Schiffahrtsgesellschaft MS Merkur Sky mbH & Company KG v MS Leerort Nth Schiffahrts GmbH & Company KG (Leerort, Zim Piraeus)
| Jurisdiction | England & Wales |
| Judge | LORD PHILLIPS, MR,LORD JUSTICE HENRY,LORD JUSTICE BROOKE |
| Judgment Date | 27 June 2001 |
| Neutral Citation | [2001] EWCA Civ 1055 |
| Docket Number | A3/00/2044 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 June 2001 |
[2001] EWCA Civ 1055
The Master Of The Rolls
(Lord Phillips)
Lord Justice Henry
Lord Justice Brooke
A3/00/2044
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE ADMIRALTY COURT
(MR JUSTICE STEEL)
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Nigel Teare Qc And Mr Nigel Jacobs (instructed By Messrs Brookes & Co, London, Ec3r 8dt) Appeared On Behalf Of The Appellant
Mr Charles Macdonald Qc With Mr Vasanti Selvaratnam Qc (Ms Nicola Warrender (27.6.01) (instructed By Messrs Bentleys Stokes & Lowless, London, E1w 1yl) Appeared On Behalf Of The Respondent
Introduction
On 19 September 1998 the "Leerort" was lying peacefully, starboard side to, in a berth at the Jaya Container Terminal in Colombo. She was laden with cargo. Part of that cargo was owned by the appellants. They have been referred to as the "Brookes Cargo Interests", for they are represented by Brookes & Co.
At about 18.11 local time, the respondents' vessel, "Zim Piraeus", when in the course of entering harbour, collided with the port side of the "Leerort", breaching No 1 hold. The "Leerort" subsequently flooded and settled on the bottom and the appellants' cargo was lost or damaged, a fate shared by cargo owned by others.
On 14 March 2000 Steel J, sitting in the Admiralty Court, made an order in the nature of a decree of limitation under which he held that the respondents were entitled to limit their liability pursuant to the provisions of the Merchant Shipping Act 1995 and gave ancillary directions. This is an appeal against that order with the permission of the trial judge.
The appellants challenge the Judge's order on two grounds, one substantial the other procedural. First, they contend that the judge could not properly be satisfied at the time he made the order that the respondents were entitled to limit their liability. It is the appellants' case that they were pursuing a line of inquiry which might enable them to defeat the right to limit, and that the judge erred in prejudging that this endeavour was bound to fail. Secondly, they contend that the judge prematurely made the order in a summary manner at a stage of the procedure when he should simply have conducted a case management conference. With characteristic realism, Mr Nigel Teare QC, for the appellants, accepts that if he fails on the substantive ground, he cannot hope to succeed on his procedural argument alone. Accordingly, I propose to deal first with the substantive ground of appeal before turning to make some comments on procedure.
The facts relating to the collision
Almost all contemporary records and reports, both written and automatic, relating to the time of the collision, have now been obtained. They enable a detailed reconstruction to be made of events aboard the "Zim Piraeus" in the minutes leading up to the collision. I shall give times in GMT; local time was GMT plus 6.
The vessel cleared the harbour breakwater at about 12.05 GMT. At that time the revolutions per minute ("rpm") of the engine were recorded as 58. This corresponds to a speed of 14 knots in ballast conditions, but the engine had only been running ahead for some four minutes. It is estimated that the vessel would probably have been making good a speed of about 10 knots as she cleared the breakwater. As the vessel came into the harbour she was in an automatic remote control mode on her bridge console. When in that mode the engine responded to the telegraph commands by means of a computer programme. As the vessel came in, at a time recorded on the engine logger print out as 12.07.29, the Master gave a half astern order to take the way off the vessel.
