BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES ADMIRALTY COURT (QBD)
The Rolls Building
100 Fetter Lane
B e f o r e :
|NAUTICAL CHALLENGE LTD||Claimant/Defendant|
|EVERGREEN MARINE (UK) LIMITED||Defendant/Claimant|
MR V SOKOLENKO appeared with the permission of the Court for Nautical Challenge.
Crown Copyright ©
MR JUSTICE ANDREW BAKER:
Ever Smart's Loss
Alexandra I's Claimed Losses
(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 Basic Loss
(1) The reasonable cost of de-slopping prior to repair was agreed at US$57,942.93.
(2) The reasonable cost of replacement outfitting, i.e. owners' supplied items, was agreed subject to one disputed item at US$198,037.18. The disputed item was that Nautical Challenge paid US$34,000 to airfreight the replacement windlass to DDW, whereas it could have been carried by sea on a container service for US$2,500. It is commonplace for there to be sufficient urgency about the provision of specialist spares or replacement parts or equipment during ship repairs for the use of airfreight to be reasonable. Indeed, there can be situations where the progress of repairs will otherwise be held up at (typically) far greater consequential cost to the shipowner than the extra he will pay to transport the part or piece of equipment by air. But that was not this case. Even on the most optimistic of assessments of how quickly the repairs might be done the fitting of the windlass would come at the end of the repair programme and there was plenty of time to order it with delivery by sea in good time. In the event, there is the further irony that, within the vessel's hugely prolonged period at DDW, as it became, Nautical Challenge only procured delivery of the windlass to the yard in early February 2016 and it was then only fitted some six weeks or so later. Whereas carriage by sea would not have taken more than three weeks.
In my judgment, it was unnecessary and unreasonable to use airfreight for the windlass, and the extra cost generated by that choice is not for Ever Smart's account in this damages assessment.
(3) The reasonable cost of repair supervision by the technical managers, I-Ships, gave rise to two specific points. The first is that for no reason that is explained adequately or at all in evidence I-Ships charged, and it seems Nautical Challenge either paid or agreed to pay, or at least did not object to, a rate of US$1,500 per day, although the governing contract between them entitled I-Ships to charge only US$850 per day. On the expert evidence, even that contractual rate may have been on the high side, but very fairly Mr Jacobs QC accepted he could not say it was unreasonable. In the damages assessment, therefore, I-Ships' involvement as technical managers in supervising the repairs should be allowed at US$850 per day. The second specific point to which this item gave rise was the length of time over which that charge should reasonably be allowable. That follows my conclusion as to the length of the reasonable repair period. In the circumstances, for 220 days, that gives an allowable claim, in my judgment, of US$187,000.
(4) The vessel consumed bunkers and luboil during the 56 days between the casualty and making the repair yard. The only difference between the parties on the reasonable cost to be allowed is a by-product of their disagreement as to how much of that period should be treated as for Ever Smart's account. I have found in favour of Alexandra I on that dispute. The reasonable cost to be allowed should therefore be that assessed by Mr Lillie on that basis, namely US$125,000 for bunkers and US$10,000 for luboil, a total of US$135,000.
(5) In relation to agency fees, Mr Bailey assessed a reasonable allowance at US$42,411.57. Whilst a much larger claim had been pleaded and, for his part, Mr Lillie would have allowed quite a lot more than Mr Bailey, in the event Mr Sokolenko was content to agree Mr Bailey's figure.
