Tecoil Shipping Ltd v The Owners of the Ship "Poseidon"

The Claimant has made an application for judgment in default of an acknowledgment of service in a collision claim. The Claimant is the registered owner of the “TECOIL POLARIS”, a 2,821 DWT oil tanker.

On 18^th July 2018 the TECOIL POLARIS was at berth at Albert Dock in Hull. The vessel was stationary, without power and without a crew. At about 2205 a vessel named the “POSEIDON” was underway in the Albert Dock when she collided with the starboard side plating of the TECOIL POLARIS, causing considerable damage. The POSEIDON was apparently manoeuvring towards her berth at the time.

The Claimant issued an in rem claim against the owners of the POSEIDON on 28^th June 2019, seeking damages, interest and costs. The claim form was served on the Defendant on 1^st July and deemed served on 3^rd July 2019. However, the Defendant has not filed an acknowledgement of service within the time permitted or at all. Accordingly, the Claimant has applied for judgment in default of an acknowledgement of service with the damages to be assessed.

In support of the application the Claimant has provided a First Witness Statement made by Irina Yakovleva, the Claimant’s General Director, dated 18^th December 2019 and three witness statements made by Mr. Simon Domin of the Claimant’s solicitors, Stephenson Harwood LLP, dated 18^th December 2019, 31^st December 2019 and 7^th January 2020. The Court was also shown a CCTV recording the POSEIDON manoeuvring at the relevant time made by the port authorities in Hull.

The Claimant acquired the TECOIL POLARIS in October 2016 and appointed a third party, Kompannya NT, to manage the care of technical and crewing matters. Before the collision, the vessel had been used to transport products for an oil-refining company, STR Tecoil Oy, pursuant to a contract of affreightment dated 30^th June 2017. On 21^st May 2018 the TECOIL POLARIS sailed from Hamina, Finland to Immingham, where she was to load a cargo of used lubricant oil. After loading the cargo, the vessel was detained by the Maritime and Coastguard Agency on 6^th June for failing to comply with statutory requirements relating to documentation, equipment and the crew. The cargo which had been loaded on board the TECOIL POLARIS was discharged and loaded onto other vessels. The vessel then shifted across the Humber to Hull under her own steam on 12^th June where she was allocated a lay-up berth at Albert Dock. On 21^st June 2018 the vessel was no longer in class and had lost her H&M cover and it appears that the Master has subsequently been prosecuted for various breaches of the Merchant Shipping (International Safety Management (ISM) Code) Regulations 2014/1512. However it is asserted that by 18^th July, the majority of the deficiencies had been rectified and arrangements were being made to tow the vessel to St Petersburg so that a class inspection by the Russian Maritime Register could take place.

The collision in question occurred at about 2205 on 18^th July 2018. The TECOIL POLARIS was lying portside to the quay. She was unmanned and without power. The incident was captured by a CCTV recording. The recording was shown at the hearing and it is clear that the POSEIDON was manoeuvring at the time of the impact. It can be seen that the collision took place between the port side of the POSEIDON and the starboard side of the TECOIL POLARIS. From the CCTV recording it appears that, during the collision, the port side of the TECOIL POLARIS was pushed bodily and apparently heavily against the quay side.

On 20^th July 2018 Stephenson Harwood wrote to Ropner Insurance Services Limited whom it was understood were the insurers of the POSEIDON. Later the same day, Messrs Lodestar Marine (“Lodestar”) confirmed that they were the P&I insurers of the POSEIDON. Messrs Brookes Bell surveyed the TECOIL POLARIS on behalf of the Claimant on 21^st and 24^th July 2018. A joint inspection took place on 25^th July 2018 attended by Brookes Bell, for the Claimant, and Crawford & Company, the surveyors instructed by Lodestar. The damage to the TECOIL POLARIS is set out in detail in the Brookes Bell report.

