Cruise And Maritime Services International Ltd v Navigators Underwriting Agency Ltd Re Marco Polo

On or around 6 July 2009 there was an outbreak of norovirus on the cruise ship “Marco Polo” (“the Vessel”). She had departed Tilbury two days earlier with passengers starting their holidays. The voyage had to be curtailed. Passengers were significantly affected.

The head charterers of the Vessel, under a time charter for a 5 year period, were Marco Polo Chartering Limited (“the Head Charterers”). The Head Charterers in turn time chartered the Vessel to Transocean Tours Touristik GmbH (“Transocean”).

Transocean, a cruise and tour company based in Bremen, entered into a “General Sales Agency Agreement” with the Claimant dated 27 July 2007 (“the GSAA”).

The Head Charterers held a policy of insurance (“the Policy”). The Claimant was named as co-insured. Navigators Underwriting Agency Limited was lead underwriter under the Policy. It is sued by the Claimant on its own behalf and on behalf of all underwriters subscribing to the Policy, namely the members between April 2009 and April 2010 of 7 Lloyd’s syndicates (together “the Defendant”).

The Policy was a liability policy. The Claimant claims an indemnity against liabilities said to have been incurred by the Claimant to the passengers in respect of personal injury and “ruined holidays”.

Miller Marine Insurance Services Limited (“Miller Marine”) was the broker placing the Policy with the Defendant. The Claimant originally also sued Miller Marine. At an earlier point in the litigation I ordered disclosure of the placing files. The Claimant discontinued its claim against Miller Marine after consideration of those files.

The evidence available at trial was limited. In some respects this was due to the passage of time. Neither party’s disclosure of documents was complete. Notably in the case of the Claimant there was little from its dealings at any stage with as many as 8 Tour Operators involved, or in relation to preparation for or response to the outbreak of norovirus.

Mr Demian Smith, called by the Defendant, had little material recollection of the specific facts of the insurance in issue. Mr Richard Bastow was the principal witness called by the Claimant. With some exceptions when he frankly accepted a point that tended against the Claimant, I did not find the evidence of Mr Bastow reliable. It was clearly impaired by the passage of time, but it was also affected by views he had reached, sometimes more recently, of what he thought the legal position should be.

The basis of liability of the Claimant to passengers alleged by the Claimant was as “contracting carrier” under the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974 (“the Athens Convention”), as applied by the Carriage of Passengers and their Luggage by Sea (Domestic Carriage) Order 1987, and before amendment by the 2002 Protocol.

Article 1(1)(a) of the Athens Convention defines a “carrier” as “a person by or on behalf of whom a contract of carriage has been concluded, whether the carriage is actually performed by him or by a performing carrier”. Article 1(2) defines a “contract of carriage” as “a contract made by or on behalf of a carrier for the carriage by sea of a passenger or of a passenger and his luggage”.

In my judgment the Claimant was not a contracting carrier. The available evidence at trial showed that passengers contracted not with the Claimant but with a number of Tour Operators. The passengers made only one contract, and that was made when their booking, which was with the Tour Operators, was accepted by the Tour Operators. That acceptance generally took the form of a “confirmation invoice”.

At the time of the outbreak of norovirus the Claimant did not consider it had any contractual relationship with the passengers. Mr Bastow accepted this in his evidence, though he had little choice but to do so. He had for example written on 3 August 2009 to Transocean:

“… of course you have only a General Sales Agency Agreement with [the Claimant], whilst [the Claimant] in turn only have a Sales Agreement with the tour operators themselves and do not have any contractual relationship with individual passengers.”

Obviously the Claimant has since come to see the matter differently, but in my judgment its original view was the correct one.

As for a contract between the passengers and the Tour Operators, Mr Bastow described that as a “booking contract”. This was in order to try to leave room for the possibility of a second contract, between the Claimant and the passengers. I do not, with respect, consider “booking contract” a good or accurate description. The terms used by the Tour Operators, where the documents are still available, showed that their agreement was to provide a cruise, rather than just to arrange a cruise for the passenger with a cruise provider as a travel agent might. The terms used by the Tour Operators did not put the Claimant into a contractual relationship with the passengers.

