SUNGLEAM MARITIME LTD v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP OR VESSEL HE DA 98 AND SISTER SHIP SHUN CHENG
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HCAJ200/2007
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ADMIRALTY ACTION NO. 200 OF 2007
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Admiralty action in rem against the ship or vessel He Da 98 and sister ship Shun Cheng
BETWEEN
| SUNGLEAM MARITIME LIMITED | Plaintiff | |
| AND | ||
| THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP OR VESSEL HE DA 98 AND SISTER SHIP SHUN CHENG | Defendants |
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Before: Master de Souza in Chambers
Date of Hearing (on the papers): 7 January 2013
Date of Receipt of Addition Materials: 11 January 2013
Date of Handing Down Decision: 18 January 2013
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D E C I S I O N
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I. INTRODUCTION
1. Having heard this admiralty action, the Honourable Mr. Justice Reyes on 26 August 2011 entered judgment on liability and made an order nisi for costs in relation to liability against the Defendants in favour of the Plaintiff. The assessment of damages was adjourned for further directions.
2. The order nisi for costs was subsequently varied on 16 September 2011. On the same day, the learned judge further ordered that the Plaintiffs’ Claim on a Reference be dealt with by documents only before the Registrar of the High Court. The Amended Claim in a Reference eventually came before me on 7 January 2013 for assessment of damages on the papers.
II. background
3. On 30 November 2007, the Plaintiff’s vessel Pontodamon, a bulk carrier of 38,684 gross tonnes registered at the port of Limassol, Cyprus, was in collision with the Defendants’ vessel He Da 98 off Shanghai, PRC. At the material time, Pontodamon was en route to Vancouver, Canada having just completed her scheduled dry-docking at the Chengxi Shipyard, PRC.
4. Consequent upon the collision, Pontodamon sustained damage to her starboard shell plating and vertical frame over number 3, 6 and 7 cargo holds and had to be placed off-hire by her charterers pending repairs.
5. Following surveys, Pontodamon proceeded to the Longshan Shipyard, Zhoushan, PRC where permanent repairs were carried out. The repairs were effected between 5 and 12 December 2007 after which Pontodamon was redelivered fully efficient to the charterers.
6. None of the afore-going matters was controversial.
7. The Plaintiff claimed loss and damage as particularized more fully in the Amended Plaintiff’s Claim in a Reference dated 10 March 2010. Of the 27 items of loss totaling US$1,383,536.84, just 2 items of relatively inconsequential amounts have been agreed.
8. To advance its various claims, the Plaintiff has filed evidence and written submissions. In opposition, the Defendants have done likewise, all pursuant to the learned judge’s directions. The Defendants have effectively required strict proof of the alleged loss and damage save the limited concession noted whilst challenging quantum and casting doubts on and querying the accuracy and authenticity of some of the supporting documentation.
iii. The Plaintiff’s claim
9. The Amended Claim in a Reference grouped the various heads of claim conveniently into three categories, broadly reflecting the time and place where they were allegedly incurred. They were: (a) the costs incurred at Shanghai (items 1 – 8), where Pontodamon went immediately after the collision; (b) the costs incurred at Zhoushan (items 9 – 26), where permanent repairs were undertaken at the Longshan shipyard; and (c) Agency (item 27).
10. For convenience, each group shall be dealt with in turn.
11. The evidence establishes that on 30 November 2007, following completion of her scheduled dry-docking for maintenance at the end of November 2007, Pontodamon departed from the Chengxi Shipyard, Shanghai. At the time the vessel was under time charter to Bunge S.A. of Geneva, the charterparty having been made and concluded on 28 November 2007.
12. On the outward passage leading to the open sea and while still in the vicinity of Shanghai, Pontodamon came into collision with the Chinese vessel He Da 98 heading for the port of Shanghai sustaining damage that had to be repaired with reasonable diligence and expedition to minimize loss particularly of charter hire, a significant consideration affecting the selection of the shipyard competent to undertake permanent repairs to the vessel. It was plainly in the best interest of the Plaintiff and the Defendants to return Pontodamon to service with minimal delay.
