England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		28 July 2000

A Synopsis of the case

1. At about 1810 hours local time (GMT plus two hours) on 23 July 1995 the 90 foot motor yacht "MV Milasan" ("the Vessel") sank by the stern in calm water and good weather about 25 miles off Cape Spartivento, which is on the eastern Calabrian coast. She was in the course of a voyage from Piraeus, via the Corinth canal then Zante, Zakinthos, to Puerto Cervo in Sardinia. There her owner, Sheikh Khalid A Abbar, was supposed to join her with his family and friends for a summer cruise. On the voyage from Greece she had on board a Master, an engineer and a deckhand. The Master said that he first saw water rising fast in the engine room bilges at about 1700 hours. He thought it was flowing in on the port side aft and he said that it quickly rose above the floor plates. The engineer said that attempts to stem the flow were unsuccessful. By about 1730 hours the crew had taken to a life raft and the yacht sank about 40 minutes later. At about 1830 hours that evening they were picked up by a Croatian vessel, "Cikola", which had heard their "Mayday" signal. The crew remained on board the vessel that might. They were taken to Pozallo, a small port on the southern Sicilian coast. When the Master of the Vessel came ashore at about 0800 hours local time on 24 July he reported by telephone to the manager^[1] of the yacht that she had sunk the previous evening. Later that morning the Defendant insurers received a fax informing them that the Vessel had been lost and that a claim on the Vessel's hull insurance would be made.
2. Mr David Johnston of Holmes Hardingham (solicitors for the Defendants) interviewed the crew in Sicily on 25 and 26 July 1995. He took manuscript statements and read them back to the crew. Subsequently they were signed by each of the crew members.
3. The First Claimant ("Brownsville") is the legal and registered owner of the Vessel; the Second Claimant ("Sheikh Khalid") is the beneficial owner. They did claim on the policy of marine insurance dated 7 May 1995 with the Defendant insurers ("the Insurers") for the total loss of the Vessel.^[2] The Insurers rejected the claim and so the Claimants have brought these proceedings.
4. The Claimants allege that the Vessel was lost through an accidental incursion of seawater into, first, the Vessel's engine room, and then the aft accommodation. Although there have been some changes in the pleadings as to the precise basis on which the loss occurred, the Claimants now say that the initial incursion of seawater into the engine room was probably as a result of a sea water box flange failing. The pleaded case does not particularise how it failed. Towards the end of the trial, in the course of cross examination of the Defendant's expert, Mr Robinson, Mr Young QC for the Claimants appeared to suggest that flexible piping might fail;^[3] or a blank flange acting as the cover of a sea strainer might fail if it was not properly tightened down by a crew member or for some other reason.^[4] However no positive factual case as to the cause of the initial entry of water into the engine room was advanced by the Claimants in their Closing Submissions.^[5]
5. Recognising that this inability to prove that the initial entry of seawater was caused by an insured peril under the policy terms might be a problem, the Claimants have emphasised that the experts agree that the Vessel could not have sunk with water in the engine room alone.^[6] The Claimants therefore say that the proximate cause of the sinking was water gaining access to the aft accommodation. They contend that this occurred in the following way: (i) in 1992 new sewage tanks, pumps and lines were installed in the yacht; (ii) this necessitated creating apertures in a watertight bulkhead at frame 14 (at the aft end of the engine room) to carry sewage lines from a pump in the engine room to the aft accommodation; (iii) the sewage lines ran through a tank (called Tank 6C) located between frames 11 to 14, (aft of the engine room and under the aft accommodation), which although designed as a fresh water tank had been used for fuel but, because of the creation of these apertures, was made a void space; (iv) as the engine room flooded, water flowed through these apertures at frame 14 into Tank 6C; (v) seawater then flowed out of this tank, via an open manhole cover to the tank and also through apertures at the aft end of Tank 6C at frame 11; (vi) as a result of this inflow of water into the aft accommodation the Vessel took on a port list; (vii) portholes in the aft accommodation had been left open on the voyage from Zante, so that when the Vessel began to sink lower by the stern and her port list increased, water also entered into the aft accommodation via portholes on the port side; (viii) eventually the Vessel developed a 50 degree port list and sank by the stern. The Claimants say that the Vessel was therefore lost by perils insured under the policy. Those pleaded are: perils of the seas;^[7] latent defect in her hull or machinery;^[8] and crew negligence or negligence in the maintenance of the vessel.^[9]
6. The Insurers deny that the vessel sank as a result of an insured peril. They say that the proximate cause of the loss of the Vessel was the initial incursion of seawater into the engine room. They allege that the Claimants cannot demonstrate (on a balance of probabilities) that a particular mechanism for the incursion of seawater was caused by an insured peril. Furthermore they say that water cannot have go aft as the Claimants allege because there were actually no apertures in the watertight bulkhead at frame 14 as the Claimants assert. In any event, the Defendants say, the mechanism suggested by the Claimants and the timing given by the crew's evidence is inconsistent with the Insurers' expert's calculations, which, they say, have not been and cannot be challenged.
7. The Insurers have further pleaded positively that the vessel was deliberately cast away by the acts of the Master and the engineer with the connivance of her owner, Sheikh Khalid. The Insurers allege that water was deliberately introduced into the engine room by the engineer, probably by disconnecting the piping from the seawater box,^[10] at about 1640 hours on 23 July. They further allege that the engineer opened the valves in the bilge lines running from the engine room to below the aft accommodation so that water could flow aft from the engine room once it reached a certain height there. They say that the vessel did not take on any significant port list, save perhaps at the last.
8. The Insurers allege that the plan to scuttle the Vessel was first thought of by the Manager of the yacht, Mr Haissam Mahjoub, who was Sheikh Khalid's right hand man in Athens where Sheikh Khalid was a frequent visitor. The Insurers say that Sheikh Khalid agreed to this plan and that the Master was specifically recruited in Piraeus to carry out the plan to which the engineer was also a party.^[11] The Insurers allege that the plan was put to the Master and engineer and they agreed to carry it out during a weekend cruise from Athens on 8/9 July 1995, when only Sheikh Khalid and his companion, Miss Anthi Priovolos, were aboard the yacht with the crew and Mr Mahjoub. The Vessel then underwent repairs and a Classification Society Special Survey in Piraeus before undertaking her voyage to Sardinia. The Insurers say that the final signal to the Master and the engineer to sink the yacht on her voyage to Puerto Cervo was given when she called at Zante, Zakinthos, before starting her passage across the Ionian Sea towards the Straits of Messina. The Insurers say that Sheikh Khalid decided to scuttle the Vessel because his efforts (since 1993) to sell her for a reasonable sum had all failed and he was fed up with the yacht because she was becoming old, dowdy and costly to run. Moreover, they say, because of legal difficulties, he had found it was impossible to charter out the yacht, so there was no prospect of recouping any of the large and growing running costs in that way.
9. The Insurers also resist the claim on an entirely separate ground.^[12] They say that between the time Mr Paul Grout left as Master of the Vessel in September 1994 until the appointment of Captain Pastras on 1 July 1995, she had no professional skipper in charge of her. The Insurers allege that this put the Owners in breach of a warranty in the policy, which was in the terms: "warranted professional skippers and crew in charge at all times".^[13] Therefore, the Insurers allege, they became discharged from all liability on the policy from September 1994 and again at renewal in May 1995 pursuant to section 33(3) of the Marine Insurance Act 1906.
10. The trial before me took place between 8 May and 12 June 2000. It occupied 12¹/₂ Court hearing days. Further time was taken reading the Trial Bundles^[14] and the parties' opening Outline Arguments and their written Closing Submissions, which were prepared after the evidence had been concluded. I heard oral evidence of fact on behalf of the Claimants from the deckhand,^[15] Sheikh Khalid, the Master,^[16] the Vessel's Manager,^[17] a previous Master, ^[18] and the Vessel's engineer.^[19] On behalf of the Insurers I heard oral evidence of fact from a previous engineer,^[20] a previous Master^[21] and Miss Priovolos. She gave evidence that Sheikh Khalid had confessed to her in April 1998 that the vessel had been deliberately sunk on his instructions in order to recover on the insurance policy. Sheikh Khalid strongly denies that he gave any orders to scuttle the Vessel or that he made any confession to Miss Priovolos.
11. In addition I heard oral evidence from the two experts. Mr Alan Stanley, who was called by the claimants, is a marine engineer with considerable practical experience on board ships. Mr John Robinson, who was called by the Defendants, is also a marine engineer. However he has had a more academic career and has specialised in the application of computer programmes to marine engineering problems. The experts had been able to agree a substantial number of matters out of court which enabled cross examination to be shortened considerably. Closing oral submissions took the form of "question and answer" sessions on the full and very helpful written Closing Submissions that had been exchanged.
12. I shall consider the claim under the following headings:

(1)The law:

(a)the pleaded issues;

(b)the issues on the proper construction of the policy terms;

(c)the "professional skipper" warranty issue, including the issue of waiver;

(d)the relevant legal principles generally in relation to total loss cases where scuttling is alleged.

(2)The facts:

(a)The Owners - Brownsville and Sheikh Khalid

(b)An assessment of the witnesses of fact other than the alleged conspirators;

(c)the Vessel - her layout and equipment; her previous history, including her condition and maintenance and the cost of her use; the possibility of selling her; her insurance;

(d)the Vessel's crew - including the recruitment of Engineer Karagiannides, Captain Pastras, and the deckhand, Mr Hatjitsaikos;

(e)the events leading up to the Vessel's last voyage;

(f)the Vessel's last voyage up to her loss;

(g)the aftermath: the rescue; the events in Sicily and communications with Sheikh Khalid, Mr Mahjoub and the Insurers;

(h)Miss Priovolos;

(3)The Cause of the Loss:

(a)the parties' technical cases;

(b)the facts and the technical cases;

(c)conclusions on the cause of the loss, including the issue of proximate cause;

(4)Was Sheikh Khalid privy to a plan to scuttle the Vessel?

BThe Law

13. The Pleaded issues

(1)The Claimants' pleaded case

Before the trial started the Claimants' pleaded case had gone through a number of changes. At the outset of the trial the Re-Amended Points of Claim pleaded that the cause of the initial entry of seawater into the engine room was the failure of one or more flanges fitted to the sea water box. Although the pleading alleged that the Vessel was lost by an insured peril,^[22] it no longer specified any other particular facts which the Claimants alleged constituted one or more of the individual insured perils identified in the policy and also the cause of the entry of water into the engine room.^[23] During the trial^[24] the Claimants sought leave to re-re-amend their Points of Claim to assert a particular case that the cause of the initial incursion of seawater into the engine room was the negligence of the crew in failing to fasten down properly a sea strainer cover flange. I refused leave.^[25] In their Written Closing Submissions the Claimants accepted that they had not pleaded a specific cause of the "failure" of a sealine and therefore of the initial incursion of seawater into the engine room.^[26] However they submit that this does not matter for two reasons. First because, given the terms of the policy, they do not have to assert and prove the loss was caused by the operation of a particular peril. Secondly because the proximate cause of the sinking was the incursion of seawater into the aft accommodation. They have always pleaded that this was either via the holes that had been made in what had been the watertight bulkhead at frame 14 at the aft end of the engine room; or via faulty valves in the aft bilge suction lines.^[27] However the Claimants abandoned the second of those arguments in the trial when their expert, Mr Stanley appreciated that the diameter of the aft bilge lines (50 mm at the most) would be too small to account, on its own, for a sufficient ingress of water to fit with the timings as given in the crew's evidence.^[28] The Claimants' pleaded case is that the entry of seawater into the aft accommodation by means of the apertures constitute one or more of the insured perils: ie. perils of the seas; latent defect or negligence in the repair or maintenance of the yacht. However, their argument sensibly concentrated on the last of those perils. The Claimants also plead that portholes had been negligently left open by the crew or inadequately secured by the crew and that this permitted further water to flood into the vessel and ultimately to sink her. But it was accepted in argument that the action of leaving the portholes open/unsecured was not, by itself, the proximate cause of the loss.

(2)The Defendants' Pleaded case

The Defendants have three lines of defence. First, they put the Claimants to proof that the cause of the loss of the Vessel was one of the particular insured perils covered by the policy. The Defendants say that the proximate cause of the loss was the initial incursion of sea water into the engine room. They assert that the Claimants cannot prove that this was caused by any of the enumerated insured perils under the policy or that the incursion was due to a fortuity. Secondly the Defendants assert positively that the cause of the initial incursion of seawater and its progress into the aft accommodation was the deliberate action of the engineer and the Master in flooding the engine room and then opening the bilge lines to the aft accommodation spaces. Thirdly the Defendants say that because the Claimants were in breach of the "professional skipper" warranty from September 1994 until July 1995, this means that the insurers are relieved of all liability persuant to section 33(3) of the Marine Insurance Act 1906.

14. Given the manner in which the Claimants have pleaded and argued their case, it is necessary to consider the proper construction of the Institute Yacht Clauses. If the Claimants are correct in their contention that, upon the proper construction of the clauses the policy is similar to an "All Risks" policy, then they say (and I think the Defendants would accept) that it is unnecessary for them to prove that the initial incursion of seawater was caused by particular acts or a state of affairs; it would be enough that they proved that the entry was fortuitous. But if the Claimants are wrong on this submission, then they accept that it is necessary to consider the issue of the proximate cause of the loss of the Vessel. If I hold that the proximate cause is the initial incursion of seawater into the engine room, then the Claimants would have failed to prove that the loss was caused by a particular insured peril and must therefore lose the case in any event. If, on the other hand, the Claimants are correct in saying that the incursion of water into the aft accommodation was the proximate cause of the loss, then it becomes necessary to consider whether that loss was caused by one of the insured perils relied upon, in particular negligence in the maintenance or repair of the Vessel.
15. The proper construction of the policy: is it similar in effect to an "All Risks" policy?

(1) The policy provides that it is subject to the Institute Yacht Clauses ("IYC") dated 1 November 1985, which state that the insurance is subject to English law and practice. The Perils covered by the IYC are set out in Clause 9 of those terms. They state:

"9. PERILS

9.1 This insurance covers loss of or damage to the subject-matter insured caused by:

9.1.1 perils of the seas ...

9.2 and, provided such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers, this insurance covers:

9.2.2 loss of or damage to the subject-matter insured....caused by

9.2.2.1 latent defect in hull or machinery ...

9.2.2.2 the negligence of any person whatsoever, but excluding the cost of making good any defect resulting from either negligence or breach of contract in respect of any repair or alteration work carried out for the account of the Assured and/or the Owners or in respect of the maintenance of the yacht".

(2) The Claimants say that where, as in the IYC, the policy covers an "uninterrupted continuum of potential causes (not providing cover for mere ordinary wear and tear)", it is akin to an "All Risks" cover, so that the Assured does not need to prove which particular peril operated to cause the loss. It only needs to prove that the loss was fortuitous and on a balance of probabilities the loss fell somewhere within the "continuum" of cover.^[29]

(3) This construction is disputed by the Defendants. They point out that the policy is not actually on "All Risks" terms. They submit that in those circumstances the Claimants have to identify an insured peril on which they rely for the cause of the loss of the Vessel and they must prove that peril was either the cause or a cause,^[30] on a balance of probabilities.

(4) On this question of construction I accept the submissions of the Defendants. The policy is clearly not an "All Risks" policy. In Clause 9 of the IYC specific perils are identified. The terms state expressly that the insurance covers loss or damage to the subject-matter insured "caused by..." the particular perils that are then set out. That is no different from any other policy that enumerates specific risks, whether only one or a large number of risks are identified. There is no specific wording in these policy terms that enable an Assured to evade the task of identifying which particular insured peril caused the loss suffered. And if the cause of the loss is disputed by the insurers there is no specific policy wording to enable an Assured avoiding the need to prove (on a balance of probabilities) that the loss claimed was suffered by a particular peril. No authority was identified by the Claimants which suggests that where you have a spectrum of perils that are identified in a policy, then the effect is the same as an "All Risks" policy. I note that a similar argument to the present one was rejected by Mustill J (in the context of a claim for the loss of a cargo of oil) in Shell Petroleum Co Ltd v Gibbs: The "Salem".^[31] At page 946 he said: "If the assured wishes to have a seamless cover insuring against all forms of fortuitous losses in transit he can obtain it by insuring on the terms of the Institute Cargo Clauses (All Risks)". I respectfully agree; the same principle must apply to a policy on a ship also. Accordingly, on the proper construction of the IYC the Claimants must prove that the loss alleged was proximately caused by one (or more) of the particular perils listed in the policy.^[32]

16. This conclusion creates an immediate difficulty for the Claimants, because they have not pleaded any specific facts that they say were both the reason for the initial incursion of water into the engine room and which would also amount to one of the insured perils, as they acknowledged in paragraph 1 of their Closing Submissions.^[33] They are therefore forced to resort to two arguments. The first is that the Vessel was seaworthy at the time of her loss and the incursion of seawater into the engine room is unexplained, so therefore there is a rebuttable presumption that the cause of the incursion of seawater is "perils of the sea".^[34] This argument necessarily presumes that the initial incursion was the proximate cause of the loss. The second argument (and I think their principal one) takes the opposite line. It is that the initial incursion of seawater into the engine room was not the proximate cause of the loss of the Vessel; the proximate cause was the incursion of the water into the aft accommodation and the cause of that is both pleaded and, they say, proved.
17. I will have to make conclusions on both of these arguments after I have set out my findings of fact. However I note two points on the law at this stage. The first is in relation to the Claimants' suggestion that they can rely on a "rebuttable presumption" of loss by "perils of the seas" when a seaworthy ship is lost in unexplained circumstances. This question was considered most recently by the Court of Appeal in Lamb Head Shipping Co Ltd v Jennings: "The Marel".^[35] Dillon LJ concluded that this presumption resulted from the basic rule that a claimant must prove, on a balance of probabilities, that the loss was caused by a particular insured peril under a standard type of marine policy. If the ship is proved to have been seaworthy before the start of the voyage and she is lost in wholly unexplained circumstances, then the probability is (at least to start with) that she was lost by perils of the seas because^[36] she was seaworthy before she set out. But if it is not shown that the vessel was seaworthy when she left on her last voyage, the presumption does not apply, "since it cannot be held on a balance of probabilities that her presumed sinking was due to perils of the sea rather than to her unseaworthy condition".^[37] But Dillon LJ emphasised that this presumption only applied where it was proved that the vessel was seaworthy at the outset of the last voyage and also where the circumstances of the loss were unknown.
18. In the present case, on the facts relied on by the Claimants, I find it difficult to see how they can rely on this presumption. Their argument assumes that the proximate cause of the loss was the initial incursion of water into the engine room. But the Claimants have not set out to prove that the Vessel was initially seaworthy. Indeed one of their arguments is that a flange failed because she was not seaworthy. Further, the presumption only operates when the loss of the Vessel is unexplained. Dillon LJ emphasised that this does not mean that the presumption operates in favour of the Claimants when they have not been able to put forward a plausible explanation for the loss or their explanations have been rejected by the Court as too improbable for belief, so that the loss is "unexplained" in that sense. The presumption only applies where a seaworthy ship disappears in wholly unexplained circumstances.^[38] That is not this case, because the crew were rescued and have told their story in evidence. Accordingly I think that, on the facts of the present case, the Claimants are, as a matter of law, unable to rely on any "rebuttable presumption" that the Vessel was lost by "perils of the seas".
19. The second point of law concerns causation. The Claimants accept that the Court is only concerned with the (or a) "proximate cause" of the loss. They argue that because the Vessel could not have sunk if only the engine room had flooded, therefore the initial incursion of water into the engine room could not be the "proximate cause" of the loss; it was an event without which the loss could not have occurred, but it is only the incursion of water into the aft accommodation that could be the proximate cause. The Claimants advanced two arguments, although I think that they are really both aspects of the same point. First they say that the initial incursion is only a precondition to the loss; secondly they say that the incursion into the aft accommodation was an independent cause and was the effective cause of the loss.
20. When there is a claim for a loss on a policy against marine risks the Court's approach to questions of causation is governed by the House of Lords' decision in Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd.^[39] In that case the question was whether the proximate cause of the loss of a ship was the fact that she had been torpedoed, (a war risk which was an excepted peril in the policy terms), or that her back had been broken when she subsequently took the ground repeatedly after being berthed against a breakwater, (a marine peril and covered by the policy). Courts have particularly followed the expression of principle stated in that case by Lord Shaw of Dunfermline. He described "proximate cause" as "an expression referring to the efficiency as an operating factor upon the result".^[40] The "result" in question is, in that case and this, the loss of the Vessel. In a further passage, he stated that "the true efficient cause never loses its hold", so that the issue is whether the result, ie. the loss of the ship, is attributable "in common language to the casualty as a cause".^[41] In this case "the casualty" must be the initial incursion of seawater into the engine room. So the questions are: (i) was that initial incursion an "operating factor" on the loss of the yacht; and (ii) did the initial incursion cease to have a hold on the ultimate result - the loss of the Vessel? That is a question of fact and countless cases have emphasised that the Courts must approach the issue of causation using "common sense". In Rhea Shipping Co SA v Edmunds: The "Popi M"^[42] Bingham J considered an argument that the proximate cause of the loss of the vessel was not the initial incursion of seawater into the engine room, but the negligence of the crew in failing to put back non-return valves in bilge lines or their failure to shut properly a shaft-tunnel. He said that the correct question to ask was: "what caused the vessel to sink".^[43] With respect I agree. In reaching an answer all the circumstances of the case have to be considered and I have to take a "common sense" view of those facts.
21. The "professional skipper" warranty: proper construction

The policy that incepted from 1 May 1995 provided:

"Warranted professional skippers and crew in charge at all times".

The Claimants accept that this is a promissory warranty; ie. that the assured promises that a state of affairs will exist at the time the policy is concluded and will continue to exist so long as the policy is operative. The Claimants also accept that on 1 May and until Captain Pastras took up his post on 1 July 1995, there was no one whose sole and exclusive job was nominally that of Master of the Vessel.^[44] However they submit that, upon the proper construction of the policy they were not in breach of this warranty.

22. The Claimants submit that:

(1) the warranty does not require the "skipper" to have any particular qualifications; nor does it require that he be permanently on board the Vessel;

(2) the clause requires that "professional skippers and crew" be "in charge at all times". They say that it is impossible to have two skippers in charge at any one time and that it is impossible for both skippers and crew to be in charge at the same time. Furthermore the type of crew and the numbers will vary according to the time of year and the use to which the Vessel is being put at the time;

(3) therefore the warranty cannot be construed literally and should be given a broad practical construction. It means that the appropriately qualified professional person or persons must be employed by the owners to look after the well-being of the yacht in accordance with the requirements made of her at that particular time of year. A person must be designated as being in charge of the yacht's well-being. It does not matter whether that person is officially "the skipper", so long as he is in charge and has responsibility for the well-being of the yacht.

