Brownsville Holdings Ltd v Adamjee Insurance Company Ltd (The Milasan)
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr. Justice Aikens |
| Judgment Date | 28 July 2000 |
| Judgment citation (vLex) | [2000] EWHC J0728-20 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | 1997 Folio No 1091 |
| Date | 28 July 2000 |
[2000] EWHC J0728-20
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Hon. Mr. Justice Aikens
1997 Folio No 1091
Timothy Young QC and Sara Masters instructed by Linklaters & Paines appeared on behalf of the Claimants.
Nigel Teare QC and Poonam Melwani instructed by Holmes Hardingham appeared on behalf of the Defendant.
28 July 2000
A Synopsis of the case
At about 1810 hours local time (GMT plus two hours) on 23 July 1995 the 90 foot motor yacht "MV Milasan" ("the Vessel") sank by the stern in calm water and good weather about 25 miles off Cape Spartivento, which is on the eastern Calabrian coast. She was in the course of a voyage from Piraeus, via the Corinth canal then Zante, Zakinthos, to Puerto Cervo in Sardinia. There her owner, Sheikh Khalid A Abbar, was supposed to join her with his family and friends for a summer cruise. On the voyage from Greece she had on board a Master, an engineer and a deckhand. The Master said that he first saw water rising fast in the engine room bilges at about 1700 hours. He thought it was flowing in on the port side aft and he said that it quickly rose above the floor plates. The engineer said that attempts to stem the flow were unsuccessful. By about 1730 hours the crew had taken to a life raft and the yacht sank about 40 minutes later. At about 1830 hours that evening they were picked up by a Croatian vessel, "Cikola", which had heard their "Mayday" signal. The crew remained on board the vessel that might. They were taken to Pozallo, a small port on the southern Sicilian coast. When the Master of the Vessel came ashore at about 0800 hours local time on 24 July he reported by telephone to the manager 1 of the yacht that she had sunk the previous evening. Later that morning the Defendant insurers received a fax informing them that the Vessel had been lost and that a claim on the Vessel's hull insurance would be made.
Mr David Johnston of Holmes Hardingham (solicitors for the Defendants) interviewed the crew in Sicily on 25 and 26 July 1995. He took manuscript statements and read them back to the crew. Subsequently they were signed by each of the crew members.
The First Claimant ("Brownsville") is the legal and registered owner of the Vessel; the Second Claimant ("Sheikh Khalid") is the beneficial owner. They did claim on the policy of marine insurance dated 7 May 1995 with the Defendant insurers ("the Insurers") for the total loss of the Vessel. 2 The Insurers rejected the claim and so the Claimants have brought these proceedings.
The Claimants allege that the Vessel was lost through an accidental incursion of seawater into, first, the Vessel's engine room, and then the aft accommodation. Although there have been some changes in the pleadings as to the precise basis on which the loss occurred, the Claimants now say that the initial incursion of seawater into the engine room was probably as a result of a sea water box flange failing. The pleaded case does not particularise how it failed. Towards the end of the trial, in the course of cross examination of the Defendant's expert, Mr Robinson, Mr Young QC for the Claimants appeared to suggest that flexible piping might fail; 3 or a blank flange acting as the cover of a sea strainer might fail if it was not properly tightened down by a crew member or for some other reason. 4 However no positive factual case as to the cause of the initial entry of water into the engine room was advanced by the Claimants in their Closing Submissions. 5
Recognising that this inability to prove that the initial entry of seawater was caused by an insured peril under the policy terms might be a problem, the Claimants have emphasised that the experts agree that the Vessel could not have sunk with water in the engine room alone. 6 The Claimants therefore say that the proximate cause of the sinking was water gaining access to the aft accommodation. They contend that this occurred in the following way: (i) in 1992 new sewage tanks, pumps and lines were installed in the yacht; (ii) this necessitated creating apertures in a watertight bulkhead at frame 14 (at the aft end of the engine room) to carry sewage lines from a pump in the engine room to the aft accommodation; (iii) the sewage lines ran through a tank (called Tank 6C) located between frames 11 to 14, (aft of the engine room and under the aft accommodation) , which although designed as a fresh water tank had been used for fuel but, because of the creation of these apertures, was made a void space; (iv) as the engine room flooded, water flowed through these apertures at frame 14 into Tank 6C; (v) seawater then flowed out of this tank, via an open manhole cover to the tank and also through apertures at the aft end of Tank 6C at frame 11; (vi) as a result of this inflow of water into the aft accommodation the Vessel took on a port list; (vii) portholes in the aft accommodation had been left open on the voyage from Zante, so that when the Vessel began to sink lower by the stern and her port list increased, water also entered into the aft accommodation via portholes on the port side; (viii) eventually the Vessel developed a 50 degree port list and sank by the stern. The Claimants say that the Vessel was therefore lost by perils insured under the policy. Those pleaded are: perils of the seas; 7 latent defect in her hull or machinery; 8 and crew negligence or negligence in the maintenance of the vessel. 9
The Insurers deny that the vessel sank as a result of an insured peril. They say that the proximate cause of the loss of the Vessel was the initial incursion of seawater into the engine room. They allege that the Claimants cannot demonstrate (on a balance of probabilities) that a particular mechanism for the incursion of seawater was caused by an insured peril. Furthermore they say that water cannot have go aft as the Claimants allege because there were actually no apertures in the watertight bulkhead at frame 14 as the Claimants assert. In any event, the Defendants say, the mechanism suggested by the Claimants and the timing given by the crew's evidence is inconsistent with the Insurers' expert's calculations, which, they say, have not been and cannot be challenged.
