BP Exploration Operating Co Ltd v Chevron Transport (Scotland)

Legal principles and disposition: The House held that for the purposes of section 6(4) of the Prescription and Limitation (Scotland) Act 1973 an interval of negative prescription may be interrupted by error induced by a debtor or by persons acting on his behalf even where the creditor was not consciously refraining from suing; the interruption begins when the creditor is put into the error and ends when the error is discovered (or could with reasonable diligence have been discovered). The House also held that, as a matter of construction, the word "owner" in section 74 of the Harbours, Docks and Piers Clauses Act 1847 (as incorporated into the Zetland County Council Act 1974) means the registered or true owner (proprietor) and does not include a bareboat (demise) charterer.

Consequences: On the prescription point the House allowed a broader approach to the period excluded under section 6(4) and granted BP a proof before answer on the plea of prescription against Transport (subject to limited deletions of certain averments). On the section 74 point the House held that BP may pursue a statutory claim against the registered owner (Tankers) and that the statutory claim against a bareboat charterer (Transport) was irrelevant and should be excluded from probation; the statutory averments against Shipping (on personal bar) were allowed to go to proof.

Background and facts:

• BP operated the Sullom Voe terminal. On 28 February/1 March 1990 the tanker Chevron North America moved off a berth in bad weather and caused substantial damage to four loading arms on the jetty. BP claimed repair costs and associated losses.
• BP brought three actions: against Chevron Shipping Co (served 21 February 1995), Chevron Tankers (Bermuda) Ltd (served 16 June 1995) and Chevron Transport Corporation (served 28 September 1995). Claims were advanced in contract, in delict (negligence) and as a statutory debt under s.74 of the Harbours, Docks and Piers Clauses Act 1847 (incorporated into the Zetland County Council Act 1974).

Procedural history: The Lord Ordinary allowed proof before answer in all three actions. The First Division (Inner House) recalled those interlocutors: it sustained the plea of prescription in the action against Transport and excluded the s.74 statutory claims in the actions against Shipping and Tankers as irrelevant. BP appealed to the House of Lords.

Issues for this Court:

• whether BP had averred facts sufficient to defeat the plea of prescription against Transport by operation of section 6(4) of the 1973 Act (error induced by defendant or its agents);
• whether, where a vessel is the subject of a bareboat (demise) charterparty, liability under s.74 of the 1847 Act attaches to the registered owner or to the charterer;
• whether BP's averments of personal bar against Shipping justified a proof before answer on the statutory case against Shipping; and
• whether averments about the existence and terms of the charterparty in actions against Shipping and Tankers should be allowed to go to proof.

Court's reasoning (concise):

• On prescription (section 6(4) 1973 Act) the House adopted a generous construction: the term "refrain" covers periods when the creditor did nothing to enforce the obligation because the creditor was misled by the debtor's words or conduct; the interruption therefore can begin when the creditor is put into the error and end when the error is discovered or could with reasonable diligence have been discovered. The creditor need not prove the precise date he would have sued but must prove that the defendant's words or conduct induced the error which caused the delay.
• On s.74 of the 1847 Act the House (following prior authorities and textual and purposive analysis) concluded that "owner" in that section means the registered/true owner (proprietor), not the bareboat charterer; that construction best accords with the statutory purpose of providing a single easily ascertainable person liable without proof of negligence and with related provisions (detention, distraint and sale, and recovery over under s.76). The definition of "owner" in the local Zetland Act (including a wide definition in s.3) did not alter the meaning of s.74 as incorporated.
• As a consequence the statutory claim under s.74 could proceed against the registered owner (Tankers) and (subject to the personal bar averments) against Shipping; the s.74 claim against Transport (the bareboat charterer) was irrelevant and excluded from probation.

Relief sought and outcome: BP sought proofs before answer and to preserve their statutory claims. The House allowed the appeals in part: it permitted proofs before answer on the relevant points (subject to specified exclusions) and clarified the law on prescription and on the meaning of "owner" in s.74.

Appeal allowed in part. The House held (1) that section 6(4) of the Prescription and Limitation (Scotland) Act 1973 should be given a generous construction so that an induced error by the debtor (or person acting on his behalf) interrupts prescription from the date the creditor is induced into the error until the date the error is discovered (or could with reasonable diligence have been discovered); accordingly BP’s averments were sufficient to allow a proof before answer on prescription against Transport (subject to deletion of certain irrelevant averments). (2) that the word "owner" in section 74 of the Harbours, Docks and Piers Clauses Act 1847 means the registered/true owner and does not include a bareboat demise charterer; accordingly the statutory case under s.74 should proceed against the registered owner (Tankers) and not against the bareboat charterer (Transport), and the statutory averments against Shipping (personal bar) should go to proof.

Lord Ordinary (Dawson) allowed proof before answer in all three actions (2000 SLT 201). The First Division of the Court of Session recalled those interlocutors and sustained the plea of prescription in the action against Transport and excluded the statutory s.74 case in the actions against Shipping and Tankers (2000 SLT 1374). The House of Lords allowed the appeals in part and set out the orders described in the judgment ([2001] UKHL 50).