Lodestar provided security by a letter of undertaking dated 3^rd August 2018 in the amount of US$200,000 with liberty to seek additional security “if and to the extent that the security sum…is reasonably deemed to be insufficient…but always subject to an overall total sum…of US$500,000”. On 22^nd November 2018, and relying on a provisional calculation of the losses suffered by the Claimant, Stephenson Harwood wrote to Lodestar to: “…invite your client to…admit liability…provide additional security…and…make an interim payment of £250,000.00…”. On 10^th December 2018, Stephenson Harwood again wrote to Lodestar to “…seek the provision of security up to the maximum of USD500,000 within 7 days of this email…”. Lodestar replied the same day saying that they were “…not in a position to provide further security for [the Claimant’s] claim…”.

The TECOIL POLARIS remains at Albert Dock, because the Claimant has so far been unable to finance the necessary repairs. The collision has caused the Claimant substantial losses. The POSEIDON also remains at Hull.

On 21^st June 2019 Clyde & Co LLP wrote to Stephenson Harwood to confirm that they were “…instructed to act by the P&I insurers of [the POSEIDON]…” but “…not instructed to act by the Owners of [the POSEIDON]…”. Clyde & Co commented that

“…[i]t would…be premature for your client to commence proceedings…[and that they would]…provide our substantive response in due course…”. Stephenson Harwood responded on 25^th June 2019 explaining that they could not “…understand how it can be that you are not instructed on…[the behalf of the Owners of the POSEIDON]…in relation to this claim…”. There was no response from Clyde & Co (No further message was ever sent by Clyde & Co, let alone a “substantive response”, as indicated in their email of 21^st June2019). The only correspondence sent by Clyde & Co after their email on 21^st June was on 20^th December 2019 and 9^th January 2020, as appears below.

On 28^th June 2019 the Claimant issued in rem proceedings against the Defendant, the owners of the POSEIDON. The Claim form was served by fixing a copy of it to the POSEIDON at Hull on 1^st July 2019 in accordance with the provisions of CPR PD61 para. 3.6(a) of PD61. The Defendant has not filed an acknowledgment of service.

On 18^th December 2019 the Claimant applied for judgment in default of an acknowledgment of service. The Claimant also sought the Court’s permission to amend the name of the Defendant to correct a misnomer pursuant to CPR Part 17. The claim form describe the Defendant as the “the Owners of the M/T POSEIDON”. The POSEIDON is in fact a research vessel, not a motor tanker. The prefix “M/T” was included in error. Mr Bird submitted that the proposed amendment could not have caused any confusion to the Defendant and that the amendment should be allowed because:

The evidence also indicates that not only was the Claimant’s application and the supporting evidence served on the Defendant by fixing it to the POSEIDON, but it has also been served on Clyde & Co, who are instructed by Lodestar, the Defendants’ P&I insurers. However it is apparent that the latter have taken little if any interest in the proceedings and despite a number of requests for clarification by Stephenson Harwood since 20^th December 2019 as to whether or not Clyde & Co are instructed by the Defendant and whether they will appear at the hearing no material response to the requests has been forthcoming. The only correspondence from Clyde & Co after the making of this application was an email dated 20^th December in which they asked for “…electronic versions…[of the application]…”. Stephenson Harwood provided copies the same day. Despite having received no response from Clyde & Co, Stephenson Harwood provided as a matter of professional courtesy copies of Mr Domin’s secomd witness statement and its exhibit to Clyde & Co on 3^rd January 2020, emphasising that they would expect them to “…reciprocate the courtesy by confirming that you do not act for the Defendant…”. There has been no response from Clyde & Co to this email except that on 9^th January 2020, Clyde & Co emailed Stephenson Harwood, indicating that they were not instructed to act on behalf of the Defendant. The email continued: “Accordingly, we are not instructed to appear either at the hearing that has been listed for 14 January 2020 specifically, nor in these proceedings generally. That said and, as we understand it, the above hearing not being in private, we intend to send a representative from this firm, strictly on behalf of RSA and not on behalf of the owners of the vessel, or the owners of any other vessel thereof, or any other person, to observe and record what takes place at the hearing. As we have intimated above, however, we will not be participating or formally appearing in the hearing in any way. You will no doubt be fully aware that in those circumstances any judgment that your clients may obtain in these proceedings can and will only be a judgment against the “POSEIDON” itself as a res, and cannot and

At the hearing on the 14^th January 2020 the Court considered the application to amend the claim form mentioned in paragraph 12 above. The Court considered that the use of the letters “M/T” was a straightforward error which could not possibly have caused any confusion as to the identity of the vessel against which claims were being brought and agreed with Mr Bird. An Order of the same date was made allowing the amendment.

