On 12 June 2019 the Supreme Court gave its judgment in The Renos (Sveriges Angfartygs Assurans Forening (the Swedish Club) & Ors v Connect Shipping Inc & Ors) [2019] UKSC 29, which is likely to be one of the landmark marine insurance decisions of the year. The insurers appealed against a finding that the insured vessel was a constructive total loss (CTL). There were two grounds of appeal: that costs incurred before the assured tendered Notice of Abandonment should be excluded from the CTL calculation, and that SCOPIC remuneration payable to the salvors should also be excluded from that calculation.
The insurers failed on the first ground of appeal. In an area of law devoid of direct authority, the Supreme Court took the view that pre-NOA costs and expenses should rank towards a CTL. The decision is of particular importance in circumstances where (as in this case) substantial costs are incurred before the extent of the damage, and the full costs of recovery and repair, can be ascertained. The judgment confirms that those costs may in principle rank towards a CTL, whether or not incurred before NOA is tendered.
The insurers succeeded on the second ground of appeal. The Supreme Court held that even though the assured had no option but to pay SCOPIC remuneration in order to recover the vessel, it was not a cost of recovery and/or repair. The Court’s reasoning on this point appears to have been influenced by the fact that environmental pollution is a P&I, not H&M, risk, and that the “objective purpose” of the SCOPIC payment was, in the Court’s view, to minimise the owners’ liability for environmental pollution.
The trial judge had made findings as to enough of the costs of recovery and repair claimed by the assured to establish that the vessel was a CTL, on the basis that pre-NOA Costs and SCOPIC remuneration were included, and found it unnecessary to make findings as to the other alleged costs of recovery and repair. With SCOPIC now excluded, the Supreme Court has ordered those other costs to be determined upon a remission to the trial judge, to establish whether the vessel was a CTL. The case therefore continues.
Steven Berry QC and Neil Hart, instructed by Patrick Hawkins and Ioanna Gavriiloglou of Hill Dickinson International, acted for the assured before the Supreme Court. Steven Berry QC and Rebecca Akushie acted at first instance and before the Court of Appeal.
