Mr Justice Colman :
Introduction
- The claimants apply for summary judgment against underwriters under a marine policy in respect of the total loss of their motor yacht MOANA on 21st May 1999.
- The vessel was insured by the defendants under a time policy of insurance issued on 30 April 1998 for 12 months and extended for a further 12 months by endorsement dated 29th March 1999. The policy incorporated the Institute Yacht Clauses 1.11.85.
- The vessel sank off Lae in Papua New Guinea ("PNG") having been abandoned by the crew of three in circumstances where sinking appeared to be inevitable because the after compartments were filling with water at a rate faster than the bilge pumps in the lazarette could contain.
- Shortly before she sank the skipper had unmoored the vessel because he judged her to be in a dangerous position due to a 7 foot swell at the mooring.
- Although the wind was only light at force 3 to 4, the swell was severe and causing many boats in the mooring to be endangered.
- About 20 minutes after departure to the open sea the skipper felt reducing response from the steering gear. The lazarette was found to be filling with water for no apparent reason and the pumps proved unable to contain the inflow. The water passed through the bulkheads into the engine room. The engine had to be taken out of gear. Distress signals were sent on the VHR radio and flares were launched but the vessel began to sink and, having been abandoned, duly did so. Being at a considerable depth, it is impossible to ascertain by diving what caused the entry of sea water.
- The defendant underwriters' adjusters sent a surveyor to Lae to interview the crew and others. The interviews were conducted within a week of the loss. His report dated 31st May 1999 stated that inquiries indicated that the vessel was in good order and condition and was well maintained. Subsequently, after having asked the owners for a considerable amount of further information, the defendants, through their adjusters, declined the claim on the sole ground that the owners had failed to establish that the loss was caused by an insured peril.
- The claimant maintains that on the facts which have emerged this could only have been a loss by an insured peril, namely perils of the seas, particularly in view of the evidence which suggests that the vessel was in good condition and well maintained immediately prior to the last short voyage.
- The defendant underwriters submit that where the entry of seawater which causes the vessel to sink is, on the face of it, due to an unexplained reason, the owners must prove on the balance of probabilities that the perils of the seas caused the hull to open and for that purpose they need to prove a probable explanation of how it came to do so. Mr John Passmore, on behalf of the defendant underwriters, relies in support of this proposition on the decision of the House of Lords in The POPI M [1985] 1 WLR 948 and that of the Court of the Appeal in The MAREL [1994] 1 Lloyd's Rep 624. The defendants do not advance a positive case that the loss was caused by an uninsured peril. They simply suggest that none of the possible explanations advanced by the claimant can be correct and that therefore the claimant has failed to establish loss by an insured peril.
- Before investigating the evidence, it is necessary to consider the authorities - both on what amounts to perils of the seas in the context of a marine policy and on what assured has to prove in order to establish that the underwriters are liable.
The Scope of the Cover
- The Institute Yacht Clauses 1.11.85 CL 328 set out the insured perils in clause 9. The clause is divided into three sub-clauses. The first provides that the "insurance covers loss of or damage to the subject-matter insured caused by" a list of specific perils including at 9.1.1 "perils of the seas rivers lakes or other navigable waters". The second sub-clause covers loss or damage by a list of specific perils provided that such loss or damage have not resulted from want of due diligence by the owners or their managers. These perils include malicious acts, latent defects in hull or machinery and the negligence of any person whatsoever. The third sub-clause is irrelevant to the present case.
- Clause 10 lists ten groups of losses excluded from the scope of cover, none of which are relevant for present purposes.
- Clause 21 excludes from cover various specific war risks and associated perils. Clause 22 excludes strikes and political acts and clause 23 nuclear risks.
- Accordingly, an assured who puts forward a claim under the policy must establish that it is more probable than not that the proximate cause of the loss was a peril within the scope of the cover. Where it is alleged that the vessel has been totally lost by perils of the seas, the assured must adduce evidence which either explains the precise mechanism of failure of the vessel to withstand the sea conditions or from which it can be inferred that some such failure must, on the balance of probabilities, have occurred.
- In this connection it is to be remembered that it is not enough for a claimant to prove simply that water has entered his vessel in the course of a voyage and that in consequence it has sunk. This is because the scope of perils of the seas does not include "the ordinary action of the wind and waves", as is clear from rule 7 of the rules for the construction of the policy set out in the first schedule to the Marine Insurance Act 1906. That, however, does not mean that a loss by perils of the seas does not occur where a vessel sinks because of the loss of water-tight integrity due to the impact of adverse, but not exceptionally severe, weather on the vessel. The very illuminating analysis of the substance of this peril by Mustill J. in The "Miss Jay Jay" [1985] 1 Lloyd's Rep 264 at page 271, upheld on appeal at [1987] 1 Lloyd' Rep 32, clearly shows that there will not be a loss by perils of the seas where the vessel's condition is so weak that, not only can it not withstand adverse weather, but it cannot withstand even perfect weather because it suffers from "debility": see Wandsworth Lighterage and Coaling Co v. Sea Insurance Co (1929) 34 LLR 98 at 105. In such a case the vessel is so intrinsically weak that the proximate cause of the loss is its intrinsic weakness and not the fortuitous effect upon it of the wind or waves. In substance, it is the inherent condition of the vessel which is the proximate cause of the sinking and that is not an insured loss in view of section 55(2)(c) of the Marine Insurance Act.
