Wednesday, March 19, 2014

The Aliakmon and Title to Sue: a recent Bombay decision

In a recent judgment, Dreymoor Fertilizers v. mvTheoforos-1, the Bombay High Court (Sriram J.) has held that a claimant, suing in tort for economic loss, must establish either legal ownership or possessory title over the relevant property at the time of loss. Without going into the correctness of the decision in the specific facts before the Court, it is respectfully submitted that some of the observations in the judgment may require reconsideration. In particular, the learned Single Judge held (para 21.4), following The Aliakmon [1986] AC 785 and The Wear Breeze [1969] 1 QB 219: 

The law was and always had been that an action for negligence in respect of loss or damage to goods could not succeed unless plaintiff was, at the time of tort complained of, owner of goods or person entitled to possession of them. The duty of care is owed only to the owner of the goods or the person entitled to possession…” 

With respect, one wonders whether the law is actually as clear as is supposed. English Courts themselves have moved away from the apparent rigidity of this exclusionary rule. In Shell v. Total [2010] EWCA Civ 180, for instance, the Court of Appeal specifically held that neither the Aliakmon nor the Wear Breeze in fact concluded this point. Shell, who had neither possessory title nor legal ownership (which vested in the trustee), was held to have title to sue on the basis of beneficial ownership. Whether Shell can be applied in Indian law (where the general view has been that the concept of double ownership does not exist – the only owner is the legal owner) may perhaps be controversial. However, Shell does at the very least explain that neither of the two decisions cited by Sriram J in fact concludes the issue. 

Further, cases prior to the Aliakmon indicate that title to sue can be maintained in economic loss cases even without legal ownership or possessory title to the relevant property. Interested readers may refer to the discussions in Shell, paras 116 to 144.  These cases were not considered by the learned Single Judge of the Bombay High Court. 

It is respectfully submitted that the decision requires further consideration, at least insofar as it purports to bring in a strict exclusionary rule into Indian law.


Badri said...

Thanks for the informative post. I wonder why the Indian courts have to rely on obselete positions of English law. Examples of such cases are Maestro Engineers, Trimex v Vedanta, Enercon (last two relied on cases that were slightly "old"). Are there no Indian cases on this point? Judges should stop the habit of basing their decisions on English decisions without considering the evolution of Indian law on the subject.

vswami said...


None can readily disagree with the point made in the initial reaction posted.
Looking back, one would have thought that citing,- more as a force of habit, or flight of fancy, than anything else, foreign case law -e.g. foreign HL's or QB's, be it of direct relevance even remotely, or not, for readily infer able sound reasons, was almost given a bye-bye / fond farewell. In one's perspective/ sincere view, any such write-up trying to analyzing or understanding Indian cases in the light of foreign cases, equally so even in court practice, could, besides serving no useful purpose, at best help in muddling up independent understanding of the legal position back home.

vswami said...

Why to blame judges? It is lawyers who are supposed to function as effective catalysts in law- / case- law - making. If so, it is they who should desist from/have got cured of the irresistible decades- old-itch, doing so. For, though said in a lighter vein, but in reality itself, if at all it is the Bench alone who could have a pardonable excuse for being ignorant of, any law (or all laws), more so of case law. Any possible counter view?

Anonymous said...

@Badri: If at all, if they want to draw light from foreign decisions, it is essential that they analyse the entire foreign case-law: instead of cherry-picking convenient passages. The common law develops not by quoting passages but by appreciating the reasoning and the principles emerging from the ratio of cases.

@vswami: While one tends to agree with you that it is counsel's duty, it often so happens that a hearing goes in one direction; counsel if forced to concede some point - but while writing the order, the court either broadens the concession, or expresses a view of much broader than needed to dispose the specific case. Unfortunately, such tendency can only create confusion in the law.

Anonymous said...

"one needs to look at the reality of the position of the person to whom the duty of care is said to be owed to determine whether it has a sufficient interest in the property which needs to be put right. "
-Linklaters Business Services v. MAlpine, [2010] English High Court.
This approach again shows that the question of title to sue is really a pragmatic decision for the court; rather than going strictly by legal/possessory titles etc... It is unfortunate that Hon'ble Bombay High Court has applied such a rigid formula. What needs to be seen is not questions of title at the stage of title to sue; but only whether the defendant owed to the claimant, on the pleaded case, a "duty of care" applying the neighbourhood principle of Lord Atkin as developed in economic loss jurisprudence...

vswami said...

" a view of much broader than needed to dispose the specific case. Unfortunately, such tendency can only create confusion in the law..."

That is precisely the reason behind that school of thought glowingly gaining currency in recent times that both sides, especially in cases involving complicated property or tax cases, written arguments should be allowed and kept on record. In any case where the court has traveled clearly beyond the scope of the precise dispute,any observation or finding of court need be challenged on a timely basis by invoking the well known doctrine /principle - obiter dictum. For one such instance of a recent origin, attention may be invited to the SC judgment in re Nahalchand, a property law case. A study/critique of that case, if interested , may be found in a couple of write-ups in public domain.

vswami said...

< Refer

LAW vs Case Law on 'FLATS' (MOFA)

LAW vs Case Law - A Critique

Links @