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Lloyd's Maritime and Commercial Law Quarterly

PROOF OF SCUTTLING The Captain Panagos D.P . In his judgment of 23 May 1986 in Continental Illinois National Bank & Trust Co. of Chicago v. Alliance Insurance Co. Ltd . ( The Captain Panagos D.P .), 1 Evans, J., found that the owners of the m.v. Captain Panagos D.P . were responsible for scuttling their vessel and that, consequently, the insurers were not liable to pay any claims under the insurance. This was the first time that an English court had made such a finding since 1960. 2 The plaintiffs appealed and the Court of Appeal 3 upheld the judgment of Evans, J. In the course of their judgment, their Lordships restated the principles upon which the evidence relating to an alleged scuttling should be reviewed. The decision thus represents the most recent judicial pronouncement on the law in this area, one that has not been free of doubt. The facts were that, on 20 November 1982, the vessel grounded on the edge of the Farazen Sands on the eastern shore of the Red Sea, in the course of a voyage from Canada to Bandar Abbas in Iran. On 23 November, while still aground, the vessel suffered a fire, which damaged the engine room and other parts of the vessel. The owners and the ship’s mortgagees, who had the benefit of the insurance, claimed for a constructive total loss. The insurers alleged that the owners had “procured or connived at the wilful running aground and setting on fire of the vessel”. After 40 days of hearing evidence, Evans, J., concluded that the vessel had been deliberately run aground by the master, “probably with the active co-operation of the second officer”, and that the late Captain Pateras, the managing director and principal shareholder of the owners, had connived at both the grounding and the fire. This finding was based on inferences from the facts and without direct testimony from Captain Pateras, who had died three months after the vessel was lost. On appeal, the plaintiffs accepted that the vessel had been deliberately cast away by the master and second officer. They contested only the issue of Captain Pateras’s connivance. They sought to prove the absence of his connivance by reference to his personal diaries, which were unavailable at the trial of the action. A necessary consequence of this argument was that an amendment of the Points of Claim to include loss by barratry was required. The Court of Appeal had to decide whether this was possible and whether the defendants should be granted leave further to amend their Points of Defence in reply. Finally, the case raised the question of the burden of proof in cases of alleged scuttling in that the plaintiffs challenged whether the evidence of Captain Pateras’s involvement was sufficient, given the seriousness of the allegation involved. The Court of Appeal accepted the argument that Captain Pateras’s diaries should be admitted at this late stage in the proceedings. Though members of the late Captain’s family knew of the diaries’ existence, their whereabouts at the time of the trial were unknown. There was no lack of diligence on the part of the plain 1. [1986] 2 Lloyd’s Rep. 470. 2. Financial Times , 25 June 1986, p. 6. 3. [1989] 1 Lloyd’s Rep. 33 (Neill and O’Connor L.JJ., and Sir Roger Ormrod). 25

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