Scottish Court of Session Decisions

1. Introduction

This claim began as an action for compensation under section 1 of the Merchant Shipping (Oil Pollution) Act 1971. The action was based on averments that in 1992 the claimant entered into forward contracts with Terregles Salmon Company Ltd ("Terregles") for the purchase of smolt with delivery in Shetland in 1993 and that the claimant was unable to take delivery in consequence of the Braer mishap. Head 1 of the claim was for wasted expenditure and loss of profit. Head 2 was for physical damage to cages caused by oil corrosion. Head 3 was for legal costs incurred in connection with the claim.

On 10 September 1998 I decided questions as to the relevancy of the action under heads 1 and 3. My Opinion on these questions (Shetland Seafarms Ltd v The Braer Corporation, 1999 SLT 1189) sets out the details of the claim under head 1.

After Assuranceforeningen Skuld ("Skuld"), the insurer of the Braer, paid its limitation fund into court and was exonerated and discharged, it became necessary for those parties who were suing The Braer Corporation in actions under the 1971 Act to lodge claims on the limitation fund. A Practice Note dated 15 May 1999 provided in effect that from that date there should be no further procedure in the existing actions for compensation and that all steps of process, pleadings, productions and the like in such actions should form part of the process in the Skuld limitation action. The claims that had been pursued in those actions were thereafter pursued by way of claims on the limitation fund.

Until recently the claimant's case was to the effect that the contracts with Terregles were entered into in October and November 1992 and were evidenced by two faxed letters bearing to be dated 17 October and 14 November 1992 (12/3 and 12/4 of Process). These letters bear to be written by Dr J A K Elliott, the managing director of Terregles, and are addressed to Mr Robert Gardiner, the claimant's manager. They confirm orders for smolt placed by the claimant in October and November 1992 for delivery in January and March 1993.

The proof in this claim was fixed for 16 November 1999. Shortly before that date the objectors revised their pleadings by adding the allegation that the faxed letters were backdated and that they were drafted after the occurrence of the mishap in pursuance of a fraudulent scheme to obtain compensation under the 1971 Act. In view of the nature of this line of defence, I discharged the diet of proof (cf Assuranceforeningen Skuld v IOPCF 1999 GWD 35-1662).

Since then the pleadings have been extensively re-written by both the claimant and the objectors. The claimant has deleted heads 2 and 3 of the claim and has reduced the claim to £1,428,891.12. On 18 February 2000 the claimant lodged a Note of Adjustments the effect of which is that the claimant no longer maintains that any contract was concluded in October or November 1992. The claimant's position in relation to the faxes is as follows:

The claimant has tabled an explanation for the drafting and submission of the faxes and avers that they were submitted on behalf of the claimant in good faith. I need not go into the details of that at this stage.

The claimant now pleads the following account of the circumstances in which its contractual obligations to take delivery of the smolt were incurred.

In view of these averments the claimant's position now is that the faxes can be disregarded because Mr Baxter, as the controlling mind of the group, had on behalf of both companies made an agreement between them in August 1992, about five months before the Braer casualty. The agreement was to the effect that the January and March 1993 output of Terregles would be delivered to and accepted by the claimant. Furthermore, according to the claimant, the price payable by the claimant under this agreement was determined by Mr Baxter before the Braer incident at £1.40 per smolt. Mr Baxter's decisions are now said to be the source of the claimant's obligations to take delivery of the smolt in January and March 1993.

This change in the claimant's case has raised a question of prescription. The following plea has been added on behalf of the objector Alexander Eunson:

Counsel for Mr Eunson made no submission as to the relevancy of the averments that Mr Baxter, on behalf of both the claimant and Terregles, made a contract between them some time in August 1992 and on an unspecified date before the Braer incident determined what the contract price would be. It was sufficient for the purposes of his argument to establish that the obligations allegedly constituted in this way were different obligations from those evidenced by the faxes.

Section 9 of the 1971 Act provides as follows:

The compensation action, which later became a claim in the limitation process, was raised timeously. The question now is whether the revised version of the claim, which was pled well beyond the cut-off date, is in essence a new claim and as such excluded by section 9.