23. The Defendants submit that:

(a) the warranty requires that the assured employs at all times a person who is professionally qualified to be a skipper of this type of motor yacht; eg. he has a RYA Master's qualification. The reason is that even when the Vessel is not cruising and is in a marina, she will have to be tended and may have to be moved or taken out to sea for her own safety. A professional skipper's judgment will be needed to decide on any seamanship operations, as opposed to routine maintenance in the engine room or in the Vessel generally;

(2) the wording of the warranty is clear in demanding that "professional skippers" be "in charge" and "at all times". Therefore if the assured has not employed a professional skipper of any sort during the currency of the policy he must be in breach.

24. Conclusion on construction of the "professional skipper" warranty

(1) I accept the submission that a practical construction must be given to the words of the warranty. I think it is clear that the Insurers were concerned to ensure that the Vessel was properly looked after all the time, both winter and summer, and wherever she was - whether cruising or in a marina for the winter months. That is the rationale for the warranty and it must be construed against that background.

(2) Therefore I have concluded that a "skipper" is someone who commands a vessel of the type in question. The plural "skippers" is used because the parties appreciate that "skippers" may change during the policy period. The words "professional skipper" refer to a person who has some professional experience that qualifies him to be regarded as a "skipper". That is why the word "professional" is used. This does not necessarily mean that he has to have passed formal examinations, but overall he must pass muster as a person qualified to be "skipper". The "skipper" together with the "crew" has to be "in charge" of the Vessel "at all times". In my view the wording "professional skippers and crew to be in charge" means that the skipper and the crew together are to take care of and manage the vessel; that is the sense in which they are to be "in charge" of the Vessel together "all the time". The last phrase is, in my view, quite clear. It means that there must be a professional skipper and a crew that looks after the vessel the whole time, as opposed to intermittently or at intervals. All these requirements of the warranty are cumulative and must all be complied with.

(3) It must follow from this construction that the Claimants were in breach of the warranty from 1 May 1995 to 1 July 1995. This is because the Claimants did not employ anyone who was a "professional skipper" to look after or "be in charge" of the Vessel "all the time" during that period. They did have an engineer on board and also a deckhand. But if, as I hold, the requirements of the warranty are cumulative, then the lack of a "professional skipper" during this time puts the Claimants in breach.

25. Waiver

That leaves the argument of the Claimants that the Insurers have waived compliance with the warranty by (i) accepting the second instalment of the premium for the policy in November 1995 despite their knowledge that there had been no professional skipper on board from 1 May to 1 July 1995; and (ii) not repudiating liability for breach of the warranty until the point was taken in the Re-re-amended Points of Defence in October 1999.

26. As I understand paragraphs 96 to 100 of the Claimants' Closing Submissions, they accept that the doctrine of "waiver by election" is not applicable to a breach of a warranty in a marine insurance contract.^[45] But they do argue that there has been a waiver by estoppel, relying on the facts I have mentioned above. Waiver by estoppel requires proof of a clear and unequivocal representation by the representor and reliance by the person to whom the representation was made. There is no plea of an express representation in the Re-Re-Amended Points of Reply, served in March 2000. The only points taken^[46] are that the Insurers knew of the lack of a professional skipper by 27 July 1995 at the latest, yet they did not rely on the breach of warranty until five years later in their Re-Re-amended Points of Defence. No particulars of reliance by the Claimants are pleaded. There is nothing in the witness statement of Sheikh Khalid to suggest that he relied on the Defendants' demand for the second instalment of the premium as a representation that they were waiving compliance with the warranty. Nor is there any statement from him that he regarded the failure of the Insurers to take the "warranty point" as a representation that they waived compliance with it or that he relied upon this failure. Even if it had been pleaded, it is very difficult to see what "reliance" there could have been in fact by Sheikh Khalid.
27. In those circumstances the waiver argument must fail. Accordingly I find that the Insurers are entitled to win on the "warranty point" in any event.
28. General Principles of law as to the approach to cases of total loss of vessels where it also asserted by the Insurers that the vessel has been wilfully cast away with the connivance of the owners

The cases^[47] establish that a Court must follow the following principles when a claim for a total loss is made upon a policy that gives cover for specific perils that are set out in the policy terms and the Insurers not only put the Claimants to proof but also assert that the vessel was deliberately cast away with the connivance of the Owner/Assured:

(1) It is for the Claimants to prove that the loss was caused by an insured peril, on a balance of probabilities;

(2) an incursion of seawater into a vessel is not, by itself, a peril of the seas;

(3) the Claimants have to identify and prove (on a balance of probabilities) why water entered a vessel in order to identify the cause of entry as a peril of the seas;

(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";^[48]

(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 unambiguous against the Owners. But if there is a motive for dishonesty then it may assist in determining whether there has been dishonesty in fact.

C The Facts

(1) Brownsville Holdings and Sheikh Khalid; Haissam Mahjoub and other witnesses

29. Brownsville Holdings

This was a Jersey company, which was set up to own the Vessel. That was its sole activity. Sheikh Khalid was the beneficial owner of all its shares.

30. Sheikh Khalid Abbar

I will not make an assessment of Sheikh Khalid as a witness until I have considered all the facts of the case. However there are certain undisputed facts about Sheikh Khalid. He comes from one of the richest families in Saudi Arabia and is a man of great personal wealth. Until the spring of 1995 Sheikh Khalid was the General Manager of the Al Abbar Company which was a trading company owned by the Abbar family. It had a turnover of some £30 million per annum. In spring 1995 Sheikh Khalid left that company to run his own independent consulting business in Jeddah. This provided local and foreign companies with advice on investment and business generally. In the company's office Sheikh Khalid employed a secretary or personal assistant, Mr Zubair. He would prepare letters and faxes on Sheikh Khalid's instructions and he would deal with day to day correspondence. Sometimes letters were prepared by Mr Zubair and simply placed before Sheikh Khalid for signature.

31. Sheikh Khalid spent a great deal of time in Athens. He had visited Athens each month for some years prior to 1995. However Sheikh Khalid did not speak Greek, except for a very few words. He rented a number of apartments in Greece until, as a result of disputes with Miss Priovolos in 1998, he left Greece.
32. Sheikh Khalid accepted that he provided all funds for the purchase, maintenance and repair of the Vessel and that it was he who would receive the proceeds of the insurance for the loss if the action were to succeed.^[49] He described the "Milasan" as "my toy". He said that when he owned it he loved it and wanted to know everything about it.^[50]
33. In 1995 Sheikh Khalid was married to a lady called Valerie. However he had also known Miss Anthi Priovolos for some time before then. She accompanied him on the weekend trip on the yacht in early July 1995. Subsequently, in November 1996, Sheikh Khalid and Miss Priovolos were married.
34. Haissam Mahjoub

Sheikh Khalid had known Mr Mahjoub since about 1986. Mr Mahjoub was a trusted friend. Sheikh Khalid described Mr Mahjoub as someone who would "attend to other things that I would not like to".^[51] Mr Mahjoub was based in Athens. Sheikh Khalid sent him remittances there for the yacht, any apartment he had and for other expenses. I will not make any assessment of Mr Mahjoub as a witness until I have considered all the facts of the case.

35. An assessment of the witnesses of fact other than the alleged conspirators

I think that it is only fair to assess the evidence of Captain Pastras and Mr Karagiannides when I have considered all the evidence on the facts of the case. However I should give my impression of the witnesses of fact that I heard:

(1) Mr Hatjitsaikos - the deckhand: He gave evidence first. His recollection was often confused. He had given different versions of events, particularly on whether he checked the bilges after 1700 hours on 23 July upon the orders of the Master. He said that he did do so to Mr Johnston a few days after the loss. He said that he did not do so to Linklaters in 1999. The Defendants alleged in cross examination that he gave evidence that he checked the bilges as a favour to the Master, Captain Pastras, who was an old friend and to whom Mr Hatjitsaikos owed a favour. As I explain below, I am not convinced of that allegation. However, overall I did not find his evidence particularly reliable.

(2) Mr Paul Grout: He was Master of the Vessel for under three months in July to September 1994. He gave evidence after Sheikh Khalid, Captain Pastras and Mr Mahjoub and he was in court whilst some of their evidence was given. He was called by the Claimants in order to prove that the pump for the "black water"^[52] sewage lines from the aft accommodation was situated in the engine room, so that the lines must have gone through apertures in the bulkhead at frame 14. He also gave evidence about the state of the Vessel when he took over from Mr Ryves as Master in July 1994. He was an independent witness who tried to assist but I did not find his evidence very reliable, as I explain below.

(3) Mr Mike Ryves: He gave evidence for the Defendants. He had been Master of the Vessel from 1988 to 1994. I found that he had an impressive memory of the general layout and history of the yacht.^[53] The Defendants tried to impugn his evidence and to destroy his credibility by saying that he had left the Vessel after a serious argument with Sheikh Khalid, who was furious at the poor state of the yacht when he joined her for his summer cruise in 1994. I found him a truthful witness. I dismiss any suggestion that he lied to cover up his own negligence in fitting the sewage pipes through apertures in what should have been a watertight bulkhead.^[54] I also dismiss the suggestions that he had been syphoning off money from remittances that were made by Sheikh Khalid for running the Vessel. I am prepared to accept that, by the summer of 1994 Sheikh Khalid had lost confidence in Mr Ryves. But Sheikh Khalid did not give evidence of any matter which substantiated his suggestions that Mr Ryves had been syphoning off money. Mr Mahjoub did give three instances in his evidence.^[55] But none of them were put to Mr Ryves when he gave evidence. There was no credible evidence, apart from Mr Mahjoub's assertions, that Mr Ryves syphoned off money. I dismiss those suggestions.

(4) Mr Rundle: He was the Vessel's engineer from March 1993 to January 1995. He was called by the Defendants. He was an independent witness. The Claimants sought to impugn the reliability of his evidence by asserting that he drank too much alcohol during the latter part of his employment on the Vessel and that he was dismissed because of his drinking habits. But Mr Mahjoub accepted that Mr Rundle was a good engineer and that he had not been sacked but resigned voluntarily.^[56] In re-examination Mr Rundle said that Mr Mahjoub was unhappy that he (Mr Rundle) wished to resign after he came back from his Christmas break in early 1995.^[57] I accept both those pieces of evidence. For these reasons and those which I elaborate more below, I find that Mr Rundle was not dismissed for drunkenness. I found that he was a truthful witness and that his evidence was generally reliable.^[58]

(2) The Vessel - her layout and equipment

36. "Milasan" was a 90 foot yacht of 95.46 registered tonnes. She had been built in Istanbul in 1975 to an Italian design. Her Classification Society, which supervised her construction and her "Class" thereafter, was ABS. "Milasan" was of a steel construction with an aluminium superstructure. An agreed General Arrangement plan of the yacht is appended to this judgment and her general layout is obvious from that plan. The following facts concerning the vessel's structure and equipment at the time of her last voyage are, for the most part, not in dispute:

(1) Her engine room was amidships, slightly aft of the athwartship centre line. She had twin diesel engines operating twin screws.

(2) In the engine room were two pumps driven by diesel generators and a further general service bilge pump which was driven by the main engine. All three pumps could be used to pump the engine room bilges. In addition there was an automatic submersible pump in the engine room bilges.^[59] That was installed in about 1992.^[60]

(3) There was a CCTV system in the engine room with a monitor on the bridge.^[61] Although the camera was usually trained on the gauges in the engine room it could be rotated to focus on any part of the engine room.^[62] Mr Karagiannides stated in evidence^[63] that the CCTV system did not work, but I do not accept this evidence. The vessel had just gone through special survey before her last voyage. If there had been problems with the CCTV I would have expected them to have been dealt with then; but there is no contemporaneous mention of either a problem with the CCTV or of work to restore a broken CCTV system.

(4) At the bottom of the engine room aft of the double bottom tanks were two "sludge tanks", which appear to have been added at some point after she was built.

(5) The engine room bilges were both port and starboard and aft of these two tanks. Athwartships floor plates were normally in place above these bilges. The floor plates stopped at the engines and shaft areas so that access beneath the shafts could be obtained when required. The floor plates could be lifted when work was being carried out beneath them, but normally they were screwed down. When the floor plates were raised, the engine room lighting would penetrate into the bilges.

(6) In 1993 the pipework and valves from the main bilge distribution manifold were renewed. In the new system all the valves for the bilge pumps were mounted on two separate manifolds, one for inlet valves and one for outlet valves. The suction and discharge manifolds were mounted one above the other in a position about 1.5 metres forward of the aft engine room bulkhead on the port side running fore and aft alongside the hull. The discharge manifold was about 30 cm below the water line and the suction manifold was about 45cm below the water line. Both manifolds were above the engine room floor plate level.^[64]

(7) Beneath the engine room floor plates in the bilges there were lines carrying water and fuel. At the aft end of the bilges there was also a sealine which carried seawater to the engines for cooling. This line was attached to the outer shell of the Vessel by a "seabox", inboard of which there was a seavalve. Although the precise diameter of the sealine is not known, the experts agreed that it could not have been more than 75 mm. I find that it was probably that diameter. That was twice the diameter of the Vessel's bilge lines, which it is agreed were likely to be 1^1/₂ inches or 35 mm.

(8) Inboard of the "seabox" was a sea strainer. This contained a filter in which to catch debris sucked in with the seawater which was to be used for cooling the engines. The sea strainer was attached to the top of a vertical pipe (probably 75mm in diameter), but was still below external sea level. There were no plans that showed what type of cover was fitted to this sea strainer to keep it watertight and there was a dispute between the parties about this. The Claimants submitted that the sea strainer had a cover that was held in place by a bridge piece which fitted over the top of the cover. The Claimants said that the flange and bridge piece were secured in place by a single jacking bolt fastened through the centre of the bridge piece and the flange.^[65] The Defendants said (relying on 2 photographs taken by Mr Ryves)^[66] that there were two types of sea strainer in the vessel. One type was as described above; the second type^[67] was covered by a blank flange which was secured by many circumferential bolts. It is impossible to conclude how the sea strainer inboard of the "sea box" was secured. If necessary I would hold that the Claimants have failed to satisfy me that, on a balance of probabilities, this particular strainer was of the bridge piece/jacking bolt type.

(9) "Milasan" had three sets of fuel double bottom tanks stretching from the forward half of the engine room forward, with a set of deeptanks at the forward bulkhead of the engine room. These were used as day tanks.

(10) Immediately forward of those tanks was the owner's cabin, also called "the state room" and beneath that was a storage room called the "cambuse". Forward of these spaces were the crew's cabins.

(11) Aft of the after engine-room bulkhead (at frame 15) was a fresh water deeptank. This stretched the whole width of the yacht and ran from deck level down to a point just less than a metre above the keel. That tank was one frame deep and was thus between frames 14 and 15. The space beneath that tank was void. Frame 15 was a steel frame with holes in it to allow the (enclosed) propeller shafts to pass through; there were also holes big enough for a man to climb through them. At frame 14 there was a solid steel bulkhead which was designated to be watertight. Accordingly it should not have had any holes in it, although there were certain watertight apertures to permit the passage aft of the propeller shafts and some pipes and cables. There was a major issue at the trial on whether or not there was one or more non-watertight holes in the bulkhead at frame 14 in the area between the bottom of the fresh water tank and the Vessel's bottom plating. This issue is considered below.

(12) Immediately aft of the bulkhead at frame 14 there was a tank which was referred to as "Tank 6C". This tank ran virtually the width of the yacht, but was only about a metre deep at its forward end and about half a metre deep at its aft end, which was at frame 11. Above this tank was the aft accommodation. This tank had been designated by ABS as a fresh water tank when the Vessel had been built. However it was agreed between the parties that at some time in the late 1980s the crew began to use it as a diesel fuel tank. Another major issue at the trial was whether this tank was still capable of being used to hold either fresh water or diesel fuel at the time the Vessel sank. Obviously if there were non-watertight apertures in frame 14 at the level of Tank 6C, then it could not have been used to carry water or fuel. Unfortunately the evidence on the use of this tank just before or during the last voyage was very confused and I must consider it in detail below.

(13) Above Tank 6C and aft of the engine room was the aft guest accommodation. This consisted of three cabins. The largest cabin ran athwartships and was aft of Tank 6C. The other two were forward of that, one to port and one to starboard. They were directly above Tank 6C. There was also a "suitcase locker" in the middle of the aft accommodation. There were sanitary facilities in this accommodation area and also in the forward accommodation area. When the yacht was built discharge from these facilities was directly overside. However there was a tank in the midship bilges directly aft of Tank 6C, between frames 11 and 8, which did not stretch across the full width of the yacht, into which "grey water"^[68] was piped where it was stored until it could be discharged into a slop tank ashore.

(14) The steel frames 9 and 10 were designed with apertures in them, but frame 8 was a solid bulkhead across the Vessel. All these frames extended from the keel to just below the accommodation flooring.

(15) The aft accommodation bilges could be sounded at various points around the accommodation. There were four inspection ports and the wooden hatches were meant to be screwed down, so that to obtain access the carpet had to be lifted, then the retaining screws undone. The Claimants assert that, at the time of the casualty, one hatch and inspection port were not screwed down, namely those at the aft starboard corner of the accommodation in the larger of the three cabins.

(16) Aft of the accommodation was the steering gear flat also known as the "lazarette".

(17) On the top deck of the Vessel two tenders (and latterly, jet skis) were stored. The tenders had to be lifted into the water by cranes. These cranes were powered by a bank of batteries in the engine room. One tender had a hard shell and a powerful outboard engine. The other was a large inflatable hull boat (referred to as an "RIB") and it also had an outboard engine. There were also two lockers in which two rubber inflatable life rafts were stowed.

37. There were disputes about a number of the original fittings in the Vessel and some that had been added to the Vessel in the early 1990s when Mr Ryves was Master. The three important items, which are central to the outcome of this case, were:

(1) the Vessel's bilge alarm system. This is relevant to the credibility of the evidence of the Master and the engineer on when and how they discovered the incursion of water into the engine room on the day the Vessel sank; and

(2) the "black water" tanks and associated pipes and pumps;

(3) The way in which Tank 6C was used after September 1992.

These last two items are linked. They are crucial to the question of whether there were holes in what should have been a watertight bulkhead at frame 14, thereby allowing water to get from the engine room into the spaces further aft and thus causing the Vessel to sink.

38. The Bilge Alarm system

This was installed by Mr Ryves in 1990 after the Vessel had suffered a substantial flood of seawater into the engine room. The cause of that incursion was never established, but investigators inclined to the conclusion that it was the result of the negligent operation of the sea suction valves on the bilge lines by an engineer. It is agreed that on the 1990 occasion water did not flow, either via the bilges or otherwise, into the aft accommodation. Following the incident a claim was made on the Insurers. Their surveyor recommended that non-return valves should be fitted to the bilge system^[69] and that a bilge alarm should be installed. Mr Ryves was against the installation of non-return valves as he feared that debris could cause them to jam open.^[70] He recommended that, instead, an automatic submersible bilge pump should be installed^[71] and also a bilge alarm system.

39. A bilge alarm system was fitted by Mr Ryves himself in 1990.^[72] It provided for both audible and visual alarms. Mr Ryves' evidence, which I accept, was that the audible alarms were "extremely loud and piercing".^[73] It had four sensors, one for each main bilge compartment, which were linked to the main control panel which was located at the top of the cambuse ladder, just off the lobby well, above the main deck level. The control panel had four lights, one for each bilge sensor. There was also an audible alarm and a "power on" light.^[74]
40. The four main bilge compartments were in the lazarette, below the suitcase locker, the engine room and below the cambuse. In those compartments there were float switches, which triggered the bilge alarm if the float got to a certain point. Then both the visual and audible alarms operated.
41. In February 1993 modifications were made to the Vessel's bilge piping and pumping system. At the same time there were modifications to the bilge alarm system. These were undertaken under the supervision of Mr Ryves, who was still the Vessel's Master. Further alarm panels were installed on the bridge and in the crew's quarters.^[75] Each had a visual and audible alarm. Mr Karagiannides accepted all this in evidence, but he suggested in cross examination that not all the system worked properly or well at the time of the sinking. I do not accept that evidence. First, as I have already noted, the Vessel had just undergone her Special Survey in which such matters would be tested if necessary. Mr Karagiannides gave evidence that the bilge alarm system was tested by ABS at the Special Survey and also that he had tested it on the last voyage: either at Piraeus, or at Corinth, where she had picked up bunkers, or at Zante.^[76] I accept that, at one or other of those points, Mr Karagiannides did test the bilge alarm system and it worked properly. Accordingly when water did enter the engine room on 23 July the bilge alarm system should have sounded, in a loud and piercing manner, on the bridge and in the crew quarters. I must consider whether it did sound, or why it might not have done so, below.
42. The "black water" tank and associated pipes and pumps

It is agreed that in the spring or summer of 1993, when the Vessel was undergoing substantial steelwork and other renovation at Astilleros de Mallorca,^[77] a "black water" tank was installed in the bilge space immediately aft of the "grey water" tank between frames 8 and 11 and beneath the aft accommodation. The "black water" tank was installed by Astilleros de Mallorca between frames 5 and 8. A further such tank was installed in the cambuse, to serve the crew accommodation and the owner's cabin forward of the engine room. It is agreed that there were separate pumps for these two tanks and their associated piping. It is also agreed that the pump for the forward "black water" tank was placed in the cambuse. It is agreed that Astilleros de Mallorca did not install the piping between the lavatories aft and the aft pump and "black water" tank between frames 5 and 8.

43. The fact in dispute is: where was the pump for the aft "black water" tank placed? The Claimants say that the evidence establishes that it was placed in the engine room and because of that the sewage pipes from the lavatories in the aft accommodation to the pump and then to the aft "black water" tank had to go through what had been a watertight bulkhead at frame 14. Thus, they say, holes in that bulkhead were created for those pipes. The Claimants say that it was through the annular space between the sewage pipes and the circumference of the holes in the bulkhead at frame 14 that, on 23 July 1995, seawater from the engine room made its way into Tank 6C and then (via similar spaces in the bulkhead at frame 11 and via the open manhole cover) into the aft accommodation. The Defendants say that the evidence establishes that the pump for the aft "black water" tank was situated in the suitcase locker and not in the engine room. Therefore there was no need for any sewage pipes to go through the bulkhead at frame 14; so this supports their case that the bulkhead at frame 14 remained watertight all the time.
44. The Claimants' case on the location of the "black water" pump and associated piping

The Claimants rely particularly on four particular pieces of evidence for their case that the pump was located in the engine room and that sewage piping went through the aft bulkhead of the engine room at frame 14. First they say that since 1992 Tank 6C had remained a void space, so there was no reason why the sewage piping to and from the pump should not have gone through that tank and through the bulkhead at frame 14 into the engine room. Secondly they rely on the evidence of Mr Hatjitsaikos that he cleaned and painted Tank 6C whilst the Vessel was in dry dock in July 1995 (just before her last voyage) and whilst doing so he saw light through a bulkhead into the engine room. Thirdly they rely on evidence from Mr Grout that he pumped "black water" from a pump in the engine room^[78] when he was the Master between July and September 1994. Fourthly they rely on the evidence of Mr Stanley that it would make "practical sense" to have the pump in the engine room, because that would mean any maintenance on the pump could be done without creating a nasty smell in the aft guest accommodation which is what would happen if the pump were in the suitcase locker.

