In Owners of the ship Front Ace v Owners of the Ship Vicky 1 – Lawtel 26.2.08 the appellant shipowners appealed against a decision of the Admiralty Registrar assessing the quantum of damages in respect of a collision at sea, and the respondent shipowners cross-appealed. The appellant's tanker collided with the respondent's very large crude carrier while the tanker was manoeuvring alongside the carrier in order to receive part of the latter's cargo in a ship to ship discharge operation. The tanker's bow came into contact with the starboard side of the carrier causing significant damage. The appellant admitted liability for the collision and conceded that the respondent was entitled to recover the costs of repairing the damage. The issues between the parties arose out of the loss of a fixture which had been entered into before the collision and which the appellant said that they were unable to perform as a result of the collision. The appellant's vessel obtained another fixture but at a lower freight rate because of a fall in the market in the meantime. The registrar held that the loss of the fixture was caused by the collision. He awarded damages based on the "time equalisation" method and reduced the damages by 20 per cent on the basis that the respondent's claim was for the loss of a chance, which he assessed at 80 per cent. Both sides appealed. The appellant submitted that the registrar should have held that the loss of the fixture was caused not by the collision but by the unexplained decision of the master to deviate on the way to the port where repairs were carried out, and that the registrar had erred in using the time equalisation method put forward by the respondent and had been bound by authority to use the "ballast/laden" method. The appellant submitted that the registrar should not have reduced the damages by 20 per cent for the loss of a chance, given his conclusions of fact on causation and mitigation.
The Court of Appeal held that the respondent could show that but for the collision it would have performed the fixture. It followed that it was entitled to recover the loss flowing from the loss of the fixture unless there was a break in the chain of causation. The question was whether the cause of the loss of the fixture was the collision or a new cause, namely an unexplained deviation. The registrar was entitled to hold that it had been reasonable for the respondent to make their arrangements on the basis of the estimated time of arrival of the vessel at the shipyard for repairs to be carried out on the vessel with clean tanks. Although the master's 12 hour deviation was unexplained, the registrar could reasonably conclude that the probable reason was that it was designed to allow the vessel to arrive at the shipyard in accordance with his instructions with the cargo tanks in clean condition. The registrar had been entitled to hold that the deviation was not an extraneous event breaking the chain of causation and that the collision was the effective cause of the loss of the fixture.
There was no binding authority for the proposition that that the 'ballast/laden' basis was the appropriate methodology to be adopted in all cases where a ship owner lost a fixture as a result of a collision. The question for decision in every case was simply what, if any, loss of profit was incurred as a result of the collision. How that loss was to be calculated would depend upon the facts of the particular case – The Argentino 14 App Cas 519.
The ballast/laden method was unsuitable for very large crude carriers which had one major loading area because it did not reflect the commercial importance to an owner of discharging as closely as possible to that area, nor did it take account of different voyage lengths, whereas the time equalisation method did take account of the overall position until the end of the substitute charterparty, which had been entered into as a direct result of the collision. The parties' experts agreed that the time equalisation method was a valid methodology and the registrar had been entitled to adopt it.