Translate
IBU
Consol
|
|
Document recovered by & Copyright Julian H.
Stacey July 2017
[ Large Round Seal, With Text ]
THE ASSOCIATION OF AVERAGE ADJUSTERS
FOUNDED 1869
[ Text Below Seal ]
_ANNUAL_ _GENERAL_ _MEETING_ _10TH_ _MAY__, _1984_
_ADDRESS_ _BY_ _THE_ _CHAIRMAN_ - _MR._ _R.A._ _STACEY_
_CONTENTS_
Pages A/B Introductory remarks, new members etc.
" C/I Summary of decisions taken by the Association
during the past year, with some personal comments.
" 1/3 The functions and objects of The Association
of the Average Adjusters.
" 3/13 General Average contributory values and amounts
made good.
" 14/22 Air Freight
" 23/26 Delayed settlement of G.A. contributions.
[ END OF PAGE: First Front , 1 of 36 scanned ]
Ladies and Gentlemen,
I welcome you to the 115th Meeting of the Association of
Average Adjusters. I am particularly pleased that so many Adjusters
from other countries are present today and I would like to extend a
special welcome to Mr. George Zacharkow, Chairman of the Association
of Average Adjusters of the United States, to Mr. Ken Hext, Chairman
of the Canadian Association of Average Adjusters and to Mr. Geoffrey
Hudson, President of the European Association of Average Adjusters.
During the past year I have received generous hospitality
and have met many fellow adjusters from other countries when attending
the Meetings of the Canadian Association in June, the European
Association in September, and the United States Association in October.
The warm welcome I received in each case, as Chairman of this
Association, was very much appreciated.
At the private meeting of members yesterday Mr. George Hughes
was elected Chairman for the coming year. George and I, having sat our
examinations together in 1960 and 1961, have developed a considerable
bond of friendship over the years and I most heartily wish him a happy
and successful year in office. At the same meeting Keith Wood was
elected Vice-Chairman and Robert Clancey, who has been Treasurer of
the Association for the past 11 years, was elected an Honorary Member.
My next duty is not so pleasant. At the end of May last
year my partner Jim Swatton died at the early age of 45 as a result of
a major heart attack when apparently well on the road to recovery after
bypasss urgery the previous December. I also have to record the death
of The Rt. Hon. Sir Gordon Willmer, who was elected an honorary member
of this Association in 1951.
During the past year our ranks have also been depleted by
the retirements of 2 Associate members, namely W.E. Sloss and R.E.
Griffiths. we wish them both a long and happy retirement.
[ END OF PAGE: A , 2 of 36 scanned ]
It is also my sad duty to advise you that the partners of
Manley Hopkins, Son & Cookes have recently resigned from membership
of the Association. They apparently feel that the decision taken at
the extraordinary meeting of the Association last November, to invite
certain unqualified persons to become full members, without examination,
devalued our examination system, and coupled with the fact that no
similar invitation was made to what they consider to be many equally or
better practical adjusters on the staff of member firms, resulted in a
situation which they found intolerable.
The firm of Manley Hopkins, Son & Cookes have been members
of this Association since its formation and I hope that in due course
the present partners will reconsider their decision and will once again
become full and active members.
On the credit side I have great pleasure in announcing that
R. Cornah and K. Jones, both of Richards Hogg International Adjusters,
having satisfied the Examiners for the final examination, have been
elected full members and I am sure you will join me in wishing them a
long and successful career in the profession. Three other candidates
for this examination were not so fortunate.
In the preliminary examination B. Ashly and N. Rogers having
satisfied the examiners, have duly been elected Associate members.
Once again 3 other candidates failed to satisfy the examiners.
Mr. R.K. Hastings, who is a member of the Association of
Average Adjusters of the United States and is presently practising
with Stevens Elmstie in Hong Kong, has been elected an Overseas member.
During the year, the following changes in Representative
members have occurred.
Mr. K.A. Riding in place of Mr. J.L. Kirby, representing the
Sea Insurance Co. Ltd., Liverpool. Mr. S.J. Niotis in place of
Mr. G.P. Bisbas, representing the Greek Shipping Co-operation Committee;
and Mr. R.M.L. Duffy, representing the General Council of British
Shipping.
[ END OF PAGE: B , 3 of 36 scanned ]
At the private meeting of members yesterday the following
new representative members were elected.
Mr. K. Yamazaki, representing the Sumitomo Marine and
Fire Insurance Co. Ltd.
Mr. F.R. Wickstone, representing the Liverpool Marine
and General Insurance Co. Ltd.
Mr. A.F. Oughton, representing the Victory Insurance Co. Ltd.
In his address to the Association last year, William Richards
put forward a number of new ideas regarding the future role and
constitution of the Association. As the Chairman's Address is given
on his last day of office, it means that the new Chairman has to take
responsibility for pursuing any matters arising from his predecessor's
Address. I therefore propose to give a brief summary of some of the
events that have taken place during the last year, together with a
few personal comments.
One of the suggestions put forward by William Richards
last year was (and I quote) "We should immediately start looking for
ways in which to bring non-member firms who are practising either
in the U.K. or elsewhere in the world, into the Association, subject
to their fulfilling certain requirements, such as (a) Having completed
five years in practice as a principal anywhere in the world or
(b) Having spent 10 years in service with a member firm and three
years as a principal of a non-member firm". William went on to explain
that his idea was that "This would be a once-and-for-all basis,
_without_ _examination_ and once it had been done he hoped that the
maritime community would then ensure that cases were dealt with by
qualified Adjusters who were members of this Association".
In considering these suggestions it must be borne in mind
that the Association did, some years ago, invite all existing
non-member firms to become members of this Association subject to
[ END OF PAGE: C , 4 of 36 scanned ]
their principals sitting and passing our examinations. Only one
non-member ever accepted this invitation. The main reason for
refusing the Association's offer was that many of the non-members
were in their late forties or early fifties and, being heavily
involved in running their businesses, felt they did not have
sufficient time to study for academic examinations. A man with
over 25 years working experience in the business should have little
difficulty with the practical questions, which represent the major
part of the examinations and would only need to devote time to
study the wider aspects for the theoretical questions. No one
enjoys sitting examinations but surely any dedicated professional
man must be prepared to be examined for competency in his chosen
field.