The Claimant referred to a “Passenger Cruise Information Form” that it issued, in the name “Transocean Tours”, to the Tour Operators for onward transmission to passengers. This too did not put the Claimant into a contractual relationship with the passengers.

It is clear that the facts are not augmented by the content of any direct contact between the Claimant and the passengers. As Mr Bastow put it at one point in his evidence “…no, [the Claimant] didn’t trade with the public directly at all”. Nor was direct contact practical, for the Claimant did not have the names and addresses of the passengers to enable contact between them.

The passengers’ claims, including under the Athens Convention, lay against the Tour Operators with whom they contracted. The contemporaneous documentation gives some examples of passengers and Tour Operators engaging with one another in a way that is consistent with this over the following months.

The slip describes the interest under the Policy as “CHARTERERS LIABILITY (Damage to Hull, P&I but excluding cargo)”.

The “Conditions” section of the slip states that the Policy is “to cover Charterers Liability as per Clause MM.No. 1416”. That Clause provides so far as material:

“This insured is to indemnify the Assured … in respect of losses, costs and expenses incurred as Charterers for:

1.

Liabilities to the third parties and/or Owners of the chartered vessel which would be covered by a Charterers entry in the United Kingdom Mutual S.S. Assurance Association (Bermuda) Limited with the limitation of liability clause deleted.

Excluding

a.

Liabilities and expenses covered solely at the discretion of the Club’s Directors;

b.

Cargo liability absolutely;

c.

Contractual or assumed liabilities other than to the Shipowner under the Charter Party, except with the prior agreement of Underwriters and at an additional premium, if required.”

The cross reference just cited engages the 2009 UK Club Rules. Rule 2 (C) provides so far as material:

“Liability to pay damages or compensation

i for personal injury, illness or death of any passenger …;

ii to passengers on board an entered ship arising as a consequence of a casualty [defined to include “an incident involving … a threat to the life, health or safety of passengers”] to that ship while they are on board, including the cost of forwarding passengers to destination or return to port of embarkation and of maintenance of passengers ashore;

iii for loss of or damage to the effects of any passenger,

PROVIDED ALWAYS that:

a The terms of the passage ticket or other contract between the passenger and the Owner have been approved by the Managers in writing and cover for the liabilities set out in this paragraph (C) has been agreed between the Owner and the Managers on such terms as the Managers may require …”

In my judgment, on no proper analysis can the liability relied on by the Claimant fall within “losses, costs and expenses incurred as Charterers”.

There was no charter of the Vessel by the Claimant; the Claimant was not a Charterer. Under the GSAA the Claimant was appointed a general sales agent by Transocean to market cruises on the Vessel. The GSAA has its individual features but no reading of it allows a credible interpretation of it as a charterparty.

Under the GSAA, the Claimant was to be paid a marketing advance. It was authorised to describe itself as sales/marketing agent for Transocean, to describe Transocean as the “Cruise Line” and use Transocean’s logo. The agreement was that it would appoint Tour Operators who would contract with passengers. It did not hire out the Vessel or any part of it. The Vessel was not under its orders.

On the basis that what passengers were charged and what Tour Operators received were matters left to the Claimant, the Claimant did commit to pay sums by reference to number of passengers per night. The arrangements included a minimum amount, free places in some circumstances and adjustments in certain circumstances. I cannot accept that this was, as Mr Bastow suggested, “effectively hire”.

The Claimant suggested that a parallel was to be drawn with a slot charter or space charter or time trip charter, but I found the suggestion wholly unpersuasive. Mr Bastow suggested in evidence that “it was recognised that under the GSAA [the Claimant] was in the position of being a sub-charterer from Transocean”. I do not accept there was this “recognition”, but on any view it would have been inaccurate.