13. Following the collision, both ships were requested by Shanghai Maritime Safety Administration to proceed to the Wusong anchorage for investigation. Eventually, Pontodamon was released, leaving Shanghai for the Zhoushan Longshan Shipyard on the morning of 4 December 2007. She arrived at the anchorage of the shipyard the same evening and berthed the following morning.
IV. Costs incurred at Shanghai
14. Items 5 and 6 respectively Communication Charges (US $30.18) and Repatriation Costs (US $75.00) being agreed are allowed as claimed.
15. Item 1 concerns Pilotage of CNY 51,263.00 or US $6,974.56. This was a necessary expenditure. The amount actually paid by the Plaintiff’s agents, China Marine Shipping Agency exceeded the claimed amount by CNY 1,000.00 as evident from the Trip Account on page 23 Tab 8 of the bundle. The discrepancy, the result of a typographical error aside, the lower amount sought is supported by documentation and will be allowed as claimed.
16. Item 2 covers Launch Hire for transportation as can be seen from the documents under Tab 2 of the bundle. The amount paid was CNY 12,000.00 or US $1,632.65. This sum is plainly recoverable.
17. Item 3 for tug service is supported by the documents under Tab 3. The service invoiced and apparently paid for in cash cost US $27,030.00. The Plaintiff is entitled to reimbursement in the same amount.
18. Item 4 is the claim for superintendence. The engagement of a superintendent to oversee and supervise ship collision damage repairs for shipowners such as the Plaintiff is plainly both a common feature and a necessity. There was no quarrel in this regard.
19. The Plaintiff appointed Technomar Ltd for this purpose at the cost of Euro 9,461.24 or US $ 14,381.08 as documented under Tab 4. Technomar Ltd arranged for the attendance of one of their superintendent engineers, Mr. Periklis Kiatos (“Mr. Kiatos”) to supervise repairs and to co-operate with the repairers and Class Surveyors both at Shanghai and the Zhoushan Longshan Shipyard. Mr. Kiatos was responsible for confirming the repairs undertaken, the accuracy of the final invoiced amount and for the signing off of the work completion report prior to the release and the sailing of the Pontodamon. Details of the various inspections and surveys undertaken by Mr. Kiatos are given in his 1st affirmation filed on 7 September 2012.
20. Technomar Ltd charged the Plaintiff a daily rate of Euro 560 for the service. The Defendants through Mr. Lu Yumin (“Mr. Lu”), their Assistant General Manger contended that the rate was too high, suggesting that a lower daily charge of Euro 375 was the appropriate rate at the time. Accordingly, the Defendants submitted that a reasonable allowance for item 4 would be US $11,850.28. No evidence for such contention was offered.
21. When a vessel is damaged in collision, the basis on which the owner is entitled to recover damages from the wrongdoer is different from that in cases of total or constructive total loss. The measure of damage is the amount necessary to indemnify the owner for the loss in respect of out-of-pocket expenses and detention of the ship. The cost of superintendence, being usual out-of-pocket expense is accordingly recoverable: see Marsden Collisions at Sea (13th ed. paras15-31, 15-32).
22. As to quantum, the amount allowable would depend entirely on the facts of each case as there is no general fixed allowance in respect of superintendent’s costs. Some of the relevant factors for consideration encompass the country of residence of the superintendent (Athens, Greece for Mr. Kiatos), the location of the repairs (PRC), the experience and expertise of the shipyard tasked with the repairs and the complexity of the repairs to be undertaken.
23. The Plaintiff sought quotations from two reputable Hong Kong survey companies, namely London Offshore Consultants (Hong Kong) Ltd and Andrew Moore & Associates. These can be seen in the emails appended to the Plaintiff’s written submissions filed on 1 November 2011. From these email exchanges, depending on the level of experience and expertise, the day rate cost of engaging a supervising superintendent to attend collision damage repairs to a vessel in Shanghai over a projected repair period of 12 days in 2007 ranged between US $1,700.00 and US $2,650.00.
