Nautical Challenge Ltd v Evergreen Marine (UK) Ltd

Damages following a collision are confined to loss legally caused by the collision. A claimant may recover general damages for loss of use of a profit-earning vessel without proving particular lost fixtures, but must establish the loss by reasonable evidence. Impecuniosity may enlarge recoverable loss where the necessary causal chain is proved. It does not make the tortfeasor responsible for losses caused by the claimant’s unreasonable failure to mitigate or by subsequent market conditions. The claimant’s financial circumstances must be considered as they affect causation, including whether they caused an extended repair period. A reasonable repair cost is assessed by reference to reasonable decisions made in the circumstances, rather than merely the lowest available quotation.

The judgment assessed damages arising from the collision of the tanker Alexandra I and the container ship Ever Smart. Liability had previously been apportioned 80:20 against Ever Smart by Teare J, with that apportionment upheld by the Court of Appeal.

The issues included the reasonable cost and duration of repairs, loss of use, the effect of the claimant’s alleged impecuniosity, extended losses arising from delayed repairs and market deterioration, and alleged diminution in the vessel’s value. The court also assessed the agreed losses of Ever Smart.

1. Outcome. The court assessed Ever Smart’s recoverable loss at US$2,531,373.71 and Alexandra I’s recoverable loss at US$9,308,594.71, each inclusive of agency at 1%, subject to the existing 80:20 apportionment.
2. The decision to repair at DDW Dubai rather than at the lower-quoted ASRY yard was reasonable. Safety and proximity justified the choice, and the court could not conclude that the final bill would have been materially lower at ASRY. The reasonable repair period was 220 days, not the shorter period advanced by Evergreen Marine (UK) Ltd.
3. Loss of use was recoverable as general damages. Following The Mediana [1900] AC 118, the claimant did not need to identify particular lost fixtures. The court assessed the loss by reference to likely lawful market earnings, allowing for idle time, piracy-security costs and residual operating expenses.
4. The court explained the relevance of Lagden v O’Connor [2003] UKHL 64; [2004] 1 AC 1067. It provisionally considered that foreseeability of the relevant type of impecuniosity might be required, while the precise reason for the claimant’s impecuniosity need not be investigated once the relevant inability to pay and causal necessity were established.
5. The extended losses failed because causation was not proved. The claimant’s failure to secure credit arrangements and complete repairs within the reasonable period, followed by the collapse in the chartering market, caused the additional losses. They were not caused by the collision. The claim for permanent diminution in value also failed for want of evidence.

• Court of Appeal: upheld the 80:20 liability apportionment: [2018] EWCA Civ 2173.
• High Court (Admiralty Division): assessed the parties’ recoverable damages in the present judgment.