Aspen Underwriting Ltd and Others v Kairos Shipping Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Teare,Mr. Justice Teare |
| Judgment Date | 27 July 2017 |
| Neutral Citation | [2017] EWHC 1904 (Comm) |
| Docket Number | Case No: CL-2016-000749 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 July 2017 |
[2017] EWHC 1904 (Comm)
Mr. Justice Teare
Case No: CL-2016-000749
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Peter MacDonald Eggers QC and Sandra Healy (instructed by Norton Rose Fulbright LLP) for the Claimants
Steven Berry QC (instructed by Campbell Johnston Clark Limited) for the Third Defendant
Hearing date: 6 July 2017
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
On 3 April 2013 the vessel ATLANTIK CONFIDENCE ("the Vessel") sank in the Gulf of Aden. It has been held by this court in a Limitation Action commenced by her Owners, the First Defendant, that the Vessel was deliberately sunk by the master and chief engineer at the request of Mr. Agaoglu, the alter ego of the Owners; see The Atlantik Confidence [2016] 2 Lloyd's Reports 525. In this action the Hull Underwriters of the Vessel, who paid out on the hull and machinery policy ("the Policy") in August 2013 but who now consider, on further investigation, that the Vessel was deliberately cast away by her Owners, claim recovery of the insurance proceeds which were paid to Owners and the Vessel's mortgagees, Credit Europe Bank NV, the Third Defendant ("the Bank").
The Bank is domiciled in the Netherlands. These proceedings were served on the Bank there. The Bank maintains that under the Brussels Regulation this court has no jurisdiction to hear and determine the claim against the Bank. It must be sued in the courts of the Netherlands where it is domiciled. The Hull Underwriters maintain that this court has such jurisdiction for three reasons. First, it is said that Bank is bound by a Settlement Agreement which confers exclusive jurisdiction on this court. Second, it is said that the Bank is bound by the exclusive jurisdiction clause in the Policy. Third, it is said that the claims brought against the Bank are matters which relate to tort, delict or quasi-delict and the harmful event occurred in England. This is the judgment of the court upon the Bank's challenge to the jurisdiction.
The financing of the Vessel
On this subject there was evidence from Mr. Tayfun who is currently, and has been since 2006, Division Director of the Corporate Credits Department of the Bank. He was not the designated relationship or account manager for the Owners. They were Mr. Urer and Mr. Erguler of the Bank's branch in Malta. In addition there was evidence from Mr. Nazlicicek who managed the Owners' account in coordination with the Malta branch. Mr. Tayfun had infrequent contact with Mr. Agaoglu. Mr. Nazlicicek had frequent contact with him.
By a loan agreement dated 9 March 2010 (but subsequently amended) the Bank lent $38.2m. to the Owners and to Capella Shipping Limited, the owners of the ATLANTIK GLORY, to re-finance the purchase of the Vessel and the ATLANTIK GLORY. The loan was secured by a first mortgage on both vessels and by a deed of assignment which included an assignment of the insurances on the vessels. Additional security included a personal guarantee from Mr. Agaoglu and first and second mortgages on real estate in Istanbul owned by Mr. Agaoglu.
By a further loan agreement (entitled Framework Credit Agreement) dated 14 March 2011 the Bank lent $3.5m. to the Owners for working capital and enabling overdraft. This loan was secured by a second mortgage and a second deed of assignment.
At the beginning of April 2013 the debt against the Vessel under the first loan was just under $10m., namely $9,990,158, and under the second loan just under $3.9m., namely $3,899,704.86. The debt against the ATLANTIK GLORY under the first loan was just under $25m., namely $24,906,136.39. Those sums included missed repayment of principal in the sum of $723,280 and missed repayment of interest in the sum of $685,068.
The Policy
Evidence of the insurance on the Vessel was given Mr. Zavos, a solicitor with Norton Rose Fulbright LLP. who act for the Hull Underwriters. By a hull and machinery policy made through Willis as broker between the Hull Underwriters and the Owners (together with the Vessel's managers, the Second Defendants) the Vessel was insured for the period of 12 months from 15 October 2012 at a value of $22m. The Policy identified the Bank as mortgagee. By endorsement no.6 dated 8 February 2013 there were attached notices of the assignments and loss payable clauses in favour of the Bank.
Events after the loss of the Vessel
On 3 April 2013 the Vessel was lost.
