Dornoch Ltd v Westminster International BV [QBD (Admiralty)]

JurisdictionEngland & Wales
JudgeTHE HON. MR JUSTICE TOMLINSON,The Hon. Mr Justice Tomlinson,Mr Justice Tomlinson
Judgment Date29 April 2009
Neutral Citation[2009] EWHC 201 (Admlty),[2009] EWHC 889 (Admlty)
Docket NumberCase No: 2008 Folio 1277
CourtQueen's Bench Division (Admiralty)
Date29 April 2009

[2009] EWHC 201 (Admlty)




Before: The Hon. Mr Justice Tomlinson

Case No: 2008 Folio 1277

(1) Dornoch Limited (on its Own Account and on Behalf of all other Underwriting Members of Syndicate 1209 for the 2007 Year of Account)
(2) Royal & Sun Alliance Insurance plc
(3) Aspen Insurance UK Limited and Others
(1) Westminster International BV
(2) Koninklijke Boskalis Westminster NV
(3) Boskalis Westminster Limited
(4) Nigerian Westminster Dredging and Marine Limited

Iain Milligan QC and Guy Blackwood (instructed by Messrs Stephenson Harwood) for the Claimants

Tom Weitzman QC and Peter MacDonald Eggers (instructed by Messrs Nabarro LLP) for the First to Third Defendants

The Fourth Defendant was not represented

Hearing date: 29 January 2009

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.

THE HON. MR JUSTICE TOMLINSON The Hon. Mr Justice Tomlinson

The Hon. Mr Justice Tomlinson:


The mega-size trailer hopper dredger, WD Fairway, to which I shall refer hereafter as 'the vessel', became a constructive total loss as a result of a collision off China in March 2007. The vessel was at the time owned by the First Defendant, one of the companies in the Boskalis Group.


The vessel's hull and machinery cover was written in two layers. The primary layer of up to €5 million was underwritten by seven insurance companies of which six are incorporated in the Netherlands, Fortis Corporate Insurance NV, HDI-Gerling Verzekeringen NV, Aegon Schadeverzekering NV, Allianz Global Risks Nederland, Generali Schadeverzekering Maatschappij NV, Mutual Insurance Association 'Munis' UA, whilst the seventh, BDM NV, Antwerp, is incorporated in Belgium. The policy to which these underwriters subscribed is governed by English law but contains a Dutch exclusive jurisdiction clause. I shall refer to these seven insurance companies as the proposed additional Defendants. If joined, they would be Defendants 5–11. Fortis and Munis are already, respectively, the 14 th and 15 th Claimants, and thus if the proposed joinder is permitted, will be both Claimant and Defendant in the same action.


The excess policy, €145 million in excess of €5 million, was written by the Claimants. It too is governed by English law.


On 27 th March 2007 the owners tendered notice of abandonment to the hull and machinery underwriters.


By 16 th April 2008 the hull and machinery underwriters had each for their own proportion paid the insured the amount due in respect of the constructive total loss of the vessel.


On or about 30 th July 2008 the hull and machinery underwriters each for their own proportion paid the insured the amount due to the salvors of the vessel by way of settlement of the salvage and wreck removal claim.


The underwriters say that in the circumstances they impliedly accepted the notice of abandonment and exercised their rights to take over the vessel pursuant to Sections 63(1) and/or 79(1) of the Marine Insurance Act 1906. They say further that that implied acceptance and/or exercise of rights was confirmed on 25 th August 2008 when the insured offered to purchase the vessel from the hull and machinery underwriters for €25 million, which offer was rejected.


The underwriters say that in these circumstances they were entitled to possession of the vessel and to call for registration in their name. They also say that the insured held the vessel on trust for the hull and machinery underwriters, alternatively that the hull and machinery underwriters had an equitable lien on the vessel in their respective proportions.


It is common ground that by December 2008 all bar one (or possibly two) underwriters had expressly stated that they wished to exercise their rights to take over the vessel.


On 9 th January 2009 the first Defendant sold the vessel to the Fourth Defendant, a related company for €1000. The First Defendant admits that it did so in order to prevent the underwriters from themselves realising the market value of the vessel. They contend that they were entitled so to do because in their contention not all of the underwriters had, by the time of the sale, either impliedly or expressly elected to take over the vessel.


