Kastor Navigation Company Ltd v AGF MAT (Kastor to)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Tomlinson |
| Judgment Date | 04 December 2002 |
| Neutral Citation | [2002] EWHC 2601 (Comm) |
| Docket Number | Case No: 200 Folio 1196 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 04 December 2002 |
[2002] EWHC 2601 (Comm)
The Honourable Mr Justice Tomlinson
Case No: 200 Folio 1196
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
Mr Stephen Hofmeyr QC and Mr Andrew Baker (instructed by Ince and Co.) for the Claimants
Mr Steven Berry QC (instructed by Holman Fenwick and Willan) for the Defendants
Hearing dates: 1,2,3,4,8,9,11,15,16,17,18,22,24,25,29,30,and 31 July 2002.
Mr Justice Tomlinson
This is a claim against underwriters in respect of the total loss of a ship. "Kastor Too" was a steel-built four hold geared motor bulker of 17,665 tonnes deadweight, 148 metres in length built in Japan in 1977. The First Claimant was the registered owner of the vessel. The Defendants subscribed to a contract of marine insurance contained in a slip policy on the MAR 1991 Form insuring the First Claimant's interest in the hull and machinery of the vessel against marine risks for a period of 24 months at 30 December 1999. The vessel was valued at US$3M. The Defendants insured 80% of the risk. The insured perils included fire, explosion and perils of the sea. The Second Claimant was mortgagee of the vessel and the assignee of and loss payee under the policy.
On 29 February 2000 the vessel sailed from Aqaba bound for Vizagapatnam laden with a cargo of rock phosphate in all four holds. At about 1420 hours on 9 March when the vessel was in a position between the island of Socotra and the coast of South Yemen a fire was discovered at the purifier flat level in the engine room. The fire was observed by the Chief Engineer and the Third Engineer through a window in the engine room control room where they then were. The Third Engineer took a 5 kg CO2 fire extinguisher from the control room but he could get no closer to the fire than the stairway on the starboard side of the engine room because of the smoke and flames so he emptied the extinguisher from there in the general direction of the fire to no effect. There were no further efforts to fight the fire and the engine room was abandoned within two or three minutes of the initial observation of the fire. Although the emergency fire pump located in the steering gear room was started the main fire pump at bottom plate level was not. The emergency fire pump was used for boundary cooling. After closing of all openings in the engine room the fixed CO2 system was activated. This appeared initially to have the effect of reducing the amount of smoke issuing from the funnel area. This effect was shortlived. Within thirty minutes smoke escaping from the funnel area and the starboard engine room ventilator began to increase significantly. The crew abandoned ship and took to the two lifeboats. All personnel including the Master and Chief Engineer, the last to leave, were in the boats by about 1700. Between 0500 and 0600 hours the next morning, ie, about 15 hours after the initial observation of the fire, the vessel sank stern first.
The ship would not have sunk with the engine room alone flooded. In order for her to sink at least two compartments must have been flooded, the only realistic contender here in addition to the engine room being No.4 hold, which is immediately forward of the engine room bulkhead. A steel ship constructed in accordance with the Load Line and other conventions in force when this ship was built should not sink as a consequence of a fire in the engine room. For a steel ship constructed in this way to have sunk as a consequence of fire in the engine room within only 15 hours or so of the outbreak of the fire would be very remarkable. That is no doubt why the underwriters have declined to pay the Claimants' claim for the total loss. Although the underwriters adduce no positive case as to the cause of the sinking, no one could have been in any doubt as to the underwriters' suspicion that the vessel had been scuttled.
