"Front Ace", Owners of the Ship v "Vicky 1", Owners of the Ship [2008] EWCA Civ 101

[2008] EWCA Civ 101

Case No A3/2007/0648/0683

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION

ADMIRALTY COURT

The Admiralty Registrar

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 26/02/2008

Before

SIR ANTHONY CLARKE MR

LORD JUSTICE DYSON

LORD JUSTICE JACOB

Between

THE OWNERS OF THE “VICKY 1”Defendants/

(Transcript of the Handed Down Judgment of

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Ms Vasanti Selvaratnam QC (instructed by Thomas Cooper) for Claimants

Mr Simon Rainey QC and Mr Thomas Macey-Dare (instructed by Norton Rose) for Defendants

Judgment

Sir Anthony Clarke MR:

Introduction

[1]On 12 December 2002 the defendants’ tanker VICKY 1 came into collision with the claimants’ VLCC called FRONT ACE off Balikpapan in Indonesia while she was manoeuvring alongside FRONT ACE in order to receive part of her cargo in a ship to ship discharge operation. The bow of the VICKY 1 struck the starboard side of the FRONT ACE in way of her no 1 starboard cargo tank causing significant damage. The defendants subsequently admitted liability for the collision and the assessment of the quantum of damages was referred to the Admiralty Registrar, Mr Paul Miller, by consent orders dated 2 August and 8 November 2005. By an order made on 9 March 2007 the Registrar gave judgment for the claimants in the total sum of US$1,987,347.80, exclusive of interest and costs. Both parties sought permission to appeal. Permission was refused by the Registrar but subsequently granted to both parties by Moore-Bick LJ.

Issues in the reference

[2]Not all the items claimed by the claimants were in dispute. The defendants conceded that the claimants were entitled to recover the costs of repairing the damage and associated expenses, which amounted to US$79,274.79 together with agency at 1% and related interest and costs. The issues between the parties arose out of the loss of a fixture which had been entered into before the collision and which the claimants said that they were unable to perform as a result of the collision. This gave rise to essentially two questions; first, whether the loss of the fixture was caused by the collision and, secondly, if it was, how the loss should be calculated.

Issues in the appeal

[3]The Registrar resolved the first question in favour of the claimants. He held that the loss of the fixture was caused by the collision and, in that regard, rejected the defendants’ case that the claimants failed in various respects to take reasonable steps to mitigate their loss. The defendants challenge some of those conclusions in this appeal. In particular they challenge the Registrar’s conclusion that the loss of the fixture was caused by the collision.

[4]The second question before the Registrar was what was the correct approach to quantum. This involved two sub-questions. As to the first, the defendants argued for something called the ballast/laden method, submitting that the court was bound to adopt it by the decision of the House of Lords in The Argentino (1889) 14 PD 519. The Registrar rejected the submission that the court was so bound and awarded damages based on what was called the time equalisation method upon which the claimants relied. I will return to these methods below. The defendants maintain in this appeal that the Registrar erred in principle in this regard.

[5]The second sub-question arises out of the decision of the Registrar to reduce the amount he would otherwise have awarded for loss of the fixture, namely US$2,360,495.49, by 20%. He held that the correct approach was to treat the claimants’ loss as a loss of a chance, which he assessed at 80%. He did so by reference to the principles in Allied Maples Group Ltd v Simmonds & Simmonds

[1995] 1 WLR 1602

. It is this part of his decision which forms the basis of the claimants’ appeal. They say that, given the Registrar’s conclusions of fact on causation and mitigation, he should have awarded 100% of the loss caused by the loss of the fixture. The defendants, by contrast, say that the Registrar was right on this point. I will consider each of these topics in turn.

Loss of the fixture

[6]It just happened that the day before the collision the claimants had entered into a voyage charterparty dated 11 December 2002 with Chevron Tankers Ltd (‘Chevron’) under which the FRONT ACE (‘the vessel’) was fixed to load at 1/3 ports Arabian Gulf and to discharge at 1/2 ports Singapore, Thailand, Philippines at a freight rate of WS 125. As to the laydays at the loading port the charterparty provided:

“B. Laydays: 1-3 January 2003 to be narrowed to one day (0001-1600 hours) basis Mina Saud in Charterers’ option, declarable by 1800 hours Singapore Time on 20 December 2002.”

The charterparty further provided by “Special Provisions”:

“4. Cancellation Clause (Laytime) – In the event it becomes apparent that the vessel is unable to arrive within agreed cancelling, Owner to advise Charterer accordingly and Charterer to have 24 hours to either extend or cancel the charter without penalty to either side – (such clause to be in addition to the usual right to cancel in the event the vessel did not arrive and be ready to load on the stipulated cancelling date). 9. ETA – Owner will instruct vessel’s Master to advise all parties including Charterers of vessel’s Estimated Times of Arrival (ETAs) at load and discharge ports as instructed in Charterer’s Voyage Orders, or other written instructions.”

[7]Those were the relevant terms of the charterparty relating to the laydays and to the charterers’ option to cancel as at the time of the collision. By an addendum dated 16 December 2002 the following was added to the provision for the laydays:

“5th-7th January 2003 Basis Ash Shihr to be narrowed to one day (0001-1600 hours) by Charterer.”

On 26 December Chevron cancelled the charterparty in circumstances in which the Registrar held that they were entitled to do so.

[8]Thereafter on 30 December the claimants entered into a new voyage charterparty, this time with Vitol SA (‘Vitol’), under which the vessel was fixed to load at 1/2 ports West Africa for discharge at 1/2 ports Singapore, Japan. As the Registrar observed, both Chevron and Vitol are oil majors. The key difference between the two fixtures was that, whereas the freight rate under the Chevron fixture was WS 125, it was only WS 90 under the Vitol fixture. The voyages were of course different but the key difference and the reason for the substantial loss of profit asserted by the claimants was that the freight market declined between the two fixtures. There can be little doubt that the fall in the market influenced Chevron’s decision whether or not to cancel the charterparty.

