ABS Company Ltd v Pantaenius UK Ltd & Ors

This is the trial of a claim by the owner of the Motor yacht Queen B Speed (“Yacht”) for the reasonable costs of repairing the Yacht pursuant to an insurance policy underwritten by the second to fourth defendants (“Policy”) following a grounding incident in the Bosporus Strait on 7 January 2018. The first defendant marketed the Policy as agent for the second to fourth defendants. The claimant maintains that it is entitled to recover the whole of its actual costs of repairing the Yacht, whereas the defendants maintain that the Yacht could and should have been repaired much more cheaply using facilities and labour located in Turkey and that some of the costs incurred as a result of damage not attributable to the grounding incident relied on by the claimant.

The trial took place between 26 June to 1 July 2020. I heard oral evidence from

The Yacht was a little over 6 months old at the date of the incident. She is a Pershing 82/20 VHP built by Ferretti, a well known Italian registered motor yacht builder. She is just short of 24 metres in length with a beam of 5.5 metres and draws 1.3 metres. She had a planning hull manufactured from Glass Reinforced Plastic (“GRP”) and is powered by two 3,878 HP high performance diesel engines. She has a top cruising speed of about 45 knots and thrust is delivered by a high performance surface piercing propellor connected to each engine via proprietary surface drive unit attached to the yacht’s transom. The yacht is designed to accommodate up to 9 guests in four guest cabins and is crewed by three people including a master accommodated in a further two cabins. The yacht is unusual by reason of her planning design and consequent high speed. The yacht’s master had commanded her from July 2017 and had covered approximately 1000 nautical miles in her prior to the incident.

The incident leading to this claim is described in the master’s statement. Given that his statement has been admitted unchallenged, it follows that his description of what occurred is accepted by the defendants. At the time of the incident, the Yacht’s home port was Istinye Marina, which is located on the Northern side of the Bosporus Strait. The incident occurred when the Yacht was returning from a day trip to her home port at a location close to an islet at the southern entrance to the Strait. The Yacht’s master states and I accept that (a) there was at the time a 10 knot speed limit in the Bosporus Strait and (b) that as he says in paragraph 19 of his statement:

“It is not unusual to encounter debris in the waters of the Bosporus. In my six years’ experience of navigating the Strait, I have seen numerous loose ground tackles, chains, wires, cables, fishing buoys, ropes and lines. Some of this debris floats but some is also part or fully submerged, which makes it difficult to see, particularly at night or at twilight. It is not uncommon for yachts to have their propellors entangled with such debris.”

In paragraph 22 of his statement, the master says and I accept that the yacht was not suffering from any damage not had she been involved in any other incident prior to the incident the subject of this claim since the Yacht had been delivered to the claimant in May 2017 or since he had taken command of the Yacht in July 2017 – see paragraphs 8, 10 and 14 of his statement. I am satisfied that the master would have known of any relevant prior damage or incident.

The master describes the incident in paragraphs 24 to 32 of his statement in these terms:

“24.

We departed The Princes Islands at around 5.30pm bound for Istinye.

25, I was in the heln position driving “Queen B Speed” when, at about 7.10pm, in approximate position 41°01.203’ N, 029°00.215’ E (just south of The Maiden’s Tower) and while cruising at about 7 — 8 knots (about 1,000 — 1,200 RPM) the starboard engine system alarmed on the engine indicator panel. Consequently, the starboard engine automatically shut down into “safe mode” to prevent damage or further damage.

26.

It was a bad moment to lose power. We were at a very busy section of the Strait where there is an east-west ferry crossing and north / south bound traffic funnels round The Maiden’s Tower. It was dark, and there were numerous fishing and smaller pleasure craft between the Tower and the Uskudar shore to the east. We also had to deal with a south / south westerly wind which was setting us towards Uskudar.

27.

It was very difficult to control and manoeuvre “Queen B Speed ” with only one engine (the port engine) in the prevailing weather conditions, so much so that I was forced to steer her eastwards between The Maiden’s Tower and Uskfidar shore, Whereas usually I would keep to the deeper water to the west of the Tower.

28.

It was about 5 to 10 mins later (during which time I was doing my best to keep “Queen B Speed” in safe water and avoid collision with other nearby traffic) that I was unable to keep away from shallower water such that the yacht ultimately passed over – at between 5 and 6 knots speed — some reefy rocks found between the Maiden Tower and the Uskudar shore. We did not remain aground but were able to continue. The grounding is what I would describe as a “touch and go”.

29.

Shortly after grounding the crew member with the most engineering experience, Mr Okan Ceviker, went to the engine room and switched the starboard engine back on by taking it out of “safe mode” and then both engines were used to manoeuvre “Queen B Speed” away from the shallower water.

30.

Once clear of the shallow water, the crew and I checked to see whether the yacht was taking on water. We also checked the engines. We determined that we would be able to make it back to lstinye safely, about 7 — 8 miles away.

