Jan de Nul (UK) Ltd v NV Royale Belge
| Jurisdiction | England & Wales |
| Judgment Date | 31 July 2000 |
| Judgment citation (vLex) | [2000] EWHC J0731-24 |
| Docket Number | 1998 FOLIO No.1708 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 31 July 2000 |
[2000] EWHC J0731-24
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Honourable Mr Justice Moore-Bick
1998 FOLIO No.1708
Mr. Alistair Schaff Q.C. and Mr. Simon Kerr instructed by Collins Stone & Thompson appeared for the claimant
Mr. Nicholas Hamblen Q.C. and Mr. Michael Ashcroft instructed by Clyde & Co appeared for the respondent.
Pursuant to the Practice Statement issued by the Master of the Rolls on 9th July 1990 I hereby certify that the attached textrecords my judgment in this matter and direct that no further record or transcript of the same need be made.
Introduction
This action arises out of capital dredging operations carried out in Southampton Water between 1996 and 1997 in the course of which the depth of the main shipping channel to the Prince Charles Container Port was increased and the course of the channel straightened. The port of Southampton is operated by Associated British Ports ("ABP") , a statutory corporation formerly known as the British Transport Docks Board established under section 1 of the Transport Act 1962. Its constitution, powers and duties are now regulated by the Transport Act 1981. The contractor employed by ABP to carry out the work was the claimant, Jan de Nul (UK) Ltd ("Jan de Nul") , the English subsidiary of Jan de Nul N.V., a Belgian company specialising in dredging operations around the world. The defendant in this action, N.V.
Royale Belge, is a Belgian insurance company with which Jan de Nul insured its liabilities to third parties arising out of the works.
The port of Southampton lies on the confluence of the rivers Test and Itchen, Southampton Water being the name given to that part of the estuary which extends from the lower tidal reaches of the Test and the Itchen to the Solent. Prior to October 1996 a navigation channel was maintained at an advertised depth of 10.2m from the Solent to the container port which lies at the head of Southampton Water in the lower reaches of the Test. A similar, though slightly shallower, channel was maintained leading from the main channel to a number of commercial berths in the lower reaches of the Itchen as well as the Empress Dock. Just downstream of the container port there is a large area known as the Upper Swinging Ground which is maintained to the same depth as the channel to enable vessels using that part of the port to turn. The Middle and Lower Swinging Grounds provide similar facilities further down the channel. The whole of the North-eastern side of the estuary above the point where the Itchen enters Southampton Water is occupied by Southampton Docks which lie directly on the main navigation channel. On the South-western side, however, the depth of water outside the main channel is very limited and this side of the estuary is mainly occupied by a variety of small commercial organisations and yacht clubs. The only exception of any significance is the Marchwood military port which lies opposite the lower end of the Western Docks. An advertised depth of 8m is maintained throughout about two thirds of the area of the military port extending out to the main channel; in the remainder of the port an advertised depth of 4.9m is maintained.
In order to enable larger vessels to use the container port ABP decided in 1996 to increase the depth of the main navigation channel and the Swinging Grounds from 10.2m to 12.6m and to straighten the channel slightly at a point known as Gymp Elbow between the Lower and Middle Swinging Grounds. This involved capital dredging, that is, the removal of previously undisturbed material from the bed of the channel. The material forming the bed of the estuary varied throughout its length, but two sections are of particular importance in relation to the present case because in each of them the sub-soil was predominantly composed of a material which was generally referred to as "greensand" but which was in fact clay containing a high proportion of glauconite. Glauconite is grey-green in colour and it is that which has given rise to the description "greensand". Glauconite is encountered in very fine particles which have a tendency to form "card-house" structures, that is, they agglomerate edge to edge to form loose structures which have a large volume relative to their density and which therefore remain in suspension much longer than other materials of a broadly similar type. Downstream from a point approximately 7,000m from the mouth of the channel the sub-soil was composed of greensand of a more or less homogeneous nature. From that point upstream as far as and including the Upper Swinging Ground the sub-soil was composed of laminated greensand, that is, clay containing glauconite interspersed with discrete bands of fine-grained sand.