[9]The critical issue before the Registrar was whether the loss of the Chevron fixture was caused by the collision. The claimants said that it was, whereas the defendants said that it was not but that it was caused by the claimants’ failure to take reasonable steps to mitigate their loss by proceeding to a repair port, namely Karimun, near Singapore, with reasonable expedition, so as to arrive and berth by mid afternoon on 22 December 2002. The defendants’ case was that, if the vessel had done so, she would have been repaired in time to avoid cancellation of the charterparty and would have avoided any loss by having to accept the Vitol fixture.

[10]The striking aspect of the case is this. After the collision the vessel discharged part of her cargo at Balikpapan. She then proceeded to another Indonesian port, namely Cilacap, where she discharged the remaining part of her cargo before proceeding to Karimun for permanent repairs which were necessary for her to be able to carry out the Chevron fixture. While the vessel was en route from Cilacap to Karimun, the master for some unaccountable reason decided to turn round and proceed back the way he had come for some hours, before again turning round and resuming his original course. The vessel returned to the point of deviation some 12 hours later. Mr Simon Rainey QC submits on behalf of the defendants that this was a wholly unexplained and ultroneous event which broke the chain of causation between the collision and the loss of the Chevron fixture.

[11]It was indeed a wholly unexplained event. It was not noted by the master in the deck log book. The master, who was not called to give evidence, does not mention it in his statement. There was nothing in the documents disclosed by the claimants to alert the defendants to it until about a day before the trial began when, at the defendants’ request, the claimants disclosed the vessel’s GPS log. The GPS log noted the positions of the vessel derived from her GPS during the voyage. The defendants had the positions plotted and it was only that plot that alerted them to the deviation described above. The claimants did not explain in evidence (or at all) why the deviation had been carried out. Mr Rainey submits that the Registrar could only speculate about the reason, that he was wrong to do so and that, in any event, his speculation is unsupported by evidence and unsustainable.

[12]Before considering the relevant legal principles and returning to this part of the appeal, I should note some aspects of the defendants’ case before the Registrar which are not, or are not now, pursued in this appeal. In the defendants’ skeleton argument in support of an application for permission to appeal, which was drafted by Mr Nigel Meeson QC, who had appeared before the Registrar, the reason given for the fixture being lost was that on 26 December Chevron were given an ETA Fujairah for 8 January which was outside the laycan, thereby entitling them to cancel. It was submitted that the ETA should have been expressed in the form of a range of dates in such a way that Chevron would not have been able to cancel the fixture and would not have done so. The Registrar rejected these submissions. The defendants initially sought to challenge that rejection but some time before the hearing they abandoned that part of their appeal.

[13]Before the Registrar the defendants advanced a further point, namely that the fixture was lost because the master insisted upon unnecessary tank cleaning while the vessel was at Karimun. However, the defendants do not rely upon this argument in the appeal. The appeal thus turns on the deviation.

The legal principles

[14]The legal principles under this head are not in dispute. They were correctly summarised by the Registrar and may be stated in this way. The burden is on the claimants to show that the loss of the Chevron fixture was caused by the collision. The claimants can show that but for the collision they would have performed the fixture. It follows that they are entitled to recover the loss flowing from the loss of the fixture unless there was a break in the chain of causation. The authorities contain many ways of expressing the kind of event which might break the chain of causation. Perhaps the best known, or one of the best known, is that quoted by the Registrar from the speech of Lord Wright in The Oropesa

[1943] AC 32

at 39:

“To break the chain of causation it must be shown that there is something which I will call ultroneous, something unwarrantable, a new cause which disturbs the sequence of events, something which can be described as either unreasonable or extraneous or extrinsic.”

[15]So the question is whether the loss of the fixture was the collision or a new cause, something which can be described as ultroneous or unwarrantable or unreasonable or extraneous or extrinsic. In this context I take each of those adjectives as expressing essentially the same idea. In the absence of any explanation by the master or by the claimants as to why the vessel deviated as she did, as I see it the question is whether the loss of the fixture was caused by the collision or by the deviation. No other extraneous or extrinsic cause has been suggested. In order to answer this question, it is necessary to analyse the facts in some detail. Having done so, I will consider briefly the burden of proof and mitigation of loss, in so far as it is necessary to do so.

The facts

[16]As stated above, the collision occurred on 12 December 2002. The damage to the vessel was inspected on the same day. On the next day, 13 December, Mr Ahluwalia, who was the technical superintendent employed by Wallems, whom the Registrar described as the vessel’s agents, sent a specification to various yards including Karimun. The specification included a liquidated damages clause and a provision that the vessel should be taken to the repair berth within 24 hours after arrival, unless otherwise stipulated by the claimants. On 14 December Karimun offered to carry out the repairs in eight running days on certain terms and conditions. Also on 14 December the master informed Wallems that his ETA Cilacap was 18 December, his ETD Cilacap was 19 December at 1100 LT and his ETA Singapore was 22 December at 1100 LT and that tank cleaning, which he specified in some detail, would take place on passage from Cilacap to Singapore and at Singapore. The master concluded by saying that the vessel would be ready for the proposed hot work by noon on 23 December. It was at that time contemplated that there would be a close up inspection at Singapore. During 14 December Mr Singh of Wallems informed Mr Nygaard of Frontline that the plan that was being worked out was an ETA at the yard on 23 December, with, say, six days for repairs and the vessel being likely to sail for the Persian Gulf on 30 December. Frontline, who were substantial tanker operators, were the managers of the vessel.

[17]On 15 December the master reported to Wallems that on the basis of an ETD Cilacap of 19 December, the ETA Singapore would be am on 22 December for carrying out a class survey and the vessel could then proceed to Karimun for repairs. On the same day Mr Singh sent Mr Nygaard a quotation from Karimun and asked him whether they should waste time on a close up inspection by rafting at Singapore anchorage or whether they should go direct to the yard where staging would in any event have to be built for the repairs. On the same day Mr Ahluwalia asked the yard whether they could reduce the repair period of eight days. On 16 December the master sent a message in much the same terms as before, although he attached his planned preparations for hot work at Karimun. Mr Nygaard emailed Mr Singh saying that “close up in Singapore can be cancelled if we choose Karimun for repair”. Wallems then informed the master that the close up inspection at Singapore had been cancelled and, if Karimun was chosen, that the vessel would call at Singapore only to pick up a surveyor.

