Martin Dalby Partner
Court finds marina can limit liability
Holyhead Marina Ltd v. Peter Farrer & others  EWHC 1750 (Admlty)
The Admiralty Court has held that the owners of a marina could limit their liability for damage to property, including vessels, pursuant to s.191 of the Merchant Shipping Act 1995. The Court found that a marina fell within the wide meaning of the term “dock” in s.191. However, the Court declined to grant summary judgment on the claim for a limitation decree because the argument that the Claimant had lost its right to limit could not be dealt with summarily.
The background facts
The Claimant was the lessee of an area of water, known as a marina, within Holyhead Harbour. In March 2018, during Storm Emma, which resulted in what was referred to as "the catastrophic breakdown of the entire Marina", 89 craft moored in the marina were damaged.
The Claimant sought to limit its liability under s.191 Merchant Shipping Act 1995 (MSA 1995). The Defendants, who were the owners of the damaged craft, resisted the claim to limit. The Defendants’ claims amounted to about £5 million, whereas the Claimant contended that the limit of its liability was about £550,000.
Under s.191, the owners of any dock or canal have a right to limit liability that is similar to a shipowner’s right to limit under the 1976 Convention of Limitation for Maritime Claims. S.191 provides that the owners of a dock or canal may limit their liability for damage caused to property by reference to the tonnage of the largest UK ship which, at the time of the loss or damage is, or within the preceding five years has been, within the “area over which the authority or person discharges any functions”. S.191(9) describes a dock as “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”.
The Admiralty Court decision
The Defendants argued that the marina was not a “dock” within the criteria specified in the MSA 1995. They also alleged that the design, construction and maintenance of the marina were defective and that, therefore, the damage was the result of the Claimant’s reckless act or omission, with the consequence that it had lost any right to limit.
Further or alternatively, the Defendants submitted that the area over which the Claimant discharged its functions extended beyond the marina itself and to the whole of Holyhead Harbour. Among other things, they contended that the marina management communicated with approaching vessels by VHF and that the marina’s website contained information on harbour by-laws and regulations that were applicable beyond the marina itself. As the harbour was frequented by large passenger ferries, the Defendants maintained that limitation should be calculated by reference to the tonnage of the largest UK vessel to call to the harbour as a whole and not just to the marina.
The Court rejected the argument that s.191 applied only to facilities used by commercial ships and found that the marina was within the statutory meaning of a dock as a “landing place, jetty or stage”. Furthermore, although one of the Claimant’s functions was to enforce compliance with harbour regulations and by-laws as applicable throughout the harbour, this function was discharged only within the marina itself and the Claimant’s powers did not extend to areas of the harbour outside of the marina.
The Court also found that the Claimant was the owner of a “dock” within the meaning of s. 191, either because it owned a leasehold interest in the marina or because it had control and management of the marina. The Court further dismissed the argument that the limit of the Claimant’s liability should be assessed by reference to the tonnage of the largest UK ship to use the wider harbour.
Nonetheless, the Court declined to grant the Claimant summary judgment in respect of the right to limit because the Defendants had an arguable (albeit weak) case that the Claimant had lost its right to limit.
This decision will be of particular interest to ports or harbours capable of handling large vessels that also operate marinas for pleasure and other small craft. Marinas, by the nature of their trade, are unlikely to face claims of particularly high value, relative to commercial ports. Such significant claims are likely to be as infrequent as the weather event that gave rise to the claims in this case. Nonetheless, the potential exposure points highlighted above are worth noting.
Insurers offering coverage to owners of small vessels may also wish to reflect on the impact that limitation available to the marina where a vessel is typically moored may have on a recovery, following an incident. It should be borne in mind that most marinas will accommodate vessels of less than 2,000 net tons, affording managers the defence of the lowest limitation (currently 1.51mln. SDR or approximately GBP1.66mln.). Many vessels that frequently moor in such marinas, for which an insurer may offer cover, will be worth significantly more than this.