Esso Petroleum Co. v. Hall Russell and Co., (1988) 100 N.R. 355 (HL)

• Case Date: October 06, 1988
• Jurisdiction: Canada (Federal)
• Citations: (1988), 100 N.R. 355 (HL)

Esso Petroleum v. Hall Russell & Co. (1988), 100 N.R. 355 (HL)

MLB headnote and full text

Esso Petroleum Company Limited v. Hall Russell and Company Limited (appellants) and Others (respondents) (Scotland) (first appeal)

Esso Petroleum Company Limited (original appellants and cross respondents) v. Hall Russell and Company Limited (original respondents and cross-appellants) and Others (original respondents) (Scotland) (second appeal) (conjoined appeals)

Indexed As: Esso Petroleum Co. v. Hall Russell and Co.

House of Lords

London, England

Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Templeman, Lord Goff of Chieveley and Lord Jauncey of Tullichettle

October 6, 1988.

Summary:

Esso subscribed to a voluntary agreement called the Tanker Owners Voluntary Agreement concerning Liability for Oil Pollution (TOVALOP) under which it agreed to compensate those damaged by an oil spill. An Esso tanker was damaged and spilled oil at Sullom Voe in the Shetlands after a tug assisting it to berth became disabled, allegedly as a result of the negligence of the tug's designer-builder. Pursuant to its obligations under TOVALOP, Esso paid compensation to third parties damaged by the spilled oil. Esso brought an action against the tug's designer-builder for damages including the TOVALOP payments. The tug's designer-builder averred that the pilotage authority was vicariously liable for the acts of the pilot on the tanker. Objections were raised to the pleadings. Decisions by the Lord Ordinary and the First Division of the Inner House of the Court of Session on appeal left Esso with only its claim for the value of the oil lost and the cost of repair of the tanker and consequential losses. The TOVALOP payments were ruled unrecoverable. The tug's designer-builder's claim that the pilotage authority was vicariously responsible for the acts of the pilot was struck out. Both parties appealed.

The House of Lords dismissed the appeals except for an issue concerning the propriety of Esso's declaratory conclusion.

Damages - Topic 528

Limits of compensatory damages - Remoteness - Torts - Foreseeability - A tug specially designed and built for berthing tankers in Sollum Voe suffered a hydraulic line coupling blowout and caught fire - It cast off its towing line and the tanker being berthed lost control, was damaged and spilled oil into the sea - The tanker owner claimed in negligence against the tug's designer-builder for damages, not only for physical damage to the tanker, but also damages resulting from spillage of the oil - The House of Lords held that such damage was a foreseeable result of the designer builder's negligence - See paragraphs 16, 27 to 28.

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - Esso subscribed to a voluntary agreement called the Tanker Owners Voluntary Agreement concerning Liability for Oil Pollution (TOVALOP) under which it agreed to compensate those damaged by an oil spill - An Esso tanker was damaged and spilled oil after a tug assisting it to berth became disabled, allegedly as a result of the negligence of the tug's designer-builder - Under TOVALOP Esso paid compensation to third parties damaged by the spilled oil - Esso claimed against the tug's designer-builder for damages including the TOVALOP payments - The House of Lords held that Esso could not claim for the TOVALOP payments, because they were voluntary payments which were not caused by, but only triggered by, the alleged negligence of the tug's designer-builder and were unrecoverable purely economic loss - See paragraphs 15 to 20, 51 to 54.

Shipping and Navigation - Topic 4250

Pilotage - Compulsory pilotage - Relationship of pilot to shipowner - The House of Lords held that a compulsory pilot is the servant of the shipowner for all purposes, so that a shipowner is liable to third parties for damage caused by a pilot - See paragraphs 64 to 79.

Shipping and Navigation - Topic 4251

Pilotage - Compulsory pilotage - Liability of pilotage authority for acts of pilot - The House of Lords held that a pilotage authority, which is bound to license pilots but not navigate ships, is not responsible to shipowners for negligence of licenced pilots - See paragraphs 64 to 79.

Shipping and Navigation - Topic 8866

Pollution - Voluntary compensation agreements - Payments - Recoverability - [See Damages - Topic 531 above].

Shipping and Navigation - Topic 8867

Pollution - Voluntary compensation agreements - Payments - Subrogation - [See Subrogation - Topic 15 below].