- At this point it is also necessary to have regard to the peril of latent defects in hull (clause 9.2.2.1). Loss or damage caused by this peril is insured only if it has not resulted from want of due diligence by the owners or their managers. In other words, where the loss of the ability of the vessel to remain afloat because of loss of its watertight integrity or for some other reason is caused by a defect which could not ordinarily be expected to be discovered by the use of due diligence by the owners or their manager, the loss or damage has not resulted from want of such due diligence. This additional insured peril does not reduce the scope of a loss by perils of the seas. Rather, it provides a wider cover in cases of loss by sinking by extending to those cases where the loss is proximately caused by a latent defect, for example a condition of debility, where the condition is latent.
- Finally, where the vessel insured under a time policy is sent to sea in an unseaworthy condition, a loss by perils of the sea will be covered by the policy unless the assured was privy to the unseaworthy condition at the start of the voyage: see section 39(5) of the Marine Insurance Act 1906. The burden of proving that the loss is uninsured on these grounds rests on the underwriters. The condition to which this provision refers is not, however, mere general debility, but unseaworthiness in the broader sense of unfitness to withstand unexceptional wind and sea conditions even if they are adverse.
Proving an insured Loss
- The assured owner has the burden of proving that the proximate or dominant cause of the loss was an insured peril. Where the loss is by sinking and there is no recovery of the wreck it may often be possible for the assured to establish precisely how the vessel came to sink. For example, there may be evidence from the crew on the basis of which the mechanism of loss can be specifically established, as where the evidence shows that the hull gave way in a particular place and in particular sea conditions. In such a case, provided that the assured can further establish that the condition of the vessel was not so debilitated that it could not withstand the ordinary action of the wind and waves in calm conditions, the loss will have been established to have been caused by perils of the seas. It is, however, beyond question that the underwriters do not have to allege and prove that the sinking was caused by the operation of an uninsured peril. Thus, in The POPI M [1985] 1 WLR 948 Lord Brandon stated the position thus:
"In approaching this question it is important that two matters should be borne constantly in mind. The first matter is that the burden of proving, on a balance of probabilities, that the ship was lost by perils of the sea, is and remains throughout on the shipowners. Although it is open to underwriters to suggest and seek to prove some other cause of loss, against which the ship was not insured, there is no obligation on them to do so. Moreover, if they chose to do so, there is no obligation on them to prove, even on a balance of probabilities, the truth of their alternative case.
The second matter is that it is always open to a court, even after the kind of prolonged inquiry with a mass of expert evidence which took place in this case, to conclude, at the end of the day, that the proximate cause of the ship's loss, even on a balance of probabilities, remains in doubt, with the consequence that the shipowners have failed to discharge the burden of proof which lay upon them."
- The proof of loss by perils of the sea does not, however, fall into some special category of forensic exercise. In each case it is for the claimant assured to adduce sufficient evidence to enable the court to conclude, if necessary by inference from primary facts, that it is more probable than not that the vessel's loss was proximately caused by that peril.
- It is however in those cases where the precise mechanism of the sinking is in doubt that problems of proof of loss by perils of the seas can arise. In relation to such cases it is necessary to be clear about two particular propositions.
- Failure of the assured to explain precisely what caused seawater to enter a vessel and thereby caused it to sink does not necessarily mean that it is not open to the court to conclude on the whole of the evidence that it has been established that the loss was proximately caused by perils of the seas. In particular it is not in such circumstances incumbent on the court to conclude that it is left in doubt as to the proximate cause of the loss if it can properly be inferred from the whole of the primary facts that it is more probable than not that perils of the seas caused the loss.
- Secondly, there is no general principle in such cases that it is impermissible to reach a conclusion based on inference by the process of elimination of competing explanations for the loss. If the evidence is such as to enable the court to rule out all suggested uninsured causes, as intrinsically impossible, the court will generally be able to conclude that it is more probable than not that entry of seawater and consequent sinking was a loss by perils of the seas. There may, however be exceptional cases where it is not possible to draw this inference and the court is left in doubt as to whether the unelimated explanation or some other unknown but uninsured peril is the proximate cause of the loss.
