An Aberdeenshire subsea company has lost an appeal against a £980,000 lawsuit.
James Fisher Subsea Excavation (JFSE) has been in a long-running legal dispute with Norwegian firm Scanmudring over work it carried out for the DanTysk windfarm in the German North Sea.
In 2015, JFSE was hired to carry out dredging work for the windfarm and rented crew members and a “scanmachine” from Scanmudring to do so.
The work was initially expected to last just 10 days.
However, after four days of work, a plan to lift the machine back to its support ship failed and it became stuck on the seabed for four months, accruing fees to Scanmudring of £900,000, plus £80,000 interest.
JFSE has been appealing a ruling made last year by a commercial court judge that the Oldmeldrum-based company owes that sum to the Norwegian firm.
However, the Court of Session has thrown out James Fisher’s appeal, with two of the three judges presiding over it agreeing with the initial ruling.
The terms of the contract meant that if the machine had a “breakdown” the payable rates over the period would cease, however “standby rates” over the four months were payable if the machine was just “temporarily abandoned”.
The judges ruled it had not broken down, against JFSE’s argument, as the machine was technically operable, just stuck in clay on the seabed, and evidence showed plans were in place to recover it.
In its submission, JFSE argued the initial ruling had effectively turned a contract with an estimated value of £65,000 to one worth almost £1m.
However, delivering his judgement, Lord Menzies said that although the contract produced a “bad bargain” for JFSE, “that does not justify this court in rewriting the parties’ contract”.
The terms of the contract also meant the rates were payable under temporary abandonment regardless of whether the machine was “fit for purpose”, according to the ruling.
Despite this, evidence did show that the machine was not in fact fit for purpose.
It had a series of defects resulting from poor welding and miscalculations by Scanmudring.
As a result of this, the top plate of the machine detached during the lifting operation to initially recover the machine, which led to it being stuck on the seabed.
The only judge who voted to grant JFSE’s appeal, Lord Carloway, argued that a machine without a working “pad-eye” (lifting lug) meant the machine was not fully operational and Scanmudring was therefore liable.
Lord Menzies and Lord Brodie voted against the appeal.
The latter judge said that the initial ruling was correct to side with Scanmudring’s assessment that “damage to the boom would not have affected the functioning of the scanmachine”.
He added that the assessment of Alistair Braid, JFSE’s “eyes on the project” on board the ship was correct in saying the machine was still operational despite being stuck on the seabed.
It was later recovered as a requirement of German authorities and windfarm operator Vattenfall and returned to Scanmudring.
James Fisher Subsea Excavation (JFSE) is the trading name of James Fisher Mass Flow Excavation.
The business was formed in 2014 when Cumbrian company James Fisher & Sons merged part of its business with Aberdeen-based KDM Marine, later adding assets of a business, X-Subsea, acquired in 2015.
James Fisher & Sons failed to respond to requests for comment on the outcome of the dispute with Scanmudring.
A spokesman for Scanmudring, which has its headquatrers in Mandal, in the southernmost tip of Norway, said the company was “pleased with the verdict”.
He added: “This resolution allows us to continue our core focus of supplying solutions with our growing portfolio of advanced underwater machinery and tooling.”
The only potential avenue for JFSE to make a further appeal is with the UK Supreme Court.
Other north-east businesses owned by James Fisher & Sons include the National Hyperbaric Centre in Aberdeen, Oldmeldrum companies Fisher Offshore and ScanTech Offshore and JFD Global (UK), based at Westhill.
JFD includes the former Divex subsea equipment business, which Fisher acquired in 2013 for up to £33m.
In 2016, the group acquired Aberdeen-based visual asset management company Return To Scene from administrators in a £2m deal.
Results announced by James Fisher & Sons earlier this week revealed 2018 pre-tax profits of £55.4m, up £8.1m, or 17%, on the previous year on revenue which grew by 13% to £561.5m.