So far no one has yet suggested any workable alternative
to examinations. At school, college and university it is necessary
to pass examinations to prove the degree of competency in subjects
studied. It is necessary to pass examinations to become a doctor,
dentist, lawyer, etc., and in a profession as complicated and
involved as Average Adjusting, which requires detailed academic
knowledge as well as extensive practical experience, there is no
alternative to examinations as proof of competency. In my view,
anyone who has not passed such an examination is not entitled to
call himself an Average Adjuster. The Association's examinations
have in fact, been open to any employee of a member firm since
1974, and therefore, there is no reason why principals of non-member
firms who have set up their business since that date, should not
have first entered the Association's examinations and thereby
qualified as members.
[ END OF PAGE: D , 5 of 36 scanned ]
The Association has sometimes been criticised for being
a "closed shop", and whilst this may have been true in the distant
past, it has not been so for some twenty years. Many present-day
members, myself included, started their career as employees in
member firms and by means of private study, such as the A.C.I.I.
in its old form, and hard practical work within their company,
brought themselves to the attention of the existing partners, and
in due course obtained the necessary sponsorship (not now required)
in order to sit for the Association's membership examinations.
Reference to the current list of members of the Association reveals
that well over fifty percent have come up through the ranks.
Therefore the comments of some principals of non-member firms, that
they set up outside the Association because they did not get a chance
to qualify within their original member-firm, seems to me to be
questionable. It takes courage to accept the challenge of the
Association's examinations, particularly when all your working
colleagues are aware that you are taking the examinations, as well
as friends and acquaintances in the market. To this extent, it is
putting your reputation at risk for at least two years.
In June last year a special Sub-Committee was appointed
to consider unification of the profession. The Committee's
recommendations, together with suggestions put forward by other
members, were considered at an Extraordinary Meeting of members
last November. After lengthy discussion, during which it was
suggested that the London Marine Insurance market would like us to
admit certain non-members to our Association, the following
proposition was carried:-
[ END OF PAGE: E , 6 of 36 scanned ]
"That the partners of Francis & Arnold,
Mediterranean Average Adjusting Company,
A.C. Pewtress & Co., and Goodacre (Marine
Claims Services) Ltd., insofar as they
satisfy the criteria in terms of the Rules,
be admitted to Membership of the Association
without examination".
The replies to the invitations extended were as follows:
Mr. Goodacre and Mr. Pewtress declined the invitation,
although both indicated they would like the opportunity to reconsider
the position in the future if the Association altered a number of its
rules.
The partners of Messrs. Francis & Arnold indicated that they
were very interested in becoming members of the Association, but they
had some difficulties regarding the informal relationship they have
with another adjusting company in Greece. They have recently
indicated to us that they are contemplating becoming fellow directors
in the Greek Company, and as members of this Association are not, at
present, permitted to practise in partnership or as directors with
non-members, the Management Committee referred the matter to the
Private meeting of members yesterday.
At this meeting it was decided to extend the invitation to
Mr. Brown of Francis & Arnold Hellas as well as the London partners of
Francis & Arnold, namely Mr. A.D. Arnold, Mr. F.P. Gegney, and Mr. R.A.
Phillips, but Mr. Brown's son will be required to pass the Association's
examinations within the next _6_ years.
[ END OF PAGE: F , 7 of 36 scanned ]
Christopher Smith of Mediterranean Average Adjusting
Company accepted the Association's invitation and has been elected
a member with effect from 1st April this year, but Mr. Hicks, one
of his partners, not having practised as a principal for five years
prior to the invitation, will be required to pass the Association's
examinations within the next six years.
Christopher Brotherton who was elected a member of this
Association in 1957, joined the partnership of Mediterranean Average
Adjusting Company in August last year, and at that time his membership
of this Association was suspended but has now been reinstated.
Prior to 1966 there was only one firm of Average Adjusters
practising in London who were not then members of this Association
and they had been established for many years and were respected
in the market. After Mr. Brown and Mr. Tattersall started up a
London office of Francis & Arnold in 1966 other senior assistants
subsequently decided to break away from their firms and set up new ones,
no doubt encouraged by the market's apparent willingness to accept
adjustments prepared by non-qualified people. More recently this has
resulted in two or three new firms starting up in business as Average
Adjusters each year. This raises the thought in my mind, that I do
not think the Marine Insurance Market of London, which has led the
world in knowledge and expertise in this field, would accept the
appointment of a solicitor's clerk to deal with a major legal problem
on their behalf, anymore than they would be willing to have a medical
student carry out a major operation on their person. Why, then, are
they so willing to accept an unqualified Average Adjuster assessing
the claims upon them, when they are ultimately paying the bill?
[ END OF PAGE: G , 8 of 36 scanned ]
My own view is that this Association should now abandon any
further attempts at so called "Unification" with non-member firms
practising in the U.K. Enough damage has already been done and it
would be unfair to loyal senior staff who have stayed with their firms
for 20 or 30 years and who many members consider to be superior in
knowledge and ability, to some of those who left to set up their own
businesses.
The present position is that any Average Adjuster practising
in the United Kingdom, as well as experienced staff of member firms,
can still apply to become members of this Association and will be
welcomed, subject to passing the examinations and complying with our
rules. In the meantime, I consider we should retain our examination
system and strict rules of professional conduct, as this is the only
way to maintain the high standards of competency and professional
integrity, for which we aim.
After the Extraordinary Meeting last November a small
sub-committee was set up to look into the role of the Association
during the next ten years. This sub-committee has issued a
preliminary report which was considered at the private meeting of
members yesterday, and I anticipate that there will be considerable
developments later this year. Among many items being considered, is the
form of examination for membership, and some members of this committee
have suggested making the A.C.I.I. diploma a compulsory requirement
prior to sitting the Association's examinations.
I obtained the Associateship diploma in 1953, having studied
nine subjects in the Marine branch, all of which were designed to impart
to candidates a broad and fairly detailed knowledge of all aspects of
Marine Insurance. I agree that that type of examination formed a
very useful base upon which to build up the more specialised knowledge
required for the Association's membership examinations. Indeed, I would
go further and say that if that same type of examination were available
[ END OF PAGE: H , 9 of 36 scanned ]
today, it would not be unreasonable to suggest that the successful
completion of the A.C.I.I. should give exemption from the first
part of our own qualifying examination. Unfortunately, the A.C.I.I.
syllabus was changed to a general examination in all branches of
insurance, and eventually reached a point a few years ago when
candidates would only study two or three marine related subjects
in the Associateship examination, and even if they proceeded to the
Fellowship examination, they would still not cover much more than
half of the old marine A.C.I.I. syllabus. Fortunately the Marine
Market has set up the Marine Insurance Education Council upon which
Average Adjusters are represented and this organisation is co-operating
with the Chartered Insurance Institute to improve the syllabus. However,
at the present time I can see no justification for suggesting that the
A.C.I.I., in its present form, should be a pre-requisite to sitting
our own Association's examinations, although it might be accepted
on the same basis as a University degree, whereby only four years
practical experience is required. To sit for the A.C.I.I., I believe
it is necessary to have 2 "A" Levels in specified subjects. This would
mean a man who had worked in Average Adjusting for 20 years or more
might then be asked at the age of 40 to go back to night school for a
year or so to obtain "A" Level diplomas, then study a further 3 or 4
years to complete his A.C.I.I., all before facing another 1 or 2 years
of study to become an Associate or full member of this Association.