31.

We continued our voyage at about 7 — 9 knots, although the propulsion was extremely “jerky”, giving a very uncomfortable ride.

32.

We arrived at lstinye at about 8.00pm and I, together with the crew, undertook some further checks, including whether the engine room and bilges had any water. I also contacted Ms Demirkol, who was in the US on business at the time, to give her my report of events.”

I accept this evidence because it was not challenged. It is asserted by the defendants that further damage could have been caused to the Yacht both by the post incident part of the voyage the master describes and by what happened on the 8-9 January 2018, which the master describes in paragraphs 33-35 of his statement in these terms:

Before turning to the issues that matter, I note two points – first the defendants’ counsel challenges the description of the Yacht as a “superyacht”. Nothing turns on this point as long as it is accepted, as I accept, that the Yacht is a luxurious high performance yacht that was designed travel at much higher speeds than is expected of a motor yacht of the same length with a displacement or semi displacement hull. For what it is worth, it is common ground the Yacht was insured by the defendants under the Policy that was subject to the first defendant’s

Although Mr Wathey summarises the issues that have to be resolved as being in substance three in number being:

In so far as is material, the term of the policies provided that,

I accept Mr Jones' submission that these provisions are to be construed in their documentary, factual and commercial context, being so far as factual context is concerned those facts known or ascertained at the time the policy was agreed - see Arnold v Britton [2015] UKSC, [2015] AC 1619 per Lord Neuberger PSC at [15]. In my judgment, that context is, as I have described already, that the yacht was a high value, luxurious high performance yacht designed to cruise at high speeds in safety. It is in that context that the key phrase, "... on the basis of reasonable repair or replacement costs necessary to reinstate the yacht as nearly as reasonably possible to its pre-accident condition ..." is to be construed. Ultimately, this will be a question of fact tested objectively but against the point made above and the requirement that the yacht can be used after repair in the same way that it was before the casualty - see in this regard The DC Mewestone [2013] 2 Lloyd's Rep 131 at [141-142].

The claimant's case is that as a result of the incident, the yacht suffered: (1) impact damage to both the port and starboard propellers; (2) impact damage to the starboard side directional fin; (3) stress damage to both the vessel's drive systems, including the driveshaft, steering rams and trim cylinders and all associated components within; (4) de-lamination of the transom collar around the starboard driveshaft and stress cracking in way of the starboard trim ram support, i.e. structural damage to the hull; and (5) impact damage to the hull bottom starboard of the keel, including removal of the anti-fouling paint in some areas.

Before turning to these items in detail, I should describe the drive system. It is the component by which power is transmitted from the engine to the propellers. The drive system is attached externally to the transom of the yacht. There is a through-hull connection by which the engines, located in the engine space at the stern of the vessel, are connected to the drive units. Each drive system can be moved by the master from the helm position both horizontally and vertically. Vertical adjustments enable the vertical angle of the yacht between the bow and stern to be altered so as to enable the yacht to commence and remain planing and is controlled hydraulically by trim cylinders. Horizontal movement is controlled by using hydraulic rams. The yacht does not have conventional rudders but is steered by altering the angle of the propellers to the centre line of the yacht. Attached to the underside of each of the drive units is a directional fin. Its purpose is to provide directional stability, in particular at low speeds, and is the closest that the yacht has to a rudder.

There are a number of drawings and photographs of the relevant parts but that which is most helpful in showing the features I have so far described are those at para.21 of Mr Chettleborough's report, which I incorporate by reference into this judgment at this point. The pictures at para.19 are also helpful in showing the drive units and their connection to the yacht's engines through the stern of the yacht.

Turning next to the propellers, it is common ground that they were surface piercing. Mr Chettleborough says, and I accept that,

In cross-examination, Captain Arici accepted that: (a) the propellers were high speed propellers; (b) that they were subject to very high stresses when running at high speed; and (c) in those circumstances an owner would have to be very sure about being able to rectify damage to the propeller blades before deciding to repair rather than replace them. He also accepted that he was not a marine engineer and that he had no experience of repairing propellers. However, he maintained the position that there was a locally based company capable of repairing the yacht's propellers. I return to that issue in more detail later.

Before turning to the issues that matter, I should say something about the expert evidence, not least because this is the most important evidence relevant to the issues that matter. I am satisfied that subject to one qualification both experts did their best to provide objective and professional evidence on the issues that arise. I reject the suggestion that Captain Arici’s professional independence was compromised by the frequency of instructions received by him or his firm from the first defendant or companies associated with the first defendant. This was tested directly in cross-examination but of more importance was the nature of his responses on the technical issues that arise. Subject to one qualification, to which I return later, his evidence was fair and objective.

