Llr Insurance & Reinsurance Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd

8/10/2019 Llr Insurance & Reinsurance Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd

1/20

SINGAPORE COURT OF APPEAL

11 September 2006

MARINA OFFSHORE PTE LTDv

CHINA INSURANCE CO (SINGAPORE) PTELTD

[2006] SGCA 28

Before ANDREW PHANG BOON LEONG JA,CHAN SEK KEONG CJ, and

JUDITH PRAKASH J

Insurance (marine) Whether loss caused by perilsof the seaWhether policy mixed time and voyageor just time Whether vessel unseaworthy Whether vessel sent to sea in unseaworthy conditionwith privity of assured Marine Insurance Act1906, sections 25 and 39.

This was an appeal by the assured, MOPL,against the judgment of Tan Lee Meng J dismiss-ing a claim by MOPL under a policy of insuranceissued by the defendant insurers on MOPLs tug,

Marina Iris, which was lost on the night of2627 December 2003.

In October 2003 MOPL was investigating thepossibility of purchasing Marina Iris and sentCaptain Tony Goh TG Marine to the shipyard inKobe, where the vessel had been laid up for someten months, to examine and report on her generalcondition. Captain Goh found the vessel to be asmall tugboat constructed in Japan in 1982, basi-cally for coastal operations. According to Cap-tain Goh, the vessel was in a fair condition but hestated that, considering her age, additionalrepairs and modifications might have to be car-ried out in order to enable the vessel to be enteredwith an international classification society.

MOPL purchased the vessel. Its intention wasto have the vessel classed with Bureau Veritasand registered as a Singapore flag vessel. Whilstsome of the repair work recommended by Cap-tain Goh was undertaken in Kobe, not enoughwas done for class or Singapore flag registrationpurposes. MOPL decided that the vessel shouldcome to Singapore for the rest of the work andwas registered as a Panamanian vessel in order toenable the vessel to sail on her own steam fromKobe to Singapore.

Concurrently, negotiations were going on for

the placement of insurance. It was eventuallyagreed that the vessel would be insured for$800,000 for a period of one year from 24

December 2003 to 23 December 2004, that CICwould cover up to 60 per cent of the insured sumand AXA would cover the remaining 40 per cent.Each of the insurers issued a policy, which werefor all material purposes in the same terms. Thepolicies stated, under the heading trading:

Singapore home trade including Indonesianwaters and inclusion of one voyage risk fromKobe to Singapore.

Each of the policies contained a warrantystating:

Warranted satisfactory vessel seaworthi-ness/condition survey for her safe voyage toSingapore by appointed surveyor TGMarine and all recommendations to be com-

plied [sic] at owners expenses [sic] before hersailing from Kobe to Singapore.

The insurers were persuaded by MOPLs bro-ker to appoint Captain Goh to conduct the addi-tional survey. A certificate of inspection wasissued on 25 December 2003 and the full reportof the survey was released on 31 December2003. The report recommended a route for thevessel to follow.

The vessel with six crew members on board,three being deck crew and three being enginecrew, departed from Kobe, headed to Singapore,at about 1400 on 26 December 2003. The vessel

sank some time in the early hours of 27 Decem-ber 2003. MOPL commenced proceedingsagainst the insurers in December 2004, arguingthat the vessel had been totally lost by reason ofperils of the sea, in that upon the completion ofher survey and sea trial, the vessel had departedKobe for Singapore but had encountered heavyweather. The insurers denied liability under thepolicies on the grounds that MOPL had been inbreach of warranty in that the vessel had notfollowed the route recommended by CaptainGoh, that the loss was not caused by perils of thesea but by reason of unseaworthiness, and that

MOPL had not exercised due diligence in seek-ing to ensure that the vessel complied with thevoyage recommendations of Captain Goh.

