Case law - H&M claims Flashcards
- Agenoria Steamship Co. Ltd v Merchants Marine Insurance Co. Ltd [1903] BOLD
On a voyage from Australia to New Zealand, the vessel sustained damage and after being temporarily repaired in Auckland, she proceeded to Australia for permanent repairs. The owners included in their claim against their hull and machinery underwriters the cost of dispatching a superintendent who represented them. The underwriters contended that the repairs could have been done in an equally efficient manner without the additional cost. The Court decided that the owners were entitled to the cost of a surveyor, but that a local one would have sufficed in the circumstances.
- Alchemist, The [1982, USA] BOLD
Removal of solidified cargo from damaged tanks not repair of damage to vessel - U/rs liability limited to cost of removal of cargo from non-cargo areas etc.
In the “Alchemist”, the polymerised acrylic acid resulted in a final amount of oil adhering to the side of the tanks which cannot be removed. If the most reasonable way of removing it is to incur the expense of anti-pollution measures and clean up cost, when the vessel is in drydock, surely these costs are allowable in the same way as removal of the last of the acrylic acid was in the case of the ‘alchemist’.
- Andreas Lemos, The [1982] BOLD
Theft of equipment by gang of armed men from vessel anchored in Chittagong Roads. Not piracy without force or threat of force (only used in escape). Riot occurred only after loss. Theft was deemed to be clandestine. No operation of the threat of piracy or riot under a war risks policy where violence was only used or threatened when the gang engaged in committing a clandestine theft were attempting to make an escape.
- Armar, The [1981]
P chartered their vessel to X. A cargo of sugar was shipped on board the vessel under a bill of lading naming the consignees as C, and including a general average clause. The vessel grounded, and P incurred general average expenses. Before the cargo was delivered to C, a Lloyd’s Average Bond was signed, showing C as consignees but rubber stamped by D. There was no express provision in the bond as to proper law or jurisdiction. P arranged general average in London and issued a writ against D. D applied for leave to set aside an order for notice of the writ to be served out of the jurisdiction.
Held, on appeal, (1) D were not contractually bound by the provisions as to general average in the bill of lading and they had not agreed with P that P should be able to choose where adjustment should take place; (2) an argument that D could have foreseen adjustment in a place other than the destination, and that the place might be London did not satisfy the standard required by English courts in examining a claim for the assertion of extra-territorial jurisdiction; (3) there was nothing in the facts and circumstances of the case to make English law the system with which the transaction had the closest and most real connection.
- B Atlantic, The [2018] BOLD
“In any case where one or other or both of events A and B are said to be the proximate cause(s), and where B is the last in time, a number of possibilities arise. Either A or B may be adjudged to be the sole proximate cause. The court may, depending on the facts, select A as the proximate cause because its causative potency is such as to eclipse the significance of the fact that it is earlier in time than B or that something else had to happen before the loss arose; or because putative cause B is the inevitable consequence of cause A or will, in the ordinary course of events, arise from A without any intervening fortuity, 170 or will usually do so …” Alternatively, both A and B may both be adjudged to be proximate causes. If so, it may be that in order for the event in question to have happened it was necessary for both A and B to occur. Or it may be that the event would have happened if either A or B had occurred but, on the facts, both of them can be said to have caused it. If there are two proximate causes one of which is covered and one of which is within the exclusion, insurers are not liable, at any rate if, as here, both causes need to operate if the loss is to occur … The effect of the exclusion is that, if the matter excluded is a cause, liability does not arise even if an insured peril is also the cause …”
- Brillante Virtuoso, The [2019] BOLD
This case concerned what was ultimately found (in a judgment given in 2019) to be an attempt to defraud the vessel’s war risk insurers of US$ 77 MM. However, before the question of liability under the policies was tried, the preliminary issues which had arisen regarding the quantum of the loss were placed before the High Court. In addition to disputing the existence of a CTL, Underwriters contended that there should be no liability for standby tugs from the point the vessel was redelivered under LOF (7 October 2011) on the basis that the original peril had ceased to operate (piracy, vandalism, malicious mischief etc.). However, in the 2015 judgment the court held that the vessel was a CTL and
(i) that the original peril continued to operate after redelivery by the salvors,
(ii) that such ongoing expenses as the standby tugs were incurred for the benefit of assured and underwriters; therefore sue and labour expense should be recoverable until proceedings were commenced on 8 February 2012 (date when claim form issued) but not until the vessel was ultimately delivered to scrap purchasers on 15 March 2012.
- Caribbean Sea, The {1980} BOLD
In this case, the vessel sank in moderate weather and investigation showed that a short tube connecting the starboard main sea suction valve to the ship’s side had developed a circumferential crack. The Owners argued that the loss was caused by a latent defect; the Insurers contended that the loss was due to wear and tear or to a defect in design. The trial Judge commented as follows:” …in considering whether there was a defect in the hull or machinery which directly caused the loss of or damage to the ship, one is concerned with the actual state of the hull and machinery and not with the historical reason why it has come about that the hull and machinery is in that state. If the hull and machinery is in such a state that there can properly be said to be a defect in it, and such defect is the proximate cause of the casualty, it would seem to matter not that it had come into existence by virtue of (for example) poor design, or poor construction, or poor repair, unless a casualty so caused is excluded from the cover…” In rejecting both of the Insurers’ defences he found that the proximate cause of the loss was a combination of fatigue cracks arising from faulty design and the normal working of the ship. The defect constituted a latent defect, not wear and tear. (One question left open by the decision in “Jackson v Mumford” was whether a “defect in machinery” was restricted to a “defect of material”, or whether, for example, damage caused by the negligent assembly of materially sound parts of an engine would fall under the definition, despite the absence of a defect of any material. In this case the Judge approved the notion that the inadequacy of a particular part could constitute a shortcoming of, as opposed to a defect in, the machinery. On the other hand, he departed from the narrowness of the earlier judgment in also approving the suggestion that a defect in machinery did not have to be a material defect and could include incorrect assembly.)
- Chandris v Argo Insurance [1963] BOLD
Average bond states that in respect of goods, interests must pay what is “legally due”.
It is open to cargo to challenge the amount said to be due by shipowners.
So a general average adjustment, even when produced by a independent professional average adjuster, is in no way conclusive of what is legally due to be paid, and cargo can (and often do!) challenge it.
Under 1939 Limitation Act, cause of action arises at time of loss, and not when adjustment issued. Action on a policy of marine insurance is for unliquidated damages and not condition precedent that claim should be quantified.
Practical Effects
GA - Assured’s right to recover on policies arose when General Average loss occurred.
