Law of Marine Insurance

Prepce Lloyd's Market Association for permission to quote from and reproduce various Institute and International clauses...

Author: Howard Bennett

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Prepce Lloyd's Market Association for permission to quote from and reproduce various Institute and International clauses; to Xchanging Group for permission ro reproduce and/or quore from the Ins-sure Companies Marine Policy and associated schedules; and to the Britannia Steam Ship Insurance Association Ltd for

CONTENTS-SUMMARY

similar permission in respect of the Association)s rules.

I am also extremely grateful to Lord Mance, whose judgments have contributed so significantly to the development of insurance contract law in the period since the first edition, for graciously agreeing to contribute a foreword. On a personal note, I should like to thank my wife, Fouzia, who has provided unfailing support and warm encouragement, and has tolerated an author's preoccupation with indulgence and good humour. Special acknowledgements are due also to our daughter, Sonia, who has become accustomed to a laptop computer accompanying her to ballet lessons, and our little son, Adam, who has lived his entire life with the project, blithely unawate of the challenge posed by the doctrine of utmost good faith to the sleep-deprived. I have endeavoured to stare the law as at 31 October 2005. Attention should, howevet, be dtawn to the commercially sensitive judgment ofAikens J in Enterprise Oil Ltd v Strand Insurance Co Ltd [2006] EWHC 58 (Comm) indicating (obiter) a disinclination to follow the reasoning of Colman J in Lumbermens Mutual Casualty Co v Bovis Lend Lease Ltd (discussed at 21.16 below) on global settlement and claims undet liability policies. Needless to say, responsibility for . . .. any errors or omISSIOns remaIns ffime. Howatd Bennett Nottingham Halloween, 2005

Vll1

Foreword Preface Table ofCases Table ofStatutes Table ofStatutory Instruments Table ofInstitute and International Clauses 1. Introduction to the Law of Marine Insurance

V

Vll XXXl

!xxvii Ixxxiii

lxxxv 1

2. Formation of Marine Insurance Contracts

29

3. Insurable Interest, Illegality, and Public Policy

67

4. The Doctrine of Utmost Good Faith

99

5. Marine Insurance Brokers

183

6. Premiums

217

7. An Introduction to Modern Marine Cover

235

8. Inrerpretation and Rectification ofInsurance Contracts

261

9. Principles of Causarion

301

10. Marine Risks

331

11. The Inchmaree Clause

365

12. Collision and Contact Losses

393

13. War Risks

403

14. Srrikes Risks

437

15. Excluded Losses

451

16. Cover Provided by Mutual Insurance Associations

483

17. Duration of Cover

493

18. Attachmenr and Alreration of Risk

513

19. Sub-standard Shipping

565

20. Rights of Third Parties

597

21. Losses

631

22. Claims and Claims Handling

681

Contents-Summary

23. Measures ofIndemnity 24. Averting and Minimizing Loss 25. Subrogation

729 747

26. Double Insurance and Contribution

809

Appendices

841 -

775

Index

973 """

CONTENTS Foreword Preface Table ofCases Table ofStatutes Table afStatutory Instruments Table ofInstitute and International Clauses

V Vll

XXXI

lxxvii lxxxiii

lxxxv

1. Introduction to the Law of Marine Insurance A.

Marine Insurers (1) The Early Evolution of Lloyd's (2) The Rise of Lloyd's to Prominence within the Marine Market (a) The Vansittart scandal (b) The South Se, Bubble (c) The effect of the Bubble Act on the marine insurance market

(d) The marine insurance market and Lloyd's The Institute of London Underwriters and the International Underwriting Association of London (4) The Mutual Insurance Associations (5) Government Involvement in Marine War Risks Insurance (a) The origins of government involvement in war risks

1.03 1.04 1.09 1.10 1.12 1.15 1.17

(3)

1.19 1.22 1.27 1.28

insurance

(b) Modern government-backed war risks cover: Queen's

1.31 1.34

enemy risks

B. Marine Insurance Law (1)

From Law Merchant to Common Law: Early Development of Marine Insurance Law

(2) Lord Mansfield (3) Codification

C. The Nature of Marine Insurance (1)

(2)

x

Insurance of Losses Incident to Marine Adventure Extension to Mixed Land and Sea Adventures

Xl

1.34 1.41 1.44 1.50 1.51 1.58

Contents

Contents

2. Formation of Marine Insurance Courracrs

(2)

A.

Contract Formation in a Subscription Matket

2.04

B.

Contract Formation outside the London Market

2.25

C. Obligatory and Facultative Agreements (I) (2)

Floating Policies Facultative/Obligatory Covers

(3) Facultative Covers D.

Leading Underwritet Agreements IdentifYing rhe Leader (2) Extent of a Leader's Power to Bind the Following Marker (a) Amendments to cover Impacr of the LMP reforms (h) Declarations under open covers (c) Claims

(I)

(3) Legal Nature of a Leader's Power (4) Termination of a Leader's Power E.

F.

Delegated Authorities (1)

Binding Authorities

(2)

Line Slips

(1) (2)

(3)

2.44 2.45

2.62 2.63 2.66

Joint and Composite Policies Definition ofJoint and Composite Insurance Legal Structure of Composite Policies Contractual Status Under Composite Policies

(a) Authorized agency (h) Ratification

Insurance Act 1906 (b) The concept of insurable interest in the Marine Insurance Act 1906 (c) The relationship between insurable interest and wagering (d) Defeasible, contingent, and partial interests (3) Insurable Interest in Particular Types of Insurance (a) Property insurance (h) Insurance on freight, hire, and profits (c) Liability insurance (4) Limited Interests

2.28 2.29 2.38 2.43

2.47 2.48 2.51 2.55 2.56 2.57 2.61

B.

The contract formation requirement The time of loss requirement

(c) The Marine Insurance (Gambling Policies) Act 1909 (d) The general law on gaming and wagering contracts Xli

3.02 3.03 3.04 3.08 3.D9 3.12 3.16 3.17

Pervasive Interests

Embodiment in a Policy

3.65

D. The Impact of War on Contracts of Insurance

3.78

4. The Doctrine of Utmost Good Faith A.

Evolution and Framework of the Doctrine of Utmost Good Faith (1) Misrepresentation and Non-disclosure in General Contract Law (2) Insurance as a Contract Uberrimae Fidei (3) Utmost Good Faith in the Marine Insurance Acr 1906 (4) Voidable, not Void (5)

2.92

Insurable Interest (1) The Legal Matrix (a) The evolution of the law on insurable interest prior to the Marine Insurance Act 1906 (h) The insurable interest requirements of the Marine Insurance Act 1906

3.26

3.70

B.

A.

3.21

C. Illegality of the Insured Adventure

2.69 2.70 2.77 2.79 2.81 2.86

3. Insurable Interest, Illegality, and Public Policy

3.20

3.31 3.37 3.40 3.41 3.52 3.56 3.57 3.58

(5)

(4) Is Classification as Joint or Composite Insurance a Matter of Law or Contract?

The Concept of Insurable Interest (a) The concept of insurable interest prior to the Marine

4.02 4.03 4.05 4.08 4.10

Source ofthe Doctrine and the Remedy ofAvoidance: Common

Law or Equity? (6) Avoidance and Rescission

4.11 4.22

The Definition of Materiality (1) Materiality Prior to Pan Atlantic v Pine Top in the House of Lord, (2) Materiality in rhe Honse of Lord, in Pan Atlantic v Pine Top and Beyond

4.23 4.27 4.35 4.41

C. Inducement (1) Establishing the Requirement for Inducement as a Matter of Legal Principle (2) The Meaning ofInducement (3) Proof of Inducement (a) The so-called 'presumption' of inducement (h) Unknown information (4) Inducement in a Subscription Market Xlll

4.42 4.44 4.53 4.54 4.60 4.61

Contents

Contents

(5) Negating Inducement

4.64

M. Co-insurance

4.184

Circumstances Requiring Disclosure (1) The Physical Hazard (2) The Moral Hazard (3) Other Circumstances Relevant to Assessment of the Risk

4.66 4.67 4.69 4.72

N. Utmost Good Faith after the Formation of the Contract

4.193

O. Basis Clauses

4.205

E.

Information

4.79

F.

Misleading or Inaccurate Circumstances

4.82

G.

Circumstances not Requiring Disclosure (1) Diminution of the Risk (2) Within the Insurer's Actual or Presumed Knowledge (3) Waiver

D.

(4) Warranties

(5) Application to Misrepresentation

4.89 4.90 4.91 4.99 4.106 4.108

H. Knowledge of the Assured (1) Who is the Assured? (2) Constructive Knowledge

4.111 4.113 4.117

I.

4.122 4.123 4.124 4.125

Brokers and the Doctrine of Utmost Good Faith (1) Independent Duties (2) The Relevant Brokers (3) Scope of Disclosure Duty (4) Relationship Between the Duties of the Assured and the Placing Broker

4.129

].

Actionable Misrepresentations (1) Representations of Fact (2) Representations of Expectation or Belief

4.130 4.131 4.133

K.

Marine Insurance Act 1906, Section 17: Pre-formation Utmost Good Faith Beyond Sections 18-20 (1) Fraudulent Misrepresentation and Non-disclosure by the Assured (2) Non-material Misrepresentation and Non-disclosure (3) Mistake by the Insurer, Known to the Assured (4) The Insurer's Pre-formation Duties of Dtmost Good Faith

4.148 4.150 4.151 4.152

Remedies (1) Avoidance (a) Nature of the Remedy (b) Proportionality in General Contract Law (c) Loss of the Right ofAvoidance (d) Post-formation Revelations (e) The Consequences ofAvoidaI1ce (2) Damages

4.154 4.155 4.156 4.158 4.163 4.168 4.172 4.173

L.

XIV

4.147

5. Marine Insurance Brokers A.

Agency (1) The Broker as Agent of the Assured (2) Liability ro Third Parties

5.02 5.03 5.05

B.

Brokers and Sub-Agency (1) Contract (2) Tort

5.09 5.10 5.15

C. The Scope of the Broker's Duty to the Assured

5.16

D. The Standard of the Broker's Duty

5.20

E.

Duties of Brokers (1) The Broker's Duty to Obtain Cover (2) The Broker's Duty to Ensure Proper Presentation of the Risk to the Insurer The Broker's Duty in Placing the Cover (3) (4) The Broker's Duty when Assisting in Making Claims

5.23 5.23

F.

Remedies for Breach of Duty (1) Measure of Damages: Basis of Assessment (2) Cost of Alternative Insurance

5.42 5.43 5.50

G.

Causation Defences (1) The Risk was Uninsurable on Terms the Assured would have Accepted (2) The 'Two Defence' Problem

5.51

5.30 5.36 5.40

5.52 5.58 5.62

H. Contributoty Negligence I.

Brokers' Rights to Remuneration

5.74

J.

Brokers' Security for Sums Due

5.76

6. Premiums A.

Whether and When Premium is Earned

6.02

B.

Time of Payment

6.09

C. Consequences of Failure to Pay on Time

(1) At Common Law (a)

Renunciation Substantial failure of performance Premium Default Clauses

(b)

(2)

XV

6.13 6.14 6.15 6.17 6.18

Contents

Contents

(4) Displacing the Brokers' Premium Liability Rule (5) Market Recapitalization

6.21 6.21 6.24 6.25 6.27 6.29 6.32 6.33 6.35 6.37

E.

Mutual Insurance

6.38

F.

War Risks and Additional Premium Areas

6.41

D. Brokers and Premiums (I) Liability of the Broker for Premium (2) Consequences of the Broker's Liability for Premium (a) Default (b) Set-off (c) Premium default clauses (d) Payment of premium and issuance of policy (3)

The Position as Between Broker and Assured

(g) Business common sense (h) Validity rathet than invalidity (i) Taking advantage of one's own wrongdoing

0)

(k) Ambiguity (3)

B.

7. An Introduction to Modern Marine Cover The SG Policy

7.02

B.

The Separation of Marine and War Risks Cover

7.03

C.

Modern Cover (1) The Policy (2) Cargo Cover (3) Hull Insurance (4) The Eiusdem GenerisClause

7.07 7.08 7.10 7.15 7.23

D. Valued aud Uuvalued Policies (I) The Significance of an Agreed Value (2) Determining Whether a Policy is Valued: Agreed Value

E.

7.24 7.26

(3) Re-opening an Agreed Value

7.33 7.38

Burden aud Standard of Proof (1) General Principles (2) 'All Risks' Covet (3) Exclusions

7.48 7.48 7.54 7.58

v Sum Insured

8. Interpretation and Rectification ofIusurance Contracts A.

Principles ofInterpretation (I) The Intention of the Parties (2)

Factors Taken into Account in Interpreting Contracts

(a) The natural meaning of the words (b) Specialist meaning 1: technical legal meaning (c)

Specialist meaning 2: custom and usage

(d) Schedule 1 rules of interpretation (e) (f)

Context within the contract Excessive unreasonableness XV!

(I) Estoppel by convention Contractual Interpretation and the Doctrine of Precedent

The Slip as an Aid to Interpretation of the Policy (I) General Admissibility but Variable Evidential Value (2) The Rule ofLaw Approach (a)

A.

8.02

8.04 8.06 8.07 8.12 8.14 8.15 8.16 8.23

Context outside the contract Evolutionof the modern approach to admissibility Restrictions on admissibility of extrinsic evidence The utility of extrinsic evidence Context excluding extrinsic evidence

Inadmissibility of contractual negotiations

(b) The patol evidence rule (c) Marine Insurance Act 1906, section 89

C.

Rectification

8.26 8.32 8.33 8.34 8.35 8.39 8.42 8.50 8.51 8.58 8.59 8.63 8.64 8.72 8.73 8.74 8.75

8.77

9. Principles of Causation

A.

Remote, Immediate, and Proximate Causes

9.03

B.

Leyland Shipping v Norwich Union

9.08

C. The Contextual Nature of Proximity; also of Complex Causes

9.12

D. Concurrent Proximate Causes

9.20 9.21

(1)

One Proximate Cause or More?

(2) Concurrent Causes, One Cause Specifically Included, None Specifically Excluded (3) Concurrent Causes, at Least One Specifically Excluded (4) Exceptions or Exclusions?

9.22 9.25 9.30

E.

Applying the Effectiveness Test of Proximate Cause

9.33

F.

Apprehension of a Peril

9.46

G.

Mistaken Belief ofPetil

9.55

H. Response to Perils

9.56

I.

9.59 9.60 9.61

The Language of Causation (1) The Adhesiveness of the Proximate Cause Rule (2) Displacing the Proximate Cause Rule (al Displacement by a Combination of Wording and Other Circumstances

(b) Displacement by Simple Change of Language

XVll

9.62 9.65

Contents

Contents

10. Marine Risks A.

Hull and Freight Insurance (I) Perils of the Seas, Rivers, Lakes, or Other Navigable Waters (a)

(2) (3) (4) (5)

B.

B.

Fortuitous accidents

(b) Of the seas (c) Proof (d) Causation Fire and Explosion Violent Theft by Persons from Outside the Vessel Jettison Piracy

Cargo Insurance (I) 'All Risks' Cover Under the Institute Cargo Clauses (A) (2) Named Perils Cover Under the Institute Cargo Clauses (B) and (C)

10.02 10.03 10.04 10.18 10.26 10.43 10.60 10.69 10.70 10.74 10.77 10.78

Covered Perils under the Inchmaree Clause (I) Bursting of Boilers, Breakage of Shafts, and Latent Defects in the Machinery or Hull (a) 'Shafts' (b) 'Latent defect' 'Defect'

Inchmaree Clause and that Provided in Respect of Maritime Perils

(c)

'Latent' Requirement of consequential loss or damage

Damage Timing of the damage Causation (d) Measure of indemnity (e) 'Additional perils' cover (2) Negligence (a) No defence of opetational negligence of the master or crew

A.

Loss of or Damage to the Subject-matter Insured (I) Contact (2) Aircraft, Helicopters, and Satellites (3) Accidents in Cargo Handling (4) Cargo Insurance

12.02 12.03 12.04 12.06 12.08

B.

Third Parry Liability (I) Collision Liability under Hull Policies (a) 'Legally liable by way of damages' (b) 'Any sum Or sums paid' (c) 'Three-fourths' (d) 'Vessel' (e) 'Coming into collision' (f) Basis for the assessment of liability (g) Limitations and exclusions (h) Legal costs cover (2) Collision Liability under Cargo Insurance

12.09 12.10 12.11 12.13 12.14 12.15 12.18 12.20 12.21 12.22 12.23

(b) Negligence as a covered peril (3) Barratry of Masters, Officers, or Crew (a) Prejudice (b) Who is the owner? (c)

Fraudulent or criminal conduct

(d) Barratry of mariners (e) Causation (f) Burden of proof (g) Proof of complicity (h) Relationship with war and strikes cover XVl11

11.03

11.30 11.37 11.43 11.44 11.47 11.54 11.57 11.58 11.60 11.64 11.65

11.73

12. Collision and Conract Losses

10.81

11.03 11.04 11.05 11.06 11.13 11:14 11.16 11.21 11.24 11.25 11.28 11.29

11.66

C. Relationship Between the Cover Provided under the

11. The Inchmaree Clause

A.

The Due Diligence Proviso

13. War Risks

A.

Perils of War, Uprising, and Hostility Perils ofWar (a) Warlike operations (b) The modern perils of 'war' and 'civil war'

(I)

(2)

Revolution, Rebellion, and Insurrection

(3) Civil Strife arising Thereform (4) Any Hostile Act By or Against a Belligerent Power

B.

Perils of Deprivation and Inhibition on Use (I) Capture and Seizure (2) Arrest, Restraint, and Detainment

(3) (4) (5) (6)

The Consequences Thereof Any Atrempt Thereat Confiscation or Expropriation Restrictions on Scope of Cover (a) Clause 5.1.2: requisition and pre-emption (b) Clause 5.1.3: order of government Or public or local authority (c)

Clause 5.1.4: arrest restraint detainment confiscation or XIX

13.05 13.05 13.06 13.18 13.31 13.37 13.38 13.43 13.45 13.48 13.53 13.55 13.58 13.62 13.64 13.70

Contents

(d)

(e)

expropriation under quarantine regulations or by reason of infringement of any customs or trading regulations Clause 5.1.5: ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause Characterization and burden of proof

C. Derelict Weapons

Contents

(b) Causarion (c)

13.71

B.

Rats or Vermin

D. Inevitable Losses

13.75 13.80

E.

F.

Perils ofIndustrial Disturbance or Civil Unrest (I) Loss or Damage Caused by Participants (2) Strikers (3) Locked-out Workmen (4) Persons Taking Part in Labour Disturbances (5) Persons Taking Part in Riots (6) Persons Taking Part in Civil Commotions

14.03 14.04 14.06 14.10 14.1 I 14.12 14.15

Terrorism and Associated Perils (I) Any Tertorist (2) Persons Acting Maliciously (3) Politically Motivated Persons

14.18 14.19 14.20 14.28

G.

15.57 15.59 15.61 15.64

War and Strikes Risks (1)

13.84

14. Strikes Risks A.

(3)

Insuring against inherent vice

15.70

Effecting the Distinction Between Marine and

Non-Marine Risks (2) The War and Strikes Risks Exclusions

15.72 15.74

The Marine Risks Exclusion in War and Strikes Clauses for Hulls or Freight

15.78

Radioactivity and Non-Conventional Weapons

15.80

16. Cover Provided by Mutual Insurance Associations A.

Protection and Indemnity Cover

16.03

B.

War Risks (2) Queen's Enemy Risks (3) Further Cover Available under the British War Risks Rules

16.14 16.14 16.15 16.19

Defence Cover

16.20

(1)

C.

Government Reinsurance

17. Duration of Cover 15. Excluded Losses A.

B.

C.

Voluntary Conduct of the Assured (I) The General Voluntary Conduct Limitation (2) Wilful Misconduct (a) Wilful (b) Causation (c) Standard of proof (d) Scuttling (e) Pleading (3) Co-Insurance

1.5.04 15.05 15.10 15.11 15.14 15.18 15.19 15.25 15.27

Delay (I) Losses 'Consequent On' Delay (2) Delay and the Proximate Cause Rule (3) Perils of Deprivation and Inhibition on Use

15.29 15.30 15.33 15.38

Losses that Occur in rhe Natural Course of Events (I) Ordinary Wear and Tear, Ordinary Breakage, and Ordinary Leakage

15.42

(2)

Inherent Vice or Nature of the Subject-matter InsufG-d

(a)

The meaning of inherent vice xx

15.46 15.50 15.51

A.

Time and Contracts of Marine Insurance

17.02

B.

Cargo Insurance

17.11

C. War and Strikes Risks Cargo Insurance

17.22

D. Voyage Policies on Hulls

17.28

E.

Voyage Policies on Freight

17.38

F.

Time Policies on Hulls and Freight

17.46

G. War Risks Hull Insurance

17.49

H. Continuation Clauses

17.51

I.

17.55

Mutual Insurance

18. Attachment and Alteration of Risk A.

Failure of Risk to Attach in Voyage Policies (I) Failure to Embark upon the Route of the Designated Voyage (2) Delayed Commencement of the Designated Voyage

18.02 18.03 18.20

B.

The General Doctrine ofAlteration of Risk

18.27

C. Alteration of Risk in Voyage Policies XXI

18.30

Contents

Contents (I) (2)

Change ofVoyage Deviation

(3)

Delay

(4)

Excuses for Deviation or Delay

D. Promissory Warranties (I) The Legal Characterization of Promissory Warranties (2) Identifying Promissory Warranties (3) Interpretation and Breach (a) Interpretation generally

(b) (c) (d) (e)

(4)

(5) (6)

(7) (8)

(9)

E.

Breach

Timing 'Uninsured' warranties The additional insurances warranty under the Institute and International hull clauses (f) Sailing warranties Causation Materiality Cure Breach Excused Waiver Mitigating the Law of Promissory Warranties (a) Contractual drafting Navigation limits Severable cover Held covered clauses Alternative interpretations (b)

Held Covered Clauses (I) Examples of Held Covered Clauses (2) Scope (3) Additional Premium (4) Amendment ofTerms

(5) Notice Option or Obligation? (7) Utmost Good Faith (6)

18.31 18.34 18.38 18.41 18.54 18.55 18.61 18.66 18.67 18.71 18.75 18.80 18.83 18.87 18.89 18.90 18.92 18.93 18.94 18.97 18.98 18.99 18.101 18.104 18.105 18.110 18.111 18.114 18.115 18.117 18.119 18.123 18.125

(3) Stowage B.

(4) The Relative Nature of Seaworthiness and Cargoworthiness

19.14 19.18

Seaworthiness in Voyage Policies (I) Rationale for the Warranty (2) Time of Compliance and the Doctrine of Stages

19.20 19.22 19.23

C. Seaworthiness in Time Policies Privity (2) Who is the Assured? (3) Causation

(1)

(a)

D. Proof of Unseaworthiness E.

F. G.

19.51

The Relationship Between Unseaworthiness and Cover under the Inchmaree Clause

19.56

The Relationship Between Unseaworthiness, Inherent Vice, and Ordinary Wear and Tear

19.60

Cargo Policies

19.61

H. Contractual Responses to Sub-standard Shipping (I) The Due Diligence Proviso to the Inchmaree Clause (2) Ownership, Management, and Flag (3) Classification (4) The International Safety Management Code

A. B.

Contracts (Rights of Third Parties) Act 1999 Assignment (1) Assignment of the Subject-matter Insured . (2) Assignment of the Benefit of the Contract of Insurance (3) Assignment of rhe Policy (4) Protection of the Insurer Contractual Restrictions on Assignment

C. Third Parties (Rights against Insurers) Act 1930

19. Sub-standard Shipping The Concepts of Seaworthiness and Cargoworthiness (1) Seaworthiness (a) Physical condition (b) Master and crew (c) Documentation (2) Cargoworthiness XXll

19.03 19.03 19.04 19.06 19.10 19.11

19.64 19.65 19.66 19.71 19.78

20. Rights of Third Parties

(5)

A.

Unseaworthiness and the doctrine of proximate cause

(b) The causation test of section 39(5) (4) Multiple Instances of Unseaworthiness

19.30 19.32 19.39 19.40 19.41 19.47 19.49

Insurance Policies Covered (2) QualifYing Events for a Transfer of Rights (3) The Timing of a Transfer of Rights

(1)

(4) Anti-avoidance Provisions

(5) The Rights that are Transferred (a) An enforceable right to claim under a liability policy

xxiii

20.02 20.07 20.08 20.12 20.14 20.21 20.27 20.33 20.36 20.40 20.42 20.44 20.48 20.49

Contents

Contents

(b) Defences Notification and claims co-operation provisions Dispute resolution procedures Restrictions on the scope of cover Pay first clauses Liabilities and set-off Limitation

(6) Distriburion ofInadequate Fund (7) Ptovision ofInformation (a) Section 2(1): disclosure by persons othet than an insurer (b) Section 2(2): disclosure by an insurer (8) Relationship Between Assured and Third Party in rhe Light of a Statutory Transfer of Rights (9) Relationship Between Insurer and Assured in the Light of a Statutoty Transfer of Rights (10) Recovety of the Assured

20.56 20.57 20.60 20.61 20.62 20.65 20.68 20.73 20.74 20.75 20.80

B.

(3) Whether Total Loss of Freight is Actual or Constructive

21.93 21.96

E.

Loss of Adventure

21.97

F.

Finality of Losses and the Doctrine ofAdemption of Loss

21.98

or Cargo

G. Successive Losses (1)

Successive Losses: Cumulative Recovery

(2) Successive Unrepaired Losses (3) The Doctrine of Merger of Unrepaired Partial Losses (4) Successive Total Losses 22. Claims and Claims Handling

20.82 20.83

A.

Claims Handling in a Subscription Market

22.02

B.

Liabilities in a Subscription Market

22.04

C. Occurrence Notification Obligations

The Concept of a Loss (1) Ptoperty Insurance (2) Liability Insurance

21.02 21.03 21.14

Attaching Losses to Periods of Cover (1) Ptoperty Insurance (2) Liability Insurance

21.18 21.19 21.31

C. The Classification of Losses (1) Actual Total Loss (a)

Destruction

(b) Damage so as to cease to be a thing of the kind insured (c) Itretrievable deprivation (d) Applicability of the de minimis principle (2) Constructive Total Loss (a)

Constructive total loss based on reasonable abandonment

21.36 21.37 21.38 21.39 21.46 21.52 21.53 21.54

(b) Constructive total loss based on deprivation of possessIOn Deprivation of possession

Unlikelihood of recovery (c)

21.59 21.60 21.62

(1)

Provisions (a) Condition precedent

(b) Suspensive condition (c) Watranty (d) (e)

(3) Partial Losses

D. The Doctrine ofAbandonment and the Notice of Abandonment Procedure (1) The Doctrine ofAbandonment (2) Abandonmenr and Notice ofAbandonment Distinguished (3) When Notice ofAbandonment is Not Required (4) Insurers' Rights upon Acceptance of Abandonment (5) The Impact ofAbandonment on the Assured's Rights (a) Unilateral divesring of rights (b) Does abandonment deny unilateral divesting?

21.77 21.84

XXiV

E.

22.12 22.13 22.18 22.19 22.20 22.21 22.25

(6) Form of Notice ofAbandonment (7) Time for Giving a Notice ofAbandonment (8) Acceptance and Refusal of a Notice ofAbandonmenr (9) Changing an Election

22.30 22.31 22.33 22.35 22.36 22.45 22.46 22.49 22.51 22.52 22.53 22.58 22.61

Limitation (l) Ptoperty Insurance

22.62 22.64

(c)

21.90 21.91

D. Loss ofFreight (1) Whether Freight Lost

Condition or innominate term Severable innominate term

(3) Non-compliance Under Marine Wordings

21.74

Calculating whether insured property is a constructive total loss

Notification Provisions in Marine 'Policies

22.05 22.06

(2) The Consequences of Non-compliance with Notification

Constructive total loss based on damage to insured

ptoperty (d)

21.109 21.110 21.1 12 21.1 15 21.123

20.81

21. Losses

A.

(2) Relationship Between Loss of Freight and Loss of Vessel

Consequences of improper divesting

xxv

Contents

Contents

F.

G.

(2) Liability Insurance (3) Conrracr 1erms and Accrual of rhe Cause ofAction

22.68 22.69

Insurers' Rights in Connection with Claims (I) Claims Co-operation Clauses (2) Appoinrmenr of Surveyor and Average Adjuster (3) Approval Provisions (4) Murual Insurance

22.73 22.73 22.74 22.75 22.76

Fraudulent Claims (1) The Concept ofFraud (2) Fraud of the Assured (3) Types of Fraudulenr Conduct in rhe Malting of a Claim (4) Relevance to the Claim (5) Temporal Limits on the Fraudulenr Claims Jurisdiction (6) Joint and Composite Policies (7) Remedies for Fraud in a Claim (a) Rejection of the claim (b) Contract termination (8) Fraudulenr Claims Clauses

22.77 22.78 22.80 22.81 22.90 22.96 22.100 22.101 22.102 22.106 22.109

H. Good Faith in the Malting of Claims

22.113

I.

22.115 22.115 22.120

Making Payment of Loss Moneys (I) Method of Payment (2) Time of Payment

24. Averring and Minimizing Loss A.

B.

B.

Loss of or Damage to Property (1) The Yardstick fot Calculating the Measure ofIndemnity (a) Agreed and insurable values (b) Displacing the insurable value in modern unvalued policies (c) Vessels inrended for scrap (2) Toral Losses (3) Parrial Losses (a) Damage to a vessel (b) Partial loss of goods (c) Partial loss offreight (d) One agreed value covering several species of property

23.02 23.03 23.03

Thresholds to Recovery (1) Particular Average Warranties (2) Deducribles (3) Franchise Clauses

23.38 23.39 23.40 23.48

23.06 23.11 23.12 23.14 23.15 23.28 23.35 23.37

23.49

C. Under-insurance XXV!

24.02 24.03 24.07 24.09

General Average (1) General Average Losses and Liabilities (2) Insurance of General Average Losses and Liabilities

24.41 24.44 24.48

C. Salvage Salvors' Remuneration (2) Insurance of Liability fot Salvage Remuneration (a) Article 13 salvage award (b) Special compensation (c) Life salvage

(I)

23. Measures ofIndemnity A.

Sue and Labour Expenses (I) Conrractual Wordings (2) Required Standard of Conduct (3) Persons Falling within rhe Sue and Labour Docrrine (4) Duty or Liberty? Consequences of Non-compliance with Secrion 78(4) (5) Joinr and Composite Insurance (6) Negligence Cover and tbe Sue and Labour Doctrine (7) Entitlement to Reimbursement of Expenses (8) Supplemenrary Nature of the Sue and Labour Reimbursemenr Undertalting (9) Suing and Labouring in Anricipation of a Peril (10) Relationship Between the Period of Cover and the Sue and Labour Doctrine (11) Expenses Recoverable under a Reimbursement Undertaking

D. Under-insurance (I) Sue and Labour (2) General Avetage and Salvage (3) Insurance Against a Shortfall by Reason of Under-insurance

24.10 24.18 24.19 24.25 24.29 24.30 24.33 24.37

24.56 24.58 24.62 24.63 24.67 24.69 24.70 24.71 24.73 24.75

25. Subrogation A.

B.

The Doctrine of Subrogation (I): Access to the Assured's Rights Against Third Parties (I) Actual Payment a Pre-requisite to Operative Subrogation Rights (2) Subrogarion Affords the Insuret Access to the Assured's Cause of Action (3) Conrrol and Conduct of Claims Against Third Parties (4) Third Patty Defences to Subrogation Actions (5) Joint Insurance and Co-insurance The Doctrine of Subrogation (2): Insurer's Entitlement to the Benefit of Dimunitions of Loss XXVll

25.09 25.10 25.12 25.16 25.25 25.27 25.36

Contents

Contents Proceeds of Third Party Action by the Assured Benefits Voluntarily Conferred on the Assured (3) Non-monetary Benefits (4) Mixed Purpose Benefits (5) Settlements (I)

(2)

C. The Distribution of Sums Received or Recovered from Third Parties (1) Assured Fully Compensated by tbe Insurance Indemnity (2) Assured Not Fully Compensated in Fact by the Insurance Indemnity (a) General ptinciple (b) Deductibles (c)

Under-insurance

(d) Valued policies (e)

25.49 25.50 25.60 25.61 25.67 25.72

D. The Nature of the Insurer's Restitution Rights Against the Assured The Nature of the Assured's Restiturion Rights Against the Insurer

25.73 25.80

26. Double Insurance and Contribution A.

The Concept of Double Insurauce

26.02

B.

Double Insurance and Policy Terms (I) Terms Relating to Cover (2) Rateable Proportion Clauses (a) Time of double insurance

26.05 26.06 26.07 26.09 26.10 26.15

(b)

'Existence' of another insurance

(c) 'Covering the same loss' (3) Clauses Excluding Liability if Loss Covered by

(4) Voluntary Payments (5)

26.58

Non-satisfaction of a Contribution Claim by Reason of

Insolvency

F.

25.46 25.47

Deductibles in the Institute and International

hull clauses

E.

25.37 25.38 25.42 25.43 25.44

26.61

Quantifying Liability in Contribution (1) Bases for QuantifYing Liability in Contribution (2) Marinelnsurance Act 1906 (3) The Case Law

Appendix 1: Marine Insurance Act 1906 Appendix 2: Marine Insurance (Gambling Policies) Act 1909 Appendix 3: Third Parties (Rigbrsagainst Insurers) Act 1930 Appendix 4: Ins-sure Companies Marine Policy Appendix 5: Ins-sure Mar91 Schedule Appendix 6: Institute Cargo Clauses (A) (1/1182) Appendix 7: Institute Cargo Clauses (B) (111182) Appendix 8: Institute Cargo Clauses (C) (1/1182) Appendix 9: Institure War Clauses (Cargo) (1/1182) Appendix 10: Institute Strikes Clauses (Cargo) (111/82) Appendix 11: Institute Time Clauses Hulls (1110/83) Appendix 12: Institute Voyage Clauses Hulls (1111/95) Appendix 13: International Hull Clauses (01111103) Appendix 14: Institute Voyage Clauses Hulls (1/11195) Appendix 15: Institure War and Strikes Clauses (Hulls-Time) (1110/83) Appendix 16: Institute War and Strikes Clauses (Hulls-Time) (1111/95) Appendix 17: Institute Time Clauses Freight (118/89) Appendix 18: Rules of the Britannia Steam Ship Murual Insurance Association Ltd (extracts)

Index

C. Valued and Unvalued Policies and Double Insurance

26.19

D. Return ofPtemium

26.28

E.

26.32 26.33

The Right to Contribution (1) Sources of Law (2) Time When the Right to Conttibution Arises: Impact on Contribution of Defences to Claim by Assured (a) Marine Insurance Act 1906, section 80 (b) The common law (3) Primacy of Liability XXV111

843 863 865 867 868 869 874 879 884 888

892 901 911 931 941 943 946

973 -\'

26.16

Another Insurance

26.62 26.63 26.69 26.73

26.40 26.41 26.43 26.57 xxix

TABLE OF CASES AfS Ocean v Black Sea & Baltic Genetal Insutance Co Ltd (1935) 51 LlLRep 305 8.54, 8.57 Abel v POttS (1800) 3 Esp 242 22.55 Abtam Steamship Co Ltd v Westville Shipping Co Ltd [1923J AC 773 .4.04 Abt Rasha, The [2000J 2 Lloyd's Rep 575 24.53 AdamSteamship Co Ltd v London Assurance Corp (1914) 20 Com Cas 37 1.59 Adamastos Shipping Co Ltd v Anglo-Saxon Pettoleum Co Ltd [1959) AC 133 8.22 Adamson & Sons v Liverpool &,London & Globe Insurance Co Ltd [1953] 2 Lloyd's Rep 355 22.27 Adelaide Steamship Co Ltd v Attorney-Genetal (No 2) [1926J AC 172 12.09, 15.72 Adelaide Steamship Co Ltd v R (The Watilda) [1923] AC 292 13.12 Admital C, The [1981J I Lloyd's Rep 9 22.116 Admitalty Commissionets v Btynawel Steamship Co (1923) 17 LlLRep 89 13.11 Aegeon, The [2002J EWHC 247, [2003J QB 556 22.78, 22.82, 22.89, 22.91, 22.92, 22.93,22.95,22.98,22.103,22.107,22.108 Aegeon, The (No 2) [2002J EWHC 1558 (Comm), [2003] Lloyd's Rep IR54 .. .4.195, 18.95 Agapitos v Agnew (The Aegean) [2002J EWHC 247, [2003J QB 556 22.78,22.82, 22.89,22.91,22.92,22.93,22.95,22.98,22.103,22.107,22.108 Agapitos Laiki Bank (Hellas) SA v Agnew (The Aegeon) (No 2) [2002J EWHC 1558 (Comm), [2003J Lloyd's Rep IR 54 .4.195, 18.95 Agathon, The (No 2) [1984J 1 Lloyd's Rep 183 2L13 Agip SpA v Navigazione Aha halia SpA (The Nai Genova and Nai Supetba) [1984J 1 Lloyd's Rep 353 8.79,8.80 Agnew v Lansf6tsaktingsbolagens AB [2001J 1 AC 223 .4.01, 4.175 Aiken v Stewart Wtightson Membets Agency Ltd [1995] 2 Lloyd's Rep 618 5.55 Aikshaw, The (1893) 9 TLR 605 8.83,8.87 Aiolos, The [1983J 2 Lloyd's Rep 25 _ 25.14, 25.15 Aitchison v Lohte (1879) 4 App Cas 755 _ 24.12,24.38,24.63 Ajum Golam Hassen & Co v Union Marine Insurance Co [1901] AC 362 _ 10.28,19.04,19.54 Al-jubail IV, The [1982J 2 Lloyd's Rep 637 18.41 Alati v Ktuget (1955) 94 CLR 216 _ _. _ _ .4.03, 4.04 Albion Insurance Co Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342 _ _ 26.04 Aldrich v Norwich Union Life Insurance Society [2000] Lloyd's Rep IR 1 .4.74 Aldtidge v Bell (1816) 1 Statk 498 22.56 Alexandet v Cambell (1872) 41 LjCh 478 .4.131 Alexion Hope, The [1988] 1 Lloyd's Rep 311 1065 Alfted McAlpine pic v BAl (Run-Off) Ltd [1998J 2 Lloyd's Rep 694 22.05, 22.13, 22.14,22.16,22.21,22.22,25.21 Algussein Establishment v Eton College [1988J 1 WLR 587 8.33 Aliza Glacial, The [2002J EWCA Civ 577, [2002J 2 Lloyd's Rep 421 9.21,9.60, 13.63,13.72,13.75,13.76,13.78,13.79,13.83,15.41,21.73, 21.82, 21.83 Allen v Robles [1969J 1 WLR 1193 .4.167 Allen v Sugrue (1828) 2 B & S 456 21.77 Allen v Univetsal Automobile Insutance Co Ltd (1933) 45 LlLRep 55 _ 18.91

xxxi

Table ofCases Allgemeine Versicherungs-Gesellschaft Helvetia v Administrator of German Property [1931] IKB 672 22.32, 22.36 Allianz Marine Aviation (France) v GE Frankona Reinsurance Ltd London [2005] EWHC 101 (Comm), [2005] Lloyd's Rep IR437 8.58 .4.04 Allied Irish Bank pIc v Byrne [1995] 2 FR 325 A1llcins v Jupe (1877) 2 CPD 375 3.1 7 A1lobrogia, The [1979J I Lloyd's Rep 190 20.44 Almojil (M) Establishment v Malayan Motor & Genera! Underwriters (Private) Ltd (The Al-Jubail IV) [1982J 2 Lloyd's Rep 637 18.41 Alps, The [1893] P 109 9.58 Aluminium Wire & Cable Co Ltd v Allstate Insurance Co Ltd [1985] 2 Lloyd's Rep 280 , 8.21,9.27 Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982J QB 84 8.40,8.41,8.58 Amazonia, The [1990] I Lloyd's Rep 236 8.58 2.07,8.51,8.54 American Airlines Inc v Hope [1973] I Lloyd's Rep 233 American International Marine Agency of New York Inc v Dandridge [2005] EWHC 829 (Comm), [2005] I CLC 1102 ······· ···· .. ··· .2.15 26.04, 26.32, 26.51, 26.74 American Surety Co v Wrighrson (1910) 16 Com Cas 37 Amoco International Financial Corp v Iran (1987) 15 Iran-UCCTR 189 13.59 Anderson v Fitzgerald (1853) 4 HLC 484 6.06,6.07,8.53, 18.90 13.46 Anderson v Matten [1907]2 KB 248 Anderson v Morice (1876) I App Cas 713; (1875) LR 10 CP 609; (1874) LR 10 CP 58 3.36, 3.44, 3.45,10.28,19.60 Anderson v Pacific Fire & Marine Insurance Co (1872) LR 7 CP 65 4.10, 4.140 Anderson v Royal Exchange Assurance Co (1805) 7 East 38 5.40,22.56 Anderson v Thornton (1853) 8 Ex 425 6.06,6.07 Andreas Lemos, The [1983] I All ER 590 ···.· .. · .10.76, 14.14, 15.76 Andree v Fletcher (1787) 2 TR 161 3.07 Andros Springs (Owners) v World Beauty (Owners) (The World Beauty) [1970] P 144 ······ ·· .. ······ .. ·········· .24.26 Aneeo Reinsurance Underwriting Ltd v Johnson & Higgins Ltd [2001] UKHL 51, [2002] I Lloyd's Rep 157; [1998J I Lloyd's Rep 565 2.14, 2.38, 4.55, 4.63, 5.29,5.46,5.49 Angel Bell, The [1979J 2 Lloyd's Rep 491 20.01, 20.19 Angel v Merchants' Marine Insurance Co [1903] 1 KB 811 21.74 Anghelatos v Northern Assurance Co Ltd (The Olympia) (1924) 19 LlLRcp 255 15.22, 15.23,15.24 5.03 Anglo-African Merchants Ltd v Bayley [l970J I QB 3ll Anita, The [1971] I WLR 882; [1970] 2 Lloyd's Rep 365 7.04,13.61, 13.71, 13.74, 13.75,13.83,21.47,21,49, 21.103, 22.57 Annefield, The [1971] P 168 8.61 Annen v Woodman (1810) 3 Taunt 299 6.02, 6.04,17.32,18.19,19.24 Anning v Anning (1907) 4 CLR 1049 20.28 Anonima Petroli Italiana SpA v Marlucidez Armadora SA (The FHiatra Legacy) [1991] 2 Lloyd's Rep 337 15.18 Ansoleaga Y Cia v Indemnity Mutual Marine Insurance Co Ltd (The Leonita) (1922) 13 LlLRep 231 15.23, 15.24 Anstey v Ocean Marine Insurance Co Ltd (1913) 19 Com Cas 8 23.29 Antaios, The [1981] 2 Lloyd's Rep 284 6.41 Antaios, The [1985] AC 191 8.26 Antaros Compania Naviera SA v Salen Rederierna AB (The Antaios) [1985]AC 191 8.26 Aqua Design & Play International Ltd v Kier Regional Ltd (2002) EWCKCiv 797, [2003] BLR III , 8.09

xxxii

Table ofCases Aquarius Financial Enterprises Inc v Certain Underwriters at Lloyd's (The Delphine) [2001] 2 Lloyd's Rep 542 7.48,7.56,15.23 Arab Bank pic v Zurich Insurance Co [1999] I Lloyd's Rep 262 2.78, 2.95, 4.185, 4.188,22.98 Arawa, The [1980] 2 Lloyd's Rep 135; [1977] 2 Lloyd's Rep 416 14.04, 14.ll Arburhnott v Fagan [1996J Lloyd's Rep IR 135 8.ll, 8.44 Arcangelo v Thompson (1811) 2 Camp 626 9.20 Archbolds (Freightage) Ltd v S Spanglett Ltd [1961] I QB 374 3.71 Ardgantock, The [1921] 2AC 141 13.11 , 15.35 Argentino, The (1889) 14 App Cas 519 Aries Tanker Corp v Total T;ansport Ltd [1977J I WLR 185 20.25 Arkwright v Newbold (188 I) 17 ChD 20 I .4.53 Armar, The [1954] 2 Lloyd's Rep 95 23.23 Arnus, The (1924) 19 LlLRep 186 15.22,15.24 Arrow Shipping Co Ltd v Tyne Improvement Commissioners (The CryStal) [1894) AC 508 22.47 Arthur Average Association for British, Foreign and Colonial Ships, Re (1875) LR 10 Cb App 542 1.23 Arthur Barnett Ltd v National Insurance Co of New Zealand Ltd [1965] NZLR874 25.16,25.51 Asfarv Blundell [1896] I QB 123 .4.101, 21.39, 21,93 Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488 8.62 Aspden v Seddon (1874) LR 10 Ch App 394 8.62 Assicurazioni Generali di Trieste v Empress Assurance Corp Ltd [1907J 2 KB 184 25.07, 25.37,25.73 Assicurazioni Generali SpA v Arab Insurance Group (BSC) [2002] EWCA Civ 1642, [2003] Lloyd's Rep IR 131 2.25, 4.45, 4.50, 4.52, 4.55, 4.56, 4.64 Assicurazioni Generali SpA v Ege Sigorta AS [2002] Lloyd's Rep IR 480 8.70 Assievedo v Cambridge (1712) 10 Mod 77 3.06 Associated Japanese Bank International Ltd v Credit du Nord SA [1989] 1 WLR 255 .4.18 Associated Oil Carriers Ltd v Union Insurance Society of Canton Ltd [1917J 2 KB 184 4.24, 21,93,21,96,21,97 Astrovlanis Compania Naviera SA v Lina (The Gold Sky) [1972] 2 Lloyd's Rep 187 .... 15.20, 15.21,15.25,24.14 Athel Line Ltd v Liverpool & London War Risks Insurance Association Ltd (The Atheltemplar) [1946] KB 117 13.11 Atheitemplar, The [1946] KB 117 13.11 Athens Maritime Enterprises Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Andreas Lemos) [1983] I All ER 590 10.76, 14.14, 15.76 Atlantic Lines & Navigation Co Inc v Hallam Ltd (The Lucy) [1983J 1 Lloyd's Rep 188 .4.04,4.51 9.58, 11,59, 15.40, 15.41 Aclantic Maritime Co Inc v Gibbon [1954] I QB 88 Atlantic Mutual Insurance Co v King [1919] I KB 309 13.39 Attorney-General v Ard Coasters Ltd (The Ardgantock) [1921] 2 AC 141 13.11 Atrorney-General v De Keyser's Royal Hotel [1920] AC 508 13.65 13.56 Attorney-General's Reference (No I of 1992) [1993J I WLR 274 Atrwood v Small (1838) 6 Cl & F 232 .4.41, 4.64 Atry v Lindo (1805) I Bos & Pul (NR) 236 17.39 AubertvGray(l862)3B&SI69 3.78 Austin v Drewe (1816) 6 Taunt 436 10.62 Austin v Zurich General Accident & Liability Insurance Co Ltd (1944) 77 LlLRep 409 26.16 Australasian Insurance Co v Jackson (1875) 33 LTNS 286 3.71, 1l.54 Australian Agricultural Co v Saunders (1875) LR 10 CP 668 18.68, 18.85 Avon Insurance pIc v Swire Fraser Ltd [2000] Lloyd's Rep IR 535 .4.49

xxxiii

Table ofCases Avondale Blouse Co Ltd v Williamson (1948) 81 L1LRep 492 """""",,,,,,,,,,,,5.56 Axa General Insurance Ltd v Gottleb [2005] EWCA Civ 112, [2005J Lloyd's Rep IR369 ",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,22.102 Axel Johnson Petroleum AB v MG Mineral Group AG [1992] 1 WLR 270 """""",6,27 Ayrey v British Legal & United Provident Assurance Co Ltd [1918] 1 KB 136 .4.165 Bah Lias Tobacco & Rubber Estates v Volga Insurance Co (1920) 3 LlLRep 155 18.26 Bahamas International Trust Co Ltd v Threadgold [1974] I WLR 1514 , , , , , " , , , , , , , , ,8,59 Bain v Cove (1829) 3 Cat & P 496 , , " , , ", , , , , , , , , " , , , , , , " " , , , , , , , , , , , ", , , 18,39 Bainbridge v Neilson (1808) 10 East 329 ' , , , " , , , , " , , , , " " , , , , , , , , , " " , , , , , ,2LlOO Baines v Holland (1855) 10 Exch 802 "",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 18,74 Baker v Adam (1910) 15 Com Cas 227 """"",,,,,,,,,,,,,,,,,,,,,,,, ,20,19,20,26 Balfour v Beaumont [1982J 2 Lloyd's Rep 493"",,,,,,,,,,,,,,,,,,,,,,,,,, ,2,66,17.47 Ballantyne v Mackinnon [1896J 2 QB 457 """",,,,,,,,, .. ,,,,,,,,,,,,,,,,,,,19.48 Bamburi, The [1982J 1 Lloyd's Rep 312 .", ,9.46, 13,50, 21.53, 21.61, 21,64, 21.70, 2Ll02 Bamcell II, The (1984) 150 DLR (3d) 7; (1982) 133 DLR 727 """,,10,14,18,107,18,109 Bank of America National Trust & Savings Association v Christmas (The Kyriaki) [1993] 1 Lloyd's Rep 137 " " " " " " ' ' ' " " . " " " " , , , , ' ' ' ' ' ' ' ' ' ' ,22,66, 22.70, 23,39 Bank of Athens v Royal Exchange Assurance (The Eftychia) (1937) 59 L1LRep 67; (1937) 57 L1LRep 37 """""",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 15,23, 15.24 Bank ofAustralasia v Palmer [1897J AC 540 """"""",,,,,,,,,,,,.,,,,,,,,,,,8,74 Bank of Boston Connecticut v European Grain & Shipping Ltd (The Dominique) [1989] AC 1056 " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " ,4,17 Bank afCredit & Commerce International SA v Ali [2001] UKHL 8, [2002] 1 AC 251 ",,,.,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, , , 8,03, 8,37 Bank of England v Vagliano Btos [1891J AC 107 """, .. """"""""",,,,,,, 1,49 Bank Leumi Le Israel BM v British National Insurance Co Ltd [1998] 1 Lloyd's Rep 71 .. .4.63 Bank Line Ltd v Arthur Capel & Co [1919] AC 435 """"",,,,,,,,,,,,,,,,,,,,22.09 Bank of New South Wales v South British Insutance Co (1920) 4 L1LRep 266 ' , ", , , , , , 20,23 Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Good Luck) [1990J 1 QB 818 """" ,4,203,18,55,18.56,18.57,18,58,18,94,20,12 Banke" Insurance Co Ltd v South [2003] EWHC 380 (QB); [2004] Lloyd's Rep IR 1 ,. ,22,23 Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1990J I QB 665" ,4,14,4,152, 4,160,4,174,4,176,4,182,4,196,5,44,20,22 Banque Moneteca & Carystuiaki v Motor Union Insurance Co Ltd [1909J 1 KB 785 .... 10.74 Banque Sabbag SAL v Hope [1972] 1 Lloyd's Rep 253 " , , , , , ", , , , , , , , , , , , , , , , , "" 8,85 Bara Bi, The (1923) 16 LlLRep 45 """,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,15,23,15.24 Barbel' v Fleming (1869) LR 5 QB 59 " , , , , , , , , , " , , , , , , , , , , , , , , , , , , , , , , . ,,3.52, 17.39 BatbervFletcher(I779) 1 Dougl305 """"""".""""""""",,,,,,,,, ,4,62 Barclay Holdings (Australia) Ltd v British National Insurance Co Ltd (1987) 8 NSWLR 514 "",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 4,31 Barclay v Stirling (1816) 5 M & S 6 " , , " , , , , , " , " " , , , , , , , , , , , , , , , , " , , , , , , , ,17.45 Bating v Christie (1804) 5 East 398 " " " " " " " " . " " " " " " " " " " " " , , , 18,64 Baring v Claggett (1802) 3 Bos & Pltl201 ,,, " , , ." , , , , " , , , , , , , " , , , , , , , " , , , , , 18,64 Barker v Blakes (1808) 9 East 283 , , , " , , , "", , , " , , , , , , " , , , , , , " " , , , , , " , , , , 22,56 Barker v Janson (1868) LR 3 CP 303 ",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,7,28, 7.39 Barlee Marine Corp v Mountain (The Leegas) [1987J 1 Lloyd's Rep 471 , , , , , "., , , 2.50,2,59 Barnett's Trusts, Re [1902] 1 Ch 847 """",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,13.58 Barraclough v Brown [1897] AC 615; (1895) 1 Com Cas 329; (1895) 1 Com Cas 262" .22.48 Barrett Bros (Taxis) Ltd v Davies [1966J 1 WLR 1335 " " " " " " " " " " " " " " ,20.58 Barrlett & Parrne" Ltd v Meller [1961] 1 Lloyd's Rep 487 " " " " " " " " " " " " " ,8,54 Bartlett v Pentland (1830) lOB &Cr760 "",,,,,,,,,,,,,,,,.,,,,,,,,,,, "", , 22,1l7 Batton v Armstrong [1976J AC 104 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,:,,,,,,,,,,,,, ,4.47 Baston & Firminger Ltd v Nasima Enterprises (Nigeria) Ltd [1996J"CLC 1902 ." .... ".5.13 XXXIV

Table ofCases Batard v Hawes (1853) 2 El & Bl 287 ",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.,,,,,,,,,26,61 Bates v Hewitt (1867) LR 2 QB 595 , , " , , " , " , " , , ", , " , , " , , ", . " , ", , ,4,95, 4,97 Battley v Faulkner(1820) 3 B & AId 288 , , , " , " , , , , , , " , , " , , , , , , , , , ." , , " , " , 22,62 Baxendale v Fane (The Lapwing) [1940J P 112 ' " ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' 10.14,10,25,11.39 Baxendale v Harvey (1859) 4 H & N 445 """""""".""",.".""""",18,29 Bayview Motors Ltd v Mitsui Marine & Fire Insurance Co Ltd (2002J EWCA Civ 1605, [2003J 1 Lloyd's Rep 131; [2002J EWHC 21 (Comm), [2002J 1 Lloyd's Rep 652""""""",."",,13.47,13.58,17,14,17,16, 17.19,21.25,21.65,24,08 Bean v Stuparr (1778) 1 Douglll ",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,18.54 Beatson v Haworth (1796) 6 TR 531 """"",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,18,36 Beattie v Lord Ebuty (1872) LR 7 ChApp 777""""",,,,,,,,,,,,,,,,,,,,,,,, ,4,133 Becker, Gray & Co v London Insmance COtp [1918J AC 101 ,,,,,,,,,,,,,9.04,9,53, 13.50 Beckett v West of England Insurance Co Ltd (1872) 25 LTNS 739 """.""", 1.54, 17,45 Bedouin, The [1894J PI"""""""",,,,,,,,,,,,,,,,,,,,,,,,, ,4,148, 4,150, 9,58 Beley v Pennsylvania Mutual Life Insurance Co 95 A 2d 202 (1953) ..... , . , ,. , " .... . 13.23 Bell v Bell (1810) 2 Camp 475 """"""",,,,,,,,,,,,,,,.,,,,,,,,,,,,,.,,,,17,34 Bell v Ca"tairs (1810) 2 Camp 543 ""',.",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 4,62 Bell v Nixon (1816) Holt 423 '''''''''',,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,21.38 Bell v Tinmoutb (1988) 53 DLR (4th) 731 " " " " " " " " " " " " " " " " " " " ,5.31 Belle ofPorrugal, The [1970J 2 Lloyd's Rep 386 " " " " " " " " , .. """",10,65,11.40 Bennett Steamship Co v Hull Mutual Steamship Protecting Society [1914J 3 KB 57 ... , . 12.16 Bennett v Axa Insurance pic [2003J EWHC 86 (Comm), [2004J Lloyd's Rep IR 615 ",,18,72 Bensaude v Thames & Metsey Marine Lloyd's Rep [1897) AC 609 "",,,,,,,. 15.31, 15.39, 15.40, 18,65 Benson v Chapman (1849) 2 HLC 696 """"""."".""",." ,21.84, 22,61, 23,14 Beresford v Royal Insurance Co Ltd [1938J AC 586 """'" ,3,73, 3,74,15,05,15,07,15,09 Berger & Light Diffuse" Pty Ltd v Pollock [1973J 2 Lloyd's Rep 442 """,2.43,4.42,21.39 Berk (FW) & Co Ltd v Style [1956] 1 QB 180 "'"""""""",,,,, 7.54, 15.55,24,27 Bermon v Woodbridge (1781) 2 Dougl781 " " ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ,5,04, 19,23 Berns & Koppstein Inc v Orion Insurance Co Lrd [1960] 1 Uoyd's Rep 276 ... " ... ,.,18.76 Berridge v Man on Insurance Co Ltd (1887) 18 QBD 346 , , , , , , , , , , , , , , , , , , , , , , , , , , ,3,17 Beutsgracht, The [2001] EWCA Civ 2051, [2002J 1 Lloyd's Rep 574 """,2,31,2,32,2.33, 2.35,2,36,2.39,6,17,22,22 Beu"gracht, The (No 2) [2001] 2 Lloyd's Rep 608 """", .. """""."", ,2,31, 2.35 BICC pic v Burndy Corp [1985J Ch 232 , , , , , , ", , , , , , " " , , " , , " , " , , " , , " , ,,20,25 Biccard v Shepherd (1861) 14 Moo PC 471 """""",,,,,,,,,,,,,,,,,,,,,,,,,,19,61 Bigl Estate v Alberta (1989) 60 DLR (4tb) 438 "'''""""""""""",,,,,,, ,25.52 Bird v Appleton (1800) 8 TR 562 ", , " , , , " , , " , , , , , , , " , , " , , , " , " , " , , , " ",3,77 Bitd's Cigatette Manufacturing v Rouse (1924) 19 LlLRep 301 ,,,,,,,,,,,,,,,, ,7,53, 15.58 Birmingham & District Land Co v London & North-Western Railway Co (1886) 34 ChD 261 " , " , " , , " " , , " , " , , , " , , " " , " " " , , , " , , " , " , , , " , ,,22,64 Birrell v Dyer (1884) 9 App Cas 345 " , , , , , , , " , , , " " " , , , " , , , , , , .8.56, 18.30, 18,109 Bishop v Pentland (1827) 7 B & Cr 219 ",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,11.31 Bissett v Wilkinson [1927J AC 177 ' , " , , , , , , , , " , , , , , , , , , , , , " , , , " , , , , , ,4,133, 4,134 Blaauwpotv Da Costa (1758) 1 Ed 130 """'''"""""".""",,,,, ,,25.75, 25.76 Black King Shipping Corp v Massie (The Lirsion Pride) [1985] 1 Lloyd's Rep 437 ., , , , ,4,123, 4,200,4,203,6.41,18,120,20.22,22,35,22.52,22,88,22,1l3 Blackburn, Low & Co v Haslam (1888) 21 QBD 144 """"""""""" ,4,121, 4,125 Blackburn, Low & Co v Vigo" (1887) LR 12 App Cas 531 , " , , . " , , , , ,4,116, 4,1l9, 4,121, 4,122,4,175 Blackburn Rove" Football & Athletic Club pic v Avon Insurance pic [2004] EWHC 2625 (Comm), [2005] Lloyd's Rep IR 239 """"",,,,,,,,,,,,,,,,,,,,,,,,,8,26 Blackburn v Liverpool, Brazil & River Plate Steam Navigation Co (1902] 1 KB 290 ' .. , .10.14 Blackett v Royal Exchange Arsurance Co (1832) 2 Cr & J 244 , , ", , , , " , , , , " , , . " , ,,8.53

xxxv

Table ofCases Blackhurst v Cockell (1789) 3 TR 360 18.76,18.90 Blackpool & Fylde AetO Club Ltd v Blackpool Botough Council [1990J 1 WLR 1195 2.43 Blane Steamships Ltd v Minister of Transport [1951] 2 KB 965 22.48 Blascheck v Bussell (1916) 33 TLR 74 7.34 Boag v Economic1nsutance Co Ltd [1954] 2 Lloyd's Rep 581 26.06 Boaed ofTtade v Hain Steamship Co [1929] AC 534 9.29, 13.11, 13.42 BOC GtOUP pIc v Cemeon IIc [1999] 1 All ER (Comm) 970 8.03 Boggan v MOtOt Union Insutance Co Ltd (1923) 16 LlLRep 64 14.17 Boiler Inspection & Insurance Co of Canada v Sherwin-Williams Co of Canada [1951] AC 319 '" '" " 10.68 Bolam v Priem Barnet Hospital Management Committee [1957] 1 WLR 582 5.20 Bolitho v City & Hackney Health Authority [1998] AC 232 5.21 Bombay & Persia Steam Navigation Co v Shipping Comroller(1921) 7 LlLRep 226 " 13.64 Bond Air Services Ltd v Hill [1955J 2 QB 417 7.58 Bondrerr v Hemigg (1816) 1 Holt 149 _ 9.37,21.49 Bonner v Cox Dedicated Corporate Member Ltd [2005J EWCA Civ 1512; [2004] EWHC 2963 (Comm); [2005] Lloyd's Rep lR 569 2.07, 2.21, 2.67, 4.201,15.69 Boon & Cheah Steel Pipes Sdn Bhd v Asia Insurance Co Ltd [1975] 1 Lloyd's Rep 452 21.52 Booth v Gair (1863) 15 CB(NS) 291 24.27 Bosma v Larsen [1966J 1 Lloyd's Rep 22 22.71 Boston Fruit Co v British & Foreign Marine Insurance Co [1906] AC 336 2.83 Bosworth (No 3), The [1962) 1 Lloyd's Rep 483 24.69 BottOmley v Bovill (1826) 5 B & C 210 , 11.54, 18.31 Bouillon v Lupton (1863) 15 CB(NS) 113, (1863) 33 LJCP 37 18.43,19.25,19.26,19.27 BoultOn v Houlder Bros & Co [1904] 1 KB 784 1.59, 1.60,4.200 Bousfield v Bames (1815) 4 Camp 228 26.20, 26.22, 26.24, 26.27 Bavis Construction Ltd v Commercial Union Assurance Co pIc [2001] Lloyd's Rep lR 321 26.04, 26.38, 26.58 Bovis Lend Lease Ltd v Saillatd Fuller & Parmers [2001] 77 Con LR 134 26.38 Bowden v Vaughan (1809) 10 East 415 4.134 Bowring (CT) & Co Ltd v Amsterdam London Insurance Co (1930) 36 LlLRep 309 15.57 Boyd v Dnbois (1811) 3 Camp 133 '10.80 BP Exploration Operating Co Ltd v Kvaemer Oilfield Producrs Ltd [2004] EWHC 999 (Comm), [2005] 1 Lloyd's Rep 307 8.07 BP pIc v GE Frankona Reinsurance Ltd [2003] EWHC 344 (Comm), [2003] 1 Lioyd's Rep 537 2.32, 2.39, 2.40, 2.41, 2.42 Braconbush, The (1945) 78 LlLRep 70 , 7.52 Bradbourn v Great Western Railway (1874) LR 10 Ex 1 25.01 Bradford v Levy (1825) Ry & Mood 331 11.54 Bradford v Symondson (1881) 7 QBD 456 6.05 Bradley (FC) & Sons Ltd v Federal Steam Navigation Co (1926) 24 LlLRep 446 19.18 Bradley, Re [1912] 1 KB 415 22.15 Bradley v Eagle StarInsurance Co Ltd [1989] AC 957 20.33,20.50,20.53,21.14 Bragg v Anderson (1812) 4 Taunt 229 17.08 Brandeis, Goldschmidt & Co v Economic Insurance Co Ltd (1922) 11 LlLRep 42 24.48 Brandon v Curling (1803) 4 East 410 3.80 Brentwood, The [1975] 2 SCR 477 11.68, 11.71 Brine v Featherstone (1813) 4 Taunt 869 , 4.62 Bristol & West Building Sociery v May, May & Merrimans (No 2) [1998] 1 WLR 336 25.02 Btitain Steamship Co Ltd v R (The Petersham) [1921] 1 AC 99; [1919] 2 KB 670 '" 13.06, 13.08, 13.40 British & Foreigh Steamship Co Ltd v R (The St Oswald) [1918] 2 KB 879 13.10 British & Foreign Insurance Co Ltd v Wilson Shipping Co Ltd [1921] 1 AC 188 21.116, 21.118 XXXVI

Table ofCases Britis~': Foreign Marine Insurance Co Ltd v Sanday & Co [1916]

C650 . British & Foreign Marine Insu~~~~~

C.. 'G' ov

aunt

'['19'.. ']" .. " 21 lAC41

1.49, 21.54, 21.97 4.92,7.54,7.59,

British Sugarplc v NEI Power Projects Ltd (1997) 87 BLR 42' 10.78, 10.79, 15.06,24.20 Bnnsh-Amencan Tobacco Ltd v HG Poland (1921) 7 LiLRe i······················· 8.60 . P 08 18.39 Broad & Montague Lrd v South E. 6.06 Broadmayne, The [1916] P 64 . ast Lancashtre Insurance Co Ltd (1931) 40 LILRep 328 Brocklebank v Sugrue (1831) 1 'R,;b 13.64 :: :: '" 21.91 Brooking v Maudsley (1888) 38 ChD 636 Brooks v MacDonnell (1835) 1 Y&CEx ··· .. ··· .. ···· .. · .. · 4.10 Broom v Batchelor (1856) 1 H & N 255 .500 2 1.111 8.32 Brothersron v Barber(1816) 5 M & S 418

'l'oi

!vi &

Brotherton v Aseguradora COlseguros SA (No 2) [2003]' EWCA·C:················ ;21.101 Rep 1R 746 .. .. .. ... . . IV 705, [2003] Lloyd s

Brotherton v Aseguradora Cols~~;o~·SA(N~ 3)[i(;O;iEwti~'lir(~·85, 4.86, 4.156, 4.169 Lloyd's Rep IR 762 1 omm), [2003] 4.63,4.81,4.89,4.92 Brough v Whitmore (1791) 4 TR 206 ················ Brown Bros v Fleming (1902) 7 Com C~~ '2;' .. : " .. '" ." " .. 7.02 21.07 Brown v Howard (1820) 2 Brod & B 73 5 Brown v Raphael [1958] Ch 636 . . 22.62 Brown v Tayleur (1835) 4 A & E 24'1'" '" . '" " .. " 4.134, 4.138 Brown v Vigne (1810) 12 East 283 17.08 Brownlie v Campbell (1880) 5 A 17.35 pp I 925.. C .. .. .. .. .. . 4182 0 mgs Lt d v Adam' . BrownSVI'11 e Hid' Rep 458 " Jee nsurance 0 Ltd (The Milasan) [2000] 2 Lloyd's Bruce v Jones (1863) 1 H & C 769· .. ······ .. ·· .. ····· .. ··· .. ···· .. · .7.55,15.18,15.22 Brutus v Cozens [1973] AC 854. ··············· 26.24,26.25,26.26,26.27

C;;·

TLR59i

"..

Bryant & May Ltd v London Assu;a~c~'C~;. (i886)i 8.59 Buckeye State, The (1941) 39 F Su 344 P 10.81 '(994) .; 9' 10.60 Bucks Priming Press Ltd v Prudent!J Assur~~;~ Bldchow Vaughan & Co v Compania Minera (1916) 32 TLR 40 22.79 Bunge Seroja, The [1998] HCA 65, [1999] 1 Llo d's Re 12 4 13.52 Burges v Wickham (1863) 3 B & S 669 Y P5 10.07 Burke v LFOT Pry Ltd [2002] HCA 17 19.18,19.19 Burmah Oil Co Ltd v Lord Advocate [196'5'] 'AC 26.33 Burnand v Rodocanachi Sons & Co (1882) 7 A C······· .. ·· .. ··· .. ·· .. ·· .13.65,13.66 Burston Finance v Speirway Lrd [1974] 1 WLlf64;s 333 ····· 25.38,25.40 Burron v English (1883) 12 QBD 218 6.34 Business Computers Ltd v Anglo Af' .. 1.01, 24.45 20.25 Busk v Royal Exchange Assuranc: C~(~~ 1;)s~,,: ~O~~77] 1 WLR 578 Burler v Wildman (1820) 3 B & Ald 398 '" 73 10.63, 10.65, 11.31 Burlin's Sertlement, Re [1976) Ch 251 ············ 7.23,10.70,10.72,13.57 ........................................... 8.77

Re' LR2i

'6;

75'

L··:···

···· .. ···· .. ·········· ..

Cadogianis v Guardian Assurance CO [1921J 2 AC 125

Cale~o~;~ ~?r~ Sea Ltd v British Telecommunications ~l~ i200i) UKHL 4:

[2ooij.....

1890 Y s ep 553 . Calico Printers As~o~iation v Bardays 'B~k i.'td·(·1'930)' 'c~~ 25.02,25,03 Callaghan v Domlmon Insurance Co Ltd [1997] 2 LIo d's Re 54~ 71 ·······.·· 5.11 Y P ." 22.66,22.70 Callaghan v Thompson [2000] Lloyd's Re IR 474 Callender v Oelrichs (1838) 5 Bin (NG) p 4.164 Cambridge v Anderron (1824) & C 6~~ 5.29

36

c' .,,., .".. '..

211

Canada Rice Mills Ltd v Union Marine & Ge~~~~'I~~~~~~~~ C~ L~d '['194'1']' . , , .. , '. , .. 21.38 AC 55............ 956 ............................... ,10.10,10.14,10.44,10.45

xxxvii

Table ofCases Canada Steamship Lines Ltd v The King [1952J AC 192 Canadian Imperial Bank of Commerce v Insurance Corp of Ireland Ltd (1991) 75 DLR (4th) 482 Canadian Transport Co Ltd v Court Line Ltd [1940J AC 934 Candler v London & Lancashire Guarantee & Accident Co of Canada (1963) 40 DLR (2d) 408 Cane v Moye (1658) 2 Sid 121 Canterbury GolfInternational Ltd v Yoshimoto [2002] UKPC 40 , Cantiere Meccanico Brindisino v Janson [1912] 3 KB 452 Caparo Industries pic v Dickman [1990] 2 AC 605 Cape plc v Iron Trades Employers Insurance Association Ltd (1999) [2004] Lloyd's Rep m~...........

Table ofCases 4.110 20.01 25.25 15.12 1.37 8.40 4.107 5.45

8n

Capital Coastal Shipping Corp v Hartford Fire Insurance Co (The Cristie) [1975] 2 Lloyd's Rep 100 10.06, !l.40, 19.46, 19.54 Capital Finance Co Ltd v Stokes [1969] I Ch 261 6.34 Capricorn, The [1995] I Lloyd's Rep 622 3.35, 355 Captain Panagos DP, The [1985J 1 Lloyd's Rep 625 1.57, 7.33, 7.34, 23.07, 23.08, 23.09 Captain Panagos Dp, The (No 2) [1989] 1 Lloyd's Rep 33; [1986] 2 Lloyd's Rep 470 ... 10.65, 11.62,11.64,11.73,15.18,15.19 Car & Universal Finance Co Ltd v Caldwell [1965] I QB 525 4.04 Carihhean Sea, The [1980] 1 Lloyd's Rep 338 11.08, 11.13, 11.24 Carius v New York Life Insurance Co 124 F Supp 388 (1954) 13.23 Carras v London & Scottish Assurance Corp Ltd [1936J I KB 291 21.91, 21.93 Cattery Boehm (1766) 3 Burr 1905 .4.05, 4.10, 4.13, 4.89, 4.92, 4.153, 4.178 Cartwright v MacCotmack [1962] 2 Lloyd's Rep 328 , 17.47 Carvill America Inc v Camperdown UK Ltd [2005] EWCA Ciy 645, [2005J 2 Lloyd's ~m................5~6~

Case v Davidson (1820) 2 Brod & B 379; (1816) 5 M & S 79 , 22.38 Cassel v Lancashire & Yorkshire Accident Insurance Co Ltd (1885) 1 TLR 495 , ' ,22.14 Casson v Osrley Ltd [2001J EWCA Civ 1013, [2003J BLR 147 8.05 Castellain v Preston (1883) 11 QBD 380 357,25.05,25.06,25.07,25.10,25.39, 25.40,25.65 Castelli v Boddington (1852) 1 El & Bl66 6.27 Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd (The Potoi Chau) [1983] 2 Lloyd's Rep 376 22.66,24.45 Catariba, The [1997] 2 Lloyd's Rep 749 21.111,21.1 14,23.21,23.23 Cates (Captain JA) Tug & Wharfage Co Ltd v Franklin Insurance Co [1927] AC 698 21.48,21.69,21.106,22:59 Catherine Chalmers, The (1874) 32 LT 847 , 10.44 Cator v Western Insurance Co of New York (1873) LR 8 CP 552 21.05 Cawley v National Employers' Accident & General Assurance Association Ltd (1885) 1 TLR255 22.14, 22.15 CazaletvStBarbe(1786) 1 TR187 21.107 CCR Fishing v Tomenson (The La Pointe) [1986] 2 Lloyd's Rep 513 2.42, 9.23, 10.14 Cee Bee Marine Ltd v Lombard Insurance Co Ltd [1990] 2 NZLR 1 553,8.21,8.47,9.27 Central Bank of India Ltd v Guardian Assurance Co Ltd (1936) 54 LlLRep 247 22.86 Central Insurance Co Ltd v SeacaifShipping Corp (The Alolos) [1983] 2 Lloyd's Rep 25 " 25.14,25.15 Central Railway of Venezuela v Kirsch (1867) LR 2 HL 99 , 4.64 Centre Reinsurance International Co v Curzon Insurance Ltd [2004] EWHC 200 (Ch), [2004] Lloyd's Rep IR 622 " 20.41, 20.43,20.45,20.46,20.81 Centre Reinsurance International Co v Frea1tley [2005] EWCA Civ 115, [2005] Lloyd's Rep IR 303 20.43, 20.44

XXXV111

Century Insurance Co of Canada v Case Existological Laboratories Ltd (The BamcelllI) (1984) 150 DLR (3d) 7; (1982) 133 DLR 727 10.14,18.107,18.109 Cepheus Shipping Corp v Guardian Royal Exchange Assurance plc (The Capricorn) [1995] 1 Lloyd's Rep 622 3.35, 3.55 Chandris v Argo Insurance Co Ltd [1963] 2 Lloyd's Rep 65 22.65 Chandris v Isbrandtsen-Moller Co Inc [1951J 1 KB 240 '" 8.Q3, 8.17 Chapman GA) & Co Ltd v Kadirga DenizciIik ve Ticare' [1998] Lloyd's Rep IR 377 6.02, 6.04,6.22,6.30,6.33,6.35,6.36 Chapman v Walton (1833) 10 Bing 57 '" 5.20 Charente Steamship v Director of Transports (1921) 9 LlLRep 355 , .. , .. ", .. ,.,,13.10 Charles Brown & Co Ltd v Nitrate Producers' Steamship Co Ltd (1937) 58 LlLRep 188 .. 11.13 Charlton v Fisher [2001] EWCA Civ 112, [2002] QB 578 15.05, 15.09 Charman v New Cap Reinsurance Corporation Ltd [2003J EWCA Civ 1372, (2004J Lloyd's Rep IR373 6.30 Charter Reinsurance Co Ltd v Fagan [1997] AC 313 8.05,8.07,8.10,8.16,8.24,20.62 Chatenay v Brazilian Submarine Telegraph Co [1891] 1 QB 79 859 Cheng v Governor of Pentonville Prison [1973] AC 931 . '" 14.28 Cheshire(Thomas) & Co v Vaughan Bros [1920] 3 KB 240 3.11 China Traders' Insurance Co Ltd v Royal Exchange Assurance Corp (1898J 2 QB 187 ,.,,1.59, 1.60,4.200 China Transpacific Steamship Co v Commercial Union Assurance Co (1881) 8 QBD 142 1.59 Chitty v Selwyn (1742) 2 Ark 359 18.20 Christensen v Sterling Insurance Co 284 P 2d 287, 22 ILR 893 ' , .. , , 13,23 Christie v Secretan (1799) 8 TR 192 . 19.22 Christin v Ditchell (1797) Peake Add Cas 141 18.89 Ciampa v British India Steam Navigation Co Ltd (1915J 2 KB 774", .. , .. , "., .. 19.13 Citadel Insurance Co v Adantic Union Insllrance Co SA [1982] 2 Lloyd's Rep 543 "', .. 2.21, 2.41,2.42 Clan Line Steamers Ltd v Board of Trade (The Clan Matheson) [1929] AC 514 .... 9.05, 13.15 Clan Line Steamers Ltd v Liverpool & London War Risks Insurance Association Ltd [1943] KB 209 13.10 Clan Matheson, The [1929J AC 514.............................. . 9.05,13.15 Clapham v Cologan (1813) 3 Camp 382 .. 18.64 Clapham v Langton (1864) 34 LJQB 46 19.19 Clarke v Dumaven (Earl of) (The Satanita) [1897] AC 59 2.67 Clay v Harrison (1829) 10B&C99 3.12 Clilford v Hunter (1827) Moo & M 103 19.09 Clough v London & North Western Railway Co (1871) LR 7 Ex 26 4.04,4.20,4.167 Clyde Marine Insurance Co, Re (1924) 17 LlLRep 287 3.68 Co~operative Retail Services Ltd v Taylor Young Partnership Ltd [2001J Lloyd's Rep IR 122 25.33,25.34,25.35, 26,54 Coast Ferries Ltd v Century Insurance Co of Canada (The Brentwood) [1975] 2 SCR 477 11.68, 11.71 Coates v Modern Methods & Materials [1982] ICR 763 14.09 Cobb & Jenkins v Volga Insurance Co Ltd of Petrograd (1920) 4 LlLRep 130 751 Cobequid Marine Insurance Co v Baneaux (1875) LR 6 PC 319 .. , ' , .. , , .. " .21.42 Coca~Cola Financial Corp v Finsat International Ltd [1998J QB 43 , " .. ,., .. 6.40 Cock, Russell & Co v Bray, Gibb & Co Ltd (1920) 3 LlLRep 71 5.36 Cockey v Atkinson (1819) 2 B & AId 460 17.08, 17.48 Cockrane v Fisher (1835) I Cr M & R 809; (1834) 2 Cr & M 581 , 18.87 Cohen (George), Sons & Co v Standard Marine Insurance Co Ltd (1925) 21 LlLRep 30 , 21.69 Cohen, Sons & Co v National Benefit Assurance Co Ltd (1924) 40 TLR 347 '" .10.14, 1950

XXXIX

Table ofCases

Table ofCases

Coker v Bolton [1912] 3 KB 315 Colby v Hunter(1827) M &M 81 Colby v Machell (1827) 3 Car & I' 7 Coleman's Deposiraries Lrd, Re [1907] 2 KB 798 Coles v Sir Frederick Young (Insurers) Ltd (1929) 33 LlLRep 104 Colledge v Harty (1851) 6 Ex 205 Collinge v Heywood (1839) 9 A & E 633 Collingridge v Royal Exchange Assurance (1877) 3 QBD 173 Cologan v London Assurance Co (1816) 5 M & S 447

22.44 ··· .. ···· .18.68 6.05 22.15 5.22 18.109 22.68 25.01 21.101

Colonial Insurance Co of New Zealand v Adelaide Marine Insurance Co (1886) 12 App Cas 128 Colonia VersicherungAG v Amoco Oil Co [1997] I Lloyd's Rep 261 Comber v Anderson (1808) 1 Camp 523 Commercial & Estates Co of Egypt v Ball (1920) 36 TLR 526 Commercial & Estates Co ofEgypt v Board of Trade [1925] 1 KB 271

3.45 24.45,25.06 5.24, 5.40 13.66 l3.66

Commercial Trading Co v Hartford Fire Insurance Co [1974] 1 Lloyd's Rep 179 .. 11.44,11.54 Commercial Union Assurance Co v Lister (1874) LR 9 Ch ApI' 483 Commercial Union Assurance Co v Niger (1921) 7 LlLRep 239 Commercial Union Assurance Co Ltd v Hayden [1977] QB 804

25.16, 25.18 .4.194 26.49,26.71,26.77, 26.78,26.80,26.81

Commercial Uoion Assurance Co pIc v Sun Alliance Insurance Group pIc [1992] 1 Lloyd's ~m......................··········8.W

Commercial Uoion Assurance Co v NRG Victory Reinsurance [1998] 2 Lloyd's Rep 600

21.14

Commission for the New Towns and Cooper (Great Britain) Ltd [1995] Ch 259 Commonwealth Construction Co Ltd v Imperial Oil Ltd (1977) 69 DLR

8.79

17.09

(3d) 558

358,25.27

Rep67

5.31

Commonwealth Shipping Representatives v Peninsular & Oriental Branch Service (The

(Bermuda) Ltd [1984] I Lloyd's Rep 476; [1982) 2 Lloyd's Rep 178 .4.09,4.25, 4.27,4.28,4.31,4.32,4.33,4.34,4.35,4.37,4.38,4.39,4.42, 455, 4.69, 4.101,4.127,4.150,4.176,4.177 Conrinenral Grain Co Ltd v Twitchell (1945) 78 LlLRep 251 958 Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Captain Panagos Dp) (No 2) [1989) I Lloyd's Rep 33 [1986) 2 Lloyd's Rep470 10.65, 11.62, 11.64, 11.73, 15.18, 15.19 Continental Illinois National Bank & Trust Co of Chicago v Bathurst (The Captain Panagos) [1985) 1 Lloyd's Rep 625 1.57,7.33,7.34, 23.Q7, 23.08, 23.09 12.16 Cook v Dtedging & Construction Co Ltd [1958] 1 Lloyd's Rep 334 5.35 Coolee Ltd v Wing, Heath & Co (1930) 47 TLR 78 Cooper v General Accident Fire & Life Assurance Corp (1923) 128 LT 481 . " 14.17 Copernicus, The [1896J I' 237 17.15 Corcoran v Gurney (1853) 20 LTOS 221 10.81 17.36 Cornfoot v Royal Exchange Assurance Corp [1904] I KB 40 Cornhillinsurance Co Ltd v L & B Assenheim (1937) 58 LlLRep 27 .4.156 Cory & Sons v Butr (1883) 8 ApI' Cas 393 9.29,11.58,11.59,13.45,13.47, 15.Q3 Cotyv Patron (1872) LR 7 QB 304 2.21 Cory v Patron (No 2) (1874) LR 9 QB 577 2.21 Cossman v West (1887) 13 ApI' Cas 160 21.49, 21.93

Costain-Blankevoort (UK) Dredging Co Ltd v The Davenport (The Nassau Bay) [1979] 1 Lloyd's Rep 395

12.03, 1353, 13.84

13.10, 13.11

LlLRep 220 County & District Properties Ltd v Jenner (C) & Son Ltd [1976) 2 Lloyd's Rep 729 COUrt Line Ltd v R (The Lavington Court) [1945] 2 All ER 357 21.54, Courrney & Fairbairn Ltd v Tolaini Bros (Hotels) Ltd [1975] 1 WLR 297 Cousins (H) & Co Ltd v D & C Catriers Ltd [1971) 2 QB 230

Commonwealth Smelting Ltd v Guardian Royal Exchange Assurance Ltd [1986] 2 Lloyd's

Cousins v Nantes (1811) 3 Taunt 513

Rep 121 Commonwealth, The [1907] I' 216

Coven SpA v Hong Kong Chinese Insurance Co [1999] Lloyd's Rep lR 565

8.59, 10.67 25.61, 25.63, 25.64, 25.66, 25.72

Compania Columbiana de Seguros v Pacific Navigation Co [1965] 1 QB 101 ,25.15, 25.48 Compania Maritima of Barcelona v Wishart (1918) 23 Com Cas 264 ., 7.52 Compania Maritima San Basilio SA v Oceanus Mutual Underwriting As~ociation (Bermuda) Ltd (The Eurysthenes) [1976J 2 Lloyd's Rep 171

17.03,17.04,19.34, 19.38,19.49 Compania Maritime Astra SA v Archdale (The Armar) [1954] 2 Lloyd's Rep 95 23.23

Compania Naviera Martiartu v Royal Exchange Assurance Corp [1923] 1 KB 650

7.50,

10.30, 11.47, 11.60

Campania Naviera Martiartu v Royal Exchange Assurance Corp (The Arnus) (1924) 19 LlLRep 186

··········· .15.22, 15.24

Compania Naviera Santi SA v Indemnity Mutual Assurance Co Ltd (The Tropaioforos) [1960] 2 Lloyd's Rep 469

15.20

Compania Naviera Vascongada v British & Foreign Marine Insurance Co Ltd (The Gloria) (1936) 54 LlLRep 35

15.18,15.21, 15.24, 19.33

Company of African Merchants Ltd v British & Foreign Marine Insurance Co Ltd (1873) LR 8 Ex 154 18.27, 18.39 Comunidad Naviera Baracaldo v Norwich Union Fire Insurance Society (The Bara Bi) (1923) 16 LlLRep 45

15.23,15.24

Confederation Life Insurance Co v Causton (1989) 60 DLR (4th) 372 Conohan v Coopetators 2002 FCA 60,2004 AMC 1661

x)

3.33

Coulouras v British General Insurance Co Ltd (The Katina) (No 2) (1922)

Commonwealth Insurance Co of Vancouver v Groupe Spinks SA (1983] 1 Lloyd's

Geelong) [1923J Ac 191

Constance v Noble (1810) 2 Taunt 403

Constitution Insurance Co of Canada v Kosmopoulos (1987) 34 DLR (4th) 208 Container Transport International Inc v Oceanus Mutual Underwriting Association

':'

25.52 ,

12.13

15.23 22.68 22.33 2.43 25.24

3.07

21.08, 21.09, 2UO, 21.20 Covington v Roberts (1806) 2 B & pNR 378 1057 Cox v Bankside Members Agency Ltd [1995) 2 Lloyd's Rep 437 4.201,20.42,20.66,20.67, 20.73,22.14,22.76 Coxe v Employers' Liability Assurance Corp Ltd [1916] 2 KB 629 9.60,9.65 Coxwold, The [1942] AC 691 8.09,9.04,9.06,9.34,9.45, 13.11, 13.12, 13.16, 13.17 12.16 Craighall, The [1910] I' 187 Credit Agricole Indosuez v Muslim Commercial Bank Ltd [2000] 1 Lloyd's Rep 275 5.24 Crew, Widgety & Co v Great Western SS Co Ltd [1887J WN 161 13.75 Crippen, Re [1911) I' 108 3.74 Cristie, The [1975] 2 Lloyd's Rep 100 10.06, 11.10, 19.46, 19.54