The remaining issues for consideration are:

Mr Bird has informed the Court that although CPR Part 61 sets forth the procedure for default judgment applicable to certain admiralty claims it does not make explicit provision for collision claims where the claimant wishes to apply for judgment in default of an acknowledgment of service.

Further, as Mr Bird informed the Court, the rule might operate so as to prevent the Claimant from succeeding in its application for a judgment in default of acknowledgement of service. That view appears to be supported by the editors of Marsden and Gault on Collisions at Sea, 14^th Edn 2016, who express the view at §20-54 that in an in rem collision claim judgment in default “may only be obtained by a party who has filed a collision statement within the time specified within CPR 61.4(5), and only if the party against whom judgment is sought has not filed a collision statement and the time for doing so has expired. In such a case, judgment in default may be obtained if certain conditions are met.”If taken literally that indicates that the only circumstances in which a claimant in a collision claim in rem can obtain judgment in default is where the claim form has been served, the claimant has filed a collision statement of case and the defendant has failed to file a collision statement of case. Mr Bird has pointed out that the contents of The Law and Practice of Admiralty Matters, 2^nd Edn 2016, appears to be of similar effect as at paragraph 6.26 the following appears: “Judgment in default is only available in collision claims for failure to file a statement of case”. However Mr Bird has pointed out that the editors of Admiralty Jurisdiction and Practice, 5^th Edn 2017, only appear to address the position where there has been a failure to file a collision statement of case in an in rem claim, but not the situation where there has been a failure to file an acknowledgment of service: see para. 7.73.

The question is therefore whether CPR 61 is intended to operate so to restrict the circumstances in which a claimant may obtain a judgment in default or whether, as Mr Bird has submitted, the provisions of CPR Part 12 apply so as to provide a procedure whereby a Claimant may obtain a default judgment where the Defendant has failed to acknowledge service.

The textbooks referred to above do not cite any authority in support of the proposition that CPR Part 61 operates so as to restrict the circumstances in which a claimant may obtain a judgment in default as suggested in Marsden. The issue is therefore whether this is in fact the effect of the rules.

The problem arises because of the wording of CPR Part 61.9 which deals directly with the obtaining a judgment in default in claims in rem. CPR r.61.9 provides, in relevant part with emphasis added, as follows:

“(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; and

(b)

defence only if – (i) a defence has not been filed; and (ii) the relevant time limit for doing so has expired.

(2)

In a collision claim, a party who has filed a collision statement of case within the time specified by rule 61.4(5) may obtain judgment in default of a collision statement of case only if –

(a)

the party against whom judgment is sought has not filed a collision statement of case; and

(b)

the time for doing so set out in rule 61.4(5) has expired.

(3)

An application for judgment in default –

(a)

under paragraph (1) or paragraph (2) 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

(b)

under paragraph (2) in any other claim must be made in accordance with Part 12 with any necessary modifications.”

This wording suggests that a judgment for failing to acknowledge service may only be obtained in cases “other than in a collision claim”, see CPR Part 61.9(1), and that the only provision for obtaining judgment in default in a collision claim is where the defendant has failed to file a collision statement of case. The problem is compounded by CPR Part 61.4 which contains the special provisions relating to collision claims. CPR 61.4 provides (emphasis added):

“(2)

A claim form need not contain or be followed by particulars of claim and rule 7.4 does not apply.

(3)

An acknowledgment of service must be filed.