PA - Same; date when repairs put in hand or accounts paid irrelevant.
RDC - Clause makes it condition precedent that assured should have paid claim, so cause of action arises only on payment.
- CJ Wills & Sons v World Marine Insurance Co. Ltd [1980] – Latent defect
Inchmaree clause
As opposed to normal wear and tear, a latent defect is a flaw in machinery or hull which has not resulted from the want of due diligence by the shipowner or his managers.
Mermaid was a bucket dredger operated by the plaintiff owners at the port of Aden, and insured by the defendant underwriters; the policy of insurance included an Inchmaree Clause. Whilst the dredger was in motion, a large chain, which controlled the raising and lowering of the bucket ladder, broke, and the dredger was badly damaged. On inspection of the broken link in the chain, it was found to have a defect in the weld. The owners claimed for the cost of repairs to the hull and machinery, the salvage operation in Aden and the cost of the voyage home for those repairs. The underwriters accepted the cost of the salvage operation, but refused to pay the cost of the repairs and the voyage home, on the basis that a prudent owner would have discarded the chain as being unfit for use. The court ruled that the insurers were liable for an amount to be assessed. The damage to the hull and machinery was caused by a latent defect in a weld in a link of a chain, and not by its usage.
Scrutton J: [p 351] …Turning now to the Inchmaree Clause, it enables the assured to recover damage to hull or machinery through any latent defect in the machinery, provided such loss or damage has not resulted from want of due diligence by the owners of the ship or by the manager. It was admitted that there was, here, a latent defect in the chain. I find that damage to hull and machinery was caused by this latent defect, and that if the weld had been sound and without defect the link, though worn, would have been of ample strength to stand the strain. I further find that the loss or damage did not result from want of due diligence by the owners or the manager, who were justified in thinking
- Cohen Sons & Co. v National Benefit Assurance Co. Ltd [1924]
The respondents insured their fishing vessel Zadar with the appellants under a time policy of insurance. Soon after leaving Port Lincoln in South Australia, and in calm conditions, Zadar suffered a rapid ingress of water into her engine room and sank; the point and cause of entry were unknown. The respondents claimed on their policy of insurance citing the loss as being due to a peril of the sea. The High Court of Australia dismissed the insurer’s appeal, and found for the respondent owners. The loss was attributed to a peril of the sea.
Mason J: [p 384] …On the other hand, losses due to fortuitous incursions of seawater are attributable to perils of the sea. Such losses comprehend loss or damage caused by foundering in violent weather or by collision with another vessel or with submerged rocks or other obstructions in calm weather. They also include damage done to cargo by the entrance of water through a hole in a pipe gnawed by rats (Hamilton, Fraser and Co v Pandorf and Co) or through a valve left open by mistake (Blackburn v Liverpool, Brazil and River Plate Steam Navigation Co), and the sinking of a submarine as the result of the negligent cutting of pipes which caused leaks in the skin of the vessel (George Cohen, Sons and Co v National Benefit Assurance Co Ltd). As these cases demonstrate, it is enough that an accidental or fortuitous event leads to the admission of seawater into the vessel, thereby causing its loss, or damage to it, even if at all relevant times the sea is calm and the weather is fair. The consequential loss or damage cannot then be attributed to the ordinary action of the wind and waves. The old view that some extraordinary action of the wind and waves is required to constitute a fortuitous accident or casualty is now quite discredited (the Xantho case).
- Commonwealth Smelting Ltd v Guardian Royal Exchange Assurance Ltd [1986]
What constitutes an explosion? Not a marine case, smelting works ‘blew up’ but not an actual explosion, spinning parts broke off and it seemed like an explosion. Held ‘explosion’ needed to be caused by chemical or nuclear reaction, bursting out of gases under pressure - not the case here so claim failed.
“Explosion” in an insurance context denoted an event which was violent, noisy and one which was caused by a very rapid chemical or nuclear reaction or the bursting out of gas or vapour under pressure. (1984)
“It seems to me that the word ‘explosion’ is used in these policies to denote the kind of catastrophe described in Webster, 1961, and Encyclopaedia Britannica: an event that is violent, noisy and is caused by a very rapid chemical or nuclear reaction, or the bursting out of gas or vapour under pressure. The damage and destruction in this case were not so caused, or at any rate explosion in that sense was not the predominant cause; it was centrifugal disintegration. Accordingly, the claim fails.”
- Davidson v Burnand [1868-69]
As ship’s draught increased during loading a discharge pipe was brought below waterline and water flowed in through a valve negligently left open. The resultant damage to cargo was recoverable as by “perils of the sea” or “all other perils”.
The plaintiffs effected a policy of insurance on goods ‘at and from’ Jamaica to New York aboard Montezuma. The day after loading, it was found that seawater had penetrated the hold of the vessel and damaged the goods. A survey confirmed that a discharge pipe in the engine room had inadvertently been left open, with the result that, as the cargo was loaded and the vessel’s draught increased, seawater entered Montezuma and contaminated the goods. The plaintiffs claimed on their policy of insurance. The court ruled that the damage done to the goods was due to the negligence of the crew, but was, nevertheless, a peril of the sea and, therefore, the plaintiffs could recover.
- DC Merwestone, The [2016] BOLD
In cold weather at Klaipėda, Lithuania, the crew of DC Merwestone negligently failed to close the sea suction or drain the pump after using the emergency fire pump to de-ice the vessel’s hatches and deck. This left the system open to the sea, and frozen water in the pump caused it to crack and displace the filter lid. When the ice melted, seawater entered through three breaches, flooding the bow thruster room and engine room. Additional flooding was attributed to negligent modifications to bulkhead watertightness made nine years earlier.
Court Findings:
Proximate Cause: Popplewell J determined the loss was proximately caused by a peril of the sea—the fortuitous ingress of seawater—resulting from crew negligence at the port (a fortuitous external factor).
Negligence and Seaworthiness:
The crew’s negligence, while contributing to the situation, did not negate the fortuitous nature of the seawater ingress, which was the real efficient cause of the loss.
Similarly, the negligence of contractors who modified the bulkheads was another proximate cause for damages unrelated to the bow thruster space.
Legal Principle: The fortuitous ingress of seawater, rather than the events that made it possible, is the proximate cause of the loss. The action of the sea on the vessel’s hull and machinery is considered the effective cause of the loss.
Conclusion:
The case reinforces that proximate cause in marine insurance focuses on the fortuitous event (here, seawater ingress) rather than antecedent negligence or unseaworthiness that facilitated it. Negligence may be a contributing factor, but the ingress of seawater was deemed the primary, efficient cause of the loss.