The trial judge held that: (a) Captain Gohsrecommendation as to the route to be followedwas a warranty, and it had been broken; (b) therewas no satisfactory evidence of the alleged heavyweather and it could not be concluded that thevessel had been lost by perils of the sea; (c) thevessel was not seaworthy when she sailed fromKobe, in that she did not have a competent mas-ter, her stability for an ocean voyage was indoubt, the master had not been provided with the

requisite information on the stability of the vesselfor the long voyage from Kobe to Singaporeacross the Pacific Ocean and the stability booklet

383INSURANCE AND REINSURANCE[2007]

PART 5Marina Offshore Pte Ltd v China Insurance CoSing CA]


2/20

was not on board the vessel when she departedKobe, and that the vessel lacked the necessarypilot books and, possibly, important charts to sailacross the Inland Sea. The judge was of the viewthat the policy was a mixed time and voyagepolicy, in that it covered the voyage from Kobeto Singapore and then covered trading activitiesin Singapore until 23 December 2004, andaccordingly that there was an implied warrantyof seaworthiness under section 39(1) of theMarine Insurance Act 1906. In the alternative, ifthe policy was a time policy, then the vessel hadbeen sent to sea in an unseaworthy state with theprivity of MOPL, and therefore the insurers wereentitled to rely on section 39(5) to avoid liabilityto MOPL.

MOPL appealed.

Held, by Singapore CA (ANDREWPHANG BOON LEONG JA, CHAN SEK KEONG CJand JUDITH PRAKASH J) that the appeal wouldbe allowed and that MOPL was entitled torecover.

(1) There was no routing warranty.

(a) Section 35(2) of the Marine InsuranceAct 1906 provided that express warranties hadto be written on the policy or contained in adocument incorporated by reference into thepolicy. There was no express warranty on the

route of the vessel. The written warranty didnot expressly mention the route or contain anylanguage relating or referring to the course ofthe voyage. Further, its terms, by providingthat the surveyors recommendations had to becomplied with before the vessel left Kobe,made it clear that any recommendations thatthe surveyor had as to what had to be doneonce the vessel was en route would not be partof the warranty requirements (see para 24).

(b) It was not possible to imply into thepolicies a warranty that any particular routewould be followed simply because Captain

Goh had made a routing recommendation. TheAct made it clear in sections 33 to 41 thatimplied promissory warranties were only thosewarranties implied by law through the varioussections of the Act that imposed them. For thepurposes of marine insurance, the court couldnot find that an implied warranty was con-tained in a policy simply because the circum-stances might make it important or reasonablethat certain conditions be followed to reducethe risk. The normal contractual test relating tothe implication of terms did not apply to amarine policy. In this case, had the insurers

wanted to impose the condition that the vesselshould follow the particular route, if any, rec-ommended by the surveyor, they should have

stated so in clear words as part of the languageof the express warranty. They did not do so(see para 25).

(2) There was no implied warranty of seawor-thiness. The policies were time policies withinthe definition in section 25 of the Marine Insur-ance Act 1906 and the implied warranty in sec-tion 39(1) was inapplicable.

(a) A mixed time and voyage policy wasone in which a vessel was insured from oneplace to another and also for a definite periodof time. Both policies provided for the dura-tion of the risk to be determined by a period oftime which began and ended on specifieddates. There was no indication next to the

dates provided that the policies were issued inrespect of any specific voyage so as to makethe policies mixed or hybrid policies (see paras28 and 31).

(b) Significantly, not even one of the Insti-tute Voyage Clauses is incorporated as part ofthe terms of the policies let alone the whole setof such clauses. There was a warranty that asatisfactory seaworthiness or condition surveyof the vessel would be provided before thesailing of the vessel from Kobe to Singapore:such a warranty would not be required if thepolicies were not pure time policies but were

voyage policies in respect of the journey fromKobe as, in that case, the law would imply awarranty that the vessel would, at the com-mencement of the voyage from Kobe, be sea-worthy for the purpose of the voyage toSingapore (see para 32)

Lombard Insurance Co Ltd v KinYuen Co Pte Ltd [1995] 1 SLR 643, applied;

Malayan Motor & General Underwriter (Pte)Ltd v MH Almojil, The Al-Jubail IV[19821983] SLR 52, distinguished.