45. The Defendants' case on the location of the "black water" pump and associated piping

They rely on the following principal pieces of evidence: first, the positive evidence of Mr Ryves, who was Master of the Vessel in 1993, that the pump was not located in the engine room but was in the suitcase locker. Secondly they rely on the evidence of Mr Rundle, the engineer between April 1993 and January 1995 to same effect; thirdly they rely on the evidence of Mr Karagiannides (in re-examination) that the pump was "at the luggage locker";^[79] fourthly they rely on the evidence concerning the use of Tank 6C after September 1992, when it had to be emptied and cleaned.^[80] The Defendants say that the evidence establishes that Tank 6C continued to be used as a diesel oil tank up to the last voyage, so that there could not have been any sewage piping going through that tank and through the bulkhead at frame 14 unless it were watertight and the Claimants do not suggest that this was the arrangement. Fifthly the Defendants rely on Mr Stanley's acceptance that it would be less likely to cause blockages if the pump for the aft "black water" tank were placed in the aft space;^[81] they say that if there were two pumps then it would also be logical to have one aft of the engine room.

46. The use of Tank 6 C after September 1992

Up until September 1992 Tank 6C was certainly used as a diesel oil tank. When the contamination of the fuel occurred Mr Ryves reported to Sheikh Khalid that the fuel in the tank was rarely used because it "acts as ballast to keep the fore/aft trim of the ship correct".^[82] After the contamination incident the tank was cleaned.^[83] The Memorandum of Mr Ryves to Sheikh Khalid does not state that the fuel that had been taken from the tank and centrifuged was subsequently returned to the tank. But in cross examination Mr Ryves stated that the cleaned fuel oil was returned. He explained that this was "part of running the ship".^[84] Mr Ryves was pressed by Mr Young QC in cross examination on this point. His evidence was that throughout his time as Master the Tank 6C had been used to hold fuel oil as ballast and that Tank 6C was full of fuel oil when he left the yacht at the end of July 1994.^[85] If that is correct, then (obviously) no holes could have been made in the bulkhead at frame 14 in 1993 to enable sewage pipes to be passed through Tank 6C from the aft accommodation to a pump in the engine room.

47. In their Closing Submissions the Claimants appear to suggest that Mr Ryves was responsible for creating the holes in the bulkhead at frame 14. They submit that he subsequently realised that this was negligent conduct, so he would wish to cover it up by claiming that the aft "black water" pump was in the suitcase locker and that after September 1992 Tank 6C continued to be used as a fuel tank; therefore there could not have been any sewage pipes running through frame 14.^[86] This point was never put in cross examination to Mr Ryves. He would have been the Master at the time if the holes had been cut and the sewage pipes through Tank 6C had been installed. If I had concluded, on other evidence, that this work had been done by the Vessel as opposed to the shipyard, I would have had to find that he organised it. So if it were to be suggested that he was responsible for this negligent work, the point should have been put to him. However, as will be clear from my findings below, I have decided that Mr Ryves was telling the truth in stating that the aft "black water" pump was fitted in the suitcase locker and that no sewage pipes were run to the engine room through Tank 6C and holes cut in frame 14. If they had been as alleged by the Claimants it would have been an extraordinary piece of ineptitude by Mr Ryves. There is also the position of Mr Rundle, the engineer at the time it is said this work was done. He would also have had to be involved if Mr Ryves were organising this work rather than the shipyard. Mr Rundle is an ex-Royal Navy Able Seaman marine engineer mechanic first class who had been in the RN for 11 years. He had numerous Royal Navy certificates.^[87] Having seen Mr Rundle in the witness box I feel sure that he would have appreciated the consequences of cutting two 3 inch diameter holes in a watertight bulkhead at frame 14 and at the aft end of Tank 6C, then passing two ill-fitting flexible hoses through those holes to carry sewage to a pump in the engine room. I am sure that this arrangement would have been something that he would have remembered if it had been done. But he did not do so. It was not suggested to him that he had been involved in the creation of those holes or that such an act would have been negligent because it compromised the watertight integrity of the bulkhead. I found Mr Rundle a truthful and helpful witness. His evidence on this point,^[88] which I accept, confirms my conclusion that these holes were not made.
48. Mr Hatjitsaikos' evidence

Mr Hatjitsaikos' evidence was that during the dry dock in July 1995 he was cleaning and painting in a space aft of the engine room from which he could see engine room lighting. This piece of information apparently came to light by chance, when Mr Stanley and the Claimants' solicitors were asking Mr Hatjitsaikos questions about the Vessel and Mr Hatjitsaikos volunteered the information.^[89] But Mr Hatjitsaikos' evidence on this point is very confused.

(1) In his statement of 14 September 1999,^[90] given to the Claimants' solicitors, he states that when the Vessel was in dry dock he cleaned and painted "the bilges". He also refers to "the aft bilges" and states that he had to remove the carpet and to unscrew hatches apart from one beneath a bed in the aft cabin that was not screwed down.^[91] He explained that he could only paint for a short time because of the fumes. His statement continued:

"Because it was dark I could see that some light was coming into the aft bilges from the engine room. The light was coming through one, and perhaps two, holes in the aft bulkhead".^[92]

He then describes the holes and pipes going through them. But there are no bilges, in the proper sense of the word, between frame 11 and frame 14. The bilges are continuous only at frame 11, going aft to the solid bulkhead at frame 8 and then aft of frame 8. So if he was in a bilge, he could not have been between frames 11 to 14 when painting. However he does also refer to "hatches". That could be a reference to a manhole. There is no doubt that the only means of getting into Tank 6C is by the two manhole covers to it in the aft accommodation.^[93] But this evidence is quite inconclusive.

(2) In his evidence in court, Mr Hatjitsaikos did not confirm that he was painting in Tank 6C. He said he could not remember if he was working in a tank.^[94] He also said that he remembered cleaning a "narrow tank", but he could not remember any more details.^[95]Tank 6C extends across the width of the Vessel, so in that sense it is not narrow. However, he may having been using the word to describe the fact that the tank was only a metre deep at most. When Mr Hatjitsaikos was asked how he got into the space he was cleaning and painting, he said that he could not remember whether there was a manhole cover or whether he unscrewed bolts on a manhole cover.^[96] But he also said that he entered "the bilges" through a hatch at the foot of a double bed in the aft cabin and he marked the spot on a diagram of the Vessel.^[97] That position is certainly aft of frame 11 and is probably aft of frame 8. Either way Mr Hatjitsaikos could not have gained access to Tank 6C via a manhole at that position. To gain access to Tank 6C through a manhole he would have had to be in one of the two cabins just aft of the engine room. But his evidence was not to that effect. Lastly, there are two 4 inch diameter propeller shaft tubes that run through Tank 6C and anyone in that tank would be bound to encounter them; and if it was dark they would fall over them.^[98] But Mr Hatjitsaikos, who was cleaning and painting in this darkened area for some hours, did not remember climbing over the tail shaft or anything resembling that.^[99]

49. I have concluded that Mr Hatjitsaikos was not cleaning and painting in Tank 6C when he saw holes, pipes and lights. He was new to the Vessel when he did this task. It would not be surprising if he did not know exactly where he was in relation to the engine room, nor what was in the next compartment or area to where he was working. Moreover, I note that there is no reference to cleaning and painting any tanks in the "Dry Dock Repair List"^[100] that was prepared by engineer Karagiannides for the dry dock in July 1995. If a tank like 6C was to be cleaned and painted this might well have been mentioned. Accordingly I reject the submission of the Claimants that I can rely on Mr Hatjitsaikos' evidence to demonstrate the existence of the holes carrying sewage pipes in the bulkhead at frame 14.
50. The evidence of Mr Ryves; Mr Grout; Mr Karagiannides and Mr Stanley

I have already stated that I found Mr Ryves to be a credible witness whose evidence on the layout of the Vessel is generally reliable, even so long after he left her. He was Master when the "black water" tanks and associated piping and pumps were fitted in March/May 1993.^[101] I accept his evidence^[102] that the aft "black water" pump was located in the suitcase locker aft of the engine room, located between frames 7 and 8.^[103]

51. I also accept the evidence of Mr Rundle, who was the engineer on board between April 1993 and 1995, which supports this conclusion.^[104] I recognise that there was nothing in Mr Rundle's statement^[105] about his part in fixing the aft piping and that this evidence emerged only in cross examination. But I find that his statement in cross examination that he had only remembered a day or so before he gave evidence^[106] was open, genuine and truthful.
52. Mr Rundle also gave evidence that he was told by Mr Ryves that Tank 6C contained fuel and was used as ballast. However, he accepted that he personally had not either put fuel in or taken it out of the tank, nor had he personally investigated the tank.^[107] So his evidence on the uses of Tank 6C does not add anything either way.
53. Mr Grout was the Master for just under three months in July to September 1994. His witness statement says that he had no recollection of an aft diesel tank. But in cross examination by Mr Teare^[108] he accepted that Tank 6C was used to carry either dirty fuel or water.^[109] Obviously if the tank was used to carry either water or dirty fuel, it would have had to be watertight; there could not have been any non-watertight apertures to carry sewage pipes in the bulkhead at frame 14.
54. In relation to Mr Grout's evidence about using a "black water" pump in the engine room, I have concluded that Mr Grout was confusing the "grey water" pump with a "black water" pump. He was only on the Vessel for a short time during July-September 1994. He gave his statement in February 2000. In cross examination he admitted that his memory was hazy.^[110] He said that he thought that the pump that he used served both the forward and the aft "black water" tanks,^[111] but this is obviously incorrect. It is now agreed that the forward tank had its own pump in the cambuse.
55. The Defendants rely on a sentence in the statement that Mr Karagiannides gave Mr Johnston, the solicitor acting for the Insurers, soon after the Vessel sank. In that he said that there was a fuel tank "at the end of the engine room in the bilge".^[112] In cross examination he confirmed that this reference was to Tank 6C at frames 11 to 14. He also said that there was a void space, but this was aft of frame 11.^[113] In cross-examination he was also referred to his later statement (given in September 1999) at para 18, ^[114] which states that sewage pipes passed through the bulkhead at frame 14. His oral evidence, which was confused, was to the effect that two grey water pipes of 1¹/₂ inch diameter passed through two 3 inch diameter holes.^[115] He also said that the "black water" pipe went through the bulkhead in the way seen in a photograph.^[116] However he also accepted that such an arrangement was watertight, so there could not have been spaces around the pipes through which water could flow aft of frame 14.^[117] He then said that the "grey water" pipes were flexible and made of rubber and the pipe was the same diameter as the hole itself.^[118] Given all these contradictions in Mr Karagiannides' evidence on this point, I conclude that I cannot place any reliance on it one way or the other.
56. Mr Stanley's evidence on this issue effectively amounts only to comment. In his second report he appears to acknowledge that if there were separate "black water" pumps, then it would be "logical" to have the aft one in the suitcase locker as stated by Mr Ryves.^[119] But in evidence he emphasised the practical advantage of having the pump in the engine room because that would obviate the need to disturb occupants of the aft accommodation if the system needed to be serviced or repaired whilst guests were on board.^[120] Both points can be accepted. But ultimately neither point can be decisive in making a finding of fact on the issue.
57. My conclusions are:

(1) that the aft "black water" pump was fitted in the suitcase locker in the aft accommodation;

(2) that no "black water" sewage pipes were passed through the bulkheads at frame 14 and frame 11; therefore there were no apertures in those bulkheads through which seawater could pass into and out of Tank 6C if the engine room had flooded;

(3) that Tank 6C was used after 1992 as a diesel fuel tank, although it was probably only used for storage and because it was thought that a full Tank 6C prevented the the Vessel from being trimmed by the head.

(3) The Vessel's previous history - her condition, maintenance and cost of use

58. General history: From 1989 to 1993 the Vessel spent each winter at Mallorca. The yacht was only used in the summer months when Sheikh Khalid would use her for cruising. From 1988 to 1994 the Master of the Vessel was Mr Ryves. During this time Sheikh Khalid acted as his own manager of the Vessel.^[121]
59. During the 1990s the Vessel suffered repeated problems and much money had to be spent on her maintenance and repair. The figures of annual expenditure were not seriously in dispute. The important events in the history of the yacht are as follows:

(1) The engine room flooded in September 1990. As I have already noted, this resulted in the underwriters' surveyors required that either high level bilge float alarms be installed or non-return valves be installed. High level bilge float alarms were installed and underwriters were informed of this by Sheikh Khalid in May 1991.^[122] Further, ABS, having surveyed the damage caused by the incident retained the yacht in class without requiring that non-return valves be fitted.^[123]

(2) During the spring of 1992 the yacht underwent repairs in drydock at Astilleros de Mallorca. Holes and rotten steel had been found in the hull which were temporarily repaired with doublers. Serious corrosion and holes in the crew quarters had been found which required the crew quarters to be gutted and refitted extensively. The view of Sheikh Khalid's surveyor, Mr Ian Fairhurst, was that apart from the replacement of the doubler works which would have to be done next year, there should be no need for large expenditures on the yacht for some years to come.^[124] However that may have been optimistic, given the view of Mr Ryves, as reported to Sheikh Khalid, that the vessel only "managed to scrape through ABS".^[125]

(3) Following the 1992 summer cruise, in September 1992 the diesel fuel tanks were contaminated with water. I have already dealt above with the consequences of this incident.

(4) From November 1992 onwards the Vessel underwent further extensive works at Mallorca. Amongst these were modifications to the starboard generator to deal with corrosion; the installation of a further blower fan in the engine room and various carpentry, painting and crew works.

(5) The vessel was drydocked at Astilleros de Mallorca from the end of March to about 18 May 1993. During that time the temporary doublers installed the previous year were replaced with insertions. Extensive steel work had to be done. The works were wider and more expensive than had been anticipated. During this time the "Black Water" tanks were installed. I have already dealt with the questions that arise from their installation.

(6) Following the 1993 summer cruise the Vessel returned to Mallorca at the end of September. Extensive rust was found in the port crane which was dealt with. No serious works were carried out during this winter period. Mr.Ryves' request for permission and funds to carry out much needed hull painting was refused by Sheikh Khalid.^[126]

(7) In June 1994 it was decided that the yacht should leave Mallorca for Corfu. One of the reasons for the early departure to Corfu was the increase in berthing costs at Mallorca during the summer months.^[127]

(8) Following the summer cruise of 1994, the Vessel spent the winter at the Alimos marina in Athens. This is discussed further below.

60. The Financial arrangements: Accounting 1992-5

There are no financial records for years prior to 1992. From 1992 until June 1995 the way in which Sheikh Khalid decided on what funds to provide for the yacht was consistent. While Mr.Ryves was captain, each month he would fax Sheikh Khalid or his secretary, Mr Zubair, with a request for a specific sum of money to cover wages, berthing costs individual items of particular expenditure and a "float". The funds would then be remitted to Mr Ryves. Additional items of expenditure, for example dry docking, might be dealt with separately but were always the subject of a written request and written response detailing the amounts. After Mr Majhoub became the manager of the Vessel and until June 1995, a similar process was adopted, with Mr Majhoub reporting to Sheikh Khalid.

61. Until 1994, Mr.Ryves was not required to produce faxed accounts. However, his evidence was that he had always been required to keep relevant invoices and a book itemising expenditure which Sheikh Khalid would check whenever he came on board.^[128] I accept that evidence. In 1994 Sheikh Khalid asked Mr Ryves to send monthly accounts by fax, although he did not require the supporting invoices. That was done.^[129] When Mr Mahjoub became manager, he sent accounts every two months. The accounts were eventually in an identical format to those previously presented by Mr Ryves.^[130] So I conclude that up until the summer season of 1995 Sheikh Khalid had evolved and insisted upon an accounting system for expenditure on the yacht by either the Master or the Manager.
62. Budgets: 1992-1995

For the years 1992, 1993 and 1994 a similar system was used prior to the summer cruise. Mr Ryves was asked by Sheikh Khalid to produce a figure of estimated expenditure for the forthcoming cruise. The figures would include an estimate of the bunkers needed to reach the starting point of the cruise and the bunkers required for part of the cruise at least. Crew wages for the intended month of departure from Mallorca were also covered. The figures were considered by Sheikh Khalid (with the assistance of Mr Zubair) and, where appropriate, he questioned or amended them.^[131] The figures were then used by Sheikh Khalid to calculate the appropriate sum to be remitted to Mr Ryves by a transfer to a bank (usually Banque Indosuez).

63. Expenditure on the Vessel: 1992 and 1993

(1) In 1992 a total sum of US$412,967 was spent on the yacht including wages and berthing charges. The sum spent on repairs, maintenance and providing a "float" was US$208,943.^[132] Sheikh Khalid agreed that this expenditure was large.^[133]

(2) In 1993 the sum of US$405,738 was spent in total, including the cost of wages and berthing. The sum spent on repairs, maintenance and the "float" was US$241,200.

(3) Having spent a great deal of money on the yacht, Sheikh Khalid did expect that she would be in a good condition. But when he joined her for the summer cruise in 1994 he was clearly very disappointed in her state and he blamed Mr Ryves for this. Mr Ryves and Sheikh Khalid had a serious disagreement over the reason for the condition of the yacht and as a result Mr Ryves resigned at the end of July 1994. He was replaced by Mr Grout, who gave evidence that he found the yacht "very dirty".^[134] I accept that evidence.

64. Expenditure on the Vessel: 1994 and 1995

It is clear that the expenditure on the yacht was markedly reduced in 1994 and 1995. In 1994 it was US$182,813.^[135] Of that figure some US$27,950 was spent on repairs and maintenance and the "float". In the period 1 January to 1 July 1995 the total expenditure on the yacht was US$117,511. Of this US$26,620 was spent on repairs, maintenance and the "float". Sheikh Khalid agreed that he was attempting to make economies, eg. by not having a Master on board.^[136] He also saved money by arranging to insure the Vessel for only three months at a time. In doing so Sheikh Khalid deliberately misled the Insurers, as I set out below. Sheikh Khalid made further economies by refusing to sanction expenditure on hull painting,^[137] and by ordering the Vessel to leave Mallorca for Corfu at the end of June 1994 so as to avoid the increase in berthing charges at Mallorca in July 1994.^[138]

65. In evidence Sheikh Khalid stated that a major reason why he reduced the amount of money spent on the yacht in 1994 was that he no longer trusted Mr Ryves. Sheikh Khalid said that because of this he was not prepared to give Mr Ryves a free hand on expenditure. This might explain the reduction in expenditure up to the end of July 1994. But it does not explain why there should have been continuing reductions after Mr Ryves resigned and into 1995.

(4) The possibility of Selling the Vessel

66. It is agreed that from late 1993 Sheikh Khalid was prepared to sell the Vessel if he obtained the right price. But he denied that he was actively trying to sell her. He maintained in cross examination that others, such as Mr Ryves and Mr Mahjoub, were much more motivated to procure the sale of the yacht because they would obtain commission on the sale.^[139] I have concluded that the evidence demonstrates that Sheikh Khalid was more actively involved in attempts to sell the Vessel than he was prepared to admit in cross examination. In particular I note that:

(1) he signed two non-exclusive listing agreements with brokers in February and April 1994;^[140]

(2) in April 1994 the yacht was advertised for sale in a Greek yachting magazine. Mr Mahjoub (who was not then the manager of the Vessel) accepted in cross examination that he discussed this with Sheikh Khalid after Mr Mahjoub had placed the advertisement and that Sheikh Khalid approved the action;^[141]

(3) both Mr Mahjoub and Sheikh Khalid said at various times that the latter would like a newer yacht and the "Milasan" was for sale;^[142]

(4) There was also evidence that professional photographs of the yacht were taken in March and April 1994 for use in a proposed brochure and Sheikh Khalid was aware of this.^[143] A brochure was later produced.

67. Sheikh Khalid hoped to obtain a price of about US$1.3 million for the Vessel. But he never had any serious offers for her at that price or anything like it. The single joint expert on valuation valued the yacht (as at 23 July 1995) at a much lower figure of $600,000 to $700,000 gross or a net selling price of $540,000 to $630,000.^[144]
68. I have concluded that Sheikh Khalid did wish to sell the yacht in 1994 and 1995, but he had hoped to do so for $1.3 million or thereabouts. However by the summer of 1995 he appreciated that he was not going to obtain that figure or anything like it on a sale. Moreover he also knew that he could not attempt to charter the yacht. He had made enquiries about this in October 1993 but was told by Mr Ryves that there were serious administrative and legal difficulties in Spain where the yacht was based.^[145] Therefore by the summer of 1995 Sheikh Khalid was in the position of owning a yacht that he wished to sell but could not and which he could not charter in order to defray the expense of maintaining her. Moreover he appreciated that continued personal use of the yacht would require continued heavy expense in maintenance and repairs.
69. The Insurers submitted that Sheikh Khalid deliberately concealed documents concerning attempts to sell the Vessel. The history is as follows:

(1) the Claimants sought specific discovery of documents relating to attempts to sell the Vessel as a part of a larger application for specific discovery following service of the Points of Claim. Documents were produced following an order in July and October 1997.

(2) At that stage the only document produced in this category was the Greek sale advertisement.^[146] Other documents did exist, including the two listing agreements and brochures of the Vessel which I have referred to above. Those were only produced by the Claimants in July 1998.

(3) Furthermore there were other relevant documents that the Claimants never produced, but were obtained by the Defendants. These included correspondence between Mr Mahjoub and the two brokers Cavendish-White^[147] and Oyster Marine.^[148]

(4) Two affidavits of documents were sworn in July 1997; one by Mr McKie of Linklaters and one by Sheikh Khalid. Both refer to the Greek advertisement and both state that there is no further relevant documentation concerning attempts to sell the Vessel. In the case of Mr McKie he was obviously relying upon instructions from his client in making that statement. But it is clear from the discovery that was made in 1998 and the documents that the Insurers obtained for themselves that Sheikh Khalid's statement was wrong. There were other documents and I find it difficult to believe that he was unaware of their existence in July 1997.