- Dimitrios N Rallios, The [1922] BOLD
This was a contract of carriage case in which the Court of Appeal quoted with approval a leading commentator’s definition of the concept as being: “A defect which could not be discovered by a person of competent skill and using ordinary care.” The judgment is interesting for the comments made concerning the matter of whether those responsible for checking the vessel acted negligently and whether any such negligence might affect the Court’s conclusion as to whether a defect was “latent” or not. The leading Judge said: I am quite clear that negligence is not a test of latency”. (It should be noted, however, that the Court stopped short of approving that definition as exhaustive or definitive). if someone negligently misses something, that does not make it latent. It has to be something that you ‘could not’ discover, not something you ‘might not’ discover.
- Eurysthenes, The [1976] BOLD
Whilst on a voyage from the United States to the Philippines, the vessel grounded. The cargo interests claimed against the shipowners for the loss sustained by their cargo and the shipowners sought indemnity from their P&I insurers. The defendant P & I Club alleged that, at the time of her sailing, the Eurysthenes had knowingly be sent to sea in an unseaworthy state for not having a sufficient number of crew members, proper charts, a serviceable echo sounder and an operative boiler. The question of what constitutes “privity” within the meaning of s. xx of the Marine Insurance Act 1906 came before the Court. The Court of Appeal found that privity Means ‘knowledge and consent’, and that it is not necessarily the same as wilful misconduct. Further, ‘Knowledge’ not just positive knowledge, but also the knowledge implied by phrase “turn a blind eye” i.e. if one suspects the truth but turns a blind eye so as to not know it for certain, one should be deemed to know the truth and thus be privy to the unseaworthiness. However, negligence in not knowing the truth at all is not considered to be as equivalent of turning the blind eye.
- Field Steamship Co. Ltd v Burr [1899] BOLD
Vessel in collision and had to be run ashore to prevent her sinking. Cargo of cottonseed rendered worthless and consignees refused to accept delivery. Shipowners incurred expenses in discharging and disposing of cargo and sought to recover this from Hull Underwriters as part cost of repairs. Claim not allowed.
These provisions are in keeping with the precept of reasonable cost, whereby the insurer is only liable for the cost of repairs pursuant to the damage caused by a peril insured against. To this effect, in Field Steamship Co Ltd v Burr [1899] 1 QB 579, CA, where, after a collision, a shipowner tried to claim from a hull underwriter for expenses incurred in dealing with damaged cargo, AL Smith LJ remarked: [p586] ‘…All he [the insurer] has to do under his contract is to make good to the insured shipowner the deterioration occasioned to the hull and machinery of his ship by a sea peril, and nothing more.’
But this view challenged in Medina Princess, suggests in some circumstances removal of cargo for repairs could form part of the reasonable cost of repairs.
- Fraser Shipping Ltd v Colton [1997]
The plaintiffs sold their vessel, Shakir III, to a Chinese company for demolition and contracted a tug company to tow it from Jebel Ali to Shanghai or Huang Pu. The vessel was insured under a valued policy with the defendants, which covered the journey to Shanghai’s outer anchorage plus seven days, in a single tow with an approved tug. The policy also included a Change of Voyage Clause. However, on 25 May 1993, the tow was redirected to Huang Pu, and the plaintiffs did not inform the insurers until after Shakir III had already arrived on 25 June 1993. At that time, Huang Pu’s anchorage was known to be dangerous due to a typhoon, and the vessel had already experienced a minor collision. When the typhoon struck, the towlines broke, and Shakir III was swept and stranded. The plaintiffs made a claim, but the insurers refused payment. The court ruled that the insurers’ acceptance of the late notice did not waive their rights under section 45 of the Marine Insurance Act, and as the notice was not immediate, the plaintiffs were not covered under the Change of Voyage Clause.
Vessel insured against ATL (not CTL) as a dead ship for its tow to a scrap yard - grounded in a typhoon. Assured claimed ATL on two grounds:
1. total loss by destruction (ceased to be a thing of kind insured)
2. total loss by deprivation (assured irretrievably deprived) despite it being possible to salve ship, simply too expensive, and this should be taken into account.
1. Held vessel had not lost its essential identity by virtue of grounding. Was insured as a decommissioned dead ship capable of being towed - and it still was. It had not been destroyed.
2. Held the question of deprivation in MIA 57 depends on whether it is physically possible to salve or not, cost of salvage is not relevant. (would be relevant to a CTL, but no cover for CTL in this case).
- Global Process Systems v Syakariat Takaful Malaysia (The Cendor Mopu) [2011] BOLD
Oil rig transported on a barge lost its legs during voyage (so rig was the cargo).
Cargo insurance specifically excluded loss by inherent vice or nature of subject matter. Insurers rejected claim on basis that loss was due to fatigue cracking therefore excluded as an inherent vice.
Held - the proximate cause of the loss was inherent vice - legs not capable of withstanding voyage.
Court of Appeal overturned decision - held cause of loss was a ‘leg breaking wave’ which caused a leg to fall off, putting further stresses on remaining legs which also then broke off. So a loss by perils of the seas. Supreme Court upheld the court of appeal.
Applying commonsense principles, the proximate cause of the loss was not inherent vice, ordinary wear or tear or the ordinary action of the wind and waves but an external fortuitous accident of the seas. This took the form of the rolling and pitching of the barge at sea which caught the first leg at the right moment to produce stresses sufficient to cause the leg to break off.
Perils of the seas does not require exceptional weather, enough that this was a fortuitous accident at sea.
(see whittle v mountain, miss jay jay)
So this was not a loss by inherent vice, proximate cause of the loss was perils of the seas.
- Hall v Hayman [1912] BOLD
Ship stranded in St. Lawrence and a C.T.L.
1) Stranding in November and could not be refloated till spring but that did not make it “unlikely that he can recover the ship” (S 60) and constitute a C.T.L.
2) Value of the wreck could not be taken into account. (1906 Act had altered common law position).
3) Only future salvage operations (subsequent to Notice of Abandonment) can be taken into account
This was a reinsurance case whereby the plaintiffs reinsured the steamship King Edward with the defendants under a time policy of insurance which included cover only for total loss. King Edward was severely damaged by a gale in the St Lawrence, as a result of which she was sold by her owners to a purchaser, who later repaired her. The plaintiffs, having settled on the original policy of insurance for a constructive total loss, then claimed on the reinsurers on the basis that the cost of repairs, which included the unrepaired wreck, exceeded the repaired value. The court ruled that there was no constructive total loss, and that the value of the wreck could not be added to the repair costs. The 1906 Act had superseded the common law, and the word ‘expenditure’ in s 60(1) could no
longer include the value of the wreck.