24. The Plaintiff opted for and was charged a day rate of Euro 560 or US $851.20 plus incidental expenses such as hotel accommodation and air travel in relation to Mr. Kiatos.
25. There was nothing exceptional, extravagant or unreasonable in the amount pursued under item 4. The Plaintiff is entitled to recover the amount claimed in full.
26. Item 7 is for agent’s service/transportation fee. The amount sought is US $75. The expense billed by China Marine Shipping Agency Shanghai Co. Ltd in relation to Mr. Kiatos is corroborated by the two documents at Tab 5 and will be allowed as claimed.
27. Agent’s fee of US $600.00 is the subject of item 8. The item of claim is supported by the documents at Tab 8, in particular by the Trip Account at page 23. The amount is also allowed in full.
V. Costs incurred at Zhoushan
28. The first claim under this grouping, item 9 entitled Pilotage, is for an amount of CNY 51,642.00 or US $7,026.12. The service charged to the Plaintiff by the Zhoushan Harbour Administration Bureau related to Pilotage and Shifting. The charge is properly documented under Tab 9. There is no basis for not allowing the same in full.
29. Evidence in support of items 10 and 11, respectively Anchorage Berthing (CNY 1,230 or UD $ 167.35) and Quarantine fees (CNY 3,000.00 or US $408.16) charged by the Zhoushan Harbour Administration is located under Tabs 9 and 10. These sums are recoverable in full.
30. Whilst the Pontodamon was at Zhoushan, tug service was a necessary expense as was the case previously at Shanghai. The cost is claimed under item 12. The service provided at the total cost of CNY 41,032.00 or US $5,582.59 is evidence by the documents under Tab 12. There is no reason for not reimbursing this sum and I so order.
31. Item 13 has latterly been withdrawn for want of proof.
32. The superintendent incurred additional cost at Zhoushan for transportation (US $400.00) and shore pass fees (US $ 161.00) as invoiced under Tabs 14 and 15. These costs under items 14 and 15 are recoverable.
33. As can be seen from the documents under Tab 16, Pontodamon underwent an occasional survey for hull damage at the behest of the owner. The class survey by Nippon Kaiji Kyokai was invoiced and paid for in the amount of US $ 6,522.00. This cost is similarly recoverable as claimed under item 16.
34. Item 17 is the damage survey fees. The preliminary damage survey was conducted by China Maritime Technical Services Ltd (“CMTS”) at the cost of Euro 19,600 or US $29,024.00. Pontodamon was further surveyed by East China Adjuster & Surveyors Co. Ltd (“East China Adjusters”) at Shanghai and Zhoushan. The adjusters charged US $5,680.00 for their service. The documents substantiating these two separate charges are at Tab 17. These being necessary and reasonable expenditure shall be compensated in full.
35. By far the most contentious claim is the one relating to permanent repairs to Pontodamon for which an amount of US $380,000.00 is sought.
36. The Defendants alleged that the amount was patently exorbitant, a consequence of the lack of proper tender. It was submitted that the work could have been undertaken at a more modest expense if more tenders than one had been sought, given the availability of other shipyards in the general vicinity technically competent to carry out the task that was not especially complex, entailing no more than about 33 metric tonnes of replacement steel.
37. Considerable reliance was placed on the survey report of East China Adjusters, previously referred to above, with its suggested repair estimate of US $213,200.00 as also the valuation inspection report dated 16 July 2008 and the damage repair account audit dated 5 December 2010, both prepared by Ejoy Insurance Surveyors & Adjustors Co Ltd (“Ejoy Adjustors”) and exhibited to 1st affirmation of Mr. Lu, offering a lower estimate of US $187,533.00. In short, the Defendants urged that there was a failure to mitigate loss by the Plaintiff in not obtaining the most competitive quotes. Further, it was contended that the circumstances relating to the settlement of the inflated repair account was suspect and unreliable.
38. At issue is whether the Plaintiff has taken proper, timely and reasonable steps to mitigate loss by putting Pontodamon’s repair out to tender, the burden of proof to the contrary being on the Defendants.
