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Petitioner: Braganza (Appellant) VS Respondent: BP Shipping Limited and another (Respondents)
Court Name: Supreme Court of United Kingdom Judge(s): Lord Kerr, Lord Neuberger, President Lady Hale, Lord Wilson Lord Hodge. Title: Braganza (Appellant) vs BP Shipping Limited and another (Respondents) Case No.: On appeal from 2013, EWCA Civ 230, th March, 2015. Date of Judgment:2014-11-10 Reported As: 2015 PSC 609 Result: appeal partly allowed
JUDGMENT
JUDGMENT LADY HALE: (with whom Lord Kerr agrees)--- 1. Between 01.00 and 07.00 on 11 May 2009, Mr Renford Braganza, Chief Engineer on BP's oil tanker the British Unity, then in the mid-North Atlantic, disappeared. No-one knows for certain what happened to him. But his employers formed the opinion that the most likely explanation for his disappearance was that he had committed suicide by throwing himself overboard. This would mean that his widow was not entitled to the death benefits provided for in his contract of employment. Clause 7.6.3 of that contract provided relevantly as follows:--- "For the avoidance of doubt compensation for death, acciacotal injury or illness shall not be payable if, in the opinion of the Company or its insurers, the death, accidental injury or illness resulted from amongst other things, the Officer's wilful act, default or misconduct whether at sea or ashore ...." (emphasis supplied) 2. It is not the task of this or any other court determining a claim under such a contract to decide what actually happened to Mr Braganza. The task of the court is to decide whether his employer was entitled to form the opinion which it did. The issue of general principle in this appeal, therefore, is the test to be applied by the court in deciding that question. The facts 3. Mr Braganza was an able and well qualified Chief Engineer. Like all the crew of the MV British Unity, he was an Indian national. He was a Roman Catholic and married with two children. In July 2008, the family had moved from India to Toronto in Canada and he had taken extended leave for this purpose. After returning to work with BP, he joined the British Unity in Gibraltar in February 2009. The vessel's main engine had broken down in August 2008 and been repaired but the damaged
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cylinder liners had not been replaced. This major work was done in April 2009 in Ferrol, Spain. Shortly after leaving Ferrol, the cooling water jacket of one of the cylinders began to leak. The vessel then proceeded via Falmouth to Brofjorden in Sweden, where a cargo of unleaded gasoline was loaded and also two spare cooling water jackets, which were stored in an alleyway on the main deck, close to a hatch providing access to the engine room below. 4. After sailing from Brofjorden, Mr Braganza received an email on 5 May 2009 from an engineering superintendent asking him to carry out a scavenge inspection/ring inspection of the engine in about six days' time and suggesting that it would be prudent to replace the cooling water jacket at the same time as the engine was stopped for that purpose. Mr Braganza replied that he would do the inspection in about six days' time and try to carry out the jacket replacement at the earliest opportunity. To do this, it would first be necessary to lower the cooling water jacket through the hatch into the engine room below. Ms Belinda Bucknall QC, for Mrs Braganza, stresses the "highly weather-sensitive nature" of the cooling water jacket exchange. (Indeed, Mr Williamson, the engineering superintendent who had supervised the major works in Vol. XXXIV Pakistan Supreme Court Cases 619 Ferrol had intended to telephone Mr Braganza on the morning of 11 May to suggest that he think about the operation "because obviously the lifting of a one and half tonne cylinder head in any sort of swell would be risky") The main engine would have to be shut down for several hours, leaving the vessel at the mercy of wind and wave. 5. The vessel was originally bound for Jebel Ali in the United Arab Emirates, but on 7 May, while in the middle of the Bay of Biscay, it was ordered to proceed to New York instead. It therefore altered course and headed across the Atlantic. On 9 May, the weather worsened during the day and the log recorded at 20.00 a rough sea and high swell and shipping water on deck. On 10 May the weather began to improve. At 19.00, the Master, the Chief Officer, Mr Braganza and the second engineer met to discuss the plans for the next day. These included "lowering liner jacket to engine room from main deck" and "M/E scavenge inspection and liner jacket renewal". It was agreed that the Master and Chief Officer would check the weather in the morning. 6. 