(5) In cross-examination Sheikh Khalid stated that in July 1997 he had given instructions to his secretary, Mr Zubair, to give all relevant documents to his Jeddah lawyers (not Linklaters) and he did not know what happened thereafter.^[149] This appears to contradict what Sheikh Khalid had said in his affidavit in July 1997, where he had said that he personally did not keep records, as they were all kept by Mr Mahjoub.^[150]

(6) Mr Mahjoub tried to deal with the suggestion that he had concealed documents by saying in cross-examination that he sometimes worked on board the Vessel and so kept perhaps five or six files of correspondence relating to "Milasan" in the Vessel. He suggested that the correspondence with the brokers would have been amongst those files and so lost with the Vessel.^[151] I do not accept this explanation. All the correspondence that I have seen, including that with the two brokers, is to or from Mr Mahjoub's Athens office. Mr Mahjoub's suggestion that he would have taken correspondence from his office to the Vessel and left it there is not credible. Moreover it is contrary to what Mr Mahjoub had apparently told Sheikh Khalid at the time the latter swore his second affidavit in July 1997. In paragraph 22 of that affidavit Sheikh Khalid states that he had been told by Mr Mahjoub that the only documents lost when the Vessel sank were the log book; some invoices and receipts mostly relating to the period before 1994 and some copies of ABS documents.^[152] It is also contrary to evidence that Sheikh Khalid gave in cross-examination, when he said that he kept documents relating to the Vessel in Jeddah. I accept that particular piece of evidence.^[153]

(7) Therefore I am driven to the conclusion that both Sheikh Khalid and Mr Mahjoub had not been frank about the existence of documents that demonstrate that there were attempts to sell the Vessel between 1993 and 1995. I conclude that Mr Mahjoub knew of the existence of those documents because he was intimately involved in the attempts to market the Vessel. His explanations for the failure to produce documents in both 1997 and 1998 were further attempts to evade the truth. I also conclude that Sheikh Khalid must have been aware of further documents concerning attempts to sell the Vessel at the time he swore his two affidavits in July 1997. I can only conclude that he wished to conceal their existence because they were an embarrassment to his claim. Either they demonstrated a motive for him to scuttle the yacht or they demonstrated that he had not told the whole truth about the state of the attempts to sell when he had persuaded the Insurers to permit him to renew his insurance for only short periods. That is the next subject that must be considered.

(5) Insurance of the Vessel

70. From 1988 until she sank the Vessel's Hull and Machinery had been insured by the Defendants. They also wrote a crew medical expenses policy. The H&M policies were annual until 1994 and ran from 1 May to 30 April each year. From 1992 the insured value of the Vessel was US$1.3 million. This figure was, therefore, much more than the yacht was actually worth when she sank.^[154] In the schedule to the policy the Vessel's permanent crew were identified by name; additional crew, such as deckhands, chefs and stewardesses were added or deleted as appropriate following notification by either Sheikh Khalid or Mr Zubair. Up to April 1994 the premium was paid annually in one instalment and in advance.
71. The 1994/5 Renewal

On 10 April 1994 Sheikh Khalid sent a fax to the Insurers asking for a renewal of the H&M cover for only three months because "currently negotiations are going under way for the sale of yacht and it may be finalised after the month of April".^[155] This request was granted. At the expiry of the three month period Sheikh Khalid asked for and obtained insurance for a further three month period.^[156] Then the Insurers renewed for a further six months to 30 April 1995.^[157]

72. On 11 April 1995 Sheikh Khalid sent a fax to the Insurers stating: "this is to advise you that currently I am in negotiation with a client to sell M/V Milasan. Therefore, I would appreciated if you can extend the existing cover for three months".^[158] In fact the Insurers agreed to payment of the premium in two instalments for a one year policy which was to run from 1 May to 30 April 1996.
73. In cross examination Sheikh Khalid accepted that when he faxed the Insurers in April 1994 and April 1995 there were no negotiations going on with potential buyers of the Vessel. He accepted that the two faxes did not state the truth. But he would not accept that in sending them he was lying. He characterised his statements in these faxes as follows in his evidence:

(1) in relation to the fax of 10 April 1994: "This is business tactics, it is not really lies, you can take it as a lie but this is not a lie";^[159]

(2) in relation to the fax of 11 April 1995: "No it is not really a lie. It is a strategy of negotiations. I do not think it is a lie. I mean I negotiate all the time. It does not mean that I am lying. You are free to accept or refuse".^[160]

74. Sheikh Khalid also suggested that he had asked for the three month extension in 1994 because his family company, which placed a great deal of insurance with Adamjee, was trying gradually to reduce the amount of business it placed with Adamjee.^[161] This suggested explanation does not make sense and I reject it. If Sheikh Khalid had wanted to reduce the exposure to Adamjee then the way to do it would be to place the insurance on the yacht elsewhere rather than renew it with the same company, albeit for three months only.
75. In my judgment Sheikh Khalid was telling the insurers lies in the two faxes of April 1994 and 1995. He did so deliberately in order to obtain insurance for a shorter period so as to save having to make a large outlay in one go. He thought it was legitimate to tell these lies in order to obtain a commercial advantage for himself and Brownsville Holdings over the Insurers.
76. The Defendants pointed to another matter where the Insurers were misled by Sheikh Khalid. This was in relation to the lack of a skipper for the Vessel after September 1994. Mr Grout left the yacht at the end of September. At that stage the policy was about to be renewed for six months until May 1995. Sheikh Khalid did not inform the Insurers that Mr Grout had left and that another skipper would be employed. This was in contrast to previous and later occasions when there were changes to or deletions to the crew, when he had kept the Insurers informed.^[162] In September 1994 Sheikh Khalid said nothing to the Insurers. Then he subsequently sent a misleading fax on 27 November 1994.^[163] This stated:

"Further to our telecon of today kindly be advised that Captain and engineer of Milasan will be away from boat from 16 December 1994 to 7 January 1995 for Christmas and New Years holidays. Please note that Milasan at present is berthed in Athens marina and a deck hand will be on board".

77. In cross examination Sheikh Khalid confirmed^[164] that the "Captain" there referred to was Mr Grout who had finished his employment on the "Milasan" at the end of September and was not expected to return at any time if at all. But Sheikh Khalid would not accept that the November fax was misleading and intended to give the impression that before 27 November there was a Master on board and that there would be one after 7 January 1995.^[165] In my judgment Sheikh Khalid deliberately refrained from informing the Insurers by his fax of 27 November 1994 into thinking that there was a Master on board then and that there would be one on board except for a short period over Christmas and New Year 1994/5. I can only conclude that, contrary to Sheikh Khalid's evidence, ^[166] he did this because he was well aware of the needs of the "professional skipper" warranty; yet he wanted to avoid having to employ a skipper over the winter because it was an "unnecessary expense".
78. When Captain Pastras was employed in July 1995 Sheikh Khalid continued the deception of the Insurers. He wrote a letter dated 1 July 1995 to Mr Pervez of Adamjee which stated:

"...I am recruiting another Captain to replace Captain Paul Grout....Please delete Captain Paul Grout and add the new Captain Konstadinos Pastras..."

In my view the clear intention of this letter is to give the impression that Mr Grout had only just left the Vessel and was to be replaced immediately by Captain Pastras. Sheikh Khalid tried to evade this conclusion by saying in cross examination that the letter was drafted by his secretary, Mr Zubair, and presented to him for signature only. Sheikh Khalid also claimed that he did not understand the technicalities of the "professional skipper" warranty. I do not accept these explanations. It is clear from other evidence,^[167] that Sheikh Khalid took a keen personal interest in all matters to do with the Vessel. As I have said, it is clear from the terms of the fax of 27 November 1994 referred to above that he was aware of the warranty and its effect. Overall I am sure that he understood the effect of the letter of 1 July.

79. I can only infer that he kept quiet in September 1994 and wrote the misleading fax and letter in order to convince the Insurers that he was, in the main, complying with the "professional skipper" warranty, whilst pretending to disclose that there would not be a skipper on board for a short time over Christmas and New Year 1994/5. Those acts were deliberate and, in my judgment, calculated to mislead.
80. The Defendants also alleged^[168] that Sheikh Khalid made an exaggerated claim in the name of Brownsville in 1987. It was not possible to explore all the circumstances of the claim and the validity of the invoices on which it was based. So I am not prepared to find that there was an exaggerated claim in 1987.

(4) The Vessel's Crew - the recruitment of engineer Karagiannides; Captain Pastras and deckhand Hatjitsaikos

81. 1988 to 1994

Between 1988 and July 1994 Mr Ryves was the Master of the Vessel. I have already dealt with the issue of his general credibility and his evidence in relation to the maintenance and alterations to the yacht whilst he was Master. From April 1993 to January 1995 Mr Mike Rundle was the engineer on board. Again I have dealt with his credibility and his evidence on the maintenance and alterations to the yacht whilst he was on board.

82. July 1994 to 23 July 1995

After Mr Ryves resigned in July 1994 Mr Grout was appointed Master. At the same time the yacht was moved from Mallorca to Athens. Also Sheikh Khalid entrusted the management of the Vessel to Mr Mahjoub, who had become a friend and whom he trusted.

83. Mr Grout remained Master until 30 September 1994, when he left for domestic reasons. It was accepted that there was an informal arrangement between Mr Grout and Sheikh Khalid that, if possible, Mr Grout would return as the Master of the yacht the following season. This is borne out by the fulsome reference that Sheikh Khalid gave Mr Grout when he left the yacht in September 1994.^[169] Mr Grout, who was called by the Claimants, also confirmed this arrangement in cross examination.^[170] However, when Mr Grout wrote to Sheikh Khalid on 24 May 1995^[171] - (the Vessel, which was at the Alimos Marina in Athens still had no permanent Master) - asking about employment as a master, he apparently received no response.
84. When Sheikh Khalid and Mr Mahjoub were asked in cross examination why Mr Grout was not re-employed in May 1995, they both said that it was because they wanted a Greek Master now that the Vessel was permanently based in Athens. This may have been the case. The Defendants attached sinister significance to the rejection of Mr Grout. But I am not sure that, on any view, thoughts of scuttling the Vessel had occurred as early as May 1995.
85. Mr Rundle was the engineer on board until about 19 January 1995. Sheikh Khalid insisted^[172] that Mr Rundle was dismissed because he was drinking too much alcohol. But a contemporaneous fax^[173] from Mr Mahjoub to Mr Zubair states that Mr Rundle resigned. There was no reason why Mr Mahjoub should dilute the truth for Mr Zubair's benefit if in fact Mr Rundle had been dismissed for drunkenness. Mr Mahjoub's evidence was that Mr Rundle was a good engineer and that he had resigned rather than been dismissed^[174] although he said that Mr Rundle had a problem with alcohol. Mr Rundle denied that was the case. I suspect that the truth is that Mr Rundle was bored in the marina in Athens and that, once his wife had left the yacht in September 1994, he may have drunk more than was sensible. Nevertheless he was clearly a sufficiently good engineer for Mr Mahjoub to want him to come back to the Vessel after New Year 1995. I find that Mr Rundle was not dismissed but he resigned voluntarily in January 1995.
86. He was replaced by Mr Karagiannides, who started employment on 10 January 1995. Therefore he had a few days "handover" period whilst Mr Rundle was still on board. Mr Karagiannides was recommended to Mr Mahjoub by another engineer in the Alimos Marina, Mr Nikos Papadimitrio.^[175] I accept that it would be quite common for employers to try and find both Masters and engineers by asking around in the marinas in Greece. Mr Karagiannides had a Greek Chief Engineer's certificate which he had obtained in 1976. He had previously worked in cruise liners and, between 1991-4, on board the yacht "Syrus", where he had met Captain Pastras, who was the master of that yacht between 1992 - February 1995.^[176] I infer from the fact that the two men were on board the yacht together for two years that they would have got to know one another well, although Captain Pastras was reluctant in evidence to acknowledge that Mr Karagiannides was his friend.^[177]
87. On 1 July 1995 Captain Pastras was hired as the Master of "Milasan". In evidence Mr Karagiannides accepted that Captain Pastras was hired by Mr Mahjoub on the engineer's own recommendation.^[178] Mr Karagiannides told Captain Pastras of the job, although he may not have been the first to do so.^[179]
88. Mr Hatjitsaikos, the deckhand, was hired on 10 July 1995. He was a friend of Captain Pastras, whom he had known for a long time and with whom he had served in yachts for three cruising seasons.^[180] Captain Pastras accepted that he had obtained the job for Mr Hatjitsaikos, recommending him to Mr Mahjoub. So on the last voyage of "Milasan" Captain Pastras knew both the other crew members well, as he accepted.^[181]

(5) The events leading up to the last voyage: the early July cruise and the dry docking in Piraeus

89. The Weekend Cruise of 8-9 July 1995 prior to the dry docking

It is agreed that Sheikh Khalid spent this weekend cruising on the yacht with Miss Priovolos and Mr Mahjoub. The Master, Captain Pastras, and the engineer were on board as well, but not the deckhand as he was only employed on 10 July. The engineer gave evidence that during this cruise Sheikh Khalid told him that the Vessel was too slow and too old and that he wanted to sell her and buy a new yacht. I accept that this was said by Sheikh Khalid.^[182] The Defendants allege that it was during this cruise that Sheikh Khalid and Mr Mahjoub broached the plan to scuttle the Vessel to the Master and the engineer. Whether they did so or not must be decided when reviewing all the facts of the case.

90. After the cruise Sheikh Khalid stayed in Athens for a time then went to London. He probably arrived in London on 21 July 1995. Thus he left Greece as the yacht left on her last voyage from Piraeus.
91. The Vessel's Class: the dry docking and Special Survey

The yacht was due to undergo various class surveys, including her Special Survey, by March 1995.^[183] It appears that some extension was obtained. Mr Karagiannides told Mr Johnston that a three month extension had been obtained.^[184] Mr Mahjoub said in cross examination^[185] that he had been granted an extension by ABS by telephone "until August". There is no written confirmation of any extension. Either way there is no doubt that the Special Survey was overdue by July 1995 in the sense that it ought to have been done by March 1995 and, as the Vessel was not being used for cruising then, there was no practical reason why it should not have been done by the end of March. By July 1995 the need to complete the Special Survey was pressing, particularly if the Vessel were to be used for cruising that season.

92. The Special Survey took place between 11 and 18 July 1995.^[186] The question that arises in relation to that survey is whether the ABS surveyor saw the state of the bulkhead at frame 14 and, in particular, whether he saw any holes in it and sewage pipes going through it. I did not hear any evidence from the ABS surveyor, so I have to rely on the records and also the evidence of others concerning the ambit and thoroughness of the ABS survey.
93. The record^[187] is that all the Vessel's tanks and watertight bulkheads were inspected, which would include Tank 6C and frame 14. If so then the ABS surveyor would have been bound to see whether there were holes in the bulkhead at frame 14 and sewage pipes passing through that tank. If he had seen that then it is, in my judgment, likely that he would have investigated the matter further.^[188] Captain Pastras said to Mr Johnston that the main ABS surveyor was "very strict".^[189] Mr Karagiannides' evidence was a little equivocal on this point, but he appeared to say that the surveyor inspected all the tanks accompanied by him.^[190] He also gave evidence that the ABS surveyor actually saw the bulkhead at frame 14 and the apertures in it.^[191] I am not prepared to accept this latter piece of evidence, given my findings above.
94. Mr Stanley gave an opinion, based upon his attendance at many Class surveys, that class surveyors should, but often did not, actually inspect all the tanks and spaces that they were supposed to on a Special Survey, particularly where access was difficult or inconvenient.^[192] I am prepared to accept that a class surveyor will sometimes take the word of the Master or engineer about the internal condition of a tank or space that is difficult to get into, but this is not such a case. The bulkhead at frame 14 was at the aft end of the engine room and was easy to see. Any holes in it and additional sewage pipes would have been obvious. There is also some further evidence to suggest that the ABS surveyor would have been likely to see the bulkhead at frame 14. The class record shows that the surveyor examined both tailshafts, their bearings and glands in position.^[193] To do that the floor plates at frame 15 would have to be removed and either the surveyor would have shone a torch towards frame 14 through the (designed) apertures in frame 15 or he would have climbed into the space between frames 14 and 15 to have a look. Either way, as Mr Stanley accepted, the surveyor had the opportunity to see the bulkhead at frame 14. He also accepted that if he had seen any holes in frame 14 then he would have required them to be repaired and made proper.^[194]
95. The Claimants relied on a contemporaneous document called a "Dry Dock Repair List"^[195] that was prepared by the engineer. That stated, as Item 8 (out of eight items in total): "Inspection one F.O D.Bottom F.O. Tank and one F.Water Tank". The suggestion was that this meant that the ABS surveyor would only have inspected those particular tanks. I do not accept that argument. First there is no evidence that this was intended to identify the tanks that the ABS surveyor would inspect; secondly it is contrary to the engineer's own evidence that the ABS surveyor actually inspected all the tanks with him; thirdly it is contrary to the ABS records themselves. Lastly it is not actually inconsistent with the Tank 6C being inspected. As far as the ABS was concerned that tank had remained designated as a Fresh Water tank. So it could have been that "F.Water" tank that was to be inspected.
96. I find that the ABS surveyor did inspect the watertight bulkheads including frame 14; he did inspect the tailshaft, bearings and glands in position and he did inspect the sea valves in the engine room. In doing all this he would have seen and did see the bulkhead at frame 14. I find that he saw that there were no holes or sewage pipes in that bulkhead when he did so.
97. Other aspects of the ABS Surveys

The ABS records show that as part of the dry docking survey all the Vessel's sea chests, strainer plates and fastenings and sea valves and fastenings were cleaned as necessary, examined and considered satisfactory.^[196] The Claimants did not produce any cogent evidence to challenge that record. The annual machinery survey also recorded that the bilge pumping system was examined and tested, bilge wells were examined and remote reach rods and level alarms (where fitted) were tested and considered satisfactory.^[197] Again the Claimants did not produce any cogent evidence to contradict that record. I find that those examinations were done and that the equipment and lines listed were in a satisfactory condition when the Vessel left the dry dock in Piraeus.

98. The Yacht's call sign

On 18 July 1995 Sheikh Khalid telephoned his secretary Mr Zubair and instructed him to send to Mr Mahjoub a copy of an invoice for the use of the Vessel's radio telephone.^[198] Mr Zubair did this by sending a fax to Mr Mahjoub. At the head of the fax to Mr Mahjoub it says: "Re: Milasan Radio Telephone Call sign - MBWA2". The fax said:

"As per Sheikh Khalid's instructions over telephone today I am sending you attached herewith a copy of radio traffic for ship - Milasan indicating call sign as "MBWA2" for your kind information".

Attached to the fax was a copy of the July 1994 radio telephone account for "Milasan". The call sign on the account had been ringed, doubtless by Mr Zubair, who had also written the call sign in thick pen on the copy account.

99. Sheikh Khalid was cross examined on why he gave Mr Zubair this instruction. His answers were confused and incoherent. He suggested that it was sent so that Mr Majhoub could investigate who the calls were from or what they were about. I find that unconvincing when the account was a year old and related to a time when Mr Majhoub had only just become the manager of the yacht. Mr Mahjoub could not explain why the fax and the account were sent.^[199]
100. Mr Teare QC suggested to both witnesses that the reason that the fax was sent was so that Mr Mahjoub would know the call-sign of the yacht and so he could call her by radio telephone at sea if necessary. The implication (although this was not expressly put to either witness)was that Mr Mahjoub might want to call the yacht at sea in order to monitor the scuttling plan. Both witnesses vehemently denied that the reason why Mr Mahjoub would want to know the call sign was so that he could call the vessel at sea.^[200] Based on the heading of the fax from Mr Zubair itself, I find that Sheikh Khalid did wish the call sign to be sent to Mr Mahjoub for his information. I reject as implausible the reasons suggested by Sheikh Khalid for sending a copy of the July 1994 account to Mr Mahjoub. I find that there is really only one reason why Mr Mahjoub would want to know the call sign and that is so that either he or someone on his behalf could call the Vessel if necessary. It does not follow that the purpose of a radio telephone call would have to be sinister. But I do bear in mind the fact that both Sheikh Khalid and Mr Mahjoub were very defensive about the reason for the call sign being given to Mr Mahjoub at all.
101. The arrangements for the proposed stay in Puerto Cervo, Sardinia

On 14 July 1995 Captain Pastras sent a fax, via Mr Mahjoub's office in Athens, to the managing director of the marina at Puerto Cervo. It confirmed that the Vessel would be arriving at the port on 25 July and would be staying for ten days.^[201] The fax asked for confirmation and the price of diesel fuel if a quantity of more than 10,000 litres were purchased. The Master gave Mr Mahjoub's office fax number for a reply. The office manager replied on 15 July^[202] confirming a place at the marina for ten days. It also asked for a deposit of Lira 5 million, to be deposited in advance in a named bank; and also for final confirmation within seven days, ie. by 22 July.

102. In his evidence Captain Pastras said that he could not remember whether he replied to that fax.^[203] But an undated manuscript letter, which the Master confirmed was in his handwriting,^[204] from the Master to the Manager of the marina, was disclosed in the action. The Master could not recall whether a letter in those terms was sent.^[205] Mr Mahjoub said that he recalled the Master giving him the manuscript letter and that it was sent by fax from Mr Mahjoub's office.^[206] There is no reason why the letter should have remained simply a draft, although it is curious that there was no response from the marina (that has come to light) commenting on the proposals in it. On balance I hold that the letter was sent from Mr Mahjoub's office.
103. The letter^[207] states:

"Regarding your fax, dated on 16 July 1995 I would like to inform you that the amount of 5,000,000 lira a deposit, it will be given by me the Captain, on arrival at your harbour and before berthing.

It is more convenient to me because I want to avoid any misunderstanding with the owners.

The date of arrival is still the same as I mention to my previous fax (July 14/95) but I will give you 24 hours notice before arrival.

Thanking you for your understanding".