Crocker v General Insurance Co Ltd of Trieste (1897) 3 Com Cas 22

17.37

Crocker v Srurge [1897) 1 QB 330 Crooks v Allan (1879) 5 QBD 38 Crowley v Cohen (1832) 3 B & Ad 478 Crown of Leon (Owners) v Admiralty Commissioners [1921] 1 KB 595

17.37 24.45 3.69 13.64

Crows Transport Ltd v Phoenix Assurance Co Ltd [1965) 1 WLR 383

,

Cruikshank v Janson (1810) 2 Taunr 301 Ctystal, The [1894] AC 508 CTN Cash & Carry Ltd v General Accident Fire & Life Assurance Corp pte [1989] 1 Lloyd's Rep 299

xli

17.11 17.10 22.47 1857

Table ofCases

Table ofCases

Cullen v Butler (1816) 5 M & S 461 10.15, 25.01 Cunard v Hyde (No 1) (1859) 29 LJKB 6 3.76 Cunard Steamship Co Lrd v Marten [1902J 2 KB 624 23.51, 24.02, 24.37, 24.71 Cunliffe-Owen v Teather & Greenwood [1967J 1 WLR 1421 8.14 Currie (MR) & Co v Bombay Native Insurance Co (1869) LR 3 PC 72 22.54,24.12,24.13 Curtis & Sons v Mathews [1918J 2 KB 825 13.26,13.29,13.30,13.34 CVG Siderurgicia del Orinoco SA v London Steamship Owners' Mutual Insurance Associarion (The Vainqueur Jose) [1979J 1 Lloyd's Rep 557 20.57,20.61

Depaba v Ludlow (172!) 1 Comyns 360; (I720) I Com Rep 360 1.39, 3.06 Deposit & General Life Assurance Co v Ayscough (1856) 6 El & BI 761 .4.20 Derry v Peek (1889) 14 App Cas 337 .4.03, 5.07, 22.78 Deutsche Ritckversicherung AG v Wa!brook Insurance Co Ltd [1995] 1 WLR 1017 4,123 Deutsche-Australische DampfSchiffsgesellschaft v Sturge (1913) 30 TLR 137 17.17 Devaux v rAnson (1839) 5 Bing NC 519 1.54,3.52, 17.41, 17.44 DG Finance Ltd v Stott [1999J Lloyd's Rep IR 387 3.57 Diamond, The [1906J P 282 10.60 10.36, 15.21, 15.26 Dias, The [1972J 2 QB 625 Dibbens, Re [1990] BCLC 577 3.57 Dick Bentley Producrions Lrd v Harold Smith (Motors) Ltd [1965J 1 WLR 623 4.179 Dickinson v Jardine (1868) LR 3 CP 639 25.01 Dickson v Devitr (1916) 86 LJKB 315 5.64, 5.65, 5.66, 5.70 Dina Services v Prudential Assurance [1989] 1 Uoyd's Rep 379 , 10.69 Direct Line Insurance v Khan [2002] Lloyd's Rep IR 364 22.100,22.102 Direct Travel Insurance v McGeown [2003] EWCA Civ 1606, [2003J Lloyd's Rep

Da Costa v Scandrer(1723) 2 P Wms 170 6.07 Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd (The Kapitan Petko Voivoda) [2003] EWCA Civ 451, [2003J 2 Lloyd's Rep I; [2002J EWHC 1306 (Comm), [2002J 2 All ER (Comm) 560 8.21 Dairy Contractors Ltd v Tasman Orient Line CV (The Tasman Discoverer) [2004] UKPC 22, [2005J 1 WLR 215 8.50 Dalzell v Mair (1808) 1 Camp 532 6.05, 6.33 Daneau v Luarent Gendron, Ltee [l964J I Lloyd's Rep 220 .4.165 19.17,19.20,19.61 Daniels v Harris (1874) LR 10 CP I DarbishirevWarran [1963J 1 WLR 1067 24.11 Darrell v Tibbitts (1880) 5 QBD 560 25.42, 25.73 Davidson v Bumand (1868) LR4 CP 117 10.14, 10.23, 19.51 Davidson v Gwynne (I810) 12 East 381 11.48 Davidson v Willasey (I 813) I M & S 313 17.39 Davies v London Provincial Marine Insurance Co (1878) 8 ChD 469 _ 4.03 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 8.05 Davis v Garrett (I 830) 6 Bing 716 18.34 Dawson v Mercantile Mutual Insurance Co Ltd [1932] VLR 380 18.107,18.109 Dawsons Ltd v Bonnin [1922J 2 AC 413 .4.205,18.62,18.91 De BusschevAlr (1878) 8 ChD 286 5.13 De Costa v Scandtet (I723) 2 P Wms 170 1.42, 4.13 De Hahn v Hartley (I 786) I TR343 18.71, 18.92 3.17;9.38 De Mattos v Gibson (1868) LR 3 Ex 185 De Maurier Oewels) Ltd v Bastion Insurance Co Ltd [l967J 2 Lloyd's Rep 550 .4.107, 4.108,4.165,8.54,18.109 De Monchy v Phoenix Insurance Co of Hartford (I929) 34 L1LRep 201 15.42,15.46,15.47 De Vaux v Salvador (I836) 4 A & E 420 12.09 De Wolf v Archangel Maritime Bank & Insurance Co Ltd (I874) LR 9 Qll451 .. 18.24, 18.25 Deatle v Hall (1823) 3 Russ I 20.13 Debtor (No 627 of!936), Re a [l937J Ch 156 26.61 .4.79 Decorum Investments Ltd v Atkin (The Elena G) [2001J 2 Lloyd's Rep 378 Deepak Fertilisers & Petrochemicals Corp v leI Chemicals & Polymers Ltd [1999] I Lloyd's Rep 387 3.36,3.63,25.30 Deering v Earl of Winchelsea (I787) 2 Bos & P 270 26.32 Delany v Stoddart (I785) 1 TR22 18.41, 18.44 1.37 Delbye v Proudfoot (I692) 1 Show KB 396 Delphine, The [2001J 2 Lloyd's Rep 542 7.48,7.56,15.23 Demetra K, The [2002J EWCA Civ 1070, [2002J 2 Lloyd's Rep 581 8.78, 8.81, 8.90,10.65 Denby v English & Scottish Maritime Insurance Co Ltd [1998J Lloyd's Rep IR 343 ..... 2.66, 2.67,8.54 Denison v Modigliani (I794) 5TR 580 18.27 Dennistown v Lillie (I821) 3 Bl202 .4.133, 4.134 Denoon v Home & Colonial Assurance Co (1872) LR 7 CP 341 21.87, 21.88 Denoyr v Oyle (I649) Style 166 :: 1.37 DenrvSmith(I869)LR4QB414 18.64

Ditbrie v Hilton (1868) LR4 CP 138 21.39 Dixon v Hovill (1828) 4 Bing 665 5.37 11.36,19.20 Dixon v Sadler (1839) 5 M & W 405 Dixon v Whitwortb (1879) 4 CPD 371 24.37 Dodwell & Co Ltd v British Dominions & General Insurance Co Ltd (1918) [1955] 2 Lloyd's Rep 391n '" " .. 15.47 Doheny v New India Assurance Co Ltd [2005J EWCA Civ 1705, [2005J Lloyd's Rep IR251 .4.104 Dome Mining Corp Ltd v Drysdale (1931) 41 LlLRep 109 22.88 Domingo Mumbra SA v Laurie (I924) 20 L1LRep 122 15.23 Dominique, The [1989J AC 1056 .4.17 Don King Productions Inc v Warren [2000J Ch 291 20.27 Dora Forster [1900J P 241 21.115 .4.70,4.71,4.127,7.45,7.47 Dora, The [1989J 1 Lloyd's Rep 69 Doriga Y Sanudo v Royal Exchange Assurance Corp (The Marianela) (1922) 13 L1LRep 126 15.24 Douglas v Scougall (1816) 4 Dow 269 19.22 Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 .4.183 Doyle v Powell (1832) 4 B & Ad 267 18.39 DPP v Stonehouse [1970] AC 55 13.56 Drake Insurance pic, Re [2001] Lloyd's Rep IR 643 6.03 Drake Insurance pic v Provident Insurance pic [2003J EWCA Civ 1834, [2004J QB 601; .4.53, 4.156, 4.171, [2003J EWHC 109 (Comm), [2003J Lloyd's Rep IR 781 26.07, 26.59, 26.60 Driefonrein Consolidated Mines Ltd v Janson [1900J 2 QB 339 3.80,13.18 Drinkwater v London Assurance Corp (1767) 2 Wils KB 363 13.32 Driscol v Bovill (1798) 1 B & P 313 18.44 Driscoll, Re [1918J 11R 152 25.51 DSG Retail Lrd v QBE Inrernational Insurance Ltd [1999J Lloyd's Rep IR 283 " 2.76 8.20,9.23,9.33, 10.06, 19.30, 19.45, 19.60 Dudgeon v Pembroke (1877) 2 App Cas 284 Duff v Mackenzie (1857) 3 CB(NS) 16 23.39 Dufourcet & Co v Bishop (1886) 18 QBD 373 25.18, 25.37 Dunbar v AB Painters Lrd [1986J 2 Lloyd's Rep 38; [1985J 2 Lloyd's Rep 616 5.59 18.36 Dunbeth, The [1897J P 133 Duncan v Worrall (1822) 10 Price 31 4.15 Dunlop Bros & Co v Townend [1919] 2 KB 127 2.34 Dunlop Tyres Ltd v Blows [2001J EWCA Civ 1032, [2001] IRLR 629 8.41

xlii

xliii

m5~.......,.............8.~

Table ofCases Dunthorne v Bentley (1996) [1999] Lloyd's Rep IR 560 Dutham Bros v Robertson [1898J 1 QB 765 Durrell v Bederley (1816) Holt NP 283 Duus Btown & Co v Binning (1906) 11 Com Cas 190 Dyson v Rowcroft (1803) 3 Bos & Pul473

Table ofCases 9.62 20.13 4.80 25.23 21.43

Esso Petroleum Co Lrd v Hall Russell & Co Ltd (The Esso Bernicia) [1989] AC 643 .... 25.14 Esso Petroleum Co Ltd v Mardon [1976J QB 801 .4.138, 5.07 Etablissemems Georges et Paul Levy v Adderley Navigation Co Panama SA (The Olympic Pride) [1980J 2 Lloyd's Rep 67 8.77 Etherington and The Lancashire & Yorkshire Accident Insurance Co [1909] 1 KB 591 9.36,9.44 Eurasian Dream, The [2002] EWHC 118 (Comm), [2002J 1 Lloyd's Rep 155 19.07, 19.10 Eurodale Manufacturing Ltd v Ecclesiastical Insurance Office pic [2003] EWCA Civ 203, [2003J Lloyd's Rep IR444 14.19 European Asian Bank v Punjab & Sind Bank (No 2) [1983J 1 WLR 642 5.24 Eurysthenes, The [1976J 2 Lloyd's Rep 171 17.03, 17.04, 19.34, 19.38, 19.49 Evelpidis Era, The [1981] 1 Lloyd's Rep 54 20.18 Everett v Hogg, Robinson & Gardner Mountain (Insurance) Co [1973] 2 Lloyd's Rep 217 558, 5.60 Everth v Hannam (1815) 6 Taunr375 11.54 Everth v Smith (1814) 2 M & S 278 21.91 Ewer v National Employers' Mutual Insurance Association (1937] 2 All ER 193 22.86 Express & Star Ltd v Bunday [1988J ICR 379 14.06, 14.10 Eyre v Glover (1812) 16East218 3.55

Eagle Oil Transport Co Ltd v Board of Trade (1925) 23 LlLRep 301 13.12 Eagle Star & British Dominion Insurance Co Ltd v AV Reiner (1927) 27 LlLRep 173 8.89 Eagle Star Insurance Co Lrd v Cresswell [2003] EWHC 2224 (Comm), [2004J 1 All ER (Comm) 508 8.02 Eagle Star Insurance Co Ltd v Games Video Co (GVC) SA (The Game Boy) [2004] EWHC 15 (Comm), [2004J 1 Lloyd's Rep 238 7.39,7.47,22.89,22.93 Eagle Star Insurance Co Ltd v National Westminster Finance Australia Ltd (1985) 58 ALR 165 (PC) 5.29,550 Eagle Star Insurance Co Ltd v Provincial Insurance pIc (1994) 1 AC 130 26.47, 26.50, 2651,26.55 Eagle StarInsurance Co Ltd v Spratt [1971J 2 Lloyd's Rep 116 2.14 Earle v Rowcroft (1806) 8 East 126 " 11.48, 11.55, 11.56 EasrIndia Co v Oditchurn Paul (1849) 7 Moo 85 22.62 Ebsworth v Alliance Marine Insurance Co (1873) LR 8 CP 596 3.39 Economides v Commercial Assurance Co pic [1998J QB 587 4.134,4.136,4.137,4.139,4.145, 4.146,7.47 Eden v Parkison (1781) 2 Dougl732 18.77 Edgar v Bumstead (1808) 1 Camp411 " 22.119 Edgington v Fitzmaurice (1885) 29 ChD 459 , .4.45, 4.137 Edington v Jackson (1832), unreported 21.79 Edwards Oohn) & Co v Motor Union Insurance Co Ltd [1922J 2 KB 249 3.11, 25.07, 25.10, 25.22 Edwards v Foorner (1808) 1 Camp 530 " .4.134 Efrychia, The (1937) 59 LlLRep 67; (1937) 57 LILRep 37 , 15.24 Egan v Static Control Components (Europe) Ltd [2004] EWCA Civ 392, [2004J 2 Lloyd's Rep 429 , 8.44 Eglantine, Credo & Inez, The [1990) 2 Lloyd's Rep 390 ., 12.18 Eide UK Ltd v Lowndes Lambert Group Ltd (The Sun Tender) [1999J QB 199 5.76, 5.79 El Ajou v Dollar Land Holdings pic [1994J 2 All ER 685 .4.123 Elcock v Thomson [1949J 2 KB 755 7.34,7.39,23.23,23.24,23.27 Elder, Dempster & Co Ltd v Patetson, Zochonis & Co Ltd [1924J AC 522 19.11,19.15 Elena D'Amico, The [1980]1 Lloyd's Rep 75 " " 24.11 Elena G, The [2001] 2 Lloyd's Rep 378 4.79 Eleyv Bradford [1972J 1 QB 155 25.01 Elliott v Wilson (1776) 4 Bro PC 470 18.34, 18.36 Elton v Brogden (1747) 2 Str 1264 , " 18.44 Emperor Goldmining Co Ltd v Switzerland General Insurance Co Ltd [1964] 1 Lloyd's Rep 348 24.26 Empresa Cubana de Fleres v Kissavos Shipping Co SA (The Agathon) (No 2) [1984] 1 Lloyd's Rep 183 " 21.13 Engineer, The [1898J AC 382 '" , 12.21 England v Guardian Insurance Ltd [2000J Lloyd's Rep IR 404 22,121,25.79 Enlayde Ltd v Roberts [1917J 1 Ch 109 5.25 Equitable Fire & Accidenr Office Ltd v Ching Wo Hong [1907] AC 96 18.84 Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 , , .4.03, 4.04 Esperanza, The (1822) 1 Hagg 85 13.46 Esposito v Bowden (1857) 7 El & Bl763 " 3.78 Esso Bernicia, The [1989] AC 643 25.14

Fairbanks v Snow (1887) 13 NE 596 4.47 Falkner v Ritchie (1814) 2 M & S 290 21.99 Fanhaven Pty Ltd v Bain Davies Northern Pty Ltd [1982] 2 NSWLR 57 5.30,556 Fanti, The [1991] 1 AC 1 16.03, 20.41, 20.63, 22.65, 22.72 Farnworth v Hyde (1865) 34 LJCP 207 " 21.42,21.75 Farrell v Federated Employers' Insurance Association Ltd [1970] 1 WLR 1400 26.44 Fawcus v Sarsfield (1856) 6 El & BII92 10.06, 19.30, 19.46 Feaseyv Sun Life Assurance Corp of Canada [2003J EWCA Civ 885, [2003J Lloyd's Rep IR637 , 3.27, 3.34, 3.36, 3.40, 3.51, 3.62 Federal Commerce & Navigation Co Ltd v Tradax Export SA [1978J AC 1 8.61 Feise v Parkinson (1812) 4 Taunt 640 .4.62, 6.06, 6.07 Felicie, The [1990J 2 Lloyd's Rep 21n 20.70,20.72 Fenton Insurance Co Ltd v Gothaer Versicherungsbank WAG [1991] 1 Lloyd's Rep 172 .. 6.16 Ferrcom Pty Ltd v Inbush (NSW) Pty Ltd (1996) 9 ANZ Insurance Cases 76, 728 557 Field Steamship Co Ltd v Burr [1899J 1 QB 579 15.35, 21.06 Fielding & Plarr Ltd v Najjar [1969J 1 WLR357 ." " " 3.71 Figre Ltd v Mander [1999J Lloyd's Rep IR 193 " 6.16,6.17 Piliarra Legacy, The [1991] 2 Lloyd's Rep 337 15.18 Fine's Flowers Ltd v General Accident Assurance Co of Canada (1977) 81 DLR (3d) 139 5.16, 5.29 Finlay v Liverpool & Grear Western SS Co Ltd (1873) 23 LTNS 251 13.75 Fiona, The [1993J 1 Lloyd's Rep 257 19.13 Fireman's Fund Insurance Co v Western Australian Insurance Co Ltd (1927) 33 Com Cas 36 '" 19.16 Firestone v Chubb Insurance Co of Canada (1995) 21 OR (3d) 370 25.51 Firma C~Trade SA v Newcastle Protection & Indemnity Association (The Fanti) [1991] 1 AC 1; [1989J 1 Lloyd's Rep 239 16.03, 20.41, 20.63, 22.65, 22.72 First National Bank of Chicago v West of England Shipowners Mutual Protection and Indemnity Association (Luxembourg) (The Evelpidis Era) [1981] 1 Lloyd's Rep 54 20.18 Fisher v Liverpool Marine Insurance Co (1874) LR 9 QB 418 3.68 Fisher v Smith (1878) 4 App Cas 1 5.77 Fisk v Masrerman (1841) 8 M & W 165 , ,., .. , .. 26.29 Fitzherbert v Mather (1795) 1 TR 12 "" 4.127 Fleming v Smith (1848) 1 HLC 513 22.34,2256,22.61

xliv

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Table ofCases

Table ofCases

Fletcher v Ingliss (1819) 2 B & Ald 3 I 5 10.25 FlindtvWaters (1812) 15 EaSt 260 3.81 Flinn v Headlam (1829) 9 B & Cr 693 .4.42 Flint v Flemyng (1830) I B & Ad 45 1.53, 1.54, 17.43 FNCB Lrd v Barnet Devaney (Harrow) Ltd [1999] Lloyd's Rep IR 43 2.78 FoleyvTabor(l861)2F&F663 19.16, 19.22 Foley v United Fire & Marine Insurance Co of Sydney (1870) LR 5 CP 155 3.52, 17.39 Fomin v Oswell (1813) 3 Camp 357 5.24 Fooks v Smith [1924] 2 KB 508 21.26 Forbes v Aspinall (1811) 13 EaSt 323 17.42,17.43,21.86,21.87 Forder v Great Western Railway Co [1905] 2 KB 532 15.11 ForreSter v Pigou (1813) I M & S 9 .4.62 Forshaw v Chabert (1821) 3 Brod & B 158 18.75, 19.09 Forsiktingsaktielskapet VeSta v Burcher [1989] AC 852 5.42,5.67, 18.89 ForSter v ChriStie (1809) 11 EaSt 205 .................................•.......... 9.48 FoSter v Wilmer (1746) 2 Str 1249 18.37 France Fenwick & Co Ltd v The King [1927] I KB 458 13.64 Francis v Boulton (1895) 65 LJQB 153 21.40,23.32 Frangos v Sun Insurance Office Ltd (1934) 49 LlLRep 354 19.46, 19.60 Fraser Shipping Ltd v Cotton (The Shakir III) [1997] I Lloyd's Rep 586 .4.197, 18.122, 18.127,21.41,21.48,24.27 Fraser v BN Furman (Productions) Ltd [1967] I WLR 898 5.59,8.21,9.27 Freeth v Burr(1878) LR 9 CP 208 6.15 Friends Provident Life & Pensions Ltd v Sirius International Insurance [2005] EWCA Civ 601, [2005]2 All ER (Comm) 145 22.24, 22.27, 25.21 21.08 Fuerst Day Lawson Ltd v Orion Insurance Co Ltd [1980) 1 Lloyd's Rep 656 Furness, Withy & Co Ltd v Duder [1936] 2 KB 461 12.11 Furness Withy (Australia) Ltd v Metal Distriburors (UK) Ltd (The Amazonia) [1990] 1 Lloyd's Rep 236 8.58 3.80 Furtado v Rogers (1802) 2 Bos & Pul191

General Insurance Co of TrieSte Ltd v Cory [1897] 1 QB 335 18.81 General Reinsurance Corp v ForsakringsaktiebolagetFennia Patria [1983J QB 856; [1982] QB 1022 2.13, 2.14, 2.15 General Shipping & Forwarding Co v British General Insurance Co Ltd (I923) 15 LlLRep 175 7.25 Genforsikrings Aktieselskabet (Skandinavia Reinsurance Company of Copenhagen) v Da Costa [1911] I KB 137 3.68 George Hunt Cranes Ltd v Scottish Boiler & General Insurane Co Ltd [2001] EWCA eiv 1964, [2002) Lloyd's Rep IR 178 8.19, 22.14, 22.15 George Wimpey UK Ltd v VI Components [2005] EWCA Civ 77, [2005] BLR 135 8.79,26.02 Gernon v Royal Exchange Assurance (1815) 6 Taunt 383 22.55 Gibbs v Mercantile Mutual Insurance (Australia) Ltd [2003] HCA 39, (2003) ALR 497 1.55 Gibson v Small (1853) 4 HLC 353 17.05, 19.30, 19.61 GIO Personal Investment Services Ltd v Liverpool & London Steamship Protection & Indemnity Association Ltd unrep, Comm Ct, 27 November 1997 4.65 Girl Pat, The [1937) I All ER 158 21.65, 21.66, 21.102 Glafki Shipping Co SA v Pinios Shipping Co (The Maita) (No 2) [1986]2 Lloyd's ~12.......................~,7~

8.14, 10044 13.22 6.04 22.85,22.102, 22.107 Gambles v Ocean Marine Insurance Co of Bombay (1876) 1 ExD 141 17.03 Game Boy, The [2004] EWHC 15 (Comm), [2004] I Lloyd's Rep 238 7.39,7.47, 22.89, 22.93 Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (Nos 2 & 3) [2001] EWCA Civ 1047, [2001] Lloyd's Rep IR 667 4.201, 8.29, 8.52, 8.57 Gardenet v Salvador (1831) I M & Rob 116 21.42, 21.107 1.59 Gatra v Eagle Star Insurance Co (1923) 16 LlLRep 339 Gare v Sun Alliance Insurance Ltd [1995] LRLR 385 4.70,4.85 Gedge v Royal Excbange Assurance Corp [1900] 2 QB 214 3.17 Gee & Garnham Ltd v Whittall [1955] 2 Lloyd's Rep 562 15.55 Geelong, The [1923] AC 191 13.10,13.11 General Accident Fire & Life Assurance Corp Ltd v JH Minet & Co Ltd (1942) 74 LlLRep I 5.23 General Accident Fire & Life Assurance Corp Ltd v Midland Bank Ltd [1940] 2 KB 388 2.71, 2.72, 2.93 General Accident Fire & Life Assurance Corp v Tamer (The Zephyr) (1985] 2 Lloyd's Rep 529; [1984] I Lloyd's Rep 58 2.08, 2.14, 2.16, 2.19,2.20,2.21,2.27, 4.62,5.04,5.07,5.08,5.30,5.229

Glasgow Assurance Corp Ltd v Symondson (191 I) 27 TLR 245 2.42, 4.78 Gledsranes v Royal Exchange Assurance (1864) 5 B & S 797 2.34 Glen Line Ltd v Attorney-General (1930) 36 Com Cas I 22.36, 22.41 Glencore International AG v Alpina Insurance Co Ltd [2003] EWHC 2792 (Comm), [2004] Lloyd's Rep 11 I 2.39,2.40,4.64, 4.77, 4.93 Glencore International AG v Ryan (The Beursgracht) [2001] EWCA Civ 2051, [2002] I Lloyd's Rep 574 2.31, 2.32, 2.33, 2.35, 2.36, 2.39, 6.17 Glencore International AG v Ryan (The Beursgracbt) (No 2) [2001] 2 Lloyd's Rep 608 ... 2.31, 2.35,22.22 Glengate-KG Properties v Norwich Union Fire Insurance Society Ltd [1996] 1 Lloyd's Rep 614 3.39,3.50,3.55, 18.72 Glennie v London Assurance Co (1814) 2 M & S 371 21.52 Glicksman v Lancashire & General Assurance Co [1927] AC 139 .4.78 Globe & Rurgers Fire Insurance Co v Truedell [1927] 2 DLR 659 25.16 Gloria, The (1936) 54 LlLRep 35 15.21, 15.24, 19.33 Glowrange Ltd v CGU Insurance pIc, unrep, Comm Ct, 29 June 2001 15.49 GlynnvMargetson&Co [1893]AC351 8.21 Goddarr v Garrett (1692) 2 Vern 269 1.39, 3.04 Godin v London Assurance Co (1758) I Burr 489 26.QI, 26.03 Gold Sky, Tbe [1972] 2 Lloyd's Rep 187 15.20,15.21,15.25,24.14 Goldcorp Exchange Ltd, Re [1995] lAC 74 25.79 Goldschmidt v Marryat (1809) I Camp 559 1.59 Goldschmidt v Wbitmore (1811) 3 Taunt 508 11.59 Good Luck, The [1990] I QB 818 .4.203, 18.55, 18.56, 18.57, 18.58, 18.94,20.12 Gooding v Wbite (1913) 29 TLR 312 7.43 Goole & Hull Steam Towing Co Ltd v Ocean Marine Insurance Co Ltd [1928] 1 KB 589 23.21, 25.11, 25.69, 25.71 Gordon v Rimmington (1807) I Camp 123 10.66 Gordon v Street [1899] 2 QB 641 .4.148 Go" v Withers (1758) 2 Burr 683 13.46, 21.99 Goulsrone v Royal Insurance Co (1855) I F & F 276 3.50 Grace v Leslie & Godwin Financial Services Lrd [1995] CLC 801 5.41,5.60 Graham Joint Stock Shipping Co Ltd v Motor Insurance Co Ltd [1922] I KB 563 .. 1.59, 20.22 Graham v Belfast & Northern Counties Railway Co [1901] 2 IR 13 15.1 I Gtainget v Marrin (1862) 2 B & S 456 21.77

xlvi

xlvii

GabayvLloyd(l825)3B&C793 Gagliormella v Metropolitan Life Insurance Co 122 F Supp 246 (1954) Gale v Machell (1781) 2 DougI790n Galloway v Guardian Royal Exchange (UK) Ltd [1999] Lloyd's Rep IR 209

Table ofCases Grand Union (Shipping) Ltd v London Steamship Owners Mutual Insurance Association Ltd (The Bosworth (No 3)) [1962]1 Lloyd's Rep 483 24.69 Grant, Smith & Co & McDowell Ltd v Seattle Construction & Dry Dock Co [1920] AC 162 10.06 Gr.ntvKing (1802) 4 Esp 175 18.21 Grauds v Dearsley (1935) 51 LlLRep 203 11.45 Grayv Barr [197l] 2 QB 554 3.74,15.09 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (The Bunge Seroja) [1998] HCA65, [1999]1 Lloyd's Rep 512 10.07 Great Indian Peninsular Co v Saunders (1861) 2 B & S 266 24.27 Grear North Eastern Railway Ltd v Avon Insurance pic [2001] EWCA Civ 780, [2001J 2 Lloyd's Rep 649 8.22 6.22 Great Western Insurance Co v Cunliffe (1874) LR 9 Ch ApI' 525 4.85, Greci. Express, The [2002] EWHC 203 (Comm), [2002] Lloyd's Rep IR 669 4.169,7.40,7.41,7.46,14.27,15.18,15.79,24.02, 24.14, 24.16 10.06, 11.12, 11.13 Green Lion, The [1974] 1 Lloyd's Rep 593 Green v British India Stearn Navigation Co Ltd (The Matiana) [1921]1 AC 99; [1919J 2 KB 670 13.06 7.58,10.29 Green v Brown (1744) 2 Str 1199 Green v Elmslie (1794) Peake 278 , 9.37 Green v Pacific Mutual Life Insurance Co (1864) 91 Mass (9 Allen) 217 13.47 Green v Young (1702) 2 Salk 444 18.34 .4.07, 4.68, 4.101 Greenhill v Federal Insurance Co Ltd [1927J 1 KB 65 Greenock Steamship Co v Maritime Insurance Co Ltd [1903J 1 KB 367 18.115, 18.116,18.119 Griffen, Re [1899]1 Ch 408 20.28 Grill v General Iron Screw Collier Co (1866) LR 1 CP 600 9.22 22.76 Groom v Crocker [1939J 1 KB 194 Gronp Josi Re v Walbrook Insurance Co Lrd [1996]1 WLR 1152 " .. .4.09, 4.116, 4.124 Groupama Insurance Co Ltd v Overseas Panners Re Ltd [2003] EWHC 34 (Camm) '" .4.197 Grover & Grover Ltd v Mathews (1910) 15 Com Cas 249 2.14, 2.86 Gunns v Par Insurance Brokers [1997] 1 Lloyd's Rep 173 .455 H, Re [1996] AC 563 : 15.18 Hadenfayre Ltd v British National Insurance Society Ltd [1984] 2 Lloyd's Rep 393 18.28 Hadkinson v Robinson (1803) 3 Bos & Pul388 9.47 Hahn v Corbert (1824) 2 Bing 205 21.124 11.53, 13.47 Hai Hsuan, The [1958]1 Lloyd's Rep 351 Haigh v de Ia Cour (1812) 3 Camp 319 " 7.39 Hair v Prudential Assurance [1983] 2 Lloyd's Rep 7 4.104 Halhead v Young (1856) 6 E & B 312 3.12, 3.55 Hall Bros SS Co Ltd v Young [1939]1 KB 748 12.11 Hall v Hyman [1912]2 KB 5 1.49, 21.66, 21.74 Halvanon Insurance Co Ltd v Compania de Seguros do Estado de Sao Paulo (1995] LRLR 303 21.14 Ham v Somak Travel Ltd [1998] EWCA Civ 153 8.42 Hamilton, Fraser & Co v Pandorf & Co (1887) 12 App Cas 518; (1886) 17 QBD 670; (1885) LR 16 QB 629 10.06, 10.24, 10.52, 10.55, 10.56, 15.62, 15.63 Hamilton v Mendes (1761) 2 Burr 1198 21.99, 21.101 Hammond v National Life & Accident Insurance Co 243 So 2d 902 (1971), 54 ILR 522 13.23 Hammond v Reid (1820) 4 B & Aid 72 18.36 Hampshire Land Co, Re[1896]1 Ch 743 ,c 4.118 Hanak v Green [1958] 2 QB 9 , 6.27,20.25

Handelsbanken Norwegian Branch of Svenska Handelsbanken AB (PUBL) v Dandridge (The A1iza Glacial) [2002] EWCA Civ 577, [2002] 2 Lloyd's Rep 421 9.21,9.60, 13.62,13.72,13.75,13.76,13.78,13.79,13.83,15.41, 21.73,21.83 Hansson v Hamel & Horley Ltd [1922]2 AC 36 8.50 Harbutt's 'Plasticine' Ltd v Wayne Tank & Pump Co Ltd [1970] 1 QB 447 9.29 Harding Maughan Hambly Ltd v Compagnie Europeene de Courtage d'Assurances & de Reassurances SA [2000]1 Lloyd's Rep 316 5.75 Harding v Bussell [1905]2 KB 83 .. " . " . " 1.60,4.200 Hardy v Motot Insurers' Bureau [1964] 2 QB 745 3.73, 15.09 18.37 Hare v Travis (1827) 7 B & Cr 14 Hargreaves (B) Ltd v Action 2000 Lrd [1993] BCLC 1111 6.27 Harlow, The [1922] l' 175 12.16 Harman v Kingston (1811) 3 Camp 150 3.81 HarmanvVaux(1831)3Carnp429 10.81 Harmonides, The [1903] l' 1 21.77 20.33 Harrington Moror Co Ltd, ex I' Chaplin [1928] Ch 105 Harris v Polana [1941] 1 KB 462 10.64 Harris v Scaramanga (1872) LR 7 CP 481 24.52 Harrison v Douglas (1835) 3 A & E 396 4.165 Harrisons Ltd v Shipping Controller (The Inkonka) [1921]1 KB 122 9.05,13.10 Hart v Standard Marine Insurance Co Ltd (1889) 22 QBD 499 8.09 14.16 Hartford Fire Insurance Co v War Eagle Co 295 F 663 (1924) Harrleyv Buggin (1781) 3 Dougl39 18.27,18.40 Harvest Trucking Co Lrd v pB Davis [1991] 2 Lloyd's Rep 638 5.38,5.53 Hatch, Mansfield & Co Ltd v Weingort (1906) 22 TLR 366 25.37 17.32,17.35 Haughten v Empire Marine Insurance Co Ltd (1866) LR 1 Ex 206 Haywood v Rodgers (1804) 4 East 590 .4.150 Hearne v Edmunds (1819) 1 Brod & Bing 388 10.81 Heath Lambert Ltd v Sociedad de Corretaje de Seguros [2004] EWCA Civ 792, [2005] 6.10, 1 Lloyd's Rep 598; [2003J EWHC 2269 (Comm), [2004]1 Lloyd's Rep 495 6.30, 6.33, 6.35, 6.37 Hedburg v Pearson (1816) 7 Taunt 154 21.52 4. I79 Hedley Byrne & Co Ltd v Heller & Partners Lrd [1964J AC 465 Hedley v Pinkney & Sons Steamship Co Ltd [1894] AC 222 19.03 Heilbut, Symons & Co v Buckleton [1913J AC 30 ., 4.179 Heintich Hirdes GmbH v Edmund [1991]2 Lloyd's Rep 546 17.47 Helicopter Resources Pty Ltd v Sun Alliance Australia Ltd (The kebird) (1991) 312 LMLN 5.33,15.55,17.13 Hellenic Dolphin, The [1978J 2 Lloyd's Rep 336 19.41 Helmsville Ltd v Yorkshire Insurance Co Ltd (The Medina Pdncess) (1965] 1 Lloyd's Rep 361 23.21 Helstan Securities Ltd v Hertfordshire County Council (1978] 3 All ER 262 20.27, 20.28 Henderson v Merrert Syndicates Ltd [1995]2 AC 145 1.18, 5.15, 5.42 Henderson v Underwriting & Agency Association Ltd [1891J 1 QB 557 1.60 Henkle v Royal Exchange Assurance Co (1749) 1 Yes Sen 317 6.04, 8.81, 8.91 9.55, 10.16, 13.41 Henry & MacGregor v Marten (1918) 34 TLR 504 8.48 Heritage Insurance Services Lrd v Rotch Properry Group Ltd [2003J NpC 100 (Ch) 21.79 Herne v Bay (1842), umep Herting v Janson (1895) 1 Com Cas 177 7.28 Heselron v Allmm (1813) 1 M & S 46 18.37 4.100 Hewitt Bros v Wilson [1915] 2 KB 739 Hewitt v London General Insurance Co Ltd (1925) 23 LlLRep 23 18.115, 18.116, 18.121 Heyman v Darwins Ltd [1942] AC 356 18.57

xlviii

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Table ofCases

Table ofCases Hibernia Foods plc v McAuslin General Accident Fire & Life Assurance Corp pic (The Joint Frost) [1998J 2L1oyd's Rep 310 Higgins v Dawson [1902J AC 1

,.

17.18 8.51

Highlands Insurance Co v Continental Insurance Co [1987] 1 Lloyd s Rep 109 4.144, 4.161 HIH Casualty & General Insurance Ltd v AXA Corporate Solutions (2002) EWCA Civ 1253, [2003J Lloyd's Rep IR 1 18.94,18.95 HIH Casualty & General Insurance Ltd v Chase Manhattan Bank [2003J UKHL 6, [2003J 2 Lloyd's Rep 61; [2001] EWCA Civ 1250, [2001] 2 Lloyd's Rep 483; [2001J 1 Lloyd's Rep 30 2.42, 2.65, 2.68, 4.01, 4.22, 4.100, 4.110, 4.129, 4.182, 5.63 BIB Casualty & General Insurance Ltd v New Hampshire Insurance Co [2001] EWCA Civ735, [200IJ 2 Lloyd's Rep 161 ······· .8.21, 8.64, 8.69, 8.73, 8.76,18.62 HIH Casualty & General Insurance Ltd v Waterwall Shipping Inc (1998) 146 9.30, 15.43 FLR 76 8.32 Hillas & Co Ltd v Arcos Ltd (1932) 43 LlLRep 359 Hindustan Steam Shipping Co v Admiralty (1921) 8 LlLRep 230 13.08

Hine Bros v Steamship Insurance Syndicate Ltd (1895) 72 LT 79

22.116

Hiscox Underwriting Ltd v Dickson Manchester & Co Ltd [2004J EWHC 479 (Comm), [2004J 2 Lloyd's Rep 438 2.64 Hitchman v Stewett (1855) 3 Drew 271 26.61 Hobbs v Hannam (1811) 3 Camp 93 11.44 Hobbs v Marlowe [1978J AC 16 25.01, 25.14, 25.75 Hoffman (C) & Co v British General Insurance Co (1922) 10 LlLRep 434 19.04, 19.51 11.69 Holm v Rice (1981) 124 DLR (3d) 463 Holmes & Sons Ltd v Merchants' Marine Insurance Co Ltd (The Nefeli) [1919] 1 KB 383 24.75 Homburg Houtimport BV v Agtosin Ptivate Ltd (The Starsin) [2003J UKHL 12, [2004J 1 AC 715 8.20, 8.50 Home Insutance Co of New Yotk v Gavel (1928) 30 LlLRep 139 18.84 Hood v West End Motot Cat Packing CO [1917J 2 KB 38 5.20, 18.120

Hood's Trustees v Southern Union General Insurance Co of Australia Ltd [1928] Ch 793 20.33 Hooley Hill Rubbet & Chemical Co Ltd, Re [1920J 1 KB 257 10.60 Hopewell Ptoject Management Ltd v Ewbank Pteece Ltd [1998J 1 Lloyd's Rep 448 5.63 Hore v Wbitmore (1778) 2 Cowp 784 ., 18.93 15. I 8 Homal v Neubetget Ptoducts Ltd [1957J 1 QB 247 Homcastle v Stuart (1806) 7 East 400 17.39 Horne v Prudential Assurance Co Ltd 1997 SLT (Sh Ct) 75 , 20.59 Hotty v Tate & Lyle Refineries Ltd [1982J 2 Lloyd's Rep 416 .4.51 Horsc, Carriage & General Insurance Co Ltd v Petch (1917) 33 TLR 131 25.43 HorsIer v ZortO [1975J Ch 302 , ' 4.04 HoughvHead(1885)55LJQB43 21.11 Houghton (RA) & Mancon Ltd v Sunderland Marine Mutual Insurance Co Ltd (The Ny-Eeasteyr) [1988J 1 Lloyd's Rep 60 ·····.·· .11.12, 11.13, 11.63, 15.18 Houghton v TrafalgarInsurance [1954J 1 QB 247 8.51 Household Global Funding Inc v Btitish Gas Trading Ltd [20011 EWHC 400 (Ch) 8.29 Houstman v Thornton (1816) Holt 242 22.36

Howard Marine & Dredging Co Ltd v Ogden & Sons (Excavations) Ltd [1978) QB 574 Howard v Pickfotd Tool Co Ltd [1951] 1 KB 417 Hucks v Thornton (1815) Holt 30 Hudson v Hattison (1821) 3 Biod & B 97 Hughes v Asset Managets pIc [199513 All ER 669 Hughes v Pump House Hotel [1902J 2 KB 190 Hull v Coopet (1811) 14 East 479 Hummingbird Motors Ltd v Hobbs [1986J KfR 276

························· .4.182 , ················· .26.53 11.57,17.06 22.60 3.71 ·· .. ················ .20.13 ; 18.22, 18.23 .4.136

Hunt v Royal Exchange Assurance (1816) 5 M & S 47

,

22.56

Hunter v Northern Marine Insurance Co Ltd (1888) 13 App Cas 717

17.09

Hunter v Potts (1815) 4 Camp 203 Hurtell v Bullard (1863) 3 F & F 445 Hurry v Royal Exchange Assurance Co (1801) 2 Bos & Pul430 Hussain v Btown [1996J 1 Lloyd's Rep 627 Hutchins Btos v Royal Exchange Corp [1911J 2 KB 398

15.63 5.37 17.13 18.29, 18.79 11.19

Hydarnes SS Co v Indemnity Mutual Marine Assurance Co [1895] 1 QB 500 Hyde v Bruce (1782) 3 Doug1213 Hyderabad (Deccan) Co v Willoughby [1899J 2 QB 530

17.45

18.70,18.71 18.45, 18.115, 18.119

Icebird, Tbe (1991) 312 LMLN 5.33 IF P&C Insutance Ltd (Publ) v Silversea Cruises Ltd [2004J EWCA Civ769, [2004J Lloyd's 3.53, 8.90, 9.28, 9.43,13.42,14.18 Rep IR696 Ikarian Reefet, The [1993J 2 Lloyd's Rep 68 10.65, 11.63, 15.18, 15.22 Iketigi Compania Navieta SA v Palmer (The Wondrous) [199212 Lloyd's Rep 566; [1991J 1 Lloyd's Rep 400 3.11, 3.54, 7.59, 8.57,13.49,13.50,13.73,13.76, 13.82, 13.83, 15.Q7, 24.27

Imperial Marine Insurance Co v Fire Insurance Corp (1879) 4 CPD 166 Inchmaree, Tbe (1887) 12 App Cas 484 .. ,

2.34 10.18, 10.24, 11.01

India v India Stcamship Co Ltd (The Indian Endurance & The Indian Grace) (No 2) [19981 AC 878 , Indian Endutance, The & Indian Grace, The (No 2) [1998J AC 878

'

8.58,24.45 8.58,24.45

Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries [1977J QB 580 ... 4.51 Inglis v Stock (1885) 10 App Cas 263 2.39, 3.43 9.05,13.10 Inkonka, The [1921] 1 KB 122 Insurance COtp of tbe Channel Islands v McHugh [1997J LRLR 94 .4.156, 22.70 Insurance Corp of the Channel Islands v Royal Hotel Ltd [1998J Lloyd's Rep IR 151 .4.56, 4.164

Integrated Containers Service Inc v British Traders Insurance CO [1984J 1 Lloyd's Rep 154 21.13, 24.23, 24.26, 24.31, 24.32, 24.35 International Lottety Management v Dumas [2002J Lloyd's Rep IR 237 .. .4.112,4.136, 4.137

International Management Group (UK) Ltd v Simmonds [2003] EWHC 177 (Comm), [2004j 1 Lloyd's Rep 476

.4.23, 4.57, 4.63, 4.79, 4.205

Interpart Comerciao e Gestao SA v Lexington Insurance Co [2004] Lloyd's Rep IR 690

22.93

Inversiones Manria SA v Sphere Drake Insurance Co pIc (The Dora) [19891 1 Lloyd's Rep 69

.4.70, 4.71, 4.85, 4.90, 4.127, 7.38, 7.45, 7.47

Investors Compensation System Scheme Ltd v West Bromwich Building Society [1998] I WLR 896 ' 8.03,8.04, 8.Q7, 8.09, 8.37, 8.39, 8.40, 8.45, 8.48, 8.49, 9.04 Ionides v Pacific Fite & Marine Insurance Co (1871) LR 6 QB 674 2.08, 2.21, 2.39, 2.42,4.135,4.141, 8.75, 8.76, 8.82 Ionides v PendetCI874) LR 9 QB 531 .4.66, 7.38, 7.42 5.53,9.37,9.40, Ionides v Universal Marine Insurance Co (1863) 14 CB(NS) 259 13.08, 13.Q9, 13.57 Itaqi Ministty of Defence v Arcepey Shipping Co SA (The Angel Bell) [I979J 2 Lloyd's Rep 491 20.01,20.19 Ireland v Livingston (1872) LR 5 HL 395 5.24

Iron Trades Mutual Insurance Co Ltd v Companhia de Deguros Imperio [1991] 1 Re LR 213 Irvin v Hine [1950J 1 KB 555 Irving v Manning (1847) 1 HLC 287 Irving v Richatdson (1831) 2 B &Ad 193 Isaacs v Royal Insutance Co (1870) LR 5 Ex 296

Ii

.4.165,4.195 21.53, 23.15, 23.23, 24.37 6.27,7.27,21.79 3.46, 26.22 17.47

Table ofCases

Table ofCases

Issaias (Elfie A) v Marinelnsurance Co Lrd (1923) 15 LlLRep 186 10.16, 11.61, 11.62, 11.63, 15.18, 15.22, 15.24 Iralia Express, The (No 2) [1992J Lloyd's Rep 281 , 6.27,22.67,22.121

Kacianoffv China Traders Insurance Co Ltd [1914] 3 KB 1121 951,9.52,9.53 Kallis (George) Manufacmrers Ltd v Success Insurance Ltd [1985] 2 Lloyd's Rep 8 (PC) ., .18.11 Kaltenbach v Mackenzie (1878) 3 CpD 467 ··.·········· .22.32, 22.33, 22.34 Kammins Ballrooms Co Ltd v Zenirh Investments (Torquay) Ltd [1971] AC 850 .4.164 4.164 Kanchenjunga, The [1990J 1 Lloyd's Rep 391 Kapitan Petko Voivoda, The [2003] EWCA Civ 451, [2003] 2 Lloyd's Rep 1; [2002J EWCA 1306 (Comm), [2002] 2 All ER (Comm) 560 8.21 Karen Oltmann, The [1976J 2 Lloyd's Rep 708 , 858 Kastor Navigation Co Ltd v Axa Global Risks (UK) Ltd (The Kastor Too) p004J EWCA Civ 277, [2004]2 Lloyd's Rep 277 21.36,21.106,21.120,21.121, 21.124,21.125,22.32,22.33,22.34,22.35,22.55

Kastor Too, The [2004] EWCA Civ 277, [2004]2 Lloyd's Rep 277 21.36,21.106, 21.120,21.121,21.124,21.125,22.32,22.33,22.34,22.35,22.55 Kausar v Eagle StarInsurance Co Ltd (1996) [2000] Lloyd's Rep IR 154 .4.157, 18.28,18.29 Kawasaki Kisen Kabushiki Kaisha of Kobe v Bantham Steamship Co Ltd [1939] 2 KB 544 8.09, 13.19, 13.22 Keevil & Keevil Ltd v Boag [1940] 3 All ER 346 1.59 Keighley, Maxred & Co v Durant [1901] AC 240 2.87 Keir v Andrade (1816) 6 Taunt 498 3.77 Kelly v Norwich Union Fire Insurance Society Ltd [1989] 2 Lloyd's Rep 333 7.53, 11.22,2Ll9 Kelner v Baxted1866) LR 2 CP 174 2.89 Kennedy v Panama, New Zealand & Australian Royal Mail Co Ltd (I 867) LR 2 QB 580 , .4.03 Kent v Bird (1777) 2 Cowl' 583 3.06 Kenyon v Berthon (1778) 1 DougI12n 18.90 Kerr v Ayr Steam Shipping Co Ltd [1915] AC 217 .7.52 Kewley v Ryan (1794) 2 HBI 343 18.37 Khan v Ahbey Life Assurance Co [2002] NpC 5 22.93 Khedine, The (1882) 7 ApI' Cas 795 12 Kldston v Empire Marine Insurance Co (1866) LR 1 CP 535 24.29 King (or Fiehl) v Chambers & Newman (Insurance Brokers) Ltd [1963] 2 Lloyd's Rep 130 5.26,5.56 King v Brandywine Reinsurance Co (UK) Lrd [2005] EWCA Civ 235, [2005]1 Lloyd', Rep 655; [2004] EWHC 1033 (Comm), [2004] 2 Lloyd's Rep 670 8.1 1,9.62,24.26 King v Vicroria Insurance Co Ltd [1896] AC 250 25.15, 25.26, 25.76 Kingscroft Insurance Co Ltd v Nissan Fire & Marine Insurance Co Ltd (No 2) [1999J . Lloyd's Rep IR 603 .4.94, 4.118, 4.119 Kingsford v Marshall (1832) 8 Bing 458 10.81 Kingston v Phelps, cited (1795) 7 TR 165 18.37 Kiriacoulis Lines SA v Compagnie d'Assurances Maritimes Ariennes et Terrestres (CAMAT) (The Demetra K) [2002] EWCA elv 1070, [2002] 2 Lloyd's Rep 581 8.78,8.80, 8.90, 10.65 Kirkaldy (J) & Sons Ltd v Walker[1999] Lloyd's Rep IR 410 8.52,8.53, 18.62, 18.63, 18.94, 18.96 KJS Merc~Scandia XXXXII v Certain Lloyd's Underwriters (The Mercandian Continent) [2001] EWCA elv 1275, [2001] 2 Lloyd's Rep 563 .4.195, 4.197, 4.198, 22.22, 22.89, 22.94, 22.97, 22.114 Kish v Taylor Sons & Co [1912] AC 604 18.53 Kleinwort v Shepard (1859) lEI & E1447 13.47 Kleovoulos of Rhodes, The [2003] EWCA Civ 12, [2003J 1 Lloyd's Rep 138 8.12, 8.60, 13.71, 13.75, 13.83 Kler Knitwear Ltd v Lombard General Insurance Co Ltd [2000] Lloyd's Rep IR47 18.79, 18.109 Knight ofSt Michael, The [1898] I' 30 9.52,10.60 Knight v Cambridge (1724), cited (1743) 2 Str 1173 11.56 21.27, 21.30, 21.117, 23.19 Knight v Fairh (1850) 15 QB 649 Knox v Wood (1808) 1 Camp 543 3.10 Koch Marine Inc v D'Amica Societa Di Navigazione ARL (The Elena D'Amico) [1980] 1 Lloyd's Rep 75 24.11 Koebel v Saunders (1864) 17 CB(NS) 71 , 19.61 Kopitoffv Wilson (1876) 1 QBD 377 19.16 Kulukkundis v Norwich Union Fire Insurance Society [1937] 1 KB 1 21.93 Kumar v AGF Insurance Ltd [1999] Lloyd's Rep IR 147 8.28

Iii

liii

6.27, 22.62 JabboudF & K) v Cusrodian of Israeli Absentee Properry [1954] 1 WLR 139 Jackson (John C) Ltd v Sun Insurance Office Ltd (1962) 38 WWR 294 10.81 Jackson v Greenfield [1998] BpIR 699 , , 20.41 JacksonvMumford(1902)8ComCas61 11.04, 11.07, 11.08, 11.10, 11.13 Jackson v North American Assurance Society of Virginia Inc 183 SE 2d 160 (1971), 54 ILR 525 , , , 13.23 Jackson v Union Marine Insurance Co (1874) LR 10 CP 125 9.58, 15.35,21.92,21.93 Jaglom v Excess Insurance Co Ltd [1972] 2 QB 250 2.14,2.15,8.54 James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC572 8.41 James v CGU Insurance pic [2002] Lloyd's Rep IR 206 , .455, 4.101, 15.18 James Yachts Ltd v Thames & Mersey Marine Insurance Co Ltd [1977] 1 Lloyd's Rep 206 1.61 Jamieson & Newcastle Steamship Freight Insurance Association, Re [18951 2 QB 90 9.58, 21.95 Janson v Driefomein Consolidated Mines Ltd [1902] AC 484 3.78 Jardine v Learhley (1863) 32 LJQB 132 22.34 JEB Fasreners v Marks, Bloom & Co [1983] I All ER 583 .4.41, 4.48 Jenkins v Deane(1934) 47 LlLRep 342 18.84, 26.16 Jenkins v Power (1817) 6 M & S 282 6.22,6.32 JJ Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyd's Rep 32; [1985] 1 Lloyd's Rep 264 9.23,10.06,10.08,15.49, 19.45,19.46,19.48,19.60 ····· .17.1 1,17.16 John Martin ofLondon Ltd v Russell [1960J 1 Lloyd's Rep 554 1852 John Potter & Co v Burrell & Son [1897] 1 QB 97 John v Price Waterhouse [2002] EWCA Civ 899 8.02, 8.34 Johnson & Co v Hogg (1883) 10 QBD 432 13.47 Johnson v Marshall, Sons & Co Ltd [1906] AC 409 15.11 Johnson v Sheddon (1802) 2 Easr 581 23.32 17.18 Joinr Frost, The[1998] 2 Lloyd's Rep 310 Jones v Bangor Mutual Shipping Insurance Sociery Ltd (1889) 61 LT 727 .4.165, 4.167 Jones v Neptune Marine Insurance Co (1872) LR 7 QB 702 17.45 Jones v Nicholson (1854) 10 Exch 28 , 11.48 Jones v Randall (1774) 1 Cowp 37 : 3.04 Joseph Watson & Son Ltd v Firemen's Fund Insurance Co of San FranClsco [1922] 2 KB 355 9.55 Joyce v Kennard (1870 LR 7 QB 78 23.51 Jumbo King Ltd v Faithful Properties Ltd [1999J 4 HKC 707 8.45

Table ofCases

Table ofCases Kusel v Atkin (The Catatiba) [1997] 2 Lloyd's Rep 749

21.111,21.114, 23.21,23.23

Kuwait Airways Corpv Kuwait Insurance Co SAK (No 1) [1997] 2 Lloyd's Rep 687; [l997J 2 Lloyd's Rep 687; [1996J 1 Lloyd's Rep 664 8.02, 8.18, 8.30, 8.43, 9.20,9.23,9.29, 13.47, 21.12, 21.47, 21.65, 24.27, 24.29, 24.71, 25.58,25.63 Kytiaki, The [1993J 1 Lloyd's Rep 137 22.66, 22.70, 23.39 Kyzuna Investments Ltd v Ocean Marine Mutual Insurance Association (Europe) [2000] Lloyd's Rep IR 513 7.31,7.35,7.36,7.37 La Fabrique de Produits Chimiques SA v Large [1923J 1 KB 379 10.69 2.42, 9.23,10.14 La Poinre, The [1986J 2 Lloyd's Rep 513 Lady Gwendolen, The [1965J P 294 ·····.········· .4.114 Lag>, The [1966J 1 Lloyd's Rep 582 14.06 Lagden v O'Conllor[2003J UKHL 64, [2004J 1 AC 1067 123 Laing v Glover (1813) 5 Taunr 49 18.71 L'Alsacienne Premiere Societe Alsacienne et Lorraine d'Assurances Contre l'Incendie Ies Accidents et les Risques Divers v Unistorebrand International Insurance SA [1995] Lloyd's Rep IR 333 2.65 Lamb Head Sbipping Co Ltd v Jennings (The Marel) [1994J 1 Lloyd's Rep 624; [1992J 1 Lloyd's Rep 402 7.51, 10.06, 10.30, 10.37, 10.41, 10.42 Lambert v Co-operative Insurance Society Ltd [1975] 2 Lloyd's Rep 485 4.07 Lambert v Liddard (1814) 5 Taunt 480 17.08 Lanasa Fruit Steamship & Importing Co Inc v Universal Insurance Co 302 US 556

(1~...................··················15~ Lancasbire County Council v Municipal Insurance Ltd [1997] QB 897 8.32,8.53, 12.12 18.89, 19.28, 19.63 Lane v Nixon (1866) LR 1 CP 412 8.21, 9.27, 24.22 Lane (W &j) vSptatt [1970J 2QB480 Lang v Andetdell (1824) 3 B & Cr 495 17.09, 18.88 Langdale v Mason (1780) 1 Bennett's Fire Insurance cases 16, (1780) 2 Park on Imurance965 13.33, 14.15 Langhom v Cologan (1812) 4 Taunt 330 6:02 13.23 Langlas v Iowa Life Insurance Co 63 NW 2d 885 (1954), 21 ILR 416 Lapwing, The [1940] P 112 ···· .10.14,10.25,11.39 Laroche v Oswin (1810) 12 East 133 18.29 Laurie v West Hardepool Steamship Thirds Indemnity Association (1899) 15 TLR486 20.12, 20.28 Laveroni v Drury (1852) 22 LJ Ex 2 10.24 21.54, 22.33 Lavington Court, The [1945] 2 All ER 357 Law Guarantee Trust & Accident Society Ltd v Munich Reinsurance Co (1915) 31 TLR 572 2.42 Lawrence v Aberdein (1821) 5 B & Ald 107 8.51 , " ,9.06,9.60 Lawrence v Accidental Insurance Co Ltd (1881) 7 QBD 216 Le Cheminant v Pearson (1812) 4 Taunt 367 ., "" " "., 21.111 Le Crasv Hughes (1782) 3 Doug 81 3:21 Ledingham v Ontario Hospital Services Commission (1979) 46 DLR (3d) 699 25.51, 25.52 Leduc & Co v Ward (1888) 20 QBD 475 18.01 ,, ", , , ' , .. 24.39 Lee v Southern Insurance Co (1870) LR CP 397 ,. " . , Leegas, The [1987J 1 Lloyd's Rep 471 2.50, 2.59 Lefevre v White [1990J 1 Lloyd's Rep 569 20.69, 20.71, 20.72 Legal & General Assurance Society Ltd v Drake Insurance Co Ltd [1992] QB 887 26.10, 26.42,26.45,26.48,26.50,26.51,26.52,26.53,26.60 Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 .: 8.21,9.27 Legge v Byas, Mosley & Co (190 I) 7 Com Cas 16 22.116

liv

Lek v Mathews (1927) 29 LlLRep 141 22.78, 22.85, 22.88 Lemos v British & Foreign Marine Insurance Co Ltd (1931) 39 LlLRep 275 15.22,15.24 Lennard's Carrying Co v Asiatic Petroleum Co Ltd [1915] AC 705 .. , " , .. , .. ,.4.113 Leon v Casey [1932J 2 KB 576 1.59,1.60,4.200 Leonita, The (1922) 13 LlLRep 231 15.23, 15.24 10.81 Letchford v Oldham (1880) 5 QBD 538 10.15 Letts v Excess Insurance Co (1916) 32 TLR 361 Levin v Allnutt (1812) 15 East 267 13.60 , , .. " 14.15 Levy v Assicurazioni Generali [1940] AC 791 .. , Lewis v Gteat Western Railway Co (1877) 3 QB 195 15.11 7.26,23.29,23.32 Lewis v Rucker (1761) 2 Burr 1167 Lewis v Tressider [1985J 2 QdR 533 5.20,5.21,5.37,5.50 Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350; [1917J 1 KB 873 9.08, 9.12, 9.14, 9.21, 9.35, 9.44, 9.56,10.15,10.60, 15.16,15.35,15.57,15.63,15.72, 19.41, 19.42 Liberian Insurance Agency Inc v Mosse [l977J 2 Lloyd's Rep 560 .4.68, 4.167, 18.115,18.117,18.121,18.122,18.126 Lidgett v Secretan (1870) LR 5 CP 190 17.33 7.25,7.27,7.39,21.120,23.21 Lidgett v Secretan (No 2) (1871) LR 6 CP 616 Lind v Mitchell (1928) 45 TLR 54 11.39, 24.21, 24.24 Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 ." ... , .. , .. 20,14, 20.27,20.28 Lindsay Blec Depots v Motor Union Insurance Co (1930) 46 TLR 572 " , 17.11 Lindsay v Klein (The Tatjan.) [1911J AC 194 19.54 22.121 Lips, The [1988] AC 395 4.123,4.200,4.203,6.41, 18.120,20.22, Litsion Pride, The [1985J 1 Lloyd's Rep 437 22.35,22.52,22.88,22.113 Liverpool & Londo,n War Risks Association Ltd v Ocean Steamship Co Ltd (The Priam) [l948J AC 243 13.14, 13.16, 13.53 Liverpool & London War Risks Insurance Association Ltd v Marine Underwriters of SS Richard de Larringa [1921] 2AC 141 13.10,13.11 Livie v Janson (1810) 12 East 648 9.40, 21.116, 21.117, 21.119 Lloyd v Fleming (1872) LR 7 QB 299 20.1 0 Lloyd's & Scottish Finance Ltd v Modern Cars & Caravans (Kingston) Ltd [1966] 1 QB 764 24.26 Lloyds TSB General Insurance Holdings v Lloyds Bank Group Insurance Co Ltd [2001] EWCA Civ 1643, [2002J Lloyd's Rep IR 113 9.04, 9.60 .4.20 Load v Green (1846) 15 M & W 216 LockyervOfHey(l786) 1 TR252 19.20,21.27 Loders & Nicoline Ltd v Bank of New Zealand (1929) 33 LlLRep 70 21.89 Lohre v Aitchison (1878) 3 QBD 558 21.38, 21.107, 23.18 London & Lancashire Fire Insurance Co Ltd v Bolands Ltd [1924] AC 836 , , 8.12, 14.13,14.14 London & Manchester Plate Glass Co v Heath [1913] 3 KB 411 14.16 , .. 21.25, 21.28 London & Provincial Leather Processes Ltd v Hudson [1939] 2 KB 724 London & Provincial Marine & General Insurance Co Ltd v Chambers (1900) 5 Com Cas241 1.59 London Assurance Co v Sainsbury (1783) 3 Doug 245 ' , , .. , , , 25.14 London Assutance v Mansel (1879) 11 ChD 363 .4.112 London Borough of Bromley v Ellis [1971] 1 Lloyd's Rep 97 5.39 London, Chatham & Dover Railway Co v South Eastern Railway Co [1893] AC 429 6.14 London County Commercial Reinsurance Office Ltd [1922J 2 Ch 67 1.56, 3.11, 3.16 London General Insurance Co v General Marine Underwriters Association [1921 J I KB 104 4.96,4.117

Iv

Table ofCases

Table ofCases

MIS Aswan Engineering Establishment Co Ltd v Iron Trades Mutual Assurance Co Ltd [1989] 1 Lloyd's Rep 289 8.07,8.54,8.57 Mac, The (1882) 7 PD 126 .. " , , 12.16 3.32, 3.33, 3.36, 3.46, Macaura v Northern Assurance Co Lrd [1925] AC 619 3.47,3.50,3.60 Macbeth & Co Ltd v Maritime Insurance Co Ltd [1908) AC 144 , 21c74 McCormick v National Motor & Accident Insurance Union Ltd (1934) 49 LlLRep 361 " .4.164, 4.167, 20.56 McCowin Lumber & Export Co Inc v Pacific Marine Insurance Co Ltd (1922) 38TLR901 22.117 MacDowell v Fraser (1779) 1 Dougl 260 , .4.06, 4.131 19.23, 19.29 McFadden v Blue Star Line [1905J 1 KB 697 Mackay v London General1nsurance Co Ltd (1935) 51 L1LRep 201 18.91 Mackender v Feldia AG (1967) 2 QB 590 4.156, 18.84 " " .8.77, 8.81 Mackenzie v Coulson (1869) LR 8 Eq 369 Mackenzie v Shedden (1810) 2 Camp 431 17.39 Mackenzie v Whitworrh (1875) 1 Ex D 36 3.69 MacMillan v AW Knorr Becker Scott Ltd [1990] 1 Lloyd's Rep 98 5.06 McNealy v Pennine Insurance Co Lrd [1978] 2 Lloyd's Rep 18 5.03,5.25 McNeil v Law Union & Rock 1nsurance Co Lrd (1925) 23 LlLRep 314 5.75 Magnus v Burremer (1852) 11 CB 876 · ·· .. ······· .10.12, 10.25 " 7.28,21.86,23.36 Main, The (1894) P 320 Mains v London Assurance (1935) 52 LlLRep 211 15.23 Maira, The (No 2) [1986) 2 Lloyd's Rep 12 7.25,7.29 Malbi v Ahhey Life Assurance Co Ltd [1996] LRLR 237 .4.64 Mallett v McMonagle [1970] AC 166 " 5.53 Mallough v Barber (1815) 4 Camp 150 : 5.25,5.50 Mammorh Pine, The [1986] 3 All ER 767 24.26

Manchester Liners Ltd y British & Foreign Marine Insurance Co Ltd (1901) 7 Com ~U·····...........353 Mancomunidad del Vapor Frumiz v Royal Exchange Assurance [1927] 1 KB 567 12.08 Mandarin Star, The [1969] 2QB 449 10.69, 14.20, 14.25 Man~ervCommercia1 Union Assurance Co [1998] Lloyd's Rep IR93 2.58, 2.59 Mamfest Shipping Co Ltd v Uni~Polaris Insurance Co Ltd (The Star Sea) [2001J UKHL 1, [2003] 1 AC 469; [1997] 1 Lloyd's Rep 360; [1995] 1 Lloyd's Rep 651 1.59, 1.60,4.14,4.195,4.199,4.202,4.204,10.65,10.80, 19.04, 19.06, 19.08, 19.34,19.35,19.36,19.37,19.39,19.40,19.46,19.47, 19.48,22.80,22.89, 22.102,22.106,22.107,22.108,22.113 Mann Macneal & Steeves Ltd v Capital & Counties Insurance [1921] 2 KB 300 4.103 Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] Ac 749 8.09, 8.26,8.48 Maori King, The [1895] 2 QB 550 19.13 .4.53, 4.57, 4.65, 4.77, 22.107 Marc Rich & CoAG v Portman [1996) 1 Lloyd's Rep 430 March Cabaret Club & Casino Ltd v London Assurance [1975] 1 Lloyd's Rep 169 4.85, 4.86,4.87 Mate v Charles (1856) 5 E & B 978 8.32 Marel, The [1994J 1 Lloyd's Rep 624; [1992] 1 Lloyd's Rep 402 7.51, 10.06, 10.30, 10.37,10.41,1Q.42 Margetts & Ocean Accident Guarantee Corp, Re [1901] 2 KB 792 '" .12.16 Madanela, The (1922) 13 L1LRep 126 15.24 Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd [1953] 1 Lloyd's Rep 514 12.16 Maritime Insurance Co v Allianza Insurance Co of Santander (1907) 13 Com Cas 46 17.10 Maritime Insurance Co v Stearns [1901] 2 KB 912 18.07,18.114 Maritime Transport Overseas GmbH v Unitramp (The Antaios) [1981] 2 Lloyd's Rep 284 6.41 Mark Rowlands Ltd v Berni 1nns Ltd [1986] 1 QB 211 , .. 3.30,25.25,25.32 Markel International Insurance Co Ltd v La Republica Campania Argentina de Seguros [2004] EWHC 1826 (Comm), [2005] Lloyd's Rep 1R 90 4.69 Marsden v Reid (1803) 3 East 572 4.62, 18.36 Marsttand Fishing Co Ltd v Beer (The Girl Pat) [1937] 1 All ER 158 21.65, 21.66, 21.102,21.106 17.37 Marten v Vestey [1920) AC 307 Martin Maritime Ltd v Provident Capital Indemnity Fund Ltd (The Lydia Flag) [1998] 2 Lloyd's Rep 652 9.25,19.57 Martin P, The [2003] EWHC 2158 (Comm), [2004] 1 Lloyd's Rep 389 2.82, 3.27, 3.36,3.49,4.74,4.76,4.88,4.104,4.107,4.197,6.37, 26.31, 26.34, 26.38, 26.39,26.41,26.50,26.53,26.55,26.69,26.72,26.80,26.82 Martin v Sitwell (1691) 1 Show KB 156 1.39, 6.05 Mason v Sainsbury (1782) 3 Dougl61 25.02,25.75 5.77 Maspons y Hermano v Mildred, Goyeneche & Co (1883) 8 App Cas 874 Mata Hari, The [1983] 2 Lloyd's Rep 449 8.91 Matiana, The [1921] 1 AC 99; [1919] 2 KB 670 13.06 17.13 Marthie v Potts (1802) 3 Bos & Pul 23 Matvieff v Crosfield (1903) 8 Com Cas 120 22.117 Mayban General Assurance Bhd v Alstom Power Plants Ltd [2004] EWHC 1038 (Comm), [2004] 2 Lloyd's Rep 609 10.79,15.53,15.54 Mayor, &c, of Boston v France Fenwick & Co Ltd (1923) 28 Com Cas 367 22.48 Mazarakis Bros v Furness, Withy & Co (1923) 17 LlLRep 113 13.12 M'Carthy v Abel (1804) 5 East 388 21.91 MDIS v Swinbank [1999] Lloyd's Rep 1R 516 21.15 M'Dougle v Royal Exchange Assurance Co (1815) 4 Camp 283 10.81

Ivi

Ivii

London Guarantee Co v Fearnley (1880) 5 App Cas 911 22.14,22.15 London Steamship Owners Mutual Insurance Association Ltd v Bombay Trading Co Ltd (rhe Felicie) [1990J 2 Lloyd's Rep 21n 20.70,20.72 Long v Allan (1785) 4 Dougl276 " 6.04 Lonhro Exports Ltd v Export Credits Guarantee Department [1999] Ch 158 25.80 Lonsdale & Thompson Ltd v Black Artow Group pic [1993) 3 All ER 648 3.31 Loraine v Thomlinson (1781) 2 Dougl585 6.04 Lordsgate Properties v Balcombe [1985) 1 EGLR 20 5.75 · ······················ .18.64 Lothian v Henderson (1803) 3 Bos & PuI499 Lowe & Sons v Dixon & Sons (1885) 16 QBD 455 26.61 Lozano v Janson (1859) 2 EI & BI160 13.47, 21.50, 21.101 Luhbock v Rowcroft (1803) 5 Esp 50 9.48 Lucena v Craufurd (1803) 2 Bos & Pul (NR) 269 3.04,3.07,3.21,3.22,3.23,3.24, 3.30,3.40,3.41,3.47,3.55 Luckie v Bushby (1853) 13 CB 864 , 6.27 Lucy, The [1983] 1 Lloyd's Rep 188 .4.04, 4.51 Luke v Lyde (1759) 2 Burr 882 1.41 Lumbermens Murual Casualty Co v Bovis Lend Lease Ltd [2004] EWCA 2197 (Comm), [2005] 1 Lloyd's Rep 494 21.15, 21.16 Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 8.62 Lydia Flag, The [1998] 2 Lloyd's Rep 652 : 9.25, 19.57 Lynch v Dunsford (1811) 14 East 494; sub nom Lynch v Hamilton (1810) 3 Taunt 37 .4.84 Lynch v Narional Life & Accidentlnsurance Co 278 SW 2d 32 (1955) 13.23 Lyons v JW Bendey Ltd (1944) 77 L1LRep 335 5.31 Lysaght (J) Ltd v Coleman [1895] 1 QB 49 21.05

Table afCases

Table

Mead v Davison (1835) 3 A & E 303 3.13,3.65 Medina Princess, The [1965] 1 Lloyd's Rep 361 23.21 Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1993] 1 Lloyd's Rep 257 19.13,19.43 Melanesian Mission Trust Board v Australian Mutual Provident Society [1996] UKPC 53, (1997) 74 p & CR297 8.08, 8.52 Mellish v Andrews (1812) 15 East 13 21.24 Mentz, Decker & Co v Marlrimelnsurance Co [1910] 1 KB 132 18.!!6, 18.119, 18.123 Mercandlan Continent, The [2001] EWCA Civ 1275, [2001] 2 Lloyd's Rep 563 4.195, 4.197,4.198,22.22,22.89,22.94,22.97,22.114 Mercantile Marine Insurance Co v Titherington (1864) 5 B & S 765 . , .. , .. 8.20, 17.30, 17.36 Mercantile Steamship Co Ltd v Tyset (1881) 7 QBD 73 9.58 Merchants & Manufacturers Insurance Co Ltd v Hunt [1941] 1 KB 295 4.14, 4.175 Merchants Marine Insurance v North of England Protecting & Indemnity Association (1926) 26 LlLRep 201 12.16 Merchants Trading Co v Universal Marine Co (1870) (1874) 2 Asp MC 431n 10.06 Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 .4.113, 4.!!4 Merrett v Capltollndemnlry COtp [1991] 1 Lloyd's Rep 169 25.41 Metropolitan Police Commissioner v Caldwell [1982] AC 341 14.24 Meunier, Re [1894] 2 QB 415 14.29 Meyer v Gtegson (1784) 3 Dougl 402 6.04 Meyer v Ralll (1876) 1 CPD 358 9.57 Miceli v Union Marine & General Insurance Co Ltd (1938) 60 LlLRep 275 7.51 Michael, The [1979] 1 Lloyd's Rep 55 11.62, 11.64,22.88 Michael v Gillespy (1857) 2 CB(NS) 627 . 17.06 Michael v Tredwln (1856) 17 CB 551 19.30 Michael v Valentine (1923) 16 LlLRep 244 5.38 Michalos (N) & Sons Maritime SA v Prudential Assurance Co Ltd (The Zinovia) (1984) 2 Lloyd's Rep 264 10.16, 11.62, 11.63,15.18 Micklefield v Hepgln (1793) 1 Anst 133 3.04 Micklefield v SAC Technology Ltd [1990] 1 WLR 1002 8;33 Middleton v Pollock (1875) LR 20 Eq 29 6.27 Midland Mainline Ltd v Eagle Star Insurance Co Ltd [2004] EWCA Civ 1042, [2004] 2 Lloyd's Rep 604; [2003J EWHC (Comm) 1771, [2004J Lloyd's Rep IR 22 9.41, 9.43, 15.49 Mllasan, The [2000] 2 Lloyd's Rep 458 , .. 7.57,10.30,15.22 Millet, Glbb & Co Ltd, Re [1957] 1 WLR 703 25.15, 25.76 Miller v Law Accidentlnsurance Co [1903] 1 KB 712 '" 9.50, 13.49, 13.50 Miller v Woodfall (1857) 8 El & Bl493 22.37, 22.40 MilIesvFletcher(1779) I Dougl231 21.101 Minden, The [1942] AC 50 7.03,9.53, 10.66, 11.44, 11.45, 13.46, 13.50, 13.51, 18.31,18.46,18.47,21.63,21.67,21.68,21.97, 21.106, 22.35 Minett v Anderson (1794) Peake 277 17.34 Mint Securiry Lrd v Blair [1982] 2 Lloyd's Rep 188 .4.165, 5.38 Miss lay Jay, The [1987] 1 Lloyd's Rep 32; [1985J 1 Lloyd's Rep 264 9.23, 10.06, 10.08,19.45,19.48,19.60 Mitchell v Edle (1787) 1 TR 608 22.56 Mitor Investments Pry Ltd v General Accident Fire & Life Assurance Corp Ltd [1984] WAR365 5.18, 5.29 Mitrovich Bros & Co v Merchants Marine Insurance Co Ltd (1923) 14 LlLRep 25; (1922) 12 LlLRep451 7.51 Mitsui Construction Co Ltd v Attorney-General of Hong Kong (1986) 33 Build LR 1 8.26 Molr v Royal Exchange Assurance Co (1815) 3 M & S 461; (1814)4 Camp 84 18.88

Nal Genova and Nal Superba, The [1984] 1 Lloyd's Rep 353 8.79,8.80 Nam Kwong Medicines & Health Products Co Ltd v China Insurance Co Ltd [2002] 2 Lloyd's Rep 591 18.12 Napier & Emick (Lord) v Hunter [1993] AC 713 25.16,25.54,25.55,25.58,25.60,25.63, 25.65, 25.n, 25.73, 25.77, 25.78, 25.79 Nassau Bay, The [1979] 1 Lloyd's Rep 395 12.03,13.53,13.84

Iviii

lix

Monarch Sreamshlp Co Ltd v Karlshamms Olje&briker [1949] AC 196 Mandel v Steel (1841) 8 M &W858 Monksfield v Vehicle & General Insurance Co Ltd [1971] 1 Lloyd's Rep 139

9.03, 19.42 20.25 26.44, 26.45, 26.49 17.41,17.42 Monrgomery v Egglngton (1789) 3 TR 362 Monroya v London Assurance Co (1851) 6 Exch 451 10.44 Moonacre, The [1992] 2 Lloyd's Rep 501 3.17, 3.30, 3.31, 3.50, 3.62, 5.22, 5.26, 5.70,5.73 Moor Line Lrd v Isaac King (1920) 4 LlLRep 286 9.40, 13.12 Moore Large & Co Ltd v Hermes Credit & Guarantee pic (2003) EWHC 26 (Comm), [2003] 1 Lloyd's Rep 163 4.53, 4.60, 4.76, 4.104 Moore v Evans [1918JAC 185 21.36,21.47 Moore v Lunn (1923) 15 LlLRep 155 19.07 Moore v Mourgue (1776) 2 Camp 479 5.27,5.28 Moran, Galloway & Co v Uzielll [1905] 2 KB 555 3.31,3.46,3.48 Mordy v Jones (1825) 4 B & Cr 394 9.57 Morgan v Price (1850) 4 Exch 615 ., 26.23 Morgan v Provincial Insurance Co Ltd [1932) 2 KB 70 18.105, 18.109 Morley v Moore [1936] 2 KB 359 25.Ql Morley v United Friendly Insurance pic [1993J 1 WLR 996 15.12 MornlngSrar, The 1984 (4) SA 269 3.74,13.78 Morris v Ford Motor Co Ltd [1973] 1 QB 792 25.22 Morrison v Universal Marine Insurance Co (1873) LR 8 Ex 197 2.08, 4.10, 4.19, 4.20,4.96,4.167 Moses v Prarr (1815) 4 Camp 297 6.02 Moss v Byrom (1795) 6 TR 379 !!.55, 18.27 Motor & General Insurance Co Ltd v Pavy [1994] 1 WLR 462 22.13 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990]1 Lloyd's Rep 391 .4.164, 18.95 Motteux v London Assurance (1739) 1 Atk 545 8.81, 8.87, 18.47 Mount v Larkins (1831) 8 Bing 108 18.23 MounrainvWhltrle[1921] lAC615 10.13,19.46 Moxon v Atkins (1812) 3 Camp 200 17.09 M'Queen v Great Western Railway Co (1875) LR 10 QB 569 .4.59 MSC Mediterrananean Shipping Co SA v Polish Ocean Lines (The Tychy) (No 2) [2001] EWCA Civ 1198, [200!) 2 Lloyd's Rep 403 8.37,8.40,8.41 Mudlark, The [1911] P 116 12.16 Muirhead v Forth & NonhSea Steamboat Mutual Insurance Association (1894) ~n····.·.··................18.~ Mullet v Thompson (1811) 2 Camp 610 '" '" 18.70 Mullett v Sheddon (18!!) 13 East 304 '" 21.49 Muncaster Castle, The [1961J AC 807 11.n Munro, Brice & Co v FW Marren (1920) 2 LlLRep 2, (1920) 36 TLR 241; sub nom Munro Brice & Co v War Risks Association [1918] 2 KB 78 7.52,7.58 Murphy v Bell (1828) 4 Bing 567 3.06 Murray v Legal & General Assurance Sociery Ltd [1970] 2 QB 495 " 20.66, 20.67 Murray v Mann (1848) 2 Ex 538 .4.20

Table ofCases

Table

National Employers Mutual General Insurance Association Ltd v Haydon [1980] 2 Lloyd's Rep 149 26.06, 26.16 National Fite1nsurance Co v Mclaren (1886) 12 OR 682 25.52 National Insurance & Guarantee Corp v Imperio Reinsurance Co (UK) Ltd [1999] Lloyd's Rep lR 249 5.65,5.69 National Justice Campania Naviera SA v Prudential Assurance Co Ltd (The Ibrian Reefer) [1993] 2 Lloyd's Rep 68 , 10.65, 11.63, 15.18, 15.22 National Oil Co of Zimbabwe (Private) Ltd v Srurge [1991] 2 Lloyd's Rep 281 13.36 National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 1 Lloyd's Rep 582 2.82, 2.85, 2.86,2.87,2.90,3.62,3.63,15.11,22.82,24.14, 25.29, 25.30 12.13, 20.62 Nautilus Steam Sbipping Co Ltd, Re [1936J Ch 17 Naviera de Canarius SA v Nacional Hispanica Aseguradora SA (The Playa de las Nieves) [1978] AC 853 15.32, 15.35, 15.37 Navone v Haddon (1850) 9 CB 30 21.108 Naylot v Palmer (1853) 8 Ex 739 10.75 Naylor v Taylor (1829) 9 B & C 718 21.100 , , .. 5.77 Near East Relief v King, Chasseur & Co Ltd [1930] 2 KB 40 Nefell, The [1919] 1 KB 383 24.75 Nelson v Salvador (1829) M & M 309 18.87 Nema, The[1982] AC 724 , 8.59 Nesbitt v Lushington (1792) 4 TR 783 10.76 Neter (NE) & Co Ltd v Licences & General Insurance Co Ltd (1944) 77 LlLRep 202 7.51, 10.Q7 Netherlands Insurance Co Est 1845 Ltd v Karl Lijunberg & Co AB (The Mammoth Pine) [1986J 3 All ER 767 24.26, 25.22 Neue Fischmehl Vertriebsgesellschaft Haselhorst mbH v Yorkshire Insllrance Co Ltd (934) 50 LlLRep 151 19.04 New Hampshire Insurance Co v MGN Ltd [1997] LRLR 24 2.74, 2.93, 2.96, 4.40, 4.64,4.102,4.185,4.187,4.192,4.194,8.40,8.69 New South Wales Leather Co Pty Ltd v Vanguard Insurance Co Ltd [1991] NSWLR699 3.14 13.22, 13.23 New York Life1nsurance Co v Bennion 158 F 2d 260 (1946), 13 ILR 224 Newby v Reed (1763) 1 Black W 416 26.01 Newcastle Fire Insurance Co v Macmorran & Co (1815) 3 Dow 255 18,54,18.90 Newton's ofWembley Ltd v Williams [1965] 1 QB 560 '" .4.156, 18.84 Nickels & Co v London & Provincial Marine & General Insurance Co Ltd (1900) 6 Com Cas 15 9.48, 13.57 Nicol's Case (1859) 3 De G &J 387 .4.20,4.47 Nigel Upchurch Associates v Aldridge Estates Investment Co Ltd [1993] 1 Lloyd's Rep 535 20.42,20.76 Niger Co Ltd v Guardian Assurance Co (1922) 13 LlLRep 75 18.39 Nima SARL v Deves Insurance pic (The Prestrioka) [2002] EWCA Civ 1132, [2002J Lloyd's Rep IR 752 17.12,18.12,18.13,18.15,18.18 Nishina Trading Co Ltd v Chiyoda Fire & Marine Insurance Co Ltd (The Mandarin Star) [1969] 2 QB 449 10.69, 14.20, 14.25 Nissan v Attorney-General [1970] AC 179 13.64, 13.65 Nisshin Shipping Co Ltd v Cleaves & Co Ltd [2003] EWHC 2602 (Comm), [2004] 1 Lloyd's Rep 38 5.12,20.03 Nittan (UK) Ltd v Solent Steel Fabrication Ltd [1981] 2 Lloyd's Rep 633 8.47 18.48,18.49 Nohel's Explosives Co v Jenkins;& CO [1896J 2 QB 326 Noble Resources Ltd v Greenwood (The Vasso) [1993] 2 Lloyd's Rep 309 24.14,24.16 Nohle v Kennoway (1780) 2 Doug KB 510 4.92 Nocton v Kruger [1914] AC 932 ~ .4.03, 4.64 Normhurst Ltd v Dornoch Ltd [2004] EWHC (Comm), [2005J Lloyd's Rep IR 27 .... 22.121

0& RJewellers Ltd v Terry [1999] Lloyd's Rep lR436 5.30, 5.61 O'Btien v Hughes-Gibb & Co Ltd [1995] LRLR 90 5.17, 5.28 Oceanic Steam Navigation Co Ltd v Evans (1934) 40 Com Cas 108 22.48 Oceanic Steamship Co v Faber (1907) 13 Com Cas 28; (1906) 11 Com Cas 179 11.23 O'Cennor v BDB Kirby & Ce [1972] 1 QB 90 5.72 O'Connor v Hart [1983] NZLR280 4.04 Oei v Foster [1982] 2 Lloyd's Rep 170 9.65 Office Appliance Trades Association of Great Britain & Ireland v Roylance (1940) 67 LlLRep 86 9.48 Ogden & Ce Pry Ltd v Reliance Fire Sptinkler Ce Pry Ltd [1975] 1 Lloyd's Rep 52; [1973] 2 NSWLR 7 " 5.32 O'Kane v Jones (The Martin P) [2003] EWHC 2158 (Comm), [2004] 1 Lloyd's Rep 389 2.81, 3.27, 3.36, 3.49, 4.76, 4.88, 4.104, 4.107, 4.197, 6.37, 26.31, 26.34,26.38,26.39,26.41,26.50,26.53,26.55,26.69, 26.72, 26.80, 26.82 5.11, 22.117 Okeanis, The [1986] 1 Lloyd's Rep 195 Oliverson v Brightman (1846) 8 QB 781 17.35

