North Star Shipping Ltd & Ors v Sphere Drake Insurance Plc & Ors, Court of Appeal - Commercial Court, April 22, 2005, [2005] EWHC 665 (Comm),[2005] 2 CLC 238,[2005] 2 Lloyd's Rep 76
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North Star Shipping Ltd & Ors v Sphere Drake Insurance Plc & Ors, Court of Appeal - Commercial Court, April 22, 2005, [2005] EWHC 665 (Comm),[2005] 2 CLC 238,[2005] 2 Lloyd's Rep 76
Neutral Citation Number: [2005] EWHC 665 (Comm)
Case No: 1996 FOLIO NO. 644IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONRoyal Courts of JusticeStrand, London, WC2A 2LLDate: 22/04/2005Before :THE HONOURABLE MR JUSTICE COLMAN- - - - - - - - - - - - - - - - - - - - -Between :- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -Mr David Goldstone (instructed by Shaw & Co) for the ClaimantsMr Nicholas Hamblen QC and Mr Graham Charkham (instructed by Richards Butler) for the DefendantsHearing dates: 11th October 2004 - 3 February 2005- - - - - - - - - - - - - - - - - - - - -JudgmentTHE HONOURABLE MR JUSTICE COLMAN : Introduction 1. In the early hours of the morning of 6th July 1994 the first claimant's bulk carrier ``North Star'' was damaged by an explosion at Drapetsona, near Piraeus. The vessel was moored in shallow water alongside the mole for the purpose of undergoing repairs in order to complete her special survey. The explosion was caused by the detonation of an explosive device which was located about one metre below the water line on the port side and just aft of the engine room forward bulkhead with No. 6 hold. It is in issue whether the device was either attached or placed close up to the outside of the hull or was placed up against the internal shell plating at the forward end of the engine room. The explosion blew an aperture in the shell plating just aft of the bulkhead. The aperture consisted of the space left by missing plating detached by the explosion and the space created by the fracturing of the edge of the hole left by the missing plating and the formation between those fractures of tongues of metal or ``petals'' which had been displaced from their alignment with the side of the hull. The result was that substantial quantities of seawater were admitted to the engine room and, through the bulkhead, into No. 6 hold. The seawater so completely damaged the engine room machinery that the vessel could not be repaired except at a cost likely to be in excess of its value. Accordingly, the Owners claim under their war risks policies for a constructive total loss. 2. The vessel was registered in Malta. The assured registered owner was North Star Shipping Limited which was a one-ship company managed by Kent Trading Corporation (``Kent''), which had offices in Piraeus and New York. Kent was beneficially owned by the third and fourth claimants, the brothers Harry and Michael Petrakakos, (``HP'' and ``MP'' respectively). I refer to them, Kent and the registered owners collectively as ``the Owners''. Both brothers had been educated in the United States where their father had been a successful businessman in New York. HP had a master's degree from MIT in naval architecture and marine engineering and shipping and shipbuilding management. MP had a master's degree also from MIT in naval architecture and marine engineering. In 1977 both brothers set up P&P Marine Consultants, a consultancy service providing ship repairs supervision and claims and management services. It operated in New York and Piraeus, and it provided services to several large shipowners and to P&I clubs, particularly the Oceanus.3. Kent was set up in 1983. As well as its shipping activities it was a trading company which owned or managed other companies dealing in carpets and computer software design. 4. By the end of 1993 Kent operated a fleet of four vessels - North Star, North Rock, Agios Nektarios and Taxiarchis. HP, although fully competent to deal with all technical aspects of ship management, was more concerned with decision-taking as to financial and commercial matters than MP who concentrated more on the technical aspects of management and consultancy work. 5. North Star was purchased by one of the Kent companies in a damaged condition for US$1.3 million in September 1989. It was then 17 years old. Substantial repairs were then carried out. These included the fitting of a new tail shaft and propeller and major crankshaft repairs, as well as sand blasting and painting of the holds. It was transferred to the Owners in 1992 and at the time it was transferred from the Cypriot flag to the Maltese flag. At the time of the loss the vessel was mortgaged to the National Bank of Greece. The amount outstanding on that mortgage in April 1994 was US$225,000. Her market value was about US$1.4 million and her scrap value in the range US$0.95 million to US$1.05 million. 6. At the time of the loss the North Star had been under time charter to an Israeli company called Negev Star since July 1992. Since the previous year the vessel had been employed to carry phosphates from Israel to India. 7. On 25 November 1993 a new agreement was made between the Owners and time charterers for a 48 months time charter expiring in December 1997. The rate was US$4,600 per day until 1 December 1994 with a 3 per cent increase annually thereafter. 8. In April 1994, for c...See the full content of this document
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