- Since the decision of the House of Lords in The POPI M, supra, and the subsequent decision of the Court of Appeal in The MAREL [1994] 1 LR 624 have been strongly relied upon by Mr John Passmore on behalf of the defendants, it is necessary to examine these propositions in the light of those two cases.
The POPI M
- The issue was whether on the whole of the evidence the owners had succeeded in discharging the burden of proof of a loss by perils of the seas. The particularly salient facts were that (i) the judge, Bingham J., specifically found that the owners had failed to establish that the vessel was seaworthy at the start of the voyage, (ii) the evidence showed clearly how water initially entered the vessel in the course of a voyage in favourable conditions of sea and wind and how it flooded not only the engine room but also the after compartments; (iii) the judge found on the basis of seven considerations that, whereas it was not impossible that the hull had been opened by a collision with a submarine, that explanation was so inherently improbable as the likely cause of the casualty that he could only conclude that such was the cause if he were satisfied that any other explanation could be effectively ruled out; (iv) the judge further found on the evidence that the underwriters' explanation for the failure of the hull, namely its state of deterioration, could be effectively ruled out.
- The House of Lords rejected the process of reasoning which Bingham J. used to conclude, by eliminating deterioration of the hull as a possible cause, that it was more likely than not that the rupture of the hull was caused by collision with a submarine. Lord Brandon, with whom all other members of the House agreed, construed the judgment as having overlooked the alternative possible conclusion that it was impossible to infer on the evidence that the uneliminated explanation for the rupture of the hull could not be said on the balance of probabilities to be the true explanation for the loss: see pages 955-956. The House of Lords reversed the decision because its members considered on the judges' findings of primary fact that the uneliminated explanation (collision with a submarine) was so intrinsically improbable that it was unjustifiable to infer by a process of elimination that it, rather than an explanation attributable to the deteriorated condition of the hull which had not been put forward by either side, was more probably than not the proximate cause of the loss.
- The passage in Lord Brandon's speech at the foot of page 953 in which he observed:
"that once it was shown that the water which sank the ship had entered through an aperture in her shell plating, the burden of proof was on the shipowners".
has to be read against the background that the judge was left in doubt whether the vessel was seaworthy and that there was evidence which established precisely where the water entered the hull. That passage is, in my judgment, to be understood as stating no more than that on the facts before the court the assured could only discharge the burden of proof of a loss by perils of the seas if it put forward an explanation for that water entry which was both not attributable to the general debility of the vessel and which was intrinsically sufficiently probable. Had there been a finding that the vessel was seaworthy, that is to say, not so debilitated that it could not withstand the ordinary action of the wind and waves in the favourable conditions experienced, the assured would have established that it was to be inferred that the sea water entry must on the balance of probabilities have been due to perils of the seas, without the need to advance any particular explanation, such as collision with a submarine. In this connection I agree with the observations of Toulson J. in The S/Y Delphine (Unrep 30.4.01) at para 20 of his judgment that Lord Brandon's remarks as to the need for the assured to "condescend to particulars" was to be understood in the context of the unusual facts in The POPI M. Where the assured is able to eliminate unseaworthiness amounting to general debility at the start of the voyage, as well as other uninsured perils, such as scuttling, but yet is unable to adduce evidence which explains precisely how water entered the vessel and caused it to sink, the inference may ordinarily properly be drawn that the loss was caused by perils of the sea. In my judgment, nothing in the speech of Lord Brandon in The POPI M has disturbed the well-established approach to unexplained losses exemplified by Anderson v. Morice (1874) LR 10 CP 58 and Ajum Goolam Hossen & Co v. Union Marine Insurance Co Ltd [1901] Ac 362, both of which cases were cited in the Popi M.
The MAREL
- This was another case of unexplained hull failure, not unlike The POPI M. The judge found that it was wholly improbable and very nearly impossible that the breach of the hull was caused by collision with a floating object such as a derelict container. However, there were also findings that entry of seawater into the engine room was not caused by unseaworthiness of the hull or piping systems and further, although it was not possible to say how water had entered the No.4 hold, this must have been due to some unseaworthiness at the commencement voyage in the bulkhead separating that hold from the engine room or in the double bottom tanks. On these findings Judge Diamond QC had concluded that the assured had failed to discharge the burden of proving a loss by perils of the seas.
- The Court of Appeal dismissed the appeal, Dillon LJ giving the leading judgment. His observations at page 629 are pertinent to the present case. Having held that collision with a container or other submerged object was to be rejected as virtually impossible he continued:
"(Counsel for the assured)
.....referred to the presumption or inference that the court makes when a ship has disappeared at sea and it is shown that she was seaworthy when she set out on her last voyage that the loss was by "perils of the sea". I shall refer to this as "the presumption". He submitted that though, in the present case, the Marel did not simply vanish without trace, and there is a certain amount of evidence as to the circumstances of her sinking, nonetheless the presumption applies insofar as the evidence available does not provide a complete explanation of how she came to sink.
