Keynvor Morlift Ltd v The Vessel "Kuzma Minin"

In this matter three Claimants, hereafter “KML”, “SSL” and “FDEC” respectively, seek remuneration for salvage services performed to the Defendant’s vessel “KUZMA MININ” (“the Vessel”) on 18^th December 2018. This present hearing arises from the Claimant’s application for judgment in default of acknowledgment of service, pursuant to CPR 61.9. The claimants submit that they are entitled to an award of salvage remuneration at common law in accordance with the Salvage Convention 1989, as enacted by the Merchant Shipping Act 1995. Alternatively the Claimants contend that they are entitled to remuneration by way of restitution assessed on a quantum meruit basis. Unusually, Mr Kemp, of HFW, has gone so far as to propose that the appropriate level for the quantification of an award is £550,000.

There are a number of claims pending in respect of the casualty. By an Order dated the 12^th February 2019, in claim No AD 2019 000001 brought by Glander International Bunkering DMCC, the court gave judgment and ordered that the Vessel should be appraised and sold by the Admiralty Marshal. The Vessel has since been duly appraised and sold by the Admiralty Marshal. The appraisal is confidential to the Admiralty Marshal but the sale price is known as the proceeds of sale have been paid into Court. That sum is $1,003,000. In addition to Glander International Bunkering DMCC there are two other cautioners, namely the MCA, represented by Stephenson Harwood, and Redwater NV, represented by Hill Dickinson.

The claim by the present Claimants was commenced by an in rem claim form issued on the 19^th March 2019. The Claim Form, together with detailed Particulars of Claim (likewise dated 19^th March 2019) and the corresponding Response Pack, was duly served by the Admiralty Marshal on 20^th March 2019 by affixing the same to the bridge window of the Vessel. This can be seen from the witness statement of Mr

The present application was issued by a notice which was filed and issued on 9^th April 2019. The Service took place as appears from the Certificate of Service filed. The evidence in support of the application and Claim is contained in the witness statements filed.

On the 12^th April 2019, Teare J made an order directing that, for the purpose of obtaining judgment in default pursuant to CPR Part 61, the issues of both liability and quantum should be considered before the Admiralty Registrar. Teare J also directed that, pursuant to CPR 61.9(4), an application for Judgment in Default in an in rem claim must be served on all persons who have entered cautions against release on the Register and should generally be heard in open court with respect to both liability and quantum.

The hearing date and time was notified by the Court on 9^th May 2019 and the two known cautioners were served by the Claimants on the 10^th May 2019 with the application notice and all evidence in support, together with notice of the hearing date thus complying with the requirements of CPR Part 61.9(4). Having heard Mr Phillips, for the Claimant, at the hearing on the 22^nd May 2019 judgment was reserved.

On the 10^th July 2019 Mr Justice Teare made an Order in Claim no. AD-2019-000033 giving judgment to PJSC Sberbank of Russia (“PJSC”), the mortgagees of the Vessel, in the sum of US$1,608,570 together with costs summarily assessed as £75,000 and ordering that the PJSC Sberbank could enforce its judgment against the proceeds of the sale of the Vessel paid into Court.

On the 23^rd July 2019, very shortly before I had intended to provide a draft judgment with a view to handing down judgment in the present proceedings on the 29^th July 2019, an application was received by the Court from Linklaters, acting for PJSC, seeking permission to intervene in the proceedings. The Application Notice was supported by a witness statement of Mr Duncan Hedar dated 22^nd July 2019 which also sought a stay of the Claimant’s application for default judgment. I informed Mr Phillips of this development on the 23^rd July 2019 by email and indicated that the application should be heard before judgment was given and added “if some agreement can be reached as to an exchange of documents and possibly written submissions and as to a time for that it may be possible to avoid a hearing and for me to reconsider my present draft in the light of any new submissions. If that occurs I would like to be kept informed by email.”

After that Messrs HFW and Linklaters entered into correspondence in the course of which it was agreed that there would be disclosure of the evidence already put before the Court, that PJSC would put written submissions before the Court and that the Claimant would put responsive submissions before the Court. A time table was agreed. In effect this amounted to an agreement that PJSC might intervene in this claim for the purposes of making submissions with respect to the level of any salvage award to be made.

This judgment has been prepared in the light of the original evidence and submissions and the further submissions and documentary evidence provided.

I have been referred to a number of documents, including the Claim Form, the

The Claimants are a consortium of three companies which co-operated and together provided salvage services to the Defendants on 18^th December 2018 in the circumstances described below. They seek a single award for the services provided by them.

The Defendants are the owners of the bulk carrier “KUZMA MININ”, her bunkers, stores and freight at risk. The “KUZMA MININ” (“the Vessel") is a 1980 build bulk carrier with container capacity, length overall of 180.5m, 22.9m in beam, 13.5m moulded depth, 16,257 gross registered tons, 7,306 tons net, and which has a deadweight capacity of 23,169 MT and a draught of 9.88m. At the material time the casualty was manned by a crew of 18 hands all told. She was unladen at the material time.

On the night of Monday 17^th December 2018 the Vessel was lying to her port anchor off the coast of Falmouth. At about 0300 on Tuesday 18^th December, when the wind was Southerly a fresh to severe gale with heavy seas, the casualty began to drag her port anchor towards the lee shoreline. At all material times up to and during the course of the grounding the Vessel’s starboard anchor remained housed and unused up to and during the course of the grounding. At about 0530 on the 18^th December 2018 the Vessel grounded beam on to the waves on a reef and sand in the vicinity of Gyllyngvase beach (East and South, off Swanpool Point) Falmouth Bay. The Vessel remained aground but with generator power and the use of her main engine but it is apparent that she was unable to free herself from the reef.