23.30 that same night, the Master and Mr Braganza met for about an hour. They discussed the weather conditions for the next day, with the assistance of a weather routing report which the Master had sent to Mr Braganza's computer. During the meeting, Mr Braganza emailed an engineering superintendent to report that he intended to stop the main engines the next day and do a scavenge inspection and that, weather permitting, he would like to change the liner jacket at the same time. He was advised to go ahead "if weather and schedule permits". The Master left Mr Braganza's cabin at about 00.30 on 11 May. That was the last anyone saw of the Chief Engineer. At 01.00 he sent a routine email to the second engineer. At 07.00 it was noticed that his cabin door was open, as it habitually was unless he was sleeping. His bed looked as if it had, been slept in. He did not breakfast as usual in the officers' mess. 7. The Chief Officer carried out a risk assessment around 08.00 and the Master agreed that the job could be carried out. The Judge concluded that it was unlikely that there was no pitching or rolling but that it was not such as to make the planned operations unsafe. Lowering the cooling water jackets into the engine room began shortly after 08.00 and was safely completed by about 09.30. Mr Braganza was not there. Soon afterwards, the Master announced that he was missing. A search was made on board but he was not found. The vessel was turned around and a search and rescue operation conducted but he was not found. The cooling water jacket replacement was postponed until some days later. 8. On arrival in New York, an investigation was carried out on behalf of the Isle of Man where the British Unity was registered The ship's crew were interviewed under caution. Its conclusion was that Mr Braganza was lost overboard, presumed drowned, but no finding was made as to the reason for this. BP then set up its own inquiry, in accordance with its own procedures, to "investigate the
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relevant circumstances leading up to the loss of Mr Braganza, identify if possible the root causes of the incident and identify any changes required to the BP Shipping Safety Management System". The five person team took about for months to make their extensive inquiries. Their eventual report was dated 17 September 2009. It considered five "possible scenarios". The team were able to discount three explanations - hiding or being hidden on board, collection by another vessel and fall from vessel due to horseplay, altercation or foul play. That left an accidental fall from the vessel, which could not be discounted, and suicide. 9. Under the heading "suicide", the team made six "bullet points" which led them to consider that suicide was a possibility. There was much criticism of each of these points in the courts below and the conclusions of each are briefly summarised below:--- (1) Mr Braganza's "behaviour was reported to be notably different on this voyage than on previous voyages": (a) he was quiet and withdrawn, (b) there were no clean officer's uniforms in his cabin, and (c) his attention to detail in record keeping had slipped. The judge rejected (a) and (b) but found (c) justified. The Court of Appeal found all three justified. 2) The shoes and sandals he usually wore on boara ware found in his cabin after' his disappearance. The judge found it difficult to see how this could be probative of suicide as he could have worn his work boots. The Court of Appeal agreed with him but thought it unimportant. (3) "Several e-mail messages received from his immediate family ... Suggest [he] had some family and/or financial difficulties that were causing him concern". The judge set out the emails from Mrs Braganza in some detail, including one on the 27 March, where she wrote "I really cannot figure out what has shaken you out so much that you seem to be so afraid of life" (see also paras 73 and 74 of Lord Neuberger's judgment). They certainly suggest that he was worried about something. The team did not interview Mrs Braganza about her communications with her husband during the voyage and what these might mean, but the judge concluded that this was not unfair, because she could have provided an explanation as soon as she got their report. The Court of Appeal considered that the team was "undoubtedly correct" on this point (para 30). (4) He was not aware, before joining the ship, of its status and reputation and was reported to be unhappy about this. The judge accepted that this was correct. (5) He considered himself eligible for the 2008 bonus which had been paid to him, but the employer had later advised him that it would be withdrawn. The judge thought that this could not be a cogent reason for inferring suicide. The Court of Appeal held (as we shall see) that this was not a necessary approach for the team to adopt. (6) There were indications that the watertight door from the accommodation block that opens onto the upper deck on the starboard side may have been opened during the hours of darkness on the morning of 11 May. No member of the crew reported opening this door. The judge rejected this point, as there was no evidence that the door had been opened during the hours of darkness and the bosun could have left it secured on only one dog when he went on deck at the start of the working day. The Court of Appeal considered this an extremely small point (para 33). 10. The team's report went through several drafts. The first version did not mention suicide. After exchanges with BP Legal, the final version concluded that "Having regard for all the evidence the investigation team considers the most likely scenario to be that the CIE jumped overboard intentionally and therefore took his own life". The judge rejected the suggestion that there had been