In the second place he submitted that, on the facts of this present case, all other possible explanations of the sinking of the Marel were negative and, therefore, the Judge was bound to accept that, however improbable it seemed or was, the sinking of Marel was caused by some peril of the sea, presumably other than collision with a floating or submerged container.
Put in its widest form the first of these submissions is inconsistent with the propositions of Lord Justice Scrutton, Lord Evershed and Lord Justice Sellers, cited above, as to the onus of proof and it must therefore, be wrong. It would mean that if a ship was seaworthy when she set out and is lost, the loss must be held to have been due to "perils of the sea", unless it is affirmatively established by underwriters that it was due to some other cause.
Once it was shown that the vessel had been lost without trace, and had been seaworthy when she sailed, the onus would switch.
As I see it, the presumption is really founded on the balance of probabilities. If it is known that a ship was seaworthy when she set out, and she has never been seen since and nothing has been heard of her crew, then on the balance of probabilities she must have sunk and, on the balance of probabilities, the sinking must have been due to "perils of the sea" because she was seaworthy when she set out. The only alternative would be that she was scuttled, but members of a ship's company who scuttle their ship do not normally intend to commit suicide. They expect to be rescued.
But if it was not shown that the ship was seaworthy when she left on her last voyage, the presumption does not apply since it cannot be held on the balance of probabilities that her presumed sinking was due to perils of the sea rather than to her unseaworthy condition.
In the present case what we do know of the circumstances of the sinking of the Marel eliminates a number of possible perils of the sea. Thus, she was not overwhelmed by exceptionally bad weather. She did not hit an uncharted reef. She was not run down and sunk by another vessel. As for the possibility that she sank as a result of collision with an unidentified object, it is shown that it is wholly improbable, and very nearly impossible, that the casualty could have been caused by the only form of unidentified object which was suggested as a possibility, that is a derelict container.
Therefore, on those facts, there was no room for the presumption. It was for the plaintiffs to prove their case."
- It was submitted on behalf of the assured that, the underwriters not having positively alleged scuttling and the judge having held that the vessel could not have been scuttled without the complicity of one or more of the ships witnesses and that they were all witnesses of truth, scuttling had been eliminated and accordingly the judge ought to have concluded that, however improbable, collision with a submerged object had caused the ingress of seawater and he had been wrong to remain in doubt as to the cause of loss.
- Dillon LJ. rejected this argument on the grounds that it was inconsistent with the approach to proof of a loss by perils of the seas which had been explained in The Popi M by Lord Brandon, in particular the fact that it is always open to a court to reject an uneliminated but intrinsically highly improbable explanation: see the judgment at pages 632-633. Unless that explanation which remains uneliminated has intrinsic cogency the court is therefore entitled to conclude that the burden of proof remains undischarged.
- It is to be noted that Dillon LJ, when considering the alternative possibility that the vessel had been scuttled, referred to passages from the judgments of Cairns and Buckley LJJ in The Dias [1972] 2QB 625 at 647 and 640-641 respectively, including in the latter citation the passage from the judgment of Branson J. in The Gloria (1936) 54 LLR 35 at pages 50-51 as follows:
"The onus of proof that the loss was fortuitous lies upon the plaintiffs, but that does not mean that they will fail if their evidence does not exclude all reasonable possibility that the ship was scuttled. Before that possibility is considered some evidence in support of it must be forthcoming. Scuttling is a crime and the Court will not find that it has been committed unless it is proved with the same degree of certainty as is required for the proof of a crime. If, however, the evidence is such that the court giving full weight to the consideration that scuttling is a crime is not satisfied that the ship was scuttled but finds that the probability she was is equal to the probability that her loss was fortuitous the plaintiffs will fail."
- As in The Marel, therefore, where underwriters do not raise a positive allegation of scuttling, they are nonetheless entitled to suggest that if, on the whole of the evidence, that explanation cannot be eliminated, the claimant in respect of a loss, for which there is no specific and cogent explanation by reference to perils of the seas, has failed to discharge the burden of proof. However, as Brandon J. observed, for such a submission to succeed the likelihood of scuttling must at least be equal to that of a loss by the insured peril. Unless that likelihood has such substance, the assured will be entitled to judgment. There may be cases where there is neither a specific and cogent explanation for a loss by perils of the seas nor any possibility of real substance that the vessel could have been scuttled. In such cases, the court is entitled to infer that the loss happened in a way that is unknown, but by perils of the seas, by looking at the whole of the evidence before it, including in particular evidence that the vessel was in all relevant respects seaworthy at the start of the voyage.
