Cunard ordered to pay shipyard

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Cunard, the shipping line owned by Trafalgar House, has lost a legal battle against the German shipyard that participated in the ill-fated refitting of the QE2.

A High Court judge has ordered the company to pay the shipyard pounds 4.18m it withheld,claiming the shipyard failed to finish the re-fit on time.

It is the latest embarrassing chapter in a saga that has seen the company provide pounds 7.5m for the cost of compensating passengers after their transatlantic Christmas voyage was made a misery by poor standards on the liner.

It was a bungled attempt to catch up on more successful rivals such as P&O that led to the public relations nightmare when hundreds of passengers were joined on a sailing from Southampton to New York by 2,000 workers struggling to complete a pounds 30m refit of the flagship cruise liner.

Many passengers missed out on the cruise altogether, although most of those who did travel wished they had not. Those who made the crossing complained of "Niagaras" of dirty water in the lavatories, corridors blocked by "unsecured materials" and a fenced-off swimming pool.

The highly publicised fiasco resulted in the resignation in May of John Olsen, chairman and chief executive of Cunard.

It also led to bitter recriminations between the shipping line and the shipyard, Blohm and Voss. Cunard argued that the problems were caused by the Hamburg-based shipyard failing to complete the pounds 22.72m contract for structural work on time, and sued.

Pending the outcome of the legal action, Cunard withheld pounds 4.18m of its payment to the shipyard. However, a High Court judge sitting in chambers ruled that the British ship-line should meet payments of its contract immediately.

"The decision has no bearing on the merit of our main claim against the shipyard," said Tom Smith, spokesman for Cunard. He added that the company intended to take up the judge's invitation to appeal in the Appeal Court.

Blohm and Voss confirmed that the judge had ruled in its favour but refused to reveal the details of the confidential judgment.

"There has been a judgment in our favour," said Dr Michael Baumhauer, the shipyard's general counsel.

However, a source within the company said it was determined to rebuild its long-standing relationship with Cunard as soon as the matter was resolved.

"In the meantime, we seem to be treated like whipping boys," he said.

Cunard faces outstanding litigation in the US from passengers who are claiming $50m in a federal court for alleged inconvenience and possible exposure to asbestos.