Jx

!xi

Normid Housing Association Ltd v Ralphs [1989J 1 Lloyd's Rep 265 20.47 Normid Housing Association Ltd v Ralphs (No 2) [1989J 1 Lloyd's Rep 274 .. '" 20.47 North & $curh Trust Ce v Berkeley [1971] 1 WLR 470 5.03 North Atlantic Insurance Co Ltd v Bishopsgate Insurance Ltd [1-.998] 1 Lloyd's Rep459 2Ll7 North Atlantic Insurance Co Ltd v Nationwide General Insurance Co Ltd [2004] EWCA Civ 423, [2004J Lloyd's Rep lR 466; [2003J EWHC 449 (Comm), 2.67 [2003J 2 CLC731 12.21 North Btitain, Tbe[1894] p 77 North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877) 5 ChD 569 26.Q2 North British Fishing Boat Insurance Co Ltd v Starr (1922) 13 LlLRep 206 4.78, 4.92 North Eastern 1aDA Steamship Insurance Association v Red Sea Steamship Co Ltd (1906) 12 Com Cas 26 6.05 North of England Iron Steamship Insurance Association v Armstrong (1870) LR 5 QB 244 25.68,25.69,25.71,26.27 North of England Pure Oil~Cake Co v Archangel Maritime Insurance Co (1875) LR 10 QB 249 '" '" 20.09, 20.10 North Star Shipping Ltd v Sphere Dtake Insurance pIc (No 2) [2005] EWHC 665 (Comm) .4.40, 4.69, 4.76, 4.85, 11.65, '15.79 [2005] 2 Lloyd's Rep 76 North Star Shipping Ltd v Sphere Dtake Insurance pic (The North Star) [2004] EWCA 2457 (Comm), [2005] Lloyd's Rep IR 404 24.29 24.29 North Star, The [2004] EWCA 2457 (Cemm), [2005] Lloyd's Rep lR 404 Northumbrian Shipping Co Ltd v Timm (E) & Son Ltd [1939J AC 397 19.27 22.86 Norton v Royal Fire & Life Assurance Co (1886) 1 TLR 460 Norwegian American Cruises AlS v Mundy (The Vistafjotd) [1988J 2 Lloyd's Rep 343 8.58 Norwest Refrigeration Services Pry Ltd v Bain Dawes Pty Ltd (1984) 157 CLR 149 5.26 Norwich Union Fire Insurance $cciery Ltd v Price (WH) Lrd [1934] AC 455 22.52,22.58 18.48 Notaro v Henderson (1872) LR 7 QB 225 '" Noten BV v Harding [1990] 2 Lloyd's Rep 283 8.09, 15.56, 15.57 NottS Patent Brick & Tile Co v Buder (1886) 16 QBD 778 .4.03 Nourse v Liverpool Sailing Ship Owners' Mutual Protection & Indemnity Association [1896] 2 QB 16 24.69 lLl5, 11.16, lLl7, lLl9, 11.20, 11.21, Nukila, The [1997] 2 Lloyd's Rep 146 11.23,11.26,15.68, 2Ll9, 21.20, 24.39 Nurt v Bourdieu (1786) 1 TR 323 11.44 Ny-Eeasteyr, The [1988J 1 Lloyd's Rep 60 ILl2, lLl3, 11.63, 15.18

Table ofCases Olympia, The (1924) 19 LlLRep 255 15-22, 15.23, 15-24 Olympic Pride, The [1980] 2 Lloyd's Rep 67 8.77 Orakpo v Barclays Insurance Services [1995] LRLR 433 _.. 22.86,22-102,22.107,25.75 O'Reilly v Gonne(1815) 4 Camp 249 _ 18.50 O'Reilly v Royal Exchange Assurance (1815) 4 Camp 246 18.50 _. - -. _.. 20.15 Orient Co Ltd v Brekke & Howlid [1913] 1 KB 531 Osman v J Ralph Moss Ltd [1970] 1 Lloyd's Rep 313 _ - . - .. 5.37 O'Sullivan v Management Agency & Music Ltd [1985] 1 QB 428 _ .4.04 Oswell v Vigne (1812) 15 East 70 18.27, 1830 OT Compute", Re [2004] EWCA Civ 653, [2004] Lloyd's Rep lR 669 _ 20.38, 20.39,20.42,20.77 Outhwaite v Commercial Bank of Greece SA (The Sea Breeze) [1987]1 Lloyd's Rep 372 ... 18.86 Ove"eas Commodities v Style [1958J 1 Lloyd's Rep 546 15.59,17.15,18.64, 18.68,18.72,18.119,18.126,21.05 Overseas Marine Insurance Co, Re (1930) 36 LlLRep 183 3.11 Owners of Cargo on Ship 'Maori King' (The Maori King) [1895] 2 QB 550 19.13 Owners of the Steamship Gracie v Owners of the Steamship Argentino (The Argentino) (1889) 14 App Cas 519 15.35 Owne" of Steamship 'Larchgrove' v R (1919) 1 LlLRep 408 _ 13.12

Table _£'r. Patterson v Harris (1861) 1 B & S 336 Patterson v Ritchie (1815) 4 M & S 392 Pawson v Watson (1778) 2 Cowp 785 PCW Syndicates v PCW Reinsurers [1996] 1 WLR 1136

P&S Platt v Crouch [2003] EWCA Civ 1110, [2004J 1 p & CR 18 _ , 839,8.40 Pacific & Generallnsutance Co Ltd v Hazell [1997] LRLR 65 6.16 Padrelsland, The [1984] 1 Lloyd's Rep 408 _ 20.60 20.41,20.63,22.73 Padre Island, The (No 2) [1989J 1 Lloyd's Rep 239 Page v Scottish Insurance Corp (1929) 140 LT 571 _.. 25.11 Pagnan SA v Tradax Ocean Transportation SA [1987] 2 Lloyd's Rep 342 8.21 Palamisto General Enterprises SA v Ocean Marine Co Ltd (The Dias) [1972] 2 QB 625 10.36,15.21, 15.26 15.23 Palitana, The (1924) 20 LlLRep 74,140 _ Palmer v Fenning (1833) 9 Bing 460 _ _ 18.21 Palmet v Ma"hall (1832) 8 Bing 317 _ 18.22 Pan American World Airways Inc v Aetna Casualty & Surety Co [1975] 1 Lloyd's Rep 77 · .. ···· .. ···· .. ··· .13.30,13.35,14.19 Pan Atlantic Insurance Co Ltd v Pine Top Insutance Co Ltd [1995] lAC 501; [1993] 1 1,47,1.49,4.16,4.25,4.26,4.33, Lloyd's Rep 496; [1992]1 Lloyd's Rep 101 4.35,4.39,4.40,4.42,4.44,4.51, 4.54, 4.55, 4.58, 4.83, 4.89, 4.105, 4_108,4.142, 4.148, 4.157. 4.161,4.177, 4.178 Panamanian Oriental Steamship Corp v Wtight (The Anita) [1971] 1 WLR 882, [1970] 2 Lloyd's Rep 365 7.05,9.60,13.61, 13.71, 13.74, 13.75, 13.83,21.47,21.49, 21.103,22.52,22.57 Pangood Ltd v Barclay Brown & Co Ltd [1999J Lloyd's Rep IR 405 5.11,5.14,5.15 Papademittiou v Hende"on (1939) 64 LlLRep 345 15.13 Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] EWHC 118 (Comm), [2002] 1 Lloyd's Rep 719 19.07,19.10 Parente v Bayville Marine Insurance [1975] 1 Lloyd's Rep 333 11.13 Park v Hammond (1816) 6 Taunt 495 5.23 Parkin v Dick (1809) 2 Camp 221 3.76 Parmeter v Cousins (1809) 2 Camp 235 _ 1731 Parry v Cleaver [1970] AC 1 25.01 Parry v Great Ship Co Ltd (1864) 4 B &S 556 _ 8.81, 21.101 Pasquali & Co v Traders & General Insurance Association (1921) 9 LlLRep 514 7.54 Pateras v Royal Exchange Assurance (The Sappho) (1934) 49 LlLRep 400 15.21 Paterson Steamships Ltd v Canadian Co~operative Wheat Producers Ltd (1934] AC 538 _ 19.16, 19.43

15.65 21.101 .4.06, 18.90 . 4.09,4.118,4.119, 4.123, 4.124, 4.126 Pearson & Son Ltd v Dublin Corp [1907] AC 351 .4.110 Pedley v Avon Insurance [2003] EWHC 2007 (QB) 4.60, 4.69 Pellas (E) & Co v Neptune Marine Insurance Co (1879) 5 CPD 34 _ _6.27, 20.26 Pelly v Royal Exchange Assurance(1757) I Burr341 _1.42, 17.13 Pelton SS Co Ltd v North of England Protecting & Indemnity Association (1925) 22 LlLRep 510 12.16 _ 26.32 Pendlebury v Walker(184 I) 4 Y & C Ex 424 Pesquerias y Secaderos de Bacalao de Espana SA v Beer (1949) 82 LlLRep 501 _ 13.26, 21.125,22.32 13.06, 13.08, 13.40 Petersham, The [1921J 1 AC 99; [1919J 2 KB 670 Petrofina (UK) Ltd v Magnaload Ltd [1984] QB 127 2.75,3.58,3.60,25.28,26.02 Petro~ec Inc v Petroleo Brasileiro SA Petrobas [2004] EWCA Civ 156, [2004] 1 Lloyd's ep 629 _ _. _ 8.02, 8.05 Petromec Inc v Petroleo Brasileiro SA Petrobas (No 2) [2004] EWHC 127 (Comm) .. , 8.40 Peyman v Lanjani [1985] Ch 457 4.164 Phelps,James&CovHill [1891] 1 QB605 18.48 Phelps v Auldjo (1809) 2 Camp 350 18.47 Phillips v Barber(182I) 5 B &Ald 161 _ _ 10.26 Phillips v Irving (1844) 7 Man & G 325 _ 18.39 _.956 Philpott v Swann (1861) 11 CB(NS) 271 Phoenix Assurance Co v Spooner [1905] 2 KB 753 25.18 Phoenix General Insurance Co of Greece v Halvanon Insurance Co Ltd [1985] 2 Lloyd's Rep 599 _ " . '" .4.201, 22.22 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 , 18.57 Phynn v Royal Exchange Assurance Co (1798) 7 TR 505 _ _.. _ 11.55, 18.44 Pickersgill & Sons Ltd v London & Provincial Marine & General Insurance Co [1912] 3 KB 614 22.64 19.52 Pickup v Thames & Mersey Marine Insurance Co Ltd (1878) 3 QBD 594 Piermay Shipping Co SA v Chester (The Michael) [1979] 2 Lloyd's Rep 1 11.62, 11.64, 22.88 Pieschell v Allnutt (1813) 4 Taunt 792 _ _ 3.77 Pilkington United Kingdom Ltd v CGU Insurance pic [2004J EWCA Civ 23, [2004] Lloyd's Rep IR 891 _ 11.15 Pim v Reid (1843) 6 Man & G 1 18.28 8.91 Pindos Shipping Corp v Raven (The Mata Hari) [1983] 2 Lloyd's Rep 449 Pink v Fleming (1890) 25 QBD 396 9.06,15.34,15.35,15.36,15.37 Pintada, La [1985] AC 104 6.14, 22.121 Pioneer Concrete (UK) Ltd v National Employers Mutual General Insurance Association Ltd [1985] 1 Lloyd's Rep 274 20.57, 22.13, 22.15 Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) [1982] AC 724 8.59, 8.61, 8.62 Piper v Royal Exchange Assurance (1932) 44 LlLRep 103 .7.43 Pipon v Cope (1808) 1 Camp 434 11.46 Pitman v Universal Marine Insurance Co (1882) 9 QBD 192 23.19, 23.21, 23.22, 23.23 Pirtegrew v Ptingle (1832) 3 B &Ad 514 18.69,19.26 Platform Home Loans Ltd v Oysron Shipways Ltd [2002] 1 AC 190 5.45 Playa de las Nieves, The [1978] AC 853 15.32,15.35,15.37 Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] 1 All ER 162 ... 12.15 21.06, 21.62, 21.65, Polurrian Steamship Co Ltd v Young (1913) 19 Com Cas 143 21.66,21.102,21.106,21.107

lxii

]xiii

_.. _

Table ofCases

Table ofCases

Polzeath, The [1916] I' 117 16.15 Popham & Willett v St Petersburg Insurance Co (1904) 10 Com Cas 31 10.11 Popi M, The [1985] I WLR 948; [1984] 2 Lloyd's Rep 555; [1983] 2 Lloyd's Rep 235 7,49,7.56,7.57,10.28,10.31, 10.33, 10.38, 10,41, lQ.42, 19.55 Post Office v Norwich Union Fire Insurance Co [1967] 2 QB 363 ' 20.50,20.51, 20.56 Potoi Chau, The [1983) 2 Lloyd's Rep 376 22.66,24,45 Powell v General Electric Co [2005] EWCA 644 (QBD) 8.22 Powell v Hyde (1855) El & Bl607 13,46, 13,47 Power Packing Casemakers Ltd v Emst [1983] ICR 292 14.11 6.21, 6.22 Power v Burcher (1829) 10 B &Cr 329 20.09, 20.10 Powles v Innes (1843) 11 M & W 10 2.07 Praet Gulian) et Cie SA v HG Poland [1960] 1 Lloyd's Rep 416 8.35,8.40 Prenn v Simmonds [1971] 1 WLR 1381 Prentis Donegan & Partners Ltd v Leeds & Leeds Co Inc [1998] 2 Lloyd's Rep 326 5.11, 5.13,5.14,6.22,6.29 President ofIndia v La Pintada Campania Navigacion SA (La Pintada) [1985] AC 104 6.14, 22.121 Presidem of India v Lips Maritime COtp (The Lips) [1988] AC 395 22.121 17.12, 18.12, Prestrioka, The [2002] EWCA Civ 1132, [2002] Lloyd's Rep IR 752 18.13,18.15,18.18 Priam, The [1948] AC243 13.14,13.16,13.53 Ptide of DonegaL The [2002] EWHC 24 (Comm), [2002] I Lloyd's Rep 659 11,41, 19.04,19.05,19.10,19.23 Prinrpak v AGF Insurance Ltd [1999] Lloyd's Rep IR 542 18.103 1.59 Prohatina Shipping Co Ltd v Sun Insurance Office Ltd [1974] QB 635 Ptoject Asia Line Inc v Shone (The Pride of Donegal) [2002] EWHC 24 (Comm); [2002] 1 Lloyd's Rep 659 11,41,19.04,19.05,19.10,19.23 Ptomet Engineering (Singapore) Pte Lrd v Sturge (The Nukila) [1997] 2 Lloyd's 11.15,11.16,11.17,11.19,11.20, lUI, 11.23, 11.26, 15.68, Rep 146 21.19,21.20,24.39 Property Insurance Co Ltd v National Protector Insurance Co Ltd (1913) 18 Com ./ Cas 119 4.100 .4,1 19,4.120 P1Oudfoot v Monrefiore (1867) LR 2 QB 511 Provincial Insurance Co of Canada v Leduc (1874) LR 6 PC 224 22.59,22.60 Provincial Insurance Co v Morgan [1933] AC 240 18.70 Prudent Tankers Ltd SA v Dominion Insurance Co Ltd (The Caribbean Sea) [1980] 1 Lloyd's Rep 338 11.08, 1LI3, 11.24 Pryke v Gibbs Hartley Cooper [1991] 1 Lloyd's Rep 602 2,42,2.65 Punjah National Bank v de Bainville [1992] 1 WLR 1138 5.05

Quebec Marine Insurance Co v Commercial Bank of Canada (1870) LR 3 PC 234 ..... 18.65, 18.75,19.23,19.26,19.29 Queensland National Bank Ltd v Peninsar & Oriental Steam Navigation Co [1898] I QB 567 19.13 Quinta Communications SA v Warrington [2000] Lloyd's Rep IR 81 8.67 Quorum v Schramm [2002] Lloyd's Rep IR 292 7.34,8.27,21.04

R v Bottrill, ex p Kuechenmeister [1947] KB 41 R v Cunningham (1957) 41 Cr ApI' Rep 155 R v Dagnall [2003] EWCA Civ 2441, (2003) 147 SjLB 995 R v G [2004] I AC 1034 R v Governor of Winson Green Prison, Birmingham, ex p Littlejohn [1975]'1 WLR 893

lxiv

13.19 14.24 13.56 14.24 14.28

R v Gullefer [1990] 1 WLR 1063n '" R v jones [1990J 1 WLR 1057 R v Oshorn (1919) 84jp63 R v Savage [1992] lAC 699 Rafsanjan Pistachio Producers Co~operative v Bank Leumi (UK) pIe [1992] 2 Lloyd's Rep 512 Raiffeisen Zentralbank Osterrieh AG v Five Star Trading lie [2001] QB 825

13.56 13.56 13.56 14.24 .4.148 12.13,

20.12,20.14,20.16 18.29 23.39 25.38, 25,40, 25.75, 25.76 17.39, 21.91, 21.93, 21.96, 22.33, 22.34,

Raine v Bell (1808) 9 East 195 Ralli v johnson (1856) 6 El & BI422 Randal v Cockran (1748) 1 Yes Sen 98 Rankin v Porter (1873) LR 6 HL 83

Rawson v Samuel (1841) Cr & Ph 161 Rayner v Godmond (1821) 5 B & AJd 225 Rayner v Preston (1881) 18 ChD I Raynor v Ritson (1865) 6 B & S 888 Read v Bonham (1821) 3 Brad & B 147 Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] I WLR 989

22.35,22.36,22.61 6.27, 20.25 10.81 20.09 1.59, 4.200 22.55 8.04,8.36,

8.39, 18.35 Red Sea, The [1896] I' 20 22,40 .4.03, 4.64 Redgrave v Hurd (1881) 20 ChD I Redman vWihon (1845) 14M &W 476 ~ 11.31,19,44 Redmond v Smith (1844) 7 Man & G 457 3.70, 3.71 Reed (AE) & Co v Page, Son & East Ltd [1927J 1 KB 743 19.11,19.24 Reese Silver Mining Co v Smith (1869) LR 4 HL 64 .4.04 Regina Fair Co Ltd v Blossom [1958] 2 Lloyd's Rep 425; [1957] 2 Lloyd's Rep 466 10.35 Reid v Standard Marine Assurance Co Ltd (1886) 2 TLR 807 21.21 Reimer v Ringrose (1851) 6 Exch 263 21.75 Reinhart Co v joshua Hoyle & Sons Ltd [1961] I Lloyd's Rep 346 21.19 Reischer v Barwick [1894] 2 QB 548 9.05,9.24,9.36,9,44 Reliable Distributors Ltd v Royal Insurance Co of Canada [1984] 6 WWR 83 14.26 Reliance Marine Insurance Co v Duder [1913] I KB 265 8.03 Rendall v Combined Insurance Co of America [2005J EWHC 678 (Comm), [2005] 1 CLC 565 .4.134, 4.146 Remon (GH) & Co Ltd v Black Sea & Baltic General Insurance Co Ltd [1941] I KB 206 17.15 Republic of Bolivia v Indemnity Mutual Marine Insurance Co Ltd [1909] 1 KB 785 10.74,10.76 Republic of China v National Union Fire Insurance Co of Pittsburgh (The Hai Hsuan) [1958] I Lloyd's Rep 351 .. ·· .. ·· .. ······· 11.53, 13,47 Reynolds v Phoenix Assurance Co Ltd [1978J 2 Lloyd's Rep 440 .4.85,4.86,7.33 Rhesa Shipping Co Ltd v Edmunds (The Popi M) [1985] I WLR 948; [1984] 2 Lloyd's Rep 555; [l983J 2 Lloyd's Rep 235 7.49,7.56,7.57,10.28,10.31, 10.33,10.38,10,41,10,42,19.55 Rhodes, Re (1887) 36 ChD 586 21.21 Richardson, ex I' Governors ofStThomas's Hospital, Re [1911] 2 KB 705 22.65, 22.68 Rickards v Porestal Land, Timher & Railways Co (Tbe Minden) [1942J AC 50 7.03, 9.53,10.66, 11.44,11.45,13,46,13.50,13.51,18.31,18,46,18,47, 21.53,21.63,21.67,21.68,21.97, 2LI06, 22.35 Rickman v Carmirs (1833) 5 B &Ad 651 17.20, 21.87 19.26 Ridsdale v Newnham (1815) 4 Camp III Rivaz v Gerussi Bros & Co (1880) 6 QBD 222 2.37,4.25,4.66 Rivetlate Properties Ltd v Paul [1975] Ch 133 8.79

lxv

Table ofCases

Table ofCases

River~Z;o~~a.t .~~.~:. ~~~ ~.~~~~s~.i~e. ~~~~~i~.g. ~~. :~~~ .~.U.~c~~~e.r.~~t~~). ~1.~~~] ... . 11.72 Roadworks (1952) Lrd v JR Charman [1994] 2 Lloyd's Rep 99 2.49, 2.57 Roar Marine Lrd v Bimeh Iran Insurance Co [1998] 1 Lloyd's Rep 423 2.45,2.59 Roberts v Anglo-Saxon Insurance Association Lrd (1926) 26 LlLRep 154 18.105, 18.109 Roberrs v Plaisred [1989] 2 Lloyd's Rep 341 5.34 Roberrson v Ewer (1786) 1 TR 127 11.56, 21.06 Roberrson v French (1803) 4 Easr 130 8.07,8.14,8.20 Roberrson v Hamilton (1811) 14 East 522 ··· ·················· .3.39 Roberrson v Pettos M Nomikos [1939] AC 371 3.54, 15.41,21.53,21.94,22.33 Roberrso n v Royal Exchange Assurance Corp (1924) 17 LlLRep 17 22.59 ,' 13.47, 13.50 Robinson Gold Mining Co v Alliance Assurance Co [1902] 2 KB 489 Rodan International Ltd v Commercial Union Assurance Co plc (1999] Lloyd s Rep IR495 11.14 Roddick v Indemnity Mutual Marine Insurance Co Ltd [1895] 2 QB 380; [1895] 1 QB 536 18.82 9.53,21.97,21.102 Rodocanachi v Elliott (1873) LR 8 CP 649 Rogers v Whittaker [1917] 1 KB 942 13.34, 13.35 Roper v Johnson (1873) LR 8 CP 167 24.15 Rosa v Insurance Co of the State of Pennsylvania (The Belle of Portugal) (1970] 2 Lloyd's Rep 386 10.65,11.40 RoscowvCorson(1819) 8 Taunr 684 11.55 10.35 Roselodge Lrd v Castle [1966] 2 Lloyd's Rep 113 Roserto v Gurney (1851) 11 CB 176 21.75 Ross v Humer (1790) 4 TR 33 11.48, 11.51, 11.55, 18.43 RotchvEdie(1795)6TR413 13.52 Rothschild OJ Assurance pic v Collyear [1999] Lloyd's Rep IR 6 22.09 21.67,21.93,21.102,22.33 Roura & Forgas v Townend [1919] 1 KB 189 Roux v Saivador (1836) 3 Bing NC 266 21.42, 21.44, 21.50, 22.31, 22.61, 25.18,25.37 Rowcroft v Dunmore (1801), cited 3 Taunt 228 , 10.25 Royal & Sun Alliance Insurance pic v Dornoch Ltd [2005] EWCA Civ 238, [2005] 1 All /' ER (Comm) 590; [2004] EWHC 803 (Comm), [2004] Lloyd's Rep IR 826 8.31, 8.55,8.57 Royal Bank of Scotland pic v Ettidge (No 2) [2001] UKHL 44, [2002] 2 AC 773 10.31 Royal Boskalis Wesrminsrer NYv Mountain [1999] QB 674; [1997] LRLR 523 21.61, 21.65,21.66,21.71,21.102,21.104,22.32,22.61,22.91, 24.27, 24.31, 24.32,24.38,24.71 Royal Brompton NHS Trusr v Hammond (No 3) [2002J UKHL 14, [2002] 1 WLR 1397 26.36 Royal Exchange Assurance Corp v M'Swiney (1849) 14 QB 646 3.55 Royscor Trusr Lrd v Rogerson [1991J 2 QB 297 4.183 Rozanes v Bowen (1928) 32 LlLRep 98 .4.07, 5.03 Russian Bank for Foreign Trade v Excess Insurance Co Ltd [1918] 2 KB 123 13.50, 13.52,13.67,15.39,15.40,22.52 Ruys v Royal Exchange Assurance Corp [1897] 2 QB 135 21.102 Sadler v Dixon (1841) 8 M & W 895 Sadlers' Co v Badcock (1743) 2 Atk 554 Safadi v Wesrern Assurance Co (1933) 46 LlLRep140 Sailing Ship 'Blairmore' Co Ltd v Macredie [1898] AC 593 Sailing Ship Garston Co v Hickie & Co (1885) 15 QBD 580 St Machar, The (1939) 65 LlLRep 119 Sr Oswald, The [1918] 2 KB 879

lxvi

19.23 3.04 20.19 21.48,21.77,21.107 17.08, 17.09 : 12.16 13.10

St Paul Fire & Marine Insurance Co (UK) Ltd v McDonnell Dowell Constructors Ltd [1995] 2 Lloyd's Rep 116 4.40, 4.51, 4.56, 4.58, 4.89 Salem, The [1982] QB 946 7.55,9.60, 10.78, 11.44, 11.52, 13.46, 13.47, 14.26,14.27,15.16 SalrvCooper(1880) 16ChD544 4.17 Salvador v Hopkins (1765) 3 Burr 1707 1.42 Samuel (P) & Co Ltd v Dumas [1924] AC 431 1048, 3.72, 4.184, 4.185, 9.15, 9.16, 9.18,9.29,10.14,10.15,10.16,10.17,10.58,10.59, 10.78, 11.34, 11.44,12.02,15.28,18.83,22.100,25.30 Samuel v Royal Exchange Assurance Co (1828) 8 B & Cr 119 17.35 San Roman, The (1873) LR 5 PC 301 18.49 Sanday v British & Foreign Marine Insurance CO [1915J 2 KB 781 13.50, 13.52,21.37 Sappho, The (1934) 49 LlLRep 400 15.21 Sarginson Bros v Keith Moulron & Co (1942) 73 L1LRep 104 5.22 Sarpen, The [1916] P 306 13.65 Sassoon (ED) & Co v Western Assurance Co [1912] AC 561; (1923) 16 LlLRep 129; 10.06,10.19,15.51,15.59,15.67,15.68 (1923) 14 LlLRep 135 Satanira, The [1897] AC 59 , 2.67 Saunders v Baring (1876) 34 LTNS 419 21.42, 25.18, 25.37 18.51 Scaramanga & Co v Sramp (1880) 5 CPD 295 Scarf v Jardine (1882) 7 App Cas 345 .4.164 Scheiderman v Merropoliran Casualty Co of New York 220 NYS 2d 947 (1961) 13.23 Schiffshypothekenbankzu LuebeckAG v Compton (The Alexion Hope) [1988J 1 Lloyd's Rep 311 10.65 1.60, 4.92, 5.54 Schloss Bros v Stevens (1905) 10 Com Cas 224 .4.104 Schoolman v Hall [1951] 1 Lioyd's Rep 139 Schroder v Thompson (1817) 7 Taunt 462 18.39 Schtraks v Government of Israel [1964] AC 556 14.28 8.09,8.12,8.13, Schuler (L) AG v Wickman Machine Tools Ltd [1974] AC 235 '" 8.23,8.24,8.29,8.40 Scindia Steamships (London) Ltd v London Assurance [1937] 1 KB 639 11.19, 11.25 Scott Lithgow Ltd v Secretary of State for Defence (1989) 45 BLR 1 22.17 SCOtr v Copenhagen Reinsurance Co (UK) Ltd [2003] EWCA Civ 688, [2003] Lloyd's Rep IR 696 9.04,21.12,21.22,21.30,21.102,21.105 Scott v Irving (1830) 1 B & Ald 605 22.117 18.44, 18.46 Scott v Thompson (1805) 1 B & P (NR) 181 Scottish Marine Insurance v Turner (1855) 4 HLC 312 22.39 Scottish Metropolitan Assurance Co Ltd v Stewert (1923) 39 TLR 407 17.47 Scottish Shire Line Ltd v London & Provincial Marine & General Insurance Co Ltd [1912] 3 KB 51 17.39, 21.91 Sea Insurance Co v Blogg [1898] 2 QB 398 18.87 Sea Insurance Co v Hadden (1884) 13 QBD 706 22.42,25.37 Sea Voyager Maritime Incv Bielecki [1999) Lloyd's Rep IR356 20.54 Seaman v Fonereau (1743) 2 Str 1183 .4.13,4.80,4.84 Searle v A R Hales & Co Lrd [1996J LRLR 68 .4.180, 5.03 Seashore Marine SA v Phoenix Assurance pIc (The Vergina) (No 2) [2001] 2 Lloyd's Rep 698 24.66 Seaspeed Dora, The [1988] 1 WLR 221 25.13 Seavision Investment SA v Evenett (The Tiburon) [1990] 2 Lloyd's Rep 418 2.55, 18.64 Seeburg v Russian Wood Agency Ltd (1934) 50 LlLRep 146 14.07 3.78,3.80 Seligman v Eagle StarInsurance CO [1917J 1 Ch 519 Sellar v M'Vicar(1804) 1 Bos & Pul (NR) 23 18.04 Seymour v London & Provincial Marine Insurance Co (1872) 41 LJep 193 18.68 Shalrir III, The [1997] 1 Lloyd's Rep 586 4.197,18.122,18.127,21.41,21.48,24.27

lxvii

Table ofCases

Table ofCases

Sharp v Sphere Drakelnsurance pic (The Moonacre) [1992J 2 Lloyd's Rep 501 3.17, 3.30,3.50,3.62,5.22,5.26,5.70,5.73 Shaw v Moss Emoires & Bastow (1908) 25 TLR 190 20.28 Shaw v Robberds (1837) 6 A & E 75 18.27, 18.70 17.32 Shawe v Felton (1801) 2 East 109 12.02, 14.04 Shelbourne & Co v Law Investment & Insurance COtp [I 898J 2 QB 626 9.60,7.55, Shell International Pettoleum Co Ltd v Gibbs (The Salem) [1982J QB 946 10.78,11.44,11.52,13.46,13.47,14.26,14.27,15.16 Sbell UK Ltd v CLM Engineering Ltd [2000J 1 Lloyd's Rep 612 15.42 21.66,21.101,22.59 Shepberd v Henderson (1874) 7 App Cas 49 Shogun Finance Ltd v Hudson [2003J UKHL 62, [2004J 1 AC 919 8.74 Shooter v Incorporated General Insurances Ltd (The Morning Star) 1984 (4) SA 269 3.74, 13.78 Shore v Benrnall (1828) 7 B & C 798(b) 11.36 Shore v Wilson (1842) 9 Cl & Fin 355 8.34 Short v McCarthy (1820) 3 B & Ald 626 22.62 18.78 Sillem v Thornton (1854) 3 El & Bl868 Simmonds v Cockell [l920J 1 KB 843 18.67 Simmons v Gale [1957J 2 Lloyd's Rep 485 7.58 Simner v New India Assurance Co Ltd [l995J LRLR 240 4.119, 4.164 .4.167 Simon, Haynes, Barlas & Iteland v Beet (1945) 78 LlLRep 337 Simon, Israel & Co v Sedgwick [l893J 1 QB 303; (1892) 67 LTNS 352 17.12, 18.07, 18.11,18.13,18.14,18.17,18.114 Simpson & Co v Tbomson (1877) 3 App Cas 279 22.32, 25.10, 25.14, 25.25 Simpson 55 Co v Premier Underwriting Association Ltd (1905) 10 Com Cas 198 18.73 Sinner v New India Assurance Co Ltd [1995J LRLR 240 4.111 10.06, 11.12, 11.13 Sipowicz v Wimble(The Green Lion) [1974J 1 Lloyd's Rep 593 Sir William Garthwaite (Insurance) Ltd v Port of Manchester Insurance Co Ltd (1930) 37 LlLRep 194 1.59, 1.60 Sirius International Insurance Co (PUBL) v FAI General Insurance Ltd [2004] UKHL 54, [2004J 1 WLR 3251 8.09, 8.11, 8.38 Sirius International Insurance Corp v Oriental Assurance Corp [1999] Lloyd's Rep m~................................

.. 4~

SnOwville UK Ltd v Holidaybreak pIc [2004J EWHC 1336 (Ch) 8.48 Soares v Thornton (1817)7 Taunt 627 11.44, 11.51 Societe Anonyme d'Intel'mediaries Luxembourgeois v Farex Gie [1995] Lloyd's Rep IR 116 2.43, 2.67, 4.09, 4.75, 4.98, 4.123, 4.128,5.04 Societe d'Avances Commerciales (SA Egyptienne) v Merchants' Marine Insurance Co (The Palirana) (1924) 20 LlLRep 74, 140 15.23 Socony Mobil Oil Co Inc v West of England Ship Owners Mutual Insurance Association (London) Lrd (The PadreIsland) [1984J 1 Lloyd's Rep 408 20.60 Socony Mobil Oil Co Inc v West of England Ship Owners Mutual Insurance Association (London) Ltd (The PadreIsland) (No 2) [1991J 2 AC 1; [1989J 1 Lloyd's Rep 239 20.41, 20.63, 22.72 24.10 Solholt, The [1981) 2 Lloyd's Rep 574 Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1981 J 2 Lloyd's Rep 574 24.10 South Australia Asset Management Corp v York Montague Ltd [1997] AC 191 5.44, 5.46,5.47,5.48 South Staffordshire Tramways Co Ltd v Sickness & Accident Assurance Association Ltd [1891J I QB 402 17.47 Soya GmbH Mainz KG v White [1983J 1 Lloyd's Rep 122; [1982J 1 Lloyd's Rep 136; [1980J 1 Lloyd's Rep 491 15.01,15.44,15.51,15.55,15.60,15.65,15.67,15.68 Spalding v Crocker (1897) 2 Com Cas 189 8.88 Spectrum Plus Ltd, Re [2004J EWCA Civ 670, [2004J Ch 337 26.51 23.30 Spence v Union Marinelnsutance Co Ltd (1868) LR 3 CP 427 Sphere Drake Insurance Ltd v Euro International Underwriting Ltd [2003] EWHC 1636 (Comm), [2003) Lloyd's Rep IR 525 15.67,26.32 Spinney's (1948) Ltd v Royal Insurance Co Ltd [1980J 1 Lloyd's Rep 406 7.59,8.09,9.66, 13.26,13.28,13.30,13.33,13.34,13.35,14.15 Spriggs v Wessington Court School [2004J EWHC 1432 (QB), [2005J Lloyd's Rep 1R474 4.164 22.75, 22.121, 22.123 Sprung v Royal Insurance (UK) Ltd [1999J Lloyd's Rep IR 111 18.48 Stag Line Ltd v Foscolo, Mango & Co Ltd [1932J AC 328 Stamma v Brown (1743) 2 Srt 1173 11.55, 11.56 Stanley v Western Insurance Co (1868) LR 3 Ex 71 7.53,9.29,9.56, 10.60 Star Sea, The [2001] UKHL 1, [2003J 1 AC 469; [1997J 1 Lloyd's Rep 360; [1995J 1 Lloyd's Rep 651 1.59, 1.60,4.114,4.199,4.202,4.204,19.04,19.06,

Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 1 AC 199 2.81 Slattery v Mance [l962J 1 QB 676 15.21 Slazengers Ltd v Seaspeed Ferries International Ltd (The Seaspeed Dora) [1988] 1 WLR221 25.13 18.65,19.13 Sleigh v Tyser [1900J 2 QB 333 Small v United Kingdom Marine Mutual Insurance Association [1897] 2QB311 10.16, 11.49 Smit Tak Offshore Services v Youell [1992J 1 Lloyd's Rep 154 21.14 Smith, Hogg & Co Ltd v Black Sea & Baltic General Insurance Co Ltd [1940] AC 997 19.16,19.43 Smirh (MH) (Plant Hire) Ltd v DL Mainwaring [1986J 2 Lloyd's Rep 244 25.14,25.15 Smith New COUrt Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 .4.183 Smith v Chadwick (1884) 9 App Cas 187 4.56, 4.59 5.29 Smirh vCologan (1788) 2 TR 188n Smirh v Land & House Properry Corp (1884) 28 ChD 7 .4.14 Smith v Lascelles (1788) 2 TR 187 5.29 Smith v Reynolds (1856) 1 H & N 221 3.17, 3.55 21.100 Smith v Robertson (1814) 2 Dow 474 Smith v Surridge (1801) 4 Esp 25 " .. 18.48 8.14 Smirh v Wilson (1832) 3 B &Ad 728

State Government Insurance Office (Qld) v Brisbane Stevedoring Pry Ltd (1969) 123 CLR 228 25.55 3.58, State of rhe Netherlands v Youell [1998J 1 Lloyd's Rep 236; [1997J 2 Lloyd's Rep 440 3.64,4.191,10.78,11.41,24.09,24.15,24.23,24.24 Stare Trading Corp oflndia Lrd v M Golodetz Ltd [1989J 2 Lloyd's Rep 277 18.57 Sraric Control Componenrs (Europe) Lrd v Egan [2004J 2 Lloyd's Rep 429 .. '" 8.10 7.32,23.23,24.73 Sreamship Balmotal Co Ltd v Marten [1902J AC 511 Steamship Calcutta Co Ltd v Andrew Weir & Co (1910) 15 Corn Cas 172 19.15 25.40, 25.73 Stearns v Village Main Reef Gold Mining Co (1905) 10 Com Cas 89 13.64 Steaus Romana, The 158 F 2d 260 (1946), 13 ILR 224 Steel v State Line Steamship Co (1877) 3 App Cas 72 '" 19.03 Stephen v Scottish Boatowners Mutual Insurance Association (The Talisman) [1989J 1 Lloyd's Rep 535 24.07,24.22,24.23 Stephens v Australasian Insurance Co (1872) LR 8 CP 18 2.29,2.32,2.34 Stephens v Cannon [2005J EWCA Civ 222, [2005J CP Rep 31 7.50

lxviii

lxix

19~19~1~3~19~1~~19~19~1~~1~~19~ 22.80,22.89,22.102,22.106,22.107,22.108,22.113 Srarfire Diamond Rings Lrd v Angel [1962J 2 Lloyd's Rep 217 8.07 Starrett Housing Corp v Iran (1984) 4 Iran-USCTR 122 13.59 8.20, 8.50 Starsin, The [2003J UKHL 12, [2004J 1 AC 715

Table ofCases

Table ofCases

Stewart v Bell (1821) 5 B &Ald238 " ' " ' ' ' ' ' ' ' ' ' ' ' ' ' ' """,."".""",17,13 Stewart v Greenock Marine Insurance Co (1848) 2 HLC 159 , 22.38 Stewett v Aberdein (1838) 4 M & W 211 """",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,22,117 Stock v 1ngliss (1884) 12 QBD 565 " " " ' " ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ,,3.35 Stockdale v Dunlop (1840) 6 M & W 224 , , , " , , , ," , ' " , , , ' " , , , ' , , , , " ' , , ,3,12,3.55 Sto10s Compania SA v Ajax Insurance Co Ltd (The Admiral C) [1981J 1 Lloyd's Rep 9 ,,,.',,,,,,,,,,,,,,,,,,,,,,,,' .... ,,,,,,, .. ,,,,,,,,,,,,,.',,,, ,22,116 Stone v Marine Insurance Co, Ocean Ltd of Gothenburg (1876) 1 ExD 81 6.02, 17.30 Stone Vickers Ltd v Appledore Ferguson Shipbuilders Ltd [1992] 2 Lloyd's Rep 578 .",,2.84, 3,61,25,29 Stoneham v Ocean, Railway & General Accident Insurance Co (1887) 19 QBD 237 .... 22.14, 22,15,22.16 StoOlUvaart Maacschappy Nederland v Peninsular & Oriental Steam Navigation Co (The Khedine) (1882) 7 App Cas 795 ' ... , , .. ' , , .. , , .. , , , , , , , , , , . ' .... , , , , , .... ,12,20 Stott (Baltic) Steamers Ltd v Matten [1916J 1 AC 304 " .. """"""",,,,,,,,,,,10,21 Stowers v GA Bonus pIc [2003J Lloyd's Rep IR 402 , .. " " " " . " " " " , .. """",5.56 Sttang v Scott (1889) 14 App Cas 601 , .. " .. ",,,,,, .. ,,.,,,,,,,,, .. ,,,,,, .. ,,,24,45 Stranna, The [1938J P 69 " .. ", .. ", .. ", .. ",,,,, .. ,.,,, .. ,,,,,,,,,,,,,,,,,10,21 Stringer v English & Scottish Marine Insurance Co (1870) LR 5 QB 599 21.21, 22.34,22,60,22,61 Strive Shipping Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Grecia Express) [2002J EWHC 203 (Comm), [2002J Lloyd's Rep IR 669 ' ' , , A,85, 4,88, 4.169,7,40,7,41, 7,46,14,27,15,18,15.79,24,02,24,14,24,16 Srtong & Pearl v S Allinson & Co Ltd (1926) 25 LlLRep 504 ",.""".""",."",5.23 Stroude v Beazer Homes Ltd [2005J EWCA Civ 265, [2005J NPC 45 """""""",8,40 Strover v Harrington [1988J Ch 390 , , ' , , .. , , , , , .. , . , , , , , , " ' , , .. , , , , , , , . ,4,64 Structural Polymer Systems Ltd v Brown [2000J Lloyd's Rep IR 64 , , , , , , , , , , .. , , , , , , ,2L15 Stuart v British & African Steam Navigation Co (l875) 32 LT 257 , ' , .. '" , , ,18.52 Sumitomo Bank Ltd v Banque Btuxelles Lamberr SA [1997J 1 Lloyd's Rep 487""",. A,138 Sun Fire Office v Hart (1889) 14 App Cas 98 "", .. " .. ", .. """."""""",,6,03 Sun Tender, The [1999J QB 199" .. " .. " .. "" .. """" ... """" .. ", ,5.76, 5,79 Sunport Shipping Ltd v Tryg-Baltica International (UK) Ltd (The Kleovoulos of Rhodes) -[2003] EWCACiv 12, [2003J I Lloyd's Rep 138, ,8,12, 8,60,13.71,13.75,13.83, 2L71 Suplhite Pulp Co Lrd v FaberCl895) 1 Com Cas 146 ''''''''''''''''''''''''''~'' A,165 Surrey Heath Botough Council v Lovell Construction Lrd (1990) 48 BLR 108 ",25,32,25.33 Surherland v Pratt (1843) 11 M & W 296 ' , , .. , , , , , , , .. , ' , , , .. , , ' , , , .. , , ' , , , , , . , ,3,13 Svenssons 1hvaruaktiebolag v Cliffe Steamship CO [1932J 1 KB 490 , ..• """,19.28, 19,29 Swain v Wall (1649) 1 Rep Ch 149"" .. , .. "", .. " " " " " " " , . " " " " " " ,26.32 Swan v Maritime Insurance Co [1907] 1 KB 116 " ,.", "" '""" .20.13 Sweeting v Pearce (1861) 30 LJCP 109 ", .. ",,,,,, .. ,,,,, .. ,.,,,,,,,,,,,,,,.,22,117 Swiss Reinsurance Co v United Insutance Co Ltd [2005J EWEC 237 (Comm), [2005] Lloyd's Rep IR341""" .. ", .. ".""" .. , .. "",,,,,,,,, .. ,,,,,,, ,6,02, 6,07 Sykes v Forster, umep, QB, 30 March 2001 ,,,,,,, .. ,,,,,,,,,, .. ,,,,,,,,,,,,,8,34,8,40 Symington & Co v Union Insurance Society of Canton Ltd (1928) 31 LlLRep 179 ... ,. 10.60, 10.73, 13,57 Symington & Co v Union Insurance Society of Canton Ltd (No 2) (1928) 32 LILRep 287 , .. ' , , , , , ., ' , , , " ' , " , , , , , , , "., , " , , , , , . , , , , , , , , , ,8,86,9,49,9,60 Syndicate 1242 at Lloyd's v Morgan Read [2003J Lloyd's Rep IR412 " " ' " " " ' , , , , ' ,2,64 Sze Hai Tong Bank Ltd v Rambler Cycle Co Lrd [1959J AC 576 ' , , " , , , , , , ,,' , ' , , , , , ,8,21

Talbot Underwtiting Ltd v Nausch Hogan & Murray [2005J EWEC 2359 (Comm) "" ,2,81 Talisman, The [1989J 1 Lloyd's Rep 535 " " " " " " " " " " " " ' " ,24,07, 24,22, 24.23 Tamphn (FA) SS Co Ltd v Anglo-Mexican Petroleum Products Co Ltd [1916J 2

T&N Ltd v Royal & Sun Alliance pic [2003J EWEC 1016 (Ch), [2004J Lloyd's Rep IR 106 " " " " ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ,8.D?, 8.78, 8,80, 20,37 , 14.28 T v Secretary of State for the Home Department [1996] AC 742 Tait v Levi (1811) 14 East 481 , , , , , , , , " ' .. , .. , , ... ' , .. , , , , , , , .. , , , , , , .. , 1L36, 18.34

Ixx

~m""""'",,13m

Tannenbaum & Co v Heath (1908) 13 Com Cas 264 , , , , " , , , , , , . , , , .. , , , , , , , , , .. , . L60 Tanner v Bennett (1825) Ry & Mood 182 , .. , " " " ' , ... "", ... , .. " .. ", ,9,57,11,40 Tarbuckv Avon Insurance pic [2002J QB 571 " " " " " " " " " " " " " " , ,20,37, 20.39 TaskervCunninghame(1819) 1 Bligh 87 "', .. ,.,", .. , .. ", .. " " " " " , , , ",18,33 Tasman Discovetet, The [2004J UKPC 22, [2005J 1 WLR 215 ' " , , , .. , .. , , " , , . : , " ,8,50 Tate & Sons v Hyslop (1885) 15 QBD 368 " " " " " " " " " " " " ' " A.73, 4.75, 25,19 Tatham, Bromage & Co v Burr (The Engineer) [1898J AC 382 " , , , , , , " , , ... , , " , ,,12.21 Tatjana, The [1911] AC 194 " ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' " " .. """ .. " .. "", .. ,19.54 1imersall v National Steamship Co Ltd (1884) 12 QBD 297 """"",.""""",,19,13 Taylor v Dunbar(1869) LR4 CP 206 " " " ' ' ' ' ' ' ' ' ' .. , .. " " " , .. ,,,,,,,15,36,15,37 Taylor v Wilson (1812) 15 East 324 " " " " " ' , .. """ .. ,."", .. """",,,,,17,06 Tekuol Ltd ~ International Insurance Co of Hanover Ltd [2005J EWCA Civ 845, [2005J 2 Lloyd s Rep 701; [2004J EWEC 2473 (Comm), [2005J Lloyd's Rep IR 358 , " , .. 8.17, 8.51,9.29,9,65 Telfait Shipping Corp v Inersea Carriers SA [1985] 1 WLR 553 ' , , , " , ,., , " , , ,22,68, 22,71 Tempus Shipping Co Ltd v Louis Dreyfus & Co Ltd [1930J 1 KB 699 "",9.53, 10,60, 10,65 Tersons Ltd v Stevenage Development Corp [1963] 2 Lloyd's Rep 333 """""""",8,57 Tesco Stotes Ltd v Pook [2003J EWEC (Ch), [2004J IRLR 618 """"".""."",,8.33 Teuronia, The (1872) LR4 PC 171 " " " " " " ' " " , , , , .. ,,,,,,, .. ,.,,,, .. , .. ,18,49 TFL Prospetity, The [1984J 1 WLR 48 " " ' ' ' ' ' ' ' ' ' ' ' ' , .. """,,, .. ,,,,,,, .. ,,,8,22 Thames & Mersey Marine Insurance Co Ltd v British & Chilean Steamship CO [1915J 2 KB 214 ", .. , " " " .. ,"', .. "" .. """"" .. ",,,,, .. ,,,,, ,,25,68, 25,71 Thames & Mersey Marine Insurance Co Ltd v Gunford Ship Co Ltd [1911] AC 529 .... 3.11,

3,49,7,25,7,39,7,44,18,82, 26m, 26,56

Thames & Mersey Marine Insurance Co Ltd v Hamilton, Fraser & Co (The Inchmaree) (1887) 12 App Cas 484 , ... " .. ,", .. , .. " " " " , .. ",' .. "" 10,18, 10,24, 1LOI Thames & Mersey Marine Insurance Co Ltd v HT Van Laun & Co (l905) (l917) 23 Com Cas 104 " " " " " " ' ' ' ' ' ' ' ' ' ' " , . " " .. " .. ", .. , .. "",18,34,18.37 Thellusson v Ferguson (1780) 1 Dougl231 " " " " " " " ' , , , , , , .. , .. ,.,,,,, .... ,18.37 Thellusson v Fletcher (1780) 1 Doug 315 "', .. ,""'"",,,,,, .. ,,,, .. ,, ,3,07, 2L107 Theodorou v Chestet [1954J 1 Lloyd's Rep 204 ' ' ' ' ' ' ' ' , .. " .. " " " .. ", .. """ .1.57 Thin v Richards & CO [1892J 2 QB 141 """""",." .. " " " , .. , .. , .. "",,, 19,28 Thomas & Co v Brown (1899)4 Com Cas 186 ' ' ' ' ' ' ' ' , .. " " " , .. , .. , .. ", .. " ,25.25 Thomas Bares & Sons Ltd v Wyndam's (Lingerie) Ltd [1981J 1 WLR 505 """,.,8,79,8,80 Thomas Chesire & Co v Vaughan Bros & CO [1920J 3 KB 240 , , , , , , , , , , , , , ... , , , , , , ,5.58 Thomas (M) & Son Shipping Co Ltd v London & Provincial Marine & General Insurance Co Ltd (1930) 30 TLR 595""'''''''''''"""" .. """,,,,,,,,,,19,38,19.50 Thomas v Metropolitan Life Insu[~nce Co 131 A 2d 600 (1957) """""""""",13.23 Thomas v Richatd Evans & Co Ltd [1927J 1 KB 33 , , , .. , , , .. , , ", , , , , , , , , , . " .. , .. 6.39 Thomas v Tyne & Wear Steamship Freight Insurance Association [1917J 1 KB 938 ..... 19.49 Thomas Wilson, Sons & Co v Owners of the Cargo per the Xantho (The Xantho) (1887) 12App Cas 503; (1886) 11 PD 170""""""",,10,03,10,13,10,14,10,15,10,20, 1051, 10.55, 10.56, 10.59, lL32, l2.02, 19,45 Thomas Witter Ltd v TBP Industries Ltd [1996J 2 All ER 573 " " " " " " " ' " A.03, 5,07 Thomas Young & Sons Ltd v Hobson & Partners (1949) 65 TLR 365 """, .. """,,5,28 Thompson v Adams (1889) 23 QBD 361 " " " " " " " " " " " " " . " " " " " " ,2,14 Thompson v Hopper (1856) 6 El & B1172 """",."""",,10,16,18.29,19.22,19.30 Thompson v Taylor (1795) 6 TR 478 , , , , " , , , .. , , , , , , , , , , " , , , .. , .. , " , , , .3.52, 17.39 Thompson v Whitmore (1810) 3 Taunt 227 """"""'"."""""""""",10.25 Thomson v Weems (1884) 9 App Cas 671 " " " " " " " " " ' " ,6,05, 1858, 18,89, 18,90

lxxi

Table ofCases

Table ofCases Thor Navigarion Inc v Ingosstrakh Insurance Co Lrd [2005] EWHC 19 (Comm), [2005J I Lloyd's Rep IR 547 7.33,7.36,7.37,8.79,23.03,23.08,23.10 Thorsa The [1916J P 257 19.15 Thrun;coe, The[1897J P 301 9.56, 10,44 2.55,18.64 Tiburon, The [1990J 2 Lloyd's Rep 418 Tierney v Etherington (1743), cited 1 Burr 348 , 17.13 TL Creda Ltd v Hay Fielding Ltd, unrep, CA, 30 October 1984 5.20 21.87, 21.88 Tobin v Harford (1864) 34 LJCP 37; (1863) 13 CB(NS) 791 Todd v Ritchie (1816) 1 Stark 240 11.56 3.57, 3.58 Tomlinson (Hauliers) Ltd v Heppburn [1966J AC 451 Toomey v Banco Vitalicio de Espana SA de Seguros y Reasseguros (20041 EWCA Civ 622, [2005] Lloyd's Rep IR 423 18.62 8.22 Tor Line AB v Alltrans Group of Canada (The TFL Prosperity) [1984] 1 WLR 48 Toronto Railway Co v National British Irish Millers Insurance Co Ltd (1914) 111 LT 555 4.165 8.1l Total Gas Marketing Ltd v Arco British Ltd [1998] 2 Lloyd'sRep 209 Touche Ross & Co v Baker[1992J 2 Lloyd's Rep 207; [1991J 2 Lloyd's Rep 230 2.15, 2.66 Toulmin v Inglis (1808) 1 Camp 421 11.57 7.02 Ttade Indemnity Co Ltd v Workingron Harbour & Dock Board [1937J AC 1 Traders & General Insurance Association v Bankers & General Insurance Co (1912) 9 LlLRep 223 15,47 Trading & General Investment Corp v Gault Armstrong & Keble Ltd (The Okeanis) [1986J I Lloyd's Rep 195 5.11, 22.117 14.06, 14.07, 14.08 Tramp Shipping Corp v Greenwich Maritime Inc [1975J ICR 261 15.18, Transrhene Packaging Co Lrd v Royal Insurance (UK) Ltd [1996] LRLR 32 22.66,22.70 Tridenr General Insurance Co Ltd v McNiece Bros Pty Lrd (1987) 8 NSWLR 270 2.86, 2.90 Trim Joint District School Board of Management v Kelly [1914] AC 667 10.15 Trinder, Anderson & Co v Thames & Mersey Marine Insurance Co [1898] 2 QB 114 10.16, 11.32,15.11, 15.16,21.96 Tropaioforos, The [1960] 2 Lloyd's Rep 469 15.20 Truscott v ChriStie (1820) 2 Brod & B 320 ······· .3.52,17,41,17,43 TSB Bank pIc v Camfield [1995J 1 WLR 430 , .4.04 Tudor]ones 1I v Crowley Colosso Lrd [1996] 2 Lloyd's Rep 619 5.23,5.69,5.70 Turcan, Re (1888) 40 ChD 5 20.27 , 19.19 Turnbull v Janson (1877) 36 LT 635 .4.01 Turner v Green [1895] 2 Ch 205 20.02 Tweddle v Atkinson (1861) 1 B & S 393 Tychy, The (No 2) [2001J EWCA Civ 1198, [2001] 2 Lloyd's Rep 403 8.37,8,40,8,41 Tyrie v Fletcher (1777) 2 Cowp 666 6.02, 8.61

Upcerne, The [1912] P 160 Upjohn v Hitchens [1918] 2 KB 48 Usher v Noble (1810) 12 East 639 UzielH & Co v Boston Marine Insurance Co (1884) 1 Lloyd's Rep 437 ,

12.16 10.64 23.05 , .. 22.35

Vacuum Oil Co v Union Insurance Society oECanron Lrd (1926) 25 LlLRep 546; (1925) 24 LlLRep 188 21.07, 22.35 20.57, 20.61 Vainqueur Jose, The [1979] 1 Lloyd's Rep 557 Vale & Co v Van Oppen & Co Ltd (1921) 37 TLR 367 5.25 .4.92,18.05 Vallance v Dewar (1808) 1 Camp 503 VallejovWheeler(1774) 1 Cowp 143 11.51 6.07 Vandyck v Hitt (1800) 1 EaSt 96 Vasso, Tbe [1993J 2 Lloyd's Rep 309 24.14, 24.16 Velos Group Ltd v Harbour Insurance Services Ltd [1997J 2 Lloyd's Rep 461 5.14,5.74, 6.02,6.35 Ventouris v Mountain (The Iralia Express) (No 2) [1992J Lloyd's Rep 281 6.27, 22.67,22.121,22.676 Verderame v Commercial Union Assurance Co plc [1992] BCLC 793 , ,." 5.06 Vergina, The (No 2) [2001J 2 Lloyd's Rep 698 24.66 Vermaas' ScheepvaartbedrijfNV v Association Technique de l'Importation Charbonniere (The Laga) [1966J I Lloyd's Rep 582 14.06, 14.07 Versicherungs und Transport AG Daugava v Henderson (1934) 39 Com Cas 312 ., 21.14 Village Main Reef Gold Mining Co v Stearns (1900) 5 Com Cas 246 1.60 22.66, 22.71 Virk v Gan Life Holdings pIc [2000J Lloyd's Rep IR 159 Visger v Prescott (1804) 5 Esp 184 3.78 Visscherij Maatschappij Nieuw Onderneming v Scottish Metropolitan Assurance Co (1922) 10 LlLRep 579 15.24 8.58 ViStaf)ord, The[1988J 2 Lloyd's Rep 343 Vorrigern, The [1899] P 140 19.27, 19.28

m

Union Marine Insurance Co v Borwick [1895J 2 QB 279 12.08, 26.06 5.24,5.64 United Mills Agencies Ltd v Harvey, Bray & Co [1952] 1 All ER 225n United Scottish Insurance Co Ltd v British Fishing Vessels Mutual War Risks Association Ld (The Braconbush) (1945) 78 LlLRep 70 7.52 University oEKeele v Price Waterhouse [2004] EWCA Civ 583, [2004J PNLR 43 8.21 Universo Insurance Co of Milan v Merchants Insurance Co Ltd [1897] 2 QB 93; [1897] 1 QB 205 6.21, 6.22, 6.26, 6.35,10.30 Unum Life Insurance Co of America v Israel Phoenix Assurance Co Ltd [2002] Lloyd's Rep IR 374 : 2,45, 2.57, 2.61

19.54 Waddle v Wallsend Shipping Co Lrd [1952] 2 Lloyd's Rep 105 Wade v Cockedine (1905) 10 Com Cas 115 19.15 Wadsworth Lighterage & Coaling Co Ltd v Sea Insurance Co Ltd (1929) 34 LlLRep 285 10.06, 10.13 22.121 Wadsworth v Lydall [1981] 1 WLR 598 3,43 Wait, Re [1927J 1 Ch 606 Walker v Maitland (1821) 5 B & AId 171 11.31, 11.36 20.12 Walter & Sullivan Ltd v Murphy [1955) 2 QB 584 Waples v Eames (1746) 2 Str 1243 17.35 13.12 Warilda, The [1923] AC 292 15.10, 17,41 Warte v Miller (1825) 4 B & Cr 538 5.30,5.35 Warren v Henry Sutton & CO [1976J 2 Lloyd's Rep 276 Waterkeyn v Eagle Star & British Dominions Insurance Co Ltd (1920) 5 LlLRep 42; (1920) 4 LlLRep 178 3,48, 5.25, 5.26 3.57 Waters v Monarch Fire & Life Assurance Co (1856) 5 El & Bl870 Warson v Clark (1813) 1 Dow 336 19.23, 19.52 Watson v Swann (1862) 11 CB(NS) 756 2.90 18,49 Watts, Warrs & Co v Mitsui & Co Ltd [1917] AC 227 3.71 Waugh v Morris (1873) LR8 QB202 18.05 Way v Modigliani (1787) 2 TR30 Wayne Tank & Pump Co Ltd v Employers' Liability Assurance Corp Ltd [1974J QB 57 9.21, 9.29,15,49 WebSter v General Accident Fire & Life Assurance Corp Ltd [1953J 1 QB 520 21,47 26.14 Weddell v Road Transport & General Insurance Co Ltd [1932] 2 KB 563

]xxii

lxxiii

Uhde v Walters (181l) 3 Camp 16 Union Insurance Society of Canton Ltd v George Wills & Co [1916] 1 AC 281

17.09 2.34,

2.35, 18.b3

Table ofCases

Table ofCases

Wedde,burn v Bell (1807) 1 Camp 1 18.08 Wei," Aberdeen (1819) 2 B & Aid 320 19.23 Weir v Northern Counties of England Insurance Co 4 LR Ir 689 22.18 Weissbe'g v Lamb (1950) 84 LlLRep 509 24.27 22.14 Welch v Royal Exchange Assurance [1939] 1 KB 294 10.81 Wells v Hopwood (1832) 3 B &Ad 20 Wells v Owners ofG" Hoat Whhton No 2 [1897] AC 337 12.16 West ofEngland & South Wales District Bank v Canton Insurance Co (1877) 2 ExD 472 1.60 West of England Bank v Ba'chelo' (1882) 51 LjCh 199 26.03 25.18 West of England Fi,e Insurance Co v Isaacs [1897] 1 QB 226; [1896] 2 QB 377 West India & Panama Telegraph Co Ltd v Home & Colonial Marine Insurance Co Ltd (1880) 6 QBD 51 10.18,10.24 West Wake Price & Co v Ching [1957] 1 WLR 45 20.50 Western Assurance Co v Poole (1903) 8 Com Cas 108 8.89 Western Australian Bank v Royal Insurance Co (l908) 5 CLR 533 22.18 Western Canada Steamship Co Ltd v Canadian Commercial Corp [1960] 2 Lloyd's Rep 313 19.18 Westerton, Re [1919] 2 Ch 104 20.28 Westminster City Council v National Asylum Support Service [2002] 1 WLR 2956 8.34 Westminster Fire Office v Reliance Marine Insurance Co (1903) 19 TLR 668 17.11 Westwood v Bell (1815) 4 Camp 349 5.77 Wharton OJ (Shipping) Ltd v Mortleman [1941] 2 KB 283 13.10 3.73 White v Bdtish Empi'e Mural Life Assutance Co (1868) LR 7 Eq 394 25.76 White v Dobinson (1844) 14 Sim 273,116 LTOS 233 Whittingham v Thomborough (1690) 2 Vem 206 6.06 Whitwell v Hattison (1848) 2 Ex 127 17.35 18.49 Wilhelm Schmidt, The(1871) 25 LT 34 19.04, 19.22 Wilkie v Geddes (1815) 3 Dow 57 Wilkinson v Hyde (1858) 3 CB(NS) 30 23.39 William Bros (Hull) Ltd v Naamlooze Vennootschap WH Berghuys Kolenhaandel (1916) 21 Com C" 253 14.06, 14.07 William France Fenwick & Co Ltd v Merchants' Marine Insurance Co Ltd [1915] 3 KB 290 12.19, 13.25 William France Fenwick & Co Ltd v North ofEngland Protecting & Indemnity Association [1917] 2 KB 522 10.20 William Pickersgill & Sons Ltd & Provincial Marine & General Insurance Co Ltd [1912] 3 KB 614 20.22 22.14 Williams, Re (1902) 19 TLR 82 20.17,23.05 Williams v Atlantic Assurance Co Ltd [1933] 1 KB81 Williams v British Marine Mutual Insurance Association Ltd (1886) 57 LT 27 6.38, 6AO Williams v Notth China Insurance Co (1876) 1 CPD 757 2.86,21.86 Willis Steamship Co Ltd v United Kingdom Mutual War Risks Association Ltd (1947) 80 L1LRep 398 13.15 Wills & Sons v Wotld Marine Insurance Ltd (1911) [1980] I Lloyd's Rep 350n 11.25 Wilson v Boag [1956] 2 Lloyd's Rep 564 17.48 22.118 Wilson v Cteigton (1782) 3 Dougl 132 , 1.42,4.12,6.07 Wilson v Ducker (1762) 3 Burt 1361 Wilson v Forster (1815) 6 Taunt 25 , 21.49 Wilson v jones (1867) LR 2 Ex 139 3.28,3.29,3.30,3.39,3.46,3.55,21.47 Wilson v Maynard Shipping Consultants AB [1978] QB 665 8.41 7.34,26.27 Wilson v Nelson (1864) 33 LjQB 220 Wilson v Raffalovich (1881) 7 QBD 553 : 25.13 9.56 Wilson v United Counties Bank [1920] AC 102

Wilson Bros Bobbin Co Ltd v G,een [1917] 1 KB 860 24.39 Wilson Holgate & Co Ltd v Lancashire & Chesire Insurance Corp Ltd (1922) 13 L1LRep 486 8.86 Wing v Harvey (1854) 5 De G M & G 265 , .4.165 Wise (Underwriting Agency) Ltd v Grupo Nacional Provincial SA [2004] EWCA Civ 962, [2004J 2 Lloyd's Rep 483 .4.53, 4.101, 4.103, 4.165 22.88, 22.93 Wisemhal v World Auxiliary 1nsutance Co,p Ltd (1930) 38 LlLRep 54 4.59 Wisniewski v Cent,al Manchesm Health Authntity [1998J PIQR 324 Wi,h v O'Flanagan [1936] Ch 575 4.03 1.42 Wittingham v Thornborough (1690) hec Cit 20 Wolenbutg v Royal Co-opettive Collecting Society (1915) 84 LjKB 1316 6.09 3.11,3.54, Wondrous, The [1992] 2 Lloyd's Rep 566, [1991J I Lloyd's Rep 400 7.59, 13.50, 13.73, 13.76, 13.82, 13.83, 15.07,24.27 Wood v Associated National Insurance Co Ltd [1985] 1 QdR 297; [1984] I QdR 507 .................................................... 15.11,15.13,15.15,19.06 Wood v Perfection Travel Ltd [1996] LRLR 293 20.51 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC741 5.24 10.20,10.51 Woodley v Michell (1883) LR 11 QBD 47 21.121 Woodside v Globe Marine Insutance Co Ltd [1896] 1 QB 105 Woolf v Claggett (1800) 3 Esp 257 18.53 Woolfall & Rimmer Ltd v Moyle [1942] 1 KB 66 9.27 18.06,18.114 Woolridge v Boydell (1778) I Dougl17 Woolwich Building Society v Taylor [1995] 1 BCLC 132 20.76,20.80 Workvale Ltd (No 2), Re [1992] I WLR 416 20.53 Wunsche HandelsgeseHschaft International MBH v Tai Ping Insurance Co Ltd [1998] 2 Lloyd's Rep 8 17.06,17.07 Wynnstay Steamship Co v Board of Trade (1925) 23 L1LRep 278 13.10

Ixxiv

Xamho, The (1887) 12App Cas 503; (1886) II PD 170 10.Q3, 10.13, 10.14, 10.15,10.20,10.51,10.55,10.56,10.59,11.32,12.02,19.45 Xenos v Fox (1868) LR 3 CP 630 12.09, 21.06, 24.37 6.22, 8.81 Xenos v Wickham (1867) LR 2 HL 296; (1863) 14 CB(NS) 435 Yarm Road Ltd v Hewden Tower Ctanes Ltd [2002] EWCA 2265 (TCC), (2002) 85 Con LR 142 25.35 Yasin, The [1979] 2 Lloyd's Rep 45 25.01,25.28 Yasuda Fire & Marine Insurance Co of Europe v Orion Marine Insurance Underwriting Agency Ltd [1995] QB 174 5.41 Yates v Whyte (1838) 4 Bing (NC) 272 25.02, 25.75 Yorkshire Dale Steamship Co Ltd v Minister of War Transport (The Coxwold) [1942] AC691 8.09, 9.04, 9.06, 9.34, 9.45, 13.11, 13.12 18.63, 18.90 Yorkshire Insurance Co Ltd v Campbell [1917] AC 218 Yo,kshite Insmance Co v Nisber Shipping Co Ltd [1962] 2 QB 330 25.22, 25.48, 25.73,25.75,25.76 Yorkshire Water Services Ltd v Sun Alliance & London Insurance pIc [1997] 2 Uoyd's ~21............................UU

Youell v Bland Welch & Co Ltd (No 1) [1992] 2 Lloyd's Rep 127; [1990] 2 Lloyd's Rep 423 8.02,8.39,8.53,8.74,8.75,8.76 Youell v Bland Welch & Co Ltd (The Superhulls Cover case) (No 2) [1990] 2 Lloyd's Rep 431 2.21, 5.29, 5.42, 5.48, 5.49, 5.66, 5.68, 5.69, 8.02 Young v Sun Alliance and London Insurance Ltd (1977] 1 WLR 104 , 8.17 Young v Turing (1841) 2 M & Gt 593 21.79 Young v Waterloo Mutual Fire Insurance Co [1955] 5 DLR 35 10.62

lxxv

Table ofCases Zamora, The [1916] 2 AC 75 11.69, 13.66 Zemco Ltd v Jerrom-Pugh [1993] BCC 275 6.27 2.08,2.14,2.16, Zephyr, The [1985] 2 Lloyd's Rep 529; [1984] 1 Lloyd's Rep 58 2.18,2.20,2.21,2.27,4.62,5.04,5.07,5.08,5.29,5.30 Zeus, The [20001 2 Lloyd's Rep 587 " .. 18.63 Zeus Tradition Marine Ltd v Bell (The Zeus) [2000] 2 Lloyd's Rep 587 18.63 Zinovia, The [1984] 2 Lloyd's Rep 264 10.16, 11.62, 11.63, 15.18 Zurich General Accident & Liability Insurance Co Ltd v Morrison [1942] 2 KB 53 4.42 Zurich Insurance Co v Shield Insurance Co [1988] IR 174 26.04, 26.57

Paragraph numbers in bold refir to material actually reproduced in either the text or the appendices

Zyxel Communications Corp v Fairbridge Communications Ltd [2004] EWCA 1388 (QBD)

TABLE OF STATUTES

8.45 (1)

Act concerning Matters of Assurances used among Merchants 1601 1.36

s1 An additional Act concerning

(a) (b) (2) (3) (5) s2

1.37

Matters of Assurance used amongst Merchants 1662

(14 Car II, c 23)

1.37

(3)(a) (4) (5) s3

20.05 20.05 20.05 20.05 20.06

~)

~ln

(~

~ln

(1)

Bills of Exchange Act 1882 1.45 Bubble Act 1720 (6GeoI,c 18) 1.14, 1.15, 1.16, 1.17, 1.22, 5.27 s1 5.27 s 12 1.15, 5.27 s 18 1.14 Civil Liability (Contribution) Act

1978 s1 (1) (3) s 2(1) s6

(5) Convoy Act 1803 (43 G3, c 57)

(1)

s1

(1)

(2) (4) (5) (6)

26.35, 26.36, 26.54 26.54 26.37,26.38 26.37 26.36 26.35, 26.39 26.39 26.39

20.41 20.53, 25.14 .......•................. 20.53 20.53 20.53 20.53 20.53

Companies Act 1989

s 141 (3) (4)

20.53 20.53 20.53

Contracts (Rights of Third Parties)

Act 1999 s1

!xxvi

13.56

Customs and Inland Revenue Act

1867 (30 Vict, c 23) s7 s9

2.79, 5.12, 20.01, 20.02, 20.04, 20.06 20.06

2.09, 8.82 8.75 8.75

Employment Protection (Consolidation)

Act 1978 Sch 13, para 24(1)

14.06

Extradition Act 1989

s 6(1)(a) Sch 1

Companies Act 1985

s425 s 651

20.06 , .. 18.71

Criminal Attempts Act 1981

26.36, 26.37, 26.39, 26.54

s 7(3) s 9(2) Sch 2

5.12,20.03 20.03 20.03 5.12, 20.03 5.12, 20.04 20.05

Fatal Accidems Act 1976

14.28 14.28 20.53

Finance Act 1959

3.67, 21.13

Finance Act 1970

3.67

Gambling Act 2005 s3 s9 s334(1) s335

3.19 3.19 3.18 3.18 (1) ..........•............•.• 3.18 (2) 3.18 Gaming Act 1845 3.17 3.17, 3.18 s 18

Ixxvii

Table ofStatutes Harbours, Docks and Piers Clauses Act 1847 556 22.47 Insolvency Act 1986 Ptl Pt VIII 51A 52(1A) 5 5(2)(a) 56 5126(1) 5 130(2) 5260(2)(a) 5262 $ 323 5423 $651 $653 Sch Al pata 12(1)(h) Interpretation Act 1978 59 $23(3)

20.40, 20.80 20.40, 20.80 20.55 20.79 20.40 20.54 20.52 20.52 20.40 20.54 22.118 20.47 20.41 20.41 20.55 20.55

Table ofStatutes

Marine Insurance Act 1906 .... , ..... 1.47, 1.48,1.49,1.61,2.12,2.23, 2.31,3.01. 3.04, 3.21, 3.30, 3.37,3.65,4.16,4.22,4.23, 4.25,4.32,4.41,4.42,4.54, 4.154, 4.175, 4.177, 4.180, 6.07,6.32,8.84,17.04,17.30, 18.11,18.31. 18.34,21.75, 21.106,23.33,23.37,26.40, 26.72, App.1 s1 1.51,17.01,18.11 ~

~16

52 (I)

(2) 53 (I)

(2) (a) ~

(c) 17.46 17.46

54 (I)

Joint Stock Companies Act 1844 ... , . . 1.14

Law of Property Act 1925 $ 136 20.12, 20.18, 25.15 Law Reform (Contributory Negligence) Act 1945 5.66,5.67 54 5.67 Law Reform (Married Women and Tortfeasors) Act 1935 56(I)(c) 26.37 Limitation Act 1980 , 20.69 55 22.62 514A 5.42 Malicious Damage Act 1861 $ 58 14.24 Marine and Aviation Insurance (War Ri5ks) Act 1952 1.31,1.32, 1.33, 1.48 16.15 51 (I) 1.31 $2(1) 1.32 $ 10 (I) 1.32,16.18 (2) 1.32 Marine InsuranceAct 1745 (19GeoII,. c 37) 3, 1.40,3.06,3.07,3.08, 3.09,3.17,3.55 Marine Insurance Act 1788 1.48 Marine Insurance Act 1824 1.16

!xxviii

(2) (a) (b)

$5 (1)

(2) $6 (I)

(2) 57 (I)

(2) 58 5 14 (I)

(2) (3) 515 516 (1) (2) (3) (4) 517

$ 18

18.11 1.58, 4.182,18.12 1.61 17.01,18.11 3.70,3.75 1.52, 1.55, 1.56, 1.57 1.52 1.52 1.55, 3.56 3.12, 3.16, 3.18, 3.22, 20.10, 26.56 3.09,3.11,3.75 3.09, 3.11 3.11 3.26 3.26 3.26, 3.27, 3.29, 3.56 38, 3.20, 3.22 3.12, 3.13, 3.14, 3.15" 3.13 3.45 3.37, 3.38 3.37 3.39

3.46 3.57 3.42 20.09, 26.03 7.26,23.04,23.05,23.10 23.04, 23.08, 23.10 23.04 7.27,23.04,23.29 23.04 .4.08,4.09,4.10,4.11,4.21, 4.30,4.147,4.149,4.150,4.151, 4.152,4.155,4.161,4.176,4.178, 4.186,4.196,4.197,4.200,4.202, 4.203,4.204,22.113,22.114 1.47,4.08,4.09,4.10,4.11, 4.21,4.114,4.115,4.116,4.117,

Marine Insurance Act 1906 (com.) 4.118,4.119,4.126,4.127,4.147, 4.149,4.178,4.197,4.1294.128 (1) .4.08,4.43,4.111,4.117, 4.119,4.155,4.176 (2) 4.23, 4.25, 4.36, 4.75 (3) .4.89, 4.108, 4.151, 4.197 (a) 4.90 (b) .4.75,4.91,4.94 (c) .4.99, 4.101, 4.104 (d) .4.76, 4.106 (5) .4.79 $ 19 4.09, 4.122, 4.123, 4.124,4.125,4.126,4.127, 4.128,4.129,4.189,4.197

W

(b)

$20

(I) (2)

~IM

.4.128 1.47, 4.08, 4.09, 4.10, 4.11, 4.21,4.128,4.142,4.147,4.149, 4.150,4.161,4.186,4.190,4.197 4.08, 4.43, 4.155 .4.23,4.25

(~

~I~

(4) (5)

.4.130, 4.131, 4.144 .4.130, 4.139, 4.140, 4.143,4.144,7.47

0)

~IU

s 21

$ 22 523 (1) (2)-(5) 524(2) 525 (1) (2) 526 (I) (2) (3)

2.10 2.11, 3.65, 3.68 3.66 3.66,3.68 3.66, 3.67 2.14 17.02, 17.03, 17.04 3.67,21.13 3.68 3.69 3.36, 3.69

527 (I) (2) (3) (4) (7)

7.24 7.24 6.09, 7.24, 7.38, 21.119, 23.50,25.10,25.67,25.69 21.78 21.80

5~...........2.31

(1) (3) 532 5 32(2) (a) (b)

2.29,2.31 2.29, 2.31, 2.34 26.41 26.27 26.01 26.27

!xxix

$

(c) (d) 33

., 26.27 .. .. 26.27

(I)

.. 18.61 .. 18.65 18.55, 18.57, 18.70, 18.94

(2) (3) 534 (2) (3)

18.92 3.71,18.94

s 35 (I)

(3) 536(1) s~ $

18.62 18.65 18.77 18M

39

(I) 19.23 (1)-(4) 19.20 (2) 19.24 (3) 19.23, 19.29 (4) 19.Q3 (5) 9.64,15.69,19.4,19.30, 19.39,19.40,19.48,19.49,19.59 540 (I) 19.61 (2) 19.13, 19.61 $41 3.70, 19.82 $ 42 (I) 18.25, 18.26 (2) 18.25 $C I&~ 544 18.Q3, 18.12, 18.14, 18.19 545 (I) 18.30 (2) 18.32 546 18.48 (I) 11.55, 18.34, 18.92 (2) 18.35 (3) 18.37 547 (I) 18.36 (2) 18.36 s 48 18.38, 18.48 s 49 18.39, 18.41, 18.42, 18.43 (I) 18.24, 18.48 (b) 18.44, 18.50 (c) 18.43 (d) 18.44, 18.48, 18.50 (e) 18.51 (f) 18.53 (g) 11.55, 18.43 $ 50 ., .20.14, 20.18, 20.24, 20.26, 20.28 (I) 20.14, 20.28, 20.31 (2) 20.14, 20.20, 20.21, 20.22, 20.23 (3) 20.18, 20.19

Table ofStatutes Marine Insurance Act 1906 (cant.) s 51 20.10 s 52 3.68 s 53 (1) 6.21, 6.22, 6.23, 6.24, 6.27, 6.29, 6.32, 6.35, 6.37, 6.40, 22.116,22.118 (2) 5.76, 5.77, 5.79 ,54 6.32 s 55 15.29 (1) 9.02,9.30,9.59,9.64, 10.66,15.01 (2) 9.30, 15.01, 15.02, 15.10 (a) 9.32,9.64, 11.29, 11.33, 11.35, 11.39, 11.40, 11.44, 15.10,15.14,15.16,19.47, 24.19,24.20,24.21,24.24 (b) 9.30, 9.31, 9.64,15.29, 15.33,15.35,15.37 (c) 9.30, 9.31, 9.64,10.24, 15.43,15.47,15.49, 15.50, 15.61 s 56 (I) 21.36, 21.84 (2) 21.36 (4) 21.84, 23.14 (5) 23.30 ,57 (1) 21.37 (2) 22.35 s 58 ···.···· .21.21, 22.37

s59 s 60 (I) (2) (i)

(a) (ii) (iii) s 61 ,62 (I) (2) (i) (3) (4) (5) (6) (7) (8) (9) s 63(1) s 65 (1)

· .. · .. · .. ··· 18 . 111 21.53, 21.53, 21.56 21.53, 21.58, 21.77, 21.96 21.53, 21.77, 21.96 21.59, 21.69 21.62, 21.67, 21.71 21.74 21.76 22.33, 22.50

(2) s 66 (1) (2) (3)

(4) (5) (6) ,67 (2) s 68 (1) s 69 (1) (2) (3)

s 70 s 71 (I) (2) (3) (4) s 72 ,75 (1) (2) s 76 (1) (2) (3) (4) s77 (I) (2) s78 (I) (2) (3)

(4)

22.33, 22.50 22.52 21.60 22.33, 22.53 22.58 22.59 21.102,22.58,22.61 21.71,21.96,22.35,22.58 22.35, 22.58 22.35 22.32

s79 (1) (2) s 80 (1) (2) s 81 s 84 (1) (2)

24.63

lxxx

Table ofStatutes 24.63 24.43 24.45 24.44 24.45 24.49, 24.53 24.50 24.52 22.121 22.04, 23.49 22.121, 23.12 25.67 21.20, 23.15 23.15, 23.16, 23.18, 23.19, 25.69 21.112, 23.15, 23.19 21.30, 21.112, 23.15, 23.19 23.35 23.29 23.29 23.31, 23.32 23.35 23.37 23.14, 23.19 7.26,21.85 23.39 23.39 23.39 23.39 21.110,21.113,21.114 21.115 24.02,24.16 24.25, 24.29 24.64 24.27 24.Q2, 24.Q7, 24,09, 24.10, 24.12,24.13,24.14,24.15, 24.16,24.20,24.21,24.24, 24.25, 24.26, 24.29 25.10, 25.69 22.32, 25.38, 25.69 25.69 26.01,26.34,26.35,26.39,26.42 26.34, 26.41, 26.42, 26.69, 26.71,26.72 26.34, 26.60, 26.61 23.49, 25.61, 25.66 5.50 1.42, 6.04, 6;07,15.49,18.08 : 6.04

Marine Insurance Act 1906 (cont.) (3)

(a) (c) (e) (I) ,85(2) s 86 s 88 s 89 s~

1.42, 6.02, 6.06, 6.07 3.16, 6.05 6.09 6.09,26.28 6.40 2.86 18.39,18.115,21.65,22.54 8.72,8.75,8.76 1.~

,91(2)

1.47, 4.43, 4.148, 4.176, 4.178,21.106 ,92 3.08 Sch 1 7.02, 8.15, 14.14, 17.28, 17.45 rl 3.13 r2 17.29 r3 17.29 r 3(c) 17.38,17.39 r 3(d) 17.40,17.41,17.42 r6 18.36 r7 10.03 r8 10.74 r9 10.69 rIO 13.48 r 11 7.59, 11.50 rI2···· 7.23 r 15 1.52 r16 1~ rI7···· 1.52 Sch 2 3.08 Marine Insurance (Gambling Policies) Act 1909 1.48, App.2 s1 " 3.16 (5) 3.16 ,2 1.49 Maritime Conventions Act 1911 12.09, 26.39 Merchant Shipping Act 1894 ,742 12.15 Merchant Shipping Act 1995 s 187 12.09, 26.39 Sch 11, Pt II, para 2 24.56 MisrepresenrationAct 1967 .4.162 s2 (I) .4.179, 4.182, 4.183 (2) 4.04, 4.158, 4.159, 4.160, 4.162,4.182 Offences Against the Person Act 1861. .. 14.24 Policies of Marine Insurance 1868 (31 & 32 Vict, c 86) 1.44 sl 20.14

!xxxi

Public Order Act 1986 s 1. (I) (2) (3)

(4) (5) s 10(2)

14.12 14.12 14.12 14.12 14.12 14.12 8.12, 14.14

Rehabilitation ofOffendersAcr 1974 . .4.69 s 7(3) .4.69 Road Traffic Act 1988 9.62 Sale of Goods Act 1893 1.45 s 16 3.43 Sale of Goods Act 1979 s16 3.43 s20A 3.43 s 31(2) 6.04 s 32(2) 5.28 s 53(1) 20.25 SrampAct 1795 3.65, 8.81, 8.82 Stamp Act 1891 3.66, 3.67, 8.83 Summer Time Act 1972 , 17.46 Supply of Goods and Services Act 1982 s13 5.2 Supreme COUrt Act 1981 ,35A 6.14 Supreme Court ofAdjudicature Acts 1873 and 1875 4.03, 4.17 Terrorism Act 2000 ,1 14.19 Third Panies (Rights against Insurers) Act 1930 1.48, 2.95, 5.06, 8.54,12.13,16.04,20.01, 20.33,20.35,20.36,20.39, 20.40,20.41, 20.48, 20.49, 20.50,20.51,20.52,20.53, 20.54,20.55,20.57,20.58, 20.62,20.66,20.68,20.69, 20.72,20.73, 20.74, 20.81, 20.83,22.97,25.79, App.3 s1 20.40, 20.50 (I) 20.46, 20.47, 20.48, 20.63, 20.83 (3) 20.44,20.45, 20.46, 20.63

(4) (a) (b) (5) (6)(.) s2 (1)

20.82 20.81 20.36 20.40 20.74 20.75,20.79,20.80

Table ofStatutes (2) (3)

s3 s3A (1)

20.80 20.67,20.78 20.44, 20.47 .. .. 20.40

(2)

Treason Act 1351

............ 20.40 ....... 13.32

War Risks Insurance Act 1939 1.31 Workmens' Compensation Act 1906 .. 10.15

TABLE OF STATUTORY INSTRUMENTS

Civil Procedure Rules r 31.12 r 58.14 r 58.14(2)

25.13 1.59 1.59 1.59

Insolvency Rules 1986 r 4.90 Insolvent Partnerships Order 1994 Insurance Brokers Registration Council (Code of Conduct) Approval Order 1978 example 14

Ixxxii

22.118 20041

Lloyd's Delegated Underwriting Byelaw (No 1 of 2004) 2.64 Merchant Shipping (International Safety Managemenr (ISM) Code) Regulations 1998, SI1998/1561

5.73

\xxxiii

19.78

TABLE OF INSTITUTE AND INTERNATIONAL CLAUSES Paragraph numbers in bold refer to material actually reproduced in either the text or the appendices Institute Additional Expenses Clauses

(Cargo-War Risks) 21.97 Institute Additional Perils Clause-Hulls (lil0/83) 11.28, 11.37 11.37 d 1.2 (I/Il!95) 11.28 d 1.2 11.37 Institute Cargo Clauses (1912)

d 11.1 d 11.2 (111/82) (A)

1.20

3.12, 3.15 3.15

7.10, 7.11, 7.12, 7.59,10.77, 10.79,11.44,12.08,13.61, 14.04,14.22,15.03,15.06, 15.63,15.76,17.23,18.12, 21.76,24.52, App 6 d 1.1 9.63 17.13 d 1.3 d2 24.49,24.51,24.52, 24.65,24.74 d 3 , 12.23 d4.1 15.10 d 4.2 7.59, 15.46 cl4.3 7.59, 15.55 d 4.4 , 15.50 d 4.5 9.59, 15.33 d 4.7 14.22 d 5.1 19.61 19.63 d 5.2 19.61 19.62 d 6.2 13.61 d 7 9.63 d8 17.18 d8.1 17.11, 17.20, 18.111 d 8.1.1 17.11 17.14, 17.15, 17.16 d 8.1.2 17.11 17.14, 17.15, 17.16,17.17 d 8.1.3 17.11 17.14,17.18, 17.19 d 8.3 17.13,18.30,18.111 18.112 d9 18.11118.112,18.117, 18.124 d9.1 18.111

1xxxv

d 9.2 d 10 d12 d 13 d 14 d 16 d 16.1 d 16.2 (B)

d 4.2 d 1.1 d1.1.4 d 1.2.2 d 1.2.3 d1.3 d 3 d4.1 d 4.3 d4.4 d 4.5 d 4.7 d 5.1 d 5.2 d 7 d 8 d8.1 cI8.1.1 d 8.1.2 d 8.1.3 d 8.3 d9 d9.1 d 9.2 d 10 dI2 cl13 cl14 d 16

18.111 18.11118.112,18.117 21.51 21.75,21.76 26.08 24.05 24.16, 25.22, 26.55 24.05 24.Q5 25.20 7.10,9.18,9.59,10.44, 10.60,10.77,10.81,10.82, 10.83,12.08,14.04,14.22, 15.76,17.23, 24.52,App 7 18.111 9.63 12.08 10.82 9.13,10.82 10.82,17.13 ' .. 12.23 15.10 15.55 15.50 9.59,15.33 10.83, 14.22 19.61 19.63 19.61 19.62 9.63 17.11,17.12 18.lll 17.11 17.11 17.11 18.30, 18.111 18.112 18.11118.112, 18.117, 18.124 18.111 18.111 18.11118.112,18.117 21.51 21.75, 21.76 26.08 24.05 26.55

Table ofInstitute and International Clauses

Table ofInstitute and International Clauses Institute Mortgagees' Interest

Institute Cargo Clauses (cont.)

