Case law A2 only Flashcards
Magnus and Others v Buttemer [1852]
Whilst the vessel was waiting for her order in 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.
The “Vancouver” [1886]
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 to 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 “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.
“Knight of St. Michael”
[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.
Agenoria Steamship Co Ltd v Merchants’ Marine Insurance Co Ltd [1903]
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.
Vlassopoulos v British & Foreign “The Makis” [1928]
Whilst loading, the ship’s foremast broke of and fell into one of her holds, where it was damaged beyond repair. Repairs necessary to enable the safe prosecution of the voyage were effected. After that damage had been repaired the ship proceeded on her voyage and she met with a second mishap, seriously damaging her propeller blades, and the ship was put into a port of refuge. The owners sought contribution to all the expenditure incurred both at the loading port and at the port of refuge. As regards the first casualty, the Court held that the lettered Rules prevailed and that the owners could not recover contribution in general average for the expenditure incurred in the loading port, since they could not prove their claim under the lettered Rules. As regards the second casualty, the defendants questioned whether ship cargo and freight were in immediate danger. The Court held that it is not necessary in order to constitute a general average act that the ship should be actually in the grip or even nearly in the grip of the disaster that may arise from a danger. It is sufficient to say that the ship must be in danger, or that the act must be done in order to preserve her from peril. It was also commented that the peril must be real and not imaginary, substantial and not merely slight.
“Eurysthenes”
[1976] 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.
“Renos”
[2019] 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.
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’.
Dimitrios N Rallias [1922]
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).
Brown v Nitrate Producers [1937]
This was another contract of carriage case in which the trial Judge had to consider how to define the term “latent defect”. He found that that a latent defect is latent not just to the eye but to all the senses. He went on to add that the test to be carried out in order to identify any such defect must be reasonable: “I cannot myself believe that in every case it is obligatory upon the ship’s officer on the commencement of a voyage to go and tap every rivet to find if it has a defect or not…” He concluded: “I think it means such an examination as a reasonably careful man skilled in that matter would make…”
“Caribbean Sea” [1979]
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.)
“Nukila” [1997]
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.