Mr Chettleborough's evidence in all respects was objective and fair. I reject the implicit suggestion that he was in any sense an advocate for the claimant, as was implicitly, or perhaps even explicitly, suggested by Mr Watthey in his opening submissions. Mr Watthey suggested

Although Mr Chettleborough did not inspect the yacht, or the component parts, in my judgment he was fully entitled to carry out an engineering assessment on the basis of the information to be gathered from the various photographs, of which there are many, and other technical assessments available to him. I am satisfied that if, and to the extent, he was unable to express an unqualified opinion by reference to these materials, he would have done so. Where the issues turn upon questions of engineering or naval architectural expertise, therefore, I prefer his evidence, simply because he is a qualified and experienced marine engineer and naval architect and Captain Arici is not and did not claim to be.

Finally, before turning to the factual issues that require resolution, I need to say something about the onus and standard of proof. The legal onus of proof rests on the claimant to prove that it was entitled to recover the sums it claims under the policy. However, where the defendants seek to advance a positive case then the evidential burden rests on the defendant to prove that positive case. With these preliminaries addressed, I now turn to the issues that need to be resolved.

Captain Arici carried out an inspection of the yacht on behalf of the defendants on 31 January 2018 - that is to say, some three-and-a-half weeks after the incident. The yacht was ashore at the time of that inspection. Captain Arici described the damage as follows, at para.10.2 and following of his initial report. In respect of the hull, he stated,

It is next necessary to consider damage to the transom of the yacht. Captain Arici describes

I now turn to the starboard directional fin attached to the underside of the starboard drive unit. This is the first area of serious dispute between the parties. In summary, the defendants maintain that the damage was inconsistent with it having occurred during the incident and probably was either pre-existing or occurred after the incident when the yacht returned to her home port or on the trip on 9 January 2018. The damage is to the leading edge of the fin and is shown in a number of photographs at para.10.6 of Captain Arici’s report. This shows a notch-shaped dent in the leading edge of the fin which has been bent to starboard as a result of the impact. Captain Areeke says of this damage, at para.10.6 of his report,

The claimant submits that I should reject that evidence because:

Both experts are agreed that the damage was caused by contact with a metal rod, wire or chain. The key difference between the experts in the end comes to this, that Mr Chettleborough considers the damage to the fin is consistent with the damage to the starboard propeller but Captain Arici does not. As I have said earlier, if the defendants wished to advance a positive case that damage to the fin was caused by another incident, the evidential burden was on the defendants to prove it. Their own expert evidence does not prove that cause.

Captain Arici considers that the damage to the fin to be "fresh". I agree. That rules out the

The Master describes two phases of the incident: first, an initial fouling of the starboard prop causing the starboard engine to shut down, then subsequently the propellers hitting the bottom as the vessel became difficult to control on one engine at low speed- (see Captain Arici's report at para.9.1 and the Master's statement at paras.25 to 28 and at para.36. In those circumstances, (a) there were two parts to the incident; (b) the damage to the fin is consistent with the first part as described by the Master; (c) there is no admissible evidence that shows the incident did not occur as the Master described and (d) no evidence of the vessel being involved in any other incidents before or after the incident. The damage to the starboard propeller was much more severe than that to the port propeller. That is consistent with the incident having occurred in the way described by the Master. On the material that is available to me, I am satisfied, on the balance of probabilities, that the starboard fin was damaged in the first part of the incident described by the Master. Had I concluded otherwise, the cost of repairing the fin, quantified at about €1,000, would be irrecoverable, because it would have

The next issue concerns the damage to the drive units. The drive units were ultimately removed from the yacht on the claimant's instructions and shipped back to the manufacturer. The damage found is summarised in the report prepared by the manufacturer of the drive units, Top Rise SRL. There is no dispute as to these findings. Mr Chettleborough's view is that the reported damage all resulted from the incident as described by the Master. The only issue between the parties arises from the suggestion by the defendants that at least some of the damage was the result of motoring the yacht back to her home port after the incident and/or during the trip on 9 January to the marina where the yard that maintained the yacht at the material time was located. Captain Arici is not in a position to give any evidence on this issue. He did not examine the drive units and, more importantly, is not a marine engineer. His evidence is limited to a speculative comment that damage to bearings and/or other equipment within the drive units may have been either caused or worsened as a result of operating the vessel for a further 32 to 35 nautical miles with, as he put it, "Heavily imbalanced propellers". In support of this argument, the defendant relies on the drive units' manual that warns that in the event of a system failure, both engines should be stopped and restarted only after the fault had been removed and with the prior approval of authorised staff.

