Is a Marina a “dock” for the purposes of limiting liability?

This question was considered at the Admiralty Court in Holyhead Marina Ltd v Farrer & Ors [2020] EWHC 1750 and subsequently at the Court of Appeal in Holyhead Marina v Farrer [2021] EWCA Civ 1585.

The Facts

The Port of Holyhead was operated by Stena Line Ports (SLP), the Statutory Harbour Authority. Permitting the construction of Holyhead Marina (‘the Marina’) in 2000, SLP granted a 35-year seabed lease to Holyhead Marina Ltd., which entitled them to construct and operate the Marina in the southwest of Holyhead harbour.

The Marina itself comprised mainly of floating pontoons anchored to the seabed, designed for the berthing of small pleasure craft. However, when Storm Emma hit from the North-East in March 2018, the pontoons forming the Marina broke-up, becoming detached and causing some £5,000,000 damage to the 89 yachts and pleasure craft moored there.

Expert evidence indicated that the design, construction and maintenance of the Marina was defective, particularly due to the lack of shelter to the North-East. In anticipation of many claims being brought against them, Holyhead Marina Ltd. initiated proceedings in an attempt to limit their liability under S191 Merchant Shipping Act 1995. This would limit their liability to circa £550,000 (merely 11% of the £5,000,000 damage caused).

At this time, SLP had transferred their freehold interest in the seabed to Conygar (Holyhead) Ltd., but Holyhead Marina Ltd. remained lessees and continued to manage and control the Marina.

THE LEGAL ARGUMENT

S191(1) and (2) allow liability to be limited for:

“a harbour authority, a conservancy authority and the owners of any dock or canal… for any loss or damage caused to any ship, or to any goods, merchandise, or other things whatsoever on board any ship… within the area over which the authority or person discharges any functions”.

S191(9) defines “owner” to include:

“any authority or person having the control or management of any dock or canal, as the case may be”.

Teare J found that Holyhead Marina Ltd. were the owners of the marina within the meaning of S191. This was based on the fact that Holyhead Marina Ltd. exercised management and control over the Marina and that their leasehold interest entitled them to do so in any event.

The owners of the damaged vessels therefore argued that the Marina was not a “dock” within the meaning of S191(9) and was consequently outside the scope of the limitation.

S191(9) defines “dock” to include:

“wet docks and basins, tidal docks and basins, locks, cuts, entrances, dry docks, graving docks, gridirons, slips, quays, wharves, piers, stages, landing places and jetties”.

In reaching a decision, Teare J accepted that the Marina was not a “dock” in the ordinary sense of the word as its primary purpose was the simple mooring of pleasure craft. However, Teare J found that the Marina served a dual purpose by allowing those returning from sea to step ashore and ‘land’. He also decided that the intention of S191 was to apply to a wide range of structures, not only to traditional docks.

Ultimately, Teare J ruled in favour of Holyhead Marina Ltd., finding that the Marina constituted a landing place under S191(9) and was therefore a “dock” for the purposes of the limitation.

The Court of Appeal – Holyhead Marina v Farrer [2021] EWCA Civ 1585

In January 2021, the Court of Appeal granted permission to appeal the ruling that the Marina constituted a “dock” for the purposes of S191. The decision of the Court of Appeal was handed down on 03 November 2021.

Firstly, the vessel owners argued that it was only the individual elements of the Marina (i.e., the pontoons) that could constitute “landing places”, not the Marina as a whole. The Court of Appeal disagreed and stated, “the marina as a whole is a landing place, even though the many constituent pontoons themselves making it up are also landing places… it would be absurd to construe the limit as applying to the constituent parts of a structure simply because both parts and the whole can properly be described as, for example, a landing place”. This argument therefore failed.
Secondly, the vessel owners argued that the only purpose of S191 was to limit liability in relation to structures with a primarily commercial purpose (to promote and facilitate trade), inferring this intention from prior judgements and the Limitation Convention 1976. However, the Court of Appeal concluded that the distinction between leisure structures and commercial structures had no bearing on whether S191 applies, stating that facilitating trade is not the only purpose of the limitation. This argument therefore failed.
Thirdly, the vessel owners argued that because each pontoon could be individually defined as a landing place, each should have a separate limitation fund available. This would mean that even if the Holyhead Marina Ltd. could benefit from the limitation right under S191, it would be applied separately for each pontoon, vastly increasing the damages payable to the vessel owners. However, the Court of Appeal disagreed and stated that a finding against Holyhead Marina Ltd. on this basis would lead to an absurdity. This argument therefore failed.
Finally, the vessel owners argued that there were good commercial reasons to exclude marinas from the scope of S191, namely that insurance premiums for pleasure craft would increase as a result if liability was limited. They stated that the market understanding was that liability could not be limited in respect of marinas and that this is supported by Holyhead Marina Ltd.’s own insurance policy of £10,000,000 (far exceeding the vessel owners’ total claim of £5,000,000). However, the Court of Appeal stated that the Holyhead Marina Ltd.’s own insurance policy does not bear upon the correctness of the limit, and that any market misunderstanding of S191 “will be corrected once this case is determined”. This argument therefore failed.

Conclusion

As a result, the judgement of Teare J was upheld and described as “excellent”. The Court of Appeal agreed that although the Marina was not a “dock” in the ordinary sense of the word, it was clearly caught by S191(9) definition as a landing place.

The ruling makes clear that the S191 limitation of liability applies to a wide range of structures that fall within the scope of S191(9), whether or not they are primarily for leisure or commercial purposes. This has wide-reaching application to the vast majority of bodies that operate over docks (as defined under S191), including marinas.

For more information on this article, please contact Tommy Fox.