[ END OF PAGE: I , 10 of 36 scanned ]
Before proceeding to the main subject of my Address, I
would like to give you a few facts regarding the Association of
which some of you may not be aware.
The objects of the Association are
"1. To promote professional standards and correct principles in
the adjustment of marine claims by ensuring, through
examination or otherwise, that those entering into
membership possess a high level of expertise.
2. To achieve uniformity of practice amongst Average Adjusters
by providing a forum for discussion, and by establishing
rules of practice where necessary.
3. To ensure the independence and impartiality of its members by
imposing a strict code of professional conduct.
4. To provide a service to the maritime community by establishing
procedures by which advice on all aspects of marine claims may
be obtained so as to facilitate their settlement."
In order to maintain the professional expertise of future
members, the Association's Examining Committee is responsible for
preparing the question papers for both the Preliminary and Final
Examinations, each of which consists of 4 X 3 hour papers, and the
current pass mark is 75%. When I tell you that there are no optional
questions and that the syllabus is effectively "anything connected
with Average Adjusting", you will realise that it is not an easy
task for the candidate to satisfy the examiners.
The Rules of Practice of the Association cover matters
upon which the law is not clear and members must either adjust claims
in accordance with these Rules or state in their Adjustment the
[ END OF PAGE: 1 , 11 of 36 scanned ]
reason for departing from them. Representative members as well as
full members of the Association may move resolutions intended to
become rules of practice, at General Meetings of the Association.
In the late 1930's the Association set up an Advisory
Committee consisting of seven members elected annually in order to
report on questions upon which the advice of the Association has
been sought by members, representative members, and annual
subscribers, or where there appear to be differences in practice
between members. Since the first Report of this Committee was
issued in 1937, some 40 opinions have been issued to date. The only
restriction on the use of this Committee for advice, is that it is
not permitted to consider a point which is currently in dispute on
a specific Adjustment.
In 1977 the Association formed a Practice Committee upon
which each member firm was represented by a senior partner. This
Committee meets four times a year to discuss practical problems
relating to Average Adjusting on an off-the-record basis. In the
last few years members of the Admiralty Solicitors have been invited
to attend one of the meetings during the year, and during the last
12 months a further extension of the Committee was made; whereby
two senior Claims Adjusters representative of Lloyd's and Companies
Underwriters, attended two of the meetings. These latter meetings
have proved extremely beneficial in promoting greater understanding
of the problems faced by Average Adjusters and Claims Adjusters, in
their day-to-day business.
The Panel of Referees, composed of past Chairmen and Senior
Members, is available to arbitrate on current disputes, where both
parties are willing to be bound by the decision of the Panel.
The Association is also represented by three senior members,
together with the Chairman, on the Marine Claims Committee which is
[ END OF PAGE: 2 , 12 of 36 scanned ]
concerned with discussing current problems affecting the London
Marine Insurance Market.
In addition to the foregoing, the Association also
appoints special committees to deal with such matters as providing
Adjusters' views on new insurance clauses, etc.
I now come to the main subject of my address, namely
"Practical Adjusting Problems" which I have divided under three
main subject headings.
_The_ _first_ _is_ _General_ _Average_ _contributory_ _values_ _and_
_amounts_ _made_ _good_.
Rule XVII of the York/Antwerp Rules 1974 deals with the
assessment of contributory values and the opening sentence of this
Rule makes it clear that the contribution shall be based upon the
actual net values of the property at the termination of the
adventure. There is an important exception so far as cargo is
concerned in that its value at destination is to be based upon the
commercial invoice rendered to the receiver, rather than its actual
net market value. This special provision was incorporated into the
1974 Rules purely for the purpose of simplifying the preparation of
General Average Adjustments, and gave legal authority to what had
been adjusting practice for certain types of cargo, (e.g.
manufactured products) under the 1950 Rules.
Whilst it may appear relatively simple to ascertain the
value of a ship at the termination of the adventure, certain
practical problems do occur. Rarely is a vessel sold in her
damaged state at the end of the General Average voyage, which
would provide proof of her net value. It is therefore customary
to obtain the opinion of expert ship Valuers to advise on the
vessel's sound value at the date of termination of the adventure,
and the adjuster then deducts from this figure the cost of any
[ END OF PAGE: 3 , 13 of 36 scanned ]
repairs effected on the voyage, subsequent to the General Average
act, together with the actual or estimated cost of repairs to any
damages in existence upon termination of the adventure.
Although the York/Antwerp Rules 1974, brought in a new
provision that the beneficial or detrimental effect of any demise
or time charter party shall be ignored, there can still be considerable
differences between the figures arrived at by ship Valuers for the
same vessel. Their opinions can only be based upon the sales of
similar vessels around the date of the termination of the adventure,
to which figure they must add or deduct estimated figures to cover
comparative Special Survey position and the trend in the freight
market. Furthermore, the reported sale values of vessels, generally
exclude the value of any bunkers remaining onboard, these being paid
for by the purchaser separately. In the case of certain types of
vessels, particularly those which may have been built for a specific
purpose, there may well be no market value as such, and in these
circumstances, the only guide to her sound value would be a
calculation based upon the original cost of building, less a figure
for annual depreciation. In other words her written down value.
The value of the vessel should include all her unbreached
stores and equipment as well as the bunkers remaining onboard, if
these are the Shipowners' property. In the past, I think Average
Adjusters have tended to ignore Shipowners' bunkers on the basis that
after having deducted any bunkers purchased subsequent to the General
Average act on the voyage, the net addition of a relatively small
quantity of bunkers to the assessed value of the ship, which in any
case cannot be completely accurate, would make little difference to
the final apportionment of the General Average claim between the
contributing interests.
