court that “you do not disclose when you do

not have to disclose” and that “you do not make a disclosure unless the warranty requires

you to”. In cross-examination, the defender was asked whether it was his understanding

that he would only disclose material that was required to be disclosed by the warranties in

the Agreement. The defender confirmed this. He also agreed that all the material that was

ultimately disclosed was that which was required to be disclosed by the warranties.

[183] From all of this, Lord Davidson drew out the following proposition: If the disclosure

of two RFIs and one ITT was made pursuant to warranty 11.3, then it followed from the

defender’s (and his legal advisor’s) reasoning, that these were required on the basis of their

being either “outstanding or ongoing negotiations of material importance to the business, profits or

assets of the Company” or “outstanding quotations or tenders for a contract that, if accepted, would

give rise to a material Contract”. The RFIs disclosed pursuant to warranty 11.3 were more

premature in the negotiation process than an ITT (and, in the present case, did not even

progress as far as an ITT). The following logic therefore applied: if the RFIs were disclosed

because they required to be so disclosed under warranty 11.3, then so too did the ITT require

to be disclosed under warranty 11.3. The ITT was not disclosed and, accordingly, the

[184] Mr Howie began by noting that warranty 11.3 could be analysed as having two

limbs: one concerned with “tenders and quotations,” and the other with “outstanding or

ongoing negotiations” of material importance to the business, profits or assets of the Company

or any of its subsidiaries. Conspicuously, the warranty did not mention ITTs, as it could no

doubt readily have been done had it been thought necessary or desirable that it should

extend to cover such invitations. Mr Howie submitted that the meaning of the first limb was

straightforward: it warranted that, as at the date of execution, there are no “negotiations” in

train the results of which were to be viewed as having a significant effect on the business,

profits or assets of one of the specified entities. Further qualifications on the negotiations

which they have to meet in order to be relevant as subjects of the warranty were imposed by

the application of the words “outstanding” and “ongoing”. The use of both of these terms

implies that the negotiations have to have been in existence both at and before the crucial

date, howsoever vigorously it may be that they were being prosecuted on that date, if they

[185] He submitted that the arrival of the ITT did not entail a falsification of the warranty.

Irrespective of the view one might take of the importance of the Repsol charter parties to the

business profit or assets of the Company, the receipt of the ITT did not give rise to any

“ongoing” or “outstanding” “negotiations” within the meaning of the warranty.

[186] Mr Howie submitted that in ordinary English, the word “negotiations” signified a

bilateral or multi-lateral process of conferral or treaty with another or others for the purpose

of bringing about some mutual agreement. It was not a unilateral activity which, on the

other hand, the issue or the receipt of an invitation to tender was. In the commercial context

of which the warranty afforded an example, the natural and ordinary meaning to be

accorded the word “negotiations” was a reference to the process undertaken by two or more

persons to seek to forge by compromises or exchange with the other party a consensus in idem

which will create a contract of some description. The receipt of an invitation to tender is not

part of such a process. An invitation to tender or to treat is an invitation to negotiate and is

thus by definition, not a part of the negotiation itself. An invitation to tender may pass

unaccepted in which case no process of negotiation ever comes into existence. It may be

accepted by the issue of an offer which is thereafter ignored by its recipient or accounted

unworthy of response. Again, in either of those events, there were no negotiations which

came into being. Unless the offer born of the invitation was met with a response of qualified

acceptance from the issuer of the initial invitation, no negotiations come into being.

[187] In the present case, the “Tender” or “Quotation” would come from the Company,

not Repsol. The ITT was merely an invitation. It was not a tender or quotation. When it

was issued there were no outstanding negotiations. In support of these submissions

1) Spencer v Harding (1870) LR 5 CP at 563-564 (“Spencer”) (per Willes J):

“…the question is, whether there is here any offer to enter into a contract at

all, or whether the circular amounts to anything more than a mere

proclamation that the defendants are ready to chaffer for the sale of the

goods, and to receive offers for the purchase of them. In advertisements for

tenders for buildings it is not usual to say that the contract will be given to

the lowest bidder, and it is not always that the contract is made with the

lowest bidder. Here there is a total absence of any words to intimate that the

highest bidder is to be the purchaser. It is a mere attempt to ascertain

whether an offer can be obtained within such a margin as the sellers are

2) Carlill v Carbolic Smokeball Company [1893] 1 QB 256 at 268-269, where

“…advertisements are offers to negotiate - offers to receive offers - offers to

chaffer, …If this is an offer to be bound, then it is a contract the moment the

person fulfils the condition. That seems to me to be sense, and it is also the

ground on which all these advertisement cases have been decided during the

century; and it cannot be put better than in Willes, J.'s, judgment in Spencer v.

Harding. “In the advertisement cases,” he says, “there never was any doubt

that the advertisement amounted to a promise to pay the money to the person

who first gave information. The difficulty suggested was that it was a

contract with all the world. But that, of course, was soon overruled. It was

an offer to become liable to any person who before the offer should be

retracted should happen to be the person to fulfil the contract, of which the

advertisement was an offer or tender. That is not the sort of difficulty which

presents itself here. If the circular had gone on, ‘and we undertake to sell to

the highest bidder,’ the reward cases would have applied, and there would

have been a good contract in respect of the persons.” As soon as the highest

bidder presented himself, says Willes, J., the person who was to hold the

vinculum juris on the other side of the contract was ascertained, and it

1) Gloag on “Contract” adopted the analysis of Willes, J in Spencer.

The ITT showed its author “ready to chaffer” (see p23 of Gloag). Negotiations were

[188] Mr Howie submitted that invitations to put in offers are invitations to negotiate, and,

hence, not in themselves part of such contemplated negotiations. In support of that

1) Harvela Investments Ltd v Royal Trust Company of Canada (C.I.) Ltd [1986] AC

207, in which Lord Diplock distinguished the terms of the request for bids for

the shares in that case (which included a provision that a bid would be

accepted if it were to be made) from “a mere invitation to negotiate for the

shares…” (see page 224). Mr Howie argued that, by definition, the

“negotiation” cannot begin until there has been a formal response. In the

present case, the pursuer does not aver that there was any formal response to

the ITT as at the date the defender gave the relevant warranty. That, it is

2) The current edition of Cartwright’s “Contract Law” describes “preliminary

discussions and proposals to enter into negotiations” as “invitations to treat” and

gives as an example of the species the invitation to submit tenders (see page

3) A similar analysis was adopted in Professor McQueen’s “Contract Law in

Scotland” (at paragraph 2.17) and the entry in the “Stair Memorial

Encyclopaedia” on “Obligations”, volume 15, (at section 626).

