Strive Shipping Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Colman |
| Judgment Date | 25 March 2002 |
| Neutral Citation | [2002] EWHC 203 (Comm) |
| Docket Number | Case No: 1996 Folio No 1764 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 25 March 2002 |
[2002] EWHC 203 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
The Honourable Mr Justice Colman
Case No: 1996 Folio No 1764
MR N HAMBLEN QC AND MR M COBURN (instructed by Clyde & Co for the Claimants)
MR A BOSWOOD QC, MR S MORIARTY QC AND MR D DALE (instructed by Richards Butler for the Defendant)
JUDGMENT: APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)
INDEX
TITLE PAGE
| Index | 2 |
| Introduction | 3 |
| Scope of Cover | 8 |
| Burden of Proof | 10 |
| Standard of Proof | 14 |
| The Claimant's Case on the Circumstances of the Loss | 20 |
| Defendants' Evidence and Criticisms of the Claimant's Case on the Circumstances of the Loss | 34 |
| Expert and other Evidence on the Circumstances of the Loss | 42 |
| Access to the Sea Valve | 43 |
| Use of the Drencher Valve as a Method of Sinking | 44 |
| Uncertainty of successfully achieving a Total Loss | 45 |
| Motive: the Claimant's Case | 49 |
| Motive: the Defendants' Case | 52 |
| Motive: Discussion | 59 |
| Overview of the Evidence | 68 |
| The Defendants' Case on Non-Disclosure | 71 |
| The Expert Evidence on Materiality | 74 |
| The Claimant's Case on Non-Disclosure | 78 |
| Non-Disclosure: Analysis of the relevant Principles | 83 |
| The Materiality of Allegations against the Assured and Suspicious Circumstances | 88 |
| The Connection of Mr Ventouris with the Italia Express | 97 |
| The Loss of the Star One | 100 |
| The St Nicholas and other Losses in Combination | 104 |
| The Coha II: Introduction | 106 |
| The Coha II: the Claimants' Case | 111 |
| The Coha II: Expert Evidence | 129 |
| The Coha II: the Possibility of Survival | 136 |
| The Coha II: total Disappearance | 141 |
| The Coha II: the overall Picture | 142 |
| Value of the Grecia Express | 148 |
| Non-disclosure in respect of the Value of the Grecia Express | 155 |
| The Claimants' Duty to avert or minimise the Loss | 158 |
| Waiver | 165 |
| Summary of Conclusion | 169 |
Mr Justice Colman:
Introduction
This claim has given rise to a trial which has quite unique features in the history of marine insurance litigation in the English courts. It has involved allegations by the war risks insurers that the person controlling the shipowner company, Mr. George Ventouris, not only caused the company's vessel to be fraudulently cast away but also failed to disclose to the defendant Association, amongst other matters, that, two months before the risk was placed, he had fraudulently cast away his own luxury power boat, the Coha II. Both allegations are very strongly challenged. This court has therefore had to determine two allegations of scuttling in one trial. The circumstances of both losses have been extraordinary, to say the least.
In order to resolve these major issues this court has had before it, not only the evidence given in this trial, but also in no less than three other sets of proceedings.
First, in relation to the Grecia Express, there has been the evidence given to the Greek Maritime Enquiry conducted by ASNA. This includes the transcript or record of numerous interviews of many witnesses, particularly of those directly involved with the vessel when it was observed to be cast off from the moorings and sinking.
There is also before this court evidence given to the Greek criminal courts in which the owner, Mr. Ventouris, and the crew member and watchman on board Grecia Express, Mr. Vangelis, were prosecuted at the instigation of the defendant insurers.
Thirdly, there has been the evidence given in 1998 before Mr. Justice Langley in this court in a claim by Mr. Ventouris's company, Esperance Co. Ltd, against the insurers of the Coha II in respect of the total loss of that vessel. That claim was abandoned by Mr. Ventouris after 12 days of the trial in circumstances which I shall explain later in this judgment.
This vast quarry of evidence has been fully exploited by both sides. In this court the oral factual and expert evidence relating both to the Grecia Express and the Coha II has extended over a period of 16 days. The trial was conducted by counsel on both sides with commendable efficiency.
The issues may be summarised as follows.