Clauses (1/3/97) elU el2.1.4

elI6.1 el16.2

11.44 10.17 10.17

24.05 , .24.0525.20 (C) 7.10, 7.11, 7.12, 9.18,10.60, Institute Notice of Cancellation, 10.77,10.81,10.82,10.83, Automatic Termination of 12.08,14.04,14.22,15.76, Cover and War and Nuclear 17.23,21.97,24.52, App 8 Exclusions Clause-Hulls el1.1. 7.11,9.63 (1/11/95) 17.49, 17.560 dU.1. ····· .. ····· 7 .11 Institute Strikes Clauses (Cargo) d1.L2 7.11,9.13 (11l/82) 7.14,14.02, d1.1.3 ··········· 7 .11 14.11, App 10 d1.1.4 .7.11, 12.08 ell 14.01 d1.1.5 · .. ······· .. ···· 7 .11 el2 24.52 dL2 ······ .. ······ .. 7.11 ···· .. ····· 15 . 10 el3.1 d 1.2.1. 7.11 el3.2 15.46 eI 1.2.2 7.11 elB 1555 el3 12.23 el3.4 15.50 el4.1 15.10 el3.5 15.33 dO 15.46 el3.7 14.04 15.55 el4.3 el3.8 21.97 cl4,4 .759, 15.50 el3.9 15.80 el4.5 · · 959 ,15.33 el4 , .19.61 el4.7 10.83, 14.22 el5.3 18.112 el5.1. 19.61,19.63 18 .112 el7 ···· .. ······· el5.2 19.61, 19.62 el9 26.08 el7 9.63 elll 24.05, 26.55 el8 17.11, 17.12 el1L2 25.20 ······ .. 18 .111 el8.1 Institute Time Clauses-Hulls eI 8.1.1. 17.11 Disbursements and Increased ··· .. ·······17.11 el8.L2 Value (Total Loss only, el8.1.3 17.11 including Excess Liabilities) el8.3 18.30, 18.111, 18.112 (11l0/83) 24.75 el9 18.111, 18.112, 18.117, (1/11/95) ,' .24,75 18.124 Institute Time Clauses-Hulls ······ .. ··· 18.111 el9.1 Excess Liabilities el9.2 18.111 (1110/83), ,' ,", .. '" .24,75 el10 18.111,18.112,18.117 (1/11/95) , ,' ' , .. ' .12,21, 24,75 el12 21.51 Institute Time Clauses Freight el13 21.75, 21.76 (1/8/89) , , . , .. ' , , 7.25, App 17 el14 26.08 el4.,., .. " " .. ",." .. 18.113 el 16 24.05,26.55 el7,l ", , , .. 10,02 el16.1 24.05 eI 7.2 .. , .. " " " .. , .11.02 el16.2 24.05,25.20 eI 11 ,' ', ' , , ,24,65 Institute Commodity Trades Clauses ellU , , .. "", ', .. 24.74 (A) 21.08, 21.09 d 11.3 " ", .. ,,24.52, 24,66 d5.3 19.62 el12 .. , ' , , , .. , , , ' , .. ' ,23.48 (B) ', .. " 23,36 el13.1 .. " eI 5.3 19.62 el14" , ", , .. ,21.95 (C) d15 , .. " " 21.94 el5.3 19.62 elI5.1" ", .. " .. ,.,3.54,21.94 Institute General Average-Pollution cl15.2 .. " ', .. ,., 21.94 Expenditure Clauses-Hulls el15.3, .. ",.,.":.,,."'" .21.94 (1/ll/95) 24.54 el16 , ' , ... , ' ... ' , , ..... 6,03,21.94 Institute Malicious Damage Clause

14.22

!xxxvi

Institute Time Clauses Freight (1/8/89) (cont.)

el 18,1 .. ", """,., ... 23.25 el 18.2 , ", ,21.122, 23,25 , 21.122, 23.25 el18.3 .. ,' el19 " " .. , .. ,21.80 el 19,1 ."" """"" .21.74 el21,l.,,, ,,,,,.,,,.,.18.83 d2L2 ,,,, ,,,, 18.83 el22 .. ,' ',.,' 6.03,6.20 (1/11/95) , 7.21,7,36, 11.65, 12,06, 23.08, App 12 elU ... , .. " "." .. ,,, 18.100 el1.5 .. "., " ... ,." .. 23.11 el 3 , , ,,,,.,,, .. 18.113 el 4 , . , . , , " , , " , . '" ... 23.26 el 5,2 ", .. ".,,, 13,68,19,67,20.11 el 6.1 " ", 10,02 el 6.1.8 , 12,06 el 6.2 .. ",' , .. ,., 11.01 el 10 .... " , .. " .. , .. ,24,65 d10.1 " ,,,,, ,24.49, 24.74 dl0.2, " , 2451 el 10.4 "" ,2452, 24,66, 25.72 el 10.5.1 ."."." .... ,'.". ,24.67 el 10.5.2 "." ,.",,,, 24.54 diU",., ", 24,04 ell1.2 " ,.,,, 24.37, 24.40 el 11.3 , ,,, ,, 22.60 ellI.4 ,." " .. ",24.72 el 1I.5 .. "", "",,,,,, .24.28 el 11.6 ."" .. , .. ,,,, ........ 24,29 eI 12.1 " ",23.40, 23.47, 24.40 23.44 el12.2 ' , .. ,,, , .. "",25.72 el12.3 , .. , elI3,l " """".22.28 el13.2 " .. , ,.""" .... 23,17 el 13.3 ,,,, ,,,,,,,,, .. ,, .. 23.17 el 14." , .. ,,,,,,, 23.18 elI5, ,." ,23,18 el 16, , ,." ,,, ,23,18 el 18.2 .. ,.", ,'.', ,,2U22 el 19 .. , .. , , .. "." .. 21.80 el 19.1 ", , .. "." 21.74 el 21 .. " ,'.'." 20,19 el 23 , .. "",., 6.03, 6.20

(11l1/95) , ., ' , , ., , 7.25 d4 , , ", 18.113 d7,1 , .. , , , 10.02 eI 7,2 .. , .. , " .. " , .11.01 ellU " , .. " ,,24,74 ellL2 , , .. , ".2451 d 11.3 , .. , , .. ,24.52 d 12 , .. , ,', 23.48 eI 14 , 15.29, 21.95 el14.1 " ", .. , .. 23,36 el14,2 .. , , .. " ....... 26.08 el16,1 , .. ", ,3.54, 7,21, 21.94 d16.3 , .. , ',., ,21.94 el 17 , ,,.,' ,,., 6.03 dI3.2 , "", 26.07 Institute Time Clauses Hulls

(1/10/83) "",7,15,7,16,7,17, 8,90, 9,25, 12,06, 16.04, App 11 elU " " .. ,.18.100 eI 1.2 '.',' " .12.07, 12.21 el1.3 .. , " ,23.11 el2, ,., 1752, 17.53 el3 ", .. " " .18.113 el4 ", 19.69, 20.11, 23.26 el4.2 .. , "",13.68,19,67 el5 ' .. , ,' 19,69, 20,19 eI 6,1 , .. , .. , ,.10,02 ", .. , .. 12.04 el6.1.7 .. , .. ,' el6.2 .. , .. " , .. " 11.01 el6.2,l , ,., ,12.06 ,. 12,05 d 6,25 , .. , .. , ell0,2 ,'., " .. , .. 23.17 ell0.3 ." .. , , " .. ,23.17 el10.4 ,' , " .. , 22.25 eI 11 . , ' , .. , 24,65 ellU ".' .. , 24.49, 24.74 el 11.2 .. "."" " .. ,24.51 el 11.4 .,.", 24.52, 24.66 el 12.1 ,., 23.40, 23.47, 24,40 d12,2 " '", " 23.44 el 12.3 , ,.,,,, ,.,,.,25.72 el 12.4 "" "", ,25,72 el 13.1 ,."." ", ...... 24,04 d13,2 " "." .. 24.37, 24,40 el 13.3 , ,,,'., ,,, ,22.60 el 13.4 "., ,,'., ,24,72 el 13.5"" """, .24.28 el 13,6., ", 24,29 elI4,,, , .. ,.,, ,,. ,23,18 elI5 ".,,,, ,,, ... ,23.18 el 16., .. ",,,.,, ,,,,,,, .23.18 el 18"".", "", ...... 23,25

Institute Voyage Clauses Freight (1/8/89)

Ixxxvii

d3 "" " ... 18.30,18.113 ,,,, .. , .. ,, 10.02 el5.1 el5.2 ., , .. , ,11.01 el 10., .. "."." ,,, ,23.48 diU,,,,, ,,,,, .23.36 dl1.2 , ",' .. ,24.51, 26.08 elI2, .. , "",,,, 21.95 el 13,1 ", 3.54,21.94 el 13,2 ,,,, ' , .26,08

Table ofInstitute and International Clauses Institute Voyage Clauses Freight (1/8/89) (cont.) cl13.3 21.94 (1111/95) cl3 18.30,18.113 cl5.1 10.02 cl5.2 11.01 clIO , .. 23.48 cll0.1 23.36 cl10.2 26.08 cl12 15.29, 21.95 cl12.1 3.54,21.94 cl12.3 21.94 Institute Voyage Clauses Hulls (1/10/83) 7.16,7.17,11.67 el2 18.30, 18.113 cl4.1 10.02 cl4.2 11.01 cl14 23.18 cl16 , 23.25 cl16.2 21.122 cl17.1 21.74 cl17.2 21.18 (1/11/95) App 14 cl1.1 18.52 el2 , 18.30, 18.113 cl4.1 10.02 cl4.2 11.01 cl14 23.19 cl16 23.25 cl16.2 21.122 el17.1 21.74 21.81 cl17.2 Institute War Clauses (Cargo) (1/1/82) 7.14,13.61,13.63, 13.67,17.22, App 9 c 11.2 " 25.20 cl1 13.02 cll.l 13.02 13.47 cl1.2 " ., 13.02 13.44 d 1.3 13.0217.27 cl2 , 24.52 cl3 " 13.63 cl3.1 15.10 cl3.2 15.46 cl3.3 15.55 d 3.4 15.50 el3.5 15.33 cl 3.6 13.63 el3.7 " 13.63 21.97 el3.8 15.80 el4 19.62 cl5 17.23,17.25 el5.1.1 17.24

cl 5.1.2 17.24 el 5.1.3 17.24 cl 5.1.4 17.24 el 5.2 17.26 cl5.3 17.26 el 5.4 17.27 el5.5 18.112 el6 18.112 el9 , 26.08 el11 24.05,26.55 Institute War and Strikes Clauses (Freight-Time) (1/10/83) cl3 '" " 21.95 cl4.5 21.95,21.97 (1/11/95) cl3 21.95 cl4.5 21.95 cl4.6 21.97 Institute War and Strikes Clauses (Freight-Voyage) (1/10/83) ..... 21.95 cl4.5 21.95, 21.97 (1/11/95) d3 21.95 cl4.5 21.95 cl4.6 21.97 Institute War and Strikes Clauses (Hulls-Time) (1/10/83) 7.22, 15.Q7, 16.19, App 15 cl1 7.05, 14.01 cl1.4 14.01 cl1.5 " " 14.01 cl1.6 14.01 cl2 17.51 cl3 , .. 21.70 cl4.1.3 13.62 cl4.1.4 13.62 cl4.1.5 13.62 cl4.1.6 13.62 cl4.1.7 15.75 cl4.2 15.78 cl4.4 15.41, 24.48 cl5.2.3 13.68 cl12 15.78 (1/11/95) '" .App 16 cl1 14.Ql cl 1.4 14.Ql cl 1.5 11.65, 14.01 cl 1.6 14.Ql cl2 17.51 cl3 21.70 cl 5 '" 13.62 cl5.1 " 13.62 cl5.1.1 ~ 17.50 cl5.1.2 13.62, 13.64-69 17.50

!xxxviii

Table ofInstitute and International Clauses Institute War and Strikes Clauses (Hulls-Time) (1/10/83) (COnt.) cl5.1.3 13.6213.70 cl5.1.4 7.59, 13.62, 13.71-74 13.82 cl5.1.5 7.59, 13.62, 13.75-79 13.82,15.41 el 5.1.6 15.75 cl5.2···· 17.50 cl 5.3 11.65 cl5.5········· 24.48 el6.1···· 17.50 cl6.2 17.50 cl6.2.2 13.68 Institute War and Strikes Clauses (HullS-Voyage) (1110/83) cl3 21.70 (1/11/95) cl3 21.70 Institute Yacht Clauses (1111/85) 7.35 International Hull Clauses (1/11/02) 7.19,11.27,11.67,12.05 cl2.1.9 12.05 el 2.2.1 11.27 cl 2.2.2 11.27 d 2.3 11.27 el 2.4 , 11.27 d41······ 11.28 el43.1 22.07 el46.1 22.07 (01/11103) 21, 6.03, 7.19, 7.22, 7.26, 11.27, 11.28, 11.65, 12.05, 22.33,22.83,24.72, App 13 el2 21.81, 23.41 el2.1 10.02 d 2.1.1 10.02 cl2.1.2 10.02 cl 2.1.3 10.02 cl2.1.4 10.02 cl 2.1.5 10.02 cl2.1.6 " 10.02 12.02 cl2.1.7 10.02 cl2.1.8 10.0210.22, 12.06 el2.1.9 10.02 12.02 cl2.2 " . 11.01 cl2.2.1. 11.01 el2.2.2 11.01 el2.2.3 11.01 el2.2.4 11.01 cl2.2.5······ 11.01 cl2.5 11.70 cl6 " 12.21, 23.41 cl6.1 12.14,12.19,12.21 cl6.1.1. 12.10 cl6.1.2 12.10

Ixxxix

cl6.1.3 el6.2 cl6.2.2 cl6.3 el6.4 cl6.4.1. cl6.4.2 el6.4.3 cl6.4.4 cl6.4.5 cl8 cl8.1 cl 8.2 cl 8.4 · el 8.5.1 el8.5.2 cl 8.6.2 cl9 el9.1··.· el9.2 el9.3 el9.4 cl9.5 cll0.1 cl10.2 el10.4 elll el12 el13 cl13.1 cl13.1.1. cl13.1.2 el13.1.3 el13.1.4 el13.1.5 el13.2 el14 el14.1 cl14.2 el14.3 cl14.4 cl14.4.1. el14.4.2 eI 15 el15.1 el15.2 el15.3 cl15.4 cl15.5 cl16 el17 el18

12.10 12.21 12.21 12.22 12.21, 15.Q3 12.21 " 12.21 12.21 12.21 12.21 23.41,24.65 24.49, 24.74 24.51 24.52, 24.66 24.67 24.54 24.54 23.41,23.47 24.04 24.37,24.40 22.60 24.28 24.29 18.99, 22.07 18.100 12.07, 12.21 12.07, 12.21, 18.99, 18.100 17.54 19.73, 19.75, 19.76, 19.81,19.82 19.73,19.74,22.07 19.73 19.7319.74 " 19.73 19.77 19.81 19.81 19.74,19.75,19.81 23.26 13.68,19.67,20.11 19.68, 23.11 19.69 19.70, 19.76, 19.77 19.76 19.70 23.40-23.47 23.40 23.47 23.40, 23.42, 23.43, 23.47 23.47, 24.40 23.44,23.45 23.46 23.18 23.18 23.18

Table ofInstitute and International Clauses el 42.1 .. .. .. .. .. . .. 22.03 el42.1.1. 22.03 el42.1.2 22.03 el42.1.3 22.03 25.17 el42.1.4 22.03 el43.1 22.26, 22.27 el43.2 22.26,22.27,22.83 el44.1 23.17 el44.2 23.17 el44.3 23.17 el44.4 23.17 el45 22.73 el45.1 22.73 el45.2 22.73 el45.2.1. 22.73 el45.2.2 22.73 el45.2.3 22.73 el45.2.4 22.73 el45.3 22.110,22.111,22.112 el45.3.1 22.11022.111 el 45.3.2 22.110 22.111, 22.112 el45.4 22.112 el46 22.74 el46.1 22.74, 23.17 el46.3 22.74 el46.7 22.122 el48 20.01, 22.115, 22.117 el49.1 25.20 el49.1.1. 25.20 el49.1.2 25.20 el49.1.3 25.20 el49.1.4 25.20 el49.2 .. 25.22,25.23 el49.3 25.22 el49.4 25.72

International Hull Clauses (1111102) (cont.) el20 23.25 el20.2 21.122 el21.1 21.74 el22 6.03, 22.43 el23 20.19 el24.1 18.83 el24.2 18.83 el25 6.20 el26 18.102 el27 22.04 el30 14.20 el30.3 11.65,14.20 el31 15.80 c131.1 15.80 17.50 c131.2 15.80 17.50 el 31.3 15.80 17.50 el31.4 15.80 el31.5 15.80 el32 18.99 el35 6.11, 6.19 el35.1 6.11 el35.2 6.19 6.31 el35.3 6.19 el35.4 6.19 6.20 el35.5 6.196.20 el35.6 6.11 6.12,6.31 el36.1 20.03 el36.2 20.05 el37 12.05,12.17,12.18 el38 12.14,12.22 el 39 6.03, 6.20 el40 23.41, 24.55 el40.10 24.55 el41.1.3 11.37

1 INTRODUCTION TO THE LAW OF MARINE INSURANCE

A. Marine Insurers (1) The eady evolution of Lloyd's (2) The rise of Lloyd's to prominence within the marine market (3) The Institute of London Underwriters and the International Underwriting Association of London (4) The Mutual Insurance Associations

1.03 1.04

B. Marine Insurance Law

1.09

marine insurance law

(2) Lord Mansfield (3) Codification

C. The Nature of Marine Insurance

1.19 1.22

1.34 1.41 1.44 1.50

(1) Insurance oflosses incident to

marine adventure (2) Extension to mixed land and sea adventures

(5) Government involvement in

marine war risks insurance

1.34

(1) From law merchant to common law: early development of

1.27

1.51 1.58

The need to protect investment in maritime adventure was recognized in early 1.01 civilizations.' Contractual transfer of risk was pioneered through loans on the security of a vessel or cargo, repayahle at a high rate of interest should the secured property arrive safely but otherwise not tepayable. Such maritime loans exisred in ancient Babylon, were used by the Phoenicians, ancient Greeks, and Romans, 2 and were revived in medieval Italy. They became known as 'bottomty' where the secured property was a vessel and 'respondentia' where the secured property was cargo. In addition, from at least the time of commercial prominence of ancient Rhodes, risk has been shared through the system of general average, by which a loss incurred for the benefit of a common maritime adventure is shared among all interests benefited by the

1 G Clayton, British Insurance (1971) Ch 1; V Dover, A Handbook to Marine Insurance (8th edn, 1975) Ch 1; H Raynes, A History ofBritish InsuranceC2nd edn, 1964) Ch 1. 2 Although the Romans also used and may have preferred a system of loss sharing by partnership.

xc

1

Introduction to the Law ofMarine Insurance

Marine Insurers

loss. 3 In general average, however, the interesr thar sustains rhe loss must srill carry its share and recovery is conringenr upon orher interesrs deriving benefit

learning and amused his colleagues by brewing a black drink from roasred coffee berries'.' Conopius was subsequenrly expelled from Oxford by parliamenrary visirors and rerurned to the Levanr where he became Bishop of Smyrna,' but his legacy of coffee drinking flourished. So popular did it become among the undergraduate studenrs of borh Oxford and Cambridge that in 1677 one Cambridge don was moved to complain: 'Why doth solid and serious learning decline and few or none now follow it in the Universiry? Answer: because of coffee-houses where rhey spend all their time."

from the loss.' 1.02 It was in rhe fourteenth century in the ciry states of, mainly northern, Italy that there developed transactions recognizable as contracts of insurance, wirh the risk of mischance befalling a ship or cargo being transferred from that properry's owner to another person in rerurn for the payment of a non-rerurnable sum of money. Insurance spread ro northern Europe, with leading cenrres initially in Bruges and later in Anrwerp. Meanwhile, the practice of insurance was imporred into England by merchants from the region of Lombardy, especially the ciry of Florence. Restrictive legislation caused the Lombards to leave England towards the end of the fifteenth cenrury, bur London continued to develop as a centre for commerce generally and marine insurance in particulat. When Anrwerp was sacked by the Spanish in 1576, London, with strong political backing, 5 inherited much of its commercial significance, including in the

field of marine insurance.

A. Marine Insurers 1.03 Marine insurance is roday underwtitten in England by insurers that operate through the Lloyd's market, insurance companies that operate outside Lloyd's, and by murual insurance associations. In time of armed conflict, the government may support the market. To trace the developmenr of the marine market and explain this strucrure, one may start with the origins of Lloyd's, which lie iii cc

.

seventeenth-century COnee consumption.

6

(I) The Early Evolution of Lloyd's 1.04 William Laud, Archbishop of Canrerbury, whose teligious policy was a major cause of the English civil war, was elected Chancellor of Oxfotd Universiry in 1630. In that capaciry, he was an influenrial patron of Orienral studies, in particular endowing a lectureship in Arabic. He befriended a Cretan scholar named Nathaniel Conopius, who was fleeing from Mohammedan rule, and brought him to Oxford, 'where, from Baliol College, he disseminated his grave

-------"--" 3

General average was recognized by the maritime law of ancient Rhodes: Digest XlY.2. 1;

Barton v English (1883) 12 QBD 2)8, 22L 4 For outline discussion of general average and exploration of insurance of losses and liabilities admissible in general average, see 24.41££ 5 See 1.36 below. 6 See also W Reynardson, 'The History and Development of P&I Insurance: The British Scene' (1969) 43 Tul LR 457.

2

The passion for coffee was not confined to the universiries. Puriran rule during 1.05 rhe Commonwealth saw the suppression ofmany forms ofenrertainment and the new coffee houses flourished upon a pleasurable blend of caffeine and conversation. The first London coffee house was opened in 1652 in Sr Michael's Alley, Cornhill, by one Pasqua Rosee." Coffee houses proliferated, and we know that by 1688 one Edward Lloyd had opened Lloyd's Coffee House in Tower Street, not far from Tower Wharf and rhe Custom House. From the beginning, Edward Lloyd seems to have targeted the shipping communiry as his clientele. In 1691 , Lloyd's moved to new premises at 16 Lombard Srreer where it remained for some 80 years. By rhe rime Edward Lloyd died in 1713, leaving a subsranrial esrate, Lloyd's was well established as a cenrre for businessmen ro meer and as a location for rhe holding of auction sales, increasingly of vessels. The connecrion with marine underwriring seems not to have developed until 1.06 the 1720s, bur in the next rwo decades Lloyd's reputation grew, during which rime it came ro enjoy a de ficto monopoly in rhe London marine insurance marker, a developmenr discussed below. The I750s and 1760s, however, saw Lloyd's fall into disrepure. In 1763, rhe business passed inro rhe somewhat ineffecrual hands of Thomas Lawrence." Substantial profirs during the Seven Years War gave way ro less spectacular peacerime business, and vulrurine specularors exploired and abused rhe insurance market as a means of indulging in

7 8 9 10

C Wedgwood, The Kings Peace (J955) 79. H 1i:evor-Roper, Archbishop Laud (2nd edn, 1962) Ch 8. D Gibb, LloydsofLondon (1957) 1. Encyclopaedia Britannica, Vol 6, 'Coffee'. Rosee had been the servant of a merchant named

Daniel Edwards who brought back the drink from his travels abroad. His house was rapidly

inundated by coffee-seeking 'friends' and, in the interests of domestic tranquility, the merchant encouraged Rosee to set up in business (D Gibb, Lloyd's o/London (l957) 1-2). He duly opened 'The Sign of Pasqua Rosee's Head', now the site of the Jamaica Wine House. 11 Lloyd's had a curious succession, not infrequently operating as a dowry. After the death of Edward Lloyd in 1713, it passed to his son-in-law William Newton, one of his waiters who had married his daughter in January of that year. William Newton, however, died shortly afterwards and his widow married one Sheppard. Next in line was Sheppard's brother-in-law, Jemson, who was followed in 1738 by Baker, the nephew of another of Sheppard's sisters. Samuel Saunders, son-in-law of Baker, succeeded in 1754. Thomas Lawrence waS Saunders' brother-in-law.

3

Marine Insurers

Introduction to the Law ofMarine Insurance unadulterated wagering upon the safery of property and the lives of persons in which they had nO interest. The combination of such disteputable behaviour and the ambition of one of Lawtence's waiters, Thomas Fielding, led to the establishment in 1769 undet Fielding's management of the rival New Lloyd's Coffee House at 5 Pope's Head Alley.12 1.07 The new premises, however, were cramped, old, and insanitary. Only rwO yeats latet, the underwtiters wete again looking fot somewhere new. This prompted the election in 1771 fot the first time of a Committee to represent the underwriters and the payment of a subsctiption, a step that matks the fitst significant moVe by the underwritets themselves towards assumption of tesponsibility fot the otganization of the market. Nevertheless, two years later the nine-member Committee had failed to find alternative premises. Ultimately, an immigrant from the Baltic and an ordinary subsctibet, one John Julius Angustein,13 artanged for the lease of twO rooms in the Royal Exchange,14 to which the underwritets moved in Match 1774. Lloyd's 15 had metamorphosed from coffee house to otganization of underwritets, although it was not until the first Lloyd's Act in 1871 that thete could be said to be a structured organization regulated by a constitution. 1.08 The Wat of American Independence subjected Lloyd's to a sevete otdeal. The official entry of France into the wat in 1778 saw its hostile maritime action escalate from privateering, and 656 ships were lost in 1779. At the time, thete was no legal prohibition on the insurance of enemy vessels, and Lloyd's sustained heavy losses as a result of British successes as well as British revetses." The greatest disaster came in August 1780. Two convoys rotalling together somi: sixty-thtee merchant vessels, and protected only by one ship of the line and a couple of ftigates, encounteted the combined fleets of France and Spailt. Only eight metchantmen escaped, resulting in losses of £1.5 million. A considetable number of Lloyd's underwriters failed to meet their obligations. Nevertheless,

12 The choice of name for the new coffee house suggests the existence of a strong connection between underwriting and the name 'Lloyd's'. 13 Elected Chairman of Lloyd's in 1795 and known to subsequent generations as the Father of

Lloyd's. 14 The Exchange was built by Sir Thomas Gresham in the 1560s as a meeting place for merchants. It opened in 1570 and became known as the Royal Exchange after a visit by Elizabeth I in 1571. 15 The 'New' was dropped in 1794. The original Lloyd's went out of business by about 1785: C Golding and D King-Page, Lloyds (1952) 12-13. Lloyd's, however, is not rhe only modem commercial institution to have its_.roots in a London coffee house. The Stock Exchange is the descendant of Jonathon's Coffee House and the Shipping Exchange started life as the Baltic

Coffee House. 16 Much Dutch shipping and goods was insured at Lloyd's, which sustained considerable losses after Holland declared war on Britain. For the impact of war on insurance contracts today,

Lloyd's survived (as ;ViII be seen, it had no genuine competition) and soon found, itself basking m a penod of financial prosperity. 'Seldom, if ever, has Lloy~,~ been mote prospetous or more prominent than it was in the Napoleonic war~. Sharply nsmg commodity prices led to an inctease in the demand for manne msuran~e) creating an underwriters' market where coverage commanded whatever premiUms the underwriters deemed necessary. In addition, the Royal Navy, which at one stage during the eighteenth century had been reduced to a shambohc state, was m a better position to fulfil its convoy protection duties. (2) The Rise of Lloyd's to Prominence within the Marine Market

The a~ove outline of the early histOry of Lloyd's does not, howevet, reveal why 1.09 Lloyd s came to assume such a dominant position in the marine insurance matk~t. The ~nswer lies in a combination of corruption, chance, and commerCial expediency.

(a) The Vansittart scandal At the heginning of the eighteenth centuty, thete was no centte of matine 1.10 msurance.. Undeiwtiting was vety much a patt-time activity pursued by petsons of all callmgs. The 'fixed point in a floating matket''' was provided by the brokets, then known as 'office-keepets' since the term 'broker' had fallen into dlsrep~te as synonymous with a handlet of stOlen goods. The brokers knew whete m the City of London to find individuals prepared to assume, on their personal account, a proportion of the risk in the course of their secondary intetest of undetwriting. The pivotal role of the broker emerges against the backgtound of a matket devoid of regulation: When [th~ i~surers].un~erwrote ... they usually were not acting as partners in a firm, but rIskmg thelf pnvate fortunes in such a way that there was no partnership control, no common liability, no check on what was written or who wrote it It was ~ free-~or-aIl trade and, so long as the office-keeper was willing to accep't a

man s secunty, there ,:as no bar to the most unsuitable person committing himself to any extent on any fisk The one binding controlling element must have been the office-keeper's judgement; and his duty to his client was not only to get a risk completed at the best rate, but to mal<e sure that it was placed with reliable men whose ~eans would satisfY the claims when they arose, If his integrity and good sense faIled, then the assured must suffer and the good name ofthe London market cc . h h' 19 SUner WIt 1m. Ne;7ett7helessb' the 0ficcasional broker was no patagon of virtue. Scandal erupted 1.11 ill ,1. A roltin P) [2003J EWHC 2158 (Comm), [2004J 1 Lloyd s Rep 389,

E. Mutual Insurance The essence of the agreement between a mutual insurance association and irs 6.38 members is the pooling of losses and liabilities actually sustained, in contrast with the commercial purchase of indemnity through payment of a premium which predicates no necessary connection between the money paid by the assured and the volume of losses incurred during the currency of the policy. Accordingly, it has been observed that any reference to premium in the context of mutual insurance must be treated with care: 'the foundation of the contract is not the payment ofa premium, but an agreement that each member should bear his aliquot share of the losses of the year covered by the policy'." This sharing of liabilities together with the expenses of the association is effected through a series of advance and supplementary calls on the members. Prior to the commencement of any policy year, the club directors determine the 6.39 level of advance premium payable by reference to a percentage of the club's estimated liabilities for the following year. Each member contributes according to the premium rating and tonnage of its entered vessels. 89 Should the advance calls prove inadequate to meet the liabilities that ultimately materialize in the course of that year, a supplementary call will be levied eithet during or after the end of the policy year. Since time needs to elapse after any given year of account for liabilities incurred in the course of that year to be reported to the club and quantified with certainty, individual policy years cannot be closed, and a decision made on supplementary calls, for an appropriate period of time, often three years." In order to avoid unexpectedly large supplementary calls in particularly bad years, associations may accumulate reserves of surpluses on calls in good years. 91 All calls are payable in such instalments and on such dates as specified by the directors.

80

para 226.

232

87

Heath Lambert Ltd v Sodedad de Correta)e de Seguras [2002J EWHC 2269 (Comm), [2004J

1 Lloyd's Rep 495.

Williams v British Marine Mutual Insurtmce Association Ltd(l886) 57 LT 27,29 per Wills J. Additional per voyage premiums may be levied in respect of certain high risk voyages. 90 Provision also exists in club rules for the levying of'carasrrophe' or 'overspill' calls in respect of any liability of the association in excess of the General Excess Loss Reinsurance Contract, as to which, see 16.11 below. 91 For a similar scheme in the cOntext of employers' liability, see Thomas v Richard Evans & Co Ltd[1927J 1 KB 33, 52-3, 88 89

233

Premiums 6.40 Since association members do not pay premiums as such, rhe provisions of rhe

Marine Insurance Act 1906 relating to premiums are inapplicable to murual insurance 92 The rule in section 53(1) that the insurer looks to the broker for premium and not to the assured has no relevance to mutual insurance. Financial obligations for calls are owed to the club by the members and liabiliries for losses covered by rhe terms of the club's rules are owed by the club to the members. In principle, therefore, either the association or the member can invoke a right of equitable ser-off. In Williams v British Marine Mutnal Insurance Association Ltd," the Queen's Bench Division held a club member entitled to ser off the balance of an outstanding claim against supplementary calls relating to the same policy year. Outside insolvency, however, the existence of such rights of set-off is subject to the rules of the association. Accordingly, the rules of the United Kingdom P&I club, for example, expressly preserve the association's rights of set-off against the members while denying any right to the members to set off, withhold, or delay payment of any sum due to the association by reason of any claim against it. 94

7 AN INTRODUCTION TO MODERN MARINE COVER

A. The SG Policy

7.02

B. The Separation of Marine and War

Risks Cover

7.03 7.07 7.08

C. Modern Cover

F. War Risks and Additional Premium Areas 6.41

War risks are underwritten both by the London market and mutual insurance associations, and a similar approach to premium is adopted." War risks present a relatively modest risk except in areas of military tension or actual conflict, where the risk is high, volatile, and impossible to rate on an annual basis. Consequently, war risks cover is granted in return for an appropriately modest premium, but provision is made for the exclusion of such areas of high risk as may be designated at any time. Such an area is termed an additional premium area (or APA). An owner that wishes to trade in such an area is required to notify the insurer in advance and pay the appropriate, often substantial, additional premium assessed by reference to the prevailing level of risk. Compliance with the obligation to notify is often a condition precedent to the insurers' continued liability on the policy, so that breach autOmatically terminates the assured's cover.

MIA 1906,,85(2). (1886) 57 LT 27. 94 For confirmation of the right to exclude non~insolvel1CY set~off rights by contract, see Coca-Cola Financia! Corp v Finsat Internationa! Ltd [19981 QB 43, 50-3. 95 Maritime Transport Overs~as GmbH v Unitramp (The Antaios) [1981] 2 Lloyd's Rep 284, 291; Black King Shipping Corp v Massie (The Litsion Pride) [19851 1 Lloyd', Rep 437, 440. 92 93

(l) (2) (3) (4)

The policy Cargo cover Hull insurance The euisdem generis clause

7.10 7.15 7.23

(1) The significance of an agreed value (2) Determining whether a policy is valued: agreed value v sum insured (3) Re~opening an agreed value E. Burden and Standard of Proof (1) General principles (2) 'All risks' cover (3) Exclusions

7.26 7.33 7.38 7.48 7.48 7.54 7.58

D. Valued and Unvalued Policies

In the modern London market, insurance is customarily written on the basis of 7.01 a simple basic form to which is attached an appropriate standard set of more detailed clauses. It was not always thus.

A,

The SG Policy

The agreements concluded in Lloyd's coffee house in the eighteenth century for 7.02 the assumption of risk in return for payment of a premium developed into a standard form contract, the SG policy.' This policy developed on an entirely ad hoc basis, risks being amended and exceptions deVeloped in response to evolving law and practice. Moreover, a complex way of presenting the cover evolved. Although the SG policy itself spelt out the cover granted in terms of a list of risks and exceptions, ad hoc clauses were developed by individual insurers or brokers and, from the late nineteenth century, the Institute of London

1 Although there is no clear evidence, it is generally assumed that 'SG' stands for 'ship and goods'. The policy is reproduced in MIA 1906, Sch I.

234

235

An Introduction to Modern Marine Cover

The Separation ofMarine and war Risks Cover

Underwriters also developed and promulgated a series of standard clauses for particular types of tisk, known as 'Institute clauses'. 2 These mote detailed statements of the cover would be appended ro the SG policy. However, as both the SG policy and the standard clauses had the force merely of contractual terms, they were open ro amendment. A particulat tisk might be crossed out, or an endorsement slip might be attached to the policy or standard clauses with glue. The result was hardly a model of clarity. As early as 1791, Buller J remarked that 'it is sufficient to say that a policy of assurance has at all times been considered in courts of law as an absurd and incohetent instrument'. 3 The SG policy nevertheless survived until the 1980s.

United States. The watching marine underwriters were acutely aware of the power of the navies of both Ftance and the United States, and a General Meeting of Lloyd's, held on 15 June 1898, resolved to insure war and marine risks separately. In the following year it was detetmined that, in the absence of contrary agreement, all marine policies should include an FC&S clause. The insurance companies following suit, this became the practice of the London market. Although subject to revision, the FC&S clause endured until the 1980s.

B. The Separation of Marine and War Risks Cover 7.03 In the seventeenth centuty, it was customary to insure against both marine and

wat tisks in the same policy. This tradition endured into the nineteenth century, when 'it was still thought to be at once the duty and the advantage of a marine underwriter to cover war as willingly as he covered collision, fire or srranding'.' By the nineteenth century, however, the market had come to appreciate that the two categories of risk constituted separate species and a movement towards

separate coverage commenced. This fitst took the form of building upon the 'FC&S clause', an exclusion of liability for the risks of capture and seizure. 5 The exclusion dates from tension berween Britain and France in 1739 and was developed through the Napoleonic wars. In the early nineteenth century, the infant United States navy demonstrated the limits of the protection even/ the British navy could extend to merchant shipping against determined predators. 1862 saw the invention of rhe propelled torpedo and 1893 the launch by the French navy of its fitst submarine. Moreover, the value of ships and cargo had multiplied manifold since the Napoleonic Wars. There was, however, no formal market response until 1898. In that yeat, a small group of French explorers, undet the command of Captain Jean Baptiste Marchand, planted a French flag in the village of Fashoda in the Sudan, then under rhe dominion of Great Britain. The resulting diplomatic incident threatened to develop into war between Britain and France until Marchand was ordered to withdraw. In addition, the 1890s saw a period of considerable tension between Britain and the

2 3

See 1.20 above. Brough v Whitmore (1791) '4 TR 206,210. It has also described as 'perhaps past praying for'

(Trade Indemnity Co Ltd v Workington Harbour & Dock Board [19371 AC 1, 17 per Lord Atkin) and an 'obscure, loosely drawn and inaccurate instrument' (Rickards v Foresta! Land, Timber & Railways Co [19421 AC 50, 78 per Lord Wrighr. . 4 D Gibb, Lloyd's afLondon (1957) 221. S Literally, 'free of Capture and seizure',

236

The principle of separation was further teinfotced, and further resttictions 7,04 on the writing of war risks insurance introduced, in the 1930s. On 26 April 1937, the German airfotce, fighting on the side of the Nationalist forces in the Spanish civil wat, attacked the defenceless, historic Basque town of Guernica. For over three hours, bombers drojJped a mixture ofhigh explosive and incendiaty devices, while fightet aircraft machine-gunned the population. The entite town was destroyed and over fifteen hundred inhabitants were killed. It was an unprecedented demonstration of the horrific and devastating impact of the use of air power against a built-up area. The atrocity was ptominently repotted in the Btitish ptess. 6 Underwriters tealized that unrestricted writing of war risks insurance could expose the market to catastrophic losses that could thteaten irs solvency. Consequently, in order to guard against unsustainable aggregation of losses, the following year the market adopted the War and Civil War Risk Exclusion Agreement. 7 This agteement stipulates that all 'loss, damage or liabilities occasioned by, contingent upon, or resulting directly or indirectly ftom War and Civil War' shall be excluded from all contracts of insurance and reinsurance by means of approved exclusion clauses. The agreement does, however, further provide for a list of exceptions, within which war risks may be insured. Marine third party liability insurance is excepted without condition. Catgo may be insured againSt war risks within the limits laid down by the War Risk Waterborne Agreement, 8 while hull wat risk insurance must comply with the War Risks on Hulls Agreement. 9 The mechanics of the sepatation were, nevertheless, far from immediately 7.05 apparent. A typical example is furnished by The Anita. lO The policy in the usual SG form had the FC&S clause deleted and incorporated the Institute War and Strikes Clauses (Hulls-Time). Clause 1 of these clauses provided that,

6 Flwo of the fouf foreign journalists who were able to repOft from the scene in the immediate aftermath worked for British newspapers and a third for the Reuters agency in London. The coverage is described, and the main article in 'The Times' quoted in full, in Southworth, G'uernica! Guernica!(l974, University of California Press) Book 1, eh L : T~e current version is dated 1 April 1982, although it has been amended subsequently. DIscussed at 17.22 below. 9 Discussed at 17.49 below. 10 Panamanian Oriental Steamship Corp v Wrtght (The Anita) [1970] 2 Uoyd's Rep 365.

237


Modern Cover

subject to certain exclusions, the insurance coveted the tisks excluded ftom the SG policy by the FC&S clause. This provoked the following cry of despair from

specific set of war and/or strikes clauses into the policy. The cover provided by war and strikes clauses reflects the war and strikes exclusions in the marine clauses, but significant differences do exist. With respect to nomenclature, the merget in 1998 of the Institute of London Underwtiters with the London International Insurance and Reinsurance Market Association to become the International Underwriting Association of London (the IUA) led to a further revision of the policy and to subsequent standard clauses being titled (International' clauses.

Mocatta J: 11 It is probably too late to make an effective plea that the traditional ~ethods of insuring against ordinary marine risks and what arc usually called war rIsks should be radically overhauled. The present method, certainly as regards war risks insurance, is tortuous and complex in the extreme. It cannot be beyond the wit of underwriters and those who advise them in this age of law reform to devise more straightforward and easily comprehended terms of cover. However the form taken by the war risks cover here, since clause 1 of the Institute clauses only covers the risks excluded from the SG form by the Fe and s clause, requires one to sec what

cover is given by the SG form on the facts, which would be excluded from it by the fc and s clause, for it is only in respect of such exclusion that the plaintiffs can recover under the present policy.

1.06 Thus, only if the risk in question was prima jade within the SG cover but then excluded by the FC&S clause was it within the war risks cover, subject to further exptess exclusion or modification. Further condemnation came from the United Nations Conference on Trade and Development in its 1978 report on marine

insurance: 12 The very concept of granting an insurance cover and excluding it in the same

document (the SG Form), and then excluding it again in attached clauses, which override the first document in any case, and then granting it again (either in another document or as an additional attachment) by reinstating the original exclusion, is so complicated and contorted that the uninitiated is confused by the very procedure of insurance without even considering the complicated draftsman-

ship. The very complexity of the subject matter calls for the most simple and straightforward procedures.

C. Modern Cover 1.01 The 1980s saw the introduction of a new system for the provision of marine cover, together with new standatd Insritute clauses. The SG policy was abandoned. In addition, while testrictions on covet against war tisks remained, the FC&S clause as the device for separating war risks insurance was also abandoned in favour of a simpler disrinction between 'marine' and 'wat and strikes' risks. All sets of clauses coveting marine risks expressly exclude enumerated war and strikes perils." War and/or strikes cover is provided by incotporating a

(1) The Policy The SG policy was replaced in 1983 by the simple Institute of London Undet- 1.08 writets 'Companies Marine Policy' and similar 'Lloyd's Marine Policy' (known as the MAR forms). These had four pages. Apart from institutional crests and legends and space for formal embossment, the fitst page cattied the insurers' promise to insure coupled with a stipulation that the liabiliry of each parricipating insurer was limited to the proportion for which it had subscribed. The second page consisted of a schedule that identified the assured, detailed the essenrial particulars of the marine adventure insured, and stated the premium and any special terms. The third page was for underwriters to initial their lines. The fourth page carried little more than institutional ctests and legends. In addition, an Institute or Lloyd's 'Matine Schedule' detailed the policy number, the name of the assured, the period of insurance and the premium. Alternative J andJ(A) forms, with complementary J andJ(a) Schedules, were similar but also contained a ftaudulent claims provision and, in the case of the J fotm and schedule, an exclusion of war risks. In 1991, both Lloyd's and the Institute of London Underwriters introduced a 1.09 revised version of the MAR forms. This contained an exclusive jurisdiction clause in favour of the English courts, reiterated in new Lloyd's and Institute Mar91 Schedules. Subsequently, in 1999, the advent of the International Underwriting Association of London saw the Insritute MAR forms (but not the Lloyd's MAR forms) replaced by a new, four-page 'IUA Marine Policy' to be used in conjunction with an IUA Marine, Mar91, JOt J(a) Schedule. The new policy contained fewer substantive provisions and less information. It contained the same basic promise to insure and space for underwtiters to initial their lines. Otherwise, the only substantive provisions were statements on both the face of the policy and the third page limiting each insurer's liability to the proportion each has underwtitten. 14 There was no jurisdiction clause in the IUA policy

ibid 372. Para 123. For discussion of the report, see K Goodacre, 'The UNCTAD Report on an international legal base for marine insurance contracts, as related to Hull Claims' [1979] 11

12

LMCLQ315. 13

For discussion of the exclusions, see 15.70ffbelow.

238

14

See further 22.04 below.

239


Modern Cover

itself. Finally, the advent ofins-sure Services Ltd in 2003,15 saw the replacement of the IUA documentation (but, again, not rhe Lloyd's documentation) by the substantively identical Ins-sure 'Companies Marine Policy', together wirh Ins-sure Mar91, J and J(a) Schedules. 16 In modern marine practice, most hull and cargo business is underwritten on Mar91 terms, with J and J(a) documentation employed for rhe insurance of 'specie, namely fine art and antiquities. 17

loss. This is not true in point of law, bur it is cerrainly the case that the perils covered are quite likely ro generare a total loss of the insured cargo. It is also the case thar common causes of partial loss of cargo, most norably rheft, are not covered under the (C) clauses bur are covered under rhe (A) clauses. The rypes of cargo for which the (C) clauses might be regarded as adequate include bulk commodities and items of large, second-hand machinery.

(2) Cargo Cover 7.10 New cargo clauses were launched on 1 January 1982. They remain in use today.

General cover is provided by three basic sers of clauses. The Cargo Clauses (A) provide 'all risks' cover, subjecr to a significant list of specified exceptions. The Cargo Clauses (B) and (C) are confined ro named perils, subject to rhe same exclusions plus one more, the list of covered perils in (C) constituring a sub-set of the list in (B).18 In practice, the (B) clauses are never used. Also covered under all the cargo clauses are liabilities in salvage and general average, and expenditure reasonably incurred in endeavouring to averr or minimize loss or damage covered under rhe policy.19 7.11

Normally, cargo will be insured subject to the (A) clauses. Where, however, there is no appreciable risk to the cargo orher than by reason of an accident befalling the vessel or other conveyance in which it is carried, the (C) clauses will suffice. These cover:'o 1.1

loss of or damage to the subject-matter insured reasonably attributahle to

1.1.1 fire or explosion 1.1.2 vessel or craft being stranded grounded sunk or capsized 1.1.3 overturning or derailment of land conveyance 1.1.4 collision or contact of vessel craft or conveyance with any external object other than water 1.1.5 discharge of cargo at a port of distress, 1.2 loss of or damage to the subject-matter insured caused by

1.2.1 general average sacrifice 1.2.2 jerrison.

7.12 It is sometimes said that the (C) clauses insure againsr toral rather than partial

15 16

See 2.23 above. The Ins~sure Companies Marine Policy and Mar91 schedule are reproduced in Appendices 4

Apart from rhe general cargo clauses, a range of more specialized clauses exist to 7.13 cater for cargoes that carry particular risks by reason of rheir own properries, or rhe way rhey are rraded. Specialisr clauses, often agreed wirh a relevant trade association, accordingly exist for bulk oil, coal, commodities," FOSFA rrades," frozen food (excluding frozen meat), frozen meat, jute, narural rubber, and timber. All are modelled on the general cargo clauses with appropriate amendments, usually to rhe range of covered perils or exclusions. All the cargo clauses contain exclusions covering war risks and srrikes risks. 7.14 Cover againsr such risks is provided by separate Instirure War Clauses (Cargo) and Institute Strikes Clauses (Cargo)." Unlike the position in hull insurance, the two rypes of risk are addressed independenrly because the duration of cover is shorrer for war risks than for strikes risks. 24 The specialist cargo clauses are complemented in some cases by specialist war clauses and in all cases by specialist srrikes clauses. (3) Hull Insurance Standard clauses in the hull marker have rradirionally distinguished between 7.15 insurance on a time basis and insurance on a voyage basis. 25 In practice, how-

ever, ships are normally insured on a time basis, wirh voyage policies reserved for cases where the ship has to undertal<e a one-off voyage of a particular nature, such as a voyage to a repair yard or a last voyage to be scrapped. The new Instirute hull clauses thar were launched on 1 October 1983 to accompany the new MAR form reflected these two bases of cover. In addition to the basic Insritute Time Clauses Hulls (1/10/83) and Institure 7.16 Voyage Clauses Hulls (1110/83), a number of variants, based on these models, were promulgated to carer for particular rypes of hull risk. Fishing vessels and yachts have their own dedicated clauses. 'Port risks' clauses cater for vessels that eirher work within the defined geographical limits of a port, such as tugs and pilor boats, or will be laid up, perhaps for repair, within the port for a period of

and 5. 17 Specie is underwritten in th.e cargo market, but often requires more extended on~land cover than is permitted for standard cargo insurance (as to which, see 17,11-17.27 below). 18 The (C) perils are listed below. Some are discussed in the context of named perils in hull policies in Ch 10 below. 19 For discussion of such cover, see Ch 24 below. 20 The causation language and some of the perils listed are discussed in later chapters.

240

21 22 23 24

Meaning such cargoes as cocoa, coffee, fats and oils not in bulk, metals, and sugar. Oils, seeds, and fats. For discussion of the perils covered under war and strikes clauses, see Chs 13 and 14 below. See 17.22 below. 25 See 1.20 above.

24I


Modern Cover

time. Further sets of clauses offer cover for resrricted ranges of perils or, conversely, elements of cover additional to that offered under the basic time and voyage clauses.

liabilities arising out of collisions, salvage, and general average, and the incurring . of expenditure in the course of reasonable efforts to avert or minimize the occurrence of an insured peril." A wide range ofliabilities are not insured, cover for which will be obtained from a P&1 club.'o The fact that the market policy concentrates on the ship as a physical asset rather than liability leads ro the market policy often being referred to as a 'hull and machinery' policy. While this accurately reflects the primary focus of the market policy, its extension to a number of significant liabilities and expenses should not be overlooked. Part 2, comprising clauses 34 to 44, contains 'Additional Clauses', including, inter alia, optional extra elements of cover. These clauses had no direct counterpart in the 1983 clauses, although most provisions reflect or reproduce other standard market clauses. Part 3, comprising clauses 45 to 53, contains 'Claims Provisions'. 31 These are entirely new standard clauses.

7.17 From the insurers' perspective, however, the 1983 clauses emerged as flawed in one important respect, namely that cover was often present in circumstances

whete the root problem waS the sub-standatd condition of the ship, often due ro inadequate maintenance. Since it is extremely difficult for insurers ro invoke a common law defence of unseaworthiness in time policies,26 the Joint Hull Committee decided to revise the standard hull clauses to insert express contractual protection against sub-standard maintenance, at the same time taking into account certain changes in the law of salvage and general average. The result was a new complete set of hull clauses launched on 1 November 1995. 7.18 The new clauses were not widely used: the drafting process had not been charac-

terized by appropriate consultation of assureds, and shipowners with high standards and good records objected to being apparently stigmatized by reason of an undifferentiated approach. Moreover, the hull market at the end of 1995 was extremely soft" and foreign competition welcoming to assureds disenchanted with London, so that insurers were unable to insist on adoption of the new clauses. 7.19 Nter the dust had settled, the Joint Hull Committee returned to the question of

new clauses under the auspices of the IDA. Nter a more sensitive drafting process involving careful consultation, a new set of clauses, the International Hull Clauses (J/11/02), was introduced for time policies. At the same time, the Joint Hull Committee made it clear that it would keep the clauses under regular review. The 2002 clauses received a warmer welcome, although their drafting gave rise to a few issues. The Joint Hull Committee responded by launching the following year the International Hull Clauses (01/11/03), a slightly modified version of the 2002 clauses. 7.20 The 2003 clauses are divided into three sections. Part 1, comprising clauses 1 to

33, contains the 'Principal Insuring Conditions'. This consists of an amended and teorganized version of the 1983 clauses. The cover granted insures against loss of or damage to the insured ship by a series of named perils,28 certain

26

While rhe Inrernarional Hull Clauses (01/11/03) have been more warmly 7.21 received rhan the 1995 clauses, ir would be erroneous to think of them as the standard London marker form. The reality is that all thtee fotms ate used in greater or lesser measure for time policies. From an underwriter's perspective. the 1995 clauses remain attractive because they offet the strongest protection against sub-standard shipping. Where, thetefore, a shipowner cannot demonsttate a proven ttack record of running a good quality fleet, eithet because of its claims record Ot because it is new to the industry, underwriters will seek to use the 1995 clauses. 32 From an assured's point of view, the International Hull Clauses offer the widest cover, a lowet thteshold for a constructive roralloss,33 and more lenient provisions relating to navigation limits. With tespect ro substandatd shipping, they offet underwriters greater protecrion than rhe 1983 clauses but less than the 1995 clauses. It remains to be seen to what extent the International hull clauses will displace the Instirute clauses. The International hull clauses are designed for standard time policies. No vari- 7.22 ants for voyage policies, specific types of vessels, or diffetent Ot mote limited perils were produced. Such insurance continues to be written on the Institute clauses. Moreover, as with cargo, all standard hull forms contain war and sttikes risks exclusion clauses. In contrast with cargo insurance, however, cover against such risks is conferred under one combined set of clauses. The clauses generally

See 19.30ff below.

In other words, there was excessive capacity in the market for the volume of hull risks seeking cover. '" 28 The named perils are discussed in Chs 10 and 11 below. There is no standard 'all risks' policy for hulls in the London marker. Such policies are occasionally developed and offered by individual insurers or consortia of insurers, but thedominanr approach· remains use of the standard forms with their named perils.

29 For cover against collision liability, see Ch 12 below; for cover against salvage and general average liabilities and expenditure to avoid or minimise loss, see Ch 24 below, 30 The cover provided by P&I clubs is discussed in Ch 16 below. 31 For discussion of claims, see' Ch 22 below. 32 Albeit with the due diligence proviso curtailed: see 11.67 below. 33 See 21.80 below.

242

243

21


Valued and Unvalued Policies

employed in the matket ate the Institute Wat and Strikes Clauses (Hulls-Time) (1/10/83).34

the acquisition of the insured propetty.41 From the insuret's perspective,42 an .agteed value that exceeds the market value, as is almost invariably the case, will produce a higher premium. Moreover, a higher agteed value may reduce an insurer's exposure. Where policies contain a franchise clause,43 rendering the insurer liable only for losses that exceed a stipulated percentage of the agreed value, the higher the agreed value the greater a loss will have ro be before the insurer is liable. Likewise, where a policy makes the standard for a constructive total loss the agreed value or a percentage thereof,44 a higher agreed value reduces the likelihood of a casualty qualifying as such a loss.

(4) The Eiusdem Generi< Clause 7.23 The SG policy, having stipulated various perils, continued 'and of all other

perils, losses, and misfortunes, that have or shall come to the hurt, dettiment, or damage of the said goods and merchandises, and ship, &c, or any part thereof. This clause provided cover for any loss caused by a peril not within the foregoing list but similar thereto. 35 The presence of such a clause served on occasion to relieve the judiciary of nice questions of causation and definition of various perils. 36 Such a clause was a feature of previous versions of the Institute clauses but does not feature in any of the modern clauses produced from 1'982 onwards, commensurately reducing the cover provided.

D. Valued and Unvalued Policies 7.24 All marine insurance policies are either valued or unvalued." 'A valued policy is

a policy which specifies the agreed value of the subject-matter insured.'" In practice, the vast majority of marine policies are today valued. Section 27(3) of the Marine Insurance Act then provides that: 'Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the policy is, as between the insurer and assured, conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial.' 7.25 This institution of a contractual valuation rendered by law conclusive as

between assured and insurer benefits both parties. 39 From the assured's point of view, an agreed value dispenses with any need to prove the true market value of the insured property'o and allows the assured to insure for a sum in excess of the market value, guatanteeing that insurance proceeds will be adequate to finance acquisition of a replacement asset or dischatge financial obligations attached to

34 Subject to amendment to comply with the War Risks on Hulls Agreement, discussed at 17.49 below. 35 MIA 1906, Sch 1, r 12. Some instances of application of the eiusdem genens clause are mentioned in subsequent chapters. See generally Arnould, Law ofMarine Insurance and Average Sir Michael Mustill and] Gilman (eds) (16rh edn, 1981) para 823-5. " eg see Butler v Wildman (1820) 3 B & Aid 398. 37 MIA 1906, s 27( 1). Unvalued policies are sometimes referred to as 'open' policies. This is to be distinguished from open covers, discussed. at 2.31 above. " ibid, s 27(2). 39 Thames & Mersey Marine Insurance Co Ltd v Gunftrd Ship Co Ltd [1911}AC 529, 548~9. 40 Lidgett v Secretan (No 2) (1871) LR 6 CP 616, 627.

244

(1) The Significance of an Agreed Value Where a policy is unvalued, the measure of indemnity seeks to restore the 7.26 assured to the financial position enjoyed as at the commencement of risk. The measure of indemnity is calculated by refetence to the insurable value of the insured property, and the insurable value is the market value the insured property ttuly has at the time of inception of the tisk plus certain charges and expenses. 45 An agreed value ttansfotms the financial batgain. The insurable value of the insured property is fixed by contract in a manner binding on the assured and insuret." Consequently, in the event of loss of or damage ro the insured property, the agreed value generally serves as the yardstick for calculation of the measure of indemnity'" The contract remains one of indemnity, but of indemnity according to its terms. Thus, where the property is totally lost, the measure of indemnity is the agreed value. Where the property sustains a partial loss, the measure of indemnity is generally" that proportion of the measure of the indemnity that corresponds to the proportion of the market value of the property that has been lost. It should be noted, however, that at common law the agreed value is irrelevant in determining whether the loss sustained is total or partial. Subject to contrary intention,49 that is a matter for the common law

41 See Glafki Shipping Co SA v Pinios Shipping Co (The Maira) (No 2) [198612 Lloyd', Rep 12, discussed at 7.29 below. 42 See General Shipping & Forwarding Co v British Generalinsurance Co Ltd (1923) 15 LlLRep 175,176-7. 43 See, eg the Institute freight clauses. 44 As is the case with the Institute and International hull clauses: see 21.80 below. " MIA 1906" 16. 46 Lewis v Rucker (1761) 2 Burr 1167, 1171 per Lord Mansfield, in the COntext of cargo insurance where the insurable value is the prime COSt of the insured goods plus certain expenses: 'The effect of the valuation is only fixing, conclusively, the prime cost. If it be an open policy, the prime COSt must be proved: in a valued policy, it is agreed.' 47 See generally Ch 23 below. 48 Damage to a vessel that is repaired before expiry of the insurance is an exception: see 23.16 below. 49 Present in Institute and International hull clauses in the context of constructive total losses: see 21.80 below.

245


Valued and Unvalued Pollcies

principles governing the types of loss. 50 The agreed value then affects the measure of indemnity yielded by whatever loss has occurred. In addition, the presence of an agreed value does not dispense with the need for a genuine insurable

During this time, rhe freighr market from New Orleans declined considerably, but the court refused to reopen the valuation when the vessel and most of the freight were lost on the delayed return voyage.

interest. 51

7.27 To the extent of any discrepancy between the true loss susrained by the assured

as at the time of the casualty and the agreed value, marine insurance law clearly departs from a true indemnity principle, 52 a departure sanctioned on the ground of commercial convenience 53 and that is not viewed as infringing prohibitions on wagering. The presence of a genuine insurable interest answers any accus-

ation of wager, and the rule against wagets does not prohibit a contractual quantification of the measure of indemnity. 54 Lord Mansfield considered that a valuation in a cargo policy merely fixed the prime cost of the goods, as if admitted by the insurer at trial. 55 An analogy was also drawn between establishing a contractual yardstick for the measure of indemnity through an agreed value and fixing the damages to be paid for breach of contract through a liquidated damages clause. While such damages in principle are assessed by reference to the loss in fact caused by the breach, the common law of contract permits the parties, subject to the constraints of the penalty jurisdiction, ro avoid disputes about loss by establishing the damages payable by express contractual stipulation. There was no reason to deny a similar convenience and freedom to the parties to an insurance contract. 56

7.28 The result is that an assured under a valued policy may recover considerably in

excess of the loss in fact sustained. Over-valuation provides no ground of irself to defeat a claim. 57 Outside the rare circumstances where the agreed value can be reopened, 58 rhe agreed valuarion is binding upon the insurer even where considerably inflated through erroneous assumption. In Barker vJanson, 59 rhe court refused to reopen a ship's valuation agreed on an undamaged basis, despite the fact that, unknown to the parties, the vessel had been so severely damaged by a storm as to be rendered a constructive total loss. The Main" concerned insurance on return freight from New Orleans reasonably valued. On rhe outward voyage, the vessel sustained damage requiring repairs and resulting in delay.

See 21.78-21.79, 21.85-21.86 below. MIA 1906, s 75(2); Lewis v Rucker (1761) 2 Burr 1167, 1171. 52 Irving v Manning (1847) 1 HLC287. 53 Lidgett v Secretan (No 2) (1871) LR 6 CP 616, 627-8. $4 Lewis v Rucker (l761) 2 Burr 1167. ss ibid. The prime cost together· with specified expenses is the insurable value of goods: MIA 1906, s 16(3). 56 Irving v Manning (I 847) I HLC 287, 307, 57 Herringv]anson(I895) I Com Cas 177. 58 See7.38ffbelow. 59 (1868) LR3 CP 303. 60 [1894] P 320. 50

51

246

Again, in The Maira (No 2)," a loan secured by a mortgage on a ship required 7.29 that the ship be insured for 130 per cent of the total secured amount. When the insurance came to be renewed, the insured value so required was just under

US$12 million while the market value of the ship was only US$4,875,000. The ship's managers obtained insurance for US$10 million. When the ship was subsequently rendered a total loss, the assured successfully claimed against the managers for the shortfall between the insurance obtained and the value required by the loan, despite rhe fact that the policy proceeds were sufficient to discharge the outstanding liabilities on the secured loan and the shortfall represented a windfall to the assured. Insurance for 30 per cent above mortgage liabilities was stated by the arbitrator to be common practice, even where the value of the insured ship was considerably less than those liabilities, and rhis practice was duly endorsed by the courts. The value of a ship fluctuates according to the freight markets. Over the lifetime 7.30 of a policy, a ship's value may rise to reflect sttong rates and fall when cargoes are rare and rares are weak. Under a valued policy, however, the measure of indemnity for a total loss remains constant. Regardless of the true value of the vessel at the time of the loss, the assured will be entitled to the agreed value. This borh avoids any dispute as to rhe precise value of rhe vessel at the time of loss and, at a time of weak freight rates, presents the unscrupulous shipowner with the rempting prospect of a financial boon if the vessel is conveniently lost. Many cases involving overt allegations ofscuttling or where insurers put assureds 1'0 proof of the cause of loss are contested against a backdrop of a general downturn in trade or parricular financial problems affecting the assured.

An agreed value is conclusive of rhe insurable value of the insured property not 7.31 only in the context of calcularing the measure of indemnity but for all monetary purposes under the policy. Ir affects rhe distribution of subrogation recoveries" and the rights of the assured in cases of double insurance. 53 Ir also provides the basis for the operation of average in cases of under-insurance64 and of contracrual provisions that a certain amount or percentage of rhe insured property shall remain uninsured. 65 Moreover, when the Institute or International hull clauses refer to the 'insured value' in rhe context of derermining whether the

--- - - - - - - - - - - - - - - - - 61 Glajki Shipping Co SA v Pinios Shipping Co No 1 (The Maira) (No 2) [1985] I Lloyd's Rep 300, affd [1986] 2 Lloyd's Rep 12, 17. 62 See 25.67-25.71 below. 63 See 26.19-26.27 below. 64 See 23.49-23.50 below. 65 See 18.80 below.

247



vessel has become a constructive total loss or determining the measure of 66 indemnity for untepaired damage, the reference is to the agreed value.

while no particular form of wording is required to create an agreed value, the fact that one part of the contract contemplates an agreed value will not necessarily confer that status upon a figure in another part of the policy that does not describe itself as an agreed value or carry wording orherwise linking it to the value of the insured property, In Wilson v Nelson," the policy stated that the insured ptoperty 'shall be valued at as under', the last two words being added in handwriting. There was, however, no statement of value or any figure at all in the body of the policy, but rhe sum '£1,300' was written in the margin. The Court of Queen's Bench held that this figure could not, without more, be interpreted as more than a sum insured. Thirdly, a figure expressed to be a sum insured may also operate as an agreed value alrhough clear wording to rhat effect will be required. In the non-marine case of Elcock v Thomson," a policy contained a sum insured but also ptovided rhat: 'The sum set opposire each item in this specification has been accepted by the underwriters and the assured as being the true value of the ptoperty insured and in the event of a loss the said ptoperty will be assumed to be of such value and will be assessed accordingly.' When rhe insured property was damaged by fire, Morris J held rhat the measure of indemnity should be calculated on a valued policy basis.

7.32 An agreed value is, however, a creature of contract and its conclusiveness is

confined to the assured and insurer as parties to the insurance contract in which it is found. As between the assured and a third party, liabilities will be quantified on market values. In Steamship Balmoral Co Ltd v Marten:' the insured vessel's liability to contribution to general average and salvage was adjusted on the basis of its market value of £40,000 rather than its agreed value of £33,000. A majority of the House of Lords had no doubt that the adjusters had been correct to employ the market value as the contributory value, since the agreed value could bind only parries to the insurance contract. (2) Determining Whether a Poliey is Valued: Agreed Value v Sum Insured

7.33 A distinction needs to be drawn between an agreed value and a sum insured. The latter serves to fix the maximum exposure of the insurer on the policy and, as a consequence, will affect the level of premium. It also provides the basis for the division of liability between assured and insurer in cases of underinsurance.'. While an agreed value performs rhese functions, it goes further in valuing the insured property. A sum insured fulfils no valuation function and, consequently, has no role to play in calculating the measure of indemnity or in any other context where the value of the insured property is relevant. A policy containing a sum insured and no agreed value is unvalued, and the measure of indemnity will be calculated by reference to the insurable value.

7.34 Whether a particular figure in a policy represents an agreed value or a sum insured depends upon the true interpretation of the policy in questiclll." The authorities, however, support the following propositions. Firsr, a provision that, in the event of a loss, insurers will indemnifY 'not exceeding' or 'up to' a specified amount will be interpreted as a sum insured.'o Likewise, the phrase 'amount insured' is, without more, to be equated with 'sum insured'.71 Secondly,

66

Kyzuna Investments Ltd v Ocean Marine Mutual Insurance Association (Europe) [2000]

IJoyd's Rep IR 513. 67 [19021 AC 511. 68 Reynolds v Phoenix Assurance Co Ltd [1978] 2 Lloyd's Rep 440, 450; Continental Illinois National Bank 6- Trust Co ofChicago v Bathurst (The Captain Panagos DP) [1985] 1 Lloyd's Rep 625,630; Thor Navigation Inc v Ingosstrakh Insurance Co Ltd [2005] EWHC 19 (Comm), [20051 1 IJoyd's Rep 547, para 26,

These principles are further illusttated by Kyzuna Investments Ltd v Ocean 7.35 Marine Mutual Insurance Association (Europe).74 A yacht policy provided rhat whether the yacht had become a constructive total loss should be calculated by reference to 'the sum appearing in the schedule hereto as rhe value of the insured property'. The policy also incorporated the Institute Yacht Clauses (1111185), which twice refer to the 'insured value'. However, the main insuring clause provided that insurers would indemnifY 'up to the amounts andlor limits contained herein' and the only figure in rhe schedule was described as a 'sum insured'. The assured contended rhat, in the context of the policy as a whole, the phrase 'sum insured' was to be understood as denoting an agreed value. The argument was rejected. Authority clearly established that the phrase 'sum insured' served to denote a ceiling on recovery and was distinct from an agreed value, and there was no evidence to displace that understanding of the phrase. Despite the definition of constructive total loss, the inescapable fact was that the schedule referred to in that definition ptovided for a sum insured, the ordinary meaning of which was reinforced by the main insuring clause. Those provisions in the incorporated Institute clauses that depended for their operation on an agreed value were simply inapplicable. Similar facts presented themselves in Thor Navigation v Ingosstrakh Insurance Co 7.36

Kyzuna lnvestmertts Ltd v Ocean Marine Mutual Insunmce Association (Europe) [2000] Lloyd's Rep IR 513; Thor Navtgation Inc v Ingosstrakh Insurance Co Ltd [2005] EWHC 19 69

(Comm), 12005] 1 IJoyd's Rep 547. 70 BlascheckvBussell(1916) 33 TLR 74; Quorum v Schramm [20021 Lloyd's Rep IR292. 71 Continental Illinois National Bank & Trust Co·ofChicago v Bathurst (The Captain Panagos DP) [1985J 1 IJoyd's Rep 625.

248

n (1864) 33 LJQB 220.

73

[1949J 2 KB 755.

249

74

[20001 Lloyd's Rep IR 513.

7.37



Inc. 7S A leading Russian marine insurance company concluded a hull and machinery policy incorporaring the Insrirure Time Clauses (1/11195) and conraining the figure of US$1.5 million expressed ro be a 'sum insured'. The insured shipowners believed that rhe policy was valued and argued that the figure of US$1.5 million policy should be undersrood and applied as an agteed value. It was held, however, that Kyzuna was indisringuishable and rhat the policy was unvalued. In particular, the statement in rhe Institute clauses rhat 'This insurance is subject ro English law and practice', coupled with the invatiable practice of the English market ro insute hull and machinety on a valued basis, provided no basis fot displacing the clear meaning of the phtase 'sum insured' and regarding it instead as code fot an enrirely different concept. The practice, aftet all, of the English market was ro adopt a valued basis through use of phrases such as 'agreed value' or 'valued at', and not by reference ro a sum insured.

not vety far to seek' but that commercial concerns may render 'inrelligible and legitimate' an agreed value 'going much beyond' the market value of the insured property.80 Indeed, while the statutory reference to a fraud exception is well supported by judicial dicta," examples of its application are rate. One example is provided by Haigh v de La Cour," in which the assured induced the insurer to agree ro a value by producing forged invoices and bills of lading. 83

The result of Kyzuna and Thor Navigation is that, where a policy contains a figure expressed to be a 'sum insured' and does not clearly provide that that figure is also ro operate as an agreed value, the policy will opetate on an unvalued basis. The only exceprions ate where the evidence establishes either that the phtase 'sum insured' was adopted by mistake and the policy should be tecrified ro substitute 'agreed value' for 'sum insured' or the phrase 'sum insured' was employed by the parties as meaning'agteed value' and an esroppel by convention tequites that it be so tead. Such argumenrs were advanced unsuccessfully in Thor Navigation. 76 (3) Re-opening an Agreed Value

7.38 Although an agreed value is generally conclusive evidence as between assured

and insurer of the insurable value of the insured property, there ate exceptions. Section 27(3) of the Marine Insurance Act 1906 provides that the conclusiveness of the agreed value is subject to the absence of fraud and to the othet provisions of the Act. It is now clear that the relevanr staturory provisions include those relating ro pre-formation utmost good faith. 77 Moreover, as noted above," valued policies remain subject ro the rules on insurable interest so that a gtOSS overvaluation that crosses the grey line ftom valuation to pure speculation will render the policy void as a waget. 79 7.39 It has been observed that 'Where there is heavy over-valuation fraud is, a priori,

7S

76 77

[20051 EWHC 19 (Comm), [20051 1 Lloyd's Rep 547. On rectification, see 8.77ffbelow and on estoppel by convention, see 8.58 below. Inversiones Manria SA v Sphere Drake Insurance Co pI!: (The Dora) [1989] 1 Lloyd's Rep

.

~n 78

See 7.26 above.

79

[onides 0 Pender (I 874) LR 9 QB 531 at 536. See 7.42 below.

250

More commonly, insurers will endeavour to re-open an excessive valuarion by 7.40 alleging that the overvaluation constituted a breach of a pre-formation duty of utmost good faith, in which context the state of mind of the assured is irrelevanr. If the extenr of the overvaluation is ro constitute an actionable nondisclosure, the insurer has ro establish three things: first, that the assured knew of the overvaluation or should have known of it in the ordinary course of business; secondly, that the overvaluarion was material according ro the standard of the prudenr underwriter; and, thirdly, that the non-disclosute of the overvaluation induced the actual insurer inro the conrract. Given that valued policies routinely overvalue insured property, it is clear that the fact of overvaluarion would not of itself sarisfY the tests of materiality and inducemenr. Overvaluation requires disclosure only where its extenr is so great that it calls for an explanation when judged against normal commercial practice. In The Grecia Express," where the insured vessel had allegedly been excessively overvalued by its managers, Colman J stated that: .. . where the proposed value is consistent w.ith reasonably prudent ship management, the excess over market value cannot be material to the risk, whatever its precise extent. That which would render the overvaluation material would be the want of any reasonable explanation for the disparity consistent with prudent ship management. Accordingly, in cases where a reasonable explanation is established the true market value does not have to be disclosed.

More generally: 'It is only where the disparity [between the agreed and market values] cannot be justified on reasonable commercial grounds that it ought to be disclosed.'''

80 Thames & Masey Marine Insurance Co Ltd v Gunfird Ship Co Ltd [191 I] AC 529, 542 per Lord Shaw. See also Barker v Janson (1868) LR 3 CP 303, 306 per Bovill C} 'An exorhitant valuation may be evidence of fraud, but when the transaction is bona fide, the valuation agreed upon is binding.' 81 ibid. See also Lidgett v Secretan (No 2) (1871) LR 6 CP 616, 629; Elcock v Thomson [1949J 2 KB 755, 760. 82 (1812) 3 Camp 319. 83 See also Eagle Star Insurance C'o Ltd v Games Video Co (eVe) SA (The Game Boy) [2004] EWHC 15 (Comm), [2004J 1 Lloyd's Rep 238. M Strive Shipping Corp v Hellenic Mutual \tilr Risks Association (Bermuda) Ltd (The Grecia Express) [2002J EWHC 203 (Comm), [2002J Lloyd's Rep IR 669, para 478. 85 ibid para 479.

251

7.41



Conversely, an overvaluation that is inconsistent with reasonable commercial practice raises questions about the nature of the risk and, as such, is one that, if disclosed, a prudent insurer would take into account in assessing the risk and one that the actual insurer could legitimately claim would have led to a different decision on the acceptability of the risk or the terms on which to write it. An insurer is entitled to know that an agreed value has an abnormal basis, not least

insured it initially for £2,000, subsequently increasing the valuation on renewal to £2,500. Roche J held that the assured had overpaid when buying the yacht, but was prepared to accept that the initial valuation, albeir optimistic, was not commercially excessive and reflected the price the assured hoped to obtain on a resale. However, by the time of the increase of the valuation on renewal, the assured had repeatedly failed to resell the yacht and was well aware that £2,500 was at least double the true market value. Roche J held that this overvaluation was excessive and should have been disclosed. Again, in Gooding v White,90 cargo probably worth no more than £2,000 was insured at a value of £5,000. According to Pickford J, it was unnecessary to decide whether the overvaluation was part of an attempted insurance fraud, as the insurers alleged, or merely reflected an unrealistic estimate of the cargo's profitability. The overvaluation was excessive and, therefore, required disclosure whatever its explanation.

since, without explanation, a prudent insurer would be concerned that an over-

valuation that defies explanation on commercial grounds might suggest an enhanced risk of a casualty being procured in order to claim on the policy. Indeed, it was common ground in The Grecia Express 'that the only possible basis for materiality is that excessive valuation suggesrs the risk of moral hazard'." 7.42 It should be noted that the test for materiality does not require such a level of

overvaluation as to render the agreed value pure speculation. Overvaluation to that extent transcends questions of disclosure since the insurance will be open to attack as a wager. The thresbold for materiality of overvaluation is lower. Thus, in Ionides v Pender," goods with a cost price ofJess than £8,000 were the subject of insurance on cargo and profits valued at approximately £14,000 and orher insurances worth £2,500. In particular, a quantity of spirits costing £973 was valued at £2,800. The assured argued that this valuation was justified because of the extreme ptofitability of the spirit, expected to be further enhanced by an imminent heavy import duty. The trial judge directed the jury that overvaluation was not excessive unless the contemplated level of profitability was greater than could be expected under any circumstances that could be reas~n ably contemplated. The jury found that the overvaluation was excessive, that the evidence was insufficient to establish a fraudulent intent, and that the ,excessive valuation was a material fact not disclosed to the underwriters. The Court of Queen's Bench refused the assured's application for a new trial on the ground of a misdirection with respect to overvaluation. It was held that the judge's direction was 'perhaps ... too favourable to the assured, as it makes the question, whether there was an excessive valuation or not, depend on whether the valuation was so high as to amount in part at least to a wager' .88 A distinction,

therefore, arises between overvaluation that is pure speculation and renders the insutance vulnerable as a wager and that which is excessive, which, albeit not fraudulent, suffices for a defence of non-disclosure. 7.43 A number offurther examples of material overvaluation may be given. In Piper v

Thames & Mersey Marine Insurance Co Ltd v GunfOrd Ship Co Ltd" concerned 7.44 the analogous problem of over-insurance by double insurance instead of by an excessive valuation. A combination of hull, freight, and disbursements policies produced a cumulative overvaluation of £21,800 in excess of a true value of £11,400. The hull policy contained an agreed value of £18,500 in respect of a ship worth £9,000. The House of Lords held that this overloading of insurance was material. Indeed, even overlooking the overvaluation on the hull policy, the remaining cumulative overvaluation generated by two ppi policies on disbursements, one ofwhich benefited the ship's managers, was still material. Lord Shaw quoted a witness for the insurers as condemning the vessel as 'insured fOr loss and not againstloss'." According ro Lord Robson, once the level of insurance is such that, even allowing for any sum necessary for reinstatement, those who own and control the insured property stand to make a handsome profit in the event of a loss, 'the incentive to care over the safety of the ship begins to be substantially affected, and the insurers are entitled to form their own opinion as to how far they will trust the assured under such circumstances'. 93 In contrast, expert evidence in The Dora" established that 'an assured insuring a 7.45 yacht will put forward the value he subjectively believes the yacht ro have. More particularly, the purchaser of a yacht will naturally insure the yacht for the price he pays.''' On this basis, Phillips J concluded that 'where a yacht owner insures for the price he has paid, a discrepancy between the insured value and the open market value is not material.'96 On the facts, therefore, the insurer was unable ro avoid the policy because the assured failed to disclose that rhe market value of

Royal Exchange Assurance,89 the assured purchased a yacht for £1,000 and

ibid para 474. 87 (1874) LR9 QB 531. as ibid 536 per Blackburn J, delivering the judgment of the Court. " (1932) 44 ULRep 103. 86

252

so (1913) 29 TLR312. " [1911] AC 529. 92 ibid 545. " ibid 550. 94 lnversiones Manria SA v Sphere Drake Insurance Co pic (The Dora) (1989J 1 Lloyd's Rep

69,92. 9S ibid per Phillips J.

96

ibid.

253


Burden and Standard ofProof

the yacht was US$80,000 less than the agreed value of US$480,000. It is unclear to what extent the same apptoach applies to commercial vessels where the value is less a matter of personal opinion and more a reflection of trading opportunity.

a non-fraudulent misrepresentation would, therefore, require that the insurer

7.46 Similarly, there will be no breach of the pre-formation duty of disclosure where

the difference between the agreed and market values represents an honest and reasonable estimate of the consequential loss the assured is likely to susrain from the loss of the insured property. In The Grecia Express,97 a ferty with a market value ofUS$4 million was insured under a policy with an agreed value ofUS$6 million. That value was subsequenrly increased to US$8 million. Given that the vessel could be expected to generate an annual ptofit of about US$2.5 million and that wete the vessel lost at the commencement of the season, a ptemium ptice would have to paid for a teplacement, there was no basis to conclude that the incteased agteed value was matetial to the motal hazard in suggesting that the assuted was contemplating the possibility of a ftaudulent claim. 7.47 It will be appatent from the fotegoing discussion that the allegation btought

against the assured is genetally framed as non-disclosute of excessive ovetvaluation tather than being couched in terms of a misrepresentation, although in The Dare?' Phillips J referred to 'the representarion made as to the value of Dord. Ir is suggested that non-disclosure is indeed the apptopriate analytical tooL Actionable misrepresentations are divided into statements of facr or opinion. Any representation being made as to the commercial legitimacy of the proposed value can only be regarded at face value as a statement of opinion. By virtue of section 20(5) of rhe Marine Insurance Acr 1906, such a sratement·is true if made in good faith. Liability for a false Statement of opinion depends, therefore, on proof of fraud. Clearly, if fraud can be esrablished, the agreed value can be re-opened. However, as demonstrated above, fraud is rately the basis for re-opening an agteed value. At common law, in approptiate citcumstances one can look behind a statement of opinion to an implied underlying reptesentation of the fact of the existence of teasonable grounds to justifY the opinion. This petmits liability to arise at least in cases whete the opinion has been attived at negligently, albeit not in cases of simple error. However, in Economides v Commercial Assurance Co plc,99 the Court of Appeal held that the wotding of section 20(5) ptecludes the implication of such an underlying representation in the context of insurance contract law. Impugning an agreed value on the basis of

97 Strive Shipping Corp v Helknit Mutual 'U'lar Risks Association (Bermuda) Ltd (The Grecia Express) [2002J EWHC 203 (Comm), [2002J Lloyd's Rep IR 669, paras 445-480. 98 Inversiones Manria SA v Sphere Drake Insurance Co pte (The Dora) [1989] 1 lloyd's Rep

.

~,n

99

[19981 QB 587, discussed ar 4. 139ffabove.

254

esrablish rhat a facr had been wrongly stated. Bur whar is the fact represented by a proposed agreed value? Given the acceptance of considetable overvaluation as often commercially legitimate, a proposed agreed value amounts to a proposal fot the financial basis of the conttact tathet than any representation of fact regatding the matket value of the insuted propetty. The commetciallegitimacy of any overvaluation must be regatded as a matter of opinion. 1Oo Conceivably, the assured could be regarded as impliedly stating that any overvaluation lies within the tange of commetciallegitimacy. Howevet, establishing the inaccuracy of such a statement tequites a judgment on a mattet of opinion, namely what is commetcially legitimate in the citcumstances, and Economides holds in essence that an inaccurate opinion cannot be held against an assuted unless advanced ftaudulently. It seems difficult to avoid the conclusion that any attempted tefOtmulation of a ptoposed agteed value in the fOtm of a statement must fail as an inditect attempt to rendet an opinion statement actionable beyond the natrow limits that Economides holds that section 20(5) permits. No such difficulty atises in the context of the pte-fotmation duty of disclosure. The assured is required to disclose {every material circumstance' and overvaluation in excess of that which is commetcially teasonable can clearly constitute a 'citcumstance'.

E. Burden and Standard of Proof (I) General Principles It is always incumbent upon the assuted to prove accotding to the civil law 7.48 standatd of proof of a balance of probabilities that the loss the subject of the claim was caused by a petil insuted against under the policy. Courts ate genetally reluctant to decide cases purely on the incidence of the burden of proof. 'OI However, unless an assured can demonstrate on a balance of probabilities, fitst, that an event happened that qualifies as a covered petil and, secondly, that that event was causative of the loss in the manner dictated by the causation wotding in the contract, the insurer

will win without having even to endeavour

to

establish that the rtile cause of the loss was an event not coveted by the policy, much less to succeed in so doing. The importance of the burden of proof was teaffirmed by the House ofLotds in 7.49

100 Eagle Star Insurance Co Ltd v Games Video Co (GVC) SA (The Game Boy) [2004J EWHC 15 (Comm), [2004] 1 Lloyd's Rep 238, para 118. 101 Aquarius Financial Enterprises Inc v Certain Underwriters at Lloyd's (The Delphine) [2001] 2 Lloyd's Rep 542, para 19.

255


Burden and Standard ofProof

A vessel loaded with sugar sank in calm weather off the Algerian coast in deep water. Claiming for a loss by perils of the sea, the assured shipowners alleged a collision with an unidentified submerged submarine. It was found that the ship sank because of the inflow of water through an aperture in the shell plating in the port side. The evidence did not permit a holding as to whether the ship had been seaworthy when embarking upon the voyage. While conceding the inherent improbability of the assureds' explanation for this inflow, Bingham J held in the assureds' favour on the basis that the insurers' alternative explanation, namely a loss by ordinary wear and tear, was unsustainable on the evidence. The Court ofAppeal dismissed the insurers' appeal, albeit on the basis that it was not necessary to establish the precise nature of the operative sea peril. The insurers then appealed to the House of Lords. This time, they were successful.

issues through a decision on substance. In an exceptional case whete that is not possible, the court should generally provide a detailed explanation of why that is SO.105

The Popi M

102

7.50 The House of Lords accepted that the defence of ordinary wear and tear had not been substantiated. However, defending insurers were under no obligation to prove a cause ofloss not covered by the policy. On the evidence, the lowet courts had not been justified in inferring a loss by perils of the sea. Even the precept of Sherlock Holmes that 'when you have eliminated the impossible, whatever temains, however improbable, must be the ttUth"03 failed to petsuade. Fot the lawyer, the fictional detective's aphotism has thtee weaknesses. First, the judge does not always have to solve the case: .. . the judge is not bound always to make a finding one way or the other with

regard to the facts averred by the parties. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any ,

averment made by him has failed to discharge that burden. No judge likes to • decide cases on burden of proof if he can legitimately avoid having ro do so. There are cases, however, in which, owing to the unsatisfactory state of the evidence or

otherwise, deciding on the burden of proof is the only just course for him to take. 104

Secondly, the detective's maxim applies only once all televant facrs are known, 7.51 petmitting elimination of all possible explanations except one. On the facts, some significant information was not available. Thitdly, 'the legal concept of proof of a case on a balance of probabilities must be applied with common sense'. If a fitst instance judge, as a tribunal of fact, finds that an explanation is improbable, it cannot then with common sense be held that the assured has established it to the requisite standatd. An explanation cannot at the same time be improbable and more likely than not. 'OG It is inhetent, however, in the standatd of proof on a balance of probabilities that 7.52 the assured is not requited expressly to disprove any alternative explanation raised by the insurer no matter how imptobable. Pute conjecture on the part of the insurer will not prevent a court ftom concluding that rhe loss has been proved by supportive citcumstantial evidence adduced by the assured. The line between surmise and legitimate inference may not be easy to draw,107 but, where the probabilities support one view, a court is both justified in drawing a firm conclusion and obliged so to do notwithstanding the existence of a contrary possibility. 1as The assured may succeed in proving only that parr of a loss sustained was caused 7.53 by a coveted peril. In such a case, it is in principle incumbent upon the assured also to establish what proportion was so caused. Thus, in Kelly v Norwich Union Fire Insurance Society Ltd, 109 damage was occasioned by two incursions of water, the tetms of the policy extending only to the second. As appottionment of loss between the two incutsions was impossible, the assured tecoveted nothing."o

Deciding a case on the burden of proof is, however, an option of last resort. A court should always strive to arrive at findings of fact to enable it to dispose of

Stephens v Cannon [20051 EWCA Civ 222, [20051 CP Rep 31, para 46. [1985) 1 WLR 948, 956. See also Lamb Head Shipping Co Ltd v Jennings (The MartI)

105 106

[19941 1 Lloyd's Rep 624, discussed at 10.30, 10.41 below. Other perils of the sea cases decided against the assured on the burden of proof include Cobb & Jenkins v lIotga Insurance Co Ltd of Petrogrltd (1920) 4 LlLRep 130, 178; Mitrovich Bros & Co v Merchants Marine Insurance Co Ltd 102 Rhesa Shipping Co Ltd v Edmur"ls (The PopiM) [198312 Lloyd's Rep 235, affd on different grounds [198412 Lloyd's Rep 555, rvsd [198511 WLR 948. The case is discussed in more detail

in the context of proof of loss by perils of the sea at l0.33ffbelow. 103 See Sir Arthur Conan Doyle, The Sign ofFour, Ch 6, in the context of the method of entry to the deceased's bedroom adopted by his killer, an Andaman Islander named Tonga, Since he could not have entered through the"door (locked), the window (inaccessible) or the chimney (toO small) and could not have been concealed in the room (no place for concealment), it was deduced that he had to have entered through a hole in the roof. 104 [1985] 1 WLR 948, 955-6 per Lord Brandon, See also Campania Naviera Martiartu v

Royal Exchange Assurance Corp [1923) 1 KB 650, 657.