It should be noted that cl 19.1 of the ITCH(95) and cl 17.1 of the IVCH(95) have now resolved the matter by expressly excluding the value of the wreck, when they state: …nothing in respect of the damaged or break-up value of the Vessel or wreck shall be taken into account.
- Hough v Head [1885] BOLD
Policy on chartered freight (loss of hire) for six months April to October. Accident in June but repaired and off-hire in November/December. No claim on policy as no loss of hire/ freight within the period covered.
- Hutchins Bros v Royal Exchange Insurance Corp [1911]
Meaning of the words “caused by”
After a voyage to the Black Sea, the vessel Ellaline returned to Britain for drydocking and painting. On inspection of the stern frame, a crack was identified, which was later confirmed as a cooling crack caused by faulty workmanship during the casting process. A claim was made by the shipowner for a replacement stern frame. The vessel was insured under a policy which included the Inchmaree Clause. The court ruled that the cost of a new stern frame was not recoverable, on the basis that the only damage sustained was to the stern frame itself. The damage had been caused by a latent defect during manufacture, and had only been discovered as a result of it being exposed by ordinary wear and tear during the lifetime of the ship.
- Irvin v Hine [1950] BOLD
Sold after expiry. Either;
1) SV2000 - DV685 x IV9000 = 6000, or SV2000
IV9000 - DV685 = 8315
so limit to estimated repair cost 4600
Trawler was insured for US$2k in 1936 but high demand for small ships due to war leads to insured value of US$9k in 1942.
Trawler badly damaged after stranding, and the owner, after failing in his claim for a constructive total loss, then claimed for a partial loss. As the trawler had not been repaired or sold during the risk, the court turned to s 69(3) of the Act as being applicable to the case and, in quantifying the depreciation, illustrated the difficulties in so doing. Both the assured and the underwriters produced alternative methods of computing the depreciation which were considered by Devlin J.
Devlin J: [p 572] …I assess the cost of repairs due to the stranding at £4,620.
I now return to s 69, sub-s 3, of the Act. By its provisions, I have first to ascertain the reasonable depreciation arising from the unrepaired damage. That requires a comparison between the value of the vessel immediately before the damage, and the value in her damaged condition. The value in her damaged condition is taken by both sides to be £685. There is a dispute about the ascertainment of her undamaged value, both on the law and on the facts. Counsel for the underwriters contended that the value to be ascertained for this purpose was her true value, which he put at £2,000, and not her conventional [insured] value of £9,000…he contended that the extent to which the ship had depreciated in value should be ascertained by a comparison between her true undamaged value and her true damaged value. This would show that she had depreciated in value by approximately two-thirds. This proportion should then be applied to her conventional [insured] value, thus arriving at a figure (subject, of course, to the overriding maximum of the cost of repairs) of about £6,000. Section 27, sub-s 4, provides that the value fixed by the policy is conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial. Consequently, I think that, unless the underwriters’ alternative contention is right [method (ii)], the effect of s 69, sub-s 3, is that the true damaged value must be subtracted from the conventional [insured] undamaged value [method (i)]. This is indeed what was contended on behalf of the assured. It produces a figure of over £8,000. It is unnecessary for me to decide whether this contention of the assured is to be preferred to the alternative contention of the underwriters. For both methods produce a higher figure than that which I have taken as the cost of repairs; and there is no doubt that that the latter figure is overriding.
Notes
Method (i): Insured value less damaged value: £9,000-£685=£8,215.
Method (ii): Depreciation (true undamaged value less true damaged value)
applied as a proportion of the insured value:
£2,000-£685 x £9,000=£5,918.
£2,000
It was not necessary in Irvin v Hine to choose between methods (i) and (ii) because, in both instances, the computation resulted in amounts greater than the estimated cost of repairs, which was the overriding figure. As the court had not expressed particular preference for one or the other method of computation as being applicable under s 69(3) of the Act,11 the case cannot be cited with confidence as ‘the’ authority which has settled the law on the subject. Nevertheless, method (ii) has become the system which has since received approval by the court for determining the measure of indemnity in the event of depreciation.
- Irene EM, The [2013]
The claimants sought $18 million, arguing their vessel became either an actual total loss (ATL) or a constructive total loss (CTL) after grounding on 30 October 2009 during a voyage to Dahej, India. They attributed the loss to perils of the seas or negligence by the crew. Insurers contended that the grounding was due to the vessel’s defective engine/generators, rendering it unable to resist the tidal current, and argued it was neither an ATL nor a CTL as repairs were feasible for no more than $12 million.
Judgment: Claimants Successful
Held by QBD (Comm Ct) (Andrew Smith J):
Proximate Cause of Loss:
The grounding was caused by perils of the seas, not ordinary actions of wind or waves.
Claimants did not need to prove precisely when or how the grounding occurred; proving fortuity and that a peril of the seas was the proximate cause sufficed (Popi M applied).
Proximate cause was determined by common sense, not chronological order (The Cendor MOPU applied).
Grounding as a Peril of the Seas:
A peril of the seas includes unexpected actions of currents, even if predictable, as long as the incident was fortuitous (Miss Jay Jay applied).
The grounding was not an inevitable outcome of the vessel’s condition or crew’s actions.
Actual Total Loss (ATL):
Under Section 57 of the Marine Insurance Act 1906, a vessel is an ATL if it is “destroyed or so damaged as to cease to be a thing of the kind assured.”
The vessel was not an ATL as repairs were physically and legally possible, even if prohibitively expensive.
Constructive Total Loss (CTL):
While ATL was denied, the claimants demonstrated sufficient grounds for loss under perils of the seas, supporting their broader claim.
Key Points:
Proximate cause: The fortuitous grounding due to sea currents was deemed the efficient cause, regardless of pre-existing vessel defects.
Repair feasibility: Prohibitive cost alone does not establish ATL; repairs must be impossible to qualify.
The judgment reinforced the importance of fortuity and reasonable foreseeability in maritime insurance claims.
- Jackson v Mumford [1904] BOLD
Jackson v Mumford [1902] The leading Judge in the Court of Appeal included obiter dicta in his judgment as follows: “The phrase ‘defect in machinery’ means a defect of material, in respect either of its original or after-acquired composition.” He added: “the phrase does not cover the erroneous judgment of the designer as to the effect of the strain which his machinery will have to resist, the machinery itself being faultless, the workmanship faultless, and the construction precisely that which the designer intended it to be”. As a consequence, the view was held for many years that the word ‘defect’ was limited to a ‘defect in material’ and that damage caused by a weakness or defect in design was not included within the term ‘latent defect’.