Mr Diccon Rogers is the Managing Director of the First Claimant. He has provided two witness statements. From the first witness statement the following appears:

The relevant salving instruments used in the operations under consideration were:

According to Mr Rogers the salient features of the services were:

Mr Roger’s first witness statement does not give details of the demobilisation of the salving instruments and personnel. However, Mr Rogers provides a resume of the equipment used and damaged and the personnel deployed, as follows:

The costs associated with performing the services are put forward by the Claimants as being £118,500.

For the Claimants, Mr Nevil Phillips, provided the court with a carefully prepared and detailed skeleton argument to which he added in oral submission. Mr Phillips has also made it clear that the claim is brought by the present Claimants acting as a consortium, that the Court is not required to apportion any award of salvage between them and that the Claimants only require the Court to make a single award in respect of their services as a whole. In his email of the 23^rd July 2019 Mr Phillips also stated that the pilot, Captain Gurd, is not a claimant to these proceedings and has, apparently elected not to put forward a claim for salvage.

Mr Phillips’ submissions may be summarised as follows:

Although I have not had the benefit of hearing Mr Turner QC he has provided written submissions which are, not surprisingly, well presented and helpfully set out in a way which addresses the points in issues in this case. It is unfortunate that he was not provided with a copy of the Claimants’ skeleton. Therefore, not unnaturally, his submissions tend to respond to the case put forward in Mr Kemp’s witness statement. In outline his submissions are that, although the Claimant is entitled to a salvage award, nonetheless the benefit to the casualty, the nature of the services, the dangers faced by the casualty, the skill and efforts demonstrated, the time taken, out of pockets and losses, the risks taken by the salvors, the promptness of the services rendered, the availability of vessels and equipment intended for salvage operations,

With respect to Mr Turner’s particular submissions on these points they may be summarised as follows:

In response to the case put forward by PJSC the Claimants have introduced further witness statements. The first is a second witness statement made by Mr Rogers and the second has been made by Captain Gurd, the Chairman of Falmouth Pilots LLP and the pilot who attended the casualty during the services. The main points have been highlighted by Mr Nevil Phillips in his submissions dated 12^th November 2019. His first general submissions are to the effect that it is apparent that the intervention is to minimise the quantum of any award to reserve the Interveners’ own prospects of recovery under the mortgage on the vessel, the submissions made by the Interveners in seeking to minimise the efforts of the salvors are unjustified and that the further evidence has been provided to meet the charges of exaggeration raised. He has then dealt with 10 matters raised by PJSC which are summarised as follows:

As I have already indicated my original judgment was largely complete when it became apparent that PJSC were intending to apply to intervene. I have sought to summarise the additional submissions and information provided by the parties and I have revised my original findings where I consider it appropriate to do so.

This claim was brought in rem and, on the evidence before me, it is clear that it was properly served. The Owners of the casualty have not acknowledged service of the claim and that has led to the Claimants making this application for default judgment. The provisions of CPR Part 61 contain different rules from those applying in other courts and in Admiralty matters it has long been established that to obtain a default judgment it is necessary to satisfy the Court that there is a proper claim and that the sums sought are appropriate.

PJSC are the mortgagees of the Vessel and, given the fact that the owners have chosen not to take part in the proceedings, it is understandable that they would wish to make submissions with the intention of preserving as much of the fund as possible as they have a substantial interest in whatever remains after any salvage award has been paid. In my view that course is understandable although it was unfortunate that the intervention took place at a late stage in the proceedings.

PJSC has introduced the MAIB report in evidence. In his submissions Mr Phillips has contended that the MAIB report should not be admitted relying on the decision of the Court of Appeal in Rogers v Hoyle. In that case objection was taken to the admission of the Department of Transport’s Air Accident Investigation Branch (“AAIB”) report

In my view that approach is strengthened because the 2012 Regulation provides that the issue of the report’s admissibility is only specifically proscribed if the judicial proceedings have the purpose of attributing or apportioning liability or blame. As the present proceedings are solely dealing with issues of salvage and not the apportionment of fault or blame it appears to me that the 2012 Regulation does not prevent the MAIB report from being admitted in evidence. However as both Leggatt J and Christopher Clarke LJ have emphasised the weight to be placed on any information derived from such a report is a matter for the decision of the tribunal and

Were the operations salvage services? Having considered the whole of the evidence now put before me together with all the submissions made I have no doubt whatsoever that the operations performed by the Claimants were “salvage operations” within the meaning of the Salvage Convention as enacted by the Merchant Shipping Act 1995. The casualty was, on any view, in danger and the operations undertaken by the Claimants were successful. It follows that this is a case in which it is proper to make an award of salvage assessed upon the principles set out in Art.13 of the Convention. It is to be noted that Mr Turner QC, counsel for PJSC, has not advanced any argument that the services performed were not salvage but expressly accepts that an award of salvage remuneration would be proper.

The claim for quantum meruit. The finding above, as Mr Phillips recognised, renders it unnecessary to consider the Claimants’ alternative claim for an award based upon the equitable principles of restitution and/or quantum meruit. However, for the sake of completeness and having considered Mr Phillips’ interesting submissions, I doubt that

However in the absence of salvage, by agreement or otherwise, a claimant may be able to recover on the basis of quantum meruit but, in my view, only where he can establish that there is in existence an express or implied contract for the provision of some services other than salvage, for example towage. Thus I do not accept that it is open to a claimant to simply assert a right to a recovery based upon quantum meruit as an alternative claim if he fails to establish that the circumstances are such as to render the case one of salvage. In my view this is made clear by the dictum of Bowen LJ in Falcke v Scottish Imperial Insurance Co. (1886) 34 Ch D. 234 at 248 where it was said: “The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will. There is an exception to this proposition in the maritime law. I mention it because the word “salvage” has been used from time to time throughout the argument, and some analogy is sought to be established between salvage and the right claimed by the Respondents. With regard to salvage, general average, and contribution, the maritime law differs from the common law. That has been so from the time of the Roman law downwards. The maritime law, for the purposes of public policy and for the advantage of trade, imposes in these cases a liability upon the thing saved, a liability which is a special consequence arising out of the character of mercantile enterprises, the nature of sea perils, and the fact that the thing saved was saved under great stress and exceptional circumstances. No similar doctrine applies to things lost upon land, nor to anything except ships or goods in peril at sea.”

