Dam Van Minh v Da Guang Tankers (Private) Limited (in Liquidation) & Anor

On 21 June 2021 Clyde & Co issued a claim form in respect of a collision that was alleged to have occurred on 22 June 2019 in the South China Sea some 90 miles south west of Hon Khoai Island, Ca Mau Province, Vietnam between the claimant’s fishing vessel “CM-99596-TS” and the defendants’ vessel “OCEAN UNICORN” – a large oil tanker. The defendants, respectively the owners and the demise charterers of OCEAN UNICORN, denied that a collision, of which there is no contemporaneous record, had taken place. On 6 May 2022 the court made an order for security for costs. The order was not complied with. On 14 July 2025 the claim was struck out because it had not been actively pursued and because of non-compliance with the order for security. At the same time the court considered an application by the defendants that Clyde & Co be ordered to pay the costs of the action on the grounds that they did not have the authority of either the claimant or the claimant’s insurers to commence and maintain it. I found that stage 1 of the wasted costs procedure set out in paragraph 5.7 of PD 46 was satisfied (essentially that there was a prima facie case that costs had been wasted and that wasted costs proceedings were justified). I made directions towards stage 2 giving Clyde & Co the opportunity to put in evidence and make submissions in opposition to the payment of wasted costs. They did so and I listed a hearing, which took place on 18 March 2026.

Mr Kimbell KC, for the defendants, put the application on two bases, each of them independent in the sense that he maintained that if either basis were made out then wasted costs would follow. They were (1) that Clyde & Co had expressly warranted that they were instructed by the claimant’s hull and machinery underwriters, PetroVietnam Insurance JSC (“PVI”), when (as they have admitted) they were not and (2) that they did not have instructions or authority from the claimant either. In both cases, Mr Kimbell submitted that the defendants were entitled to the costs of the action as either wasted costs or as damages for breach of warranty.

I find that Clyde & Co were validly instructed by the claimant and so no damages or wasted costs can be awarded under limb (2) of the application. But I find (as was, I repeat, admitted) that Clyde & Co were not instructed by the claimant’s hull and machinery underwriters and this has indeed caused the defendants substantial loss comprising, save for a small discount, the entire costs of the action.

My reasons follow.

A feature of collisions such as is alleged to have occurred in this case is that some of the claims are fraudulent. I quote from paragraph 7 of the first statement of Richard Offord, the general manager of Thomas Miller (South East Asia) Pte Ltd, the managers of the Singapore branch of the UK P & I Club with whom OCEAN UNICORN was entered:

Because of the prevalence of false claims, Mr Offord explained that the approach of the Club differed between those cases where the fishing vessel owner was self-representing and those in which the claim had been “taken up by the fishing boat’s insurers”. In this case, because Clyde & Co were acting for the claimant the Club assumed that they were instructed by the hull and machinery underwriters. Accordingly, on receipt of the initial letter of claim dated 8 July 2019, the Club instructed CJC solicitors to act. CJC proposed Singapore as a jurisdiction. Clyde & Co counter-proposed English law and jurisdiction. On 30 August 2019 CJC wrote to Clyde & Co asking for categorical confirmation that they acted for both the owners and the underwriters. Clyde & Co replied: “We do represent both owners and underwriters”. Three days later, on 3 September 2019, CJC agreed English law and jurisdiction and agreed also to security by LOU in the sum of US$803,079 in order to avoid arrest, subsequently increased to US$1,303,079.

On 25 November 2019 Clyde & Co repeated that they were “instructed by the owners and insurers of the fishing vessel CM-99596-TS”. They sought an admission of liability. That was refused. The claim was issued just within limitation on 21 June 2021 and served on 14 October 2021. On 7 March 2022, CJC applied for security for costs. The application came before me on 29 April 2022. I made an order for security in the total sum of US$250,000. An integral part of the reasoning in support of the order was that Clyde & Co were instructed by both the claimant and the claimant’s insurers, PVI, and that in the ordinary course of events PVI could be expected to meet the order for security. It was at this point that the true position became clear. The first tranche of security was due on 27 May 2022, but was not provided. A stay of the claim therefore came into effect. Thomas Miller, for the Club, chased PVI direct for the security and for the costs of the application (GB£30,000). This eventually produced a response from PVI which was: “we would like to confirm that Clyde & Co was NOT authorized to bring legal proceedings before the High Court in London by PVI on behalf of hull and machinery interests”. CJC demanded an explanation from Clyde & Co. This was the explanation offered, (email from Clyde & Co to CJC dated 24 July 2022):