- I have referred to the position where the loss cannot be specifically explained, but yet there may be an inference that it was nonetheless caused by perils of the seas, that inference being drawn from the whole of the evidence, including the condition of the vessel when she sailed. In this connection, it is to be observed that the relevant condition of the vessel for the purposes of this inference is that it was sufficiently seaworthy to withstand the ordinary action of the wind and waves, that is to say that it was in all relevant respects in a condition better than that of general debility, and not that it was in such a condition as to be able to withstand adverse but unexceptional sea conditions. Obviously, however, the better the condition of a vessel over and above general debility, the more ready the court will be to infer that a loss which cannot be precisely explained was caused by perils of the seas, as distinct from scuttling.
- In many cases there may be primary evidence which, although suggesting from where water entered a vessel, does not indicate why the entry occurred. In such cases, if the assured is to establish a case of loss by perils of the seas strong enough to displace all other uneliminated but uninsured perils as possible causes of the loss, he will need to advance a cogent explanation for the seawater entry on which he relies. Omission to do so may lead to the court being left in such doubt that it is unable to infer that the loss was more probably caused by perils of the seas than by an uninsured peril. That was the case in both the POPI M and The MAREL.
The Claimant's Case
- In proceeding by means of an application under CPR 24.2 the claimant can recover summary judgment only if on the whole of the evidence now before the court its case is so strong that the underwriters have no realistic prospect of successfully defending the claim or the matter ought for some other reason to proceed to trial. As appears from the recent decision of the House of Lords in Three Rivers District Council v. Bank of England [2001] UKHL 16, which was concerned with the striking out of a claim rather than summary judgment for want of defence, it is for the applicant under CPR 24 to establish that the claim or defence, as the case may be, is no better than fanciful. The court must be completely confident that this is so notwithstanding the availability of further disclosure, requests for information and the full investigation of the facts by oral evidence and cross-examination at a trial. If it appears that the issues are fact-sensitive and that evidence as to such issues ought to be tested at a trial it will normally be inappropriate for summary judgment on the claim to be given under CPR 24. In the present case, if judgment is to be given on the claim, it is therefore necessary for the court to be completely confident that the assured would succeed in discharging the burden of proving a loss by perils of the seas if the matter went to trial.
- In paragraph 13 of the particulars of claim it is pleaded as follows:
"On the balance of probabilities, the vessel sank because her steering gear and the through hull fitting relating thereto were damaged by contact with floating debris as she pitched and rolled in very heavy sea conditions, causing breach of her watertight integrity in way of the lazarette which consequential flooding could not be controlled by pumping. Alternatively, the vessel's watertight integrity in way of the lazarette was breached from within by a heavy object or objects within the lazarette being thrown against the hull in consequence of the violent movement of the vessel in the swell, with the same consequences."
- The claimant supports its case on loss by perils of the seas by reliance on the following matters.
- The vessel was owned by the claimant company which in turn was beneficially owned by one Roger Cunningham CBE who has lived and worked in PNG for some 20 years. His honour (in 1990) was for services to shipping and commerce in PNG. He had served as a chief engineer with Shell and the well-known Spanish owners, Larrinaga. He was the holder of the British First Class Steam and Motor Engineer's certificate and a fellow of the Institute of Marine Engineers. He currently works as a marine surveyor for classification societies, including Lloyd's Register of Shipping, but on a non-exclusive basis.
- The vessel was purchased by Mr Cunningham in Singapore in March 1998. He personally carried out a thorough inspection, subjected her to sea trials and formed the view that the vessel and her engines were in excellent condition.
- The owning company at the time of the loss was registered in the British Virgin Islands because it was ascertained by Mr Cunningham that it would be easier to deal with the authorities in PNG and Australia than if the owning company was a Hong Kong company as it had formerly been.
- The crew of the vessel consisted of a skipper, John Murley, a qualified yachtmaster with several years experience of the navigation and operation of yachts as well as construction and maintenance. The mate and cook was Susan Venturella, who had a yachtmaster qualification. They took up their duties in March 1999. The third member of the crew was the engineer, Mara Fainang, a local man with a 4th engineer's certificate, who had worked for Mr Cunningham for several years.
- At the time of the loss Mr Cunningham was in Brisbane. The skipper had access to Mr Cunningham's son and daughter for the purpose of getting assistance, advice or obtaining instructions. They were in charge of day to day management. Both his son, Mark, and his son in law, Henry Munro, were experienced owners of motor yachts.
- On June 1998 the local surveyor in Lae of the PNG Department of Transport and Works carried out a full condition survey under the misapprehension that the vessel was to change to the PNG flag. He stated that the vessel was found by him to be sound and seaworthy in all respects with lifesaving equipment and all systems in good working order. He described the vessel as "an outstanding ship for this country". He again conducted an inspection of the vessel on 23rd March 1999 and has stated that he found that all systems were operative and that she was sound in all respects. Her condition was similar to that which he had found on her arrival in PNG. He said in his statement that she was well-maintained and that the crew were hard working and competent and took a pride in their ship. That inspection was two months before the loss. I observe that the surveyor does not state what access he had to the lazarette or to the steering gear or hull in way of the lazarette.