In my judgment, this is an issue on which the evidential burden rested on the defendants and they have failed to discharge it. Mr Chettleborough does not support the theory, and Captain Arici is not qualified to give any evidence about it and in fact does not do so. Not merely is there no evidence of any additional damage being caused by use of the engines after the incident but no evidence either as to what, if any, additional damage was or might probably have been caused as a result of such activity and, more importantly, what material impact, if any, that had on the repairs that had to be carried out as a result. As to the second of these two points, if a bearing, for example, had been damaged in the incident, it is likely it would have to have been replaced whether or not it was further damaged subsequently. There is no evidence that addresses these issues at all. Although Mr Watthey submitted that it would never be possible to establish that additional damage was caused to the drive units after the incident, I do not accept that to be so. Engineering evidence could have been obtained as to the effect on the drives of running the engines with damaged propellers. Indeed, such evidence might have been obtained from the manufacturers. However, no such evidence has been adduced. Even if such evidence had been adduced, it would have been necessary to prove that any additional damage increased the costs of repair. Again, this is a matter for expert engineering evidence and there is no such evidence. As I said earlier, if a bearing, for example, was damaged in the incident and was further damaged by subsequently using the engines, that would be nothing to the point if the bearing had to be replaced as a result of the damage caused in the incident. It is possible, however, that subsequent running with a by then damaged bearing might have damaged other parts unaffected by the original incident. If so, the cost of making good the additional damage might well have been a separate incident triggering a separate claim and deductible. However, in the absence of any evidence on that issue, this is impermissible speculation.

In consequence, I conclude that the whole of the damage to both drive units was caused by one or other of the phases of the incident described by the Master and that the whole of the cost of repairing both drive units is recoverable as part of the repair of the damage to the yacht caused by the incident the subject of these proceedings and I reject the submission that any part of the reasonable cost of repairing the drive units should be deducted from the sum otherwise recoverable by reference to the assertion that the drive units were further damaged as a result of use after the incident. I turn to the reasonableness of the cost of repair of the drive units later in this judgment.

The next issue I have to consider concerns the damage to the propellers. There is no dispute that both were damaged in the incident and that the starboard propeller was more severely damaged than the port propeller. Initially, Captain Arici assessed the damage to the blades of the starboard propeller as about 40 per cent. However, it is agreed between the experts now that the extent of the damage to the starboard propeller is about 50 per cent. This is unsurprising given the description of the first part of the incident by the Master and in particular his evidence that the initial impact was so severe as to cause the starboard engine to shut down.

There are a large number of photographs of the damaged propellers reproduced in both experts' reports. Mr Chettleborough's evidence was that the damage was consistent with both propellers coming into contact with hard objects. I accept that evidence, which is not in dispute. In my judgment, the level of damage is consistent with the description of the incident; that is, of an initial contact that was so severe as to cause the starboard engine to shut down and thereafter a touch and go grounding at a time when the only power available was from the port engine. This is consistent with damage to the port propeller being caused either in

At paras.41 to 44 of his report, Mr Chettleborough says this,

It is convenient to start with the propellers. The issue between the parties is whether the propellers reasonably required to be replaced or, as the defendants maintain, repaired, as Captain Arici puts it, "... at a local propeller engineering shop, including dynamic balancing ...". It is not in dispute that in fact the claimant acquired replacement propellers from the manufacturers of the propellers damaged in the incident at a cost of just short of US$68,000. In the end, the defendants authorised the replacement of the starboard propeller but only local repair of the port propeller.

This issue has to be approaching applying the conclusions I reached earlier concerning the construction of the policy. In my judgment, the claimant is entitled to recover the cost of replacing both propellers. My reasons for reaching that conclusion are as follows. First, I accept Mr Chettleborough's evidence on this issue, at paras.105 to 108 of his report, which are in these terms,

By its letter dated 1 March 2018, Rolla advised the yard (in translation) as follows,

Captain Aricie maintained that there was a rule of thumb that a propeller was repairable if less than 10 to 15 per cent of the outer edge of a blade had been damaged. If right, this would suggest that the port propeller was capable of repair even if the starboard one was not. However, he accepted that this supposed rule was his personal rule and that it was not supported by any technical literature. In my judgment, it is not a sound basis for reaching a judgment on the issue I am now considering, because it was a personal rule, there was no objective engineering basis for it, Captain Arici is not qualified to arrive at such an engineering conclusion and, finally, it was not a rule that Mr Chettleborough had ever come across in many years of marine engineering experience. In my judgment, all of these are very good reasons for rejecting Captain Arici's rule as a tenable basis for deciding whether or not the port propeller should be repaired rather than replaced. Further, Captain Arici's rule was one that, if correct, would apply to all propellers irrespective of what they were required to do. That is inherently problematic, because, as is obvious, the engineering stresses that high

Although Captain Areeke maintained there was a specialist repairer able to carry out propeller repair work in Turkey called Germari(?), in my judgment, if that point was to be proved, it required evidence from the repairer concerned of its ability and experience in carrying out such repairs; there is none. Finally on this issue, it was suggested to Ms Dermacott(?) that she, and/or the beneficial owner of the vessel, was motivated only by a desire to ensure (break in recording) and it was for that reason the propellers were replaced rather than repaired. In my judgment, this is immaterial to the issue that arises, as Popplewell J (as he then was) held in the DC MERWESTONE ibid at para.142,

In any event, I consider Ms Dermacott to be a reliable witness and I accept her evidence, therefore, that all she was concerned to ensure was that a reliable repair was carried out to the yacht so that the yacht was safe for use by the beneficial owner and his family. The reason why this point is said to be of significance is because clause 4.3 of the policy conditions provides that the policy does not cover loss of a manufacturer's warranty. However, as I have explained, that was not the basis on which the propellers were replaced. They were replaced in order to ensure that the yacht was safe to use and could safely be used in the way she was designed to be used, and intended to be used, when she had been delivered.