(1922) 12 LlLRep 451, (1923) 14 LlLRep 25; Miceli v Union Marine & GeneralImnrance Co Ltd (1938) 60 LlLRep 275; Ne"r (NE) & Co Ltd v Licemes & General Insurance Co Ltd (1944) 77 LlLRep 202. 107

As to which, see Kerr vAyr Steam Shipping Co Ltd[1915] AC 217, esp the speech of Lord

Shaw. 108

Campania Maritima afBarcelona v Wishart (1918) 23 Com Cas 264; Munro, Brice (} Co v

FW Marten (1920) 2 LlLRep 2, (1920) 36 TLR 241; United Scottish Insurance Co Ltd v British Fishing Vessek Musual w"r Risks Association Ltd (The Braconhush) (1945) 78 LlLRep 70. 109 [19891 2 Lloyd's Rep 333. See also Stanley v Western Insurance Co (1868) LR 3 Ex 71. 110 But see Birds Cigarette Manufacturing v Rouse (1924) 19 LlLRep 301, discussed at 15.58 below.

256

257

An Introduction to Modern Marine Cover (2) 'All Risks' Cover 7.54 Where insurance covers 'all risks', the assured's burden of proof is considerably eased, bur it is not lifted altogether. All risks cargo insurance is not a guarantee that the insured cargo will arrive in an undamaged condition. The very term 'risk' denotes an accidental cause of 10ss.111 Such cover is, however, 'quasiuniversal' so that the assured need not identifY the precise cause of the loss and demonstrate that that cause is properly characterized as accidental. Instead, it suffices that the assured establishes on a balance of probabilities that the cause of the loss, whatever it was, was accidental. The precise cause may remain in doubt, yet the assured will recover.'12 7.55 It is clear, therefore, that me burden of proof is considerably lighter for an assured under all risks cover than under a named perils policy. Consequently, it has been argued that where named perils policies embrace a range of perils that collectively provide an 'uninterrupted continuum' of cover, they should be treated as akin to all risks cover so that the assured need not identifY the precise cause of the loss bur merely that it was fortuitous and fell somewhere within the continuum. Such an argument has been rejected. An assured that desires seamless cover and a lighrening of rhe burden of proof musr contracr for all risks cover.' 13 7.56 Notwithstanding the easing of the assured's burden of proof under all risks cover, that burden is still present, and it seems logical that a claim may fail without the insurer establishing on a balance of probabilities that the cause of the loss fell outside the scope of cover or any other specific defence merely because the assured has failed to establish on a balance of probabilities that the loss was accidental. This reasoning has, however, been doubted. In The Delphine,' 14 the assured claimed under an all risks yacht policy in respect of a sinking caused by fire. The insurers alleged arson by the assured. Toulson J rejected the possibility of a finding in favour of the insurers on the basis of failure by the assured to discharge the burden of proving fortuity. The assured denied that he caused the fire and, if that denial was to be believed, it followed that the fire was a risk within the meaning of the policy. The burden of proving arson clearly lay on the insurers. The consequence, according to Toulson J, was

111 Schloss Bros v Stevens [1906] 2 KB 665 at 673; British 6- foreign Marine Insurance Co Ltd v Gaunt [1921] 2 AC 41 at 46-7,52,57; PasqtulJi & Co v Traders' & Genera! Insurance Association (1921) 9 LlLRep 514 at 516: Berk (FW) 6- Co Ltd v Style[195611 QB 180. 112 British & Foreign Marine Insurance Co Ltd v Gaunt [1921] 2 AC 41. m ShellPetroleum Co Ltd v Gibbs (The Salem) [19821 QB 946, 959: Browmville Holdings Ltd v Adam}ee Insurance Co Ltd (The Milasan) [2000]2 Lloyd's Rep 458, pata 15. 114 Aquarius Financiall::,uerprises Inc v Certain Underwriters at Lloyd's (The'Delphine) [2001J 2 Lloyd's Rep 542.

258

Burden and Standard ofProof rhat, unless rhe insurers proved arson, the assured's denial would have to be accepred:'15 'the fire was eirher accidental so far as [the assured] was concerned or it was deliberate. There is no third possibility. In reality, rhe question is whether the evidence of arson is sufficiently strong for [the assured's] assertion that the fire was accidental to be disbelieved'. The Popi M was disringuished on the basis of its 'unusual facrs' and rhe need, arising out of cover against perils of the sea, to esrablish rhe precise operative peril. The House of Lords, according to Toulson J, upheld rhe insurers' appeal 'because rhere might have been some other unknown cause of rhe casualty, not due to perils of the sea' ."6

It is respecrfully suggesred that this reasoning is erroneous. First, rhe House of 7.57 Lords did not decide The Popi M on the basis of any appreciarion of alternarive causes of rhe loss. The reasoning of Lord Brandon in his dismissal of rhe aphorism of Sherlock Holmes is that a conclusion thar an assured's explanarion for a loss is unproved does nor require any level of recognition of an alrernative explanation,117 alrhough ir cannot be denied rhat rhe likelihood of an alrernarive explanation may influence a conclusion as to wherher the assured's explanation should be rejected as unproved. Secondly, it is well esrablished that insurers under a named perils policy who suspect scurtling are not required to respond to a claim of a fortuitous loss by perils of the sea by affirmatively alleging scuttling. They are entitled simply to put the assured to proof of its claim according to the srandard of a balance of ptobabilities. Logic does not dictate a difference of principle in the context of all risks cover. The lighter evidential burden faced by an assured, in that the precise operative peril need not be proved, certainly renders less likely a conclusion that the assured has failed to discharge its burden, but it cannot eliminate the possibility. Especially, bur not uniquely, because of the cogency of evidence required before a court will uphold an affirmative defence of scurtling,'18 it must be possible for a court to conclude that, although the evidence does not warrant a positive holding of scuttling by the assured, nevertheless the accidental nature of the loss has not been established on a balance of ptobability. (3) Exclusions A distinction needs to be drawn with respect to exclusions,'19 General exclusions 7.58 qualifYing the entirety of the cover must be disproved by the assured in order to recover. Thus, in policies warranted free of particular average, the burden of proving a total loss lies on the assured. Where the cover is subject to specific exclusions, however, the burden of proof generally falls upon the insurer,12o and

115 119

120

ibid para 21. 116 ibid para 17. 117 See 7.50 above. Munro, Brice 6- Co v w:tzr Risks Association Ltd[1918J 2 KB 78. Green v Brown (1744) 2 Str 1199. But see further below.

259

118

See 15.18 below.

An Introduction to Modern Marine Cover an insurer cannot shift rhis burden to the assured by framing rhe exception as a condition precedent to liability. It 'is axiomatic in insurance law, that, as it is always for an insurer to ptove an exception, so it is for him to prove the breach of a condition which would relieve him from liability in respect of a particular loss' .'21 However, a reverse burden clause may oblige the assured to disprove the operation of an exclusion where the insurer presents an arguable case for the operation of an exclusion and satisfaction of the causal connecrion required by the policy between the exclusion and the loss.'" 7.59 Difficulty may arise in determining whether a specific restriction on cover is

appropriately characterized as an exclusion, in which case the burden of proof falls on the insurer, or as part of the definition of a named peril or the scope of all risks cover, in which case the burden of proof falls on the assured.'" Certain restrictions on cover that in the modern Institute clauses are drafted as exclusions and form part of a clause headed 'Exclusions' previously formed part, expressly or implicitly, of the definition of the covered perils. Thus, restrictions on the scope of the perils of artest, restraint, and detainment formerly expressed as part of the definition of such terms 124 are now found within the 'Exclusions' in the Institute war and strikes clauses for hulls or freight. 125 Again, 'all risks' cover has been regarded as a marter of interpretation of the term 'risk' not to cover loss or damage caused by inherent vice or ordinary wear and tear, wirh rhe burden falling on the assured to adduce evidence rhat the loss or damage was nor so caused."6 Under the Institure Cargo Clauses (A), the absence of cover for such loss or damage is not left ro implication from the rerm 'risk' but is made the subject of express exclusions. 127 The provenance of these exclusions has led to the view, in the context of the peril of detainment, that the assured should remain subject to a burden of disproving the operation of these res,rictions notwithstanding their modern presentation as exclusions. 128 It is, however, suggested that attributing such significance to the historical provenance of a contractual provision over the apparently clear contractual allocation of status is highly questionable.

", Bond Air Services Ltd v Hill [1955J 2 QB 417, 427 per Goddard LC]. See also Simmons v Gale [1957J 2 Lloyd's Rep 4S5 (Supreme Court of New Sourh Wales) (unsuccessfully appealed to rhe Privy Council on other grounds: [195812 Lloyd's Rep I). m Spinneyl (I948) Ltd v Royal Insurance Co Ltd[1980J 1 L1oyd's Rep 406, 426. 123 The issue of characterization is relevant also to the operation of concurrent cause rules: see 9.30-9.31 below. "4 MIA 1906, Sch 1, r 11. ", eg Institute War aod Strikes Clauses (Hulls-Time) (1111/95), ell 5.1.4-5.1.5. 126 British & Foreign Marine Insurance Co Ltd v Gaunt [1921] 2 AC 41,52,57. 127 Institute Cargo Clauses (A), cl4.2-4. 128 Ikerigi Compania Naviera SA v Palmer (The Wondrous) [1992J 2 Lloyd's Rep 566, 572.

260

8 INTERPRETATION AND RECTIFICATION OF INSURANCE CONTRACTS

A. Principles of Interpretation (1) The intention of the parties (2) Factors taken into account in interpreting contracts (3) Contractual interpretation and the doctrine of precedent

B. The Slip as an Aid to Interpretation

8.02 8.04

of the Policy

8.63

(1) General admissibility but variable

evidential value (2) The rule of law approach

8.06

8.59

C. Rectification

8,64 8.72

8.77

This chapter is concerned with how one ascertains the content of the bargain 8.01 between insurer and assured. This necessarily involves interpretation of the terms selected by the parties, in the same way as with any commercial contract. In addition, however, the insurance context raises the question of the urility of the slip as an aid to interpretation of any subsequent policy. The availability of rectification will also be considered.

A. Principles of Interpretation Phillips J once observed, in the context of a reinsurance dispute: 'As is the way 8.02 with hotly contested issues of construction, Counsel on each side has assured me that my task is a simple one and that the answer is obvious. I do not find the issue simple." Difficulries of interpretation should not be underestimated: 'The fact that a Court succeeds in construing a contractual provision does not

-~--~---------------1 Youell v Bland Welch 6- Co Ltd (No 1) [1990J 2 Lloyd's Rep 423, 427. He cootioued: 'It involves construing a single sentence, fifteen lines long, the grammatical structure of which is far

from dear.'

261

Interpretation and Rectification ofInsurance Contracts

Principles ofInterpretation

mean that the provision is unambiguous, let alone that it is clear." Faced with construing the word 'flood' in a household insurance policy, Lawron LJ was moved to remark: 'This appeal raises a semantic problem which has troubled many philosophers for centuries, and it can, I think, be expressed in the aphorism that an elephant is "difficult to define but easy to recognise"." Sadly, difficulties of interpretation are often the result of inadequate attention being paid to the drafting of contracts. Judges have often been moved to remark disparagingly on the qualities of drafting displayed even in professionally prepared documents relating to commercial transactions involving considerable

designed to assist a court in the often challenging task of divining the intention of the parties.'

sums of money.4

8.03 In construing a contract, the court seeks to give effect to the bargain concluded by the parties. 5 The modern approach to interpretation is to reject any impediment to determining and implementing the intention of the parties in concluding the contract they did in fact conclude, while remaining vigilant not to rewrite the contract. In particular, a commercial contract will be construed through the eyes of reasonable commercial parties and not via the application of abstract, technical legal rules. Thus, in comments prefacing the leading modern judicial statement of the principles governing the interpretation of contracts, Lord Hoffmann, in Investors Compensation System Scheme Ltd v W0st Bromwich Building Society: stated that: 'Almost all the old intellectual baggage of "legal" interpretation has been discarded.' That said, the process of interpretation is not entitely at large. Principles of interpretation can be formulated. However, subject to a few remaining rules of inadmissibility, these principles must be understood not as rules in any formal sense but rather as suggested thought process_es

, Youell v Bland Welch & Co Ltd (The Superhulls Cover case) (No 2) [19901 2 Lloyd's Rep 431, 440 per Phillips]. 'The court's task is to make sense of the agreement as best it can, even if the eventual answer cannot be regarded with any more enthusiasm than that it is the least unsatisfac~ tory construction': John v Price Waterhouse [2002] EWCA eiv 899, unreponed, para 75 per Robert Walker L]. 3 lOung v Sun Alliance ImdLondon Insurance Ltd [1977J 1 WLR 104,108-9. 4 eg Kuwait Airways Corp v Kuwait Insurance Co SAK (No 1) [1997] 2 Lloyd's Rep 687, 701 per Schiemann LJ: 'The problem arises because the policy has been constructed on the kebab principle of draughtsmanship: various clauses have been garnered together from various sources and skewered together.' The case concerned the interpretation of a sue and labour clause in an aviation policy, a clause described by a witness as 'a mishmash ofNol'man French, marine doctrine and what the panies wanted in an aviation contract' (ibid 695 per Staughton LJ). See also the comments of Lord Hobhouse: [1999J 1 Lloyd's Rep 803, 808-9. Again, see Eagle Star Insurance Co Ltd v Cresswell [20031 EWHC2224 (Comm), [20041 I All ER (Comm) 508 at [171 ('dog's breakfast'); Petromec Inc v Petrako Brasileiro SA Petrobas [20041 EWCA Clv 156, [20041 I Lloyd's Rep 629, paras 21-22. 5 Reliance Marine Insurance Co v Duder [1913] 1 KB 265, 273. 6 [199811 WLR 896, 912-13.

262

(1) The Intention of the Parties The purpose of interpretation is to give effect to the intention of the parties as 8.04 revealed objectively by the available and admissible evidence 8 The focus must inevitably fall upon the words chosen by the parties to express their intention, but the meaning to be given to those words may be affected by a wide range of factors. Testimony from the parties themselves will not, however, be received as too likely to be coloured by self-interest. Both the objective narure of the process and the breadth of material available to the court were encapsulated by Lord Hoffmann in the first of five principles enunciated in the Investors Compensation case: 'Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were in at the time of the contract.'9

It is often stressed that the role of the court is to interpret the contract and that 8.05 any tendency rowards rewriting is to be strenuously avoided. Judicial rewriting would constitute an improper infringement of the liberty of the parties to order their own affairs, even if in a seemingly improvident fashion. It would, moreover, be destructive of the certainty that commercial parties especially need to be able to repose in the agreements they conclude.'o Often, however, the problem posed is the application of the contract to circumstances that clearly were entirely beyond the contemplation of the parties at the time the contract was concluded. The court's task is then to determine the intention to be imputed to the parties: 'a solution should be found which is both reasonable and realistic' .'1 In Casson v Ostley Ltd, 12 in the context of the application of an exemption clause in a building contract to negligent breaches, Sedley LJ openly acknowledged that any intention ascertained is 'in most such cases a fiction'" and that the

7 Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240, 244 per Devlin J: 'A rule of construction cannot be more than a guide to enable the court to arrive at the true meaning of the panics.' See also BOC Group pic v Crntean Ilc [19991 I All ER (Comm) 970, 980 per Evans L]: '1 would guard against allowing tules, maxims or relevant factors becoming masters rather than servants'; Bank ofCredit & Commerce International SA vAli [2001] UKHL 8, [200211 AC 251, para 78 per Lord Clyde: 'The exercise is not one where there are strict rules'. 8 Bank ofCredit & Commerce InternationalSA vAli[20011 UKHL 8, [200211 AC251, para 8. 9 (1998] 1 WLR 896,913. On objectivity, see also Reardon Smith Ltd v Yngvar Hansen-Tangen [197611 WLR 989,996. 10 Charter Reinsurance Co Ltd v Fagan [1997] AC 313, 387. 11 Per Lord Clyde, para 78. 12 [200 I] EWCA Clv 1013, [20031 BLR 147. 13 ibid para 29. cf the analysis of the doctrine of frustration by Lord Radcliffe in Davis Contractors Ltd v Fareham Urban District Council (1956] AC 696, 727.

263



process of interpretation of the parties' chosen terms 'is more nearly that of the concert artiste than that of the linguist' .'4 Acknowledging the creative aspect of the judicial function in such application of contracts to uncontemplated events, Sedley LJ stated as follows: 15

what it says. Too ready a departure from the ordinary meaning of the words used will also undermine commercial certainty." Accordingly, subject to the possibility of technical meanings, the inquiry as rothe true interpretation of a contract 'will start, and usually finish, by asking what is the ordinary meaning of the words used.'2Q

We mitigate the uncovenanted effects of literalism not

by nakedly writing a new

contract for the parties but by construing the words according to principles which enable the contract, in effect, to be reconstructed. It is a very reasonable stopping place on the road that runs between second-guessing parties who have simply

contracted incautiously and leaving a party at the mercy of unconsidered words.

(2) Factors Taken into Account in Interpreting Contracts 8.06 In the quest for the Holy Grail of the interpretation process-the intention of

the parties-a variety of factors may affect the meaning to be attributed to the contractual words. Often, a number of factors corroborate one another in indicating the same meaning. Sometimes, different factots may point towards different meanings, in which case the court will have to decide which factor, or combination of factors, is the more persuasive in the context of the particular contract in question.

In Melanesian Mission Trust Board v Australiim Mutual Provident Society," Lord 8.08 Hope reasoned as follows: Where ordinary words have been used they must be taken to have been used according to the ordinary meaning of those words. If their meaning is clear and unambiguous, effect must be given to them because that is what the parties are taken to have agreed to by their contract. Various rules may be invoked to assist interpretation in the event that there is an ambiguity. But it is not the function of the court, when construing a document, to search for an ambiguity ... It is of course legitimate to look at the document as a whole and to examine the context in which these words have been used, as the context may affect the meaning of the words. But unless the context shows that the ordinary meaning cannot be given to them or that there is an ambiguity, the ordinary meaning of the words which have been used in the document must prevail.

References to 'ordinary meaning' should not, however, mislead. The court's task 8.09 is not to ascertain in isolation the abstract meaning of a word as it may be

(aJ The natural meaning ofthe words 8.07 The srarting point in interpreting the words chosen by the parties to express

their agreement is their ordinary and natural meaning." According to Lord Ellenborough in Robertson v French: 17 'The same rule of construcrion which applies to all other instruments applies equally to this insttument of a policy .of insurance, viz that it is to be construed according to its sense and meaning as collected in the first place from the terms used in it, which terms are themselves to be understood in their plain, ordinary and popular sense'. This 'reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents' .'8 Commercial insurance policies are compiled by informed professional people, namely underwriters and brokers. The natural assumption, therefore, is that the language of such patties in formal contractual documents says what it means and means

" [200Ij EWCA CIv 1013, [2003J BLR 147, para 33. See also Petromec Inc vPetroleo Brasileiro SA Petrobas [2004J EWCA CIy 156, [2004J I Lloyd's Rep 629, para 21 (poor quality drafrlng

rendering the identification of parties' intentions from words used 'a search for a mare's nest'). 15 [200Ij EWCA CIy lOB, [2003J BLR 147, para 32. 16 Robertson v French (1803) 4 East 130, Stadire Diamond Rings Ltd v Angel [1962J 2 Lloyd's Rep 217; MIS Aswan Engineering Establishment Co Ltd v Iron Trades Mutual Insurance Co Ltd [1989J I Lloyd's Rep 289, 293-4. " (1803) 4 East 130, 135. 18 Part of Lord Hoffmann's fifth principle in Investors Compensation Scheme Ltd v 'West Bromwich Building Society [1998J I WLR 896, 914.

264

employed in the English language, but to determine and give effect to the intention of the parties behind the words chosen,22 while at all times stopping shott of judicial tewriting of the contract. An authoritative dictionary may be consulted to reveal the natural English language meaning of a term,23 but: 'One must beware confusing construction and definition.'24 As Lord Hoffmann observed in Investors Compensation:" 'The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.''' The search is for the intention of the parties as objectively revealed by their chosen words in the context of the document as a whole

19 BP Explom'ion Operating Co Ltd v Kvaerner Oilfield Products Ltd [2004J EWHC 999 (Comm), [2005J I Lloyd's Rep 307, para 94. 20 Charter Reinsurance Co Ltd v Fagan [1997] AC 313, 384 per Lord Mustill. See also T&N Ltd v Royal 6-SunAlliance pic [2003J EWHC 1016 (Ch), [2004J Lloyd's Rep IR 106, para 132. " [1996) UKPC 53, (1997) 74 p & CR 297, 301. " Aqua Design 6- Play International Ltd v Kier Regional Ltd [2002J EWCA CIy 797, [2003J BLR Ill, paras 9, 24. 23 eg In Spinneys (1948) Ltd v Royal Insurance [1980J I Lloyd's Rep 406, 436, Mustill J referred to the Oxford English Dictionary definition of 'rebellion', a standard war risk. 24 Lord Clyde, 'Construction of Commercial Contracts: Strict Law or Common Sense' (2000) 27 JMCL I, 10. 25 [199811 WLR 896,914. " See also Schuler (L) AG v Wickman Machine Tools Ltd [1974J AC 235, 256 per Lord Morris: 'Words are bur the instruments by which meanings or intentions are expressed.'

265



and the relevant background." The commercial context indicates, therefore, that the terms of a commercial conrract should be interpreted according to the understanding of commercial parties." In consequence, literalism is an unteliable guide to the interpretation of a commercial contract. To the question: 'Whar is literalism?' Lord Steyn has offered the following answer by way of example:" 'The tyrant Temures promised the garrison of Sebastia that no blood would be shed if they surrendered to him. They surrendered. He shed no blood. He buried rhem all alive. That is literalism. If possible it should be resisted in the interpretative process.' Accordingly, in Hart v Standard Marine Insurance Co Ltd,'O a warranty not to exceed a specified quantity of iron was held to be infringed by an excessive quantity of steel, rhe term 'iron' being construed not according to scientific understanding but as used in commercial transacrions, all business people being aware thar sreel is merely processed iron. 31

ordinary meaning of the words was perhaps best articulated by Sir Thomas Bingham MR as follows: 33

8.10 The increasing significance paid in the modern law to context raises rhe question of the urility of the concept of an ordinary and natural meaning. Lord Hoffmann has expressed doubt, 'at least in some cases':" 'Because the natural meaning of words is so sensitive to syntax and context, the natural meaning of words in one sentence may be quite unnatural in another. Thus a starement that words have a particular natural meaning may mean no more than that in many contexts they will have that meaning. In other contexts their meaning will be different but no less natural.'

As Lord Steyn stated succinctly in Total Gas Marketing Ltd v Arco British Ltd," 'loyalty to the contractual text viewed against its relevant contexrual background is the first principle of construcrion'.35

Courts will never construe words in a vacuum. To a greater or lesser extent,

depending on rhe subjecr matter, they will wisb

to

be informed of what may

variously be described as the context, the background, the factual matrix or the mischief. To seek to construe any instrument in ignorance or disregard of the circumstances which gave rise to it or the situation in which it is expected to take effect is in my view pedantic, sterile and productive of error. But that is not to say that an initial judgment ofwhat an instrument was or should reasonably have been intended to achieve should be permitted to override the clear language of the instrument, since what an'author says is usually the surest guide to what he means. To my mind construction is a composite exercise, neither uncompromisingly literal nor unswervingly purposive: the instrument must speak for itself, but it must do so in situ and not be transport~d to the laboratory for microscopic analysis.

(b) Specialist meaning 1: technical legal meaning A word may carry both a technical legal meaning and a common parlance 8.12 meaning. Occasionally, technical interpretation is required by law. The peril of 'riot' is construed in marine policies in accordance with the definirion in the Public Order Act 1986 because s 10(2) of that Acr so dictates." More generally,

8.11 This is undoubtedly true, but the challenge is to permit context to shed light on the parties' intentions while acknowledging that the parties are not prisoners of their context. The relationship between the context of the contract and the

31 See also Kawasaki Kisen Kabushiki Kaisha ofKobe v Bantham Steamship Co Ltd [1939] 2 KB 544 (meaning of 'war' in a charrerparty cancellation clause, discussed at 13.19-13.21 below); Yorkshire Dale Steamship Co Ltd v Minister ofwar Transport (The Coxwold) [1942] AC 691. 707 (proximate cause, discussed at 9.45 below); Noten BV v Harding [1990] 2 Lloyd's Rep 283 (proximate cause, discussed at 15.57 below). This blends into the relevance ofcommercial common sense as a factor in its own right, discussed at 8.26ffbelow. 32 Charter Reinsurance Co Ltd v Fagan [1997] AC 313, 391. See also Static Control Components (Europe) Ltd v Egan [2004] 2 Lloyd's Rep 429. para 27 pc> Arden LJ: 'rhere ace not twO possible constructions in any given situation, namely a purely linguistic one and one in the light of the factual background, but only one" the true interpretation. This is because the object of interpretation is to discover the meaning of the provision in question in its context ... Thus, in principle, all contracts must be construed in the light,of their factual background, that background being ascertained on an objective basis. Accordingly,'the fact that a document appears to have a clear meaning on the face of it does not prevent, or evetiexcuse, the Court from looking at the background.'

33 Arbuthnott v Fagan [1996] Lloyd's Rep IR 135,139. See also Lord Clyde, 'Construction of Commercial Contracts: Strict Law or Common Sense' (2000) 27 JMCL 1,16: 'While the words which commercial people use are still the focus to which construction is directed, the emphasis is not on literalism, but on the expectation of commercial people.' " (1998] 2 Lloyd's Rep 209, 218. 35 See also Sirius International Insurance Co (Pub!) v FAI General Insurance Ltd [2004J UKHL 54, [20041 1 WLR 3251. para 18.1n King v Brandywine Reinsurance Co (UK) Ltd [2004] EWHC 1033 (Comm). [2004] 2 Lloyd's Rep 670, affd [2005] EWCA Civ 235. [2005] 1 Lloyd's Rep 655, one issue was whether the COStS of cleaning up oil pollution were recoverable under the heading of'removal of debris of property ... covered hereunder', which extended $600 million of cover. According to Colman J (para 86): 'In order to identify the mutually intended meaning of these words it is necessary first to identify the possible range of dictionary meanings, secondly to investigate the setting of the words in their contractual environment and thirdly to investigate the circumstances in which the contracts were negotiated, in patticular the circumstances of the parties and the mutually known features of the market in which they were negotiating.' It was held there was no cover. As a matter oflanguage, the term 'debris' was not associated with liquids; the contract dearly regarded liability for pollution as distinct from liability for removal of debris; and the extent of cover exceeded the limit of cover for pollution clean-up costs available in the London market at the time the contract was concluded. The Court of Appeal upheld this ruling, although it relied purely on the ordinary meaning of the phrase 'removal of debris'. Spilled oil or pollution from spilled oil was not 'debris' and dean-up of spilled oil involved much more than simply removal (paras 117-18). 36 See 14.12-14.14 below.

266

267

27 28 29

On the ordinary meaning of the words and extrinsic evidence, see further 8.42-8.43 below.

Mannai Investment Co Ltd v Eagle Star Lift Assurance Co Ltd [1997] AC 749, 771. Sirius International Insurance Co (PUBL) v FAI General Insurance Ltd [2004] UKHL 54,

[2004] 1 WLR 3251, para 19. 30 (1889) 22 QBD 499.



there is a rebuttable presumption that parties who employ a term of legal art in a formal legal document intend that term to carry its technical meaning,37 Thus, at common law, a technical approach was adopted by the House of Lords to the

Although the SG policy is no longer used, to the extent that the defined terms

r ' d.38 pen'I 0 f" flOt'b erofe statute mtervene

8.13 The technical meaning will not prevail, however, if evidence in the wording of

the contract or the background to the contract persuades the court that a different meaning was intended by the parties. 39 In particular, the policy concerns that influence a particular branch oflaw to impart a particular meaning ro a word may not carry across to the interpretation of a commercial contract. Thus, various strikes risks employ terms recognized in, for example, employment law, criminal law, or extradition law, It cannot be readily assumed that the concerns of, for example, the criminal law correspond to those of the reasonable commercial person taking out a policy of marine insurance'o

(c) Specialist meaning 2: custom and usage 8.14 Words may also acquire a particular meaning through the custom of a particular trade, market, or locality." To be legally recognized, a cusrom must be certain, notorious, and reasonable,42 Once established, a custom usually binds all parties. However, in the case of customs particular to the Lloyd's market and not general to the London insurance market, the courts have declined to hold assureds bound by customs prejudicial to their interests unless it could be shown that the assured knew of the custom and contracted with reference to it. 43 (d) Schedule 1 rules ofinterpretation 8.15 The old SG policy is reproduced in Schedule 1 to the Marine Insurance Act

1906 together with seventeen rules of interpretation of terms used in tb.e policy.

37 Schuler (L) AG 0 Wickman Machine Tool Sales Ltd[1974] AC 235, 264, Sunport Shipping Ltd o Tryg-Baltica International (UK) Ltd (The Kleoooulos ofRhodes) [2003J EWCA Civ 12, [2003J I

Lloyd's Rep 138, para 28. 38 London & Lancashire Fire Insurance Co Ltd v Bolands Ltd [1924] AC 836, discussed at 14.13 below.

39 The tcchnicallegal meaning of the word 'condition' as indicating a major contractual tcrm, breach ofwhich constitutes a repudiation of the contract, was rejected as the correct interpretation in Schuler (L}AG v Wickman Machine Tool Sales Ltd [19741 AC 235, discussed ar 8.23 below. 40 See also the concern to ensure that the interpretation of a contract conforms with commercial common sense: 8.26ffbelow. " Robertson 0 French (1803) 4 East 130, 135. In Smich 0 Wi&on (1832) 3 B & Ad 728 a contract to lease a rabbit warren in Suffolk provided for payment byrhe lessor for the rabbits left in the warren at the end of the lease at the fate of £60 per 1,000 rabbits. Evidence was given and accepted by the COUft of a local custom that, in respect of rabbits, '1,000' meant 1,200. 42 Cunliffe-Owen 0 Teather & Greenwood [19671 1 WLR 1421,1438. 43 Gabay v Lloyd (1825) 3 B & C 793 (limitation on cover). See also the cases on settlemerit of losses between insurer and assured by means of set-off on accounts between insurer and broker: 22.117 below.

268

f.emain in current usage, the rules

of interpretation retain

their value as expres-

sions of the market's understanding and are given statutory force by section 30(2) of the 1906 Act unless the context of the policy otherwise requires and subject to the provisions of the Act.

(e) Context within the contract The meaning of words can be affected by their context within the contract in 8.16 various ways. First, meaning can be affected by the function a particular term is designed to fulfil. In Charter Reinsurance Co Ltd v Fagan,44 the phrase 'actually paid' in a reinsurance contract was held not to render payment on the primary policy by the reinsured a condition precedent to entitlement to payment under the reinsurance contract. The ordinary meaning of the phrase, indicative of a condition precedent, was held to be displaced by a meaning dictared by the function of the relevant rerm within rhe contract as part of the measure of indemnity payable by the reinsurer, Secondly, rhe juxtaposition of words can influence interpretation through the 8.17 eiusdem generis principle. According to this principle, where the choice of words within a clause indicates an intention that the clause should be confined to a particular class or genus, the individual terms within the clause will be construed in a manner that conforms to that class. 45 Thus, in Young v Sun Alliance & London Insurance Ltd," an ingress of water from a natural source in a ground floor lavarory was held not to constitute a 'flood' within a policy term that covered 'storm, tempest or flood'. The householder might in common parlance have referred to the room as flooded, but the policy clearly contemplated a genus, namely unusual manifesrations of natural phenomena, and the rerm 'flood' was construed accordingly, Similarly, in Tektrol Ltd v International Insurance Co ofHanover Ltd,47 a policy covered business interruption caused, inter alia, by accidental loss of any property used at the business premises for business purposes. An exclusion that covered damage caused by loss of information on computer systems 'caused deliberately by rioters strikers locked out workmen persons taking part in labour disturbances or civil commotion Ot malicious persons' was held not to include a computer hacker who created and disseminated a virus that contributed to the loss by the assured of a valuable computer source code. According to Buxton L] :48

"" [19971 AC 313. 4S

Chandris 0 Isbrandtsen-Moller Co Inc[195l] 1 KB 240. 246.

46

[1977J I WLR 104. ibid paras 11-12.

48

" [20051 EWCA eiv 845, [2005J 2 Lloyd's Rep 701.

269

Interpretation and Rectification ofImurance Contracts


The concept of rioters, etc, causing damage to information on the computers at the insured's premises suggests strongly that the context envisaged by the draftsman is of interferences directed specifically at those computers and committed on or near the insured's premises. 'Deliberately' fits well into that context, because such persons might well damage information accidentally or carelessly in the course of other depredations. But suddenly to tag on at the end of the excepting clause a reference to remote hackers, a completely different category of person making a

'inasmuch as the written words are the immediate language and rerms selecred by rhe parties themselves for the expression of their meaning'. 55

complerely differenr kind of attack, significantly changes rhe rhtUst of rhe exception, in a way that one would expect wording.

to

be done only by much more specific

.. . If the insurer wished to exclude all damage caused however indirectly by a computer hacker he needed to place that exclusion in a separate clause, and not refer to malicious persons in the same terms as rioters or locked-out workmen.

8.18 The eiusdem generis rule will not, however, easily operate to displace a settled, normal meaning of a rerm in a commercial document. Long-standing authority cleatly establishes that the peril ofseizure embraces forcible takings ofpossession both belligerent and peaceful. 49 In Kuwait Airways Corp v Kuwait Insurance Co SAK (No 1),50 the peril of 'seizure' was included in a series of perils of deprivation of possession by a government within its own jurisdiction. Rix J held that a government should be assumed to act peacefully within its own jurisdiction and that, in context, 'seizure' should be interpreted as confined to peaceful takings. 51 However, the Court ofAppeal and House of Lords disagreed, holding that the policy wording contained no evidence of an indication to depart from the settled extent of the peril." 8.19 Thirdly, the express reference to one matter may impliedly include another similar matter that is not mentioned. 53 Thus, where certain terms are descrilied as conditions precedent and others are not, the obvious inference is that the latter do not have condition ptecedent status, although ultimately the status of the clause will depend on the policy as a whole. 54 8.20 Fourthly, marine policies are usually based on standard clauses promulgated by the London market. These, however, are susceptible to modification according to the requitements of the parties. Should a discrepancy arise between a written endorsement on the policy and its standard terms, the former will prevail

Fifthly, the courts will strive to avoid internal inconsistency. Any reasonable 8.21 interpretation that reconciles contractual clauses will be pteferred over an interpretation that prevents the clauses ftom conflicting with one another. 56 Moreover, if a literal reading of a clause would defeat rhe main objecr and intent of the contract, or alter the commercial nature of the contract, it will be read restrictively. 57 Thus, the courts will be reluctant to accept that an insurer has waived any and every defence under a contract, thereby transforming an insurance policy into an on-demand bond. 58 Similarly, if at all possible, a policy will not be construed as affording cover under one provision and then removing that cover under another. Thus, while failure to take reasonable care normally connotes negligence, a provision requiring the assured to take reasonable precautions to prevent loss or damage will be construed as confined to recklessness in a policy designed to cover industrial risks including the assured's negligence. 59 Sixthly, by virtue of the doctrine of repugnancy, a clause that can only be 8.22 construed in such a way as to reduce a contract to a declaration of intent can be disregarded and effectively deleted from the contract." This is obviously an interpretation of last resort, and a court invited to apply the repugnancy doctrine will be astute to the danger of rewriting the contract. Similarly, in rare cases, a clause that makes no sense at all in the context of the contract may be

55 Robertson v French (1803) 4 East 130, 136 per Lord Ellenborough. See Mercantile Marine Insurance Co v Titherington (1864) 5 B & S 765; Dudgeon v Pembroke (1877) 2 App Cas 284; Homburg Houtimport BV vAgeosin Private Ltd (The Stanin) [2003J UKHL 12, [2004J 1AC 71 5,

para II. 56 Pagnan SA v Tradax Ocean Iransportation SA [1987] 2 Lloyd's Rep 342; University o/Keele v

Price ViliIterhouse [2004J EWCA Ciy 583, [2004J PNLR 43. 57 Glynn v Margetson & CO 11893J AC 351; Sze Hai long Bank Ltd v Rambler Cycle Co Ltd

[1959J AC 576. 58

BIB Casualty & General Insurance Ltd v New Hampshire Insurance Co [2001] EWCA Civ

735, [2001J 2 Lloyd's Rep 161, para 31.

59 Fraser v BN Furman Productions Ltd [1967J 1WLR 898; Lane (W & J) v Spratt [1970J 2 QB 480. Likewise Aluminium Wire & Cable Co Ltd v Allstate Insurance Co Ltd [1985] 2 Lloyd's Rep

280; Legal & Generallnsurance Australia Ltd v Eather (1986) 6 NSWLR 390 (Court ofAppeal of New South Wales); Cee Bee Marine Ltd v Lombard Insurance Co Ltd [1990] 2 NZLR I (Court of Appeal of New Zealand). See also the interpretation of the delay exclusion under old forms of marine policy covering perils necessarily involving loss of time: 15.38-15.41 below. For a non~ insurance, maritime parallel, see Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd (The 49

See 13.47 below.

so 11996J 1 Lloyd's Rep 664, [1997J 2 Lloyd's Rep 687, [199911 Lloyd's Rep 803. S> 11996J 1 Lloyd's Rep 664, 690-1. 52 11997J 2 Lloyd's Rep 687, 695, 701, 11999J 1 Lloyd's Rep 803, 814. 53 54

In accordance with the maxim expressio unius est exclusio alterius. George Bunt Cranes Ltd v Scottish Boiler & General Insurance Co Ltd (2001] EWCA eiv

1964, [2002J Lloyd's Rep IR 178, para 11.

!Wpitan Petko Voivoda) [2002J EWHC 1306 (Comm), [2002J 2 All ER (Comm) 560, paras 23, 27; [2003J EWCA Civ 451, [2003J 2 Lloyd's Rep 1, para 20 (in cases of unauthorized deck carriage, the carrier cannot rely on certain defences in the Hague-Visby Rules, such as perils of the sea, that are relevant only because the cargo is carried on deck). 60 Tor Line AB vAlitrans Group ofCanada (The TFL Prosperity) [1984] 1WLR48; GreatNorth Eastern Iidilway Ltd v Avon Insurance pic [2001J EWCA Civ 780, [2001J 2 Lloyd's Rep 649,

para 31.

270

271



disregarded as incompatible with the cleat and contrary intention of the parties. 61 Thus, where a charterparty expressly incorpotated a statute that provided it did not apply to charterpatties, the section that excluded charterparties was distegarded:'

restricted to being a factor in its interpretation and not transformed into a

(f) Excessive unreasonableness 8.23 The courts will have regard to the practical consequences of any parricular

interpretation as a factor in determining whether that is the intetpretation to be adopted. An interpretation that produces excessively unreasonable consequences is unlikely to reflect the intention of the parties. In Schuler (L) AG v Wickman Machine Tool Sales Ltd," clause 7(b) ofthe contract required exclusive sales agents to visit each of six named potential customers each week and ro ensure that the visits were all carried out by the same named representative or, in unavoidable default, by the same named alternative representative. The clause was described as a 'condition'. The question was whether the word 'condition' was employed in its technical legal sense to denote a term any breach of which was a repudiation of the contract. The House of Lords tefused to accept that the word 'condition' was used in its technical sense. Such an interpretation meant that a

solitary failure to visit one firm in one week by the representative or alternative entitled the principal to terminate the conttact. Yet rhere was no provision in the contract for substitution of the primary or alternative represenratives even if one or both should die, retire, or otherwise leave rhe company, or to covet simultaneous illness of both eligible representatives, or to cover refusal by one of the customers to accept a visir each and every week. A technical interpretation of the word 'condition' could, therefote, have produced results described variously·as 'so unreasonable', 64 'absurd', 65 and 'grotesque'. 66 On the issue of interpretation,

Lord Reid stated as follows:·' 'The fact that a particulat construction Itads to a very unteasonable result must be a relevant consideration. The more unteasonable a result the more unlikely it is that the parties can have intended it, and if they do intend it the mote necessary it is that they shall make that intention abundantly clear.' However, Lord Reid went on to affirm that, in the absence of an alternative intetpretation, effect had to be given to the clause no matter how unreasonable the consequences. On the facts, the ptesence of another clause in the contract addressing termination procedures, permitted the word 'condition'

ground for rewriting. Parties, especially commercial parties, are entitled ro make uncompromising or unwise contracts. Courts may look again at the contract if the most obvious interpretation produces such an excessively unreasonable

resulr as ro raise the question of whethet the parties can indeed have intended that result. However, in doing so, they must be careful not 'to force upon the words a meaning which they cannot fairly beat' and thereby 'substiture for the batgain actually made one which the court believes could better have been made'.68Jt is noteworthy that, in Schuler itself, a majority of the House of Lords considered that, howevet unreasonable the consequences of a technical interpretation of clause 7(b), construed in isolation it was at least difficult to find any alternative. Ultimately, it was the relationship between clause 7(b) and another clause in the contract thar addressed termination for 'material breach' rhat permitted the rechnical interptetation of clause 7(b) to be rejected." In matine insurance law, the influence of the unteasonableness of a particulat 8.25 interpretation may be seen especially in the courts' approach to clauses that are argued to be conditions precedent, including promissory warranties. Breach of a condition precedent triggers an auromatic prospective discharge of the insurer's contingent liabiliry, a response that may be wholly disproportionate to and, indeed, unconnected with the breach. Consequently, courts will genetally scrutinize an alleged condition ptecedent with considerable care in order to determine whether the clause is amenable to interpretation as a diffetent type of contractual term. 70

(g) Business common sense In a similar, atguably the same, vein, the objective nature of the search fot the 8.26 intention of the parties imports that a contract should be construed in a manner consistent with what makes commercial sense. The less commercially sensible an interpretation, the less likely the parties as deemed reasonable commercial people are to have intended ir. 71 Thus, it has been said that 'if detailed semantic and syntacrical analysis of words in a commercial contract is going to lead to a conclusion that flours business commonsense, it must be made to yield to business commonsense'. 72 Moteovet, 'the pootet the quality of the dtafting, the

to be construed as catrying its non-technical meaning of contract term. 8.24 It is, however, essential that the excessive unreasonableness of a contract

IS

68

Charter Reinsurance Co Ltd v Fagan [1997] AC 313, 387 per Lord Mustill.

[1974J AC 235, 251-2 (Lord Reid), 265 (Lord Simon), 271 (Lord Kilbrandon). For Lord Morris, the inter~re1ationship between the clauses reinforced the non~technical interpretation of cl 7(b). 70 See 18.79, 18.105-18.109,22.13-22.17 below. 69

" Powell v General Electric Co [20051 EWHC 644 (QBD), unreporred. 62 Adamasto' Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959J AC 133. 63 [1974J AC 235. 64 ibid 251 per Lord Reid. 6S ibid 265 per'Lord Simon. 66 ibid 272 per Lord Kilbrandon. 67 ibid 251.

272

11

12

Mannai Investments Co Ltd v Eagle Star Lift Assurance Co Ltd [1997J AC 749, 771, Antaros Compania Naviera SA v Sa/en Rederiema AB (The Antaios) [1985J AC 191,201 per

Lord Diplock.

273

Interpretation and Rectification ofImurance Contracts


less willing any court should be to be dtiven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention' provided the words are capable of sustaining a more sensible interpretation."

Ultimately, if the contract on its tcue interpretation is commercially bizarre, the

8.27 In Quorum v Schramm," in the aftermath of a fire that had probably damaged a

painting" insured under a fine art policy, the parties agreed a clause addressing the measure of indemnity for partial loss. Part of this clause operated as an average clause, rendering the assured its own insurer for the proportion of the risk corresponding to the difference between the sum insured and the market value of the painting immediately prior to the loss. This average clause left part of the risk with the assured if the value of the painting had risen above the sum insured. This made commercial sense. However, on its wording, the clause also left part of the risk with the assured where the value of the painting had fallen below the sum insured. This was 'an extraordinary commercial consequence, as

premium would have been paid on the basis of the sum insured and there would be no commercial logic in this consequence'." Accordingly, and indeed at the insurers' invitation, Thomas] held that the avetage clause should be construed in accordance with the plain intention of the parties that it should apply only where the market value had risen above the sum insured.

courts cannot rewrite it: 'any remoulding by the Court in the course of the construction process of the parties' obligations expressed in the language used must be founded on the intention of the parties whether express or implied in the document itself read in the relevant matrix of facts'.79 In Kuwait Airways Corp v Kuwait Insurance Co SAK (No 1),80 an aviation policy 8.30 covered aircraft hulls against a range of perils set out in six paragraphs lettered (a) to (f). Paragraph (a) comprised war, invasion, hostilities, and similar perils while paragtaph (e) contained perils of deprivation of possession including seizure. An extension of the policy to aircraft spares covered the same range ofperils 'other than Paragraph (a)', which was to apply only to spares in transit. This reflected the caution with which the insurance market approaches war risks cover for goods, which in principle is to be confined to goods in transit. A considerable quantity of insured spares was then seized by Iraqi forces when they invaded Kuwait. Prima fide, this loss could be regarded as caused by any one of a range of perils listed in paragraph (a) and also by seizure. The question was whether, in the context of the cover for spares not in transit, cover against the

further liberality of interpretation than sanctioned in Schuler v Wickman."

perils in paragraph (a) had been merely omitted from cover or, as argued by the insurers, excluded." A majority of the Court of Appeal found in favour of the insurers. 82 If insurers did not want to cover loss ofspares by war except while in transit, it made no commercial sense to cover exactly such a loss under another name. Reading the extension as merely omitting paragraph (a) would be an 'over-literal interpretation'. 83 This holding was, however, reversed by the House of Lords. Background market concerns regarding the extent of cover that it was prudent to offer for goods not in transir were irrelevant. The wording of the extension was clear. The perils in paragraph (a) were omitted, not excluded, and there was simply no licence for a court to rescue an insurer from an imprudent bargain. According to Lord Hobhouse, 'it must ... be stressed thar it is not for the Courts to rell the parties what conttaer they should have made nor, after the event, to evaluate the merits and demerits of their bargain. If, as here, the parties have used plain language to express theit intentions, that should be the end of it: the Courts should enforce the contract in accordance with its terms.'84

73 Mitsui Construction Co Ltd v Attorney-General o/Hong Kong (1986) 33 Build LR 1, 14 per Lord Bridge. See also Blackburn Rovers Football & Athletic Club pIc v Avon Insurance pic [2004J

unreported, para 22 per Lightman J.

EWHC 2625 (Comm), [2005] Lloyd's Rep IR 239, para 13, rvsd on other gounds [20051 EWCA Civ 423, [20051 Lloyd's Rep IR 447. 74 [2001] EWHC 505 (Comm), [2002) 1 L1oyd's Rep 249.

So that the excluded perils in para (a) would prevail over the covered peril ofseizure: see 9.29 below.

8.28 In Kumar v AGF Insurance Ltd,77 a solicitors' liability policy contained a non-

avoidance clause under which insurers waived the right to 'avoid, repudiate or rescind this insurance upon any ground whatsoever', while conferring on the insurers a right to seek indemnification from the assured in cases of fraudulent pre-formation non-disclosure or misrepresentarion relevant to any subsequent claim. This was construed as including the right to rely upon the automatic, prospective discharge triggered by a breach of promissory warranty. The clear purpose of the policy was to provide a reliable source of indemnification for injured third parties. Moreover, at the time the policy was concluded, the law on breach of promissory warranty had not been clarified and a body of opinion assimilated such a breach to the repudiatoty breach of general contract law. 8.29 Commercial common sense is not, however, to be regarded as encouraging

75

'La Danse Grecque' by DegaS~

79

80

Household Global Funding Inc v British Gas Trading Ltd [2001] EWHC 400 (Ch), [1999J 1 Lloyd's Rep 803.

81

[1997] 2 Lloyd's Rep 687, 695, 701. 83 ihid 695 perSraughton LJ. [1999] 1 Lloyd's Rep 803, 816. See also Schiemann LJ, dissenting, in the COUrt of Appeal who held that there was no linguistic basis for the insurers' suggested interpretation. It was, 82

[2001) EWHC 505 (Comm), [20021 1 Lloyd's Rep 249, para 76 per Thomas J. 77 [1999) Lloyd's Rep IR 147. 78 Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (Nos 2 & 3) [200l]/EWCA Civ 1047, [2001) Lloyd's Rep IR 667, para 85.

moreover, perfectly possible that the extension was designed not to cover hostile destruction of spares while covering ho~tile confiscation.

274

275

76

84

8.31



Royal'& Sun Alliance Insurance pIc v Dornoch Ltd's concerned reinsurance of third party liability. A claims control clause required the reinsured, as a condition precedent to any entitlement to recover, to advise reinsurers within 72 hours of gaining knowledge of any loss or losses that might give rise to a claim. The purpose of the clause was to permit the reinsurers to exercise control over the response ro a claim falling within the tetms of the direct cover. On a literal reading, however, the clause made little sense. Under a reinsurance contract, there is no loss until liability on the ditect cover has been established. Consequently, the obligation ro notify arose only once it was too late for the reinsurers ro profit from notification. The reinsurers argued, therefore, that 'loss' meant alleged or claimed loss. However, in the context of reinsurance of financial liability, the commercial imperative fot urgent notification is elusive so that forfeiture of cover in the event of failure ro notify within three days was highly unreasonable. The underlying problem was that an inappropriate clause had been incorporated into the contract and the reinsurers were seeking a selective rewording. They were seeking ro invoke business common sense with respect to the trigger for the notification obligation in order then to benefit from the commetcially unreasonable urgency of notificarion. The Court of Appeal rejected this prayet.

precise. It is accotdingly the duty of the court to construe such documents fairly and broadly, without being roo asture or subtle in finding defects.'

(h) Validity rather than invalidity 8.32 Patties are presumed ro intend their contracts to be valid and enforceable. Consequently, an interpretation that produces a valid, enforceable contract will be pteferted over one that renders the contract or part thereof invalid or unenforceable. B6 Fot example, where a guarantee has been susceptible ofbeing construed as given in teturn fot considetation that was either past or both past and future, the latrer interptetation has been preferred in order to tendet the guarantee valid. 87 Similarly, where one interptetation of the covet provided by a policy would produce an illegal contract, a court will favour an alternative interpretation." Where the problem is uncertainty of meaning, courts should again endeavour ro respect the parties' intention to conclude a binding contract and belief that they have done so. In Hillas'& Co Ltd v Arcos Ltd," Lord Wtight stated that: 'Business men often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear ro them in the course of theit business may appeat ro those unfamiliar with the business fat from complete or

(i) Taking advantage ofone's own wrongdoing Conttacts ate presumed not to petmit wrongdoers ro take advantage oftheir own 8.33 wrongdoing,90 although the ptesumption is rebuttable by cleat wording. 91 In the insutance context, it is thetefote unlikely that an obligation undertaken by the insurer will be construed as a promissory wattanty, a type of term that functions as a contingent condition precedent to the continued liability of the insuter on the policy. Intetpretation as a promissory warranty would petmit the insurer to commit the wrong of breaking the obligation and profit from that bteach through the discharge from liability." Any such obligation, ifsufficiently significant, is instead likely ro be construed as a condition as that term is employed in general contract law, so that breach gives rise to a right on the parr of the innocent party to elect ro treat the contract as dischatged if that patty so wishes.

(j) Context outside the contract The traditional approach ro the interpretation of contracts denied the admissi- 8.34 bility of extrinsic evidence, that is evidence ourside the four corners of the document, except in defined circumstances coveted under other headings in this section of this chapter. Thus, it was accepted that extrinsic evidence was admissible ro prove the existence of a specialist meaning, or to resolve problems of the applicability of the instrument, excessive unteasonableness, or ambiguity.93 Today, in contrast, language is understood as always contextual, a legal instrument as always a product of the circumstances in which it was drafted." Thus, even where rhe wording of a contract can be given meaning when read in isolation and none of the traditional grounds for admitting extrinsic evidence are operative, extrinsic evidence remains admissible ro establish the background against which the contract was concluded and, thereby, ro indicate the true intention of the parties and ro influence the interpretation of the contract. 95 It does not, however, follow from increased admissibility thar extrinsic evidence will readily be regarded as overriding the meaning otherwise attributed ro the language of the parties.

90

Alghussein Establishment v Eton College [1988] 1 WLR 587; Tesca Stores Ltd v Pook [2003]

EWHC 823 (Ch), [2004] lRLR 618.

[2005] EWCA Civ 238, [2005J 1 All ER (Comm) 590. In accordance with the maxim verba ita sunt intelligenda ut res magis valeat quam pereat. 87 Broom v Batchelor (1856) 1 H & N 255. See also Mare v Charles (1856) 5 E & B 978 (capacity in which bill ofexchange accepted). 88 Lancashire County Council v Municipal InsuranCe Ltd [1997J QB 897, 906; 910. 89 (1932) 43 L1LRep 359, 367.

Micklefield v SAC Technology Ltd [1990] 1 WLR 1002. For discussion of promissory warranties, see 18.54ffbelow. " As previously held in Shore v Wi&on (1842) 9 CI & Fin 355, 565-7. 94 Westminster City Council v NationalAsylum Support Service [2002] 1 WLR 2956, para 5. On the demise of Shore v Wilson specifically, see Chitty on Contracts Beale et al (eds) (29th edn, 2004) paras 12-117 and 12-118, acknowledged in Sykes v Forster (QB, 30 March 2001). 9S Admissibility that will be unaffected by a conventionally worded entire agreement clause: John v Price Waterhouse [2002] EWCA Civ 899, unreported, para 67.

276

277

91

92

85

86



8.35 Evolution of the modern approach to admissibility The advent of this mote liberal approach to the consrruction of contracrs was signalled by the judgment of Lord Wilberforce in Prenn v Simmonds. 96 Lord Wilberforce stated: 'The rime has long passed when agreements, even those under seal, were isolared from rhe marrix of facrs in which they were ser and interprered purely on internal linguistic considerations' and rhar contractual interpretarion required one to 'enquire beyond the language and see whar the circumsrances were wirh reference ro which the words were used, and the object, appearing from those circumstances which the person using them had in view'.

generally more liberal approach ro the admissibility of extrinsic evidence, there remain three technical, legal limits on admissibility.lO' First, the exttinsic circumstances sought to be adduced as evidence must have been reasonably within the knowledge of, or reasonably available to, both parties no later than the time of conclusion of the contract.'os The question is a broad one, namely whether reasonable people in the position of the parties would have known of the circumstance, so that it can then legitimately be regarded as part of the background against which the parties concluded the contract and relevant to illuminating their intention in doing so.

8.36 Subsequently, in Reardon Smith Line Ltd v Yngvar Hansen-Tangen," Lord Wilberforce, wirh the concurrence of a majority of the House of Lords, emphasized that no contract was made in a vacuum and that, with respect to commercial contracts, courts were always entitled to 'know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating' .

Secondly, evidence relating to the course of negotiations leading up to the 8.40 conclusion of the contract is as a matter of law inadmissible as an aid to its interpretation.'06 The court is concerned with the contract ultimately concluded rather than preliminary or interim negotiating posirions or intimations of the objectives of one of the parties. Evidence ofsuch positions or objectives is simply 'unhelpful' .'07 Where the final version differs from eatlier versions, speculation on the motivation behind rhe change is pointless.'os Moreover, admissibility of negotiations might encourage the parties to generate statements favouring their desired construction for the purpose of providing evidence in the event of any subsequent dispute. 109 Consequently, such evidence is admissible only if it reveals a common intention as to the meaning of a certain term so as to found an esroppel by convention'lO or an action for rectification of the subsequent documentary record"' In practice, the line between extrinsic evidence that conttibutes to the factual matrix and evidence that merely relates to the process of negotiation is often elusive, but the modern general admissibility of

8.37 The full width of the admissibility of evidence as to background was then reiterated" by the House of Lords in Investors Compensation Scheme Ltd v West Bromwich Building Society." According to Lord Hoffmann, '00 with whom three further members of the House agreed, the phrase 'matrix of fact' was 'if anything, an undetstated description of what the background may include'. In principle, it included 'absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man'. Nevertheless, the evidence must be relevant'01 and cogent. Thus, according to Lord Phillips MR: 102 'Before taking extrinsic evidence into account, it is important to consider precisely why it is said to assist in deciding the meaning ofwhat was subsequently agreed and to consider whether its relevance is sufficiently cogent to the determination of the joint intention of the parties to have regard to it.' 8.38 The factual matrix of the contract does not include the merits of the underlying dispute. 103 8.39 Restrictions on admissibility of extrinsic evidence

" [19711 1 WLR 1381, 1383-4.

Notwithstanding the

97 [1976J 1 WLR 989,996. And arguably extended. 99 [1988J 1 WLR 896. "0 ibid 913. '" Bank ofCredit and Commerce International SA v Ali [2001J UKHL 8, [2002J 1 AC 251, para 39. '" MSC Mediterranean Shipping Co SA v Polish Ocean Lines (The Tychy) (No 2) [2001] EWCA Civ 1198, [200I] 2 Lloyd's Rep 403, para 29. 103 Sirius International Insurance Co (PUBL) v PAI General Insurance Ltd [2004] UKHL 54, [2004J 1 WLR 3251, para 16. 98

278

104 For discussion and criticism of the second and third limits on admissibility considered below, see G McMeel, 'Prior Negotiations and Subsequent Conduct-the Next Step Forward for Contractual Interpretation?' (2003) 119 LQR 272; Lord Nicholls, 'My Kingdom for a Horse: the Meaning of Words' (2005) 121 LQR 577. 105 Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976J 1 WLR 989,997; Youell v Bland Welch & Co Ltd [1992] 2 Lloyd's Rep 127, 133; Investors Compensation Scheme Ltd v \.\:lest Bromwich Building Socicty [199811 WLR 896, 913: P&S Platt Ltd v Crouch [20031 EWCA Civ 1110, [2004J 1 p & CR 18, para 56. 106 Prenn v Simmonds [1971] 1 WLR 1381; Schuler (L) AG v Wickman Machine Thols Ltd [1974J AC 235. It is also inadmissible where the issue is whether the parties intended a document to be legally binding: Petromec Inc v Petroleo Brasileiro SA Petmhas (No 2) [2004) EWHC 127 (Comm), unreported, para 27, "7 [1971] 1 WLR 1381, 1385 per Lord Wilberforce. See also P&S Platt Ltd v Cmuch [2003J EWCA Civ 1110, [2004J 1 p & CR 18, patas 39,52; Stroude v Beazer Homts Ltd [2005J EWCA Civ 265, [2005J NPC 45. 108 Canterbury Go!fIntermuional Ltd v Yoshimoto [2002J UKPC 40, unreported, para 28. '" Sykes v Forster (QB, 30 March 2001). 110 Amalgamated Investment & Property Co Ltd v 1exas Commerce International Bank Ltd [1982]

QB84. 111

Rectification is discussed at 8.77f£ below.

279



background evidence is no licence to undermine rhe inadmissibility of evidence of negoriations. 112 The crucial distinction was stated by Lord Phillips MR in The Tychy (No 2)"3 in the following terms: 'When a formal contract is drawn up and signed, care must be talten to distinguish between admissible background evidence relating to the nature and object of rhe contractual venture and inadmissible evidence of the terms for which each party was contending in the course of negotiations.'

to a commercial contract have expressed themselves clearly and unambiguously, a COUrt will not lightly find by reference to extrinsic contextual matrers that they intended a different meaning. Thus, in one case, Bingham LCJ stated that the evidence failed to disclose 'such a clear consensus between the parties as would entitle the court to override what seems to me to be the clear effect of the policy wording."20

8.41 The third rule of inadmissibility excludes evidence of post-formation statements or actions of rhe parties." 4 This is excluded for reasons that parallel rhe exclusion of evidence of negotiations. The court is concerned to construe the con~ rract the parties in fact concluded. The parties' beliefs in this respect may be mistaken or self-serving. In addition, if post-formation conduct could affect the interpretation of the contract, 'one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or a year later' .'15 Such evidence is, however, admissible to support a claim for estoppel by convention,'16 as part ofthe factual matrix to evidence the purpose of the contract,117 as evidence of a term necessarily to be implied, 118 or as evidence of a variation of the contract or the making of a substitute contract. 119 8.42 The utility of extrinsic evidence Although extrinsic evidence is always admissible to illuminate the background to the contract, if the words employed by rhe parties, when read against the internal context of the contract as a whole, have an ordinary and natural meaning, it may be rare that extrinsic evidence will persuade a court that the words should instead carry a different meaning. There is no formal presumption in favour of the ordinary and natural meaning as distinct from the meaning as revealed by extrinsic evidence. On the contrary, interpretation is said always to be a contextual exercise. Nevertheless, if parties

112 See the express acknowledgement of this rule of inadmissibility by Lord Hoffmann in Investors Compensation Scheme Ltd v west Bromwich Building Society [1998] 1 WLR 896, 914. 113 MSC Mediterranean Shipping Co SA v Polish Ocean Lines (The 7jchy) (No 2) [2001] EWCA 1198. [2001] 2 Lloyd's Rep 403, para 29. See also New Hampshire Insurance Co v MGN Ltd

[1997] LRLR24, 30-1. 114 James Miller 6' Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 572; Schuler (L) AG v Wickman Machine Tooh Ltd [1974] AC 235. 115 James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd[1970] AC 572, 603 per Lord Reid. 116 Amalgamated Investment & Property Co Ltdv Texas Commerce International Bank Ltd [1982]

In Kuwait Airways Corp v Kuwait Insurance Co SAK (No 1),'21 already dis- 8.43 cussed,122 iu which the assured sought to recover in respect of aircraft spares seized by invading Iraqi forces from Kuwait airport, the insurers relied on background market concerns regarding the extent to which it was prudent to grant war risks cover in respect of goods other than in transit. The House of Lords dismissed such evidence as irrelevant: 'it must in any event be stressed rhat it is not for the Courts to tell the parties what contract they should have made nor, after the event, to evaluate the merits and demerits of their bargain'.'" The parties had expressed their intentions in clear terms and 'that should be an end ofit'.124

An example from the insutance markets of extrinsic evidence having determina- 8.44 tive, or at least primary, evidential value is provided by Arbuthnott v Fagan.'" This concerned the interpretation of a clause in the contract between Lloyd's names and Lloyd's members' agents. Under clause 9 of the contract, the names owed an autonomous dury to pay such cash calls as the agents might honestly demand in order to fund the underwriting business. Clause 9(c) also ptovided that due compliance with such cash calls was a condirion precedent to the issuing of any proceedings 'in respect of any matrer arising out of or in any way connected with either the malting of such requirement lie a cash call] by the Agent or the subject matter thereof'. When the names sued the agents for breach of contract and negligence in the conduct of undetwriting, the agents argued thar meeting all cash calls was a condition precedent to the names' entitlement to sue. Construing the phtase 'in any way connected' in the abstract, it was possible to argue that underwtiting was not unrelated to the malting of calls. However, the Court of Appeal held that clause 9(c) did not apply. It was common ground between the parties, but not stated in the contract itself, that the purpose of the provision was to protect policyholders from disputes between names and agents adversely affecting the flow of funds required to meet liabilities. Whatever complaint the name might have regarding the call made, the call was first to be honoured. However, clause 9(c) was in no way designed to protect

QB84.

Dunlop 7jres Ltd v Blows [2001] EWCA Civ 1032. [2001] IRLR 629. Wihon v Maynard Shipping Comultants AS [1978] QB 665. 119 james Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 572, 603; MSC Mediterranean Shipping Co SA v Polish Ocean Lines (The 7jchy) (No 2) [2001] EWCA 117

'"

Civ 1198, [2001] 2 Lloyd's Rep 403.

280

120

Ham v Somak Travel Ltd[1998) EWCA eiv 153, unreported.

[1999] 1 Lloyd's Rep 803. '" See 8.30 above. [1999] I Lloyd's Rep 803, 816 per Lord Hobhouse. '" [1996] LRLR 135.

121

123

281

'" ibid.


agents against the consequences of breach of their underwriting duties. The Court accordingly construed clause 9(c) as confined to complaints relating to cash calls. While it is probable that the Court would have reached the same conclusion on the wording of clause 9 even without the extrinsic evidence of the purpose of clause 9(c), Steyn and Hoffmann LJJ took that evidence as the foundation for their judgments. Their approach was not to construe clause 9 in isolation and then refer ro extrinsic matters merely by way of corroboration.'26 8.45 Extrinsic evidence may, however, go further than revealing the rrue intetpret-

ation of the words chosen by the parties. It may reveal thar the parries made a wholly inappropriate choice of words, or employed wholly inappropriate syntax to express their intention. It is now clear that the words chosen should be construed so as to give effect to the parties' intention. Thus, according to Lord Hoffmann in Investors Compensation Scheme: 127 The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax ... The 'rule' that words should be given their 'natural and ordinary meaning' reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties all intention which they plainly could not have had.

This principle can be seen as tying in with the principle of construing contracts consistently with commercial sense, '28 a connection that Lord Hoffmann indeed went on to make. 8.46 It is worth noting that, while Lord Hoffmann's reformulation of the rules of interpretation has attracted a certain measure of critical comment for its per~

ceived general relaxation of principles of admissibility of extrinsic evidence,129 it is only, or at least predominantly, in cases of apparent drafting error, or at least infelicity, that the courts in practice have resorted to extrinsic evidence to over-

Principles ofInterpretation Thus, where the policy contains a clear misnomer, as a matter of interpretation 8,47 it will be read as evidently intended. In Nittan (UK) Ltd v Solent Steel Fabrication Ltd,'31 Sargrove Electronic Controls Ltd was tal<enover by Solent Steel, a division of which carried on the business of the taken-over company under the name of Sargrove Automation. Solent Steel's amended product liability policy, however, referred to the assured as Sargrove E]ectronic Controls Ltd, an error the Court of Appeal classified as an obvious misnomer, reading the policy as if the assured had been correctly identified. A further, arguably more controversial, example of clear error in rhe language is 8.48 provided by the Investors Compensation Scheme case itself. 132 The Scheme was established by stature to compensate victims of negligence on the part of persons authorized to carry on investment business. There was considerable mis-selling of home income plans. 133 Under the Scheme, in return for compensation, the investor transferred to the Scheme all rights and claims against the negligent adviser 'and other third parry claims'. Clause 3(b) then excluded the following from the scope of 'rhird party claims': 'Any claim (whether sounding in rescission for undue influence or otherwise) that you have or may have against the [mortgagee] in which you claim an abatement of sums which you would otherwise have to repay to the [mortgagee under the home income plan].' The Scheme sued one of the lenders as assignee of the investors' claims. The lender claimed that it was a third party and that, under the terms of clause 3(b), any right an investor might have against the Scheme had not been assigned. The House of Lords held, however, that the effect of clause 3(b) was to assign all claims to financial compensation while leaving the investor with any right to seek rescission of the contract with the lender. The clause was to be read as meaning 'any claims sounding in rescission (whether for undue influence or otherwise) in which you claim an abatemenr'.'34 The difficulty with rhis principle of interpretation is that the correction of errors 8.49 in recording the intention of the parties has traditionally been the province of the remedy of rectification. The latter requires proof of a clear conflict between rhe tenor of the instrument sought to be rectified and a prior outward expression

ride the interpretation that would otherwise be afforded the parries' language. 130

'" See also Egan v Static Con".o! Components (Europe) Ltd [2004] EWCA Civ 392, [2004] 2 Lloyd's Rep 429. 127 [1998] 1 WLR 896, 914 (part of Lord Hoffmann's fourth principle). See also Lord Hoffmann's judgment in Jumbo King Ltd v Faithful Properties Ltd [1999) 4 HKC 707, quoted in Zyxel Communications Corp v Fairbridge Communications Ltd [2004] EWHC 1388 (QBD), unreported, paras 20, 24. 128 See 8.26ff above. 129 See McKendrick, Contract Law: Text, GlSes and Materials (2nd edn, 2005) 422-4. 130 Lord Steyn, 'The Intractable Problem of the Interpretation of Legal Texts' in S Worthington (ed) Commercial Law and Commercial Practice (2003) Ch 5, 128.

131 [1981] 1 Lloyd's Rep 633. Contrast Cee Bee Marine Ltd v LombardInsurance Co Ltd[1990] 2 NZLR J. 132 See also Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd[1997] AC 749. 133 These were loans secured by a morrgage on the borrower's house with the borrowed money invested in equity-linked bonds. When the stock market fell, investors incurred heavy losses. 134 See also Heritage Insurance Services Ltd v Rotch Property Group Ltd [2003] NPC 100 (Ch) (reference to Appendix 2 in a contractual definition instead of to AppendiX 1 was a clear mistake and to be read as obviously intended); Snowville UK Ltd v Holiclaybreak pic [2004J EWHC 1336 (Ch), unreported (indemnity clause).

282

283



of the common intention that the instrument purports to codifY.135 No such evidential burden exisrs in the law of interpretation. In the light of Investors Compensation Scheme, however, it would appeat that where the alleged error consists of misrepresenting the common intention, the party alleging the error may seek to have the contract read in the allegedly correct manner through either rectification or interpretation. Nevertheless, where the alleged error consists in including a provision that should not have been included or in omitting a provision that should have been included, it is hard to see that interpretation can provide an alternative to rectification.

clause capable of either a broad or narrow interpretation, rhe clause will be construed narrowly in favour of the assured. 140

8.50 Context excluding extrinsic evidence

While the external context of a contract is usually invoked to broaden the range ofadmissible evidence, that context may dictate that extrinsic evidence should not be considered. A cargo policy is a document that may be passed along a chain of purchasers and through banks participating in documentary credits. This commetcial context sits ill with aids to interpretation outside rhe four corners of the document. Thus, it has been held that a negotiable bill of lading 'should be given the meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person or class of persons to whom the document is addressed' .'36 This excludes knowledge of circumstances surrounding rhe formation of the contraer known to the original parties but not to subsequent holders. Moreover, such a document needs to be able 'to be raken up or rejected promptly and without any opportunity for prolonged inquiry'.137 The process of examination by new holders may affect rhe interpretation of or significance to be attribured to a contractual rerm. '38

(k) Ambiguity 8.51 Where the result of applying the principles of interpretation already outlined is that the relevant clause is capable of twO or more equally legitimate interpretations, the ambiguity entitles the court to invoke the contra profirentem rule. 139 Under this rule, the ambiguity is resolved against whichever party is the profirens of the ambiguous clause. Thus, if the insurer is the profirens of an exemption

It is, however, to be emphasized that the contra profirentem rule is available only 8.52 if a clause is genuinely ambiguous and not merely difficult to interprer. '4' Merely because (expert) witnesses differ over the meaning to be ascribed ro a term does not of itself render the term ambiguous. '42 Before concluding that a clause is ambiguous, a court should first endeavour to ascertain its interpretation in accordance with the guidelines already discussed. A court should not 'move straight ro the contra profirentem rule without first looking at the context and, where appropriate, permissible aids to identifYing rhe purpose of the commercial document of which the words form part' .'43 The rule clearly requires identification of the profirens. Ironically, the term is 8.53 itself ambiguous, being capable of referring to either the party seeking to rely on the clause (the profirens coram judice) or the party responsible for introducing the ambiguity into the contract (the.profirens in contrahendo).144 It is, however, now clear that the contra profirentem rule employs the term profirens in the latter sense. 145 The wording of a policy is generally put rogether by the broker, who, as agent of 8.54 the assured, then tenders the wording in the form of a slip to the insurer for consideration of acceptability of the risk, including the precise terms, and the appropriate level of premium. Where the term that proves ambiguous is one inserted by or on behalf of the assured, the contra profirentem rule requires interpretation in favour of the insurer and against the interests of the assured. 146

140 Lawrence vAberdein (1821) 5 B & AId 107; Houghton v Traftlgar Insurance [19541 1 QB 247; Ilktrol Ltd v International Imuram'e Co ofHarlOver Ltd [2005J EWCA Civ 845, [2005J 2 Lloyd's

Rep 701. 141 Higgins v Dawson [1902] AC 1; American Airlines Inc v Hope [1973J 1 Lloyd's Rep 233, 250. '" Kirkaldy OJ & Sons Ltd v Walker [1999J Lloyd's Rep lR 410,419. 143 Dirett Travel Insurance v McGeown [2003J EWCA Clv 1606, [2003J Lloyd's Rep lR 599, para 13 per Auld L]. See also Melanesian Mission Trust Board v Australian Mutual Provident Society [l996J UKPC 53, (1997) 74 P & CR 297, para 8; Gan Insurance Co Ltd v Tid Ping Insurance Co Ltd (Nos 2 & 3) [2001] EWCA Clv 1047, [2001] Lloyd's Rep IR 667, para 21 per Mance LJ: 'principle of last resort'. 144 Youell v Bland Walch & Co Ltd [1992] 2 Lloyd's Rep 127, 134. 145 See the cases cited below. Also Anderson v Fitzgerald (1853) 4 HLC 484, 507; Lancashire County Council v Municipallnsurance Ltd [I997J QB 897, 905, 910; Kirkaldy OJ & Sons Ltd v Walker [1999J Lloyd's Rep IR 410,416. It is possible that prima facie contrary statements that the

See 8.78-8.80 below. Dairy Containers Ltd v Tasman Orient Line CV (The Tasman Discoverer) [2004] UKPC 22, [2005J 1 WLR 215, para 12 per Lord Bingham. See also Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2003J UKHL 12, [2004J 1 AC 715, para 74. 137 Hansson v Hamel & Horlry Ltd [19221 2 AC 36, 46 per Lord Sumner. 138 Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2003J UKHL 12, [2004J 1 AC 715. 139 The expression' contra proferentem rule' is a convenient abbreviation 'of the maxim verba chartarum fortius accipiuntur contra proferentem.

proferens is the party for whose benefit the clause in question was introduced into the contract (eg Blackett v Royal Exchange Assurance Co (1832) 2 Cr & J 244, 251) may be predicared on tbe assumption that a party who benefits from a clause wHi have been responsible for its introduction. 146 AlS Ocean v Black Sea & Baltic Generallnsurance Co Ltd (1935) 51 LlLRep 305; Bartlett & Partners Ltd v Meller [1961] 1 Lloyd's Rep 487, 494; De Maurier Oewels) Ltd v Bastion Insurance CO [1967J 2 Lloyd's Rep 550, 559; American Airlines Inc v Hope [1973J 1 Lloyd's Rep 233, 250; Dmby v English & Scottish Maritime Insurance Co Ltd [1998J Lloyd's Rep IR 343, 358.

284

285

135 136

Interpretation and Rectification o/Insurance Contracts

Principles 0/Interpretation

Where, in conrrasr, the ambiguity resides in an amendmenr ro the slip inrroduced by the insurer, the ambiguity will be resolved against the insurer. '47

ro the insurer, the assured remains responsible for introducing the wording that .turns our ro be ambiguous, and, therefore, the ambiguity falls ro be resolved in favour of the insurer. '53 On the other hand, there is something ro be said for a second view, that documents prepared by bodies represenring the market's underwriters, such as the Joinr Hull Committee and the Joint Cargo Committee, should, if found to be ambiguous, be construed in favour of the assured. ,s4 On a third view, standard marker wordings should receive a standard inrerpretation regardless of which party proposed inclusion of the relevanr wording in the patticular case, so that the contra proftrentem rule is an inappropriate tool ro adopt. 155 The second view, although applying the contra proftrentem rule, would, of course, be consistent wirh the third in producing uniform interprerarion.

Moreover, courts

will not interpret ambiguities in insurers' own standard docu-

ments in favour of the insuret simply because of the technical analysis of insurance conrtact formation. In MIS Aswan Engineering Establishment Co Ltd v Iron Trades Mutual Insurance Co Ltd, 148 the policy adopted rhe insurer's standard liability fotm and excluded 'the cosr of replacing at making good defective materials, plant, machinery, goods at commodities'. Inadequate packing and srowage tesulted in liability fat breach of conrracr on the part of the assuted, Lupdine, for goods lost because pails ir supplied collapsed owing ro rhe mode of stowage. Lupdine being insolvenr, Aswan sued Lupdine's insutet under the Third Parties (Rights against Insurers) Act 1930 149 Hobhouse J held rhat the insurer was not protecred by the exclusion: This was not a liability for the cost of replacing or making good anything. What the wording refers to on its natural meaning is a situation where the assured has undertaken a contracwal1iabiliry to replace or make good as under a guarantee

clause in a contract for the sale of goods. If, contrary to my view, it is not clear that this wording has this meaning then it is at best ambiguous and capable of more than one meaning, and the ambiguity must be resolved against the defendants. 1SO

8.55 It has even been suggested rhat a rerm that benefits the insurer will not be inrerpreted in the insurer's favour even if included in wording advanced by brokers. 's, This view, however, runs counter to established authority and ignores the possibility rhat rhe clause might be deliberately inrroduced on the assured's behalf ro render the risk more acceptable to insurers. In the case in quesrion, moreover, there were other grounds for declining to inrerprer in the insurer's favour. 8.56 A third possibility is that the ambiguity might reside in a clause thar is, or must be regarded as, the deliberare acr of both parties. In such a case, the contra proftrentem rule cannot apply152 and the court will have to firid another roure to interpretation. 8.57 Where the ambiguity is found in a standard market document, such as a set of Institute or Inrernational Clauses, the position is less clear. On one view, the same principles apply so rhar where such wording is incorporared into the proposal put

(I) Estoppel by convention As already seen, pre-contractual negoriations are inadmissible as an aid to inrer- 8.58 pretation of rhe ensuing conrraer. '56 They may, nevertheless, affect rhe interpretation of the conrract by giving rise to an estoppel by convention. Where the rwo parties have concluded the contract on rhe basis, expressly or impliedly manifested by each ro the other,157 thar a particular term is to carry a particular meaning, each party will be esropped as against the orher from disputing that meaning, provided it is unconscionable to do SO.'58 Accordingly, the rerm in quesrion will be consrrued in accordance with the meaning assumed by the parties, regardless of any meaning otherwise indicated by the normal principles of interpretation. '59 In Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd, 160 C was a property company with a

'" AlS Ocean v Black Sea & Baltic Generallnmrance Co Ltd(1935) 51 LlLRep 305. 310; Ikerigi Compania Naviera SA v Palmer (The Wondrous) [1991] 1 Lloyd's Rep 400, 416. 154 MIS Aswan Engineering Establishment Co Ltd v Iron Trades Mutua! Insurance Co Ltd [1989] 1 Lloyd's Rep 289, 293-4. 155 Gan Insurance Co Ltd v Tid Ping Insurance Co Ltd (Nos 26-3) [2001] Lloyd's Rep IR 667, [20011 Lloyd's Rep IR 667, para 21; Royal & Sun Alliance Insurance pic v Dornoch Ltd [20041 EWHC 803 (Comm), [20041 Lloyd's Rep 1R 826, para 82. See also Tersons Ltd v Stevrnage Development Corp [196312 Lloyd's Rep 333, 368. 156

See 8.40 above.

W Jaglom v Excess Insurance Co Ltd [1972J 2 QB 250, 261. '"' [19891 1 Lloyd's Rep 289. . 149 The 1930 Act is discussed in Ch 20 below. 'so [19891 1 Lloyd's Rep 289, 293-4. '" Royal & Sun Alliance Insurance pic v Dornoch Ltd [20041 EWHC 803 (Comm), [2004J Lloyd's Rep 1R 826, para 82. 152 Birrell v Dryer (1884) 9 App Cas 345, 351-2, 354 (watranty defining'navigational limits under a time policy).

Sometimes referred to as conduct 'crossing the line' between the parties. 158 Norwegian American Cruises A/S v Mundy (The VistafjordJ [1988] 2 Lloyd's Rep 343, 350-2; Furness Withy (Australia) Ltd v Metal Distributors (UK) Ltd (The Amazonia) [19901 1 Lloyd's Rep 236, 251; Hiscox v Outhwaite [19921 1 AC 562, 575-6; India v India Steamship Co Ltd (The Indian Endurance & The Indian Grace) (No 2) [19981 AC 878, 891, 913. 159 The same approach was adopted as a matter of interpretation but without any reference to estoppel by convention in The Karen Oltmann [1976] 2 Uoyd's Rep 708. If extrinsic evidence revealed that the parties had applied a particular meaning to a certain word, in effect constructing their own dictionary, the court should apply that meaning as representing the intentions of the parties. For an application in a marine reinsurance context, see Allianz Marine Aviation (France) v GE Frankona Reinsurance Ltd London [2005J EWHC 101 (Comm), [20051 Lloyd's Rep IR 437. It is, however, difficult to see how this approach differs from estoppel by convention. 160 [1982J QB 84.

286

287

157

Interpretation and Rectification ofInsurance Contracts subsidiary, ANPP, registered in the Bahamas. D was a bank prepared to lend money to ANPP ptovided C guaranteed the loan. C duly executed a guarantee covering all sums due from time to time to D from ANPP. For exchange control purposes, however, the loan was not made directly by D to ANPP. Instead it was made through one of D's subsidiaries, called Portsokon. ANPP defaulted on the loan and D claimed against C on the guarantee. C refused to pay on the ground that the guarantee covered only sums owed to D, whereas the debt was owed to Portsokon. C sought a declaration from the courts that it was not liable. The claim failed. The Court of Appeal held that both parties had assumed that the guarantee would cover the sums advanced by Portsokon and had acted accordingly. Each was, therefore, estopped as against the other from disputing that the guarantee was to be so understood. (3) Contractual Interpretation and the Doctrine of Precedent 8.59 The doctrine of precedent artaches to propositions of law. The meaning that a word carries as a matter of language is a quesrion of facr, and therefore outside the doctrine,16' while the interpretation of a conttact is a matter of law, and potentially within.'6' In Chatenay v Brazilian Submarine Telegraph CO,163 Lindley LJ stated as follows: The expression 0' (1825) 4 B & Cr 394.

324

Where the claim is for loss of chartered freight, the wording of the charter is 9.58 crucial. Perils of the sea that frustrate a voyage equally cause the resulring loss of freight.,06 Similarly, where rhe charter provides for automatic cessation ofhire in certain circumstances, the proximate cause of the relevant circumstances is also

the cause ofthe lost freight.'o, Where, however, liability to fteight will cease upon the exercise of a contractual option to cancel, it has been held that the exercise of such an option breaks the chain ofcausation berween that which triggers the right to cancel and the ensuing loss of freight.'os A ftrtiori, where a chartered vessel is seriously damaged by stranding so as to require repairs and to permit the cancellation of the charter and a decline in the freight market renders a replacement charter less lucrative, the proximate cause of the diminished profitability of the vessel on returning to service is the decline in the market and not the stranding.'o,

I. The Language of Causation Section 55(1) of the Marine Insurance Act 1906 adopts the proximate cause 9.59 rule as a default rule, operative unless the policy otherwise provides. Confusingly, the Institute clauses generally eschew the terminology of 'proximate cause'"0 and employ a bewildering range of alternative causal expressions: 'caused by', 'arising from', 'resulting from', 'attributable to', 'reasonably attributable to', 'by', 'consequent on'. This raises the question of whether a different causation test is contemplated.

(1) The Adhesiveness of the Proximate Cause Rule

As already noted, the proximate cause doctrine is considered to represent the 9.60 intentions of the parties in the absence of evidence to the contrary. The courts,

105 ibid 400 per Abbott Cj. A fortiori where subsequent conduct is negligent or constitutes a breach of duty: Tanner v Bennett (1825) Ry & Mood 182: Meyer v Ralli (1876) 1 CPD 358. 106 jackson v Union Marine Insurance Co (1874) LR 10 CP 125; Rt Jamieson 6- Newcastle Steamship Freight Insurance Association [1895J 2 QB 90. '07 The Alps [1893J P 109: The Bedouin [1894J P 1. >0, Mercantile Steamship Co Ltd v 7jser (1881) 7 QBD 73, 75 per Lord Coleridge Cj; 'the

freight was lost by the exercise of the cancelling option which the charterers had the right to exercise. The breakdown of the ship gave the charterers the opportunity which it was at their

pleasure to avaH themselves of or to decline ... Here it seems to me that it was not the perils of the seas which caused the freight to be lost, though it may be that these perils gave the charterers the right to cancel the charter.' But see Atlantic Maritime Co Inc v Gibbon [1954] 1 QB 88, 128. >0, Continental Grain Co Ltd v Twitchell (1945) 78 LlLRep 251. 110 By way of exception, see the delay exclusion in the Institute Cargo Clauses (A), (B), (C), d 4.5, discussed at 15.33-15.37 below.