[18]Those exchanges show that a repair contract had not yet been made with Karimun. Wallems were still trying to reduce the repair time, which the yard said on 16 December depended upon the amount of cleaning required. They also said that they were checking the availability of high tensile steel called AH32 and added that, once the claimants had confirmed the contract, they would appreciate it if Wallems would authorise them to make arrangements for the materials to be shifted to Karimun “from our Singapore side”.

[19]In the meantime, on 13 December, V Ships, who were in charge of post-fixture operations for the claimants, had informed Chevron’s brokers of the collision. Mr Jacobsen, who was based in Oslo and the chartering manager of Frontline, proposed an extended laycan option to Chevron. On 16 December the addendum quoted above was agreed and the master was informed. It is thus clear that both the claimants and Chevron intended to carry out the Chevron fixture at that stage. In any event, whatever Chevron’s approach, it was very much in the claimants’ interest to do their best to meet the cancelling date and perform the fixture because WS 125 was a favourable freight rate in the prevailing market conditions.

[20]On 17 December the master gave his ETD Cilacap as noon on 20 December and ETA Singapore OPL, which I think means outer port limits, at noon on 23 December. Internal discussions took place between Mr Singh and Mr Nygaard which in part related to the type of steel to be used. However that may be, it was agreed between them that the repairs with Karimun would be confirmed. Mr Singh so stated in an email to Mr Nygaard in which he noted:

“Ship is berthing on 18th am, ETD 20th, full speed sailing time to Karimun around 63 hours, this means ship will arrive shipyard on 23rd am. Sailing time from Karimun to Ras Ashir (sic) is 11 days. This means ship should sail out from yard on 26th December to arrive in time for loading. We do not believe repairs can finish between 23rd Dec and 26th Dec. Please discuss with operations department.”

There is no reply to this message in the documents before the court. Before the Registrar it was at one time suggested that the message showed that it was clear as early as 17 December that the Chevron fixture was going to be lost. However, this does not seem to have been a point which was pursued before the Registrar and it has not been pursued in this appeal.

[21]The contract between the claimants and Karimun was confirmed, at any rate in principle, in the course of 17 December. In his confirmation email to Karimun Mr Ahluwalia asked them to note that the vessel’s ETA Singapore would be 23 December. Karimun’s response said among other things that they had gone ahead to have materials sent to Karimun before the vessel’s arrival on 23 December. Mr Singh replied saying that there was a good possibility that the vessel might arrive on the evening of 22 December and asking the yard to be prepared so “we can start with the job early”. A little earlier he had emailed the yard saying “you can now start planning as we would like to complete the job in shortest time. Vsl ETA 23rd Dec morning.” It is possible that the source of the suggestion of an ETA before 23 December was the master. Having given an ETA Singapore OPL at noon on 23 December based on ETD Cilacap at noon on 20 December, later on 17 December he gave an ETD Cilacap at 1800 LT on 19 December.

[22]The yard responded to the suggestion that the vessel might arrive earlier by saying that there could be no night movement, after 1700 hours, for VLCCs at Karimun and that, if she arrived too late in the evening they might have to leave her at the Karimun anchorage and only move her in the morning.

[23]I should also note that on 17 December Mr Ahluwalia informed one of the surveyors who was to attend the vessel at Karimun that she was calling at Singapore OPL after noon on 23rd, so that his arrival in Singapore on 22nd December would be appropriate. Also on 17 December, V Ships informed Chevron’s brokers that the vessel’s ETA Singapore for repairs would be noon on 23 December and that, allowing six to eight days for repairs, ETD Singapore would be, say, noon on 30 December.

[24]There were further exchanges on 18 December which confirmed the ETA of the vessel as 23 December and also confirmed both the attitude of the claimants that the work should be done as soon as possible and the fact that the yard understood that to be the position. So, for example the yard emailed:

“ETA of vessel is on the 23rd December 2002 is noted and we will be in close liaison with your local Singapore agent, nearer to arrival date. Vessel’s off hire time is very short is noted and all efforts will be put in, to complete her soonest possible.”

The master sent a message on 18 December asking for charts for the Chevron voyage to be supplied during the vessel’s call at Singapore, again giving an ETA at Singapore OPL of am on 23 December.

[25]As to the position vis-à-vis Chevron, Mr Singh sent a message to V Ships saying that they had planned to do permanent repairs at Karimun to Class satisfaction, that the ETA Karimun was 23 December in the morning, that repairs would take about five days but that the exact time could only be given after an examination of no 1 starboard cargo tank. The master advised V Ships that the vessel would not be able to meet the laycan of 01-03 January but that she would try her utmost to meet the laycan of 05-07 January subject to departure from the yard. V Ships replied to the master saying that they understood that the tank would have to be examined internally but that “meantime from our end we trying to entice Chevron to stick with the vessel”. V Ships informed Chevron’s brokers that the vessel was expected to arrive in Singapore am on 23 December with five days provisionally advised for repairs, subject to internal inspection of the damage.

[26]It appears that the final agreement between the claimants and the yard may not have been made until some time on 18 December. In these circumstances, it seems to me to be appropriate to pause to assess the position at that time.

[27]First I should note that it was not (so far as I am aware) suggested that the claimants should not have contracted with Karimun. It was certainly not so suggested in the course of the appeal. Other yards were considered but Karimun was chosen for a number of reasons, including the price of the repairs and the time estimate of eight days. Mr Ahluwalia gave the reasons in his statement and (we were told) was not cross-examined about them. Karimun is in Indonesia but is owned and operated by Sembawang. He said that he negotiated the period with Mr Kok of Karimun and made the agreement when the yard agreed to obtain Class approved steel from Singapore and to reduce the repair period to five days. No complaint is made in this appeal as to the terms of the agreement between the claimants and Karimun.

[28]Secondly, and critically, as at 18 December, the state of mind of both parties was that, although the ETA of the vessel at the yard was 23 December, it was possible that she might arrive earlier and it was important that the repairs should be carried out as soon as possible in order to enable the vessel to be gainfully employed. There is nothing in any of the contemporary documents or, indeed in the oral evidence of the claimants’ witnesses, who included Mr Ahluwalia, Mr Nygaard and Mr Jacobsen, to support the conclusion that the claimants were in any way dragging their feet. On the contrary all the evidence is to the same effect, namely that they wanted the repairs done as soon as possible in order to enable them to perform the Chevron fixture.

