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Limitation of liability for marinas: key decision upheld

  • Legal Development 08 November 2021 08 November 2021
  • UK & Europe

  • Marine

The decision of the Court of Appeal handed down this week in Holyhead Marina v. Peter Farrer [2021] EWCA Civ 1585 has upheld a landmark decision of the Admiralty Judge confirming that Holyhead Marina was entitled to limit its liability under section 191 of the Merchant Shipping Act 1995. This important finding will be of great interest to owners, insurers and users of docks and marinas. The successful Respondents (the Marina owners seeking to limit their liability and their insurers) were represented by Emma Rice of Clyde & Co and her team based in Manchester.

Limitation of liability for marinas: key decision upheld

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 at least £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 Clyde & Co issued proceedings on behalf of Holyhead Marina seeking limitation of the Marina’s liability pursuant to section 191 of the Merchant Shipping Act 1995 ("MSA 1995"). Pursuant to 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 ship that has been in the relevant area during the 5 years preceding the incident. Holyhead Marina argued that on this basis the relevant limit of their liability was 500,000 SDRs (Special Drawing Rights), equivalent to approximately £550,000.

The owners and insurers of the damaged vessels resisted the claim to limit liability and raised a number of defences. Holyhead Marina issued an application to strike out the defences and it was upon the hearing of the application to strike out that the matter initially came before Teare J in the Admiralty Court, before subsequently being considered by the Court of Appeal.

Admiralty Court

The main issue before the Admiralty Judge - which was also the most significant point of principle for other owners, operators and insurers of marinas around the country - was whether the Marina fell within the definition of "dock" under the MSA 1995.

Teare J held that the definition of "dock" in section 191 of MSA 1995 did extend to include Holyhead Marina. Although the Judge did not feel that the Marina was a dock within the narrowest meaning of that term, the statutory definition in section 191(9) states that “dock” includes "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". On this basis the Judge had little difficulty in holding that the pontoons comprising the Marina at Holyhead were places where the owners of small pleasure craft returning from sea would step ashore or "land" and as such were "landing places" within the meaning of that definition. The fact that this was not a typical example of a landing place in the context of commercial shipping such as may be used by merchant ships or passenger liners made no difference to the finding.

Although other issues were considered before the Admiralty Court and resolved in favour of the Marina's owners, the only finding on which the owners and insurers of the damaged vessels were granted leave to appeal to the Court of Appeal concerned the meaning of the definition of "dock" under MSA 1995.

Court of Appeal

The leading judgment in the Court of Appeal was delivered by the Master of the Rolls, Sir Geoffrey Vos and provided a complete endorsement of the reasoning of the Admiralty Judge, describing that judgment as “erudite” and worthy of consideration in its entirety.

The vessel owners raised a number of arguments before the Court of Appeal to the effect that the Marina owners should not be afforded the protection of limitation. These included submissions that the types of structure listed in section 191 were all for the use of commercial or passenger shipping and not, like marinas, for the mooring of pleasure craft; that the judge’s decision was in conflict with the ordinary meaning of the words in the definition of dock, and also that the Marina as a whole could not be a landing place, jetty or stage, because it was a collection of pontoons rather than just one. These arguments and others all contributed towards what the Master of the Rolls described as the “overriding point” made by the appellants that a marina as a whole could simply not be fairly regarded as a landing place, stage or jetty within the meaning of MSA 1995.

Having reviewed and comprehensively endorsed the reasoning of the Admiralty Judge, the Master of the Rolls proceeded to dismiss each of the arguments raised by the appellants. On the key issue of whether the decision below was in conflict with the ordinary meaning of the words in the definition of “dock” he noted:

“Ultimately, I conclude that terms as general as “landing place”, “stage” or “jetty” should not be construed so narrowly as to exclude either a collection of pontoons joined together to form a marina or the Marina itself.”   

In response to the appellant’s further argument that any finding that the pontoons making up the Marina were landing places, stages and jetties should therefore mean that Holyhead’s liability could only be limited for each pontoon, rather than for the Marina as a whole, the Master of the Rolls held:

“The Marina as a whole is a landing place, even though the many constituent pontoons themselves making it up are also landing places. Section 191(3) makes clear that the limitation of liability “relates to the whole of any losses and damages which may arise on any one distinct occasion”. It would be absurd to construe the limit as applying to the constituent parts of a structure simply because both parts and the whole can properly be described as, for example, a landing place.”               

On this basis the Master of the Rolls had little difficulty in dismissing the appeal in full and upholding the reasons set out in the “excellent” decision of the Admiralty Judge.        

Comment

The decision of the Court of Appeal provides emphatic confirmation that UK marinas used for berthing leisure craft may limit their liability pursuant to MSA 1995. 

One of the key policy objectives underlying the right to limit liability for maritime claims is to provide commercial certainty and this decision now ensures that this certainty and protection will be extended to the owners, operators and insurers of marinas in the vast majority of cases. As the Court of Appeal noted, to the extent that there was any uncertainty regarding whether MSA 1995 applied to marinas, “that understanding will be corrected once this case is determined.”

For further information regarding this case please contact Emma Rice of Clyde & Co. 

End

Additional authors:

Naomi Dymond-Drury

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