Cases Flashcards
(54 cards)
1
Q
Quebec v Commercial Maritime
HINT: Boiler
A
Vessel insured on voyage policy
- Begins voyage with an already defective boiler which later broke down requiring repairs.
- After repairs the vessel sailed on but was total loss due to heavy weather
- Insurers denied claim as the vessel had sailed in unseaworthy condition, breaching implied warranty of seaworthiness in VP
- Privy council agreed insurers were not liable even though the breach had been put right at time of TL.
2
Q
Hamilton v Pandorf
HINT: Rats
A
- Freight case
- Bill of lading included exceptions clause in respect of ‘dangers and accidents of the seas’
- Rats gnawed through a lead pip allowing seawater ingress which damaged the cargo
Held that the exception clause would apply because the action of the rats was only the remote cause, the immediate cause of damage to cargo being seawater ingress
3
Q
Dudgeon v Pembroke
A
- Vessel insured under a time policy
- Whilst on passage begun taking on water
- On return it encountered heavy weather and became waterlogged, eventually grounding and becoming a total loss
- The vessel was unseaworthy however the assured was not aware of this
- Hol held it was a loss by peril of the seas - ‘heavy weather’ as the immediate cause of the loss.
- And that any loss immediately caused by a peril of the seas is within the policy even if it would not have occurred but for the concurrent actions of another cause not within the policy
4
Q
Reischer v Borwick
HINT: floating object
A
- Vessel insured against collision and contact damage but not in respect of perils etc.
- Vessel hit floating object causing damage and allowing seawater ingress
- Temp repair failed, vessel had to be beached and became TL
- Insurers argue only liable for initial contact damage
- Court held in favor of assured: initial contact was proximate cause of loss and tug was in ‘continuous danger’ from the time damage was caused
5
Q
Thomas v Tyne & Weir
HINT: unaware
A
- Vessel insured under time policy
- Sent to sea in unseaworthy state: 1) insufficient crew (assured was aware) 2) unfitness of the hull (assured unaware)
- Vessel lost due to unfitness of the hull
- Court held that insured was able to recover because the exclusion of MIA 39(5) ‘In a time policy - no implied warranty that the ship shall be seaworthy BUT where the ship is sent to sea unseaworthy, the insurer is not liable for any loss attributable to unseaworthiness’ only operates if the assured was aware
6
Q
The Ikaria
HINT: Torpedo
A
- Vessel insured under H&M policy included war risks exclusion
- Hit by a torpedo during WWI
- A strong wind caused vessel to range heavily against a quay and was shifted
- Bad weather etc. caused vessel to become a TL
- Insurers argued war risks exclusion should apply
- Court held TL was a result of war perils as vessel was still suffering from casualty of original torpedo attack
- ‘Proximate cause is not necessarily proximate in time but rather which cause is proximate in efficiency’
7
Q
British and Foreign v Gaunt
HINT: no explanation
A
- Cargo shipped on all risks terms
- On arrival, found to have sustained water damage
- Insurers rejected claim because assured couldn’t specify exactly how/when damage occurred
- Court held that under an all risks policy assured only obliged to show fortuity had occurred and not the exact nature of the accident
8
Q
Samuel v Dumas
HINT: scuttling
A
- Vessel scuttled by crew with connivance of owner
- Claim made by innocent mortgagee
- Held unable to recover because scuttling, with owner’s connivance, was not a peril of the sea - no fortuity in deliberate act to sink vessel
9
Q
Wadsworth Lighterage v Sea Insurance
HINT: wear and tear / calm night
A
- Wooden barge insured against TL including damage by collision, standing or sinking
- Vessel sank after 50 years on a calm night
- Held loss was not due to fortuity but due to wear and tear and excluded by Section 55 MIA
10
Q
Masefield v Amlin
HINT: pirates
A
- Vessel hijacked by pirates, ransom paid and ship returned to owners
- Insured claimed ATL (they were irretrievably deprived of cargo) or CTL (because ATL unavoidable)
- Insured argued that recovering cargo should not be taken into account because paying ransom was contrary to English public policy.
- Court held payment of ransom held not to be contrary to public policy i.e not illegal
- And held that insured was not irretrievably deprived of property if it was legally/physically possible to recover, even by disproportionate expenses
11
Q
Miss Jay Jay
HINT: 1.weather 2.two proximate causes
A
- Vessel damaged partly due to heavy weather and party due to poor design
- It is not necessary that the weather must be exceptionally bad to give rise to a peril of the sea. As long as PoS is the immediate cause of loss, a claim may still arise even where weather was reasonably expected.
