There have been rumours that there was something strange about the loss of the 150,000-dwt Brillante Virtuoso (built 1992) since ship surveyor, Capt David Mockett, was murdered in the Yemen after allegedly finding no bullet holes or rocket propelled grenade damage that confirmed there had been a pirate attack.
But High Court judge Justice Flaux was clear that insurers had never alleged that the claim brought by the owners was deliberately exaggerated or fraudulent and if there were gaps in the owner’s disclosures they were no more than what inevitably happens when documentation cannot be found or may never existed in the first place.
There is going to be a two part trial of the claim brought by the owner of the Brillante Virtuoso, Suez Fortune Investments, a company linked to Central Mare and the Greek shipowning Pistiolis family, but Justice Flaux has now made key rulings in favour of the owner.
The judge decided that the loss of the Brillante Virtuoso amounted to a constructive total loss and the owners are entitled to an indemnity on that basis as well as to further indemnity in respect of salvage, tug and agents costs.
The Brillante Virtuoso with a hull insured for $55m, with $22m of increased value cover on top, was sailing from the Ukraine to China with a cargo of fuel oil when the vessel was boarded by pirates off Aden masquerading as the port authorities.
The armed gang overpowered the crew, ordered the master to sail to Somalia and after the engine stopped and could not be restarted set off an explosion that engulfed the engine room and accommodation.
Suez Fortune’s case is that the Brillante Virtuoso was rendered a total loss as a result of a peril insured against, namely a pirate attack.
Suez Fortune sued a panel of ten Lloyd’s of London insurers led by Talbot Underwriting.
The insurers defence was that the Brillante Virtuoso was in breach of a warranty in the insurance policy by calling at Aden, although the owners say this was with underwriters knowledge and was to embark a security team.
There were multiple disputes in the wake of the attack, which rendered the Brillante Virtuoso a dead ship, including the extent of damage, measures taken to mitigate the loss, repair costs in China and the demolition sale of the vessel.
“Part of this picture which the insurers sought to paint in their written closing submissions of matters ‘going on behind the scenes about which little or nothing has been revealed [which] are very curious and obscure’ included the involvement of the owners after the delivery of the vessel to Aryana [a GMS linked demolition buyer that paid $700,000 for the wreck on an as is where is basis],” declared Justice Flaux.
“Unless the insurers were contending that the owners were making a deliberately exaggerated and therefore fraudulent claim (which has never been alleged, let alone pleaded), none of this was of any relevance to the issues the court has to decide in this case,” he added.
“It seems to me that they are no more than an indication of the extent to which the insurers were suspicious of the owner’s claim without having any proper or sound basis for their suspicions,” noted the judge.
Justice Flaux was also clear “there has been no suggestion in this case that the vessel was fraudulently over-valued.”
Suez Fortune sued in its own name and on behalf of Piraeus Bank as an assignee of the proceeds of the insurance cover. Defendants are Talbot Underwriting, Hiscox Syndicates, QBE, Chaucer Corporate Capital, Markel Capital, Catlin Syndicate, Aprilgrange (a little known entity believed linked to the Travelers insurance group), Brit, Novae Corporate Underwriting and Gai Indemnity.
Click on the judgment in the related media column to the right to read a detailed 45,000 word description of the events that surrounded the loss of the Brillante Virtuoso.
