BP Exploration Operating Co Ltd v Chevron Transport (Scotland)

Under section 6(4) of the Prescription and Limitation (Scotland) Act 1973, a creditor may be induced to refrain from claiming even without consciously deciding to abstain. A debtor-induced error which causes the creditor not to claim interrupts prescription while the error subsists. The creditor need not prove when a claim would otherwise have been made. The excluded period ends when the error is discovered or could with reasonable diligence have been discovered.

In section 74 of the Harbours, Docks and Piers Clauses Act 1847, “owner” means the registered owner, not a bareboat demise charterer. The section imposes strict liability on the owner as owner and provides a readily ascertainable defendant for damage to harbour works.

A tanker moved away from its berth at the Sullom Voe oil terminal during severe weather and allegedly caused substantial damage to the terminal's loading arms. BP brought separate actions against three companies in the Chevron group: Shipping, initially represented to be the owner and operator; Tankers, the admitted registered owner; and Transport, the admitted bareboat charterer.

The Lord Ordinary allowed proof before answer in all three actions: 2000 SLT 201. The First Division, 2000 SLT 1374, dismissed the action against Transport as prescribed. It also excluded BP's statutory claims against Shipping and Tankers under section 74 of the Harbours, Docks and Piers Clauses Act 1847, holding that liability attached to the bareboat charterer.

The principal questions were whether Transport's alleged role in inducing BP's error interrupted the five-year prescription and whether “owner” in section 74 meant the registered owner or the bareboat demise charterer.

1. The appeals were allowed unanimously and the First Division's interlocutors were recalled. Lord Hope delivered the principal speech on prescription and the resulting orders. Lord Clyde and Lord Millett gave concurring reasons. Lord Hobhouse dealt fully with section 74, with Lord Slynn, Lord Hope, Lord Clyde and Lord Millett agreeing in substance.

2. Per Lord Hope, Lord Clyde and Lord Millett, section 6(4) of the Prescription and Limitation (Scotland) Act 1973 does not require a conscious decision to abstain from proceedings. A creditor “refrains” from claiming where, because of fraud or debtor-induced error, the creditor does not make a relevant claim. A narrower construction would deny protection where the error concealed the existence of the obligation or the debtor's identity.

3. The creditor need not prove the hypothetical date on which a claim would have been made absent the error. It is sufficient to prove that the debtor, or someone acting on the debtor's behalf, induced the error and that the creditor consequently did not claim. The excluded period begins when the operative error is induced. It ends when the error is actually discovered or could with reasonable diligence have been discovered. It does not extend to allow time for preparing and serving proceedings after discovery.

4. BP had sufficiently averred that representations made on Transport's behalf induced it, from about April 1990, to believe that Shipping was the responsible party. If proved, the resulting exclusion could defeat Transport's plea of prescription. BP was therefore entitled to proof before answer, although its averments seeking to extend the interruption until proceedings could reasonably be served were irrelevant.

5. Per Lord Hobhouse and Lord Clyde, section 74 of the Harbours, Docks and Piers Clauses Act 1847 uses “owner” in its natural proprietary sense. It means the registered owner and excludes a bareboat demise charterer. The liability is strict and arises from ownership, rather than fault, possession or responsibility for navigation. Its purpose is to give the harbour undertaking a direct remedy against a readily ascertainable person. Sections 75 and 76, concerning detention or sale of the vessel and recourse against the actual wrongdoer, reinforce that construction.

6. The extended definition of “owner” in section 3 of the Zetland County Council Act 1974 did not govern the incorporated section 74. Section 4 expressly specified which definitions and modifications applied to the incorporated enactment.

7. The statutory case against Transport was excluded from proof. All averments in the actions against Tankers and Shipping were remitted to proof before answer, including Shipping's personal-bar issue. Subject to the specified exclusions, the remaining claims against Transport also proceeded to proof before answer.

1. House of Lords: The appeals were allowed unanimously. The First Division's interlocutors were recalled. Proof before answer was allowed in all three actions, subject to exclusion of the section 74 case and specified prescription averments in the action against Transport: [2001] UKHL 50 .

2. First Division of the Court of Session: The Lord Ordinary's interlocutors were recalled. The action against Transport was dismissed as prescribed, and the statutory cases against Shipping and Tankers were excluded from proof: 2000 SLT 1374.

3. Outer House of the Court of Session: The Lord Ordinary, Lord Dawson, allowed proof before answer in all three actions: 2000 SLT 201.