(6) There was a surprising and substantial difference between the parties over the reasonable cost to be allowed for the hire of tugs to assist the vessel during the 56 day period offshore after the collision. The factual evidence, such as it is, shows that the local maritime authorities only imposed a requirement for there to be one tug (with fire-fighting capabilities) to be in attendance for the STS transfer operations to off-load Alexandra I's cargo of condensate, that that was also Nautical Challenge's understanding at the time, and indeed that, at least initially, it only ordered a single tug, for the planned STS transfer on to Falcon Pride. I also accept Mr Bailey's clear expert evidence that there was no need for greater tug assistance than that. In keeping with all of that, Alexandra I was not attended by any tug until she was preparing to off-load cargo to Falcon Pride two weeks or so after the collision. But it seems that she was attended at all times thereafter by at least one tug, and sometimes two, even though for most of that time she was not engaged in STS transfer operations or in truth doing anything other than the holding station pattern I described earlier, waiting initially for the second STS transfer, then for her shift to the repair yard, it may be with certain onboard operations by the crew in preparation for the repairs but which there is no suggestion required tug assistance. The enormous cost of tugs incurred in the event was US$626,000. I have some sympathy with the notion, in the abstract, that an owner in Nautical Challenge's position is not likely to run up such a large bill without good reason, whether or not it had particular financial troubles. But the ordering of this level of unnecessary tug assistance cries out for a more specific explanation, yet is not explained by evidence. Mr Bailey, for his part, would have allowed only US$58,500, but that was on the basis of his view that Alexandra I's entire cargo should have been offloaded in a single STS transfer operation. That has not been my finding, however, and there was evidence, accepted by Mr Jacobs QC, that any use of a tug would have involved a minimum commitment to pay for three days, even if it was needed for less than that, e.g. for just a single day. On that basis, the proper cost of tugs to allow in this damages assessment is in my judgment US$117,000.
(7) A reasonable allowance for paint was agreed at US$90,169.23.
(8) A reasonable allowance for Classification Society charges incurred was agreed at US$68,107.
(9) There was a small difference over the reasonable cost to be allowed for travel and accommodation expenses. In the event, however, Mr Sokolenko agreed the figure proposed by Ever Smart for that, namely US$10,093.50.
(10) The reasonable cost to allow for the repair bill itself was not far from being agreed. Mr Bailey, for his part, would have allowed US$6,612,923, whereas Mr Lillie assessed the reasonable cost at US$6,967,620. A helpful spreadsheet prepared by Mr Bailey identified and explained in summary the particular points of difference. To the extent they turned on matters of technical engineering or ship repair expertise, Mr Sokolenko did not pursue those points of difference. Where, however, they were by-products of the difference between the experts on the reasonable period to allow for repairs, or otherwise not dependent on specific expertise, Mr Sokolenko took his stand upon Mr Lillie's figures. On that basis, the only differences pursued were where Mr Lillie allowed general services charges and shifting costs during the repair works, as incurred, up to mid-September 2015 (when on Mr Lillie's assessment of the reasonable time required the collision repairs ought to have been completed). Having found in favour of Alexandra I on the repair period to allow, in my judgment it is right to allow Mr Lillie's rather than Mr Bailey's figures on those items. (I also note and have no reason not to accept Mr Lillie's factual evidence that Nautical Challenge would not have had any choice, as per DDW's normal practice, over the shifting required by the yard and the associated charges actually billed). If my arithmetic is correct, that means adding to the reasonable repair cost that Mr Bailey calculated (a) US$28,393 in relation to general services, (b) US$18,660 in relation to shifting costs. That gives a reasonable repair cost of US$6,659,976.
(1) 100 days at US$8,585, on the basis that Mr Pearce's calculations indicate a typical 100-day round voyage duration for the 'non-SIRE' business he analysed and his TCE earnings rate for what he called 'Period 2', the 218 day period I have concluded is relevant for such business, was US$17,025; that is a loss of US$858,500.
(2) 118 days at US$6,713.50, on the basis that Mr Pearce gives a daily TCE earnings rate for 'Period 2' on SIRE business, adjusted for idle time at 50%, of US$15,153.50; that is a loss of US$792,193.
(3) The sum of those gives a total recoverable claim for loss of use, prior to 'agency', of US$1,650,693.
(4) In customary fashion, agency of 1% falls to be added to that loss, so the final recoverable total becomes US$1,667,199.93.
"It is to be noted that Lord Hope [in Lagden v O'Connor at ] links his test of reasonable foreseeability to the familiar rule that a wrongdoer must take his victim as he finds him. This is important because it avoids the argument which might well be advanced that in the circumstances of a particular case the claimant's impecuniosity could not have been reasonably foreseen. We have noted when dealing with physical abnormalities that what must be reasonably foreseeable is the type or kind, and not the degree, of damage or loss ... . After Lagden v O'Connor what has formerly applied to the claimant with the egg-shell skull is to apply equally to the claimant with the egg-shell bank balance." (my emphasis, being the sentence criticised by Mr Jacobs).