- According to the evidence of Judy Munro, the daughter of Mr Cunningham, the vessel was to be used on the day after the loss for entertaining personnel from a local company. This was not to be in the nature of a commercial or charter activity. A letter from the owners dated 14th September 1999 to the adjusters, Richards Insurance Services, explained that this was to be "a day out provided by Mr Cunningham, free of charge, for the directors and senior management of Mobil, who are substantial clients of Mr Cunningham".
- Immediately following the loss the adjusters appointed a surveyor, Mr Des Ward, to go to Lae to investigate the loss. He interviewed and took statements from the skipper, the mate and the engineer amongst others.
- The skipper stated that while he was on board he found no significant defects apart from the port stabilisers which had suffered impact damage before he took over as skipper. It was intended that the vessel would be taken to Madang where repairs could be carried out together with routine maintenance, such as anti-fouling and replacement of anodes. All these outstandings were in his view irrelevant to the loss. When the crew retired for the night at about 2200 the vessel was moored in Lae harbour with two lines and there was a slight but normal swell. At 0130-0200 the crew had risen and found that the onshore swell had considerably increased. Other vessels at the mooring were having "problems with the conditions". The swell was about 7 feet and only a light wind to a maximum of about force 4. The skipper decided to leave the mooring and make for the open sea. The moorings were let go at 0325 and they proceeded at about 3 knots heading into the swell with the light wind on the port beam.
- According to the skipper, after about 20-30 minutes he noticed that the steering was "not responding as it should". He sent the engineer to check the steering compartment. The engineer reported that the compartment was full of water. The steering then became progressively worse. The two 24 volt submersible pumps in the steering compartment were shown to be working by indicator lights in the wheelhouse. By about 0400 it "became clear that the submersible pumps were either not coping or not working". The steering became "totally ineffective". A tug some quarter of a mile away appeared to be having difficulty in manoeuvring. When asked by VHR radio whether it could supply an extra pump, it declined to do so due to its own manoeuvring difficulties. The emergency pump on the port main engine, which had been brought into operation and was working, was unable to cope with the water ingress. The engineer and the mate reported that they could not see any water entering from anywhere else but the steering compartment. The bulkheads were not watertight.
- The skipper then started transmitting "Mayday" calls but with no response. He took the main engine out of gear. The cockpit deck was awash and the vessel was settling heavily by the stern with an increasing list to starboard. The vessel was rolling considerably. The swell remained at about the same height as before. The skipper instructed the mate and engineer to prepare to abandon ship. He continued transmitting "Mayday" calls and fired two or possibly three distress flares. An inflatable life raft was launched. The tender's outboard motor was started. Clothes, lifejackets and emergency equipment were gathered and thrown into the dinghy. The mate and engineer climbed into the dinghy and stood off about 100 metres from the vessel. The skipper remained on board sending Mayday messages until about 0535-0540 when he jumped into the sea and swam towards the tender. The skipper's statement concludes with the following remarks:
"There were three or four skin fittings in the steering compartment in addition to the rudder tubes. We had checked the rudder glands about two or three weeks prior to the loss and they appeared to be in order.
When the vessel went down I believe the fuel tanks were about two thirds full ie. about 8000 litres onboard as we had bunkered in Lae on the 6th May 2999.
I do not have any explanation for the ingress of water into the steering compartment although I believe this is what caused the ship to sink.
I am unable to offer any further information or explanation as to the loss."
- The mate and the engineer gave statements to Mr Ward which confirmed the skipper's recollection of events. The engineer stated:
"I had not carried out or known of any work to the vessel which might have caused the water to enter and I do not know why she sank other than that she took on water in the steering compartment.
I do not have any further knowledge with respect to the loss of the vessel and I do not know what may have caused her to sink."
- Other witness statements speak of the severity of the swell and the fact that tugs and barges anchored in the harbour dragged anchor and yachts broke their moorings with seas breaking across Voco Point which is close to the harbour entrance. The sea conditions were not unknown: one witness stating that once or twice a year they experienced severe weather from the south east. Information was also obtained that the crew of the tug SWISS CO 168 had picked up a distress signal from the vessel.
- In consequence of his investigations, Mr Ward wrote a report dated 31st May 1999 in which he stated amongst other things:
"Our enquiries indicate that the MOANA was in good order and condition and well maintained.
The only known defect was with respect to a stabiliser fin which was known to have been damaged from an impact at some unknown date. There is no evidence that this damage in any way contributed to her loss. The stabiliser fins were mounted in the hull in way of the engine room."
- Having summarised the circumstances of the loss as described by the skipper, his report continued:
"During our enquiries these circumstances have been reasonably verified by independent persons ashore. We have spoken to witnesses to the victualling process on the day prior to the loss, the release of distress flares and the arrival of the crew at the Lae Yacht Club after the casualty. None of our inquiries have indicated any suspicious circumstances.
