Nautical Challenge Ltd v Evergreen Marine (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 29 January 2019 |
| Neutral Citation | [2019] EWHC 163 (Admlty) |
| Docket Number | Case Nos: AD-2015000131, AD-2016000017 |
| Court | Queen's Bench Division (Admiralty) |
| Date | 29 January 2019 |
[2019] EWHC 163 (Admlty)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
ADMIRALTY COURT (QBD)
Court No 8
The Rolls Building
100 Fetter Lane
London EC4
Mr Justice Andrew Baker
Case Nos: AD-2015000131, AD-2016000017
Mr N Jacobs QC and Mr P Henton (instructed by Ince Gordon Dadds LLP) appeared on behalf of Evergreen Marine (UK) Limited.
Mr V Sokolenko appeared with the permission of the Court for Nautical Challenge.
Approved Judgment
Introduction
On 11 February 2015 off Jebel Ali at 23.42 hours local time the Ever Smart, a 7,024 TEU container ship, drove into and almost through the Alexandra I, a Suezmax tanker. Ever Smart made contact at an angle of about 42° to Alexandra I's heading. At impact Ever Smart was making 12.4 knots over the ground, 10.3 knots through the water, Alexandra I just 2.4 knots over the ground. The point of impact was on Alexandra I's starboard bow, thankfully forward of her collision bulkhead and cargo tanks. She was laden with about 975,000 barrels of condensate, loaded (as I find) in Iran, for discharge at Jebel Ali. Ever Smart was exiting Jebel Ali carrying a mix of laden and empty containers, as is typical for a container ship on a regular liner rotation.
These two claims have been collision actions between the owners of the two vessels at the time of the collision, Nautical Challenge Ltd, the owner of Alexandra I, and Evergreen Marine (UK) Ltd, the owner of Ever Smart.
Teare J determined that, whilst both vessels were at fault, responsibility for the resulting damage should be apportioned 80:20, i.e. the damage is to be borne as to 80% by Ever Smart and as to 20% by Alexandra I: see [2017] EWHC 453 (Admiralty), [2017] 1 Lloyd's Report 666. That apportionment was upheld by the Court of Appeal: see [2018] EWCA Civ 2173. An application by Ever Smart for permission to appeal to the Supreme Court is pending on the papers, I was told.
It now falls to the court to assess the damages recoverable, subject to apportionment, by Alexandra I and Ever Smart respectively, upon the basis of which final monetary judgment can be entered. I shall not refer again until the end of this judgment to the 80:20 apportionment. All references to amounts will be to amounts claimed or adjudged to be recoverable at 100%, i.e. prior to the application of that or any other apportionment.
A major issue to consider in assessing the damages recoverable by Alexandra I is the impecuniosity (as asserted) of its owner, Nautical Challenge. A little over two years after the collision, in April 2017, Alexandra I was sold by judicial auction, having been arrested in Singapore for non-payment of crew wages. She was then the Ambassador, having been re-named after the collision repairs in mid-2016.
Whatever I make of Nautical Challenge's claim of impecuniosity as regards the position at the time of and in the two years or so after the collision, until she was finally sold in Singapore, it is certainly impecunious today. Having been represented ably by Clyde & Co and leading and junior counsel at all stages, it failed to put them in funds for the final hearing of the damages assessment and they came off the record. With my permission, Mr Vitali Sokolenko represented Nautical Challenge at the hearing, he having authority from Nautical Challenge to do so under a power of attorney granted on 8 January 2019.
Mr Sokolenko is Ukrainian by nationality, now resident in Switzerland, and I accepted from him — although this was not formally evidenced — that his wife was and is the ultimate beneficial owner of Nautical Challenge. This was an exceptional grant of a special right of audience, but for which Nautical Challenge would have been unrepresented at the damages assessment hearing. Mr Sokolenko vindicated my assessment both that he knew the case well, having, as he said, lived with it for the past four years as Clyde & Co's effective client, and that he would be capable of presenting the case for Nautical Challenge sensibly and appropriately. That said, he was not always able to restrict himself to submissions upon the evidence adduced at trial, but strayed at times into asserting matters of fact not in evidence. I do not criticise him for that, but equally I shall judge the case solely on the evidence.
