THE “FAR SERVICE” - [2010] UKSC 18

Easter Term

[2010] UKSC 18

On appeal from: 2009 CSIH 35

JUDGMENT

Farstad Supply AS (Appellant) v Enviroco Limited and another (Respondents) (Scotland)

before

Lord Phillips, President

Lord Hope, Deputy President
Lord Rodger
Lord Mance
Lord Clarke

JUDGMENT GIVEN ON

5 May 2010

Heard on 9 and 10 March 2010

Appellant Respondent

Alistair Clark QC Robert Howie QC

Paul O'Brien Almira Delibegovic-
Broome

(Instructed by HBJ (Instructed by Paull &

Gateley Wareing LLP )

Williamsons )

LORD CLARKE (with whom Lord Phillips agrees):

The assumed facts

1. On 7 July 2002 the oil rig supply vessel Far Service (‘the vessel’) was damaged by fire while berthed in Peterhead harbour. She was owned by the pursuer, Farstad Supply AS (‘the owner’), and was under charter to the third party, Asco UK Limited (‘Asco’). Asco had engaged the defender Enviroco Limited (‘Enviroco’) to clean out some of the tanks on board the vessel. Enviroco was carrying out the work. On Asco’s instructions the master of the vessel started up the engines, preparatory to moving to another berth. At the same time an employee of Enviroco inadvertently opened a valve which released oil into the engine room near hot machinery. The oil ignited and caused the fire.

The claims

2. The owner sued Enviroco for damages in negligence. Enviroco denies liability but for the purposes of the appeal it is to be assumed that it is liable. Enviroco says that the fire was materially contributed to by the contributory negligence of both the owner and Asco. Those allegations are denied but for the purposes of the appeal it is to be assumed that Asco would be liable in negligence to the owner for the consequences of the fire but for any defence Asco might have under the terms of the charterparty.

3. Although there is a contract between Enviroco and Asco, the terms of that contract are not before the Court and, so far as I am aware, Enviroco has not alleged any breach of that contract against Asco. Enviroco’s claim is solely for contribution. It says that, if it is liable to the owner, it is entitled to a contribution from Asco under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 (‘the 1940 Act’). If it is entitled to such a contribution, it is agreed that Asco will (at the least) be entitled to an indemnity from the owner under clause 33(5) of the charterparty. Asco has played no part in the debate at any stage. That is no doubt because, whatever the result, it will not ultimately be liable. It either has a defence to Enviroco’s claim for contribution or it is entitled to an indemnity from the owner under the terms of the charterparty. The owner accepts that that is the case and has accordingly made the submissions which Asco would have made.

4. After a debate on the assumed facts, on 23 April 2008, the Lord Ordinary, Lord Hodge, held that Enviroco was not entitled to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] UKSC 18
Decision Date

CaseChat Overview and Summary

The case before the court was an appeal by Farstad Supply AS (the appellant) against a decision of the Inner House of the Court of Session in Scotland. The appellant was the owner of an oil rig supply vessel, the Far Service, which was damaged by fire while berthed in Peterhead harbour. Enviroco Limited (the respondent) was engaged by Asco UK Limited, the charterer of the vessel, to clean out some of the tanks on board the vessel. The fire was caused by an employee of Enviroco inadvertently opening a valve which released oil into the engine room near hot machinery. The appellant sued Enviroco for damages in negligence, and Enviroco sought contribution from Asco under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940. The main issues before the court were whether Enviroco was entitled to a contribution from Asco and, if so, whether the terms of the charterparty between the appellant and Asco were relevant to the determination of that issue. The court held that Enviroco was not entitled to a contribution from Asco because the terms of the charterparty between the appellant and Asco provided that Asco was not liable for any damage to the vessel caused by its own negligence. The court also held that the terms of the charterparty were relevant to the determination of the issue of contribution because the right to contribution under section 3(2) of the 1940 Act depended upon whether Asco would have had a defence to the appellant's claim for damages arising out of the fire. The court allowed the appeal and restored the interlocutor of the Lord Ordinary dated 23 April 2008. The case was remitted to the Lord Ordinary to proceed as accords.

Orders