Scottish Court of Session Decisions

This is an action for compensation under the Merchant Shipping (Oil Pollution) Act 1971 ("the 1971 Act") arising from the loss of the Braer on 5 January 1993. The action was raised in December 1995 against The Braer Corporation as owner of the Braer and Assuranceforeningen Skuld ("Skuld") as its insurer. The International Oil Pollution Compensation Fund ("the Fund") has intervened as minuter.

As in a number of these cases the pursuers have also convened as defenders three individuals as directors of The Braer Corporation. There is a dispute on Record as to whether the third of these individuals, Mr Hudner, is a director; but the point no longer matters. Counsel for the pursuers now accept that no claim lies against any of the directors. They have undertaken that they will amend the instance and the conclusions and abandon against these three defenders, as they did in Skerries Salmon Ltd v The Braer Corporation (1 December 1998, unreported, at pp. 1-2). I shall therefore treat this action as being sued against the owner and the insurer only.

The action comes before me on an opposed motion for the pursuers "to allow the Record to be opened up and amended in terms of the pursuers' Minute and the Answers for the minuters and defenders ... ; to find the pursuers liable to the defenders and minuters in the expenses occasioned by the amendment, and of new to close the Record ... " The motion does not refer to the adjustments that the parties have made to the Minute and Answers, but at the hearing of the motion all parties referred to the adjusted version of the Minute and Answers.

By means of the proposed amendment the pursuers seek inter alia to substitute for themselves as individuals the pursuers as "the whole surviving partners of the firm of Gray Fishing Company, 2 St Olaf Street, Lerwick, Shetland as such partners and as individuals and the said firm of Gray Fishing Company". The Minute expands on the affairs of the partnership and on the losses that it is alleged to have sustained. It makes it clear beyond any doubt that the losses claimed for are losses of the partnership. The pursuers also seek to add averments that the partnership received payments from Skuld and the Fund and to add a plea that if the pursuers' claim is otherwise time-barred, the defenders and the Fund by having made these payments are personally barred from taking the point. Counsel for the pursuers intimated at the hearing of the motion that they did not now seek to argue that plea.

The motion raises a prescription point. The action was raised at the instance of Stephen Gray and Stanley Gray as individuals. The pursuers sought decree for payment by the defenders jointly and severally of £438,554.39, with interest from 5 January 1993.

On 13 June 1996 defences were lodged. The defences raised the question whether the losses referred to in the Summons were those of the pursuers or of a partnership of which the pursuers were the partners. The defenders pled that the pursuers had no title to sue. Thereafter, the pursuers put on record various averments regarding the interest of the partnership in the business venture the losses of which were referred to on Record.

On 4 September 1996 the Record was closed. In the Closed Record the pursuers aver that they are the partners of Gray Fishing Company of Lerwick; that the partnership owns and operates the fishing vessels Elly Gerda and Sola Gratia; that the partnership came into existence on 1 May 1994, and that the two vessels were purchased by the partnership at that time (cond. 1). The pursuers aver that their business is that of fishing for prawns and shellfish (cond. 7) and that they were prevented from fishing in their usual waters by reason of the imposition of the Exclusion Zone (cond. 8). The pursuers aver that the Exclusion Zone was designated on 8 January 1993 and extended on 27 January 1993 (cond 3).

The crucial averments of loss are as follows:

Counsel for the pursuers accept that despite averments on Record that the pursuers have suffered and will continue to suffer certain losses, the losses for which compensation is claimed are losses allegedly sustained by the partnership from 1 May 1994 onwards. Counsel for the pursuers also accept that the instance of the summons demonstrates conclusively that the action was raised by the pursuers as individuals and only as individuals. The pursuers do not seek to argue that their having so raised the action was effective to protect the rights of the partnership of which they are the whole partners.

Before the Record was closed a Minute of Amendment was prepared on behalf of the pursuers with the purpose of substituting the partnership in place of the pursuers as individuals. This Minute of Amendment was circulated to the defenders and to the minuter in about June 1996. The Minute of Amendment was not lodged until 10 June 1997. Answers were lodged for the defenders on 16 June 1997 and for the minuter on 26 June 1997. Thereafter the Minute and Answers were adjusted. The present motion was not enrolled until 14 December 1998.

One further matter of significance is that the minuter has agreed settlements with the pursuers of their claims without, so far as I can see, any clear stipulation as to the basis on which payments under the settlements will be made. Counsel for the minuter has confirmed that the minuter will honour these agreements, subject only to pro-rating of the amounts in due course.