[29]I should add that this is what one would expect. The claimants had no incentive to drag their feet or cause delay in such a way that the Chevron fixture might be at risk. The market was such that the freight rate of WS 125 was advantageous to them, so that their economic interest was in performing the charterparty. In my judgment, the contemporary documents support the conclusion that the claimants were doing what one would expect, namely to make arrangements to have the damage safely repaired as soon as reasonably practicable so as to give them the best chance of avoiding a cancellation of the fixture. Safety was of course of importance and fully taken into account. So, for example, Mr Singh sent a message to the master on 17 December which included the following with regard to the hot work which the repairs would entail:

“The hot work will be as per WSM safety standard and there will be no short cuts. You as Master must satisfy yourself that hot work standard of WSM are fully complied with …”

[30]In short, I would hold that the claimants and their various agents acted reasonably in taking the steps that they did and that, at any rate up to and including 18 December, there is no evidence of any failure on their part to take reasonable steps to mitigate their loss by performing the Chevron fixture if they could and there is no evidence of any extraneous (or other similar) event which might break the chain of causation if for some reason they missed the cancelling date and Chevron cancelled the charterparty.

[31]It follows that I would accept the conclusions reached by the Registrar to this effect. I have tried to consider the contemporary documents and the available evidence and to reach my own conclusion, both in order to evaluate the conclusions reached by the Registrar and in order to put the issues in the appeal in their context. Mr Rainey submits that when the vessel left Cilacap at 1300 on 19 December there was no reason why the vessel should not have reached Karimun, completed her repairs and arrived at Ash Shihir before the expiry of the laycan under the Chevron fixture at 1600 on 7 January 2003.

[32]In considering that submission it is to my mind important to have regard to the fact that throughout the exchanges to which I have referred the ETA Karimun was treated as am on 23 December. Although it was at one time thought that the vessel might arrive on the evening of 22 December, the yard had drawn attention to the fact that, as a VLCC, the vessel could not be berthed after 1700 hours in the evening. In all the circumstances, the Registrar was in my judgment entitled to find, as he did at [20], that the claimants acted reasonably in basing their plans on an ETA Karimun of am on 23 December.

[33]At some stage the second officer prepared a passage plan which formed the basis of much debate in the course of argument in this appeal. It appears that, as one would expect, the plan, which was (as I understand it) developed on a computer, was varied from time to time. The plan we have in the bundle, which may have been initially prepared on 14 December, was for the voyage from Cilacap to Karimun and gives an ETD Cilacap at 1300 LT on 19 December and an ETA Karimun at 1200 LT on 23 December. Both ports are in the same time zone, namely GMT plus 7. A number of features of the plan were drawn to our attention. The measured distance of the route, which is described as a safe route with acceptable under keel clearance, is stated at 1006 miles, although we were told that that is the distance to Singapore OPL and not to Karimun, which would be 1037 miles. That suggests that the plan was (at least originally) based on a voyage to Singapore OPL and not Karimun. The plan takes account, or purports to take account of tides and uses speeds adjusted for depth in some parts of the voyage. The master refers to it in his statement and there is nothing in it which in my opinion invalidates the conclusion that those on board the vessel were working to an ETA Karimun am on 23 December or that it was reasonable for them to do so. That is, in my opinion so for the reasons given above, even though it was originally contemplated that there would be a close-up inspection at Singapore which was later abandoned.

[34]It is unfortunate that the master was not called to give oral evidence, especially in the light of the deviation. However, he was not in the employment of the claimants at the time of the trial and there is no evidence that anyone on the claimants’ side, except the master and presumably those on board the vessel, was aware of the deviation. The claimants’ managers and agents, including in particular Mr Ahluwalia, were very critical of the master after the voyage, specifically in connection with the navigation of the vessel at Karimun. Although it is right to say that the master was subsequently exonerated, I would accept Ms Selvaratnam’s submission that, if the claimants, their managers or agents had been aware of the deviation, it would have been investigated.

[35]In the event the only evidence from the master, apart from the contemporary exchanges and a statement about berthing problems at Karimun, was a statement which had been taken from him by the claimants’ solicitors in order to deal with the pleaded allegations of delay. The statement did not of course deal with the deviation because Thomas Cooper & Stibbard were not aware of it. The master says in his statement that he instructed the second officer to prepare a passage plan to take the vessel through the Sunda Strait. He says that this was a slightly longer route which was chosen to give the crew time to carry out the proposed tank cleaning. The master also says that during the voyage from Cilacap to Karimun he adjusted the vessel’s speed from time to time so that she would arrive at the yard upon the completion of tank cleaning, purging and gas freeing. He wanted, if possible, to proceed straight to the berth and to avoid anchoring because he thought that the anchorage was not ideal for a VLCC and he did not want to anchor there. I see no reason on the face of it to reject that evidence. The only possible ground for doing so would be that he did not mention the deviation but, on the contrary, he concealed it, that he must have had something to hide and that his evidence should not therefore be regarded as reliable. I will return to this submission below.

[36]In his statement the master also gave details of the tank cleaning, purging and gas freeing. He said that all possible such work was carried out before arrival at Karimun except for the chemical cleaning which had to be done before the commencement of hot work and which it was not possible for the crew to carry out during the voyage because of the need for staging.

[37]The contemporary documents show that the vessel sailed from Cilacap at 1330 on 19 December. The master gave an ETA Singapore OPL of either 0700 or 0900 23 December. Later on 19 December V Ships gave Chevron’s brokers and ETA Singapore of 23 December. The records show tank cleaning and gas freeing until 2400 hours. On 20 December the master reported an ETA at Singapore OPL of 0700 on 23 December and stated “speed adjusted in order to arrive repair yard in clean condition”. Wallems replied noting the ETA and saying that Mr Ahluwalia and others would meet the vessel with a required chart. The master gave the yard an ETA off Karimun Island at 1100 on 23 December and requested an Indonesian chart. He also sought confirmation about the tides. The records show tank cleaning en route.

