National Justice Compania Naviera SA v Prudential Assurance Company Ltd (Ikarian Reefer)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STUART-SMITH |
| Judgment Date | 08 December 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J1208-7 |
| Docket Number | QBCMF 93/0618/B |
| Court | Court of Appeal (Civil Division) |
| Date | 08 December 1994 |
[1994] EWCA Civ J1208-7
(ORDER OF MR. JUSTICE CRESSWELL)
Before: Lord Justice Stuart-Smith Lord Justice Farquharson Lord Justice Evans
QBCMF 93/0618/B
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(COMMERCIAL) FINAL LIST
MR. G. POLLOCK Q.C. (Instructed by Messrs. Ince and Co., Knollys House, 11, Byward Street, London EC3R 5EN) appeared on behalf of the Appellant/Defendant)
MR. D. STEEL Q.C.and MR. N. JACOBS (Instructed by Messrs. Clifford Chance, 200 Aldersgate Street, London EC1A 4JJ) appeared on behalf of the Plaintiff/Respondent)
( )
Thursday 8th December 1994
For the reasons set out in the judgment of the Court, to which all three members of the Court have contributed, this appeal will be allowed and judgment will be entered for the Defendants.
1. INTRODUCTION
At about 23 hours on 12 April 1985 the Ikarian Reefer bound for Abidjan ran aground on the shoals of St. Ann off the coast of Sierra Leone on the west coast of Africa. Efforts to refloat the vessel were unsuccessful. At about 01.00 hours on 13 April 1985 a fire broke out in the engine room and swiftly spread to the accommodation area. At about 01.15 hours the Master of the vessel gave the order to abandon ship. All the ship's company were accommodated in the life boats and some two hours later they were rescued by a Yugoslav vessel the Ljubljana with which they had earlier been in radio contact.
The shoals of St. Ann lie off an inhospitable coast and extend for some 46 miles. The seabed is made up of fine light brown sand formed by silt brought down by the nearby rivers. The shoals are shallow and constitute a well-known hazard to shipping. The chart being used by the Master at the time of the grounding included a specific warning about the unreliability of the depths recorded having regard to their shifting nature. There has never been a clear explanation from the Master, who was navigating the vessel at the time, why it went aground or why it was in the vicinity of the shoals. It was well equipped for navigation and its instruments included a Decca DS5 satellite navigator and an echo sounder as well as radar.
The Ljubljana carried the Master and crew of the Ikarian Reefer to Lome where they were repatriated to Greece a few days later. The Ikarian Reefer refloated of her own accord and in the days following the casualty was boarded by local fishermen in the employ of a Greek company who claimed salvage. The difficulties in dealing with the salvors later caused a number of problems but on 22 April 1985 two fire experts Mr. Cook and Dr. Bound acting for the owners and the underwriters respectively were able to go aboard and make an inspection lasting two days. They discovered an open tap on the line of the diesel oil service tank (DOST) close to the seat of the fire and concluded that the fire had been started deliberately.
For the next year the owners of the vessel who are the claimants in these proceedings were engaged in negotiations with the salvors and it was not until July 1986 that an agreement was reached and the owners took steps to tow the vessel to Spain for scrap. Both owners and underwriters were anxious to make a further inspection because photographs taken by Mr. Cook showed a fractured valve controlling the diesel line running from the DOST. However, before the vessel was taken in tow, she sank near her anchorage in circumstances which remain obscure and the broken valve was never recovered.
The claimants are a Greek company in which two brothers, Costas and Anthony Comninos, are the controlling shareholders. Effectively they were the owners of the Ikarian Reefer. They are both Greeks who operate their business out of Piraeus. At the relevant time they and the companies they controlled owned some 25 ships.
The Ikarian Reefer was the subject of a policy of marine insurance no. 132875HD which covered it inter alia against perils of the sea, fire and barratry. The present appellants are the lead underwriters. The insured value of the vessel was $3,000,000 with an agreed market value of $450,000. When the present claim was made under the policy the underwriters rejected it and alleged that the vessel had been intentionally grounded and the fire started deliberately.