The entitlement to a judgment in default. The provisions of CPR Part 61.9 govern the procedure which applies to applications for judgment in default where a claim is brought in rem. These are:

“(1)

In a claim in rem (other than a collision claim) the claimant may obtain judgment in default of – (a) an acknowledgment of service only if – (i) the defendant has not filed an acknowledgment of service; and (ii) the time for doing so set out in rule 61.3(4) has expired; …

(3)

An application for judgment in default – (a) under paragraph (1) … in an in rem claim must be made by filing – (i) an application notice as set out in Practice Direction 61; (ii) a certificate proving service of the claim form; and (iii) evidence proving the claim to the satisfaction of the court; and

(4)

An application notice seeking judgment in default and, unless the court orders otherwise, all evidence in support, must be served on all persons who have entered cautions against release on the Register. …”

Mr Phillips has submitted that as the Defendants have not filed an acknowledgment of service and the Claimants have filed an Application and served it in accordance with the procedures set out together with the evidence necessary to prove the claim to the satisfaction of the court it follows that the Claimants are entitled to judgment in default for a salvage award which must be assessed. I agree with him. Mr Phillips has drawn the Court’s attention to the fact that under the rules there is no requirement for service of the application notice or the supporting evidence on the defendant to the in rem claim. CPR Part 61 contains no such requirement and, aside from the position in relation to cautioners who must be served in accordance with CPR Part 61.9(4), CPR 61.9(3) only requires that the application notice and evidence are to be filed. Further CPR Part 12.11(2) provides in terms that “Any evidence relied on by the claimant in support of his application need not be served on a party who has failed to file an acknowledgment of service.”. Mr Phillips has therefore submitted that it is not necessary to serve the Defendants and that this is consistent with the policy in respect of a default judgment which is only sought in circumstances where the defendant has already failed to engage in the proceedings. I consider that Mr Phillips’ approach is correct and hold that all procedural requirements for the present application have been satisfied.

It is therefore necessary for the court to consider what is the appropriate sum for the salvage remuneration on the facts of the present case. However PJSC has intervened and submissions and further evidence have been filed. With the exception of the MAIB report no objection has been made as to the admissibility of the further evidence and in respect of that report I have already decided to admit it, as set out above. It is common ground that the assessment of the salvage award may take account of those submissions and such other evidence as has now been provided.

The criteria to be considered in approaching an award of salvage. As the services performed in the present case were not performed in compliance with a contractual agreement, such as for example an LOF, the Merchant Shipping Act 1995 requires that the assessment of the award must be made in accordance with the principles set out in the Convention. The relevant provisions are:

As appears from the foregoing the starting point is the provisions of Art.13 but before turning to that there are two preliminary matters which I consider need to be mentioned with respect to my approach.

The submission of a precise figure for the award. In the present case Mr Kemp has, by his witness statement, stated his opinion that a reward of £550,000 would be appropriate. He has reached that figure as a result of the “round robin” exercise carried out within his firm. Mr Turner QC has submitted that such a course is inappropriate and contrary to practice and principle. I consider that that submission is correct for the following reasons:

The awards in previous claims put forward by the Claimants. It is to be noted that Mr Kemp has exhibited two awards made by arbitrators in previous cases. They are: (i) the The Rea made by Mr Geoffrey Brice QC in 1979 and (ii) The Skopelos made by Mr Lionel Persey QC in 2018. The propriety of doing so was considered by Peter Gross QC, as he then was, sitting as a Deputy Admiralty Judge in The St John [1999] 1 Lloyd's Rep. 883. He considered that it was helpful to be provided with recent comparators of salvage awards given but, as he recognised, each case depends upon its own facts. Insofar as Mr Kemp appears to rely upon the decisions provided it is, I think, to demonstrate that even where services are of short duration nonetheless the fact that they were performed “in the nick of time” is an important feature when considering the overall award. With respect to Mr Kemp that is not a principle for which he required the support of earlier decisions. Aside from that so far as The Skopelos is concerned the circumstances, service and salved values are so different from the present that I do not consider that it affords me any real assistance. With respect to The Rea it is by no means a recent award and it is a fact that perception of the dangers arising from pollution are taken more seriously today than was the case 40 years ago. Further it is to be noted that there are major differences in the present case because the casualty in the present case was already aground and required the use of 5 tugs and other equipment to salve her whereas in The Rea the casualty had not grounded and therefore whether she would or the manner in which she would ground were still matters for argument. My impression is that the dangers and services in the present case are of such a nature as to distinguish them from the facts of The Rea. Insofar as Mr Kemp relies upon The Rea to support a suggestion of a figure of about 20% of the salved fund and therefore his proposed figure of £550,000, using a percentage comparison has the drawback of depending upon what is found to be the proper salved value. In my view neither of the awards mentioned provided me with more than minimal assistance. Bearing those matters in mind I turn to the criteria set out in Art.13.

The values put forward by the Claimants are: ship sound value - £2,823,462.00 less deductions (estimated damage) - £450,000.00, giving a ship salved value of £2,373,462.00. Which together with bunkers - £40,119.00 gives a total salved fund of £2,413,581.00. In a note to his witness statement Mr Kemp has stated that the sound value set out above mirrors the value of $3,570,000 which appears in the certificate of valuation and is converted at the rate of $1/£0.7908858589.