104. Mr Mahjoub's evidence was that he could not recall giving any money to the Master for the berthing fee.^[208] He accepted that if he had given him the money and it had not been spent then he would have expected the Master to account for it upon his return to Greece.^[209] But there is no receipt for its return. In these circumstances I find that the Vessel set off on her last voyage without her owner having paid the requested deposit of Lira 5 million for berthing at Puerto Cervo and without her Master having been put in funds to pay the deposit upon his arrival there. Once again this finding does not, by itself, imply anything sinister, but it is a fact I keep I mind.
105. Budgeting for the 1995 cruise

The Defendants submit that it is significant that, in contrast to previous years, Sheikh Khalid did not request any budget or estimate of the costs of the cruise from the Master in July 1995. It appears to be accepted that Sheikh Khalid did not request a general budget for the proposed cruise in 1995. He said in evidence that he asked Mr Mahjoub for an estimate of the fuel needed and he obtained an oral estimate.^[210] Mr Mahjoub's evidence at first was that he did not provide Sheikh Khalid with an estimate of the likely fuel costs for the cruise; he left it to the Master and the engineer.^[211] A little later he said that he did not prepare any budget for the cruise but he did get estimates for fuel from the Master and engineer and discussed those with Sheikh Khalid.^[212] It is clear that in 1995 there was not the same arrangement that there had been in previous years. Sheikh Khalid said that this was because, in previous years, he had not trusted Mr Ryves and so wanted a budget in advance. He may not have trusted him but obtaining a budget would not have prevented Mr Ryves from siphoning off money if that was his intention; indeed an inflated budget would have made the task easier. Considering the evidence overall on this subject I find that no budgets for expenses generally or for fuel costs in particular for the proposed cruise in 1995 were prepared by either Mr Mahjoub or Sheikh Khalid. I also conclude that the reason for the lack of a budget or estimate was not the fact that Mr Ryves was no longer Master of the Vessel. However, once again, those facts, in themselves, are not necessarily sinister.

(6) The Vessel's last voyage up to the time she sank

106. The yacht left Piraeus on 20 July 1995. She had been unable to bunker there because the bunker tender was delayed. As she was intending to get to the Ionian Sea via the Corinth canal and as the canal dues are higher at night, Mr Mahjoub decided that the Vessel should leave Piraeus, get through the canal and bunker in Corinth the following day. In his oral evidence (which I accept on this point) he explained that he had a house there and so he visited the Vessel on 21 July and paid for the bunkers there.^[213]
107. The Vessel then proceeded to the island of Zakinthos, calling at Zante, which is on its south-east coast. The Master and engineer said that this was to take on 10,000 litres^[214] of fresh water as a lot had been used to clean the decks on passage from Corinth. There is no documentary evidence for the purchase of a large quantity of water at Zakinthos, although the receipt for port dues was recovered from the yacht.^[215] A call at Zakinthos, which was on the Vessel's route before crossing the Ionian Sea via Cape Skinari at the north of the island, was logical and reasonable.^[216] I expect some water was taken on board, but probably nothing like the Vessel's full capacity. Again there is nothing especially sinister in this call by itself, although I accept that it could give Sheikh Khalid and Mr Mahjoub the opportunity to give final instructions or to make final checks if there were a conspiracy to scuttle the yacht.
108. The condition of the Vessel on leaving Zakinthos

The Vessel left Zakinthos at about 2200 hours on 22 July to cross the Ionian Sea. There are three issues of fact concerning the Vessel's condition when she left Zakinthos that are relevant to how the Vessel was ultimately lost. They are: (i) the state of the bilge alarm; (ii) whether her portholes were left open; and (iii) whether she was loaded symmetrically or asymmetrically. I should make my findings on all three points at this stage.

109. The State of the Bilge Alarm: I have already concluded that this was in working order when the Vessel completed her dry docking and Special Survey. I have also found that the engineer had tested the bilge alarm at some stage before the Vessel left Zakinthos, so that it was in working order when she set out across the Ionian Sea. I will consider below the state of the bilge alarm when the engine room started to flood.
110. The Portholes: The Claimants submit that the portholes in the aft accommodation had been left open by Mr Hatjitsaikos after he had cleaned and painted Tank 6C whilst the Vessel was in dry dock and that they remained open thereafter.^[217] However the evidence of Mr Hatjitsaikos was that he double checked the portholes (on the Master's orders) before the start of the voyage and on leaving Corinth and Zakinthos to see that they were closed.^[218] Captain Pastras' evidence was that so far as he was aware the portholes were closed on leaving Zakinthos.^[219] There is thus no evidence to support a contention that the aft accommodation portholes were open at all after the Vessel left Zakinthos. I find that they were closed.
111. The engineer gave evidence that he had discussed opening the engine room portholes during the day the Vessel sank. But the Master did not support this statement in his evidence. In the end the engineer said that he did not know whether the portholes were closed.^[220] I have concluded that the portholes in the engine room were closed at all relevant times. There were two inlet fans in the engine room and also an extractor fan. The space was not manned and the crew only went in there to check things periodically. There was thus no need to open the portholes and to do so on a voyage would have been contrary to good sense and seamanship and would have served no useful purpose.
112. The loading of the Vessel: The Claimants submit that the probability is that the Vessel was loaded asymmetrically because it would have been impossible to keep the fuel tanks in balance the whole time. I accept that fuel would usually be used from one tank at a time and transferred to the day tank for immediate use. This might well have produced some asymmetry if uncorrected. But it could be corrected by the appropriate movement of fuel, as Mr Rundle explained.^[221] In that way a list would be kept to a minimum. Furthermore the evidence of the Master and the engineer was that they were not aware of any noticeable list before 1700 hours on 23 July 1995.^[222] I accept the evidence of the engineer that he would have noticed a list of more than one degree.^[223] Accordingly I find that the Vessel did not have any list caused by asymmetrical loading before the ingress of water into the engine room on the afternoon of 23 July 1995.
113. Crossing the Ionian Sea

It is agreed that upon leaving Zakinthos the Master stood the first watch until about 0200 or 0300 hours on 23 July. After the Vessel had rounded Cape Skinari at the northern end of Zakinthos, she set a course of about 269 degrees, on autopilot, towards the Calbrian coast.^[224] The engineer and Mr Hatjitsaikos took the watch from 0200/0300 hours until about 0800 hours. Then the Master came on watch again until about 1400 hours. So a pattern of watches of approximately six hours was established. Based on that pattern the engineer and Mr Hatjitsaikos could have expected to be on watch from about 1400 hours until 2000 hours on 23 July. Both the Master and the engineer accepted in cross examination that the watch system was about 6 hours on and 6 hours off although the engineer said it was not a fixed routine.^[225]

114. The Master on watch at 1600 hours on 23 July

However (as is agreed) the Master came on watch again at about 1600 hours after the engineer and Mr Hatjitsaikos had only been on watch for two hours. There was a dispute as to why the Master did this. It could not have been because of the weather or the conditions. As the Master himself said, it was hot, the sea was calm,^[226] the visibility good and there were only some sailing craft nearby as the Vessel approached Cape Spartivento on the Calbrian coast.^[227] Nor was it the impending transit of the Straits of Messina, because that was still some four or five hours ahead, as the Master accepted.^[228] The Master suggested that he would not sleep for 12 hours a day.^[229] I did not find this a convincing reason to come on watch on a hot, calm afternoon after only two hours rest, having taken (effectively) the middle watch and another in the forenoon until 1400 hours and with the prospect of the more difficult navigation through the Straits of Messina some four or five hours ahead.

115. I therefore find that the Master came on watch at about 1600 hours earlier than would expected having regard to the six hour watch pattern that had been evolved, when there were no navigational or other obvious reasons for him to do so.
116. The Crew's account of the sinking

Broadly the crew's account is that flooding in the engine room was discovered by the Master at about 1700 hours; he alerted the engineer and the deckhand who were in their cabins; the engineer went into the engine room but only activated the general service pump some 15 minutes later; the deckhand was ordered by the Master to check the bilges in the aft accommodation and beneath the "state room" and he did make some attempt to check the bilges aft and forward; the vessel took on a noticeable port list by about 1715 hours (perhaps 6 or 7 degrees) which increased to 20 degrees by about 1730 hours, when the crew abandoned ship and took to a life raft; then the port list increased to 50 degrees and the Vessel sank at about 1810 hours. The Claimants submit that this evidence should be accepted. They say that the Defendants did not challenge the timing of events or suggest that the crew were lying about the timing when they were cross examined.

117. I do not accept the submission that the crew's evidence should be accepted because the timing was not challenged by the Defendants in cross examination. It was clear from Mr Robinson's reports that the timing of the crew was in issue. Moreover it was specifically put to the Master^[230] and the engineer that they had deliberately sunk the Vessel upon instructions from Mr Mahjoub. It was put to the engineer that he had begun the flooding in the engine room shortly after 1600 hours.^[231] The deckhand's evidence that he had checked the aft accommodation bilges was also challenged.^[232]
118. Alleged inconsistencies in the crew's evidence

The Defendants submit that the evidence of the crew is inconsistent, both as between the three crew members and also as between the different statements and the oral evidence of each individual. I find that this is the case, although it would perhaps be very suspicious if all the evidence was identical. The Defendants also submit that there are some improbabilities in the crew evidence. I find that is also the case.

119. In this respect I note the following in particular:

(1) In his statement to Mr Johnston two days after the loss, the Master said that he went into the engine room at about 1700 hours as part of his "general visual inspection".^[233] In his second statement he said that he went into the engine room because the bilge alarm on the bridge was lit, although the buzzer from the corridor bilge alarm was not sounding.^[234] In cross examination he could not say which version was correct; he kept reiterating that he could not remember.^[235]

(2) The crew evidence about the bilge alarm was contradictory and confused. The Master said that the light on the bridge worked but the buzzer did not. The engineer gave conflicting evidence about the number of bilge alarm panels^[236] (which may simply be a memory lapse), but also said, in cross examination that one was out of order by 23 July.^[237] He also said that the buzzer was not loud.^[238] I reject both those pieces of evidence. I prefer the evidence of Mr Ryves that the buzzer was loud and piercing and the evidence of the Master and of the engineer himself that the bilge alarms had been tested and were in working condition on the Vessel's departure from Zakinthos. I find that it was in working order at 1700 hours on 23 July. Whether it had been deliberately turned off by either the Master or the engineer that afternoon is a matter I must consider below.

(3) The evidence about water in the aft accommodation and the aft bilges is also confused. Mr Hatjitsaikos told Mr Johnston that, on the Master's orders, he checked the bilges in all three aft cabins by taking up the carpet and then the wooden hatch.^[239] In his statement to Linklaters in 1999^[240] he disavowed his earlier statement and said that although he was asked to check the bilges aft he did not do so; he simply felt that the carpets in the aft cabins were dry as he went in there barefoot. In oral evidence he gave a further version which was that he had gone into the largest cabin aft and had lifted a manhole cover that had remained unsecured since the dry docking and that he found the bilge dry. He said that he did not check other bilges because he was afraid.^[241]

(4) The Claimants submit that I should accept this third version; the Defendants say I should accept none because the deckhand was persuaded by the Master to agree to give false evidence about going to check the aft bilges; they say he never went to check at all. I do not accept that the deckhand inspected the bilges in any of the aft cabins. In order to do so he would have had to lift carpets and unscrew manhole covers unless they were already left unsecured. There is no credible evidence that any manhole cover would have remained unsecured after the dry docking and it is inherently unlikely that the Vessel would have gone to sea in that state. I find that the deckhand was asked to go and look at the aft accommodation and that he made a hurried and probably panic stricken inspection; in doing so he saw that there was no obvious sign of water in the cabins. He probably did not venture beyond the cabin doors.

(5) I reject the deckhand's evidence^[242] that he was sent forward by the Master to check the bilges beneath the owners' cabin. There are no bilges beneath that cabin, as the Master must have appreciated. The cambuse is beneath that cabin and the two are separated by what Mr Stanley characterised as a "solid deck".^[243]

(6) The evidence about where or how the water was entering the engine room has varied. In giving their statements to Mr Johnston neither the Master nor the engineer could identify a source.^[244] However when they gave their statements to Linklaters in 1999, each identified a point near to the aft of the port engine beneath the floor plates. The Master also referred to a "small fountain" and the engineer referred to the water "bubbling everywhere".^[245] The later versions are more elaborate and detailed. But they do not necessarily add verisimilitude to the previous, somewhat bald, narratives, as the descriptions are consistent both with an accidental incursion of water and a deliberate one.

(7) The engineer gave evidence (in his statement to Linklaters) that he tried to start an electric pump when he first went into the engine room after being called by the Master. But he did not then attempt to start the general service bilge pump which was driven by the main engines.^[246] He said that he only started the bilge pump some 15 minutes after he had first gone into the engine room and when the Vessel had developed a list of about 6-7 degrees to port. He said that it did not reduce the water level and that the Vessel sank to the level of portholes in the engine room which were open.^[247] In cross examination he accepted that the obvious thing to do upon discovering water in the engine room was to start the general service bilge pump and to leave it running as long as possible. Yet he accepted that he stopped the main engine soon after starting this pump, although this had the effect that all the pumps (save for the submersible pump if used) would stop working and the flooding would worsen.^[248] Mr Karagiannides said in cross examination that he panicked. I accept that he would have been very concerned at the situation. But Mr Karagiannides was an experienced engineer who had been at sea for 14 years and had obtained his chief engineer's certificate in 1976. I find it difficult to accept that, in a panic, he would have simply failed to start the obvious pumps - the general service pump or the bilge pumps - for 15 minutes and, once he had started one of those, he would then, almost immediately, have deliberately disabled all the pumps (save the submersible one) by stopping the engines. Mr Karagiannides did not give any convincing explanation for such irrational behaviour.

(8) The Defendants also submit that the crew's evidence of a list to port is impossible to reconcile with the expert evidence and calculations of Mr Robinson, which they say must be accepted as they were not seriously challenged by Mr Stanley. I accept that submission, which I deal with below when considering the parties' technical cases.

120. Conclusions on the crew's evidence as to the events after 1700 hours on 23 July

I accept the submission of the Defendants that the evidence of the crew is inconsistent and in certain respects incredible, for the reasons that I have give above. The effect of this will be considered below.

(6) The aftermath: the rescue; the events in Sicily and communications with Sheikh Khalid, Mr Mahjoub and the Insurers

121. The Rescue

The Master had taken a position of the Vessel by a radar range and a visual bearing off Cape Spartivento at about 1700 hours. He said that this placed him about 25 miles off Cape Spartivento and this position was agreed by the Defendants in their closing argument.^[249] The Master also said that he could see land.^[250] Before the crew abandoned the Vessel the Master had contacted Bari radio and announced that they were abandoning ship. The engineer said that three ships responded to the request for assistance sent out by Bari radio after the crew had taken to the life rafts.^[251] Although the Master said in cross examination that he could not recall whether he hoped to be picked up soon, I find that he must have been confident that they would have been found and picked up within a reasonably short time and certainly before nightfall.^[252]

122. The crew were picked up by the Croatian vessel "Cikola" at some time between 1840 and 1915 hours. The Master had taken with him only a small bag containing the crew's passports and a small sheaf of the Vessel's papers. He did not take the log. Nor did he take his personal GPS, although he did take his VHF radio. The Master said that they were very shocked when they got on board "Cikola" and remained so until put ashore at Pozallo.^[253] However he was able to speak to Bari radio from "Cikola" to report that they had been picked up.
123. Informing Sheikh Khalid and Mr Mahjoub of the loss

The Master's evidence was that he did not attempt to contact either Mr Mahjoub or Sheikh Khalid whilst on board "Cikola", although he could probably have done so.^[254] He said that the first contact with Mr Mahjoub was when he came ashore in Pozallo.^[255] I accept that evidence. The Claimants submitted in their Closing Submissions, for the first time, that there was credible evidence that the Master had contacted Mr Mahjoub whilst on board "Cikola".^[256] The Claimants rely upon manuscript notes on a letter dated 1 July 1995 from Sheikh Khalid to the Insurers.^[257] The manuscript states (in part): "24...Capt Called Haissam at 6.00AM 9am Mr Haisam called me". The Claimants rely on the entry for "6.00AM". They say that the writing is that of Mr Zubair, so that this is a reference to a call from the Master to Mr Mahjoub (whose forename was Haissam) and the time must have been 0600 hours Jeddah time. But neither Sheikh Khalid^[258] nor Mr Mahjoub^[259] could identify the author of the note. I have not heard evidence from Mr Zubair; nor was there any written evidence from him. I have no evidence at all as to the provenance of this manuscript note. I therefore cannot place any evidential weight on it at all.

124. The Claimants also rely upon the contents of a fax sent by Mr Zubair to the Insurers at about 0940 hours (Jeddah time)^[260] in which Mr Zubair reports the loss of the Vessel. In fact fax it is stated: "Captain [Pastras] called from that ship ["Cikola"] to report this [the fact the yacht had sunk]". But this is not useful evidence either. There is no evidence that Mr Zubair talked directly to the Master to find out the facts that are set out in that fax. Mr Zubair received his information from Mr Mahjoub, who in turn received it from the Master. Mr Mahjoub did not suggest either in his contemporaneous fax to Sheikh Khalid^[261] or in evidence that the Master had telephoned him from the Vessel. So I cannot place any evidential weight on the statement in Mr Zubair's fax to the Insurers that the Master reported to Mr Mahjoub from the "Cikola".
125. Accordingly I reject the submission that the Master informed Mr Mahjoub from the "Cikola" that the Vessel had been lost.
126. The Defendants rely upon the fact that the owner and manager were not told about the loss of the Vessel until over 15 hours after the event. They say this indicates that the sinking was planned and so there was no need to tell the owner immediately that the plan had been successfully completed. I consider this below.
127. The manuscript report of the Master on the loss

It is agreed that when Captain Pastras spoke to Mr Mahjoub on coming ashore on 24 July, Mr Mahjoub asked him to fax a report on the loss of the vessel. It is also agreed that a report was prepared by the Master and the engineer and was written in manuscript (and in English) on the notepaper of the hotel in Pozallo where the crew were staying. The report was faxed at 1614 hours local time on 24 July^[262] to Mr Mahjoub in Athens. In that report it states how the Master discovered water in the engine room at 1700 hours and that it proved impossible to stem the flow. It also states:

"At approximate (sic) 17.30 the Yacht took a serious list (20^o) to the Starboard side in that time I press the Auto Distress signal...."

The letter is signed by the Master and engineer. Mr Mahjoub said in evidence that shortly after this report was sent he had a telephone call from the Master who told him that there was a "printing error" in that report.^[263] Mr Mahjoub claimed in cross examination that he did not enquire about the nature of the "printing error". I find that impossible to accept, whether there was a conspiracy to sink the yacht or not. If there was not, then the manager of the yacht would want to know about the error because he would want to know what the true facts were; if there was a conspiracy then the Master would be anxious to tell Mr Mahjoub why the text had to be altered in order to hide something or add details to create a credible story. So I find that, despite protestations to the contrary, Mr Mahjoub knew what the change in the wording was before the second version was sent by the Master.

128. It is agreed that a second version of this report was sent to Mr Mahjoub at 1755 hours that day. It is accepted by the Claimants that the word "Starboard" was tippexed out by the Master and the engineer at the hotel and the word "(PORT)" was written by them over the top of the original.^[264] Otherwise the report remained the same. So the effect of the change is that the "serious" list to starboard is subsequently reported as a "serious" list to port.
129. The Claimants submit that this was simply a "slip of the pen, which was not surprising in the circumstances".^[265] The Defendants say that this change was made because the Master and engineer had to have a consistent concocted story and the latter version was sent to make it consistent. I am not satisfied that the Claimants' suggestion is plausible. I find it very unlikely that the Master and engineer would have mistaken a "serious" list to port as being one to starboard, particularly as they also report that the list increased to 50^o before the Vessel sank.
130. There is another explanation. The Master had stated in the Italian Costguard's standard form questionnaire (in answer to question 58)^[266] that the Vessel had listed to portside. He was not questioned about that answer,^[267] but given the fact that this evidence was taken by video link and there was a very limited time available for cross examination, I do not criticise Mr Tear for not raising this answer with him. This answer in the questionnaire was not raised with the engineer either. However the Master had a copy of the Coastguard's report with him in the hotel when he prepared his manuscript report to Mr Mahjoub. I find that either he remembered (after sending the first report) that he had stated in the questionnaire that the list was to "portside" or he checked this after sending the first version. Whatever the reason for appreciating the difference, the Master realised that either he ought to be consistent, so he would have to say the same thing in his report to Mr Mahjoub, or he had to explain the change. If it was an honest mistake I would have expected the Master simply to cross out "starboard" and put in "port". The fact that he obliterated the word "starboard" with tippex and replaced it with "(PORT)" lends some support to the Defendants' submission that the change was sinister because the whole idea of a list was concocted in the first place. So also is the fact that, as Mr Mahjoub accepted, there was a telephone call between the Master and Mr Mahjoub between the first version of the report being sent and the second version.^[268]
131. If there was a conspiracy then it was important that there should be consistency between the answer given to the Coastguard and the manuscript report. When Mr Zubair reported the loss to Adamjee in his fax of 0944 hours on 24 July^[269] he said that the Master would report the accident to the authorities and that he would give a detailed report to the Owners. Therefore the Insurers were expecting some kind of report from the Master to be created. It is clear from the manuscript note at the bottom of Mr Zubair's fax to Adamjee that a copy was sent to Mr Mahjoub. So he knew that Adamjee was expecting a report from the Master. When the Master sent the second version of the manuscript report (after the telephone conversation with Mr Mahjoub) he also sent a copy of the Coastguard Questionnaire to Mr Mahjoub.^[270] Mr Mahjoub sent on this Questionnaire to Mr Zubair.^[271] Later on 24 July Mr Zubair sent a fax to Adamjee^[272] which said that he was enclosing the manuscript report from the Master and also a "police report of 14 pages". In fact these were the second version of the Master's report and the Coastguard report:^[273] the first version of the Master's report was not sent to the Insurers. Mr Zubair's fax also stated that "the same report" (which I assume means both, in fact) had been sent to the loss adjusters WK Webster & Co in London. So both the Coastguard's report and the Master's report were widely disseminated. If anyone had read the first version of the Master's report (referring to the 20 degree starboard list) and then the Coastguard report referring to the portside list, it might have led to further questions. Why the first version remained extant is, perhaps, a blank or unlit part of the canvas.
132. Reporting the Loss to the Insurers

By the end of Closing Submissions it was agreed that the timing of the various telephone calls and faxes on 24 July 1995 (whose occurrence was not challenged) must have been as follows:

(1) the Master telephoned Mr Mahjoub at about 0800 hours^[274] Italian local time (one hour ahead of British Summer Time) on coming ashore at Pozallo.

(2) Mr Mahjoub telephoned Sheikh Khalid in London shortly thereafter. Sheikh Khalid was asleep and the call woke him. Sheikh Khalid instructed Mr Mahjoub to inform Mr Zubair that the Vessel had sunk and to instruct Mr Zubair to advise the underwriters.

(3) Mr Mahjoub thereupon sent a fax to Mr Zubair.^[275] This wrongly stated that the discovery of the water in the engine room was at 6pm on 23 July (as opposed to 5pm). The fax instructed Mr Zubair to inform the underwriters immediately.