The vessel is allegedly unique or at any rate unusual. The market in which she might be sold is both buoyant and highly competitive. In the contention of the underwriters, the price at which the Boskalis Group might purchase the vessel from underwriters would or might include a substantial premium to prevent the vessel from coming into the hands of their competitors.


It is accepted by the insured that they must account to the underwriters for the market value of the vessel. The underwriters say that assessment of that market value might prove difficult in the absence of an arm's length sale.


In these circumstances the Claimant excess underwriters and the existing four Defendants are agreed that the following issues arise for decision in this action:

First Tranche

i) Did the underwriters acquire an equitable lien over the vessel by virtue of paying a CTL?

ii) Did the underwriters impliedly elect to take over the vessel by paying the salvage?

iii) If not, what was the effect of some, but not all, of the underwriters electing to take over the vessel?

iv) Is the lex situs of the vessel relevant to any of the above and, if so what is the lex situs?

v) Whether the jurisdiction of the court under Sections 423–425 of the Insolvency Act 1986 depends on the Claimants establishing actual prejudice as opposed to prejudice being the purpose of the transfer?

Second Tranche

vi) If any of the underwriters' rights depend on the lex situs, what is the effect of the lex situs?

vii) If any of the underwriters' rights depend on whether the vessel was unique, was she unique?

viii) Was Nigerian Westminster a bona fide purchaser of the vessel without notice of the underwriters' rights?

ix) If not, what remedy is appropriate?

x) Did Westminster International transfer the vessel to Nigerian Westminster for the purpose of putting the vessel beyond the reach of the underwriters or otherwise to prejudice the interests of the underwriters?

xi) If so, should the court exercise its discretion to order Nigerian Westminster (or any trustees) to transfer the vessel to the underwriters or their nominee?

The first tranche of issues is due to be resolved at a hearing before me on 12 th and 13 th February 2009. The second tranche of questions, or at any rate such of the questions as remain relevant in the light of the answers to the first five questions, is to be determined at a further hearing in May.


The Claimant excess layer underwriters wish to join the primary layer underwriters as Defendants to the action. They wish them to be bound by the court's determination of the issues which arise or which may arise as between all of the underwriters. They say that there are important issues on which it is essential or at any rate desirable that all underwriters should be bound inter se. One such issue which may be of significance is the entitlement of underwriters whose collective proportions fall short of 100% of the total cover to possession of the whole of the vessel.


The proposed additional Defendants have consented to their joinder as Defendants. They have agreed that, if joined, they will appear in the action without the need for service upon them. The first three Defendants however object to the joinder of their primary layer underwriters as additional Defendants. They say that such a joinder would be subversive of the exclusive Dutch jurisdiction clause in the primary layer policy, upon which they wish and are entitled to rely. They say that it would be subversive because although it is said that the purpose of the joinder is to ensure that underwriters are bound inter se by the judgment of the English court, in fact any determination of the English court in an action to which both insured and insurer are party will also bind them as against each other. It is common ground that the jurisdiction clause precludes the proposed additional Defendants being joined as Claimants without the consent of the first three Defendants, which is not forthcoming.


Accordingly, the Claimants apply to join the proposed additional Defendants, who as I have already remarked include two of their own number. The application is made pursuant to CPR 19.2 which provides, so far as relevant:-

“(1) This rule applies where a party is to be added or substituted except where the case falls within Rule 19.5 (special provisions about changing parties after the end of a relevant limitation period).

(2) The court may order a person to be added as a new party if—

it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

(a) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”


Mr Iain Milligan QC, for the Claimants, says that they are entitled as of right to join the additional Defendants because pursuant to Council Regulation (EC) No.44/2001, the 'Judgments Regulation', the court has jurisdiction over them in relation to some issues which may arise between the insurers inter se. He relies upon Articles 6.1 and 24 which provide;-

“Article 6

A person domiciled in a Member State may also be sued;

(1) where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely...

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1 books & journal articles
  • Characterization of proprietary restitution in the conflict of laws.
    • Canada
    • Ottawa Law Review Vol. 44 No. 2, September - September 2013
    • 22 September 2013
    ...[2007] EWHC 132 (QB) at para 20, [2007] 2 All ER (Comm) 1 32, Eady J; Dornoch Ltd v Westminster International BV (The WD Fairway), [2009] EWHC 889 (Admlty) at paras 85-89, [2009] 2 All ER (Comm) 399, Tomlinson J. Although in Barros Mottos, supra note 99 at para 120, Lawrence Collins J accep......

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