The established principle with respect to valuing the property salved is that it is to be assessed as salved at the place where and the time at which the salvage is terminated, whether or not that is the port of destination. This principle is reflected in a long line of decisions starting with The George Dean (1875) Swab 290 and set out at p. 569 of Kennedy & Rose: Law of Salvage [9^th Ed]. The learned editor has added the following quotation taken from the judgment in The Gaupen (1925) 22 Ll.L.Rep 271 at 375: “The law is that when a vessel is brought into port and her cargo arrested, the price to be taken is the price at the time of the arrest, which is as if the Marshal had to sell the ship and the cargo at that time”. Also mentioned in Kennedy are the decisions of Clarke J, as he then was, in The Yolaine [1995] 2 Lloyd’s Rep 7 and Gross J, as he then was, in The Ocean Crown [2009] EWHC 3040 (Admlty); [2010] 1 Lloyd’s Rep 468. In the first Clarke J. reiterated the principle referred to above. As he said “One method of arriving at that value is to ascertain the sound value of the vessel and to deduct the reasonable cost of repairs”. He then proceeded to assess the value of the vessel on the evidence available to him. For present purposes the relevance of The Ocean Crown is Gross J’s consideration of the effect of the size of an award and the importance of the salved fund in establishing that award. These views are summarised at para 16-103 of Kennedy. It is to be noted that Gross J. reiterated the oft mentioned point that all cases must be decided on their own facts.

The evidence shows that the present services were terminated once the casualty had been re-anchored in Falmouth Roads. The vessel was subsequently moved to a more secure mooring within the harbour as part of a separate operation however I consider that for the purposes of assessing the values in this case it is proper to take Falmouth as being the place where the service was completed.

However as the learned author of Brice, Maritime Law of Salvage 5^th Ed. observed at para 3-92 “Although the time and place at which the value of the salved property must be assessed is now firmly established in principle it is less clear how, at least in some cases, one establishes that value”. He also observed: “As a matter of practice the valuation of ships is habitually ascertained for salvage purposes by reference to certificates of valuation given by experienced valuers and brokers on a charter free basis: The Kia Ora (1918) 252 Fed. Rep 507” [para 3-100]. That was an American case but the same practice is well established in England. In many cases, where at least the salvage award is contested, the parties may each put forward their own valuations and the tribunal will decide the salved values as an exercise of discretion on a balance of the evidence provided.

In a claim for default judgment it is probable that only the salvors will put forward a valuation, as has happened in the present case. In this case Mr Phillips has submitted that the fund is to be evaluated as at the termination and place of the services and that the valuation certificate should be taken as the only evidence of the casualty’s sound value at that time. In the absence of any other information that is probably the only course available to a tribunal. However CPR Part 61.9(3)(a)(iii) requires that the evidence filed must be to the satisfaction of the court. The general importance of this is to ensure that the decision does not compromise the rights of any other claimant which is of particular importance where the vessel has been sold and the fund paid into court is known and is somewhat limited. In my view the court should endeavour to ensure its decision is based upon evidence which it considers satisfactory.

The ship’s sound value was derived from a certificate obtained from Vessels Value dated the 8^th April 2019. The valuation of a vessel is a matter of expert evidence where a qualified witness expresses an opinion based upon the information available to him. Of course it is open to an expert to utilise mechanical or electronic means to assist in calculating or formulating his views but nonetheless it should still be his opinion which is put before the court. In the present case no expert has actually expressed an opinion and all the certificate provides is apparently an answer provided by a computer. Strictly speaking, since a computer cannot express an opinion, I doubt whether the certificate itself satisfies the rules pertaining to the provision of expert evidence.

Considering the Vessels Value certificate in the present case there are a number of striking features which raise doubts as the weight which the court can place on it. The certificate provided states the valuation date was 18^th December 2018 which is the date of the termination of the services and the value given is $3.57 million. It sets out the particulars of the casualty. These are that she was a Handy Bulk Carrier, flagged in Russia, of 23,200 DWT, length overall 180.5m and powered by a MAN engine. She was built in Germany in 1980 and at the material time it appears that her class was suspended. The certificate does not state that the Vessel was inspected by the valuers but states “The model is calibrated using confirmed sales prior to the date of valuation. Sales in circumstances which make them unreflective of fair market value (e.g. with charter) are excluded. Calibration is performed by computational algorithms which automatically adjust the parameters of the mathematical functions to best fit the sales data using, nonlinear, constrained and weighted regression analysis. The software is run daily to ensure valuations reflect the latest sales and earnings information”. The disclaimer also states that the “Market Value is provided is an estimate of fair price, … and is based on the Vessels Value estimates as its opinion in good faith”. The certificate has very limited information as to how the calculation is achieved but states that the valuation of the Vessel’s market value is estimated using five factors: (i) type, (ii) features recorded in the vessels database, (iii) age, (iv) cargo capacity and (v) freight earnings.

Further the valuation has provided 10 comparables giving their sale dates between 2^nd November 2018 and 18^th December 2018. It is to be noted that there are no comparables provided after the 18^th December 2018 which I find surprising as a sale soon after the relevant date ought to be considered relevant. It certainly would be if the exercise was to consider charter rates for a vessel in a loss of use claim. Further it is to be noted that all the comparables have a larger carrying capacity than the casualty and they are all of more recent build by at least 14 years. The nearest of the comparables in terms of age are (i) Amsel, 27,300 DWT, built 1994, sale price $2.2 million, (ii) Hai Xing, 29,500 DWT, built 1998, sale price $3.6 million and (iii) Mount Travers,28,500 DWT, built 2002, sale price $6 million. There is no apparent reason why the value of $3.57 million is almost the same as that in the case of the Hai Xing which was larger and younger by about 18 years. On the face of the data apparently used there is no rational explanation as to why the Amsel has not been highlighted as the only real comparable and even then she is larger by some 4,000 DWT and younger by some 14 years. Logically it is highly improbable that the value of the present casualty exceeded that of the Amsel and given the differences in carrying capacity and age it appears to me that a true sound value of the present casualty should be less than the value of the $2.2 million comparable. Therefore it seems to me that the sound valuation of $3.57 million is suspect.