This motion centres on the interpretation of section 9 of the 1971 Act, which is in the following terms:

Counsel for all parties agree, in line with the view that I expressed in Eunson v The Braer Corporation (30 July 1998, unreported), that section 9 operates prescription rather than limitation. Counsel for the pursuers accept that, for the purposes of this case, the date on which the partnership's claim was made judicially is the date on which the Minute of Amendment was lodged (Boyle v Glasgow Corporation 1975 SC 238).

Counsel are agreed that if the triennial prescription referred to in section 9 applies, the claim of the partnership, if valid, prescribed before the Minute of Amendment was lodged. But if the claim of the partnership is subject only to a sexennial prescription under section 9 the claim was timeously made.

Article VIII of the International Convention on Civil Liability for Oil Pollution Damage 1969, which the 1971 Act implements, provides as follows:

Counsel for the pursuers argued that the word "nor" in section 9 indicated that there were different categories of loss to which one or other of two prescriptive periods applied. In the case of a loss sustained once and for all, the triennial prescription applied. It ran from the date when the liability of the defenders under section 1 and the loss incurred by the claimant concurred. In a case where there were continuing losses, however, the only prescription that applied was a sexennial prescription. It might be that certain losses would not be sustained until more than three years after the claim arose. The section envisaged that there should be a single, comprehensive assessment of the claimant's losses. Since future losses in a continuing loss case could be unpredictable, such an assessment could not be properly carried out if the triennial prescription applied. The section should be construed to mean that in such a case the claim was subject only to a sexennial prescription. Counsel for the pursuers also submitted that article VIII of the 1969 Convention (supra) supported their proposed interpretation of section 9.

If that interpretation was sound, the matter became one for the discretion of the court under Rule of Court 24.1(2)(b)(iv) and (v). In the circumstances, the court should exercise its discretion in favour of the pursuers on the basis that both pursuers have agreed substantial settlements with the minuter from which the minuter does not seek to resile; that no prejudice to the defenders would be sustained since they raised the point of the partnership interest in the first place; and that the defenders' agents stated in a letter to the pursuers' agents dated 14 August 1996 that they would not oppose the amendment. The delay in amending had been caused by the paucity of information as to whether a partnership existed. The delay in moving the amendment had been caused by difficulty in quantifying the loss. Counsel for the pursuers accepted that if the triennial prescription should be held to apply, the claim of the partnership, if valid, had lapsed. In that event, the question of the discretion of the court did not arise and the motion fell to be refused.

Counsel for the defenders and for the minuter argued that section 9 simply meant that all claims were subject to a triennial prescription running from the date when the claim emerged but that in any event no claim could be pursued more than six years after the occurrence or first of the occurrences resulting in the discharge or escape of oil. In the present case the partnership's claim arose on the first occurrence of the losses sustained by it. In Dunlop v McGowans (1980 SC (HL) 73) it was held that the prescriptive period under the Prescription and Limitation (Scotland) Act 1973 ("the 1973 Act") began to run when damnum and iniuria first concurred, even though further losses were expected to occur. A similar principle applied in this case, the equivalent of iniuria being the event giving rise to liability under section 1 of the 1971 Act. If that was correct, it followed that the pursuers had no right to sue as individuals for the partnership loss and that the partnership had failed to sue until more than three years after the relevant date. The partnership's claim had therefore prescribed and the question of the discretion of the court did not arise. If that question were to arise, the motion should be refused. The effect of the claim was that it would potentially reduce the value of other claims on the limitation fund; that the pursuers had had the point drawn to their attention when the defences were lodged in June 1996 and had themselves pled averments about it on Record; that the pursuers knew all about the partnership, being its only partners; and that they had been inexcusably dilatory in lodging and then in moving the Minute of Amendment.

I am asked to decide only the prescription point. I need not therefore consider the question whether any claim can lie at all for losses suffered by a persona that was brought into existence after the pollution damage occurred.

The pursuers' case is periled on the submission that in any case involving continuing loss only the six-year time limit applies. In my opinion the basic error in this submission is in the idea that section 9 creates two alternative prescriptive periods related to different categories of claim. That is not the natural reading of the section. In my opinion, the section creates one prescriptive period of three years applicable to all claims, with a long-stop provision that after the elapse of six years from the date of the relevant occurrence, or the first of the relevant occurrences, no action can be brought to enforce any claim, whether for losses already sustained or for losses apprehended.

