Margolle v. Delta Maritime

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Loic Ludovic Margolle and another v Delta Maritime Company Limited and others
English Admiralty Court: Gross J.: 28 November 2002
Nicholas Saunders, instructed by Constant & Constant, for Margolle
Elizabeth Blackburn QC, instructed by Richards Butler, for Delta Maritime
This case is believed to be the first in England where a party's ability to limit its liability under the 1976 Limitation Convention was held potentially open to successful challenge. It also illustrates just how difficult it will be in most cases to "break" that limitation.

DMC Category Rating: Confirmed

This case note is based on an Article in the December 2002 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA. DLA is an International Contributor to this website.

At about 4.30 am on 23 April 2001, the fishing vessel, "Saint Jacques II", owned and skippered by Mr Margolle, collided with the "Gudermes", a motor tanker owned by Delta Maritime. Delta Maritime and the cargo owners immediately issued proceedings for damages in the region of US$700,000. In August 2001, Mr Margolle began these proceedings under the Merchant Shipping Act 1995 seeking a decree under the 1976 Limitation Convention limiting any liability he might have for damages.

The dispute centred on Article 4 of the Convention, which provides:
"Conduct barring limitation
A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result."

There was no suggestion that the collision was caused intentionally, but Delta Maritime alleged it was caused by the "personal act or omission" of Mr Margolle committed "recklessly and with knowledge that such loss would probably result".

Mr Margolle applied for summary judgment, on the basis that Delta Maritime had no real prospect of successfully contesting the limitation claim and there was no other compelling reason why the claim should go to trial. In February 2002, the Admiralty Registrar dismissed the application. The Registrar reached his conclusion believing Mr Margolle was on the bridge at the time of the collision. New evidence, however, confirmed that he was, in fact, asleep below. Mr Margolle appealed.

The Collision
The collision took place as the Saint Jacques II, skippered by Mr Margolle, was sailing from Boulogne towards the Falls Bank fishing grounds. In his haste to get there before his competitors, Mr Margolle set a course across the South West Traffic Lane of the Dover Straits Traffic Separation Scheme, heading against the flow of traffic, in contravention of Rule 10 of the Convention on the International Regulations for Preventing Collisions at Sea 1972. This, as Mr Justice Gross put it, was the "nautical equivalent of a motorist proceeding the wrong way along a motorway".

Although Mr Margolle had determined the course to be steered, he was down below when the collision took place, having left the vessel in charge of a 17-year old deckhand. Mr Margolle argued that the navigation of the vessel in the final minutes before the collision could not be the result of his personal act, because he was asleep at the time.

But this was not the first time the Saint Jacques II had breached the Collision Regulations. Delta Maritime had evidence of five other instances of rogue navigation. Mr Margolle, however, argued that because he had "got away with it" so many times in the past, one could not infer from that that he was reckless or had knowledge that damage would result, as required by Article 4.

Challenging the Convention
The burden of proof under the Limitation Convention rests with the party seeking to "break" the limit. That burden is - intentionally - a very heavy one. Where there is no allegation of intent, the party challenging the limitation must establish both reckless conduct and knowledge that the relevant loss would probably result (MSC Mediterranean Shipping Co SA v Delumar BVBA, (the Rosa M) [2000] 2 Lloyd's Rep 399).

These two requirements have been looked at in the context of the Warsaw Convention and the carriage of goods and persons by air. When a person acts recklessly, "he acts in a manner which indicates a decision to run the risk or a mental attitude of indifference to its existence" (Goldman v Thai Airways Limited [1983] 1 WLR 1186). The knowledge required is actual, not constructive, "in the sense of appreciation or awareness at the time of the conduct in question, that it will probably result in the type of damage caused. Nothing less will do" (Nugent v Goss Aviation [2000] 2 Lloyd's Rep 222).

But the test under the Limitation Convention is even higher than the test under Warsaw because it requires a "personal act or omission" of the party seeking to limit, rather than the act or omission of "the carrier his servants or agents". In addition, under Warsaw, the relevant knowledge is that "damage would probably result" whereas, under the Limitation Convention, the relevant knowledge under Article 4 is that "such loss" would probably result.

In Schiffahrtgesellschaft MS Merkur Sky MBH & Co v MS Leerort Nth Schiffahrts Gmbh &Co KG [2001] 2 Lloyd's Rep 291, Lord Phillips MR thought that "such loss requires foresight of the very loss that actually occurs, not merely of the type of loss that occurs". In a collision between Ship A and Ship B, therefore, the owners of Ship A would only defeat the owner of Ship B's right to limit liability if they could prove that he intended that Ship B should collide with Ship A or acted recklessly with the knowledge that it was likely to do so. Arguably, however, it would be enough for the owners of Ship A to prove that the owner of Ship B intended that his ship should collide with another ship or acted recklessly with the knowledge that it was likely to do so.

Given the weight of this burden of proof, only truly exceptional cases will give rise to any real prospect of defeating an owner's right to limit.

The judge agreed that this was just such a case. If one looked only at the last minutes of navigation before the collision, Mr Margolle could not have had any personal involvement in the navigation during those minutes because he was asleep at the time. Had the case rested on this alone, Mr Margolle would have been able to limit his liability.

But the decisive factor was the evidence that this was not the first time the Saint Jacques II had been navigated across the traffic lane on Mr Margolle's instructions. This appalling navigational practice, combined with the obviousness of the risk of collision, left it open to the court at trial to infer that Mr Margolle had the relevant actual knowledge that a collision would probably result, whether with the Gudermes or with some other vessel.

The fact that Mr Margolle had got away with this sort of behaviour in the past made no difference, since there is nothing to suggest that the risk or probability of a collision diminishes with repeated reckless navigation. If anything it increases. In any event, the test was the subjective knowledge of Mr Margolle, not an objective or logical analysis of risk.

As a result, the judge was satisfied that Delta Maritime had a real prospect of demonstrating at trial that Article 4 of the Limitation Convention applied. Mr Margolle's application for summary judgment was dismissed.


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