325

Principles ofCausation however, do not readily conclude that policy wording evidences an intention to adopt a different causal test. First, it is clear that such intention will be not inferred from the mere fact of a change of causal wording.'" Precisely because the proximate cause test represents the presumed intention of the parties, its applicability 'does not depend on nice distinctions between the particular varieties of phrase used in particular policies' .'12 Secondly, the inclusion of a range of different causal phrases within the same contract equally fails to persuade. Indeed, the difficulty of formulating a wide range of different causation tests that may sensibly be regarded as responding to the intentions of parties to a commercial contract may reinforce the applicarion of the proximate cause rule where a policy adopts several causal formulae. Thirdly, the adoption of different causal formulae for covered perils and exclusions will not of irself lead to rhe application of different causation tests.'13 Fourthly, causal phrases that taken in isolation do not evidence the requisite intention to oust the proximate cause rule do nor necessarily increase in persuasive potency through cumulative use in the same exclusion.'" Ultimately, however, it is a matter of interpretation of the particular contract. (2) Displacing the Proximate Cause Rule 9.61

Notwithstanding its encapsulation of the intentions generally expected of the contracting parries, the proximate cause rule will be displaced in two situations: firsr, where a change of formula insufficient in itself combines with other factors such as policy structure and wording to evidence the requisite intention and, secondly, where the espoused causal formula is unequivocal in adopting a different test. -

111 Lawrence vAccidental Insurance Co Ltd (I 881) 7 QBD 216 ('arising from'); Coxe v Employers' Liability Assurance Corp Ltd [1916J 2 KB 629, 634 ('caused by, arising from, or traceable to'); Symington dr Co v Union Insurance Society of Canton Ltd (I928) 34 Com Cas 23 ('reasonably attributable to'); Panamanian Oriental Steamship Corp v Wright (The Anita) [1971J 1 WLR 882 ('arising from'); Shell/nternational Petroleum Co Ltd v Gibbs (The Salem) [19821 QB 946, 998 ('attributable to'); Lloyds TSB General Insurance Holdings v Lloyds Bank Group Insurance Co Ltd

The Language ofCausation (a) Displ4cement by a combination ofwording and other circumstances Although many different causal formulae have been held in and of themselves 9.62 not to evidence an intention to adopt a different causation test, the question is ultimately one of interpretation of the contract as a whole. King v Brandywine Reinsurance Co (UK) Ltd 15 concerned insurance cover relating ro the disastrous oil spill from the Exxon Valdez in Alaska. The policy covered, inter alia, liability in damages for personal injuty 'and/or loss of, damage to or loss of use of tangible property caused by or alleged ro have been caused directly or indirectly by seepage, pollution or contamination arising out of the operations of the Insured'. The question was whether the navigation of the Exxon Valdez, which was the proximate cause of the pollution, arose out of an operation of Exxon, namely the consignment of a cargo of oil for carriage on the vessel on the relevant voyage. Colman J held that, in context and especially given the contrast with the phrase 'caused by', the phrase 'arising out of imported a broader test extending to all contributing events so that a sufficient causal link was present on the facts."6 Clause 1.1 of the Institute Cargo Clauses (B) and (C) extends cover to loss or 9.63 damage 'reasonably attributable to" named perils, such as fire, in contrast to the 'caused by' test required of the perils named in clause 1.2, such as jettison. The change in causation wording is the only distinction between the two categories of peril, clearly suggesting that the phrase 'reasonably attributable to' is intended to embody a more relaxed causation requirement than proximity of cause. Similarly, clause 7 of the Institute Cargo Clauses (A), (B), and (C) contains exclusions of losses 'caused by' strikers, 'resulting from' sttikes, and 'caused by' any terrorist. The alteration in causal wording clearly reflects the difference in immediacy of impact upon cargo of the acts of people, as opposed to a withdrawal of labour."7 Two provisions of the Marine Insurance Act 1906 depart from the proximate 9.64 cause formula articulated by section 55(1). In the context of the legislation, it is clear that the departute contemplates a deliberate relaxation of the proximate cause rule. Section 55(2) (a) provides that the insurer is not liable for loss 'attributable to' the assured's wilful misconduct, in marked conttast to the adoption of the proximate cause test as a general proposition in subsecrion (1) and in specific contexts in subsections (2)(b) and (2)(c). Such a change in terminology within the same section of the Act reflects the concern that it may be necessary to look beyond the proximate cause in order to link the assured's wilful misconduct ro

(200lj EWCA Civ 1643, (20021 Lloyd's Rep lR 113, para 40 ('result from'). One commentaror has stated that the dropping of the adverb 'proximately' in favour of simply 'caused by' in the Institute clauses is reflective merely of a wish to render the English drafting more easily accessible to foreign assureds: K Goodacre, Goodbye to the Memorandum (1988) 21. 112 Lloyds TSB Generaiinsurance Holdings v Lloyds Bank Group Insurance Co Ltd [200 1] EWCA Civ 1643, (20021 Lloyd's Rep IR 113, para 40 per Porter LJ. 113 Handelsbanken Norwegian Branch of Svenska Handelsbanken AB v Dandridge (The Aliza Glacial) 120021 EWCA Civ 577, (2002] 2 Lloyd's Rep 421, para 60 ('arising from' imports normal proximate cause test for exclusion in war risks policy where cover granted for losses 'caused by' named perils). 114 Coxe v Employers' Liability Assurance Corp Ltd[1916] 2 KB 629."

(2004] EWHC 1033 (Comm), (20041 Lloyd's Rep IR 554. '" ibid para 235, relying on Dunthorne v Bentley (1996) (19991 Lloyd's Rep IR 560 (interpretation of Road Traffic Ace 1988). 117 See 14.04 below.

326

327

115

Principles ofCausation the loss it somehow induced, particularly given the nineteenth-century tendency of marine insurance law to adopt a last in time approach to proximity of causation."' Similarly, section 39(5) adopts the phrase 'attributable to' in the context of unseaworthiness in time policies. Although the modern approach to proximity of causation would classify unseaworthiness as a proximate and not a

remote cause of any loss attributable to the vessel's unfitness for the insured adventure, such classification was not self-evident when the Act was drafted. '"

(b) Displacement by simple change oflanguage 9.65 Although fine variations of language will not displace the proximate cause rule,

this does not mean that a choice of different words can never suffice to import a

it is clear that a reference ,to a 'direct or indirect' cause is incompatible with the proximate cause rule. In Coxe v Employers' Liability Assurance Corp Ltd, 120 a military officer was killed by a train while

different causation test. In particular,

walking along a line unlit because of wartime regulations. Life insurers invoked an exclusion in respect of death 'directly or indirectly caused by, arising from, Ot traceable to ... war'. Scrutton J upheld the defence. The war had created the special danger of poor visibility, the assured had been exposed to that danger by his military duties, and the special danger had caused his death. War was, therefore, causally related to the assured's death. There had, however, to be some limits to the scope of this more relaxed causation test. The same exclusion was highly unlikely to protect the insurer where the assured was drafted into the army in time ofwar and then killed by lightning at a military camp not particularly prone to lightning strikes. 121 Again, in Tektrol Ltd v International Insurance Co ofHanover Ltd, 122 the claimants sought indemnification in respect of a lost computer source code. Five copies of the code were kept. Two were lost to a virus, while the remaining three were subsequently stolen by burglarsi Insurers were held entitled to rely on an exclusion of consequential loss 'arising directly or indirectly from' the impact of the virus. The virus was a causa sine qua non of the loss and clearly was at least an indirect cause within the meaning of the exclusion. 9.66

The Language ofCausation damage occasioned by or through or in consequence, directly or indirectly, of any of a list of specified war risks. Having established that the general state of affairs in the Lebanon at the relevant time constituted two excluded perils, Mustill J considered the question ofcausation. The impact ofthe causation clause was as follows: 124 ... it is quite clear that the draftsman has gone to great lengths to ensure that the doctrine of proximate cause does not apply. Plainly there must be some limit on the application of the clause, for the chain of causation recedes infinitely into the past. The draftsman must have intended to stop somewhere: and that place must be the point at which an event ceases to be a cause of the loss, and becomes merely an item of histOly. The draftsman has not explained how that point is to be identified, nor indeed do I believe that words can be found to do so. It is, eventually, a matter of instinct guided by the fact that this is a policy which (unlike others in which similar clauses can be found) expressly insures against violent acts. In essence the task is to assess whether the particular act of violence simply takes place against the background of a 'warlike' state of affairs, or whether it has itself (even if in a rather remote way) a warlike aspect of its own.

Given the factual background, the assured had no possibility of evading the broad drafting of the exclusion.

'" ibid 441-2.

Spinneys (1948) Ltd v RoyalImurance Co Ltdm concetned insurance on property in Beirut against certain acts of violence. A claim for extensive looting admittedly fell prima pciewithin the cover. However, the policy excluded 'any loss or

For discussion of wilful misconduct and causation, see 15. 14ffbelow. For discussion of unseaworthiness and causation, see 19.40-19.48 below. "0 [1916J 2 KB 629. Followed in Oei v Foster[1982J 2 Lloyd's Rep 170. m ibid 634-5. 122 [2004J EWHC 2473 (Comm), [2005jLloyd's Rep 1R 358, rvsd on other grds [2005J EWCA Civ 845, [2005J 2 Lloyd's Rep 701. '" [1980J 1 Lloyd's Rep 406. 118 119

328

329

10 MARINE RISKS

A. Hull and Freight Insurance (1) Perils of the seas, rivers, lakes or other navigable waters (2) Fire and explosion (3) Violent theft by persons from outside the vessel (4) Jettison

(5) Piracy

1000Z

B. Cargo Insurance 10.03 10.60

10.74 10.77

(1) 'All risks' cover under the

10.78 Institute Cargo Clauses (A) (2) Named perils cover under the Institute Cargo Clauses (B) and (e) 10.81

10.69 10.70

The standard market clauses for hulls and freight provide cover against loss of 10.01 or, in the case of hull insurance, damage to the insured property on a named perils basis and divide the list of covered perils into two groups, a division necessitated by the fact that cover in respect of the second group of perils, but not the first, is subject to a due diligence proviso. For convenience, the term 'marine risks' is adopted to designate the first group of perils. This chapter is concerned with that fitst group, while the second group is considered in Chapter II below. The scope of cover under the Institute cargo clauses is also briefly considered.

A. Hull and Freight Insurance The list of marine risks is substantially the same in the various Institute and 10.02 International hulls and freight clauses. Clause 2.1 of the International Hull Clauses (01111/03), for example, provides as follows:' This insurance covers loss of or damage to the subject-matter insured caused by 2.1.1 perils of the seas, rivers, lakes or other navigable waters

1 See also Institute Time Clauses Hulls (1/8/89 and 1/11/95), c16.1; Institute Voyage Clauses Hulls (1110183 and 1111195) cl4.1; Institute Time Clauses Freight (I110183 and 1111195), cl 7.1; Institute Voyage Clauses Freight (118189 and 1111195), cl5.I.

331

Marine Risks 2.1.2 nre, explosion 2.1.3 violent theft by persons from outside the vessel 2.1.4 jenison 2.1.5 piracy 2.1.6 2.1.7 2.1.8 2.1.9

contact with land conveyance, dock or harbour equipment or installation earthquake, volcanic eruption or lightning. accidents in loading, discharging or shifting cargo, fuel, stores or parts contact with satellites, aircraft, helicopters or similar objects, or objects

falling therefrom. (1) Perils of the Seas, Rivers, Lakes or other Navigable Waters 10.03 Accotding to Schedule 1 rule 7 to the Marine Insurance Act 1906: 'The term "perils of the seas" tefers only to fortuitous accidents or casualties of the seas. It does not include the ordinary action of the winds and waves.' However, despite such quasi-statutory assisrance, the phrase 'perils of the seas' has generated a considerable body of case law. Since 1887, it has been clear rhat the phrase carries the same meaning in marine insurance law and in the law of carriage of goods by sea. 2

(a) Fortuitous accidents 10.04 Although, as a matter of interpretation, contracts of marine insurancepresumptively provide an indemniry against risks rather than certainties, fortuiry is an integral element in the definition only of perils of the seas. Rule 7 itself excludes 'the ordinary action of rhe winds and waves' precisely because such action lacks fortuiry. Yet the scope of this exclusion is narrow. 10.05 The requirement of fortuiry excludes 'rhat natural and inevitable action of the winds and waves, which results in what may be described as wear and tear'. 3 Normally, issues such as ordinary wear and tear and inherent vice are raised by the insurer by way of defence, in which case the burden of proof rests upon the' insurer. In the context of perils of rhe seas, fortuiry being part of the definition of the peril reverses rhis burden, requiring the assured to show thar the loss was not attributable to such causes. 4 10.06 In Merchants Trading Co v Universal Marine Co,' the Court of Common Pleas approved the direction of Lush J to the jury at first instance that the underwriters were 'answerable for casualties arising from the violent action of the

Hull and Freight Insurance elements, as distinct from the silent, natural, gradual action of the elements upon the vessel irself, which latter phenomenon properly belonged to ordinary wear and tear. There is no peril of the sea where a vessel sinks because of its general debility, old age, or decay. 6 Such a sinking may be attendant with an element of chance in that there may be no inevitabiliry about precisely when or how it will happen. However, the assured cannot recover under the heading of peril of the sea because the operative cause of the loss is not a fortuitous maritime occurrence but merely the succumbing of the vessel to its debilitated condition.' Insurance against perils of the seas 'is not a guarantee that a ship will float'.' However, for the cause of the loss to be exclusively the state of the vessel: 'The loss must be disassociated from any peril of wind or water, even if these form the immediate context of the loss, and constitute the immediate agency (for example, the percolation of water through an existing flaw in the hull) by which the loss takes place." The vessel must be in such a condition as to sink at its moorings or in a millpond sea.'o Fortuiry is not to be equated with unforeseeabiliry." In Neter (NE) & Co Ltd v 10.07 Licenses & General Insurance Co Ltd, 12 while rounding the Cape of Good Hope in June, a vessel encountered weather rhat was rough but normal for those seas at that time of the year. A claim against cargo underwriters failed because of an absence of proof that damage to the cargo had been caused by the weather. However, Tucker J added obiter that: ... it is clearly erroneous to say that because the weather was such as might reasonably be anticipated there can be no peril of the seas. There must, of course, be some element of the fortuitous or unexpected to be found somewhere in the facts and circumstances causing the loss, and I think such an element exists when

&

6 Dudgeon v Pembroke (1874) LR 9 QB 581, 595-6, explaining Fawcus v Sars/ield(1856) 6 EI BII92; Sassoon (ED) & Co v Western Assurance Co [1912] AC 561; Wadsworth Lighterage &

Coaling Co Ltd v Sea Insurance Co Ltd (1929) 34 LlLRep 285; Sipowicz v Wimble (The Green Lion)

[1974] 1 Lloyd's Rep 593; Capital Coastal Shipping Corp v Hartftrd Fire Insurance Co (The Cristie) [1975] 2 Lloyd's Rep 100. In Hamilton, Fraser & Co v Pandorf6oCo (1887) 12 App Cas 518, 524, Lord Halsbury LC observed: 'You would not speak of the danger of a ship's decay; you would know that it must decay, and the destruction of a ship's bottom by vermin is assumed to be one of the natural and certain effects of an unprotected wooden vessel sailing through certain seas.'

, ]]Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss]ay]ay) [1985] 1 Lloyd's Rep 264, 272; Lamb HeadShipping Co Ltd v]ennings (The Marel) [1992] 1 Lloyd's Rep 402, 426. , Grant, Smith & Co & McDonnell Ltd v S,attl, Construction & Dry Dock Co [1920] AC 162, 172 per Lord Buckmaster. 9 ]]

2

Thomas Wiuon, Sons & Co v Owners of the Cargo per the Xantho (The Xantho) (1887)

12 App Cas 503. 3 ibid 509 per Lord Herschel!.

ibid. For a comparative discussion of foreseeability and perils of the sea in the context of carrier's liability, see Great China Meta! Industries Co Ltd v Malaysian International Shipping Corp Berhad 10 11

ts in just over one year. The sale contract ultimately concluded provided fOf 154 weeldy instalments of £3,000. In an action on the policy, the assured conceded

Alteration of risk should not, however, be confused with mere increase in risk. 18.29 The insurer remains on risk where the identity of the risk is unaltered bur the probability of a loss occurring is increased by a change of circumstances. 48 'If a person who insures his life goes up in a balloon, that does not vitiate the policy.'49 Raine v BeitO concerned hull and freight insurance from the port of loading in Spain to London with liberty to touch and stay at any POft. 51 Having loaded a full cargo at various Spanish ports, the ship incurred a necessary stop at Gibraltar to take on board sufficient provisions for the London voyage. In the course of this stop, the ship loaded additional cargo in the form of chests of dollars. The vessel subsequently being lost by perils of the sea, the insurers sought, unsuccessfully, to argue alteration of risk. Lord Ellenborough stated as follows:" If the taking in the dollars at Gibtaltar matetially varied the risk of the underwriters, they would be discharged by it; bur that it did not vary the risk by occasioning any delay of the voyage was exptessly found by the jury ... I have turned it in my mind whether the risk might not have been increased by the particular kind of cargo, namely, treasure, taken in there: if it were known at the time to an enemy, it might hold Out an additional temptation for him to seek for and attack the ship. But I do not know that a mere temptation of this SOrt has ever been held a sufficient ground to avoid a policy if the original act itself were

lawful. Company ofAftican Merchants Ltd v British & Foreign Marine Insurance Co Ltd (1873) LR 8 Ex 154, 157 per Blackburn J. Also Hartley v Buggin (1781) 3 Dougl39, discussed at 18.40 below; Shaw v Robberds (1837) 6 A & E 75,83. 41

42

(1794) 5 TR 580.

A letter of marque is a special authorization of hostile acts against a designated state or person, effectively a licence to carry out acts of privateering. It thus transforms the nature of the risk from exclusively peaceful trading to including involvement in hostilities. 43.

44

(1794) 5 TR 580.581.

" ibid 398. See also Kausar v Eagle Star Insurance Co Ltd (1996) [2000] Lloyd's Rep 1R 154,

ibid 582. It is, however, a fine question of construction whether the presence of a letter of marque transforms the voyage into one properly regarded as immediately different or merely promises a departure from the covered voyage at some future stage: see Oswell v Vigne (1812) 15 East 70 (and see 18.37 below for discussion of intended deviations). Denison v Modigliani was distinguished in Moss v Byro",! (1795) 6 TR 379 where the assured had no intention to use the letter of marque, obtained it only to encourage seamen to sign on for the voyage and, consequently, did not obtain a certificate necessary to its validity. It was held the policy remained valid and that any use by the master of the invalid letter of marque against the wishes of the owner would constitute barratry. ' 45

" [1984] 2 Lloyd's Rep 393.

156. Change of voyage is discussed at 18.31ffbe1ow. " Pim v Reid (I 843) 6 Man & G 1; Thompson v Hopper (1858) EI BI & El1038. " Baxendale v Harvey (1859) 4 H & N 445. 449 per Pollock CB arguendo. See also Hussain v

Brown [199611 Lloyd's Rep 627, 631; K4usarv Eagle Star Insurance Co Ltd(l996) [2000] Lloyd's Rep lR 154, 156-7. 50 (1808) 9 East 195. 51 A 'liberty to touch and stay' clause constitutes contractual permission to deviate to some extent from the ordinary and proper course of the voyage, enlarging the risk covered. The extent of the permission is a matter of construction of the clause and policy in question. 52

524

(1808) 9 East 195, 199-200. See also Laroche v Oswin (1810) 12 East 133.

525

Attachment and Alteration ofRisk

C. Alteration of Risk in Voyage Policies 18.30 This section is concerned with the three docrrines of change of voyage, deviation, and delay. In rhis context, the term 'deviation' is employed in the most restrictive of its three meanings. In a very general sense, it indicates any departure from the insured adventure sufficient to constitute a variation of tisk. 53 Its narrow meaning, adopted by the Marine Insurance Act 1906, is confined to a temporary departure from the contractual route for the insured voyage. An intermediate meaning includes delays in the prosecution of the insured voyage.'4 Pre-Act case law adopted either the first or third of these meanings. The drafting of the Institute clauses unfortunately creates confusion. 'Held covered' clauses maintain the policy, subject to certain conditions, notwithstanding specified alterations of risk. 55 However, whereas clause 8.3 of rhe Institute Cargo Clauses (A), (B), and (C) refers expressly to both delay and deviation, clause 2 ofthe 1983 and 1995 Institute Voyage Clauses Hulls and clause 3 of the 1989 and 1995 Institute Voyage Clauses Freight expressly menrion deviation alone while remaining confusingly silenr with respect to delay. (1) Change of Voyage

18.31

The Marine Insurance Act 1906 defines a change of voyage as a voluntary change of the destination of the ship from that contemplated by rhe policy after the commencemenr of the risk. 56 Consequently, determining whether there is a change ofvoyage requires precise identification of the voyage insured, including the proper limits of any liberty to touch and stay clause. 57 The requiremenr of volunrariness requires differenriation between the volunrary apprehension of a peril and rhe insured war peril of restraint." Accordingly, orders ofthe German government on the outbreak of the Second World War, obedience to which involved abandonment of the voyage, constituted a restraint of princes. There was no change of voyage since the master 'was not acting on his own initiative, but on orders which . .. morally as a good subjecr he ought not to have

resisted) .59

53 See, eg Oswell v Vigne (1812) 15 East 70; Birrell v Dryer (1884) 9 App Cas 345. " See, eg Mount v Larkins (1831) 8 Bing 108. 55 For discussion of held covered clauses, see 18.110ffbelow. 56 MIA 1906, s 45(1). 57 Bottomley v Bovill 082,6) 5 B & C 210 (widely drafted liberty to touch and stay clause held confined to intermediate voyages 'subordinate to or connected with either of the voyages contemplated by the parties as the principal objects of the contracts': per Abbott CJ at 219,) 58 See 9.46ff and 13.50-13.52 above. 59 Rickards v Forestal Land, Timber & Railway Co Ltd (The Mindin) [1942l AC 50, 109 per Lord Porter. See also Viscount Maugham at 73 and Lord Wright at 82.

526

Alteration ofRisk in v"yage Policies As already seen, where a ship sails for a different destination, the risk never 18.32 attaches, regardless ofwhether the route of the insured voyage coincides to some extent with that of the new voyage. Similarly, where it is resolved to change a voyage after inception of the risk, the insurer's discharge is not postponed to the point of physical departure from the route of the insured voyage, By virtue of secrion 45(2) of the Marine Insurance Act 1906: 'Unless the policy orhetwise provides, where there is a change of voyage, the insurer is discharged from liability as from the time of change, thar is to say, as from the time when the determination to change it is manifested; and it is immaterial that the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs.' This provision codifies the decision of the House of Lords in Tasker v 18.33 Cunninghame. 60 In response to a suggestion of their agents at Cadiz that the destination of the vessel on the homeward voyage be altered, the assured took out insurance incorporating this variation. Subsequently, rhe agents determined upon a second change of destination. A letter notifYing the assured of this further change arrived on the same day the vessel was lost while still at Cadiz. Having initially indemnified the assured in ignorance of rhese facts, the insurers then successfully sought restitution on the basis of a change ofvoyage before the loss, The circumstances surrounding the first change of destination evidenced a conferment of authoriry upon the agents to alter the destination of rhe vessel. Moreover, the second change had taken effect although the vessel had not sailed before the loss or even completed loading of cargo. 'Undoubtedly a mere meditated change does not affect a policy. But circumstances are to be taken as evidence of a determination, and what better evidence can we have, than that those who were authorised had derermined to change the voyage.'61 (2) Deviation

A marine adventure insured by reference to a voyage conremplates not merely 18.34 specified termini a quo and ad quem but also a particular route rhe vessel will follow between them. Any departure, withour lawful excuse, of rhe vessel from this insured route, without a change of the terminus ad quem,62 constitutes a deviation in the sense in which this term is employed by the Marine Insurance Act 1906, automatically discharging the insurer prospectively from liability

60

(1819) 1 Bligh 87.

" ibid 102-3 per Lord Eldon LC. 62 Thames & MerseyMarine Insurance Co Ltd v HTVtm Laun &Co (1905) (1917) 23 Com Cas 104, 110-11 per Lord Davey: 'It is otten a nice question on the facts whether an interruption of the voyage amounts to a deviation only or is a change of voyage, The usual test is whether the ultimate terminus ad quem remains the same.'

527


Alteration ofRisk in Voyage Policies

under the contract without prejudice to liability for previous 10sses. 63 Such a discharge is irreversible; risk does not attach once more if the vessel regains the insured route. 64 This discharge stemming from the simple fact of a change of risk, it is unaffected by any lack of a causal link between rhe deviation and a subsequent loss:5

merely by a manifestation of the determination to change the terminus ad quem. In such cases, viewed as a whole, the actual voyage is never or immediately ceases to be that which was presented to the insurer and which the insurer agreed to cover. Firm evidence of a present determination to depart temporarily from the insured route would seem to present a parallel situarion, discharging the insurer without any need for an actual departute. Viewed as a whole, the actual voyage again would no longer seem to correspond with the insured voyage. Such, however, is not English law. Where a vessel sails on the insured voyage having already resolved to deviate and sustains a loss prior to the dividing point between the insured voyage and the deviation, the insurer is liable. Provided the termini ad quem of the insured and actual voyages coincide, the vessel will be regarded as having embarked upon rhe insured voyage and the risk will anach. Only as and when the intended deviation materializes will the insurer be discharged. 74 'The intention to deviate is immaterial; there must be a deviation in fact to discharge the insurer from his liability under the contract.'''

18.35 In the absence of specific designation by the policy, the insured route the vessel

is bound to follow is the usual and customary route. 66 According to Lord Porter in Reardon Smith Line Ltd v Black Sea 6- Baltic General Insurance Co Ltd:" It is the duty of a ship, at any rate when sailing upon an ocean voyage from one port to another, to take the usual route between those two ports. If no evidence be given, that route is presumed to be the direct geographical route, but it may be

modified in many cases for navigation or other reasons, and evidence may always be given to show what the usual route is, unless a specific route be prescribed by the

[contracr]. 18.36 Some leeway may be introduced by a clause giving 'liberty to touch and stay' at

specified ports. Such express freedom, however, in turn constitutes a specific route to which the vessel must adhere, refraining from calling at any port not comprehended by the contract, including a port at which usage would sanction a call in the absence of any express contractual term. 68 Moreover, the courts will construe such a clause as confined to permitting the visiting of ports only for purposes connected with the voyage:' Liberty to touch and stay clauses are no longer used in the standatd market clauses.'o Where the policy specifies several ports of discharge, the vessel must proceed to such of them as are visited71 in the order designated in the policy" or, if the policy stipulates merely 'ports of discharge' within a given area, in their geographical order. 73 18.37 Ai; already seen, where a vessel sails for a destination other than the insured

terminus ad quem, the insurer is on risk for no part of the passage even to the extent the actual and insured routes coincide. A change of voyage is ttiggered

6l MIA 1906, s 46(1); Green v Young (1702) 2 Salk 444. Deviation may arise also through infringement of geographica1limits imposed by the insurance contract: Tait v Levi (1811) 14 East 481. 64 MIA 1906, s 46(1); Elliott v Wi&on (1776) 4 Bra PC 470. 65 Elliott v Wi&on (1776) 4 Bra PC 470; Davis v Garrett (1830) 6 Bing 716. " MIA 1906, s 46(2). 67 [1939] AC 562, 584 (evidence of usual commercial practice to bunker at a particular port denied deviation in bill of lading case). 68 Elliott v Wi&on (1776) 4 Bra PC 470. 69 Hammond v Reid (1820) 4 B & AId 72. See also MIA 1906, Sch 1, r 6. 70 Bur cf held covered clauses, discussed at 18.110 below. 71 There is no obligation to visit them all. n MIA 1906, s 47(1); Beatson v Haworth (1796) 6 TR 531; Marsden v Reid(1803) 3 East 572. 73 MIA 1906, s 47(2); The Dunbeth [1897J P 133.

528

(3) Delay

By virtue of section 48 of the Marine Insurance Act 1906, the adventure insured 18.38 under a voyage policy 'must be prosecuted throughout its course with reasonable dispatch, and, ifwithout lawful excuse it is not so prosecuted, the insurer is discharged from liability as from the time when the delay became unreasonable'.76 Although the issue may be settled by the contract," what constitutes a reason- 18.39 able delay is in principle a question offact." In Phillips v Irving," a ship insured as seeking a cargo was held to act reasonably in posrponing sailing by reason of a locally depressed freight market caused by empty troop ships all seeking return cargoes. Reasonableness was to be determined 'not by any positive and arbitrary rule, but by the state of things existing at the time at the port where the ship happens to be'. 80 A delay is reasonable if occasioned by the need to obtain a permit from consular authorities" or by shortage of tonnage in

74 Hare v Travis (1827) 7 B & Cr 14, esp 17-18. See also Foster v Wilmer (1746) 2 Str 1249; Thellusson v Ferguson (1780) 1 DougI 231; Kewley v Ryan (1794) 2 HBI 343; Kingston v Phelps cited (1795) 7 TR 165; Heselton v Allnutt (1813) 1 M & S 46. cf Thames 6- Masey Marine Insurance Co Ltd v HT Van Laun 6-Co (1905) (1917) 23 Com Cas 104 (obiter). 75 MIA 1906, s 46(3). 76 Even if the delay is reasonable or excused under MIA 1906, s 49, discussed below, the

insurer may not be liable for losses caused by delay, see 15.29ffabove. 77 Doyle v Powell (1832) 4 B & Ad 267. 78 MIA 1906, s 88; Bain v Cove (1829) 3 Car & P 496. 79 (1844) 7 Man & G 325. 80 ihid 328 per Tindal q. " British-American Tobacco Co Ltd v HG Poland (1921) 7 LlLRep 108.

529


Alteration ofRisk in VOyage Policies

wartime. 82 Again, underwriters are not discharged where a vessel, delayed eighteen months by an embargo, could have departed in ballast but in breach of the terms of the chartetparty that required a return cargo of timber." The delay must, however, promote the insured adventure. A delay enabling one vessel's crew to assist in salving the cargo of another of the assured's vessels is unreasonable under a policy with a liberty only to stay and trade. 84

excusing, there must be no lawful excuse and, in the context of delay, the . enquiry as to a lawful excuse does not arise unless the voyage has not been prosecuted with reasonable dispatch. Since, in the. circumsrances laid down by section 49, there would almost certainly be no discharging deviation or delay in the first place, section 49 would appear merely to provide clarification of what constitutes lawful excuse and reasonableness.

18.40 Similarly, in Hartley v Buggin,85 a vessel sent to Mrica with liberty to exchange

goods for slaves remained for several months acting as a receiving ship for slaves subsequently transferred to other vessels. Lord Mansfield, articulating also the change of risk rationale behind discharge for all forms of deviation, had no hesitation in holding the underwriters discharged for a deviation in the form of this delay: It is not material, to constitute a deviation, that the risk should be increased. The voyage is to the coast of Mrica, and thence to the West Indies, which includes an insurance on the ship while she stays and trades at Mrica, and it is w.ith liberty

to

exchange goods and slaves; but that exchange is for the benefit of the ship, one

slave for another. If a ship insured for a trade is turned into a factory ship, or a floating warehouse, the risk is different; it vades the stay, for while she is used as

a warehouse no cargo is bought for her. 86

(4) Excuses for Deviation or Delay 18.41

Section 49 of the Marine Insurance Act 1906 states that certain deviations or delays are excused provided the vessel resumes the insured route,87 and prosecutes the voyage, with reasonable dispatch once the exculpatory circumstances cease to operate. 88 In essence, the insurer is not discharged where such "';ould appear to be the intention of the parties or where necessity prompted a departure from the contemplated route or schedule.

The nature of section 49 is illustrated by the first excuse, namely authorization 18,43 by a special term in the policy. Yet for a deviation to discharge the insurer, it must constitute a departure from the voyage contemplated by the policy. Express authority to visit a port outside the usual route serves to define the voyage insured and exercising that authority cannot amount to a deviation requiring excuse. Again, deviation or delay is excused under section 49(1)(g) where caused by barratrous conduct of the master or crew if barratry is an insured peril. However, barratrous conduct frequently involves deviation and, as a matter of contractual interpretation, specific inclusion of barratry as a named peril in the policy must limit any g~neral deviation defence." And where the policy positively requires a deviation or delay as reasonably necessary for compliance with an express or implied warranty,90 specific excusing by section 49(1)(c) seems superfluous. The remaining excuses constitute examples of involuntary deviations and 18.44 delays. Thus, the insurer is not discharged where the deviation or delay is caused by circumstances beyond the control of the master and his employer,91 such as compulsion by the crew" or force of weather," or, according to section 49(I)(d), where reasonably necessaty for the safety of the ship or subject-marter insured: Nothing is more clear than the general principle that a deviation never puts an end to the insurance, unless it be the voluntalY act of those who have the management

18.42

The preelse role of section 49 is, however, not entirely clear. For eirher a deviation or delay prima ficie to discharge an insurer, and, therefore, to require

82

of the ship ... Deviation occasioned by force, and deviation occasioned by necessity are the same, for necessity is force. It is no matter whether it be the want of repair, or any other immediate danger, which renders the deviation necessary. When the deviation is necessary and unavoidable, it has no effect on the obligation of the insurer. 94

Niger Co Ltd v Guardian Assurance Co (1922) 13 LlLRep 75 (the policy evidenced contem~

plation by the parries of some delay). 83 84

Schroder v Thompson (1817) 7 Taunt 462. Company ofAftican Merchants Ltd v British & Foreign Marine Insurance Co Ltd (1873) LR 8

Ex 154. as (1781) 3 Dougl39. 86 ibid 40. 87 Although not necessarily at the point where the vessel left the insured route: Delany v Stoddart (1785) 1 TR 22. 88 Although, where the dev'iation or delay is occasioned by necessary repairs to the vessel, a court should adopt a reasonable approach to calculating the rime necessary for the repairs viewed as a whole rather than descending to an enquiry at the level of each individual item of repair:

Almojil (M) Establishment v Malayan Motor & Gimera! Underwriters (Private) Ltd (The AI-Jubail IV) [1982] 2 Lloyd's Rep 637, 641 (Court of Appeal of Singapore).

530

89 As it did before the Act: Ross v Hunter (1790) 4 TR 33. so As in Bouillon v Lupton (1863) 15 CB(NS) 113, discussed at 19.25 below. 91 MIA 1906, s 49(1)(b). 92 Elton v Brogden (1747) 2 Str 1264 (insistence by crew of vessel with letter of marque on returning to POrt with captured prize); Driscol v Bovi! (1798) 1 B & P 313 (refusal to proceed on insured voyage for fear of Moorish cruisers). 93 Delany v Stoddart (1785) 1 TR22. 94 Scott v Thompson (1805) 1 B & P (NR) 181, 186 per Sir James Mansfield C). Tbe emphasis being upon freedom, a deviation occasioned by a master's incompetence is voluntary: Phyn v Royal Exchange Assurance Co (1798) 7 TR 505.

531

Attachment andAlteration ofRisk 18.45 In Hyderabad (Deccan) Co v Willoughby," a station-master wrongly insisted that

a quantity of gold, in transit from a mine in India to London, be consigned for transport to the port of loading at rbe owner's risk. The gold was, therefore, taken to the assured company's head office where one bar was stolen before the mistake could be rectified. According to Bigham J, in the circumstances rhis detour was 'a jusrifiable deviation, if, indeed, it was a deviation at all; ir was a necessary act done in the prosecution of the insured journey':" .. . it is as if a master had steered his ship out of her course in order to escape the dangers of a storm; such things have to be done as occasion arises, and though in a sense they may be called deviations, they really are merely incidents in the prosecution of the voyage. [The detour] was in the circumstances within the scope of the adventure. It was done in the prosecution of the adventure, and properly done in order to secure its safe accomplishment. S? 18.46

Deviation occasioned by submission to authority is likewise involuntary." The Minden" arose in consequence of the instructions given by rhe German government to German ships upon the outbreak of war in 1939 to take refuge in neutral ports and return to Germany if possible or scuttle as a last resort. The lirigation concerned rbree German vessels that abandoned their insured voyages and attempted to return to Germany, one successfully, the remaining rwo scurt1ing in the presence of Allied warships. The House of Lords held thar the government instructions constituted the insured peril of restraint of princes and the vessels' obedience not only negated the underwriters' defence of change of voyage, as already noted, but also that of deviarion. The deviarion 'was clearly in furtherance of German war policy and under German government control. Thus, it was not the voluntary act of the masrer ... Ir was rhe direct effect of the restraint' .100

18.47 In Phelps v Auldjo,'01 in contrast, the master of an armed merchantman was

ordered by the captain of an English warship ro put to sea to examine a srrange sail bearing enemies' colours. Without remonstraring and in the absence of any overt force or threars, the master obeyed. The strange sail proved to be neurral and the merchantman returned safely to POrt but was subsequently lost by fire. Lord Ellenborough held the deviation to be unjustified: 'If a degree of force was exercised towards [the master] which either physically he could not resisr, or morally as a good subject he ought not to have resisted, the deviation was justified. But if he chose to go out in the hope of making a prize, he could not rhereby extend rbe risk of the underwriters."o, If the decision, only briefly

Alteration ofRisk in v"yage Policies reported, is authority for the proposition that compulsion must be oven, it cannot stand with a number of more recent authotities, of which The Minden is one, regatding the perils of restraint and detainment.,03 Alternatively, evidence may have been adduced rhat the master of the merchantman was actuated by the opportunity to capture a prize, so thar any latent compulsion, physical or moral, was consequently inoperative on the facts. Involuntary deviations and delays reasonably necessary for rhe safety of the ship 18.48 or subject-matter insured, as excused by section 49(1)(d) of the 1906 Act, typically include the repairing of damage to the vessel to enable it to proceed safely,'04 reasonable necessity being judged by reference to the standard of the reasonably competent and skilful master. lOS Where, however, the cargo in peril is not 'the subject-matter insured' under the policy at issue, a deviation to save it is not excused by section 49(1)(d). This raises rwo issues. The first is whether section 49(1) is exhaustive or merely illustrative of the reasons that may excuse a deviation or delay. It is suggested rbat section 49 need not and, in the light of the above scenario, should not be read .as exhaustive. The governing provisions are sections 46 and 48, and section 49 may be read merely as illustrative of their concepts of lawful excuse and reasonableness. It is scarcely credible that either Sir Mackenzie Chalmers or Parliament intended to exclude the possibility that an instance of lawful excuse might not have been litigated or contemplated by the time the Act was drafted. The second issue is compatibility berween matine insurance law and the law of the carriage of goods by sea. It is unclear whether the master's duty to take reasonable care of the cargo entrusted to him extends to an obligation to deviate in the intetests of its preservation in the absence of any danger to rhe vessel,'06 although such a deviation would probably be justified.,o'To the extent that such a duty or liberty does exist under a contract of affreightment, the law should avoid placing the master in the position of choosing berween such a duty and the insurance of all parties interested in the voyage. A further problem of compatibility, however, remains intractable. Where a mas- 18.49 ter reasonably apprehends that an existing peril'o, not currently threatening the

103

See 13.50 above.

104

Motteux v London A<surance Co (1739) 1 Atk 545; Smith v Surridge (1801) 4 Esp 25. Phelps, james & Co v Hill(1891) 1 QB 605. . .

lOS

At common law, contrast dicta in Notara v Henderson In the Court of Exchequer Chamber (1872) LR 7 QB 225, favouring a broadly interpreted duty to cargo owners possibly including deviation or delay, with a firm view to the contrary at first instance: (1870) LR 5 QB 346. . 107 Nobels Explosives Co v Jenkins & Co [1896]2 QB 326 (where the relevance of the uncertam threat to the vessel, as opposed to the goods, to the holding of justification at common law is unclear); Stag Line Ltd v Foseoto, Mango & Co Ltd [1932] AC 328.. . 108 \f!atts, \.Wttts & Co v Mitsui & Co Ltd [1917) AC 227 (apprehenSion of future penl cannot justify a deviation). 106

" [1899] 2 QB 530. ibid 534. " ibid. " Scott v Thompson (1805) I B & P (NR) 181 (detention by naval vessel). 99 Rickards v Forestal Land Timber & Railways Co Ltd (The Minden) [1942] AC 50. 100 ibid 82 per Lord Wright. '0' (1809) 2 Camp 350. '" ibid 351.

532

533


Alteration ofRisk in Voyage Policies

vessel will do so if the voyage is continued, a deviation to avoid the peril will be excused in carriage law and rhe carrier will incur no liability for any resulting 10SS.'09 Moreover, where the apprehended peril constitutes a restraint, the deviation will further be excused under the traditional war risks exclusion in contracts of affreightment."o This excusing by rhe law of carriage of goods of deviations caused by reasonable apprehension of perils provides a stark contrast to the harsh refusal of the proximate cause doctrine of marine insurance law to attribute losses caused by such a deviation to the apprehended peril. '" Should a vessel deviate reasonably in order to avoid hosrile warships but losses be incurred through the ensuing retardation of the voyage, rhe carrier will incur no liability for such losses and the deviation will not discharge any insurance policies. However, the proximate cause doctrine operated by marine insurance law denies any recovery for the losses caused by the master's reasonable and prudent response to avoid the apprehended peril.

and shocking to the sentiments ofmankind, that the shipowner should be deterred from endeavouring to save life by the fear, lest any disaster to ship or cargo, consequent on so doing, should fallon himself Yet it would be unjust to expect

18.50 A final question wirh respect ro section 49(I)(d) is wherher an uninsured peril may excuse a deviation. In the absence of aurhority,112 ir is suggested rhat the insurers should not be discharged since whether a peril is insured is irrelevanr to wherher it generates a necessiry denying volunrariness. 18.51

Involunrariness may be generated by a moral imperative. Secrion 49(1)(e) provides that deviations are excused for the purpose of saving human life, or aiding a ship in disrress where human life may be in danger. Deviarion ro preserve cargo in the absence of rhreat to human life is not exonerated by rhe srarure. This disrincrion was articulated and explained by Cockburn C] in Scaramanga

& Co v Stamp: 113 The impulsive desire to save human life when in peril is one of the most beneficial instincts of humanity, and is nowhere more salutary in its results than in' bringing help to those who, exposed to destruction from the fury of the winds and waves, would perish if left without assistance ... It would be against ~he common good,

>09 The TeuMnia (1872) LR 4 PC 171, 179: The Wilhelm Schmidt (1871) 25 LT 34: The San Roman (I 873) LR 5 PC 301,305 per Sir Montague Smith: 'an apprehension of capture founded on circumstances calculated to affect the mind of a master of ordinary courage, judgment, and

experience, would justifY delay': Nobels Explosives Co v Jenkim & Co [1896] 2 QB 326; Hague! Visby Rules, art rv, r 4. "0 Nobels Explosives Co vJenkins & Co [1896] 2 QB 326. 111 See 9.46££ above. 112 Two cases often cited in connection with this issue provide no answer. Both arise out of a vessel prematurely putting to sea to avoid seizure by approaching hostile forces in a state unfit for

the voyage and deviating to effect repairs and complete its cargo. In O'Reilly v Royal Exchange Assurance (1815) 4 Camp 246,·'an FC&S clause protected a cargo insurer. In O'Reilly v Gonne (1815) 4 Camp 249, a freight policy cont~ining no such clause produced the opposite result. The premature departure and deviation being attributable to a covered peril, the case falls within MIA

1906, s 49(1)(b). 113 (1880) 5 CPD 295, 304-5.

that he should be caHed upon to satisfy the call of humanity at his own entire risk. Moreover, the uniform practice of the mariners of every nation ... of succouring others who are in danger, is so universal and well known, that there is neither injustice nor hardship in treating both the merchant and the insurer as making their contracts with the shipowner as subject to this exception to the general rule of not deviating from the appointed course.

The preservation ofproperty as distinct from human life may be in the common 18.52 interest of merchants, shipowners, and insurers, but it does not attract the same

moral imperative and is legally catered for through the law of salvage, which rewards successful.salvors generously. 'It would obviously be most unjust if the shipowner could thus take rhe chance of highly remunerative gain ar the risk and possible loss of the merchanr or the insurer, neither of whom would derive any benefit from the preservation of rhe property saved."14 This disrinction is, nevertheless, subject to contrary intention. Thus, clause 1.1 of the Institure Voyage Clauses Hulls (1110/83) and (1111195) expressly confers liberty 'to assist and toW vessels or craft in distress', although rhe provision should not be interpreted as permitting unrestricted towage and salvage services. First, the clause includes a warranty prohibiting rhe performance of such services pursuanr to a contract previously agreed between the assured and those in control of the vessel assisted. Secondly, in John Potter & Co v Burrell & Son,'15 a liberry to tow and assist 'in all situations' was construed as silent on the amount of towing con-

templared and confined to towage services consistent with the objects of the contract. This test was satisfied on rhe facts since the rhree-week delay incurred in deviating to tow a vessel in distress to a porr of safety was no longer than the delay that would have resulred from towing the vessel on the insured route to the insured terminus ad quem. Likewise, Stuart v British & African Steam Navigation CO" 6 concerned an action on insurance of cargo lost when the carrying vessel was wrecked while deviaring some three miles and rendering assisrance to a stranded ship. Despite the absence of any threat to human life, the insurers were held liable under an express liberty 'to tow and assist vessels in all situarions', although the court conceded thar some limits had to be implied-'you must not so construe a condition as to make it eat up the contract'.117

Section 49(l)(f) excuses deviarions reasonably necessary for the purpose of 18.53 obtaining medical or surgical aid for any person on board the ship. This clarifies, and conceivably modifies, the common law position established by Woolf v Claggett. '18 In rhis case, Lord Eldon is reported as denying that sickness of the

'" ibid. m [1897) I QB 97. '" (1875) 32 LT 257. m ibid 262 per Pollock B. 118 (1800) 3 Esp 257.

534

535


Promissory "Warranties

crew would justify a deviation unless two conditions wete satisfied. First, such a propottion of the crew had to be afflicted as to render it impossible to navigate the vessel. Secondly, evidence bad to be adduced that the vessel pur to sea wIth adequate medical provision for the voyage, including a surgeon where appropriate. On the facts, the insurer was discharged in the absence of such evidence. The relevance of this decision to the modern law is, however, doubtful. Illness afflicting even a single person, whether crew or passenger, clearly excuses a deviation under section 49(l)(f). Moreovet, a distinction should be drawn

policy, the insurer is discharged from liability as from the date of the breach of warranty, bur withour prejudice to any liability incurred by him before that date'. The auromatic nature of the discharge was, nevertheless, challenged in The Good Luck'24 This challenge raised the question of the technically correct characterization of the promissory warranty.

between the circumstances that excuse a deviation and the extent of the war~

ranty of seaworthiness implied into all voyage policies. Thus, where a ship is inadequately medically provisioned, any resulting deviation is excused although the insurer may have a defence based upon unseawotthiness. In Kish v Taylor, Sons 6- CO,'19 chatterers failed to load a full cargo as required by a chatterparty. To minimize the loss, the master procured additional cargo, overloaded the deck, rendered the vessel unseaworthy, and was compelled to deviate for repairs before safely completing the voyage. The deviation was held to be justified but without prejudice to the shipowner's right to damages for breach of the terms of the charterparty.

D. Promissory Warranties 18.54 In the general law of contract, the term 'warranty' is associated with minor

conttactual terms, breach of which sounds in damages alone and may not lead to discharge of the contract. In insurance law, however, the phrase 'promi§sory wattanty' signifies that the term serves to define the risk insured. Breach of such a warranty renders the risk materially different from that which the insurer agreed to cover. 120 In this sense,121 a warranty 'is a condition on which the contract is founded' .122 Where, however, the promissory warranty relates to a

claim, it will be considered as defining the circumstances in which the insurer is liable for that claim, rather than defining the entirety of the risk under the policy. 123 (1) The Legal Characterization of Promissory Warranties

The Good Luck was owned by the Good Faith group, mortgaged to the appellant 18.56 bank, and entered with the respondent murual insurance association. The association's rules provided for rhe declaration of prohibited areas and contained an express warranty of compliance with such ptohibitions. When the appellant bank advanced money to the owners on the primary security of mortgages of a number of vessels including the Good Luck, it obtained an undertaking from'the association 'to advise you promptly if the association ceases to insure' the vessel. In November 1981, the association discovered that the Good Luck was being operated in a prohibited area, in breach of the warranty, but did not inform the bank. In 1982, while the owners were renegotiating and seeking to inctease the bank loan, the vessel was rendered a constructive total loss while inside the prohibited atea. The ownets lodged a claim with the association, pretending ignorance of the prohibition. In July 1982, the bank extended Good Faith's credit facilities, with the maximum total indebtedness being limited to 67 per cent of the value of the security furnished. The valuation of the security included US$4.8 million attribured to the Good Luck and the insurance claim, the bank talcing an assignment of the insurance proceeds. 125 On 4 August, the association rejected the owners' claim, leaving the bank with US$4.8 million of unsecured debt. The bank sued the association for breach of the undertalcing, arguing that the 18.57 association's cover 'ceased' immediately the warranty had been broken, relying on a literal reading of section 33(3). The association contended that it was not until 4 August that the club had ceased to insure the Good Luck. It argued that bteach of an insurance warranty should be assimilated to the general contract law concept of a tepudiatory breach, which triggets no automatic discharge but merely affords the innocent party the right to accept the breach, such acceptance prospectively discharging the parties from future performance of the primaty contractual obligations.'26 This argument found favour in the Court of

18.55 Section 33(3) of the Marine Insurance Act 1906 ptovides that, in the event of non-compliance with a warranty, 'then, subject to any express provision in the

'"

124

[19121 AC 604.

no Newcastle Fire Insurance Co v Macmorran & Co (1815) 3 Dow 255, 265. 121 For other usages of the term 'warranty', see 18.105ffbelow. >22 Bean v Stupart (1778) 1 Douglll, 14 per Lord Mansfield. 123 On promissory warranties in the claims context, see 22.13-22.17 below.

536

Bank ofNova Scotia v Hellenic Mutual W'tlr Risks Association (Bermuda) Ltd (The Good Luck)

1199211 AC 233. 125 For further discussion of a.ssignment in the context of insurance, see 20.07ffbelow. 126 Heyman v Darwins Ltd [1942] AC 356; Photo Production Ltd v Securicor Iransport Ltd [1980J AC 827.

537


Promissory warranties

Appeal'" but was rejected by the House of Lords. Delivering the leading judgment, Lotd Goff declined to depart from the 'plain meaning' of section 33(3), stating that: .. . if a promissory warranty is not complied with, the insurer is discharged from liability as from the date of the breach of warranty, for the simple reason that

damages for breach. There is no authority in favour of insurers being able to sue assureds fot damages for breach of a promissory warranty, for example to reimburse expenses incurred in investigating _a claim that were wasted because the insuret was in any event not liable. The promissory warranty is a terminologically disguised contingent condition precedent.

fulfilment of the warranty is a condition precedent to the liability of the insurer. This moreover reflects the fact that the rationale of warranties in insurance law is

(2) IdentifYing Promissory Warranties

that the insurer only accepts the risk provided that the warranty is fulfilled ... In the case of conditions precedent, the word 'condition' is being used in its classical sense in English law, uncler which the coming into existence of (for example) an obligation, or the duty or further duty to perform an obligation, is dependent

upon the fulfilment of the specified condition.'" From the time of the breach ofwarranty, the Good Luck had thetefore ceased to be insuted by the club, which had broken its undertaking to the bank. 18.58 The decision of the House of Lords in The Good Luck settles definitively the question of the legal chatacterization of the promissory warranty in insurance contract law. The term 'promissory warranty' is merely a label used in insurance law for the condition precedent of general contract law. A promissory warranty is a condition precedent to the insuter's liability on the conttact. Once btoken, the insutet automatically ceases to be liable. If the breach pre-dates the attachment of tisk, the insutet will nevet come on tisk, producing a total failute of consideration fot premium putposes. 129 If the breach occurs after inception of risk, the insurer remains liable for any casualties within the scope of the policy, but has no liability for any subsequent casualty. There is no total failure of consideration for premium purposes. 130 18.59 This feature of the operation of promissory warranties derive§ from and teinforces the function of the promissory warranty as defining the risk insured. A breach ofwarranty constitutes an alteration of risk. The insurer does not come on tisk or is automatically discharged from liability because the risk is no longer within the policy. 18.60 Confusingly, the promissory wattanty is almost certainly not a promissory obligation as understood by general contract law, namely an obligation sounding in

m [1990J 1QB 818. See also CTN Cash 6- Carry Ltd v GenmllAccident Fire 6- Lift Assurance Corp pic [1989J 1 Lloyd's Rep 299, 303. '" [1992J 1 AC 233, 262-3, approving Hobhouse J at first instance [1988J 1 Lloyd's Rep 514, 544 and Kerr LJ in State Trading Corp of India Ltd v M GoilJdetz Ltd [I989J 2 Lloyd's Rep 277, 287. 129 Where the warranty necessarily relates in time to circumstances at the inception of the risk, breach will result in the insurer never coming on risk. Such a warranty may be said to be a condition precedent to attachment of the risk: Thomson v \.%ems (1884), 9'App Cas 671, 684. 130 For discussion of attachment of risk and the earning of premium, see 6.02 above.

538

According to section 33(1) of the Marine Insurance Act 1906, a promissory 18.61 warranty is 'a warranty by which the assured undertakes that some particulat thing shall be done, or that some condition shall be fulfilled, or whereby he affirms or negatives the existence of a particular state of facts'. A warranty must, however, relate to the risk. A promise to pay the premium by a particular date might be an undertalcing to do a patticular thing, but the obligation would be classified as a normal contractual obligation and not as a promissory insurance warranty.131 Whether a term constitutes a promissory warranty depends upon the intention 18.62 of the patties as revealed by the contract as a whole.'" No particular form of words is required and, inde,d, the word 'warranty' need not be used. 133 The test for detetmining whether a given term is properly characterized as a promissory warranty has been put as follows: 134 'It is a question of construction, and the presence or absence of the word "warranty" or "warranted" is not conclusive. One test is whethet it is a term which goes to the root of the transaction; a second, whether it is descriptive of or bears matetially on the risk of loss; and third, whether damages would be an unsatisfactory or inadequate remedy.' In Yorkshire Insurance Co Ltd v Campbell 135 a proposal form misstated the 18.63 pedigree of the insured horse. The policy incorporated the proposal form and contained a warranty of the truth of all statements rherein. Deliveting the judgment of the Ptivy Council, Lotd Sumnet observed: 'Prima facie, words qualifying the subject matter of the insurance will be words ofwarranty"36-t he pedigree so qualifying as it alone indicated what kind of horse was insured and defining the risk. Similarly, a requirement in a floating policy that a declaration

131 That is not to say that appropriate wording could not transform the obligation into a promissory warranty, merely that in the absence of such wording a premium payment obligation

would not be characterized as a promissory warranty.

'" 1»omson v Weems (1884) 9 App Cas 671, 683. '" MIA 1906, s 35(1); Dawsons Ltd v Bonnin [1922J 2 AC 413, 428-9; Kirkaldy UJ 6- Sons Ltd v walker [1999J Lloyd's Rep lR 410,421. 134 HIH Casualty & General Insurance Ltd v New Hampshire Insurance Co [2001] 2 Lloyd's Rep 161, para 101 per Rix L]. See also 100mey v Banco Vittzlicio de Espana SA de Seguras y Reasseguros

[2004J EWCA Civ 622, [20051 Lloyd's Rep IR 423, paras 40-42. 135 [1917JAC218. '" ibid 224.

539


Promissory "Wa'rranties

be made 'as soon as possible' after the sailing of the relevant vessel has been held to be a warranty in the light of evidence that compliance affected the insurer's opportunity to obtain reinsurance and, therefore, the risk assumed."'ln Kirkaldy (]) & Sons Ltd v Walker,138 a policy for the insurance of a floating dock for towage labelled certain terms as 'conditions' and others as 'warranties'. One of the terms labelled a condition required the dock to undergo a condition survey. Notwithstanding the normal contraty inference ro be drawn from the labelling, the term was accepted to be a warranty. The term made no sense unless it operated as a condition precedent to insurers' liability.139

only if inconsistent.'" The implied warranty of seaworthiness will not be excluded by an express provision relating to one aspect of seaworthiness.'"

18.64 In contrast, where the purpose of a requirement that insured property be

marked in a certain way is solely to identifY which property is insured rather than to describe the nature of that property, there is no warranty, and noncompliance results merely in the non-attachment of the policy to the property not duly marked. 140 A statement that a vessel is an 'American ship' constitutes a warranty that the vessel is of that nationality'41 and also that the vessel has on board all documentation that a vessel of that narionality ought to carry.'42 In The Tiburon, '43 a warranty thar a vessel was under German flag, ownership or management was broken as the flag was Liberian, the owner a Panamanian company, '44 and the management Swiss. However, the language or style of the name of a vessel cannot be construed as a warranty of its nationality. "5 18.65 An express warranty must be stated in the policy or in a document incorporated

in the policy in accordance with ordinaty contract law principles."6 Warranties may, however, be implied, "7 an express warranty excluding an implied warranty

Union Insurance Society o/Canton Ltd v George Wills & Co (1916] 1 AC 281. [1999] Lloyd's Rep IR410. 139 See also Zeus Tradition Marine Ltd v Bell (The Zeus) [2000] 2 Lloyd's Rep 587. 140 Overseas Commodities Ltd v Style[1958] 1 Lloyd's Rep 546. 141 Baring v Cklggett (1802) 3 Bos & Pu1201; Lothian v Henderson (1803) 3 Bos & Pu1499; Baring v Christie (1804) 5 East 398. No warranty of nationality or that nationality will not be changed during the currency of the policy will be implied: MIA 1906, s 37; Dent v Smith 137

138

(1869) LR 4 QB 414. Institute and International hull clauses, however, provide for automatic

(3) Interpretation and Breach Assuming that a term is a promissory warranty, a question of interpretation 18.66 arises to determine precisely what it requires and, thereby, what amounts to a breach.

(a) Interpretation generally Promissoty warranties should in principle be interpreted in the same way as any 18.67 other contractual term, in accordance with the intention of the parries to the contract as revealed by the words chosen in the light of the context in which the conrract was concluded. Accordingly, where cargo that was warranted surveyed 'immediately' prior to shipment was in fact surveyed up to two weeks earlier, it was held that the term 'immediately' could not be read literally. Such a construction 'would be unrealistic and would overlook the actual operating conditions under which goods are surveyed and shipped. Although warranties in marine insurance are to be strictly construed, the word "immediately" must be given a reasonable interpretation l • 15o

Likewise, in Colby v Hunter,'51 a vessel insured at and from Hamburg was 18.68 warranted 'in port' on 19 October, on which date the ship was in the port of Cuxhaven, some ninety miles below Hamburg. Lord Tenretden CJ held that the warranty should be construed as requiring the vessel to be in the port of Hamburg on 19 October. The phraseology 'safe on the 19th of October' would have been appropriate for the literal interpretation suggested by the assured. Such literalism did not, however, represent the true interpretation of the warranty. Again, in Overseas Commodities Ltd v Style,152 tins of pork were warranted 'marked by manufacturers with a code for verification of date of manufacture'. McNair J rejected an argument that the code did not need to be accurate. 'Verification, in its ordinaty sense, means the establishment of the truth or correctness of a particular facr.'''' The assured was unsuccessful also in arguing that the warranty should be applied severally, rendering the insurer liable in respect of those tins correctly marked. The contract of insurance was not several

termination on change of a vessel's flag, see 19.67 below. 142 Lothian v Henderson (1803) 3 Bas & Pul 499. An express warranty of the neutrality of a vessel imports a condition that the assured will ensure so far as possible that papers establishing neutral status will be carried: MIA 1906, s 36(2). 143 Seavision Investment SA v Evenett & Clarkson Puckle Ltd (The Tiburon) [1990) 2 Lloyd's Rep 418. 144 It was argued that the corporate veil should be pierced· bur held that, even if it were, the beneficial owner of the vessel was French. 145 Cklpham v Cologan (1813) 3 Camp 382. 146 MIA 1906, s 35(2); Bensaude v Thames & Mersey Marine Insurance Co Ltd [1897J AC 609. 147 MIA 1906, s 33(2). However, outside the established implied warranties codified in the 1906 Act, implied warranties are conspicuous by'their absence, and it is/difficult to imagine a condition precedent satisfying any of the bases for implication of terms ioro contracts.

,., MIA 1906, s 35(3). Sleigh v 7jser [1900] 2 QB 333. See also Quebec Marine Insurance Co v Commercial Bank of Canada (1870) LR 3 PC 234. Seaworthiness is discussed in Ch 19 below. 150 Berm 6' Koppstein Inc v Orion Insurance Co Ltd (1960) 1 Lloyd's Rep 276, 280 per District Judge Herlands (District Court of New York). See also Havelock v HanciLl (1789) 3 TR 277; Australian Agricultural Co v Saunders (1875) LR 10 CP 668; Simmonds v Cockel! [1920] 1 KB 843. 151 (1827) M & M 81. 152 [1958J 1 Lloyd's Rep 546. 153 ibid 557.

540

541

149


Promissory Warranties

and the broken warranty discharged the liability of the insurer on that contract. Similatly, breach of a warranty of 'no contraband of war' discharges the insurer in respecr of the whole cargo, including such goods as are nor contraband. 154

broken, Ashurst J remarking that the 'very meaning of a warranty is to preclude all questions whether it has been substantially complied with; it must be literally so' .'62 Strict compliance is, however, a double-edged sword; it is required, bur it suffices. Laing v Glover163 concerned a statutory requirement to sail in convoy,164 likened by the court to a warranty. Having initially sailed witb a convoy, the vessel was driven back into the port of clearance by adverse weather and then sailed again in isolation. It was held that the initial sailing satisfied the warranty and subsequent events were irrelevant. In Hyde v Bruce, 165 a warranty that a ship had twenty guns was held satisfied by the presence of the guns despite a crew of less than half the number required to man them.

18.69 In Pittegrew v Pringle,155 a vessel was warranted not ro sail after I September, the

policy providing that the vessel was deemed ro sail when ir cleared customs provided ir was then 'ready for sea'. The vessel duly cleared customs in time and sailed down river with sufficiently light ballast ro cross the bar at the river mouth after which further ballast necessary for the sea would be loaded. It ran aground in the river and did not load the extra ballast until 4 September, ultimately proceeding our ro sea on 8 September. The Court of King's Bench held the sailing warranty broken because the vessel had not been 'ready for sea' in respect of ballast until after I September. It is, however, strongly arguable that the phrase 'ready for sea' should have been construed by reference ro the port in question, the construction adopted rendering the deemed sailing provision otiose.

18.70 The courtS will not, however, extend a warranty beyond the requirements

demanded by its rerms and any ambiguity in a warranty for which the insurer is responsible will be resolved in the assured's favour under rhe contra proftrentem rule. 15' Consequently, a warranty that a vessel will be pur ro a certain use will not be construed as excluding other uses 157 and insurance'on the cargo, being 1031 hogsheads of wine' imports no warranty that the wine is the only cargo.'58 In Hyde v Bruce,159 the insurer argued in vain rhat a warranty rhat a ship had twenry guns meant the ship was of the force of twenty guns, including a crew sufficient ro work that number. Insread, the court held that the mere presence of the guns sufficed.

(b) Breach 18.71 Once the requirements of a promissory warranty have been ascertained, any departure will constitute a breach. A warranty must be strictly complied wirh. 160 In De Hahn v Hartley,16' a vessel was warranted to sail with a crew numbering at least fifty. Having safely completed the first part of the voyage wirh a crew of only forty-six, six more crew were taken on. The warranty was held to be

It is unclear whether the maxim de minimis non curat lex applies to breaches of 18.72 promissory warranties. That its application is at least not unarguable was indicated in Overseas Commodities Ltd v Style.'66 A warranry requiring marking of insured tins of pork burts was broken in respect of a substantial number, said to exceed 'any number which could be disregarded under the de minimis rule'.'67

A breach of warranry must be actual and not intended. In Simpson SS Co v 18.73 Premier Underwriting Association Ltd.,168 a vessel was warranted lnat to proceed east of Singapore except to Java and Australasia'. The vessel embarked upon a voyage to an unauthorized place east of Singapore and was lost by perils of the sea off the coast of Tunis. Bigham J held that there had been at most an intention to proceed into prohibited waters 'and an intention to commit a breach of course does not itself constitute a breach'. Construing the warranry tightly, he remarked that 'the only prohibition was that the vessel should not navigate watets east of Singapore, and she never did' .169 Similarly, in Baines v Holland, '70 a warranry that a vessel should sail from 18.74 Quebec upon the second part of a voyage by a certain date was held not to be infringed by a failure to commence the first part in reasonably sufficient time to arrive at Quebec by the stipulated departute date. The court held that the warranry simply had no application to the first part of the voyage during which

ibid 346. 163 (1813) 5 Taunr 49. Pursuant to the Convoy Act 1803, 43 G3, C 57. 165 (1782) 3 Doug1213. The case is queried below. '" [1958J 1 Lloyd's Rep 546. 167 ibid 557 per McNair]. Application of the rule to a promissory warranty was raised in argument but did not require resolution in Bennett v Axa Insurance pic [2003] EWHC 86 (Camm), [2004J Lloyd's Rep IR 615. For an application of the de minimis rule to a proviso in a consequential loss policy, see Glengate-KG Properties Ltd v Norwich Union Fire Insurance Society Ltd [199611 Lloyd's Rep 614, 620. 16' (1905) 10 Com Cas 198. >6, ibid 201. cfMIA 1906, s 46(3). "0 (1855) 10 Exch 802. 162

164

154

Seymour v London & Provincial Marine Insurance Co (1872) 41 LJCP 193.

ISS

(1832)3B&Ad514.

156 Provincial Insurance Co v Morgan [1933J AC 240. Ambiguities must, however, be genuinely present and not manufactured to enable the term to be restricted through the contra proferentem rule: see 8.51 ff above. '" [1933J AC 240. See also Shaw v Robberds (1837) 6 A & E 75. IS' Muller v Thompson (1811) 2 Camp 610. 15' (1782) 3 Doug1213. The case is queried below. 160 MIA 1906,,33(3). '" (1786) 1 TR 343.

542

543

Attachment and Alteration 0/Risk the vessel was lost after the date stipulated for leaving Quebec. On such reasoning, promissOly warranties are not susceptible ro anticipatory breach.

(c) Timing 18.75 Whether a warranty has been broken may depend upon the time at which compliance is required. In Forshaw v Chabert,171 a vessel was insured on a voyage from Cuba to Liverpool. The insured vessel sailed with a crew of ten, only eight of whom had signed on for the whole voyage. The other two left the ship at Jamaica, two replacements for the remainder of the voyage being taken on. When the vessel was subsequently lost, it was held that an implied warranty of seaworthiness required the vessel ro commence its voyage with a full complement for the whole voyage. The warranty had, therefore, been .broken and the underwriters were not liable. 18.76 In Blackhurstv Cockell,172 a vessel was insured lost or not lost, 'warranted well


Thornton'76 concerned insurance of a building where the description of the premises was held to be a warranty. This description was accurate when transmitted to brokers for the purpose of procuring insurance, but an extra srorey was thereafter added ro the building, the insurance being concluded while such work was in process. The building was subsequently destroyed by fire. The court held that rhe warranted description had to be true at the time of conclusion of the insurance, or at least that any alteration should not have increased the risk. Moreover, it was further held rhat rhe description constituted a warranty 'that rhe assured would not, during the time specified in the policy, volunrarily do any thing to make the condition of the building vary from this description, so as thereby to increase the risk or liability of the underwriter'.177 Otherwise the assured could change the nature of the insured property, recovering in the event of loss an enhanced indemnity, whilst paying a premium calculated on a different risk.

December 9th'. It transpired that the vessel had been lost at about 8.00 am on 9 December, the insurance being effected that afternoon. Buller J held that a warranty 'must he literally complied with; and if it be so, that is sufficient'. Consequently, the vessel having been safe at some time on the day in question, the warranty was satisfied and the undetwriters were liable. CodifYing this decision, section 38 of the Marine Insurance Act 1906 now provides that:

A continuing warranty, which requires the assured to guarantee a state of facts or 18.79 performance of certain acts throughout the duration of the policy, clearly carries a greater threat of breach and consequent deprivation of cover. It is regarded as a draconian term, with the result that a warranty will not be interpreted as of continuing effect in the absence of the clearest wording. '78

''Where the subject-matter insured is warranted "well» or "in good safety" on a

(d) 'Uninsured' warranties

particular day, it is sufficient if it be safe at any time during that day.'

Insurers may require the assured to retain a proportion of rhe risk in order to 18.80 encourage solicitude over the safe prosecution of the insured adventure. This purpose would be defeared if the assured were free to cover rhe retained proporrion under a separate policy. Consequently, the specified proportion will be (warranted uninsured'.

18.77 Similatly, an express warranty of neutrality is satisfied if the insured property is

neutral at the time of inception of the risk, even if thereafter it changes status: 173 'The warranty is, that things stand so at the time: not that they shall continue"74 and no continuing neutrality warranty will be implied, although there is an implied condition that 'so far as the assured can control the matter, its neutral character shall be preserved during the risk'. 175 18.78 A warranty may, however, be construed to have a continuing effecr. Sillem v

171 (1821) 3 Brad & B 158, approved in Quebec Marine Insurance Co v Commercia! Bank of Canada (1870) LR 3 PC 234. 172 (I789) 3 TR 360. The nature of the implied condition is open to doubt. Since it gives effect to a promissory warranty, the neutrality of the vessel may be an implied condition precedent to the attachment of risk. However, the language of s 36(2), according to which breach of a second implied condition relating to a promissory warranty of neutrality affords the insurer the right to avoid the contract, militates against construing a breach of an implied condition as automatically discharging the insurer's Habilit}dn principle, automatic discharge is preferable as consistent with the doctrine of promissory warranties, but the natural reading of the Act favoW's the alternative analysis. 173 MIA 1906, s 36(1); Eden v Parkison (1781) 2 Dougl 732. '7' ibid 736 per Lord Mansfield. 175 MIA 1906, s 36(1).

544

A condirion in a hull policy 'that the assured shall keep one-fifth uninsured' 18.81 requires the assured ro remain its own insurer for one-fifth of the value of the insured vessel, breach affording the insurer a complete defence to a claim arising out of a subsequent casualty.'79 In derermining whether the assured under a valued policy has broken a warranty to mainrain uninsured a specified proportion of the value of the property, the court will have regard to the agreed rather than the real value. '80 In General Insurance Co o/Trieste Ltd v Cory,'" a vessel valued at £12,000 was 18.82

(1854) 3 El & B1868. 177 ibid 882 per Lord Campbell q. Hussain v Brown [1996] 1 Lloyd's Rep 627 (question on a proposal form in the present tense interpreted as not having continuing import); Kler Knitwear Ltd v Lombard General Insurance Co Ltd [20001 Lloyd's Rep IR 47. 179 Muirhead v Forth & North Sea Steamboat Mutual Insurance Association [1894] AC 72. '80 ibid. 181 [18971 1 QB 335. '76 178

545

Attachment and Alteration ofRisk insured under time policies for £9,600 with the balance of £2,400 being warranted uninsured. A syndicate that had subscribed to a policy in the sum of £5,000 then ceased business and the assured, estimating the value of that policy as no more than £2,000, took our a further policy for £3,000 to make good the shortfall. Mathew J declined to hold that the resulting nominal possibility of recovety in excess of £9,600 broke the warranty. Given the circumsrances, the extra policy in no way contradicred the purpose of the warranty, namely that the assured should retain for his own account a certain proportion of the risk. Were the undelwriterS' argument correct, no matter what proportion of the cover

failed in reality, rhe assured ought to do norhing, although any prudent assured would maintain the real value of his insurance cover. A literal interpretation of the warranty might have favoured the underwrirers, 'but it is possible by a strict construction to reach the point of absurdity, which would be done if the construction were so strict as to put the owner under a greater liability than that imposed upon him under the original policy'.182 18.83 Some doubt surrounds the question of whether a 'warranted uninsured' term is broken by obtaining a policy binding in honour only. In Roddick v Indemnity Mutual Marine Insurance Co Ltd, ,as the issue arose of whether a warranty of £5,000 'uninsured' in a £5,000 valued policy on property valued at £10,000 was infringed by a £2,600 honour policy on disbursements. The assured won on the basis that the cover of the two policies did not overlap, but different views emerged obiter as to whether conclusion of an honour policy would in principle break an 'uninsured' warranty. At first instance, Kennedy J persuasively argued that the warranty would be broken by any insurance treated in practic) as effective: The main, if not the whole, object of the warranty is to give the insurer a pledge of

the good faith of the assured and of his diligence in preserving rhe thing assured by


law. 186 The issue remains to be resolved authoritatively, although a later dictum of Lord Alverstone CJ supports the view of Kennedy J. '.7

(e) The additional insurances warranty under the Institute and International hull clauses The Institute and International hull clauses stipulate certain permitted additional 18.84 insurances,188 These cover: disbursements, managers' commissions, pronts) or

excess or increased value of hull and machinery; freight, chartered freight, or anticipated freight, insured for time; freight or hire under voyage contracts; anticipated freight where the vessel sails in ballast and not under charter; time charter hire or charter hire for a series of voyages; premiums; returns of premiums; and insurance of certain excluded risks. In respect of most of these insurances, a limit is placed on rhe value of the additional insurance permitted. It is a breach of promissory warranty for any insurance on the specified interesrs in excess ofthe permitted amounts or any other ppi or similar honour insurance that includes the total loss ofthe vessel'·' to be effected to operate during the currency of the hull policy by or for the account of the assured, owners, managers, or mortgagees."o Thus, where a hull policy contained a warranty that freight insurance should not exceed a certain value, it was no defence that the transgressing freight insurance covered war risks excluded under the hull policy. '" For the warranty ro be infringed, the additional insurance must be 'effected'. 18.85 Where a second insurance provides that it will not come into force nor liability attach until payment of the premium, the Privy Council has held that the second insurance is not 'effected' until the premium is paid. '92 However, once the additional insurance has been effected, it would appear irrelevant that the insurer has a defence ro any claim. '93 Even retrospective avoidance of a policy does not expunge it from history and deny it has ever been 'effected'.'"

reason of his remaining his own insurer to the extent specified in the warranty. It was admitted in the course of argument, and could not but· be admitted, that a

claim under an 'honour' policy is regularly recognised and discharged by the underwriter as faithfully and as promptly as a claim under a policy which is not open to the same legal objection. 184 In the Court ofAppeal, however, Eve LJ observed that, even if the assured were certain to be paid, it was 'plain that [honour] policies did not constitute any legal security'.185 AL Smith LJ accepted that the warranty should be construed as requiring the assured to remain his own insurer for the stipulated amount, but was not satisfied that it would be contravened by a policy unenforceable at

ibid 342. 183 [1895] 1 QB 836, [1895] 2 QB 380. '" [1895] 1 QB 836, 839. 185 [18951 2 QB 380, 384.

182

546

186

ibid 387. Lord Esher MR reserved his opinion.

'" Thames & Mersey Marine Insurance Co Ltd v 'Gunftrd'Ship Co Ltd[191l] AC 529,538. 188 Institute Time Clauses HuUs (1/10/83), d 21.1; International HuH Clauses (01/11/03), d 24.1. 189 An additional ppi or other honour policy that covered only damage to the vessel falling short of a total loss would not constitute a breach of the warranty. An honour policy that covered damage without limitation would, however, break the warranty if, on its true interpretation, it covered such damage as would render the insured vessel a constructive total10s5. 190 Institute Time Clauses Hulls (l/10/83), cl21.2; International Hull Clauses (01111103), d24.2. 19' Samuel (P) & Co Ltd v Dumas [1924) AC 431. '" Equitable Fire & Accident Office Ltd v Ching W0 Hong [1907) AC 96. 193 Comrast]enkins v Deane (1934) 47 LlLRep 342 where a 'subsisting' second insurance was stated to require a policy under which the insurer could be called upon to pay. See also Home Imurance Co ofNew York v Gavel (I 928) 30 L1LRep 139, 194 Mackender v Feldia AG [1967] 2 QB 590, 603-4; Newtons of Wembley Ltd v Williams [1965] 1 QB 560.

547


Attachment and Alteration ofRisk 18.86 In contrast, potential overlap of a second insurance in a prohibited manner will

not necessarily be held to break the warranty. In Australian Agricultural Co v Saunders,'95 wool was insured under a fire policy 'in transit to Sydney by land only, or in any shed or store, or any wharf in Sydney, until placed on ship'. The policy provided that no claim was recoverable 'if the property insured be previously or subsequenrly insured elsewhere' unless wrirren notice of the second insurance was given to the insurer. The assured subsequently concluded a marine policy on the wool 'at and from the River Hunter to Sydney per ship and steamers and thence per ship or ships to London, including rhe risk of craft from the time that the wools are first waterborne and of transhipment or landing and re-shipment at Sydney'. The wool having been damaged by fire while warehoused at Sydney, the fire insurer sought ro evade liability on the basis that no notice ofthe marine policy had been given. The Courr ofExchequer Chamber held, however, that the clause in the fire policy was directed to genuine double insurance and should be construed as limited thereto. A conceivable overlap, for example with respect to damage sustained by fire on landing the wool, was insufficient. Bramwell B stated: 'I doubt whether a mere possibility rhat some portion of the risk covered by both policies might accidentally coincide consti-

movement occasioned by the partial weighing of a second anchor before delaying departure by reason of adverse weather conditions.'99 Even movement prima facie sufficient will not satisfY the warranty unless effected with the intention of prosecuting the voyage. In Sea Insurance Co v Blogg,2°O the insurance covered steamers 'sailing on or afterMarch 1'. By 10.00 pm on 29 Februaty, the vessel in question was ready to proceed to sea. The master, therefore, moved the vessel some 500 yards from the wharf into the river and anchored until morning, purring to sea after dark being prohibited by pilotage regulations. Although this manoeuvre saved some thirty minutes on 1 March, the sole purpose of the master's actions, according to the evidence, was to prevent his crew from going

ashore and getting drunk. In consequence, it was held that the ship sailed on I March, rendering the insurers liable for the subsequent casualty. Where the warranty requires the vessel ro 'deparr', the vessel must actually leave 18.89 port, resulting in a breach of warranty even where there is sufficient prosecution of the voyage within the porr to constitute a sailing. The warranty effectively excludes port risks. 2o ' (4) Causation

tutes such a double insurance as was meant. >196

18.87 The warranty is subject to a proviso that protects any mortgagee 'who has

accepted this insurance without knowledge of the breach. The precise meaning of the term 'acceptance' in this context is unclear. In The Sea Breeze, '97 the warranty was infringed by a policy for the account of the ship's managers and a mortgagee bank sought to avail itself of the proviso. However, two letters from the bank to the insurer asserring its entitlement to the insurance proceeds ';"ere held not to constitute 'acceptance' of the policy. Staughton J commented upon the 'vague' drafting of the proviso: 198 'The notion of the draughtsman may have been that it would be unfair if a mortgagee having advanced money to the shipowner, or left it outstanding on the faith of an apparently valid policy, were affected by a breach of warranty unconnected with the trading or operation of the vessel. But if that was the intention the draughtsman has by no means succeeded in saying it.'

There is no requirement of any causal link between a breach of promissoty 18.90 warranty and the loss in respect ofwhich the assured claims. 202 Thus, a failure to provide a twenty-four hour watch, as warranted, will afford an underwriter an unassailable defence against a claim for storm damage, regardless of the inability of any watchman, had one been present, to prevent the damage. 203 Although described as 'one of the less attractive features of English insurance law',204 the absence of any causation requirement merely reflects again the role of the warranty in insurance contracts. Promissory warranties serve to define the risk

covered and breach simply renders the adventure no longer that which the insurer agreed to cover. The insurer no longer being on risk, no question of a causal link between the breach and subsequent casualty can arise.

(j) Sailing warranties 18.88 Litigation has also arisen concerning promissoty warranties requiring a voyage to commence at a certain time. A requirement that a vessel 'sail' on or before a

cerrain date will not be satisfied by the weighing of one anchor and slight

'" (1875) LR 10 CP 668. 196 ibid 674. 197 Outhwaite v Commercia! Bank afGreece SA (The Sea Breeze) [1987] l'Lloyd's Rep 372. 198

ibid 377.

548

'" Ne&on v Salvador (1829) M & M 309. [1898] 2 QB 398. Contrast Cockran, v Fisher (1834) 2 Ct & M 581, affd (1835) 1 Cr M &

200

R809.

'" Moir v Royal Exchange Assurance Co (1814) 4 Camp 84, affd (1815) 3 M & S 461. Also another action on the same policy: (1815) 6 Taunt 241. Likewise if the warranty is to 'sail from' a port: Lang v Anderdm (1824) 3 B & Cr 495. '" Christin v Ditthell (1797) Peake Add Cas 141; Thomson v Weems (1884) 9 App Cas 671, 685; Wedderburn v Bell (1807) 1 Camp 1: Lane v Nixon (1866) LR 1 CP 412, 422-3. 203 Forsikringsaktieselskapet lIesta v Butcher [1989) AC 852. 204 ibid 893 per Lord Griffiths.

549


(5) Materiality 18.91

A promissory warranty serves to define the risk insured. Moreover, freedom of contract admits of no objective constraint on what the parties can make the subject-matter of a promissory warranty. Provided the term, on its true interpretation, is indeed a promissory warranty, it is irrelevant how remote from risk definition the subjecr-marrer of the rerm would be in the absence of such characterization. In this connection, a strict distinction must be drawn between

promissory warranties and rhe doctrine of urmost good faith. The concept of materiality, which serves to delineate the scope of duties of utmost good faith by reference to an objective standard of relevance, has no role to play in the context of warranties: .. . it is a first principle of the law of insurance, on all occasions, that where a representation is material it must be complied with-if immaterial, that immateriality may be inquired into and shown; but that if there is a warranty it is part of the contract that the matter is such as it is represented to be. Therefore the materiality or immateriality signifies nothing. The only question is as to the mere fact. 20s

18.92 In Mackay v London General Insurance Co Ltd,20' answers ro questions on a

proposal form constituted warranties in the resulting contract of third party motor liability insurance. The assured stated that no other insurer had ever refused the assured such insurance or required an increased premium or special conditions. In fact, three years previously, the assured's motor bicycle insurer had required an excess. This qualified as an increased premium or special condition. Swift J held that, consequently, the insurer had an unimpeachable defence, despite the fact that, had the information been disclosed prior to conclusi~n of the contract, ir would have been disregarded by the insurer as irrelevant. (6) Cure 18.93 Consistently with the irrelevance of an absence of any causal link, breach of

a promissory warranty cannot be cured. Section 34(2) of the Marine Insurance Acr 1906 states that: 'Where a warranty is broken, the assured cannot avail himself of the defence that the breach has been remedied, and rhe warranty complied with, before Ioss.'207 It was, for example, no defence in De Hahn v


Hartlej08 that the warranted number of crew had been recruited before rhe vessel sailed on the leg of the voyage during which the casualty occurred. (7) Breach Excused

In principle there is no excuse for breach of a promissoty warranty since, 18.94 regardless of the reason for non-compliance, the risk has altered. It was accordingly irrelevant in Hore v Whitmoreo, that the Governor of Jamaica restrained the vessel from sailing by the warranted date. Nevertheless, by virtue of section 34(1) of the Marine Insurance Act 1906, non-compliance is excused where either a change of circumstances renders a warranty inapplicable to the circumstances of the contract or compliance becomes unlawful. (8) Waiver In The Good Luck,210 rhe Court of Appeal assimilated breach of a promissoty 18.95 warranty with a repudiatory breach in general contract law, holding that breach gave rise to a righr of election rather than triggering an automatic discharge. As already seen, the House of Lords overruled that decision in favour of a literal reading of section 33(3) of the Marine Insurance Acr 1906. For the Court of Appeal, a significant difficulty with a literal reading of section 33(3) was the statement in section 34(3) of the Act that the insurer can waive a breach of warranty. If the remedy for breach is automatic discharge, there would appear to be nothing to waive. According ro Lord Goff, however, the effect of a waiver as contemplated by section 34(3) is simply that 'to the exrent of the waiver, the insurer cannot rely upon the breach as having discharged him from liability'.211 In other words, the waiver referred to in section 34(3) is waiver by equitable estoppel barring the insurer from raising the breach of warranty against the assured.'" There is no scope for waiver by election.'" In the context of breach of promissory warranty, waiver by equitable estoppel 18.96 requires the insurer to represent unequivocally that it will not invoke the automatic discharge against the assured. Such a representation requires the insurer to lmow of the assured's actual breach, or the representation will need to be that the insurer will not rely on any breach whatsoever of the warranty.214 The latter

.------_._-_. Newcastle Fire Insurance Co. v Macmorran 6- Co (1815) 3 Dow 255, 262 per Lord Eldon LC. See also Kenyon v Berthon (1778) 1 Dougl 12n; Pawson v watson (1778) 2 Cowp 785: Blackhurst v Cockell(1789) 3 TR 360; Anderson v Fitzgerald(1853) 4 HLC 484; Thomson v Weems (1884) 9 App Cas 671, 683-4, 689; Yorkshire Imuranee Co Ltd v Campbell [1917J AC 218; Cadogianis v Guardian Assurance Co [1921] 2 AC 125; Dawsom Ltd v Bonnin [1922] 2 AC 413, 429; Allen v UniversalAutomobile Imuranee Co Ltd(1933) 45 LlLRep 55. 20' (1935) 51 LlLRep 201. 207 cf MfA 1906, s 46(1) (deviation discharges an insurer regardless of whether the ship regains the route before occurrence of a casualty). 20$

(1786) 1 TR 343. 209 (1778) 2 Cowp 784. 210 Bank of Nova Scotia v Hellenic Mutual W0r Risks Association (Bennuda) Ltd (The Good Luck) [1990J 1 QB 818, rvsd [1992J 1 AC 233. 208

211 ibid 263. m Kirkaldy UJ & Sons Ltd v walker [1999J Lloyd's Rep 410, 422; HIH Casualty & General Insurance Ltd v AXA Corporate Soludom [2002J EWCA Civ 1253, [2003J Lloyd's Rep lR 1.