4) Professor McNeill’s book, “Scots Commercial Law” was particularly clear,

noting that people will: “…indicate that they are willing to do business, but

without intending to begin the process of contract formation. These types of

pre-contract statements or actions are sometimes referred to as ‘invitations to

treat’ and must be distinguished from ‘offers’.” The former, he added, merely

invite offers, and gives as an example of what he is talking about, the

[189] Accordingly, Mr Howie submitted that the “tenders and quotations” portion of the

warranty was readily construed. Those words bore the meanings normally attributed to

them in English when used in connection with commercial dealings with a view to the

formation of contracts (the subject of the whole of warranty 11). They connote offers, a point

which is underlined by the immediately succeeding phrasing, which stated that they are

such as would lead to a material contract were they to be accepted. The causal relationship

between acceptance and the creation of a contract which was envisaged by the draftsman in

this passage of the warranty was, he submitted, a direct and immediate one. Leaving aside

the qualification imposed by the word “material” on the contemplated contract, that was the

position which obtains in relation to any offer. By contrast, it was never the position of an

invitation to treat. Acceptance of such an invitation can give rise only to an offer.

[190] In short, the pursuer’s complaint arises from non-disclosures of the ITT of one of the

subsidiaries of an invitation to treat from Repsol. That could not constitute a state of affairs

falsifying the warranty because, as at the date of execution of the SPA, Mr Howie argued,

there were no tenders or quotations “outstanding” (ie, extant but awaiting a response – be it

counter-offer, de plano acceptance or outright rejection) which, if accepted, would “give rise

to” a material contract. The ITT was not an offer. Quite the contrary, Mr Howie suggested.

If accepted, it would not give rise to an immediate contract, only an offer. It follows that the

second limb of the warranty was not breached by virtue of the receipt of the invitation to

[191] As at the crucial warranty date ITT was newly received and lay unanswered.

Indeed, he noted that on the evidence of Messrs Payton, Bruce and Wallace, the ITT lay

unread. It therefore had not instituted any negotiations, still less did it demonstrate

negotiations “outstanding” or “ongoing” from some date in the past. In the present case,

there is no special provision attached to the invitation as stopped that in Harvela from being

the mere invitation to negotiate, and so that is what it would appear to be. The ITT was

never a part of the negotiations; those begin with the tender which a ship-owner or charterer

by demise submits when he takes up the invitation to negotiate. The tender submitted, after

all, might be an alternative tender with little resemblance to the standard template in the

invitation to tender, and it would be on that alternative, rather than the template, on which

the parties would negotiate. Alternatively, in such a case, Repsol might want nothing to do

with the alternative, and no negotiation would take place at all.

[192] Mr Howie turned from the law, to consider the evidence about the ITT. He

submitted that the fact that the ITT was a mere invitation to treat and not the start of

negotiations, far less an offer open for acceptance, was clear from its terms. He identified

1) The covering email of 5.23pm stated that: “Tenders are required by COB

2) Tenderers were requested to return section C which detailed the intention to

submit or otherwise. The recipient was not entering negotiations far less

3) The ITT was a unilateral request for the recipient to submit a “tender”. It

clearly narrates that Braemar were instructed: “…to obtain competitive

4) The ITT was heavily qualified and made it clear that there was no “tender”

capable of acceptance which could result in a contract. For example, the ITT

“RSR reserves the right to award a contract to none, one or more

Tenderers and will consider the submission of ‘alternative tenders’ as

per Annex B in so far as they are technically compliant and provide a

“3. A RSR, shall be under no obligation to accept the lowest or any

Tender submitted hereunder and it reserves the right to reject any or

6) The Form of Tender states that: “We hereby undertake that, if this Tender is

accepted: (a) That we shall execute a contract for the Work”. Accordingly, if

any tender was accepted by Repsol then a formal contract would need to be

7) The ITT stated that the “Charter party to apply” was: “RSR Supply vessel CP,

[193] Accordingly, Mr Howie submitted even acceptance by Repsol of a tender would

merely be a counter-offer or an agreement to agree. This point was reinforced by the fact

that the terms and conditions attached to the ITT were only in draft form. For example, the

terms stated (in bold and highlighted in red), in clause 40.2: “Please note an alternative

termination will apply which will be advised in due course.” Similarly, the ITT reinforced

the conclusion that its receipt did not open negotiations: Section A3 C reads, inter alia, that:

“RSR shall not be held liable for any expenses incurred in the preparation or

submittal of Tenders or any subsequent discussion and or negotiations…”

Plainly, the negotiations envisaged in this case will – as one would expect – be followed by

the receipt by Repsol of North Star’s tender. The drafting was inconsistent with the notion

that the very receipt of the ITT even initiates negotiation anent the completed charters.

[194] Accordingly, even if any Tender was accepted by Repsol, this would require the

parties to agree a formal contract. The terms of any such contract would need to be

negotiated and subsequently agreed by the parties. The pursuer’s argument under this

“There are no outstanding or ongoing negotiations of material importance to the

business, profits or assets of the Company or any of the Subsidiaries, or any

outstanding quotations or tenders for a contract that, if accepted, would give rise to a

[196] While Mr Howie addressed himself in his submissions to both limbs of warranty

11.3, as I understood his submissions, Lord Davidson relied essentially on the first limb. In

my view, on the evidence, only the first limb of warranty 11.3 was potentially engaged. I

therefore need not address in any detail Mr Howie’s submissions in respect of the second

limb or the cases he referred to and which arose in very different circumstances (eg cases

about the advertisement of goods for sale in Spencer and Carlill). In any event, the cases

cited by Mr Howie, some of antique vintage or arising in a context lacking the specific

[197] The essence of Mr Howie’s submission is that ”negotiations” require to be bilateral

and, by reason of the inactivity on the part of any of the sell side management team, the un-

responded to ITT was necessarily unilateral at the specific point in time that the warranty

bit. In support of this submission he referred to the language of “tender” and words of

qualification to preclude acceptance of an offer used in some of the documentation.

[198] In my view, this warranty is particularly fact-sensitive. General observations about

“negotiations” do not assist. It is necessary to construe this warranty against the evidence

about the use of ITTs in this sector and the de facto monopoly the Company had to satisfy

Repsol’s special displacement requirement in the form of S-Class vessels. Much of the

evidence I have referred to in relation to warranty 26.6 is relevant to this warranty. I need

[199] By reason of the fact-sensitive nature of receipt of an ITT (eg as explored in the

discussion of the scenarios outlined above), I did not find the discussion of the word

“negotiations” under reference to cases (eg such as Harvela) whose circumstances are very

different from the instant case, or the general textbook discussions (cited in para [188],

above) seeking to characterise “negotiations”, “offers” or “offers to negotiate” etc., to

[200] In my view, in this case the evidence is critical to the interpretation of warranty 11.3.

The existence of an option in a charter party meant that, if the counter party wished to

secure the services of that vessel beyond the duration of the charter party, it could do so

without further negotiation. It simply exercised the option and the charter party would

continue on the terms previously agreed. In the context of an optionable charter party, the

receipt of the ITT signalled the reverse: it was saying, in effect, “we are considering not

exercising the option but, rather, are renewing negotiations for vessels currently subject to a

charter party between us, but on terms other than those contained in the charter agreement

and which exercise of the option would have continued”. Again, in the context provided by

the evidence and the particular significance of the S-Class Vessels and the Repsol charter

parties, the defender’s failure to disclose the ITT breached warranty 11.2.