To be timeous any action to which the section applies must therefore meet two requirements. It must be raised within three years from the date on which the claim arose and in any event it must be raised within six years from the date of the relevant occurrence or the first of the relevant occurrences. These requirements are cumulative and not optional. It is conceivable that if a tanker were to sink, oil might not escape from it until more than three years after the sinking. In that event the earliest date on which the triennial prescription could start to run would be the date when the oil escaped. But if oil did not escape from the wreck until more than six years after the sinking, no claim could be maintained in respect of any damage resulting from that escape.

In contrast with the 1973 Act (s. 19A), section 9 gives the court no discretion to over-ride either of its time limits. The six-year cut-off protects the owner and the insurer by giving them the reassurance that after six years from the relevant date no further claims can possibly be made. That, in my view, is the clear and obvious purpose of the section and it is consistent with the provisions for the establishment of the limitation fund (1971 Act, ss. 4, 5 and 12).

In my view, the section envisages that a single claim will be made. The prescriptive period begins to run when the claim arises. The question then is when the claim can be said to arise. I agree with the submission for the defenders and the minuter that that question can be decided on a similar principle to that which applies to a claim arising ex delicto. Such a claim arises when iniuria and damnum first concur (Dunlop v McGowans, supra). On that view, where the loss is sustained over time the prescriptive period begins to run on the first occurrence of the loss, even though at that date further and perhaps more serious loss is apprehended (ibid., Lord Keith of Kinkel at p. 81). One can apply that test in the present case, substituting for "iniuria" "liability under section 1".

Counsel for the pursuers suggested that Dunlop v McGowans was of no relevance because it was decided under the 1973 Act whereas the present case fell to be decided under a different legislative regime. I do not accept this submission. The relevant provisions in Dunlop v McGowans related to the date on which the obligation to make reparation "became enforceable" (1973 Act, ss. 6(1)-(3); 11(1)). But in my view, despite that difference in language, the relevant provisions of the 1973 Act were concerned, like those of section 9 in this case, to identify the date at which a claim that is subject to prescription becomes prestable. Whether it is said that on that date the claim "arose" (s. 9) or "became enforceable" (1973 Act, s. 6) is immaterial.

On this view of section 9, a claim for continuing loss has no distinguishing feature. The date on which such a claim arises is the date of the first occurrence of loss. The claimant then has a period of three years from that date within which to sue for all of his losses. If the claimant apprehends that he will sustain further losses, he must predict what those losses will be and quantify them by the best available methods. This is a familiar process in litigation.

I do not think that it is necessary in this case to refer to the Convention; but if I am wrong in that view, I consider that my interpretation of section 9 is supported by article VIII of the Convention (supra). which envisages as the starting point of the prescriptive period a single date "when the damage occurred." That, I think, refers to the date when damnum first occurs, even though certain of the claimant's losses have yet to be sustained.

The argument for the pursuers leads to a strange result. It is essential to the pursuers' argument that once their claim belongs to the category of continuing loss, only a six-year prescription applies. Therefore all losses may be claimed in such a case whether they were sustained within the three year period or between the expiry of that period and the sixth anniversary of the relevant occurrence or the first of the relevant occurrences. Counsel for the pursuers accept that if a claimant sustains a one-off loss with no further consequences within the three-year period and fails to claim timeously, the three-year prescription will apply and the claim will then be cut off. But if between the expiry of that period and the sixth anniversary of the relevant occurrence, or the first of the relevant occurrences, a further loss or series of losses should emerge in consequence of the same event, the claimant will have a claim not only for the new losses but for the original loss as well. I cannot accept that a claim that was extinguished by the triennial prescription can be made valid again by the occurrence of some subsequent loss.

The argument for the pursuers is also, in my view, illogical. It depends on the proposition that on the eve of the triennial prescription, in continuing loss cases, future losses may be difficult to predict and quantify. But the pursuer may face exactly the same problem on the eve of the sexennial limit. In that case the pursuer has no alternative but to sue for all his losses, past and future, otherwise the claim will be cut off forever. He must therefore estimate future losses as best he can. If that must be done in the latter case, I cannot see why it should not be done in the former.

For these reasons I consider that the claim of the partnership in this case has prescribed and therefore that the attempt to introduce that claim by means of amendment is futile. In the circumstances, the question of the court's discretion does not arise. I shall therefore refuse the motion.