The paucity of information was noted at the hearing and, since then, the Claimant’s solicitors have provided two ‘Vessels Value’ documents. In the first Mr Adrian Economakis has provided an explanation as to the data which lies behind vessel valuations and “how it is collected, validated and managed”. Part of that includes a collection of information leading to the “sales database”. The second is composed by Dr Alex Adamou in which he describes “the mathematical models and computational algorithms behind VesselsValue automated online valuations.” In this, inter alia, he acknowledges the difficulties in co-relating the various data basis derived from information which, as I understand it, is fed into the system. From his description I understand that one of the most reliable indicators is the actual age of the vessel. For these purposes it is to be noted that the paper accepts that there is room for error which, tested against 2,069 “backvaluations” has indicated an accuracy range which is impressively small in a large number of cases but rises to plus or minus 30% when taken overall. As the document states: “Although it would be hubris to claim that our valuations were entirely error free, there are many reasons why a valuation might differ from the actual sale price. For example, the vessel may have a particularly good or bad survey position.” In general I accept that this type of system is a valid tool in seeking to value a vessel which may provide a helpful addition to the traditional valuation exercises undertaken by shipbrokers and, so it would appear, may form a basis for many future ship valuations. However, being computerised, it is only as reliable as the information upon which it relies. Thus it is as much open to scrutiny as the ship brokers who traditionally performed this exercise.

In my view there are two further aspects of the Claimants’ case which are of concern. The first is that the deductions are said to be estimated at £450,000 and the second is that the value of the bunkers are said to be an estimate. In his witness statement Mr

The second is that the casualty was sold by the Admiralty Marshal at the end of March 2019 for the sum of $1,003,000 which is presently in court and equates to £802,1994.40 at the present rate of exchange of $1/£0.80. The exchange rate has fluctuated between $1/£0.79 on December 18^th 2018 dropping to $1/£0.66 around 29^th March 2019 before rising again. For purposes of understanding the value of the sum in court I consider that the present rate is the most relevant however for the purpose of considering the salved fund the appropriate rate of exchange to be applied is that at the date of the termination of the services. The Admiralty Marshal gave notice of the sale and the payment into court on the 1^st April 2019. To my mind the question is the extent, if any, that the court should give weight to this information. The court sale was, as usual, on an “as is where is” basis, ie. it is a sale price which recognised and accepted the fact that the Vessel carried damage. That is reflected in the Admiralty

Mr Phillips has submitted that the court sale price is irrelevant because it took place some three months after the termination of the services and therefore does not represent the salved value at the time and place of the services being terminated.

In my view the Claimant’s case as to the salved values is unsatisfactory. As indicated above I consider that the sound value put forward is suspect. The salved value put forward for the Vessel is also suspect because the information to support the estimate of the deductions is, in my view unsatisfactory. In these circumstances I do not think that it would be correct to ignore the actual sale price, as Mr Phillips urges me to do. As a matter of fact, there is nothing to suggest that the state of the casualty had materially deteriorated over a period of only 3 months or that there was a fluctuation of the market or that either of those factors singly or jointly could have resulted in the loss of so large a proportion of the casualty’s apparent value. In my view the reality must be that, at the time of termination, the sound value of the casualty was considerably lower than the figure put forward by the Claimants.

Bearing these factors in mind and the objective of the court to come to a fair conclusion I consider that the Court should come to a decision based upon all the evidence before it as best it can. I consider that it is appropriate to take as the starting point the value of the nearest comparable at $2.2 million. In my view the other comparables provided were so different in size and age as to be of little material assistance. That vessel was younger and larger than the casualty which was, therefore, probably of a lesser value. I consider that should be taken as being $2,000,000.

As to deductions there is no doubt that the casualty suffered significant physical damage whilst aground. The evidence provided is that the damage was extensive and significant. There is uncertainty as to whether repair costs would have been greater than that estimated by the Claimants. Such uncertainty would, at least in part, account for the lower court appraisement and sale price. I have also taken into account the fact that the court sale took place 3 months after termination and that there might have been a reducing market in operation although there is no actual evidence of that. It is also proper to make an allowance for the possibility of some continuing deterioration although I do not expect that would have been of great significance over a relatively short period with a vessel which was already of advanced years. Bearing those matters in mind I have therefore come the conclusion that a proper salved value should be taken as being $1,500,000. Using Mr Kemp’s exchange rate as at the time of the services the figure amounts to £1,186,328.78.

In my view this approach is supported by the views of Brandon J, as he then was, in the Lyrma (No.1) [1978] 2 Lloyds Law Rep 27. That was a case where affidavit evidence was provided as to the sound value of the vessel being £80,000 but where she was sold by court order pendente lite for a sum of £32,500. There was no reliable evidence as to the deductions to be set against the sound value to reach a salved value and the judge said: “I can only do my best in the circumstances to put a value upon the salved value which seems to me to be just.”

