In a decision which raised interesting issues in respect of quantification of damages and mitigation of loss in negligent workmanship cases, the High Court has, subject to liability, ruled that the owners of a damaged fishing trawler are entitled to £435,000 in compensation.
The beam trawler’s engine had been seriously damaged by the alleged negligence of a marine services company. The damage would have cost £435,000 to repair but, in the event, the vessel did not return to service and its owners took advantage of a Government scheme to reduce capacity in the fishing fleet by accepting a grant of over £1.1 million to take it permanently out of commission.
The owners sued the marine services company for diminution in the trawler’s value. However, the latter contended that no damages were payable because the owners had succeeded in mitigating their loss in its entirety by participating in the decommissioning scheme.
However, in dismissing those arguments, the Court found that the owners had ‘suffered an immediate and direct loss’ which was quantifiable as the reasonable cost of repairs required to put the trawler back into the condition in which it was before the damage occurred. The loss had not been avoided or mitigated by the receipt of the decommissioning grant or otherwise.
The Court accepted that there was a ‘theoretical possibility’ that the existence of a Government scheme could have the effect of fixing the value of a chattel so that physical damage did not cause it to diminish. However, at the time that the trawler was damaged, there was no certainty that the decommissioning scheme would in fact be introduced or that vessel would be accepted into it.
The vessel’s owner had given evidence that neither the prospect nor the existence of the scheme had affected either the volume of the market or the price paid for fishing vessels at the relevant time. There was no evidence that fishermen had bought vessels with a view to putting them into the decommissioning scheme.
In those circumstances, it was impossible to conclude that the prospect of the introduction of the scheme had had the effect that the damage to the vessel caused no diminution in its value. Arguments as to whether the marine service company had in fact been negligent were left over for another day.