On 5th-6th July 2011 the vessel Brillante Virtuoso was severely damaged by fire while off the coast of Aden, Yemen. The Claimants (the vessel’s owners and its mortgagee bank) maintained that the fire was caused by pirates (or thieves or terrorists or persons acting maliciously or from a political motive) and claimed under its war risks insurance policy.

As we reported in our news item of 15th January 2015, following a quantum trial in Part One of these proceedings, at which both Claimants were represented by Peter MacDonald-Eggers QC, Tim Jenns and Richard Sarll of 7KBW, the Commercial Court (Flaux J) decided that the vessel had been rendered a constructive total loss; and quantified the salvage and sue and labour expenses recoverable (in principle) under the insurance (see [2015] EWHC 42 (Comm)).

Following that judgment, the Defendants re-configured their counsel team, bringing in Jonathan Gaisman QC and Stephen Kenny QC of 7KBW to help defend the issues of liability in Part Two of the proceedings. On 1st May 2015 the Defendants were given permission to amend their defence to allege, among other things, that that the fire had not been started as the Claimants had claimed, but rather was the result of wilful misconduct on the part of the owners; and that if any intruders had come on board the vessel on the night of 5th/6th July 2011, they had been confederates of the owners who had been assisted by members of the crew. The Claimants denied the Defendants’ allegations (which, as noted below, have yet to be tested).

After a number of interlocutory hearings during 2015, on 18th December 2015 the owners were ordered to deliver up to their solicitors (or the bank’s solicitors), for proper disclosure review, an email archive held by its former manager, Worldwide Green Tankers Ltd, by 4th January 2016. The owners failed to do this, and on 12th January 2016, the Court made an “unless” order requiring that the archive be delivered up by 19th January 2015, failing which the owners’ claims would be struck out. The archive was not, however, handed over. Instead, on 19th January 2016 the owners applied for an extension of time to comply with the “unless” order, or for relief from the sanction in it.

The Commercial Court (Flaux J) has now heard those applications. Following a two-day cross-examination of the vessel’s beneficial owner, Mr Marios Iliopoulos, the judge, in a robust judgment handed down on 10th May 2016, has expressed his “firm conclusion” that owners’ explanation for its failure to comply with the “unless” order that control over the archive had fallen into the hands of a Mr Agha, who had unexpectedly refused to make it available to the owners for delivery to the solicitors, and had then exercised an option to acquire all the shares in Worldwide Green Tankers Ltd – was “a complete invention“. Accordingly the owners’ claims remained struck out, and were dismissed. The Court made orders in the Defendants’ favour for indemnity costs in relation to the costs of the applications, and for a payment on account of £750,000.

The claims of the mortgagee bank remain on foot.

To review the judgment please click here.

Owners’ Counsel: Claire Blanchard QC (Essex Court Chambers) and Tim Jenns (7 KBW) – instructed by Hill Dickinson LLP.

Defendants’ Counsel: Jonathan Gaisman QC, Stephen Kenny QC (both of 7KBW) and Nichola Warrender (Quadrant Chambers) – instructed by Norton Rose Fulbright LLP.