The claim remained stayed. No further steps were taken in the action. But both sides wrote to the court in order to keep the court informed. Clyde & Co wrote on 28 November 2023. This letter referred to proceedings brought by the claimant against PVI, who had refused to indemnify him under the hull and machinery policy. This prompted a train of enquiry on the part of CJC (using Vietnamese lawyers), which revealed the following:

In the light of this information (and particularly the statement of the claimant that he had never brought a claim against the OCEAN UNICORN) CJC invited Clyde & Co to provide proof that they were genuinely instructed by the claimant. Clyde & Co did not respond. Some 16 months later, on 10 April 2025 CJC invited Clyde & Co to discontinue and to return the Club’s LOU. Clyde & Co replied the next day to say that they were unable to obtain instructions and were going to apply to come off the record. A court order to that effect was made on 25 June 2025. On 4 July 2025, CJC made the application for the claim to be struck out and for a “stage 1” order for wasted costs on the ground that Clyde & Co had never been instructed by PVI and that there was a prima facie case that they had never been instructed by the claimant either. I made the order of 14 July 2025 referred to at paragraph 1 above.

There was then an exchange of evidence. Eleven further statements were filed and two more immediately before the hearing. Much of the evidence related to the instruction of Clyde & Co by the claimant himself. In the end, that has proved a short point, which I have relegated to the end of this judgment. As to the instruction – or, as I might better call it, the non-instruction – of PVI, the focus of the evidence and the submissions was the significance of this to the course that was taken by the Club and the defendants. The position of Clyde & Co was that the admitted breach of warranty of authority to act had caused no loss. The battle-lines were drawn as is set out in the following paragraphs.

As touched on in paragraph 6 above, Mr Offord of the Club stated that the approach of the Club differed markedly according to whether a claim such as this one was presented by the fishing boat owner acting alone, or, acting with the backing and involvement of insurers. In the former case, the Club would appoint local representatives and would explore a “commercial settlement”. If the Club, having made enquiries into such matters as the voyage data recorder, the accounts of the crew, the presence or absence of hull damage, paint residues etc had assessed the claim as doubtful “we would generally reject the claim and monitor further developments before considering any further engagement”. By contrast:

In this case:

The response of Clyde & Co was very helpfully summarised at paragraphs 40 – 46 of Mr Happé’s skeleton argument. The main points were these:

I adopt the following paragraphs from Mr Kimbell’s skeleton argument with which Mr Happé did not take issue as representing an accurate statement of the legal principles I have to apply.

The procedure is a summary one. It has been said on many occasions that an application for a wasted costs order is inappropriate “where complicated proceedings requiring detailed investigation into the facts would ensue”; see Civil Procedure (the White Book), Vol 1 at 46.8.14. Hence, at the commencement of the hearing on 18 March I refused Mr Happé’s application to call oral evidence from Mr Jai Sharma, the solicitor at Clyde & Co with conduct of the claim. Had Mr Offord attended the hearing, Mr Happé would have applied to cross-examine him and that too I would have rejected as inappropriate. An order for oral evidence and cross-examination “should rarely be made”; see Walker Preston Solicitors Ltd v Annolight Ltd [2021] EWCA Civ 1663.

Although (see (6) above) the two jurisdictions will usually lead to the same result, the wasted costs jurisdiction involves appraisals which do not feature in the breach of warranty of authority jurisdiction. These are the appraisals mandated by sub-paragraphs (a) and (c) of paragraph 5.5 of Practice Direction 46. That paragraph states as follows:

In this case, because the breach of warranty of authority is admitted, the analysis under that jurisdiction focuses on the question of causation of loss. Expressed in the language of sub-paragraph (b), to which the breach of warranty jurisdiction on this aspect corresponds: Has the breach of the warranty of authority caused the defendants to incur unnecessary or wasted costs?

The answer to the question is: Yes.

