Lloyd's Maritime and Commercial Law Quarterly
Compensation in tort for unrepaired damage to ships: a modern view, examining valuation, supervening events and lost profit
John Knott*
Time hath, my Lord, a wallet at his back, Wherein he puts alms for oblivion.
1
Collisions between ships generate a wide variety of claims. Even where the repair of damage is monitored by independent surveyors there is likely to be a dispute between a tortfeasor and his victim as to the proper cost of repair and the amount of lost profit. Where the damage is unrepaired there is less certainty and even more scope for dispute: moreover, the courts have less experience in scrutinising such claims, as most damaged ships are repaired by the time of a trial. These factors have led to a less sophisticated treatment of unrepaired damage claims, particularly where there is supervening damage or loss. This paper compares damage to chattels with damage to real property; distinguishes between approaches which seek to determine the extent of a ship’s reduction in value and those which rely directly on an estimate of the cost of repairs; identifies some shortcomings in the current method of assessing compensation in unrepaired damage claims; and proposes solutions.
1. INTRODUCTION
a. Damage to ships
A claim in tort which is virtually guaranteed to generate controversy is one for compensation in respect of unrepaired damage to a ship. There is a combination of reasons for this, which may include: variations over time in the cost and circumstances of repair options; the effect of subsequent events, including further damage or sinking; the scrapping or normal sale of the vessel; a defendant’s perception that no real loss has been sustained; or the paucity of relevant judicial decisions. This last is in marked contrast to the volume of reported decisions concerning the cost of actual repairs, and reflects the relative infrequency of litigation involving claims where a ship has been damaged but repairs have not been undertaken by the time of a trial. Yet unrepaired damage claims form an important area in theory and practice; they can arise from a variety of causes; and they
* Consultant, Holman Fenwick Willan LLP. I am grateful for very helpful comments by Michael Howard QC on earlier drafts of this article, and by Guy Main of Holman Fenwick Willan LLP on the sale and purchase of ships, based on his experience.
1. W Shakespeare, Troilus and Cressida, III, iii, 145.
COMPENSATION IN TORT FOR UNREPAIRED DAMAGE TO SHIPS
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