"Krysia" Maritime Inc v Intership Ltd

In this action the claimants, as Owners of the fast support and intervention vessel “KRYSIA”, claimed damages from the defendants, the Owners of the dumb barge “EUROPA”. The claim arose out of an incident on 30^th September 2006, when the number 1 port outer propeller of “KRYSIA” was fouled by a rope and wire attached to the aft end of a Yokohama fender which was secured forward on the portside of “EUROPA”.

Following a hearing on 24^th, 25^th and 26^th June 2008, when I sat with Captain D P Richards, Elder Brother of Trinity House, as Nautical Assessor, I handed down judgment on 1^st July 2008. I held that the fouling of the propeller was caused by negligence in the management of “EUROPA”. However, I also concluded (applying section 187(1) and (2) of the Merchant Shipping Act 1995, which replaced section 1 of the Maritime Conventions Act 1911), that the fouling was also caused by fault in the navigation of “KRYSIA”. I concluded that “EUROPA” was 70% to blame and “KRYSIA” 30% to blame. I apportioned liability for any damage and loss to “KRYSIA” resulting from this fouling accordingly,

The trial did not deal with issues of damages. The claimants allege that this fouling caused substantial damage to “KRYSIA”’s propeller, gearbox and line shaft resulting in losses of approximately US$ 560,000. Issues of damages will be dealt with at a future hearing.

When judgment was handed down, Mr Stewart Buckingham, appearing for the defendants, indicated that he wished to submit that the defendants should only have to pay a proportion of the claimants’ costs. He wished to argue that this would be in accord with longstanding practice in Admiralty Court cases, which should be continued now, after the advent of the CPR. Mr Buckingham invited me to consider a number of cases. As this submission seemed to me to involve a point of principle, I fixed a separate date to hear argument. I heard the submissions of counsel in the afternoon of 23^rd July 2008. At the end of the afternoon there was insufficient time to give judgment, which I am now handing down.

Since this judgment was prepared, I have been informed by the parties that they have settled the issue of costs of the liability hearing. However, as I have dealt with the point of principle raised by Mr Buckingham, I asked the parties if they would agree to judgment being handed down in any event. They have done so.

Both parties agree, as is obvious, that the starting point for any discussion on costs must be CPR Part 44.3. The relevant parts of this provide:

“44.3

(1)

The court has discretion as to –

(a)

whether costs are payable by one party to another;

(b)

the amount of those costs; and

(c)

when they are to be paid.

(2)

If the court decides to make an order about costs –

(a)

the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

(b)

the court may make a different order.”

………..

(4)

In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –

(a)

the conduct of all the parties;

(b)

whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(c)

any payment into court or admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

…………..

(5)

The conduct of the parties includes –

(a)

conduct before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol;

(b)

whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c)

the manner in which a party has pursued or defended his case or a particular allegation or issue; and

(d)

whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.

(6)

The orders which the court may make under this rule include an order that a party must pay –

(a)

a proportion of another party’s costs;

(b)

a stated amount in respect of another party’s costs;

(c)

costs from or until a certain date only;

(d)

costs incurred before proceedings have begun;

(e)

costs relating to particular steps taken in the proceedings;

(f)

costs relating only to a distinct part of the proceedings; and

(g)

interest on costs from or until a certain date, including a date before judgment.

(7)

Where the court would otherwise consider making an order under paragraph (6)(f), it must instead, if practicable, make an order under paragraph (6)(a) or (c).

(8)

Where the court has ordered a party to pay costs, it may order an amount to be paid on account before the costs are assessed.

(9)

Where a party entitled to costs is also liable to pay costs the court may assess the costs which that party is liable to pay and either –

(a)

set off the amount assessed against the amount the party is entitled to be paid and direct him to pay any balance; or

(b)

delay the issue of a certificate for the costs to which the party is entitled until he has paid the amount which he is liable to pay.”