[38]On 21 December, which was a Saturday, the master gave an ETA off Karimun of 1000 on 23 December. Wallems replied noting his ETA Singapore OPL on the morning of 23 December and all parties were informed. A little later the master confirmed his ETA Singapore OPL at 0600 on 23 December and stated “speed adjusted in order to arrive at rpr yard in clean condition”. The records show tank cleaning between 0600 and 2100.

[39]On 22 December the master reported that no 1 starboard cargo tank was gas free and ready for hot work “yesterday evening”. He also gave the gas content of other tanks and an ETA Karimun at 1000 on 23 December. The records show tank cleaning by two members of the crew. The master again reported his ETA at Singapore OPL and the fact that his speed was adjusted to arrive at the yard in clean condition. I interpose to note that the master’s subsequent voyage report dated 29 December, which gives details of the voyage does not state that the vessel deviated for 12 hours but does say that the vessel adjusted speed to arrive at Karimun am on 23 December.

[40]The vessel arrived at Singapore OPL at 0800 on 23 December where she was boarded by Mr Ahluwalia and two others and supplied with an Indonesian chart. The vessel subsequently proceeded to Karimun but at 1100 she anchored off the yard due to unavailability of tugs. It had been hoped that she would berth at slack water, which was at about 1230, but in the event she was assisted to her berth at about 1555 by three tugs. The master subsequently filed a report in which he was critical of the pilot and the tugs and other aspects of the berthing procedure which he regarded as unsuitable for a VLCC.

[41]The Class surveyor boarded and repairs subsequently began but on 26 December Chevron cancelled the charterparty following receipt of an email from V Ships in these terms:

“… I have just spoken to the Master who advises that all repairs will be completed and the vessel sail from Singapore AM 30th AGW. Basis departing Singapore AM 30th the vessel has ETA Fujirah 8 Jan AM.”

As stated above, it is now accepted that Chevron were entitled to cancel the fixture and no criticism is now levelled at the claimants for the terms in which that message was sent to Chevron. In the event the repairs took 6 days 12 hours.

[42]The defendants’ case depends upon a single submission. It is that the vessel could and should have arrived at Karimun on 22 December, a day earlier than she did, thereby starting repairs much earlier so as to enable the claimants to give an ETA within the laycan. The first step in that argument is that the Registrar held that the vessel could have arrived and berthed at Karimun before 1700 on 22 December. The Registrar so held in [28] as follows:

“I make the following findings. Firstly that in all probability tank cleaning such as could be achieved on the voyage was done by the evening of 21 December 2002 and that any tank activity on 22 December 2002 was in the nature of maintaining the state of the tanks rather than cleaning the same. Secondly I find that the vessel could have arrived earlier than it did. The essential issue is how much earlier since in essence the Defendants need to establish that in all probability the repair could have been advanced (in respect of start and finish) by one day thereby calling for a date of ETA Fujariah (Ash Shihr in fact) 07 January 2003, that is to say within the amended lay can to appear in the e-mail of 26 December 2002. I return to this below. Thirdly it is clear that the vessel could (physically that is in terms of engine capacity) have arrived 12 hrs earlier with tanks cleaned as much as possible en voyage but of itself this period is nihil ad rem in the light of the repair yards’ exhortation preventing VLCC movements after 1700 hrs. Fourthly I hold that the Front Ace could in terms of her engine capacity have achieved a higher average ballast speed than she did which was the result of adjusting down from her stated ballast speed of 14 knots and the real issue here is by how much if by any amount she could and should have exceeded 14 knots in all the circumstances including the adverse current of up to 1 knot and any restrictions imposed upon berthing by tide conditions. I hold that this vessel could have arrived and berthed by mid afternoon on 22nd December 2002 achieving such before the 1700 hrs VLCC movement restriction having proceeded at an average speed somewhat in excess of 14 knots but not exceeding 14.5 knots and with an OPL to berth time of 4.5 hrs. On this basis she would not have arrived in time to berth at slack water but I find that such was not a prerequisite of berthing though clearly desirable if possible. In fact she did not berth at slack water when she berthed on 23rd December 2002. I so hold on this scenario which is based on the premise that the vessel would have been stemmed for repairs for 22nd December 2002 and would have been ordered to proceed with all possible haste and without detracting from my view that the programming including berthing at slack water was not in the circumstances of this case unreasonable. I hold that average speeds of 15 knots and 15.5 knots were not reasonably to be expected in the light of the prevailing adverse current of 1 knot. On this basis an advance of one day could have been in all probability achieved with its consequential advancement of departing the repair yard at Karimum.”

[43]Although the Registrar so held, it is to my mind a key part of that holding that, as he put it, that scenario was “based on the premise that the vessel would have been stemmed for repairs for 22 December”. In these circumstances a critical part of his conclusion that the claimants did not fail to take reasonable steps to mitigate their loss was that it was reasonable for them to have made their arrangements on the basis of an ETA Singapore OPL of 23 December. For the reasons I have given in [27-31] above, that finding was in my opinion justified and, that being the case, there seems to me to be no reason to blame the master or the claimants for adjusting the speed of the vessel to arrive in accordance with the ETA.

[44]The Registrar’s reasoning on this point is to be found in his [24-28] as follows:

“24. I consider first whether this conduct of Owners and more particularly of the Master as regards its quality and character is capable of constituting a failure to mitigate or as an intervening event breaking the chain of causation. I consider the same conduct in terms of its actual effect (i.e. causative effect) below though in a case where time is short the potential effect of tardiness is a factor to be taken into account in assessing the quality and character of the conduct. I remind myself of the law set out in paragraphs 16 and 17 above, in particular that the onus is upon the Defendant to establish that the conduct falls outside the reasonable, that the victim’s duty is not an onerous one and that conduct of a victim of tort in dealing with the situation in which the Defendant’s conduct has placed him is not to be weighed in nice scales. 25. The prosecution of this voyage has to be viewed against the fact as I have already found that no criticism is to be levelled against Owners and their agents for the selection of Karimun, for the programming geared to ETA Karimun of 23 December 2002 AM and for the plan to clean such tanks as the yard required to be cleaned en route. Five tanks 1S, 1C, 1P, 2C and 4C were cleaned. Further I hold that there is no evidence that the Master’s programming of the voyage and tank cleaning was at the time it was planned fundamentally flawed even though it was to prove that not so much time was required for tank cleaning (see further below). 26. I hold that the conduct of Owners and in particular the Master in or about and during this voyage does not in its quality and character amount to conduct capable of constituting a failure to mitigate or a break in the chain of causation. There is in my judgment nothing outside the realms of reasonable response to the circumstances created by the collision. In so holding I do not overlook my finding (see below) about when tank cleaning as far as possible en voyage was achieved. Nor do I overlook the 12 hrs when no forward progress in the voyage occurred. This period occurred virtually at the commencement of the voyage and in the absence of any evidence of any other explanation I hold in all probability to have been designed to prevent the ship arriving too early and in particular to accommodate the yard’s prohibition of post 1700 movements. It is an odd way to achieve this end but in terms of quality and character of conduct is simply an odd way of achieving a reasonable aim. Whilst the Defendants could rightly complain had they been asked to pay for the bunkers consumed during the 12 hrs period I hold they fail to establish any conduct of a quality and character capable of amounting to a failure to mitigate or capable of constituting a breach of chain of causation.”