[201] Construed against the specific background known to the parties in this case,

“negotiations” acquires a particular complexion. Consider the circumstances of the sell

side’s understanding of Repsol’s position. The business possessed the only vessels capable

of meeting Repsol’s specific requirements (especially the displacement requirement). Repsol

was obliged by the health and safety requirements of the industry to have 24/7 365 days-a-

year ERRV cover. The ITT related to the S-Class Vessels which were subject to options for a

further five years. The commencement dates proposed in the ITT were inconsistent with the

exercise of these options. That is, in my view, a significant fact. The options constituted a

standing offer by North Star to Repsol that the S-Class Vessels could be operated on like

terms for one or more of the one-year periods, at Repsol’s choice. No further negotiations

were required if Repsol wished to exercise one or more of the options.

[202] On the evidence, the ITT could only be understood to be a gambit to secure the

necessary services of an ERRV from the same counterparty (ie North Star) but by departing

from the current optionable charter party’s terms and rates: it was the opening of

negotiations. If the option constituted a standing offer to obtain the services of the S-Class

Vessels in like terms as in the extant charter parties (as I find it is), the sending of the ITT

signalled Repsol’s clear intention to re-negotiate the options on offer. (This, indeed, was the

very language used by Ross Atkinson to describe the ITT: see para [90], above.) It was the

re-opening of negotiations which could, from that point, be considered to be “outstanding or

ongoing”. Accordingly, the ITT falls within the phrase “outstanding or ongoing

negotiations of material importance”. In this very specific context, the description of the ITT

as a “unilateral” negotiation is inapposite, even assuming that negotiations must necessarily

be bilateral (which I do not accept as a universal proposition). Given the significant

contribution of the S-Class to the profitability of the business, North Star had no option but

to respond. In other words, it could not fail to engage in what was effectively a re-

negotiation of the provision of the same vessels (the S-Class Vessels) to the same customer

(Repsol) for the same period covered by the options in the extent charter parties, but seeking

different day rates. For these reasons, in the very particular circumstances disclosed in the

evidence in this case, the ITT was disclosable under warranty 26.6

[203] The third issue, based on clause 8.1.3, related to the pre-completion window (see

para [5], above). Lord Davidson began with a series of observations: The Signing Date was

14 October 2017 and completion was 2 November 2017. The obligation was personal to the

defender. It required writing and referred to a “material event”. The purpose of the clause

was to oblige the Warrantor (ie the defender) to notify the Buyer (ie the pursuer)

pre-completion of any event, material in its effect on the business, so that the pursuer can

open up the issue at or prior to completion. He noted that clause 9.3, the payment clause,

was conditional on, inter alia, the Warrantor having complied with clause 8. The defender

disputed the application of clause 8.1.3 on both the facts and interpretation.

[204] Turning to the evidence, Lord Davidson submitted that what was clear was that no

one opened the ITT prior to the signing of the Agreement. What was also clear fact was that

the only alert to the pursuer, in the relevant time frame, was Mr Bruce’s email of 22 October

2017. Thus the Warrantor had no knowledge of the content of the ITT prior to the signing.

He only became aware after the signing. On the issue of knowledge, Lord Davidson

submitted that it will not do for the defender to argue that, as the ITT came in before

signing, the Warrantor was not obliged to notify. The defender’s evidence revealed he was

ignorant of the content of the ITT and of the covering Repsol email. Neither he, nor the

management team, nor Simmons knew whether or not it was material prior to the ITT being

opened the following Tuesday. On Tuesday, 16 October 2017, Mr Wallace opened up the

ITT (Mr Bruce cannot recall when in the week he opened it, and Mr Payton has never

opened the ITT). Mr Bruce’s email was sent on 22 October 2017. In cross, the defender

indicated that his management team, and subsequently he, became aware of the content of

the ITT – but only after signing. Thus the Warrantor became aware of the content of the ITT

[205] On the issue of materiality Lord Davidson submitted that the ITT raised questions, at

the very least, about the sustainability of the option exercise of the S-Class given that, at the

time, an ITT appearing indicated the client was looking to push down the rates. Such an

attack on the rate raised a question as to whether the S-Class contracts would be rolled over.

A reduced rate being applied to the S-Class would not be a rollover of the charter. This was

material, given the importance of the S-Class contracts to the business. Further there was

the issue of methanol capacity which imposed a cost for one vessel of between £400,000 -

£500,000 and a cost for both vessels of between £800,000 - £1 million.

[206] Turning to interpretation, Lord Davidson submitted that the purpose of clause 8.1.3

referring to the Warrantor made it a direct obligation for him to notify the Buyer. The

requirement to notify in writing placed a degree of formality on the obligation. It referred to

the Warrantor expressly. It referred to notifying “in writing”. It referred to a “material

event”, thereby indicating an important obligation in the context of moving forward to

completion. Compliance with clause 8 was a condition for payment per clause 9.3. In his

submission, Mr Bruce’s email of 22 October 2017 did not meet either formality or accuracy.

It did not notify a “material event”. It did not come from the Warrantor. At completion

nothing else had been communicated by the defender, nor by management, nor by

Simmons. Thus neither the arrival of the ITT before signing nor the email of 22 October 2017

avail the defender. The defender was accordingly in breach of clause 8.1.3.

[207] Mr Howie noted that the pursuer’s case under clause 8.1.3 of the Agreement was that

in the period between signature and completion of the Agreement the defender “…failed to

notify the pursuer…of the terms of the ITT”. The pursuer accepts that the ITT was referred

to in correspondence, but argues that it was not notified “as a material event”.

[208] In relation to the wording of clause 8.1 and 8.1.3 of the Agreement, Mr Howie

submitted that what required notification was, first, a matter of which knowledge first

comes to the Warrantor in the period from 15 October 2017 to 2 November, and, secondly

which as at the date it so comes to his attention was such as forms a material event or might

reasonably be thought likely to amount to such an event in the future. Mr Howie noted that,

quite aside from the qualifications with which the clause hedges the notification to be given,

on this central issue of the subject of the clause, on the evidence led, the pursuer’s allegation

[209] Mr Howie developed his submission as follows. The pursuer complained of a want

of notification of the “terms of the ITT”, not the fact of receipt itself. The latter could not

have been complained of under the clause, because the receipt of the Repsol email and

attached ITT came just prior to the commencement of the pre-signing window. On the

evidence of all of the witnesses present at the Brodies meeting, the defender was informed of

the receipt of the ITT on the evening of 13 October 2017. That date preceded, and hence fell

outwith, the period of time referred to in clause 8.1.3. The fact of that receipt could not

therefore be a “matter” which the clause would ever oblige the defender as Warrantor to

intimate to the pursuer. A case of breach on that account would be irrelevant.

[210] The pursuer’s claim was that breach arose through failure to notify the buyer of the

terms of the ITT. But that allegation was, Mr Howie submitted, more relevant than would

be an averment to notify of the receipt - or the existence - of the ITT. The “matter” to be

notified is such as is or might be expected to be a “material event” quoad the business. It

must therefore be an “event” – a happening or occurrence. The qualification about

reasonable expectation relates to the future “materiality” of the happening. The word

“event” is not an apt description of the terms of a document. The presence, for example, in

an ITT of a reference to a mandatory requirement on a vessel offered for charter in May 2018

that it have a methanol capacity is not an “event” – it is not an occurrence. It is Mr Howie

argued, a continuance of a state of affairs which has existed since the document was

composed prior to it being sent to the addressee. From that it followed that the contents of

the ITT could never be a “material event” in relation to the business, and so a failure to notify

the buyer of those terms could not be the basis of an allegation of breach of clause 8.1.3.