On 4 April 2013 a meeting took place in Amsterdam at the Bank's offices. It was attended by Mr. Agaoglu, Mr. Tayfun, Mr. Nazlicicek and (for part of the time) Mr. Basbay, the Bank's Chief Executive Officer. Mr. Agaoglu disclosed that his vessels were having difficulty paying their operational costs. In particular sums were owed to bunker suppliers, engine manufacturers and other third parties. A list of the most prominent claims amounted to about $1.6m. The Bank agreed to pay those debts between 9 and 11 April 2013. This was formalised by a $1.7m. General Credit Agreement dated 8 April 2013.
The loss of the Vessel was "touched upon" at the meeting. Mr. Agaoglu described the casualty in general terms. Mr. Agaoglu told the Bank that the amount which would be paid out was the insured value of $22m. This surprised Mr. Tayfun greatly. He expected that the amount to be paid would be the Vessel's market value. He further understood that the insurance claim would be presented by the Owners without any involvement from the Bank.
There was discussion as to how the insurance proceeds would be applied. Mr. Agaoglu wanted, first, to pay the full debt due against the Vessel and, second, to settle operational debts and, third, for the remaining balance to be disbursed to his companies to settle other debts. The Bank reluctantly agreed to allow about $4m. to settle operational debts of other vessels provided that about $2m. would be paid in respect of the debts against the ATLANTIK GLORY
By an email dated 4 April 2013 the Owners asked the Bank to provide a letter formally authorising the Hull Underwriters to pay the proceeds of the insurance claim to the brokers, Willis. Such a letter was executed on behalf of the Bank on 5 April 2013. The letter was addressed to the "Underwriters concerned" and was headed "Re: Atlantik Confidence/30 March 2013 Fire, explosion and subsequently sank". It provided as follows:
"We hereby authorise you to pay to Willis Ltd all claims of whatsoever nature arising from the above mentioned casualty provided that (i) there are no amounts due under the policy and (ii) Credit Europe Bank N.V. is the sole loss payee of the policy.
We agree that settlement of such amounts in account or otherwise with Willis Ltd., shall be your absolute discharge in respect of such amounts paid.
We further agree that settlement by Willis Ltd of such amounts to the USD denominated account with number ……..in our name held with Standard Chartered Bank or otherwise to the account of Kairos Shipping Ltd, with IBAN ……………………………held with Credit Europe Bank N.V., Malta Branch shall be an absolute discharge to Willis Ltd in respect of such amounts paid."
On 18 April 2013 the Bank asked the Owners for the current status of the claim. The Owners replied that day saying that they would ask their lawyer for a weekly report but that correspondence could not be shared because it was "private and confidential".
It appears that settlement discussions took place between the Owners and the Hull Underwriters. Willis indicated in an email dated 29 July 2013 that it understood that Clydes would sign the Settlement Agreement on "Owners'/Bank's behalf". This appears to have been a misunderstanding for on 6 August 2013 an Agreement was signed by Clyde & Co. LLP as agents only on behalf of "the Assureds" (defined as being the Owners and the Managers) and by Norton Rose Fulbright LLP as agents only on behalf of the Underwriters. The Agreement provided as follows:
AGREEMENT
"ATLANTIK CONFIDENCE"
This agreement is made the 6 th day of August 2013
BETWEEN:
(1) The UNDERWRITERS more particularly described in schedule 1 hereto ("Underwriters") for their respective several proportions;
(2) KAIROS SHIPPING LIMITED of 5/2 Merchants Street, Valletta VLT 1171, Malta, as owners of the Vessel (as defined below), ZIGANA GEMI ISLETMELERI AS of ltri Sokak, No. 10/A, Balmucu 34349, Istanbul, the Republic of Turkey as managers of the Vessel and their associated, affiliated and subsidiary companies for their respective rights and interests (hereinafter together the "Assureds").
WHEREAS:
(A) The Assureds purchased hull and machinery insurance from the Underwriters for 12 months at 15 October 2012 in respect of the "ATLANTIK CONFIDENCE" (the "Vessel") in the sum of US$22,000,000 on the terms and conditions appearing in policy no. B08019389M12 and the endorsements thereto (the "Insurance").
(B) The Insurance was placed on behalf of the Assureds by Willis Limited ("Willis"). Credit Europe Bank NV of Tower Road 143/2. Silema SLM1064, Malta (the "Bank") was mortgagee of the Vessel and loss payee under the Insurance. The Bank have consented to Underwriters making payment to Willis in accordance with a letter dated 5 April 2013, a copy of which is annexed as schedule 2 hereto.
(C) The Vessel suffered a fire and sank off the coast of Oman in March/April 2013 (the "Casualty"). The Assureds advanced claims under the Insurance, inter alia, in respect of damage to and/or loss of the Vessel...
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