[45]In [24] and [26] the registrar three times uses the expression that the conduct of the owners and master was not ‘capable of’ amounting to conduct constituting a failure to mitigate or a break in the chain of causation. However, I do not think he can have meant that. He must surely have meant simply that their conduct did not break the chain of causation between the collision and the loss of the fixture and did not amount to a failure to take reasonable steps to mitigate the claimants’ loss. In any event that was as far as he needed to go in order to resolve the issues of causation and mitigation. The question in this appeal is whether he was wrong so to conclude.

[46]In my judgment he was not. Once it is concluded, as I have done at [27-31], that the Registrar was entitled to hold that it was reasonable for the claimants to make their arrangements on the basis of an ETA Kerimun am on 23 December, there is no sensible basis for criticising the master or owners for failing to take steps to arrive earlier. The vessel did arrive at Karimun in the morning of 23 December in accordance with the ETA and the arrangements which the claimants had previously (and reasonably) made with the yard. Nothing had happened to make the master reasonably think that he should arrive earlier.

[47]In these circumstances, although it is true that we do not know why the master decided to carry out the 12 hour deviation described above, the Registrar could reasonably conclude that the probable reason was that it was designed to allow the vessel to arrive at Karimun in the morning of 23 December in accordance with his instructions. He could reasonably so conclude because no-one has been able to think of any other explanation. There is no suggestion that he was on a personal frolic of his own. As the Registrar put it in [26] quoted above, it was an odd way to achieve that end but in terms of quality and character of conduct it was simply an odd way of achieving a reasonable result.

[48]I entirely understand Mr Rainey’s point, which he made powerfully and with great emphasis, that the deviation by the master was an ultroneous and extraneous event which the claimants have not only failed to explain, but which the master obscured by failing to enter it in the deck log book. Mr Rainey also invites the court to draw adverse inferences from the late disclosure of the GPS log and relies on other failings in the claimants’ disclosure. However, the question is ultimately whether the collision was the effective cause of the loss of the Chevron fixture. That question must be answered on the balance of probabilities in the light of all the evidence in the case. Although the Registrar had earlier formulated the test on the footing that the burden of proving a failure to mitigate or that there was a break in the chain of causation was on the defendants, it seems to me from the way that he expressed his conclusions in [26] that he made a positive finding that there was no break in the chain of causation.

[49]Mr Rainey submits that his conclusion that the reason for the deviation given by the Registrar, namely that it was in order to arrive in the morning of 23 December, was not based on evidence but was mere assertion by Ms Selvaratnam. I would not accept that submission. As just stated, the Registrar was entitled (and indeed bound) to consider the evidence as a whole and to decide whether the collision was the effective cause of the loss of the charterparty. He did precisely that and, for the reasons I have given, was entitled to hold on the balance of probabilities that the deviation was for the reason stated and that the causal link was established.

[50]That is in my judgment so, even though there were other ways of achieving the same end. It is not, for example, in dispute that, as the defendants’ expert Captain Frampton said, the vessel could have acted differently. He was asked whether the fact that the vessel corresponded to an order to arrive with the cargo tanks in clean condition. He replied:

“No. If you were wanting to arrive at a specific time, the best way to do this is to steam at a steady and constant speed throughout the voyage to arrive at that time, not to steam at a high speed then retrace your steps and then continue on the passage again. So that is inconsistent. One way to arrive with your tanks in clean condition is to proceed at a fairly moderate speed, or even quite a high speed, and then wait off the port, which of course has the advantage then that if something changes you can utilised the time you have gained. I suppose it is the old adage of ‘waste not a minute’.”

I entirely understand that point of view but it nevertheless seems to me that, unless the planned ETA of 23 December was unreasonable, which for the reasons that I have given in my opinion it was not, the master is not to be blamed for planning her arrival in accordance with it, at any rate in circumstances such as existed here. As the Registrar observed, the position might be different if the claimants were claiming the cost of bunkers used during the 12 hour period of deviation.

[51]I would add three points by way of postscript. The first is that a saving of 12 hours would probably not have made any difference. As the Registrar observed in his [28], the fact that, but for the deviation the vessel could have arrived 12 hours earlier than she did was nihil ad rem in the light of the yard’s prohibition of vessels of the size of the FRONT ACE berthing after 1700. The vessel in fact arrived at Singapore OPL at 0800 on 23 December. If she had arrived at 2000 on 22 December and then proceeded to Karimun she would not have been allowed to berth until some time in the morning. Moreover it was reasonable for the master to plan her berthing at slack water. In the event she could not berth at slack water because of the shortage of tugs and there is no evidence that, if she had arrived at Karimun a little earlier on 23 December than she did in order, in principle, to be able to berth on arrival, there would have been sufficient tugs to enable her to do so. In these circumstances it is more likely than not that the delay of 12 hours caused by the deviation did not cause the vessel to berth later than she would have berthed if there had been no such deviation.

[52]The second point is that in these circumstances it is not necessary for us to consider upon whom the burden of proof lies on the question whether there was a break in the chain of causation. The third point is that, while I entirely understand why, when granting permission to appeal, Moore-Bick LJ emphasised the importance of completing voyages with the utmost despatch, I have been persuaded by Ms Selvaratnam that the Registrar was entitled to reached the conclusion he did.