Both counsel accept that when a court has to consider what costs order to make following a trial, the first question to be considered under the CPR costs regime is: which party has been “the successful party” within CPR Pt 44.3 (2). That has been interpreted to mean: “which party has really won at trial?” (See: Fleming v Chief Constable of Sussex Police Force [2004] EWCA Civ.643 at paragraph 35 per Potter LJ). Once this issue has been decided the court can then consider whether or not the general rule in CPR 44.3 (2)(a) should apply, so that the unsuccessful party has to pay the costs of the successful party, or whether it should make a different order under CPR Pt 44.3(2)(b).

As a matter of construction of CPR Part 44.3, I think it is clear that the judge has a general discretion on how to deal with costs if he decides that, on the facts of the case, it would not be appropriate to follow the “general rule” under Pt 44.3 (2)(a). If the general rule is not followed, a judge may often follow an “issue based” approach to costs and, if that is done, then it has to be justified. In that case the judge has to show that he has taken into account the factors indicated in Pt 44.3(4) and (5), to the extent relevant to the case in hand. A number of Court of Appeal cases have explained the application of those paragraphs.

However, as I understand the wording of Pt 44.3, a judge’s discretion is not to be confined to a choice between making either an order that the unsuccessful party must pay the successful party’s costs, or making an “issues based” order for costs. Such a confinement would, it seems to me, to be contrary to the plain wording of both Pt 44.3(2)(b) and Pt 44.3(6). But, if a judge does not make an order under the general rule in Pt 44.3(2)(a), and does not make an “issue based” costs order, using what Chadwick LJ has called “a conventional issue based approach”, (Footnote: ¹)then the basis of any other approach has also to be justified. Moreover, it has to take into account only those matters referred to in Pt 44.3 and must not take into account irrelevant matters.

With that general introduction, I can now consider the arguments of the parties.

Mr Buckingham, for the defendants, accepts that in this case the claimants constitute the party who has “really won at trial” on the issue of liability. Despite that, his submission is that the court should not adopt the general rule in CPR 44.3(2)(a) in this case. He submits that the court should, instead, make a different order, for two reasons: first, because the court has held that the claimants were 30% to blame for the fouling of the propeller. Secondly, because of the longstanding practice in the Admiralty Court that costs should reflect the court’s decision on the degree of blame which attaches to each of the parties, applying the provisions of section 187(1) and (2) of the Merchant Shipping Act 1995, which provisions were formerly found at section 1 of the Maritime Conventions Act 1911.

Section 187 of the Merchant Shipping Act 1995 provides:

“(1)

Where, by the fault of two or more ships, damage or loss is caused to one or more of those ships, to their cargoes or freight, or to any property on board, the liability to make good the damage or loss shall be in proportion to the degree in which each vessel was in fault.

(2). If, in any such case, having regard to all the circumstances, it is not possible to establish different degrees of fault, the liability shall be apportioned equally”

As I pointed out in my judgment on liability, section 1 of the Maritime Conventions Act 1911 and so now section 187(1) and (2) of the Merchant Shipping Act 1995, have been applied to cases where there has been no collision, but damage has been done to one ship by the “fault” of another ship in its navigation or management. See: the “NORWHALE” [1975] 1 QB 589.

Mr Buckingham referred me to a large number of collision cases which had been decided before the CPR came into force. In these cases, the court had found both ships to blame, although in varying proportions. Mr Buckingham demonstrated that the court had, in those cases, made a variety of orders as to costs to reflect the fact that the claimants had been found partly to blame for the collision. Mr Buckingham relies upon them because they are cases where each side has been held at fault but there is no counterclaim by the defendant.

I do not need to go through all those cases. I can start with “The Rockabill”, (Footnote: ²) a decision in the Court of Appeal. There had been a collision between two ships in the River Mersey. The Mersey Docks and Harbour Board were also defendants. There was no counterclaim by the Harbour Board. All three parties were found to blame for the collision. In dealing with costs, Scott LJ expressed the view that “the ordinary rule” should be that costs ought to be divided in the same proportion as liability, unless there was some reason to depart from it. (Footnote: ³)

The next case I should mention is the ”The Trivia”. (Footnote: ⁴) Willmer J found that the defendant’s vessel “Trivia” was to blame for the sinking of the claimant’s barge “Baron”, when moored alongside in the Surrey Docks in London, but he found that “Baron” was also partly to blame because she was poorly secured and he held each equally to blame. He gave the claimants 50% of their costs. He pointed out that, under the procedure of the Admiralty Court at the time, there was no means of making a payment into court.