Due to the phenomenal increase in the price of oil during
the last decade, I suggest that the position has changed so
[ END OF PAGE: 4 , 14 of 36 scanned ]
drastically that the Shipowners' bunkers cannot now be ignored and
that the net quantity at risk should now be included in the
calculation of the contributory value of the vessel, unless the
adjuster is satisfied that this would make little difference to
the apportionment of the General Average.
I now wish to consider the amount to be made good for
sacrifices of ship and the unusual results that can occur in the
assessment of the contributory value. Damage to Ship was first
dealt with under Rule XVIII of the York/Antwerp Rules 1924 and after
minor amendment in 1950, read as follows:
"The amount to be allowed as general average
for damage or loss to the ship, her machinery
and/or gear when repaired or replaced shall be
the actual reasonable cost of repairing or
replacing such damage or loss, subject to
deduction in accordance with Rule XIII. When
not repaired, the reasonable depreciation
shall be allowed, not exceeding the estimated
cost of repairs.
Where there is an actual or constructive
total loss of the ship, the amount to be
allowed as general average for damage or
loss to the ship caused by a general average
act, shall be the estimated sound value of
the ship, after deducting therefrom the
estimated cost of repairing damage which is
not general average and the proceeds of
sale, if any."
[ END OF PAGE: 5 , 15 of 36 scanned ]
According to Lowndes & Rudolf, Tenth Edition 1975, paragraph 837:
"_No_ _change_ _whatever_ _was_ _made_ _in_ _the_ _general_ _provisions_
_and_ _intention_ _of_ _the_ _Rule_ _in_ _1974_ _but_ _the_ _layout_ _and_
_some_ _of_ _the_ _wording_ _was_ _altered_ _in_ _order_ _to_ _define_
_more_ _clearly_ _and_ _secure_ _greater_ _uniformity_ _of_ _practice_
_on_ _two_ _particular_ _points_.
(1) The words "constructive total loss" in the
second paragraph of the 1950 Rule were not defined,
and as this expression had varying legal meanings
in different jurisdictions, one meaning was
selected and the words "constructive total loss"
were changed in 1974 to: "When the cost of
repairs of the damage would exceed the value of
the ship when repaired."
and
(2) There were occasional differences in practice
under the 1950 Rules where damage to the vessel was,
in fact, repaired, but where the figures would
demonstrate that the vessel was a commercial total
loss."
Some adjusters considered that when the cost of repairing accidental
damage, plus the estimated scrap value of the wreck, equalled the
repaired value, no allowance should be made for the cost of repairing
damage caused by sacrifice. The majority apparently maintained that
providing the Shipowners acted reasonably and I stress this point,
and provided repairs were carried out, the cost of repairs due to
sacrifice should be dealt with under the first paragraph of the rule,
and only in those cases where the vessel was an actual Total Loss, or
she was sold for scrap because the estimates proved she was a C.T.L.,
did the second paragraph apply.
[ END OF PAGE: 6 , 16 of 36 scanned ]
It is suggested in Lowndes & Rudolf that:
"By separating the provisions of the 1974 Rule into
two sections: "(a) when repaired or replaced; and
(b) when not repaired or replaced," it has been
made clear that the previous majority view should
now prevail."
The first part of Rule XVIII of the 1974 Rules reads as follows:-
"The amount to be allowed as general average for damage
or loss to the ship, her machinery and/or gear, caused
by a general average act shall be as follows:
(a) When repaired or replaced, the actual
reasonable cost of repairing or
replacing such damage or loss, subject to
deduction in accordance with Rule XIII;"
Let us now consider the following facts, which are based
upon a case in which I became involved a few years ago.
A vessel on a voyage to Australia with cargo stranded
outside the discharge port. Being in a dangerous position, the
engines were used extensively until the vessel successfuly refloated,
after which she proceeded into the port and discharged her cargo.
The vessel then sailed to Japan to effect permanent repairs, this
course being cheaper than repairing in Australia. The following
figures ignore such items as deductions new for old, which are not
relevant to the principles involved.
Stranding damage repairs ... GBP 400,000
Refloating damage repairs ... GBP 900,000
Estimated sound market value ... GBP 1,000,000
Estimated scrap proceeds if sold ... GBP 250,000
Insured value ... ... GBP 2,000,000
[ END OF PAGE: 7 , 17 of 36 scanned ]
The Adjuster involved in the case, no doubt encouraged by
the comments in Lowndes & Rudolf in Paragraphs 447/450 and 827
regarding what is entitled "negative contributory values", tackled
the problem on the following basis:-
Sound value ... GBP 1,000,000
Deduct damages ... 1,300,000
-------------
Net contributory value minus GBP 300,000
_Add_: Made good ... 900,000
-------------
Total contributory value ... GBP 600,000
-------------
This calculation of the contributory value, offends against
a cardinal principle of General Average that the party whose property
is sacrificed, should not be placed in a better or worse position than
the party whose property was not sacrificed. It is for this reason
that the total amount made good in General Average for sacrificed
property, is customarily made to contribute to its own loss. The
second problem arising from this method of calculation, is that it is
incorrect to say that the net arrived value of the property was minus
GBP 300,000, when it appears that the vessel could have realised GBP 250,000
if sold for scrap in damaged condition.
As one might expect, the "Concerned in Cargo" disputed the
adjustment, and after arriving at a compromise settlement with the
Shipowners, submitted the facts to the Advisory Committee of the
Association, on the grounds that there appeared to be a difference in
practice between Adjusters.
In 1982 the Advisory Committee reported that they considered
the cost of repairing the refloating damages was admissable in General
Average, and that the contributory value should be assessed on the
following basis:-
(See over)
[ END OF PAGE: 8 , 18 of 36 scanned ]
Scrap value ... GBP 250,000
Add: Made good ... 900,000
-------------
Total contributory value ... GBP 1,150,000
=============
This opinion was qualified in the following way:-
"The Committee have assumed that the election to repair
was reasonably taken in relation to the commercial value
to the Owner, and that the repairs were carried out
subsequent to the termination of the adventure."
On the facts of this case, the immediate question is, why
did a Shipowner spend GBP 1,300,000 on repairing his ship, which
apparently was only worth GBP 1 million, when in theory he could have
sold the vessel as scrap for GBP 250,000, and for an additional GBP 750,000,
could have purchased a similar vessel.
