Lloyd's Maritime and Commercial Law Quarterly
P PAYS X FOR THE PHYSICAL DAMAGE DUE TO D’S NEGLIGENCE
The Esso Bernicia
Ten years ago, the Esso Bernicia, an Esso tanker in ballast, collided with the jetty at the Sullom Voe terminal in the Shetlands and 1,174 tons of bunker oil escaped. This did no good to the sheep grazing on the foreshore, and B.P., the operator of the terminal, spent a fortune trying to clear up the mess. Having paid some £500,000 to the crofters for the sheep and over £3½ million to B.P., Esso now brought suit for these sums, as well as for £170,000-odd in respect of loss to itself (lost bunker oil, repair to the vessel, consequential loss). The defender was Hall, Russell, an Aberdeen firm which had designed and built the Stanechakker, one of the three tugs which were helping to berth the Esso Bernicia when the blow-out of a coupling started a fire and caused it to abandon its efforts, with the aforementioned results.
The claim for damage to the Esso Bernicia, the loss of the oil and the consequential loss presented no real problem, and the House of Lords held that Esso could probably also claim the sum it had by statute to pay the owner of the jetty for colliding with it, but the other claims were dismissed below, and Esso’s appeal failed.1
Insofar as Esso relied on its payments to the crofters and B.P. as constituting a loss to itself, the difficulty was that such loss was purely economic. Esso sought to contend that it was consequent on the physical damage sustained by its vessel, but of course it was not: the cause of the payments’ becoming due was the physical damage to the sheep and the terminal, and the reason for the payments’ being made was the agreement called TOVALOP, whereby tanker operators have undertaken inter se to pay victims of any pollution damage due to oil’s escaping from their tankers.
As a decision of tort law, this is faultless: it simply applies Cattle v. Stockton Waterworks Co.,2 now ineradicably entrenched by a series of decisions3 which have dispelled any doubts sown by Junior Books.4 The fact that a plaintiff who has suffered economic loss has also sustained property damage in the same incident does not help his claim for economic loss unless that loss is consequent on, not simply additional to, the property damage.5 But if so, why was Esso allowed to claim for
1. Esso Petroleum Co. Ltd. v. Hull, Russell & Co. Ltd. (The Esso Bernicia) [1988] 3 W.L.R. 730.
2. (1875) L.R. 10 Q.B. 453.
3. E.g., Candlewood Navigation Corp. Ltd. v. Mitsui O.S.K. Lines Ltd. (The Mineral Transporter) [1986] A.C. 1.
4. Junior Books Ltd. v. Veitchi Co. Ltd. [1983] 1 A.C. 520.
5. Spartan Steel & Alloys Ltd. v. Martin & Co. (Contractors) Ltd. [1973] Q.B. 27; Muirhead v. Industrial Tank Specialities Ltd. [1986] Q.B. 507.
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