- Kastor Navigation Co. Ltd v AGF Mat v AXA Global Risks [2004]
In this case, a fire broke out in the engine room of a vessel, causing a constructive total loss (CTL). Fifteen hours later, the vessel sank in deep water, which was deemed an actual total loss (ATL), but the cause of the sinking was unexplained. The assured only learned of the fire after the vessel sank and did not provide notice of abandonment (NOA) to the insurers at the time. The court ruled that the assured could not recover for the ATL because the sinking’s cause was unexplained and not covered by the policy. However, the assured succeeded in claiming for CTL due to the fire, as the vessel would have been a CTL due to the fire even before sinking.
The court held that under Section 62(7) of the Marine Insurance Act 1906, NOA was not required because the assured was unaware of the fire until after the sinking, and there would have been no benefit to the insurer from receiving notice at that time. Additionally, by initially claiming ATL, the assured demonstrated an intention to abandon the vessel, satisfying the legal requirements for abandonment. The judge concluded that the assured was entitled to claim for a constructive total loss and that the eventual actual total loss did not affect their right to recover for the earlier CTL.
- Kelly v Norwich Union Fire Insurance [1990]
Non marine case.
Subsidence under a bungalow caused by mains water leak. Leak occurred in 1977, damage occurred in 1981. Assured took out his first policy in 1977, before first water leak.
Held no claim as cause of damage occurred before policy inception. Marine cases differ on this, they cover against loss or damage occurring during the policy, so it does not matter if the cause of damage is before the policy started - this is why we have claims for progressive damage over several policies
- Knight of St. Michael, The [1898]
Shortly after sailing, part of the cargo onboard started to heat and half of it had to be discharged at a port of refuge. Only a portion of it was delivered at destination. The shipowner claimed on his policy of insurance for the loss of freight. The defendant insurers denied liability. The court ruled that, notwithstanding that fire did not break out and no damage was suffered by the cargo, the assured could recover the lost freight, since the cargo loss was due to the preventive action of the master. The Court found that it was reasonably certain that, if the voyage had continued, spontaneous combustion would have taken place and the ship and cargo would have been destroyed by fire. The result is that loss suffered as a result of an action taken to mitigate an existing state of peril, is recoverable under a policy covering that peril.
In the special circumstances of this case, where the master had acted to prevent a loss by fire, the owner was not prevented from recovering the lost freight; however, the cargo-owner would not have been able to recover from his insurer, on the ground of inherent vice of the cargo.
- Kusel v Atkin [1997]
Grounded, and left unrepaired. Then damaged in a hurricane and left unrepaired. Policy terminated and no repairs had been effected and the vessel remained unsold. Cost of repairs to each loss did not exceed insured value - but cost of repairing the two combined did. Assured claimed for successive unrepaired damages for more than the insured value.
Under MIA77.1 insurer is liable for successive losses even if the aggregate amount exceeds insured value.
Under MIA69.3 - measure of indemnity for unrepaired damage is capped at the insured value.
So what is the measure of indemnity for successive unrepaired damages? Do sections 69.3 and 77.1 come into conflict?
Held two sections not in conflict - 77.1 refers to successive repaired damages, which was not the case here. Held MIA 69.3 applies. So underwriters cannot be held liable for unrepaired damages for an aggregate amount greater than the insured value, no matter how many damages occurred, or the effect each loss might have had on the ship’s value at the time they occurred (measure of indemnity to be assessed at termination of cover).
- Kuwait Airways v Kuwait Insurance [2000] BOLD
Non marine case.
Aircraft seized by Iraqi forces during invasion of Kuwait. Insurers accepted liability for a total loss and were preparing to pay out full value as set out in policy. Assured disputed value set out in policy and then set about trying to recover the planes. Incurred US$30 million retrieving some of the planes and claimed this under their S&L clause. Held in court of appeal that their right to S&L ceased when insurers accepted liability and commenced payment.
Non marine, but could affect marine re NOA CTL etc.
- Leyland Shipping Co. Ltd v Norwich Union Fire Insurance Society [1918] BOLD
The “Ikaria” [1918] During the First World War a vessel was lying off Le Havre when she was hit by a torpedo. She had sustained severe damage, but the crew were able to bring her into the port alongside a quay. However, a gale caused the vessel to range heavily against the quay and she was ordered by the authorities to move to the outer harbour. As a result of the continuing bad weather and touching bottom at low tide because she was down by the head, the vessel became a total loss. Shipowners claimed for a loss by sea perils under their hull policy but their insurers argued that the war risks exclusion should apply. The House of Lords agreed that the total loss was a result of war perils, since at all times the vessel was still in the grip of the casualty that originated with the torpedo attack. The proximate cause is not necessarily proximate in time and the real test is to consider which cause is proximate in efficiency.
- Lloyd (J.J.) Instruments Ltd v Northern Star Insurance Co. Ltd (The Miss Jay Jay) [1987] BOLD
A fast motor yacht encountered adverse weather on a passage from France to the U.K. On arrival it was found that the hull had been damaged partly as a result of poor design of internal stiffeners and partly because of the adverse weather. In the High Court it was held that (with regard to Rule of Construction 7) it was not necessary for weather to be exceptionally bad to give rise to a claim arising from perils of the sea. If the action of the sea is the immediate cause of the loss, a claim will still arise even if conditions are within the range that could reasonably be anticipated. In the Court of Appeal, it was confirmed that where there are two proximate causes of a loss and one is included (adverse weather) and the other is not expressly excluded by the policy (unseaworthiness due to inadequate stiffeners) the claim will succeed.
- Lockyer v Offley [1786] BOLD
Master engaged in smuggling (barratry) during currency of policy and the vessel was seized by authorities after expiry for this smuggling. Underwriters not liable as no loss during period covered by policy.
- Lohre v Aitchison [1878] BOLD
Ship encountered severe heavy weather and salved into port where repairs carried out at a cost (even after “new for old” deduction) in excess of insured value. Also endeavoured to recover the salvage award under Sue and Labour Clause. Held:
1) Assured entitled to recover in respect of repairs up to sum insured even though might be more than the amount payable for total loss with benefit of salvage, i.e. can claim a partial loss (instead of CTL), and can keep the property (MIA61)
2) That neither general average nor salvage came within the words or object of the Sue and Labour Clause.