4. Submissions

Counsel for Mr Eunson argued that the claim relating to the contracts seemingly evidenced by the faxes had been abandoned. The claim now related to a contract made by Mr Baxter, as a director of both the claimant and Terregles, on a different date and on different terms. This was not a modification of the claim. It was a new claim based on a different contract altogether (NV Devos Gebroeder v Sunderland Sportswear Ltd 1990 SC 291, Lord President Hope at 302-304; Macleod v Sinclair 1981 SLT (Notes) 38; J G Martin Plant Hire Ltd v Bannatyne, Kirkwood, France & Co 1996 SC 105). Counsel for the objector therefore moved me to sustain his plea-in-law 7 and to refuse the whole claim.

The IOPCF, Mr James L R Robb and Mr Brian Robb have not taken the plea of time bar and their counsel made no submission on the point.

Counsel for the claimant argued that this was a claim made under section 1 of the 1971 Act for losses caused to the claimant by its inability to fulfil contractual obligations to take delivery of smolt. That was the case whether the contracts were concluded in terms of the faxes or were concluded in the circumstances now averred. All other material terms, as to price, quantities and delivery dates, remained the same. A pragmatic approach was appropriate to determine whether the nature of the claim had changed (Johnston, Prescription and Limitation, paras 2.03, 2.26). On that approach, the court should conclude that the nature of the claim remained the same. In any event, if prescription had any application in this case it could apply at most to the claim for wasted expenditure. The claim for loss of profits was a separate claim unaffected by the question regarding the circumstances in which the contracts were concluded.

5. Decision

The cases cited by counsel for the objector relate to section 6 of the Prescription and Limitation (Scotland) Act 1973. That section is worded differently from section 9 of the 1971 Act; but in my view in both sections the same principle applies in the determination of the question whether a modified version of a claim that a party seeks to add during the dependence of an action has prescribed. The test in either case is whether the modified version is presented on a fundamentally different basis.

In my opinion, the objector's plea is unsound. The argument for the objector was focused on the change in the averments as to the source of the claimant's contractual obligations to take delivery of the smolt. That change might have had some significance in a question between the claimant and Terregles; but in my view this presentation of the argument overlooks the basic question, namely whether the "claim" to which section 9 refers has been so altered in character as to be presented on a fundamentally different legal basis (NV Devos Gebroeder v Sunderland Sportswear Ltd, supra, at 303; Macleod v Sinclair, supra, Lord Jauncey at 39-40).

In N V Devos Gebroeder v Sunderland Sportswear Ltd (supra) the pursuers, having failed in an action for breach of contract, amended their case to introduce a quasi-contractual claim for recompense. It was held that the obligations on which those claims rested were separate and distinct. The claim for recompense had therefore prescribed (ibid, at 304). Similarly, in J G Martin Plant Hire Ltd v Bannatyne, Kirkwood, France & Co (supra) it was held that the claim that the pursuers sought to add by amendment introduced a new ground of fault and relied on a new ground of action. The proposed amended version of the claim had therefore prescribed.

The adjustments for the claimant in the present case do not involve such a change. The claim made in the action for compensation was a claim under section 1 of the 1971 Act in respect of damage caused by contamination resulting from the discharge or escape of oil. The damage alleged in that action, and in the original version of the present claim, consisted of wasted expenditure and loss of profit resulting from the claimant's inability to fulfil contractual obligations to take delivery of smolt in January and March 1993. That remains the basis of the claim and the claim remains calculated, by reference to quantities and price, in exactly the same way. In my view the nature of the section 1 claim has not been materially altered by the change in the averments as to the source of the contractual obligations to take delivery. I conclude therefore that the claim as now presented has not prescribed.

If I had held that the claim for wasted expenditure had prescribed, I would have held that the claim for loss of profit had prescribed too. In my view, the latter claim is not a free-standing claim. It is integral with the wasted expenditure claim and relates back to the contractual obligations said to have been owed by the claimant to Terregles.

6. Interlocutor