[211] In any event, he argued that the pursuer’s the claim under 8.1.3 would still fail on the

facts established at the proof. The obligation to notify was not triggered unless the “matter”

becomes known to the defender (qua warrantor) in the relevant space of time. Something

becomes known to a man only on the first occasion it is drawn to his attention – hence the

inability of 8.1.3 to apply to the mere fact of receipt of the ITT. The defender first knew

about the receipt on 13 October 2017, whereas the critical period for the purposes of clause

8.1.3 began on 15 October 2017. The defender’s evidence however (and no other witness

could speak to this matter) was that he did not know of the terms of the ITT until after

Completion in November 2017, and, therefore, not until after the end of the pre-completion

window and any clause 8.1.3 obligation to notify. His position at the proof was that he had

never seen Repsol’s covering email or the terms of the ITT prior to the intimation of the

[212] Mr Howie noted that it appeared to be common to the evidence of Callum Bruce,

Gordon Wallace and the other witnesses to the 13 October meeting that the content of the

ITT was not then discussed. Nobody appeared to have opened up the ITT to find out what

it said. It was the next week before Mr Bruce himself did so. The defender was then aboard

a ship, out of the country, and so his only chance to find out about it was to be told of it in

the course of the meeting on 13 October 2017 or at some other date. No production attests to

his being told of the ITT’s contents at any time prior to November 2017 and in oral evidence

no witness deponed to telling the defender about it (Graham Payton couldn’t have done so

as he still hadn’t seen it himself; nor had Fraser Dobbie or Ross Atkinson). That, Mr Howie

suggested, is not surprising. The defender was not a “hands on” chairman of the Company

and had not been for some years. He was selling his shares. The details of the ITT, of

interest as they would no doubt be to those in North Star who had to respond to it, would

not be of concern to the defender. In re-examination, the defender was quite clear that he

himself had not known of the terms of the ITT until after the instant dispute broke out. That

evidence was, Mr Howie said, destructive of the pursuer’s case under clause 8.1.3.

[213] In addition to the above, Mr Howie made one or two points about the email of

22 October 2017. The evidence clearly disclosed that, for whatever reason, given that there

was to be a change in ownership, on 22 October, Callum Bruce notified Steven Lowry, a

partner in Basalt, that the ITT had been received. Notwithstanding Callum Bruce’s use of

“RFQ”, rather than an “ITT”, this was not actually of significance. Mr Howie suggested that

the difference between an “RFQ” and an “ITT” seemed to be rather elusive. Graham Payton

could not say what it was and Fraser Dobbie thought the abbreviations meant the same

thing, a view shared by Callum Bruce the author of the email. Steven Lowry did not seem to

have been misled by some subtle difference (if any) in the usage of the two abbreviations.

He appreciated that each of the two S-Class Vessel charters were going to have to be re-

tendered for, not least because that was what Mr Bruce had written. The reference to the

abbreviation “RFQ” was, accordingly, of no moment. No more does it matter that the

author of the email was Callum Bruce. The function of notification is not one to which

delectus personae applies. Callum Bruce gave evidence that he was acting in this on behalf of

the vendors and was thus capable of notifying for them, whether or not he said that in the

Discussion of issue 3: Clause 8.1.3 anent the pre-Completion window

[214] The defender argues that the pursuer complains about not being advised of the

“terms of the ITT” and, as that was received before the pre-Completion window (and of

which the defender says he was not aware until after Completion), clause 8.1.3 did not bite

in respect of the ITT. I did not understand Mr Howie to dispute that (apart from Callum

Bruce), the sell side management team only became aware of the terms of the ITT (or of the

Repsol email or the cover letter) after the Signing Date, but within the pre-Completion

window. Separately, Mr Howie argued that the “terms of the ITT” do not constitute an

[215] I consider first the defender’s argument that the terms of the ITT are not capable of

constituting an “event” and that the receipt of the ITT pre-dated the period covered by this

warranty. In my view, this distinction is too fine. It is inconsistent with the terms of this

warranty, construed in the context of the Agreement and the relevant evidence. Clause

8.1.3 related to the pre-Completion window, as I have termed it. Consider the purpose of a

clause covering the gap between signing the Agreement and payment of the final sum under

it at completion. By the point in time that this clause became operative, the sell side would

(or should) have provided all of the information provided under the warranties already

discussed. Having regard to its place within the Agreement, the commercial purpose of this

clause was obvious: to oblige the defender to bring to the pursuer’s notice in writing (ie

denoting this as a matter of some importance) “any matter which becomes known to him”

after the signing date and which “constitutes, or might reasonably be expected to constitute,

[216] The starting point is to note that the scope of the clause is very broad: it requires

disclosure of “any matter… which constitutes, or might reasonably be expected to constitute, a

material event…” (emphasis added). In my view, there is little force in the argument that the

terms of the ITT do not constitute an event for the simple reason that the potential “event” is

what might, in the real world, flow from the terms of the ITT. The terms of the ITT are not

just words; they convey in words an intention to bring into existence a state of affairs having

legal effect (in the form of a contract for the services of ERRVs for Repsol’s North sea assets).

If North Star declined to respond to the ITT or responded so unsuccessfully, with the result

that Repsol did not exercise the options in the charter parties for the S-Class Vessels, that

would (by reason of its adverse effect on the profitability) constitute a material event.

[217] Furthermore, if it was clear from the terms of the ITT (or, indeed, from the email or

cover letter), that Repsol was proposing to go to the market (eg by ditching the displacement

requirement or, separately, by imposing a methanol condition with which the S-Class

Vessels as configured could not immediately comply) so it could widen considerably the

body of potential providers of ERRVs with a view to securing their services during the

period which options for the S-Class Vessel would otherwise have covered. Against that

background, Repsol’s issue to the only provider capable of servicing its very particular

needs (in the form of the displacement requirement) of an ITT that was inconsistent with the

exercise of those options was significant. It undermined any assumption that the first option

would be exercised. It signalled a disinclination to secure the use of the S-Class vessels by

that means, ie without further negotiations. This is in my view a potentially “material

event” in terms of this clause. On the evidence of all of the buy side witnesses, the ITT

created a risk with serious consequences underpinning the sell side’s certitude about

Repsol’s exercise of the options for the S-Class Vessels. None of the sell side witnesses asked

about this demurred from this assessment. Separately, in my view, the inclusion of the

requirement for methanol capacity, compliance with which would cost the business

c£400,000 to £800,000, also fell within the terms of clause 8.1.3. The sell side’s appreciation of

[218] Mr Howie relies on the fact that the defender himself remained ignorant of the terms

of the ITT until this litigation ensued. I have already explained why I do not accept that

evidence. In any event, even if that were the case, I accept Lord Davidson’s submission that

this does not avail the defender. The defender cannot rely on the sell side’s email of

22 October 2017 for the purpose of satisfying the pre-Completion window clause, but at the

same time try to avoid attribution of the knowledge (of the ITT) of those sending it on his

[219] On the whole evidence, and construing clause 8.1.3 against that background and in

the context of the Agreement, I find that the terms of the ITT, knowledge of which was only

acquired by the sell side and the defender during the relevant period, had the potential to

constitute a material event. I reject the defender’s argument to the contrary. That brings me

[220] Did the 22 October 2017 email (see para [69] to [70], above) comply with the

requirement to give notice in writing? In my view, it failed to do so for a number of reasons,

(1) In the first place, the receipt of the ITT compelled the buy side to convene an

after-hours meeting with Brodies on the eve of the Signing Date. Its receipt at

that stage was treated with the utmost seriousness by the sell side. However,

it did not communicate the fact of the ITT to the pursuer until nine days after

it was received or six days after it was opened. This was not “as soon as

reasonably practicable”, as the opening phrase of clause 8.1.3 required.

