Niggling points in ship-repair contracts

A few potentially important points in a case decided last week for the benefit of those practising in the recondite but potentially big-money area of shipbuilding and ship-repair. In Saga Cruises BDF Ltd v Fincantieri SpA [2016] EWHC 1875 (Comm), the Saga Sapphire was an elderly cruise liner owned by SC and bareboat chartered to associated company A, who operated her. She went in to Italian repairers for inspection and possible repair of luboil coolers. The repair contract was between SC and the yard. Having come out and recommenced cruising, she suffered a failure of the port cooler: the cruise had to be abandoned, as did a subsequent one. SC assigned its cause of action to A, who claimed damages from the yard. The actual holding was that the yard had been in breach, but nearly all the damages claims failed on causation grounds. Nevertheless the following points are worth a note:

(1) The repair contract, unlike many such contracts such as BIMCO’s excellent Repaircon, contained no term explicitly excluding liability for post-redelivery losses and throwing the owner back on the terms of the guarantee. But the vessel was handed back under a protocol of redelivery saying The Contractor has today completed the Works and the Owner has accepted that the requirements of the Agreement have been complied with pursuant to the provisions of Clause 9 of the Agreement in all respects except as outlined herein.….Each party confirms that, with the exception of the above described matters … it has no other requests or claims against the other party whatsoever. Sara Cockerill QC rightly decided that such losses were therefore recoverable at common law, rejecting a rather desperate argument from the yard that the protocol was sufficient to make up for the lack of a general exclusion.

(2) In so far as the yard accepted a duty to advise on defects in, and necessary repairs to, the coolers, this was a concurrent contract-tort duty and hence susceptible to a contributory negligence deduction in so far as SC had been at fault. This holding, that duties to advise are potentially subject to the contributory negligence legislation, is potentially a very useful weapon in a yard’s armoury.

(3) Even though any loss of profit had been suffered by A and not SC, A could claim as assignee under Offer-Hoar v Larkstore [2006] 1 WLR 2926. In addition it was probable that in any case SC could have sued under the principle in Darlington v Wiltshier Northern [1995] 1 WLR 68.

Small points perhaps, but then it’s attention to small details like this that marks the line between lawyers who are merely competent and those truly excellent.

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