39. The Plaintiff concedes that albeit not strictly a requirement, there is an expectation that tenders will be sought so as to minimize loss. That duty has been described thus:
“ No doubt a duty to put out work to tender will be readily inferred where there are a sufficient number of efficient firms able to do it, the work is of a straightforward character, and there is no pressure of time which necessitates its immediate commencement. By contrast, where there is only one yard which can practically do the work, or where there is a situation of urgency, there would be little point in asking for tenders. We therefore come back to the elementary question, whether the shipowner has, under the circumstances, and on the facts, acted reasonably.” (Marsden (supra) paragraph 15-35), and
the “duty may be expressed as being to make such arrangement for the repair of the damage as a prudent uninsured owner would make for himself.” (per Lord Merriman, The Pacific Concord [1960] 2 Lloyd’s Rep. 270, at col. 1 page 283)
40. A detailed account of the tendering process and the eventual selection of the Zhoushan Longshan Shipyard to carry out permanent repairs on Pontodamon is set out in the evidence of Mr. George Vellis (“Mr. Vellis”), the Marine Technical Manager of the Plaintiff and Mr. Dimitris Vranopoulos (“Mr. Vranopoulos”), the Managing Director of Marine Plus SA (“Marine Plus”). I find the following matters established on the evidence.
41. At the end of November 2007 Mr. Vellis had to travel to China to attend Pontodamon following completion of her scheduled dry-docking at the Chengxi Shipyard at Shanghai. The dry-docking took place between 17 and 30 November 2007. On 30 November 2007, shortly after Pontodamon sailed from the Chengxi Shipyard, the collision occurred at 2130 hrs local time. Earlier on the same day at 1010 hrs local time, pursuant to the Time Charter, the vessel had been delivered to Bunge SA, the charterers. Against this background and in order to minimize loss of hire at the daily rate of US $75,000.00, the Plaintiff was justifiably concerned to return Pontodamon to service following permanent repairs as quickly as possible.
42. Marine Plus, a Greek company with extensive experience in assisting shipowners in having their vessels repaired in China since 1992 was asked to assist in sourcing shipyards and to obtain tenders for the permanent repairs to Pontodamon. Its in-depth knowledge and experience of working closely with shipyards in China can readily be seen from the web page produced by the Defendants and from the evidence of Mr. Vranopoulos, the erroneous description of it being a local company notwithstanding. In particular, the website demonstrates that most of Marine Plus’ ship repair and conversion business was and is undertaken in China, accounting for about 80% of their annual ship repair and conversion business turnover. Engaging Marine Plus was a distinct advantage in my view.
43. Mr. Vranopoulos explained that Marine Plus had in the past worked very closely with Mr. Wu Xinyu (“Mr. Wu”), the Managing Director of Willing Shanghai Trading based in Shanghai. Mr. Wu was described as “our local Chinese associate”, an apt enough label given their close working ties in the past.
44. The evidence disclosed that Mr. Vranopoulos and Mr. Wu approached eight potential shipyards in and around Shanghai to check for berth and dock availability. There being some urgency in effecting permanent repairs, the enquiries were conducted by telephone, hence the absence of records. Details of the various shipyards contacted were given in paragraph 6 of Mr. Vranopoulos’ 1st affirmation.
45. As a result of the high freight market at the material time, most of the Chinese yards were engaged in new building work, exacerbating the difficulty of identifying a suitable repair yard.
46. In explaining the eventual selection of the Longshan Shipyard, Mr. Vranopoulos affirmed:
“ 7. When trying to source a suitable shipyard to effect the repairs to Pontodamon, Mr. Wu and I were aware that some of the Chinese shipyards were technically unable to perform this repair work to an appropriate standard; and that some of those that were able to do so were not immediately available on such short notice. By technically able, I do not mean that the repairs then known to be needed were of a highly technical nature; but that the shipyard was not technically competent in my experience to properly carry out the required repairs.