(2) Secondly, it was not highlighted in any way in that email that the ITT was

significant. Rather, the impression given was to bury this in a list of matters

(3) More concerning still, was the mis-description of the ITT as an “RFQ” and

(4) In two further respects, what was said about the RFQ was misleading by

(i) the pursuer was not advised that the displacement requirement had

been dropped (and which was the single factor that gave the S-Class

(ii) the pursuer was not advised about the new requirement for methanol

These features are dissonant with the bland sentence in the email describing

what North Star would do in reply, “[a]s per our normal approach as the

incumbent…”(emphasis added). While North Star was the “incumbent”, the

abandonment of the displacement requirement cast very serious doubt on its

certainty in retaining that status. Further, the need to respond to the new

methanol capacity (and a spend of £800,000 to £1,000,000 for the S-Class

Vessels) did not credibly fall within the phrase “our normal approach”.

(5) Finally, there was no reference whatsoever in the email of 22 October 2017, or

subsequently, which conveyed that this matter was being notified for the

purposes of clause 8.1.3. (As noted above (at para [119]), the defender

remained equivocal in his evidence as to whether the ITT was notifiable.)

This is not mere formalism. The defender could have complied by referring

expressly to clause 8.1.3 in relation to the ITT (and which would have

signalled that this was a matter which constituted or might reasonably

constitute a material event), or by using language which unambiguously

All of the factors just described minimised the potential significance of the ITT (including its

timing and terms) and was apt to mislead the buy side as to its real significance and

[221] Accordingly, I find that the email of 22 October 2017 did not constitute compliance

Parties’ submissions on issue 4: misrepresentation and the entire agreements clause

[221] This part of the pursuer’s case is a common law claim for negligent

misrepresentation. A number of discrete questions arise on this aspect of the pursuer’s case,

(1) Was the representation in the email a representation of fact or opinion?

(2) If it was a representation of fact, was it of continuing effect as at the Signing

(4) Does the law recognise a duty to correct a representation made in pre-

misrepresentation by the point the representee and representor enter into a

(5) Was it in any event excluded by the entire agreements clause? Yes- with some

[222] Lord Davidson presented his submission under a number of headings.

[223] He submitted that the primary issue between the parties was the law in respect of

false representation in circumstances where facts change between the statement and the

When a statement made by one party to another party contemplating entry into a

contract is true when made, but becomes untrue prior to the contract being entered,

the question is whether the statement-giver is liable for misrepresentation to the

statement-receiver? To put it another way: if the relevant statement was accurate

when given, but is false at the time of the contract, where does the risk fall?

Lord Davidson submitted that the statement-giver bears the risk. The pursuer accepted that

the statement must be one where there was reliance on the statement by the party entering

into the contract. Where there is a statement relied upon by that party made during

negotiations which continues in effect but is in fact false when the contract is entered into, it

constitutes a misrepresentation. It is a misrepresentation that would permit reduction or if

[224] In support of that submission Lord Davidson referred the observations of Lord Reed

at paragraphs 16 to 19 Cramaso LLP v Ogilvie-Grant and Others [2014] UKSC 9[ [2014] AC

1093 (“Cramaso”) (with whom all other Justices concurred) setting out the law regarding the

effect of representations in pre-contractual discussions which may lead to setting aside the

contract by reason of error or fraud. He also referred to Lord Reed’s observations that:

“[The law] is thus capable in appropriate circumstances of imposing a continuing

responsibility upon the maker of a pre-contractual representation in situations where

there is an interval of time between the making of the representation and the

conclusion of a contract in reliance upon it on the basis that where the representation

has a continuing effect the representor has a continuing responsibility in respect of its

“[…] it has long been accepted that the relationship between the parties to

contractual negotiations may give rise to such a duty in respect of representation

which the representor can reasonably foresee is likely to induce the other party to

enter into the contract, unless circumstances negating the existence of such a duty

These passages supported the continuing effect of a representation and the imposition of a

duty of care where a person has entered into a contract after a misrepresentation has been

made to him by the other party to the contract. The Inner House had applied this passage in

Royal Bank of Scotland Plc. v O’Donnell [2014] CSIH 84 (“O’Donnell”) He also cited Gloag

[225] Applying these to the instant case, Lord Davidson submitted that the statement in

the Simmons email relative to the S-Class contracts, though accurate at the time it was sent,

was rendered false by the arrival of the ITT on 13 October 2017. Any claim by the defender,

that the sell side believed the statement remained accurate, was not the test. Objectively the

facts were as follows: the sell side took no steps to assess the ITT; the management team

knew in context that an ITT signified at least a challenge to the S-Class Vessel rates; they

knew the importance of the information to the buy side both at 5 October 2017 and at 13

October 2017; they did not inform the buy side before signing the Agreement.

[226] The defender contends it was a statement of opinion and therefore not actionable.

However, Lord Davidson invited the court to consider the circumstances: the buy side had

to look to the sell side for the necessary data to assess whether to buy. The buy side were

provided with clear statements of both the S-Class being the only vessels for the contract

and the consequent stability of rates over time due to the options available to Repsol. These

statements were not simply an expression of a view, but the information gathered from the

North Star management team, passed on by Simmons and where the whole sell side were

aware of the importance of contracts, options and rates and especially regarding the S-Class

[227] The buy side asked about the S-Class Vessel contracts eight days before the Signing

Date. Although financially astute and assisted by WoodMac, nonetheless the buy side were

dependent on the statements in the Simmons email. WoodMac altered its assessment of the

S-Class contracts as a result of the representation made in the Simmons email of 5 October

2017. The Simmons email contained statements about the present state of knowledge of the

sell side. This was based on facts relative to the S-Class Vessels and Repsol. It was not the

equivalent of advice (cf. Grant Estates (In Liquidation) and Others v The Royal Bank of Scotland

plc [2012] CSOH 133 (Grant Estates”); Standard Chartered Bank v Ceylon Petroleum Corp

[2011] EWHC 1785 (Comm) at para 544) but rather the communication of information required by

[228] Lord Davidson submitted that the answer must be yes. What was entirely clear was

that no one on the sell side thought to open the ITT. None of the North Star management

team or Simmons thought they should inform the defender about the statement in the

Simmons email. The defender did not inquire into the content of the ITT. All of those

present at the meeting at Brodies’ knew that the buy side required information relative inter

Does the entire agreement clause 18 enable the defender to avoid liability?