It is alleged by the claimant owners of the car ferry, the Grecia Express, that during the night of 4th/5th March 1994, when the vessel was moored for the winter closed season at Aegion on the southern shore of the Gulf of Corinth, it was sunk by unknown persons acting maliciously, one of the risks insured by the war risks cover provided by the defendant Association. The sinking occurred because somebody cut each of the vessel's eight mooring ropes by which she was attached to two shoreside bollards. Somebody also opened one of four seawater drencher valves located in the vessel's auxiliary engine room. It is common ground that the consequence of these two acts was that the vessel, being still restrained by her anchors, drifted round in an arc, moving from a distance of about 30 metres from the shore at the stern to about 150 metres broadside to the shore. Water entering the auxiliary engine room through the open valve caused her to develop a trim by the stern in consequence of which her stern vehicle ramp, which had been left open throughout her time at the mooring, sank below the surface, thereby admitting the sea to the garage deck. By calculations by the expert witnesses it is estimated that water entry through the valves began at 0100/0200 on 5 March. At between 10.30 and 10.50 the same day the vessel capsized and sank in the shallow water 150 metres off shore. The first of two tugs only arrived from Patras over two hours later. It is common ground that in consequence of that sinking she became a constructive total loss.
Mr. Vangelis, the sole watchman, is said by the claimants not to have been on board during that night, but, in dereliction of his duty, to have spent the night in his car with a woman friend and only to have discovered that the mooring ropes had broken at about 0715 the following morning and only to have discovered that the vessel was developing a trim by the stern, and therefore admitting water, at about 0900.
The claimants contend that the vessel sank in spite of efforts on the part of Mr. Kouratolos, their port captain, to get crew members from Drapetsona, near Piraeus, to Aegion to help with re-mooring her and to procure two tugs from Patras to manoeuvre the vessel back to the shore.
The defendant's case is that Mr. Vangelis assisted in sinking the Grecia Express and that Mr. Ventouris was complicit. It is contended that Vangelis was not a witness of truth. He had admittedly lied to the Greek maritime enquiry about his movements on the night in question. Only he would have been sufficiently acquainted with the vessel's valve system to have admitted just the right amount of water, by opening just one valve, to allow the vessel to drift into deeper water before it was so substantially trimmed by the stern that it capsized and was substantially submerged sufficiently to become a constructive total loss.
It is alleged that Mr. Ventouris had strong motives for disposing of the vessel. It was 28 years old, relatively slow and of limited passenger and vehicle capacity. It would also require structural modifications to enable it to comply with SOLAS requirements in the following October. The owners' accounts were completely unreliable in as much as they showed that the vessel was trading profitably. The vessel was insured for US$8 million, whereas its true market value was about US$2 million. Mr. Ventouris was not a witness of truth. He had made a fraudulent claim in respect of the loss of the
Coha II.
The defendants advanced an alternative case, namely that the claimant assured was in breach of the duty to take reasonable steps to avert or minimise the loss under the Association's rules (Rule 3.14) and/or under section 78(4) of the Marine Insurance Act 1906. In particular Vangelis ought to have re-boarded the vessel at about 0900–0915 on 5th March and to have closed the watertight doors, thereby sealing off the auxiliary engine room, and/or the claimants by Captain Kouratolos and/or their agents at Patras ought to have taken steps to get tugs from Patras earlier than they did or ought to have arranged to put a crew on board and so for the vessel's mooring ropes to have been attached to a shore-based winch so that the vessel could have been winched ashore.
The defendants advance a further alternative case based on their right to avoid cover for non-disclosure of material facts up to the time of renewal of the vessel's entry in the defendant Association. There is no issue as to whether any of the facts relied upon were disclosed: none of them were. There are, however, major issues as to whether some of the facts alleged to be material did indeed exist and, if so, whether they were material. All the facts are said to be material because they go to moral hazard or to the magnitude of the risk of sabotage.
The facts relied upon as material are:
(i) the connection which Mr. Ventouris had previously had with a passenger ferry called the Italia Express which, some six years before the loss of the Grecia Express, sank at its moorings at Drapetsona, following an explosion caused by limpet mines attached to its hull;
In relation to the loss of the Coha II the claimant's case is that this was an unfortunate accident which very nearly cost Mr. Ventouris and his crew and employee, Mr. Architectonides, their lives. They are both said to have fallen overboard in the course of a voyage from Piraeus to Tinos, in the Aegean, in October 1993. The power boat continued...
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