7. The Insurers have further pleaded positively that the vessel was deliberately cast away by the acts of the Master and the engineer with the connivance of her owner, Sheikh Khalid. The Insurers allege that water was deliberately introduced into the engine room by the engineer, probably by disconnecting the piping from the seawater box, 10 at about 1640 hours on 23 July. They further allege that the engineer opened the valves in the bilge lines running from the engine room to below the aft accommodation so that water could flow aft from the engine room once it reached a certain height there. They say that the vessel did not take on any significant port list, save perhaps at the last.
The Insurers allege that the plan to scuttle the Vessel was first thought of by the Manager of the yacht, Mr Haissam Mahjoub, who was Sheikh Khalid's right hand man in Athens where Sheikh Khalid was a frequent visitor. The Insurers say that Sheikh Khalid agreed to this plan and that the Master was specifically recruited in Piraeus to carry out the plan to which the engineer was also a party. 11 The Insurers allege that the plan was put to the Master and engineer and they agreed to carry it out during a weekend cruise from Athens on 8/9 July 1995, when only Sheikh Khalid and his companion, Miss Anthi Priovolos, were aboard the yacht with the crew and Mr Mahjoub. The Vessel then underwent repairs and a Classification Society Special Survey in Piraeus before undertaking her voyage to Sardinia. The Insurers say that the final signal to the Master and the engineer to sink the yacht on her voyage to Puerto Cervo was given when she called at Zante, Zakinthos, before starting her passage across the Ionian Sea towards the Straits of Messina. The Insurers say that Sheikh Khalid decided to scuttle the Vessel because his efforts (since 1993) to sell her for a reasonable sum had all failed and he was fed up with the yacht because she was becoming old, dowdy and costly to run. Moreover, they say, because of legal difficulties, he had found it was impossible to charter out the yacht, so there was no prospect of recouping any of the large and growing running costs in that way.
The Insurers also resist the claim on an entirely separate ground. 12 They say that between the time Mr Paul Grout left as Master of the Vessel in September 1994 until the appointment of Captain Pastras on 1 July 1995, she had no professional skipper in charge of her. The Insurers allege that this put the Owners in breach of a warranty in the policy, which was in the terms: "warranted professional skippers and crew in charge at all times".13 Therefore, the Insurers allege, they became discharged from all liability on the policy from September 1994 and again at renewal in May 1995 pursuant to section 33(3) of the Marine Insurance Act 1906.
10. The trial before me took place between 8 May and 12 June 2000. It occupied 121/ 2 Court hearing days. Further time was taken reading the Trial Bundles 14 and the parties' opening Outline Arguments and their written Closing Submissions, which were prepared after the evidence had been concluded. I heard oral evidence of fact on behalf of the Claimants from the deckhand, 15 Sheikh Khalid, the Master, 16 the Vessel's Manager, 17 a previous Master, 18 and the Vessel's engineer. 19 On behalf of the Insurers I heard oral evidence of fact from a previous engineer, 20 a previous Master 21 and Miss Priovolos. She gave evidence that Sheikh Khalid had confessed to her in April 1998 that the vessel...
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