MOBC ordered to pay $1.2 million for breach of contract

Government fuel bunkering company ordered to pay $1.2 million for breach of contract

A fuel bunkering company has been ordered to pay a slick $1.2 million in damages for failing to supply a customer after a MEPA enforcement notice halted its operations.

MOBC was sued for damages by Island Bunker Oils Ltd after the then Malta Environment and Planning Authority had issued an enforcement order in 2011, halting MOBC's operations because the company had failed to install filters.

The government company's delay in fitting the filter led to Island Bunker Oils Limited - which was making use of the MOBC's facilities – to file court proceedings against MOBC because it could no longer operate.

The enforcement notice was eventually lifted in 2013 after the government made the necessary investment. 

The First Hall of the Civil Court, presided by judge Silvio Meli noted that it had been shown that the enforcement order had been issued after years of fruitless discussions, aimed at addressing complaints that foul odours were emanating from the facility.

The volumes of correspondence between the Authority and the MOBC showed that the latter was aware of the problem that was being created in the areas near the plant and persisted, ignoring instructions that would have removed the inconvenience and health hazard, noted judge Silvio Meli in his judgment on the matter.

“Therefore this court is satisfied that it was due to its intransigence on the issue, with disdain for the physical risks to the persons involved, the Authority had finally, after years of prevarication, authorised the enforcement order in question...

“Although ignorance of the law is no excuse, it was clear that due to the defendant company's near-monopoly on the market, it is also presumed to be well aware of the Authority's power to issue an enforcement order such as the one at hand.”

In order for the defence of force majeure which had been raised by the defendants, to succeed, it must be shown that no reasonable steps that could have been taken to avoid or mitigate it or its consequences, said the court.

In assessing the amount of contractual damages due, the court referred to clause 17 of the contract, which read “lessor shall hold harmless, indemnify and keep indemnified lessee ... against all liability for injury... loss, damage, claims, costs and expenses arising directly or indirectly from lessor’s actions in the receipt, storage or delivery of the products except where arising as a direct result of the negligence of lessee...”;

The damages suffered by the plaintiffs in this case had clearly been a direct result of MOBC's inaction over several years, “despite being prompted by the Authority to act in the interests of the common good of those who would inhale the noxious fumes.”

The court reached a figure of $1,229,305.55 after quantifying damages on the basis of the value of the fuel which had been stored there, the loss of earnings, the costs of transporting the fuel to alternative facilities and costs relating to demurrage, amongst other factors.

MOBC was ordered to pay Island Bunker Oils Ltd this amount, together with interests since 2011 and the costs of the case.