The loss would appear to have resulted from an ingress of water into the steering compartment followed by progressive flooding forward which was able to occur as the bulkheads were not watertight and the vessel had inadequate subdivision to cope with a flooding of this nature. The lack of subdivision is not, in our experience, untypical of a vessel of this type which is not in class.
The cause of the water entering the steering compartment is not known but it is noted that this compartment in addition to the rudder stocks contained at least 4 skin fittings with flexible pipe attached all of which had open seacocks in the normal operation of the vessel".
- Immediately following the loss Judith Munro, Mr Cunningham's daughter, and Mark Cunningham, his son, prepared short reports on the loss. Both raised the possibility that the vessel may have struck a submerged object which damaged the steering gear.
- There was some evidence that there were floating logs in the area which had been carried down the Markham River to Lae. Mr Ward dealt specifically with this as a possible cause of impact damage in a subsequent report to the adjusters dated 21 September 1999. Having referred to reports that on the day after the loss Mark Cunningham and the master had returned in the dinghy to the site of the sinking "looking for logs", he observed that this might be seen as some confirmation that logs might have been more prevalent than usual and continued:
"Had this trip been specifically to search for logs, or had logs been found, or had the trip had any significance with respect to the cause of the loss then it would surely have featured in the master's statement or been raised by the Cunningham family? In fact the master clearly states that he does not have any explanation for the ingress of water into the aft compartment.
The evidence is that the vessel did not proceed at any more than about 3 knots after weighing anchor and before sinking. It is hard to envisage how impact with a log at that speed could have penetrated the hull, particularly in the after part of the vessel. One would imagine that such a log might have been struck on more than one occasion as it passed along the hull and that an impact sufficient to cause a penetration large enough to flood the aft compartment in a comparatively short time frame would be unlikely to have passed unnoticed by the crew.
In my experience, logs are unlikely to do major damage to a small craft unless struck by stern gear or "end-on" - which usually occurs to the forward part of the vessel."
The defendants' adjusters reported on 2 September 1999 that:
"To date we have discovered no evidence of moral hazard and, on the basis of what we have discovered, suspect that no obvious motive for the scuttling of the vessel will be found."
The report continued:
"However, we consider that Underwriters do have causation defences available to them: the loss occurred suddenly with no obvious proximate cause of damage, in moderate weather conditions and the proximate cause will be impossible to verify due to the uneconomic cost of locating and surveying the wreck. Having discussed the rate of the water ingress with our Consulting Surveyor it appears that failure of the rudder glands would not allow sufficient flow of water to lead to the flooding of the steering compartment in some 30 minutes. Rather, our Consultant considers that there was either a failure of the vessel's GRP foam sandwich hull, or a failure of one or more of the skin fittings in the hull in way of the steering compartment. It would be open to Underwriters to defend the claim on the basis that weather and sea conditions of the level experienced on 21 May do not sink seaworthy vessels and that the flooding of the steering compartment indicates that there was a catastrophic failure, probably caused by wear and tear. In the absence of any compelling evidence to support the submerged object theory, the assureds would be compelled to produce evidence of the repair and maintenance of the vessel and this may throw up further possible defences for Underwriters."
The Defendants' Case
- In the course of his submission Mr Passmore on behalf of the defendants has relied on three reports by an expert, David Cannell. The first, dated 2nd April 2001, contained no statement of truth, contrary to the requirement in section 4 and Appendix 12 of the Commercial Court Guide. The second, in the form of an Addendum, was dated 20 April 2001 and was prepared because after writing his earlier report he had received further documents from the claimant's solicitors, including some plans of the vessel and now felt able to endorse his earlier report with a statement of truth having verified certain assumptions in his main report. He therefore included a statement of truth covering both that report and the Addendum. Miss Bucknall QC on behalf of the claimant strongly objected to its being admitted because it was out of time, which expired on 2nd April 2001.
- The third report dated 8 May 2001 was prepared by Mr Cannell in response to a request from those advising the defendants that he should make use of the additional documents "to provide clarification" of his 2nd April report. This report was received by those representing the claimant only 6 days before the hearing. Miss Bucknall QC has very strongly objected to its being admitted in evidence when it is (as is common ground) long out of time. It is, however, submitted on behalf of the defendants that it would be unjust to exclude either this or the earlier report because both are directly relevant to the explanation for the loss and because it was not until 18 April that Mr Connell received the further documents from the claimant's solicitors, in particular the drawing which showed the hull thickness and enabled Mr Connell for the first time to evaluate in detail the possibility of impact damage having caused the loss. Mr Connell was apparently out of his office for all but three days between receiving the documents and producing the third report.