213

Contrast the doctrine of waiver in the context of the avoidance for breach of a

pre~formation 214

duty of utmost good faith, see 4.113-4.116 above.

Agapitos LaW Bank (He/las) SA v Agnew (The Aegean) (No 2) [2002J EWHC 1556

(Comm), [2003J Lloyd's Rep lR 54, para 73.

550

551

Attachment andAlteration ofRisk


is unlikely. The insurer need not in fact know that in law its liability under the policy is discharged, but must appear in the eyes of the assured to know this legal consequence of the assured's act. There can be no apparent waiver of a right that one does not appear to know one enjoys. The assured must then rely 215 on the representation so that it would be inequitable to go back on it. This reliance requires an understanding of the insurer's legal position. The need for an apparent appreciation of its legal position on the part of the insurer and knowledge of the assured was discussed by Tuckey LJ in HIH Casualty & General Insurance Ltd v AXil Corporate Solution?-" as follows:

unforgiving, and disproportionate. A variety of different responses have emerged.

As the Judge put it 'the essence of the plea [of estoppel] must go to the willingness of the representor to forego its rights'. Unless the representation carries with it some apparent awareness of rights it goes nowhere: the representee will not understand the representation to mean that the representor is not going to insist upon

his rights because he has said or done nothing to suggest that he has any.

What I have said illustrates the difficulty in establishing this type of estoppel when neither party is aware of the right which is to be foregone. A representor who is

unaware that he has rights is unlikely to make a representation which carries with it some apparent awareness that he has rights. Conversely a representee who is not aware that the representor has a particular right is unlikely to understand the representation to mean that the representor is not going to insist on that right or abandon any rights he might have unless he expressly says so.

18.97 In Kirkaldy OJ & Sons Ltd v Walker,'" a warranty required both a towage survey

and a condition survey. Only a towage survey was carried out. The towage survey report was tendered to the insurers and acknowledged by the deputy underwriter (the underwriter being away on holiday) as 'Noted and Agreed'. This was held not to be a waiver of the requirement for a condition sUrvey. According to Longmore J: 218 'The clause did not require the surveyor surveys to be shown to underwriters: no insurer (let alone his deputy) can be~expected to carry in his mind all the terms of all the insurances currently operative. It will only be if the insurer (or his deputy) addressed his mind to the question of the absence of a condition survey that any unequivocal representation could begin

. ,

to anse.

(9) Mitigating the Law of Promissory Warranties 18.98 As the preceding discussion illustrates, a promissory warranty, like any condi-

tion precedent, is capable of operating in a manner that may appear harsh,

21S Motor Oil He/las (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd's Rep 391, 399. '" [2002] EWCA Civ 1253, [2003] Lloyd's Rep IR 1, paras 21-22. '" [1999] Lloyd's Rep IR 410. '" ibid 423.

552

(a) Contractual drafting Apart from promissoty warranties implied by statute, terms have the status of 18.99 promissory warranties only ifsuch is the true interpretation of the contract. The parties may, therefore, elect not to make a particular term a warranty, or may

reduce the impact of the common law of warranties. Navigation limits Hull policies are subject to limitations on navigation, deny- 18.100 ing cover in the event rhat the insured vessel should enter specified waters. Such limitations have traditionally been expressed as promissoty warranties. Under the International Hull Clauses (01111103), these limitations are set out as part of the srandard clauses and operate as suspensive conditions. 21 ' Consequently, the entry of an insured vessel into prohibited waters without the prior agreement of insurers suspends cover for the duration of the vessel's sray in such waters but cover resumes once the vessel leaves such waters. A similar approach applies to towage. The International Hull Clauses (011111 18.101 03) deny cover in the event of the insured vessel being towed 'except as is customaty (including customary towage in connection with loading or discharging) or to the first safe port or place when in need of assistance' or undertaking towage (or indeed any salvage) services 'under a contract previously arranged by the Assured andlor Owners andlor Managers andlor Charterers'.220 The insured vessel remains free to offer emergency salvage services either withOut any contract or on the basis of a salvage contract concluded on the spot, normally by the master. The equivalent limitation on cover under the Institute hull clauses takes the form of a promissoty warranty,22! while under the International Hull Clauses (01111103) it is again a suspensive condition.222 Severable cover A policy may be structured on a severable basis, with the 18.102 discharge of liability triggered by a breach of promissory warranty confined to the severable part of cover to which it relates and leaving cover intact with respect to the remainder of the policy. Such confined operation of a warranty may arise in three ways.

First, under a composite policy, each co-assured has the benefit of a separate 18.103 insurance contract or severable cover under the same contract. 223 The automatic

'" International Hull Clauses (OIl! lI03), clIIO.I, 32, I l. 220

ibid d 10.2.

221

Institute Time Clauses Hulls (1/10/83 and lIII/95), cI I. I.

222

International Hull Clauses (01111/03), d 11.

553

223

See 2.78 above.


Attachment and Alteration ofRisk discharge of cover triggered by a breach of warranty by one co-assured is confined to the insurance of that co-assured. Secondly, the composite policy approach may be adopted in respect of several items of property insured under the same policy. At common law, infringement of a warranty in a fleet policy by one vessel will terminate cover for the entire fleet, preventing the assured from recovering in respect of the loss of a different vessel entirely. However, this is negated by clause 26 of the International Hull Clauses (01111/03), which deems each vessel insured under the policy to be the subject of a separate contract. 18.104 Thirdly, where different categories of cover are offered under the Same policy, promissoty warranties contained in the policy may, on the true interpretation of the policy, apply selectively to the different categories of cover. In Printpak v AGF Insurance Ltcl,22' a 'commercial inclusive policy' comprised a number of sections, each offering different cover. Insurers sought to reject a claim under section A of the policy, which offered cover on stock and goods against fire and associated perils, by reason ofa breach ofa burglar alarm warranty. The Court of Appeal held, however, in favour of the assured. According to Hirst L], 'it does not follow from the fact that the policy is a single contract that it is ro be treated as a seamless contractual instrument'. 225 The structure of the policy indicated that the burglar alarm warranty applied only to section B, which offered cover

against theft. 18.105 Held covered clauses These clauses, which preserve cover (usually subjecr to certain conditions) notwirhstanding an event that triggers an automatic discharge of liability, are discussed later in this chapter. 226

(b) Alternative interpretations 18.106 The term 'warranty' is ambiguous and its true meaning in context may require careful consideration. 227 Although a promissory warranty defines the essence of the risk covered, other terms, which may be described ;as warranties, serve

different functions. 18.107 Exclusion clauses traditionally were drafted as warranties. Thus, the phrase 'warranted free from capture and seizure' means simply that the insurer excludes liability for the perils of capture and seizure, but the occurrence of such a peril does not discharge the insurer's liability. The assured remains entitled to claim in respect of losses outside the exclusion whether arising before or after the events which constitute the excluded peril. The insurer is never completely off risk, either temporarily or permanently.

A suspensive condition stipulates preconditions to cover. Should the precondi- 18.108 don cease to be satisfied, cover is suspended until it is satisfied once more, at which point cover reattaches. Coutts are attracted by this interpretation as a means of mitigating the harsh, although logical, effecrs of the promissory warranty doctrine. Thus, in Dawson v Mercantile Mutual Insurance Co Ltcl,22' the Supreme Court ofVictoria declined to view a term as a promissory warranty in view of: . . . the utter unreasonableness of a provision forfeiting the entire policy for an act which may not in any degree increase the risk of loss or accident and which may have no relation to the loss in fact claimed for. On the other hand, if the condition simply means to exclude liability for accidents not within the risk, it gives an

intelligible meaning to the [policy] and is in itself a reasonable and natural safeguard. Likewise, in The Barneell 11,229 it was regarded as 'significant' that noncompliance with a 'warranted' requirement had no bearing on the loss.

It should be noted, however, that the suspensive condition does not respond to 18.109 the full perceived harshness of the promissory warranty. Cover is indeed suspended rather rhan terminated, but causation is irrelevant to both types of term. Under a suspensive condition, an insurer is not liable for any loss or damage incurred during the suspension of cover irrespective of whether rhere is any causal link between rhe reason for the suspension and the Joss or damage incurred. A suspensive condition responds only to the inability to cure a breach of warranty. A suspensive condition interpretation has been applied to requirements, drafted 18.110 as warranties, that a road vehicle be fitted with a specified security system,"O that a cash kiosk be attended and locked at aU times during business hours,231 that a night watchman be stationed on board a vessel between certain hours,232 and that fire-fighting equipment is inspected by a specified date. 233 Similarly, courts have construed restrictions on the use of insured property as prescribing the circumstances during which the insurer is on risk rather than as a condition precedent to all furure liability on the contract. In such a case, whether the

228

[1932) ViR 380, 388 per Mann J.

229

Century Insurance Co o/Canada v Case Existological Laboratories Ltd (The BamcellI!) (1984)

150 DLR (3d) 7, 15 (Supreme Court of Canada). 230 231

De Maurier Oewels) Ltd v Bastion Insurance Co Ltd [l967] 1 Lloyd's Rep 550. CTN Cash & Carry Ltd v GeneralAccident Fire 6- Life Assurance Corp pic [1989] 1 Lloyd's

Rep 299. m

'" [1999] Lloyd's Rep lR 542.

225

ibid 546.

226

See 18. 11 Off below.

227 Roberts v Anglo-Saxon Insurance Association 'Ltd (1926) 26 LlLRep'154, 157; Morgan v Provinciallmurance Co Ltd [1932] 2 KB 70, 79-80.

554

Century Insurance Co ofCanada v Case Existological Laboratories Ltd (The Bamcellll) (1982)

133 DLR (3d) 727 (Court of Appeal of British Columbia), affd (1984) 150 DLR (3d) 7 (Supreme Court of Canada). 233 Kler Knitwear Ltd v Lombard General Insurance Co Ltd [lOGO] Lloyd's Rep IR 47.

555

Attachment and Alteration ofRisk insurer is liable depends upon whether the restriction on use is being infringed at the time of the casualty.234 This approach may be contrasted with the older case of Colledge v Harty,235 in which a restriction on the sailing of a ship ro or

Held Covered Clauses

9

from certain ports was construed as a warranty despite argument that its true interpretation was as an exception. The vessel having infringed the restriction, the COUtt was influenced by, as it saw, the impossibility of the policy ever subsequently attaching, despite the fact that, having sailed for a prohibited POtt, the vessel might thereafter have altered destination in favour of a voyage to 236 which the policy might have attached.

exercise of a liberty granted to shipowners or charterers under the contract of affreightment. Where, by reason of circumstances beyond the control of the Assured either the contract of carriage is terminated at a port or place other than the destination named therein or the transit is otherwise terminated before delivery of

the goods as provided for in Clause 8 above, tben this insurance shall also terminate unless prompt notice is given to the Underwriters and continuation of cover is requested when the insurance shall remain in fOrce, subject to an additionalpremium if required by the Underwriters, either 9.1 until the goods are sold and delivered at such POft or place, or, unless otherwise specially agreed, until the expiry of 60 days after arrival of the goods hereby insured at such POft or place, whichever shall first occur,

or 9.2 if tbe goods are forwarded within- the said period of 60 days (or any

E. Held Covered Clauses 18.111 Although the doctrine of alteration of risk, as developed by the common law and pattially enshrined in the Marine Insurance Act 1906, may be viewed as inflexible and weighted heavily in the insurer's favour, ultimately it serves to provide cleat and cettain prima ficie rules and a basis for negotiation of tetms relaxing the severity of the default position. The 'held covered' clause is such a tetm. Undet a held covered clause, in the event of a stipulated occurrence, typically one that constitutes an alteration of tisk, the insurer's liability is not prospectively dischatged. Instead, the assured temains ('is held') coveted provided any specified conditions are fulfilled, usually notification of the event by the assuted to the insurer and agreement upon any appropriate additional premium and change of terms. (1) Examples of Held Covered Clauses 18.112 The modern Institute clauses contain a numbet of clauses that mitigate the a1retation of risk doctrine. With respect to the Institute Cargo Clauses (A), (B), and (C), the following three provisions must be consideted collectively:

agreed extension thereof) to the destination named herein or to any other destination, until termination in accordance with the provisions of

Clause 8 above. 10 Where, after attachment of this insurance, the destination is changed by the Assured, held covered at a premium and on conditions to be arranged subject to prompt notice being given to the Underwriters. Clause 10 is a classic held covered clause embtacing changes of voyage by the 18.113 assured, maintaining covet provided certain conditions are fulfilled. 23' Othet changes of voyage ate the subject of clause 9, which operates in a similar fashion although differently drafted ('shall also terminate, unless .. .'). Clause 8.3 is simply a waivet of certain alterations of tisk: the assured is held covered without any

conditions. 24o

The Institute Voyage Clauses Hulls contain the following 'Change of Voyage' clause: 241 2

8.3 This insurance shall remain in force (subject to termination as provided for

Held covered in case of deviation or change of voyage or any breach of warranty as to tOwage or salvage services, provided notice be given to the Underwriters immediately after receipt of advices and any amended terms of cover and any additional premium required by them be agreed.

above 237 and to the provisions of Clause 9 below) during delay beyond the

The Institute Time Clauses Hulls contain the following 'Breach of Warranty'

control of the Assured, any deviation, forced discharge, reshipment or transhipmen-0 38 and during any variation of the adventure arising from the

clause: 242 3

234 Roberts vAnglo-Saxon Insurance Association Ltd (1927) 27 LlLRep 313; Dawson v Mercantile Mutua/Insurance Co Ltd [1932J VLR 380 (Supreme Court of Victoria, Full Court); Morgan v Provincial Insurance Co Ltd [1932] 2 KB 70, m (1851) 6 Ex 205. 236 See also Birrell v Dryer (I 884} 9 App Cas 345 where the term 'warranted no St Lawrence between the 1st of October and'the 1st ofApril' was -assumed to be a promissory warranty and not merely a clause circumscribing the risk. Sed quaere were the point argued today. 237 For discussion of c1 8.1, see 17.11ff above. .236 The landing and re-shipping or transhipment of goods necessitated by an insured peril does not terminate cover even in the absence of an express term: MIA 1906, s 59.

556

Held covered in case of any breach of warranty as to cargo, trade, locality, towage, salvage services or date of sailing, provided notice be given to the

:239 See also Institute War Clauses (Cargo), d 6; Institute Strikes Clauses (Cargo), d 7. 240

See also Institute Strikes Clauses (Cargo), d 5.3, but contrast Institute War Clauses

(Cargo), el 5.5. 24' (1110/83 and 1111195), el2. Likewise Insrirure Voyage Clauses Freight (1/8/89 and 1111/ 95), el3. 242 (1/10/83 and 1111195), el 3. Likewise lnsritute Time Clauses Freight (1/8/89 and 11111 95), el 4.

557

18.114



Underwriters immediately after receipt of advices and any amended terms of

cover and any additional premium required by them be agreed. (2) Scope 18.115 The departures from rhe agreed adventure against which a held covered clause

offers protection inevitably depend upon the wording of the clause in question. Thus, a clause covering change of voyage and deviation cannot be invoked 243 where risk never attaches. (3) Additional Premium 18.116 Since held covered clauses maintain the underwriter's potential liability despite a departure from the risk agreed to be covered, not unnaturally the assured is

required by such clauses to pay an additional premium. The underwriter may not, however, demand an exrortionate further payment in order to escape from liability under the clause. The enritlement is ro a reasonable extra premium, commensurate with any increase in the risk,244 assessed by reference to the time of the event triggering the held covered clause. 245 Where no reasonable commercial rate exists for the altered risk, given full disclosure of all relevant circumstances, the held covered clause cannot operate. 246 What is reasonable on the facts 247 may entitle the insurer, at one extreme, to no additional premium

Of,

at the other extreme, to a further premium so high as to prevent the held covered clause from operating.

Hewitt v London Generallnsurance Co Ltd,24' the deviation was less significant than variations of the voyage permitted under the terms of the policy without any additional premium. Accordingly, the assured was able ro invoke a held covered clause without incurring any financial prejudice. In contrast, in Greenock Steamship Co v Maritime Insurance Co Ltd,24' the additional premium to which the insurer was entitled under the held covered clause exceeded the indemnity the assured sought to recover. The vessel embarked upon a stage of the voyage unseaworthy by reason of inadequate fuel. Consequently, to avert a danger of a total loss, the mastet burnt a quantity of the ship's fittings, spars and cargo. This constituted a general average sacrifice for which the insurer was

18.117 In

Wooldridge v Boydell (1778) I Dougll7; Simon, Israel 6- Co v Sedguiek [189311 QB 303; Maritime Insurance Co v Stearns [1901J 2 KB 912. See 18.06-18.07 above. 244 MIA 1906, S 31(2); Hyderabad (De""an) Co v Willoughby [18991 2 QB 530; Greenock Steamship Co v Maritimelnsurance Co Ltd [1903] 1 KB 367; Hewitt v London General Insurance Co Ltd(1925) 23 LlLRep 243: 245 Greenock Steamship Co v Maritime Insurance Co Ltd [1903] 1 KB 367, see below. 246 Liberian Insurance Agency Inc v Mosse' [1977] 2 Lloyd's Rep 560, 568. 247 What is a reasonable premium is always a question of fact: MIA 1966, s 88. 243

248

(1925) 23 LlLRep 243.

249

[190311 KB 367.

558

prima fiele liable under a clause holding the assured covered in the event of a breach of warranty. Bigham J held, however, that, where the breach was not discovered until after the ensuing loss, 'the parties must assume that the breach was known to the parties at the time it happened, and must ascertain what premium it would then have been reasonable to charge'.250 The unseaworthiness having rendered the resulting sacrifice inevitable, it would have been reasonable for the underwriter to charge a premium equal to at least the probable value of the sacrifice and, indeed, a further sum in respect of the increased risk of loss of the vessel itself. In the circumstances, therefore, the held covered clause was self-defeating. (4) Amendment ofTerms Where the held covered clause expressly so provides, continuation of cover may 18.118 be dependent upon amending the terms of the policy other than the rate of premium. In Liberian Insurance Agenry Inc v Mosse,251 the clause did not expressly envisage such an alteration and Donaldson J accordingly held that an amendment other than to the premium, on the facts an insertion of a free

from particular average exception, could not be effected in order to make the held covered clause work. In the modern Institute cargo clauses, clause 10 envisages amendment of the policy terms other than the premium, whereas clause 9 does not. Although there is no authority in point, it seems clear that an insurer may not 18.119 insist upon unreasonable amendments to the terms of the cover or take advantage of a held covered clause so as effectively to renegotiate the insurance ab initio in the light of developments since the formation of the contract. Just as the common law recognized that the insurer was confined to a reasonable additional premium commensurate to the alteration in the risk created by the event triggering the held covered clause, so amendments of othet terms of the cover should likewise reflect the enhanced risk and be proportionate and appropriate thereto. An unrestricted right to require amended terms of cover would be contrary to the natural interpretation of held covered clauses. 252 (5) Notice Old wordings of held covered clauses contained no mention of any notice 18.120 requirement. 253 Given, however, that such clauses can be invoked retrospectively

250 ibid 375. Followed in Mentz, Decker 6' Co v Maritime Insurance Co [1910] 1 KB 132. '" [1977J 2 Lloyd's Rep 560. 252 And also, to the extent there exists any post~formation duty of utmost good faith, contrary to the continuing obligation of the insurer to act with the utmost good faith towards the assured. 253 See, eg Hyderabad (Deccan) Co v Willoughby [18991 2 QB 530.

559

18.121



by the assured even after loss,254 and indeed even after the period covered by rhe policy has expired,255 rhere arises a potential two-fold prejudice to the insurer. First, the insurer may be deprived of extra premium income in that the assured may naturally be tempted to refrain from giving notice unless a casualty in fact occurs. Secondly, additional information coming to light or an alteration of circumstances in the interval between the assured learning of the alteration of risk and giving notice may render it either impossible or more expensive for the insurer to obtain reinsurance on the altered risk. Consequently, mOst modern held covered clauses not only provide for the giving of notice but also deal expressly with the required rapidity of such notice. In the absence of such provision, the courts will imply a term to the effect that the benefit of a held covered clause is conditional upon the giving of notice within a reasonable time.

nothing practicable could be done by the insurer were the giving of notice .accelerated. 257 In Liberian Insurance Ageney Inc v Mosse,258 Donaldson J stated as follows:

Thames & Mersey Marine Insurance Co Ltd v HT van Laun & Cil" concerned two differently worded cargo policies. The 'Liverpool policy' held rhe assured covered in case of deviation or change of voyage 'provided notice be given and any additional premium required be agreed immediately after receipt of advices'. The 'London policy' contained a held covered clause confined to deviarions but silent with respect to notifYing the insurer. The insured adventure involved the transportation of a cargo of cattle and sheep to a Chinese port, the bill of lading specifYing Taku. After the vessel had sailed, the consignees repudiated the contract of sale and, on 16 December, the master found Taku blocked by ice, a fact known to the assured on 17 December. That same day, and repeatedly during the following week, the assured direcred the master to hold his position. Appalling conditions on board, however, compelled the master to depart for a different porr on 25 December, the entire cargo ultimately being destroyed at sea for health reasons. Notice of deviation was communicated to the insurers on 30 December. The House of Lords held that such delay in communication inftinged both the express immediate notification requirement of the Liverpool policy and a requirement of norification within a reasonable time to be implied into the London policy.

18.122 What constitutes a reasonable rime in this context reflects the reinsurance opportunities available to the insurer on the facts. Where the loss has already occurred before the assured learns of rhe departure from the agreed adventure, notice may be considerably delayed and still remain reasonable simply because

254 Greenock Steamship Co v Maritime Insurance Co Ltd(1903]·1 KB 367; Mentz, Decker &Co v Maritime Insurance Co [1910] 1 KB 132. 255 Overseas Commodities Ltd v Style[1958] 1 Lloyd's Rep 546, 559. 256 (1905) (1917) 23 Com Cas 104; [\917] 2 KB 48n. Followed in Hood v West EndMotor Car Packing Co [1917] 2 KB 38 and see generally Black King Shipping Corp v Massie (The Litsion Pride)

[1985] 1 Lloyd's Rep 437, 462-71 (no extension to express warranties ohhe implied condition precedent of giving notice within a reasonable time).

560

What time is reasonable will depend on all the circumstances. Thus if the assured learns the true facts while the risk is still current, a reasonable time will usually be a shorter period than if this occurs when the adventure has already ended. If the assured learns the true facts when the insured property is in the grip of a peril, which is likely to cause loss or damage, a reasonable time will be very short indeed.

The modern Institute hulls and freight clauses, however, override such consider- 18.123 ations by expressly providing for the assured to give notice 'immediately after receipt of advices'o Notice under the hull. clauses of a change of voyage one month after the change is clearly too lare and ineffective in the absence ofwaiver of lateness, such waiver being dependent on knowledge by the insurer of the delay in notification. 259 The modern cargo clauses contain a requirement of 'prompt notice', reinforced by rhe following appended note: 'It is necessaty for the Assured when they become aware of an event which is "held covered" under this insurance to give prompt notice to the Underwriters and the right to such cover is dependent upon compliance with this obligation.' Although whether such a note has contractual effect has been doubted, it has been stated to reflect the law accurately."o It may be that the phrase 'prompt notice' introduces a requirement of quick, although not necessarily immediate, notification that is independent of the availability of practicable measures to the insurer. 261 (6) Option or Obligation? In Mentz, Decker & Co v Maritime Insurance CO,262 the clause stated as follows: 18.124 'In the event of the vessel making any deviation or change of voyage it is mutual]y agreed that such deviation or change ofvoyage shall be held covered at a premium to be arranged provided due notice be given by rhe assured on receipt of advice of such deviation or change of voyage.' Obiter, Hamilton J agreed wirh counsel for the insurers that 'it is impossible to construe the clause as giving an oprion to the assured to be covered or not as he chooses',263 but did not elaborate upon his reasons for adopting this interpretation. Certainly, counsel for the insurets pointed to the inequity of an assured giving notice and paying an additional premium only in the event of a loss, the insurer thus assuming a different and greater risk without either knowledge permitting the

257 Mentz, Decker & Co v Maritime Insurance Co [1910] 1 KB 132 ('due notice'); Hewitt v London C,n"alinsurance Co Ltd(I925) 23 LlLRep 243, 246.

258

[1977] 2 Lloyd's Rep 560, 566.

'" has" Shipping Ltd v Colton [1997] 1 Lloyd's Rep 586, 594. 260 Liberian Insurance Agency Inc v Mosse [197712 Lloyd's Rep 560, 566. 261

ibid 566-7.

262

[1910] 1 KB 132.

561

263

ibid 135.


Attachment and Alteration ofRisk seeking of reinsurance or rhe certain benefit of an appropriately enhanced premium. Such a consideration is clearly relevant to all held covered clauses, but the law has responded hy rendering the benefit of the clause conditional upon the giving of notice at least within a reasonable time of discovery by the assured of the alteration of risk. Moreover, the wording of the clause in Mentz, Decker ('it is mutually agreed that such deviation or change of voyage shall be held covered') could he read as stating that the assured had already agreed that deviations and changes of voyage were to be covered with the result that, simply upon the true interpretation of the clause, while failure to give notice as required had the result of depriving the assured of cover, there was no contractual entitlement conferred upon the assured to elect not to give notice. The assured had the power to exercise an option by his inaction, and thereby decline deviation and change of voyage cover, but no right to do so.

An example of non-disclosure in the context of held covered clauses is provided 18.127 .by Overseas Commodities Ltd v Style. 265 The assured under a cargo policy was held coveted 'at a premium to be arranged in case of change of voyage or of any

18.125 Thete appears to be no justification for a rule of law that held covered clauses

Fraser Shipping Ltd v Coltort" concerned hull insurance on terms incorporating 18.128 the Institute Voyage Clauses Hulls (Total Loss, General Average and 3/4ths Collision Liability) (1/10/83) ou a voyage to Shanghai under tow for demolition. Notice of a change ofvoyage to Huang Pu was given to insurers toO late to be valid. However, the assured also failed to inform the insurers that: (a) the vessel had arrived off Huang Pu twenty-four hours before notice was given, during which time it had already been involved in a minor collision; (b) the porr of Huang Pu was congested so that the vessel was compelled to anchor precariously in an outer anchorage; (c) de-ballasting and work on the anchor were needed before the vessel could proceed to its delivery point; and (d) a hurricane was threatening the port. These circumstances were self-evidenrly material and induced the subscribing underwriters into agreeing an extension of cover under the held covered clause.

impose obligations. The status of the clause must be a matter of interpretation. It is suggested that a perceived inequity of burden resulting from the option interpretation of held covered clauses is relevant, if ar all, as an indication of the intention of the parties, at most giving rise to a rebuttable presumption in favour of the obligation interpretation. Thus, clause 9 of the modern Institute cargo clauses, set out in full at para 18.111 above, provides that, where the contract of carriage or transit terminates in certain circumstances, the insurance

'shall also terminate unless prompt notice is given to the Underwriters and continuation of cover is requested'. Such language, admittedly not that of the classic held covered clause, is hardly redolent of an obligation to give notice and should be read as affording the assured the opportunity, in the relevant circumstances, to assess its needs and determine whether or not they are be~t served by continuation of the insurance. . (7) Utmost Good Faith

omission or error in the description of the interest vessel or voyage'. This clause

was held inapplicable in respect of certain misdescriptions of the cargo as the error could not be rectified. However, when the problem surfaced, enquiries by the assured elicited two conflicting explanations, only that containing the explanation most favourable to the assured being passed on to the underwriters. McNair J stated, obiter, that in order to 'obtain the protection of the "held covered" clause, the assured must act with the utmost good faith towards the underwriters, this being an obligation which rests upon them thtoughour the currency of the policy'. 266 In the absence of any explanation for the failure to pass on the other explanation, the held covered clause could not be invoked.

[1958J 1 Lloyd's Rep 546. ibid 559. See also Donaldson], again obiter, in Liberian Insurance Agenry Inc v Mosse [1977] 2 Lloyd's Rep 560. 267 [1997J 1 Lloyd's Rep 586. 26S

266

18.126 The operation of the doctrine of utmost good faith once the contract has been

concluded is discussed in Chapter 4 ahove. In the context of held covered clauses, it seems clear that: (a) the doctrine of utmost good faith attaches hecause the insurer is being asked to make an underwriting decision; (h) the scope of the utmost good faith duties is limited in that circumstances are material only if they would influence the prudent underwriter in assessing the extension of cover under the clause; and (c) the remedy for breach of a good faith duty is avoidance only of the extension of cover, leaving the original policy unaffected, although the precise legal reasoning that leads to this result has yet to be authoritatively resolved. 264

264

See 4.193-4.204 above.

562

563

19 SUB-STANDARD SHIPPING

A. The Concepts of Seaworthiness and Cargoworthiness (l) Seaworthiness (2) Cargoworchiness (3) Stowage (4) The relative nature of

seaworthiness and cargoworthiness

B. Seaworthiness in Voyage Policies (1) Rationale for the warranty

D. Proof of Unseaworthiness 19.Q3 19.03 19.11 19.14

E. The Relationship Between Unseaworthiness and Cover under the Inchmaree Clause F. The Relationship Between Unseaworthiness, Inherent Vice, and Ordinary Wear and Tear G. Cargo Policies H. Contractual Responses to Sub-srandard Shippiug (1) The due diligence proviso to the Inchmaree clause

19.18 19.20 19.22

(2) Time of compliance and the

doctrine of stages C. Seaworthiness in Time Policies (1) Privity (2) Who is the assured? (3) Causation (4) Multiple instances of unseaworthiness

1951

19.23 19.30 19.32 19.39 19.40

19.56

19.60 19.61 19.64 19.65

(2) Ownership, management,

and flag (3) Classification (4) The International Safety Management Code

19.49

19.66 19.71 19.78

The safety of human life, the confidence of catgo intetests and parties with 19.01 financial intetests, whether insurets 01' banks, and the protection of the environment all demand certain standards of construction, maintenance, and operation of shipping. Marine insurance law establishes required standards by affording insurets defences where vessels ate unseaworthy 01', in catgo insurance only, unfit to catry theit catgo. Fot hull underwritets, howevet, the law is unsatisfactory. The unseaworthiness defence vaties between voyage and time policies. The vast majotity of vessels ate insured on a time basis, but the unseaworthiness defence in time policies requires not merely that the sub-standard condition of the vessel causes loss but also that the assured knows of the vessel's condition. Whete the condition of the vessel is attributable to the negligence of the owner in, fot example, employing a sub-standatd crew or failing to maintain the vessel properly, the insurer remains liable unless such negligent

565

Sub-standard Shipping

The Concepts o/Seaworthiness and Cargoworthiness

conduct is accompanied by knowledge of the consequences for the condition of the vessel. In practice, proof of such knowledge is extremely difficult.

is a question of fact.' The notion of being curable must, however, include overt .need for attention. A latent defect that is in principle easy to cure bur that cannot reasonably be discovered must render a vessel unseaworthy.

19.02 Dissatisfaction with the underlying law has led insurers to seek protection against sub-standard shipping through express contractual terms. In particular, attention has focused on the due diligence proviso to the Inchmaree clause and clauses relating to the vessel's flag, to classification, and to the International Safety Management Code.

A. The Concepts of Seaworthiness and Cargoworthiness (I) Seaworthiness 19.03 The Marine Insurance Act 1906 states simply that: 'A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured." It may be noted that the required standard is not fitness but reasonable fitness.

(a) Physical condition 19.04 The concept of seaworthiness clearly embraces the physical condition of the insured vessel and its equipment. Accordingly, vessels have been held unseaworthy by reason of a diverse range of problems, including an excessively leaking hull, 2 inadequate or defective anchors, 3 engineering defects, 4 and defects in fire-fighting equipment. 5 The precise nature of the problem need not be identified.' 19.05 It has been suggested that a vessel is less likely to be rendered unseaworthy by defects easily curable by those on board,' but the remediable nature of a defect is not incompatible with unseaworthiness. The same may be said of minor defects. Ultimately, whether a remediable or minor defect renders. vessel unseaworthy

(b) Master and crew' The seaworthiness of a vessel also includes the adequacy of the crew, in terms of 19.06 both numbers and competence, with respect to readily foreseeable circumstances of the adventure." Unseaworthiness by reason of inadequate ability of the master or crew in handling the vessel may stem from a disabling want ofskill in matters of seamanship generally, which may in turn flow from an inherent lack of abiliry or a lack of appropriate training. Equally, however, a vessel will be unseaworthy if the master or crew are generally competent but suffer from a disabling lack of knowledge of the behavioural characteristics of the particular vessel or its equipment," irrespective of whether that Jack of knowledge results from failure by the master or crew to inform themselves or the owner's failure to impart information to them. In any such case, the result is that the vessel is unfit for the adventure. Competence, moreover, is not an abstract quality to be appreciated divorced 19.07 from the insured adventure. The question is not simply whether the master or relevant crew member is generally capable and fully knowledgeable of the particular vessel, but whether that person can reasonabJy be relied upon to apply the skill and knowledge possessed in an appropriate fashion as circumstances may dictate. Consequently, a vessel will still be unseaworthy if, for example, the master, although highly qualified and knowledgeable, nevertheless cannot be reasonably trusted to respond appropriately by reason of physical disability, illhealth or addiction," mental incapacity, or even a simple disinclination through laziness or any other reason to perform a mastee S functions properly.13 Unseaworthiness is, nevertheless, a condition ofthe vessel and such a condition is 19.08 not to be equated with the occurrence of one or more acts of poor seamanship.

, MiA 1906, s 39(4). See also Hedley v Pinkney 6-Sons Steamship Co Ltd[1894J AC 222, 227. A vessel is seaworthy if 'in a condition to encounter whatever perils of the sea a ship of that kind and laden in that way may be fairly expected to encounter on the voyage': Steel v State Line Steamship Co (1877) 3 App Cas 72, 77, cited in Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (The Star Sea) [1995J 1 Lloyd's Rep 651, 657. , Hoffinann (C) 6- Co v British General Insurance Co (1922) 10 LlLRep 434: Neue Fischmehl Vertriebsgesel~chafi Haselhorst mbH v Yorkshire Insurance Co Ltd (1934) 50 LlLRep 151. 3 Wilkie v Geddes (1815) 3 Dow 57. , Project Asia Line Inc v Shone (The Pride o[ Donegal) [2002J EWEC 24 (Comm), [2002J 1 Lloyd's Rep 659. See also wedderburn v Bell (1807) 1 Camp 1 (defective sails). S Manifist Shipping Co LtIv Uni-Polaris Insurance Co Ltd (The Star Sea) [20011 UKEL 1, [2003J 1 AC 469. , Project Asia Line Inc v Shone (The Pride o[Donegal) [2002J EWHC 24 (Comm), [2002J 1 Lloyd's Rep 659, paras 39,82-85. 7 Ajum Goolam Hossen & Co v Union Marine Insurance Co Ltd[1901] AC 362, 371.

, Project Asia Line Inc v Shorle (The Pride o[Donegal) [2002J EWHC 24 (Comm), [2002J 1 Lloyd's Rep 659, para 38. 9 R White, 'The Human Factor in Unseaworthiness Claims' [1995] LMCLQ221. 10 U700d v Associated National Insurance Co Ltd [1984J 1 QdR 507,553 (Supreme Court of Queensland), Competence is determined in fact and not by reference to formal qualifications, although their presence or absence may be relevant to any question of the assured's knowledge of the crew's incompetence or to the operation of the due diligence proviso in the Inchmaree clause. " Marlifist Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (The Star Sea) [2001J UKHL 1, [2003] 1 AC 469 (vessel unseaworthy by reason, inter alia, of the master's 'massive ignorance' with respect to operating the fireNfighting equipment). " Moore v Lunn (1923) 15 L1LRep 155, 161 (alcoholism).

566

567

13

Papera Iraders Co Ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002]

EWEC 118 (Comm), [2002J 1 Lloyd's Rep 719, para 129(3)(d).

Sub-standard Shipping

The Concepts ofSeaworthiness and Cargoworthiness

A competent and fully able master or crew member may make an error or commir an act of negligence. Conversely, an isolated acr may of itself evidence the incompetent condirion of the crew. There is no requirement of legal principle for a series of acts of sub-standard seamanship before the conclusion can be drawn that there is incompetence amounting to unseaworthiness,14 although the existence of such a series may increase the likelihood of a finding

extend to the vessel's suitability as a floating warehouse for certain goods. A ship will remain seaworthy despite blocked ventilation causing unfitness to receive

of unseaworthiness.

19.09 With respect to crew numbers and composition, it was held in Forshaw v

Chabert15 that seaworthiness requires a vessel to have a crew sufficient in number for the whole voyage 16 at the commencement thereof. Moreover, it may be that a vessel will not be adequately manned unless, at least in the case of voyages of a substantial length, the crew includes persons capable of substituting in case of need for leading personnel. In CliffOrd v Hunter,17 a vessel on a voyage from Mauritius to England turned back because the master fell ill and no other member of the crew could perform a master's duties. On these facts, the issue of seaworthiness was left to the jury, which decided in the insurer's favour. (c) Documentation 19.10 Vessels are required to carry a significant and increasing number of documents in accordance with international conventions and national regulations. Indeed, the growing volume and diversiry of documentary requirements led to the Convention on Facilitation ofInternational Maritime Ttaffic 1965, designed to reduce, simplifY, and harmonize the documentary requirements to which vessels are subject. Pursuant to the Convention, a Facilitation Committee produce;; and regularly revises a list of certificates and documents required to be carried on board ships in order to comply with certain international converltions. The absence of such a document that is necessary to fulfil the insured adventure

cargo, 19

In the law of carriage of goods by sea, in contrast, the concept of seaworthiness 19.12 extends beyond the suitabiliry of the vessel to encounter the waters through which it will pass and embraces the fitness of the vessel to carry cargo. For the owner of cargo, the fitness of a vessel for its cargo is as relevant as the vessel's abiliry to withstand the perils of the adventure. While the same is true of a cargo insurer, a hull and machinery insurer has no interest i~ the experience of the cargo. To accommodate this limited interest of a hull insurer, marine insurance law distinguishes between seaworthiness and cargoworthiness, with the latter forming no part of the law relating to hull policies but featuring in cargo insurance law. In the context of cargo policies, therefore, the carrying vessel is in principle 19.13 required as at the commencement of the voyage to be reasonably fit for the carriage of its cargo to the destination contemplated by the policy.'o Accordingly, a vessel that has carried a cargo of cattle infected with foot and mouth disease is unfit to embark a further cargo of cattle unless properly cleansed and disinfected. 21 Where health regulations are in force at a particular port, any vessel embarking cargo for that port must be able to comply therewith without damage to the cargo. 22 Refrigeration machinery on board a ship should, in its original state at the inception of the voyage, be suitable for the voyage in question23 and a bullion room should be reasonably fit to withstand thieves. 24 A vessel carrying livestock must have sufficient ventilation and stockmen to care for the cargo. 25

renders a vessel unseaworthy.18 19

(2) Cargoworthiness 19.11

It is important to distinguish the fitness of the vessel to commence the contemplated adventure of navigation from its fitness to receive particular cargo. In the law of marine insurance, seaworthiness is confined ro the former and does not

" ManiftstShipping Co L'd v Uni-Polaris Insurance Co L,d (The S'ar Sea} [199711 L1oyd's Rep

Reed (AE) & Co v Page, Son & Eas' L'd [1927] 1 KB 743, 754. The term 'seaworthiness'

is sometimes employed (0 cover fitness to receive cargo, but such usage has been deplored as apt to create confusion: Eldet; Dempster (} Co Ltd v Paterson, Zochonis 6- Co Ltd [1924] AC 522,

539-40. 20 MIA 1906, s 40(2). In practice, the requirement is considerably diluted by express contractual term: see 19.61-19.63 below. 21 lkttersall v National Steamship Co Ltd (1884) 12 QBD 297. See also Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [19931 1 Lloyd's Rep 257, affd on other grounds [1994] 2 Lloyd's Rep 506.

22

Ciampa v British India Steam Navigation Co Ltd [1915] 2 KB 774 (vessel originally from a

plague-contaminated port picked up a cargo of lemons from Naples for Marseilles, where,

by

360.373-4. " (1821) 3 Brod & B 158. 16 Or, should the voyage be"divided into stages, for the next stage. 17 (1827) Moo & M 103. 18 Projec' Asia Line Inc v Shone (The Pride ofDonegal) [20021 EWHC 24 (Comm), [20021 1 Lloyd's Rep 659, para 41; Papera Traders Co Ltd v Hyundai Merchant Marif/e Co Ltd (The Eurasian Dream) (No I) [2002] EWHC 118 (Comm), [200211 L1oyd's Rep719, para 128.

reason oflong-standing French regulation, the ship was subject to a compulsory procedure for the extermination of rats, which procedure damaged the lemons). 23 Owners ofCargo on Ship 'Maori King' v Hughes (The Maori King) [1895J 2 QB 550. 24 Queensland National Bank Ltd v Peninsular 6- Oriental Steam Navigation CO [1898J QB 567. 25 Sleigh v :lYser [1900] 2 QB 333.

568

569

Sub-standard Shipping (3) Stowage 19.14 Both seaworthiness and cargoworthiness are attributes of the vessel. As a result,

where the adverse consequences of the manner ofstowage of cargo are confined to the cargo, the stowage does not render the vessel unseaworthy or unfit for its cargo. 19.15

In The Thorsa,26 cases of chocolate deteriorated in transit by rea.4' Sprung v Royallnsurance (UK) Ltd [19991 Lloyd's Rep IR III, 118.

709

Claims and Claims Handling

Fraudulent Claims

claim, however, remains the assured and parties appointed by rhe managers act for the assured. 14' Consequently, COsfs incurred are for the account of the assured, and the club has no obligation ro indemnifY the assured unless and ro the extent that the policy so provides. However, the club is under an obligation, sounding in damages for breach, ro conducr the claim with due regard ro the

he believed must have happened' .146 A reckless disregard for the truth was, however, established: '47

interests of the assured.

Anxious to persuade Underwriters and their representatives that the container

had been packed properly, he made the statements in question, careless of whether they were true or false, without bothering to consider whether or not they were

accurare. It may well be rhe case rhat Mr Graham had convinced himself that the

142

G. Fraudulent Claims 22.77 A fraudulent claim made by the assured is regarded by the law, as one might expect, with particular severity. Stringent sanctions require the scope of the fraudulenr claims jurisdiction to be traced with care. (1) The Concept Of Fraud

22.78 In the context of the fraudulent claims jurisdiction, the concept of fraud mirrors that adopted in the rorr of deceit. In Derry v Peek,''' the House of Lords held that liability in the tort of deceit required a statement made in the knowledge that it was false, or without belief in its truth, or recklessly, careless as ro whether the statement was true or false. The hallmark of deceit is dishonesty, so that a person who honestly believes the statement ro be true but lacks reasonable grounds for that belief is not deceitful. Most of the case law on fraudulent claims involves starements the assured knows are false. However, authority establishes that fraud in the claims context extends to recklessness.'44 22.79 In Bucks Printing Press Ltd v Prudential Assurance CO,145 reconditioned printing machinery packed in a container was damaged beyond repair in transit. The question was whether the cause of the damage was improper packaging or an accident in transit. A certain Mr Graham, a ditector of the sellers, stated ro insurers that he had been the foreman in charge of rhe packing and gave what purported to be a first-hand accounr of how the goods had been packed in the container. In fact, he had not been the foreman and the process he described was materially inaccurate. Saville J considered that Graham had not deliberately sought to deceive the insurers but rhat he 'was one of those people who give nO real thought ro what they are saying and who consequently ... failed to distinguish between first-hand recollection of what really happened and what

Groom v Crocker[1939J 1 KB 194. 142 Cox v Bankside MembersAgency Ltd[199512 Lloyd's Rep 437, 462-3. 143 (1889) 14 App Cas 337. 14' Lek v Mathews (1927) 29 L1LRep 141, 145, 167; Agapitos v Agnew (The Aegeorl) [2002J EWCA Civ 247, [2003J QB 556, para 30. 145 (1994) 3 Re LR 219. 14'

710

container must have been properly packed and that what he said resulted from this conviction, but this only goes towards rebutting an allegation of deliberate deceit. It does not excuse or rebut the fact that Mr Graham simply gave no thought to the

trurh or falsity of whar he was saying. (2) Fraud of the Assured The fraud must be that of the assured. For these purposes, the assured is those 22.80 people with decision-making responsibiliryo with respect to the making and handling of a claim such that their fraud can legitimately be attributed to the assured.'48 People who constitute the assured with respect to operational matters may well not constitute the assured for the purposes of rhe fraudulent

claims jurisdicrion. 149 (3) Types of Fraudulent Conduct in the Making of a Claim

A claim is fraudulent when made or maintained with conducr that is frauduJent 22.81 in the sense described in the previous section. Three typical examples of such conduct are recognized in the case law. It is fraud to bting a claim where the assured knows that the insurer is not liable 22.82 for the loss and deliberately or recklessly either misrepresents circumstances relating to the casualty or suppresses information that in either case would reveal the insurer's lack of liability. It is, moreover, irrelevant whether rhe lack of liability results from the scope of cover or a defence such as breach of warranty or breach of a duty arising out of the doctrine of utmost good faith. 1So The classic example of such a fraud would be a claim for the Joss of a vessel that has in truth been scutded. While scutding one's own vessel is not fraudulent, since desrruction of property is one of the privileges of ownership, it is fraud subsequently to bring a claim on the vessel's hull poJicy deliberately or recklessly misrepresenting or concealing the nature of the sinking. 1S '

ibid 223, 147 ibid. Manifest Shipping & Co Ltd v Uni-Polaris Imurance Co Ltd (The Star Sea) [1997] 1 Lloyd's Rep 360, 366. cf 4.112-4.115 above. '" [1997J 1 Lloyd's Rep 360, 366. 150 Agapitos v Agnew (The Aegeon) [2002J EWCA Civ 247, [2003] QB 556, para 18. 151 National Oilwell (UK) Ltd v Davy Offihore Ltd[1993J 2 Lloyd's Rep 582, 622. 146

14$

711

Claims and Claims Handling 22.83 There is, however, no general duty ofdisclosure requiring the assured to alert the insurer to the possibility of a defence or to the existence of a known defence. Suppose an assured under a policy incorporating the International Hull Clauses (01111103) notifies the insurer of a claim more than 180 days after learning of the loss, thereby failing to comply with the condition precedent to liability found in clause 43.2. Even if the assured knows that it is in breach of the condition precedent, it is suggested that the assured is not fraudulent if it fails to draw this fact to the insurer's attention. There is no misrepresentation and no deliberate suppression. 22.84 A second type of fraudulent conduct arises where the assured has suffered a genuine loss within the terms of the policy but then claims an indemnity greater than is payable in respect of the genuine loss. This may be done, for example, by exaggerating the value of lost or damaged ptoperty or alleging that certain ptoperty has been lost or damaged when in truth it has not. 22.85 It is not, however, any level of false inflating of the value of the claim that will render it fraudulent. In Lek v Mathews,'52 Viscount Sumner stated that a claim was fraudulent ifthe assured claimed falsely for 'anything not so unsubstantial as to make the maxim de minimis applicable'. This idea is sometimes translated into the proposition that only 'substantial fraud' will suffice for the fraudulent claims jurisdiction to apply.'" That, however, is to inflate the very limited tolerance granted under the de minimis maxim and runs counter to the repugnance with which the law has always regarded fraud and the deterrent funcrion of the fraudulent claims rule. 15' The de minimis threshold is not determined as a percentage of the overall claim, as a proportionate licence to be fraudulent would be absurd. Instead, the fraudulent excess should be considered in isolation. 155 22.86 A further issue arises from the tendency of assureds to inflate an initi,;r claim in order to provide a margin for negoriation. Such inflation is not necessarily frauduJent. In Orakpo v Barclays Insurance Services,156 Hoffmann L] considered that 'provided nothing is misrepresented or concealed, and the loss adjuster is in

152 (1927) 29 LlLRep 141, 145. The statement is aimed at the corrcct interpretation ofa clause in the policy, but applies equally to the common law. 153 See the argument advanced on behalf of the assured in Galloway v Guardian Royal Exchange (UK) Ltd[1999J Lloyd's Rep IR209, invoking references to substantial fraud in Orakpo v Barclays Insurance Services [1995] LRLR 443, although the relevant passages merely reflect the extent of the fraud on the facts of that case ramer than prescribing a threshold to be achieved before the fraudulent claims jurisdiction can apply.

'" See Galloway v Guardian Royal Exchange (UK) Ltd [19991 Lloyd's Rep IR 209, 214, dishonest insurance claims have-·become all too common, and the fraudulent claims rule is 'a necessary and salutary rule which deserves to be better known by the public' and should not

be diluted, per Millett LJ. 155

ibid.

os, [1995J LRLR443, 451. See also Norton o RoyalFire 6- LifiAssurance Co (1886) I TLR460.

712

Fraudulent Claims as good a position to form a view of the validity of the claim as the insured, it will be a legitimate reason that the assured was merely putting forward a starting figure for negotiation'. The caveats are important. A conclusion of fraud is avoided not merely by an absence of subjective intention on the part of the assured to obtain money to which it is not entitled, but by the status of the figure advanced as a matter of objective interpretation as an initial bargaining position rather than a representation as to the value of the insured loss. Where an assured inserted the catalogue price of new replacements in a claim for loss of used goods, the resulting figure was 'preposterous' but not fraudulent. The prices fot the individual items were clearly from producers' catalogues and represented an inirial bargaining figure. 157 If, however, a claim were put forward with an inflated figure where the status of the figure as merely an initial bargaining position was not apparent, so that the figure apparently constituted a representation by the assured as to the value of the insured loss, it is difficult to see on what basis the claim might not be regarded as fraudulent. An obvious question is how the assured would respond if the insurer happened to offer to settle for a sum in excess of the true loss. Unless the assured could credibly explain how it would decline such an offer, it is hard to avoid a conclusion rhat the inflated claim is fraudulent. There are, moreover, limits to the level of exaggeration that can plausibly be alleged to be an initial bargaining position. An excessive level of exaggeration may be regarded as evidence of fraudulent intent. '58 A third type of fraud arises where the assured makes a legitimate claim 159 but 22.87 then seeks to support that claim with a fraudulent communication with a view to obtaining payment more quickly or settling the claim on more favourable terms. This is known as a 'fraudulent device'. Despite dicta recognizing a fraudulent device as rendering a claim fraudulent,'60 22.88 the issue appears not to have arisen for decision until The Litsion Pride'61 in 1985. In this case, the assuted decided to trade the insured vessel in an additional premium area without notifYing insurers, as the policy required, in order to avoid paying an additional premium. When the vessel was rendered a constructive tOtal loss inside the additional premium area, the assured posted a fraudulently backdated letter of notification to the insurers. As a matter of

157 Ewer v National Employers' Mutua/Insurance Association [1937] 2 All ER 193, 203. See also Orakpo v Barclays Insurance Services [1995] LRLR 443,450. ,sa Central Bank ofIndia Ltd v Guardian Assurance Co Ltd (I 936) 54 LlLRep 247. 159 ~amely: for these purposes, a claim for which the insurer is liable under the policy or a claim for which the Insurer is not in fact liable, or not liable in full, but that is not made fraudulently.

'60 Lek v Mathews (1927) 29 LlLRep 141, 164; Wisenthal v World Auxiliary Imurance Corp Ltd (1930) 38 LlLRep 54, 62; Dome Mining Corp Ltd v Drysdale (1931) 41 LlLRep 109, 122; Piermay Shtppmg Co SA 0 Chester (The Michael) [19791 2 Lloyd's Rep 1,21-2. 161 Black King Shipping Corp 0 Massie (The Dtsion Pride) [19851 1 Lloyd's Rep 437, 513.

713


Fraudulent Claims

interpretation, Hirst] held that compliance with the notification requirement was not a condition precedent to the continuation of cover. Consequently, the vessel remained insured when inside the additional premium area and rhe assured had a good claim. However, the assured had forfeited the benefit of the policy through rhe fraudulent letter.

The issue is, however, confined to fraudulent devices because no qualification i.s needed or acknowledged wirh respect to fraudulent claims stricto sensu, or alternatively is builr into the concept of such a fraudulent claim.'68 The fraudulent element in any attempt to obtain money from an insurer that is not due under the policy will, ex hypothesi, sarisfY any objective rest of marerialiry to the claim, however phrased. In rhe context, however, of a genuine claim under the policy, one can contemplate 'an obviously irrelevant lie-one which, whatever the insured may have thought, could nor sensibly have had any significant impact on any insurer or judge'.169

22.89 Subsequently, rhis extension of rhe fraudulent claims jurisdiction attracted differing responses in the House of Lords in The Star Sea.'62 Lord Hobhouse described the decision as 'questionable' while Lord SCOtt considered it uncontroversial.'63 It was accepted as good law by the Court of Appeal in The Mercandian Continent.'64 In The Aegeon, '65 Mance L] conducted an extensive, albeit obiter, review of rhe aurhoriries leading ro the 'tentative' conclusion that a fraudulent device should be regarded as a sub-species of fraudulenr claim, clearly reflecring the balance of judicial opinion, while advocating or at least leaving open the possibiliry of differences between fraudulenr claims stricto sensu and fraudulenr devices with respecr to materialiry and remedies.'66 The inclusion of fraudulent devices wirhin rhe fraudulent claims jurisdicrion has since been followed at first instance. 167 (4) Relevance to the Claim

22.90 In the context of the pre-formation docrrine of urmost good faith, fraudulent non-disclosure or misrepresentation gives rise to a right to avoid the contract only if ir induces the actual underwriter into the contract, although a fraudulent assured cannot defeat an underwriter's claim to avoid on the gtound of lack of objective materiality. The question arises of whether the fraudulent claims jurisdiction acknowledges any limitations in the form of or akin to objective materialiry or subjecrive inducement. 22.91

It is clear that nor all fraudulent conduct on the part of the assured surrounding or in connection with the making of a claim will rrigger the fraudulent claims jurisdiction, and the line between fraud that does and fraud that does not trigger that jurisdicrion is drawn by an objective test of materialiry to the claim.

162 Maniftst Shipping Co L,d v Uni-Polaris Insurance Co L,d (The Star Sea) [2001] UKHL 1, [20031 1 AC 469. 163 ibid paras 71, 106. Lords Steyn and Hoffmann agreed with both Lords Hobhouse and Scott, while Lord Clyde delivered a shore concurring judgment without commenting on fraudulent devices. 164

KlS Mere-Scandia XXXXlI v Certain Lloyd's Underwriters (The Mercandian Continent)

[2001] EWCA Civ 1275, [2001] 2 Lloyd's Rep 563, pata 29. 105 Agapi'os v Agnew (The Aegeon) [2002J EWCA Civ 247, [2003J QB 556, paras 45. 166 See furrher 22.91, 22.108 below. 167 Eagle Star Insurance Co Ltd v Games Video Co (GVC) SA (The Game'Boy) [2004] EWHC 15 (Comm), [2004J Lloyd's Rep IR 867.

714

With respect to the objective limitation to apply, in The Aegeon,170 Mance L] 22.92 advanced the tentative suggestion that 'the courts should only apply the fraudulent claim rule to the use of fraudulent devices or means which would, if believed, have tended, objectively but prior to any final determination at trial of the parties' rights, to yield a not insignificant improvement in the insured's prospects-whether they be prospects of obtaining a settlement, or a better settlement, or of winning at trial'. While the language of judgments should not be dissected in the manner of starutes, taken at its wording, this formulation operates on an objective basis and sets a standard of a tendency to yield a not insignificant improvement in the insured's prospects of a favourable receprion for the claim. A contrasr may be drawn with the concept of materialiry in the context of the pre-formation doctrine of utmost good faith, which requires merely that the relevant circumstance would have been taken into account by the prudent insurer in deciding how to respond to the proposed risk. There is no requirement rhat the prudent insurer would consider, for example, an undisclosed circumstance as probably tending to increase the risk.

It is unclear whether the formulation of Mance L] will come to be accepted 22.93 as articularing the requisite connection between the device and the claim. The law on this point is currently regarded as insufficiently settled to permit the awarding of summary judgment. 171

168 Roya! Boskalis Westminster BV v Mountain [1997] LRLR 523, 599; Agapitos v Agnew (The Aegeon) [2002J EWCA Civ 247, [2003] QB 556, para 36. 169 Agapi'os v Agnew (The Aegeon) [2002J EWCA Civ 247, [2003J QB 556, para 38 per Mance LJ. 170 ibid. 171 See the refusal to grant summary judgment in Interpart Comerciao e Gestao SA v Lexington Insurance Co [2004] Lloyd's Rep IR 690 because of the unsettled state of the law on this point. In Eagle Star Insurance Co L,d v Games Video Co (GVC) SA (The Game Boy) [2004J EWHC 15 (Comm), [2004] Lloyd's Rep IR 867, Simon J referred not to The Aegeon but to Wisenthal v World Auxiliary Insurance Corp L,d (1930) 38 LlLRep 54, whese Roche J directed the jury rhat

fraud in the claims context included the use of deceit to secure payment or quicker payment. This could be interpreted purely as a test of subjective intention, and Simon J indeed analysed the tendering offraudulent documents in the case in terms ofthe assureds' intentions and expectations.

715

Claims and Claims Handling 22.94 An example of fraud by the assured in the broad context of a claim that falls

outside the fraudulent claims jurisdiction as clearly not being material to the claim, however the test is formulated, is provided by the facts of The Mercandian Continent.'" Ship repairers in Trinidad incurred liability to the claimant shipowners. Mr K Baboodal and his brother Dr R Baboodal were managing director and chairman of the insured repair company. Legal advice was obtained that the tonnage limitation regime applicable in Trinidad was less generous than that applicable in England, but the claimants contended for English jurisdiction on rhe basis of a jurisdiction agreement concluded with one Mr Totressen, the assureds' assistant general manager. One of the Baboodal brothers, therefore, forged a letter stating that only the two brothers had the aurhority to discuss the claim, also forging a countersignature on the letter of the claimants' technical director. The forgety was, however, rapidly discovered. The Coutr of Appeal concluded that the ftaud had no relevance to the insurers' liability on the policy. The fraud was confined to jurisdiction and jurisdiction did not affect liability.'" The fraud also was directed not at the insurers but at the claimants. The only adverse consequence for the insurers was that they opposed English jurisdiction for longer than otherwise would have been the case.'74 22.95 In contrast to an objective limitation, subjective inducement of the actual

insurer has no role to play in the context of fraudulent claims. The moral culpability of an assured that malees a fraudulent claim is not purged merely because the fraud is discovered before the insurer can be induced to respond to the claim in some way differently from the way it would have responded without the fraud. Pragmatically, moreover: 'Whether insurers are misled or not is in this context beside the point. The principle only arises for consideration where they have not been misled into paying or settling the claim,175 and its application could not sensibly depend upon proof that they were temporarily misled.'176

However, there was no doubt that an objective materiality test would have been passed on the

facts. Wisenthal had previously been rejected in Khan v Abbey Lift Assurance Co (2002) NPC 5, para 85 as inconsistent with a different decision test of materiality adopted by the Court ofAppeal in KlS Mere-Scandia XXXXIl v Certain Lloyd's Underwriters (The Mercandian Continent) [2001J EWCA Civ 1275, [2001J 2 Lloyd's Rep 563. However, the Court ofAppeal was there addressing not the fraudulent claims jurisdiction but a possibly wider doctrine of utmost good faith: see 22.113-22.114 below. 172 KlS Mere-Scandia XXXX11 v Certain Lloyd's Underwriters (The Mercandian Continent) [2001J EWCA Civ 1275, [200l] 2 Lloyd's Rep 563. In fact, insurers in this case did not seek to invoke the fraudulent claims jurisdiction (see 22.97 below) but to invoke a broader postformation docuine of utmost good faith, see 22.113-22,114 below: 173 k it transpired, it did not even affect quantum since the legal advice on limitation proved erroneous. '" [200l] EWCA Clv 1275, [2001J 2 ~loyd's Rep 563, pata 42. 175 Or have been misled, but have since discovered that fact. H' Agapitos v Agnew (The Aegeon) [20021 EWCA Civ 247, [2003J QIi 556, para 36 per ManeeL].

716

Fraudulent Claims (5) Temporal Limits on the Fraudulent Claims Jurisdiction A claim may be honestly made bur dishonestly pursued or maintained. Such 22.96 fraud also attracts the fraudulent claims jurisdictiori. An assured that honestly attaches a certain figure to the insured loss is fraudulent if it fails to inform the insurer on subsequently learning that the true loss is a lower figure. Similarly, whether a fraudulent device attracts the fraudulent claims rule does not depend on whether it happens to be deployed before or after the claim is made. 177

It has, however, been suggested that fraud cannot attract the fraudulent claims 22.97 rule unless the assured has a right to make a claim on the policy at the time of the fraud. In the liability insurance case of The Mercandian Continent, "8 the sequence of events was as follows: (1) incurring of liability by the assured; (2) concocting by the the assured of a fraudulent letter designed to assist the msurers; (3) discovety of the fraud by the insurers; (4) purported avoidance of the policy by the insurers in reliance on the fraud; (5) ascertainment and quantification by litigation of the assured's liability to the third party; (6) insolvency of the assured; (7) claim by the third party against the insurers under the Third Party (Rights against Insurers) Act 1930. The policy contained a clause that provided for the policy to be void and all claims to be forfeit 'if the assured shall make any claim knowing the same to be false and fraudulent'. Under liability insurance, it is clear that ascertainment and quantification of the assured's liability by litigation, arbitration, or binding settlement is required for there to be a loss and for the limitation period to commence."9 The insurers conceded that the fraudulent claims clause was irrelevant on the basis that, until liability had been ascertained and quantified, there could not be a claim. This was noted withour demur by the Court of Appeal, adding the comment that rhe position was the same at common law. This approach, however, has the undesirable result of rendering the con- 22.98 sequences of fraud dependent on an accident of timing. The same conduct would escape sanction if before liability was ascertained and quantified but severely sanctioned if after that point. Moreover, a fraudulent communication

ibid paras 15-17. K/S Mere-Scandia XXXXJl v Certain Lloyd's Underwriters (The Mercandian Continent) [2001J EWCA Civ 1275, [200l] 2 Lloyd's Rep 563, para 10. 17S See 21.14, 22.68 above, 177

178

717

Fraudulent Claims

Claims and Claims Handling must be regarded not only as effective when initially communicated but also as perpetrating fraud on a continuing basis at least until the fraud is discovered and possibly until the insurer has rejected the claim or waived the right to invoke the fraud. The element ofchance in timing is thereby accentuated. More fundamentally, there is no distinction in terms of moral culpability between an assured that seeks fraudulently to pave the way for a claim and one that seeks fraudulently to bolster a claim already made. It is noteworthy thar, in The Aegeon,'80 Mance L] btoached the possibility of a distinction between the making of a claim and the accrual of a cause of action. It is suggested that a srrict temporal apptoach to the making ofa claim and fraud is unnecessaty. It should suffice that the fraud is material to the claim. 22.99 Once, however, litigation or arbitration has formally commenced, rhe conduct of the parties falls to be governed by rules of civil procedure or the relevant rules ofarbitral process. There is no scope for supplementary, common law regulation through the fraudulent claims jurisdiction of the conduct of parties thar by definition are now in an adversarial relationship.18t (6) Joint and Composite Policies 22.100 A fraudulent claim by any assured under a joint policy provides a defence operative in respect of the entirety of the unitary interest insured under the policy and, therefore, against each joint assured. In contrast, a fraudulent claim by a co-assured under a composite policy provides, subject to contrary intention, a defence confined to the separate, or severable, cover of the particular coassured that has made the fraudulent claim. In Samuel (PJ & Co Ltd v Dumas;''' a fraudulent claim by the insured vessel's owner did not affect a claim brought by the co-insured mortgagee. However, where a fraudulent claim on behalf of a co-assured is brought by an agent that is ignorant of the fraud, the fact that the agent is another co-assured under the policy does not prevent the fraud from corrupting the claim. ' "

(aJ Rejection ofthe claim A fraudulent claim, whether the fraud relates to the loss in respect of which the 22.102 claim is made or takes rhe form of a fraudulenr device, forfeits the right of the assured to be indemnified in respect of rhat claim. It is to be emphasized that the forfeiture relates not juSt to such part of the claim as may be fraudulent bur to the entirety of the claim. For example, the fraudulent exaggeration of a genuine claim, the fraudulent suppression of a defence with respect to part of a claim, or the use of a fraudulent device relevant only to part of the loss allegedly sustained forfeits cover in respect of not just that part of the claim that is fraudulent or ro which the fraud directly relates but also such part of the claim that, considered in isolation, is genuine and legitimately recoverable under the policy.lB' That the entire claim is forfeit means also rhar any payments already made pursuant to the claim before the fraud is discovered are recoverable and any settlements concluded cease to bind. Thus, a payment on account in respect of a genuine loss covered by the policy will be recoverable if the assured later uses a fraudulent device in order to influence the final settlement of the claim even in the absence of any fraud at the time of the payment on account. '85 'The logic of the law is simple. The fraudulent insured must not be allowed to think: if rhe fraud is successful then I will gain: if it is unsuccessful, I will lose nothing.'18' If fraud carried no risk, there would be no deterrent. On the contrary, there would be a perverse incentive to be fraudulent. While it is clear that fraud forfeits the entire benefit of rhe claim, ir has been 22.103 suggested that ir goes furrher and removes or bars the assured's cause of acrion on the policy.'87 If this is correcr, it would answer rhe question of whether the dishonest presentation of a claim on one basis would taint an otherwise genuine claim that might be brought on a separate basis in respect of the same loss. Suppose, for example, that the assured knows that the insured vessel has been sunk by its master. Concerned that the insurer mighr respond to a claim for bartatry by invoking the due diligence proviso in the Inchmaree clause and arguing that the assured was negligent in employing the master in the first place,

(7) Remedies for Fraud in a Claim 22.101

Fraud in a claim gives the insurer the right to reject the claim. In addition, consideration needs to be given to the possibility of the fraud being regarded as a repudiatory breach of contract affording the insurer a right to elect to treat the conttact as discharged or as an infringement ofa duty arising under the doctrine of urmost good faith giving rise to a right to avoid the entire policy.

180 181

182 183

Agapitos vAgnew (The Aegeon) [2002J EWCA Civ 247, [2003J QB 556, para 23. ibid paras 47-52. 11924J AC 431. See al,o Arab Bank pic v Zurich Insurance CO [1999J rtloyd's Rep 262. Direct Line Insurance v Khan [2002J Lloyd's Rep IR 364.

718

184 Orakpo v Barclays Insurance Services [1995] LRLR 443 (fraudulent exaggeration of amount of rent lost by insured fire and fraudulent inclusion of other loss not caused by insured perils); Galkway v Guardian Royal Exchange (UK) Ltd [1999J Lloyd's Rep IR 209 (fraudulent addirion of computer to list of goods genuinely stolen); Direct Line Insurance v Khan [2002] Lloyd's Rep IR 364 (fraudulent claim for rent for alternative accommodation added to genuine claim for property lost by fire). 185 Axa General Insuran", Ltd v Gottleb [2005J EWCA Civ 112, [2005J Lloyd's Rep IR 369. 186 Manifest Shipping Co Ltd v Uni-Pokrir Insurance Co Ltd (The Star Sea) [2001J UKHL I, [2003] 1 AC 469, para 62 per Lord Hobhouse. See also Orakpo v Barclays Insurance Services [1995J LRLR 443,452: Axa General Insurance Ltd v Gottlieb [2005J EWCA Civ 112, [2005J Lloyd's Rep IR 369, paras 28, 31. 187 ibid para 26.

719

Claims and Claims Handling the assured suppresses rhe fact that the master sank the vessel and claims for a loss by perils of the sea, despite being aware that such a sinking cannot be considered fortuitous for the purpose of perils of the sea.'88 Assuming that the fraud comes to light, the question is whether the assured is thereby precluded from rhen claiming for a loss by barratry and endeavouring ro refute the defence based on the due diligence proviso.'89 If the fraud removes the assured's cause of action in respect of the loss, the assured is indeed precluded. This is consistent with the policy against encouraging settled expectations in a fraudulent assured. An assured should not be able to endeavour by means of fraud to sidestep an insurer's defence, safe in the knowledge that should the fraud be discovered the only consequence will be ro require the assured to advance the claim that should have been advanced all along. 22.104 It also follows that in cases of double insurance a fraudulent claim under one policy bars the right to recover under any other, since an assured should not be able to employ fraud under one policy without any risk, safe in the knowledge that, if discovered, it can recover under another. 22.105 Greater difficulry arises where the same casualry gives tise to more than one claim. Suppose the insured vessel is involved in a collision and borh sustains physical damage and incurs third parry collision liability. Does a fraudulent claim in respecr of the physical damage vitiate the liabiliry claim? The punitive ethos of the fraudulent claims rule might indicate that it should, although the policy against settled expectations would not so demand.

(b) Contract termination 22.106 It has been persuasively stated that the right to reject a claim arises by virtue of a common law rule independenrly of any right to terminate the contract, either prospectively or retrospectively."o If a fraudulent claim also constitures a repudiatory breach of contract, the insurer will have the right to elect to accept the breach and treat the contract as discharged, so that no primaty obligations can be incurred from the moment of acceptance of the breach. If it constitutes a breach of a dury arising under the doctrine of utmost good faith but not based juridically on a contractual term and not remedially controlled by the principles of general contract law, the insurer will have the right to avoid the entire conttact retrospectively. In such a case, the insurer will be entitled to recover all sums paid out under the policy in respect of previous claims, even if their legitimacy and honesry is unimpeachable.

See 10.16 above. r" Agapitos v Agnew (The Aegeon) [2002J EWCA Ciy 247, [20031 QB 556, para 28. 190 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (The Star Sed) [2001] UKHL 1, [20031 1 AC 469, para 62. 188

720

Fraudulent Claims While the matter has not been authoritatively resolved, judicial opinion appears 22.107 .to favour analysing the fraudulent claims jurisdiction as a rule of common law

thar is independent from the doctrine of utmost good faith.'" This avoids what may be regarded as overly punitive retrospective forfeiture of cover and also the lack of orthodoxy of a rettospective response to misconduct during the life of a properly concluded contract. Conversely, it has been asked why the law should treat an innocent failure to disclose during pre-formation presentation of the risk more severely than 'rhe most heinous fraud in the malcing of a claim on the policy'.'92 This, however, is merely ro highlight the distinction drawn by contract law generally between problems with formation of a contract and problems in the performance of a contract. In general contract law, innocent misrepresen-

tation generates a right to rescind while the most fraudulent and malicious breach of contract can only ever prompt a prospective discharge ofliability. Analysed as a rule of common law, the question arises of whether a fraudulent 22.108 claim can lead to a discharge of the contract. This may happen in either of two ways. The fraudulent claims jurisdiction could be based on an implied term of the contract, with fraud eligible for status as a repudiatory breach, or it could constitute a rule of general law applicable ro insurance contracts but not forming part of rhe contract, in the manner of the doctrine of frustration in general contract law."3 As a matter of principle, it is difficult to see why a fraudulent claim should not be capable of constituting a discharging event, whether as a breach of contract or extra-conrractual act. Fraud is 'fundamentally inconsistent with rhe bargain and the continuarion of the contractual relationship between the insurer and the assured' ,194 It is conceivable, however, that a fraudulent device will not necessarily amount to a repudiation of rhe contracr."s (8) Fraudulent Claims Clauses Insurance policies have long contained clauses addressing the consequences of a 22.109 fraudulent claim. Indeed, the prevalence of such clauses explains the absence of

191 ibid paras 50-52, 61, 66; Agapitos v Agnew (The Aegeon) [2002] EWCA Ciy 247, [20031 QB 556, para 45(g}. This approach was favoured, albeit that the law was regarded as toO uncertain for summary judgment, in Marc Rich Agriculture Trading SA v Fortis Corporate Insurance NV [20041 EWHC 2632 (Comm), [2005] Lloyd's Rep IR 396. The point was [eft open in The Star

Sea, para 110. 192 Orakpo v Barclays Insurance Services [1995] LRLR 443, 452 per Sir Roger Parker. See also the reference to good faith by Millett Lj in GalkJway v Guardian Royal Exthange (UK) Ltd [19991 Lloyd's Rep IR 209,214. 193 Or the requirement to serve a notice of abandonment in most cases of constructive total loss as a condition precedent to entitlement to indemnification for a total10ss. 194 Manifest Shipping Co Ltd v Uni~Polaris Insurance Co Ltd (The Star Sea) [2001] UKHL 1, [200311 AC 469, para 66 per Lotd Hobhouse. '" Agapitos v Agnew (TheAegeon) [20021 EWCA Ciy 247, [20031 QB 556, para 45(b).

721


Good Faith in the Making ofClaims

a fully developed position at common law with respect to remedies for making a fraudulent claim.

H. Good Faith in the Making of Claims

22.110 In the marine context, the J and J(a) Schedules to rhe Lloyd's and Ins-sure policies ptovide that: 'If the Insured shall make any claim knowing the same to be false and fraudulent, as regards amount or otherwise, this Policy shall become void and all claim hereunder shall be forfeited.' Clause 45.3 of the International Hull Clauses (01111/03) is more comprehensive: It shall be a condition precedent to the liability of the UndelWriters that the Assured shall not at any stage prior to the commencement of legal proceedings

knowingly or recklessly: 45.3.1 mislead or attempt to mislead the Underwriters in the proper consideration of the claim or the settlement thereof by relying on· any evidence

which is false; 45.3.2 conceal any circumstance or matter from the Underwriters material to the proper consideration of a claim or defence to such a claim.

22.111

Several points of difference may be nored. Clause 45.3 mirrors the common law in extending beyond intentional deceit to recklessness, including fraudulent devices, and embracing fraud at any srage until legal proceedings commence. In contrasr, the clause in the Schedules is confined to knowledge, requires the fraud to exist in the claim when made, and does not embrace fraudulent devices.]96 The reference in clause 45.3.1 to the proper consideration of the claim performs the function of the common law's requirement of materiality to the claim. This is explicit in clause 45.3.2. With respect to the consequences of a fraudulent claim, clause 45.3 declares the insurer free from liability, presumably in respect of the casualty that gave rise to the fraud, while the clause in the Schedules also declares that the policy 'shall become void'. It is suggested, however, that clause 45.3 should not be read as exhaustive of the consequences of malting a fraudulent claim and precluding the fraud from also constituting a repudiatory breach of contract.

22.112 The disclosure obligation in clause 45.3.2 has to be read subject to clause 45.4, whi~h provides that: 'Clause 45.3 does not require the Assured ar any stage to d,sclose to rhe Underwriters any document of matrer which under English law is protected from disclosure by legal advice privilege or litigation privilege.' A document that is privileged under the law of the jurisdiction where it is created but not privileged under English law would have to be disclosed under clause 45.3.

In The Star Sea,]97 the insurers contended that in the claims contexr rhe doctrine 22.113 of utmost good faith as articulated by section 17 of rhe Marine Insurance Acr 1906 imposed a duty of fair dealing and disclosure beyond the fraudulent claims jurisdiction. Initially, it was argued thar the docrrine imposed strict liability obligations parallel to those rhat apply at the pre-formation srage. At the stage of oral argument before the House of Lords, however, counsel for the insurers limited the suggested duty to one to refrain from unconscionable conduct. This argument was rejected. The House of Lords held rhat the assured's only duty was one of honesry."8 The House of Lords did nor need to go so far as to hold thar section 17 of rhe 22.114 1906 Acr is confined to the pre-formation doctrine of urmost good faith. The remedy of avoidance, however, is both extremely serious and not a remedy acknowledged by general contract law for failure to perform a duty arising under a validly formed contract. In The Mercandian Continent,'99 therefore, the Coun of Appeal held that section 17 applied at the post-formation stage only where (1) the assured was guilty of fraud, (2) the fraud was material in that the matter concealed or misrepresented justified a defence to the claim, and (3) the fraud or its consequences are sufficiently serious as to render the fraudulent conduct also a repudiatoty breach of contract. However, if it is correct, as has subsequently been stated, albeit obiter, that the fraudulent claims jurisdiction itself forms no pan of the doctrine of utmost good faith and does not, therefore, attract the remedy of retrospective avoidance of the contract under section 17,200 it is difficult to see how conduct that can be no more reprehensible can attract that remedy. The logical conclusion is that section 17 of the Marine Insurance Act 1906 has no post-formation application. This does not preclude the exisrence of a posr-formarion dimension to the doctrine of utmost good faith. means only that section 17 does not comprehend the entirety of the good faith doctrine. 20]

197

Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (The Star Sea)

[2003J 1 AC 469. 198 Overruling the proposition of a wider duty to refrain at least from '",In,hle able' misrepresentation or non-disclosure as advanced in Blaek King Shipping v 1'"'''.''' Litsion Pride) [1985] 1 Lloyd's Rep 437, 511-12. 199

This follows from rhe requirement that the ftaud must exist at 'making' of the claim. 196

722

of and in the

KlS Mere-Scandia XXXXlI v Certain Lloyd's Underwriters (The Mercandian Continent)

[2001] EWCA Civ 1275, [2001] 2 Lloyd's Rep 563, paras 26, 35. 200 See 22.107 above. 20' See 4.197(3), 4.199 above.

723


I. Making Payment of Loss Moneys (1) Method of Payment 22.115 In principle, loss moneys should be paid to the assured or an agent of the

assured authorized to receive payment of such money. Alternatively, the policy may nominate a designated loss payee, or the benefit of the insurer's promise to indemnifY (or of the entire policy) may have been assigned and notice given to the insurer. In such a case, the insurer should pay the loss payee or assignee, as the case may be. 202 22.116 It is standard practice in the London market for loss moneys to be paid through

the placing broker. The question arises of whether the broker has authority to give a good discharge of the insurer's indemnification obligation and, if so, what fotm of payment the broker has authority to receive. Consistent with the principle that the assured should not bear the risk of the broker's insolvency flowing from a system of accounting between the broker and insurer designed for the convenience of the insurance market,203 the insurer is directly responsible to the assured in respect of loss moneys and returnable premium and does not discharge its liability to the assured by payment to the broker as principal. 204 Nevertheless, the assured may, and frequently will, constitute the broker as its agent to receive money from the insurer, the broker's authority usually being evidenced by possession of the policy.205 It is not, however, inferred from the circumstance of having been the placing broker. 22.117 With respect to the form of payment, aurhority to receive payment does not

confet authority to make judgments regarding the creditworthiness of the debtor, with the result that the agent should accept only payment in cash. 20B Much litigation has resulted from the practice of the London market, pioneered at Lloyd's, of underwritets and brokers operaring general accounts, debiting indemnities against premiums, and periodically striking a Qalance with only the net surplus being actually paid by the appropriate party. Underwriters thus settle claims in whole or in part by set-off against premiums payable on any policy placed by that broker, regardless of any absence of muruality. Where such

202 For express provision to this effect, see International HuH Clauses (01111103), cl 48. On loss payees, see 20.01 above. 203 See 6.23 above. 204 MIA 1906, S 53(1), The rule is subject to contrary intention, but this is not evidenced by a clause in the policy providing for the broker to collect all claims: Stolos Campania SA v Ajax Insurance Co Ltd (The Admiral C) [1981] 1 Lloyd's Rep 9. 205 I-line Bros v Steamship Insurance Syndicate Ltd(1895) 72 LT 79; Legge v Byas, Mosley & Co (1901) 7 Com Cas 16. 206 Trading & General Investment Corp v Gault Armstrong & Keble Ltd (The Okeanis) [1986J 1 Lloyd's Rep 195. See generally Bowstead & Reynolds on Ageney (17th edn, 2001) Art 28.

724

Making Payment ofLoss Moneys a settlement by set-off has occurred and the broket subsequently goes into insolvency without paying the assured, the question arises of whether this method of claims settlement is binding upon the assured. The market custom amounts to ousting the broker's aurhority to colleer a claim for the benefit of the assured in favour of discharging the broker's personal obligation to the underwriter to pay premium due on any of its clients' policies. It is not surprising, therefore, that the Custom has been viewed with some disfavour and held binding only on an assured that both knows of the custom and adopts it. 207 With respect to knowledge, a clause in a policy providing that 'all losses and claims arising hereon are to be recoverable only according to the custom and usages of Lloyd's' will not suffice to bind an assured otherwise ignorant of the set-off settlement CUStom. 208 It is unlikely that the statement in the International hull 2o clauses , that payment of a sum 'whether in account or otherwise' shall to that amount discharge the insurers' obligations is any more effective. Once a broker has become insolvent, the availability of set-off as between the 22.118 broker and the undetwriter is governed by mandatory rules of insolvency law. 210 Set-off is denied in the absence of muruality of capacity in which the parries incurred liability on the opposing claims. Consequently, there can be no insolvency set-off between premiums and loss moneys in the case of marine policies placed by a broket. By virrue of section 53(1) of the Marine Insurance Act 1906, subject to contrary intention, the broket is personally indebted to the insurer but is to receive loss moneys qua agent of the assured. 211 The previous paragraph focuses upon insolvency of the broker. Should the 22.119 broker pay loss moneys to the assured and then discovet that one or more parricipating insurers had become insolvent before such payment, no action will lie against the assured to recover the loss moneys on the basis of mistaken payment. 212 (2) Time of Payment

At common law, there is no obligation on an insurer to process a claim and pay 22.120 the appropriate measure of indemnity within any particular period of time. There is no cause of action that permits an assured to sue an insurer for undue

207 Bartlett v Pentland (1830) 10 B & Cr 760; Scott v Irving (1830) 1 B & Ad 605; Stewart v Aberdein (1838) 4 M & W 211; Sweeting v Pearce (1861) 30 LJCP 109; MatviefJ v Crosfield

(1903) 8 Com Cas 120. 20a McCowin Lumber & Export Co Inc v Pacific Marine Insurance Co Ltd(1922) 38 TLR 901. 209 International Hull Clauses (01/11/03), d 48. 210 Insolvency Act 1986, s 323; Insolvency Rules 1986, r 4.90. 2" Wihon v Creighton (1782) 3 Doug1132. '" Edgar v Bumstead (1808) I Camp 411.

725


Making Payment ofloss Moneys

delay in the paying of a claim and recover damages for consequential loss caused by the delay.

resulting in the loss of profits that would have been made from trading the vessel, the insurer will be liable to reimburse the assured for the financial loss. No objection can be raised that the cause of rhe loss is the impecuniosity of the assured.'16 Of course, a voluntary decision of the assured not to effect repairs will brealc the chain of causarion.

22.121 In The Italia Express (No 2),213 the assured sought to recover various consequentiallosses in addirion to the statutory indemnity for the total loss of the insured vessel. The assured argued that the insurer's primary obligation was to pay rhe statut0ty measure of indemnity on the assured's demand for payment subsequent to the casualty. In default of payment forthwith, the insurer incurred a secondaty liability to pay damages at large and not limited to the statutory measure. Hirst] held in favour of rhe insurer. First, the Act'" was 'conclusively definitive' of the extent of the insurer's liability and not merely of that liability during the brief petiod following an assured's demand during which the insurer might discharge his liability by paying the statutory measure. Secondly, Hirst ] accepted the analysis of a contract of indemnity as involving a primary obligarion to hold the assured free from the specified harm. Consequently, the statutory measure of indemnity was the measure of the secondary obligation. Moreover, on this analysis, rhe assured's claim for addirional compensation necessarily amounted to a claim for damages for late payment of damages, a claim not genetally recognized under English law."s

'" Lagden v O'Connor [2003J UKHL 64, [20041 1 AC 1067. In so far as rhe decision in Sprung v Royallnsurance (UK) Ltd[1999] Lloyd's Rep IR 111 rests on causation (see 118), it is no longer good law.

22.122 There is, nevertheless, no impediment to rhe parries agreeing express contractual rime limits for processing and paying claims. Under the Internarional Hull Clauses (01/11/03), clause 46.7 provides that: The Leading Unclerwriter(s) shall make a decision in respect of any claim within 28 days of receipt by tbem of the appointed average adjuster's final adjustment or, if no adjuster is appointed, a fully documented claim presentation sufficient t6

enable the Underwriters to determine their liability in relation to coverage and quantum. If the Leading Underwriter(s) request additional information to make a decision, they shall make a decision within a reasonable time after receipt of the additional documents or information requested, or of a satisfactory explanation as to why such documents and information are not available.

22.123 Non-compliance by the insurer would generate liability in damages nor for late payment of damages but for breach of the expressly agreed, ancillary obligation to pay by a certain time. Consequently, where the failure to pay within the agreed time prevents the assured from effecting repairs to an insured vessel

Ventauris v Mountain (The Italia Express) (No 2) [1992] 2 Lloyd's Rep 281. MIA 1906, s 67 and, on the facts, s 68. 215 President afIndia v La Pintada Campania Navigacion SA [1985J AC 104; President ofIndia v Lips Maritime Corp (The Lips) [19881 AC 395. See also Sprung v Royaiinsurance (UK! Ltd 11999J Lloyd's Rep 111; England v Guardian Insurance Ltd [2000J Lloyd's Rep lR 404; Normhurst Ltd v Dornoch Ltd [2004J EWHC 567 (Comm), [2005J Lloyd's Rep lR 27. Otherwise, where responsibility is specifically assumed· for the consequences of late payment:/Wadsworth v Lydal! [1981J 1 WLR 598. 213

214

726

727

23 MEASURES OF INDEMNITY

A. Loss of or Damage to Property (1) The yardstick for calculating the measure of indemnity (2) Total lasses (3) Partial losses

23.02 23.03 23.12 23.14

B. Thresholds to Recovery (I) Particular average warranties (2) Deductib1es

(3) Franchise clauses

C. Under~insurance

23.38 23.39 23.40 23.48 23.49

The phrase 'measure of indemnity' denotes the quantum of the payment 23.01 required of the insurer to discharge its liability under an insurance contract in respect of a recoverable loss. This chapter considers the law governing measures of indemnity for various types of loss as well as the thresholds to recovery and reductions from the prima fide measure often found in marine policies.

A. Loss of or Damage to Property In a claim for loss of or damage to property, such as hull, cargo, or freight, the 23.02 measure of indemnity depends upon whether the loss is total or partial and whether the policy is valued or unvalued. The different types of loss are considered in Chapter 21 above, while the concept of a valued policy is discussed in Chapter 7 above. 1 (1) The Yardstick for Calculating the Measure ofIndemnity

(aJ Agreed and insurable values Marine insurance law subscribes to the indemnity principle, but does not in 23.03 principle attempt to calculate measures of indemnity in property claims by reference to the precise financial loss in fact suffered by the assured. Instead, the

1

See 7.24ffabove.

