Will ship-breaking stretch the boundaries of the duty of care?

In this blog, John-Paul Swoboda and Cressida Mawdesley-Thomas consider Begum v Maran (UK) Ltd [2021] EWCA Civ 326. This was the appeal from a decision of Jay J (discussed in a previous blog here), who had refused Maran UK’s application to strike out the Claimant’s claim and/or grant them reverse summary judgment.

Factual background

By way of reminder, this case arises out of the tragic death of Mr Mollah, who fell to his death when breaking a tanker in a shipyard in Chittagong, Bangladesh. The claim is against Maran (UK) who had ‘autonomous control’ over the sale of the vessel to the shipbrokers who arranged its onward sale. The assumed facts, for the purposes of the application, are that the price for the tanker was such that it was a certainty the vessel would be broken on the notoriously perilous ship-breaking beaches of Bangladesh.

Decision at First Instance

Jay J found that it could not be said that the duty of care alleged on behalf of the Claimant would certainly fail. He also found that the law of Bangladesh applied to the claim which imposed a strict limitation period of one year, which had not been complied with. However, Jay J held that it was arguable that this limitation period could be disapplied pursuant to Articles 7 and 26 of Rome II.

Permission to Appeal

Jay J granted permission to appeal on the issue of the existence of a duty of care. The Court of Appeal gave the Appellant permission to appeal on the limitation issues, namely whether the Claimant had a valid exception to the strict one-year time limit under either Article 7 or 26.

Coulson LJ, giving the lead judgment of the Court of Appeal, came to the same conclusion as Jay J, that it was at least arguable that a duty of care was owed to the deceased by the Defendant. Such a duty potentially arose out of the Appellant’s autonomous control of the sale of the vessel and the Defendant’s knowledge that, as a result of that sale, the vessel would be broken up in Bangladesh in highly dangerous working conditions.

Duty of Care

Duty of Care: Route 1

It was argued on appeal by counsel for the Claimant that there were two questions for the court to answer.

(1) If the Defendant had sold a dangerous product direct to the yard with full knowledge of its unsafe practices, was the Appellant’s relationship with the deceased sufficiently proximate to establish a duty of care?

(2) Could that duty then be negated as a result of the involvement of third parties?

It was noted by LJ Coulson the difficulty with the first question is that:

it assumes that the vessel was a dangerous product. That seems to me to be far from certain. If its danger lay in its size, that was hardly something that was hidden, in contrast to the snail in the ginger beer bottle. Moreover, it is arguable that if, say, the vessel was in a dry dock in China, surrounded by cranes and safety infrastructure, it would not itself be inherently dangerous….

On the second question the Claimant submitted that the acts of the intermediate buyer (Hsejar) and Zuma Yard (the ship-breaking yard) did not negative the duty of care because they had acted as anticipated. The real issue was proximity, and it was held that no real help could be gained from authorities such as Dorset Yacht. However, it could not be said that the two questions posed in answer to the question of whether a duty of care was owed were “so fanciful, so unconnected to the recent developments in the law of negligence, that the claim should not be permitted to proceed to trial…”

Duty of Care: Route 2

The Claimant’s alternative case was that even if the involvement of the Zuma Yard defeated the existence of a standard Donoghue v Stevenson duty the case fell into one of the exceptions where there is liability for the acts of a third party. One such exception is “where the defendant is responsible for a state of danger which may be exploited by a third party”.

Following a careful review of the authorities, considering when there was and was not a duty of care, it was held that there were two general principles of note:

(1) “… it may be unnecessary and potentially distracting to insist that claims in tort arising from the intervention of third parties must be corralled into a pen marked “pure omissions” …. It can be unhelpful because it can lead to interminable debates (including in the present case) about whether the facts of a particular case could be said to amount to “pure omissions”, or whether there was an act or acts which might somehow make all the difference to the application of the exception.

(2) … one of the most fast-developing areas of the law of negligence at present concerns the scope and extent of this and other exceptions to the general rule that there is no liability in tort for harm caused by the intervention of third parties.

It was acknowledged that this, again, was not a straightforward route to establishing liability. Much will turn on the precise nature and extent of the danger said to have been created. Fundamental questions therefore arise: can it really be said that a large oil tanker was the equivalent of the loaded gun in Hartwell? Did the Appellant “create a danger of harm which would not otherwise have existed” as per Robinson, simply by sending the vessel to Chattogram?

It was concluded: “The alleged duty in this case could certainly be regarded as being on the edge of that development” But since it is not appropriate to strike out claims in new and developing areas of law (cf. Vedanta), the claim should continue.

Limitation

Article 7 of Rome II

Jay J held that the Claimant had an arguable case that Article 7 of Rome II applied because the claim arose out of environmental damage. This could have the effect of replacing the one-year period in Bangladeshi law with the three-year period applicable in England and Wales.