In this connection I further do not accept Mr Bastow’s evidence by witness statement that it was agreed with Transocean that the Claimant “would pay for a proportional share of the Charterers Liability Cover which equated with the period/duration of [what he, in my view wrongly, describes as “the Claimant’s sub-charter”]”. Mr Bastow’s oral evidence revealed that he based this part of his witness statement on what, he said, the Claimant was told. The contemporaneous documents do not evidence such an agreement, and there is no contemporaneous, documented, evidence of any payment consistent with the alleged agreement. Miller Marine had no direct contact with the Claimant.

The Claimant referred to a press release in support of a contention that there was an acknowledgment between Transocean and the Claimant that the Claimant was by virtue of the GSAA a charterer. The press release was issued by Transocean and mentioned its “British charter partners”. But the press release postdates, at 3 September 2009, the outbreak of norovirus. It was directed to an insolvency process and restructuring by Transocean. It throws no light on the true legal position of the Claimant.

The fact is that the Claimant’s name was added to the Policy without any real thought. Mr James Watthey argued for the Claimant that “the objective commercial purpose of the Policy was … to cover the Claimant against liabilities from passengers arising out of the operation of the GSAA”. I respectfully disagree. This was a case where the Claimant’s name was added to the Policy, at no additional premium, for what that addition might add if anything. In practice it did not add anything material, at least in the circumstances of the case. “The cover was what it was”, as Ms Philippa Hopkins submitted for the Defendant, “… the mere naming of [the Claimant] as co-assured does not of itself mean that the alleged liability in respect of which this claim is advanced fell within the Policy.”.

It is the fact that in light of the outbreak of norovirus the Claimant made available some money and discounts on future cruises for passengers. I am not satisfied that the money and discounts were made available to passengers, rather than to Tour Operators so that they might make them available to passengers.

Whilst at sea on 10 July 2009, passengers had received a letter saying that they would receive from their tour operator “an ex gratia payment in full compensation of the full amount of your cruise fare”, together with other sums. Alongside this lay a proposal from the Claimant to Tour Operators to meet the cost of what it was proposed Tour Operators would pay passengers.

I find that this was not by reason of any liability of the Claimant to those passengers. Rather it was by reason of the commercial relationship that the Claimant wished to preserve with (most of) the Tour Operators, and for reputational reasons.

No criticism is to be made of the Claimant in this respect. Indeed credit may well be due. However for present purposes what is material is the point that making the money and discounts available does not advance the Claimant’s case that it had a legal liability to passengers, for which it was insured under the Policy.

The Claimant moved quickly to make the money and discounts available to passengers because it was concerned, as Mr Bastow made clear, to avoid things escalating. This decision, understandably in the circumstances, did not await an assessment of whether there was fault or neglect on the Claimant’s part in connection with the outbreak of norovirus or its handling.

The mere fact of the outbreak of norovirus is not enough to establish fault or neglect (see generally Swift v Fred Olsen Cruise Lines [2016] EWCA Civ 785). At this trial the Claimant adduced very little evidence of any quality on the issue of its fault or neglect.

The Claimant emphasised that there were first reports in late June and that the Vessel had arrived at Tilbury on 4 July 2009 with some passengers and crew reported as ill. However as I have mentioned already, the Claimant has not retained material documents. I note that the presence or absence of a plan in the event of an outbreak will often be material, as well as implementation of the plan; it appears in the present case there was at least a vessel outbreak protection plan but it was not provided by the Claimant as part of its disclosure in this litigation.

In due course a report into the outbreak was produced by the London Port Health Authority. Whether correctly or incorrectly, the Claimant itself was critical of the report.

In these circumstances, where (as in the event is the case) I do not need to reach a conclusion on whether there was fault or neglect, it is better that I do not do so.

The Claimant’s claim fails.

I thank both Counsel for their arguments on behalf of their clients. Mr Watthey argued what was ultimately a difficult case for the Claimant with skill and realism. I pay tribute to the clarity and precision of Ms Hopkins’ written and oral argument.