- Where there are two proximate causes, 1 included in the policy and one not expressly excluded – the claim shall still succeed.
12
Q
The Popi M
HINT: burden of proof
A
- Vessel insured under Time Policy
- During voyage, engine room floods and vessel eventually sinks - becomes TL
- Inconclusive evidence to determine what lead to damage that caused the flood
- Court rejects claim on basis that burden of proof as to proximate cause has not been discharged by Insured
13
Q
Yorkshire Insurance v Nisbet
HINT: subrogation
A
- Vessel in a collision and became a TL
- Hull insurers paid out
- Insured subsequently obtained a recovery from the government of a larger amount
- Insurer’s right to subrogation only entitled them to recover up to the amount they paid out
14
Q
Brilliante Virtusoso
A
- Attempt to defraud the vessel’s war-risk insurers
- Insurers argued that there should be no liability for standby tugs from the point the vessel was redelivered by salvors as the original peril had ceased to operate
- Court held the vessel was a CTL and that 1)the original peril continued to operate after redelivery and 2) such ongoing expense incurred by standby tugs were incurred for benefit of insurers
- and so sue and labor expenses should be recoverable up until the point proceedings had commenced e.g claim form issued.
15
Q
Vessel insured on voyage policy
- Begins voyage with an already defective boiler which later broke down requiring repairs.
- After repairs the vessel sailed on but was total loss due to heavy weather
- Insurers denied claim as the vessel had sailed in unseaworthy condition, breaching implied warranty of seaworthiness in VP
- Privy council agreed insurers were not liable even though the breach had been put right at time of TL.
A
Quebec v Commercial Maritime
HINT: Boiler
16
Q
Freight case
- Bill of lading included exceptions clause in respect of ‘dangers and accidents of the seas’
- Rats gnawed through a lead pip allowing seawater ingress which damaged the cargo
Held that the exception clause would apply because the action of the rats was only the remote cause, the immediate cause of damage to cargo being seawater ingress
A
Hamilton v Pandorf
17
Q
Vessel insured under a time policy
- Whilst on passage begun taking on water
- On return it encountered heavy weather and became waterlogged, eventually grounding and becoming a total loss
- The vessel was unseaworthy however the assured was not aware of this
- Hol held it was a loss by peril of the seas ‘heavy weather’ as the immediate cause of the loss ought to b considered and not the remote cause.
- And that any loss immediately caused by a peril of the seas is within the policy even if it would not have occurred but for the concurrent actions of another cause not within the policy
A
Dudgeon v Pembroke
18
Q
- Vessel insured against collision and contact damage but not in respect of perils etc.
- Vessel hit floating object causing damage and allowing seawater ingress
- Temp repair failed, vessel had to be beached and became TL
- Insurers argue only liable for initial contact damage
- Court held in favor of assured: initial contact was proximate cause of loss and tug was in ‘continuous danger’ from the time damage was caused
A
Reischer v Borwick
HINT: floating object
19
Q
Vessel insured under time policy
- Sent to sea in unseaworthy state: 1) insufficient crew (assured was aware) 2) unfitness of the hull (assured unaware)
- Vessel lost due to unfitness of the hull
- Court held that insured was able to recover because the exclusion of MIA 39(5) ‘In a time policy - no implied warranty that the ship shall be seaworthy BUT where the ship is sent to sea unseaworthy, the insurer is not liable for any loss attributable to unseaworthiness’ only operates if the assured was aware
A
Thomas v Tyne & Weir
HINT: unaware
20
Q
- Vessel insured under H&M policy included war risks exclusion
- Hit by a torpedo during WWI
- A strong wind caused vessel to range heavily against a quay and was shifted
- Bad weather etc. caused vessel to become a TL
- Insurers argued war risks exclusion should apply
- Court held TL was a result of war perils as vessel was still suffering from casualty of original torpedo attack
- ‘Proximate cause is not necessarily proximate in time but rather which cause is proximate in efficiency’
A
The Ikaria
21
Q
Cargo shipped on all risks terms
- On arrival, found to have sustained water damage
- Insurers rejected claim because assured couldn’t specify exactly how/when damage occurred
- Court held that under an all risks policy assured only obliged to show fortuity had occurred and not the exact nature of the accident
A
British & Foreign v Grant
22
Q
- Vessel scuttled by crew with connivance of owner
- Claim made by innocent mortgagee
- Held unable to recover because scuttling, with owner’s connivance, was not a peril of the sea - no fortuity in deliberate act to sink vessel
A
Samuel v Dumas
23
Q
Wooden barge insured against TL including damage by collision, standing or sinking
- Vessel sank after 50 years on a calm night
- Held loss was not due to fortuity but due to wear and tear and excluded by Section 55 MIA
A
Wadsworth Lighterage v Sea Insurance
24
Q
- Vessel hijacked by pirates, ransom paid and ship returned to owners
- Insured claimed ATL (they were irretrievably deprived of cargo) or CTL (because ATL unavoidable)
- Insured argued that recovering cargo should not be taken into account because paying ransom was contrary to English public policy.