To that figure something must be added for the value of the bunkers. I have been informed by the Admiralty Marshal that, by the time of the sale, the casualty’s bunkers had been wholly or virtually exhausted which gave rise to some problems at the time. However as the Vessel had been under arrest for some time it indicates that there must have been a quantity of bunkers onboard at the time of termination of the services. The original estimate put forward by the Claimants was £40,119. Initially the Claimants did not provide the basis for their estimate and Mr Turner has submitted that the figure of 105 tonnes of HFO referred to in the MAIB report should be accepted. The Claimant has since provided the bunker survey report made by R Pearce & Co on behalf of the Admiralty Registrar which indicates that there was

For the sake of completeness it is to be mentioned that Mr Turner submitted that the sound valuation put forward was a demolition value. The basis for this submission is not clear. The valuation document provided by the Claimants is a Market Valuation Certificate. The disclaimer contained in the Valuation Certificate indicates that it is an open market valuation based upon a hypothetical transaction between a willing buyer and a willing seller (see note (a)). It was based upon a system of algorithms taking account of other sales details of which were provided on the face of the document.

Having considered the values of the property salved the assessment of the proper award involves an exercise of the court’s discretion taking account of that and the other features of the case bearing in mind the criteria referred to in Art. 13. There is nothing which suggests that one of the criteria, or elements to be taken into account, is more important than another and each should be considered and given the weight which is appropriate to the circumstances of the particular case. A number of disputes have arisen between the Claimant and PJSC with respect to these elements

It is trite law that the dangers facing a vessel are to be considered on the basis that no outside assistance would be provided. Whether the Vessel could have extricated herself and the dangers facing her may be considered against the background of the circumstances leading to the casualty and her position aground. These were:

On the evidence available I consider that the Vessel was grounded in a position of considerable danger. Her bow thruster was not working and her port anchor had not held and was eventually hove in. Although she had the use of her main engine her master considered that, even before grounding, she would be unable to clear Pennance Point by using her engine. That demonstrates that the Vessel could not possibly extricate herself from her predicament once she had grounded. Where a vessel has grounded a usual method of holding her in position, of reducing movement and therefore ongoing damage is by ‘ballasting down’. However that was not a realistic option available to this vessel. There was therefore no means available to this vessel to reduce the dangers which she faced. The pre-stranding drafts were reported by the Vessel’s Master, to Captain Rowe when he boarded which was shortly after 0745, as being 6.8 metre aft and 6 metres amidships. From visual inspection at that time Captain Rowe observed that the Vessel was about 1.5 metres out of draft aft, 1 metre amidships and 1 metre forward although he acknowledges that it was difficult to read the draft cuts and the Vessel had a port list at the time.

In her grounded position the Vessel was subjected to high seas and a not inconsiderable tidal range. Although she was built to ice strengthened specifications she was a vessel of considerable age. The Pilot, Captain Gurd, has stated that the Vessel appeared to him to be in very poor condition, that she was pounding heavily and that he was concerned as to whether the Vessel’s bottom and tanks would be breached and whether she might suffer serious structural failure. There is evidence that she did suffer considerable bottom damage in a comparatively short period of time. She was pinned against a rocky shoreline and as long as she was subjected to swell and sea conditions there is reason to expect that the damage to her bottom would worsen. In my view it is proper to accept Captain Gurd’s evidence that he had the concerns which he mentions. He is an experienced mariner who has, so I am informed, no personal interest in the outcome of this case. In my judgment in the sea, swell and tidal conditions prevailing there was a considerable risk that the Vessel would continue to suffer damage and probably be driven further onto the shore. If that occurred then she would also face the danger of being strained and suffering yet further bottom or structural damage. She had grounded at a time of year when bad weather is to be expected. If she was not assisted I consider that further damage to the Vessel over a period of time was inevitable. In my judgment it was only a matter of time before she became a constructive total loss or actual total loss in the sense that she would cease to be worth salving.

It follows, in my judgment, that the risk of oil pollution was also high. There was already damage in way of the Vessel’s fuel tanks. She was not heavily loaded with fuel but there was sufficient to cause a significant amount of pollution should it escape. The area is said to be one of particular interest from a tourist and ecological point of view. The risk of any oil pollution is therefore to be taken seriously even in winter and, at the very least, that would involve expense in clean up costs. It is to the credit of the Claimants that, although it did not need to be used, they were equipped with an oil boom and had put it on stand-by.

The parties have made extensive submissions about this aspect. The Claimants submit that they are “professional salvors”. PJSC disputes this. However it seems to me that there is a danger of losing sight of the underlying purpose of considering the status of a claimant. It needs to be borne in mind that this is merely one aspect to be taken into account when considering the amount of an award. One purpose of an award is to encourage an entity to make itself readily available to perform services and to have the equipment necessary to do so. Thus a salvor which maintains salvage equipment or keeps tugs on salvage station, rather than using them for commercial activities, may reasonably expect to be treated as having a higher salvage status and be rewarded more for so doing than a commercial entity which is prepared to perform salvage when the need for it arises. Similarly the claimant which has the commercial capability to perform services and provides such services when necessary may expect to be treated as having a higher salvage status and receive a more encouraging award than a single vessel company which is not a dedicated salvor in any sense. It is not simply a matter of being ‘dubbed’ a ‘professional salvor’ or not and the status of each claimant needs to be regarded on its own merits in order to assess the level of encouragement for that organisation.

The Claimants are a consortium of three organisations which co-operated in performing the salvage services in the present case. Mr Phillips has made it clear that they seek a single award and therefore I do not consider that it is necessary to treat them separately but will consider them as a single entity which combines the attributes of all three. In my judgment these Claimants are clearly not, individually or collectively, in the highest echelon of salvage organisations. The tugs are not maintained on salvage station. They are commercial harbour tugs. Nonetheless there is a commitment of capital to some equipment, such as ground tackle, which may be used commercially or for salvage purposes. However there appears to be a willingness to co-operate to perform salvage services when the need arises and this is worthy of encouragement. That is particularly true today when there are far fewer tugs maintained on salvage station and the United Kingdom Government has, since 2011, reduced the number of Emergency Towing Vessels so that there is no longer such an entity standing by in the Western approaches. As a result, it is arguably important to provide encouragement to organisations, such as the present Claimants, to co-operate in performing salvage services in order to maintain sufficient cover to the waters around the shores of the United Kingdom.