In the case of the “EK” (Footnote: ⁵), the trial judge, Cairns J, held the claimants’ vessel, “DEBELZOVO” to be 75% to blame for the collision and the defendants vessel, “EK” to be 25% to blame. There was no counterclaim. In the report is recorded a short debate on the question of costs, after the judge had delivered judgment on the merits of the claim. Two very experienced Admiralty practitioners of the day, (Mr Waldo Porges QC and Mr J V Naisby QC) accepted that in collision cases where there was no counterclaim, there was no settled practice in the Admiralty Court that the claimant should receive only a proportion of its costs. This was accepted to be so, even in cases where the claimant recovered only a small proportion of its claim because the court had found the claimant largely to blame for the collision. However, it was also accepted that there may be specific reasons why a claimant in that position should not recover all of its costs, e.g. there had been evidence from the claimants that the judge did not accept.

In another collision case in the same year, before Karminski J, the same issue arose: M.V. Ronda (Owners) v SS Lucille Bloomfield (Owners) The Lucille Bloomfield (Footnote: ⁶). The judge had found both vessels equally to blame. The defendants had made no counterclaim. (Footnote: ⁷) The judge heard argument from the two leading silks at the Admiralty Bar of the day (Mr HV Brandon QC and Mr J V Naisby QC) on the issue of how costs should be dealt with in this circumstance. The judge concluded:

“The salient feature is that the plaintiffs had to come to this court to get judgment, even if not a full judgment in the sense of apportionment of blame against the defendants. In my view, the proper course here is to make the order for costs follow my apportionment of blame worthiness, and I have come to the conclusion that the right order to make is that the defendants shall pay half of the plaintiffs’ costs.

Looking at the cases up to this point, the broad approach of the judges seems to have been that fault on liability is a matter to be taken into account in costs, but the resulting costs orders vary considerably. It is clear that the suggestion of Scott LJ in “The Rockabill” was not followed with any degree of rigour.

The principles concerning the award of costs in a collision action where there was no counterclaim were next considered in detail in 1996, by the late Mr Geoffrey Brice QC, sitting as a Deputy Judge of the Admiralty Court. This was in the case of The “Antares II” and “VICTORY” (Footnote: ⁸). The judge had concluded that both vessels were at fault in the collision and that the defendant’s vessel “VICTORY” was 75% to blame and the claimant’s vessel “Antares II” was 25% to blame. The judge analysed a large number of collision cases on the issue of the apportionment of costs where both parties had been to blame. He also considered a number of common law cases where there was an allegation of contributory negligence by the claimant (under the provisions of the Law Reform (Contributory Negligence) Act 1945, but no counterclaim was made by the defendant.

Having reviewed the cases, the judge came to the following conclusion:

“The upshot of consideration of the cases is that many appear to result in a division of liability for costs reflecting the division of fault. However the more recent of the cases and the Court of Appeal decision in Re Elgindata (No. 2) appear to favour the plaintiff recovering the whole of his costs notwithstanding a reduction in damages on account of his own negligence. Given this historical difference in practice, I have not found the question of how the Court should exercise its discretion as regards the order for costs an easy one to answer. However, following the guidance laid down in Re Elgindata (No. 2), (Footnote: ⁹) I believe that the better course, absent some special reason. is for the Court to award such a plaintiff the whole of his costs. …… ”

The latest edition of the leading text book on the law of collision, Marsden: Collisions at Sea, (Footnote: ¹⁰)states, at paragraph 19.12: “If there is no Part 20 claim but a reduction in the amount of damages on account of the claimant’s contributory negligence, the practice is to award the claimant all of his costs”. The decision of Mr Brice QC in The Victory is cited in support of this proposition.

Mr Buckingham was unable to point to any common law cases, either before or since the introduction of the CPR, which establish as a principle that a claimant who only recovers a part of his claim because he has been found to be contributorily negligent, will, generally, only recover costs proportionately to the percentage of the claim recovered. However, Mr Buckingham submits that Pt 44.3(5)(b) supported his proposition that a court should only award a winning party a percentage of its costs if it has not succeeded in winning 100% of its claim because of a finding of fault or contributory negligence against it.