The case came on for hearing before Mr. Justice Cresswell on 13 May 1992 and the trial lasted 82 days. The Judge found that the owners had proved on a balance of probabilities that the grounding of the vessel was accidental. He identified the remaining issue to be decided in these terms: "Have the underwriters proved to the relevant standard that the Ikarian Reefer was set on fire with the connivance of the owners?" In the result he decided that the underwriters had failed to discharge that burden and found for the owners. The underwriters now appeal claiming:
(1)that the grounding was deliberate and effectively the cause of the loss;
(2)that the fire was started deliberately;
(3)that both the grounding and the fire were caused with connivance of the owners.
(A) The Law
The Judge accurately summarised the legal principles applicable to the case at pp. 71–73 (references are to [1993] 2 LLR). There is no criticism of this statement of the law. At paras. 8–10 he set out the approach of the Court in a case of this sort. While accepting that this is a correct statement, Mr. Pollock Q.C. submitted that the Judge failed to follow his own precepts. His approach was, submitted Mr. Pollock, fundamentally flawed in three important respects:
(1)He was unduly impressed by the demeanour of the witnesses, particularly the Master and Mr. Tsakiridis, and failed to test their evidence against established facts and the probabilities of the case.
(2)He appears to have decided the case piecemeal. Thus he concluded that the grounding was accidental, having at that stage only heard the evidence in relation to navigation, motive and connivance, whereas all three aspects of the case are closely interrelated. This finding had an important bearing on the Judge's conclusion as to the fire. He should not have made up his mind until he had heard all the evidence.
(3)He appears to have approached the case on the basis that he should not reject the sworn evidence of the alleged conspirators unless the underwriters could prove that their accounts were impossible.
(B) The approach of the Court of Appeal
Mr. Steel Q.C. on behalf of the owners has made a number of submissions concerning the proper approach of this Court when hearing an appeal from a decision of a Judge sitting alone.
(1)The burden of showing that the trial Judge was wrong lies on the appellant.
This proposition does not admit of any doubt. As long ago as 1896, Lord Esher in Colonial Securities Trust Co. v. Massey (1896) 1QB 38 at page 39 citing the words of Lopes LJ. in Savage v. Adam W.N. (95) 169 (11) said:
"Where a case tried by a Judge without a jury comes to the Court of Appeal the presumption is that the decision of the Court below on the facts was right, and that presumption must be displaced by the appellant. If he satisfactorily makes out that the Judge below was wrong then inasmuch as the appeal is in the nature of a re-hearing, the decision should be reversed; if the case is left in doubt it is clearly the duty of the Court of Appeal not to disturb the decision of the Court below."
(2)When questions of the credibility of witnesses who have given oral evidence arise the appellant must establish that the trial Judge was plainly wrong.
Once again there is a long line of authority emphasising the restricted nature of the Court of Appeal's power to interfere with a Judge's decision in these circumstances though in describing that power different expressions have been used.
In SS Hontestroom v. SS Saguporak (1927) AC 37 Lord Sumner said at page 47:
"None the less not to have seen the witnesses puts appellate Judges in a permanent position of disadvantage as against the trial Judge and unless it can be shown that he has failed to use or has palpably misused his advantage, the higher Court ought not to take the responsibility of reversing conclusions so arrived at merely on the results of their own comparisons and criticisms of the witnesses and of their own view of the probabilities of the case."
Viscount Sankey in Powell v. Streathan Manor Nursing Home (1935) AC 243 at page 249 said:
"On an appeal against a judgment of a Judge sitting alone the Court of Appeal will not set aside the judgment unless the appellant satisfies the Court that the Judge was wrong and that his decision ought to have been the other way. Where there has been a conflict of evidence the Court of Appeal will have special regard to the fact that the Judge saw the witnesses."
Finally in Mersey Docks and Harbour Board v. Proctor (1923) AC 253 at page 258 Viscount Cave LC. said:
"In such a case (where the Court is hearing an appeal from a Judge sitting alone) it is the duty of the Court of Appeal to make up its own mind not disregarding the judgement appealed from and giving special weight to that judgment in cases where the credibility of witnesses comes into question, but with full liability to draw its own inference from the facts proved or admitted and to decide accordingly."
(3)When a party has been acquitted of fraud the decision in his favour should not be displaced except on the clearest grounds.
This proposition is not in contest and is supported by the House of Lords in Akerhielm v. DeMare (1959) AC 789 at page 806 where the...
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