PJSC has submitted that the services, although considerable, were exaggerated. There is also a dispute as to who mobilised the equipment and organised these salvage services and, in effect, who was the mind behind the provision of these services. Mr Turner, relying upon the MAIB report, has submitted that it was the Harbour Master who exercised control in furthering the ‘National Contingency Plan response’. In my judgment the salient features of the services were as follows:

Looked at as a whole it is apparent that the services were provided by the exemplary co-operation of the Claimants working in concert with others who included Captain Gurd and the Harbour Master. I do not accept the suggestion that the part played by the Claimants has been exaggerated. Without their personnel and the expertise and courage shown by the crew of the instruments which they provided the operation could not have been successful. Although some allowance must be made because of the organisational part played by the Harbour Master and the more significant part played by Captain Gurd on site and although this operation has been, in my view correctly, described as a most effective and successful co-operative effort it cannot be ignored that the vast majority of the physical work provided and risks run were undertaken by the Claimants. The reality is that without the skill and equipment provided by the Claimants the Vessel would not have been salved when she was.

In the present case the Claimants have put forward a sum of £118,500 made up of 10 items which they set out in a schedule. The schedule has been extended to include comments by PJSC and further responsive comments by the Claimants. Mr Turner has submitted that of the sum claimed the out of pockets properly so called amount to £41,900 which is the total claimed less the sums put forward for the winch of the tug

“ST PIRAN” (£75,000) and for repairs to the RIB’s electrical systems (£1,600). Of the sum of £41,900 he submits that the Claimants have provided vouchers for only £11,138 and that is overstated. He has submitted that a sum of only £10,750 should be allowed as ‘out of pocket’ expenses, that nothing should be allowed in respect of the RIB and about half the sum claimed in respect of the winch on the “ST PIRAN”.

It is convenient to consider the sums claimed by reference to the amended schedule.

The fact is that the “ST PIRAN” suffered damage during the service and that gives rise to an ascertainable loss to the Claimants of £75,000. In my view betterment does not arise and the Court should seek to recompense the Claimants for this loss so far as is possible bearing in mind the restraints imposed by the size of the salved fund and fairness. With respect to the other ‘out of pocket’ expenses put forward I accept that there were significant sums expended in hiring the “CANNIS” and in replacing broken tow wires which also amount to allowable loss or expense. I consider that the following are expenses or losses which may be listed as ‘monies numbered’: (a) the proved charter fees in respect of the “CANNIS” - £4,988, (b) the costs of damaged towlines onboard “ST PIRAN”, “ANKORVA” and “PERCUIL” - £10,889.12 and (c) the cost of replacing the winch on the “ST PIRAN” - £75,000. This gives a total of £90,877.12.

Although the tribunal is not bound to award a sum which covers the full costs of expenses or damage claimed, and it will not do so if the fund available from which to make an award is not sufficient to allow it to do so, nonetheless the general principle is that parties who assist in salvage services may bring the costs of doing so and any losses directly arising from the performance of the services to the attention of the court which should take them into account in reaching an award. The extent to which the court will do so will depend upon the evidence provided and the whether it is considered fair to allow the expense or loss.

The remaining expenses put forward have not been sufficiently proved so as to be taken into account as specific ‘monies numbered’ however it is probable that fuel was used and that work was done in clearing up when demobilisation took place. The Claimants have put themselves forward as having a professional status and many of the aspects raised are matters which a professional salvor would be expected to take ‘in its stride’. In my view, the proper approach is to take these items generally into account when considering the appropriate award bearing in mind that it is part of public policy to encourage the performance of salvage services.

The salved fund is £1,226,447.78, which is lower than that put forward by the Claimants. It can be described as modest by modern standards. However, where services have been particularly meritorious it is acceptable to award a sum which may make a larger proportional inroad into the fund than might be appropriate if the fund was larger. The balance to be achieved, so far as possible, involves balancing fairness to each party. One aspect to be borne in mind is that the services should have preserved property for the respondent owners of the salved property.

In my judgment even though of quite short duration this salvage operation demonstrates many of the elements which should lead to a particularly encouraging award without being overly restricted by the size of the salved fund. By way of summary I consider that the Vessel was in a dangerous predicament. If unassisted she would most probably have been pushed further aground over the high tide period. The Vessel had already suffered significant damage, she was elderly and apparently not well maintained, and, in my judgment, she would have suffered further damage over the successive tides which were ‘making’. In these circumstances she would probably be subject to hogging stresses, particularly as her after portion appears to have been in deeper water and therefore less likely to be supported at low tide. Over a period of time she would most probably become a constructive total loss or even uneconomic to salve. If further bad weather struck that would be likely to occur within the near future. She was beyond any useful form of self-help and there is no evidence of any other organisation offering assistance.

I consider that the services performed were of the highest order, promptly rendered and at considerable risk to personnel and equipment. The tugs worked close in shore in very severe sea conditions and they were materially assisted by the courageous and, in the circumstances, essential work performed by Mr Rogers and the crew of the RIB in making fast lines. Actual damage was suffered by one of the tugs and the Claimants are to be applauded for their services in the face of really testing conditions. The services were successful and, of particular importance in the present case, they were timely. The response was timely and the Vessel was refloated on the high water following her grounding. The successful outcome was brought about by the cooperation of the three Claimants and others, most significantly Captain Gurd, which was very commendable. In the balance the actual time spent in the operation was relatively short and the award made must not be out of proportion to the services rendered.