[229] Lord Davidson next addressed the defender’s argument that the entire agreement

clause extinguished all representations and thus excluded the misrepresentation case based

on the ITT. He argued, however, that the pursuer was induced into entering the Agreement

by a misrepresentation. The misrepresentation occurred before the Agreement was entered

into and subsisted right up to the moment when it was signed. The misrepresentation was

the concealing, or not revealing, the arrival of the ITT which had rendered statements in the

Simmons email no longer correct. The representations in the Simmons email were not

covered by the entire agreement clause up to the signing of the Agreement. The

misrepresentation occurred on 13 October 2017 before the Agreement was signed. It was in

these circumstances that the pursuer was induced to enter the Agreement.

[230] He submitted that the entire agreement clause did not exclude misrepresentations of

this type. The express reference to fraud or fraudulent misrepresentation does not exclude

this misrepresentation even were fraud not present. If it were argued that expressio unius

dictates that the reference to fraudulent misrepresentation excludes this misrepresentation,

the answer would be that the Latin tag is not a rule of construction – one must interpret the

words as they stand. The clause does not expressly or impliedly exclude pre-contractual

misrepresentations. Of course, were the defender to claim some implied exclusion, he

would have to confront clause 18.2 whereby the parties excluded all implied terms.

[231] While the entire agreement clause referred to representations (which were not the

same as misrepresentations) the case here is not caught, he submitted, as the point is the

representation in the Simmons email and the non-disclosure were in play before the

Agreement was entered into. The pursuer would not have signed the Agreement had it

known the truth. No entire agreement clause would have operated at all between parties

but for the misrepresentation. As Lord Toulson states in Cramaso (at para 57):

“As a matter of general principle, a representation made during contractual

negotiations for the purpose of inducing a contract will ordinarily be regarded as

continuing until the contract is actually concluded because it will generally be

[232] In BSA International SA v Hugh McLelland Irvine and Others [2010] CSOH 78

Lord Glennie (at para 9) envisaged that a misrepresentation claim may survive an entire

agreement clause, making clear much depends on the actual language of the relative clause.

One must also distinguish the nature of the misrepresentation where it arises out of non-

disclosure rendering false a prior representation. Non-reliance clauses do not normally

envisage such a type of representation where a party has the means of correcting the falsity

of a prior representation but fails or chooses not to inform the other party.

[233] The law would not exclude a claim based on being induced to enter a contract by a

negligent misrepresentation without clear contractual language excluding it. Theory

suggests the law would not fail to protect a party being induced to sign away legal

protections Accordingly in the absence of very clear language an entire agreement/non

reliance/waiver clause does not exclude this type of misrepresentation.

[234] Mr Howie began by noting that while the Pursuer asserts that there has been a

“misrepresentation”, on the pleadings it was not clear what kind of misrepresentation was

intended. He assumed that the pursuer’s case was one of negligent misrepresentation. The

defender’s reply was straightforward: first, the pursuer’s claim was irrelevant, given the

terms of the entire agreement clause, and, secondly, there was no misrepresentation of fact

[235] Mr Howie observed that the starting point was that there is no general duty for a

party to make any form of disclosure (O’Donnell, cit supra at para 25). The Pursuer therefore

needed to aver, and prove, that a duty existed. The only duty relied upon appears to be a

duty to correct. He submitted that, in the present case, this was irrelevant. The terms of the

entire agreement clause were clear. The background facts and circumstances demonstrate

[236] In relation to whether there is any duty of care in relation to statements made, he

submitted that it was important to note that the team engaged by the defender made it clear

from the outset that neither he nor his advisor would accept responsibility for the accuracy

of any information provided or opinion expressed; and that, as a consequence, the pursuer

required to make its own investigations into the accuracy of the information supplied. The

pursuer engaged WoodMac to assist it in relation to verifying the accuracy of the

information and assumptions communicated to it by the Defender. In support of this

submission, Mr Howie cited passages from a number of pre-Agreement communings. The

following passage (from the “Project Barents Business Plan” dated August 2016) is

“This Business Plan does not purport to be all inclusive or contain all information a

potential participant in the Potential Transaction would desire and is not intended to

form the basis of any investment decision and should not be considered as financial

opinion or recommendation by the Company, the Client, SCIL or any other person in

relation to the Potential Transaction. In each case, the recipient should conduct its

own analysis of the information, data and statements set forth in the Business Plan.

… A purchaser will be required to agree in any formal sale and purchase agreement

that it has not relied on or been induced to enter into such agreement by any

representation, warranty or undertaking save as expressly set out in such agreement.

… No parties shall have a right of action against the Company, the Client, SCIL, or

any other person in relation to the accuracy or completeness of the information

contained in the Business Plan or any other written or oral information made

available to it in connection with the potential sale of the Company, except to the

extent that any representation or warranty is provided…in a binding Sale and

He noted that very similar caveats were contained in the “Project Barents Business Plan May

2017. The business plan clearly stated that all currently contracted options were forecast to

be exercised by customers at rates without any escalation. It was for the Pursuer to make its

own investigations and satisfy themselves of the future prospects of the Company. He

submitted that the pursuer did this engaging its own team of advisers, led by WoodMac. It

was clear that the Pursuer made its own investigations into the commercial assumptions that

[237] Accordingly, Mr Howie submitted that from the very outset it was made clear that:

(i) there would be a non-reliance statement inserted in any formal agreement; (ii) no action

could be raised in relation to the accuracy of completeness of information provided; and (iii)

that the Pursuer required to make its own investigations into the accuracy of information

provided to it except insofar as that information might be the subject of a warranty in the

[238] Mr Howie noted that if the Court accepted that a duty of care arose in relation to

statements made, the Court will need to be satisfied that there has been a breach of such a

duty and that the Pursuer relied on any such breach of duty (in this case a

[239] Mr Howie acknowledged that, in appropriate cases (especially cases where there are

no non reliance and/ or entire agreement clauses) concealment of facts may amount to

misrepresentation (O’Donnell at para 27). However, an expression of opinion though

unfounded is not a misrepresentation if it is honestly made (O’Donnell, para 26; Gloag at

[240] The defender disputed that there has been any false statement of fact made to the

pursuer. The two charter parties were disclosed; the dates that they expired and the options

were clearly set out in the CCS. The pursuer’s witnesses (Steven Lowry, Wil Jones and

Malcolm Forbes-Cable) accepted that the pursuer knew of the existence of the expiry dates

of the contracts and that there were five one-year options. There was no guarantee that

[241] Mr Howie argued that what the pursuer sought to rely upon was a statement made

by the management team in relation to their opinion on the likelihood of the options being

exercised by Repsol. It was a statement of their belief. He submitted that that statement was

a classic statement of opinion as opposed to a statement of fact. It cannot found the basis for

[242] Moreover, as at the date the Agreement was concluded, the management team still

firmly held the view that Repsol would exercise the options to extend the S-Class Contracts.

