Starlight Shipping Company v Allianz Marine & Aviation Versicherungs AG

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMR JUSTICE BURTON
Judgment Date19 December 2011
Neutral Citation[2011] EWHC 3381 (Comm)
Docket NumberCase No: 2006 Folio 815
Date19 December 2011

[2011] EWHC 3381 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Burton

Case No: 2006 Folio 815

2011 Folio 702

2011 Folio 1043

Between:
Starlight Shipping Company
Claimant
and
(1) Allianz Marine & Aviation Versicherungs Ag
(2) Royal & Sun Alliance Insurance Plc
(3) Assicurazioni Generali Spa
(4) Rembrandt Insurance Co Ltd
(5) Brit Uw Ltd (sued on its own behalf and on behalf of all underwriting members of Lloyd's Syndicate 2987 for the 2006 Year of Account)
(6) Nicholas Burkinshaw (sued on his own behalf and on behalf of all underwriting members of Lloyd's Syndicate 2003 for the 2006 Year of Account)
(7) Hiscox Dedicated Corporate Member Ltd (sued on its own behalf and on behalf of all underwriting members of Lloyd's Syndicate 0033 for the 2006 Year of Account)
Defendants

and

Overseas Marine Enterprises Inc
Third Party

and

(1) Hill Dickinson Llp
(2) Hill Dickinson International
(3) Michael Francis Mallin
(4) Alexandra Julia Tytheridge
(5) Maria Moisidou
Intended Defendants

And

Brit UW Ltd and Others
Claimants
and
(1) Starlight Shipping Co
(2) Overseas Marine Enterprises Inc
Defendants

And

Brit UW Ltd and Others
Claimants
and
(1) Imperial Marine Co
(2) Bristol Marine Co
(3) Cyclone Maritime Co
(4) Seagarden Shipping Inc
(5) Wave Navigation Inc
Defendants

MR JAMES DRAKE QC and MS EMMA HILLIARD (instructed by Lax & Co LLP) for the Claimant and Third Party in 2006 Folio 815 and for the Defendants in Folio 2011 702 and 2011 1043

MR MICHAEL SWAINSTON QC and MR TONY SINGLA (instructed by Clyde & Co LLP) for the First to Fourth Defendants in 2006 Folio 815

MR STEVEN GEE QC and MR TOM WHITEHEAD (instructed by Norton Rose LLP) for the Fifth to Seventh Defendants in 2006 Folio 815 and for the Claimants in 2011 Folio 702 and 2011 Folio 1043

MR DAVID BAILEY QC AND MR JOCELIN GALE (instructed by Mayer Brown International LLP) for the Intended Defendants

Hearing dates: 28 and 29 November 2011

MR JUSTICE BURTON MR JUSTICE BURTON
1

Starlight Shipping Company ("Starlight") sued its insurers by proceedings in the Commercial Court, 2006 Folio No 815, issued on 15 August 2006 ("the original action"), arising out of the loss of the vessel Alexandros T on 3 May 2006. The first four Defendants are known as the Company Market Insurers ("CMI") and the Fifth to Seventh Defendants as the Lloyds Market Insurers ("LMI"). In each relevant policy, there was an exclusive jurisdiction clause providing for English law and the jurisdiction of the courts of England and Wales, which is why Starlight commenced and continued its claims here. Liability was denied, and vigorously contested. Overseas Marine Enterprises Inc ("OME") were identified in the policies as Managers. Ince & Co acted for Starlight in the proceedings, and Hill Dickinson LLP, then Hill Taylor Dickinson, (whom, together with their partners and employees, all being "Intended Defendants" in the original action, I shall call "HD") acted for the Defendant Insurers.

2

The loss of the Alexandros T involved considerable loss of life, and the proceedings were made the more fraught both for that reason and because the denial of liability was based in substantial part upon allegations of unseaworthiness, to which Starlight and/or OME were alleged to be privy, and failure properly to report and repair damage to the vessel in accordance with Class Rules. In the course of the preparation for the proceedings, a number of specific allegations were made and pursued by Starlight, and Ince and Co on its behalf, falling into two general categories:

i) Serious allegations of misconduct by the Defendant Insurers and their underwriters involving alleged tampering with and bribing of witnesses, in particular the bosun, a Mr Miranda, to give false evidence, coupled with other allegations of spreading false and malicious rumours against Starlight in the course of purported investigation of its claims.

ii) Deliberate failure by the Defendant Insurers to pay up under the policy, said to have had substantial consequential financial impact upon Starlight, and to have led to substantial recoverable loss and damage.