Mr Karia submits that issues of costs in Admiralty cases should not be dealt with any differently from other types of case covered by CPR Pt 44.3. He submits that the cases on which Mr Buckingham relies do not establish the rule for which he contends. Mr Karia also submits that there is no principle that a claimant should only get a proportion of its costs where it had only recovered a proportion of its claim because the court has found that it was guilty of fault or contributory negligence. On the contrary, he submits, a claimant in such a position is the party that has won at the trial and the general rule in CPR Pt 44.3(2)(a) should be applied in the absence of any other factors.

Mr Karia referred me to a number of cases under the CPR, in particular: Summit Property Ltd v Pitmans, (Footnote: ¹¹) Fleming v the Chief Constable of the Sussex Police Force, (Footnote: ¹²) Yvonne Hazel Painting v University of Oxford, (Footnote: ¹³) Travelers Casualty and Surety Company of Canada and others v Sun Life Assurance Company of Canada (UK) Ltd and others, (Footnote: ¹⁴) Aspin v Metric Group Ltd (Footnote: ¹⁵)and Clifford Shore v Sedgwick Financial Services Ltd and others. (Footnote: ¹⁶)

He submits that these cases demonstrate the following propositions: (1) that there is no principle that a successful claimant should have his costs reduced because he was not wholly successful on all his claim or causes of action. (2) An “issues based” costs order should only be made when it is demonstrated that particular issues could be identified and shown to have taken up time and costs. (3) The conduct of the parties is an important factor when deciding what order to make, in particular whether an offer has been made or the claim (although successful) was exaggerated.

I am prepared to accept that those cases do support those propositions. However, none deal with the principle issue that arises in this case.

Mr Karia submits that the issue of the fault (or not) of “KRYSIA” was closely connected at the trial with the question of whether “EUROPA” was liable for the fouling of the propeller. He reminded me that, in my judgment on liability I had held that (i) the defendants had changed their case at the last minute on whether there was a rope attached to the Yokohama fender at all; (ii) Captain Mueschen changed his evidence in his third witness statement from what he had said in his first two statements; and (iii) that I concluded that both Captain Mueschen and Captain Jabol (witnesses for the defendants) were unsatisfactory witnesses. Mr Karia also pointed out that the defendants had never made a Part 36 offer. Indeed, the defendants’ solicitors had stated that the claim was a hopeless one, because the fouling of the propeller had been caused solely by the actions of “KRYSIA”. They indicated that they would claim indemnity costs. (Footnote: ¹⁷) His submission is that, in all these circumstances, the general rule in CPR Pt 44.3(2)(a) must be followed in this case.

I have concluded that Mr Karia is correct. First, the claimant is the party which really won at the trial. Therefore, the general rule in Pt 44.3.(2)(a) must apply unless there is a good reason why it should not do so. Secondly, the cases to which I was referred by Mr Buckingham do not establish any rule or principle, applicable to collision cases or analogous types of case in the Admiralty Court, where there is no counterclaim, that a claimant who is found at fault under section 187(1) and (2) of the Merchant Shipping Act 1995, should recover its costs in proportion to the percentage of liability of the defendant. Thirdly, the fact that the claimant in this case has recovered only 70% of its claim, because I have found it to be 30% to blame for the fouling, is not, in my view, sufficient reason (within Pt 44.3(4)(b) or otherwise) to reduce the costs awarded to the claimant. Fourthly, on the facts of this case, there is no other basis on which I can legitimately make an “issues based” costs order. Fifthly, there are aspects of the defendants’ conduct which reinforce the award of a costs order in favour of the claimants. These include the defendants’ failure to make an offer at any stage, their late change of case on whether there was a rope attached to the Yokohama fender and the unsatisfactory evidence of their two main witnesses, Captain Mueschen and Captain Jadol.

For all these reasons, I have decided to make a costs order in favour of “KRYSIA”. The parties had agreed that I should make a summary assessment of the claimants’ costs, but as they have now settled this issue there is no need to do so.