Saga Cruises BDF Ltd & Anor v Fincantieri SPA

A contract for repair and refurbishment is construed as a whole, with technical specifications and price-breakdown documents read together unless they are clearly irreconcilable. A contractor undertaking an overhaul must use reasonable skill and care, inspect as necessary, and report material findings relevant to further work. It need not recommend a particular commercial course unless the contract requires that recommendation.

Concurrent delay affects liquidated damages only where both events actually cause delay to completion at the same time. A delivery or completion protocol does not surrender accrued contractual damages without clear words. Breach may be established without causative loss, but damages require proof that the breach caused the claimed loss.

The claim arose from a contract for the dry docking, repair and refurbishment of the cruise ship SAGA SAPPHIRE. The owners claimed damages, assigned in part to the ship’s operator, after a main-engine lubricating-oil cooler failed shortly after redelivery. They alleged inadequate cleaning, inspection and reporting, and sought repair and cruise-cancellation losses.

The owners also claimed liquidated damages for delay between the revised completion date of 2 March 2012 and redelivery on 16 March 2012. The principal issues were the scope of the Yard’s contractual duties, causation, the effect of the completion protocol, recovery by the assignee, concurrent delay, and the date on which liquidated damages ceased to accrue.

1. Luboil coolers. The Specification and Appendix 11 had to be read together. Following Change Order 55, the Yard was required to carry out an in situ overhaul short of retubing and to do what was necessary to enable the Owners to decide whether retubing was required. This included reasonable skill and care in cleaning, inspection, pressure testing and reporting material findings. The Yard had to report relevant observations and make the opened cooler available for inspection, but was not required positively to recommend retubing: paras [50]–[56].
2. The Yard breached its duties by inadequately cleaning the water side and failing to report the condition of the coolers. The contractual pressure-testing requirements were also not met, although that breach was not causative. The coolers had substantial longstanding corrosion, but the evidence did not establish that they were already holed at Palermo: paras [107]–[123].
3. The breaches did not cause the claimed physical or consequential losses. Proper cleaning would not, on the balance of probabilities, have revealed a need for retubing, and the Owners themselves could observe the material corrosion. The failure was principally caused by longstanding corrosion and was not shown to have resulted from the Yard’s breaches: paras [135]–[146].
4. The Protocol recorded completion and did not exclude common-law contractual damages. Clear words were required to surrender valuable remedies. The guarantee claim would also have succeeded on notice, subject to the contractual exclusions and the findings on causation: paras [163]–[172], [192]–[203].
5. Where a breach causes loss in the operation of a cruise ship, the assignee of the contractual rights may recover substantial damages for that loss where the assignment does not prejudice the contract-breaker. The court would have allowed recovery of the cruise-related losses under the principles discussed in Offer-Hoar v Larkstore and the Albazero line of authority, although the issue did not affect the outcome: paras [205]–[226].
6. Delay. The liquidated-damages clause and the permitted-delay provisions were separate contractual regimes. Concurrent delay could assist the Yard only where both events actually caused delay to completion at the relevant time. The Yard could not rely on merely theoretical or non-causative delay attributable to the Owners: paras [234]–[251].
7. Under the Trieste Agreement, completion for present purposes was not achieved until the Yard could properly deliver the Vessel, including completion of relevant Class and safety items, or until remaining work could be completed during the transfer voyage subject to the contemplated undertaking. The Protocol was signed on 16 March 2012 and no earlier waiver or agreement stopped time running: paras [252]–[256], [264]–[285], [314]–[316].
8. The Yard was responsible for delay beyond 2 March 2012 until 16 March 2012. The Owners therefore recovered the agreed capped sum of €770,000 in liquidated damages. The luboil-cooler damages claim failed for lack of causation: paras [317]–[326].