3

The allegations were made even before the issuing of the proceedings by the Claimant. They were referred to with some particularity in Ince & Co's letter to HD of 18 July 2006. Complaints were made about attempted covert contacts with the Claimant's crew, and, in particular, an unspecified "instance of serious misconduct by one of the underwriters". As for the malicious rumours (described as "malicious scuttlebutt"), this was described and complained of, together with its alleged effect on the market. Further reference was made in Ince & Co's letter of 20 October 2006 to the underwriters "behaving in a reckless and irresponsible fashion in making … an allegation when they have no evidence to substantiate what they allege". It appears that those representing Starlight obtained a sworn affidavit dated 8 January 2007 from Mr Miranda and another member of the crew, a Mr Paulino, alleging that they were given money and offered more, in return for the giving of what they regarded as untrue evidence. A Request for Further Information was served on 24 October 2007 by Starlight in the proceedings, asking probing questions about payments made, inter alia, to Mr Miranda, and as to the circumstances of approaches to the witnesses, which led to a response, dated 19 November 2007. The allegations came fully out into the open in a witness statement of Mr Nicholas Shepherd of Ince & Co, on Starlight's behalf, dated 7 December 2007, served just prior to a Pre-Trial Review on 14 December 2007. Mr Shepherd referred (in paragraph 6) to Mr Miranda as being the apparent source of the very serious allegations which the Defendant Insurers were making, as had now become clear after exchange of witness statements, and Mr Shepherd addresses this in terms "so that the Court has some idea of what the Claimant will in due course say with regard to the boson's veracity": he exhibits the joint affidavit of Mr Miranda and Mr Paulino of 9 January 2007, to which I have referred.

4

He referred both to that affidavit and to other affidavits from crew members dealing with alleged approaches made to them by a Mr Bernardo, on the Defendants' behalf, and suggests that "Mr Bernardo appears effectively to have been attempting to solicit untruthful evidence from those to whom approaches were made to say that the Vessel was unseaworthy". Counsel for Starlight, Mr Brenton QC, specifically stated to Tomlinson J at the Pre-Trial Review on 14 December 2007, as recorded by the transcript (referring to Mr Shepherd's fifth witness statement, which the judge had read), that Mr Bernardo had "approached a number of survivors and sought to persuade them to give false evidence in return for financial inducements".

5

This position is summarised by Mr Crampton of Lax & Co, the new solicitors acting for the purpose of these proceedings for Starlight, in his witness statement for the purposes of the applications before me, namely:

"5. In their defence to the claim, the Underwriters alleged that the vessel was unseaworthy, that Starlight knew that the vessel was unseaworthy and that Starlight had in place an illegal practice, by which they refused to notify Class and the flag state authority of the vessel about defects to their vessels. These allegations were based on false evidence, which the Underwriters had obtained from the bosun, Aljess Miranda …

13. In their responses to the Request for Further Information, the Hull Insurers provide details of payments totalling US$25,100.00 and €14,864.39 made by them to Mr Miranda in connection with the provision of his evidence. Throughout the English Court proceedings, Starlight vehemently denied and disputed the allegations made by Mr Miranda in the witness statements and affidavit listed above. Starlight have always maintained that Mr Miranda's accusations relating to the condition of the Vessel and the conduct of the Starlight are completely untrue and a fabrication; and that the payments made by the Hull Insurers to Mr Miranda had the effect of motivating Mr Miranda to intentionally make … false accusations."

6

As to the second series of matters by reference to consequential loss and damage, at the same PTR, Mr Shepherd put in his sixth witness statement to support an application to amend the pleadings, to add what were called the "Additional Sums Claims", which he describes. The proposed amendment alleged that "the Claimant has sustained and claims loss and damage over and beyond the measure of the indemnity to which it is entitled under the Policy". In what was described as the best information which Starlight was presently able to provide, it was pleaded that, had the Defendants complied with their obligations to indemnify in accordance with the terms of the policy, Starlight would have purchased a replacement vessel, and had thus lost between US$ 45m and US$ 47.7m by way of increased capital cost and chartering losses of US$ 31,373,800.

7

Tomlinson J declined leave to introduce this further claim, concluding that he and the Court of Appeal were bound by the decision of Sprung v Royal Insurance UK Ltd [1992] 1 Lloyd's I & R Rep 111 CA (itself following an earlier decision of the Commercial Court by Hirst J in The Italia Express No 2 [1992] 2 Lloyd's Rep 281). Tomlinson J consequently refused permission on the basis that, in the light of English law, Starlight had no cause of action in respect of the additional claims which it sought to pursue. He also, as a matter of case management discretion, declined the...

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