I turn now to the repair costs in respect of the drive units. The claimant paid for the drive units to be removed from the yacht, sent to the Top System's factory in Italy, where they were both repaired at a cost of US$151,589, together with €3,100 and Turkish Lira 4,263 odd. The defendants' case is that this was in excess of what was reasonable and that each unit should have been repaired locally in Turkey. I reject that case, for the following reasons. The drive units are specialist pieces of equipment. This is reflected in the fact that the experts are agreed that the units needed to be inspected by the manufacturer (see para.5 of the joint memorandum signed by the experts). Top System carried out an on-site inspection and produced a report on the state of the two units dated 31 January 2018. That report has not been translated well but, in summary, stated: (a) the propellers could not be repaired; (b) that the thrust bearing, needle bearings, oil bath universal joint and certain other components inside each drive unit, would at least probably have to have suffered damage and the units required disassembly at Top System's workshops in order to ascertain the damage suffered; and (c) the trim pistons were likely to have suffered internal damage as a result of the shock imposed on them by the incident and require disassembly and overhaul at Top System's workshops. Captain Areeke accepted that Top System were well equipped to give considered advice on the condition of the drives.

There was a suggestion by Captain Areeke that there was no need to inspect both drives, at

In relation to the advice given by Top System, it was suggested by Captain Areeke in cross-examination that it would be high risk to disagree with the advice of a reputable manufacturer of specialist equipment such as the drive units. Captain Areeke accepted that to be so and accepted too that it was risky to disagree with a manufacturer when not having carried out an internal examination and if not qualified to do so. He continued to maintain, however, that it was not necessary to inspect the port drive unit. In my judgment, this was mistaken unless it could be concluded that no damage to the machinery within the drive unit had been caused by the damage that was visible to the port propeller. Given that the port propeller was the only source of power during the second phase of the grounding, I do not see how anyone, particularly someone who is not an engineer, could reasonably reach such a conclusion, and I reject it. In any event, following inspection, it was clear that the port drive unit had sustained damage in the incident and required repair, thus if the issue was looked at at the time when the decision to remove the units was taken, it was reasonable to remove both units because that was the advice of the manufacturer and the physical damage to the port propeller reasonably justified the conclusion that the port drive was likely to have suffered internal damage as a result. If the situation is looked at with all the relevant information now available, the decision was plainly correct because, when the port unit was shipped, it was found to be damaged.

Finally on this issue, I accept Mr Chattleborough's evidence that,

As Mr Chattleborough stated in his report, the drive systems are highly specialised proprietary and computer controlled systems and the ability of the yacht to manoeuvre and operate safely depended on them working correctly. In those circumstances, it is plain that both units needed to be removed and thoroughly inspected by disassembly. In my judgment, that was something that reasonably required the units to be removed and returned to their manufacturer unless the work could be done locally.

I now turn to the contention by the defendants that it was unreasonable for the units to be internally inspected and repaired by the manufacturer and that all that work could and should have been carried out in Turkey. In my judgment, it was plainly reasonable for the units to be returned to Italy and all necessary work carried out by the manufacturer. First, as I have already explained, these were highly specialised units that were integral to the safe operation of the yacht. There is no evidence from any repairer in Turkey that it was capable of repairing the units, much less repairing them to the standard required by the policy. Secondly, it is artificial to suggest that the repairs could or should be carried out locally once it had accepted, as both experts accept, that the units had to be inspected by Top System representatives and once it is accepted that such an inspection ought, on the recommendation of the manufacturers, to be carried out at its manufacturing facility. Thirdly, I do not accept that because the units are capable of routine servicing locally it therefore follows that the stripping down and repair

Captain Areeke's evidence on this issue was set out in para.14.2.3 of his report in these terms,

In reply, the Top System headquarters directed me to another service point, in Greece, Sea

We agreed a local shop support. Esbieka(?) Yachting offered their engineering support for

In any case, in spite of reminders, he never supplied the agreed quote. In any case, dismantling and assembling work can be carried out locally by Sea Front SA or another suitable Top System service provider or upon receipt of the appropriate service manual by any engineering company experienced with similar marine propulsion systems".