Some of the answers could be:-
a) As already indicated, the estimation of a vessel's sound value is
not an exact science and can be considerably affected by a glut or
a shortage of a particular type of vessel being offered for sale
at the material time.
b) Replacement of the damaged vessel will involve the disposal of the
old one for scrap, inspections of potential replacements, arranging
the finance and loans for the new vessel and eventually taking
delivery and making any necessary modifications. All of this can
take many months and involve very considerable additional
expenditure over and above the actual purchase price.
c) The value of a ship to a particular Owner may be considerably
greater than is indicated by the sales of comparative vessels.
If the Owner can repair his damaged vessel quickly, she may be
able to continue trading under an existing profitable Charter or
be able to obtain worthwhile employment because of that particular
Owner's connections, whereas none of this business would be
[ END OF PAGE: 9 (lower half missing) , 19 of 36 scanned ]
c) (Continued)
available to him when he eventually commissioned a replacement
vessel many months later.
d) While it is usually possible to prepare reasonably accurate
estimates of the cost of steelwork repairs, the same does not
apply to machinery damage. As repairs progress it is quite
common to find additional items which require repair, or
parts thought to be repairable, eventually have to be renewed,
so that the final cost could be well in excess of the original
estimates.
On the facts of the case quoted previously, the obvious
factor in doubt, is the sound value of the vessel. If the Shipowner
is prepared to spend GBP 1,300,000 on repairing the vessel, which also
has a scrap value of GBP 250,000, this implies that the value of that
vessel to that particular Owner is of the order of GBP 1,550,000 and
unless there is concrete evidence that the Owner _unreasonably_ carried
out repairs at an _unreasonable_ cost, then Rule XVIII (a) applies, and
the full cost of refloating damage repairs should be made good in
General Average. I do not support the negative contributory value
theory put forward in the latest edition of Lowndes & Rudolf, which
the authors admit has no basis in law. I prefer the practical
Adjusters' approach that no matter how badly damaged the ship may be,
if it can be sold for scrap and there are net proceeds from such a
sale, then these represent the net damaged value of the property, to
which any amount made good should be added. I fully support the opinion
of the Advisory Committee and I would suggest that even if the repairs
were effected on the voyage, so that at the completion of the adventure
the vessel was then in sound condition, the same principle should be
applied and the estimated sound value should be ignored. In other
words, the assumed sound value to the Owner must be GBP 1,550,000 from
which is deducted the cost of all repairs effected on the voyage
[ END OF PAGE: (no '10' ) , 20 of 36 scanned ]
amounting to GBP 1,300,000 leaving a scrap value of GBP 250,000 to which
will be added the amount made good of GBP 900,000.
Having criticised the estimated sound value referred to in
this case, I think I should in fairness mention that the scrap value
which the Advisory Committee was asked to consider, was also incorrect,
as this related to her estimated value for scrap delivered in Taiwan,
but the estimated cost of towage, etc., would have reduced her value
to nil at an Australian port.
When a vessel is operating under a Time Charter, the Charterer
normally pays for all bunkers on board at time of delivery, supplies
and pays for all fuel during the continuance of the Charter, and then
debits the Shipowner with the quantity of fuel remaining upon re-delivery.
Therefore, the bunkers are clearly the property of the Time Charterer
throughout the period of the Charter and being at his risk, he has an
insurable interest in respect of same.
Nevertheless, questions are raised by Time Charterers when
asked to contribute to General Average, and I personally have had two
during the last year. The first, raised by an American lawyer,
questioned the amount made good and the second, raised by the Time
Charterers' P. and I. Club, questioned the principle of contribution.
Reference to Lowndes & Rudolf Tenth Edition, Chapter 812,
makes it clear that Time Charterers bunkers are part of "the property"
at risk and they are liable to contribute in respect of those bunkers
on board at the time of the General Average act, which remain unconsumed
at the completion of the adventure, and on their value at that place
and time. The recent House of Lords decision in the case of the
"Span Terza" confirms the fact that Time Charterers bunkers remain their
property, the Shipowner merely acting as bailee.
[ END OF PAGE: 11 , 21 of 36 scanned ]
The practical problems can best be illustrated by the
following example:-
Bunkers on board at time of General Average act
(say a deviation to port of refuge) ... 600 tons
Consumed at port of refuge ... 100 tons
Consumed on remainder of voyage ... 300 tons
Remaining on completion of adventure ... 200 tons
The net contributory value will be based on 200 tons, to
which will be added the amount made good in General Average of 100 tons,
and Time Charterers will be asked to contribute on the value of 300 tons.
The vessel will undoubtedly be placed "off-hire" upon
deviating to the port of refuge, and the Time Charterers will later
debit the Shipowners with the 100 tons consumed thereat. This does not
affect the assessment of the contributory value in the circumstances
quoted earlier because it is a fundamental principle of General Average
that any amount made good for sacrificed property must contribute to its
own loss, and if the Time Charterers bunkers had not been sacrificed,
there would have been 300 tons remaining on completion of the adventure.
This practice was considered by the Advisory Committee of the
Association in 1977 and I think the following paragraph from their
Report explains the position very clearly:-
"When bunkers are owned by the Time Charterer it is the
Time Charterer who in principle will have a claim in
General Average and contribute on the quantity allowed.
The Charterer, under the terms of the Time Charter Party,
may subsequently debit the Shipowner with the cost of
the bunkers consumed and in practice if he does so the
Shipowner will then be credited with the cost in the
balance following after the apportionment of the General
Average. This does not alter the fact that the bunkers
[ END OF PAGE: 12 , 22 of 36 scanned ]
at all times are owned by the Charterers, that it is
the Charterer's bunkers which are sacrificed and that
it is the Charterer who, in the absence of a provision
to the contrary in the Charter party, must contribute on
the sacrifice."
What could appear to be a difference in practice can occur
in the following circumstances:-
Bunkers on board at time of General Average act ... 500 tons
Consumed at port of refuge ... 200 tons
Consumed on remainder of voyage ... 400 tons
Bunkers purchased after leaving port of refuge ... 350 tons
Remaining on completion of voyage ... 250 tons
From these figures it will be seen that although 250 tons
remained on completion of the adventure, some 350 tons had been
purchased after the General Average act occurred, therefore none of
the bunkers at risk at the time of the General Average act remained
onboard upon completion of the voyage and the contributory value is
therefore nil. On the other hand, if 200 tons had not been used at
the port of refuge, there would still have been 100 tons of bunkers
remaining on board on completion of the adventure, out of the 500 tons
at risk at the time of the General Average act. The practical and
equitable solution to this problem is to treat 100 tons of bunkers
consumed at the port of refuge as being a sacrifice, and this then
becomes the total contributory value of Charterers' bunkers, whilst the
remaining 100 tons is treated as a General Average expenditure.