Given the ageing nature of the Repsol platforms, the previous investigations undertaken by

Talisman, and the contents of the platform safety case, North Star’s management team

firmly believed that the options would be exercised notwithstanding the receipt of the ITT.

Mr Howie referred passages in the evidence of Malcolm Bruce and Gordon Wallace in

support of the latter observation. (It is not necessary to set these out, as it was patent on the

evidence that the sell side management team’s confidence that Repsol would exercise the

options remained unquestioned throughout the relevant period and there was no challenge

to this evidence.) He also referred to Malcolm Forbes-Cable’s evidence that WoodMac had

provided advice about the sell side’s assumptions. Mr Howie observed that it was entirely

unclear why the existence of the ITT would have made any difference to WoodMac analysis.

They claim to be experts in the oil and gas market. They were clearly aware that Repsol had

the option of testing the market at the end of the contractual period regardless of the ITT

actually being issued. These known risks were presumably factored into the analysis by

The Entire Agreement Clause and The Non-Reliance Clause in the Agreement

[243] Mr Howie noted the terms of clause 18.1 and 18.3 (set out above, at para [7]). He

submitted that these clauses were clear. The parties have delineated the nature of their

relationship. This excludes any duty of care and any possibility for a claim based upon

negligent misrepresentation. Moreover, the Pursuer is contractually barred from asserting

[244] Mr Howie submitted that the law in this area was well established and he cited the

following passages: Peekay Intermark Ltd v Australia & New Zealand Banking Group Ltd

[2006] 2 Lloyd’s Rep 511 (per Moore-Bick LJ, at para 56), Springwell Navigation Corp v JP Morgan

Chase Bank (formerly Chase Manhattan Bank) [2010] EWCA Civ 1221(at paras 143, 144 and 169),

Standard Chartered Bank v Ceylon Petroleum Corp, cit. supra, per Hamblen J at para 544(3).

Mr Howie noted that these principles have been applied in Scotland. In McMullen Group

Holdings Ltd v John Harwood [2011] CSOH 132 (per Lord Hodge, at para 58). In that case,

“… a clause such as this, in which the soi-disant recipient of a representation has

limited or defined the material on which he has relied in entering into the

contract, is fatal to a case of negligent misrepresentation in relation to material

outside of those defined limits. In my opinion, where the parties have agreed

such a provision, the law will not impose on the representor a duty of care in

relation to a representation of the extraneous matter and the representee cannot

be heard to say that such matter induced him to enter into the contract.”

Finally, Mr Howie noted Lord Hodge’s observations, albeit referring more generally to the

law about the imposition of liability for negligent statements) in Grant Estates (In Liquidation)

and Others v The Royal Bank of Scotland PLC, cit supra, at para 73.

[245] Mr Howie submitted that given the terms of entire agreement clause, no duty of care

arose as between the defender and the pursuer. That clause was, he argued, a

comprehensive clause which precluded any case made in reparation (as opposed to breach

of contract), in relation to any representation. He developed this submission as follows. In

light of case-law and having regard to the entire agreement, that clause “extinguished”,

inter alia, representations in relation to the subject-matter of the Agreement and the

documents referred to therein (a phrase, which, on the pursuer’s case, would be apt to cover

the Repsol charters) unless they be in that Agreement or those documents. On the pursuer’s

case, the ITT was not included. Any representation in relation to the ITT or day-rates (or in

the Simmons email) was extinguished, whether it was, or became, inaccurate, or not.

Secondly, the entire agreement clause also included an acknowledgement by the pursuer

that, “in entering into this agreement” it did not rely on any statement, representation …or

other assurance given or made by any person (whether a party to the agreement or not)

other than as expressly set out or referred to in this agreement”. That was a statement which

on its face alone spoke to the absence of any actual such reliance. If it were not true, the

pursuer, presumably, would not have allowed this part of the clause to stand and would not

have signed a contract containing it. As receipt of the ITT was not set out or referred to in

the Agreement, any case of negligent misrepresentation in relation to the ITT was irrelevant.

Nor did it induce the pursuer to enter into the Agreement at the price paid. Thirdly, the case

of negligent misstatement was irrelevant. The Simmons email was a statement of opinion as

at its date by a director of the company by the sell side about future hire rates on the Repsol

charters. It was not a statement capable of forming an actionable misstatement by the

defender. It was not falsified the receipt of the ITT. In any event, even if there were an

actionable misrepresentation, the entire agreement clause limited the remedies open to the

pursuer. Its “only remedy” was for “breach of contract”, and that in the form of a breach of

warranty claim. The Agreement was, he suggested, designed, inter alia, to prevent those

protections from being circumvented by the use of delictual or other non-contractual

grounds of action. The overall intent was to secure that a misrepresentation did not give rise

to a case in delict. Either it had been incorporated into the Agreement, and it fell to and was

to be remedied by an action in breach of warranty alone, or it did not induce the contract

and has been extinguished – in which case, no ground of action existed. Finally, as a fall

back, Mr Howie argued that, in the event that the court was not with the defender on

whether there was actual reliance, the entire agreement clause amounted to a contractual bar

on the bringing of an action in delict on the ground of negligent misrepresentation. The

Agreement included an express waiver of any claim which might otherwise be open to the

pursuer on account of a misrepresentation not made in the Agreement itself. Again, the

wording was clear and should be given effect to. Mr Howie submitted that it was fatal to

[246] Mr Howie submitted that the significance of the business plan and its inter-relation

with the entire agreement clause should not be overlooked. Any actual reliance on a

representation needed to be a reasonable one. In the face of the business plans and he entire

agreement clause (of which the pursuer was aware prior to signing – Mr Lowry in cross

examination), that requirement simply could not be met. Ab initio, the pursuer would have

been aware of its inability to rely on any representation which was not within the four

corners of the Agreement itself, and that if a matter was of consequence to the pursuer, the

latter should be astute to secure that it appeared in the Agreement as a warranty or

otherwise. Ex hypothesi the delictual case, that was not done by the pursuer. Reliance on a

representation not so incorporated, in the teeth of such provisions, would not be reasonable

and hence preclude a case in misrepresentation on that representation.

Discussion of issue 4: misrepresentation and the entire agreement clause

[247] Notwithstanding Senior Counsel’s full submissions, I can deal with this issue shortly.

It is important to recall the question (posed by the buy side) to which the Simmons email

was a reply. Having noted the reduction in rates in respect of the S-Class Vessels, the buy

side asked for the management team’s “expectation and rationale” for the day rates of these

assets during the option period. (In passing I note that, while evidence was elicited about

the sell side’s internal revisions to their draft answer, nothing was made of this in

submissions.) The answer in the Simmons email, when it came six hours later, began with

the statement that the S-Class had been purpose-built to meet the specific tonnage

requirements for Repsol, following a global tender exercise. In essence, this was the

rationale for the certainty underpinning the sell side’s expectation that the options would be

exercised. (That statement was consistent with the evidence led, and no party suggested

“consequently, we believe that the Grampian S class vessels are the only vessels

capable of meeting this specific requirement. As such the rate expectations would be

In my view, this passage amounts to no more than a statement of opinion by the sell side of

their expectation that the rates would continue because the options would be exercised.

