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Court of Appeal rules that marinas can limit their liability under the Merchant Shipping Act 1995

Posted: 01/12/2021


In a decision that will be of particular interest to insurers offering coverage to owners of small vessels and marinas, the Court of Appeal recently handed down their judgment in Holyhead Marina v Farrer and others [2021] EWCA Civ 1585. In doing so, their Lordships upheld the decision of Mr Justice Teare that a marina falls under the statutory definition of a “dock” for the purposes of s.191 of the Merchant Shipping Act 1995 (MSA 1995), which means that marinas can limit their liability for damage to ships or anything kept on board.

The right to limit is a longstanding principle in maritime law and was introduced to promote the number of ships and international trade by sea. In the MSA 1900, the right was broadened to include property not on board ships including that on land, which led to the simultaneous extension of the right to limit to owners of docks.

Background

The case arose as result of Storm Emma hitting the Isle of Anglesey on the night of 1 and 2 March 2018. The storm destroyed the marina causing damage to the pontoons and the total loss of 89 vessels that were moored there. Claims were issued by the owners of the affected vessels against the marina totalling in the region of £5 million.

First instance decision

In turn the marina brought proceedings against the owners seeking a decree enabling them to limit their liability pursuant to s. 191 of the MSA 1995. If the Marina was allowed to limit liability their maximum exposure would equate to £550,000.

The defendant owners challenged the claim to limit liability arguing that the marina was not a “dock” for the purposes of s.191 MSA 1995. A “dock” is set is defined in s. 191 MSA 1995 as, “wet docks and basins, tidal docks and basins, locks, cuts, entrances, dry docks, graving docks, gridirons, slips, quays, wharves, piers, stages, landing places and jetties”.

The matter was heard in the Admiralty Court by Mr Justice Teare who found that the pontoons which made up the marina were not within the ordinary meaning of the word ”dock” but did fall within the s.191 definition of a dock as, “landing places, jetties or stages”. It is this aspect of the decision that was appealed by the owners.

The owners also argued that the Marina should not have the right to limit as its purpose was to berth leisure craft as opposed to commercial vessels. They argued that the Limitation Convention could not have been intended to cover marinas such as Holyhead as the purpose of the Limitation Convention was to boost international trade.

Court of appeal

In the Court of Appeal, owners argued that the marina could not fairly be described as a dock or any of the terms used in the s.191 MSA 1995 statutory definition. They argued that this was why the Judge at first instance had to break down the structure of the Marina and look at the pontoons that made it up rather than the marina itself as a whole. It was additionally argued that this proposition was reinforced by the fact that the two predominant purposes of the marina are a) berthing and b) leisure. This is opposed to purposes of landing passengers and goods or commerce.

Sir Geoffrey Vos, Master of the Rolls, agreed with Mr Justice Teare’s first instance decision that the pontoons that made up the marina would ordinarily be considered both mooring places and landing places meaning that they fell within the statutory definition of a dock. In fact, his Lordship took this further saying that Mr Justice Teare could have “held that the Marina itself was a landing place for the same reasons… The fact that a marina is a berthing place as well as a landing place does not mean that it is not a landing place.” For the same reasons his Lordship found that the Marina should be regarded as a stage or jetty.

Sir Geoffrey Vos also found that the facilitation of trade was not the only purpose of the Limitation Convention. Referring to Hansard he found that “the legislation was a compromise between the two chief interests of dock owners and shipowners, with no suggestion that leisure craft owners were excluded from the latter category.”

For these reasons the Court of Appeal upheld the first instance judgment, finding that “the judge reached a common sense conclusion which was clearly correct”.

Conclusions

This decision is of importance to owners of marinas and docks, and their insurers, as it significantly limits their exposure in respect of claims for loss and damage to any ships or goods on board. Owners and insurers of vessels damaged in an incident at a marina should also be aware that they may not be able to recover all of their losses from the marina.


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