[ END OF PAGE: 13 , 23 of 36 scanned ]
_The_ _second_ _subject_ _I_ _wish_ _to_ _discuss_ _is_ _Air_ _Freight_.
The question of whether air freight should be treated as
part of the reasonable cost of repairs or, whether only the excess
cost over and above the normal sea freight should be allowed as
General and/or Particular Average, up to the savings achieved, is
still a problem which Average Adjusters face today.
The treatment of air freight first became relevant after
World War II when there were a number of instances in which air
charter companies using old wartime bombers were employed to carry
large machinery parts halfway round the world in order to avoid the
extensive delays to vessels which would have occurred had these parts
been sent by sea.
The decision in Western Canada Steam Ship Company Limited
v. Canadian Commercial Corporation (1960) dealt with a case where a
vessel was towed into Singapore with a broken tailshaft in 1947. The
Shipowners chartered a Halifax bomber to fly a new tailshaft from
Wales to Singapore at a cost of some $22,000. The cost of sea freight
would only have been a few hundred dollars, whilst the saving in
General Average detention expenses was nearly $25,000. The Shipowners
claimed from the Cargo Interests' contribution to the extra cost of
air freight as a substituted General Average expense.
The Cargo Owners claimed that the whole of the air freight
was part of the cost of repairs, on the basis that spare parts for
ships are frequently flown into Singapore by air, that the cost of
flying the shaft was "a usual expense" and not one of the extra
expenses contemplated by Rule F of the York-Antwerp Rules 1924.
In giving judgment Mr. Justice Ritchie said "In my View
the evidence does not warrant the inference that it is usual to charter
an aircraft for the purpose of bringing an 8 ton shaft from Wales to
Singapore and I cannot treat this as anything other than an extra
[ END OF PAGE: 14 , 24 of 36 scanned ]
expense which was incurred in place of the expense which would have
been involved if the ship had been required to remain at Singapore
while a shaft was being sent out by sea."
It is interesting to note that in Lowndes & Rudolf, 10th
Edition, published in 1975 the learned authors made the following
comments in respect of that decision:
"Judgment in the above case was given in 1960 and related
to events which took place in 1947. Since that time the
carriage of goods by air has increased probably a hundred
fold, and what was at one time unusual and exceptional,
may now be commonplace and regarded as the rule. If, and
when, such a stage has been reached, the cost of air
transport must be treated as part of the reasonable cost
of repairs and should no longer be considered as a
substituted expense for sea or other transport."
Bernard Dann, in his address to this Association in 1976,
made the following comments on the above decision:
"One will agree with Mr. Justice Ritchie that in 1947
it was not usual to charter and convert a bomber to carry
a tailshaft from Wales to Singapore. In 1976 the same
could not be said of the carriage of such a shaft on
such a journey by conventional cargo carrying aircraft.
Of course the use of air freight must be reasonable -
such as a prudent uninsured owner would use. If the
Owner uses air freight when sea would have served just
as well, then, unless the amount is relatively trifling,
he has not acted prudently. If a Shipowner has an
unbending rule always to send parts by air then there
will be occasions when the Underwriter may fairly say
[ END OF PAGE: 15 , 25 of 36 scanned ]
that the extra cost of observing the rule is not
part of the reasonable cost of repairs."
He then went on to illustrate his point by quoting two
practical examples which may be summarised as follows:-
In case 1, the vessel put into Aden with extensive damages
to main engine bearings. Some new bearings were flown to the vessel
from the United Kingdom and Japan, but due to shortage of new bearings,
others had to be flown to Denmark for remetalling and then returned to
Aden. The air freight costs amounted to several hundred thousand
dollars, but sea transport would have prolonged the repair period by
96 days and he accordingly charged the whole of the air freight to
Particular Average as being part of the reasonable cost of repairs and
the Hull Insurers settled the claim without dispute.
The second case he quoted involved damage to a turbo-charger
just after the vessel left her loading port. The Shipowners air
freighted a new part to the discharge port, but it could have been
sent by sea and still have arrived before the vessel. He therefore
only allowed the cost of sea freight.
In his concluding remarks on air freight he made the following
comments:
"When one is considering substituted expenses for
allowance in general average one cannot allow expenses
substituted for something which, being unreasonable,
could not have been allowed in general average at all.
To have carried the parts for an extra 96 days would
have been absurd and for the same reason that the excess
cost of air freight formed part of the reasonable cost
of repairs, it could not be allowed in general average.
I submit that air freight is or is not part of the
reasonable cost of repairs according to the facts of the
[ END OF PAGE: 16 , 26 of 36 scanned ]
case. If part of the reasonable cost of repairs,
it ought not to change its character simply because
it incidentally saves general average."
The Association of Average Adjusters of the United States
adopted the following Rule of Practice in 1961:
"The cost of air freight on repair parts shall be
allowed as part of the reasonable cost of repairs
when the shipment of such parts by water and/or
land conveyance would result in unreasonable delay.
Nevertheless, when shipment by air saves General
Average expense the extra cost of shipment by air
over the cost of water and/or land conveyance, shall
be allowed in General Average up to the expense
saved."
I believe the American Association gave consideration to
deleting the second part of this Rule in 1974 and came to the
conclusion that the increasing use of air freight might well require
deletion of this qualification in the future, but did not feel that
American Hull Insurers were at that time ready to accept such a
change.
A Sub-Committee of the European Association of Average
Adjusters reported in 1969 that, in their view, air freight on engine
parts by scheduled flights was now quite a normal means of transport
and should be treated as part of the cost of repairs and not as a
substituted expense, but that this stage had not been reached with
charter flights.
I think it would be fair to say that up until the end of
the 1970's, Claims Adjusters in the London Market were fairly equally
divided in their views on whether air freight should, or should not,
[ END OF PAGE: 17 , 27 of 36 scanned ]
be treated as part of the reasonable cost of repairs, and whilst I
feel that opinions are moving more towards acceptance, questions are
still being raised to-day where Average Adjusters have allowed air
freight as a claim on Hull Underwriters.