(5)

Every party must – (a) within 2 months after the defendant files the acknowledgmentof service; or (b) where the defendant applies under Part 11, within 2 months after the defendant files the further acknowledgment of service, file at the court a completedcollision statement of case in the form specified in Practice Direction 61.”

In the present case, the claim form was served by fixing a copy of the claim form on the outside of the POSEIDON on 1^st July 2019 pursuant to §3.6(a) of PD61. The deemed date of service was therefore 3^rd July, two business days after the completion of the relevant step: CPR r.7.5(1). The Defendant was obliged to file an acknowledgment of service by 17^th July 2019 and failed to do so. However the obligation to file a collision statement of case has not arisen, no acknowledgment of service having been filed.

CPR r.61.9(1) only applies to claims in rem other than collision claims. Therefore it does not apply to the present claim. CPR r.61.9(2) applies to collision claims, but only governs the situation where a party who has filed a collision statement of case wishes to apply for judgment in default of a collision statement of case. It does not apply in the situation where (as here) the obligation to file a collision statement of case has not arisen and the claimant in a collision claim wishes to apply for judgment in default of an acknowledgment of service.

Mr Bird has submitted that there is a lacuna in the rules and that the Court should have the power to grant judgment in default of an acknowledgment of service in an in rem collision claim. He has submitted that the problem arising from the views expressed in Marsden and the earlier edition of The Law and Practice of Admiralty Matters is that, if it were right that a claimant in an in rem collision claim could only apply for judgment in default of a collision statement of case, it would mean that a defendant would be in a better position by failing to file an acknowledgment of service than it would have been if it had filed an acknowledgment and then failed to file a collision statement of case. A defendant could effectively deprive the claimant of the opportunity of applying for judgment in default by refraining from acknowledging the claim form at all. That would be unjust, is unlikely to have been what the drafters of the CPR intended, and is not supported by the language of CPR r.61.9. Mr Bird also points out that the editors of the two textbooks do not cite any authority in support of the view expressed.

In these circumstances Mr Bird submits that as the language of CPR r.61.9(2) does not place any restrictions on the right of a party to obtain judgment in default of an acknowledgment of service but only imposes conditions on applications for judgment in default of a collision statement of case it follows that it is implicit that the provisions of CPR Part 12 must govern. Moreover, it is inherent in CPR r.61.9(4)(b) that the provisions

I agree with Mr Bird that it is strange that the provisions of CPR Part 61.9(1) do not appear to allow a claimant in a collision claim to apply for judgment in default of a service of an acknowledgment of service whilst CPR Part 61.9(2) does permit a judgment in default of a collision statement of case to be made where the claimant has, itself, served a collision statement of case. It is noteworthy that CPR Part 61.9(3) provides that on making an application under CPR Part 61.9(1) or (2) it is necessary to provide a certificate proving service of the claim form and evidence proving the claim to the satisfaction of the Court so that the procedure for both collision claims and other claims in rem is identical in terms of what the Court requires before a judgment in default is pronounced. In my view there is no sensible reason why a judgment in default of acknowledgment of service may not be allowed in a collision claim. However it is apparent that the different procedures set out in CPR Part 61.9(1)(b) and (2) are necessary to differentiate between ‘other’ in rem claims and collision claims where for the former the judgment is in default of defence but for the latter it needs to be in default of a collision statement of case because no ‘defence’ is filed in such cases.

The existing rules do not prescribe a party from obtaining a judgment in default of acknowledgment of service and therefore, absent an express provision to the effect that a claimant in a collision claim may not obtain a judgment in default, I consider that it is open to the Court to make such an order either: (i) by reason of the Court’s inherent jurisdiction to give judgment in circumstances where a defendant to such a claim declines to take any a part in the proceedings, or (ii) assuming that the Court has no such inherent jurisdiction, by reason of the operation of CPR Part 12 as Mr Bird has submitted.