The starting point is the evidence of Mr Offord as to the practice of the Club in circumstances such as these. His evidence was entirely plausible and Clyde & Co, with their enormous experience of maritime law and practice, did not provide any real challenge to it. This was a collision for which there was no contemporaneous evidence. The crew of OCEAN UNICORN denied all knowledge. It was not a case where the crew could, on the claimant’s case, have been oblivious to the collision because part of his case was that OCEAN UNICORN had slowed and stopped in the aftermath and then sailed away, (a serious allegation to make against any seafarer). The VDR offered no support for this account. Nor were any VHF calls heard or recorded by OCEAN UNICORN. The ECDIS playback showed no radar or AIS target which might have corresponded to the fishing vessel. There were neither hull damages nor paint residues. In view of the foregoing, this would, it seems to me, have been a classic case where the Club would have adopted a “wait and see” stance. I find that what caused them to agree English jurisdiction and to provide security against arrest was indeed the stated involvement of PVI. This gave them the impression (a) that an insurer-appointed surveyor supported the case and (b) that the claimant therefore had available to him the wherewithal to effect an arrest, (which is an expensive process in any jurisdiction). But neither thing was true.

Clyde & Co’s objections to the above analysis seem to me to be flimsy and unrealistic. It is in one sense correct that it was Clydes’ involvement which caused the Club to act as it did. But this leaves out of account the important feature of that involvement, namely that it signalled to the Club that there were insurers who were backing the claim and instructing them. As Mr Offord said: “local fishing interests in Vietnam do not appoint international law firms on their own volition”. I accept that it was Mr Ng who had conduct of the file for the Club at the time. He retired in 2024. There was an overlap with Mr Offord whom Mr Ng specifically briefed on this and all significant cases which Mr Offord took over. The change in personnel seems to me unimportant. What Mr Offord has described in his evidence is the practice of the Club – a practice which was grounded in common sense. There is no reason to think that Mr Ng would have followed a different practice of his own. That is especially so when this was a paradigm case to follow, rather than depart from, Club practice.

It was, in these circumstances, incumbent on Clyde & Co to demonstrate that, notwithstanding their breach of their warranty of authority, the defendants would still have agreed English, or perhaps Singaporean, jurisdiction and would still have provided security and incurred legal costs in defending the claim. But they have not shown this. They were themselves under a misapprehension in that they believed that they were instructed by PVI. It is not clear from Mr Sharma’s statements that Clydes would still have taken on the claimant’s case without such backing, though this can perhaps, with charity, be inferred. Be this as it may, they have conspicuously not provided any evidence that there would have been funding (particularly for an arrest) available from another, and if so what, source. In the course of argument and in response to a question from me, Mr Kimbell readily accepted that I had to take into account what might plausibly have happened in the counterfactual situation where the defendants and the Club had not been misled by the warranty of authority. That would have included the counterfactual that the claim would anyway have gone ahead in this or another jurisdiction. But he rightly submitted that the burden of proving any such counterfactual lay with Clyde & Co and they had provided no such evidence.

It was no answer to the above for Mr Happé to say that the action did in fact go ahead in this jurisdiction. This was to assume the very thing in issue. The Club’s case was that, but for the breach of warranty, they would not have agreed to English jurisdiction and the action would not have gone ahead. I find that scenario amply made out.

Equally, I reject the submission that the wasted costs application was or could only be grounded on the allegation that Clyde & Co had no authority from the claimant. The fact that this was the context in which the application for wasted costs was first mooted imposed no fetter or restriction on the defendants. The application notice itself very clearly set out twin bases – lack of authority from the claimant and lack of authority from PVI.

Lastly, I reject the legalistic submission that the defendants are unable to maintain the claim to wasted costs because of the “pay to be paid” principle. That principle seems to me to have a very doubtful application to legal costs paid by a P & I Club to its member’s legal representative in order to defend a claim against that member. I note also that where an LOU has been given by the Club (as happened here) this is treated as an exception to the general rule; see P & I Clubs, Law & Practice 4th Ed at 20.6. To the extent that the principle does apply, it seems to me that it is qualified by Rule 5 P iii. of the UK P & I Club rules, which says:

The italicised words appear to me to be broad enough to cover the present situation. If, however, this rule is not apt to cover legal costs so incurred, then it seems to me that the Club would still have a general, implied right of subrogation to claim them under ordinary principles. In either event, it would be correct to pursue the subrogated claim in the name of the defendants because that is the universal practice adopted by common law jurisdictions.

