Limitation Of Liability: Are Marinas Protected?

• Published date: 29 August 2020
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation
• Law Firm: Clyde & Co
• Author: Ms Emma Rice

The decision of the Admiralty Court handed down this week in Holyhead Marina v. Peter Farrer [2020] EWHC 1750 (Admlty) considers interesting and significant issues concerning limitation of liability that will be of great interest to owners, insurers and users of docks and marinas. The successful Claimants (the marina owners seeking to limit their liability) were represented by Emma Rice of Clyde & Co and her team based in Manchester.

Background

In March 2018 a severe storm struck Holyhead Marina in North Wales with devastating effect: the marina itself suffered a catastrophic breakdown and some 89 craft that had been moored at the facility were either sunk or damaged. The potential claims of the vessel owners and their insurers against the marina were estimated to total some '5 million and were said to be based on allegations that the design, construction and maintenance of the marina were defective.

In anticipation of these claims Holyhead Marina issued proceedings seeking limitation of its liability pursuant to section 191 of the Merchant Shipping Act 1995 ("MSA 1995"). Under that provision the owner of a "dock" within the meaning of that Act may limit its liability to a sum calculated by reference to the tonnage of the largest UK registered ship that has been in the relevant area during the 5 years preceding the incident. The claimants argued that on this basis the relevant limit of their liability was approximately '550,000.

The Defendants to these proceedings (the owners and insurers of the damaged vessels) resisted the claim to limit liability and raised a number of defences. The Claimant issued an application to strike out the defences and it was upon the hearing of the application to strike out that the matter came before Teare J in the Admiralty Court.

Issues

The key issues before the Court were as follows:

• Did the marina fall within the definition of "dock" under the MSA 1995?
• Was the Claimant's right to limit lost because the loss and damage resulted from a personal act or omission of the Claimant committed recklessly and with knowledge that such damage would probably result?
• Did the area of control exercised by the Marina extend over the entire harbour (including the pier used by the ferries which operate between Holyhead and Dublin) with the result that any limitation fund would be calculated by reference to one of the large ferries and therefore exceed the total claims of the Defendants?

Decision

On the first issue - which was also the most...