In my judgment, this is unreal. First, all this is hearsay evidence going to a critical issue in this case that was incapable of being tested in cross-examination since Mr Cassandris was not called to give evidence. Secondly, it does not make sense, on its face, since it was impossible to agree on the spare parts needed until each of the drive units had been disassembled and the extent of the damage ascertained. That reduces the weight that can safely be put on this evidence. Thirdly, it seems improbable that a commercial entity such as Esbieka Yachting would be willing to allow its facilities and equipment to be used without charge either for the reasons identified or at all.

This is another example of the defendants seeking to advance a case concerning locally based operators being willing and able to undertake specialist repairs without adducing any direct evidence from the locally based repairers as to their willingness or ability to undertake the work. In any event, Captain Areeke's own evidence is that Sea Front was unable in the end to do the work. All this evidence has to be viewed in the context of a concession by Captain

In his oral evidence, for the first time Captain Areeke said he was told by Mr Cassandris that he could not quote because Top System had already quoted to carry out the work. He accepted that by then the drives were on their way to Italy for disassembly and inspection. I am sceptical about this evidence, simply because there is no explanation offered as to why it did not appear in Captain Areeke's report. However, even accepting it at face value, it merely underscores the point that there is no evidence that there was a contractor in Turkey ready, willing or able to undertake the necessary work.

If and to the extent that the reason Sea Front ceased to be willing to undertake the work are the reasons set out by Captain Areeke in his oral evidence, in my judgment, that can have no impact on the issues that arise. Under the policy, the claimant was required to act as if uninsured (see clause 5.2 of the policy conditions) and I do not see how reasonably it could be suggested that seeking a quote from the manufacturers of the units was anything other than so acting. In my judgment, the course adopted by the claimant in relation to the repair of the drive units was reasonable in all the circumstances.

It is not entirely clear whether the defendant disputes the costs of the various inspections that were carried out on the instructions of the claimant. However, Captain Areeke accepted in the course of his evidence that it was prudent for the claimant to have done so, not least because it did not have access to the reports prepared by the defendant at the time when the repairs were being considered. In those circumstances, I conclude that incurring the costs of such inspections was reasonable.

The next issue I have to determine concerns the claimant's claim for the costs of repairing

Turning to Captain Areeke's evidence on the issue, he does not refer in his report, nor did he refer in his oral evidence, to materials required, man hours required or what labour rates should apply. In those circumstances, on the evidence, I am satisfied that the claimant has proved the reasonableness of this head of cost. Even if I am wrong to accept Mr

Applying that principle here, and it not being suggested that there should be any age adjustment, in my judgment the claimant would be entitled to recover what has been expended in the absence of any evidence that the sums expended were incurred either, (a) in respect of damage not caused by the incident; or (b) was in excess of what was reasonable for the work in fact carried out. It follows that even if I am wrong to accept Mr Chattleborough's evidence in relation to the GRP repair costs, the outcome would be the same.

I now come to two issues where, in my judgment, the claimant has failed to prove that the costs, or the whole of the costs, claimed should be recoverable. The first concerns anti-fouling. This has been charged in the sum of $8,624.81. This appears to have been for

The final issue concerns tenting. After the yacht was brought ashore, she was covered by a

I accept that tenting was necessary to prevent foreign objects entering the stern of the yacht while she was ashore awaiting the reinstallation of the drive units when the stern would have been open to the elements, and I also accept tenting was necessary in order to provide a stable environment for both the GRP work and the anti-fouling. However, that did not require tenting of anything other than the stern of the vessel. Mr Chattleborough has assessed the reasonable cost as being 50 per cent of the actual costs, giving a figure of $4,776. Since Captain Areeke has chosen not to engage with this issue beyond saying that all that was required was a tarpaulin to cover the stern, evidence which I reject as no more than an attempt to unreasonably reduce costs, I consider I should accept Mr Chattleborough's evidence on this issue.

In the result, therefore, I consider the claimant is entitled to recover the sums claimed less the adjustments I have mentioned for anti-fouling and tenting that I have just referred to.

The issue that I now have to determine concerns the summary assessment of the claimant's

The first submission which is made, therefore, by the defendants is that the totality of the costs claimed is in excess of what is reasonable and proportionate and that that carries through into the various phases that have to be looked at. Before descending into the detail, I remind myself that an exercise of this sort requires me to arrive at a figure for the claimant's costs which ensure that only reasonable and proportionate work is paid for and only a reasonable and proportionate amount is paid for that work. In a summary assessment of this sort, inevitably the exercise has to be very broad brush because the sort of detail which is made available on a detailed assessment simply is not made available on an assessment of this kind.

The first general issue that arose concerns the rates which have been charged. It was submitted

There are at least two points which need to be made in relation to grade rates under the guideline rate scheme. First of all, the rates are significant out of date. They were fixed in

In any event, and this is the second point that applies in relation to grade rates, it has always

The next question which I have to address is whether I should look at this case on a phase-by-phase basis. Although tempted at one stage to simply take a very broad brush approach and apply a reduction to reflect the necessity to ensure proportionality is arrived at, that would be to do a disservice to the way in which the application has been presented and also because there will be different issues that arise in relation to each phase which will have an impact upon what is recoverable.

