Kastor Navigation Company Ltd and Another v Agf M.a.t and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Tomlinson |
| Judgment Date | 17 March 2003 |
| Neutral Citation | [2003] EWHC 472 (Comm) |
| Docket Number | Case No:2000 Folio 1196 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 17 March 2003 |
[2003] EWHC 472 (Comm)
IN THE HIGH COURT OF JUSTICE COMMERCIAL COURT
QUEENS BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Tomlinson
Case No:2000 Folio 1196
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 : 21 February 2002
JUDGMENT : APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)
Mr Justice Tomlinson:
The argument on costs in this case has thrown up what may be a novel point on the interaction between CPR 36.21, which deals with the costs consequences of a Claimant doing better at trial than it had proposed in a Part 36 offer made before trial, and the new approach to costs whereby, in the light of the introduction of the CPR, the court must be more ready than once it would have been to depart from the general rule that the unsuccessful party will be ordered to pay the costs of the successful party. The court must be more ready than once it would have been to consider where appropriate the making of different orders for costs on discrete issues the effect of which may be that the party who has been generally financially successful in the litigation will end up not simply not recovering all of his own costs but also paying to his opponent a substantial part of the opponent's costs.
In this case the outcome of the debate is of considerable significance to the parties since their combined costs approach the amount at stake in the litigation. I was told that each side has incurred costs of the order of £850,000, whereas the claim, in which the Claimants have been successful, was for US$3 million. Notwithstanding that success, which additionally was in an amount substantially greater than that for which the Claimants had in their Part 36 offer made before trial been prepared to compromise, it was the submission of Mr Berry QC for the Defendants that the just order on costs would be for the Claimants to pay to the Defendants 80% of their costs of the action. At first sight that might seem a surprising outcome to the litigation, as Chadwick LJ observed of a similar outcome in Summit Property Ltd v Pitmans 2001 EWCA Civ2020, 19 November 2001. Since that case and an earlier decision of the Court of Appeal to which it followed, Johnsey Estates Ltd v Secretary of State for the Environment, Transport and the Regions 2001 EWCA 535, 11 April 2001 give guidance as to what is in effect a change of practice, as Aldous LJ described it in Stena Rederiaktiebolag v Irish Ferries Ltd 2003 EWCA Civ 214 13 February 2003, I have taken time to consider my judgment. In view of their importance it is slightly surprising to find that the two earlier decisions of the Court of Appeal which I have just referred have not been reported.
Following a four week trial in July 2002 I gave judgment for the Claimants on 4 December 2002 for the full amount of their claim, US$3 million due under a valued policy of marine insurance. The claim arose out of the total loss of the vessel "Kastor Too" in March 2000, in respect of which the Claimants brought this action on 1 November 2000 claiming an indemnity in respect of the actual total loss of the vessel allegedly caused by fire. In my judgment I concluded that the Claimants were not entitled to recover for an actual total loss caused by fire. They had failed to prove that the fire caused sufficient water to enter the vessel to cause it to sink within 15 hours of the outbreak of the fire. However on 17 August 2001 the Claimants had amended their pleadings so as to introduce a claim for an indemnity in respect of the constructive total loss of the vessel caused by fire, on the footing that the vessel had become a CTL by fire before she sank. Once introduced that was logically the primary claim to which the claim for an actual total loss by fire became an alternative. In my judgment I concluded that this primary claim succeeded and it is on this basis that the Claimants obtained judgment. There was no claim in respect of damage or partial loss short of total loss. The claim was only brought in respect of the total loss of the vessel, so that the only possible outcomes of the litigation were either that the Claimants would recover US$3 million or that their claim would simply fail.
I do not propose to repeat here what I said in my judgment of 4 Decemeber 2002 as to the course of the litigation and the manner in which the battle lines were ultimately drawn. It is worth highlighting that it was only on 1 May 2002 that underwriters served the report of their relevant expert, Mr Todd, in the course of which he 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 succeeded the insured value, US$3 million. 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 by reason of the incursion of seawater. Furthermore it was only on 3 May 2002 that underwriters indicated through their solicitors that they would not dispute that there had been a fire, a matter as to which at all times previously there had simply been a non-admission. Further points emerged at trial as to the ability of the Claimants to claim for a CTL in the absence of service of notice of abandonment prior to the vessel becoming an actual total loss, and in circumstances in which the Claimants had initially claimed for an actual rather than a constructive total loss.
Once the interviewing of the crew had been completed it was inevitable, if the Claimants were minded to pursue a claim against underwriters for indemnity in respect of the actual total loss of the vessel, and if they were minded to deploy in support thereof such evidence as had been elicited from the crew, that the principal problem with which they would have to grapple would be the question how a fire in the engine room and such explosions as may have been caused in consequence thereof could have been responsible for the introduction of sufficient seawater to cause the vessel to sink within 15 hours of the outbreak of fire. The casualty was in this regard unprecedented in the experience of anyone who had to consider it.
On 9 January 2001 the Claimants applied for summary judgment on their claim in respect of the actual total loss. In support thereof they deployed the witness statements taken from the officers and crew in 2000 which were in due course relied upon at trial, albeit in some cases supplemented by further statements. The Claimants also relied upon a report of a Mr Charlton, a partner of Dr Foster in the firm of Dr J H Burgoyne & Partners. This report sought to overcome the Claimants' principal problem by suggesting that there might have occurred an explosion in a topside tank, which it was suggested may have contained a particularly "gassy" residual fuel oil, i.e. an oil which contained a higher than normal amount of light fractions which might slowly be released leading to the accumulation of an explosive atmosphere in the ullage space. This theory had the merit that the no.4 starboard topside tank, the preferred candidate, shared a common bulkhead with the engine room and was at about the waterline. An explosion in this tank could have ripped open the side shell both forward and aft of the engine room bulkhead at or below the waterline. The theory however lacked any other merit. The explosion was alleged to have occurred at a time when crew members were alongside in the starboard lifeboat. They had not noticed it. Information was available as to the source of the oil in the relevant tank, demonstrating that it was not a residual fuel oil and disproving the speculation that it might have contained light fractions. At all events, it can have come as no surprise when on 23 May 2001 the application for summary judgment was dismissed by His Honour Judge Michael Dean QC. The reserved judgment of Judge Dean served to highlight, if it needed highlighting, the implausibility of a modern vessel sinking within 15 hours as a result of a fire in the engine room.
Although the Claimants introduced their claim for a CTL in August 2001, they persisted in their claim based upon an actual total loss. On 6 March 2002, four months before trial, the Claimants amended again. They deleted their pleaded case on causation, which had amounted to reliance upon Mr Charlton's report, leaving only the bare assertion that the fire caused the sinking. Particulars of any case to be advanced on causation were refused but on 22 March 2002 Toulson J ordered that they be furnished. When furnished on 28 March 2002 the Particulars abandoned Mr Charlton's theories in their entirety. The Particulars were accompanied by reports from Dr Foster and Mr Bevis (and Mr Parry). Included amongst the new theories was Dr Foster's thesis that the engine room bulkhead had "melted" or been the subject of "carburisation." The Claimants strenuously resisted the introduction of evidence from metallurgists to deal with this point. When eminent metallurgists were consulted by each party they agreed that this theory was untenable.
On 11 June 2002 the Claimants made their Part 36 offer. No point arises as to its form or out of the fact that that was less than 21 days before trial. The trial was in fact due to begin on 1...
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