"Front Ace", Owners of the Ship v "Vicky 1", Owners of the Ship

Damages for a fixture lost through a collision must restore the claimant to the position it would probably have occupied, without overcompensation. No single method of calculating lost profit is mandatory. The appropriate method depends on the facts and should compare like with like.

Where profitable employment during the relevant period is established, a market exists and the court can find the profit that would probably have been earned, the award should not be discounted as a loss of a chance. An intervening act breaks causation only if it constitutes a new, unwarrantable or unreasonable cause which disturbs the sequence of events.

The defendants’ tanker, VICKY 1, collided with the claimants’ vessel, FRONT ACE. Liability was admitted, and assessment of damages was referred by consent to the Admiralty Registrar. The principal claim concerned a profitable Chevron fixture which was cancelled while FRONT ACE underwent collision repairs. The claimants subsequently entered a less profitable and longer Vitol fixture.

The Registrar found that the collision caused the loss of the Chevron fixture and rejected allegations that the claimants had failed to mitigate their loss. He adopted the claimants’ time equalisation method for calculating lost profit, but reduced the resulting figure by 20% as damages for loss of a chance.

The defendants appealed against the findings on causation and the method of assessment. The claimants cross-appealed against the 20% reduction. The central issues were whether an unexplained 12-hour deviation broke the chain of causation, whether The Argentino (1889) 14 PD 519 required the ballast/laden method, and whether the agreed lost-profit figure should be discounted.

1. The defendants’ appeal was dismissed and the claimants’ cross-appeal was allowed. Sir Anthony Clarke MR held that the collision remained the effective cause of the lost fixture. The claimants had acted reasonably in arranging repairs on the basis of arrival at Karimun on the morning of 23 December. The vessel arrived in accordance with that reasonable plan.

2. The unexplained 12-hour deviation did not break the chain of causation. Applying The Oropesa [1943] AC 32, an intervening event must amount to a new, unwarrantable, unreasonable, extraneous or extrinsic cause which disturbs the sequence of events. The Registrar could find on the balance of probabilities that the deviation was an unusual means of achieving the planned arrival time. It probably made no difference to the berthing time because a vessel of FRONT ACE’s size could not berth after 1700 hours. The court therefore did not need to decide who bore the burden of proving a break in the chain of causation.

3. The Argentino (1889) 14 PD 519 did not require the ballast/laden method in every collision case involving a lost fixture. The governing principle was restitutio in integrum: the claimant should recover the profit lost because of the collision, no more and no less. The proper calculation method depends on the circumstances.

4. The Registrar was entitled to adopt the time equalisation method. It assessed the vessel’s probable earnings until the end of the substitute Vitol fixture and allowed a like-for-like comparison. The ballast/laden method did not adequately reflect the vessel’s principal loading area or the different lengths of the lost and substitute voyages. The experts ultimately accepted the time equalisation methodology and the relevant earnings figure.

5. The 20% loss-of-chance discount was wrong. This was not a case in which loss depended on the hypothetical conduct of a third party within Allied Maples Group Ltd v Simmonds & Simmonds [1995] 1 WLR 1602. Profitable employment was established, a relevant market existed, and the experts and parties had agreed the probable earnings. There was therefore no warrant for discounting the agreed loss.

6. The Registrar’s order was varied by increasing damages for loss of profit from US$1,888,396.30 to US$2,360,495.49, with a corresponding increase in agency at 1%.

1. Court of Appeal (Civil Division): In [2008] EWCA Civ 101, dismissed the defendants’ appeals on causation and the method of assessing lost profit. It allowed the claimants’ cross-appeal against the loss-of-chance discount and increased the lost-profit award to US$2,360,495.49.

2. High Court, Admiralty Court: The Admiralty Registrar held that the collision caused the loss of the Chevron fixture and adopted the time equalisation method. He assessed the recoverable chance at 80% and awarded total damages of US$1,987,347.80, excluding interest and costs. Permission to appeal was refused by the Registrar but subsequently granted to both parties by Moore-Bick LJ.