Finally, the warranty of authority was given directly to the Club as well as the defendants because in an email to Clyde & Co dated 9 July 2019 CJC had made it clear that they were acting “on behalf of the owners and the P & I Club”. This would indeed have been a standard practice of which Clyde & Co would have been well aware. Were it necessary, (which, in the light of the findings already made, it is not), I would join the Club as a defendant in order to permit a direct claim.

It is irrelevant to the Club’s rights of subrogation and its direct rights that the defendants are in liquidation.

Principle (4) in paragraph 13 above states that where a solicitor has failed to take proper steps to check the source of his instructions this is likely to be held to be improper and unreasonable within the meaning of PD46 even if he acted in good faith throughout. The only explanation that Clyde & Co have ever offered for their breach of the warranty of authority is the one given in their email of 24 July 2022. Given the seriousness of the breach, that explanation is manifestly inadequate. In addition to the defendants’ and the Club’s rights arising out of breach of warranty of authority, I find that they are entitled to an order for wasted costs pursuant to section 51(6) of the Senior Courts Act 1981 and CPR r. 46.8. Specifically, I find that Clyde & Co have acted “improperly, unreasonably or negligently” and that it is “just in all the circumstances” to order them to compensate the defendants for the whole or part of the costs wasted. I turn therefore to the amount of those costs.

The order of 14 July 2025 assessed the costs of the proceedings in the sum of £141,752.45 (of which £30,000 represents the costs incurred in the defendants’ successful application for security for costs). All the costs stem from the breach of the warranty of authority in that the warranty caused the defendants to enter into the collision jurisdiction agreement and litigate in England when otherwise:

This is a realistic analysis which I adopt as the basis of the award I must make. It requires me to make two assessments which are (1) the likelihood that the claimant would anyway have pursued a claim and (2) if he had, how much that claim would have cost the Club in terms of investigation / further investigation and settlement. Inevitably such assessments are broad brush. That is especially so in a jurisdiction which is intended to be summary.

It has not been shown that the claimant would have had the resources available to him to arrest and thereafter commence and maintain a claim in rem against OCEAN UNICORN or a sister ship. But he was introduced to Clyde & Co by an agency and Clydes accepted a retainer (see further below), albeit under the impression that the retainer was not from him alone. It seems to me likely that a claim would still at least have been intimated or threatened – perhaps by Clydes or perhaps by a local firm. In that scenario, the Club would have had to investigate further thereby incurring at least some of the costs which they in fact expended. I think it is unlikely that the Club would in fact have made any payment to the claimant in circumstances where the only claim he actually pursued with his own resources and without the ostensible backing of an insurer was a claim in Vietnam against PVI. I think that the Club would, as Mr Offord has said, have maintained a “low profile” and that that strategy would have paid off. I can infer from the claimant’s apparent denial of other claims in the Vietnamese proceedings and, of course, from the fact and outcome of those proceedings that he was focused on PVI. Further, once he had been successful in that claim any interest in pursuing OCEAN UNICORN would have evaporated entirely.

In these circumstances, I make a 10% reduction from the overall figure to reflect the costs that I think that the Club might still have paid on the defendants’ behalf. I therefore order Clyde & Co to pay the sum of £127,577.

Mr Sharma asserted privilege in Clyde & Co’s retainer by the claimant. At the hearing, I asked Mr Happé if there was any objection to showing the retainer to me (which was, indeed, a course that had earlier been suggested by CJC). Mr Happé was able, on instructions, to agree to this. The day following the hearing, I was supplied with copies of a letter of authority dated 30 July 2019 in favour of CL Claims signed by the claimant and a standard letter of authorisation in favour of Clyde & Co dated 7 July 2019 signed by CL Claims. I was also supplied with a copy of the CFA dated 8 August 2021 between the claimant and Clyde & Co. The latter is clearly privileged. But the former two documents do not seem to me to be privileged; see Dickinson v Rushmer [2002] 1 Costs LR 128.

Clyde & Co were instructed by agents who were acting for a disclosed principal, namely the claimant. That appears to me to have been a valid instruction.

Because, without hearing submissions, I have formed at least the provisional view that the 7 & 30 July 2019 documents are not privileged, I will order their disclosure and direct that the parties have permission to apply to set aside or vary. But, given that the point is academic to the outcome and given the costs already expended on these ancillary proceedings, I will also direct that that order is to be stayed for 21 days and that, if there is no application for permission to appeal, it is to stand as revoked.