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a "fundamental shift" between the first and final versions. The team had always felt that suicide was the most likely explanation. However, they could not rule out that he had gone on deck for a work related reason and that his fall had been accidental. The judge commented that "What can perhaps be said is that the team's initial reluctance to identify suicide as ... The cause of death suggests that such a conclusion was not clearly proven in the minds of the team" (para 88). 11. The report was produced by and for BP Shipping Limited, who owned and managed the vessel. It was then forwarded to Mr Sullivan, General Manager of BP Maritime Services (Singapore) Pte Ltd, a Singapore Company which provides management services to the shipping company and employed the officers on board the vessel. Mr Sullivan made no further enquiries of his own. On the basis of the team's report, he concluded that there had been "wilful default" within the meaning of Clause 7.6.3 of the contract of employment and thus that death in service benefits were not payable to Mrs Braganza. BP Legal informed her solicitors of this on 13 November 2009. 12. Mrs Braganza brought a claim in contract against the employer for death benefits amounting to US$230,265. She also brought a claim in tort under the Fatal Accidents Act 1976 and the Law Reform (Miscellaneous Provisions) Act 1934 for damages quantified as US$1,325,945, alleging that the death was caused by negligence on the part of both the shipping company and the employer. BP produced a supplemental report in answer to the claims (see paras 83 to 85 of Lord Neuberger's judgment). Mr Sullivan maintained his decision. The action was tried over 8 days in 2012 before Teare J, sitting as a judge of the Admiralty Court: 13. Teare J was unable to make a finding as to the cause of Mr Braganza's death (para 60): there was a real possibility, but it was not more likely than not, that he had fallen overboard (para 57); but the evidence was not sufficiently cogent to warrant a finding of suicide on the balance of probabilities (para 58). He rejected the claim in tort on the ground that there had been no breach of duty in deckling to carry out the two operations that day (para 64) and that, even if there had been a breach of duty, it had not caused the death (para 65). Mrs Braganza has not appealed that conclusion. 14. Teare J upheld the contractual claim. It was common ground between the parties that the opinion formed by the employer had to be "reasonable" (para 76). This meant reasonable in the sense in which that expression is used in Associated Provincial Picture Houses Ltd v Wednesday Corporation. [19481 1 KB 223, which had been applied to the exercise of a contractual discretion (by a P & I Club) in The Vainqueur Jose [19791 1 Lloyd Rep 557 (para 91). As Clause 7.6.3 was in the nature of an exception or exclusion clause, the burden of proving that the opinion was a reasonable one lay with the employer (para 93). The investigation team did not direct themselves that "before making a finding of suicide there should be cogent evidence commensurate with or proportionate to the seriousness of a finding of suicide" (para 94). They, and therefore Mr Sullivan, failed to take into account the real possibility that Mr Braganza had gone out on deck in order to check the weather to see whether it was safe to carry out the planned work (para 96). They had stated in the first draft of their report that they "could not find any work related reason for him to be outside during this time". His interest in the weather furnished such a reason and they should have taken it into account (para 97). This mattered because they had concluded that an accidental fall could not be discounted (para 98). Thus they were not properly .Directed in law and failed to take into account a relevant matter when forming their opinion (para 99). BP had conceded that if the opinion was not reasonable, the contractual claim should succeed (rather than the matter be sent back to them for reconsideration) (para 93). Having reached that conclusion, nevertheless Teare J very properly went on to consider the reasons advanced against the team's conclusion and formed the views outlined in para 9 above on the six "bullet points". 15. . The employer appealed: 120131 .EWCA Civ 230. Longmore LJ (with whom Rimer and Tomlinsoh LJJ agreed.) thought it "not entirely clear" whether the judge had considered that the failure of the