CPR 12 itself is generally applicable to all claims, including those being heard in the Commercial Court and the Admiralty Court unless specifically excluded by the operation of another rule, see CPR Parts 2.1, 58.3 and 61.1(3). There is no specific provision excluding the operation of CPR 12 from collision claims where no acknowledgment of service has been filed and, absent such a provision, I consider that it would be contrary to the operation of the overriding objective to hold that CPR 12 did not apply to such cases.

In these circumstances I hold that , where there is a default in acknowledging service by a defendant and the relevant time for doing so has expired, the Court may order that the claimant should have judgment subject to the operation of the provisions of CPR 61.9(3). The claim form was served on the 1^st July 2019 and time for acknowledging service HAS expired. Accordingly judgment in default should be given in favour of the Claimant.

I should add that I consider that the present apparent lacuna has been caused by an unfortunate error in the drafting of CPR Part 61.9. In my view it would be much clearer if the words “(other than a collision claim)” were deleted from the opening portion of Part 61(1) and added before the word “defence” in Part 61.9(1)(b). That would make it clear that default judgment for a failure to file an acknowledgment of service was available in all in rem claims whilst preserving the alternative default procedures necessarily different by reason of the fact that no defence will be filed in a collision claim. However a change in the wording of the rule is a matter for the Rules Committee.

Alternatively it appears to me that, even where there has been no acknowledgment of service filed by the defendant, a claimant could itself voluntarily file a collision statement of case despite the wording of Part 61.4(5) so as to bring itself within the precise wording of CPR Part 61.9(2). The Claimant has now filed a collision statement of case as a result of an order of the court dated the 14^th January 2020. That was filed on the 15^th January 2020.

The necessity to prove the claim to the satisfaction of the Court is a procedure which differs from that generally applicable in other claims and is peculiar to Admiralty in rem proceedings. Thus it is necessary for the Claimant to establish that there has been a collision and, in effect, that the fault for that collision rests upon those navigating the

The Claimant is therefore entitled to recover the costs of reasonable repairs and other financial losses arising from the collision. I am informed that the repairs have not yet taken place however some expenses have already been incurred and estimates for the damage repairs have been provided. In these circumstances it appears to me that the Court must do its best to assess the damage claim on the information presently available. The main source of evidence for the information on this aspect set out below is to be found in the witness statement of Ms Irina Vladimirovna Yakovleva dated 18^th December 2019.

Surveys. Messrs Brookes Bell have surveyed the Claimant’s vessel to assess the damage. The cost of those survey is evidenced by their invoice in the sum of £7,283.06. The cost of gas freeing and opening the ballast tanks for the purposes of those surveys appears in an invoice by Casper dated the 12^th September 2018, at £180 and £250 respectively. It also appears that the claimants incurred costs of agents, dock dues and tendering services whilst these surveys were performed of £6,975, £8,640 and £1,155 which are also set out in the Casper invoice of 12^th September 2018. As I understand it these were incurred to facilitate the surveys referred to between 12^th July and 12^th August 2018.

Collision repairs. Two repair estimates have been provided by Dunston Ship Repairs. The first is dated 1^st November 2018 and is in the sum of £70,622. The second is dated 19^th March 2019 and is in the sum of £82,385.30. The first envisages that the repairs will be carried out with the ship afloat and alongside but makes no provision for painting. The second includes a sum for painting the vessel and includes the cost of drydocking, otherwise the structural repairs referred to are the same as in the earlier quotation. The Brookes Bell report dated the 7^th August 2018 noted that there was some pre-existing damage which was not in need of repair but specifically listed the impact damage attributable to the collision. It referred to a diving survey which indicated that the impact damage was all above the waterline. The report gave estimate for the cost of steel renewal repairs in a sum not exceeding £70,000 and indicated that the repairs could be carried out

