It is rare for an owner to allow his claim to be struck out for failure to disclose evidence. However, that is exactly what has happened in the latest twist of long running insurance battle between the owners and insurers of the Brilliante Virtuoso.
By way of background, the Brillante Virtuoso became a constructive total loss after pirates allegedly detonated an explosive device on the vessel as it transited the Gulf of Aden in July 2011. The owners’ insurers declined the total loss claim alleging wilful misconduct and the case ended up in the Commercial Court. One of the allegations made was that owners conspired with the charterers in a fraudulent scheme involving the bills of lading so as to deceive the Chinese authorities into charging a lower import duty. Readers of our blog will recall the recent “DC Merwestone” case dealing with the use of a fraudulent device in an insurance claim and insurers looking to decline claims are now very hot on looking for fraud or misconduct so as to avoid having to pay claims.
The Brilliante Virtuoso is such a case. It is clear that the insurers had suspicions about the claim at the outset and, as part of disclosure process, the judge ordered the managers together with Mr Marios Iliopoulos, the ultimate beneficial owner of the ship, to hand over documents stored on the managers’ computer systems. This led to various requests for time and applications to limit the scope of the request but, ultimately, the owners decided not to comply with the order. They would not even release their computer records to their own solicitors. One can only speculate as to what might have been in the owners’ computer systems and how this might have affected the claim but, in view of the failure to comply with the order, the judge felt that he had no alternative but to strike out the owners’ claim.
The excuses put forward for not disclosing the records requested were somewhat bizarre and Mr Iliopoulos’ version of events was branded a fabrication by the judge. There is also a suggestion of some skulduggery in Greece with criminal complaints being filed and suggestions of misconduct on the part of the insurers’ lawyers and consultants. The judge noted that the evidence produced in relation to those proceedings was likely to have been created by representatives of the owners with a view of building a defamation case in Greece against the insurers.
There was also the fact that Mr Iliopoulos was arrested by City of London Police on the evening of 12 April 2016. He was questioned for some hours as part of an investigation into conspiracy to commit fraud before being released on bail.
It will be interesting to see what happens next in this long running saga. As matters stand the claim remains struck out and it is not clear if owners intend to appeal. It also remains to be seen whether the claim of Piraeus Bank, the second claimant, will proceed to trial in London and whether Mr Iliopoulos will proceed with a defamation claim against the underwriters in Greece.
All in all this is a fascinating case and we will continue to keep our followers advised of developments.