Nautical Challenge Ltd v Evergreen Marine (UK) Limited

In collision proceedings, costs protection depends on the terms and timing of the offer and on the stage of the proceedings to which it relates. A pre-trial offer under Civil Procedure Rules 1998, Part 61 does not ordinarily protect the offeror against the costs of a later appeal. A respondent seeking appellate costs protection should make a further offer during the appeal proceedings. The court may nevertheless take all relevant circumstances into account when exercising its general costs discretion. In a collision appeal, the successful party is identified by reference to the issues determined, but a qualifying settlement offer may displace the usual event-based approach. Where liability is apportioned, the court must assess all the circumstances, including the relative causative potency, blameworthiness and inter-relationship of the vessels’ faults.

The judgment dealt with consequential matters following the substantive collision judgment, which had apportioned liability for the collision between ALEXANDRA 1 and EVER SMART at 70:30 in favour of ALEXANDRA 1. The Supreme Court had referred costs issues to the Admiralty Court after allowing EVER SMART’s appeal on two issues of principle, while ALEXANDRA 1 had succeeded on a separate Court of Appeal issue that was not pursued further.

The parties disputed responsibility for the costs of the Court of Appeal and Supreme Court appeals, whether execution should be stayed pending any further appeal, and permission to appeal the re-apportionment and related findings.

1. Costs of the Supreme Court appeal. The successful party on the two issues argued in the Supreme Court was EVER SMART. However, the Supreme Court’s costs discretion permitted the court to give effect to ALEXANDRA 1’s June 2020 offer to settle liability at 60:40. The offer was effective protection for the appeal because apportionment formed part of establishing collision liability under section 187 of the Merchant Shipping Act 1995, and re-apportionment would ordinarily have been dealt with by the appellate court. EVER SMART was ordered to pay 70% of ALEXANDRA 1’s costs up to 21 days after the offer, and ALEXANDRA 1’s costs thereafter.
2. Costs of the Court of Appeal. A pre-trial Part 61 offer did not protect ALEXANDRA 1 against the costs of the later appeal. Applying the reasoning in East West Corporation v DKBS 1912 and AKTS Svendborg Utaniko Ltd. and Rowlands v Bryn Alyn Community Holdings Ltd., a fresh offer should be made during appeal proceedings so that the parties know the costs position. The court therefore awarded EVER SMART 40% of its Court of Appeal costs, reflecting success on most of the contested issues.
3. Stay and permission. A stay of execution was granted because the risk of injustice to EVER SMART, given ALEXANDRA 1’s impecuniosity and the uncertainty of recovery, exceeded the risk to ALEXANDRA 1, whose claim was secured. Permission to appeal was refused. The proposed grounds had no real prospect of success: they challenged factual assessment and the judge’s evaluative apportionment of blameworthiness, without identifying an error of law or a manifestly wrong assessment.

The judgment itself records that the Supreme Court allowed EVER SMART’s appeal on two issues of principle and referred the consequential costs issues to the Admiralty Court by order dated 18 February 2022. A prior Court of Appeal decision had upheld ALEXANDRA 1 on one issue and was later held wrong on two other issues by the Supreme Court.