- Court held payment of ransom held not to be contrary to public policy i.e not illegal
- And held that insured was not irretrievably deprived of property if it was legally/physically possible to recover, even by disproportionate expenses
A
Masefield v Amlin
HINT: pirates
25
- Vessel damaged partly due to heavy weather and party due to poor design
Weather: It was held that It is not necessary that the weather must be exceptionally bad to give rise to a peril of the sea. As long as PoS is the immediate cause of loss, a claim may still arise even where weather was reasonably expected.
2 Causes: Where there are two proximate causes, 1 included in the policy and one not expressly excluded – the claim shall still succeed.
Miss Jay Jay
HINT: 1.weather 2.two proximate causes
26
- Vessel insured under Time Policy
- During voyage, engine room floods and vessel becomes TL
- Inconclusive evidence to determine what lead to damage that caused the flood
- Court rejects claim on basis that burden of proof as to proximate cause has not been satisfied by Insured
The Popi M
27
- Vessel in a collision and became a TL
- Hull insurers paid out
- Insured subsequently obtained a recovery from the government of a larger amount
- Insurer's right to subrogation only entitled them to recover up to the amount they paid out
Yorkshire Insurance v Nisbet
28
- Attempt to defraud the vessel's war-risk insurers
-Preliminary hearing as regard the quantum of loss:
- Insurers argued that there was no CTL and there should be no liability for standby tugs from the point the vessel was redelivered by salvors as the original peril had ceased to operate
- Court held the vessel was a CTL and that 1)peril continued to operate after redelivery and 2) such ongoing expense incurred by standby tugs were incurred for benefit of insurers
- and so sue and labor expenses should be recoverable up until the point proceedings had commenced e.g claim form issued.
Brilliante Virtusoso
29
Magnus v Buttemer
- Vessel proceeded to wharf to discharge cargo
- She floated and grounded with the rise and fall of the tide
- 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)
- Court had to consider whether the grounding during the normal rise and fall of the tide, constituted a stranding
- Court held it was not a stranding, as there was an absence of fortuity in the incident.
30
- Vessel proceeded to wharf to discharge cargo
- She floated and grounded with the rise and fall of the tide
- 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)
- Court had to consider whether the grounding during the normal rise and fall of the tide, constituted a stranding
- Court held it was not a stranding, as there was an absence of fortuity in the incident.
Magnus v Buttemer
31
The “Vancouver”
- Following a voyage, the vessel was found to have a foul bottom
- Dry dock was necessary to enable repairs and painting etc.
- During repairs, stern post was found fractured due to a peril of the seas, so therefore damage repairs were recoverable from hull insurers.
- The work was carried out simultaneously and completed within the 8 days.
If carried out separately:
Owner’s works - 3 days
PA repairs - 8 days
- Court held that simultaneous works had saved time in the dry docking; the costs should be apportioned equally over those 3 days saved.
32
- Following a voyage, the vessel was found to have a foul bottom
- Dry dock was necessary to enable repairs and painting etc.
- During repairs, stern post was found fractured due to a peril of the seas, so therefore damage repairs were recoverable from hull insurers.
- The work was carried out simultaneously and completed within the 8 days.
If carried out separately:
Owner’s works - 3 days
PA repairs - 8 days
- Court held that simultaneous works had saved time in the dry docking; the costs should be apportioned equally over those 3 days saved.
The “Vancouver”
33
The “Ruabon”
- The vessel drydocked for grounding repairs
- Her next scheduled maintenance and classification survey was also due
- The owners 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 insurance
- Insurers argued that the repairs ought to be equally divided
- The court held that the whole of the dry-docking expenses should be paid by the underwriters.
34
- The vessel drydocked for grounding repairs
- Her next scheduled maintenance and classification survey was also due
- The owners 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 insurance
- Insurers argued that the repairs ought to be equally divided
- The court held that the whole of the dry-docking expenses should be paid by the underwriters.
The “Ruabon”
35
The “Knight of St. Michael”
- During a voyage, part of the cargo onboard the vessel started to heat and had to be discharged at a port of refuge
- The shipowner claimed for the loss of freight
- Insurers denied liability
- It was reasonably certain that, if the voyage had continued, spontaneous combustion would have taken place and the ship / cargo would have been destroyed
- The court ruled that the assured could recover the lost freight, because loss suffered as a result of an action taken to mitigate an existing state of peril, is recoverable under a policy covering that peril.
