QUEEN'S BENCH DIVISION
SITTING AT THE CROWN COURT IN TRURO
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
B e f o r e :
| KAIROS SHIPPING LTD
THE STANDARD CLUB EUROPE LTD
|- and -
ENKA & CO LLC
ALL OTHER PERSONS CLAIMING OR BEING ENTITELD TO CLAIM DAMAGES BY REASON OF THE FIRE ON BOARD THE M/V ATLANTIK CONFIDENCE ON OR AROUND 30 MARCH 2013 AND/OR THE SUBSEQUENT LOSS OF THE M/V ATLANTIK CONFIDENCE OFF MASIRAH ISLAND, OMAN, ON OR AROUND 3 APRIL 2013
AXA INSURANCE (GULF) BSC
Nigel Jacobs QC and Ruth Hosking (instructed by Holman Fenwick Willan LLP) for the Third Defendant
Hearing dates: April 11-14, 18-21, 25-28, May 3-5, 9-12, 16-17, 23-25, 27 and July 7-8, 12-13 2016 and further written submissions on 15 and 27 July 2016, 10 and 25 August 2016 and 23 September 2016
Crown Copyright ©
Mr. Justice Teare :
|Burden and standard of proof||6-10|
|Witnesses of fact||11-48|
|The technical cases||49-52|
|Financing of the vessel||81-83|
|The vessel's dry docking||84-85|
|The loading of the cargo||86-87|
|The voyage from Turkey||88-100|
|The outbreak of fire and the abandonment of the vessel||101-123|
|HEATHER and the loss of the vessel||124-138|
|Cause of the fire||154-198|
|Flooding of the engine room||199-208|
|Flooding of ballast tanks 4 and 5 p||209-221|
|Conduct of the master and chief engineer||222-237|
|Despatch of HEATHER ad the superintendents||238-247|
|Flooding of hold no.5||248-254|
The burden and standard of proof
"(4) if a defendant insurer is to succeed on an allegation that a vessel was deliberately cast away with the connivance of the owner, then the insurer must prove both aspects on a balance of probabilities. However as such allegations amount to an accusation of fraudulent and criminal conduct on the part of the owner, then the standard of proof that the insurer must attain to satisfy the Court that its allegations are proved must be commensurate with the seriousness of the charge laid. Effectively the standard will fall not far short of the rigorous criminal standard;
(5) although there is no "presumption of innocence" of the Owners, due weight must be given to the consideration that scuttling a ship would be fraudulent and criminal behaviour by the Owners;
(6) when deciding whether the allegation of scuttling with the connivance of the Owners is proved, the Court must consider all the relevant facts and take the story as a whole. By the very nature of these cases it is usually not possible for insurers to obtain any direct evidence that a vessel was wilfully cast away by her owners, so that the Court is entitled to consider all the relevant indirect or circumstantial evidence in reaching a decision;
(7) it is unlikely that all relevant facts will be uncovered in the course of investigations. Therefore it will not be fatal to the insurers' case that "parts of the canvas remain unlighted or blank" (see Michalos and Sons v Prudential Insurance (The Zinovia)  2 Lloyd's Rep 264 at p.273 per Bingham J.);
(8) ultimately the issue for the Court is whether the facts proved against the Owners are sufficiently unambiguous to conclude that they were complicit in the casting away of the vessel;
(9) in such circumstances the fact that an owner was previously of good reputation and respectable will not save him from an adverse judgment;
(10) the insurers do not have to prove a motive if the facts are sufficiently unambiguously against the Owners. But if there is a motive for dishonesty then it may assist in determining whether there has been dishonesty in fact."
The witnesses of fact
The owner, Mr.Agaoglu
Captain Toran, the CEO or fleet manager of the Owners
The master, Mehmet Emin Onal
The chief engineer, Ahmet Altun
The chief officer, Ethem Haluk Solakoglu
The third engineer, Serkan Maral
The electrician, Sercan Unal
The operations superintendent, Captain Taner Hasozgu
The deck superintendent, Captain Mahmut Akyurekli
The master of HEATHER, Samet Onal
Mr. Uzun, the Owners' insurance broker
Mr. Beriker, the CEO of CEB
The technical cases as to the mechanism by which fire broke out and the vessel sank
(a) Cargo's case
The Owners' technical case
The expert witnesses
"In this type of case it is almost inevitable, and is certainly a common experience so far as the members of this Court are concerned , that experts will change or modify their views in the light of the opinion of opposing experts and cross-examination. This is because in fire cases, whether at sea or on land, much of the evidence is destroyed by fire and for one reason or another inspection may not have concentrated on every point that is subsequently thought to be relevant, and however good photographs may be, they frequently pose problems of interpretation. "
"….where the subject of inquiry is fire, an experienced fire expert, when he is assessing the significance of certain evidence, must be entitled to weigh the probabilities and this may involve making use of the skills of other experts or drawing on his general mechanical or chemical knowledge."