The main grounds for objection seem to be:-
a) In the terms of the MIA 1906 Sec. 55(2)(b) the Insurer is not
liable for any loss proximately caused by delay, although the
delay may be caused by a peril insured against. Therefore,
it is argued that if the cheapest course is to send the
required parts by sea, this is all that the Hull insurer
is liable for and the fact that considerable delay can be
avoided by use of air freight, is no concern of the Underwriter.
b) The Shipowner can effect a special insurance on loss of hire
and/or profits to cover this extra delay and the extra cost
of air freight should be recoverable as a substituted expense
under such an insurance.
c) Hull insurers should only reimburse the extra cost of air
freight up to the amount saved by way of incidental repair
expenses which would have been incurred and charged to them
if the parts had been sent by sea. If General Average detention
expenses were also saved, then the extra cost of air freight
should be allowed against General Average savings first.
d) A very recent comment on this subject was to the effect that if
the vessel was operating in a liner type trade, and providing
the Shipowner had paid an additional premium for the Liner
Negligence Clause, the cost of air freight could be considered
as part of the reasonable cost of repairs.
The implication of this line of argument is that if the
vessel is not employed in a liner type trade and the policy does not
contain the Liner Negligence Clause, then the air freight cannot be
[ END OF PAGE: 18 , 28 of 36 scanned ]
considered to be part of the reasonable cost of repairs.
The arguments in favour of treating air freight as part
of the reasonable cost of repairs and the answers to the foregoing
objections, can be summarised as follows:-
i) A modern ship is a highly complicated object manufactured at
vast cost which is purchased by the Shipowner, usually with aid
of a substantial mortgage from a bank, who will insist on the
vessel being insured on "Fully comprehensive" conditions.
The purchase of a ship involves a substantial capital
commitment by the Owner and in addition he has a very much
larger commitment to the mortgagee bank in respect of
repayment of capital and interest.
The only reason a Shipowner makes such an investment and
undertakes such liabilities is that he hopes he will be able
to obtain adequate freights and keep the vessel fully employed
so that after deducting all capital commitments and running
expenses, he will make a profit. Having purchased and insured
his vessel, the Shipowner then expects his Insurers to pay for
the cost of repairs when these result from an insured peril.
If repairs can be expedited by sending spare parts by air
freight, the Shipowner will certainly adopt this course and
even if one applies the "prudent uninsured owner" test it
would be difficult to argue that he had acted unreasonably.
It seems to me that 40 or 50 years ago when air freight was
in its infancy or did not exist at all, the Shipowner had no
alternative but to send urgently required spare parts by sea
freight. However, the rapid development in size and numbers
of aircraft since the War and particularly the arrival of the
Jumbo Jets during the last decade, has meant that airlines
[ END OF PAGE: 19 , 29 of 36 scanned ]
i) (Continued)
throughout the world can now offer a fast and efficient
service for the transportation of most spare parts and Marine
Hull Insurers must move with the times and give the type of
cover required today by their clients, the Shipowners.
ii) Underwriters on Loss of Hire and/or Profit insurances,
particularly those in European countries where air freight is
already generally accepted as being part of the reasonable
cost of repairs, are not prepared to consider paying the extra
cost of air freight over sea freight as a substituted expense
under such policies. In practice, the Average Adjuster can be
faced with this problem when the Loss of Hire insurances are
placed in say, Scandinavia, but the Hull Insurances are placed
in London and the latter advance the arguments against treating
air freight as part of the reasonable cost of repairs as already
indicated in (a) and (b) previously. Clearly, the cost of air
freight is a claim on either the Loss of Hire or Hull Insurances
and the uncertainty that still exists in the London Market today
can only contribute to delay in settlement of the Shipowners'
claim, which is prejudicial to the reputation of the London
Marine Insurance Market.
iii) I can see little merit for the argument that the extra cost of
air freight over sea freight should only be allowed as part of
the reasonable cost of repairs up to the saving in expenses that
would have been charged to Underwriters had the parts been sent
by sea. For the reasons already stated it seems to be based on
an outdated point of view, inappropriate to 1984. To then
suggest that if General Average detention expenses are also
saved, the excess cost of air freight should first be charged to
[ END OF PAGE: 20 , 30 of 36 scanned ]
iii) (Continued)
General Average up to the savings before considering any
savings to Hull Underwriters in incidental repair costs,
seems to be a complete contradiction in terms. I know it
can be said that our colleagues in the United States have a
Rule of Practice which, although it provides that air freight
shall be allowable as part cost of repairs when sea freight
would have resulted in unreasonable delay, then goes on to
say that if General Average detention expenses are also saved,
air freight shall be allowed up to the savings. I consider
that air freight is either part of the reasonable cost of
repairs or a substituted expense. It cannot be both at the
same time. The authors of Lowndes & Rudolf when commenting
on the construction of Rule F of the York/Antwerp Rules 1974
suggest the extra expense referred to in the Rule implies an
extraordinary expense and certainly does not cover an enhanced
ordinary expense. As Shipowners these days invariably send
spare parts by air, the only exceptions being large parts such
as propellers or cylinder liners which are merely required to
keep up a stock of spare parts on board, surely it can now be
argued that the use of air freight has become the customary
and ordinary method of transporting spare parts and is therefore
inadmissable under Rule F as a substituted expense.
There are instances where air freight can only be considered
as part of the reasonable cost of repairs. For example, when
a vessel sustains a fire in the bridge area at a remote port as
a result of which it is necessary to send out delicate parts or
replacements for such items as wireless, radar, etc. Clearly,
the risk of sending such parts on long sea voyages with possible
[ END OF PAGE: 21 , 31 of 36 scanned ]
iii) (Continued)
transhipment, extra handling, etc., thus increasing the risk
of the parts arriving damaged, is unreasonable, when air freight
is available.
A further point to bear in mind is that even if a part of the
air freight is allowed in General Average against savings, it
will then be the cargo Insurers who will question the allowance,
particularly if they are resident in a country which already
accepts air freight as part of the reasonable cost of repairs.
In order to resolve the potential disputes between Hull, Cargo
and Loss of Earnings Underwriters and to facilitate settlement
of Shipowners' claims I suggest that a special committee be
appointed with representatives from this Association and the
Lloyd's & Companies market with a view to drafting a Rule of
Practice on the following lines:-
"When spare parts immediately required for damage repairs are
despatched by scheduled air services, the charges shall be
treated as part of the reasonable cost of repairs."
Such a rule would benefit the Shipowner when he acted reasonably
and would help to overcome the problems indicated earlier. On
the other hand, the Hull Underwriter would be protected in that
where a Shipowner automatically sends all parts by air regardless
of circumstances, the Insurer would not be liable to reimburse
the cost of air freighting a spare cylinder liner merely required
to replace a ships spare used on a damage repair.
