Kairos Shipping Ltd & Anor v Enka & Co LLC & Ors

In a limitation action alleging that a vessel was deliberately scuttled, the challenger bears the burden of proving on the balance of probabilities that the loss resulted from the owner’s personal act or omission, committed with intent to cause the loss or recklessly with knowledge that it would probably result. The seriousness of the allegation requires evidence commensurate with the charge. The court must assess the evidence as a whole, including circumstantial evidence, and exclude a real or substantial accidental explanation. A series of individually improbable events may cumulatively make an accidental explanation remote. The deliberate acts need not themselves have been sufficient to sink the vessel if they were an effective cause of the loss.

The owners of a bulk carrier sought a limitation decree under the Limitation Convention 1976 after the vessel caught fire, was abandoned and sank. A cargo insurer, subrogated to the cargo owners’ claims, alleged that the vessel had been deliberately scuttled by the master and chief engineer at the request of the owners’ controlling shareholder and director.

The principal issues were the cause of the fire, the flooding of the engine room and ballast tanks, the conduct of the crew and the owners’ response, the owners’ financial position and whether the evidence established deliberate loss and personal conduct within Article 4 of the Limitation Convention 1976.

1. Burden and standard. The cargo interests bore the burden of proving the conduct necessary to break the right to limit. The standard remained the balance of probabilities, but the grave and criminal nature of the allegation required a high degree of evidential confidence.
2. Approach to the evidence. The court had to consider the story as a whole. It could rely on circumstantial evidence and was not required to account for every detail. It had to exclude a real or substantial, rather than fanciful or remote, accidental explanation.
3. Technical causes. The evidence made it more likely than not that the fire originated in or near the storeroom and that accidental fire and flooding mechanisms were remote or unlikely. The engine room and port ballast tanks could have been deliberately flooded. The failure to establish that hold 5 was deliberately flooded was not fatal, since the deliberate flooding was an effective cause of the sinking.
4. Cumulative evidence. The unexplained change of route into deep water, misleading accounts, suspicious conduct during and after the fire, inadequate investigation of the list, return to the abandoned vessel, financial pressure and deficient disclosure cumulatively established deliberate scuttling.
5. Finding and order. The master and chief engineer deliberately sank the vessel at the request of the controlling shareholder and director, whose act was intended to cause the cargo loss. The owners’ claim for a limitation decree was dismissed.