- However, the cargo-owner would not be able to recover from their insurer, on the grounds of inherent vice of the cargo.
36
- During a voyage, part of the cargo onboard the vessel started to heat and had to be discharged at a port of refuge
- The shipowner claimed for the loss of freight
- Insurers denied liability
- It was reasonably certain that, if the voyage had continued, spontaneous combustion would have taken place and the ship / cargo would have been destroyed
- The court ruled that the assured could recover the lost freight, because loss suffered as a result of an action taken to mitigate an existing state of peril, is recoverable under a policy covering that peril.
- However, the cargo-owner would not be able to recover from their insurer, on the grounds of inherent vice of the cargo.
The “Knight of St. Michael”
37
Agenoria Steamship v. Merchants’ Marine Insurance
- During a voyage, the vessel sustained damage
- Undertook temporary repairs and then proceeded to Australia for permanent repairs
- Owners claimed for the cost of a superintendent
- Insurers argued that the repairs could have been done in an equally efficient manner without the additional cost.
- The Court allowed the cost of a superintendent but held a local one would have sufficed in the circumstances.
38
- During a voyage, the vessel sustained damage
- Undertook temporary repairs and then proceeded to Australia for permanent repairs
- Owners claimed for the cost of a superintendent
- Insurers argued that the repairs could have been done in an equally efficient manner without the additional cost.
- The Court allowed the cost of a superintendent but held a local one would have sufficed in the circumstances.
Agenoria Steamship v. Merchants’ Marine Insurance
39
"The Makis"
- Casualty 1: Whilst loading, the ship’s foremast broke off becoming damaged beyond repair
- Repairs necessarily effected to enable the safe prosecution of the voyage
- Casualty 2: During continuation of voyage ship damaged her propeller blades, and was put into a port of refuge
- The owners sought GA contribution to all the expenditure incurred at the loading port and at the port of refuge
- Insurers questioned whether ship cargo and freight were in immediate danger.
- Casualty 1:
- Court held that owners could not recover GA contributions for the expenditure incurred in the loading port, since they could not prove their claim under the YA Rules
- Casualty 2:
- Court held that for a GA act, it is not necessary to be actually 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 a real, substantial peril
- 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 a real, substantial peril
40
- Casualty 1: Whilst loading, the ship’s foremast broke off becoming damaged beyond repair
- Repairs necessarily effected to enable the safe prosecution of the voyage
- Casualty 2: During continuation of voyage ship damaged her propeller blades, and was put into a port of refuge
- The owners sought GA contribution to all the expenditure incurred at the loading port and at the port of refuge
- Insurers questioned whether ship cargo and freight were in immediate danger.
- Casualty 1:
- Court held that owners could not recover GA contributions for the expenditure incurred in the loading port, since they could not prove their claim under the YA Rules
- Casualty 2:
- Court held that for a GA act, it is not necessary to be actually 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 a real, substantial peril
"The Makis"
41
The “Eurysthenes”
- Whilst on a voyage the vessel grounded
- Cargo interests claimed against shipowners for their loss sustained and shipowners sought indemnity from their P&I insurers for their liability.
- P&I Club argued that the ship had knowingly been sent to sea in an unseaworthy state
- The Court found that ‘privity’ means 'knowledge and consent', and it is not necessarily the same as wilful misconduct
- And 'knowledge' includes if one suspects the truth but turns a blind eye so as to not know it for certain, they should be deemed to 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
42
- Whilst on a voyage the vessel grounded
- Cargo interests claimed against shipowners for their loss sustained and shipowners sought indemnity from their P&I insurers for their liability.
- P&I Club argued that the ship had knowingly been sent to sea in an unseaworthy state
- The Court found that ‘privity’ means 'knowledge and consent', and it is not necessarily the same as wilful misconduct
- And 'knowledge' includes if one suspects the truth but turns a blind eye so as to not know it for certain, they should be deemed to 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
The “Eurysthenes”
43
The "Renos"
- A vessel insured under ITCH 1/10/83 caught fire and sustained substantial damage
- Estimates for cost of repairs were inconclusive suggesting that the vessel may / may not be a CTL
- 6 months after the casualty, the owners served a notice of abandonment to the underwriters
- Insurers acknowledged liability for a partial loss but not for CTL
- Court held that 6 months was a sufficient period of time for the owners to make inquiries in terms of s. 62(3) of the MIA
- And that "Future" in s. 60(2)(ii) means future to the casualty i.e. including cost of recovery incurred before the service of the NOA.