(4) Mr Zubair sent a fax to Adamjee at about 0944 hours Jeddah time.^[276] This fax contained a number of factual inaccuracies which Mr Zubair must have been given by Mr Mahjoub. Thus it states that:

(a) the yacht sank "on Sunday early morning";^[277]

(b) the "Captain called from that ship radio to Mr Haissam [Mahjoub] to report this".^[278]

(c) "they [ie. the crew] are sailing to Italy and as soon as they will reach shores they will report this accident to the concerned authorities and will give us detailed report of the accident".^[279]

133. Subsequent events

The Defendants have relied upon a number of facts subsequent to the loss of the Vessel. These are:

(1) that Sheikh Khalid did not see the crew or speak to them about the loss of the yacht. I will deal with this below.

(2) that Sheikh Khalid did not make any enquiries of ABS as to why the yacht should have sunk so soon after the dry docking and Special Survey. That fact is not disputed. I deal with its significance below.

(3) that Sheikh Khalid did not demand any accounts of expenditure for June and July from Mr Mahjoub, although detailed accounts had been the previous practice. The lack of accounts is accepted and the reason for it remains unexplained. Sheikh Khalid could not explain why there were no accounts for June and July 1995.^[280]

(8) Miss Priovolos

134. Miss Priovolos' evidence was that, during an argument her and Sheikh Khalid in April 1998, he admitted to her that the Vessel had been sunk to collect the insurance money.^[281] The argument had arisen because her son had been injured in a road accident involving a motor bike that had been kept on board "Milasan". Miss Priovolos said that she was angry with Sheikh Khalid because he seemed more concerned to keep the police away than with the injuries her son had received in the accident.
135. The Claimants say that Miss Priovolos' evidence that Sheikh Khalid confessed to arranging for the yacht to be scuttled is untruthful. They submit that her evidence was unreliable generally and that she had a motive for trying to blacken the character of Sheikh Khalid. This was that there are continuing proceedings in Greece between Miss Priovolos and Sheikh Khalid about the ownership of a flat in Athens.
136. The evidence of Miss Priovolos that Sheikh Khalid admitted to her that he arranged for the yacht to be scuttled is, effectively, hearsay evidence of the commission of a criminal act by Sheikh Khalid. If this had been a criminal trial there would, doubtless, have been serious objections to the evidence being received. In a civil trial I can receive this hearsay evidence under section 1 of The Civil Evidence Act 1995. When deciding what weight to place upon the evidence I have to have regard to "any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence".^[282]
137. Overall I am not satisfied that I can place weight on this evidence. Miss Priovolos had an axe to grind against Sheikh Khalid and in giving her evidence in Court she made plain her current dislike and distrust of him. She admitted that she had deliberately sought out Adamjee, through an intermediary, to give them the information about the alleged "confession". Her evidence about which language was spoken when Mr Mahjoub and Sheikh Khalid talked in her flat the day after the alleged "confession" was unsatisfactory. She said that they talked in Greek and Arabic, whereas I accept Sheikh Khalid's evidence that he cannot speak more than a few words of Greek.
138. Lastly it seems inherently improbable that Sheikh Khalid would confess the plan to Miss Priovolos in April 1998 for two reasons. First, by that time Sheikh Khalid had started divorce proceedings (according to the Muslim religious laws) against Miss Priovolos. Her evidence was that this was done "behind my back".^[283] It is not entirely clear whether Miss Priovolos was aware of those proceedings in April 1998. Either way it seems to me more likely that he would not give Miss Priovolos any information that could be used against him in relation to the pending divorce. An admission that he had ordered the Vessel to be sunk to collect the insurance proceeds would have been ideal ammunition for her. Secondly the present action had been started in March 1997 to recover the insurance proceeds. In July 1997 the Insurers had served Points of Defence alleging that the Vessel had been deliberately scuttled with the connivance of Sheikh Khalid. In August 1997 Points of Reply had been served by the Claimants in which it is expressly denied that the Vessel was scuttled or that Sheikh Khalid was privy to her sinking. What plausible reason could there be for admitting in April 1998, even in the course of an argument, the very acts the Insurers had accused him of in July 1997 and he had denied? I think that none have been demonstrated by the Insurers.
139. Accordingly, on the evidence I am not prepared to find that Sheikh Khalid made the statement to Miss Priovolos in April 1998 that he ordered the Vessel to be sunk in order to collect on the insurance.

(D) The Cause of the Loss

(1) The Parties' Technical Cases

140. The Claimants' Technical Case

By "technical cases" I intend to cover two aspects. The first is the parties' cases on the means by which water got into the engine room in the first place and thence into the aft accommodation. The second is whether the suggested means is consistent with the structure of the Vessel and her equipment and the facts as known or found by me.

141. On the question of how water got into the engine room in the first place, the Claimants' case is very general. They say that it was because a sea line "failed". They assert generally that a flange or flanges in the seawater system failed. The Claimants' expert, Mr Stanley, considered that a failure of the cooling water system at some point was consistent with what the crew described. He regarded a failure of the sea water system as entirely plausible.^[284] In the course of his cross examination of Mr Robinson, the Defendants' expert witness, several ways in which water could get into the engine room were canvassed by Mr Young QC. In particular it was suggested that there could be an incursion of seawater if part of the flexible piping between the sea strainer and the engines were to fail or if the cover flange on the sea strainer were to come off because it had been insufficiently tightened.^[285] Mr Robinson maintained his view that whilst the possibility of failures of those pipes or flanges could not be excluded the likelihood of them happening was remote.^[286] He regarded the likelihood of a sudden "full bore" failure as being remote, although he could not discount it entirely.^[287]
142. As for the movement of water into the aft accommodation, the Claimants' case changed in the course of the trial. At the outset they had two cases. First that the water had entered the aft spaces via the annular spaces between the sewage pipes and the circumference of the holes in frame 14.^[288] Secondly that water had gained entry via an aft bilge line. But this second case was abandoned by Mr Stanley when he appreciated that the diameter of the aft bilge lines (50mm at the most) would be too small to account, on its own, for a sufficient ingress of water to fit with the timings as given by the crew's evidence.^[289] A refurbished case only emerged in the cross examination of Mr Robinson, after Mr Stanley had given his evidence. The case then put (and adopted in the Claimants' Closing Submissions)^[290] was that (i) as the engine room flooded water passed through the apertures created in the otherwise watertight bulkhead at frame 14 into Tank 6C; (ii) water filled up Tank 6C and then flowed out of a manhole cover that had been left open or unfastened by Mr Hatjitsaikos after painting the tank at Piraeus; then flowed from the accommodation aft; (iii) water also flowed aft through the apertures in the bulkhead at frame 11, at the after end of Tank 6C on the port side, into the space between frames 11 and the solid bulkhead at frame 8; (iv) this gave the vessel a port list as described by the crew; (v) water then flooded into the remainder of the spaces aft until the Vessel sank.
143. Mr Stanley had not addressed this case in his reports. Nor did he do any calculations to test whether the rate of flooding that this mechanism would produce would be consistent with the timings given in the crew's evidence. In those circumstances I am not sure that the Claimants even had the right to put forward this new technical case. But in any event Mr Robinson demonstrated from his answers to Mr Young in cross examination that this new case would not fit the evidence of the crew. In the absence of any contrary evidence from Mr Stanley the Claimants have to accept Mr Robinson's answers and I do so as well. The inconsistencies are as follows:

(1) Mr Robinson said that if water had flooded aft of Tank 6C into the space between the frames 11 and 8 on the port side then this would have produced a small list to port but the yacht would have righted herself as the water continued to flow aft.^[291] That is inconsistent with the crew's evidence of an ever increasing port list;

(2) Mr Robinson accepted that water would flow aft to frame 6 although it may take a little longer. However, without doing the calculations his view was that water would reach frame 6 level before getting to engine room floor plate level. So the new case would not be consistent with Mr Hatjitsaikos' evidence of the aft accommodation bilge/cabin floor being dry.^[292]

144. I therefore accept the submission of the Defendants that the Claimants' new case cannot be a basis for accepting the crew's evidence on the timing of the flow of water aft. Nor is it an answer to Mr Robinson's calculations.
145. The Defendants' Technical case

The Defendants allege that seawater was deliberately introduced into the engine room by the engineer. The submission was that the piping from the seawater box was disconnected so as to allow water into the engine room.^[293] The Defendants also say that seawater was introduced deliberately by the engineer into the aft spaces. The Defendants' expert, Mr Robinson, has used the description of the bilge piping and pumping layout given by Mr Ryves^[294] as the basis of his opinions on how the deliberate flooding could be done. According to Mr Ryves' evidence on the piping layout, which I accept, pipework connects bilge suction points in both the aft large cabin and the aft peak (or lazarette) to a common distribution manifold located at the forward end of the engine room on the starboard side. Each pipe run connects to the manifold through a manually operated valve. Further, the bilge lines from the three engine room suction pipes all lead, through their own manual valves, to a second distribution manifold on the port side of the engine room. A further pipe without valves connected those two distribution manifolds.^[295] The Defendants submit that if the valve connecting any of the aft leading bilge lines were left open and the engine room bilge suction valves were set open, a connection would exist between the suction points in the aft part of the Vessel and the engine room. It would then be possible for water to flow from the engine room, via the bilge lines and the two manifolds, to the aft spaces, once the level of water had reached the height of the two distribution manifolds. Mr Stanley accepted that a deliberate flow of water to the aft accommodation could be achieved in this way or by opening valves which were blanked off in the aft accommodation.^[296]

146. The Defendants' expert, Mr Robinson has done a series of flooding calculations which indicate that the progress of the flooding as described by the crew did not match the stability characteristics of the Vessel, so far as they were known. His calculations were done on the following assumptions, all of which were designed to be as favourable as possible to the Claimants:

(1) the height of the centre of gravity of the vessel was not more than 3.2 metres;^[297]

(2) the seawater line from the seabox to the strainer was of 75mm diameter and the bilge pipes in the engine room and from the aft spaces were of the largest suggested diameter, ie. 50mm;

(3) the flow of water through these lines had a minimum of obstructions;

(4) the portholes in the engine room and the aft accommodation had been left open on the voyage;

(5) there was either symmetrical loading^[298] of the vessel or asymmetrical loading.^[299]

147. The conclusions that Mr Robinson has reached on the progress of flooding in the Vessel, based upon the assumptions he has made, including that of asymmetrical loading, giving a 1 degree list prior to the incident, are as follows:

(1) If the Claimants' case that there were holes in the bulkhead at frame 14 is accepted, then it would have taken about 21 minutes for water to rise to the floor plate level in the engine room.^[300] If there was an initial list of 1 degree then water would have reached the level of frame 6^[301] only about 12 minutes after the initial incursion. Seawater would have reached the aft accommodation floor level at approximately 30-33 minutes after the first incursion of water in the engine room. So if it is assumed that the initial incursion was at about 1655 hours, then water would have reached the engine room floor level at 1716 hours, but it would already have reached frame 6 level by 1707 hours.^[302] It would have risen to the aft cabin floor level by about 1730 hours. But at that stage the vessel would only have had a list of about 6 or 7 degrees.^[303] The water would have reached the aft port holes at about 1735 hours and the engine room portholes some 12-15 minutes later, ie. at between 1745 and 1750 hours. The list would have been just over 8 degrees at its maximum, (when the engine room portholes were immersed), but it would then have reduced to 6 degrees. The vessel would have started to take water more rapidly once the Vessel had sunk so the aft portholes were at the waterline - and assuming the portholes were open. If the portholes had been closed, then she would only have lost stability at about 1830 hours.

(2) If there were no holes in the bulkhead at frame 14 and so water could only gain access to the aft accommodation via bilge lines that had been left open, then the engine room would have flooded to floor plate level quicker because less water would have flowed out aft. On this basis the progress of the flooding aft generally would have been much slower. If it is assumed that the first incursion was at about 1655 hours, then the water would only reach the level of the engine room portholes at about 1800 hours. The vessel would have taken on only a 5 degree list by the time the engine room portholes were at water level, assuming the aft accommodation portholes had been left open. If the portholes had been closed, the maximum list would have been 15.6 degrees.^[304]

148. Conclusion on the Technical cases

Mr Stanley did not seriously challenge these calculations of Mr Robinson. He produced no report to challenge them before the trial. In cross examination he attempted to question the calculations in Robinson (4), but he accepted that he had not made any such calculations himself.^[305] Mr Robinson's calculations were not challenged when he was cross examined by Mr Young. I accept that they are accurate. It must follow that if there had been some fortuitous failure of a flange at the sea strainer in the engine room at about 1655 hours, then the timing of the flow of water into the aft accommodation and the progress of the list of the Vessel cannot fit with the crew's evidence.

(2) The facts and the Technical Cases on the cause of the sinking of the Vessel

149. I must now consider the facts of the loss in conjunction with the conclusions I have reached on the parties' technical cases. The Defendants' first submission is that the technical case of the Claimants is dependent on a combination of improbable facts all acting together in a way which make it very difficult to accept. I agree with that submission. The improbable combinations of facts are:

(1) that part of the sea water system failed, although the Vessel had been through a Special Survey in which the sea water system had been serviced and then inspected and passed by ABS; and

(2) that apertures had been cut into the watertight bulkhead at frame 14 and also at frame 11, so as fundamentally to undermine the safety standard of the yacht.^[306] Yet, on the Claimants' case, this extraordinary^[307] arrangement was either permitted or ignored by the ABS surveyors on two annual surveys and the Special Survey in July 1995. At the latter survey the surveyor had ample opportunity to inspect the bulkhead at frame 14 and, on my findings, he did so; and

(3) that a piping arrangement was made that rendered a large tank, Tank 6C, quite unusable, even though it had been designed as a fresh water tank and had been used as such or a diesel oil tank continuously until 1992; and

(4) that a manhole cover to the bilges in the aft accommodation which had been removed in the dry dock had not been replaced before the Vessel went to sea; and

(5) that the bilge alarm system, which had been tested by ABS at the Special Survey and afterwards by either the Master or engineer, either did not work at all when water entered the engine room or it did not sound in the passage way outside the crew's cabins. Furthermore it did not work at all in relation to water when it got into the bilges aft of the engine room; and

(6) that water in the engine room quickly caused a substantial list to port, even though, on the crew's evidence, no water had got into the aft accommodation bilges at the time that the substantial port list was evident; and

(7) that portholes in the engine room and the aft accommodation were left open for the voyage across the Ionian Sea, although that would be contrary to basic seamanship.

150. For the reasons that I have already given above, I must reject the submission of the Claimants that I should accept the evidence of Mr Hatjitsaikos.^[308] Thus:

(1) I reject the suggestion that his evidence about cleaning and painting in a space aft of the engine room during the dry docking proves the existence of apertures in frame 14;

(2) I reject the suggestion that Mr Hatjitsaikos actually checked the bilges in the aft accommodation on the Master's orders and found them dry;

(3) the evidence of Mr Hatjitsaikos that there was a noticeable list to port soon after checking the bilge is inconsistent with the calculations of Mr Robinson, if it is assumed that there were no holes in frame 14 and the flooding in the engine room started at about 1655 hours. Therefore Mr Hatjitsaikos' evidence of a list does not support the Claimants' case on the source or the timing of the flooding;

(4) I reject the suggestion that the manhole cover to Tank 6C was left open or unsecured by Mr Hatjitsaikos after he completed whatever cleaning/painting work he did in spaces under the aft accommodation.

151. Having reached these conclusions I must next look at all the facts and the technical cases concerning the sinking of the yacht. I have reminded myself that if I am to reach a conclusion that the Vessel was deliberately sunk by the actions of the Master and the engineer, then that is a conclusion that they have committed a crime, so I must be satisfied to a very high standard of probability that approaches the criminal standard of proof.
152. My conclusion is that the Master and the engineer did deliberately sink the Vessel. This, in summary is for the following reasons in addition to the matters that I have set out above:

(1) The Claimants have not provided any credible evidence as to why a flange in the Vessel's sea water system should have failed fortuitously shortly before 1700 hours on 23 July 1995. On the contrary the evidence of the recent Special Survey and dry docking supports the conclusion that a fortuitous failure was, as Mr Robinson said,^[309] only a remote possibility. I discount that possibility entirely.

(2) The Claimants do not have any other case to explain the fortuitous entry of seawater into the engine room on 23 July shortly before 1700 hours.

(3) There are a number of matters directly concerned with the events between 1600 hours and the sinking of the Vessel that can only point to a conclusion that sea water was deliberately let into the engine room and then the aft accommodation by the engineer that afternoon. They are:

(a) the fact that the Master came back on watch at 1600 hours after resting for only two hours after two six hour watches earlier that day. This was contrary to the pattern that had been established since the Vessel left Zakinthos and neither the Master nor the engineer had any cogent explanation for this action;

(b) the conclusion that there were no apertures in the bulkhead at frame 14 (or frame 11). The Claimants now have no other case on how sea water got into the aft accommodation.^[310] As it is accepted that sea water did get into the aft accommodation and then the Vessel sank, the only other feasible means by which water could have got there is by the engineer deliberately opening valves to let it in;

(c) the evidence of the Master concerning the reason for going into the engine room and the discovery of the incursion of sea water was confused and inconsistent. Of particular importance is the fact that, although the bilge alarm had so recently been tested and found satisfactory, none of the crew gave evidence that it sounded in a loud and piercing way on the bridge, or in the crew's quarters or at the main control panel at the top of the cambuse ladder. The Master's and engineer's evidence about the bilge alarm and its deficiencies has the hallmarks of an arrière - pensée by people wishing to disguise a serious flaw in their story. Given that it is not suggested that Mr Hatjitsaikos was a party to any conspiracy, the fact that he said in his first statement to Mr Johnson that he did not hear any bilge alarm^[311] (which I accept) confirms my conclusion that the bilge alarm had been serviceable on leaving Zante, but had been deliberately disabled by the engineer or Master on the afternoon of the 23 July. This was done so as not to alert Mr Hatjitsaikos until the incursion of seawater into the engine room was well under way;

(d) the engineer's evidence of his actions (or lack of them) to deal with the rapidly rising water in the engine room are not credible. As I have already stated, I cannot accept his evidence that the reason for a delay of 15 minutes before he started the general service pump was that he panicked for 15 minutes. A panic by an experienced marine engineer for a few minutes is one thing and sometimes encountered; but a 15 minutes panic is much less credible. Nor can I accept his evidence on why he delayed starting the submersible pump and why he stopped the engine and so the general service pump so soon after he started it. Such reactions are not consistent with a fortuitous entry of seawater and the actions of a qualified and experienced marine engineer wishing to save his vessel from sinking;

(e) the crew's evidence that there was a fortuitous entry of sea water into the engine room shortly before 1700 hours leading to the vessel sinking at about 1810 hours with a 50 degree port list is inconsistent with the structure of the Vessel and the likely progress of the flooding aft. This is for three reasons. First, sea water could not have gained access to the aft accommodation fortuitously, because of my finding that there were no apertures in the bulkhead at frame 14 and the Claimants' abandonment of their secondary case of entry via a faulty valve on the bilge lines. Secondly (and whether that first conclusion is accepted or not) if the entry was fortuitous and started at about 1655 hours, then water would have reached the aft accommodation cabin level before it got to the engine room floor plate level. So if, as I find, the deckhand did go aft and looked in one or more cabins, he would have found evidence of flooding there, but he did not. Thirdly, the crew's evidence of a list of 20 degrees by 1730 hours is inconsistent with the calculations of Mr Robinson, which I accept. He is unable to produce such a list assuming a fortuitous entry of seawater into the engine room at 1655 hours and a fortuitous movement of seawater aft.

(4) There are also a number of facts immediately after the sinking that are suspicious and point to a deliberate sinking by the Master and the engineer. These are:

(a) the failure of the Master to take the Vessel's log. He managed to gather up a file of documents from the bridge, including the crew's passports, documents relating to the purchase of fuel at Corinth and lubricants at Zakinthos and the Vessel's cash-box. Yet the Master was quite unable to explain why he did not also take the log.^[312] The Master accepted that the log contained details of the yacht's navigation, her positions and weather conditions on the voyage.^[313] It is the single most important record that a Master would normally wish to retrieve from a sinking vessel and he had time to get it.^[314]

(b) next there is the failure to report the loss of the Vessel to Mr Mahjoub until the crew were put ashore in Pozallo the following morning. The Master had the time and facilities to speak to Bari radio from the "Cikola" and he did so. He therefore had the time and facilities to speak to Mr Mahjoub. If the sinking had been fortuitous this failure to report the loss would have been quite inexplicable. I do not accept his evidence that he was too emotionally distressed during his 15 hours on board to speak to Mr Mahjoub.^[315] As it is I think this failure points to the fact that the Master had no need to tell Mr Mahjoub that the Vessel had sunk because that was what was expected.

(c) next there is the altered manuscript report, sent from the Central Palace Hotel in Pozallo. The Master had already stated to the Italian coastguard that the Vessel had developed a port list and that because of the port list there was "infiltration" of water.^[316] If there had been such infiltration then it could only have been through open portholes. In order to get water through those portholes, there had to be a list to get them to the waterline. But, for reasons I have already given, I find that no portholes were left open on the voyage. Furthermore, in view of the calculation of Mr Robinson, which I accept, there could not be any substantial list (either way) if the water had entered the aft accommodation fortuitously. Therefore I find that the notion of a substantial list to port, allowing water to enter the Vessel, was an invention of the Master when answering the Questionnaire. Having invented a port list, he had to stick to it. But when preparing his report to Mr Mahjoub with the engineer he forgot that he had already committed himself to a port list and he reported a starboard list of 20 degrees instead. I cannot accept that experienced seamen could mistake a 20 degree port list with a 20 degree starboard list, particularly in the circumstances in which this list had (apparently) occurred. Therefore I accept the submission of the Defendants that the list was invented; the Master and the engineer were confused when writing the manuscript report in the hotel and temporarily forgot what they had stated in answer to the Questionnaire. Subsequently they tried to hide the reference to the "starboard" list by tippexing it out.

(5) Lastly I should consider my impression of Captain Pastras and Mr Karagiannides as witnesses.

(a) Captain Pastras: Because he gave evidence by video, I found it very difficult to assess Captain Pastras other than by the actual answers he gave. On many points he said he could not remember: eg. the arrangements for the payment of the deposit for the berthing fee at Puerto Cervo and the reason for coming back on watch on 23 July at 1600 hours. He was unconvincing on the subject of why the manuscript report to Mr Mahjoub was changed by tippexing out "starboard" and replacing it with "PORT". He could not explain why no bilge alarm had sounded when, as must have happened, water got into the aft bilges.^[317] Nor were his answers to questions on why he did not take the log book or other documents (as opposed to those he did take) convincing explanations. Overall I have concluded that I cannot place any weight on his evidence on the central factual points concerning the sinking of the Vessel to counter my conclusion that the Vessel was deliberately sunk by Captain Pastras and the engineer.

(b) Mr Karagiannides: I did not find him a convincing witness either. In particular his explanations for his lack of action after he entered the engine room were lame and lacked credibility. As I have indicated above his evidence was often confused and contradictory. Once more I cannot rely on his evidence to counter the conclusion that I have reached that he and the Master deliberately sank the Vessel.