8. In the end, we shortlisted two possible shipyards, namely Longshan Shipyard and Xinya Shipyard as we believed they were the most suitable of those available. Indeed, these were the only two yards of the eight yards that we approached that said they were able to accommodate the Vessel for repairs at this time. Both Longshan Shipyard and Xinya Shipyard are located on small islands near Zhoushan. Tender specifications were sent to both shipyards for them to provide their fee quotation for repairs. The fee quotations from Longshan Shipyard and Xinya Shipyard were then provided to and examined by Ocean Freighters and myself.
9. Only after Xinya Shipyard’s tender was received was it clear that Xinya Shipyard could not actually carry out the repairs. This was because Xinya Shipyard had insufficient space alongside a berth for Pontodamon. At Xinya Shipyard, the repair work would have to be conducted at least partly whilst Pontodamon was at anchor. The shipyard was unable to provide dry dock facilities for Pontodamon’s bottom repairs due to overbooking at the time. Ocean Freighter’s Technical Superintendent, Mr. Periklis Kiatos, was also sent to attend to these two shipyards and look into the situation more closely.
10. I agreed with the views of Mr. Kiatos that conducting the repairs at anchor at the Xinya Shipyard could cause delay and difficulties with the repair process. Shore cranes and staging could not be used whilst at anchor. Carrying out the repair work afloat at Xinya Shipyard plus the time waiting for a dry dock elsewhere, if need be, might result in an estimated 10 to 15 days of additional delay in the repair process. This was also clearly unacceptable.
11. In light of the above, and as the Longshan Shipyard had berth space immediately available, they were awarded the repair contract.
12. Another reason for awarding the repair contract to Longshan Shipyard was the difference in price for steel renewals in dock. Longshan Shipyard offered to charge USD4.2 per kg for steel renewals, whilst Xinya Shipyard offered to charge USD5.0 per kg. Longshan Shipyard’s quote was considered by Ocean Freighters to be more reasonably priced given the substantial amount of steelwork to be renewed.
13. Most shipyards in China were over-booked and the prices quoted were higher than usual. The base steel price quoted by Chinese yards was in the range of USD2.5 – 2.8 per kg but high surcharge was applied for steelworks done in dock of as much as 50% to 100%. In light of the urgency of the repairs to Pontodamon, as well as the fact that the steelwork had to be done in dock, we considered the price quoted by Longshan Shipyard, i.e. USD4.2 per kg, to be reasonable in all the circumstances; indeed, we believed at lower than the prevailing market price.
14. In light of the foregoing, I believe that Ocean Freighters, by instructing Marine Plus SA with extensive knowledge and expertise of shipyards in China, and finally awarding the repair contract to Longshan Shipyard, had taken the necessary steps to source a suitable shipyard for the permanent repairs to Pontodamon. The repairs were carried out in good time at a reasonable price after checking with a number of yards and obtaining and comparing the respective quotes from them.”
47. Mr. Vellis’ 1st affirmation was to similar effect. In particular, he stated at paragraph 11:
“ The Longshan Shipyard was willing to guarantee access to both a repair berth and a dry dock facility, if needed, for the Pontodamon. The Xinya Shipyard however could not. I considered that the time to effect repairs afloat at the Xinya Shipyard plus the time waiting for a dry dock elsewhere, if needed, might conceivably lead to an estimated 10 to 15 days of additional delay in the repair process. Such a delay would be very costly not just in terms of the shipyard fees but also in terms of loss of hire. After careful consideration therefore, I recommended and the Owners decided to award the repair contract to the Longshan Shipyard. This decision was primarily based on the availability of alongside repair facilities and a dry dock, if necessary, during the proposed repair dates. This in turn would directly mitigate the Owner’s losses.”
48. Mr. Vellis was also able to confirm that in order to resume service with minimal delay and keep Pontodamon fixed on her lucrative charterparty, Mr. Kiatos succeeded in negotiating a much earlier repair completion date with Longshan Shipyard and a discount of approximately 10% of the quoted repair price thereby achieving costs saving.