In her witness statement Ms Yakovleva has submitted that the second repair estimate is a more accurate reflection of the costs of damage repair. However it is for the Claimant to satisfy the Court that the costs put forward are a necessary consequence of the collision and reasonable. In the face of the Brookes Bell report I do not accept that it is necessary to drydock the vessel. Further the first quotation more nearly accords with the Brooks Bell estimate. However I accept that painting is necessary. In its second quotation Dunston provide a figure for paint supply of £6,309 but it is probable that this includes hull painting in drydock which I do not consider should be allowed. The other problem is that the second quotation, whilst providing the costs per square metre for certain work does not provide the overall prices for washing the vessel although labour is provided on the basis of a minimum square meterage which would give rise to labour costs of about £1,600 in a wet berth. Doing the best I can with these figures I consider that a sum of £5,000 should be allowed for painting. Added to the figure in the first Dunston quotation that amounts to £75,622.

Loss of freight. Ms Yakovleva has calculated that the daily operational loss in respect of the vessel was Euros 3,556.08 per day. This was based upon her previous voyage revenue less her operating expenses over a 13 day voyage. This was based upon a single voyage but it was contemporaneous and appears to be a reasonable basis for the calculation made. The result also appears to be reasonable for this type of ship.

The question is to what period the above figure should be applied. I have read the letter from Stephenson Harwood making further submissions on the relevant period to take into account but it must be borne in mind that in the present case the Claimant’s vessel was already detained by the maritime authorities. It is therefore uncertain as to what period of loss of use is properly attributable to the collision and what is due to other causes which do not flow from the collision. A further vexing issue is the extent to which the loss of use has been caused by the impecuniosity of the Claimant or more directly by

Additional costs to be incurred during repairs. Ms Yakovleva has submitted that there would be additional costs of agency, dock dues and tendering services during the period of repair. She has submitted that these would have amounted to £18,928.35 over a 5 week period calculated on the basis of £225, £278.71 and £37.10 per day respectively.

For the reasons set out above I consider that the Claimants have provided evidence which is satisfactory in the following sums:

The Claimant is therefore entitled to judgment in the following sums: £119,033.41 and Euros 124,462.80.

Interest. Mr Bird informed me that the base rate is 0.75% and invited me to make an order for interest of 4%. In my view and having considered the submissions contained in the letter from Stephenson Harwood dated 21^st January 2020 I find that the proper rate of interest to be 4% from the date of the collision.

Costs. I have considered the statement of costs dated 21^st January 2020. Although my initial impression that the costs put forward were high I have taken account of the matters set out and the accompanying letter on costs from Stephenson Harwood also dated 21^st January 2020. Bearing those matters in mind I consider that the costs put forward in this claim, which cover both the claim itself and the application, are reasonable and should be allowed in full in the amount of £105,584.50.

Part 36 offer. Having come to the conclusions as to the recoverable damages set out above I turned to the questions of costs and interest and found that Stephenson Harwood had sent a further letter of the 21^st January 2020 and that they seek a costs order pursuant to CPR 36.17 on the basis that a Part 36 offer was made to settle this matter by letter to Lodestar dated the 10^th December 2018. In my view there are two problems with this application. The first problem is that it is made to Lodestar which was, I understand, the P&I insurer of the Defendant owners but is not itself a party to the proceedings. In my view it is implicit to CPR Part 36.5 that the offer must be made to the Defendant or his legal advisers instructed as such. If the provisions of CPR Part 36.5 are not followed then the offer will not have the consequences specified in Part 36, see CPR Part 36.2. The second problem is that the offer is split into a sterling component and a euro component. The offer made in the sterling figure was £105,111.97 and therefore is less than the sterling sum I have awarded above. However the euro offer amounted to Euros 157,307.81 which is greater than the sum I have awarded in Euros. Whilst I do not consider that the fact that a split offer has been made is fatal to the offer nonetheless I consider that for the special provisions of CPR Part 36.17 to apply it is necessary for the overall offer to better the result of the judgment. I have therefore compared the sums at present exchange rates and conclude that in sterling the present award amounts to £222,997.19 and the Part 36 offer amounts to £236,511.18. In these circumstances I do not consider that the judgment obtained is, in fact, more advantageous than the Part 36