Hellenic Industrial Development Bank Sa v Charles Neville Rupert Atkin and Another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE TOMLINSON |
| Judgment Date | 25 June 2002 |
| Neutral Citation | [2002] EWHC 1405 (QB) |
| Date | 25 June 2002 |
| Court | Queen's Bench Division |
| Docket Number | NO: 1999/1448 |
[2002] EWHC 1405 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERICAL LIST
Mr Justice Tomlinson
NO: 1999/1448
MR M McLAREN QC appeared on behalf of the Claimant
MR N JACOBS appeared on behalf of the Defendants
th June 2002
The trial of this action was due to start on Tuesday 11 June 2002. It was listed for fourteen days. By letter dated 20 May 2002 the defendants made a Part 36 offer to settle the action. On 5th June 2002 the claimants accepted the offer. The terms of the agreement are, I am told, that the defendants will pay to the claimants the sum of US $500,000 ("the principal sum") with the period and rate of interest to be determined by the court, and with costs to be assessed if not agreed at a subsequent assessment or taxation.
So far as concerns interest, the defendants' Part 36 offer letter stated:
"In this regard, we would envisage that there would be a half-day hearing before a Commercial Court Judge at which the issue as to rate/period of interest will be determined. The central focus of such an application will be the reasons why it has taken eight years for this matter to get to trial, including five years of inactivity."
Thus it is that the matter has come before me. Parties are, of course, to be encouraged to settle their disputes, but it has to be said that this is not a terribly satisfactory procedure. Where, as here, parties have settled a multifaceted dispute for precisely half the sum claimed, the court obviously has no opportunity to assess the relative merits and demerits of the claim and the defences. Furthermore, in this case one of the issues was whether the policy is properly to be regarded as a valued policy. So the settlement might reflect a consensus that the assured had a good claim but that there was real doubt as to how the valued policy issue might be resolved, or it might reflect a consensus that there was nothing in that point but that it was thought that the underwriters had an arguable prospect of defeating the claim in its entirety. Of course the parties may have had widely differing reasons for settling as they did. I cannot speculate. But that means that I am approaching a discretionary jurisdiction from an uncomfortable starting point of ignorance as to the merits or as to the basis upon which a recovery has been made.
The action was brought in December 1999 but it relates to the actual total loss of the Julia, a traditional Greek sailing vessel, as long ago as May 1994. I believe that the vessel was on charter at the time, although it is suggested that some of the passengers on board may have been friends of the skipper, Mr Nicolaos Politis. The registered owner and assured was Mr Politis c0mpany, Nicolaos Politis SA. The action was brought by the claimant bank as mortgagee of the vessel and assignee of the proceeds of the Hulland machinery insurance. There is apparently a dispute between the assured and the bank concerning default rate interest which may have accrued on the outstanding indebtedness. But the principal amount outstanding as at the date of the loss was, as I understand it, of the order of $80,000 or so, so that, subject to that outstanding dispute, the lion's share of any insurance recovery was always destined to go to the assured.
On 15 May 1994 there was an engine room fire. The vessel sank in the Aegean. A claim on the Hulland machinery insurance, the underwriters subscribing to which are represented by the defendant, was notified the next day. The claim form is dated 16 May 1994, although it apparently did not reach the underwriters' representatives until some time later, maybe not until August. Underwriters carried out investigations through their surveyors and their lawyers. It is suggested that their investigation was hampered by a lack of cooperation on the part of the assured. Closer examination reveals that the underwriters' surveyor was having difficulty in obtaining appointments to conduct second interviews of crew members and guests on board, who had scattered to the winds in the Greek summer. In any event the grounds on which liability was declined owed little to the interviews of passengers or crew.
On 22 December 1994 the underwriters declined liability and avoided the policy in these terms:
"Further to our telephone conversation on 19th December 1994, we advise that underwriters have now had an opportunity to consider this matter in the light of their surveyor's report and the advice of their solicitors. During the course of their enquiries a matter of serious concern has come to underwriters' attention which they consider entitles them to avoid the policy from inception of the renewal on 1st April 1994. This vessel was insured at an agreed value of 180 million Greek Drachma during 1993/94. At renewal in 1994 the assured represented that the insurable value of the vessel had increased to US $1 million, and underwriters accepted the renewal risk at that valuation. Underwriters are now advised that the true market value of the vessel as at 1st April 1994 would have not exceeded more than US $700,000. If underwriters had been made aware of the true position they would have declined to accept the risk at more than the vessel's actual value, so the misrepresentation was material to their consideration of the risk for the purposes of section 20 of the Marine Insurance Act 1906. In the circumstances, underwriters hereby avoid the policy from renewal from 1st April 1994 and they herebe authorise you to collect a return of the premium paid by the owners for the 1994/1995 period of insurance.
Without prejudice to the above, underwriters would also point out that the circumstances of this loss give rise to some concern. The evidence which has been taken from those on board the vessel at the time of the loss is contradictory and in particular underwriters are advised that the effect of the crew members' evidence is that the owner would have been in the engine room at the time the fire commenced. Underwriters do not make any allegations against the owner with regard to the cause of the fire, but they reserve the right to make such further investigations and to raise any further matters which they may be advised to do if a claim under the policy is pressed."
It might be surprising that a representation as to a vessel's value could be regarded as a representation of fact or that the discrepancy was material. Furthermore, on renewal, in response to the request to increase insured value, the underwriters asked for an independent valuation. That independent valuation concluded that the vessel's value was between US $1 and $1.2 million; but there it is. As I have already indicated, I cannot speculate about these things.
In early December 1994 the assured commenced proceedings against underwriters in Greece. This was in breach of the exclusive English jurisdiction clause by which they were bound. On 29 September 1995 the Greek court dismissed the action on the basis that the English court had exclusive jurisdiction. Thereafter only desultory efforts were made to progress the claim. The...
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