Although Mr Rogers and Mr Kemp have suggested that the Claimants have the status of professional salvors in truth the Claimants are three separate organisations. The First and Second Claimants have some experience in salvage operations and have some equipment which can be used for those purpose. However it appears to me that they are both to be regarded as essentially commercial maritime organisations with a willingness to perform salvage if the opportunity should present itself. The Third Claimant is clearly a commercial tug company and its investment in equipment is for that purpose. However it is also prepared to put its equipment at risk in order to provide services when necessary. The input of the Third Claimant is significant because it provided the most powerful instruments used in the services. I do not regard the status of the Claimants, individually or jointly, as being such that they should be rewarded for maintaining a stance as professional salvors. However the fact that they were prepared to co-operate with each other, with Captain Gurd and with Captain Sansom is, in my view, highly meritorious and deserves encouragement. This is particularly true as it appears that there is a lack of emergency towing vessels on station in the area and there was no evidence of any professional salvor offering to take part in these services.

In my judgment, on the evidence before the court, these salvors deserve an encouraging award which, given the dangers and the nature of the services rendered, may represent a substantial proportion of the salved fund without being unjust to the salved interests. However it is to be recognised that the Pilot also rendered personal services as did the helicopter flight which put him onboard. Captain Sansom also cooperated and contributed to success albeit to a lesser extent. In considering the proper award to these Claimants it is proper to take account of, and make an allowance for, all those who contributed towards success.

Bearing these factors in mind including the expenses and losses considered above I conclude that an appropriate award to the Claimants is £450,000.

The Claimants originally submitted that interest on the award should run at 1.75%. Unless further submissions are made about this aspect I consider that is the correct figure for interest to run from the termination of the services. Judgment interest at the rate of 8% from the date the judgment is handed down is also appropriate.

The Claimants seeks an order for costs which they ask to be summarily assessed in the sum of £112,885.31. Mr Phillips has submitted that the intervention of PJSC has increased the costs by a significant amount and that PJSC should pay the Claimants’ costs occasioned by the intervention. Mr Phillips further submits in the alternative that PJSC should bear its own costs of the intervention and that the Claimants should recover their costs from the fund in court. As a further alternative Mr Phillips has submitted that PJSC’s intervention costs should form part of its recovery in its own judgment already obtained against the Vessel. Mr. Turner has made no specific submissions on this aspect but the Application Notice of PJSC dated 22^nd July 2019, seeking permission to intervene, is accompanied by a draft Order which seeks costs from the Claimants for the costs of the application.

The claim form was issued in rem, the owners of the “KUZMA MININ” did not acknowledge service and have taken no part in the proceedings. In these circumstances the Claimants have sought an order for judgment in default with the quantum of the award to be assessed. PJSC has also obtained a judgment in default with respect to its interest as a mortgagee of the Vessel but has sought to intervene for the purpose of making submissions with respect to the quantum of the salvage award. Mr Phillips has, in my view correctly, submitted that this is done for the purpose of maintaining as large a fund as possible against which the mortgage claim may be enforced. In principle I can see no reason why there should not be such an intervention but where such an intervention takes place it is bound to increase the Claimants’ costs.

In the normal course of events Claimants who are successful in obtaining judgment will be entitled to an order for the costs of obtaining that judgment, including the assessment of the quantum, which will be enforced against the res. In a case where the owners of the vessel dispute the quantum of the award, unless there is an offer to settle which is effective, the claimants would also be entitled to the associated costs of that assessment. The Claimants’ costs of having the salvage award assessed have certainly been increased by the fact of the intervention in much the same way that they would have been if the Owners of the Vessel had taken part. In these circumstances there is no logical reason why the Claimants should not be entitled to recover those costs against the fund which represents the res. In the absence of an effective offer the respondents to an assessment of the salvage award would usually bear their own costs. In my judgment the appropriate order for costs in the present case is that the Claimants are entitled to recover their own costs against the fund representing the res and that PJSC should bear its own costs of the intervention.

In my view the Claimants are entitled to recover for the reasonable costs of the solicitors team which is involved in obtaining the judgment and the assessment of the award for salvage. Part of that service may include taking a view of the likely salvage award particularly where it is necessary to obtain security for the claim or where the defendant has made an offer to settle the claim. It is less necessary where, as in the present case the Defendants have taken no part in the claim so that the essential job facing the Claimants’ solicitors is a matter of obtaining the necessary evidence and placing that evidence before the court for a decision on the appropriate award.

Further it is to be expected that the team will bring their experience and expertise to bear for the benefit of their clients which should include taking a view of the probable award. In the present case the need for assessing the probable award was not directly necessary for the purposes of furthering the claim and, in my view, the opinions of those directly involved with the claim should have been sufficient and if that team wishes to discuss the matter within the firm of solicitors that is, in my view, a matter for the team acting for the Claimants. Put simply the reasonable costs to be attributed to the conduct of a claim should amount to the cost of the team directly necessary for that purpose and it is not reasonable to expect the parties to provide for an extra 9 members of the firm over and above the team directly engaged.

In the circumstances of this case I do not consider that the expense of obtaining the views of other members of the firm can be regarded as a reasonable expense of bringing the claim and I disallow the sum of £3,042.19 for the obtaining of the Art.13 award estimates.

In the absence of any submissions to the contrary I consider that the remaining sum of £109,843.12 is, prima facie, reasonable but I will allow further submissions on the costs at the handing down of the judgment if any party wishes to raise the matter further.

The Claimants are entitled to a sum of £450,000 as reward for the salvage services performed together with costs, subject to any further submissions at the handing down, in the sum of £109,843.12.