(6) The Claimants submitted that there were a number of factors that pointed strongly against a finding that the Master and the engineer deliberately let sea water into the engine room. They emphasise:

(a) that there is no suggestion that the Master and engineer would have done this on their own initiative. Therefore it could only have been on the orders of the owner, Sheikh Khalid. However, there was no motive for him to sink the yacht. Moreover she had just gone through an expensive Special Survey and dry docking. I accept that there was no urgent reason why Sheikh Khalid should wish the Vessel to be sunk. But her maintenance costs were high and he did regard her as old and dowdy. His enthusiasm for his "toy" seems to have waned by 1995.

(b) there are circumstances surrounding the sinking which indicate a deliberate plan had not been made, in particular: taking on full tanks of bunkers at Corinth; leaving personal belongings behind including the Masters GPS; evacuating into life rafts rather than the larger and safer tenders; the fact that the Vessel started to sink only three hours before nightfall and in circumstances when there was no guarantee that the crew would be picked up. I have concluded that none of these points is very strong, however. If only a small quantity of bunkers had been taken at Corinth it would have looked suspicious; so would use of a tender which contained the crew's luggage.^[318] Leaving the GPS is equally consistent with wishing to give the impression of abandoning ship in a hurry. The timing could also be said to be equally consistent with a deliberate sinking. The Vessel was within 25 miles of land, but not in a particularly busy seaway such as the Straits of Messina; the weather was calm and warm. The danger of being left to the sharks or the dogfish (as the Master put it)^[319] was, I think, minimal.

(c) The crew's evidence as to the sinking was consistent. I have already dealt with this aspect. My conclusion is that it was not consistent.

(d) The Master wrote to Sheikh Khalid in November 1995 demanding compensation for missing items;^[320] but he did not threaten Sheikh Khalid despite the fact that the claims were not met. This appears to be the case and it may be one of the "blank or unlit" parts of the canvas that cannot be seen or interpreted.

(e) There is no explanation of why Mr Hatjitsaikos should have found the aft bilges dry when he examined them on the orders of the Master. But as I have already stated, I cannot accept the evidence of Mr Hatjitsaikos that he did examine the bilges or even went into the aft cabins.

153. Proximate Cause of the Loss

In view of my conclusion that the Vessel sank because the Master and engineer deliberately let water into the engine room, the argument on whether the proximate cause of the loss of the Vessel was the fortuitous entry of seawater into the engine room or the entry of seawater into the aft accommodation is, strictly speaking, irrelevant. My finding must mean that the proximate cause of the loss was the deliberate action of the engineer and Master in letting seawater into the engine room. If I had been satisfied that the entry of seawater into the engine room had been fortuitous, I would have answered the question: "what caused the Vessel to sink?" thus: the initial entry of water into the engine room. That was the proximate cause of the loss of the Vessel because, looking at all the facts in a common sense way, that cause continued to be an "operating factor" on the ultimate loss of the Vessel. Or, put in negative terms, that initial incursion of seawater never ceased to have a hold on the ultimate result, ie. the loss of the Vessel.

154. Therefore, as the Claimants have failed to plead or prove that the initial incursion of seawater into the engine room was the result of the fortuitous action of an insured peril, they would have been bound to lose their claim in any event, given my construction of the policy terms.

(4) Was Sheikh Khalid privy to the deliberate sinking of the "Milasan"?

155. It is for the Insurers to prove that he was privy to the sinking and they must discharge the high standard of proof that I have already mentioned. I have concluded that they have satisfied this standard, for several reasons.
156. First I found Sheikh Khalid an unsatisfactory witness in a number of respects. He was reluctant to admit that he had lied to the Insurers about the reasons for wanting short term renewals of insurance in September 1994. But he had clearly done so. Nor would he accept that his lies constituted dishonesty; to his mind they were "business tactics". But he was clearly being dishonest. He was also dishonest in telling the Insurers about the position of the Vessel's Master in November 1994 and again in July 1995. This shows that he was prepared, if necessary, to use dishonest methods to gain an advantage from his Insurers. Sheikh Khalid also deliberately attempted, during these proceedings, to conceal the full extent of his attempts to sell the yacht. He evaded this issue in his cross examination. In this he was assisted by Mr Mahjoub, who, as I have already found, gave disingenuous evidence about documents in the course of his cross examination. Sheikh Khalid's evidence was also unsatisfactory in other respects, for instance the reasons for obtaining the Vessel's Call Sign from Mr Zubair on 18 July 1995. But I appreciate that the fact he was an unsatisfactory witness cannot, alone, prove he was a party to scuttling the yacht.
157. Secondly, however, Sheikh Khalid did have a motive to sink the yacht. He admitted to the engineer on the weekend cruise in July 1995 that the yacht was too old, too slow and he wanted a new one. He had been unable to sell her at the price he wanted, ie. US$1.3 million net, despite efforts since 1993. She was a wasting asset (worth only about $600-700,000 in July 1995) yet a constant drain on his pocket. That must have been a irritation despite the fact that he was a very rich man. He accepted in cross examination that he was the beneficial owner of the yacht and that he would be the sole beneficiary of the insurance claim if it were successful.
158. Thirdly, I also found Mr Mahjoub an unsatisfactory witness. In particular his evidence about leaving five or six files on the yacht as the reason why there had not been proper disclosure of documents concerning the attempts to sell the Vessel was not credible. Neither was his evidence about the funds for Puerto Cervo or the lack of a budget generally for the 1995 cruise or for fuel in particular or the lack of accounts after the Vessel had sunk.
159. Fourthly, there is no reason why Captain Pastras and Mr Karagiannides should have sunk the Vessel on their own initiative. Barratry was not pleaded by the Claimants.^[321] Nor was it argued by the Claimants that the Master and engineer would have deliberately sunk the yacht for some personal reason. Therefore once I find that the yacht was deliberately sunk by the Master and engineer, suspicion must immediately fall upon the beneficial owner, Sheikh Khalid.
160. Fifthly, the circumstances leading up to and at the time of the last voyage are suspicious and, taken together, cannot be given some innocent explanation. The important facts are:

(1) that Captain Pastras was hired only on 1 July, only shortly before the Special Survey and the cruising season. That was contrary to the position in all previous years. It was odd that Mr Grout was not considered in late June or early July, given Mr Grout's letter of 23 May expressing continued interest in being reemployed as master of the Vessel. Mr Mahjoub's explanation of wanting a Greek master because he would get on better with the manager of the marina at Athens sounded feeble.

(2) Captain Pastras was recommended to Mr Mahjoub by Mr Karagiannides (who had worked with Captain Pastras on board "SIRIUS") and Captain Pastras in turn recommended the deckhand, Mr Hatjitsaikos. Shortly after Captain Pastras had been recruited (but before the deckhand had been employed) the cruise of 8/9 July took place. The Vessel was just about to go into Special Survey and the Master had only been on board a week. It seems too coincidental that the cruise (with a newly appointed skipper) should have been just a private party for Miss Priovolos and Sheikh Khalid's right hand man, Mr Mahjoub.

(3) It is even more of a coincidence that nine days later Sheikh Khalid should request Mr Zubair to send to Mr Mahjoub the Call-Sign of the Vessel. Neither Sheikh Khalid nor Mr Mahjoub could explain this request satisfactorily. The only rational explanation for Mr Mahjoub wanting it was so he could call the Vessel by radio telephone when she was at sea. Mr Mahjoub had never needed the call-sign before. The suspicion must be that a radio-telephone call at sea might be necessary during the execution of the plan.

(4) Neither Mr Mahjoub nor Sheikh Khalid seems to have shown any surprise or shock at the fact that it was over 15 hours after the loss that the Master informed them both when he came ashore. Moreover, instead of waiting for the report of the Master (which he had ordered), the first thing that Sheikh Khalid requested Mr Mahjoub to arrange was notification of the loss to the Insurers. The notification seems to have been given within about 45 minutes of Sheikh Khalid being informed of the loss. That does not seem like the action of a person to whom the loss of his "toy" has come as a complete surprise and shock, but rather the reaction of someone who was expecting the news of the loss.

(5) Sheikh Khalid seems to have made no efforts to find out why the Vessel sank;^[322] nor did Mr Mahjoub. ABS were not questioned on why a vessel that had just undergone a Special Survey should suddenly spring a leak in her engine room. Nor was the dry dock where the Special Survey had been carried out subjected to any enquiry. The crew were not interviewed by either Sheikh Khalid nor Mr Mahjoub to find out further what had happened or why. There were no other enquiries by either man. There is force in the Insurers' comment that this indifference sits oddly with Sheikh Khalid's apparent enthusiasm for the yacht when in cross examination he said she was "my toy. I love it. I want to know everything about it".^[323]

(6) A total of US$34,100 was transferred to Mr Mahjoub in October and November 1995 by Mr Zubair on the orders of Sheikh Khalid.^[324] The faxes notifying Mr Mahjoub of these transfers were found in the "Milasan May 1995" file that was disclosed. Neither Mr Mahjoub nor Sheikh Khalid could explain what those transfers were for.^[325] It must be likely that these sums were for Mr Mahjoub's part in organising the sinking.

161. Taking all these factors together I have concluded that they amount to sufficient "circumstances of cumulative suspicion, anyone of which, taken alone, would not justify the Court in fixing so grave and criminal a stigma upon Plaintiffs as that of fraudulently [sinking] a vessel"^[326] to reach the conclusion that I am satisfied that Sheikh Khalid was privy to the plan to sink the yacht. I so find.

E Overall Conclusions

162. In summary my conclusions are:

(1) On the proper construction of the Institute Yacht Clauses of the policy, the Claimants as Assureds, must prove (on a balance of probabilities) that the cause of the loss of the Vessel was one of the particular perils set out in Clause 9. The Claimants have to prove facts that bring the cause of the loss within the wording of one of those insured perils.

(2) On the proper construction of the "professional skipper warranty" the Claimants were obliged to keep a suitably qualified skipper on board the yacht at all times. By failing to do so from September 1994 and after the last renewal in May 1995, the Claimants were in breach of warranty. That breach discharged the Insurers from all liability pursuant to section 33(3) of the Marine Insurance Act 1906. There was no waiver of this breach of warranty by the Insurers.

(3) There were no apertures in the aft bulkhead of the engine room at frame 14 so as to carry "black water" sewage pipes from the aft accommodation to a pump in the engine room. There were, therefore, no apertures through which sea water could gain access to the aft accommodation fortuitously once the engine room had flooded.

(4) The Claimants have neither pleaded nor proved that the initial incursion of sea water into the engine room of the "Milasan" was caused by the fortuitous action of one of the insured perils set out in clause 9 of the Institute Yacht Clauses.

(5) The Defendant Insurers have proved (to the necessary high standard) that the initial incursion of sea water was caused by the deliberate action of the Master, Captain Pastras, and/or the engineer, Mr Karagiannides at about 1640 hours on 23 July 1995, so as to permit water to enter the engine room via a sea line. Further the Master and/or the engineer deliberately arranged the valves on the aft bilge lines so that water could flow into the aft accommodation when it had reached the necessary height in the engine room.

(6) Even if I had not reached the conclusion set out in (5) above, I would have concluded that the proximate cause of the loss of the Vessel was the initial incursion of sea water into the engine room as opposed to the incursion of sea water into the aft accommodation from the engine room. Therefore as the Claimants have failed to prove that the initial incursion of sea water was the fortuitous action of one of the insured perils set out in Clause 9 of the IYC, the Claimants' claim must fail in any event.

(7) Sheikh Khalid, the beneficial owner of the Vessel, was privy to the plan to sink the Vessel deliberately.

(8) Accordingly the Claimants' claim fails and is dismissed.

163. I must thank all counsel, their solicitors and the experts for their unfailing help in this case.

Note 1   Mr Haissam Mahjoub, who worked for the Second Claimant in Athens    [Back]

Note 2   The policy was written on terms including the "Institute Yacht Clauses" (hereafter "IYC") dated 1 November 1985: Bundle F/1122A; 1123; 1125 and 1125A    [Back]

Note 3   Day 11/pages 21 - 23    [Back]

Note 4   Day 11/pages 25 - 34    [Back]

Note 5   Their case was confined to a submission that the initial incursion was a "fortuity": see pages 2, 41 and 42    [Back]

Note 6   Joint Memorandum of 2 March 2000: para 2.9: D1/198    [Back]

Note 7   IYC clause 9.1.1    [Back]

Note 8   IYC clause 9.2.2.1    [Back]

Note 9   IYC clause 9.2.2.2    [Back]

Note 10   It was agreed that the "seabox" is attached to the outer skin of the Vessel in the engine room and from it runs a sealine, via a seavalve.    [Back]

Note 11   But not the deckhand, Mr Hatjitsaikos. However the Insurers did contend that Mr Hatjitsaikos had been persuaded, out of loyalty to the Master, who was a friend and who had got him the job on board the Vessel, to give false evidence    [Back]

Note 12   This was raised in the Re-Re-Amended Points of Defence: A-1/Tab 13 paras 12-17. A further plea that the Insurers were entitled to avoid the policy because of non-disclosure or misrepresentation as to the lack of a qualified skipper was not pursued at the trial.    [Back]

Note 13   See the Schedule of Clauses, Conditions and Warranties to the Insurers' policy No. 06/P/852/007/004/05/95: F/1122    [Back]

Note 14   It was agreed between Counsel that the documents in the Trial Bundles should be treated as evidence of the facts therein stated, unless there was a particular challenge to the authenticity of a document. All questions of the weight to be attached to a particular document were left to argument. No document's authenticity was challenged    [Back]

Note 15   Mr Stylianos Hatjitsaikos, who began work as deckhand on 10 July 1995, when the Vessel was in dry dock in Piraeus    [Back]

Note 16   Captain Kostandinos Pastras. He began employment as Master on 1 July 1995. He gave evidence by video link from Venice on Day 3. The Claimants' application to hear his evidence by video link was only made on Day 2 and was resisted, but I held that as that was the only means of obtaining oral evidence from the Master it should be permitted.    [Back]

Note 17   Mr Haissam Mahjoub    [Back]

Note 18   Mr Paul Grout, who had been Master from July 1994 to September 1994    [Back]

Note 19   Mr Nikolas Karagiannides, who was engineer from 10 January 1995 until the Vessel sank    [Back]

Note 20   Mr Michael Rundle, who was engineer from April 1993 to January 1995    [Back]

Note 21   Mr Michael Ryves, who had been Master from February 1988 until the end of July 1994    [Back]

Note 22   The perils identified were: perils of the sea (Clause 9.1.1 of the IYC); latent defects in the hull or machinery (Clause 9.2.2.1 of the IYC); or crew negligence or negligence in the repair or maintenance of the Vessel (Clause 9.2.2.2 of the IYC).    [Back]

Note 23   Paragraph 4(b)(ii) and (iii) of the Points of Claim had relied on such facts but they were deleted when the Points of Claim were amended in 1998.    [Back]

Note 24   On Day 7.    [Back]

Note 25   See ruling given on Day 7/pages 75-90    [Back]

Note 26   See Closing Submissions para 1    [Back]

Note 27   Re-Amended Points of Claim para 4(b)(iii): Bundle A1/28.    [Back]

Note 28   See the Points of Agreement and Disagreement of the Experts dated 15 May 2000: D1/page 213: paras 3.2.1 and 3.2.2    [Back]

Note 29   Closing Submissions para 25 on page 8    [Back]

Note 30   The Defendants accept that if there are two operative causes, one covered by the policy risks and one not, then provided that the second cause is not an excluded peril, the Assured can recover: The Miss Jay Jay [1987] 1 Lloyd's Rep 32    [Back]

Note 31   [1982] QB 946    [Back]

Note 32   Compare the SG policy and the comments of Mustill J (as he then was) in Shell International Petroleum Co Ltd v Gibbs [1982] QB 946 at 959B-D    [Back]

Note 33   This was inevitable given that the Claimants had not identified in the pleadings, the witness statements or Mr Stanley's reports any possible events leading to the failure of a flange which would amount to perils of the seas; latent defect or negligence in repair or maintenance    [Back]

Note 34   They rely on a statement of principle by Lord Brandon in Rhesa Shipping Co SA v Edmunds: The "Opi M" [1985] 2 Lloyd's Rep 1 at 4    [Back]

Note 35   [1994] 1 Lloyd's Rep 624    [Back]

Note 36   My emphasis    [Back]

Note 37   See The "Marel" at page 629    [Back]

Note 38   The "Marel" at page 629    [Back]

Note 39   [1918] AC 350    [Back]

Note 40   See report at page 369    [Back]

Note 41   See report at page 370    [Back]

Note 42   [1983] 2 Lloyd's Rep 235. On this point the decision of Bingham J was not challenged on appeal    [Back]

Note 43   See report at page 249    [Back]

Note 44   Claimants' Opening Submissions para 24    [Back]

Note 45   See: Kirkaldy v Walker [1999] LR and IR 410 at 422 per Longmore J    [Back]

Note 46   In paragraph 14: A1/95-6    [Back]

Note 47   On this point I was referred to Elfie A Issaias v Marine Insurance Co Ltd: The "Elias Issias" (192) 15 Lloyd's List Reports 186; The "Olympia" (1924) 19 Lloyd's List Reports 255 at 257 per Lord Birkenhead LC; Compania Naviera Martiartu v Royal Exchange Assurance Corporation: The "Arnus" (1924) 19 Lloyd's List Reports 95 at 96 per Scrutton LJ; Compania Naviera Santi SA v Indemnity Marine Assurance Co Ltd: The "Tropaioforos" [1960] 2 Lloyd's Rep 469 at 473 per Pearson J; Piermay Shipping Co SA v Chester: The "Michael" [1979] 2 Lloyd's Rep 1 (CA); N Michalos & Sons v Prudential Assurance Co Ltd: The "Zinovia" [1984] 2 Lloyd's Rep 264 at 270-272 per Bingham J; The "Captain Panagos DP" [1986] 2 Lloyd's Rep 470; The "Ikarian Reefer" [1992] 2 Lloyd's Rep 68 at 71-73 per Cresswell J; [1995] 1 Lloyd's Rep 455 at 457(CA)    [Back]

Note 48   The "Zinovia" (supra) at 273 per Bingham J    [Back]

Note 49   Day 1/page 92    [Back]

Note 50   Day 1/page 149    [Back]

Note 51   Day 1/page 109 lines 5-10; Mr Mahjoub accepted this effectively: Day 5/page 3    [Back]

Note 52   "Black water" was the phrase used to describe effluent from the lavatories on board the Vessel. In this case I was particularly concerned with the arrangements for the aft accommodation    [Back]

Note 53   His evidence on the layout of the yacht and her history were only challenged on three points, albeit the most important ones: the location of the "black water" pump; the use of Tank 6C after 1992; and whether the bilge alarm sounded in a previous incident    [Back]

Note 54   This is dealt with more fully below    [Back]

Note 55   At Day 5/pages 47; 48 and 162    [Back]

Note 56   Day 5/pages 112-113    [Back]

Note 57   Day 6/page 135    [Back]

Note 58   I make more detailed findings below    [Back]

Note 59   It was stated by Mr Ryves and Mr Rundle and not challenged; it was accepted by Captain Pastras, but denied by the last engineer, Mr Karagiannides.    [Back]

Note 60   Ryves witness statement: C1/139 para 48    [Back]

Note 61   Because there would often be only one crew member on watch (eg the Master), the engine room was unmanned most of the time; therefore it was necessary to have a CCTV system so that gauges (or other things in the engine room) could be monitored from the bridge    [Back]

Note 62   Rundle: Day 6/page 44    [Back]

Note 63   Day 8/pages 116-118    [Back]

Note 64   This is Mr Ryves's description, on which he was not cross examined and I accept it: C1/138-9: para 45    [Back]

Note 65   They relied on the fourth statement of Mr Karagiannides, the engineer, (C1/83A) which was produced on the sixth day of the trial. There was no means of verifying his statement. The previous engineer, Mr Rundle, had stated that he could not remember how the sea strainer was secured, although he thought the arrangement described by Mr Karagiannides plausible: D6/pages 22-25. The inability to verify Mr Karagiannides' statement was one reason why, on the seventh day of the trial, I refused leave to amend the pleading to permit the Claimants to make a further allegation that the cause of the incursion of water into the engine room was crew negligence    [Back]

Note 66   See E/2199R and U    [Back]

Note 67   As in photograph E/2199R    [Back]

Note 68   This definition covers all discharged domestic water other than from lavatories.    [Back]

Note 69   The experts agreed that under the relevant rules of ABS there was no requirement that the Vessel should have non-return valves to the bilge lines: D1/217 para 2.2    [Back]

Note 70   Report of Ryves to Sheikh Khalid: E1/50    [Back]

Note 71   It was probably installed in 1992: see Ryves statement para 48: C1/139    [Back]

Note 72   Ryves statement: para 29: C1/136    [Back]

Note 73   Ryves' statement: C1/140 para 50. He was not challenged on this in cross examination. I reject the evidence of Mr Karagiannides, in cross examination that the alarm sound was very poor: Day 8/page 112 lines 9-17    [Back]

Note 74   Ryves statement: para 30: C1/136    [Back]

Note 75   Ryves statement: para 47: C1/136    [Back]

Note 76   Day 9/page 73    [Back]

Note 77   Astilleros de Mallorca prepared a drawing of the proposed tank, but not the associated piping or pumps: E/527    [Back]

Note 78   Statement para 30: C1/105; Day 4/151    [Back]

Note 79   Day 9 page 111 lines 3-8    [Back]

Note 80   It was agreed that this work was done following contamination of diesel oil in the tank with water. The use of the tank after this work was done in September 1992 was hotly disputed    [Back]

Note 81   See Day 10/page 109 lines 16-24    [Back]

Note 82   Fax Memo of 13 Nov 1992: E/319. The actual effect on the trim may not have been as great as Mr Ryves believed. But he clearly thought that using the tank assisted the trim.    [Back]

Note 83   Memo of Mr Ryves to Sheikh Khalid: 7 Nov 1992: E/310; Day 7/page 155    [Back]

Note 84   Day 7/page 154    [Back]

Note 85   Day 7/pages 163-167    [Back]

Note 86   Claimants' Closing Submissions: para 44 page 20; para 75 page 38    [Back]

Note 87   Statement para 2: C1/page 171    [Back]

Note 88   Witness statement para 5: C1/page 171; cross examination: Day 6/pages 96-98    [Back]

Note 89   Mr Stanley in cross examination: Day 10/page 38 lines 4-8    [Back]

Note 90   C1/page 85 paras 7-9    [Back]

Note 91   Para 7    [Back]

Note 92   Para 9    [Back]

