LIABILITY IS ONE ISSUE, BUT SETTING DAMAGES IS A KNOTTIER PROBLEM

In the recent TUG BRUCE A. McALLISTER case (92 Civ. 5559), tried in the Southern District Court of New York, a barge owner sued a tug which had been engaged to move its barge, during which time the barge collided with another vessel. The preliminary issue submitted for court determination was whether the tug was liable for damages sustained by the barge in the collision.

The court found that the tug in clear weather, light winds, and with full knowledge of the prevailing tides and currents, negligently steered her tow into a stationary vessel. The court summarily held the tug liable for all damages sustained to the barge.

The secondary issue submitted to the court proved much more difficult to resolve. What damages would be recoverable by the barge owner?

The maxim to be applied in determining the amount of damages awarded in an admiralty collision case is restitutio in integrum. This ancient maxim has been interpreted by courts to mean, where repairs are practicable, damages assessed against the offending vessel shall be sufficient to restore the injured vessel to the condition in which she was at the time the collision occurred. In layman’s terms, the measure of damages is the difference between the value of the vessel before and after the collision.

In admiralty cases not involving vessel loss, these damages equate to 1) reasonable repair costs and 2) earnings lost during the time the vessel is laid up for repairs (detention damages).

For the vessel owner to recover repair costs, it is not necessary that the repairs actually be performed. The reduction in value of the vessel is enough to support recovery.

On the other hand, the mere fact that a ship is laid up for collision repairs is insufficient support for a detention claim. The claimant must prove the collision damage necessitated taking the vessel out of service. The claimant is then entitled to lost earnings, even if other work is performed on the vessel which is unrelated to the collision.

In addition to proving the fact of lost earnings, the claimant must prove their amount. The amount must not be merely speculative, but rather must be shown. Some of the measures more commonly used to prove detention damages are: value of lost charter hire, average earnings of an average voyage, average daily earnings, lost revenues, market costs of a substitute vessel, and the comparable earnings of competitors. Of course, money saved by taking a vessel out of service must be offset against lost earnings.

In the McALLISTER case there was no dispute that the cost to physically repair the barge was $302,000. There was, however, a substantial dispute about the amount of damages in lost earnings while the barge was laid up.

At trial, the barge owner introduced evidence of its rate structure and utilization records for its barge fleet in support of its $322,518 detention claim. The court noted that there were significant shortcomings with this evidence, citing a lack of detailed accounting documents which would have allowed the calculation of detention damages. Because of the lack of evidence from which the court could reasonably find the detention rate or that the barge operated at a profit, recovery of detention damages was denied.

The McALLISTER case underscores the fact that detention damages need not be proved with absolute exactitude. However, they must be proven with reasonable certainty to succeed.


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