[53]In all the circumstances I would dismiss the appeal on this ground.

Correct approach to quantum

[54]The claimants’ case on quantum was based on the time equalisation method. The Registrar accepted their approach and rejected the defendants’ ballast/laden method. The defendants say that he was wrong in principle to do so.

[55]The defendants’ case was that the Registrar ought to have awarded the sum of US$847,648 in respect of the loss of the fixture, with a consequent reduction in the 1 per cent for agency. That figure is derived from the agreed profits from the lost Chevron fixture of US$1,987,765.39, which gives a time charter equivalent of US$62,371 per day (based on 31.87 days) less the appropriate daily rate of US$35,773 from the Vitol fixture, which was derived from agreed profits of US$3,180,891 over 88.92 days from 1330 on 19 December 2002 to 1130 on 18 March 2003. The claimants contended for a slightly higher figure.

[56]The claimants’ case is said to have been based upon agreed facts and figures as follows. The Chevron fixture would have ended on 20 January 2003 and would have provided the claimants with the profit stated above of US$1,987.765. The Vitol fixture ended on 18 March 2003 and in fact provided the net profit stated above of US$3,180,891. In the period between the end of the Chevron fixture on 20 January 2003 and the end of the Vitol fixture on 18 March 2003 the vessel would have earned an average net figure of US$3,553,622. That figure represented the average net earnings over the 57 days between 20 March 2003 and 18 March 2003 derived from a very large selection of all the likely voyages which the vessel would have been able to perform in that period. The loss was accordingly the sum of US$1,987,765 in respect of the profit that would have been made on the Chevron fixture plus the sum of US$3,553,622 in respect of the profit which would have been made between the end of that fixture on 20 January and the end of the Vitol fixture on 18 March, namely US$5,541,387, less the profit which was in fact made on the Vitol fixture, namely US$3,180,891, which yields a net loss of US$2,360,496.

[57]There was some doubt in the course of the appeal as to whether those figures were agreed if the claimants’ methodology was accepted. However, as I read the transcript they were agreed. At Day 9 pages 13 and 14 the then leading counsel for the defendants was asked by the Registrar whether, on that assumption, he was contending for any different range of figures and he said:

“I think not on the time. If the court accepts this methodology, then we have the figures that have been produced, but that begs the question whether this is the right methodology to apply, which is a separate issue.”

In these circumstances it seems to me to be clear that the issue was one of methodology.

[58]The defendants’ case is and was that the Registrar was bound by the decision of the House of Lords in The Argentino to adopt the ballast/laden method. They say that the facts of that case were in all material respects the same as in the instant case. As a result of a collision the ARGENTINO was unable to fulfil her next fixture because the collision damage repairs could not be completed in time to do so and her owners claimed damages in respect of the loss of earnings derived from the lost fixture. The claim for loss of profit was put as follows:

“Loss of profit on succeeding voyage which had been contracted for, but which the defendants were unable to carry out, and for which another steamer was substituted, including eight days’ time loss in loading cargo upon next voyage beyond the time which would have been consumed in loading the cargo originally contracted for…”

[59]Lord Herschell, with whom Lord Fitzgerald and Lord Macnaghten agreed, said at page 524:

“But where such a claim is made as in the present case, the owner cannot, I think, be allowed in addition as a separate item demurrage in respect of the time the vessel was under repair. If he obtains as damages the loss which he has sustained owing to the loss of employment he had secured he is put in the same position as if there had been no detention. There would of course have to be taken into account, however, that if the shipowner lost the contemplated voyage, he had the use of the vessel as soon as the repairs were completed for any other purpose, and what he earned, or rather what he would have earned upon any other venture during the time he would otherwise have been engaged upon the contemplated voyage, must be set against the sum allowed him in respect of the loss of that voyage. It must be borne in mind of course that the set-off or deduction ought only to be in respect of what might have been earned in that part of the time covered by the lost voyage during which the owner has the use of his ship. It is, I think only in this way that in a case like the present the length of time during which the ship was laid up for repairs can be taken into account. It is one of the circumstances to be considered in assessing damages.”

[60]I agree with the Registrar that that statement by Lord Herschell is not binding authority for the proposition that the ballast/laden or loss of use/loss of profit basis is the appropriate methodology to be adopted in all cases where a claimant loses a fixture as a result of a collision. The House of Lords was not saying that as a matter of principle that is the only method of assessing loss of profit. It was simply considering whether the loss advanced by the claimants was recoverable.

[61]As I see it, the question for decision in every such case is simply what, if any loss of profit was incurred as a result of the collision. The underlying principle is of course that the claimants are entitled to restitutio in integrum, no more and no less. How their loss of profit is to be calculated will depend upon the facts of the particular case: see eg per Bowen LJ in The Argentino (1888) 13 PD 191 at 203. As the Registrar observed, the ballast/laden method may be appropriate in a particular case but it may not. All will depend on the circumstances.

[62]I am not sure that the defendants have permission to appeal the question whether the time equalisation method was appropriate on the facts here. However, I will briefly consider it. It was based upon the evidence of the claimants’ expert Mr Colin Pearce. In short it was based upon the earnings which the vessel could expect to have made in the 57 days between 20 January 2003, which was the projected end of the Chevron fixture and 18 March 2003, which was the actual end of the Vitol fixture. Since the Vitol fixture was directly caused by the collision this seems to me to have been a logical period to have taken. During that time it would have been possible to complete either one voyage from the Arabian Gulf (‘AG’) to North West Europe or two voyages from the AG to Singapore and in both cases to leave the vessel approximately the same distance from her primary loading area as she was following her discharge at Cilacap. In this way it was possible to compare like with like.

[63]Under the ballast/laden method both the theoretical Chevron voyage and the actual Vitol voyage are defined as starting on completion of discharge at Cilacap and finishing on discharge of the Chevron cargo. In this way each voyage has a ballast leg followed by a laden leg and (as set out above) the time charter equivalent is calculated for the Chevron voyage and then compared to the actual time charter equivalent achieved on the Vitol fixture for the period over which the voyage dates coincide.