Whilst paying tribute, I should also record that through Mr Jacobs QC and Mr Henton, instructed by Ince Gordon Dadds LLP, Ever Smart did not seek to take advantage of the inequality of legal arms resulting from Clyde & Co's departure. They presented the case as a whole, and the arguments on particular points, fairly to both sides. One conspicuous example was that, pursuant to CPR 35.11, Mr Jacobs QC put in evidence the experts' reports that had been served by Clyde & Co on behalf of Alexandra I, whilst also calling the experts whose reports had been served by Ince on behalf of Ever Smart (experts whom Mr Sokolenko cross-examined both respectfully and with admirable economy).
Thus, I was invited to have regard to the expert evidence served by Clyde & Co, even though Mr Sokolenko was not in a position to call the experts in question and so Mr Jacobs QC was unable to cross-examine them. Of course, where there were important points of difference I have borne well in mind that the expert evidence served by Clyde & Co has not been tested in cross-examination. That is not to be unfair to Alexandra I given the inequality of arms, but only to avoid unfairness to Ever Smart.
Ever Smart's Loss
Ever Smart pleaded various heads of claim totalling just over US$5 million. Through concessions that included dropping a claim for loss of use pleaded at c.US$2.2 million, and taking account of the expert evidence as exchanged for the hearing, by the time of final preparations for the hearing, the dispute as to Ever Smart's recoverable loss had narrowed very substantially, leaving a difference between the parties of US$136,598.40 against a reduced claim of US$2,506,310.60.
In the event, Mr Sokolenko confirmed, in the written outline of the case he sought permission to pursue on behalf of Alexandra I that I directed him to provide, that the remaining points of dispute would not be pursued. Ever Smart's recoverable loss was therefore agreed at US$2,506,310.60 prior to the customary claim for ‘agency’ at 1%. So, that is US$2,531,373.71 in total.
Alexandra I's Claimed Losses
The recoverable loss claimed by Alexandra I, as pursued at the hearing, comprised the following elements (prior to the customary claim for ‘agency’ at 1%):
(i) Compensation for the damage to Alexandra I measured in the normal way by the reasonable cost of repairing the damage, plus compensation for loss of the use of the vessel as a profit-earning chattel for the period reasonably required for repairs. This part of the claim leaves out of account the consequences of impecuniosity as alleged by Nautical Challenge. One particular element of this basic loss was a claim that there had to be a first employment after repairs on less remunerative business for which the vessel could compete without having a recent satisfactory SIRE inspection report. That item was in fact put forward (measured by reference to the first actual post-repair fixture, for Newton Shipping Ltd) as a separate element of the claim. But, in my judgment, it properly falls to be taken into account, or not as the case may be, as part of assessing this basic loss.
(ii) The aggravation of the basic loss resulting, as alleged, from impecuniosity. Thus, whereas the parties differed as to whether (leaving aside any impact of impecuniosity) Alexandra I ought reasonably to have been fully repaired and ready for service after the collision within 156 days (as contended by Ever Smart), 220 days (as contended by Alexandra I), or something in between (if so determined by the court), in fact she left the repair yard, DDW in Dubai, only in late July 2016, some 534 days after the collision. To some extent the repair bill itself (including ancillary costs) was therefore higher than it might have been. More significantly, Alexandra I was not available for employment for some 534 days, not only for the much shorter reasonable repair period absent impecuniosity.
(iii) Further claims for loss of use said to have resulted from subsequent periods under arrest in Malta and Singapore, together with claims for costs said to have been caused by those arrests.
(iv) An alleged permanent diminution in the value of Alexandra I said to have been caused by the fact she had suffered the collision and been repaired. The suggestion was that in her fully repaired state she was worth less than if she had never been hit.
(v) The loss said to have been suffered by reason that Alexandra I (re-named Ambassador) was sold in the event by judicial auction whilst under arrest in Singapore, rather than by a normal market, willing seller-willing buyer transaction.
The first post-repair fixture generated an arbitration claim by Newton Shipping, as charterers, in respect of which, somewhat ambitiously, Alexandra I claimed damages against Ever Smart asserting that any liability to Newton Shipping was caused by the collision. Mr Sokolenko sensibly did not pursue that claim at the hearing. I am surprised it was ever pleaded.
In all respects other than the claim for the basic loss — as I have labelled it — Alexandra I's claim was infected by a basic misapprehension that anything and everything, of which it might plausibly be said that it would not have happened to Alexandra I but for the collision, could be claimed. It was accepted that losses that may have been suffered by other businesses were too remote and could not be claimed. For example, it was said that one associated entity...
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