Commercial skulduggery

Posted: 20th October 2016

RCJThe commercial courts are often instrumental in exposing skulduggery and that was certainly so in one case in which the director of a shipping company was found to have masterminded the scuttling of a merchant vessel with a view to financial gain.

The ship was laden with steel products when she went down in deep water following a fire in her engine room. Insurers for the cargo owner put their loss at about Euros 10.2 million. However, the ship’s owner, a company that was wholly owned by the director and was his alter ego, argued that its total liability to the insurers and others who had suffered loss should be limited to £7.3 million by operation of the Limitation Convention 1976.

In ruling that there should be no such limitation, the High Court found that the vessel had been deliberately sunk by her master and chief engineer, at the director’s request. The latter had powerful financial motives for scuttling the ship; her route had been diverted into deep water – from which the wreck could not be recovered – and an unscheduled abandon ship drill had been carried out shortly before the fire.