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team, and Mr Sullivan, to direct themselves as to the need for cogent evidence before making a finding of suicide was in itself enough to render their opinions unreasonable (para 9). But, as Mocatta J had pointed out in The Vainqueur Jose, at 577, "it would be a mistake to expect [of a lay body] the same expert, proffesional and almost microscopic investigation of the problems, both factual and legal, that is demanded of a suit in a Court of Law" (para 13). It could not be the law that a non-lawyer such as Mr Sullivan had to give himself directions before forming his opinion (para 14). It would be impossible for him to give himself such a direction without taking legal advice of a kind which cannot have been contemplated by the requirements of the death benefit clause (para 20). 16. As to the failure to appreciate that there might be work-related reasons for Mr Braganza to go on deck, that failure could not make the employer's opinion unreasonable in the absence of a mechanism explaining how he could accidentally fall overboard (para 22). Thus Longmore LJ was unable to agree with either of Teare J's reaAns for saying that the opinion was unreasonable (para 23).!?He therefore went on to consider and reject the wider ranging attack mounted upon the six "bullet points" (see para 9 above). The conclusion of suicide was a reasonable one in all the circumstanc.,s (para 34). The principles 17. This case raises two inter-linked questions of principle, one general and one particular. The particular issue is the proper approach of a contractual fact-finder who is considering whether a person may have committed suicide. Does the fact-finder have to bear in mind the need for cogent evidence before forming the opinion that a person has committed suicide? The general issue is what it means to say that the decision of a contractual fact-finder must be a reasonable one. There are many statements in the reported cases to the effect that the principles are well- settled and well-understood, but this case illustrates that all is not as clear or as well understood as it might be. 18. Contractual terms in which one party to the contract is given the power to exercise a discretion, or to form an opinion as to relevant facts, are extremely common. It is not for the courts to re-write the parties' bargain for them, still less to substitute themselves for the contractually agreed decision-maker. Nevertheless, the party who is charged with making decisions which affect the rights of both parties to the contract has a clear conflict of interest. That conflict is heightened where there is a significant imbalance of power between the contracting parties as there often will be in an employment contract. The courts have therefore sought to ensure that such contractual powers are not abused. They have done so by implying a term as to the manner in which such powers may be exercised, a term which may vary according to the terms of the contract and the context in which the decision-making power is given. 19. There is an obvious parallel between cases where a contract assigns a decision-making function to one of the parties and cases where a statute (or the royal prerogative) assigns a decision-making function to a public authority. In neither case is the court the primary decision- maker. The primary decision-maker is the contracting party or the public authority. It is right, therefore, that the standard of review generally adopted by the courts to the decisions of a contracting party should be no more demanding than the standard of review adopted in the judicial review of administrative action. The question is whether it should be any less demanding. 20. The decided cases reveal an understandable reluctance to adopt the fully developed rigour of the principles of judicial review of administrative action in a contractual context. But at the same time they have struggled to articulate precisely what the difference might be. In Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The "Product Star") (No 2) [1993] 1 Lloyd's Rep 397,404, after contrasting the position in judicial review, Leggatt LJ explained that:- "The essential question is always whether the relevant power has been abused. Where A and B