Special charters of aircraft should not be dealt with in the
suggested Rule of Practice. These are best dealt with on the
facts of each particular case and the Average Adjuster can, if
necessary, submit a memorandum to the parties concerned for their
agreement to the proposed treatment of the costs incurred.
[ END OF PAGE: 22 , 32 of 36 scanned ]
_The_ _Third_ _and_ _last_ _subject_ _is_ _Delayed_ _Settlement_
_of_ _General_ _Average_ _Contributions.
Rule XXI of the 1974 York/Antwerp Rules 1974 reads as follows:-
"_Interest_ _on_ _losses_ _made_ _good_ _in_ _General_ _Average_
Interest shall be allowed on expenditure, sacrifices
and allowances charged to General Average at the rate
of 7% per annum, until the date of the General Average
Statement, due allowance being made for any interim
reimbursement from the contributory interests or from
the General Average deposit fund."
This and all previous additions of the Rules have always
specified that interest on disbursements and losses was only to be
allowed up to the date of completion of the General Average Adjustment.
The European Association of Average Adjusters appointed a
committee to look into the question of General Average interest and
they reported to their Biannual Conference, last September, at which
some of you were present. Their investigations revealed that in a few
countries it was either the practice, or permitted by the law of the
country, to extend the allowance of General Average interest up to the
estimated date of settlement, but this only amounts to a period of two
or three months at most.
In a multi Bill of Lading General Average or a major casualty
case, it can take two or three years or more to complete the Adjustment
and the financial loss to the parties who have funded disbursements or
sustained losses, due to sacrifice, can be considerable.
Applying the commercial rate of compound interest that could
have been earned on the capital expended over a three year period, the
total interest earned could easily come to over 40% on the principle
sum, whereas the allowance of simple interest under the York/Antwerp
[ END OF PAGE: 23 , 33 of 36 scanned ]
Rules would only be 21%. It seems to me that the rate of interest
allowed under the York/Antwerp Rules 1950 and 1974 has, for at least
the last twenty years, been insufficient to compensate the creditors
for the loss of use of their capital.
I appreciate there will be no change in the interest rate,
unless the York/Antwerp Rules are revised, but as and when that time
comes I would hope that apart from arriving at a more realistic rate,
provision will also be made for interest to be allowed up to the
estimated date of settlement of the General Average Adjustment.
In a simple case the Adjuster might only allow a few weeks
extra interest, whereas in a multi Bill General Average he may consider
an average time of three months sufficient, assuming all parties settle
matters promptly. In addition, the Rules should be amended to provide
for additional interest to be paid by all debtors at the legal rate
prevailing in their country from the date calculated in the General
Average Adjustment up to the time of final settlement.
I think I should now explain some of my reasons for what may
appear to be rather radical ideas. Ever since the House of Lords
(decision in the "Muncaster Castle" case, the grounds upon which the
cargo interests can dispute liability to contribute in General Average
have been increased very substantially. In the past, cargo interests
and their insurers tended to examine a General Average Adjustment and
decide whether to pay the contribution or not, based upon the evidence
contained therein. In more recent years, the tendency seems to be for
some cargo insurers to first submit the Adjustment to lawyers to see
whether they can find a legal loophole.
To illustrate my point, I will quote two instances with which
I have had personal experience. The first concerns a vessel which
struck a pier whilst leaving her loading port, sustaining major damage
to her rudder as well as extensive machinery damage due to the shock of
[ END OF PAGE: 24 , 34 of 36 scanned ]
the contact affecting the lubricating oil pump. The shipowner agreed
to accept Average Guarantees from reputable London and foreign
Underwriters insuring the cargo. A number of these Underwriters
subsequently refused to make a Payment on Account, and when the
Adjustment was issued some two years after the casualty, they promptly
submitted it to an American firm of lawyers. Having answered numerous
questions raised by the lawyers, many of the answers to which were
already clearly contained in the Adjustment, we were still faced with
requests for additional documents such as original and scrap deck and
engine logbooks for three years prior to the casualty, all engine and
steering gear maintenance records for a similar period, plus all repair
accounts and classification surveyor's reports for the same three year
period. Bearing in mind that the Adjustment included details of
classification surveys at the previous drydocking and full copies of
Salvage Association reports on behalf of Hull Underwriters and General
Average interests, in which the cause of damage was fully agreed, these
requests for information relating to a period of three years prior to
the casualty, surely indicates either a fishing expedition or delaying
tactics.
The second case also concerned a major casualty with
extensive repairs and considerable allowances to cargo interests, but
on balance they still had a very substantial debit balance to pay. In
this case, an Average Guarantee, signed by an agent in London on behalf
of a reputable foreign insurance company, was accepted by the shipowner.
After the elapse of several months, whilst the Adjustment was being
examined by Solicitors acting on behalf of the cargo insurer's London
Agent, it was eventually approved, but a further delay of over six
months occurred before the contribution was actually paid.
In both of these cases, whilst the shipowner was prejudiced
by loss of use of his capital for which he received no recompense, the
[ END OF PAGE: 25 , 35 of 36 scanned ]
cargo insurers had the use of several hundred thousand pounds, free
of interest.
It is not only shipowners who suffer from these problems.
Occasionally the shipowner is a substantial debtor under the Adjustment
and if his Hull insurances are placed worldwide, the collection can
take six months or more. In multi Bill General Average cases, it
often takes one or two years to collect all the balances from cargo
debtors before the creditors can receive their final balances.
In all the above instances, the creditors under the General
Average Adjustment are receiving no interest on the amounts due to
them, from date of issue of the Adjustment to date of final settlement.
The debtors, having only signed an Average Guarantee, can safely rely
upon the fact that legal action upon this document will only be taken
as a last resort.
Had the shipowner insisted on General Average deposits, both
he and the cargo creditors would be in a much stronger position. All
creditors would eventually receive interest earned on the proportion
of the deposit funds payable to them subsequent to the issue of the
Adjustment up to date of final settlement. On the other hand, although
the debtors would eventually receive interest on the proportion of the
deposit funds in excess of the General Average contribution, they would
be deprived of the use of the capital involved and this would accelerate
their consideration and settlement of the contributions payable.
Whilst I do not expect you to agree with all of my
conclusions, hopefully my comments may provide a basis for further
discussion.
Thank you for your kind attention.
[ END OF PAGE: 26 (Last Page) , 36 of 36 scanned ]
|