- Magnus v Buttemer [1852]
Whilst the vessel was waiting for her order to discharge her cargo, she moored in the river for some four or five days. When she did go to the wharf to discharge, she floated and grounded with the rise and fall of the tide, although at no time was she actually dry. The riverbed in the vicinity was hard and every time she grounded, she took on a list and was later found to be damaged. The owners claimed for a loss by a peril of the seas (stranding). The question before the court was whether the grounding during the normal rise and fall of the tide, constituted a stranding. The court found that it was not a stranding, as there was an absence of fortuity in the incident.
- Marel, The [1994]
Owners failed to demonstrate that on balance of probabilities loss attributable to peril of the sea. (Upheld by Court of Appeal)
Vessel sank after a ‘bump’ had been felt - owners claimed collision with a submerged container or similar. Held near impossible for container to cause such damage, followed Popi M and found that owners had failed to discharge the burden of proof upon them.
Judgement upheld by court of appeal.
- Medina Princess, The [1965] BOLD
In Helmville Ltd v Yorkshire Insurance Co Ltd (1965), the owners of the vessel Medina Princess claimed for both a partial and a constructive total loss due to alleged negligence damaging the vessel’s engines. The court ruled on several aspects of the claim:
1. Crew Wages: The court disallowed the inclusion of crew wages as part of the repair costs, following precedent cases like Robinson v Ewer (1786) and de Vaux v Salvador (1836), which precluded such recovery. The court noted there was no evidence that the crew performed work that could be covered by hull insurance.
2. Surveyor’s Fees: The court confirmed that surveyor’s fees could be included in repair costs if they were reasonable. However, in the case of sending a surveyor from England to Australia for minor repairs, the cost was deemed unreasonable, and the claim was adjusted accordingly.
3. Temporary Repairs & Towage Costs: The court accepted the cost of temporary repairs and towage to a suitable port for repairs (in this case, Karachi) as part of the repair costs under Section 69(3) of the Marine Insurance Act.
4. Computation of Indemnity: Roskill J ruled that the measure of indemnity should be determined at the termination of the insurance risk, as defined by the policy’s expiration or cancellation. The indemnity could not be computed until it was certain that the vessel would not be repaired or sold during the policy period.
Ultimately, the court held that while the damage to the vessel’s machinery was caused by negligence, the estimated repair costs were less than the insured value of the vessel. Therefore, the owners could only claim for a partial loss, excluding crew wages and cargo discharge expenses, but including the cost of machinery repairs, towage to Karachi, dry-docking, and surveyor fees. The issue of depreciation under Section 69(3) was also discussed in relation to the computation of indemnity.
- Moss v Smith [1850] BOLD
In The Alfred case, the plaintiffs, as mortgagees, claimed a constructive total loss (CTL) after the vessel encountered severe weather and had to return to Valparaiso. Despite various surveys, the ship was sold, and the cargo was forwarded on other vessels. The plaintiffs sought compensation for CTL, but the court ruled against it, as the cost of repairs was much lower than the ship’s value after repair.
Maule J explained that while it may be physically possible to repair the ship, if the repair costs were exorbitant and impractical, the ship could be considered a total loss. The principle was that a loss is considered total if the cost of repairs is so high that it would not be reasonable to undertake them. This is similar to saying that a person has “lost” a shilling if it is dropped in deep water, even though it could theoretically be recovered with expensive means.
The court emphasized that the repaired value of the ship is the key factor in determining if a constructive total loss applies. This value is based on the market value of the vessel, not the insured value. This aligns with the ruling in Irving v Manning (1847), which stated that the market value, rather than the insured value, should be used when assessing a CTL, unless the policy specifies a different value. Section 27(4) of the Marine Insurance Act reiterates this by stating that the insured value is not conclusive for determining a constructive total loss, unless the policy specifies otherwise. The case is relevant to a policy which has not (otherwise) specified a figure which is to be taken as the repaired value of the vessel.
- Nukila [1997] BOLD
A jack up rig, insured under a marine policy subject to Institute Time Clauses Hulls 1/10/83 including the Additional Perils Clause, sustained damage to one of its legs caused by a faulty weld on the leg which was agreed to be a latent defect. The insurers resisted the claim on the basis that the entire leg and welding was all one part, and therefore latently defective, the recovery of which was excluded. In the Court of Appeal the lead Judge imposed 3 tests: 1. was there damage to subject matter insured? 2. did it occur during policy? 3. was it caused by a latent defect? It was held that damage was different from, and over and above the original latent defect even though both were contained in one component. The case is important for a number of reasons, not least because it clarified that, in terms of ITCH 1/10/83, cover exists under the Inchmaree clause if, as here, the assured can show that damage to the subject matter insured has occurred which is proximately caused by a latent defect in that subject-matter. The exclusion of the cost of repairing/replacing the originally defective part was viewed as a separate exercise; in any event it was not relevant in the case of the Nukila since the insurance policy included the Additional Perils Clauses.
- Oceanic Steamship v Faber [1907] BOLD
In the case involving the steamship Zealandia, the vessel’s owners claimed insurance coverage for a loss caused by a latent defect in the propeller shaft. The shaft had a crack caused by faulty welding, which was detected during maintenance and led to its condemnation. The owners sought to claim under their one-year time policy, which covered loss or damage to the hull and machinery, including damage caused by latent defects.
The Court of Appeal ruled that the policy did not cover the latent defect itself, but only the actual loss or damage resulting from the defect. In other words, the policy was not intended to cover the machinery’s inherent weakness or defect, but rather the consequential damage that arises when a latent defect leads to actual damage or failure of the machinery.
Fletcher Moulton LJ clarified the distinction by explaining that a latent defect, which may eventually become a visible (patent) defect over time, is a common occurrence in machinery. He stated that the insurance did not cover the presence of a latent defect itself, but only the resulting actual loss or damage. In this case, the shaft was condemned because it was no longer fit for use, but there was no actual loss or damage to the machinery as a result of the latent defect. Therefore, the claim for the latent defect was not covered by the insurance policy.
- Phillips v Barber [1821] BOLD
Ship, blown over in drydock by violent gust of wind. Not a ‘peril of the sea’ as ship must be waterborne for this, but was all ‘other perils’, by contact with dock or harbour installation.
- Popi M, The [1985] BOLD
A vessel insured under a time policy was steaming through the Mediterranean in good weather when shell plating in the engine room suddenly opened up, flooding and later sinking the vessel. The owners advanced a number of theories as to what might have caused the sudden shell plating failure, including contact with a submarine. The insurers declined to settle the claim on the basis that the loss was due to ordinary wear and tear on an elderly vessel. The House of Lords reviewed the extensive expert evidence and, finding it inconclusive, rejected the claim, saying “it is always open to the Court… to conclude that the proximate cause of the ship’s loss, even on a balance of probabilities, remains in doubt, with the consequence that the Shipowners have failed to discharge the burden of proof which lay upon them.”