This action was begun on 1 November 2000. Initially the Claimants claimed for an actual total loss, allegedly caused by fire and/or explosion and/or perils of the sea. I leave out of account a subsequently abandoned allegation of crew negligence. I can also henceforth omit reference to perils of the sea. The Claimants' only case was that the fire and/or explosions caused a fortuitous entry of seawater, so reliance upon perils of the sea adds nothing. Initially, underwriters neither admitted nor denied that there had been a fire but denied that, if there had been, it had caused the sinking of the vessel. By an amendment to their pleadings introduced in August 2001 the Claimants claimed additionally or in the alternative for a constructive total loss of the vessel. They alleged that prior to her sinking the vessel was so damaged by fire that the cost of repairing the damage would have exceeded the insured value. Initially, the underwriters neither admitted nor denied that the vessel had become a CTL. Before the trial the underwriters had put in a report from their expert marine engineer, Mr Todd, which accepted that the likely cost of repairing damage of the type which is likely to have been sustained by "Kastor Too" prior to her sinking would have appreciably exceeded US$3M. However, underwriters continued to deny that the vessel had become a CTL, since their admission as to the cost of repairs related only to the scintilla temporis prior to sinking, at which time they said the vessel was doomed to become an actual total loss. Further points emerged at trial as to the ability of the Claimants to claim for a CTL having initially claimed for an actual total loss.
The battle lines which were eventually drawn, either by the time the trial began or at any rate during it, were as follows. The Claimants' primary claim was for a CTL caused by fire and/or explosions. Obviously that ranked logically before their alternative claim which was for an actual total loss also caused by fire and/or explosion. The underwriters admitted that there had been a fire in the engine room starting at about 1420 hours. Their fire expert, Dr. Bound, was instructed to prepare his report on the assumption that the fire started accidentally. In his final address Mr Berry QC for the underwriters observed that, having accepted that the fire occurred, it did not actually matter whether the underwriters additionally accepted that it had started accidentally since unless they alleged that it had been started deliberately with the connivance of the insured acceptance that a fire had occurred amounted to admission of the operation of an insured peril—see Slattery v. Mance [1962] 1 QB 676. However, somewhat to my surprise Mr Berry went further. On underwriters' behalf he accepted that the fire was accidental. I was surprised by this concession not least because it was not in any way foreshadowed in Mr Berry's written closing submissions which spoke in terms of the assumption that the fire was accidental. As will appear hereafter, in my judgment this concession does in fact have an impact upon the shape of the enquiry. It has given me cause for the most profound reflection as to the manner in which it should influence my evaluation of the evidence and my conclusion as to the probabilities. However I will revert to that later in this judgment. Underwriters denied that the insured could recover for a CTL. As to the actual total loss they asserted that a fire in the engine room and consequent explosions would not have caused and did not cause the flooding of hold No.4 or any double bottom tanks or any other spaces of the vessel than the engine room, or the sinking of the vessel. They had no positive case as to how seawater, at any rate in significant quantities, entered the engine room. They did however have a limited positive case to the following effect:—
"…… the fire cannot have been the or a proximate cause of the sinking because there was so much water in the vessel from an unknown cause at the time the vessel was abandoned at about 1700 hours as cannot have been caused by an engine room fire. In particular there was about 2,700 metric tonnes of water in the vessel, of which about 1,950 metric tonnes was forward of Frame 36. It is to be inferred that water entering from this unknown cause both before and after abandoning was a proximate cause of the sinking."
Finally, the Claimants for their part suggested that even if there were quantities of water forward of Frame 36 the reason for the ingress of which remained unidentified, nonetheless, unidentified ingress of water not being an excepted peril, they were entitled to succeed in their claim for an actual loss on the basis of concurrent causes—ingress of water into the engine room caused by fire which together with water which was forward of Frame 36 and had entered by unidentified means caused the loss of the vessel.
The underwriters' case as to the quantity of water in the vessel and its location derives from various observations as to the vessel's draft and trim as to the reliability of which there was a lively debate at trial. The underwriters put forward no case at all as to how the water found its way into these spaces—nor even as to where it had come from. At least it can be said that it must have been seawater. There was unchallenged evidence—indeed it was in part the underwriters' own evidence—that the bilges were dry when checked at between 0800 and 0900 on the day of the fire. Furthermore, it was also the underwriters' own evidence that ballasting the vessel's double bottom tanks, which have a combined capacity of about 1,364 tonnes, took...
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