Commercial Disputes Weekly – Issue 1537 March 2023

Landlord and Tenant
Tenants of a flat sought a rent repayment order against their landlord under section 40(2) of the Housing and Planning Act 2016 on the basis that he had committed the offence of managing an unlicenced house in multiple occupation. The Tribunals allowed the claims, but they were rejected by the Court of Appeal and Supreme Court. The tenants’ immediate landlord was a management company, but they had sought the orders against the superior landlord. Such orders could only be made against the immediate landlord of the tenancy that generates the relevant rent. The Supreme Court reached this conclusion on the interpretation of the statute and it was supported by the purpose of the statute which was and always had been to restrict rent repayment orders to those who directly benefit from the payment of the rent. To allow such orders against a superior landlord would create complexity where there is a chain of tenancies.
Rakusen v Jepsen and others [2023] UKSC 9, 1 March 2023

Maritime – Termination
In a dispute arising out of bareboat charters and lease financing arrangements, the claimant lessees were liable to pay termination sums to the defendant lessors under the bareboat charters for each vessel. However, the lessees were awarded their costs in the earlier litigation because they were the substantial winners. The Commercial Court dealt with various disputed elements of the termination sums. It held that the definition of break costs distinguished between pre- and post-delivery, including different elements according to the scenario. The applicable deposit interest rate was an objective question, namely the highest rate which the lessor could obtain by taking reasonable steps to investigate its options with leading banks for the relevant deposit period. To allow a subjective rate could lead to the lessor deliberately fixing the lessee with a higher shortfall.  The court also decided that although the parties could agree in the contract that one party could recover legal costs incurred as an unsuccessful litigant in any dispute as to termination, this had not been agreed in the current contract. The defendant lessors could not therefore claim their legal costs as part of the contractual indemnity.
Havila Kystruten AS and others v STLC Europe Twenty Three Leasing Ltd and another [2023] EWHC 444 (Comm), 27 February 2023

Negligence – Oil pollution
In the ongoing claims against Shell arising out of the 2011 oil spill in the Bonga oilfield off the coast of Nigeria, the court was asked to determine the date on which actionable damage was suffered by the claimants. The purpose was to decide whether the claims against the anchor defendant STASCO were statute barred for limitation and therefore whether the English court had jurisdiction to hear the substantive claims. The claims are made in negligence, nuisance and Rylands v Fletcher liability under Nigerian law. The court held that the applicable limitation period under Nigerian law is five years. However, it concluded that the claimants had not successfully established a mechanism for the oil becoming trapped, then remobilised years later, migrating upstream and inland and impacting any of the claimant communities in 2014 and 2015. There were a number of alternative credible explanations for any oil pollution such as other oil spills or leaks in the Niger Delta region caused by crude oil theft, sabotage, illegal refining or otherwise.
Jalla and others v Shell International Trading and Shipping Company Limited and another [2023] EWHC 424 (TCC), 28 February 2023

Maritime – Commodities
Glencore sold a cargo of crude oil to NIS which was found on delivery to be contaminated by organic chlorides. This led to NIS having to pay storage fees for the contaminated oil to the terminal operator. US$2,094,000 was paid by Glencore under a performance bond. The parties entered into a settlement agreement which defined Glencore’s liability for storage charges, providing that Glencore was liable for the costs to the extent that it reflected the actual loss suffered by the terminal and the prevailing market rates for storage. NIS had agreed to pay the terminal’s emergency rates which were significantly higher than the prevailing market rates. NIS failed to establish any actual loss suffered by the terminal and so was only entitled to the market rate for storage. NIS was therefore ordered to repay US$1,032,000 to Glencore.
Glencore Energy UK Ltd v NIS JSC NOVI SAD [2023] EWHC 370 (Comm), 23 February 2023

Should you wish to discuss any of these cases in further detail, please speak with a member of our London dispute resolution team below, or your regular contact at Watson Farley & Williams: