Civil Judgment
(2006) Guang Hai Fa Chu Zi No. 270
Plaintiff No. 1: Shenzhen Shipping Company
Domicile: No. 301-303, 305-309, Block B, Hang Tian Building, No. 4019, Shennan Avenue, Futian District, Shenzhen, Guangdong Province
Legal representative: Jiang Haisheng, Director
Agent ad litem: Yang Yunfu, lawyer with Yang & Lin Co., Law Firm
Agent ad litem: Ren Yanbing, lawyer with Yang & Lin Co., Law Firm
Plaintiff No. 2: Shenzhen Shenyue Shipping Company
Domicile: Fl. 3, Block B, Hang Tian Building, No. 4019, Shennan Avenue, Futian District, Shenzhen, Guangdong Province
Legal representative: Wu Jinlai, General Manger
Agent ad litem: Yang Yunfu, lawyer with Yang & Lin Co., Law Firm
Agent ad litem: Ren Yanbing, lawyer with Yang & Lin Co., Law Firm
Plaintiff No. 3: Taiping Insurance Shenzhen Branch
Domicile: Fl. 6, main building of Gong Jiao Building, No. 1001, Lian Hua Zhi Lu, Futian District, Shenzhen, Guangdong Province
PIC: Li Ziliang, General Manger
Agent ad litem: Yang Yunfu, lawyer with Yang & Lin Co., Law Firm
Agent ad litem: Ren Yanbing, lawyer with Yang & Lin Co., Law Firm
Defendant No. 1: National Australia Finance (Vessel Leasing No.2) Limited
Domicile: 88 Wood Street, London, EC2V 7QQ, England
Legal representative: Brian Birch, Director
Agent ad litem: Chen Xiangyong, lawyer with Wang Jing & Co., Law Firm
Agent ad litem: Cao Yanghui, lawyer with Wang Jing & Co., Law Firm
Defendant No. 2: Orient Overseas Container Line (U.K.) Limited
Domicile: OOCL House, Levington Park, Bridge Road, Levington, Ipswich, Suffolk IP 10 0NE, United Kingdom
Legal representative: Henry Kong Tsun Wong, Director
Agent ad litem: Chen Xiangyong, lawyer with Wang Jing & Co., Law Firm
Agent ad litem: Cao Yanghui, lawyer with Wang Jing & Co., Law Firm
Plaintiff No.1, Shenzhen Shipping Company (hereinafter referred to as ?°Shenzhen Shipping?±), and Plaintiff No.2, Shenzhen Shenyue Shipping Company (hereinafter referred to as ?°Shenyue Shipping?±) filed a law suit on 18th August 2006 against Defendant No.1, National Australia Finance (Vessel Leasing No.2) Limited (hereinafter referred to as ?°Australia Finance?±), and Defendant No.2, Orient Overseas Container Line (U.K.) Limited (hereinafter referred to as ?°OOCL?±) with regard to the dispute over collision damage. This Court accepted this case on 23rd August and formed a collegial panel for hearing. The facts of this case shall be ascertained based on the results of trials of the case of dispute over cargo damage under contract of carriage of goods by waterway filed by PICC Property and Casualty Company Limited, Shenzhen Branch (hereinafter referred to as ?°PICC Shenzhen?±) against Shenzhen Shipping under the case reference of (2005) GHFCZ No.373 and the case of dispute over ship insurance contract filed by Shenyue Shipping against Taiping Insurance Shenzhen Branch (hereinafter referred to as ?°Taiping Insurance?±) under the reference of (2005) GHFCZ No.181. However, the hearings of the aforesaid two cases have not been concluded. Therefore, this court ruled on the 11th day of October, 2006 a suspension of the subject litigation. On 31st August, 2007, Shenzhen Shipping changed its name as Shenzhen Shipping Group Co., Ltd. On 26th September 2007, this court decided to resume the litigant procedure as the cause of suspension was removed. On 8th December 2007, Taiping Insurance applied to participate in the litigation as co-plaintiff on the ground that it has made compensation in an amount of RMB7,700,000 to Plaintiff No.2, Shenyue Shipping, as the hull underwriter of M/V Peng Yang. This Court found the application filed by Taiping Insurance comply with the provisions of law through examination and approved Taiping Insurance to participate in the litigation as a co-plaintiff by a civil ruling issued on 10th December 2007 according to law. On 11th December 2007 and 14th May 2008, this court organized the evidence exchange for parties concerned. In the first public hearing on 14th and 15th May 2008, Yang Yunfu and Ren Yanbing, the agents ad litem of Plaintiff No.1 Shenzhen Shipping and Plaintiff No.3 Taiping Insurance, Zhu Weikang and Hu Wei, the agents ad litem of Plaintiff No.2 Shenyue Shipping, and Chen Xiangyong and Cao Yanghui, the agents ad litem of Defendant No.1 Australia Finance and Defendant No.2 OOCL participated in the proceeding. In the second public hearing on 7th and 8th December 2009, Yang Yunfu and Ren Yanbing, the agents ad litem of Plaintiff No.1 Shenzhen Shipping and Plaintiff No.3 Taiping Insurance, and Chen Xiangyong and Cao Yanghui, the agents ad litem of Defendant No.1 Australia Finance and Defendant No.2 OOCL participated in the proceeding. This case has now been concluded.
Plaintiff No.1 Shenzhen Shipping and Plaintiff No.2 Shenyue Shipping claimed that: In August 2004, M/V Peng Yang (hereinafter referred to as Peng Yang) owned by Shenzhen Shipping and bareboat chartered by Shenyue shipping was bound for Shenzhen Mawan Power Plant upon loading of coal at Qinhuangdao, Hebei Province. At about 1200 hrs on 23rd August, she arrived at waters of Yinzhou in Hong Kong where the Hong Kong pilot embarked and instructing the vessel pass through Ma Wan Fairway to Shenzhen Mawan Power Plant. Before Peng Yang entered into Ma Wan Fairway, another vessel, M/V OOCL Hamburg (hereinafter referred to as OOCL Hamburg), was passing through the same channel from the opposite direction (from west to east). After entry into Ma Wan Fairway, Peng Yang ran on the rocky shoal and grounded in order to avoid OOCL Hamburg. Shenzhen Shipping and Shenyue Shipping had suffered losses in an amount of RMB37, 000, 000 (Note: any amount referred to herein shall be in RMB currency unless otherwise stated.) due to such accident. The accident was completely caused by OOCL Hamburg so that Defendants Nos.1 and 2 should at least bear 90% of liabilities therefor. Australia Finance as the owner of and OOCL as the bareboat charterer of OOCL Hamburg should be liable to make compensation in the aforesaid proportion for losses sustained by Shenzhen Shipping and Shenyue Shipping. Shenzhen Shipping and Shenyue Shipping requested this court: 1. To order the Defendants to jointly and severally make compensation for losses and expenses in an amount of RMB33, 000, 000 sustained by Shenzhen Shipping and Shenyue Shipping as well as the interest thereof due to the running on the rocky shoal and grounding of Peng Yang for the purpose of avoiding OOCL Hamburg which should assume at least 90% of the liabilities therefor. The interest shall be computed from 24th August 2004 based on the current fund loan interest rate published by People??s Bank of China in the corresponding period until the day when all the payments are made in full by the Defendants; 2. To order the Defendants to jointly and severally assume the relevant legal costs, including but not limited to cost of application for evidence preservation and property preservation, execution fees, litigation fees, and the relevant expenses paid by Shenzhen Shipping and Shenyue Company for handling the subject case, such as travelling expenses, telecommunication charges, translation fee, counsel fee, and etc.
The Plaintiffs Shenzhen Shipping and Shenyue Shipping provided this court with the following evidence:
I. The documents of the identification of Shenzhen Shipping and Shenyue Shipping
1. Business License of Shenzhen Shipping; 2. Altered Particulars regarding the change of the company name from Shenzhen Shipping into Shenzhen Shipping Group; 3. Business License of Shenzhen Shipping ; 4. Business License of Shenyue Shipping; 5. Registration particulars of Shenyue Shipping; 6. Certificate of Registration of Ownership of Peng Yang; 7. Certificate of Nationality of Peng Yang; 8. Bareboat Charter Party of Peng Yang; 9. Certificate of Ship??s Operation and Certificate of Annual Examination of Peng Yang; 10. documents issued by Shenzhen Shipping for entrusting Shenyue Company as the operator of Peng Yang which is under the custody of Shenyue Company.
II. The document in support of the identification of Australia Finance and OOCL
Certificate of Registry of OOCL Hamburg.
III. Evidence in support of the course of the subject accident
1. The initial Investigation Report and its attachments issued by Hong Kong Maritime Department (hereinafter referred to as ?°HK MARDEP?±) on 9th November 2004; 2. Investigation Report and its attachments issued by HK MARDEP on 26th November 2004; 3. Book of Ship Inspection Certificates; 4. Certificate of Seaworthiness of Peng Yang; 5. Certificate of Tonnage of Peng Yang; 6. Oil Pollution Prevention Certificate of Peng Yang; 7. Certificate of Load Line of Peng Yang; 8. Certificate of Minimum Safe Manning of Peng Yang; 9. Document of Compliance with the Safety Management System by Shenyue Shipping; 10. Safety Management Certificate of Peng Yang; 11. Ship Inspection Report of Peng Yang; 12. Seafarers?? Certificates of Competence of Peng Yang; 13. Deck Log Book of Peng Yang; 14. Engine Log Book of Peng Yang; 15. Bell Book of Peng Yang; 16. Loading Chart; 17. Regulations on the Administration of Old Commercial Vessels.
IV. Evidence in support that the salvage fee in the amount of RMB16, 300, 000 has been paid by Shenzhen Shipping and Shenyue Shipping.
1. Salvage Contract; 2. Insurance Policy for coastal and inland water shipping; 3. Invoice of Premium issued by Taiping Insurance to Shenyue Shipping; 4. List of salvage cost incurred by Peng Yang; 5. Letters of correspondence between The Guangzhou Salvage Bureau and Shenyue Shipping; 6. Payment Entrustment issued by Shenyue Shipping to Shenzhen Shipping; 7. Vouchers of payment for salvage by Shenzhen Shipping; 8. Invoices issued The Guangzhou Salvage Bureau to Shenyue Shipping.
V. Evidence in support of the salvage consultant charges paid by Shenzhen Shipping and Shenyue Shipping in the amount of RMB24, 434.4.
1. Documents of Retainment; 2. Agreement of Retaining Technical Consultants; 3. Reimbursement Record of consultancy charge; 4. Air tickets and bills of accommodation fee incurred by salvage consultants; 5. Bills of accommodation and communication and etc.
VI. Evidence in support of the emergency handling fee of HKD1, 550,000 paid by Shenyue Shipping to Yiu Lian Dockyards Limited (hereinafter referred to as ?°Yiu Lian Dockyards?±).
1. Agreement of emergency tug fees for Peng Yang; 2. Records of tug services; 3. Certificate issued by Shenyue Shipping; 4. Records of Draft Survey by Shenyue Shipping; 5. Contract of purchase of ship spare parts between Shenyue Shipping and Marine Resources Engineering Co., Ltd.; 6. Receipt and invoices of tug fees issued by Yiu Lian Dockyards to China Merchants Shipping and Enterprises Co., Ltd. (hereinafter referred to as ?°Merchants Shipping?±); 7. Receipt and invoices of tug fees issued by Merchants Shipping to Shenyue Shipping; 8. Statement of expenses of emergency discharging and shipment; 9. Invoice of charges for waiting by salvage vessels issued by Yiu Lian Dockyards to Merchants Shipping; 10. Counterfoils and payment instructions of emergency handling fee issued by Shenyue Shipping to Merchants Shipping; 11. Letter dated 18th May 2005 sent to Xinde Cargo Transportation Group Co., Ltd. (hereinafter referred to as ?°Xinde Group?±) by Shenyue Shipping; 12. Letter dated 17th May 2005 sent to Nanyang International Shipping Co., Ltd.; 13. Bank slips indicating Xinde Group and Nanyang International Shipping Co., Ltd. have remitted the hire to the account of Merchants Shipping.
VII. Evidence in support of the emergency handling fee of HKD1, 070,765 paid by Shenyue Shipping to Ying Wei Stevedore Limited (hereinafter referred to as ?°Ying Wei?±).
1. Cargo discharging and shipping agreement; 2. Invoices of unloading and lighterage charges issued by Merchants Shipping to Shenyue Shipping and Shenzhen Southern Ocean Shipping Company (hereinafter referred to as ?°Southern Ocean Shipping?±); 3. Invoices of unloading and lighterage charges issued by Ying Wei to Merchants Shipping; 4. Tally Certificate issued by Ying Wei; 5. Records of shipping and landing weight of the cargo issued by Ying Wei; 6. Discharging Report issued by Ying Wei; 7. Counterfoils and payment instructions of emergency handling fee issued by Shenyue Shipping to Merchants Shipping; 8. Letter dated 18th January 2005 sent to Xinde Group by Shenyue Shipping; 9. Bank slips indicating Xinde Grouphave remitted the hire to the account of Merchants Shipping on 7th March 2005; 10. Letter dated 7th March 2005 sent to Xinde Group by Shenyue Shipping; 11. Bank slips dated 18th April 2005 indicating Xinde Group have remitted the hire to the account of Merchants Shipping.
VIII. Evidence in support of the emergency handling fee of RMB82, 616.4 paid by Shenyue Shipping to Guangzhou South Youlian Shipping Company (hereinafter referred to as ?°South Youlian?±).
1. Quotation letter issued by South Youlian; 2. Draft Record of cargo discharged; 3. Entrustment Letter for receiving the freight issued by South Youlian to Shenyue Shipping; 4. Counterfoils and payment instructions of freight issued by Shenyue Shipping to Guangzhou Hai Hong Shipping Company (hereinafter referred to as ?°Hai Hong Shipping?±); 5. Invoice of freight issued by Hai Hong Shipping.
IX. Evidence in support of the lightering and discharging fee of RMB38, 000 paid by Shenyue Shipping to Shenzhen Xin Tong Yang Ship Agency (hereinafter referred to as ?°Xin Tong Yang?±).
1. Charter Party; 2. Draft Record; 3. Remittance Notice; 4. Receipt of Payment issued by Xin Tong Yang to Shenyue Shipping.
X. Evidence in support of the port charges of HKD266, 214.8 incurred in Hong Kong by Peng Yang paid by Shenyue Shipping to Merchants Shipping.
1. Invoice and receipt of port charges issued by Merchant Shipping to Shenyue Shipping; 2. Invoice issued by Merchant Shipping to Southern Ocean Shipping; 3. Payment confirmation of Merchant Shipping; 4. Payment vouchers issued by Merchant Shipping to Southern Ocean Shipping on 29th August 2004; 5. Receipt issued by 3togo; 6. Payment vouchers issued by Merchant Shipping to Southern Ocean Shipping on 26th August 2004; 7. Receipt issued by Kexun Engineering Co., Ltd.; 8. Payment vouchers issued by Merchant Shipping to Southern Ocean Shipping on 23rd August 2004; 9. Invoice and receipt issued by Merchant Shipping to Southern Ocean Shipping on 25th August 2004; 10. Final statement issued by Merchant Shipping to Southern Ocean Shipping on 5th October 2004; 11. Comprehensive license issued by HK MARDEP to Peng Yang on 25th August 2004; 12. Invoice issued by Huahu Petroleum Co., Ltd. (hereinafter referred to as ?°Huahu?±) to Merchant Shipping on 15th September 2004; 13.certificates proving collection of certificates provided by Huahu to Peng Yang on 15 September 2004; 14. Invoice issued by Ming Lee Motor Boat Co. to Merchant Shipping; 16. Invoice issued by Hoi Tong Marine Machinery Suppliers Limited to Merchant Shipping; 17. Receipt of Cargo issued by Hoi Tong Marine Machinery Suppliers Limited to Merchant Shipping; 18. Letter sent by Shenyue Shipping to Hong Kong Shenzhen Shipping Co., Ltd. on 17th September 2004; 19. Remittance Notice of the freight; 20. Counterfoils and payment instructions of payment made by Shenyue Shipping.
XI. Evidence in support of the bonus of RMB80, 000 paid by Shenyue Shipping to the crew for their dealing with the emergency.
1. Inventory of the bonus to be released to the crew onboard Peng Yang; 2. Vouchers
XII. Evidence in support of the marine survey cost of RMB38, 857 paid by Shenyue Shipping.
1. Investigation report issued by China Classification Society Industrial Corporation, Shenzhen Branch (hereinafter referred to as ?°CCS Shenzhen?±) on 13 November 2004; 2. The bill issued by CCS Shenzhen to Shenyue Shipping on 23rd December 2004; 3. Counterfoils and payment instructions issued by Shenyue Shipping to CCS Shenzhen on 29th December 2004; 4. Invoice issued by CCIS Shenzhen on 23rd December 2004; 5. Investigation reports issued by CCIS respectively on 16th and 17th November 2004; 6. Debit Note issued by CCS Shenzhen to Shenyue Shipping on 10th December 2004; 7. Counterfoils and payment instructions issued by Shenyue Shipping to CCIS Shenzhen on 29th December 2004; 8. Ship Constant Measurement Certificate issued by CCIS Shenzhen on 17th November 2004; 9. The bill issued by CCIS Shenzhen to Shenyue Shipping on 23rd November 2004; 10. Counterfoils and payment instructions issued by Shenyue Shipping to CCIS Shenzhen on 1st December 2004; 11. Invoice issued by CCIS Shenzhen on 23rd November 2004.
XIII. Evidence in support of the repair cost of RMB4,280,000 paid by Shenyue Shipping to Yiu Lian Dockyards (Shekou) Limited (hereinafter referred to as ?°Yiu Lian Shekou?±).
1. Repair Contract; 2. Work-done List for repair items of Peng Yang; 3. Annual Repair Charges Aggregate incurred by Peng Yang; 4. Counterfoils and remittance slip issued by Shenyue Shipping to Yiu Lian Shekou on 22nd November 2004; 5. Invoice of repair cost issued by Yiu Lian Shekou to Shenyue Shipping.
XIV. Evidence in support of the repair cost of RMB1,650,000 paid by Shenyue Shipping to Shenzhen Bofu Ship Repair Co., Ltd. (hereinafter referred to as ?°Bofu Shenzhen?±).
1. Repair Contract; 2. Bill; 3. Annual Repair Charges Aggregate incurred by Peng Yang; 4. Counterfoils and payment instructions issued by Shenyue Shipping to Bofu Shenzhen; 5. Invoice of repair cost issued by Bofu Shenzhen to Shenyue Shipping.
XV. Evidence in support of the repair cost of HK20, 000 paid by Shenyue Shipping to Bofu (HK) Co., Ltd. (hereinafter referred to as ?°Bofu Hong Kong?±).
1. Invoice issued by Bofu Hong Kong to Shenyue Shipping; 2. Reimbursement Examination & Approval Sheets of Shenyue Shipping.
XVI. Evidence in support of the repair cost of RMB53, 532 paid by Shenyue Shipping to Shenzhen Hai An Ship Engineering Company (hereinafter referred to as ?°Hai An?±).
1. Work-done List; 2. Work-done Invoice; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice of repair cost issued by Hai An.
XVII. Evidence in support of the repair cost of RMB180,000 paid by Shenyue Shipping to Hai Cheng Machinery Engineering Company (hereinafter referred to as ?°Hai Cheng?±).
1. Repair Contract; 2. Work-done List; 3. Work-done Invoice; 4. Bank Slips and payment instructions issued by Shenyue Shipping; 5. Invoice of repair cost issued by Hai Cheng.
XVIII. Evidence in support of the repair cost of RMB55, 270 paid by Shenyue Shipping to Guangzhou Feng Hai Ship Repairing Company (hereinafter referred to as ?°Feng Hai?±).
1. Quotation Letter; 2. Work-done List; 3. Price List; 4. Counterfoils and payment Instructions issued by Shenyue Shipping; 5. Invoice of repair cost issued by Feng Hai.
XIX. Evidence in support of the derusting cost of RMB38,889 paid by Shenyue Shipping to Lin Zhi Long.
1. Repair Contract; 2. Reimbursement Record of the derusting and cleaning cost; 3. Invoice of materials cost issued by Shenzhen Guan Mei Entity Company.
XX. Evidence in support of the inspection and repair cost of RMB2,468.5 paid by Shenyue Shipping to Shenzhen Marine Safety Technology Service Co., Ltd. (hereinafter referred to as ?°Shenzhen MST?±).
1. Work-done List; 2. Bills of the inspection and repairing of the life rafts; 3. Counterfoils and Remittance Slips of Shenyue Shipping; 4. Invoice issued by Shenzhen MST.
XXI. Evidence in support of the repair cost of RMB187,275 paid by Shenyue Shipping to Shenzhen Xing Chan Hao Industrial Equipment Co., Ltd. (hereinafter referred to as ?°Shenzhen Xing Chan Hao?±).
1. Work-done List; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice of repair cost issued by Shenzhen Xing Chan Hao.
XXII. Evidence in support of the repair cost of RMB115,600 paid by Shenyue Shipping to Shenzhen Hai Rong Metal Surface Engineering Co., Ltd. (hereinafter referred to as ?°Shenzhen Hai Rong?±).
1. Quotation Letter; 2. Receipt of Goods (substitute for final work acceptance list); 3. Counterfoils and Remittance Slips of Shenyue Shipping; 4. Invoice of the repair cost issued by Shenzhen Hai Rong.
XXIII. Evidence in support of the self-repairing bonus of RMB10,000 paid by Shenyue Shipping to the crew onboard Peng Yang.
Application for the special self-repairing bonus filed by the deck department of Peng Yang
XXIV. Evidence in support of the cost of the paint used for the repair in the amount of RMB148,079 paid by Shenyue Shipping to Shenzhen Hao Da Er Industrial Co., Ltd. Huizhou Branch (hereinafter referred to as ?°Hao Da Er Huizhou?±).
1. Cargo Sale Inventory; 2. Delivery Order; 3. Bank Slips; 4. Invoice.
XXV. Evidence in support of the cost of the materials used for the repair in the amount of RMB52, 827.1 paid by Shenyue Shipping to Hua Kan Hardware Store and the crew on board Peng Yang (hereinafter referred to as ?°Hua Kan Hardware?±).
1. Delivery Order and Inventory; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice.
XXVI. Evidence in support of the cost of the steel used for the repair in the amount of RMB930,760 paid by Shenyue Shipping to Guangzhou Jin Kai Li Trade Co., Ltd. (hereinafter referred to as ?°Guangzhou Jin Kai Li?±).
1. Contract; 2. Delivery Order; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice.
XXVII. Evidence in support of the cost of the steel used for the repair in the amount of RMB63, 280 paid by Shenyue Shipping to Shenzhen Wei Chuang Xin Entity Co., Ltd.
1. Counterfoils and payment instructions issued by Shenyue Shipping; 2. Invoice
XXVIII. Evidence in support of the cost of depth sounder in the amount of RMB56,000 paid by Shenyue Shipping to Hai Xin Shipping Apparatus Supplying Station in Hai Zhu District, Guangzhou (hereinafter referred to as ?°Hai Xin Supplying Station?±).
1. Counterfoils and payment instructions issued by Shenyue Shipping; 2. Invoice
XXIX. Evidence in support of the cost of the triple connecting links and anti-corrosion Zinc blocks in the amount of RMB17,500 paid by Shenyue Shipping to Xin Sheng Fa (Fushang) Shipping Rig Co., Ltd (hereinafter referred to as ?°Xin Sheng Fa?±).
1. Delivery Order; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice.
XXX. Evidence in support of the cost of the sealing materials in the amount of RMB1,284 paid by Shenyue Shipping to Tang Zhen Tai Hydraulic Electromechanical Equipment Store in Tianhe Dong Road, Guangzhou (hereinafter referred to as ?°Tang Zhen Tai?±).
1. Cargo Sale Inventory; 2. Counterfoils and payment issued by Shenyue Shipping; 3. Invoice and Mail Slips.
XXXI. Evidence in support of the cost of oil in the amount of RMB238, 010 paid by Shenyue Shipping to Shenzhen Wang You Fu Lubricant Oil Co., Ltd. (hereinafter referred to as ?°Wang You Fu?±).
1. Delivery Order; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice and Mail Slips.
XXXII. Evidence in support of the tail shaft repair cost in the amount of RMB256, 519 paid by Shenyue Shipping to Ocean Resource Engineering Co., Ltd. (hereinafter referred to as ?°ORE?±).
1. Invoice issued by ORE; 2. Receipt issued by ORE; 3. Remittance Notice and payment instructions issued by Shenyue Shipping.
XXXIII. Evidence in support of the tank cleaning cost in the amount of RMB63,000 paid by Shenyue Shipping to Shenzhen Longshan Environmental Protection Science & Technology Industrial Co., Ltd. (hereinafter referred to as ?°Longshan?±).
1. Quotation Letter; 2. Task Finishing Report; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice.
XXXIV. Evidence in support of the tug fee in the amount of RMB47,700 paid by Shenyue Shipping to Shenzhen Lianda Tug Co., Ltd. (hereinafter referred to as ?°Lianda?±).
1. Tug??s Working Sheet of the Shenzhen Port; 2. Expenses Account List; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice
XXXV. Evidence in support of the tug fee in the amount of RMB18,270 paid by Shenyue Shipping to Yiu Lian Shekou.
1. Tug??s Bill of the Shenzhen Port; 2. Expenses Account List; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice
XXXVI. Evidence in support of the payment to the crew onboard of Peng Yang for their efforts in berthing and departure in the amount of RMB3,000 made by Shenyue Shipping.
Application of payment for laboring fee
XXXVII. Evidence in support of berthing charge for the period of temporary repair of Peng Yang in the amount of RMB110, 000 paid by Shenyue Shipping to Ma Wan Wharf.
1. Vouchers and Reimbursement Records; 2. Invoice
XXXVIII. Evidence in support of charges for appraisal of the cargo loss in the amount of RMB30,000 paid by Shenyue Shipping to China Certification & Inspection Group Shenzhen Co., Ltd. (hereinafter referred to as ?°CCIC?±).
1. Quotation Letter; 2. Appraisal Report; 3. Counterfoils, payment instructions and Reimbursement Record; 4. Invoice.
XXXIX. Evidence in support of the indemnity for the cargo loss in the amount of RMB1, 542, 636.06 paid by Shenyue Shipping to PICC Shenzhen Branch.
1. Water Waybill; 2. Domestic Coastal Transportation Agreement; 3. Insurance Policy; 4. Civil Judgment (2005) Guang Hai Fa Chu Zi No. 373; 5. (2006) Yue Gao Fa Ming Si Zhong Zi No. 62 Civil Judgment; 6. Letter issued by Lin Yi Hua & Co. Law Firm for notifying the payment of cargo loss indemnity; 7. Counterfoils, payment instruction and vouchers of Shenzhen Shipping; 8. Receipt
XL. Evidence in support of the lawyer fees in the amount of RMB138,280, USD45,863.75 and HKD112,195 paid by Shenzhen Shipping and Shenyue Shipping to Guantao Law Firm Shenzhen Branch (Guantao Shenzhen)
1. Lawyer fee bills issued by Guantao Shenzhen; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice of lawyer fees issued by Guantao Shenzhen; 4. Entrustment Agreement between Shenzhen Shipping and Zhong Lun Law Firm, Shenzhen Branch (hereinafter referred to as ?°Zhong Lun Shenzhen?±); 5. Counterfoils and payment instructions of Shenzhen Shipping; 6. Invoice of lawyer fees issued by Zhong Lun Shenzhen; 7. Payment instruction, invoice and payment voucher of lawyer fees paid by Shenzhen Shipping and Shenyue Shipping to Holman Fenwick & Willan; 8. Letter of Payment Instruction; 9. Bank Slips; 10. Vouchers, Transfer Notice and Receipt of Payment of Shenzhen Shipping.
XLI. Evidence in support of the cost of notarization and authentication in the amount of HKD17, 240 paid by Shenzhen Shipping and Shenyue Shipping.
1. Invoice of the cost of notarization and authentication in the amount of HKD8, 860; 2. Invoice of the cost of notarization and authentication in the amount of HKD8, 380.
XLII. Evidence in support of the cost of assessment on Peng Yang??s loss of earnings in the amount of RMB8, 000 paid by Shenyue Shipping to Shenzhen Xingyue Partnership Certified Public Accountants (hereinafter referred to as ?°Xingyue Accountants?±).
1. Audit Agreement; 2. Invoice.
XLIII. Evidence in support of costs incurred by Shenzhen Shipping and Shenyue Shipping for handling the case in the amount of RMB71,808.83.
1. Vouchers, records of reimbursements, invoices, receipts, bus/ship tickets of expenses incurred by Shenzhen Shipping and Shenyue Shipping for handling the case in the amount of RMB51,457.83; 2. Records of reimbursements and invoice of the accommodation/entertainment fees incurred in amount of RMB20,351 in the course of repair of Peng Yang.
XLIV. The audio CD recording the communication between the pilots onboard Peng Yang and OOCL Hamburg.
XLV. The Appraisal Report assessing the Peng Yang??s loss of earnings and cost of maintenance due to the subject accident issued by Xingyue Accountants, and the Business License and the Professional Certificate in Accounting of Xingyue Accountants.
XLVI. The opinions issued by Profs. Wu Zhaolin, Wang Fengchen, and Zhao Yuelin with regard to the relevance between Peng Yang??s grounding and OOCL Hamburg??s maneuvering and the accident liabilities.
On 16 October 2006, Shenyue Shipping applied to this court for investigating and collecting evidence regarding the handling of the subject accident by HK MARDEP from the same. This Court disapproved such application by reason of absence of legislative arrangement for collecting evidence between mainland and Hong Kong SAR for civil cases.
On 3rd December 2007, Shenzhen Shipping and Shenyue Shipping applied to this court for investigating and collecting evidence, such as the ship??s certificates, inspection certificates of Peng Yang and certificate of seafarers which were held available by Peng Yang at the time of accident from Shenzhen MSA, Domestic Ship Investigation Center of CCS, or CCS. The aforesaid Plaintiffs had submitted the aforesaid evidence during the trial so that this court did not deal with their above application for investigation and collection.
Plaintiff No.3 Taiping Insurance claimed that: On 31st March 2004, the bareboat charterer of Peng Yang Shenyue Shipping insured with Taiping Insurance with the period of insurance computed from 4th April 2004 to 3rd April 2005. On 23 August 2004, Peng Yang ran on the rocky shoal and grounded while avoiding OOCL Hamburg. On 28th April 2005, Shenyue Shipping filed a lawsuit against Taiping Insurance at Guangzhou Maritime Court claiming for compensation of salvage fees and tug fees in the amount of RMB18,000,000. The parties concerned reached a settlement agreement through negotiation on 29th August 2007. It is stipulated that Taiping Insurance shall indemnify Shenyue Shipping RMB7,700,000 as a final, thorough and complete settlement of the dispute under the aforesaid insurance contract. On 3rd September 2007, Taiping Insurance paid Shenyue Shipping RMB7,700,000 as indemnity. In accordance with the provisions of Article 256 of the Maritime Code of the People??s Republic of China and Article 95 of the Special Maritime Procedure Law of the People??s Republic of China, Taiping Insurance shall be entitled to exercise the right of subrogation claiming compensation against Australia Finance and OOCL. The Plaintiff request this court: 1. To order the Defendants to jointly and severally make compensation for losses and expenses in an amount of RMB7,700,000 sustained by Taiping Insurance as well as the interest thereof due to the running on the rocky shoal and grounding of Peng Yang for the purpose of avoiding OOCL Hamburg which should assume at least 90% of the liabilities therefor. The interest shall be computed from 3rd September 2007 based on the current fund loan interest rate published by People??s Bank of China in the corresponding period until the day when all the payments are made in full by the Defendants; 2. To order the Defendants to jointly and severally assume the legal costs of this case and the relevant expenses, such as telecommunication fee and travelling fees, paid by Taiping Insurance.
Plaintiff No.3 Taiping Insurance submitted to this court the following evidences: 1. Fixed term insurance policy for vessels in coastal and inland waters; 2. Insurance clause for vessels in coastal and inland waters; 3. Statement of Claims, Application for Modification of Claims, Civil Ruling (on withdrawal of the lawsuit) in respect of the dispute over insurance contract filed by Plaintiff No.1 Shenyue Shipping against Taiping Insurance; 4. The settlement agreement reached between Shenyue Shipping and Taiping Insurance; 5. The remittance note indicating the indemnity paid by Taiping Insurance; 6. The receipt of the indemnity issued by Shenyue Shipping; 7. Letter of subrogation issued by Shenyue Shipping; 8. The remittance note indicating the insurance premiums paid by Shenyue Shipping.
The Defendants Australia Finance and OOCL argued that: I. Shenyue Shipping is not the proper plaintiff of this case. The bareboat charter party concluded by and between Shenyue Shipping and Shenzhen Shipping was not registered which should only be effective between the aforesaid parties and have no effect against any third party including the Defendants. II. Taiping Insurance joined the litigation as the hull underwriter. Its claim items should include all of items covered by hull insurance, and the claimable amount should be limited to indemnity it actually paid. III. Australia Finance as the registered owner of OOCL Hamburg let the vessel to OOCL through bareboat chartering which was registered according to law. Therefore, Australia Finance is not the proper Defendant of this case and should not be held liable. IV. OOCL Hamburg was seaworthy at the material time as she was in good condition, properly manned, and carrying complete and valid ship certificates. V. OOCL Hamburg did not impede Peng Yang??s navigation. 1. OOCL passed through Ma Wan Service Area by complying with the navigation rules and using good seamanship. 2. Before Peng Yang passed Ma Wan Fairway, OOCL Hamburg was navigating as per their agreement. 3. After Peng Yang passed Ma Wan Fairway, she and the MW/MTCS did not raise any rejection to OOCL Hamburg??s entering the Ma Wan Service Area. 4. Peng Yang and OOCL Hamburg were not encountering any danger or close-quarter situation. VI. The grounding of Peng Yang was caused by her own faults and was not causatively connected with the presence and/or navigation of OOCL Hamburg. 1. Peng Yang neglected the risk of the rocky shoal. 2. Peng Yang failed to slow down and give way to OOCL Hamburg. 3. Peng Yang made small alterations of her course and the courses were made steady from time to time. 4. The pilot onboard Peng Yang changed shift at inappropriate time. 5. The Master and deck officer of Peng Yang completely relied on the pilot and failed to fulfill their duties. 6. Peng Yang was in a shabby condition and overloaded which indirectly contributed to her grounding. 7. The Plaintiffs also admitted in another case that Peng Yang ran on the rocky shoal and grounded due to the fault of their servants (including Hong Kong pilot) in the course of the navigation. Therefore, OOCL Hamburg and Peng Yang did not collide with each other and were free of the risk of collision. There is no causation between the grounding of Peng Yang and OOCL Hamburg??s navigation. VII. The amount of losses claimed by the Plaintiffs Shenzhen Shipping and Shenyue Shipping has been compensated or unreasonable. 1. Peng Yang was under shabby condition and overloaded. The double bottom tank of Peng Yang was of no protective function after the grounding and breaking of the ship??s hull plate, thus large amount of sea water flooded into the cargo tanks, which forced the vessel to ground and caused damage to the cargoes, enlarging the losses which could have been avoided. The Plaintiffs should assume by themselves all the liabilities. 2. Most of the expenses claimed by Shenzhen Shipping and Shenyue Shipping in the Statement of Claim had been indemnified by Taiping Insurance and should not be claimed against the Defendants. 3. The repairing items of Peng Yang are far more exceeding the reasonable scope of repair of damage caused by running on the rocky shoal. 4. With regard to the loss of earnings, the Appraisal Report provided by Shenzhen Shipping and Shenyue Shipping was issued based on the financial information and certification of Shenyue Shipping which only indicates the conclusion related to Shenyue Shipping. It fails to prove the connection between Peng Yang??s grounding and the loss of profits sustained by Shenzhen Shipping . Even based on the evidence provided by Shenzhen Shipping, the annual hire of bareboat chartering of Peng Yang is RMB5,000,000, which means the loss of hire within 85.08 days amounts to RMB1,165,479.45 instead of the alleged RMB3,403,720. Therefore, the Defendants request this court: 1. To dismiss the claim requests filed by the Plaintiffs; 2. To order the Plaintiffs to bear all the legal costs incurred by this case.
The Defendants Australia Finance and OOCL submitted to this court the following evidences: 1. Certificate of Registry of OOCL Hamburg; 2. The ship??s certificates and crew list of OOCL Hamburg; 3. Logbook and Engine Logbook of OOCL Hamburg; 4. Course record of OOCL Hamburg; 5. Telegraph Record Book, Automatic Prints of Telegraph Record of OOCL Hamburg; 6. Statement of the Master of OOCL Hamburg; 7. Certificate of Nationality of Peng Yang; 8. Plan for Sealing Holds and Pumping of the Guangzhou Salvage; 9. Inspection Report issued by China Classification Society Industrial Corp on 13th November 2004 and the Inspection Report issued by Ship Inspection Center of China Classification Society on 16th November 2004; 10. Certificate of Seaworthiness of Peng Yang in 2004 and 2005; 11. Draft Survey Record of Peng Yang; 12. Record of positions of Peng Yang; 13. Statement of Defense made by Shenzhen Shipping in the case under the reference of (2005) GHFCZ No.37; 14. Diving Report issued by the Guangzhou Salvage for Peng Yang; 15. Letter sent by HK MARDEP to INCE & CO on 3rd August 2007; 16. Letter sent by HK MARDEP to INCE & CO on 15th February 2008; 17. VTS record and plotting of the ship??s positions from HK MARDEP; 18. Manual of Operating Practices for MW-MTCS (excerpt); 19. The Expert Report on the Relationship between Navigation of OOCL Hamburg and the Beaching/Grounding of Peng Yang issued by Guangdong Huanan Maritime Judicial Appraisal Centre(hereinafter referred to as the ?°GHMJAC?±); 20. Expert Report of the Repair Cost of Peng Yang due to her Grounding issued by the GHMJAC; 21. The GHMJAC Supplements to the Expert Report of the Repair Cost of Peng Yang due to her Grounding.
On 22nd October 2007, Australia Finance and OOCL applied to this court for investigating and collecting the evidence, including the evidential materials of cases relating to this case that have been concluded by this court under the reference of (2005) GHFCZ No.181, (2005) GHFCZ No.373 and (2006) GHFB No.50. This court found such application in compliance with the law and issued approval after examination.
On 31st October 2007, Australia Finance and OOCL applied to this court for investigating and collecting the evidential materials of the case relating to this case that has been concluded by this court under the reference of (2004) GHFB No.48. This court found such application in compliance with the law and issued approval after examination.
On 25th April 2008, Australia Finance and OOCL applied to this court for investigating and collecting the evidence including the Hull Thickness Measurement Report or Record of 2002, 2003 and 2004 from CCS Shenzhen. This court found such application in compliance with the law and issued approval after examination. On 29th August 2008, the CCS sent a letter to this court claiming that: The thickness of hull was measured by the hull thickness measuring company entrusted by the shipowner. Such measuring company will issue the hull thickness measurement report to the shipowner. CCS did neither carry out the measurement nor provide any measurement report to the shipowner.
Through investigation and examination, it is ascertained as follows:
I. Qualifications of Shenzhen Shipping and Shenyue Shipping.
Shenzhen Shipping was established on 24th March 1982 and was changed as Shenzhen Shipping Group on 11th July 2007.
Shenyue Shipping was established on 1st September 1984 with registered capital of RMB10, 000, 000 which was totally contributed by Shenzhen Shipping. Shenyue Shipping is subordinated to Shenzhen Shipping. On 2nd November 2001, Shenzhen Shipping decided to entrust Southern Ocean Shipping to manage Shenyue Shipping. On 6th March 2002, Shenzhen Shipping decided to entrust Shenyue Shipping as the operator of Peng Yang.
II. Particulars and Manning Conditions of Peng Yang
According to the specifications on the certificate of ownership of Peng Yang, Peng Yang is a steel bulk carrier built on 1st April 1973 with length overall of 206.75ms, molded breadth of 29ms, molded depth of 18ms, light draught of 2.55ms and load draught of 13.27ms, gross tonnage of 30325MT and net tonnage of 18720MT, and port of her registry in Shenzhen. Shenzhen Shipping is the owner. It is specified in her certificate of nationality that Shenzhen Shipping is the owner and Shenyue Shipping is the operator. Based on the records of the certificate of inspection of Peng Yang, her load displacement is 64,000MT, light displacement is 10,561.30MT, reference deadweight is 53, 438MT, and navigation area is coastal waters.
On 1st January 2004, Shenzhen Shipping as the owner and Shenyue Shipping as the bareboat charterer concluded the bareboat charter party for hiring the Peng Yang for one year at the hire rate of RMB5,000,000/year or RMB1,250,000/quarter which shall be payable before the 10th day of the first month during the period of hire. According to the charter party, the vessel shall be under complete possession, arrangement and control of the charterer during the period of hire. The charterer shall carry out good commercial maintenance and repair of the vessel, engine, boilers, equipment and spare parts so as to keep then in good and effective operation conditions; The charterer shall bear the cost of manning, accommodation, navigation, operation, fuel oil supply and of the repair required from time to time during the period of hire, and shall be responsible for any duties or taxes incurred by use and operation of the vessel, including those levied by cities and states of foreign countries; The charterer shall be responsible to purchase marine insurance and insurance against war risk and protection indemnity risk. The aforesaid bareboat charter party was not registered in the registration authority of ships.
As per the certificate of seaworthiness of cargo ship issued by the Ship Inspection Center of CCS on 18th May 2004, Peng Yang is allowed to navigate in the coastal waters (route) as cargo ship. This certificate was valid until 1st April 2005. It is specified in the remarks of this certificate that: 1. The maximum permissible load shall not exceed 50,000MT under any loading condition; 2. The vessel shall only be loaded with ore, coal and non-inflammable cargo or cargo with minor fire risk; 3. The vessel is only allowed to navigate in waters of Route A1+A2.
It is specified in the certificate of seaworthiness of cargo ship issued by the Ship Inspection Center of CCS on 7th March 2005 which was valid until 31st March 2006 that this vessel shall be scrapped compulsively on 1st April 2006.
At the time of the incident, Peng Yang held the effective tonnage certificate, oil pollution prevention certificate, load line certificate, minimum safe manning certificate of coastal vessels, certificate of compliance of safety management certificate, and safety management certificate.
The Master, Chief Officer, the 2nd Officer, duty sailor, Chief Engineer, and the 2nd Engineer hold the corresponding certificates of competency.
Pursuant to the provisions of Article 4 item 4 of the Regulations on the Administration of Old Commercial Vessels promulgated by the Ministry of Communications of the People??s Republic of China on 9th April 2001, bulk carriers and ore carriers over 18 years of age fall within the 4th category of old Commercial Vessels. It is provided in Paragraph 1, Article 24 of the aforesaid regulations that vessels of the age of compulsory scrapping as stipulated in the Appendix shall be scrapped. In accordance with the provisions of Appendix No.1, the age of mandatory scrapping for the 4th category of old Commercial Vessels is over 33 years.
III. Particulars and Manning Conditions of OOCL Hamburg
As per the certificate of vessel??s registration of OOCL Hamburg issued by the Hong Kong SAR of the People??s Republic of China, OOCL Hamburg is a steel container vessel of which the keel was laid on 18th September 2003, the length overall is 309.2ms, molded breadth is 42.8ms, molded depth is 20.23ms, gross tonnage is 89, 097TM and net tonnage is 55, 204MT, port of registry is Hong Kong, owner is Australia Finance, bareboat charterer is OOCL.
At the time of the incident, OOCL Hamburg held the effective classification certificate for hull, safety management certificate, ship safety construction certificate, cargo ship safety equipment certificate, cargo ship safety radio certificate, minimum safe manning certificate, international tonnage certificate, and international load line certificate. Furthermore, when she departed from Shekou, China on 23rd August 2004, her manning complied with the requirements of minimum safe manning.
IV. Grounding of Peng Yang
On 23rd August 2004 after grounding of Peng Yang, HK MARDEP sent the senior surveyor, Li Yaoguang, to carry out investigation. On 9th November, Li Yaoguang sent a draft of the investigation report to the Master of Peng Yang, Luo Zhongsi, through the agency department of Merchant Shipping and notified the same to submit his opinions or comments (if any) to HK MARDEP before the 24th day of November.
On 26th November, HK MARDEP issued an official investigation report regarding the subject incident. It is comprised of seven chapters which in particular include Chapter I Summary, Chapter II Source of Information, Chapter III Ship??s Particulars, Chapter IV Summary of Incident, Chapter V Analysis of Evidence, Chapter VI Conclusion, and Chapter VII Recommendations. During the trial, the parties concerned have no objection to the facts regarding Peng Yang??s grounding, but disagree on the opinions of the analysis on liabilities and proportion thereof.
On 15th February 2008, HK MARDEP sent a letter to Ince & Co entrusted by OOCL stating that the draft of investigation report sent to Peng Yang on 9th November 2004 was only for the purpose of consultation, but not an official report. The draft was amended thereafter. The final investigation report issued on 26th November 2004 is the only official report on the subject incident.
The facts regarding the subject incident ascertained in Chapter IV of the official investigation report are as follows:
(I) Account of Peng Yang
1. On 23 August 2004 at about 1205, Peng Yang arrived at the Pilot Boarding Station in East Lamma Channel near Ngan Chau. The vessel Peng Yang was drawing even Keel drafts at 12.8metres forward and aft. Two pilots boarded on the vessel, named in here as Pilot A and Pilot B. As the length overall of Peng Yang exceeds 198 metres it is classed as a Class A vessel under the existing arrangement.
2. After boarding of the two Pilots, the Master told them that there was no ?°dead slow ahead?± mode with the engine telegraph, other than that the navigational equipment were in good order. The pilots acknowledged the situation and started to direct the vessel towards Ma Wan Fairway. According to the Pilots, throughout the passage prior to the accident the weather was fine and visibility was good. Tidal condition was flooding at about 1 to 1.5 knot in a north-westerly direction during the passage.
3. At the time of the accident the two Pilots together with the Master, the Second Officer and a quartermaster were on the bridge. The quartermaster was steering the ship as per the Pilot??s advice. The Master told the Pilots that Peng Yang had been navigating on this route to and from Shekou for a number of times and he felt quite comfortable to delegate the navigation of the vessel to the Pilots.
4. Due to the long distance of this route, the two Pilots took turns to charge of the pilotage. Under this arrangement they would change over their duties at about mid way. On board the chief Pilot (hereinafter referred to as Pilot A) commenced the pilotage after boarding. The co-pilot (referred to as Pilot B) assisted Pilot A with other auxiliary duties such as responding to VHF radio. According to the existing practice, the assignment of chief pilot for the intended pilotage was arranged according to the roster but not to seniority. In this case Pilot B is more senior than Pilot A.
5. The Pilot had obtained a traffic list from Pilot Association before boarding, which enabled them to know the traffic situation in the area. According to the traffic list the Pilots understood that at about the same time an outbound container vessel named OOCL Hamburg, with a length of 323 metres (another Class A vessel), would be approaching Ma Wan Fairway under pilotage in the opposite direction.
6. Along with Peng Yang there was another container vessel called ?°MSC Munich?± proceeding the same way towards Ma Wan. As the speed of ?°MSC Munich?± was faster, it overtook Peng Yang before passing Green Island. Peng Yang followed ?°MSC Munich?± and navigated in the middle the Western Fairway. One escort tug approached Peng Yang near the west of Mobil Oil Terminal and maintained at a close range to the vessel standing by for any unexpected situation.
7. At about 1245 while passing the Western Quarantine and Immigration anchorage, Peng Yang was called on the VHF channel 11 by OOCL Hamburg, which was then on its outbound passage approaching the Ma Wan Fairway. OOCL Hamburg informed Peng Yang that it would slow down and let MSC Munich and Peng Yang to pass the Ma Wan Fairway first. After the agreement Pilot A reported to VTC for their information.
8. When Passing Caltex Oil terminal Peng Yang reported to VTC that a barge was seen anchored north of Kap Shui Mun. The same was also reported to VTC by OOCL Hamburg which was approaching in the opposite direction. The location of this barge might obstruct the normal entry or Ma Wan Fairway from the west by OOCL Hamburg. VTC responded that they would deal with it after the two Class A vessels (Peng Yang and OOCL Hamburg) had passed clear.
9. At 1307 Peng Yang passed under the Ma Wan Bridge. On approaching Ma Wan, Pilot A used ten degrees port helm in negotiating the bend. The tide was flooding (following current) at time of turning. The turning was smooth without difficulties. After passing Lan Pai light the course was steady on 282 degree.
10. After the turning, Pilot A could see OOCL Hamburg on the port bow. At this juncture, Pilot B requested Pilot A to hand over the navigation to him. After the handing over, Pilot B visually observed OOCL Hamburg on the port bow near ??Yau Lian?? floating dock. He could also observe a derrick barge anchored near the floating dock.
11. At the same time, Pilot B noted some bow waves from OOCL Hamburg, indicating that the vessel was steaming ahead at speed. This was unexpected by Pilot B as he thought that ?°?±OOCL Hamburg would either stop or slow down at the west of Yau Lian floating dock and let Peng Yang to pass first. OOCL Hamburg was steaming in the middle of the waterway. If OOCL Hamburg proceeded further to the east, it might constrain the sea room that Peng Yang could safely navigate.
12. Peng Yang was steaming at about 9 to 10 knots. As the vessel was drawing a deep draft of 12.8 metres, there was a danger that it might hit the rocky shoal off Tsing Lung Tau if Peng Yang was confined to the northern side of the waterway only. Pilot B said he was well aware of the dangerous shoal which was then lying to the starboard side of his vessel. He stated that normally he would maintain a distance of about 2.5 cables from the north shore in order to pass clear of the shoal.
13. Shortly before Peng Yang ran into the shoal, Pilot A used the radar range to check the distance from shore and found that it was only 1.5cables, a sign indicating Peng Yang was too far north from the normal course. Pilot A reminded Pilot B of the close distance and Pilot B responded to him that he was turning the vessel to port as much as possible to steer away from the danger, while adjusting own ship??s course at the same time to avoid a close-quarter situation that might be developing and imposing upon by OOCL Hamburg in the restricted maneuverable sea room. Pilot B also stated that he had not ordered stop or slow down with the engine due to the oncoming of OOCL Hamburg, as he considered Peng Yang could clear the dangerous shoal with the continuous port turning.
14. Pilot B asked the quartermaster to alter course to port gradually at 5-degree alterations each time, from 280 degree to 275, then 270, 265, 260, 255 and 245 degree hoping that the vessel could clear the danger to the starboard side and at the same time not to collide with OOCL Hamburg.
15. The quartermaster responded to the port alterations by giving 15-20 degree helm to effect the turn. Pilot B said that he was trying to align the course of Peng Yang to the stern of OOCL Hamburg and continued to alter to port as much as he could while keeping OOCL Hamburg clear from the bow of Peng Yang. At the same time he considered that Peng Yang should be able to stay clear of the shoal as it was being turned away from this danger.
16. When OOCL Hamburg was passing north of the anchored barge, Pilot B expected that OOCL Hamburg would turn to starboard substantially at this position so that Peng Yang could gain more sea room to its port side to steer away from the shoal.
17. After passing the anchored barge, OOCL Hamburg was seen to have turned to starboard. However the turning was not adequate for Peng Yang to alter course any further to port as there was still insufficient sea room between them.
18. At about 1319 Peng Yang contacted with the shoal at the starboard side. The air pipes of the starboard double bottom tanks on main deck in way of No. 3, 4 and 5 cargo hold were seen shooting up with rusty dust followed by water splashes. Soon after the contact Peng Yang developed 6-degree list to starboard. The Pilots informed the situation to VTC. Due to imminent danger of further deterioration of situation, the vessel was beached at Yam O to prevent it from sinking in the main waterway.
(II) Account of OOCL Hamburg
1. OOCL Hamburg is a container vessel with a length of 323 metres. On 23.8.2004 the vessel departed from Shekou transiting Hong Kong through Ma Wan Fairway (east bound). Two Hong Kong Pilots boarded OOCL Hamburg off Black Point at 1200. After boarding the chief Pilot (referred as Pilot C) took over the pilotage while the co-pilot (referred as Pilot D) assisted in navigation.
2. OOCL Hamburg was also engaged in liner trade and had been transiting Hong Kong to and from Shekou for a number of times before. Both Pilots also obtained a traffic list before boarding. On board OOCL Hamburg the bridge team composed of the master, one navigating officer, a quartermaster and the two Pilots. After boarding the vessel Pilot C ordered slow ahead and then half ahead on the engine which gave a ship speed of about 13 knots. Tidal current was flooding (flowing westward) at about 1.2 knots.
3. At that time two inbound ocean going vessels MSC Munich and Peng Yang were under pilotage and were proceeding near Green Island to Ma Wan. After OOCL Hamburg passed CP5 and CP4 buoys it made direct contact on VHF channel 11 with MSC Munich and Peng Yang to agree that the two inbound vessels would pass Ma Wan Fairway first. After the agreement Pilot C reduced the engine speed from half ahead to slow and then dead slow.
4. When passing CP3 buoy, the escort tug of OOCL Hamburg called the Pilots informing that a barge was anchoring north of Yau Lian floating dock and might obstruct the passage of OOCL Hamburg. Pilot D checked the radar position and opined that due to the size of OOCL Hamburg, it would not be safe to pass south of the anchored barge. The presence of the anchored barge was reported to VTC.
5. The escort tug was tasked to check out what happened to the anchored barge. After checking it replied that the barge was staying there for operational need. The tug, however, could not obtain the identity of the barge.
6. Pilot C put the engine to stop before reaching CP1 buoy. The course of OOCL Hamburg was about 090 degree. At this juncture MSC Munich was seen to have cleared the Ma Wan Fairway. Pilot C tried to keep the anchored barge at fine to the port bow of OOCL Hamburg, but he felt that OOCL Hamburg appeared to have difficulties in holding its heading as the vessel was set to north by the current. Pilot C managed to steady the ship??s course at between 090 to 095 degree. At this time the speed of OOCL Hamburg continued to drop, however the steerage of the vessel could still be maintained.
7. Pilot C intended to pass north of the anchored barge as close to it as was safe as possible. He ordered dead slow ahead engine when passing Cheung Sok and kept the anchored barge to the starboard bow. By that time he could hear from the VHF radio that Peng Yang had entered the Ma Wan Fairway from the other side.
8. At this time Pilot C could observe MSC Munich passing out from Ma Wan Fairway. He stated that if the anchored barge was not there, under normal practice he would pass through the position where the barge was anchoring. By steering more to the south he could avoid the traffic near the north of the Ma Wan Fairway. However, because of the presence of the anchored barge, he had to go further north to avoid collision with this barge.
9. At this juncture Peng Yang could be visually observed. Pilot C concentrated on the passing distance from the anchored barge so as to pass it safely at about one cable. At this stage, he didn??t consider that OOCL Hamburg would pose any danger to Peng Yang, as from the bridge of OOCL Hamburg no anomaly was observed. In view that OOCL Hamburg required more speed to pass the Ma Wan Fairway, Pilot C increased the speed from dead slow to slow ahead engine when passing Yau Lian floating dock.
10. When Peng Yang hit the shoal at about 1319, the Pilot on board OOCL Hamburg could see rusty smoke came out from the deck of that vessel. This was the first time that the Pilots of OOCL Hamburg knew that there might be something wrong with Peng Yang.
(III) Account of Ma Wan Station in Vessel Traffic Centre
1. On 23.8.2004 at about 1300, VTC was monitoring the movement of Peng Yang which was the second westbound vessel after MSC Munich. The radar echo of Peng Yang appeared on Ma Wan Station radar screen and the duty Assistant Marine Controller (duty AMC) kept close monitoring of its movement. He had informed the dedicated patrol launch patrolling along Ma Wan Fairway that Peng Yang was approaching so that the patrol launch would clear the other small vessels in the Fairway.
2. Shortly after 1245 the Pilot of Peng Yang informed Ma Wan Station that they would transit Ma Wan Fairway first. The Pilot of OOCL Hamburg also confirmed that he would let Peng Yang to pass the Fairway first. The duty AMC had no objection about this arrangement. The speed of OOCL Hamburg was observed to have slowed down after passing CP1 buoy.
3. At about 1305-1310 the eastbound container vessel OOCL Hamburg was in the position near Yam O. OOCL Hamburg reported to Ma Wan Station the presence of the anchored barge near Yau Lian floating dock. The duty AMC acknowledged the message. Since the patrol launch was busy clearing the traffic for the two vessels, the duty AMC replied to the Pilot of OOCL Hamburg that they would check the barge after the two vessels had passed clear of the Fairway.
4. The radar displayed the 10-metre depth contour line near the coastal water of Tsing Lung Tau. The duty AMC observed that Peng Yang remained outside the 10 metre depth contour line all the time during the passage.
5. In accordance with the traffic regulatory measures, the Ma Wan traffic lights were switched on during the transit of OOCL Hamburg and Peng Yang.
6. After Peng Yang and OOCL Hamburg had passed the Ma Wan Fairway, the patrol launch proceeded to the anchored barge and found that it had already left. The identification of the barge was not known.
7. The accident occurred at about 1319 as Peng Yang passed over the charted shoal. The Pilot of Peng Yang reported to VTC of the situation. The escort tugs of Peng Yang and OOCL Hamburg were called in for assistance. Peng Yang reported that it was listing to starboard and taking in water. Peng Yang was found swinging to its port side towards Yam O after hitting the shoal. Fearing the situation might further deteriorate, Ma Wan Station agreed with the Pilot to beach the vessel at Yam O.
The causes of the subject incident are analyzed by HK MARDEP in Chapter VI of the official investigation report as follows:
1. The investigation has established that the immediate cause of the accident was due to the error of judgment of Pilot B after Peng Yang passed out from the Ma Wan bend. While aware that Peng Yang was in a difficult position with the rocky shoal lying close to starboard and the OOCL Hamburg approaching in the middle of the waterway, Pilot B believed that he could be able to avoid hitting the shoal and the close-quarter situation with OOCL Hamburg by altering course to port gradually at five-degree intervals, under the circumstance he had probably underestimated the effects of the following tide and squat and bank suction, and that the rate of port turn might not be fast enough to from entering into such difficult position, e.g. slow down the vessel and altering OOCL Hamburg to give way, the accident might have been prevented.
2. Pilot B of Peng Yang is considered to have overly relied on the normal action that should be taken by Pilot C of OOCL Hamburg and took no contingency action to alleviate the situation. Such behavior rendered him unprepared for any contingency or fail-safe measures to cater for unexpected situations when OOCL Hamburg failed to act as expected.
3. Pilot C of OOCL Hamburg appeared to have failed to observe the Rules of Passage for passing of two Class A vessels within the Ma Wan Service Area. Pilot C was oblivious to the situation of Peng Yang during the passing. He appeared to have not understood correctly the Rules of Passage and misjudged the effect of his decision in continuing to proceed beyond the anchored barge in to the Area.
4. The lack of appropriate guidance on the conditions under which two class A vessels could agree to pass each other within the Ma Wan Service Area had given rise to ambiguity and misinterpretation. While Pilot B though that OOCL Hamburg should have waited outside the Ma Wan Service Area to let Peng Yang to pass first, Pilot C was of the view that OOCL Hamburg could proceed to enter the Area as Peng Yang had already passed clear of the Ma Wan Fairway.
5. The master and navigating officer of Peng Yang had fully delegated the navigation of the vessel to the Pilots without discharging their duties and obligations to monitor the position and movement and to ensure the safety of their vessel. They have failed to comply with the provisions in Section A-VIII/2 of the STCW Code on ?°Navigation with pilot on board?±.
It is specified in the Manual of Operating Practices for MW/MTCS provided by the parties concerned that:
1. Class A vessel means any vessel of 198 metres and above in length overall (LOA) for the purpose of this MANOPS.
2. Ma Wan Service Area means the area of the waters bounded on the east, by a straight line along the Ting Kau Bridge; on the south, by straight lines along the Tsing Ma Bridge and the Kap Shui Mun Bridge; and on the west, by a straight line joining the Ha Pang light and Kwai Sheck.
3. The MW/MTCS shall in general follow the Rules of Passage as mentioned below when organizing and scheduling the traffic flow in the Ma Wan Service Area: While Class A vessel with LOA of 198m and above is passing, no passing of other vessels except vessels of less than 20 metres in length and passenger ferries issued with a Speed Restriction Exemption Permit.
4. Under favorable conditions, and only after clear understanding has been reached on Channel 14 or 11 between vessels (Rules of passage in section 7.11 refers) as to the point and manner of passing, two vessels may agree to pass within this area. MW/MTCS shall monitor and evaluate such arrangement.
5. In the event that no safe passing arrangements could be reached or the MW/MTCS conditions the intended arrangement in unsafe, MW/MTCS shall inform the participants of the aforesaid vessels of such and recommend alternatives to them. If the situation is not resolved or the MW/MTCS is not convinced that a safe passage can be made, the MW/MTCS may direct the vessels to resolve the problem.
6. The MW/TMCS will advise each vessel, which has reported to the station with an intention to transit the Ma Wan service area, whenever its intended transit conflicts with the known intent of any other vessel.
On 3rd August 2007, HK MARDEP sent a letter to Ince & Co which represents OOCL stating that the Rules of Passage of Class A Vessel in Ma Wan Service Area which became effective as of 30th August 2004 is not a legislative document and has not been published. It only falls within the internal operation practice among the colleagues for the purpose of regulating the traffic in Ma Wan Service Area.
During the trial of this case, the Defendants entrusted GHMJAC to give expert opinions on relationship between OOCL Hamburg??s navigation and Peng Yang??s hitting the rocky shoal. GHMJAC issued on 18th March 2008 the Expert Report on the Relationship between Navigation of OOCL Hamburg and the Beaching/Grounding of Peng Yang under the reference of YCJ [2008] HSJ No.6 signed by the assessors, Wu Rusong (senior captain), Zeng Bo (senior pilot) and Li Qinglie (senior engineer) and confirmed by GHMJAC by affixing its official stamp. It is concluded by the expert report that:
1. The immediate cause of the grounding incident is the improper maneuvering of Peng Yang. The master, the duty officers and the pilots onboard Peng Yang overlooked the relative position between the vessel??s position and the rocky shoal, and therefore neglected the threat imposed by the shoal upon the vessel, resulting in improper maneuverings. If Peng Yang were able to estimate the threat of the rocky shoal, she could take various actions (including reducing her speed, making large alterations to port) so as to eliminate the threat and avoid the beaching. Another cause of the accident is that the officers of Peng Yang have bias and concerns about the maneuvering of an old-aged vessel (for instance, she did not adopt large alterations). The old age, weak hull condition and overloading of Peng Yang restricted the pilots?? command of the vessel, which increase the difficulty of the maneuvering and enlarge the extent of damage to the vessel arising from the grounding.
2. OOCL Hamburg entering the Ma Wan Service Area did not break the agreement that Peng Yang passed the Ma Wan Fairway first. Moreover, the Ma Wan Station did not object to such entry of OOCL Hamburg. OOCL Hamburg was proceeding along the middle of the Ma Wan Service Area after passing Yau Lian float dock, which would bring about effect on the specific maneuverings of Peng Yang, but even in such circumstances, it still allowed a navigable area of about 200-meter breadth (the 200-meter transverse distance less the breadths of the two vessels) for the passage of Peng Yang. That means the two vessels could pass each other safely if proper measures were taken. So the navigation of OOCL Hamburg would not necessarily cause, and therefore had no causal connection with the grounding of Peng Yang.
Appraiser of the GHMJAC, Capt Wu Rusong, appeared at court, made explanation of the expert report, and accepted inquires from the judges and parties concerned.
At the request of Yang & Lin Law Firm, a group of experts composed of Prof. Wu Zhaolin, Prof. Wang Fengchen and Prof. Zhao Yuelin from Dalian Maritime University analyze the liability and the relativity between OOCL Hamburg??s navigation/ maneuverings and Peng Yang??s hitting/grounding within the Ma Wan Service Area. On 20th June 2008, the aforesaid experts group issued a written opinion and concluded as follows:
1. As OOCL Hamburg did not abide by the navigational rules for two Class A vessels within the Ma Wan Service Area, failed to be aware of the difficult situation Peng Yang was in, thus wrongfully estimated the influence brought about by OOCL Hamburg??s navigating near the middle of the fairway after transiting north of the anchored barge, which largely limited the safe navigational waters for Peng Yang and consequently disenabled Peng Yang to substantially alter her course to port so as to keep away from the -10.5m rocky shoal. Therefore, OOCL Hamburg??s maneuverings had causative connection with and should bear the major liability for Peng Yang??s hitting rocky shoal and grounding.
2. Peng Yang honored the agreement with OOCL Hamburg, waiting OOCL Hamburg to take actions to let Peng Yang pass the Ma Wan Service Area first, but Peng Yang failed to maintain sufficient precaution to the special situation when OOCL Hamburg was in breach of the agreement. When observing OOCL Hamburg continued to navigate near the middle of the narrow channel within the Ma Wan Service Area, Peng Yang failed to take emergent actions to mitigate the risk, or keep the due precautions against the surroundings and circumstances. Moreover, it was incorrect and in breach of the Regulations of Crew??s Position and the Regulations of Pilotage that Peng Yang??s master delegated the navigation completely to the pilots. Therefore, Peng Yang should bear the minor liability for the hitting rocky shoal and grounding.
Professor Wu Zhaolin and Professor Zhao Yuelin representing the experts group appeared at court and made explanation of the experts report, and accepted inquires from the judges and parties concerned.
V. Losses sustained by Peng Yang
(I) Salvage Fee
1. After Peng Yang got aground, Shenyue Shipping entrusted Guangzhou Salvage Bureau to carry out salvage. At dawn on 24th August 2004, the salvage vessels, equipment and personnel as organized by Guangzhou Salvage Bureau arrived at the incident site and carried out salvage.
On 16th September 2004, Shenyue Shipping and Guangzhou Salvage Bureau concluded a salvage contract stipulating that Guangzhou Salvage Bureau provides vessels, equipment, materials and personnel to carry out salvage of Peng Yang and the cargo and other properties on board. The reward for salvage is agreed as RMB16,300,000. On the same day, Shenyue Shipping issued a payment entrustment to Shenzhen Shipping requesting for payment of part of the salvage reward in the amount of RMB8, 500, 000.
On 27th September 2004, Peng Yang was refloated. At 1245 hrs on 2nd October, M/V ?°De Yue?± owned by Guangzhou Salvage Bureau towed Peng Yang away from the site. At 1630 hrs, Peng Yang arrived at Ma Wan Power Wharf. The salvage of Peng Yang was finished on the afternoon of 6th July.
Shenzhen Shipping paid for Shenyue Shipping the salvage fee of RMB3,000,000 on 16th September 2004, the salvage fee of RMB3, 300, 000 on 30th September, the salvage fee of RMB200,000 on 8th October, the salvage fee of RMB1,000,000 on 2nd November, and that of RMB1,000,000 on 2nd December, which amount to RMB8, 500, 000 in total.
Shenyue Shipping made payments to Guangzhou Salvage Bureau of the salvage fee of RMB1, 000, 000 on 5th January 2005, the salvage fee of RMB1, 000, 000 on 5th February, the salvage fee of RMB1, 000, 000 on 3rd March, the salvage fee of RMB500, 000 on 8th April, the salvage fee of RMB500, 000 on 9th May, the salvage fee of RMB1, 000, 000 on 31st May, the salvage fee of RMB500, 000 on 28th June, the salvage fee of RMB500, 000 on 14th July, the salvage fee of RMB500, 000 on 4th August, the salvage fee of RMB1,000, 000 on 30th September, and the salvage fee of RMB300, 000 on 12th October, totaling RMB7,800,000.
From 4th April to 19th October in 2005, Guangzhou Salvage Bureau had issued to Shenyue Shipping for 9 times the invoices of salvage fees totaling RMB16,300,000.
The Defendants refused to recognize the salvage fees of RMB16,300,000 paid by Shenyue Shipping on the grounds that: (1) The salvage of Peng Yang falls within commercial salvages for which the commercial rationality and feasibility should be concerned. The insured value of Peng Yang is RMB18,000,000. The aforesaid salvages fees account for more than 90% of the value of the vessel, which is obviously unreasonable. (2) No competent authority including HK MARDEP has ordered in writing a compulsory salvage and removal of Peng Yang and the cargo she carried onboard.
The collegial panel held that: CCS Shenzhen conducted investigation after Peng Yang grounded and issued an investigation report. It can be seen from the investigation report that the situation is critical before Peng Yang being refloated. Moreover, there were 48,902MT of coal loaded on board of Peng Yang at the time of the incident. If no appropriate rescue measure has been taken, the vessel and the cargo she carried on board might be subject to total loss. Therefore, it is reasonable for Shenyue Shipping to take salvage measures when the abandonment was not accepted by Taiping Insurance. Shenyue Shipping entrusted Guangzhou Salvage Bureau to carry out salvage not only of the vessel Peng Yang, but also of the cargo and other properties she carried on board. The defense of the Defendants is untenable. The claim for compensation of the salvage fees in the amount of RMB16, 300, 000 filed by the Plaintiffs shall be supported.
2. On 26th November 2004, Shenzhen Shipping issued the employment contracts to Deng Guangquan and Liu Jianzhong for employing the same as the consultants of the salvage and relevant techniques. The term of employment commences from 26th August 2004 and expires upon the completion of salvage of Peng Yang. On 27th November, Shenyue Shipping and Deng Guangquan entered into an Employment Agreement of Technical Consultant stipulating that: From 26th August 2004 to the day when the salvage of Peng Yang is completed, Shenyue Shipping entrusts Deng Guangquan as the salvage technical consultant. All cost and expenses of travel, accommodation, and communication incurred by the technical consultant and the relevant consultancy fees (RMB600/day) shall be borne by Shenyue Shipping. The Plaintiff stated that Liu Jianzhong is an experienced senior loss adjuster of the China P&I Club (CPI), and Deng Guangquan is the head of the Navigation Guarantee Department of the Chinese Navy Headquarters and an expert of salvage and negotiation.
Payment made by Shenyue Shipping for the aforesaid technical consultants is as follows: On 31st August 2004, the consultant fee of RMB2,000 paid to Liu Jianzhong; On 6th September, the consultant fee of RMB7,200 paid to Deng Guangquan; On 17th September, the consultant fee of RMB6,600 paid to Deng Guangquan; On 20th September, the cost and expenses of accommodation, communication and reception paid for Liu Jianzhong and Deng Guangquan in the amount of RMB7,007.40; On 29th September, cost of air ticket and reception in the amount of RMB1,630 incurred by Deng Guangyong. The aforesaid cost and expenses total RMB24, 437.40.
The Defendants recognized the identity of Liu Jianzhong, but refuse to recognize the payment by Shenyue Shipping of the aforesaid cost and expenses.
The collegial panel held that: Shenyue Shipping had already entrusted a professional salvage institute to carry out salvage after Peng Yang??s grounding so that the salvage and technical consultants otherwise employed are unnecessary. Therefore, the consultants?? fee in the amount of RMB24, 437.40 as claimed by the Plaintiff shall not be supported.
3. Shenyue Shipping entrusted Yiu Lian Dockyards to provide towage service to the grounded Peng Yang. Between 23rd and 30th August 2004, Yiu Lian Dockyards arranged vessels, including but not limited to M/V ?°Hai Fa?±, M/V ?°Hai Li?±, M/V ?°You 26?±, M/V ?°You Fa?±, M/V ?°Hai Shan?±, M/V ?°Hai Ba?±, M/V ?°You 18?±, and M/V ?°Hai Qi?± to provide towage service. According to the bills issued by Yiu Lian Dockyards to Shenyue Shipping??s shipping agent, Merchant Shipping, the cost of the towage service provided by Yiu Lian Dockyards amounts to HKD2, 124, 107.50. On 19th October, Shenyue Shipping and Yiu Lian Dockyards concluded an agreement on the emergency tug fees incurred by towage of Peng Yang, where Shenyue Shipping agrees to pay Yiu Lian Dockyards HKD1,550,000 as the tug fees. Shenyue Shipping made payment of the aforesaid fees through Merchant Shipping. On 4th July 2005, Yiu Lian Dockyards issued a receipt to Merchant Shipping indicating that it had received the tug fees in the amount of HKD1, 550, 000.
The Defendants refuse to recognize the aforesaid tug fees and believe that it is unnecessary to arrange tugs guarding Peng Yang at such large amount of expenses.
The collegial panel held that: Due to the grounding of Peng Yang, it is necessary and reasonable to properly arrange daily towage service with several tugs as required by the salvage and forced discharge of Peng Yang. The Defendants?? defense is untenable. The tug fees in the amount of HKD1,550,000 claimed by the Plaintiff shall be supported.
4. On 24th August 2004, Shenyue Shipping entered into a cargo discharging and shipping agreement with Ying Wei through its shipping agent Merchant Shipping. It is stipulated that Ying Wei arranges barges to get alongside Peng Yang at Yam O to carry out discharge and to deliver the cargo discharged to Ma Wan Wharf thereafter. The cost of discharge is agreed as HKD17/Ton and the freight is agreed as HKD37/Ton. If the cargo fails to be discharged within 3 days after the barges of Ying Wei got alongside Ma Wan Wharf due to reasons on the part of Ma Wan Wharf, Ying Wei shall collect charges at the rate of HKD10,000/vessel/day. The discharge shall commence on 25th August 2004.
Between 25th and 28th August, Ying Wei arranged M/V ?°Kun Xing 18?±, ?°Sui Yue 9?±, M/V ?°Sui Yue 17?±, M/V ?°Lian Xing 388?±, M/V ?°Lian Xing 398?±, M/V ?°Zhang Ji 6?±, M/V ?°Xie Hang 228?± to carry out forced discharge for Peng Yang. There were 23,801MT of cargo (with water) discharged, of which the weight of cargo discharged and shipped totaled 18,004MT, and the weight of cargo discharged amount to 5, 797MT.
Between 25th and 30th August, Ying Wei issued to Merchant Shipping respectively 10 bills which specify the charges for discharging and shipping in the amount of HKD1,070,765. On 28th August, Merchant Shipping issued to Shenyue Shipping a bill indicating the charges for discharging and shipping in the amount of HKD1,070,765 Shenyue Shipping made payment thereof to Ying Wei through Merchant Shipping. On 19th April 2005, Merchant Shipping issued to Shenyue Shipping the invoices of the charges for discharging and shipping in the amount of HKD1,070,765.
The Defendants are of the opinions that Shenyue Shipping had already concluded with Guangzhou Salvage Bureau a salvage contract which includes service of salvage of cargo. The aforesaid charges for discharging and shipping as claimed by Shenyue Shipping are repeated in this regard and should not be recognized. The Plaintiff argued that Shenyue Shipping concluded the salvage contract with Guangzhou Salvage Bureau on 16th September 2004, and entered into the agreement of discharging and shipping with Ince & Co. on 24th August. The aforesaid cost of discharge was incurred before the conclusion of the salvage contract and should not be deemed as repeated cost.
The collegial panel held that: It is appropriate for Shenyue Shipping to entrust Ying Wei to carry out discharge of cargo on board of the grounded vessel Peng Yang before officially entering into the salvage contract with Guangzhou Salvage Bureau. The argument of the Plaintiffs is tenable. The cost of discharging and shipping in the amount of HKD1,070, 765 claimed by the Plaintiffs shall be supported.
5. On 24th August 2004, Shenyue Shipping and Guangzhou Southern Yiu Lian Shipping Company (hereinafter referred to as ?°Southern Yiu Lian?±) concluded an agreement on carriage of the cargo on board of Peng Yang. It is stipulated that Southern Yiu Lian arranges vessel to get alongside Peng Yang and transport the cargo to Ma Wan Wharf at a rate of HKD20/MT (excluding stevedorage, trimming charges and other charges relating to the cargo, and the agent fees for ship??s entry and departure and joint inspection fees as well as the tallying charges and cargo agency fees incurred in Shenzhen shall not be included); the freight rate is agreed as HKD23/MT (excluding stevedorage, trimming charges and other charges relating to the cargo); the freight shall be paid within 30 days after discharge.
On 25th and 26th August, Southern Yiu Lian arranged M/V ?°Sui Yue 17?± and M/V ?°Sui Yue 9?± to get alongside Peng Yang to carry the cargo of 3, 897MT. On 4th November, Southern Yiu Lian notified Shenyue Shipping of its entrustment of Hai Hong Shipping for receiving the freight of RMB82,616.40. On 17th November, Shenyue Shipping paid the freight of RMB82,616.40 to Hai Hong Shipping. Hai Hong Shipping issued an invoice to Shenyue Shipping thereafter.
The Defendants believe that Shenyue Shipping had already concluded with Guangzhou Salvage Bureau a salvage contract which includes service of salvage of cargo. The aforesaid freight cost as claimed by Shenyue Shipping is repeated in this regard and should not be recognized. The Plaintiff argued that Shenyue Shipping concluded the salvage contract with Guangzhou Salvage Bureau on 16th September 2004, and entrusted Southern Yiu Lian to carry the cargo forcedly discharged from Peng Yang. The aforesaid freight cost was incurred before the conclusion of the salvage contract and should not be deemed as repeated cost.
The collegial panel held that: The Plaintiffs?? argument is tenable. The freight cost in the amount of RMB82, 616.40 claimed by the Plaintiffs shall be supported.
6. On 27th August 2004, Shenyue Shipping and Xin Tong Yang concluded a voyage charter party with regard to the cargo carried by Peng Yang. It is stipulated that Xing Tong Yang let out M/V ?°Xie Hang 228?± to carry the cargo at the freight rate of RMB20/MT. The freight shall be paid within one month after loading. M/V ?°Xie Hang 228?± got alongside Peng Yang to carry cargo at 1400 hrs on 28th August and finished loading at 2130 hrs on 29th August. The cargo she carried on board amount to 1,900MT. On 10th October, Shenyue Shipping paid Xin Tong Yang by cash the freight of RMB38,000. On 15th October, Xin Tong Yang issued a receipt thereof to Shenyue Shipping.
The Defendants put forward that Shenyue Shipping had already concluded with Guangzhou Salvage Bureau a salvage contract which includes service of salvage of cargo. The aforesaid freight cost as claimed by Shenyue Shipping is repeated in this regard and should not be recognized. The Plaintiff argued that Shenyue Shipping concluded the salvage contract with Guangzhou Salvage Bureau on 16th September 2004, which is after hiring of M/V ?°Xie Hang 228?± for carrying the cargo discharged from Peng Yang. The aforesaid freight cost was incurred before the conclusion of the salvage contract and should not be deemed as repeated cost.
The collegial panel held that: The Plaintiffs?? argument is tenable. The freight cost in the amount of RMB38,000 paid to Xin Tong Yang as claimed by the Plaintiffs shall be sustained.
7. After the grounding of Peng Yang, the following port charges were incurred during her stay in waters of Hong Kong (from 23rd August to 2nd October 2004):
(1) The agency fee in the amount of HKD10,800 paid to Merchant Shipping;
(2) The cost of handling the comprehensive permission at HK MARDEP in the amount of HKD111, 223;
(3) The cost of using traffic boat owned by Ming Lee Motor Boat Co. in the amount of HKD25,730;
(4) The cost and expenses of handling sea protest, purchase of phone cards, SD memory card and prepayment of telephone rate totaling HKD1, 361.80;
(5) The cost of 36, 000 litre of fuel oil supplied by Huahu to Peng Yang in the amount of HKD97, 200;
(6) The cost of 450MT of fresh water supplied by Hong Kong Water Boat Ltd. in the amount of HKD14, 400;
(7) The cost of oil absorbents and oil absorbent pad purchased from Hoi Tung Marine Machinery Co., Ltd. Hong Kong in the amount of HKD5, 500.
The aforesaid port charges totally amount to HKD266,214.80. Merchant Shipping confirmed in writing of receiving the above payments.
The Defendants believe that the aforesaid port charges have no connection with this case. After Peng Yang got aground, it was impossible to use the auxiliary engine which makes the supply of fuel oil unnecessary. Therefore, the aforesaid port charges claimed by the Plaintiffs should not be recognized.
The collegial panel held that regarding 1. the cost of oil, there was severe ingress of water into the engine room after Peng Yang grounded. The engine room crew used the port ballast pump periodically to pump the water so as to keep the ship??s stern floating and prevent the whole vessel from sinking. Therefore, it is necessary and reasonable to supply fuel oil to Peng Yang so as to support the operation of the port ballast pump. 2. Other port charges. The other port charges were also related to the handling of the incident. However, the cost of Hong Kong newspaper in the amount of HKD12 as claimed by the Plaintiff has not connection with this case and shall be deducted. Accordingly, the port charges incurred during Peng Yang??s stay in waters of Hong Kong shall be determined as HKD266, 202.80.
8. In order to encourage Peng Yang to participate in handling of the emergency, Shenyue Shipping paid emergency handling bonuses in the amount of RMB80,000 to the 28 crew members on board Peng Yang on 25th October 2004.
The Defendants argued that the crew members have the obligations of emergency handling in case of any incident. The bonuses by no means fall within the necessary expenses incurred by the incident, and should be deemed as the ordinary cost of the shipowner. It is unreasonable for the Plaintiff to claim for bonuses of crew members after claiming for loss of detention. Therefore, the emergency handling bonuses in the amount of RMB80, 000 as claimed by the Plaintiffs should not be recognized.
The collegial panel held that it is the crew??s responsibility to deal with the emergency after the incident. Therefore, the emergency handling bonuses in the amount of RMB80,000 as claimed by the Plaintiffs shall not be supported.
In summary, the salvage fees caused by the grounding of Peng Yang amount to RMB16,420,616.40 and HKD2,886,967.80.
(II) Repair Cost
1. The conditions of Peng Yang after running on the rocky shoal and grounding. At the request of Shenyue Shipping, CCS Shenzhen sent surveyors onboard Peng Yang on 8th September 2004 and the following days to carry out inspection concerning the vessel??s condition. On 16th November, CCS Shenzhen issued a survey report. It is specified as follows: 1. the vessel??s condition before refloating: (1) The vessel??s bow was under water; (2) Cargo holds No.1 to No.4 were all under water; (3) Cargo holds No. 5 to No.7 were filled with water; (4) The left lower part of the engine room front wall was cracked, and water flooded into the engine room through hold No.7; (5) Severe water ingress into the machinery space opening; (6) Water flooded through the measuring holes of the 19th and 31st double bottom cargo tank. (Note: The engine room was the only part had not been flooded before refloating which supported the floating condition of the vessel??s astern. Peng Yang also arranged crew members to pump sea water from the engine room periodically.); (7) The holds were found with damage to different extent. (Note: After review of the Hull Thickness Measurement Report and other relevant materials, the corrosion of the lower part of the front wall of the engine room is more than 20%, and 15ms of sea water was found inside cargo hold No.7 keeping the pressure on the front wall. Furthermore, the sea water had kept flooding into the engine room and being pumped out. The lower part of the front wall kept switching between ?°dry?± and ?°wet?± status, which aggravated the corrosion. If such situation maintained, the damage to the front wall of the engine room will spread and eventually cause the sinking of the whole vessel.) 2. Peng Yang??s conditions after refloating: (1) The hull was generally in good condition; (2) The fore and aft transverse bulkheads of cargo hold No.4 fell down. The damage to the fore transverse bulkhead is about 15ms ?? 10ms, and that to the aft transverse bulkhead is about 9ms ?? 5ms; (3) The falling of the transverse bulkheads caused deformation of the deck between hold No.3 and No.4 and between hold No.5 and No.6; (4) Slight leakage was found in the transverse bulkhead between hold No.3 and No.4 and that between hold No.5 and No.6; 3. Peng Yang??s conditions after drydocking: (1) Plates K and A (frame 224- 242) of the hull bottom under the bulbous bow was seriously deformed with indentations. In particular, the largest indentation is about 4.5ms wide and 2.6ms deep; (2) Starboard bottom Plates A and B (frame 28- 216) was seriously deformed with indentations. The largest indentation is about 3.2ms wide and 300mm deep. The widest continuous cracking on midship bottom Plate A (frame 71 -110) of the is 300mm; (3) The second, forth and sixth starboard bottom longitudinal beams (frame 45 - 215) of the was severely deformed; (4) The first starboard bottom longitudinal girder of fore peak (frame 228 - 235), the second starboard bottom longitudinal girder (frame 224 - 229), the first port bottom longitudinal girder (frame 227 -235), the second port bottom longitudinal girder (frame 224 - 229), and the bottom center girder of peak fore (frame 228 - 242) were damaged with severe deformation of 600mm wide; (5) The bottom solid floor of fore peak (frame 224 - 241) was seriously deformed; (6) The solid floor on Plate A (frame 47 - 205) in the starboard double bottom water ballast tank No.1 -7 was seriously deformed with the indentation of 600mm deep; (7) The second longitudinal wall on Plate A (frame 45 -220) in the starboard double bottom water ballast tank No.1 -7 was seriously deformed with the indentation of 600mm deep.
2. At the request of Shenyue Shipping, CCS Shenzhen sent surveyors onboard Peng Yang on 27th October 2004 and the following days to carry out an additional inspection concerning the damage to the vessel??s hull, engine, navigational equipment and electric facilities due to her running on the rocking shoal and grounding as well as the repair thereof. On 16th November, CCS Shenzhen issued an inspection report of Peng Yang??s hull which shows the detailed information of the damage to the hull and the repair thereof. It is also stated that after the permanent repair, relevant tests were carried out and obtained positive results, such as the visual inspection and internal quality inspection of the welding line, the vacuum test of the bottom plates, the watertight test of the fore peak and double bottom tank, and the hose test of the transverse bulkhead plating. It is written on the certificate of seaworthiness with regard to the damage and repair that: carried out damage repair inspection, all in good condition, seaworthy. On 17th November, CCS Shenzhen issued an inspection report of engine, navigational equipment and electric. It is specified that: (1) Engine: withdrew the tail shaft to conduct magnetic particle inspection and found normal; tail bearing (platinum alloy) and tail shaft SIMPLEX oil seal was replaced, installed and passed the tail shaft test; the rudder stock bearing was replaced, installed and inspected as normal; the inspection of tail shaft and propeller was finished. (2) Equipment: the depth sounder was replaced; watertight test was carried out for the underwater transducer, found normal. (3) Electric: Two anchor windlass motors; the winding was replaced, and the steering master controller, controlling cabinet electric and control cable were replaced; all found in good operating condition through inspection and function test.
3. On 28th February 2008, the Defendants entrusted the GHMJAC to carry out inspection and assessment regarding the cost of permanent repair of Peng Yang due to her running on the rocky shoal and grounding. On 8th May 2008, GHMJAC issued the Assessment Report on the Repair Cost of Peng Yang incurred from the Breaching/Grounding Accident (YSJ [2008] CJJZ No.7). On 3rd July, GHMJAC issued the Supplementary Opinion to the Assessment Report on the Repair Cost of Peng Yang (YSJ [2008] CJJZ No.7). The report is signed by the assessors of GHMJAC, i.e. Chen Hongyin (senior engineer) and Li Qinglie (senior engineer), affixed with official stamp of GHMJAC. The assessor Chen Hongyin appeared at court, made illustration and explanation of the assessment report, and accepted inquires from the judges and parties concerned. It is concluded by the aforesaid assessment report that:
(1) After verification, it is ascertained that during the repair of Peng Yang in Yiu Lian Shekou, the plates used for replacement weigh 164,081.503kg (including the weight of flat-bulb steel), and that in Shenzhen Bofu Ship Repair Engineering Company, the bulkhead plates used for replacement weigh 184,293kg; the bulkhead plates for repair, 7672kg, and the steel plates for replacement (with used plates), 4555kg. The aforesaid aggregate to 311,760kg in total, which is twice the weight as ascertained in the CCS Survey Report. Therefore, this Center takes the view that the scope of the permanent repair has been extended, accordingly, the repair cost has been increased and the repair time prolonged.
(2) An over-aged vessel will inevitably sustain serious corrosion. The extent of the corrosion should be recorded the ship??s thickness information in the previous special survey as per the relevant stipulations. Since GHMJAC was not provided with the general arrangement, basic structure drawing and the latest thickness record, it is impossible to ascertain which repair items have direct connection with the grounding accident and which items were done due to the vessel??s old age and natural corrosion. If the thickness record of Peng Yang is available, GHMJAC may continue to further its assessment on the permanent repair of the damage to Peng Yang.
(3) According to the Notice on Implementing the System of Compulsorily Scraping Commercial Vessels [JSF (2001) No.151] issued by the Ministry of Communication, the State Economic and Trade Commission and the Ministry of Finance on 29th March 2001, bulk cargo ships of over 31 years old should be compulsorily scraped, which should be implemented as of 1st May 2001. At the time of the occurrence of the accident, namely 23 August 2004, it has been 31 years plus 4 months and 22 days since ?°Peng Yang?± was built on 1st April 1973, which means that the vessel should be scraped as per the abovementioned regulations. Although CCS permits that with conditions the time limit for scraping such vessels could be extended to 1st April 2006, the owner should consider carefully whether the vessel may be extensively repaired with a huge cost or scrap the vessel directly.
(4) On the basis of the Survey Report issued by CCS Shenzhen regarding the conditions of Peng Yang after the Incident, it is concluded through comparison that the following repair costs are not necessary with regard to the subject incident:
A. The repair items as listed in Hai An??s Work-Done List and Statement of Account have no inevitable connection with the incident.
B. The repair items as listed in the Repair Contract concluded between Hai Cheng and Shenyue Shipping, the Work-Done Lists and the Statement of Account have no inevitable connection with the damage arising from the incident.
C. The repair items as listed in the Quotation and Work-Done List issued by Feng Hai concerning the repair of CO2 fire-fighting system have no inevitable connection with the damage arising from the incident.
D. The repair items as listed in the Work-Done List and the Statement of Account issued by Shenzhen MST concerning the repair of lifeboats have no inevitable connection with the damage arising from the incident.
E. The repairs by Shenzhen Xing Chang Hao, such as the replacement of the starboard windlass, bearings of the steering gears, and so forth have no inevitable connection with the damage arising from the incident.
F. The repairs of the crankshaft/engine base/connecting rod of DR0218 diesel engine conducted by Hai Rong on 9th October 2004 have no inevitable connection with the damage arising from the incident.
G. The payment of bonus specified in the Application for the Special Self-Repairing Bonus dated 13th November 2004 has no connection with the damage arising from the incident.
H. The paints and diluents sold by Hao Da Er should be calculated as per the actual paint required by the plates used for replacement in the permanent repair.
I. The supplies, such as floor glue and washing machines purchased from Shenzhen Nanshan Shekou Huakang Metal Store have no inevitable connection with the damage arising from the incident.
J. Among the 210 tons of the steel plates (thickness: 8mm/10mm/12mm) purchased from Guangzhou Jin Kai Li Trading Company, the reasonable cost should be calculated as per the actual quantity of the plates replaced for the damage repair.
K. Echo sounder??s damage is not tated/ascertained in CCS Shenzhen Survey Report, therefore, echo sounder purchased from Haizhu Hai Xin Ship Supplies has no inevitable connection with the damage arising from the incident.
L. The anchor cable connecting ring/zincs purchased from Xin Sheng Fa (Foshan) Company, except for those necessary for replacement of hull plates, have no inevitable connection with the damage arising from the incident, and therefore should be borne by the owner of Peng Yang.
M. The sealing elements purchased from Tang Zhen Tai have no inevitable connection with the damage arising from the incident.
N. The lubricating oils/gear oil purchased from Shenzhen Wang You Fu Lubricating Oil Co. Ltd. has no inevitable connection with the damage arising from the incident.
O. The stern shafts, stern sealing and other spare parts purchased on 27th September and 23rd November 2004 have no inevitable connection with the damage arising from the incident.
4. CCS Shenzhen issued a bill to Shenyue Shipping on 3rd June 2004 requesting for payment of charges for thickness measurement in the amount of RMB130,000. On 30th July, Shenyue Shipping paid CCS Shenzhen RMB130,000 for the special inspection of thickness measurement. CCS Shenzhen issued to Shenyue Shipping the invoice accordingly thereafter.
5. Based on the investigation report issued by HK MARDEP, there were aids to navigation on board Peng Yang, including one depth sounder (has not been started before the incident), one magnetic compass, one gyrocompass, one satellite navigator and two radars. It is reported that the aforesaid equipment was under good operating condition in the course of navigation.
6. On 18th October 2004, Shenyue Shipping and Yiu Lian Shekou concluded a repair contract with regard to Peng Yang. It is stipulated that: Shenyue Shipping entrusts Yiu Lian Shekou to repair Peng Yang based on the Repair List provided by Shenyue Shipping which was confirmed and signed by both parties; the term of repair shall be determined as of Peng Yang??s entry into the dockyard; the price shall be 60% higher than that prescribed in the Standard Quotation of Ship Repair 1992. For those items that are not included therein, it shall be determined as per the repair cost of COSCO vessels in recent years. However, the cost of specialized companies and the price of materials and supplies directly provided to the vessel shall be 15% higher. Peng Yang shall confirm all the bills and make full payment for the repair before leaving the dockyard. The crew members of Shenyue Shipping can also carry out repair without affecting the operation of Yiu Lian Shekou.
Peng Yang started the repair in Yiu Lian Shekou on 30th October 2004 and finished it on 12th November. The chief officer of Peng Yang confirmed and signed on the Work-Done List for Repair Items of Peng Yang issued by Yiu Lian Shekou. On 12th November, Yiu Lian Shekou issued the Annual Repair Charges Aggregate of Peng Yang to Shenyue Shipping claiming for total repair cost in the amount of RMB4,444,629. The aforesaid parties jointly determined through negotiation that the total repair cost of Peng Yang amount to RMB4,280,000. Based on the Work-Done List for Repair Items of Peng Yang and Annual Repair Charges Aggregate of Peng Yang, the repair items of Peng Yang in Yiu Lian Dockyards include the docking repair service, docking repair projects and pollution prevention engineering. The docking repair service includes: (1) hull cleaning (including blasting and painting of hull and shell marking); (2) replacement of zinc slab (zinc slab shall be provided by the shipowner); (3) suction box project; (4) replacement of bottom plate; (5) vacuum tank test of log equipment; (6) bottom plugging; (7) repair of anchor chain; (8) repair of rudder plate; (9) removal and inspection of tail shaft; (10) installation of depth sounder; (11) removal and installation of suction pipe of ballast tank; (12) Removal and installation of the plugging of the suction pipe of tank of holds No.2 and No.7 and engine room; (13) removal and installation of vent pipe and sounding pipe of the right bunker and oil bunker in engine room; (14) Fuel oil tank steam pipe test; (15) Airtight test of bunker; (16) Airtight test of the right sludge tank of engine room; (17) Removal and installation of doors for airtight test of oil tank; (18) Replacement of expansion joint and dredging of pipes; (19) Inspection and repair of Emergency fire pump with vacuum pump; (20) Cleaning of bunker No.14; (21) Cleaning of fore, right and left stool tanks and sludge tank of the main engine; (22) Cleaning pipe tunnel; (23) Correction and repair of davit arms in the living quarters; (24) Cleaning of oil tank; (25) Replacement of cable conduit of depth sounder; (26) Replacement of end cap pipe of the ice engine cooler.
Shenyue Shipping paid Yiu Lian Shekou RMB4, 000,000 for the repair on 12th November, and RMB280,000 on 23rd November, totaling RMB4,280,000. Yiu Lian Shekou issued an invoice in the amount of RMB4,280 000 thereof.
The Defendants are of the following opinions: Firstly, the repair of Peng Yang carried out in Yiu Lian Shekou falls within her annual inspections and repairs instead of the repair for damage caused by the incident. Therefore, it has no connection with the subject incident. Secondly, Peng Yang ran on the rocky shoal so that she was damaged in way of her double bottom. However, the repair she accepted in Yiu Lian Shekou involves substantial replacement of the internal frames and reinforcing materials inside the holds as required by her old age and severe rusting of the steel plate, which have no connection with the damage due to her running on rocky shoal. Thirdly, the depth sounder of Peng Yang was broken before the incident so that the repair thereof has no connection with the subject incident. In summary, the repair cost in the amount of RMB4, 280, 000 as claimed by the Plaintiffs shall not be recognized.
The collegial panel held that: (1) In accordance with the provisions of the Regulations on the Administration of Old Commercial Vessels, the age of mandatory scrapping of Peng Yang is above 33 years. Peng Yang was built on 1st April 1973. At the time of the incident, she was 31 years, 4 months and 24 days old, which is below the age of mandatory scraping. Shenzhen Shipping has the right to decide to scrap the vessel in advance or to continue operation after appropriate repair. The conclusion made by GHMJAC that Peng Yang was subject to mandatory scraping at the time of the incident lacks sufficient evidence and should not be supported. (2) In the light of Item 2 of Article 3 of the Provisions of the Supreme People??s Court on Trials of Cases of Disputes over Damages due to Ship Collision and Contacts (hereinafter referred to the ?°Provisions?±), where the annual inspection and repair of a vessel, or the repairs for carried out for the purpose of keeping a vessel??s seaworthiness or for purposes other than repair of the collision damage is carried out along with the repair of the collision damage, the compensation for repair cost shall be limited to that incurred by the repair of damage which was actually caused by the ship collision. In the subject case, the compensation for the repair cost shall be limited to the cost and expenses incurred by the repair of the actual damage to Peng Yang. According to the Work-done List for repair items of Peng Yang and the Annual Repair Charges Aggregate incurred by Peng Yang, the repair items of Peng Yang involve both the damage caused by the subject incident and daily maintenance. The cost of daily maintenance should not be excluded from the compensation. The Plaintiffs failed to provide any evidence in support of the damage to the tail shaft, depth sounder and davit arms in the living quarter caused by the subject incident. Therefore, removal and inspection of the tail shaft, replacement of depth sounders, and correction of the davit arms fall within the daily maintenance of the vessel, and the repair cost arising there from should be deducted from the amount of RMB4,280,00 claimed by the Plaintiff. It is specified in the Annual Repair Charges Aggregate of Peng Yang, the cost of disconnecting and inspection of tail shaft amounts to RMB45,860, the cost of replacement of the depth sounder amounts to RMB12,100, and the cost of correcting davit arms amounts to RMB4, 100. Accordingly, the cost of repair of Peng Yang by Yiu Lian Shekou due to the damage caused by the subject incident actually amounts to RMB4,217, 940.
7. On 1st October 2004, Shenyue Shipping and Bofu Shenzhen concluded a Repair Contract. It is agreed that Shenyue Shipping entrusts Bofu Shenzhen to carry out repair of Peng Yang based on the items specified in the Repair List provided by Shenyue Shipping at the quoted price therein in the amount of RMB1, 585, 416 (of which the cost of replacing steel structure amounts to RMB1, 501, 928, the cost of marine engineering amounts to RMB52, 732, and the cost of electric work amounts to RMB30, 756). Shenyue Shipping provides the steel materials and wharfs. The items actually repaired shall be those confirmed and accepted by Shenyue Shipping. The cost and expenses settled between the parties shall be computed based on items confirmed and accepted and the quoted price. Upon completion of the repair, Bofu Shenzhen issued a bill of the repair cost to Shenyue Shipping claiming for payment of repair in the amount of RMB1,889,429. The aforesaid parties determined through negotiation on 25th November that the total repair cost of Peng Yang is RMB1, 650, 000.
Shenyue Shipping paid Bofu Shenzhen for the repair RMB400, 000 no 22nd October 2004, and RMB300, 000 on 28th October, RMB300, 000 on 26th November, RMB200, 000 on 15th December, RMB200, 000 on 3rd February 2005, and RMB250, 000 on 9th March, which amount to RMB1,650,000 in total. On 6th December 2004, Bofu Shenzhen issued an invoice to Shenyue Shipping in the amount of RMB1, 650, 000.
The Defendants believe that the repair carried out by Bofu Shenzhen exceeds the items identified in the survey report issued by CCS. Some of the repair which fall within the repair of Peng Yang??s rusting has no connection with the subject incident. Therefore, the Defendants refuse to recognize the aforesaid repair cost of RMB1,650, 000 as claimed by the Plaintiffs.
The collegial panel held that the cost of repair of Peng Yang??s rusting which has no connection with the subject incident shall be excluded from the compensation items. On the basis of bill issued by Bofu Shenzhen on 18th November 2004, the cost of repair and replacement of the rusted and broken hatch cover (see page 6 of the bill) in the amount of RMB10,346 shall be excluded from the compensation items. After deduction thereof, the cost of repair of damage caused by the subject incident carried out by Bofu Shenzhen amounts to RMB1,639,654 in total.
8. On 16th October 2004, Bofu Hong Kong issued a bill to Shenyue Shipping claiming for payment of repair in the amount of HKD20,000. The Reimbursement Examination & Approval Sheets of Shenyue Shipping dated 17th March 2005 indicates the payment of repair in the amount of HKD20,000. Shenyue Shipping made no explanation or statement concerning the incurrence of the aforesaid repair cost during the hearing.
The Defendants believe that there is no specific list of repair items and payment vouchers in support of the aforesaid repair cost so that they refused to recognize the same.
The collegial panel held that the Plaintiffs failed to provide relevant list of repair items and payment vouchers to prove the aforesaid repair cost the claimed. Therefore, such claim shall not be supported.
9. On 18th November 2004, Hai An issued a work done list to Peng Yang stating that Hai An was entrusted by Shenzhen Shipping to carry out repair of Peng Yang at Ma Wan Wharf from 8th October to 18th November and had already finished the repair which also complied with the requirement of repair. The repair items include: removal and installation diesel generator set; removal, installation, shifting, and repair of generator as well as centering of diesel engine midline; removal and installation of inward and outward frame pipeline, supercharger, cooler and other ancillaries as well as shifting and placing of frames; removal and installation of main bearing cover and crank set as well as lifting the same out of the hold into the dockyard and back to the vessel upon completion of repair; inspection of the main bearing hole axis; load test after engine test and completion of repair; repair of engine base; repair of air intake valve No.6 and fuel pump roller bush. The chief engineer of Peng Yang signed on the aforesaid work done list for confirmation. On 19th November, Hai An issued a Statement of Account to Shenzhen Shipping claiming for repair cost in the amount of RMB52,532. On 30th April 2005, Shenyue Shipping paid RMB52,532 to Hai An for the repair. Hai An issued a corresponding invoice to Shenyue Shipping.
The Defendants refuse to recognize the aforesaid repair cost on the grounds that the main engine and auxiliary engine of Peng Yang were not damaged in the subject incident, but Shenyue Shipping still arranged oil supply to Peng Yang so that the aforesaid repairs fall within Peng Yang??s daily maintenance and have no connection with the subject incident.
The collegial panel held that the Plaintiffs failed to provide evidence in support of the connection between the aforesaid repair and the subject incident. Therefore, the aforesaid repair cost of RMB52,532 claimed by the Plaintiff shall not be supported.
10. Shenyue Shipping concluded a Repair Contract with Hai Cheng (of which the date of conclusion is unknown). It is stipulated that Shenyue Shipping entrusts Hai Cheng to repair generating set No.3 at the price of RMB157,650 (including the cost of fitting and grinding), or RMB142,650 (excluding the cost of fitting and grinding) within 10 days. The chief engineer of Peng Yang signed on the work done lists issued by Hai Cheng respectively on 11th and 24th January and 10th March 2005. Hai Cheng issued a bill to Shenyue Shipping subsequently indicating the repair cost in the amount of RMB198,550. On 10th June 2005, Shenyue Shipping paid RMB180,000 for the aforesaid repair, and Hai Cheng issued an invoice thereof to Shenyue Shipping thereafter.
The Defendants believe that generating set No.3 of Peng Yang did not suffer any damage in the subject incident, and the repair was carried out after Peng Yang was repaired and departed. Therefore, the aforesaid repair cost has no connection with the subject incident and should not be recognized.
The collegial panel held that, the subject incident did not cause any damage to generating set No.3 of Peng Yang, and the aforesaid repair was carried out and completed after Peng Yang??s departure upon repair on 19th November 2004. Therefore, the aforesaid repair cost in the amount of RMB180,000 as claimed by the Plaintiffs shall not be supported.
11. On 18th October 2004, Feng Hai provided a Quotation Letter to Southern Ocean Shipping with regard to the inspection and repair of carbon dioxide extinguishing system and fire extinguishers. On 24th October, the chief officer of Peng Yang signed on the work done list issued by Feng Hai for confirmation, and Feng Hai issued a quotation letter to Southern Ocean Shipping which specifies that the repair cost of carbon dioxide extinguishing system and fire extinguishers of Peng Yang amounts to RMB55, 270. On 3rd February 2005, Shenyue Shipping paid Feng Hai RMB55,270 for the repair, and Feng Hai issued to Shenyue Shipping the invoice thereof.
The Defendants believe that the extinguishing system and fire extinguishers did not suffer any damage in the subject incident so that the former has no connection with the latter. Therefore, the aforesaid repair cost should not be recognized.
The collegial panel held that: According to the survey report issued by CCS Shenzhen, after Peng Yang got grounded her bow and holds Nos. 1 to 4 were all underwater. Accordingly, the carbon dioxide extinguishing system of Peng Yang which was equipped in the fore peak was also underwater. During the period of 34 days from 23rd August when Peng Yang got grounded to 27th September when she was refloated, the carbon dioxide extinguishing system might be damaged. Therefore, it is reasonable and appropriate for Shenyue Shipping to carry out repair and inspection thereof. The aforesaid repair cost in the amount of RMB55, 270 as claimed by the Plaintiffs shall be supported.
12. On 12th October 2004, Shenyue Shipping and Lin Zhilong entered into a Repair Contract agreeing as follows: Shenyue Shipping entrusts Lin Zhilong to remove the rust and clean the shell plating above the light water line of Peng Yang at the unit price of RMB8.00/m2 and total price in the amount of RMB48,000. On 26th October, Shenzhen Guan Mei Entity Company issued to Shenyue Shipping an invoice in the amount of RMB38,889 for the cost of construction materials. On 27th October, Shenyue Shipping paid RMB38,889 to Lin Zhilong. The Plaintiffs stated during the hearing that Shenzhen Guan Mei Entity Company issued the invoice of the cost of derusting to Shenyue Shipping for the convenience of payment.
The Defendants refuse to recognize the aforesaid cost by reason that this is duplication of the derusting and painting costs incurred in Yiu Lian Shekou.
The collegial panel held that the it can be seen from the Work Done List of Peng Yang and the Annual Repair Charges Aggregate incurred by Peng Yang, the cost of cleaning and derusting the shell plate plating above the light water line are not included in the repair items carried by Yiu Lian Shekou. Therefore, the aforesaid cost in the amount of RMB38,889 as claimed by the Plaintiffs shall be supported.
13. Shenzhen MST issued to Shenyue shipping the bill of inspection and repair of the life rafts in the amount of RMB1,797.50 on 18th June 2004, and another bill of inspection and repair of the life rafts in the amount of RMB1,544 on 24th August 2004. On 21st October, the chief officer of Peng Yang signed on the Work Done List issued by Shenzhen MST for confirmation. On 18th November, Shenyue Shipping made payment of RMB2,468 for the inspection and repair of the life rafts in the amount of RMB2, 468. On 27th October, Shenzhen MST issued an invoice thereof to Shenyue Shipping.
The Defendants refused to recognize the aforesaid cost on the grounds that the life rafts were placed at the living quarter which did not sink into sea water according to the photos taken after Peng Yang??s grounding. Apparently, the life rafts did not suffer any damage due to the subject incident.
The collegial panel held that it can be seen from the photos taken after Peng Yang??s grounding that the life rafts equipped with Peng Yang did not sink into sea water during the incident. Furthermore, one of the bills of inspection and repair of life rafts was issued before the occurrence of the subject incident. Therefore, the aforesaid cost of inspection and repair of life rafts as claimed by the Plaintiffs has no connection with the subject incident and shall not be supported.
14. Xing Chang Hao issued to Peng Yang a Work Done List specifying the repair cost of RMB32,960 on 20th October 2004, a Work Done List specifying the repair cost of RMB5,810 on 25th October, a Work Done List specifying the repair cost of RMB19,963 on 17th November, two Work Done Lists respectively specifying the repair cost of RMB9, 585 and RMB14, 990 on 18th November, a Work Done List specifying the repair cost of RMB5,553 on 6th December, and another two Work Done Lists respectively specifying the repair cost of RMB7, 400 and RMB12, 514 on 7th December, which total RMB108,775. The chief officer and chief engineer of Peng Yang signed on every of the aforesaid Work Done Lists for confirmation. Shenyue Shipping paid Xing Chan Hao for the repair RMB78, 500 on 30th December 2004 and RMB108,775 on 3rd February 2005. Xing Chan Hao issued to Shenyue Shipping three invoices of the repair cost totaling RMB24,427 on 19th August 2004, and another three invoices of the repair cost totaling RMB162,848 on 27th December.
The Defendants refused to recognize the aforesaid repair cost on the grounds that the aforesaid repair was carried out for the damage caused by natural corrosion instead of the subject incident, that some of the repairs were carried out after Peng Yang??s departure upon completion of repair, and that some of the invoices of repair cost were issued before the date of incident.
The collegial panel held that: The repair cost specified in the Work Done Lists provided by the Plaintiffs which were issued by Xing Chang Hao and confirmed by Peng Yang amount to RMB108,775. The repair cost of RMB187,275 claimed by the Plaintiff is against the fact. Peng Yang first set sail on 19th November 2004 after the repair. The repair carried out by Xing Chang Hao thereafter has no connection with the subject incident so that the cost thereof shall be deducted. Through investigation and examination, RMB25,467 shall be deducted. Furthermore, the three invoices of repair issued by Xing Chang Hao to Shenyue Shipping on 29th August 2004 have no connection with this case and shall not be adopted as effective evidence. In summary, Shenyue Shipping shall pay Xing Chang Hao RMB83,308 for the repair of damage caused by the subject incident.
15. On 9th and 19th October 2004, Hai Rong issued two quotation letters with regard to the repair of the crankshaft, engine base, and connecting rod of DR0218 diesel engine of Peng Yang, which amount to RMB140,000 in total. Shenyue Shipping agreed to pay RMB115,600 after examination and verification. On 18th November, the chief engineer of Peng Yang signed on the Receipt of Goods (substitute for final work acceptance list) issued by Hai Rong. On 23rd November 2004, Shenyue Shipping paid RMB115,600 to Hai Rong for the repair, and Hai Rong issued the invoice thereof to Shenyue Shipping.
The Defendants refused to recognize the aforesaid repair cost claiming that it has no connection with the subject incident.
The collegial panel held that the Plaintiff failed to prove that Peng Yang??s diesel engine was damaged due to the subject incident. Therefore, the repair cost in the amount of RMB115,600 as claimed by the Plaintiffs has no connection with the subject incident and should not be supported.
16. On 13th November 2004, the chief officer of Peng Yang applied on behalf of the deck department for the special self-repairing bonus. It is stated that for the purpose of saving repair expenses the crew members of the deck department had worked overtime for 10 days to work outboard and overhead so as to hose both sides with high pressure fresh water. They had hosed 4,000m2 in total. The starboard was paint with primary coat and finish coat totaling 2,000m2. The load water line was retraced for 160ms. The crew members applied for bonus for the aforesaid efforts. On 17th November, Shenyue Shipping agreed to pay and the chief officer of Peng Yang received the bonus of RMB10,000.
The Defendants refused to recognize the bonus by reason that the aforesaid items of self-repairing correspond to those carried out by Yiu Lian Shekou.
The collegial panel held as follows: It is agreed in the repair contract between Shenyue Shipping and Yiu Lian Shekou that the crew members are allowed to carry out self-repairing. The aforesaid crew members did save some expenses for Peng Yang by carrying out self-repair and the amount of bonus applied is also reasonable. Therefore, the self-repairing bonus in the amount of RMB10,000 as claimed by the Plaintiffs should be sustained.
17. On 23rd November 2004, Hao Da Er Huizhou issued two Cargo Sale Inventories to Shenyue Shipping indicating the paint it had provided to Peng Yang for the repair which is worth RMB182,174.60. The Plaintiffs also provide three delivery orders in support thereof. On 30th December 2004, Shenyue Shipping paid Hao Da Er Huizhou RMB182,174.60 for the paint, and Hao Da Er Huizhou issued an invoice thereof to Shenyue Shipping. The Defendants have not raised any objection thereto.
The collegial panel held that the Defendants have no objection to the aforesaid expenses of paint in the amount of RMB182,174.60 which should be ascertained.
18. From 2nd October to 19th November 2004, Hua Kang Hardware had provided with Peng Yang 20 lots of supplies and materials which is worth RMB49,569.10 in total. On 29th December 2004, Shenyue Shipping paid Hua Kang Hardware RMB52, 827.10 for the supplies and materials it provided, and Hua Kang Hardware issued the relevant invoices to Shenyue Shipping.
The Defendants refused to recognize the aforesaid expenses by stating that the supplies and materials provided by Hua Kang Hardware were for the purpose of daily use in the living quarter which was not flooded after Peng Yang??s grounding incident. Therefore, they believe the aforesaid expenses of supplies have no connection with the subject incident. The Plaintiffs argued that most of the supplies of Peng Yang were stored in the fore peak which was completely flooded with water after the incident. Therefore, the supply of the aforesaid supplies and materials is related to the subject incident.
The collegial panel held that it is reasonable for Peng Yang to supplement the supplies and materials during the repair on the grounds that part of the supplies and materials stored in the fore peak which was flooded with sea water after Peng Yang??s grounding could be damaged by sea water. Therefore, the aforesaid expense claimed by the Plaintiffs shall be supported. However, according to the delivery orders provided by Hua Kang Hardware, the total cost of the supplies and materials it provided to Peng Yang amounts to RMB49,569.10. Accordingly, the expenses of supplies claimed by the Plaintiffs shall be ascertained as RMB49,569.10.
19. On 9th October 2004, Shenyue Shipping and Guangzhou Jin Kai Li concluded a Contract for purchase and sales of steel plates. It is stipulated that Guangzhou Jin Kai Li provides Shenyue Shipping with three types of ordinary steel plates totaling 210MT having a worth of RMB994,700. The first batch of steel plates totaling 100MT was provided on 10th October, and the remaining steel plates were supplied before 18th October. Guangzhou Jin Kai Li had sold to Shenyue Shipping by 20th October 196.59MT of steel plates priced at RMB930,760.50. Shenyue Shipping paid Guangzhou Jin Kai Li for the purchase respectively RMB475,327 on 11th October 2004, RMB320,580 on 15th October, and RMB134,853 on 21st October, which amount to RMB930,760. Guangzhou Jin Kai Li issued the invoices to Shenyue Shipping accordingly.
The Defendants argued that the dockyard will provide steel plates in general practice so that it is unnecessary for the Plaintiffs to otherwise purchase the same. Therefore, the Defendants refused to recognize the cost of purchasing the steel plates in the amount of RMB930,760 as claimed by the Plaintiff.
The collegial panel held that: Shenyue Shipping and Bofu Shenzhen concluded a Repair Contract on 1st October 2004 stipulating that Shenyue Shipping provides the steel plates. Based on the Assessment Report of the Repair Cost of Peng Yang issued by the GHMJAC, 196.52MT of steel plates were used during the repair carried out by Bofu Shenzhen which corresponds to the quantity of steel plates Shenyue Shipping had purchased from Guangzhou Jin Kai Li. Therefore, the cost of purchasing the steel plates in the amount of RMB930,760 as claimed by the Plaintiff should be supported.
20. On 15th November 2004, Shenyue Shipping paid Shenzhen Wei Chuang Xin Industrial Co., Ltd. RMB63,280 for purchase of the steel plates. On 16th November, Shenzhen Wei Chuang Xin Industrial Co., Ltd. issued relevant invoices to Shenyue Shipping.
The Defendants refused to recognize the aforesaid expenses for purchasing the steel plates in the amount of RMB63, 280 as claimed by the Plaintiffs on the grounds that it is unnecessary for the Plaintiffs to otherwise purchase any steel plates since the dockyards will usually provide the same, and that the Plaintiffs failed to provide any evidence in support of the specifications, quantity and purposes of the steel plates they had purchased.
The collegial panel held that the Plaintiff failed to provide evidence in support of the specifications, quantity and purpose of the steel plates they had purchased. The Defendants?? defense is tenable. Therefore, the expenses for purchasing the steel plates in the amount of RMB63, 280 as claimed by the Plaintiffs should not be supported.
21. On 28th October 2004, Shenyue Shipping paid Hai Xin Supplying Station RMB56,000 for purchase of the depth sounder. On 4th November, Hai Xin Supplying Station issued corresponding invoices.
The Defendants refused to recognize the aforesaid expenses incurred by purchase of the depth sounder in the amount of RMB56, 000 as claimed by the Plaintiffs on the grounds that the depth sounder of Peng Yang was broken before the subject incident.
The collegial panel held that the Plaintiffs failed to provide any evidence in support that the depth sounder of Peng Yang was damaged due to the subject incident, and the replacement thereof falls within Peng Yang daily maintenance. Therefore, the aforesaid expenses for purchase of the depth sounder in the amount of RMB56,000 as claimed by the Plaintiffs should not be supported.
22. Xin Sheng Fa provided Shenyue Shipping with two triple connecting links which is worth RMB6,700 on 23rd October 2004, and 40 anti-corrosion Zinc blocks priced at RMB10,800 on 3rd November 2004. On 18th November, Shenyue Shipping paid Xin Sheng Fa RMB17,500 for purchase of the triple connecting links and anti-corrosion Zinc blocks. Xin Sheng Fa issued the corresponding invoices to Shenyue Shipping.
The Defendants believe that Peng Yang??s grounding caused damage to the bottom plate but would not cause damage to or loss of the triple connecting links and anti-corrosion Zinc blocks. The damage to or loss of the triple connecting links and anti-corrosion Zinc blocks have no connection with such incident. Therefore, they refused to recognize the cost of purchasing the triple connecting links and anti-corrosion Zinc blocks in the amount of RMB17,500.
The collegial panel held that: 1. Triple connecting links are not accessory to the cable chains. The Plaintiff failed to prove that the triple connecting links were damaged due to the subject incident; 2. Anti-corrosion Zinc blocks are equipped on the hull bottom to prevent corrosions. They are always placed on the hull bottom no matter Peng Yang got grounded or not. The Plaintiffs?? purchasing of the anti-corrosion Zinc blocks fall within the daily maintenance of Peng Yang. Therefore, the cost of purchasing triple connecting links and anti-corrosion Zinc blocks in the amount of RMB17,500 as claimed by the Plaintiffs should not be supported.
23. On 17th October 2004, Dong Tang Zhen Tai provided Peng Yang with the sealing materials worth RMB1,264 plus the freight charges in the amount of RMB20. On 18th November, Shenyue Shipping paid Dong Tang Zhen Tai RMB1,284 for the aforesaid sealing materials, and Dong Tang Zhen Tai issued the invoices thereof.
The Defendants believe that the Plaintiff failed to provide evidence in support of the position where the aforesaid sealing materials were applied and its connection with the subject incident. Therefore, they refused to recognize such expenses.
The collegial panel held that the aforesaid sealing materials were used in the joints of the cargo holds. Most of the cargo holds were flooded after the subject incident, but the joints of holds were still above the water according to the photos of the incident provided by the Defendants. The Plaintiffs?? purchasing of the sealing materials falls within the daily maintenance of Peng Yang. Therefore, the cost of purchasing the sealing materials in the amount of RMB1,284 as claimed by the Plaintiffs should not be supported.
24. On 1st November 2004, Wang You Fu provided Peng Yang with main engine oil, anti-wear hydraulic fluids No.32, gear oil No.220 and HT1064 marine diesel engine oil with medium speed, which are worth RMB238,010 in total. On 18th November, Shenyue Shipping paid Wang You Fu RMB238,010 for the aforesaid goods, and Wang You Fu issued the relevant invoices.
The Defendants believe that the oil products provided by Wang You Fu fall within those of vessel??s daily consumption. Peng Yang was berthing at Ma Wan Wharf being repair. It is unnecessary to start her engine so that no fuel oil was required then. Therefore, the Defendants refused to recognize the aforesaid cost of oil which has no connection with the subject incident.
The collegial panel held that the oil products provided by Wang You Fu fall within those of vessel??s daily consumption. The cost of purchasing aforesaid oil products by Shenyue Shipping falls within the maintenance expenses during Peng Yang??s suspension of navigation. The Plaintiffs had claimed for the vessel??s maintenance expenses based on the assessment report concerning the loss for earnings and vessel maintenance expenses of Peng Yang due to her grounding issued by Xingyue Accountants. The Plaintiffs should not otherwise claim for the aforesaid cost of oil against the Defendants repeatedly. Therefore, the aforesaid cost of oil in the amount of RMB238,010 should not be supported.
25. On 28th September 2004, Shenyue Shipping paid ORE RMB229, 538 (converted from HKD216, 894 based on the exchange rate of 1.0583) by cash for purchase of tail shafts and shaft seals, and ORE issued the payment receipt to Shenyue Shipping. On 22nd December, Shenyue Shipping paid ORE RMB26,981 for freight of the aforesaid tail shafts and shaft seals. On 31st December, ORE issued the payment receipt to Shenyue Shipping. Furthermore, ORE also issued an invoice which indicates the cost of and the cost of delivering the tail shafts and shaft seals. In summary, Shenyue shipping made payments of price the tail shafts and shaft seals and the freight thereof totaling RMB256, 519.
The Defendants believe that the Plaintiff failed to prove that the aforesaid tail shafts and shaft seals were delivered to and used for Peng Yang, and that the same were damaged due to the subject incident. Therefore, the Defendants refused to recognize the aforesaid cost incurred by the purchase of the tail shafts and shaft seals which has no connection with the subject incident.
The collegial panel held as follows: According to the inspection report concerning the engine, navigational equipment, and electric of Peng Yang issued by CCS Shenzhen, the tail shafts and shaft seals of Peng Yang were repaired and replaced. Therefore, Shenyue Shipping purchased the tail shafts and shaft seals from ORE for Peng Yang. Nevertheless, the Plaintiffs failed to prove that Peng Yang??s tail shafts were damaged due to the subject incident. Accordingly, the repair of Peng Yang??s tail shafts shall be deemed as her daily maintenance. The cost of the aforesaid tail shafts and shaft seals in the amount of RMB256, 519 should not be supported.
26. According to the Work Done List issued by Longshan to Peng Yang, Longshan had carried out cleaning the oil tanks (totaling 70m3) and disposed of the oil water (totaling 740m3) for Peng Yang from 3rd to 6th October 2004. The chief engineer of Peng Yang singed on the aforesaid Work Done List for confirmation. On 14th October, Longshan issued a quotation letter to Shenyue Shipping which specifies that the charges for cleaning the oil tank amount to RMB30/m3, and the charges for disposing of the oil water amount to RMB60/M3. On 1st December 2004, Longshan issued an invoice of the charges for cleaning of oil tank in the amount of RMB54,750. On 3rd February 2005, Shenyue Shipping paid Longshan RMB63,000 for cleaning of oil tank.
The Defendants refused to recognize the aforesaid expenses by stating that they have no connection with the subject incident.
The collegial panel held as follows: The subject incident caused severe water ingress into cargo holds and engine rooms of Peng Yang. It is reasonable to clean the oil tank before the repair, and the relevant charges therefor shall be ascertained. Based on the operation specified in the Work Done List of Peng Yang and the quotation issued by Longshan, the total tank cleaning charges shall be RMB46, 500.
27. As per the Records of Tug Services and the bills provided by the Plaintiffs, the tug fee incurred by Peng Yang at Ma wan Wharf by entrusting Lianda to arrange tug services for shifting amounts to RMB47,775. On 15th March 2005, Shenyue Shipping paid RMB47,700 for the tug service, and Lianda issued to Shenyue Shipping the relevant invoice.
The Defendants believe that the aforesaid tug fee is unnecessary and the Plaintiffs failed to prove the relevance between the tug fee and the subject incident. Therefore, the Defendants refused to recognize the aforesaid charges claimed by the Plaintiff.
The collegial panel held as follows: Shenyue Shipping entrusted Lianda to provide tug service as required by the repair of Peng Yang at Mawan Wharf. The tug fee incurred thereby is reasonable. Therefore, the tug fee claimed by the Plaintiffs in the amount of RMB47,700 shall be supported.
28. On the basis of the Records of Tug Services at Shenzhen port and the bills of tug fee issued by Yiulian Shekou provided by the Plaintiffs, on 30th October 2004, Yiu Lian Shekou arranged ?°Yiu Lian Tuo 27?± and ?°Yiu Lian Tuo 38?± to tow Peng Yang from Ma Wan Wharf to Yiu Lian Shekou, which incurred the tug fee in the amount of RMB10,440. On 12th November, Yiu Lian Shekou arranged ?°Yiu Lian Tuo 27?± and ?°Yiu Lian Tuo 38?± to tow Peng Yang from Yiu Lian Shekou to Ma Wan Wharf, which incurred the tug fee in the amount of RMB7,830. Shenyue Shipping paid Yiu Lian Shekou for tug services RMB10,440 on 12th November and RMB7,830 on 19th November. The aforesaid tug fees total RMB18,270. Yiu Lian issued to Shenyue Shipping the invoices thereof.
The Defendants believe that Yiu Lian Shekou has already charged for tug services which were listed in the bills of repair cost. The aforesaid tug fee claimed by the Plaintiff was repeated and should not be recognized.
The collegial panel held that: Based on the Work-Done List for Annual Repair of Peng Yang and the Annual Repair Charges Aggregate incurred by Peng Yang, Yiu Lian Shekou arranged tugs to assist in Peng Yang??s entry into and departure from the dock once, which incurred tug fee in the amount of RMB23, 040. The aforesaid expense does not include the tug fee incurred by towing of Peng Yang from Ma Wan Wharf to Yiu Lian Shekou before the repair and from Yiu Lian Shekou to Ma Wan Wharf. Therefore, the aforesaid tug fee in the amount of RMB18, 270 as claimed by the Plaintiffs was not repeated and falls within reasonable cost and shall be supported.
29. During the repair at Ma Wan Wharf, the crew members of Peng Yang piloted the vessel in berthing at and departure from the wharf, based on which they applied for service fees for berthing and departure. On 23rd December 2004, Shenyue Shipping paid the relevant crew members RMB3,000 for their efforts of berthing and departure. The Defendants have not raised any objection thereto. The collegial panel ascertained the aforesaid service fees in the amount of RMB3,000.
30. The berthing fee incurred during the Peng Yang??s stay at Ma Wan Wharf for receiving repair amounts to RMB110,000. On 6th December 2004, Ma Wan Wharf issued the invoice of the aforesaid berthing fee to Shenyue Shipping which specifies as ?°Berthing Fee of Peng Yang during the Repair?±. On 20th December, Shenyue Shipping made payment of the berthing fee in the amount of RMB110,000 to Ma Wan Wharf.
The Defendants claimed that the berthing fee incurred during the time of unloading (i.e. 3 days) shall be deducted.
The collegial panel held that the aforesaid berthing fee was incurred by the repair of Peng Yang and has no connection with the unloading according to the records specified in the invoice. Therefore, the aforesaid berthing fee in the amount of RMB110,000 as claimed by the Plaintiff shall be supported.
31. Inspection Fee
(1) On 30th April 2005, Shenyue Shipping paid CCS Shenzhen RMB26,000 for the inspection of Peng Yang after her running on the rocky shoal, and CCS Shenzhen issued the relevant invoice to Shenyue Shipping.
(2) After CCS Shenzhen carried out the additional inspection concerning the damage to Peng Yang??s hull, engine, navigational equipment and electric facilities due to her running on the rocking shoal and grounding as well as the repair thereof, Shenyue Shipping paid CCS Shenzhen RMB6, 857 for the inspection on 23rd February 2005.
(3) At the request of Shenyue Shipping, CCS Shenzhen arranged surveyor to embark Peng Yang to determine her constant. On 17th November, CCS Shenzhen issued the certificate of constant determination. On 22nd December 2004, Shenyue Shipping paid CCS Shenzhen RMB6,000 for the aforesaid inspection. CCS Shenzhen issued the invoice thereof to Shenyue Shipping.
The Defendants have no objection to the cost specified in item (1) and (2), but refuse to recognize that specified in item (3). They believe the cost of determining Peng Yang??s constant has no connection with the subject incident.
The collegial panel ascertained the cost specified in item (1) and (2) to which the Defendants have no objection. The vessel??s constant is the important parameter for determining the accuracy of draft survey. After a vessel received repair, her constant might change. Therefore, it is appropriate for Shenyue Shipping to apply for determination of Peng Yang??s constant after repair, which also is related to the subject incident. The inspection fee incurred by determination of Peng Yang??s constant shall also be ascertained. Accordingly, the inspection fee shall be ascertained as RMB38, 857.
In summary, the cost and expenses incurred by the repair of Peng Yang due to the subject incident amount to RMB7,471,891.70.
(III) Cargo Loss
1. On 10th August 2005, Shenyue Shipping entrusted CCIC to carry out assessment on whether the cargo of coal carried on board of Peng Yang was damaged in the subject incident. On 22nd August, CCIC sent a quotation letter to Shenyue Shipping indicating the assessment fee of RMB30,000. On 28th August, CCIC issued the Assessment Report., Shenyue Shipping paid CCIC the cargo loss assessment fee in the amount of RMB25,000 on 30th August, and RMB5,000 on 20th September, which amount to RMB30,000 in total. CCIC issued to Shenyue Shipping the invoices thereof. The Defendants have not raised any objection thereto. The collegial panel ascertained the aforesaid assessment fee in the amount of RMB30,000.
2. On 19th September 2005, this court accepted the case of dispute over cargo damage under contract of carriage of goods by waterway filed by PICC Shenzhen against Shenzhen Shipping. PICC Shenzhen pleads to this court to order Shenyue Shipping to compensate the cargo loss in the amount of RMB1, 660, 610.50 and the interest thereof, and to bear all the relevant legal cost. On 14th December 2005, this court rendered the Civil Judgment (2005) GHFCZ No.373 ordering Shenzhen Shipping to compensate PICC Shenzhen RMB1,386,314.29 and the interest thereof which shall be calculated based on the current fund loan interest rate published by People??s Bank of China in the corresponding period from 1st January 2005 until the day when all the payments are made in full. The legal cost amounts to RMB18, 600, of which RMB3, 072.31 shall be borne by PICC Shenzhen and RMB15, 527.69 shall be borne by Shenzhen Shipping. Shenzhen Shipping dissatisfied with the aforesaid judgment and filed an appeal to Guangdong Higher People??s Court. On 9th August 2006, Guangdong Higher People??s Court rendered the Civil Judgment under the reference of (2006) YGFMSZ No.62 rejecting the appeal and affirming the original judgment. The acceptance fee incurred by the appeal in the amount of RMB18,600 shall be borne by Shenzhen Shipping. On 1st November, Shenzhen Shipping made the compensation of the cargo loss, interest and legal cost totaling RMB1, 542, 636.06 to PICC Shenzhen. On 2nd November, PICC Shenzhen issued the invoices thereof to Shenzhen Shipping.
The Defendants are of the opinion that the aforesaid cargo loss was incurred due to Peng Yang??s unseaworthiness and overloading and should be borne by the Plaintiffs themselves, and that the Plaintiffs have no right to claim such loss against the Defendants.
The collegial panel held as follows: based on the specifications on the Certificate of Seaworthiness of Peng Yang issued by the Ship Investigation Center of CCS on 18th May 2004, the maximum loading capacity of Peng Yang under any loading condition shall be no more than 50,000MT. According to the facts ascertained by the Civil Judgment of the aforesaid second instance cargo claim case, the weight of cargo carried by Peng Yang amounts to 48,902MT which is less than 50,000MT. The Defendants?? argument that Peng Yang was overloaded and unseaworthy lacks of factual basis and should not be supported. The cargo loss in the amount of RMB1,542,636.06 claimed by the Plaintiffs shall be included in the compensation for the subject incident.
In summary, the cargo loss caused by Peng Yang??s grounding amounts to RMB1,572,636.06.
(IV) Loss for Earnings and Maintenance Fee
On 11th October 2007, Shenyue Shipping and Xingyue Accountants concluded an Audit Agreement. It is stipulated as follows: Shenyue Shipping entrusts Xingyue Accountants to carry out auditing of the loss for earnings and maintenance fee of Peng Yang at the auditing fee of RMB8,000. On 15th October, Xingyue Accountants issued to Shenyue Shipping an Auditing Report signed by accountants of Xingyue Accountants Luo Zemin and Miao Ming and affixed with the official stamp of Xingyue Accountants. According to the records of the Business License of Partnership held by Xingyue Accountants, its business scope includes auditing (auditing and verification), accounting consultation and accounting service. The aforesaid accountants both hold legal and effective certificate of certified public accountants.
Xingyue Accountants?? auditing results are as follows: The loss of earnings caused by Peng Yang??s grounding amounts to RMB3,493,720, which is the daily net earning of RMB41,063.94 multiplying 85.08 days of off-hire peirod (3 days of unloading is deducted). The maintenance fee of Peng Yang due to the grounding amounts to RMB614, 601.39. Xingyue Accountants sent accountant Miao Ming to appear at the court accepting inquires from the judges and parties concerned.
The Defendants believe that: 1. According to the evidence provided by Shenzhen Shipping, the hire rate for bareboat charter of Peng Yang is RMB5,000,000/year. Accordingly, the loss of hire during the 85.08 days of navigation suspension (computed from the time of incident to the day when Peng Yang departed upon completion of repair) amount to RMB1,165,479.45 rather than the RMB3,493,720 as claimed by Shenyue Shipping. 2. The Auditing Report provided by Shenyue Shipping should not be adopted as evidence in support of the operating loss sustained by Shenzhen Shipping due to Peng Yang??s running on the rocky shoal. (1) The Auditing Report was issued based on the financial information and proofs provided by Shenyue Shipping and only show the conclusion related to Shenyue Shipping. It is not the effective evidence in support of the loss of profits sustained by Shenzhen Shipping due to Peng Yang??s running on the rocky shoal. (2) The certified public accounts who signed on the Auditing Report did not actually carry out auditing of the financial information or certificates provided by Shenyue Shipping. In fact, the persons who carried out auditing and drafted the report are not certified accountants and did not accept inquiries at court. The report was prepared in a way questionable and should not be adopted. (3) The Auditing Report was not properly issued based on financial principles. The cost was calculated without deducting the expenses such as the business income tax of Shenyue Shipping and depreciation of Peng Yang. The period of normal repair was not deducted when determining the time for calculating the claim amount. Therefore, the Defendants refused to recognize the Auditing Report provided by Shenyue Shipping.
The collegial panel held that: 1. Peng Yang was hired by Shenyue Shipping from Shenzhen Shipping on basis of bareboat chartering and thus was actually operated and managed by Shenyue Shipping. Shenyue Shipping is entitled to possess, operate, and benefit from Peng Yang and to any other rights and interests stipulated by law. When its rights to possess, operate, and benefit from Peng Yang is infringed by other parties, Shenyue Shipping shall have the right to claim against the infringer. Peng Yang was suspended from navigation due to the subject incident, which surely would cause loss for detention and maintenance fee. It is reasonable for Shenyue Shipping to claim for loss for detention and maintenance fee against the parties at fault in the subject incident. 2. Peng Yang was hired and operated by Shenyue Shipping which holds all the basic materials relating to the income, cost, tax and business management fee for calculation of the loss for detention and maintenance fee. Therefore, it is reasonable for Shenyue Shipping to provide the auditing materials. 3. After accepted to be entrusted to carry out auditing of the loss for earnings and maintenance fee of Peng Yang due to the subject incident, Xingyue Accountants arranged personnel to look up and collect the account books of Shenyue Shipping and materials concerning the income, cost and taxes obtained and incurred by Peng Yang during the two voyages before the subject incident and two after, and to carry out auditing based on the aforesaid information. Xingyue Accountants complied with relevant auditing procedures. 4. Xingyue Accountants has already deducted relevant operation taxes and management fees based on appropriate apportionment while calculating the net operating profits. The depreciation of Peng Yang was also apportioned in the management fee. 5. Peng Yang had been suspended from navigation for 88.08 days since 1319 hrs on 23rd August 2004 to 1520 hrs on 19th November 2004 when Peng Yang took her first departure after repair. The time of handling the incident and repair is 85.08 days after deducting three days of unloading. The Defendants argued that the time of normal repair should also be deducted from the period of suspension, but failed to provide supportive evidence. Therefore, such argument should not be supported. In summary, the auditors from Xingyue Accountants who issued the Auditing Report have relevant professional qualifications, and carried out auditing according to relevant laws and regulations. There is no conflict between the Auditing Report and other evidence. Accordingly, the aforesaid Auditing Report shall be adopted.
(V) Other Expenses
1. Lawyer Fee
(1) On 27th October 2004, Shenyue Shipping paid lawyer fee in the amount of RMB8,280 to Guantao Shenzhen for entrusting the latter to send lawyers to participate in the discussion on the incident of Peng Yang. Guantao Shenzhen issued the invoice of the lawyer fee to Shenyue Shipping.
(2) On 29th August 2004, Shenzhen Shipping and Zhong Lun Shenzhen concluded the Engagement Agreement. It is stipulated that Shenzhen Shipping entrusts Zhong Lun Shenzhen to deal with the legal issues relating to Peng Yang, and the lawyer fees for the non-litigious procedures shall be RMB130,000 and that for the litigious procedures shall be determined through negotiation. On 6th September, Shenzhen Shipping paid Zhong Lun Shenzhen the lawyer fee in the amount of RMB130,000, and Zhong Lun Shenzhen issued the invoice thereof to Shenzhen Shipping.
(3) Shenzhen Shipping and Shenyue Shipping entrusted Holman Fenwick & Willan to deal with relevant legal issues in Hong Kong. On 16th September 2004, Shenzhen Shipping paid the lawyer fee in the amount of USD25,000 to Holman Fenwick & Willan through its subordinate company Shenzhen Peng Xing Shipping Ltd. On 20th June 2007, Shenyue Shipping paid Holman Fenwick & Willan the lawyer fee in the amount of USD20,863.75. According to the bills issued by Holman Fenwick & Willan to Shenyue Shipping in December 2006, Shenyue Shipping still should pay HKD112,195. However, Shenyue Shipping did not provide the payment voucher of the aforesaid lawyer fee in the amount of HKD112, 195.
The Defendants claimed that the lawyer fee should be borne by the entrusting parties themselves in the Chinese judicial practice.
The collegial panel held that the lawyer fees incurred in mainland China as claimed by Shenzhen Shipping and Shenyue Shipping lack of legal basis and shall not be supported. Shenzhen Shipping and Shenyue Shipping failed to provide evidence in support of the relevance between the subject case and the lawyer fees incurred in Hong Kong. Therefore, such expenses shall not be supported neither.
2. Shenzhen Shipping had paid HKD17,240 of notarial fees to Lo & Lo Solicitors & Notaries Public for handling the certification of evidence originated in Hong Kong. In particular, Shenzhen Shipping paid HKD7, 935 on 6th December 2006, HKD445 on 23rd December 2006, and HKD8, 860 on 26th October 2007.
The Defendants claimed that the notarial fees incurred by handling the certification of evidence should be borne by the entrusting parties themselves in the Chinese judicial practice.
The collegial panel held as follows: in accordance with the provisions of Article 11 of the Some Provisions of the Supreme People??s Court on Evidence in Civil Procedures, if the evidence submitted by the parties concerned is originated in Hong Kong, Macao or Taiwan, relevant formalities shall also be gone through. The evidence provided by Shenzhen Shipping was formed in Hong Kong and thus relevant formalities shall be gone through. Therefore, Shenzhen Shipping??s claim for the notarial fees in the amount of HKD17,240 incurred by handling relevant formalities complies with the law and shall be supported.
3. For the purpose of determining the loss of earnings and maintenance fee of Peng Yang due to the subject incident, Shenyue Shipping entrusted Xingyue Accountants to carry out auditing of relevant expenses and paid the auditing fee in the amount of RMB8,000. On 9th November 2007, Xingyue Accountants issued the invoice of the aforesaid auditing fees.
The Defendants claimed that the auditing fees incurred for collecting evidence by Shenyue Shipping should be borne by Shenyue Shipping itself.
The collegial panel held that Shenyue Shipping entrusted Xingyue Accountants to carry out auditing for the purpose of determining the loss of earnings and maintenance fee caused by the subject incident, the cost and expenses of which are reasonable. Therefore, the aforesaid auditing fee in the amount of RMB8,000 shall be supported.
4. Shenyue Shipping had paid traveling expenses in the amount RMB51,457.83 for handling the subject incident (including RMB2,788 kept account on 14th September 2004 and RMB48,669.83 kept on account on 30th September 2004). On 30th November 2004, Shenyue Shipping paid RMB20,351 for the accommodation/entertaining fees incurred in the course of the repair of Peng Yang.
The Defendants claimed that the traveling expenses and accommodation/entertaining fess arising from handling of the subject incident by Shenyue Shipping should be borne by itself.
The collegial panel held that the arrangement of business travel by Shenyue Shipping for the purpose of handling the subject incident is reasonable and appropriate and thus the traveling expenses in the amount of RMB51, 457.83 arising therefrom shall be supported. However, Shenyue Shipping??s claim of the accommodation/entertaining fees into the range of compensation lack of evidence and shall not be supported.
In summary, other reasonable expenses incurred by the incident of Peng Yang shall be RMB59, 457.83 and HKD17, 240.
VI. Insurance Indemnification
On 31st March 2004, Taiping Insurance issued to Shenyue Shipping the Insurance Policy for Coastal and Inland Water Vessels No.1205331022004000001 stipulating that: Shenyue Shipping is both the policy holder and insured; the name of vessel is Peng Yang; time insurance against total loss of coastal and inland water vessels to which the Insurance Clause of Coastal and Inland Water Vessels promulgated on 1st November 1996 by the People??s Bank of China shall apply; the insured value and amount are both RMB18,000,000; the insurance period shall be 12 months computed from 0000 hrs of 4th April 2004 to 0000 hrs of 3rd April 2005; insurance premium amounts to RMB504,000. According to the provisions of Article 1 of the Insurance Clause of Coastal and Inland Water Vessels, the total loss of the insured vessel caused by reasons, such as collision, contact, grounding and running on the rocky shoal, shall be indemnified by the insurer. According to the provisions of Item 1 of Article 7 thereof, the total loss of the insured vessel shall be indemnified based on the insured amount. Where the insured amount is more than the insured value, the indemnity shall be determined within the insured value. In line with the provisions of Article 9 thereof, in case of marine accident which involves the common safety of vessel, cargo and freight, the insurer shall only be responsible to indemnify the salvage fee in proportion to the ratio that the salved vessel value bears to the total value of the salved vessel, cargo and freight.
On 2nd April 2004, Shenyue shipping paid Taiping Insurance the insurance premium in the amount of 504,000, and Taiping Insurance issued the invoice thereof to Shenyue Shipping.
On 17th May 2005, Shenyue Shipping filed a lawsuit requesting this court to order Taiping Insurance to pay it RMB18,000,000, the insured amount stipulated in the insurance contract and the interest of the amount of RMB12,988,506.86 and HKD1,336,979.80 paid by Shenyue Shipping, computed from the date of payment by Shenyue Shipping to the date of indemnity by Taiping Insurance. This court accepted the case. On 10th October, Shenyue Shipping applied for modifying its claims requesting this court to order Taiping Insurance to pay the insured amount of RMB18,000,000 according to the insurance contract and the interest of the amount of RMB16,842,503.06 and HKD1,336,979.80, computed from the date of payment by Shenyue Shipping to the date of indemnity by Taiping Insurance.
On 29th August 2007, Shenyue Shipping and Taiping Insurance reached an settlement agreement stipulating that: Taiping Insurance pays Shenyue Shipping RMB7,700,000 in a lump sum as the full and final settlement of the dispute; After payment of the aforesaid RMB7,700,000, any dispute or outstanding issues between the parties with regard to Peng Yang arising from and/or that may arise out of the vessel insurance contract (including but not limited to any damage, loss, responsibility, expense or claim caused by the subject incident of Peng Yang including the salvage fees which has been or has not been, or which is or is not, or will or will not be held liable ) shall be immediately, completely, finally and thoroughly settled. On 3rd September, Taiping Insurance paid the compensation of RMB7,700,000 to Shenyue Shipping through China Merchants Bank, Shenzhen Branch, and Shenyue Shipping issued the receipt to Taiping Insurance. On 5th September, Shenyue Shipping issued the Letter of Subrogation to Taiping Insurance and agreed to transfer relevant rights and interests in relation to the paid insurance indemnity to Taiping Insurance who may file recourse claim against the parties liable.
VII. Other Facts.
The parties concerned agreed the law of the Mainland China shall apply to determine the merits of this case.
The collegial panel holds as follows:
I. Causes of Actions
OOCL Hamburg did not directly contact with Peng Yang, but the Plaintiff claimed damages against the Defendants on the grounds that OOCL Hamburg was not manoeuvred properly or failed to comply with the rules for navigation, which caused losses of and damage to Peng Yang and the cargo and other properties she carried on board. In accordance with the provisions of Article 170 of the Maritime Code of the People??s Republic of China, the provisions of Chapter VIII shall apply in such circumstance. Therefore, it falls within the disputes over ship collision damages.
II. Jurisdiction
Pursuant to Item (1) of Paragraph 2 of Article 6 of the Special Maritime Procedure Law of the People??s Republic of China, a lawsuit brought on maritime tort may be, in addition to the provisions of Articles 19 to 31 of the Civil Procedure Law of the People??s Republic of China, under jurisdiction of the maritime court of the place of its port of registry. It is provided in Article 4 of the Interpretation of the Supreme People??s Court on the Application of the Special Maritime Procedure Law of the People??s Republic of China, the term ?°port of registry?± as prescribed in Item (1) of Paragraph 2 of Article 6 of the Special Maritime Procedure Law of the People??s Republic of China refers to the port of registry of the defendant ship. Where the port of registry of the defendant ship is not within the People??s Republic of China and that of the plaintiff ship is within the People??s Republic of China, the case shall be under the jurisdiction of the maritime court of the place where the port of registry of the plaintiff ship is located. The port of registry of Peng Yang is Shenzhen which is under the jurisdiction of this Court. Therefore, this Court shall have the jurisdiction over the subject case.
III. Applicable Law
In the light of the provisions of Item 1 of Article 273 of the Maritime Code of the People??s Republic of China, the law of the place where the infringing act is committed shall apply to claims for damages arising from collision of ships. It is also provided in Article 187 of the Opinions of the Supreme People??s Court on Several Issues concerning the Implementation of the General Principles of the Civil Law of the People's Republic of China (For Trial Implementation), the lex delicti (law of the place where a tort is committed) shall include the lex loci delicti commissi (law of the place where a tort is committed) and the law of the place where the result of a tort took place. If the two places are different, the people??s court may choose to apply either law. In the subject case, the collision took place in waters of Hong Kong Special Administrative Region of the People??s Republic of China (?°Hong Kong SAR?±), and the consequence took place in Shenzhen. The parties concerned did not refer to any sustentative law of Hong Kong SAR and agree to apply the law of the People??s Republic of China. Accordingly, the law of mainland China shall apply to this case.
IV. Subjects of Litigation
1. In accordance with Article 4 of the Provisions of the Supreme People??s Court on Some Issues about the Trial of the Cases of Ship Collision Disputes, the compensation liability resulted from ship collision shall be borne by ship owners, or shall be borne by the bareboat charterer if the ship collision occurs during the bareboat charter period and the bareboat charter is registered according to law. National Australia Finance (Vessel Leasing No.2) Limited is the owner of OOCL Hamburg, and Orient Overseas Container Line (U.K.) Limited (OOCL) is the bareboat charterer thereof. The bareboat charter there between has already been registered according to law. Therefore, Orient Overseas Container Line (U.K.) Limited as the bareboat charterer shall be held liable for compensation for losses of and damage to Peng Yang and properties on board due to the misconduct of OOCL Hamburg. National Australia Finance (Vessel Leasing No.2) Limited shall not assume the compensation liability.
2. Shenzhen Shipping as the owner of Peng Yang has the right to claim damages in case of any infringement upon its property rights. As above mentioned, Shenyue Shipping chartered Peng Yang from Shenzhen Shipping based on a bareboat charter and actually controls, operates and profits from Peng Yang. Thus, Shenyue Shipping enjoys every right over Peng Yang that is protected by law. In accordance with provisions of Paragraph 2 and 3 of Article 117 of the General Principles of the Civil Law of the People??s Republic of China, anyone who damages the property of the state, a collective or another person shall restore the property to its original condition or reimburse its estimated price. If the victim suffers other great losses therefrom, the infringer shall compensate for those losses as well. Even though Peng Yang has not gone through the registration of bareboat charter, Shenyue Shipping shall have the right to claim damages against anyone who infringed its rights to possess, operate, and profit from Peng Yang. It is also provided in Article 4 of the Provisions of the Supreme People??s Court on Some Issues about the Trial of the Cases of Ship Collision Disputes, the compensation liability resulted from ship collision shall be borne by ship owners, or shall be borne by the bareboat charterer if the ship collision occurs during the bareboat charter period and the bareboat charter is registered according to law. Accordingly, the ship owner shall be exempted from compensation liability provided that the bareboat charter is registered according to law. However, the aforesaid provisions can not be interpreted as the bareboat charterer is not entitled to claim damages against the infringer without registration of the bareboat charter. Therefore, Shenzhen Shipping and Shenyue Shipping shall have the right to claim damages against OOCL based on their respective losses caused by the subject incident.
3. Shenyue Shipping has insured Peng Yang with Taiping Insurance Shenzhen Branch (?°Taiping Insurance?±) for fixed term insurance against total loss of vessels for coastal and inland waterways shipping. Taiping Insurance issued the Fixed Term Insurance Policy against Total Loss of Vessels for Coastal and Inland Waterways Shipping, and Shenyue Shipping paid relevant insurance premium. Taiping Insurance and Shenyue Shipping have concluded a ship insurance contract. After the subject incident, Taiping Insurance indemnified Shenyue Shipping by lump sum payment of RMB7,700,000 on the 3rd of September, 2007. In line with the provisions of Article 93 of the Special Maritime Procedure Law of the People??s Republic of China, where the occurrence of an insured event is caused by a third party, after having paid insurance indemnity to the insured, the insurer may subrogate the right of the insured to demand indemnity against the third party up to the limit of insurance indemnity. Accordingly, Taiping Insurance should have the right of subrogation against OOCL.
V. Liability Apportionment
1. Peng Yang
(1) At 1245 hrs on 23 August 2004, OOCL Hamburg and Peng Yang agreed that OOCL Hamburg would slow down and let Peng Yang pass the Ma Wan Fairway first. Therefore, Pilot B on board Peng Yang assumed that OOCL Hamburg would slow down and wait outside of the Ma Wan Service Area on the west of the anchored barge until Peng Yang passes this area. However, the said Pilot B and the Master of Peng Yang failed to keep cautious of such special situation and overly relied on their agreement when OOCL Hamburg failed to follow such agreement. Peng Yang violates the provisions of Paragraph 1 of Rule 2 of the International Regulations for Preventing Collisions at Sea, 1972 (COLREGS).
(2) While OOCL Hamburg was approaching in the middle of the channel, Pilot B was aware of the rocky shoal nearby the starboard side of Peng Yang. He underestimated the risk and assumed that the vessel could avoid the rocky shoal and the close-quarters situation with OOCL Hamburg by making several times of small course alteration to port. Pilot B failed to correctly assess the influences of flows and depth of water, shallow water effect, bank effect and other circumstances, and failed to take precaution according to the ordinary practice of seaman as provided by the COLREGS.
(3) Peng Yang failed to promptly slow down or even stop engine, go astern, drop anchor when necessary, or give warning to OOCL Hamburg, or take any other useful measures when she realized that there was not enough space for her to turn substantially to port for avoiding the shoal. As a result, Peng Yang grounded at the speed of 10 knots. This is in violation of the provisions regarding safe speed under Rule 6 of the COLREGS.
(4) The Master and deck officers improperly shifted the entirety of their duty in navigation to the pilot when they were still obliged to monitor the position and movements of the vessel and to ensure the vessel??s safety. It constitutes a violation of the provisions on ?°Navigation with pilot embarked?± of A-VIII/2 under the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978 (STCW78).
2. OOCL Hamburg
(1) At 1245 hrs on 23 August 2004, OOCL Hamburg and Peng Yang agreed OOCL Hamburg would let Peng Yang pass the Ma Wan Fairway first, which means OOCL should have been waiting outside of the Ma Wan Service Area. However, OOCL Hamburg failed to comply with the agreement and to take proper precaution as per the ordinary practice of seaman as provided in Paragraph 1 of Rule 2 of the COLREGS.
(2) OOCL Hamburg failed to navigate to the right of the channel, and indeed she proceeded in the middle of the channel, which restricted the space available for Peng Yang. It violates the provisions on ?°narrow channels?± under Paragraph 1 of Rule 9 of the COLREGS.
(3) OOCL Hamburg failed to carry out consistent observation of Peng Yang??s movements and was not aware of the difficulties she caused to other vessels by navigating in the middle of the channel, particularly when she was passing the anchored barge. She only focused on keeping distance with the barge at anchor, and failed to observe Peng Yang??s movements. It violates the provisions on ?°lookout?± under Rule 5 of the COLREGS.
In summary, the analysis of causes of the incident as issued by the Hong Kong Marine Department (?°MARDEP?±) is proper and consistent with the facts and should be recognized. The negligence committed by Peng Yang is the immediate cause of this incident so that Peng Yang should assume major liability thereof. OOCL Hamburg also contributed to the incident and should assume the secondary liability. According to their respective degree of fault, Peng Yang should bear 55% of liabilities and OOCL Hamburg should bear 45% of liabilities.
VI. Damages
In accordance with the provisions of Paragraph 1 and 2 of Article 169 of the Maritime Code of the People??s Republic of China, ?°if the colliding ships are all in fault, each ship shall be liable in proportion to the extent of its faults; if the respective faults are equal in proportion or it is impossible to determine the extent of the proportion of the respective faults, the liability of the colliding ships shall be apportioned equally.?± ?°The ships in fault shall be liable for the damage to the ship, the goods and other property on board pursuant to the proportion prescribed in the preceding paragraph. Where damage is caused to the property of a third party, the liability for compensation of any of the colliding ships shall not exceed the proportion it shall bear.?± OOCL should bear 45% of the compensation liabilities towards Shenzhen Shipping and Shenyue Shipping based on the degree of her fault, the remaining 55% of liabilities should be assumed by the aforesaid companies themselves.
According to the facts ascertained by the collegial panel, Shenzhen Shipping has sustained from the incident the loss of cargo in the amount of RMB1, 542,636.06 and the cost of handling notarization and authentication of evidence in the amount of HKD17, 240 (i.e. RMB16, 640.05 as calculated based on the middle exchange rate of 1:0.9652 between HKD and RMB on the day when such cost was incurred), totaling RMB1, 559, 276.11. Based on the proportion of liabilities that should be assumed by OOCL Hamburg, OOCL Hamburg should compensate Shenzhen Shipping RMB701, 674.25 and the interest thereof for the aforesaid losses. The interest should be computed from the day when the aforesaid losses and cost were incurred to the day of payment as determined by this Judgment on the basis of the current fund loan interest rate published by the People??s Bank of China in the corresponding period.
The losses sustained by Shenyue Shipping due to the incident are as follows: 1. Salvage fee in the amount of RMB16,420,616.40 and HKD2, 886, 967.80 (of which HKD1, 550,000 is converted into RMB1, 649, 665 based on the middle exchange rate of 1:1.0643 between HKD and RMB on the day when such expense was incurred; HKD1,070,765 is converted into RMB1,135,974.59 based on the middle exchange rate of 1:1.0609 between HKD and RMB on the day when such expense was incurred; and HKD266, 202.80 is converted into RMB282, 467.79 based on the middle exchange rate of 1:1.0611 between HKD and RMB on the day when such expense was incurred, totally amount to RMB3, 068, 107.38), totaling RMB19,488,723.78. 2. Repair cost in the amount of RMB7, 471, 891.70. 3. Cost of cargo damage survey in the amount of RMB30,000. 4. Loss of earning in the amount of RMB3, 493, 720. 5. Cost of ship maintenance in the amount of RMB614, 601.39. 6. Other reasonable costs in the amount of RMB59, 457.83. The aforesaid losses and cost amount to RMB31, 158, 394.70.
Based on the proportion of liabilities that should be assumed by OOCL Hamburg, OOCL should compensate Shenyue Shipping RMB8,769,925.70 and the relevant interest, of which RMB7,700,000 should be paid to Taiping Insurance based on its right of subrogation, and the interest shall be calculated from 3rd September 2007 until the day of payment determined by this Judgment. OOCL should make payment of the remaining amount of the salvage fee, i.e. RMB1,069,925.70, to Shenyue Shipping and the interest thereof computed from the day when the salvage fee was incurred until the day of payment determined by this Judgment. The interest of the aforesaid cost shall be calculated based on the current fund loan interest rate published by People??s Bank of China in the corresponding period.
Based on the proportion of liabilities that should be assumed by OOCL Hamburg, OOCL shall compensate Shenyue Company for the cost of repair and cargo survey, loss for earning, ship maintenance and other reasonable cost in the amount of RMB5,251,351.91. The interest thereof shall be computed from the day when such loss or cost was caused until the day of payment determined by this Judgment and based on the current fund loan interest rate published by People??s Bank of China in the corresponding period.
Accordingly, in accordance with the provisions of Paragraph 1 and 2 of Article 169 and Article 170 of the Maritime Code of the People??s Republic of China, the judgment is rendered as follows:
I. The Defendant OOCL shall compensate the Shenzhen Shipping, for loss in the amount of RMB701,674.25 and the interest thereof. The interest of the compensation for cargo damage in the amount of RMB694,186.23 shall be computed from 1st November 2006 until the day of payment determined by this Judgment. The interest of the cost of notarization and authentication for evidence in the amount of RMB7,488.02 shall be computed from 26th October 2007 until the day of payment determined by this Judgment based on the current fund loan interest rate published by People??s Bank of China in the corresponding period.
II. The Defendant OOCL shall compensate the Taiping Insurance for loss in the amount of RMB7,700,000. The interest thereof shall be computed from 3rd September 2007 until the day of payment determined by this Judgment based on the current fund loan interest rate published by People??s Bank of China in the corresponding period.
III. The Defendant OOCL shall compensate Shenyue Shipping for salvage fee, cost of repair and cargo damage survey, loss for earning, ship maintenance fee and other reasonable cost totaling RMB6,321, 277.61. The interest of the aforesaid losses and expenses shall be computed from the day when such losses or expenses arose as follows: 1. Salvage fee in the amount of RMB127, 110.51, computed from 2nd October 2004; 2. Salvage fee in the amount of RMB17,100, computed from 10th October 2004; 3. Salvage fee in the amount of RMB37, 177.38, computed from 17th November 2004; 4. Salvage fee in the amount of RMB146, 188.57, computed from 19th April 2005; 5. Salvage fee in the amount of RMB742, 349. 25, computed from 4th July 2005; 6. Repair cost in the amount of RMB418, 842, computed from 21st November 2004; 7. Repair cost in the amount of RMB17,500.05, computed from 27th October 2004; 8. Repair cost in the amount of RMB4,500, computed from 17th November 2004; 9. Repair cost in the amount of RMB8,221.50, computed from 19th November 2004; 10. Repair cost in the amount of RMB1, 898, 073, computed from 23rd November 2004; 11. Repair cost in the amount of RMB49,500 computed from 20th December 2004; 12. Repair cost in the amount of RMB1,350, computed from 23rd December 2004; 13. Repair cost in the amount of RMB22,306.10, computed from 29th December 2004; 14. Repair cost in the amount of RMB81, 978.57, computed from 30th December 2004; 15. Repair cost in the amount of RMB83, 285.10, computed from 3rd February 2005; 16. Repair cost in the amount of RMB737, 844.30, computed from 9th March 2005; 17. Repair cost in the amount of RMB21,465, computed from 15th March 2005; 18. Repair cost in the amount of RMB17,485.65, computed from 30th April 2005; 19. Cost of cargo damage survey in the amount of RMB13,500, computed from 20th September 2005; 20. Loss of earning in the amount of RMB1,572,174 computed from 19th November 2004; 21. Ship maintenance fee in the amount of RMB 276,570.63 computed from 19th November 2004; 22. Travel expense in the amount of RMB23, 156.02, computed from 30th September 2004; 23. Auditing fee in the amount of RMB3,600 computed from 9th November 2007. The interest of the aforesaid losses or expenses shall be calculated until the day of payment determined by this Judgment based on the current fund loan interest rate published by People??s Bank of China in the corresponding period.
IV. The claims brought by Shenzhen Shipping, Shenyue Shipping and Taiping Insurance against National Australia Finance (Vessel Leasing No.2) Limited are dismissed.
V. Other claims brought by Shenzhen Shipping and Shenyue Shipping are dismissed.
The litigation fee is RMB195,410, of which the amount of RMB108,228 shall be borne by Shenyue Shipping, and the amount of RMB87,182 shall be borne by OOCL. The litigation fee in full has been prepaid by Shenyue Shipping, and this Court will not make refund to Shenyue Shipping. The OOCL shall directly make payment of its share to Shenyue Shipping.
The aforesaid obligation on money payment shall be fulfilled within 10 days upon the effectiveness of this Judgment.
In case of failure of payment within the period specified in this Judgment, the failing party shall double pay the interest for the delayed period in accordance with Article 229 of the Civil Procedural Law of the People??s Republic of China.
In case of dissatisfaction with this Judgment, the Plaintiffs, Shenzhen Shipping, Shenyue Shipping, and Taiping Insurance S, may within 15 days, while the Defendants, National Australia Finance (Vessel Leasing No.2) Limited and OOCL, may, within 30 days upon the service of this Judgment, submit a Statement of Appeal to this Court with copies according to the numbers of the other parties to the case, appealing with the Higher People??s Court of Guangdong Province.
Presiding Judge: Chen Bin
Judge: Wu Zili
Judge: Li Lifei
(Official Chop of Guanghzou Maritime Court Affixed)
14th June 2011
Certified to be true to the original
Clerk Zeng Huifen
The translation is provided by Wang Jing & CO.
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