A vessel underwent conversion work at a shipyard under a conversion contract between the vessel owners and the shipyard owners. The vessel was insured - the vessel owner and the shipyard owner were co-insureds. The vessel suffered fire damage at the shipyard. The insurance policy contained a condition precedent that a shipyard risk assessment be carried out by a specified firm of surveyors. The insurer settled the claim brought by the insureds and in exercising its subrogation rights the insurer commenced proceedings against the surveyors, alleging negligence in conducting the risk assessment. Surveyors argued that the fire was caused by the shipyard owner and claimed a contribution from it. The shipyard owner argued that under the conversion contract, the vessel owner had agreed to waive its liability and therefore it was not required to pay a contribution (whether it had been negligent or not).
The court accepted that the shipyard owner was intended to benefit from a waiver of liability under the conversion contract. It concluded that since the shipyard owner was not liable to the vessel owner for the loss, there could be no claim for contribution since the surveyor and the shipyard owner were not together "liable in respect of the same damage" under the Civil Liability (Contribution) Act 1978.
Commercial Court, Queen's Bench Division
24 January 2011