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contract with each other to confer a discretion upon A, that does not render B subject to A's uninhibited whim. In my judgment, the authorities show that not only must the discretion be exercised honestly and in good faith, but, having regard to the provisions of the contract by which it is conferred, it must not be exercised arbitrarily, capriciously or unreasonably." 21. That was in the context of a ship-owner's decision as to whether a port to which a vessel was directed was dangerous. In Paragon Finance plc v Nash J20011 EWCA Civ 1466, J20021 1 WLR 685, the court had to consider whether there was any implied term limiting the power of a mortgagee to set interest rates under a variable rate mortgage. Dyson LJ had no difficulty in holding (at paras 32 to 36) that it was necessary, in order to give effect to the reasonable expectations of the parties, to imply a term that the power would not be exercised dishonestly, for an improper purpose, capriciously or arbitrarily. He went on to discuss whether there should also be a term that the power would not be exercised unreasonably. He concluded that there had been a "somewhat reluctant" extension of the implied term to include "unreasonableness that is analogous to Wednesday unreasonableness" (paras 37 to 42). 22. These authorities, together with Ludgate Insurance Co Ltd v Citibank NA 119981 Lloyd's Rep IR 221, 239-240, and Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) 120011 EWCA Civ 1047, 120011 2 All ER (Comm) it299, at paras 64, 67, 73, are helpfully summarised by Rix LJ in Socimer International Bank Ltd v Standard Bank Lydon Ltd 120081 EWCA Civ 116, 120081 Bus LR 1304. In his conclusion, at para 66, he substitutes the more modern term "irrationality" for unreasonableness:- It is plain from these authorities that a decision-maker's discretion will be limited, as a matter of necessary implication, by concepts of honesty, good faith, and genuineness, and the need for the absence of arbitrariness, capriciousness, perversity and irrationality. The concern is that the discretion should not be abused. Reasonableness and unreasonableness are also concepts deployed in this context, but only in a sense analogous to Wednes buty unreasonableness, not in the sense in which that expression is used when speaking of the duty to take reasonable care, or when otherwise deploying entirely objective criteria: as for instance when there might be an implication of a term requiring the fixing of a reasonable price, or a reasonable time. In the latter class of case, the concept of reasonableness is intended to be entirely mutual and thus guided by objective criteria. ... Laws LJ in the course of argument put the matter accurately, if I may respectfully agree, when he said that pursuant to the Wednesday rationality test, the decision remains that of the decision-maker, whereas on entirely objective criteria of reasonableness the decision-maker becomes the court itself." 23. The same point was made (albeit in a completely different context, and so obiter) by Lord Sumption in Hayes v Willough by120131 UKSC 17, 120131 1 WLR 935, at para 14:--- "Rationality is not the same as reasonableness. Reasonableness is an external, objective standard applied to the outcome of a person's thoughts or intentions. ... A test of rationality, by comparison, applies a minimum objective standard to the relevant person's mental processes. It imports a requirement of good faith, a requirement that there should be some logical connection between the evidence and the ostensible reasons for the decision, and (which will usually amount to the same thing) an absence of arbitrariness, of capriciousness or of reasoning so outrageous in its defiance of logic as to be perverse." (emphasis added) This is an obvious echo of the classic definition given by Lord Diplock when summarising the grounds of judicial review in Council of Civil Service Unions v Minister for the Civil Service [19851 AC 374, 410:--- "By 'irrationality' I mean what can by now be succinctly referred to as 'Wednesday unreasonableness'. ... It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it."
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24. The problem with this formulation, which is highlighted in this case, is that it is not a precise rendition of the test of the reasonableness of an administrative decision which was adopted by Lord Greene MR in Associated Provincial Pictures Houses Ltd v Wednesday Corporation [1948] 1 KB 223, 233-234. His test has two limbs:--- "The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority, it may still be possible to say that, although the local authority have kept within the for corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. The first limb focusses on the decision-making process whether the right matters have been taken into account in reaching the decision. The second focusses upon its outcome - whether even though the right things have been taken into account, the result is so outrageous that no reasonable decision-maker could have reached it. The latter is often used as a shorthand for the Wednesday principle, but without necessarily excluding the former. 25. The parties in this case disagree as to whether the term to be implied into this…
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