Farstad Supply As v Enviroco Ltd: SC 6 Apr 2011

The court was asked by the parties to a charterparty whether one of them is an ‘Affiliate’ of the charterer for the purposes of provisions in a charterparty by which both the owner and the charterer agreed to indemnify and hold each other harmless (including in the case of the charterer its ‘Affiliates’) in relation to certain liabilities. The standard agreement defined an Affiliate to include subsidiary companies, which in turn implied a requirement of membership. Under Scots Law a chargee of shares would be registered as owner. The chargor would then cease to be a member and subsidiary, and a beneficiary of the indemnity. In English law, he would have an interest in equity only.
Held: The appeal was dismissed. There was no error sufficiently clearly established to allow a court to remedy the defect found: ‘The decisions therefore indicate with remorseless clarity that anyone who is entered on the register of a company as a member in any capacity is quite simply a member, with all the relevant rights and liabilities. That being so, on July 7 2002 Nominees was in all respects the relevant member of Enviroco holding the shares transferred to it. There is therefore no room for the view that, somehow, under Scots law Asco rather than Nominees should be regarded as the member of Enviroco because Asco had transferred its shares to Nominees in security only.’

Lord Hope, Deputy President, Lord Rodger, Lord Mance, Lord Collins, Lord Clarke
[2011] UKSC 16, UKSC 2010/0008
Bailii Summary, Bailii, SC Summary, SC
Seventh Council Directive on consolidated accounts (83/349/EEC of June 13, 1983, Companies Act 1985 736
England and Wales
Appeal fromEnviroco Ltd v Farstad Supply A/S CA 18-Dec-2009
A company which would otherwise undoubtedly be the subsidiary of another company ceased to be so when the shares in the former company were charged by the latter company to a Scottish bank. . .
See AlsoGawler v Raettig (Leave) CA 3-Dec-2007
Application for leave to appeal. . .
CitedAdamastos Shipping v Anglo Saxon Petroleum HL 1959
Where the terms of a statute are incorporated into a contract by reference, the contract has to be read as if the words of the statute are written out in the contract and construed, as a matter of contract, in that contractual context. The Hague . .
CitedChartbrook Ltd v Persimmon Homes Ltd and Others HL 1-Jul-2009
Mutual Knowledge admissible to construe contract
The parties had entered into a development contract in respect of a site in Wandsworth, under which balancing compensation was to be paid. They disagreed as to its calculation. Persimmon sought rectification to reflect the negotiations.
Held: . .
MentionedMuir v City of Glasgow Bank HL 1878
The bank had failed as the result of a fraud perpertrated by its directors. The liability of the members was unlimited. Lord President Inglis said: ‘Persons becoming partners of a joint stock company, such as the Western Bank, and being registered . .
CitedElliot v Mackie and Sons Ltd; Elliot v Whyte 1935
Executors of the deceased founder of the company had executed transfers of shares in favour of two of their number and a third party to qualify them as directors of the company under the articles, the trustees and executors wanting adequate . .
CitedPepper (Inspector of Taxes) v Hart HL 26-Nov-1992
Reference to Parliamentary Papers behind Statute
The inspector sought to tax the benefits in kind received by teachers at a private school in having their children educated at the school for free. Having agreed this was a taxable emolument, it was argued as to whether the taxable benefit was the . .
CitedWard v Commissioner of Police for the Metropolis and others HL 5-May-2005
The claimant had been taken under warrant to a mental hospital, but was found not to be suffering any mental illness. She complained that the arrest was unlawful, since the police officer had not been accompanied by the people named on the warrant. . .
CitedAntaios Compania Naviera SA v Salen Rederierna AB (‘the Antaios’) HL 1984
A ship charterer discovered that the bills of lading were incorrect, but delayed withdrawal from the charter for 13 days. They now sought leave to appeal the arbitration award against them.
Held: Though he deprecated extending the use of the . .
CitedInvestors Compensation Scheme Ltd v West Bromwich Building Society HL 19-Jun-1997
Account taken of circumstances wihout ambiguity
The respondent gave advice on home income plans. The individual claimants had assigned their initial claims to the scheme, but later sought also to have their mortgages in favour of the respondent set aside.
Held: Investors having once . .
CitedInco Europe Ltd and Others v First Choice Distributors (A Firm) and Others HL 10-Mar-2000
Although the plain words of the Act would not allow an appeal to the Court of Appeal under the circumstances presently applying, it was clear that the parliamentary draftsman had failed to achieve what he had wanted to, that the omission was in . .

Lists of cited by and citing cases may be incomplete.

Transport, Company, Scotland, European

Updated: 11 November 2021; Ref: scu.431825