The sub-soil of the channel was too hard to enable dredging to be carried out by simple trailing suction methods. Jan de Nul therefore used a cutter suction dredger to pre-cut the material. A cutter suction dredger ("CSD") , as its name implies, is equipped with a mechanical cutting head which loosens the soil enabling it to be pumped into barges alongside for removal and disposal. Removal of soil in this manner is a slow operation, however, and in the present case it was considered preferable to discharge the cut material back onto the bed of the channel to await later removal by a trailing suction hopper dredger ("TSHD") which would carry out the removal and disposal of the spoil more efficiently. This latter type of dredger is equipped with a suction head capable of picking up loose material which is pumped into hoppers on board. It is capable of removing material much more quickly than it can be cut by a CSD. This method of working which involved pre-cutting the soil and returning it to the channel inevitably caused a certain amount of material to be put into suspension as did the trailing operation since the dredgers which removed the pre-cut material were permitted to use what is known as the "overspill" method. Material is pumped from the sea bed as a fluid mixture with water and is discharged into the dredger's hoppers where the heavy material rapidly sinks to the bottom. Once the hoppers are full water is discharged continuously until the hoppers are filled to a pre-determined extent with solid material. However, water discharged during the overspill phase will inevitably carry with it a certain amount of fine material in suspension and care must be taken to ensure that the maximum hopper loading and the duration of the overspill phase take proper account of the nature of the material being dredged. The tender documents in the present case indicated that hoppers could be loaded to 80% capacity, but as will be seen that proved to be wrong. In the present case Jan de Nul calculated on the basis of trials which they carried out before beginning the work that all the material put into suspension would settle within the area of the channel from which it would be removed as part of the contract work.
Contrary to Jan de Nul's expectations, however, the material put into suspension did not settle within the area of the channel. Substantial amounts were carried away from the channel by the action of the tide and settled in other parts of the estuary. The commercial berths in the lower reaches of the Itchen were affected, but much of the silt was deposited at the head of the estuary and in the general area of the Marchwood basin which lies on the South-western side of the estuary opposite the Western Docks. Complaints were made by the operators of wharves, by yacht clubs whose moorings were affected and by others to whom I shall refer in more detail at a later stage. These complaints were initially directed to ABP which took some measures using its own dredgers to remove silt from various areas. In doing so it incurred substantial costs. ABP also called upon Jan de Nul to remove silt by way of remedial works which it insisted Jan de Nul was obliged to carry out as part of its obligations under the dredging contract. Jan de Nul never formally accepted that it was obliged to carry out remedial work, but it did eventually take measures to remove the silt from the remaining areas using its own equipment. The total cost incurred by ABP and Jan de Nul between them came to a little over �2� million, of which some �778,000 represented expenses incurred by ABP which it withheld from amounts due to Jan de Nul under the dredging contract. In these proceedings Jan de Nul seeks to recover under its policy with Royale Belge the whole of the cost of removing the silt from various parts of the estuary. It does so on the basis that by causing silt to be deposited in areas of the estuary which affected their operations or interests it incurred liabilities to a number of third parties and to ABP which fall within the scope of the cover and that the expenses which it incurred fairly reflect the measure of those liabilities. ABP was itself a co-insured under the policy and on 28th May 1999 assigned any claim it might have under the policy to Jan de Nul. Jan de Nul therefore also seeks, if necessary, to recover from Royale Belge whatever sums ABP was itself entitled to recover under the policy.
The policy of insurance
The policy of insurance was effected through a firm of brokers in Antwerp, J. Van Breda & Co. It contains no choice of law which is applicable to the present case, but in view of the nature of the contract there was no dispute that the only realistic choice must be between English and Belgian law. However, since neither party suggested that Belgian law differs from English law in any material respect, I approach the issues in this case on the assumption that the contract is governed by English law.
The contract is contained in three documents: the General Conditions, the Brokers' Clauses and the...
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