No defence

A ship agent in South America was served with a claim brought by subrogated cargo insurers for approximately US$58,000 against the owners/the ship and against the ship agent personally, arising from alleged damage to cargo carried on board.

The claim documentation was received by the member in their capacity as local agents, not as a defendant themselves, but they inadvertently failed to pass it on to the owners. Consequently, the owners alleged they lost the opportunity to submit reply arguments, raise preliminary objections and request evidence at the appropriate stage of proceedings. This omission also left the ship agent without any defence filed.

Once the owners were eventually informed of the matter, their P&I Club became involved to assist in handling and resolving the claim. The owners subsequently sought an indemnity from the agent asserting that the failure to notify them promptly had prejudiced their ability to defend the case effectively.

ITIC argued that no evidence had been produced to demonstrate that the owners’ defence had, in fact, been prejudiced, as they could have made an application to have their defence reinstated nor was there any evidence that the outcome of the proceedings would have been different had the claim been notified earlier, due to the fact that their defence was not very strong. ITIC also noted that the owners had incurred reduced costs by not defending the claim from the outset, particularly given that they were moving towards settlement with the claimant instead of trying to defend the claim.

The owners ultimately settled the claim for US$42,000, and ITIC agreed to contribute US$20,000 to finalise the matter, particularly in light of the agent being named as defendants and being subject to joint and several liability.