49. In his 2nd affirmation, Mr. Vellis added that it was the first time that Longshan Shipyard did any collision repair work for the owners of Pontodamon and Ocean Freighters and that no Owner’s work was carried out on the vessel whilst at the shipyard. In this regard, the Plaintiff has satisfactorily explained and addressed the Defendant’s concern over the mismatch in the numbering of the Longshan invoice for permanent repairs and the invoice reference appearing on the Payment Debit Advice dated 12 December 2007 from its bank, The Royal Bank of Scotland. The mistake was obviously an innocent one and does not carry the connotation suggested by the Defendants, namely that the telegraphic remittance was in settlement of some prior unrelated and undisclosed repair work on the Pontodamon.
50. There is ample evidence that the permanent repair costs have been paid in the amount of US $380,000.00. There is a receipt from Longshan Shipyard dated 12 December 2007 acknowledging payment of the sum partly by remittance and the balance in cash of US $175,200.00. The entire invoice was in fact settled on the very same day as its issuance.
51. There was nothing sinister or untoward about the partial cash settlement of the repair charges as the Defendants have attempted to make out. The cash portion was handed over to the shipyard by Mr. Kiatos in the presence of the Master Mr. Abdul Kader Zakkour (“Mr. Zakkour”). It was not disbursed by Mr. Zakkour as erroneously recorded in the Longshan Shipyard receipt that was handed over by Mr. Zhou Jinxu (the receipt’s signatory) at the time of payment, namely 12 December 2007. These matters as also how Mr. Kiatos came to possess such a large sum in cash are fully clearly set out in the affirmation evidence of Mr. Zakkour and Mr. Kiatos.
52. As to the source of the cash payment, the evidence and documents clearly demonstrated that on 19 November 2007, US $210,000.00 was withdrawn by Saturnus Maritime Co. from the Royal Bank of Scotland and given to Mr. Senicopoulos Alkis (“Mr. Alkis”), the Chief Cashier of the Plaintiff “in bank notes to be used for shipping purposes for the vessel Pontodamon presently under repairs at the Chengxi Shipyard Co. Ltd” (see Tab18 p.79). It is evident from Mr. Vellis’ 1st affirmation that Pontodamon was dry-docked for scheduled maintenance at that shipyard between 17 and 30 November 2007.
53. Mr. Vellis confirmed that prior to leaving for China, he received that sum in cash from Mr. Alkis. The handing over of the money is evidenced by the receipt at Tab 18 p. 80. The receipt acknowledged that the sum would “be used for the partial settlement of the cost of our m/v Pontodamon repair account with the Chengxi Shipyard Co Ltd” and that the money “will be handed over to the Director of Ocean Freighters Ltd Mr. Phaidon Moustakas presently on board our m/v Pontodamon presently undergoing repairs at the Chengxi Shipyard Co Ltd, China.” The funding was to ensure that Pontodamon’s release from the shipyard for the impending commencement of the time charter would not be delayed by any urgent or cash only invoices that had to be settled.
54. Mr. Moustakas’ receipt of the money on 27 November 2007 from Mr. Vellis and how US $200,000,00 of that cash eventually came into the possession of Mr. Kiatos from Mr. Moustakas on 4 December 2007 can be discerned respectively from the receipts at Tab 18 p. 97-3 and p. 97-1. As transpired, there being no urgent invoices requiring immediate settlement from the Chengxi Shipyard, the available fund instead was used “to pay for and expedite the collision damage repairs.” as per paragraph 13 of Mr. Vellis’ 1st affirmation.
55. There can be no doubt on the evidence that the repair bill in the sum of US $380,000.00 was paid in full in the manner described by the Plaintiff.