- And expenditure in the nature of SCOPIC is not to be considered when assessing whether a vessel is a CTL
44
- A vessel insured under ITCH 1/10/83 caught fire and sustained substantial damage
- Estimates for cost of repairs were inconclusive suggesting that the vessel may / may not be a CTL
- 6 months after the casualty, the owners served a notice of abandonment to the underwriters
- Insurers acknowledged liability for a partial loss but not for CTL
- Court held that 6 months was a sufficient period of time for the owners to make inquiries in terms of s. 62(3) of the MIA
- And that "Future" in s. 60(2)(ii) means future to the casualty i.e. including cost of recovery incurred before the service of the NOA.
- And expenditure in the nature of SCOPIC is not to be considered when assessing whether a vessel is a CTL
The "Renos"
45
List the Latent defect cases (5)
Jackson v Mumford
Dimitrios N Rallias
Brown v Nitrate Producers
The “Caribbean Sea”
The “Nukila”
46
Jackson v Mumford
- The court held the phrase ‘defect in machinery’ means a defect of material, in respect either of its original or after-acquired composition.
- Does not cover the error in design regarding:
o the effect of the strain which machinery will have to resist the machinery itself being faultless
o faultless workmanship
o the construction precisely that which the designer intended it to be
- As a consequence, the word ‘defect’ 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’
47
- The court held the phrase ‘defect in machinery’ means a defect of material, in respect either of its original or after-acquired composition.
- Does not cover the erroneous judgment of the designer as to:
o the effect of the strain which his machinery will have to resist the machinery itself being faultless
o the workmanship faultless
o the construction precisely that which the designer intended it to be
- As a consequence, the word ‘defect’ 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’
Jackson v Mumford
48
Dimitrios N Rallias
- Considered 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
- Held: “A defect which could not be discovered by a person of competent skill and using ordinary care.”
- The Court stopped short of approving the definition as exhaustive or definitive
49
- Considered 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
- Held: “A defect which could not be discovered by a person of competent skill and using ordinary care.”
- The Court stopped short of approving the definition as exhaustive or definitive
Dimitrios N Rallias
50
Brown v Nitrate Producers
- Judge had to consider how to define the term “latent defect”
- Held that a latent defect is latent not just to the eye but to all the senses
- The test to be carried out in order to identify any such defect must be reasonable “as a reasonably careful man skilled in that matter would make…"
51
- Judge had to consider how to define the term “latent defect”
- Held that a latent defect is latent not just to the eye but to all the senses
- The test to be carried out in order to identify any such defect must be reasonable “as a reasonably careful man skilled in that matter would make…"
Brown v Nitrate Producers
52
The “Caribbean Sea”
- Vessel sank in moderate weather
- Investigation showed that a short tube had developed a crack
- Owners argued that the loss was caused by a latent defect
- Insurers argued loss was due to wear and tear or a defect in design
- The court considered the actual state of the hull and machinery and not the historical reason why the hull and machinery is in that state
o If 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 does not matter that it was caused by poor design/ construction/repair, unless a casualty is excluded from the cover
- Court held in favour of assured, 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.
- Also approved the idea that the inadequacy of a particular part could constitute a shortcoming of, as opposed to a defect in, the machinery and a defect in machinery did not have to be a material defect and could include incorrect assembly.
53
- Vessel sank in moderate weather
- Investigation showed that a short tube had developed a crack
- Owners argued that the loss was caused by a latent defect
- Insurers argued loss was due to wear and tear or a defect in design
- The court considered the actual state of the hull and machinery and not the historical reason why the hull and machinery is in that state
o If 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 does not matter that it was caused by poor design/ construction/repair, unless a casualty is excluded from the cover
- Court held in favour of assured, 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.
- Also approved the idea that the inadequacy of a particular part could constitute a shortcoming of, as opposed to a defect in, the machinery and a defect in machinery did not have to be a material defect and could include incorrect assembly.
The "Caribbean Sea"
54
The “Nukila”
- Vessel insured under ITC Hulls 1/10/83 including the Additional Perils Clause, sustained damage to one of its legs caused by a faulty weld on the leg agreed to be a latent defect
- The insurers argued that the entire leg and welding was all one part, and therefore latently defective, the recovery of which was excluded
- 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?
- Held that damage was different from, and over and above the original latent defect even though both were contained in one component
- Clarified that, in terms of ITCH 1/10/83, cover exists under the Inchmaree clause if 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; not relevant in the case of the Nukila since the insurance policy included the Additional Perils Clauses.