The financing of the vessel
The vessel's dry docking
The loading of the cargo
The voyage from Turkey
"Please acknowledge that most of piracy attacks during GOA [Gulf of Aden] passage occurred close to coastwise. As recommended by master of M/V Atlantik Confidence the vessel will follow route 2 which is safer and sufficiently away from Coast wise. You can find attached the piracy map issued by Commercial Crime Services. Furthermore speed of vessel decreased due to adverse current and as you are fully aware passing GOA without convoy."
The outbreak of fire and the abandonment of the vessel on 30 March 2013
HEATHER and the loss of the vessel
The navigation of the vessel
The Cause of the fire
(a) Cargo's case
(b) The owners' case
The suggested leak
"Those other cases were all of cases of Classed ships. So that they also serve to dispose of the naïve suggestion at an early stage of the trial that such serious corrosion could not get past the system of Class surveys."
The suggested pool of oil
The suggested change of direction of spray
The suggested ignition on exposed hot surfaces of the turbo charger
The suggested spread of fire to the store room
Overall conclusion as to the cause of the fire
The flooding of the engine room
The flooding of the nos.4 and 5 double and top side tanks
i) The fire had to have spread (in a flashover) some 5-6 meters forward of the store room so as to reach the cables to the solenoid cabinet.
ii) The ballast console in the cargo office had to be switched on.
iii) The hydraulic power pack, that is, the device which generated and stored the hydraulic pressure which was required to make the hydraulic fluid flow to the actuators which operated the ballast valves, had to be switched on.
iv) There had to have been an existing earth fault, "earth fault 1".
v) Four open command wires on solenoids BA03, BA05, BA12 and BA014 had to be energised by a separate earth fault, "earth fault 2".
The ballast console
The hydraulic power pack
Earth fault 1
Earth fault 2
The conduct of the chief engineer and master after the fire alarm sounded
The despatch of HEATHER and the superintendents
The flooding of no.5 cargo hold
"Taking into account the Bank's current position, let's use 18m of the 22m insurance proceeds to be collected towards closing the credits with us.
The 4m lets present to you for you to use as you wish. I planned it so that the 1m to be used today can come out of the 4m.
If you agree to this, please send confirmation – I don't want to leave you in a difficult position but it is very difficult to contact people. "
"…….I am making payments today on the basis that these will be deducted from the remainder of the proceeds after the Kairos debts (together with the equity finance) + all delay payments (including GLORY) are closed. What amount is left, god willing, we will speak on the day the proceeds are collected. (if I take 300/500 or something from this please do not get angry/swear at me).
Ahmet brother, one thing though, until the proceeds are collected from the insurance please do not ask me for additional use. We are with you on good days and bad days but my only request is that we leave things be for now, we will find a way out somehow. Also, as Yavuz Tayfun, my only and private request is that you do not ask us to make GBI payments."
"Mr. Agaoglu is an important client and if he had sought to renegotiate the financing of the ATLANTIK CONFIDENCE and the ATLANTIK GLORY due to the poor market conditions in early 2013 , CEB may have been open to discuss this."
"So we would give a one-year or two-year loan, and we would – no doubt we would be refinancing it ……….Sometimes we would issue loans with a shorter maturity on purpose, with a refinancing …….And within the confines of the general banking practice we would know that we would have a good chance of refinancing this vessel two years down the line ……..Otherwise, no other borrower, with a fixed asset of like a seagoing vessel, would borrow a two year loan, term loan, for a fixed asset of which would sort of have a payback period of 18/20 years…."
"Now an improbability does not prove that the thing did not happen, but one improbability throws possibly some doubt upon it, and one requires stricter proof where the event is improbable than where it is a probable or likely event. Still one improbability would not be sufficient to justify me in coming to the conclusion that the event did not happen. But when there are two improbabilities the likelihood of it happening is still more remote, and when there are three it is more remote still."
"Where the owners' explanation requires a series of steps to happen in sequence, each of which is improbable or highly improbable, the explanations may become incredible, especially if some or all of the steps have to take place within a tight time-scale and involve one or more remarkable coincidences."
"As I conceive it, the duty of a Court of Law, investigating such matters, is that it must examine the story taken as a whole. It may be that the result of such an examination will make it plain that there exist six or seven or eight circumstances of cumulative suspicion , any one of which, taken alone, would not justify the Court in fixing so grave and criminal a stigma upon plaintiffs as that of fraudulently stranding a vessel. We have therefore to inquire in this, as in other cases of the same kind: Do circumstances exist, individually, perhaps, not of decisive consequence, but in the cumulative effect establishing beyond reasonable doubt that the vessel was dishonestly stranded ?"