The engine stopped, but the automatic control system failed to start it in the astern mode. Two mal-function alarms then sounded in the engine. The Master then ordered "stop" at 12.08.05, engaged emergency manoeuvering mode at 12.08.15 and set minus 36 rpm five seconds later (ie half astern). The engine started working astern at 12.08.31 and revolutions built up steadily, increasing to minus 73 rpm over some three minutes. However, this action failed to take the headway off the ship before the collision.
There is an issue as to the implication of these facts to which I shall revert. First, I propose to summarise the law in relation to limitation of liability.
Law of Limitation
In setting out the current law I can do no better than adopt some passages of the judgment of Sheen J in The Bowbelle [1990] 1 WLR 1330:
"On 1 December 1986 by virtue of the Merchant Shipping Act 1979 (Commencement No 10) Order 1986, there was a profound change in the law which gives shipowners and others the right to limit their liability in respect of certain claims. On that date there came into force those parts of the Act dealing with limitation of liability. Section 17 of the Merchant Shipping Act 1979 provides:
'(1) The provisions of the Convention on Limitation of Liability for Maritime Claims 1976 as set out in Part 1 of Schedule 4 to this Act (hereafter in this section and in Part II of that Schedule referred to as 'the Convention') shall have the force of law in the United Kingdom. (2) The provisions of Part II of that Schedule shall have the effect subject to the provisions of that Part.'
Part 1 of Schedule 4 to the Act contains the text of the Convention, of which the following parts are relevant:
'Article 1
Persons entitled to limit liability 1. Shipowners and salvors, as hereinafter defined, may limit their liability in accordance with the rules of this Convention for claims set out in article 2. 7. The act of invoking limitation of liability shall not constitute an admission of liability.
Article 2
Claims subject to limitation 1. Subject to articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability (a) claims in respect of loss of life or personal injury or loss or damage to property occurring on board or in direct connection with the operation of the ship and consequential loss resulting therefrom;
Article 4
Conduct barring limitation A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.
Article 11
Constitution of the fund 1. Any person alleged to be liable may constitute a fund with the court or other competent authority in any state party in which legal proceedings are instituted in respect of claims subject to limitation. The fund shall be constituted in the sum of such of the amounts set out in articles 6 and 7 as are applicable to claims for which that person may be liable, together with interest thereon from the date of the occurrence giving rise to the liability until the date of the constitution of the fund. Any fund thus constituted shall be available only for the payment of claims in respect of which limitation of liability can be invoked.
Article 13
Bar to other actions 1. Where a limitation fund has been constituted in accordance with article 11, any person having made a claim against the fund shall be barred from exercising any right in respect of such a claim against any other assets of a person by or on behalf of whom the fund has been constituted. 2. After a limitation fund has been constituted in accordance with article 11, any ship or other property, belonging to a person on behalf of whom the fund has been constituted, which has been arrested or attached within the jurisdiction of a state party for a claim which may be raised against the fund, or any security given, may be released by order of the court or other competent authority of such state. However, such release shall always be ordered if the limitation fund has been constituted: 3. The rules of paragraphs 1 and 2 shall apply only if the claimant may bring a claim against the limitation fund before the court administering that fund and the fund is actually available and freely transferable in respect of that claim.'
In considering the effect of those provisions upon shipowners and in order to appreciate the dramatic change which has been brought about by the enactment of the Convention on Limitation of Liability for Maritime Claims 1976 it is helpful to have in mind the state of the law immediately preceding the coming into force of that part of the Act.
On 10 October 1957 there was signed at Brussels an International Convention relating to the limitation of the Liability of Owners of Seagoing ships. The preamble to the Convention of 1957 states that the High Contracting Parties have recognised the desirability of determining by agreement certain uniform rules relating to the limitation of the liability of owners of seagoing ships. In that Convention the British system of limitation of liability was adopted and by article 5 an attempt was made to ensure that when and wherever claims were made against a shipowner, who had the right to limit his liability, that shipowner would be able to give bail or satisfactory security or establish one limitation fund against which all claims arising out of one incident would be brought. The Convention of 1957 started with the statement that the owner of a...
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