Note 93   See the ABS copy of the builders plans at G/35    [Back]

Note 94   Day 1/page 47 lines 17-18; page 50 line 18 to page 51 line 20    [Back]

Note 95   Day 1/page 48 lines 10-24; page 50 lines 22-25    [Back]

Note 96   Day 1/page 49 lines 1-6    [Back]

Note 97   Day 1/pages 40-41; he marked my copy of E/2199C    [Back]

Note 98   The evidence of Mr Stanley: Day 10/page 115 line 24; pages 116 line 15 to page 117 line 23    [Back]

Note 99   Day 1/page 52 lines 20-21    [Back]

Note 100   E/2228    [Back]

Note 101   See E/523; Ryves statement para 52: C1/140    [Back]

Note 102   Statement para 102: C1/148; day 7/page 167    [Back]

Note 103   Ryves (2): para 1: C1/169J    [Back]

Note 104   Day 6/page 96 lines 3-4. See also his statement where he confirmed para 103 of Mr Ryves' statement that the aft "black water" pump was situated in the suitcase locker: C1/180    [Back]

Note 105   See C1/page 171    [Back]

Note 106   Day 6/pages 96/7    [Back]

Note 107   Day 6/pages 38-40    [Back]

Note 108   Day 4/pages 164-168    [Back]

Note 109   Day 4/page 168    [Back]

Note 110   Day 4/page 139    [Back]

Note 111   Day 4/page 153 lines 19-21    [Back]

Note 112   See para 27 at C1/70    [Back]

Note 113   Day 8/pages 99-102.    [Back]

Note 114   Bundle C1/58    [Back]

Note 115   Day 9/pages 14-20    [Back]

Note 116   At E/2199T. This shows a flexible pipe attached by a jubilee clip to a flange which is bolted to the bulkhead.    [Back]

Note 117   Day 9/page 114 and page 41-2 for the engineer's acceptance that this arrangement would be watertight.    [Back]

Note 118   Day 9/page 23-24; page 37.    [Back]

Note 119   D/page 48 para 4.4    [Back]

Note 120   Day 10/page 108-9    [Back]

Note 121   Day 1/pages 95-99    [Back]

Note 122   See E/50; F3/703    [Back]

Note 123   B/133-4; E6/1782    [Back]

Note 124   E1/176: Memo of Fairhurst to Sheikh Khalid of 18.3.92    [Back]

Note 125   E1/203: Memo of 30.5.92    [Back]

Note 126   E3/815: Memo from Ryves to Sheikh Khalid of 30 March 1994: "the hull is in desperate need to be done". Sheikh Khalid decided against this and ordered the crew to do "touching up" E3/859.    [Back]

Note 127   E3/927 and 928: Sheikh Khalid's fax of 13 June 1994 said the heavy increase in berthing costs "is not acceptable".    [Back]

Note 128   Day 7/page 118    [Back]

Note 129   See faxes of 26 and 28 May 1994 from Sheikh Khalid to Mr Ryves, including a sample account: E3/887 and 868 (in that order)    [Back]

Note 130   Day 5/pages 114-120    [Back]

Note 131   See eg. the correspondence in relation to bunkers for 1994 at E/931; 935 and 936    [Back]

Note 132   These figures were prepared by the Defendants and set out, with references, in a Schedule to their Opening Submissions. They were not challenged in the trial: see Claimants' Closing Submissions: para 40.    [Back]

Note 133   Day 1/page 134 lines 20-24    [Back]

Note 134   Witness statement: paras 5, 8 and 11: C1/101-2. This evidence was not challenged in cross examination    [Back]

Note 135   The Defendant's schedule had given a figure of $292,813. But in evidence Sheikh Khalid and Mr Mahjoub said that three payments totalling $110,000 were not in respect of the yacht, so the figure was reduced accordingly. This reduced figure was not challenged by the Claimants.    [Back]

Note 136   Day 2/pages 69-71; Sheikh Khalid referred to having a skipper on board as "an unnecessary expense"    [Back]

Note 137   See E/859: Memo from Ryves to Sheikh Khalid of 11 May 1994 and the manuscript response faxed at E/861    [Back]

Note 138   E/928    [Back]

Note 139   Day 2/page 100 line 16 to page 101 line 2    [Back]

Note 140   See E/793 (with Med-Sale); E/848 (with Oyster Marine)    [Back]

Note 141   Day 5/page 7    [Back]

Note 142   Sheikh Khalid to Ryves in Dec 1993: Ryves statement para 65 at C1/page 142; Sheikh Khalid to Karagiannides on the weekend cruise in July 1995: Day 9/page 69; Majhoub to Karagiannides in January 1995: Day 9/page 56. I accept Mr Karagiannides' evidence on these points    [Back]

Note 143   See his manuscript comment on the fax from Ryves to him on 25.4.94: E/849: Day 2/pages 48-49    [Back]

Note 144   See the valuation of Mr Nicholas Dean of Yachting Partners International Ltd: D/185    [Back]

Note 145   See fax from Ryves to Sheikh Khalid of 15 October 1993: E/687    [Back]

Note 146   E/1909    [Back]

Note 147   E/1463B,D,E, and G    [Back]

Note 148   E/1414 and 1453    [Back]

Note 149   Day 2/pages 104-116    [Back]

Note 150   B2/369 at para 24    [Back]

Note 151   Day 5/pages 32-33    [Back]

Note 152   B2/384B-385. The same point is made in Mr McKie's affidavit of 17 July 1997: B2/page 297 para 13, but he, of course, was reliant on what he was told by his clients    [Back]

Note 153   Day 1/page 97 lines 9-10    [Back]

Note 154   Mr Dean's valuation, on behalf of both parties, being that she would sell for $600,000 to $700,000 gross or $540,000 to $630,000 net: D1/page 185    [Back]

Note 155   E/823    [Back]

Note 156   F5/1002: fax of 12 July 1994    [Back]

Note 157   F5/1049: fax from Adamjee in Saudi Arabia to Karachi office: 16 October 1994    [Back]

Note 158   E/1668    [Back]

Note 159   Day 2/page 55 lines 22-23    [Back]

Note 160   Day 2/page 103 lines 6-9    [Back]

Note 161   Statement para 26: C1/page 7; Day 2/pages 53-54    [Back]

Note 162   See E/485: fax of 13 April 1993 (changes to deckhand and engineer); E/494: fax of 20 April 1993 (change of engineer and stewardess); E/1445: fax of 28 January 1995 (change of engineer from Mr Rundle to Mr Karagiannides)    [Back]

Note 163   E/1365    [Back]

Note 164   Day 2/page 80    [Back]

Note 165   Day 2/page 80-81. Mr Rundle, the engineer was, of course, on board until January 1995    [Back]

Note 166   Day 2/pages 124-5    [Back]

Note 167   Such as the attention to accounts and the budget and the negotiations for shorter periods of insurance    [Back]

Note 168   In cross examination: Day 4/pages 107-108    [Back]

Note 169   E/1184: "...It will be my pleasure to re-employ him whenever he is available and I wish him all the success that he rightfully deserves."    [Back]

Note 170   Day 4/pages 139-140    [Back]

Note 171   E/1810    [Back]

Note 172   Statement para 18: C1/page 4: Day 2/page 85    [Back]

Note 173   E/1428: dated 26 January 1995    [Back]

Note 174   Day 5/pages 111-113    [Back]

Note 175   Karagiannides statement: para 3: C1/page 57    [Back]

Note 176   Pastras statement to Mr Johnston: para 4:C1/page 37    [Back]

Note 177   Day 3/page 10 line 18    [Back]

Note 178   Day 9/page 69 lines 13-15    [Back]

Note 179   Pastras cross examination: Day 3/pages 9-10    [Back]

Note 180   Hatjitsaikos evidence in cross examination: Day 1/page 38 line 4    [Back]

Note 181   Day 3/page 28 lines 7-22.    [Back]

Note 182   This was in Mr Karagiannides' statement which was given as part of his evidence in chief: para 6: C1/page 57. It was confirmed in cross examination: Day 9/pages 69-70    [Back]

Note 183   Notification of this was sent by ABS to the Claimant's representative in Antwerp in January 1995 and passed onto Sheikh Khalid on 26 January 1995: E/1444 and 1443.    [Back]

Note 184   Statement para 34: C1/71    [Back]

Note 185   Day 5/pages 23-24    [Back]

Note 186   ABS Record: G/249    [Back]

Note 187   G/page 251-2 for the Special Survey. The annual hull survey stated that all watertight bulkheads and bulkhead penetrations were examined and considered satisfactory: G/page 259    [Back]

Note 188   Mr Stanley accepted that if the surveyor had seen holes in that bulkhead he would have required them to be repaired and made good: Day 10/page 94 lines 17-20    [Back]

Note 189   Statement para 6: C1/page 26    [Back]

Note 190   Day 9/pages 65-66    [Back]

Note 191   Day 9/page 20. Mr Karagiannides' evidence was that the ABS surveyor saw the flexible hose and did not object    [Back]

Note 192   Stanley (2): D1/46    [Back]

Note 193   G/257-8    [Back]

Note 194   Day 10/pages 94-97    [Back]

Note 195   E/2228    [Back]

Note 196   G/256    [Back]

Note 197   G/262    [Back]

Note 198   Sheikh Khalid accepted in evidence that he gave this instruction: Day 2/page 136 lines 5-10    [Back]

Note 199   Day 5/pages 74-75    [Back]

Note 200   Sheikh Khalid: Day 2/page 137; Mr Mahjoub: Day 5/page 75    [Back]

Note 201   E/1907    [Back]

Note 202   E/1919    [Back]

Note 203   Day 3/page 32 lines 23-24    [Back]

Note 204   Day 3/page 33 lines 20-21    [Back]

Note 205   Day 3/page 34 lines 11-12    [Back]

Note 206   Day 5/page 84 lines 13-14    [Back]

Note 207   E/2202    [Back]

Note 208   Day 5/page 84 lines 24-25    [Back]

Note 209   Day 5/pages 80-81    [Back]

Note 210   Day 2/page 160    [Back]

Note 211   Day 5/page 55 line 5 to page 56 line 8    [Back]

Note 212   Day 5/page 58 lines 9-25    [Back]

Note 213   Day 5/page 78. Mr Karagiannides gave the same explanation: Day 9/page 117 lines 11-24. The bunker invoice/receipt at E/1951 is dated 21 July 1995    [Back]

Note 214   In fact the yacht's capacity was only 7,700 litres    [Back]

Note 215   E/1963    [Back]

Note 216   Captain Pastras said, and I accept, that he had taken that route "a decade of times": Day 3/page 39    [Back]

Note 217   Closing Submissions page 37 and 41    [Back]

Note 218   Day 1/page 56-58. He said that the porthole in the aft accommodation that had been open was closed for the voyage: page 58 lines 8-9    [Back]

Note 219   Day 3/page 39-40    [Back]

Note 220   Day 9/page 76 lines 18-25    [Back]

Note 221   Day 6/page 33 lines 6-20    [Back]

Note 222   Day 3/page 48 (Master, albeit slightly equivocal); Day 9/page 82 and 87 (engineer)    [Back]

Note 223   Day 9/page 116 lines 9-11    [Back]

Note 224   Master's evidence: Day 3/page 40    [Back]

Note 225   Day 3/page 40-1 (Master); 9/page 77 lines 8-21 (engineer)    [Back]

Note 226   Master's first statement para 61: C1/page 45; second statement: paras 28 and 32: C1/pages 28 & 29    [Back]

Note 227   Master's first statement para 61; Day 3/page 82. The engineer suggested that there was frequent vessel traffic (Day 9/page 81-2), but there this was not the Master's evidence and I reject the suggestion    [Back]

Note 228   Day 3/page 42    [Back]

Note 229   Day 3/page 41 line 17    [Back]

Note 230   Day 3/pages 77-78    [Back]

Note 231   Day 9/page 95 line 22 to page 96 line 2: he denied it    [Back]

Note 232   Day 1/pages 70-71    [Back]

Note 233   Pastras (1): para 63: C1/page 45    [Back]

Note 234   Pastras (2): para 32: C1/page 29    [Back]

Note 235   Day 3/pages 46-48    [Back]

Note 236   He says three in Karagiannides (1): C1/74 para 52: two in Karagiannides (2): C1/57 at para 12; three in XX: Day 8/pages 110 lines 15-25    [Back]

Note 237   Day 8/page 115 lines 12-23    [Back]

Note 238   Day 8/page 110 lines 11-12    [Back]

Note 239   Hatjitsaikos (1): para 28: C1/page 95    [Back]

Note 240   Hatjitsaikos (2): para 26: C1/page 87    [Back]

Note 241   Day 1/page 24 lines 5-9 and page 26 lines 11-25    [Back]

Note 242   Given in his statement to Mr Johnston: para 32: C1/96    [Back]

Note 243   Day 10/page 111 line 11    [Back]

Note 244   Master: C1/page 51 at para 105; engineer: C1/77 at para 79    [Back]

Note 245   Master: c1/page 29 para 33; engineer: C1/62 at para 52    [Back]

Note 246   Karagiannides (2) paras 53 and 55: C1/page 62    [Back]

Note 247   Karagiannides (2) paras 56-60: C1/page 62-3. I have already rejected the suggestion that the engine room portholes were left open, so I reject this evidence about the portholes    [Back]

Note 248   Day 3/pages 90-94    [Back]

Note 249   Defendants' Written Answers to questions from the court: para 18    [Back]

Note 250   Day 3/page 82-3 this evidence was slightly curious given his evidence of visibility being 6 miles; but the general impression is that the vessel was not too far off land at 1700 hours    [Back]

Note 251   Karagiannides (1): para 77: C1/77    [Back]

Note 252   Sunset was at 2019 hours, so darkness would have been a little later    [Back]

Note 253   Day 3/pages 67-68    [Back]

Note 254   Day 3/pages 66-68    [Back]

Note 255   Day 3/page 66. In his 1999 statement to Linklaters the Master said he did not speak to Mr Mahjoub from "Cikola": C1/page 32 para 56    [Back]

Note 256   Closing Submissions para 29    [Back]

Note 257   E/2032. There is another copy of the same letter with only half of the same manuscript note on it at E/1868. The note at E/2032 is in photocopy for the first half and then the second part is in pencil. I was not shown an original of the note at E/1868    [Back]

Note 258   Day 4/page 123    [Back]

Note 259   Day 5/page 92    [Back]

Note 260   E/2031    [Back]

Note 261   E/2029. Unfortunately the exact time this fax was sent could not be established    [Back]

Note 262   E/2045    [Back]

Note 263   Day 5/page 105 lines 15-18; page 106 lines 12-18    [Back]

Note 264   The Master's evidence was that he could not recall how, when or why the change was made: Day 3/pages 74-77    [Back]

Note 265   Closing Submissions para 67    [Back]

Note 266   E/1982 for the original; the answers were in Italian so the word "sinistra" is used; E/2003 for the English translation    [Back]

Note 267   Nor is it considered in either side's Closing Submissions    [Back]

Note 268   Day 5/page 106 lines 12-16. However Mr Mahjoub maintained that he did not spot the difference in the two reports until the trial. I do not accept that evidence    [Back]

Note 269   E/2031    [Back]

Note 270   This is clear from the fax legend at the top of the copy of the Questionnaire at E/2057 and following, which states that the document was sent from the Hotel at 1800 hours on 24 July.    [Back]

Note 271   That is clear from the fax legend on the same copy (E/2057 etc) of "Mahjoub Hellas Ltd", which Mr Mahjoub confirmed was his office fax address. This was the third page of the fax; the first two pages consisted of the second version of the letter    [Back]

Note 272   E/2054; there is no time on this fax. The manuscript notation at the top right (which it was agreed indicates that it was from Mr Zubair's office in Jeddah) states that it was the first of 17 pages    [Back]

Note 273   See E/2055-6 (the Master's report) and E/2057-2070.    [Back]

Note 274   This time is derived from the "09.00 AM" time referred to in Mr Zubair's fax to the Insurers (E/2031) sent at about 0940 hours Jeddah time on 24 July. In July 1995 Jeddah time was two hours ahead of British Summer Time and one hour ahead of Italian time. Athens time was 1 hour ahead of Italian time; ie. the same as Jeddah time    [Back]

Note 275   E/2029    [Back]

Note 276   E/2031; received copy with time of receipt of 0944 on it at F5/1163    [Back]

Note 277   Whereas it was, of course, at about 1810 hours on Sunday evening    [Back]

Note 278   I have already found that this was not done by the Master    [Back]

Note 279   Whereas the Master and engineer were already ashore    [Back]

Note 280   Day 4/pages 75-76. Neither could Mr Mahjoub: Day 5/page 130    [Back]

Note 281   Miss Priovolos' witness statement para 17: C1/page 123    [Back]

Note 282   Section 4(1) Civil Evidence Act 1995    [Back]

Note 283   Day 8/page 14    [Back]

Note 284   Stanley (1): D/Tab 1/page 9 para 3.1.5    [Back]

Note 285   Day 11/pages 22-32    [Back]

Note 286   Day 11/page 23 lines 16-24; page 33 line 6    [Back]

Note 287   Day 11/page 33 line 9 to page 34 line 5    [Back]

Note 288   Amended Points of Claim: para 4(b)(iii): A/28    [Back]

Note 289   As recorded in the Points of Agreement and Disagreement of the Experts dated 15 May 200: D/page 213: paras 3.2.1 and 3.2.2. Mr Stanley confirmed that in cross examination: Day 10/page 59    [Back]

Note 290   See para 77 at pages 40-41    [Back]

Note 291   Day 11/page 87 lines 6-9; page 101 lines 18-21; page 110 line 10 to page 111 line 13    [Back]

Note 292   Day 11/pages 88 and 108    [Back]

Note 293   Mr Karagiannides accepted that he knew how to do this, whilst denying that he had actually done it. Day 8/pages 122-3    [Back]

Note 294   As set out at C1/page 153 on which Mr Ryves was not cross examined.    [Back]

Note 295   Mr Karagiannides accepted the layout of the bilge lines and distribution manifolds as set out in Mr Ryves' diagram at C1/page 153, although he could not remember whether the valves were non return valves: day 8/pages 123-129    [Back]

Note 296   Day 10/page 60    [Back]

Note 297   This height was agreed by Mr Stanley as a working assumption: Points of Agreement and Disagreement of 15 May 2000: D/211 para 2.3. In cross examination Mr Stanley confirmed it was difficult to envisage it would be higher: Day 10/page 85 lines 12-13    [Back]

Note 298   The Claimants argued that it would be impossible for there to be symmetrical loading of fuel all the time because there would inevitably be transfers between tanks on a voyage as fuel was consumed. The Defendants accepted that this could be so but pointed to the fact that the crew had not suggested that there was any list to the vessel during the voyage prior to 1700 hours on 23 July. To deal with this point, Mr Robinson made calculations assuming asymmetrical loading of fuel that would have kept the list to one degree or less: Robinson (4) para 2.2: D/page 167L. I accept this assumption as reasonable; it was not challenged by Mr Stanley.    [Back]

Note 299   Mr Stanley had rejected the possibility of asymmetrical loading in Stanley 92): see para 2.10 at D/page 44. But he revived the possibility in Stanley (3): D/pages 49A-C, contending that this explained the list referred to in the crew's evidence. Mr Robinson said (in Robinson (4)) that even with asymmetrical loading it could not produce the list as stated by the crew, but only one of 8 degrees: D/page 176N-P: para 4.    [Back]

Note 300   Robinson (4): D1/page 67N para 4.2.2. This paragraph of the judgment is based on para 4.2 of Robinson (4).    [Back]

Note 301   Mr Robinson explained in cross examination that he took frame 6 as the position of the very aft cabin, which is where he assumed Mr Hatjitsaikos would have lifted the panel when sent aft to check by Captain Pastras: Day 11/page 70 lines 3-6. His calculations suggest that water would have been apparent in the bilges there and forward of frame 6 if a bilge inspection was done at the time Mr Hatjitsaikos was sent aft, which was after the water had reached the engine room floor plates level: ie. at about 1710 hours or just after.    [Back]

Note 302   Thus water would have been "readily apparent" to anyone lifting a bilge cover in the aft cabin, at frame 6, 10 minutes before the time that the water was at floor plate level in the engine room: see Robinson (4) para 5.2.4: D/167P    [Back]

Note 303   This is the time that the crew say that they abandoned ship and when the Vessel had a list of about 20 degrees    [Back]

Note 304   Summarising Robinson (4) para 4.3: D/167O-P.    [Back]

Note 305   Day 10/pages 76-84.    [Back]

Note 306   Mr Stanley accepted that this would be the effect of the holes in frames 14 and 11: Day 10/page lines 23-25    [Back]

Note 307   Mr Stanley was not quite prepared to accept the piping arrangements were "extraordinary", but he virtually did so: Day 10/page 90    [Back]

Note 308   Claimants' Closing Submissions para 72    [Back]

Note 309   day 11/page 33 line 6. I accept this    [Back]

Note 310   Now that Mr Stanley has abandoned the suggestion that it was through a faulty valve in the aft bilge lines    [Back]

Note 311   Hatjitsaikos (1) para 55: C1/page 98-99. My emphasis    [Back]

Note 312   Day 3/page 61    [Back]

Note 313   Day 3/page 61    [Back]

Note 314   Even he thought he might have enough time; when asked he said: "could be" Day 3/page 63    [Back]

Note 315   Day 3/page 66 line 19 to page 67 line 3    [Back]

Note 316   Answer 58 to the Coastguard' Questionnaire: E/2003    [Back]

Note 317   Day 3/page 56    [Back]

Note 318   Compare The "Tropaioforos" [1960] 2 Lloyd's Rep 469 at 492, where Pearson J found that when the crew were picked up after the ship had sunk in the morning, they brought luggage with them and the Master was perfectly dressed and clean shaven. Pearson J found that the vessel had been scuttled.    [Back]

Note 319   Day 3/page 58 line 25    [Back]

Note 320   E/2179    [Back]

Note 321   It would be an insured peril under Clause 9.2.1.3 of the IYC    [Back]

Note 322   In cross examination he said he was indifferent when the Vessel had been lost: "If it is gone, it is gone, what can I do": Day 4/page 65.    [Back]

Note 323   Day 1/page 149 line 20-21, although that did relate to 1993    [Back]

Note 324   E/2173; 2175 and 2180    [Back]

Note 325   Mr Mahjoub would only say, rather mysteriously, that this money was "for public business in Greece". He refused to give any further explanation: Day 5/page 124-6. Sheikh Khalid said he could not remember: Day 4/pages 77-8    [Back]

Note 326   The words of Lord Birkenhead LC in Angelatos v Northern Assurance Co ("The Olympia") (1924) 19 Lloyd's List Reports 255 at 257    [Back]