[64]While this method is much used for some purposes in the industry, as the Registrar recognised it has some flaws. First, it is unsuitable for VLCCs which have one major loading area, namely the AG, because it does not reflect the commercial importance to an owner of discharging as closely as possible to the AG. Secondly, it does not take account of different voyage lengths. It is not possible satisfactorily to compare the Chevron voyage which would have ended on 20 January with the Vitol fixture which did not end until 18 March, whereas the time/equalisation method does take account of the overall position until the end of the substitute charterparty, which was entered into as a direct result of the collision. It was no doubt for these reasons that Mr Pearce and Mr Charles Lawrie, who was the defendants’ expert, agreed at the experts’ meeting that the time/equalisation method was a valid methodology and also said in a later report that they had both adopted that approach in their reports.

[65]There was some disagreement initially as to the figure which such an approach produced but ultimately Mr Lawrie produced a figure based on a very large number of possible fixtures and on the carrying out of an averaging process. That figure was the above figure of US$3,553,622 for the net profit that would have been earned by the vessel in the 57 days between 20 December and 18 March. It was approximately in the middle of the range which had been produced by Mr Pearce, which was between US$3,188,637 and US$3,520,690. In the light of that fact the figure was agreed on behalf of the claimants and it was this that led to the statement by leading counsel for the defendants quoted above.

[66]Notwithstanding the stance of Mr Lawrie, it was and is submitted on behalf of the defendants that the time/equalisation method is too speculative for use in this context and we were warned against the risk of taking into account “uncertain and speculative and special profits” of which Bowen LJ spoke in The Argentino, a statement which was echoed by Jenkins LJ in The Soya

[1956] 1 WLR 714

at 727. However, I would not accept that submission. As stated above, it was clear that the vessel would have been profitably engaged in the whole period until 18 March (and beyond) but for the collision and the experts ultimately agreed an appropriate figure.

[67]In all these circumstances it seems to me that the Registrar was entitled to prefer the claimants’ methodology to that of the defendants. I would therefore dismiss the defendants’ appeal on this ground.

Loss of a chance

[68]The claimants submitted to the Registrar that on that basis the loss of profits should be assessed at US$2,360,496 (or more accurately US$2,360,495.49). However the Registrar accepted the defendants’ submission that the damages should be assessed on the basis of the loss of a chance in accordance with the principles in Allied Maples v Simmons & Simmons

[1995] 1 WLR 1602

. He assessed that loss as 80 per cent and accordingly awarded US$1,888,396.30 under this head. The claimants say that he was wrong in principle to assess these damages on the basis of a loss of a chance.

[69]Ms Selvaratnam submits that this is not a loss of a chance type case. It is a case in which the claimants proved on the balance of probabilities that they would have employed the vessel profitably in the 57 day period discussed above and that their average net earnings in that period would have been US$3,553,622. This figure was agreed by Mr Lawrie and the defendants on the basis that(a) it was in the middle of the range supported by Mr Pearce and

(b) agreement to the figure would fix the amount of the claimants’ loss, which would not be subject to further reduction. There was no suggestion in the course of the evidence of the experts or at the time of the concession quoted above that it was the defendants’ case that the figure should be reduced on the basis that the claimants’ claim was limited to the loss of a chance or that it would be appropriate to deduct 20 per cent to reflect contingencies or the risk that the vessel might not in fact earn that amount of profit. The first time that any such suggestion was made was in the latter stages of closing submissions, long after the figures had been agreed and long after the opportunity to recall Mr Pearce to substantiate a higher figure had passed.

[70]Ms Selvaratnam further submits as follows. It was not in dispute that the vessel was a modern single hull VLCC operated by premier tanker operators who would have had little problem in obtaining fixtures at the time. The averaging process used by Mr Lawrie to calculate the figure ensured that there would be no over compensation. The claimants adduced unchallenged evidence from Mr Jacobsen that the claimants achieved 96 per cent utilisation for the vessel, as the Registrar found at [20]. In these circumstances there is no room for a deduction of 20 per cent on the basis that the vessel only had an 80 per cent chance of obtaining a fixture or fixtures yielding the net profit agreed.

[71]I would accept those submissions. I am not persuaded that this is a case for the application of the loss of a chance approach discussed in Allied Maples among many other cases. This is not as I see it a case in which, as Stuart-Smith LJ put it at 1611A-B, “… the plaintiff’s loss depends on the hypothetical action of a third party, either in addition to action by the plaintiff, as in this case, or independently of it.” It is not a case where the claimants’ loss depends upon a chance of making a particular contract. The exercise upon which the experts were engaged was to find the appropriate market rate for the use of the vessel in the relevant 57 days in circumstances in which it was established that she would have been profitably employed during that period. The experts agreed the appropriate figure. So indeed did the parties, at any rate assuming that it was appropriate to adopt the time equalisation approach, which in my opinion it was.

[72]There are many cases in which courts or arbitrators have to determine what rate of profit would have been earned but for a tort or breach of contract. As I see it, in a case of this kind, where the court has held that the vessel would have been profitably engaged during the relevant period, where there is a relevant market and where the court can and does make a finding as to the profit that would probably have been made (and has been lost), there is no place for a discount from that figure to reflect the chance that the vessel would not have been employed.

[73]It has not in my experience been suggested in the past that any such discount should be made. This situation is to be contrasted with a case in which it is not shown that the vessel would have been profitably employed but she might have been. It may be that in those circumstances it would be possible to approach the problem as a loss of a chance. However, I would not wish to express a firm view on that question in this case, where it does not arise on the facts. Here, given the exercise carried out by the experts and given the figure agreed by them, there is in my opinion no warrant for a reduction of 20 per cent, either to reflect a risk that the vessel would not have been employed or for contingencies to reflect that the figure agreed might not be accurate.

[74]For these reasons I would hold that the Registrar was wrong to make such a deduction from the agreed figure and that he should have awarded damages for loss of profit in the sum of US$2,360,495.49. It follows that I would allow the claimants’ appeal on this point.

CONCLUSION

[75]For the reasons I have given I would dismiss the defendants’ appeals on the fixture point and on the approach to quantum point and would allow the claimants’ appeal on the loss of a chance point. It follows that I would vary the order of the Registrar to the extent of increasing the sum he included in the calculation of damages in respect of loss of profits from US$1,888,396.30 to US$2,360,495.49 with a corresponding increase in the sum payable for agency at 1%.