- Renos, The [2019] BOLD
A vessel insured under ITCH 1/10/83 caught fire and sustained substantial damage. Owners obtained quotations for the cost of repairs, which suggested that the vessel could be a constructive total loss. Other estimates and quotations were obtained in the following months, which were inconclusive, owing to considerable discrepancies, some suggesting that the vessel was a CTL and others that she was not. 6 months after the casualty, the owners served a notice of abandonment to the underwriters. The insurers acknowledged liability for a partial loss but not for CTL. The High Court held that 6 months were a sufficient period of time for the owners to make inquiries in terms of s. 62(3) of the Marine Insurance Act 1906, and that the word “future” in s. 60(2)(ii) means future to the casualty i.e. including cost of recovery incurred before the service of the NOA. The Supreme Court upheld the decision of the High Court and also decided that expenditure incurred in the nature of SCOPIC is not to be taken into account when assessing whether a vessel is a CTL or not.
- Republic of Bolivia v Indemnity Mutual Marine Assurance [1909] BOLD
In this case, the government of Bolivia filed a claim for the loss of goods shipped on the vessel Labrea under a marine insurance policy that covered loss caused by “pirates, rovers, thieves, takings at sea, arrests, restraints, and detainments of all kings, princes, and people of any nation,” but was also warranted “free of capture, seizure…”. The cargo was seized by insurgents, mostly Brazilian, on the River Acre (within Bolivian territory), and Bolivia sought compensation for the loss, arguing it was caused by piracy.
The Court of Appeal ruled that the loss was not caused by piracy. It defined piracy as the act of plundering indiscriminately for private, personal gain (e.g., robbery or murder for individual greed), rather than for political or public ends. The court explained that pirates typically act outside the jurisdiction of any state for personal motives, while acts with political aims, such as those by insurgents fighting for control or independence, do not constitute piracy in the context of an insurance policy.
Vaughan Williams LJ cited Hall’s International Law to emphasize that piracy involves “private ends” rather than acts aimed at political objectives. The seizure in this case was deemed politically motivated, not indiscriminate, and thus was not piracy under the terms of the insurance policy.
Additionally, the court addressed whether the event could be classified as piracy despite occurring on the River Acre (not the high seas). The policy specifically covered piracy in river transit, so the geographical location did not negate the claim. However, in other cases, where the policy did not explicitly cover river piracy, acts on the high seas would be necessary for piracy coverage.
This case established the rule that piracy, in the context of marine insurance, must be motivated by private gain (not political), and generally must occur on the high seas unless the policy explicitly covers piracy on rivers or other non-sea locations.
This case gives rise to Rule of Construction: that piracy must be for private not political gain, must take place on the high seas.
- Ruabon, The [1900]
The “Ruabon” [1897] The vessel entered dry dock at Cardiff in January 1896 for repairs in consequence of having run aground. Her next scheduled maintenance and classification survey was due in November 1896. The owners therefore took the opportunity to advance the date of the survey and carry it out concurrently with the grounding repairs. The owners claimed all dry-docking costs on their policies of insurance, which the insurers objected to, contending that the repairs ought to be equally divided. The Commercial Court and Court of Appeal followed the decision of the Vancouver case that the costs should be apportioned. However, the House of Lords ruled that the whole of the drydocking expenses should be paid by the underwriters.
This decision was incorporated by the AAA and is now ROP D5: 1 -
That, in practice, where repairs, for the cost of which underwriters are liable are necessarily effected in dry dock as an immediate consequence of the casualty, or the vessel is taken out of service especially to effect such repairs in drydock, the cost of entering and leaving the drydock, in addition to so much of the dock dues as is necessary for the repair of the damage, shall be chargeable in full to the underwriters, notwithstanding that the shipowners might have taken advantage of the vessel being in drydock to carry out survey for classification purposes or to effect repairs on his account which are not immediately necessary to make the vessel seaworthy.
- Samuel v Dumas [1924] BOLD
A vessel was scuttled by the master and crew with the connivance of the owner. A claim was put forward by the innocent mortgagee, but it was held that he was unable to recover because scuttling of the vessel, with the owner’s connivance, was not a peril of the sea. There was no fortuity involved in a deliberate act to sink a vessel.
- Scindia Steamships Ltd v The London Assurance [1937] BOLD
Latent defect
In this case, the owners of a vessel claimed under an Inchmaree Clause for damage caused when a tailshaft broke due to a latent defect while the vessel was in drydock. The shaft broke during the removal of the propeller, and both the shaft and propeller fell into the dock, causing damage to the propeller. The insurers accepted liability for the propeller but rejected the claim for the damage to the shaft itself. The court ruled that under the Inchmaree Clause, only damage caused through the breakage of the shaft (such as to the propeller) is covered, not the damage to the shaft itself. The court explained that the words “caused by” in the clause refer to damage resulting from the incident, not the incident itself. Since the shaft’s breakage was a result of a latent defect, which was excluded by the Marine Insurance Act 1906, the insurers were not liable for the damage to the shaft. The case clarified that the clause covers consequential damage but not the damage to the machinery directly caused by the latent defect.
- Star Sea, The [2001]
Summary:
Fire on a ship, not correctly extinguished due to a) faulty funnel dampers and b) incompetent master. As a result of fire getting worse and worse, ship became a CTL.
Insurers resisted claim on basis that ship was sent to sea unseaworthy with privity of assured (39.5) and under MIA 17, that in lead up to trial assured did not disclose reports on two other similar losses they’d had.
Eventually held by Lords that: MIA 17 duty did continue post contract but was limited to a duty of honesty from assured, a duty that required disclosure at claim stage merely to avoid accusation of non-disclosure lacked any commercial justification or sense.
Regarding privity, held that in order to apply the “blind eye knowledge” principle, it must be proven that there was a deliberate decision not to check certain aspects of unseaworthiness taken, despite a firmly grounded suspicion of unseaworthiness targeted on specific facts, otherwise, there is no blind eye knowledge.
Put simply, not enough evidence to show that the assured, ‘suspected’ or ‘believed’ master to be incompetent. Insurers appeal therefore failed.
- Stewart v Steele [1842]
Ship condemned following damages and sold for breaking up. How to calculate the measure of indemnity?