On appeal it was advanced on behalf of the Claimant that the deceased’s death arose out of environmental damage because the beaching of the vessel at a beach in Chattogram was an adverse change in a natural resource, as per the definition of ‘environmental damage’ in the Recitals of Rome II. Counsel for the Claimant submitted that the term “arising out of” was deliberately wider and looser than “caused by”, such that it could be argued that the death of the deceased arose out of that environmental damage. He said that, since the accident resulted from the chain of events which began with the beaching, with all the environmental risks that that posed, the deceased’s death was caught by Article 7.

This argument was emphatically rejected by Coulson LJ.

 At this point it is worth recalling the wording of article 7:

The law applicable to a non-contractual obligation arising out of environmental damage or damage sustained by persons or property as a result of such damage shall be the law determined pursuant to Article 4(1), unless the person seeking compensation for damage chooses to base his or her claim on the law of the country in which the event giving rise to the damage occurred.”…  

It was held

That duty [to the deceased] did not arise out of environmental damage; it had nothing to do with environmental damage at all. It arose out of the complete absence of workplace safety…. I consider that the judge was wrong to find that it was arguable that Article 7 was engaged in this case. As a matter of construction, it plainly was not. Thus the first potential way round the one-year limitation period is not therefore open to the Respondent.

Interestingly, Males LJ (who agreed with Coulson LJ apart from “one minor reservation”) said:

Article 7 gives rise to some issues of interpretation, both as a matter of language and policy, which are not entirely straightforward. One such issue is concerned with the nature and strength of the causative link required in order for the environmental damage to “arise out of” a non-contractual obligation and for personal injury to be regarded as the “result” of such environmental damage. …  Another issue is what is meant by “the event giving rise to the damage”, in particular whether it refers to the event on which the claimant bases his or her claim or to what is objectively to be regarded as the proximate or effective cause of that damage.

Although the concept of an “proximate or effective cause” is a particularly hot topic given the Supreme Court’s loose approach in the very different context of business interruption insurance policies in FCA v Arch and Others [2021] UKSC 1 (discussed here), the Court of Appeal was able effectively to sidestep this debate. As Males LJ pointed out, ultimately: “His death had nothing to do with environmental damage in any causative sense, but was caused by the absence of a safety harness.”

Interpretation of Article 7: A matter of EU Law

Another interesting point, noted by Males LJ is that the interpretation of Article 7 and the question of the construction of the causation clauses “are questions of European law to which it is to be expected that an autonomous answer should be given.” However, on his view even taking a weak or loose causative link “it is not reasonably arguable that the Claimant’s husband fell to his death as a result of environmental damage.”

Article 26 of Rome II

This part of the judgment concerned the ‘escape clauses’ on the grounds of public policy / undue hardship. At first instance this argument received short shrift, Jay J found that the pre-action correspondence (namely the detailed letter of claim) demonstrated that the complaint about access to justice was inapplicable. On appeal, an argument was raised for the first time that the Leigh Day letter of claim wrongly identified the accident date as 24 April rather than 30 March 2018 and that this error was also reflected in the claim form and was the cause of the delay in issuing the claim. Coulson LJ held:

…although this is something of an indulgence to the Respondent (because it is a new point on which they need to succeed in order to keep this claim from being struck out), I am confident that it is a just course. The issue that has now arisen was never even mentioned to the judge. I am entirely satisfied that, if the judge had had the material which is now available to this court, he would have concluded that a preliminary issue on the issue of undue hardship was appropriate.

The submission “that considerations of public policy also militated against the imposition of the one-year limitation period” was also quickly dismissed. It would be wrong to treat a foreign limitation period as contrary to English public policy simply because it was less generous than the comparable English provision.

Concluding Comment

Just as we saw historic abuse claims push the then-known boundaries of vicarious liability, will we now see corporate responsibility widening, or re-imagining, the scope of the duty of care? The battle, in this regard, is still being fought and the endpoint is uncertain.

It was an “indulgence” for the Court of Appeal to let this case continue by the skin of its limitation teeth relying on an argument in relation to a mistake as to the date of death not canvassed at the first application hearing. But the appeal judges were keenly aware of the implications of their decision, as Bean LJ commented in his concurring judgment:

On the Claimant’s case, the Defendant obtained the highest possible price for the Vessel and sought to wash their hands of responsibility for anything, however foreseeable, which happened after that. I endorse the observation of Males LJ at [133] that, if the Claimant is indeed able to prove the factual averments which she makes, it would be a poor system of justice that gave her no remedy against this Defendant.

Whether the EU Withdrawal Act 2018 will affect the courts’ approach to Article 7 remains to be seen, but Coulson LJ’s forceful judgment will for the time being represent the position going forward.

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