56. The Defendants alleged that the permanent repairs could have been undertaken at considerably lower cost if there had been a genuine attempt to mitigate loss. Referring to the estimate from Ejoy Adjusters, it was contended that the damage to Pontodamon could have been made good for as little as US $187,533.00 or US $213,200.00 as assessed by the surveyor appointed by the Plaintiff’s insurers, East China Adjusters. These estimates are no more than the surveyors’ opinions and are estimates at best. There was no evidence from the Defendants that repairs were indeed achievable at such lower costs. On the contrary, the Preliminary Damage Survey Report from CMTS dated 21 December 2007 furnished an estimate of US $400,000.00, lending some force to the argument that the actual repair costs paid to Longshan Shipyard was neither excessive nor well off the mark.
57. On the evidence, I find that the Plaintiff had acted entirely reasonably in having Pontodamon serviced as they did and that the amount paid for the permanent repairs was appropriate and wholly justified given the need to return the vessel as quickly as possible to charter service. That the Plaintiff had discharged its duty to mitigate there can be no question.
58. Item 18 is accordingly recoverable in full.
59. The Plaintiff has very recently confirmed the withdrawal of item 19.
60. Items 20 and 21 are claims relating to ferry charges and transportation charges, respectively in the amounts of CNY 3,000.00 or US $408.16 and CNY 2,000.00 or US $ 272.11. These necessary disbursements substantiated by the documents at Tabs 20 and 21 are to be paid by the Defendants.
61. Agent’s charges paid to the Zhoushan Huanzhou Shipping Agency Ltd of CNY 9,900 or US $1,346.94 for Pontodamon at Zhoushan pursued under item 22 are established by the documentation at Tab 22, in particular the Trip Account and the two Royal Bank of Scotland’s Payment Debit Advices. This item is recoverable, representing as it does necessary and reasonable expenditure flowing from the maritime accident. So too are the communication / sundry charges of CNY 1,100.00 or US $149.66 paid to the same agency under item 23. These charges have been made out by the document at Tab 23.
62. Tonnage dues of US $600.00 are claimed under item 24. The supporting document is at Tab 24. This amount is also recoverable in full.
63. Item 25 concerns the Plaintiff’s claim for loss of hire consequent upon the collision. The amount sought is US $ 854,257.82.
64. The rationale behind such a claim was explained succinctly by Bowen LJ in the Argentino (1888) 13 P.D. 191, at pp. 201-202:
“ A collision at sea caused by the negligence of an offending vessel is a mere tort, and we have only therefore to consider what has been in the particular case its direct and natural consequence. This consequence (in the case of an innocent ship which is disabled by an accident) is that its owner loses for a time the use which he otherwise would have had of his vessel. There is no difference in principle between such a loss and the loss which the owner of a serviceable threshing-machine suffers from an injury which incapacitates the machine, or the loss which a workman suffers who is prevented from earning money by the wrongful detention of plant which cannot at once be replaced. A ship is a thing by the use of which money may be ordinarily earned, and the only question in case of a collision seems to me to be, what is the use which the shipowner would, but for the accident, have had of his ship, and what (excluding the element of uncertain and speculative and special profits) the shipowner, but for the accident, would have earned by the use of her. It is on this principle alone that it is habitual to allow in ordinary cases damages for the time during which the vessel is laid up under repair in addition to the cost of the repairs themselves. But this is merely an application of the general principle, and is not the measure in all cases of the loss. It might conceivably, upon the one hand, be the fact that the damaged ship would not and could not have earned anything at all while laid up for repairs, though such a case must necessarily be exceptional. In such circumstances nothing ought to be allowed for demurrage. Upon the other hand the direct consequence of the accident might be that the injured vessel was necessarily thrown out of her employment, not merely during the period of repair, but for a longer period still. In such a case the loss could not properly be measured by the time taken in repairs alone.”
65. At the time of the collision, Pontodamon had just gone on time charter to Bunge SA. The charterparty at Tab 25 page 180 stipulated a daily hire of US $75,000.00 and a minimum period of hire of 3 to 5 months. As a result of the collision, Pontodamon was laid up for permanent repairs and consequently was placed “off-hire” for a period of 11.98958 days on the evidence (see Tab 25 p. 178). The Plaintiff accepted that a deduction for an address commission of 5% from the gross hire loss of US $899,218.75 was appropriate, producing a net loss of US $854,257.82 as claimed.