Accordingly, it does not have the requisite quality of a statement or representation of fact.

[248] Furthermore, while the terms and receipt of the ITT called into question the degree of

certainty with which the sell side’s expectation could be expressed, the factual statement

underpinning the rationale continued to be correct (ie it remained the case that the S-Class

Vessels were bespoke vessels commissioned to meet Repsol’s needs). The abandonment of

the displacement requirement affected the certainty of the expectation; it did not render the

[249] I therefore find that there is no relevant foundation in the evidence for the pursuer’s

[250] My answer to the first question is determinative of this issue in favour of the

defender. Out of deference to the arguments advanced, I should indicate how I would have

(1) If it was a representation of fact, was it of continuing effect as at the Signing

Date?: Had I found that the Simmons email constituted a representation of

fact, and not opinion, I would have readily held that it continued to operate

(2) Did the pursuer rely on the representation?: Yes. On the evidence, there is

no doubt that the pursuer relied on the Simmons email in its purchase of the

Company at the price it paid. I am not persuaded by Mr Howie’s submission

that the interposition of WoodMac displaced any reliance by the pursuer on

(3) Does the law recognise a duty to correct a representation made in pre-

misrepresentation by the point the representee and representor enter into a

contract?: In my view, the law would recognise such a duty. Mr Howie

contended that there is no general duty of disclosure. But, in my view, that

does not exclude a duty of care from arising in respect of representation (and

embracing a duty to correct a misrepresentation), subject, of course, to the

Lord Davidson’s submissions on the possibility of a duty of care arising,

based on the case of Cramaso (a case, Mr Howie did not challenge). The cases

Mr Howie cited were concerned, as a generality, with the effect of an entire

agreement clause; they were not inconsistent with a Cramaso-type duty

arising. It all depended on the terms of the particular entire agreement

clause, as to whether it is capable of excluding a misrepresentation inducing

(4) In any event, was the pursuer’s case of misrepresentation excluded by the

entire agreements clause?: In my view, the terms of this entire agreement

clause were sufficiently broadly drafted to exclude the pursuer from

[251] On this issue, Lord Davidson rested on the argument in the pursuer’s addendum to

“At Article 6 it is averred that on 5 October 2017 the Pursuer was told on behalf of

those acting on behalf of inter alia the Defender of their belief the S-Class Vessels

were the only vessels capable the requirement. This was in context of a request for

support for S-Class Vessels’ day rates in the option period. For these purposes it is

accepted this was a true statement when made. The arrival of the ITT objectively

challenged the correctness of the statement. Gordon Wallace and others acting on

behalf of the Defender knew or should have known the effect of the ITT on the

correctness of the prior statement. They so knew or should have known prior to the

signing on 14 October 2017. They knew or should have known the importance of

the S-Class Vessels and the relative option exercise to the pursuer and the price it

was to pay for the Company. The Defender on whose behalf they were acting thus

was subject to a duty to disclose the change of circumstances represented by the

ITT. The Defender neither directly nor indirectly made such disclosure. (With v

Flanagan [1936] 1 Ch 575 is an example of the proposition that a vendor comes

under a duty to communicate such a change of circumstances being supported by

the Court of Appeal as is Royal Bank of Scotland v O’Donnell 2015 SC 258).”

[252] Mr Howie’s reply to this issue may be summarised in two propositions: first, as there

was no duty on the defender to disclose (for the same reasons advanced in meeting the

pursuer’s case on misrepresentation), there was no concealment; secondly, in any event,

there was no wilful concealment, particularly as the defender took advice from is solicitor,

[253] In relation to the first proposition, after noting that “unlawful concealment” was not

a nomen juris, Mr Howie referred to the submissions he had made on issue 4, namely, that

there was no general duty to disclose and, in any event, any such duty was negative by the

terms of the Agreement. Mr Howie referred to a number cases to support the proposition

that, for concealment to give rise to a cause of action, there must be concealment of a fact

which the party had an obligation to reveal: Irvine v Kirkpatrick (1850) 7 Bell’s App 186 (per

Lord Brougham at 233); Broatch v Jenkins (1866) 4 M 1030 (per Lord President Ingles at 1032);

and Gloag pp 457-462. There was neither a general duty of disclosure nor a special duty to

inform arising in the circumstances of this case. In addition to the reasons already

canvassed, Mr Howie added two more. First, if the court was considering this issue at all, it

was because there is no warranty breached by non-disclosure of the ITT and hence the

warranties – being directed to other matters – cannot set up a duty to inform of the ITT. Nor

did the statement made in the Simmons email. Secondly, the statement in the Simmons

email was an expression of opinion; a belief on the part of the management on a given date.

Not only did that remain true – it could not become untrue – but on the evidence, the belief

there expressed continued to be held into November, beyond completion. There was

nothing to correct, even if (as Mr Howie submitted it was not), there had been some

theoretical duty to correct statements of the intervening inaccuracy of which one becomes

aware before signing of the Agreement. The ITT had not been opened, and the management

still thought they would win the tender at old rates as there was no realistic competition.

[254] Mr Howie’s second proposition was that there had been no wilful concealment.

Wilful concealment was a deliberate decision not to disclose that which it is, as you know,

your duty to disclose. It connotes that one’s objective in not disclosing that which one ought

to disclose is to evade that duty. He noted the definition of “wilful” in the Oxford English

Dictionary :“Done on purpose or wittingly; purposed, deliberate, intentional; not accidental

or casual. Chiefly, now always, in a bad sense, of an action either evil in itself or

blameworthy in the particular case…” Here, there was no concealment, “wilful” or

“unlawful”. The Pursuer took advice from his solicitor, Douglas Crawford. Mr Crawford

gave consideration to this issue and advised the defender that he was under no duty to

disclose the ITT. The defender accepted that advice. There was no suggestion in cross

examination of either Douglas Crawford or the defender that the advice was defective or

that the defender could be criticised for accepting the advice of his solicitor. Mr Howie

submitted that this was fatal to the pursuer’s case of wilful concealment. If it were

suggested that Douglas Crawford may have been hampered in giving advice by the limited

factual information he was himself given about the ITT, critically he had been told that the

ITT concerned the S-Class Vessel charters. Whether Douglas Crawford’s advice was correct

or not, the defender accepted that advice and acted accordingly. That cannot amount to

wilful concealment. On professional advice, the defender’s view was that there was nothing

to disclose. He could not, therefore, wilfully conceal any such thing.

[255] From parties’ submissions, it is clear that their arguments on this issue are closely

related to, if not dependant on, those advanced in respect of the pursuer’s misrepresentation

case. Given my finding that the sentence founded on in the Simmons email did not

constitute a representation of fact, the case on wilful concealment is also bound to fail.

[256] The pursuer has succeeded on three of the five cases it advances, namely the three

claims based on breach of warranties and a clause in the Agreement, and it is entitled to

declarator in terms of the first conclusion of the Summons (as amended). However, as

parties did not make formal motions as to which of their 10 pleas-in-law should be upheld,

repelled or reserved, I shall put the case out By Order for discussion of the terms of the

interlocutor to give effect to the court’s decision and to discuss further procedure.

Scottish Court of Session Decisions