- Having reviewed the whole body of Mr Connell's three reports, I am firmly of the view that I should permit all of them to be admitted in evidence on this application. To exclude them on the grounds that there had been procedural non-conformity by the defendants and then to place the defendant at risk of an adverse judgment under CPR 24.2 would in this kind of case be an entirely disproportionate response to that non-conformity. While fully appreciating that under the CPR it is to be anticipated that the court will take a more robust view of failure to comply with timetabling requirements for the service of evidence, this is not a case where this hearing ought to proceed on the completely artificial basis that no considered expert evidence would be available if the matter went to trial. There having been no application for an adjournment at the cost of the defendants, I shall therefore have regard to all three expert reports.
- The significant findings in these reports are that, having regard to the strength of the hull, it is highly unlikely that the hull would be penetrated by hitting a semi-submerged or floating object at between 2 and 3 knots. Only surface damage would be likely to be caused by a large semi-submerged tree or log. If a submerged or semi-submerged object fouled the propeller the latter as well as the shaft would be damaged but this would most certainly be detected by the captain as either the engine would stall or would be caused to run out of balance, causing vibration and noise.
- Further, if the rudder stock were bent by impact with a submerged object, the rate of water ingress would have been limited to weeping rudder glands due to the bending. This would have been much less than the capacity of the lazarette bilge pumps (10,000 litres per hour). Since they could not keep up with the volume of water, the aperture must have been much larger than that of weeping rudder glands.
- As to the possibility that the hull was punctured from inside by being struck by the 8-10 20 litre oil cans stowed in the lazarette, Mr Cannell was of the view that it would take at least a 45 litre can to cause such damage. Further, if the skin fittings and/or the seacocks located in the lazarette had been struck by a 20 litre oil container, then would not have failed so as to admit water into the vessel and even if all of them had failed, the two bilge pumps should have been of sufficient capacity to cope with the inflow.
Conclusion
- It is to be observed that none of the crew were able to suggest any reason why water had entered the vessel.
- None of them stated that there was any sound of an impact or vibration consistent with the vessel striking a submerged object. Nor did the engine cut out or start to vibrate. Evidence of the presence of floating logs in the immediate area of the loss is non-existent. On the evidence presently before the court there are various theoretically possible reasons why the vessel might have sunk:
i) it might have sustained some damage to its hull while still at the mooring of which the crew were unaware and due perhaps to contact with some fixed object, the steering only being affected after sufficient water had entered the lazarette to interfere with it.
(ii) there might have been some defect in the hull in way of the lazarette which was so serious as to amount to debility of the hull;
(iii) there might have been some defect in the hull in way of the lazarette of which the owners were unaware and which amounted to unseaworthiness but was not serious enough to amount to debility of the hull;
(iv) the vessel's hull might have been damaged by external impact with a floating object after it had left the mooring or by internal impact by an oil container while at the mooring or at sea;
(v) the vessel might have been deliberately cast away by one or all of the crew or by or with the connivance of the owners.
- Whereas it is true that there are on the face of it strong grounds for regarding the possibility as extremely small in the case of some of these, such as (v), even if one leaves that out of account altogether, it is necessary for the purposes of the present application that I should be completely confident that there is no real likelihood that after a full trial the court will be able to infer that water ingress was more probably caused by (i), (iii) or (iv) than by (ii).
- In my judgment, it is, on the evidence before me, quite impossible to be confident that such an inference will be drawn. Until the whole question of the quality of the out of the water inspections of the hull prior to the loss and the quality of the maintenance of the hull in way of the lazarette have been fully tested at a trial with the benefit of fuller disclosure of documents if any than has so far occurred as well as oral evidence from those concerned, the court is not in a position to predict with sufficient confidence whether unseaworthiness not amounting to debility or impact damage can be inferred to be more probable than the debility of some section of the hull. The claimants will have to adduce sufficient evidence to enable the court to eliminate the latter, and also deliberate casting away by the owners or with their complicity as a possible cause. This court at this preliminary state of the proceedings cannot reach that conclusion with the level of confidence necessary to justify there being judgment for the claimant owners.
- In the course of argument I invited counsel to say whether there was any case known to either of them in which summary judgment had been obtained against underwriters in respect of the total loss of a ship. Neither knew of any such case and I have never known this to be attempted, let alone achieved. Indeed, where the cause of water ingress is in doubt, it is hard to envisage a case where it would ever be appropriate to apply for judgment under CPR 24.2. Where the necessary inferences of fact depend crucially on a detailed analysis of the evidence of the primary facts which is not yet completely before the court and further upon an evaluation of the expert evidence which also is not yet complete, it will not normally be appropriate to make such an application for reasons which are more fully explained in the recent unreported decision in this Court in Maria Elena de Molestina and others v. Alvaro Noboa Ponton and Others given by me on 16th May 2001.
- This application for summary judgment therefore fails.