66. The Defendants contended that damages for loss of hire were not recoverable unless it could be demonstrated that Pontodamon had Rightship approval, a condition under the time charterparty with Bunge SA. If the vessel lacked Rightship approval, the Plaintiff would have been in breach of the charterparty and Bunge SA would have had no obligation to pay any hire to the Plaintiff. Hence, no loss of hire would have be occasioned by the collision.
67. This argument has been convincingly met by the email at Tab 25 p. 113. The email dated 23 November 2007 clearly stated: “MV PONTODAMON … VESSEL RIGHTSHIP APPROVED AND OWNERS TO MAINTAIN SAID APPROVAL THROUGOUT THE DURATION OF THIS CP...” The owners had been requested to maintain such approval for the duration of the time charter and that was indeed the case.
68. I therefore award damages to the Plaintiff in the sum of US $854,257.82 under this head of claim.
69. Item 26 relates to bunker / expenses consumed whilst Pontodamon was off-hire. The amount sought is US $27,031.48 as can readily be discerned from the charterers’ email to the owners at Tab 25 p. 178 in which the charterers informed the owners that they would be deducting 47.2 metric tonnes of fuel oil at the charterparty price of US $560 per metric tonne as well as C/V/E (communications, victualling and entertainment) and commission adjustments from the next hire payment. The charterparty price of bunkers is in the Rider Clause 34 of the charterparty at Tab 25 p. 188. The calculation supporting this item of claim can be found in the off-hire credit note at Tab 25 p. 178. I allow this claim in full.
70. Item 27 is the usual claim for Agency at 1% on the established claims. The Defendants accepted that this is should be allowed. I so order.
VI. Summary of awards
71. The items allowed are listed out as follow:
| Item | Description | Amount awarded in US $ | ||
| Costs incurred at Shanghai | ||||
| 1 | Pilotage | 6,974.56 | ||
| 2 | Launch Hire | 1,632.65 | ||
| 3 | Tugs | 27,030.00 | ||
| 4 | Superintendence | 14,381.08 | ||
| 5 | Communication charges | 30.18 | ||
| 6 | Repatriation Costs | 75.00 | ||
| 7 | Agent’s Service/ Transportation Fee | 75.00 | ||
| 8 | Agent’s Fees | 600.00 | ||
| Costs incurred at Zhoushan | ||||
| 9 | Pilotage | 7,026.12 | ||
| 10 | Berthing | 167.35 | ||
| 11 | Quarantine Fees | 408.16 | ||
| 12 | Tug/ Escorting Fees | 5,582.59 | ||
| 14 | Superintendent’s Transportation/Handing Fees | 400.00 | ||
| 15 | Shore Pass Fees | 161.00 | ||
| 16 | Class Survey Fees | 6,522.00 | ||
| 17 | Damages Survey Fees | 34,704 | ||
| 18 | Permanent Repairs | 380,000.00 | ||
| 20 | Ferry Charges | 408.16 | ||
| 21 | Transportation Charges | 272.11 | ||
| 22 | Agent’s Charges | 1,346.94 | ||
| 23 | Communication/ Sundry Charges | 149.66 | ||
| 24 | Tonnage Dues | 600.00 | ||
| 25 | Off-Hire | 854,257.82 | ||
| 26 | Bunkers/ Expenses Consumed During Off-Hire | 27,031.48 | ||
| Sub-Total | 1,369,835.86 | |||
| 27 | Agency (1%) | 13,698.36 | ||
| Total | 1,383,534.22 | |||
VII. Conclusion
72. The Plaintiff is accordingly entitled to damages of US $1,383,534.22. There shall be interests thereon at judgment rate until full payment from the date of judgment. Additionally, the Plaintiff shall also have its costs of the assessment of damages including any costs that may have been reserved in respect thereof, taxed if not agreed, on party and party basis.
| (B.L. de Souza) Master of the High Court |
Messrs Ince & Co., for the Plaintiff
Messrs. DLA Piper Hong Kong, for the Defendants