Wales had been removed to ascertain extent of damage and had not been replaced before sale. Jury had awarded the owner the sum it would have cost to replace the wales. But court held that as ship was sold for breaking up, owners had not suffered any loss by wales not being replaced and were not entitled to recover costs of replacing them.
Judge stated that the proper time to estimate the loss, where the party is put to no expense, is at the expiration of the risk.
Right of action does not apply until the expiry of the policy and then only if vessel is not lost while policy is still running.
- Thomas v Tyne & Wear SS Freights Insurance Association [1917] BOLD
Vessel insured under a time policy was sent to sea in an unseaworthy state in two respects: firstly, insufficient crew, secondly unfitness of the hull; the assured was privy to (aware of) the first but not the second. The vessel was lost due to the unfitness of the hull. It was held that the insured was able to recover because the exclusion on MIA 39(5) only operates if the loss was attributable to the particular unseaworthiness to which the Assured was privy.
- Vancouver, The [1886] BOLD
Following a voyage from Hong Kong to San Francisco the vessel was found to have a foul bottom. This was affecting the vessel’s speed so it was necessary for her to be dry docked to enable cleaning, scraping and painting before she put to sea again. Whilst in dry dock it was discovered that the stern post was fractured due to a peril of the seas, so therefore damage repairs were recoverable from hull insurers. If owner’s works had been carried out separately, it would have taken 3 days, whilst the particular average repairs would have required 8 days. The work was carried out simultaneously and completed within the 8 days. The House of Lords affirmed the earlier decision in the Court of Appeal that as the simultaneous works had saved time in the dry docking; the costs should be apportioned equally for those 3 days saved.
The owners claimed on their policy of insurance for the whole of the cost for dry-docking, or a proportion of the cost. As the policy was warranted ‘free from average under 3%’, the inclusion of the dry-dock charges was vital to the claim. The House of Lords, affirming the decision of the Court of Appeal, decided that the dry-dock charges should be apportioned between the routine maintenance carried out by the owners and the repair costs for which the insurers were liable. The additional cost of the apportioned dry-docking charges then ensured that the underwriters were liable for a particular average loss, as the total amount of repair costs then amounted to more than 3% of the insured value.
This is now ROP D5: 2a -
Where repairs on owner’s account which are immediately necessary to make the vessel seaworthy and which can only be effected in drydock are executed concurrently with other repairs, for the cost of which underwriters are liable, and which also can only be effected in drydock, the cost of entering and leaving the drydock, in addition to so much of the dock dues as is common to both repairs, shall be divided equally between the shipowner and the underwriters, irrespective of the fact that the repairs for which underwriters are liable may relate to more than one voyage or accident or may be payable by more than one set of underwriters.
- Vergina, The [2001]
Assured brought a claim under ITC cl 11 (GA and Salvage) for salvage charges incurred to prevent a loss by peril insured against.
Vessel was at risk of capsizing. Insurers agreed that vessel would have capsized but for salvage operation but denied that the capsizing would have been the result of an insured peril - so denied claim for salvage.
Held would have been two proximate causes of loss - crew negligence and fortuitous entry of seawater. Both covered, so assured could claim his salvage liabilities.
- Wadsworth Lighterage & Cooling Co. Ltd v Sea Insurance Co. Ltd [1929] BOLD
A wooden barge was insured against total loss including damage by collision, standing or sinking. The barge had spent 50 years carrying coal on the River Mersey and sank at her moorings on a calm night. It was held that the loss was due to ordinary wear and tear and therefore excluded by Section 55 of the MIA. The sinking had occurred because “a very old barge which had been bumping about in the Mersey for a long time had come to the end of its tether”. The loss was therefore due to the general debility of the barge rather than any fortuity.
- Wayne Tank and Pump Co Ltd v Employers Liability [1974] BOLD
Losses arising from included and excluded perils
In this case, the plaintiffs designed and installed equipment for storing and conveying liquid wax in a factory. They had public liability insurance with the defendants, which covered damages resulting from accidents, but excluded damage caused by the nature or condition of goods sold or shipped by the insured. After the installation was switched on and left unattended overnight before being tested, it caught fire and destroyed the factory. The plaintiffs, having paid £150,000 in damages to the factory owners, sought to recover their losses under the policy.
The Court of Appeal ruled in favor of the insurers, overturning the trial judge’s decision. It found that the dominant cause of the fire was the dangerously defective nature of the installation, which fell within the policy’s exclusion clause for damage caused by the condition of goods sold or supplied by the insured. The court held that the insurers were not liable because the defect in the installation was the main cause of the damage, even though the conduct of the worker (leaving the heating tank unattended) was also a contributing factor.
Lord Denning MR explained that, when there are multiple causes of a loss, the “dominant cause” must be identified. If the dominant cause falls within an exclusion, the insurers are not liable, even if other causes do not. In this case, the dangerous condition of the installation was the dominant cause, meaning the insurers were exempt under the exception clause. Lord Denning also noted that, even if the causes were equally contributing, the insurers could still rely on the exception clause, as specific exclusions take precedence over general coverage.
The case reinforces the principle that when a latent defect is triggered by negligence, there is no break in the chain of causation—negligence simply acts as the trigger for the accident. The ruling underscores that insurers are not liable for damage caused by defects in goods supplied by the insured, even if the damage is also linked to other actions not covered by the exception.
- Whittle v Mountain [1921] BOLD
Houseboat with defective seams was towed to a shipyard. Tug used was too powerful and caused an unexpectedly high breast wave which entered boat through the defective seams and sank her.
Held that despite the boat being defective, special circumstances had caused the entry of water and it was a loss by perils of the seas.
- Wilson Shipping Co. v British and Foreign Marine Insurance [1921] BOLD
Vessel “Eastlands” chartered to Admiralty during the war (WWI), insured against marine risks as normal, and the Admiralty took on the insurance for war risks. It was agreed in event of total loss (due to war risks), the Admiralty would pay the ascertained market value at the time of the loss.
Ship insured against marine perils and sustained 3 accidents during currency of policy which largely unrepaired. During same currency, ship torpedoed and sunk. Admiralty under T99 charter deducted from total loss settlement estimated cost of repairing existing marine damage. Even though assured prejudiced by the total loss, there was no claim against marine policy for unrepaired damage for the “loss is due not to a peril insured against, but to their failure to obtain complete indemnity under terms of charter party”.
Echoed in ITC cl 18.2.
“In no case shall the underwriters be liable for unrepaired damage in the event of a subsequent total loss (whether or not covered under this insurance) sustained during the period covered by this insurance or any extension thereof.”