So far as pre-action costs are concerned, the point which was made is that the sums involved

The next issue which arises concerns statements of case. So far as statements of case are concerned, again, the hours that have been worked are substantial. The same test applies as I have already identified. It was submitted that it was at this stage that Mr Mavraganis(?) was dropping out of the case as Ms Prentice became, in effect, solely involved in its day-to-day conduct. As it seems to me, therefore, being reasonable and proportionate in relation to the costs of preparing statements of case, there would be no need for Mr Mavraganis to be involved in this stage of the exercise and I will disallow the sums which have been claimed for him as in excess of what is reasonable and proportionate.

So far as the preparation of the statements of case are concerned, I accept the submission made on behalf of the claimant that preparing the underlying material to ensure that the statement of case reflected, for example, very accurately the costs which were being claimed would be of benefit to all parties as the litigation moved forward and, therefore, the process would be a

So far as counsel's fees are concerned, there is no realistic objection to that, as far as I can see, except that it is said there should be a marginal reduction, I think, to reflect 10 hours of counsel's time for the drafting of the pleading. In my judgment, that goes too far. What is the fee that has been charged for the work involved in preparing a carefully drawn pleading with appropriate annexes is the fee which is being claimed and I allow that as asked.

So far as the CMC is concerned, the figure that is being claimed is, again, a high one, but that, in my judgment, reflects the costs which have been incurred in preparing the various documents that had to be prepared ahead of the CMC. The quality of the documents enabled the issues to be resolved without a contested hearing and in those circumstances, it goes too far to suggest that there should be a very substantial reduction to the level of suggesting that the time costs for the solicitors should be the same as counsel's fee. That does not reflect accurately or at all the commerciality of running a solicitors practice, it does not reflect, therefore, the differential between charge-out rates that will exist as a result, and it does not reflect fairly the amount of work which had to be done by solicitors in order to comply with the obligations that arise in relation to a CMC. Nonetheless, again, there is at the margin perhaps a little too much that takes the figures which have been claimed in excess of what is reasonable and proportionate. It is unclear to me what Mr Hatcher brought to the exercise so far as the CMC is concerned and I disallow his claimed fees in their entirety. That adjustment ought properly to bring matters into line with what is reasonable and proportionate when looked at in the round.

So far as disclosure is concerned, the claimant's solicitors seek a total of 53 hours for disclosure. I accept the submission which is made on behalf of the defendants that this is in excess of what is reasonable and proportionate having regard to the nature of this case. This case was not a heavy disclosure case. I fully accept that it was necessary to carry out a review of reports prepared on behalf of the defendants which had not previously been seen. I fully accept that there had to be a review and some collating of invoices in order to make good the various financial claims and I understand that there would have to be a degree of review of material, which in the end never made it to trial bundles, in order to carry out the obligations that arise in relation to disclosure. Nonetheless, it is inappropriate, in my judgment, that is to say, unreasonable and in excess of what is proportionate, for a partner to spend 37.6 hours on disclosure in a case of this nature. There is an adjustment to be made there, it has to be a broad brush exercise and what I propose I should do is to leave Mr Hatcher's sums claimed as claimed and I reduce Ms Prentice's hours relevant to disclosure to 15 hours as well. I fully accept that there will be areas where she will have to become involved and I fully accept that she would have to review quite a lot of the material given the circumstances of this case but, as I have said, to claim 37 hours is in excess of what is proportionate in a case of this sort. So there will be 15.4 hours allowed for Mr Hatcher, 15 hours for Ms Prentice.

So far as counsel's fees are concerned, those were not seriously objected to and those were allowed as asked.

So far as witness statements are concerned, again the hours which have been claimed are challenged. They are challenged on the basis that the total time costs for solicitors are in excess of 58 hours. There were two witness statements of fact that had to be prepared. One related to the individual who managed the private affairs of the ultimate beneficial owner of the yacht and the other concerned the preparation of the Master's statement. I fully accept that Mr Hatcher's task in preparing, or principally preparing, the statement of the Master

The next issue that I have to address concerns expert evidence. There was a fairly root and branch challenge to the fees charged by the claimant's expert in the circumstances of this case because it is very substantially in excess of what the expert retained by the defendant has charged. In my judgment, that is a failure to compare like with like. The expert retained by the defendants was based in Turkey and had different qualifications to Mr Chattleborough, who was retained by the claimant and who was both a chartered engineer and naval architect and of some years' experience and based in the UK with all the implications that carries for charge-out rates. There is nothing that has been drawn to my attention which suggests that what he charged was in excess of what is reasonable and proportionate, other than by reference to the false comparison I have identified, and therefore I permit the expert fee element of this as asked.