729

Measures ofIndemnity

Loss ofor Damage to Property

measure of indemnity is, subject to contrary intention,' calculated by tefetence to the insurable value of the insured property, and, in a valued policy, the agreed value provides conclusive evidence as between insurer and assured of the in~ur able value. 3 Under valued policies, therefore, where the Insured property IS a tatalloss, the assured receives the agreed value, and where it is a partial loss, the assured generally receives an appropriate proportion of the agreed value. In the London market today, the vast majority of marine policies are valued. However, insurance on an unvalued basis, often incorporating Institute or International clauses and subject to English law, is more common in some other markets.'

provide for the measure of indemnity to be quantified by reference to the agreed or insurable value, they are all expressed to be subject to contrary intention. In the case of unvalued policies, it appears that modern policy wordings will readily displace the insurable value in favour of the market value of the insured ptoperty at the time of loss, thus aligning marine and non-marine insurance.

23.04 The insurable value, as such, applies only where the policy is unvalued and even then may be displaced by the policy wording. Subject to contrary express provision or valuation in the policy, section 16 of the Marine Insurance Act 1906 provides that the insurable interest should be ascertained as follows: (1) In insurance on ship, the insurable value is the value, at the commencement of

the risk, of the ship, including her outfit, provisions and store~ for the office~s and crew, money advanced for seamen's wages, and other dIsbursements (If any) incurred to make the ship fit for the voyage or adventure contemplated

by the policy, plus the charges of insurance upon the whole:

.

The insurable value, in the case of a steamship, includes also the machmery. boilers, and coals and engine stores if owned by the assured, and, in the case of a ship engaged in a special trade, the ordinary fittings requisi:e for ch.at trade: (2) In insurance on freight, whether paid in advance or otherwise, the Insurable value is the gross amount of the freight at the risk of the assured, plus the charges of insurance: (3) In insurance on goods or merchandise, the insurable value is the prime cost?f

the property insured, plus the expenses of and incidental

to

shipping and the

charges of insurance upon the whole: (4) In insurance on any other subject-matter, the insurable value is the ~mount at the risk of the assured when the policy attaches, plus the charges of Insurance.

23.05 It is clear from section 16 that, in calculating the insurable value, the value at the time of loss is discarded in favour of value at the inception of the risk. In the context of cargo insurance, this results from the concept of 'prime cost' referring 5 to the invoice or market value at or near the time of shipment.

(b) Displacing the insurable value in modern unvaluedpolicies 23.06 Specific statutory provisions govern the measure of indemniry in cases of total loss and partial loss in the context of different types of insurance. While they

3 MIA 1906, , 27(3). , See 23.06-23.10 below. 4 See Thor Navigation Inc v Ingosstrakh Insurance Co Ltd [2005] EWHC 19 (Comm), [20051 1 . Lloyd', Rep 547, para 8. 5

Williams v Atlantic Assuran" Co Ltd[l93311KB 81, 90-2.102-3. MIA 1906.,16(3) Usher v Noble (J 81 0) 12 East 639.

codifies

730

In The Captain Panagos DP,' a mortgagee's interest policy provided that in the 23.07 event of loss of or damage to or liabiliry of the mortgaged vessel and subsequent non-payment by underwriters under the hull policy, insurers would pay the insured mortgagee the lesser of 'the amount of such damage or liability' and the total indebtedness. Mustill J held that the policy was an unvalued marine policy on the mortgaged ship, with the quoted phrase denoting the pecuniary consequences of physical loss of or damage to the ship. Moreover: 'To keep the policy in tune with what I believe to be its purpose, this must surely mean the real pecuniary consequence, not a conventional measure, which was once thought appropriate for application to a type of policy which has nothing in common with a policy of the kind now under consideration, save that they are both policies of marine insnrance.' In consequence, the measure of indemnity was quantified by reference to the market value of the mortgaged vessel at the time and place of the loss.

Thor Navigation Inc v Ingosstrakh Insurance Co Ltd' concerned insutance 23.08 incotporating the Institute Time Clauses Hulls (1/11195). Under the heading 'Interest' the subject-matter of the policy was stated to be 'Hull and Machinery' and the perils clause provided that 'this insurance covers loss of or damage to the subject-matter insured', with no mention of the other items mentioned in section 16(1). Following the approach adopted in The Captain Panagos DP, this wording was held to displace the section 16 insurable valve as the yardstick for the measure of indemnity, again in favour of the market value of the vessel at the time and place oftoss. With respect, however, it is suggested that it is by no means self-evident that the 23.09 reasoning in The Captain Panagos DP should be so extended into cases of ordinary hull and machinery cover. The Captain Panagos DP concerned a property policy used ta reinforce a security interest over a vessel. The mortgagee's commercial interest was confined to the adverse consequences to its prospects of repayment of the secured loan flowing from a casualry affecting the secured asset. That was the interest the insurance was designed to protect. It made no commercial sense, therefore, to quantifY the measure of indemniry by reference to a loss that the mortgagee had not incurred (namely a diminution in the value

Continental Illinois National Bank & Trust Co ofChicago v Bathurst [1985] 1 Lloyd's Rep 625. , [20051 EWHC 19 (Comm), [200511 Lloyd's Rep 547.

6

731

Measures ofIndemnity of the asset as at the time of inception of risk) or by reference to assets not covered by the security interest, such as crew wages. 23.10

Thor Navigation, in contrasr, concerned insurance of the vessel itself fo~' the benefit of irs owner. In that context, section 16(1) may be regarded as provldlllg an extended definition of 'ship', avoiding the need to contract expressly to extend cover to the other items mentioned in secrion 16(1), which, one may assume, a shipowner would always wish to cover. In economic terms, section 16(1) avoids transaction costs. The decision in Thor Navigation means that any assured today that wishes to obtain an unvalued policy that extends to the full range of items mentioned in section 16 will need to contract expressly to that effect. The merits of this are, with respect, elusive. To the extent that the decision represents an instinctive dislike for indemnification by reference to the section 16 insurable interest, one can only respond that section 16 represents the settled position of pre-Act case law and the will of Parliament. (c) Vessels intendedfor scrap

23.11

By way of detogation from indemnification by reference to the agreed or insurable value, the 1983 and 1995 Institute hull clauses provide that where the insured vessel should sail '(with or without cargo) with an intention of being (a) broken up or (b) sold for brealdng up' the measure of indemnity for loss or damage should, subject to prior contrary agreement with the insurers, be limited to the vessel's marker value as scrap at the time of the casualty." The wording has, however, been criticized for uncertainty. If a shipowner accepts a charter that will leave the vessel near a scrapping centre and contemplates}he possibility of scrapping the vessel at the end of the charter depending on the then freight rates and scrap prices, does the vessel sail on that char;er voyage 'with an intention' of being scrapped? What level of firmness of contemplation must be proved in order to arrive at 'an intention'? Moreover, where the vessel is lost or damaged between two different scrapping centres with different price levels, how is the market value to be determined?9 (2) Total Losses

23.12 Where the subject-matrer insured is the subject of an actual total loss Or a constructive total loss and, in rhe case of a constructive total loss, the assured has either served a valid notice of abandonment or no such no rice is required, then, subject to contrary intention, the assured receives the agreed value if the policy

Loss ofor Damage to Property is valued or the insurable value if the policy is unvalued,lO regardless of whether a greater sum would be required or a lesser sum would suffice to indemnifY for the loss actually suffered. As discussed above," in the context ofunvalued policies, it may be that a modern 23.13 policy will be construed as displacing the insurable value in favour of the market of the insured property at the time of loss. (3) Partial Losses

An assured that unsuccessfully alleges a total loss, may, unless the policy other- 23.14 wise ptovides, reCOver for a partialloss. 12 The Marine Insurance Act 1906 does not, however, provide an exhaustive code for calculating the measure of indemnity with respect to all forms of partial loss. By virtue of section 75(1), where the Act is silent 'the measure of indemnity shall be ascertained, as nearly as may be, in accordance with those provisions, in so far a~ applicable to the particular case'. (a) Damage to a vessel Where a vessel is damaged but not totally lost, section 69 ofthe Marine Insurance 23.15 Act 1906 envisages three eventualities: where the vessel is fully repaired (subsection (1»), where it is partially repaired (subsection (2», and where it is untepaired and not sold during the risk (subsection (3». In addition, there arises a fourth possibility, not addressed by the Act, namely where the vessel is sold in its damaged condition at a time when the insurer is still on risk. It is clear from section 69(3) that whethet or not a vessel has been repaired is judged for these purposes by reference to the time of expiry of the risk." Where the damage is fully repaired, section 69(1) provides that the measure of 23.16 indemnity is 'the reasonable cost of the repairs, less the customary deductions, but not exceeding the sum insured in respect of anyone casualty'. The limit of a sum insured in respect of anyone casualty reflects the possibility of a policy containing a maximum sum payable on any single casualty. The cost of repairs includes additional costs incurred in reasonably removing the vessel to another port for repairs and also dry dock expenses. 14 The measure of indemnity is confined to the reasonable cost of repairs." The 23.17

MIA 1906, s 68. 11 See 23.06-23.10 above. MIA 1906, s 56(4); Benson v Chapman (1849) 2 HLC 696. 13 In the context of a voyage policy, the risk terminates when the ship is abandoned in circumstances and in language evidencing a clear intention not to pursue the voyage to its destination: Irvin v Hine [I950J 1 KB 555, 571. 14 Rules of Practice of the Association of Average Adjusters, 1986 (amended 1992), rr Dl, 5, 15 On reasonableness in this context, see R Cornah, 'Reasonable COSt of Repairs under Hull and Machinery Policies' (2005) 11 JIML 288. 10

12

8 Institute Time Clauses Hulls (1110/83), cl 1.3; (1111195), cl 1.5. Under the International Hull Clauses (01/11103), sailing with such an intention without prior agreement of the underwriters triggers immediate termination of cover: d 1 4 . 2 , . _ ' 9 N Hudson and J Allen, The Institute Clauses (3rd edn, 1999) 93'-4.

732

733


Loss ofor Damage to Property

cOSt may vary considerably depending upon where and by whom the repairs are effected. Insurers will naturally want repairs to be undertaken where and by whom they can most cheaply be ptoperly carried our. Consequently, clause 44.1 of the International Hull Clauses (01111/03) confers upon the leading underwriter the right to decide 'the port to which the vessel shall proceed for docking or repair ... and shall have a right of veto concerning a place of repair or a repairing firm'." The assured is entitled to indemnification of any additional expense incurred by the assured in underraking a voyage to the port of docking or repair nominated by the leader. In addition, clause 44.2 entitles the leading underwriter to take tenders or require the taking of further tenders for the repair work." The obtaining of such tenders may, however, extend the time during which the vessel is unavailable to the assured. Consequently, clause 44.2 provides in such a case, and where a tender for the repairs has been accepted with the leading underwriter's approval, that 'an allowance shall be made at the rate of 30% per annum on the insured value for the time lost berween the despatch of rhe invitations to tender required by the Underwriters and the acceptance of a tender to the extent that such time is lost solely as the result of renders having been taken and provided that the tender is accepted without delay after receipt of the Leading Underwriter(s)' approval'."

Vessel fr~m one porr to ~nother for the repair of damage covered by the Underwmers, or fo~ tnal tnps for such repairs, and then only for such wages and mamtenance as are mcurred whilst the Vessel is under way'. 22

23.18 The reference in section 69(1) of the Marine Insurance Act 1906 to customary

deductions reflects the fact rhat the courts evolved a rule in the context of wooden vessels that the assured could recover only rwo-thirds of the repair costs." The one-third deduction served both the indemnity principle and convenience, as a repaired vessel might be rendered stronger and more valuable than if no casualty had been encountered and the uniform percentage deduc~ion 20 obviated the need for detailed enquiry in every case. The Ins,itute and International hull clauses, however, provide expressly that claims are payable 'without deduction new for old', although claims for bottom treatment are restricted." The assured may claim for the wages and maintenance of the master, officers, and crew 'when incurred solely for the necessary removal of the

" See also Institute Time Clauses Hulls (1/10/83), el 10.2; (III 1/95), d 13.2, although reference is to underwriters rather than juSt the leading underwriter. 17 See also the right to instruct a surveyor and connrm the appointment of an independent average adjuster under International Hull Clauses (01111103), cl 46.1: see further 22.74 above. 18 The allowance is subject to certain deductions in accordance with cll 44.3, 44.4. For insurers' parallel rights in respect of tenders under the Institute clauses, see Institute Time Clauses Hulls (1I10/83), d 10.3; (l/11195), d 13.3, although reference is again to underwriters rather than just the leading underwrit~r. 19: For full details of the one-third new for old deduction, see the Rules of Practice of the Association of Average Adjusters, 1986 (amended 1992), r D7. 20 Loh" v Aitchison (I878) 3 QBD 558, 563-4. 21 Institute Time Clauses Hulls (1I10/83 and 1I11195), dll4-15; Internatio,nal Hull Clauses (I/l I/03), ell 16-17.

734

If the vessel is only partially repaired, by virtue of section 69(2) the measure of 23.19 indemnity is the reasonable cost of such repairs, calculated as in section 69(1), and also llldemnificati?n 'for the reasonable depreciation, if any, arising from the unrepalred damage. Where the assured elects not to repair and the vessel is no: sold u.nrep~ired during the risk, secrion 69(3) entitles the assured again to llldemnlficatlOn for the reasonable depreciation arising from the untepaired damage." However, rhe measures of indemnity recoverable under subsections (2) and (3) cannot exceed the measure recoverable under subsection (1) had the assured e1ecred for full repairs. Should the assured sell the ship untepaired dun~g th: nsk, sectlOn 69 is silent with respect to the measure of indemnity, but, III P,tman v Universal Marine Imurance CO,24 it was held by Lindley J and ~ffirmed by the Court of Appeal that the assured is entitled to the depreciation III the value of the vessel occasioned by the damage. It follows, however, from ~eCflon 75(1) that even in this situation the assured cannot recover an indemnity III excess of the estimated cost of repairs. In three of the. above four situations, therefore, the measure of indemnity 23.20 reflects, or takes llltO account, the depreciation in the value of the insured vessel and two questions arise with respect to calculation of such a measure of indemnity. First, how is the actual depreciation sustained to be calculated? Secondly, must the depreciation so calculated then be related to the agreed or insurable value, depending on whether the policy is valued or unvalued, in order to determine the precise measure for which the insurer is liable and, if so, how exactly should it be so related? With respect to the calculation of depreciation, the choice falls between, on the 23.21 one hand, the difference between the market value of the vessel if undamaged (the sound value) and the market of the vessel in its damaged condition (the damaged value) and, on the other hand, the estimated cost of repairing the damage sustained. It is clear that at common law the former is the correct appr~ach.25 Damaged and sound market values are ascertained by reference to the time of expiry of risk, 'whether that expiry is by effluxion of time in the case of a time policy, or by the completion of or abandonment of the voyage in the

22 Institute Time Clauses Hulls (1/10/83 and 1111195), d 16· International Hull Clauses (Ill I/03), cI 18. ' :: See Knight v Faith (1850) 15 QB 649. 20 (1882) 9 QBD 192. Lit/gett v Secretan (No 2) (1871) LR 6 CP 616; Pitman v Universal Marine Insurance Co (188~) 9 QBD 192. The contrary statement in Goole & Hull Steam TOwing Co Ltd v Ocean Manne Insurance Co Ltd [1928], 1 KB 589, 595 is, with respect, clearly incorrect.

735

Measures ofIndemnity case of a voyage policy or by sale in the case of either type of policy or otherwise'.26 The estimated cost of repairs remains relevant in two respects. First, it may shed light upon the amount of diminution in market value in the absence of more cogent evidence." Secondly, as noted above, ir limits the measure recoverable from the insurer. This has been explained as follows: an assured rhat has suffered a loss by depreciation has the opportunity to mitigate that loss by effecting repairs where that would be cost-effective and the assured cannot decline so as to minimize loss at the insurer's expense. 28 23.22 Where a damaged vessel is sold in an unrepaired condition before expiry of

the risk, the assured cannot claim in respect of depreciation a sum greater than the difference between the sound value and the sale price. 29 To the extent that the sale price exceeds the damaged value, the assured may be regarded as having minimized its loss, any costs reasonably incurred in making the sale being recoverable as sue and labour expenses. Were the property sold at an unteasonably low price, the shortfall would be irrecoverable as not caused by a covered peril and the sale would infringe any contractual duty to minimize losses. 23.23 Turning to the significance of the agreed or insurable value, afier some initial

hesitation,'O the case law has consistently held that calculating the amount of actual depreciation, according to sound and damaged market values, is only the first step. The amount of actual depreciation must then be expressed as a percentage of the sound value of the vessel in order to give the proportion of the vessel's value lost by reason of the depreciation. The measure of indemnity for depreciation is that proportion of the agreed or insurable value. 31 Consequently, where SV is the sound value, DV is the damaged value, and AV and IV are

Loss ofor Damage to Property the agreed and insurable value, the measure of indemnity for depreciation at

~ommon law may be represented as follows:

AV or IV X (SV - DV) SV Thus, in the non-marine ca~e of Elcock v Thomson,32 fire-damaged buildings 23.24 lllsured under a valued poltcy were neither reinstated nor sold during the currency of the risk. The agreed value was £106,850, the marker value of the buildings before the nre was £18,000, while their market value in their damaged condition was £12,600, and reinstatement would have cost over £40,000. Morns Jheld that the principles stated in section 69(3) applied equally to a non-manne cas:, that the agreed value operated as a yardstick for quantifYing the ',"easure of ,?demn,ty ror depreciation loss as for any other, and that this reqUIred calculatlon of the proportion of the market value lost by depreciation and the award to the assured of rhat proportion of the agreed value. The assured was, therefore, entitled to three-tenths of the agreed value nam I £32,055. ' ey Ultimately, however, rhe measure of indemnity is a matter for contract. Clause 23.25 18 of the Institute Time Clauses Hulls (1110/83 and 1/11195)33 'd C II provl es as

ro ows:

18 UNREPAJRED DAMAGE 18.1 The measure of indemnity in respeCt of claims for unrepaired damage shall be. t~e reasonable depreciation in the market value of the Vessel at the time thIS lU.surance terminates arising from such unrepaired damage, but not exceedlng the reasonable COst of repairs.

18.2 18.3 The underwrit,ers shall nOt be liable in respect of unrepaired damage for more than the Insured value at the time this insurance terminates.

26 Helmsville Ltd v YOrkshire Insurance Co Ltd (The Medina Princess) [1965] 1 Lloyd's Rep 361, 517 per Roskill J. 27 Lidgett v Secretan (No 2) (1871) LR 6 CP 616, 626-7; Pitman v UniversaL Marine Insurance OJ (1882) 9 QBD 192,201. 28 Kusel vAtkin (The Catariba) [1997J 2 Lloyd's Rep 749, 755. On duties to minimize loss, see 24.02ffbelow. 29 Pitman v Universal Marine Insurance Co (1882) 9 QBD 192,202. 30 See the judgment of Jesse! MR in Pitman v Universal Marine Insurance Co (1882) 9 QBD 192. 31 Pitman v Universal Marine Insurance Co (1882) 9 QBD 192 (Lindley J); Steamship Salmoral Co Ltd v Marten (1902J AC 511, 521; Elcock v Thomson (1949J 2 KB 755; Kusel v Atkin (The Catariba) [1997J 2 Lloyd's Rep 749, 755-6. See also Compania Maritime Astra SA v Archdale (TheArmar) (1954J 2 Lloyd's Rep 95, 101-2 (Supreme Court of New York). That the measure of indemnity should reflect the agreed value was also upheld in Irvin v Hine [1950) 1 KB 555, although it was left open whether that should be by the proportion method or by subtraction of the damaged value from the agreed value, The latter was, however, expressly rejected in Elcock v Thomson, For full discussion ofthe case law, see H Bennett, 'Valued Policies' irfD Thomas (ed) The Modern Law ofMarine Insumnce. Volume 2 (2002) Cb 3, 109-14.

Clause 20 of the International Hull Clauses (01111/03) is in identical terms. The contractual approach is identical to that of the ~ommon law in that first 23.26 depreciation is assessed by reference to the time when the policy expire~ and: secondly, the assured cannot recover mOre than the agreed value at that time or the reasonable cost of repairs. However, the contractual approach departs from the common law by assessing depreciation purely by reference to market values. The market value of the vessel in its damaged condition at the time the policy expires is subtracted from the market value the vessel would have had at that time if undamaged. This does not vary if the vessel is sold unrepaired before

32 33

736

[1949J 2 KB 755. See also Institute Voyage Clauses Hulls (1110/83 and 1/11/95). el16.

737


Loss ofor Damage to I'r,oh"''',

the policy was otherwise due to expire, since such a sale automatically terminates the policy."

partial and not total'. This provision codifies the decision in Spence v Union Marine I~surance Co Ltd,39 in which a cargo of cotton was shipped in 2,493 bales specIfically marked to indicate the ownership of each bale. In the course of the :,oyage, the ship was wrecked, 231 bales were lost or so damaged as to require sale and the remainder were conveyed to the destination in another ;es.'e1. Th~ marks on many of the bales were obliterated by sea water, rendering It ImpraCtIcable to identifY their owners by any reasonable means. Of the assured's forty-three bales, two remained identifiable and were delivered. The market in cotron having fallen materially, the assured then claimed as for a total loss of the remaining forty-one. It was held, however, that while the loss and sal~ of 231 bales constituted a total loss of a part of each owner's goods, the vanous owners should be tteated as tenants in common of the unidentifiable delivered cotton which could be regarded as subject only to a partial loss. Each owner, including the assured, was accordingly held entitled to a ptoportlon of the value of the cotton lost and of the damage to the unidentifiable cotton. The share for each owner of this compensation was determined by the proportion of the quantity shipped by that owner to rhe whole quantity shipped. .

23.27 The rejection of the common law by the market clauses avoids the inflation in

the measure of indemnity caused by the tendency for agreed values to exceed actual values. Thus, on the facts of Elcock v Thomson, for example, the assured's loss in terms of market value was £5,400. This, however, represented a 30 per cent fall in market value and incorporating the agreed value by the proportion method produced a measure of indemnity of £32,055. Although the estimated cost of reinstatement presumably placed a ceiling of just over £40,000 on the measure of indemnity regardless of the proportion of market value lost, the common law approach inflated rhe insurets liability considerably. Since high agreed values for vessels are common, a substantial level' of inflation in the measure of indemnity would not be untypical in hull insurance and is unacceptable to hull insurers. 35

(b) Partialloss ofgoods 23.28 A partial loss of goods may take anyone or a combination of three different

forms: total loss of a part, delivery at destination in a damaged condition, and damage preventing some of the goods from completion of transit. 23.29 It is convenient to commence with a total loss of a part of the insured goods,

'capable of several and distinct valuation at rhe outset'. 36 Where the policy is unvalued, the measure of indemnity is the insurable value of the part lost. 37 Where the policy is valued, section 7l(l) of the Marine Insurance Act 1906 provides for the assured to receive an appropriate proportion of the agreed vallie, namely the proportion the insurable value of the part (IVP) lost bears to the insurable value of the whole (IVW)." This may be represented as follows: IVP AVx--

IVW

23.30 A total loss of a part requires the severable part of the insured goods to be

rendered an actual or constructive total loss. A mere loss of identification does not suffice. According to section 56(5) of the Marine Insurance Act 1906, 'Where goods reach their destination in specie, but by reason of obliteration of marks, or otherwise, they are incapable of identification, the loss, if any, is

34

Institute Time Clauses Hulls (1/10/83), cI 4; (1111/95), d 5; International Hull Clauses

Where g~ods are delivered in a damaged condition, as opposed to a part of the 23.31 goods being totally lost, computation of the measure of indemnity is set out in slightly more complicated terms. By virtue of section 71 (3) of the 1906 Act: 'Where the whole or any part of the goods or merchandise insured has been delivered damaged ar its destination, the measure of indemnity is such proportion of the sum fixed by the policy in the case of a valued policy, or of the insurable value in the case of an unvalued policy, as the difference between the gross sound and damaged values at the place of arrival bears to the gross sound value.' This subsection reflects the fundamental principle laid down by Lord Mansfield 23.32 that .the insurance contract indemnifies only against the perils of the voyage and the Insurer IS concerned solely with the safety of the subject-matter insured, not with fluctuations in the market price of the commodity in question. 40 Consequently, the basis of the measure of indemnity is provided, not by any market value of the goods, but by their agreed or insurable value (AV or IV). The appropriate proportion thereof is then calculated by reference to values of the goods at the place of arrival where all relevant information will be available. The loss to the assured is initially represented by the difference between the gross sound value (GSV) and the gross damaged value (GDV) of the goods at

(01/11/03), cl14. 35

36

See D O'May, Marine Insurance Law and Policy (1993) 446-8. Lewis v Rucker (1761) 2 Burr 1167, 1170 per Lord Mansfield.

37

MIA 1906, s 71(2). For the insurable value of goods, see s 16(3), 23.04'above.

38

See, eg Anstey v Ocean Marine Insurance Co Ltd(1913) 19 Coin-Cas 8.

738

" (1868) LR 3 CP 427.

" Lewis v Rucker (176l) 2 Butr 1167,1170.

739


Thresholds to Recovery

the place of arrivaL 41 However, this figure is unsatisfactory "" a me""ure of indemnity because it is affected by the state of the market in the goods. Consequently, that figure is then expressed as a proportion of the gross sound arrived value and the assured is entitled to rhat proporrion of the agreed or insurable value. The resulring measure of indemniry, encapsulated in section 71 (3), may be expressed"" follows:

paid in advance and was earned on shipment. The vessel subsequently being a total loss, the measure of indemnity reflected a reduction in the agreed valuation to take accounr of rhe advance freight not at risk, giving the following equation:

(GSV -GOY) AVorlVx GSV This is, of course, the same equation as favoured ar common law for calculating the measure of indemniry for depreciarion loss in rhe case of damaged bur unrepaired vessels, discussed at paragraph 23.23 above. The gross damaged value does not include the cost of any necessary conditioning of the goods prior to sale in their damaged state. Such expenses are recoverable separarely as suing and labouring charges. 42 23.33 The thitd form of partial loss of goods occurs where part is necessarily sold at an intermediate port because of unfitness to continue to the destination by virtue ofa casualry caused by a covered peril. The 1906 Act is silent with respect to this situation. Logically the insurer should pay as for a total loss of a parr less rhe proceeds of sale. Expenses incurred in the sale will again be recoverable as suing and labouring charges. 23.34 Should different parts of rhe same insured cargo suffer different forms of partial loss, the appropriate measures of indemnity will require separare calculation.

£5500 x

(£3250 - £925) £3250 = £3,889

Consequently, a true loss of £2,325 generated a measure of indemnity, after factoring in rhe agreed value, of £3,889. However, the Institute freight clauses impose a ceiling on recovety of the gross freight actually lost in order to avoid such inflation. 45

(d) One agreed value covering several species ofproperty In a valued policy, a single valuation may cover different species of property, 23.37 in which case, unless a casualty results in a total loss of all the insured property, it will be necessaty to apportion the valuarion berween rhe different species before adjusring parriallosses. According to rhe Marine Insurance Act 1906, such apportionment is effecred by reference to the insurable values of the whole property and of the various differenr species. Where absence of relevant information prevents determinarion of rhe insurable values, the Act provides for apportionment to follow net sound arrived values, qualities, or 46 descriptions of goods. However, the practice of average adjusters is to apportion different qualities or descriptions of cargo on invoice values wherever possible and otherwise, bur only in default, to rely upon net arrived sound values. 47

(c) Partial loss offreight 23.35 In the case of a partial loss of fteight, the measure of indemnity is such proportion of the agreed or insutable value as the proporrion of freighr lost by rhe assured (FL) bears to the total freight at the risk of the assured under the policy (TF).43 This may be represented as follows:

FL AVorIVxTF 23.36

The Main" concerned a policy on return freight with an agreed value of £5,500. A casualty on the ourward voyage delayed the return voyage, the freight rates fell and the vessel ultimately sailed with a total freight of £3,250, ofwhich £925 was

41

That gross rather than net values should be used was established in Johnson v Sheddon (1802)

2 East 581, where it is shown that use of net values would permit the state of the market to affect

the measure of indemnity. For the meaning of gross value, see MIA 1906, s 71(4). 42 Francis v Boulton (I 895) 65 LJQB 153. 43 MIA 1906, s70. . .. [1894] P 320.

740

B. Thresholds to Recovery An insurer may be unwilling to accept liability for the full extent of losses and 23.38 for all losses no matter how trivial for three reasons. First, the administrative costs of investigation and adjustment are not economically viable in the context of small claims. Secondly, where a portion of the risk remains with the assured, it provides an added incentive to avoid and minimize losses. Thirdly, the nature of certain goods may render it difficult to determine whether the true cause of damage is a covered peril or inherent vice. Accordingly, a variery of clauses have evolved excluding or limiting an insurer's liabiliry.

4S InStitute Time Clauses Fteight (lf8189), cI 13.1; (1111195), cI 14.1; InStitute Voyage Clauses Freight (118189), cI 11.1; (1!l1195), cI 10.1. Compare the approach of the hull clauses to the measure of indemnity for depreciation, see 23.23-23.24 above. 46 MIA 1906, s 72. 47 Rules of Practice of the Association of Average Adjusters 1986 (amended 1992), r E3.

741

Thresholds to Recovery

Measures ofIndemnity (1) Particular Average Warranties 23.39 A warranty that insurance is free from particular average confines ~e insurels liability to total losses together with certain expendi:ure ~nd charges ill~~rred by the assured in connection with the avoidance or mlllimizlllg of losses. Where . I ded such a clause affords added significance to the correct classification of lllCU , . . f a loss as total or partial and, where appropriate, the proper ~e,:,,:ce of a notIce 0 abandonment. Flexibility is, however, provided by the possIbility of warrantlllg free from particular average below a percentage approptiate to the commodity h in question, such as three or five per cent. ~ Moreover, were t h' e Insurance contract is apportionable, the assured may recover for a to.tal loss of any apportionable part. 50 The contract is apportionable .where It .covers either different species of property, even if not llldlVldually IdentIfied III the policy, or separate parcels of the same species separately valued or otherwise separately insured. 51 General insurance of goods shipped ill bulk IS nor rendered apportionable by rhe mere facr rhat rhe goods. are packed in a n~mber of separate containers. 52 Particular average warranties ha~e not fallen lllto tOtal obsolescence, 53 bur have been discarded III the InstItute and International clauses in favour of deductibles and franchise clauses. (2) Deductibles" 23.40 By virtue of a deductible, rhe assured retains a specified proportion of the risk. The insurer's liability is limited to the amount, If any, by whiCh the measure of indemnity exceeds the stipulated amount. In the International Hull Clauses (01111/03), clause IS provides for a deductible. Clause 15.1 provIdes as follows:" Subject to Clause 15.2, no claim arising from a peril insured under, this i~~urance shall be payable under this insurance unless the aggregate of all claIms ansmg out of each separate accident or occurrence (including claims under: Clauses 2, 3, 4, 5,

48 The expenditure and charges fall into three cate~ori.e~, n.amely general average, salvage charges and particular charges (including contractual habIltty 10 salvage) and other expens~s recover~ble under a sue and labour clause. These are discussed in Ch 24 below. For thelr recoverabiliry notwithstanding a particular average warranty, see MIA 1906, s 76(1), (2). 49 On calculating whether such percentages have been reached, see MIA 1906, s 76(3), (4). so ibid s 76(1). . . " Ralti v janson (1856) 6 El & B1422; Duffv Mackenzie (1857) 3 CB(NS) 16; Wilk,mon v

Hyde(1858) 3 CB(NS) 30. .' 52 Ralli vJamon (1856) 6 EI & B1422. Despite consIderable ove.dap, ~ ~otalloss of a part under , MIA 1906, s 71 (1), (2) is nOt, therefore, synonymous with apport10nabI~Ity under s 76(1). 53 For an example of a particular average warranty i~ a ,modern pohcy, ~ee Bank ofAmenca National Trust dr Savings Association v (nri!mas .(Thef(yrtakiJ (1993J / L1oy~ s ,~ep 1.37. 54 55

Termed an 'excess clause' in non~manne direct Insurance and a retentIon In reinsurance. See also Institute Time Clauses Hulls (1/10/83 and 1111195); cI 12.1.

742

6 (including, if applicable. Clause 6 as amended by Clauses 37 or 38), Clauses 8 and 9 and, if applicable, Clause 41) exceeds the deductible amount agreed in whIch case thIS sum shall be deducted. Neverrheless the expense of sighting the botrom after stranding, if reasonably incurred specially for that putpose, shall be paid even if no damage is found. The essence of the clause is that the value of all claims under the policy of any 23.41 nature whatsoever should be aggregated and the total subject to the agreed deductible. Thus, suppose the insured vessel is responsible for colliding with another vessel, as a result of which the ins.ured vessel requires the assistance of a salvage tug and has to put into a port of refuge for emergency repairs before completing its voyage. The insured shipowner will have claims under clause 2 for damage to the insured vessel, clause 6 for collision liability (as extended if applicable by clause 38 to four-fourths liability), clause 8 for the vessel's share of any salvage award under Article 13 of the International Convention on Salvage 1989 and also for general average losses (as extended if applicable by the general average absorption provision in clause 40) and clause 9 for any suing and labouring expenses. The measure of indemnity for each of these claims is calculated and the measures are then aggregated. The deductible falls to be subtracted from the total so generated. Clause 15.2 provides for the possibility of a separate 'machinety damage 23.42 deductible''' applicable to claims fot 'loss of or damage to any machinery, shaft, electrical equipment or wiring, boiler, condenser, heating coil or associated pipework' where, first, the claim either arises under the Inchmaree clause" or from a fire or explosion that has originated in a machinery space and, secondly, the policy incorporates the additional perils clause58 and no claim arises under it. Where such a machinery damage deductible has been agreed, it is applied to the aggregate valLle of all eligible machinety damage claims arising out of the same 'separate accident or occurrence' and the balance, if any, is then brought into account under clause 15.1 and subject to the main policy deductible. Both the main policy deductible under clause 15.1 and the machinety damage 23.43 deductible under clause 15.2 provide for aggregation of claims 'arising out of each separate accident or occurrence'. Otherwise, whether a new accident or occurrence has arisen, requiring application of a second deductible, depends upon whether there has been a break in the chain of causation so that the claim can no longer be said to arise from (in the sense, presumably, of being proximately caused by) the first accident or occurrence. S9

There is no corresponding provision in the Institute hull clauses. d 2.2, discussed in eh 11 above. 58 d 44, discussed at 11.28 above. 59 For the views of the Committee of the Association of Average Adjusters, see N Hudson and T Madge, Marine Insurance Clauses (4th edn, 2005) 133-5. 56 57

743

Under-insurance

Measures ofIndemnity 23.44 In order ro provide a measure of cerrainry, clause 15 expressly addresses two readily foreseeable areas of porential difficulry in applying rhe norian of a separare accident or occurrence. First, clause 15.460 addresses 'heavy wearher', an expression stated to include conracr with floating ice. All claims for heavy wearher damage incurred 'during a single sea passage between two successive ports' are deemed ro arise from one and rhe same accident. Purting inro any parr for any ordinary purpose, wherher for bunkering or cargo handling, will rerminate rhe sea passage with a new such passage commencing on departure for another port. Where, however, a vessel mal,es an extraordinary, unscheduled srop, for example for emergency medical assistance for a crew member, it is unclear whether the scheduled single sea passage would be divided.

'This insurance does not cover partial loss, other than general average loss, under 3% unless caused by fire, sinking, stranding or collision with another vessel. Each craft and/or lighter ro be deemed a separate insurance if required by the assured.' The franchise restriction does not apply, thetefore, in cases of total loss, to claims in respect of general average, and ro parriallosses where the cause of the loss is fire, sinking, stranding, or collision with another vessel. The second sentence of the clause permits the assured to apply the franchise clause severally where the insurance covers freight to be earned by a number of craft and/or lighters and the loss amounrs to three per cent in respect of one or more individual craft and/or lighter bur not with respect ro the whole freight insured.

23.45 Should the policy expire in the course of such a voyage, clause 15.4 provides for the aggregated claims for which the insurer is liable to be subject ro a reduced deductible. This is calculated on a proportionate basis according ro the proportion that the number of heavy weather days falling within the period of cover bears to the rotal number of heavy weather days during the single sea passage in

C. Under-insurance

question. 23.46 Further assistance on aggregation is provided, secondly, in the conrext of operations to lighten the insured vessel or to load or discharge cargo from or to another vessel while at sea. Clause 15.5 provides that claims fat damage during any such separate operation are ro be treated as due to one accident. 23.47 The deductibles do not apply ro all claims. By virtue of clause 15.3, neither the main policy deductible under clause 15.1 nor any machinery damage deducrible under clause 15.2 applies to a claim for an actual or constructive total loss of the insured vessel, nor to any claim for suing and labouring expenses unde~ clause 9 arising from the same accident or occurrence thar gives rise ro a roralloss. 61 In addition, clause 15.! itself provides thar ir does not apply to claims for reasonable expenses in sighting the botrom after a stranding regardless of whether the srtanding has occasioned the vessel any damage.

(3) Franchise Clauses 23.48 The difference between a deductible and a franchise clause is rhat, whereas under a deducrible the assured always bears a proporrion of the risk, under a franchise clause the insurer pays the loss in full once the designated threshold has been achieved. The Institute freight clauses conrain the following franchise clause:"

There is no obligation to insure properry for its full value. In order to obtain a 23.49 lower premium or to spread cover among a number of differenr insurers, the assured may decide to insure for only a proporrion of the properry's value. In such a case, section 81 of the Marine Insurance Acr 1906 provides as follows: 'Where the assured is insured for an amounr less than the insurable value or, in the case of a valued policy, for an amount less than rhe policy valuation, he is deemed to be his own insurer in respect of rhe uninsured balance.' For its parr, the insurer is, accordingly, liable only for such proportion of the loss as the amounr of its subscription bears ro the agreed value in a valued policy (AV) or the insurable value in an unvalued policy (IV)." This is known as the principle of average. Assume, therefore, a valued policy under which properry is valued at £100 and 23.50 insured for £80. By virrue of section 27(3), the contractual value of the insured properry at £100 will be presumed conclusive. A toralloss under a valued policy prima ficie enrides the assured ro indemnification in the sum of the agreed value, namely £100. However, section 81 renders the assured its own insurer for the 20 per cenr under-insurance and it must, therefore, carry one-fifth of the loss itself. The insurer's liabiliry is limited to £80. The result of section 81 is that the measure of indemniry, whether for a total or parrial loss, is derived as follows: Measure of indemniry where fully insured

Sum insured X -----

AV/IV

In cases of total loss, this will give the assured the sum for which the properry is insured. The real effect of average, therefore, is felt in cases of parrialloss. 60 See also Institute Time Clauses Hulls (1110/83 and 1/11/95), cI 12.2. " See also Institute Time Clauses Hulls (1/10/83 and 1/11/95), cI 12.1.

62

Institute Time Clauses Freight (1/8/89 and 1111/95), cl12; Institute Voyage Clauses Freight 63

(1/8/89 and 1/11/95), clIO.

744

MIA 1906. s 67(2).

745

Measures ofIndemnity 23.51

The principle of average does not generally apply to liability insurance. Where a policy ot a section of a policy covers the thitd patty liability of the assured, if covet is limited by a sum insuted and liability on the facts exceeds that figure, the assured is entitled to a measute of indemnity equal to the sum insured and not metely such ptoportion of that figure as the sum insured beats to the liability incurred. 64 Average does apply, however, to liability in genetal average contn'b' utton and sal vage. 65

24 AVERTING AND MINIMIZING LOSS

" Joyce v Kennard (l 87 I} LR 7 QB 78; Cunard Steamship Co Ltd v Marten [1902J 2 KB 624. See 24.73-24.74 below.

65

A. Sue and Labour Expenses (1) Comractual wordings (2) Required standard of conduct (3) Persons falling within the sue and labour doctrine (4) OUt)' or liberty? Consequences of non~compliance with section 78(4) (5) Joint and composite insurance (6) Negligence cover and the sue and labour doctrine (7) Entitlement to reimbursement of expenses (8) Supplementary nature of the sue and labour reimbursement undertaking (9) Suing and labouring in anticipation of a peri! (10) Relationship between the period

of cover and the sue and labour doctrine (11) Expenses recoverable under a reimbursement undertaking

24.02

24.03 24.07 24.09

B. General Average

24.33 24.37 24.41

(1) General average losses

and liabilities (2) Insurance of general average losses and liabilities

24.10 24.18

C. Salvage

24.19

(1) Salvors' remuneration (2) Insurance of liability for salvage remuneration D. Under-insurance (1) Sue and labour (2) General average and salvage (3) Insutance against a shortfall by reason of under-insurance

24.25

24.29 24.30

24.44 24.48 24.56 24.58 24.62 24.70 24.71 24.73 24.75

This chapter is concerned with ancillary heads of cover undet which an assured 24.01 can recovet in tespect of losses and liabilities incuned voluntatily Ot by law in order to avert or minimize loss. It addresses the tecoverability of sue and labour expenses, of losses and liabilities arising in general avetage, and of liability for the diffetent awards that may be made at law and undet conttact to salvors. A final section then considets the issue of undet-insutance in respect of each of these heads of ancillary loss.

A. Sue and Labour Expenses It is clearly in the intetest of the insutet that an assured should take all reason- 24.02 able measures to minimize Ot, prefetably, avoid entirely any loss falling within

746

747

Averting and Minimizing Loss

Sue and Labour Expenses

the tetms of the policy. Most modern marine policies follow in the tradition of the SG policy and address this interest through express contractual terms. Section 78 of the Marine Insurance Act 1906 contains three presumptive rules of intetpretation of such so-called 'sue and labour clauses', but subsection (4) provides that: 'lt is the duty of the assured and his agents, in all cases, to talce such measures as may be reasonable for the purpose of averting or minimizing a loss.' This statut0ty duty to sue and labour appears to exist alongside any express

16.1 to take such measures as may be reasonable for the purpose of averting or

contractual term.

minimising such loss)

and 16.2 to ensure that all rights against carriers, bailees or other third parties are

properly preserved and exercised and the Underwriters will, in addition to any loss recoverable hereunder, reimburse the Assured for any charges properly and reasonably incurred in pursuance of these duties.

1

This clause amalgamates the traditional sue and labour clause with the so-called 'bailee clause', designed to protect insurers' subrogation rights. 4

(1) Contractual Wordings 24.03 The SG policy contained the following 'sue and labour' clause: And in case of any loss or misfortune it shall be lawful to the assured, their factors, servants and assigns, to sue, labour, and travel for, in and about the defence, safeguards, and recovery of the said goods and merchandises, and ship, &c, or any part thereof, without prejudice to this insurance: to the charges whereof we, the assurers, will contribute each one according to the rate and quantity of his sum herein assured.

24.04 The Institute and International hull clauses contain rhe following clause entirled 'Duty of the Assured (Sue and Labour)':' 'In case of any loss or misfortune it is the duty of the Assured and their servants and agents to talce such measures as may be reasonable for the purpose of avetting or minimising a loss which would be recoverable under this insurance.' This is complemented by an express promise to contribute to charges 'properly and reasonably incurred' in connection with such measures. 24.05 In the Institute Cargo Clauses (A), (B), and (C), clause 16 is termed in the margin a 'Duty ofAssured Clause', is entitled 'Minimising Losses', and provides as follows:' It is the duty of the Assured and their servants and agents in respect of loss recoverable hereunder

1 Strive Shipping Corp v Hellenic Mutual W'ar Risks Association (Bermuda) Ltd (The Grecia Express) [2002] Lloyd's Rep IR 669, paras 481-501. In Cunard Steamship Co Ltd v Marten

The rules of mutual insurance associations contain similar provisions requiring 24.06 the taking of reasonable measures to avoid insured losses. No such clause is, however, found in the Institute fteight clauses. 5 (2) Required Standard of Conduct As indicated by the reference to 'reasonable' measures in section 78(4) of the 24.07 1906 Act and the express sue and labour clauses, a plea of failure to sue and labour requires proof of negligence by a televant person, negligence being assessed by reference to the conduct that might reasonably be expected of a person of normal competence in the circumstances of the peril that occurred. In The Talisman: the assuted was required to 'use all reasonable endeavours to save his vessel' from loss or damage. The master found a quantity of water in the engine room bilge. Believing he had a choice berween closing the seacocks or leaving them open and allowing the pumps to eject the water, he took the latter course. The vessel, however, sank. The insurets contended that expert evidence demonsttated that the loss could have been averted by opening the seacocks. The House of Lords held that this evidence failed to address the relevant issue, namely whether 'an ordinary competent skipper, in citcumstances in which the pursuet was placed, would teasonably be expected to attempt to close the seacocks'. It proved only that 'a more knowledgeable individual, viewing the situation dispassionately' might have realized that closing the seacocks would have offeted a significant prospect of saving the vessel. 7 In Bayview Motors Ltd v Mitsui Marine'& Fire Insurance Co Ltd,' insurets argued 24.08 that the assureds had failed to sue and labour in failing to institute ptoceedings

[1903J 2 KB 511, the sue and labour clause was held inapplicable on its wording to the policy in question, but no possibility was mentioned of recovery instead at common law. The case, however, pre-dates the 1906 Act and the generality of the sue and labour doctrine as subsequently articulated by s 78(4} may not have been appreciated. Assuming the dual analysis is correct, the true interpretation of an express sue and labour clause may, of course, be to exclude any residual statutory duty. " , Institute Time Clauses Hulls (1IIO/83), cl 13.1; (1/11/95), cl 11.1; International Hull Clauses (01111103), cl9. L The sue and labour clauses in the Institute hull clauses are incorporated by reference into the corresponding war and strikes clauses. ." 3 Also the Institute War Clauses (Cargo}, Strikes Clauses (Cargo), d 11.

See 25.20 below. See also the loss of hire policy in Ikerigi Campania Naviera SA v Palmer (The WOndrous) [1992] 2 Lloyd's Rep 566, 576. 6 Stephen v Scottish Boatowners Mutual Insurance Association (The Talisman) [1989J 1 Lloyd's Rep 535. , ibid 540 per Lord Keith. 8 [2002] EWHC 21 (Comm), [2002] 1 Lloyd's Rep 652.

748

749

4

5



for the recovery of insured property stolen by local customs officials. However, the insurers' own agents had stated that such proceedings would be 'lengthy and fruitless' and the argument was duly rejected.

charge the defendant by way of damages with any greater sum than that which he reasonably needs to expend for the purpose of making good the loss. In short, he is fully entitled to be as extravagant as he pleases bur not at the expense of the defendant'. Accordingly, whereas the victim of a breach of contract owes no genuine duty to take reasonable steps to minimize the consequences of the breach, any loss that would have been averted by such steps is not recoverable from the perpetrator of the breach. Mitigation is not a duty bur a liberty or privilege, and the innocent party enjoys rhe freedom not to mitigate, albeit not at the expense of the contract breaker."

(3) Persons Falling within the Sue and Labour Doctrine 24.09 The staturory sue and labour doctrine requires the taking of reasonable measures to avert or minimize a loss by the assured and its agents. Contractual sue and labour clauses commonly refer also to the assured's servants. Such formulae do not embrace, or are at least unlikely to embrace, independent contractors. In State o/the Netherlands v Youell' insurers sought to resist a claim brought by the Dutch navy in respect of the defective painting of rwo submarines built by a shipyard, on the basis that the deficiency was occasioned by negligence on the part of the yard amounting to a breach of section 78(4). It was held, however, rhar the yard could not be regarded as the navy's agent for the purposes ofsection 78(4), or even at all. According to Rix J, in a passage approved on appeal: 10 .. . the yard was dealing with the submarines not as the navy's agent but as the submarines' builder under a building contract. It would in my judgment be a misuse of language to call the yard in such a case an 'agent'. The navy was not

delegating anything to the yatd, let alone a duty to sue and labour. Under that building contract the yard was responsible for building the submarines without defects and thus for repairing any defects prior to delivery: the latter was part of its obligations as builder, both in common sense and under the express terms of the

policy. (4) Duty or Liberty? Consequences of Non-compliance with Secrion 7S(oi) 24.10 Section 78(4) of the Marine Insurance Act 1906 is concerned with avoiding and minimizing losses otherwise falling on the insurer, which is viewed ~as having broken a contractual obligation to keep the assured free from the specified loss or expense." The general law of contract recognizes a doctrine of mitigation of loss, under which the victim of a breach of contract is often said to be under a 'duty' to miuimize losses flowing from the breach. However, it is well established that 'the duty to mitigate is not in any sense an obligation, contractual or otherwise. It is a condition attached to the right to claim damages'. " 24.11

In Darbishire v WtZrran,13 Pearson LJ observed that a claimant 'is not entitled to

9 [1998J 1 Lloyd's Rep 236. " [1997J 2 Lloyd's Rep 440, 459. approved [1998J 1 Lloyd's Rep 236, 246, 247. 11 See 22.65 above. ' 12 Soriros Shipping Inc v Sameiet Solhoit (The Soihoit) [J9811 2 Lloyd's Rep 574, 580 per Staughton]. affd [1983J 1 Lloyd's Rep 605, 608. 13 [1963] 1WLR 1067, 1075, applied Koch Marine Inc v D'Amica Societl,rDi NavigazioneARL (The Elena D'Amico) [1980J 1 Lloyd's Rep 75, 88.

750

In Currie (MR) & Co v Bombay Native Insurance CO,15 the master of a wrecked 24.12 and aground vessel gave notice of abandonment of the cargo and sold it by auction. He had, however, unjustifiably taken no steps whatever to save the cargo, a large portion of which was subsequently saved. The cargo was insured against toralloss only. The Privy Council held that under such circumstances there was no total loss and the notice of abandonment was invalid. However, it was stared obiter that the omission of the master to attempt to save the cargo 'at a time when it was probable that his endeavours would be successful, in their Lordships' judgment, precludes the Assured from claiming for a total loss of the cargo into whatever condition it might have been brought afterwards', 16 dicta that constitute the basis of section 78(4) of the 1906 Act. Such dicta are entirely consistent with a doctrine analogous to mitigation and with the permissive language of the traditional suing and labouring clause." A further difficulty with regarding section 7S(4) as imposing a genuine duty lies 24.13 in the inclusion in the subsection of the assured's agents.'s In the absence of any clear legislative intent, it would, it is suggested, be unsatisfacrory for the dicta in Currie v Bombay to be transfotmed into a statutory duty owed to the insuter by persons who are not patty ro the insurance contracr and sounding in damages for breach. 19 Its derivation suggests that section 78(4) is intended to render the assured's right to recover under the contract subjecr to the taking of reasonable

14 Similarly, ownership of a vessel imports the privilege of deliberate destruction. The law on wilful misconduct and fraudulent claims in no way detracts from the privileges of ownership, but ensures that such privilege cannot be exercised at the expense of the insurer. The fraud lies not in the destruction of the vessel but in the basing of a claim against the insurer upon such a loss. ,s (1869) LR 3 PC 72. " ibid 82-3. 17 See also Lord Blackburn in Aitchison v Lohre (1879) 4 App Cas 755, 765 (object of the sue and labour clause was 'to encourage exertion' by the assured). " F Rose, 'Failure to Sue and Labour' [1990J ]BL 190. 19 It is no answer to say thar damages will not in practice be recoverable since the indemnity payable to the assured will simply be pro tanto reduced. Damages payable by X to Y cannot be set off against a sum payable by Y to Z. It is conceivable, moreover, that the insurer might pay the assured by mistake and then seek reimbursement from the agent for breach of duty, the assured having become insolvent: ibid 197.

751



steps to avert or minimize loss by both the assured and the assured's agents. The subsection might perhaps be interpreted as rendering the assured, but only the assured, answerable for any failure to sue and labour on the part of either itself or its agents, with the insurer entitled to set off damages for breach against the indemnity payable under the policy. It is, however, suggested rhat analysis of section 78(4) as creating a condition to recovery analogous to the doctrine of mitigation in general contract law is a more natural way of achieving this result.

Interpretation of section 78(4) as imposing a condition on recovery rather than 24.16 a genuine duty does not, of course, prevent an express sue and labour clause from imposing a genuine duty if such is its true interpreration. In The Vasso,24 clause 16 of the Institute Cargo Clauses (A) was regarded as imposing a contractual duty sounding in damages for breach. There was, however, no consideration of how the reference to persons other than the assured was to be accommodated in terms oflegal principle."

24.14 Such an analysis was indeed adopted by Colman J in National Oilwell (UK) Ltd v Davy Offihore Ltd,20 where it was specifically held that damages are not available for a breach of section 78(4). Focusing on the reference to 'duty' in section 78(4), Colman J reasoned as follows:"

A sue and labour provision may, of course, address the consequences of non- 24.17 compliance. Such provisions in the rules of mutual insurance associations often state that non-compliance entitles, at the discretion of the association's directors, rejection of the claim in its entirety or reduction in the measure of indemnity.

On the construction of this provision which I consider to be correct the assured is

certainly under a duty in the sense that in cases where an omission to act as a prudent uninsured might be the proximate cause of an insured loss, he fails to act at his peril. However, the consequence of his omission to act is that no insured loss occurs. Ex hypothesi no such loss can occur because the proximate cause of any such loss would not be an insured peril but rather the uninsured peril of the assured's or this agent's omission to act. In such a case the insurers would have a defence to the claim, but they would have no set-off or counterclaim unless they had already paid on the assured's claim and were seeking to recover what they

(5) Joint and Composite Insurance The unity of interest insured under a joint policy means that a failure by one 24.18 joint assured to sue and labour as required by statute or contract is opposable against all joint assureds. In contrast, the severable or separate interests of coassureds under composite policies means that a failure to sue and labour by one co-assured does not prejudice the cover of other co-assured interests.

had paid. 24.15 A causation-based approach to section 78(4) was adopted also at first instance by Rix J, drawing a parallel with the doctrine of mitigation, and on appeal by Phillips LJ in State ofthe Netherlands v Youell." On this approach, therefore, failure to sue and labour confers on the insurer no cause of action by way"of primary or cross-claim. Instead, the insurer is simply not liable in respect of losses it can prove" were caused by the failure to take reasonable steps by any of the specified parties. Where the effect of a failure to take reasonable steps is to aggravate damage thar would inevitably have been incutred, the measure of indemnity is pro tanto reduced to the extent that the insurer can prove the extent of the aggravation.

20

[199312 Lloyd's Rep 582.

ibid 619. Also 623. Colman J thereby declined to follow the dicta of Mocatta J, apparently recognizing an actionable duty, in Astrovlanis Compania Naviera SA v Linard (The Gold Sky) 21

[197212 Lloyd's Rep 187, 221. A contractual dury approach to MIA 1906, s 78(4) was indicated obiter by Hobhouse J in Noble Resources Ltd v Greenwood (The VdS.io) [19931 2 Lloyd's Rep 309, 314, but Colman] reiterated and applied his analysis in Strive Shipping Corp v Hellenic Mutual Wilr Risks Association (Bermuda) ltd (The Grecia Express) [2002J Lloyd's Rep IR 669, paras 484, 499-501. 22 [199712 Lloyd's Rep 440, 458, [199811 Lloyd's Rep 236, 245. 23 Roper vJohnson (1873) LR 8 CP 167 (the contract breaker carries the o~rden of proving a failure to mitigate).

752

(6) Negligence Cover and the Sue and Labour Doctrine

Section 55(2)(a) of the Marine Insurance Act 1906 provides that the assured is 24.19 not to be denied recovery because the loss would not have occurred but for the negligence of the master or crew. This requires reconciling with section 78(4), which denies recovery or reduces the measure of indemnity where the assured has negligently failed to avoid or minimize loss.

It is clear that section 78(4) cannot be read as undermining section 55(2)(a). 24.20 In British & Foreign Marine Insurance Co v Gaunt," Lord Sumner dismissed a contrary argument as follows: There remains an argument based on a reading of s 78 sub-s 4, of the Act which is very novel. It is one of the disadvantages of codification that new terms used or even unfamiliar sequences of propositions suggest that the law has been changed, where those familiar with the old decisions would not have suspected it. The argument affords a striking instance of this. The secrion obviously refers to suing

and labouring. It cannot possibly be read as meaning that if the agems of the

20 Noble Resources Ltd v Greenwood (The Vasso) [199312 Lloyd's Rep 309, 314. See also Strive Shipping Corp v Hellenic Mutua! \Vtzr Risks Association (Bermuda) Ltd (The Grecia Express) [2002J Lloyd's Rep IR 669, para 489. 2S See 24.13 above. 25 [192l]2AC41,65.

753

Sue and Labour Expemes

Averting and Minimizing Loss assured are not reasonably careful throughout the transit he cannot recover for anything to which their want of care contributes. The point therefore fails.

24.21 Moreover, in the leading case of Lind v Mitchel4 27 section 55(2)(a) was held to prevail over secrion 78(4) where a master, in response to an insured peril, unreasonably and negligently abandoned the vessel. Scrutton LJ quoted the above statement of Lord Sumner, expressed his agreement, and held that section 78(4) was therefore excluded from the case.'s The insurers were, accordingly, liable as the proximare cause of the loss was the insured peril. 24.22 One possible basis for reconciling cover in respect of negligence and requirements to exercise reasonable care to avoid loss lies in the rule that a contract is not

to be construed in a manner repugnant to its commercial purpose. In order to avoid the effecrive deletion of cover, requirements of 'reasonable care' have been interpreted as infringed by subjective recklessness rather than the objective negligence traditionally associated with failure to act reasonably.29 In Lane (W & J) v Spratt,30 this approach was adopted by Roskill J with respect to a due diligence clause in a Lloyd's goods in transit policy thar required the assured to take 'all reasonable precautions for the protection and safeguarding of the goods'. However, while this remains a possible interpretation of a particular express sue and labour clause, the endorsement by the House of Lords of a negligence standard in the sue and labour conrext in The Talisman" would appear to exclude the repugnancy rule ftom providing a general solution to the conflict between negligence cover and the sue and labour doctrine in marine insurance law. 24.23 It is also not possible to draw a temporal distinction between negligence cover and suing and labouring on the basis that the former is concerned with how a loss is caused while the latter addresses the aftermath ofand response to a loss. The sue and labour doctrine is not so confined. It is true that one can only sue arid labour in response to the advent ofa peril or the threat ofa peril. 32 Consequently, certain negligent conduct that leads to a peril will indeed be too remote from the loss to fall within the purview of the sue and labour doctrine. There remains, nevertheless, considerable temporal overlap while a peril threatens" or indeed while the insured property is in the grip of a sustained peril. 34

(1928) 34 Com Cas 81. Lawrence L] agreed and Sankey L] delivered a shorr concurring judgment. " See 8.21 above. 30 [197012 QB 480. 31 Stephen v Scottish Boatowners Mutual Insurance Association (The Jalisman) [1989J 1 Lloyd's Rep 535, discussed at 24.07 above. 32 State ofthe Netherlands v Youell [19981 1 Lloyd's Rep 236, 249. 33 .A:; in Integrated Container Services Inc v British Traders Insurance Co [1984] 1 Lloyd's Rep 154, discussed at 23.31 above. 34 As in Stephen v Scottish Boatowners Mutual Insurance Association (The" Talisman) [1989J 1 Lloyd's Rep 535, discussed at 24.07 above.

The complete solution to the apparent conflict lies in the causation-based 24.24 analysis of the sue and labour doctrine as a condition upon recovety.35 On this analysis, rhe assured will be denied recovery by a failure to sue and labour only where the negligent failure to avert or minimize loss constitutes the proximate cause of the 10ss.36 Where the chain of causation is broken, the insurer is not liable simply because the cause of the loss is not a covered peril (thus accommodating section 55(2)(a), which does not make negligence a covered peril) unless under the wording of the particular policy the negligence itself constitutes a covered peril. Thus, in Lind v Mitchel4 37 Scrutton LJ considered that, if the master's conduct broke the chain of causation, the insurers remained liable because negligence was also a covered peril under the Inchmaree clause. The net result is that section 78(4) will rarely afford insurers a defence to a claim. It is highly unlikely that negligent conduct of the assured, its agents, or some other party specified under a sue and labour clause will be held to break the chain of causation so as to constitute the proximate cause of the loss and highly likely that the negligence of any such person that does achieve proximate cause status will be a covered peril under the Inchmaree clause. 38 (7) Entitlement to Reimbursement of Expenses

The sue and labour provisions in the Institute and International clauses 24.25 contain express undertakings to reimburse expenses reasonably incurred in averting or minimizing a loss. In default of such a reimbursement undertaking in an express sue and labour clause, an entitlement to recover is implied by statute. 39 In contrast, the Marine Insurance Act 1906 is silent as to whether an assured that has incurred expenditure pursuant to section 78(4) in taking reasonable steps to avert or minimize a loss, or has incurred a liabiliry to reimburse an agent for such expenditure, is entitled to seek reimbursement from the insurer. In Emperor Goldmining Co Ltd v Switzerland General Insurance Co Ltd,40 the 24.26 Supreme Court of New South Wales held that expenses can be recovered when incurred pursuant to section 78(4). Notwithstanding the contrary view adopted

27 28

754

See 24.14-24.15 above. State ofthe Netherlands v Youell [1997J 2 Lloyd's Rep 440, 458, [199811 Lloyd's Rep 236, 244-5. 37 (I928) 34 Com Cas 81. 3S

36

For negligence cover under the Inchmaree clause, see 11.37~11.42 above. MIA 1906, S 78(1). The rules of mutual insurance associations often contain provisions requiring the taking of reasonable measures to avert or minimize losses without any express corresponding reimbursement undertaking. 38 39

40

[19641 1 Lloyd's Rep 348.

755

Averting and Minimizing Loss obiter by Neill J in Integrated Container Service Inc v British Traders Insurance Co Ltd,41 mis, it is suggested, must be correct. 42 First, if the law denied the assured recovery in the event of failure to exercise reasonable care to avoid or minimize

an insured loss yet required the assured to carry the cost of reasonable steps taken, the net effect would be to deny the assured full indemnification wherever reasonable steps involving some coSt could be taken. This is hard to justifY or to accept as a sensible commercial interpretation. Secondly, law that is prepared to imply an entitlement to reimbursement of expenses into any exptess sue and labour clause, should not deny a similar entitlement where the underraking of reasonable steps is not expressly agreed but implied by law. Thirdly, in The Mammoth Pine,4' the Privy Council held that a 'bailee clause' that required the assured to ensure that all third party rights were ptoperly preserved gave rise to an implied undertaking to reimburse expenses reasonably incurred by the assured in so acting for the insurers' benefit. Fourthly, further suppOrt, if needed, may be found in the analogy with mitigation. In return for exercising reasonable care in mitigating the consequences of a breach of contract, the innocent party benefits from an implied correlative right of reimbursement of reasonable expenses incurred. 44 24.27 Any right to reimbursement is triggered by the taking of reasonable steps within

the scope of the relevant contractual or Statutory sue and labour duty, not by success in averting or minimizing an insured

1085.

45

Where, however, the cir-

cumstances are such that insurers cannot derive any benefit in that the insured loss cannot be averted or minimized, it is ex hypothesi not reasonable for the assured to seek to avert or minimize the loss at the insurers' expense and any

expense incurred is irrecoverable by way of the sue and labour doctrine." Consequently, an undertaking to reimburse sue and labour expenses is confined to expenses incurred in order to avert or minimize a loss for which the insurer

would otherwise be liable. 47 Expenses are irrecoverable where me threatened loss

Sue and Labour Expenses is partial under a policy that covers only totallosses,48 where the cause of the loss is a peril excluded or simply not covered by the policy,49 or where the insurer has a defence to any claim in respect of the avoided 10ss.50 Where expenses are incurred in parr to avert or minimize an insured loss and in part to avert or

minimize an uninsured loss, liability for such expenses is apportioned proportionately between assured and insurer. 51 Provided, however, expenses are

incurred to avert a covered loss, no apportionment is required by the fact that the same expenses serve also to avert another loss that is not covered. 52

A particular example of expenses for mixed purposes arises where an insured 24.28 vessel toget~er with other property on board are in a position of grave peril such that successful salvage is unlikely and the only basis on which a contractor will endeavour to save the property at risk is payment for work irrespective of result rather than the salvage basis of 'no cure-no pay'. Assume then that the effons to save the property fail in that the vessel is a total loss and such property as is recovered possesses a lower collective value than the cost of the services. For the shipowner, recovering the cost of the services is problematic. There is a gap in insurance cover. The contributory values in general average are zero or inadequate to meet the cost. The contractual basis of the work denies the cost status as a salvage charge. Viewed as sue and labour expenses, the contractor's services were engaged for the benefit of both vessel and other property on board so that a hull insurer's liability is confined to an appropriate proportion of the expenses and the sue and labour clauses in the Institute and International hull clauses so provide. 53 However, although P&I club rules do not specifically cover the resulting shortfall, it would be eligible for consideration under the omnibus rule. (8) Supplementary Nature of me Sue and Labour Reimbursemenr Undertaking The undertaking to teimburse sue and labour expenses, whether implicit in 24.29 section 78(4) or express or implied in an express sue and labour clause, is

" [198112 Lloyd's Rep 460, 465. 42 In non-marine insurance, it has been held that sue and labour expenses are irrecoverable unless the contract expressly or by necessary implication provides for recovery: YOrkshire \\?titer Services Ltd v Sun Alliance & Lontlan Insurance pic [1997J 2 Lloyd's Rep 21; King v Brandywine Reinsurance Co (UK) Ltd (20041 EWHC 1033 (Comm), (20041 Lloyd's Rep lR 554, para 143. In non~marine insurance, however, there is no equivalent to MIA 1906, s 78(4). 43 Netherlands Insurance Co Est 1845 Ltd v Karl Lijungberg & Co AB (The Mammoth Pine) (198613 All ER 767. '" Lloyd) & Scottish Finance Ltd v Modern Cars & Caravans (Kingston) Ltd (196611 QB 764, 782-3; Andros Springs (Owners) v World Beauty (Owners) (The World Beauty) [19701 P 144, 156. 45 KuwaitAirways Corp v Kuwait Insurance Co SAK (No 1) (199911 Lloyd's Rep 803, 816. 46 Kuwait Airways Corp v Kuwait Insurance Co SAK (No I) (19961 1 Lloyd's Rep 664, 698, (199712 Lloyd's Rep 687, 697. 47 MIA 1906, s 78(3).

756

48

Great Indian Peninsuhr Co v Saunders (1861) 2 B & S 266; Booth v Gair (1863) 15

CB(NS) 291. 49 Weissherg v Lamh (1950) 84 LlLRep 509; Berk (FW) & Co Ltd v Style (19551 2 Lloyd', Rep 382; Ikerigi Compania Naviera SA v Palmer (The Wondrous) (19921 2 Lloyd', Rep 566, 576. 50 Fraser Shipping Ltd v Colton (19971 1 Lloyd's Rep 586, 598. .. . 51 Royal Boskalis Westminster BV v Mountain [1997] LRLR 523, 602. LikeWise In cases of under~insurance,at least at common law: see 24.71-24.72 below. 52 Royal Boskalis Westminster BV v Mountain (1999) QB 674, 738 (expenses incurred both to save insured vessels and to gain the freedom and safety of their crew). 53 Institute Time Clauses Hulls (1/10/83), cl 13.5; (1/11/95), cl 11.5; International Hull Clauses (01/11/03), cl 9.4. Under the Institute hull clauses, para 5 provides for proportionate reduction of the measure of indemnity in case of under-insurance.

757



supplementary to the main insurance cover. This has a number ofconsequences. First, expenses incurred are recoverable on top of the measure of indemniry payable in respecr of losses sustained by the insured properry or liabilities covered by the policy. 54 Under the Institute and Inrernational hull clauses, however, the amount recoverable is limited to the amount for which the vessel is insured under the policy. 55 Secondly, where recovery in respect of damage to the subject-matter insured is subject to the loss achieving a threshold figure, the recovery of sue and labour expenses is not subject to that threshold. 5' Thirdly, in litigation a claim for sue and labour expenses must be specifically pleaded and particulars must be given of the measures carried, the basis on which such measures are alleged to be reasonable, and the COStS incurred in connection with each measure. 57

activiry by the [assureds] under the sue and labour clause' and that the requisite degree of risk was one of high probabiliry. The assured had to inrervene to averr or minimize a loss that otherwise would 'very probably' fallon the insurers. The Court of Appeal held that the expendirure was recoverable. Dillon L] did not specifically address the level of probabiliry required. While rhere was no 'immediate danger' of the conrainers being losr, ir was 'inevitable' that the assureds would lose the conrainers if rhey did nothing. 60 Eveleigh L], however, held that a stringenr rest of likelihood of covered loss was in principle inappropriate:"

(9) Suing and Labouring in Anticipation of a Peri! 24.30 An injunction to sue and labour, whether statutory or contractual is not con-

fined to the aftermath of rhe peril. It makes no commercial sense to tempt an assured to sustain a recoverable loss rather than incur irrecoverable expenditure in endeavouring to avoid it. The question arises, however, of rhe degree of likelihood of loss by a covered peri! thar musr be present before expenditure incurred iu successfully averting it will be recoverable as sue and labour expenses. 24.31

In Integrated Container Servia Inc v British Traders Insurance Co Ltd, 58 a lessee of 1,016 containers became insolvent and the lessor incurred almost US$54,000 expenditure in tracing and recovering all but rwo of rhe containers. Insolvency of the lessee was not a covered peril under the assured lessor's all risks policy, but it entitled the lessor to resume possession of the containers. The containers were in the possession of port authorities and agents of the lessee. There was, accordingly, a danger of insured losses ensuing through the containers being sold in satisfaction of unpaid charges or appropriated as abandoned. It was accepted that no dury to sue and labour arose 'until the assured is faced by the incidence of a peril'.59 The insurers, however, argued inter alia that 'the risk of loss was too remote at the time the expense was incurred to warrant

78(1). Subject, of course, to the policy otherwise providing: Kuwait Airways . 55 Institute Time Clauses Hulls (1110/83), cl 13.6; (1111195), cl 11.6; Intetnatlonal Hull Clauses (01/11/03). cl9.5. " MIA 1906, s 78(1); Kimton v Empire Marine1murance Co (1866) LR 1 CP 535, 544-7. 57 North Star Shipping Ltd v Sphere Drakefmurance pk: (The North Star) [2004J EWHC 2457 • (Comm), [2005J Lloyd's Rep IR 404. 58 [1984J I Lloyd's Rep 154. " ibid 249 per Buxton LJ. 54

MIA 1906,

Whether or not the assured can recover should depend upon the reasonableness of

his assessment of the situation and the action taken by him. It should not be possible for insurers to be able to contend that, upon an ultimate investigation and analysis·· of the facts, a loss, while possible or even probable, was not 'very probable'. As the right to recover expenses is a corollary to the duty to act, in my opinion the assured should be entitled to recover all extraordinary expenses reasonably incurred by him where he can demonstrate that a prudent assured

person, mindful of an obligation to prevent a loss, would incur expense of an unusual kind.

It sufficed that there was'a risk' of an insured loss materializing, although the level of risk would affect the reasonableness of measures raken by the assured in response. 62 Undeniably commercially reasonable, the effect of the decision in Integrated 24.32 Container Services was to render insolvency of the lessee an insured peril, the assured being permitted indirectly to recover in respect of the consequences of that insolvency, arguably subverting the scope of the primary cover. The insurer agreed to cover damage to or loss of the containers, not the assured's costs of administering rhe leasing contract. It is also curious that expenditure incurred nor in response to a peril but in apprehension thereof is recoverable, whereas a loss of insured properry reasonably incurred under the same circumstances is not. It is well established in marine insurance law thar a loss from fear or in anticipation of an insured peril is not proximarely caused by that peril. 63 Admittedly, rhe sue and labour clause embodies a separate contracr'4 and the causarion rule might itself be questioned, but the distinction appears paradoxical.

S

Corp v Kuwait Insurance Co SAK(No 1) [19991 I Lloyd's Rep 803, 816.

758

50

61 62

64

ibid 161. ibid 158. Followed, Royal Boskalis Westminster NV v Mountain [1997] LRLR 523, 607. ibid. 63 See 9.46-9.54 above. Royal Roskalis Westminster NV v Mountain [1997] LRLR 523, 607.

759

Averting and Minimizing Loss (10) Relationship between the Period of Cover and the Sue and

Labour Doctrine 24.33 Insurers are liable only in respect oflosses that occur during the period of cover. The question arises of the relationship between the duration of cover and the sue and labour doctrine. Three situations may be distinguished. 24.34 First, loss may occur after the period of cover has commenced bur it could have been avoided in whole or in parr by reasonable measures taken before inception of risk. Tbe insurer is not liable for the loss that could have been avoided because such loss is not proximately caused by an insured peril. Where, however, the assured does avoid loss by taking reasonable steps before inception of risk, expenses thereby incurred cannot be recoverable, despite the benefit to the insurer, since there is no basis for the obligation to reimburse sue and labour

expenses ro attach retrospectively. 24.35 Secondly, expenses may be incurred during the period of cover that avoid loss occurring once the policy has expired. The question here is whether the expenses were incurred for the benefit of the insurer. If the loss, although perfected after the expiry of tisk, would nevertheless be regarded as falling within the period of cover by reason of the grip of the peril doctrine,65 the expenses are recoverable. Moreover, while the grip of the peril doctrine renders insurers liable for total losses that mature after expiry of risk, the impact of the peril during the period of cover will often occasion an immediate partial loss for which insurers are liable and in respect of which the assured may legitimately sue and labour." An insurer is not, however, liable for expenses incurred/in avoiding loss that is not itself recoverable under the policy because it occurs after risk has expired, or indeed for any other reason." 24.36 Thirdly, expenses may be incutted after expiry of risk that avoid a loss caused by an insured peril. Although it has been said that such expenses are 'clearly within' a sue and labour clause,68 it is suggested that a distinction should be drawn according, again, ro whether the expenses inure ro the benefit of the insurer. Once insurance contract law considers the loss ro be final, so that a change of circumstance cannot alter the insurer's liability for that 10ss:69 (a) the sue and labour doctrine musr expire; (b) a failure ro take reasonable steps that would, as

6S

Sue and Labour Expenses a factual proposition, avoid the loss cannot break the chain of causation' and (c) me~ures taken by the assured cannot benefit the insurer so that exp~nses thereby lllcurred cannot be for the insurer's account. For example, once it is too late for the assured ro adeem a rotalloss, it is ex hypothesi impossible in law to avoid the loss. It cannot then be reasonable to expect rhe assured to take any ~easures. even if they would, as a factual proposition, reduce the loss and any intervention on the part of rhe assured cannot, in default ofcontrary agreement, be at the insurer's expense. (11) Expenses Recoverable under a Reimbursement Undertaking The existence and precise extent of the assured's entitlement to indemnification 24.37 under a p~rticular sue and labour clause depends, naturally, upon the true interpretation of the clause and the policy in question. The usual reference to averting and minimizing a loss does not include ascertaining its existence ~r e~tent. 70 The SG policy sue and labour clause, referring to suing and labour~ng in connection with ships and goods, has been held inapplicable when in~orporated without modification into liabiliry insurance, denying the insured reimbursement of expenses incurred." The three-fourths collision liabiliry clause in the Institute and International hull clauses has been held ro be self-contained and independent of the remainder of the contract so that legal expenses incurred in denying liabiliry are recoverable only ro the extent that the collision liabiliry clause so provides and not under the sue and labour clause." This is now express in the sue and labour provisions of the Institute and International hull clauses." Moreover, as already seen, it is express or alternatively ImplIed In the absence of contrary intention that the expenses should have been incurred in order ro prevent a loss for which insurers would otherwise have been liable. 74 Th~ ~~ncept of sue and labour expense is broad enough ro embrace not only 24.38 lIabI1mes for. servIces but also payments by way of ransom and the relinquishing ofvaluable rIghts. In the latter context, however, the assured will suffer no loss if the agreement to abandon rights is unenforceable. In Royal Boskalis Westminster BVv M~untain,75 the assureds owned a fleet of dredgers contracted to a dredging project In Iraq. In response ro sanctions imposed by the United Nations on the Iraqi invasion of Kuwait, the Iraqi authorities seized properry including the

Or, possibly, the likelihood of a loss maturing that would fall within the policy by virtue of

the grip of the peril doctrine wo~ld be such as to render intervention by the assured reasonable, see 24.30-24.32 above. For discussion of the grip of the peril doctrine, see 21.22-21.28 above. 66 Integrated Container Services Inc v British Traders Insurance Co [1984] 1 Lloyd's Rep 154, 160, 162-3. 67 See 24.27 above. " [1984J 1 Lloyd's Rep 154, 162 per Dillon LJ. 69 For discussion of finality of losses, see 21.98ff above.

760

70 Dixon v Whitworth (1879) 4 CPD 371; Irvin v Hine [19501 1 KB 555 571-2 ;; Cunard Steamship Co Ltd v Marten [190212 KB 624, affd [190312 51!. . 73 Xenos v Fox (1869) LR 4 CP 655. On recovery of costs, see 12.22 above.

KB

Institute Time Clauses Hulls (1110/83), cl 13.2; (1 II 1/95), cl I1.2; International Hull Clauses (OIII 1/03), cl9.2. 74 See 24.27 above. 75 [1999) QB 674.

761


General Average

dredgers. In order to obtain the release of the vessels, the assureds concluded a 'finalisation agreement', under which they agreed to relinquish all claims under the dredging contracr and return a sum held in the Netherlands by way of security for payments due under the contract. Once the agreement had been implemented, the fleet was allowed ro leave Iraq. The assureds then claimed the value of the relinquished claims as sue and labour expenses. The Courr of Appeal held thar a ransom payment was in principle recoverable as a sue and labour expense, rejecting the argument that such an expense had ro be capable of assessment on a quantum meruit basis. 76 It was also irrelevant whether the ranSom rook the form of a payment or the relinquishing of a valuable right. However, the assureds were unable to show thar the finalization agreement occasioned them a loss. The dredging contract provided for disputes to be tesolved by arbitration in Paris and the assureds could pursue their claims by arbitration after the finalization agreement just as they could have done beforehand. The finalization agreement caused the assureds a loss only if the agreement ro relinquish claims would be upheld in such arbitration. On the facts, no arbitral tribunal would uphold the agreement because of the duress under which it had been concluded and because it was illegal in circumventing the sanctions

B. General Average 79

legislation.

The essential concept of general average is both ancient and simple, namely that 24.41 loss sustained or expenditure incurred in time of peril and fot the common good of all interests embarked upon a common maritime adventure should be shared between those interests in proportion according ro the benefit derived from that loss or expenditure. The law of general average developed on a national basis, with resulting 24.42 divergences in the losses and expenses that were admissible in general average. A uniform approach was promoted through the promulgation by the Comite Maritime International of a set of rules, known as the York-Antwerp Rules. These rules apply by virrue of incorporation into a contract for the carriage of goods and have gained widespread acceptance. They are revised periodically, with the degree of uniformity that operates in practice being diminished by the possibility of contractual incorporation of any revision. Since the Rules are creatures of contract, it is not possible to repeal an earlier revision. After their initial promulgation in 1877,80 the Rules were revised in 1890, 1924, 1950, 1974,1994, and most recently in 2004. Modern marine policies refer currently to either the 1974 or 1994 revisions.

24.39 The reimbursement of expenses under the sue and labour doctrine is confined to expenses reasonably incurred, reasonableness necessarily being a quesrion of fact that is judged by reference ro the exigencies of the situarion. Where the expenditure incurred by rhe assured exceeds that which would have been reasonable the assured is limited ro the latrer figure. Lee v Southern Insurance Co" concer~ed a claim against freight underwriters in respect of £213, being"the costs incurred in forwarding a cargo of palm oil by rail to its destination, the carrying vessel having stranded. However, although it had been necessary to unload rhe cargo, it could reasonably have been stored locally and, once the vessel had been repaired, re-shipped at an extra cost of only £70. Only this laner sum was recoverable under rhe sue and labour clause.

Although general average does not form part of marine insurance law, section 66 24.43 of the Marine Insurance Act 1906 codifies basic concepts of general average for the purposes of English law. It does so in terms that do not differ materially from the York-Antwerp Rules. The section also considers issues relating ro the insurance of general average liabilities.

24.40 The indemnity payable under the sue and labour clause in the Institute and International hull clauses is subject to the deductible incorporated therein, unless the sue and labour claim is associated with a claim for an actual or constructive total loss of the vessel arising from the same accident or occurrence. 78

a common maritime adventure.}

76 Not following the dictum of Lord Cairns LC in- Aitchison v Lohre (1879) 4 App Cas 755.766. 77 (1870) LR 5 CP 397. See also Wiuon Bros Bobbin Co Ltd v Green [191711 KB 860; Promet Engineering (Singapore) Pte Ltd v Sturge (The Nukila) [19961 1 Lloyd's Rep 85. 78 Institute Time Clauses Hulls (1/10183), ell 132, 12.1: (1111195), ell 11.2, 12.1: International Hull Clauses (01111103), ell 9.2, 15.3.

762

(1) General Average Losses and Liabilities Rule A of the York-Antwerp Rules 1974 and 1994 provides as follows:" 'There 24.44 is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred in time for the common safety for the purpose of preserving from peril the property involved in A loss directly consequential on a general average act, whether in the form of 24.45 expenditure or sacrifice, is termed a general average loss.82 The party on whom such a loss falls is entitled ro general average contribution from all other parries

79 For discussion of the law of general average, see Lowndes and Rudo[f, General Average & }Ork Antwerp Rules D Wilson and J Cooke (eds) (12th edn, 1997); F Rose, Genera/Average: Law & Practice (2nd edn, 2005); Arnauld, Law ofMarine Insurance & Average Sir Michael MustiIl and ) Gilman (eds) (16th edn, 1981) Ch 26; D O'May, Marine Imurance Law 6- Policy (l993) Ch 12. so Succeeding the York Rules of 1864. 81 In similar terms, see MIA 1906, S 66(2). 82 Yotk-Antwerp Rules 1974 and 1994. rule C; MIA 1906, s 66(1).

763


General Average

interesred in rhe advenrure and thar have benefired from the general average loss." Contribution is not, however, recoverable where the contract of affreight84 ment excludes liability for general average contribution or where the general 85 average loss arose by reason of the acrionable fault of the claimant. Contribution is assessed on the basis of the value of rhe Interest ar the time and place where the common matitime adventure ends." All interests benefired by the general average loss contribure on a proportionate basis,87 with the right to contribution secured by a lien over the property. This hen IS usually hfted 10

contract of carriage is not frustrared. It is also usual ro include a Bigham clause, whereby rhe cargQ owners' potential liability under the non-separation agreement is limited to rhe cost rhey would have incurred in forwarding the goods to the port of desrinarion had they received rhe goods back from the carrier at rhe port of refuge. So widespread was the practice rhat a non-separarion agreement wirh a Bigham clause was incorporated into Rule G of the York-Antwerp Rules 1994.

.

.

exchange for aI ternative secutity.

88

(2) Insurance of General Average Losses and Liabilities

24.46 The impact of a peril upon the vessel may be to require a stay iu a port of refuge for repairs. Such a delay may frustrate the contract ofcarriage b~t ~nly if it will destroy the commetcial purpose of the voyage and If the ca:r~er IS unable or unwilling to exercise a right of ttanshipment. Whether the anticipated length of any delay is sufficient to frustrate the contract of carnage may be a matrer of some uncertainty. Where the contract is frustrated or the carrier exercises a transhipment right, it is clear that the common maritime adventure in principle terminates as far as the vessel is concerned on discharge of the cargo at the port of refuge. Consequenrly, cargo escapes from liability t~ c~ntribute t~wards expenses subsequently incurred by the vessel and 10 pnnclple admissible 10 general average even where, in case of transhipment, the. carrier incurs increased cost in performing the contract. Where the contract IS not frustrated Ot the correct analysis is unclear, a carrier will be deterred from agreeing to forwarding by other means because of the resulrant reducrion in general average expenses. 24.47 In order to allow forwarding of cargo withour prejudicing the carrier, ir has long been customaty to conclude a 'non-separation agreemenr' whereby cargo agrees to contribure in general average as if the cargo had remained at d,e port of refuge while repairs to the original carrying vessel were carried out and rhen completed the voyage in rhat vessel. This is subject ro the proviso that the

83 &4

York.Antwerp Rules 1974, rule B; 1994, rule A; MIA 1906, s 66(1), (3). Clear wording is needed; Burton v English (1883) 12 QBD 218; Crooks v Allan (1879) 5

The liability of an insurer for general average does not depend on an express 24.48 insuring clause in rhe policy. Instead, a rule of underlying law renders insurers liable for general average provided the general average loss was caused by a peril insured under the policy. The policy may derogate from rhe underlying law by granting cover thar is more extensive or more limired or by excluding general average cover a1together. 89 In rhe Institure and Internarional clauses, general average is usually the subject of express provision, but not always. The war and strikes clauses for hulls and freighr do not provide directly rhat general average is covered," but such is rhe effect of rhe underlying law. Unless rhe policy orherwise provides, where the loss rakes the form of a general 24.49 average expenditure, rhe party primarily liable can recover against the insurer only in respecr of its net loss after contribution. Where, however, rhe loss rakes rhe form of a general average sacrifice, the parry primarily liable can claim rhe entirety of rhe loss direcrly from rhe insurer. 91 Although rhe doctrine ofsubrogation entitles rhe insurer subsequently to exercise rhe assured's contribution rights, rhe risk ofa conrribution claim failing because of, for example, an actionable fault defence or insolvency of a contributing party is thereby placed on the insurer in the conrext of general average sacrifice. This position is retained by the Institure and International clauses, by rhe hull clauses rhrough express sripularion," and by the cargo clauses through not providing to the contrary." Where a defence of actionable faulr in rhe form of a breach of contract causes a shortfall in recovery of contriburion to general average expenditure, rhe shortfall may be recoverable under P&I cover.

QBD38.

85 Strang v Scott (1889) 14 App Cas 601. In practice, t?e scope for resisting ~ claim [or contribution on the ground of actionable fault is severely restr1~ted by reason of the wlde~rangtng defences available to sea carriers under the Hague and Hague-Vlsby Rules, although such defences are not available where the loss was caused by unseaworthiness of the vessel that is attributable to the lack of due diligence on the part of the carrier. 86 York~Antwerp Rules 1974 ~nd 1994, rule

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