Subrogation - Topic 15

General - Right of subrogation - When available - Esso subscribed to a voluntary agreement called the Tanker Owners Voluntary Agreement concerning Liability for Oil Pollution (TOVALOP) under which it agreed to compensate those damaged by an oil spill - An Esso tanker was damaged and spilled oil after a tug assisting it to berth became disabled, allegedly as a result of the negligence of the tug's designer-builder - Under TOVALOP Esso paid compensation to third parties damaged by the spilled oil - Esso claimed that the doctrine of subrogation entitled it to claim in its own name to recover from the tug's designer-builder for the TOVALOP payments - The House of Lords applied the general rule that where an indemnifier is subrogated to the rights of the indemnified, he can only pursue those rights in the name of the indemnified - The House of Lords held that Esso could sue in its own name only if the individual third parties assigned to Esso their claims against the tug's designer-builder - Here the voluntary TOVALOP payments (made irrespective of negligence) did not displace the tug designer-builder's liability to the third parties and to permit Esso to claim for the TOVALOP payments would expose the tug designer-builder to a double claim - It made no difference that Esso also suffered physical damage as a result of the negligence of the tug designer-builder - See paragraphs 12 to 14, 29 to 50.

Cases Noticed:

Castellain v. Preston (1883), 11 Q.B.D. 380, refd to. [paras. 13, 42].

Compania Colombiana de Seguros v. Pacific Steam Navigation Co., [1965] 1 Q.B. 101, refd to. [para. 13].

Cattle v. Stockton Waterworks Co. (1875), L.R. 10 Q.B. 453, dist. [paras. 14, 45].

Simpson & Co. v. Thomson (1877), L.R. 3 App. Cas. 279; 58 L.T. 1, appld. [paras. 17, 42, 48].

Yorkshire Insurance Co. Ltd. v. Nisbet Shipping Co. Ltd., [1962] 2 Q.B. 330, appld. [paras. 43, 44].

Orakpo v. Manson Investments Ltd., [1978] A.C. 95, appld. [para. 43].

King v. Victoria Insurance Co. Ltd., [1896] A.C. 250, appld. [para. 44].

John Edwards & Co. v. Motor Union Insurance Co. Ltd., [1922] 2 K.B. 249, appld. [para. 44].

Candlewood Navigation Corporation Ltd. v. Mitsui O.S.K. Lines Ltd., [1986] A.C. 1, consd. [para. 46].

Leigh and Sillavan Ltd. v. Aliakmon Shipping Co. Ltd., [1986] A.C. 785; 66 N.R. 60, consd. [para. 46].

Nacap Ltd. v. Moffat Plant Ltd., [1987] S.L.T. 221, consd. [para. 47].

The "Arabert" (No. 2) (Limitation), [1961] 1 Ll. Rep. 363, consd. [paras. 53, 60].

Stevenson v. Pontifex & Wood (1887), 15 R. 125, appld. [para. 58].

Dunlop v. McGowans, [1980] S.C. (H.L.) 73, appld. [para. 59].

British Railways Board v. Ross and Cromarty County Council, [1974] S.C. 27, consd. [para. 60].

Central S.M.T. Co. Ltd. v. Lanarkshire County Council, [1949] S.C. 450, appld. [para. 61].

Steamship "Beechgrove" Co. Ltd. v. Aktieselskabet "Fjord" of Kristiania, [1916] S.C. (H.L.) 1, appld. [para. 68].

The "Maria" (1839), 1 W. Rob. 95, appld. [para. 68].

Thom v. J. & P. Hutchinson Ltd., [1925] S.C. 386, appld. [para. 68].

Workington Harbour and Dock Board v. "Towerfield" (Owners), [1951] A.C. 112, appld. [paras. 68, 69].

Oceanic Crest Shipping Co. v. Pilbara Harbour Services Pty. Ltd. (1986), 160 C.L.R. 626, appld. [paras. 68, 77].

Cassidy v. Ministry of Health, [1951] 2 K.B. 343, consd. [paras. 69, 73].

Lister v. Romford Ice and Cold Storage Co. Ltd., [1957] A.C. 555, consd. [para. 69].

Gold v. Essex County Council, [1942] 2 K.B. 293, consd. [para. 72].

Macdonald v. Board of Management for Glasgow Western Hospitals, [1954] S.C. 453, consd. [para. 73].

Holman v. Irvine Harbour Trustees (1877), 4 R. 406, consd. [para. 75].

Parker v. North British Railway Co. (1898), 25 R. 1059, appld. [para. 75].

Fowles v. Eastern and Australian Steamship Co. Ltd., [1916] 2 A.C. 556, appld. [para. 76].

Counsel:

[None disclosed.]

This case was heard at London, England, before Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Templeman, Lord Goff of Chieveley and Lord Jauncey of Tullichettle of the House of Lords.

On October 6, 1988, the judgment of the House of Lords was delivered and the following speeches were given:

Lord Keith of Kinkel - see paragraph 1;

Lord Brandon of Oakbrook - see paragraph 2;

Lord Templeman - see paragraph 3;

Lord Goff of Chieveley - see paragraphs 4 to 20;

Lord Jauncey of Tullichettle - see paragraphs 21 to 80.