The next question which arises in relation to expert fees concerns the fees charged by the solicitors. The total hours charged for are 75 hours. In my judgment, this is in excess of what is reasonable and proportionate having regard to the nature of this case and having regard to the sums at issue in it. I fully accept that the issues that arose in relation to the experts would engage the particular skills that Mr Hatcher has to offer because of the nature of the issues that arose, in particular in relation to the grounding and engineering issues that followed. I am prepared to accept, therefore, that he should be permitted to charge 40 hours for that exercise in order to provide the support necessary for the expert concerned. What I do not

The next issue concerns the PTR and linked with it the application which was heard, in effect, to require the defendants' expert to provide certain information concerning the degree to which he and his firm had been previously instructed by the defendants. I reserved the costs of that application over until trial because I wished to see whether the point had substance or not. In the result, I concluded that there was no substance in the point and that Captain Areeke gave his evidence fairly and objectively within the confines of the qualifications and experience that he had. There was no basis on which to challenge his independence by reference to previous instructions received. In my judgment, therefore, it will be appropriate to apply a deductible in relation to the costs of that application. In my judgment, those are costs which both the claimant should not be allowed to recover and the appropriate course to adopt in those circumstances is to deduct from the costs otherwise recoverable by the claimant of the sum of, I judge, £2,900, which, in my judgment, adequately reflects a sum that would eliminate that cost element from the sums that the defendants have to pay.

More generally, so far as the PTR is concerned, I do not accept that 31 hours by Ms Prentice

It is now necessary for me to consider trial preparation. So far as trial preparation is

The next phase I have to consider concerns trial. The counsel's fees are not in dispute and I need say no more about them. So far as time costs are concerned, the solicitors claim 44.2 hours for a trial which lasted two-and-a-half days. I fully accept that it will be appropriate in a trial of this sort for counsel to be attended throughout by a solicitor with knowledge of the case. It was suggested by Mr Watthey on behalf of the defendants that that ought to be 8 hours, plus 8 eight hours, plus 4 hours. I would accept that as a correct assessment. That comes to 20 hours. Effectively, Mr Hatcher has claimed 20.4 hours. I am prepared to accept that figure as reasonable and proportionate having regard to the way in which trial attendances

Again, however, for Ms Prentice to claim, in effect, the same again is in excess of what is reasonable and proportionate. It will be appropriate for the partner in charge of a case such as this to attend at the start of the trial, and perhaps the first hour, to deal with any unexpected developments, and it would be appropriate also for the partner in charge to attend at the end of the trial for the purpose, again, of providing any last-minute input required for counsel. Doing the best I can with that, I would allow, in respect of those two elements, a total of 5 hours for Ms Prentice, to which I would add another 3 hours to cater for out of court advice being given in relation to things as they developed. That comes, as I calculate it, to 8 hours for Ms Prentice on top of the 20.4 hours for Mr Hatcher. There is no dispute about counsel's fees.

The next issue, and final issue, I think, concerns settlement and ADR, and again, a point which is made is that the solicitors' time charges are in excess of what is reasonable and proportionate. The point which is made on behalf of the claimant is that this encompasses a number of different points: it encompasses consideration of the preparation for a mediation that in the end did not take place; it concerns the consideration of two Part 36 offers, which in the end contributed not a lot to the costs issues that arise but, nonetheless, had to be considered and advice obtained; and there was the preparation of a Calderbank offer as well, which in the end did not impact on the issues that I have to resolve today. I am prepared to accept that counsel's time involved in that exercise is correctly reasonably and proportionately claimed. What I am less sure about, however, is how Ms Prentice could have accumulated 15 hours, in addition to Mr Hatcher's 5.7 hours, to create a grand total of 22 hours for the two tasks I have identified. Again, doing the best I can with Ms Prentice's hours and reminding

The final issue which arises concerns the post-hearing costs. I do not understand what the estimated fees are about. The post-hearing costs as set out are in excess of what is reasonable and proportionate. I accept counsel's fee as asked as being reasonable and proportionate but, again, I struggle to see how Ms Prentice could have spent 11.9 hours reasonably and proportionately in relation to this phase. The schedule relevant to the quantification of the claim was prepared before ever the trial started and it was only necessary to have that handy for the purposes of dealing with any quantification issues of detail that arose. So far as costs are concerned, the issue really involved the consideration of the two Part 36 offers and the Calderbank letter, which cannot sensibly have taken, on a proportionate basis, 11.9 hours. I fully accept that there will be incidental work that would have to be done, including the preparation of this costs schedule and attendance at the hearing. However, the hearing started at 10.30 a.m., it is now 2.10 p.m. There has been no break for lunch. That comes to just short of 4 hours, and the preparation of the schedule will have taken, as it seems to me, another 3 hours, so if one allows Ms Prentice's costs at 7.5 hours to allow for a modest amount of leeway, in respect of the work that had to be done, then that reflects what is reasonable and proportionate for the attendance today.