(c) On the judges interpretation, therewould be a period of time when the vessel was

in Singapore being repaired and classed duringwhich she would have no insurance cover.That was not how the policies worked. Theinsurers issued a time policy which attachedon 24 December 2003 (the date of the attach-ment was chosen as it was the intended date ofdeparture from Kobe and was required as thiswas a time policy since a voyage policy wouldhave started on departure without the need fora specific date to be specified) and which cov-ered the vessel until 23 December 2004 (in thecase of CIC) and until 6 August 2004 (in thecase of AXA). During that period, the vessel

was

on risk

as long as she was within thetrading limits and that would include being inSingapore during the period required for repair

384 LLOYDS LAW REPORTS [2007]

Marina Offshore Pte Ltd v China Insurance Co [Sing CA


3/20

work and classification surveys. It was con-templated that there would be various voyagesduring the period of cover but there was noseparate phase of insurance (see para 39).

(d) The use of the words voyage risk inthe policies did not indicate a separate phase ofinsurance but referred to the perils. Further,the employment of various deductibles and theindication given by the insurers to MOPL as tohow the premium rate had been arrived at didnot indicate that the insurers were covering thetrip from Kobe to Singapore by way of avoyage policy (see paras 41 and 42).

(3) There was ample evidence supporting afinding that the vessel had faced adverse weather

conditions prior to her becoming a casualty andthat one of the proximate causes of the loss wasperils of the sea. The fact that bad weather hadbeen anticipated did not mean that the loss wasnot fortuitous and the incursion of seawater wasa peril of a marine character (see paras 54, 56 and57).

J J Lloyd Instruments Ltd v NorthernStar Insurance Co Ltd (The Miss Jay Jay) [1985]1 Lloyds Rep 264, affirmed [1987] 1 LloydsRep 32, Canada Rice Mills Ltdv Union Marineand General Insurance Co Ltd [1941] AC 55,applied.

(4) The insurers could not rely uponunseaworthiness.

(a) It could be seen from the pleadings thatthe insurers did not plead either that the vesselwas inherently unstable or insufficiently stableor that the crew had not been provided withinformation on the stability of the vessel forthe voyage to Singapore. Nor did they pleadthat necessary pilot books and charts to sailacross the Inland Sea had not been provided byMOPL. The insurers had the onus of provingthat the vessel was unseaworthy since the poli-cies were time policies and they therefore also

had the burden of setting out precisely thegrounds on which the allegation of unseawor-thiness was made. Since the insurers failed tomake their stance clear in their pleading, theissues of stability and lack of pilot books orcharts had not been before the judge for con-sideration. However, the judges holding thatthere was no competent master of the vesselwas not against the weight of the evidence andthe vessel was, accordingly, unseaworthy onher departure from Kobe (see paras 61 and64);

The Empire Jamaica [1955] 1Lloyds Rep 50, considered.

(b) Under section 39(5) of the 1906 Act theinsurers had to show not only that unseawor-

thiness was a cause of the loss but that MOPLwas privy to sending the vessel to sea in an

unseaworthy state. As far as thefi

rst require-ment was concerned, whilst the judge foundthat it was more probable than not that thevessel was lost as a result of her unseaworthi-ness, he did not find in terms that it was thecrews incompetence that caused the loss.Instead, he found that the cause of the loss wasunseaworthiness, particularly with regard tostability, and [exacerbated], I suppose, by theincompetence of the crew. However, therewas no finding as to how the crews incompe-tence had on its own operated as a proximatecause of the loss. As far as the second require-

ment was concerned, MOPL, whilst knowingabout the lack of certification of the crew,believed that they would be competent to bringthe vessel to Singapore (see paras 65, 67 and68);

The Eurysthenes [1977] QB 49,considered.

(5) There had not been an express recom-mendation by Captain Goh that the voyageshould be undertaken only in fair weather condi-tions: Captain Goh had merely considered thatthe vessel was fit to proceed in fair weatherconditions and was not giving any instruction as

to how she should proceed (see para 73).(6) There was no breach of the warranty

requiring a seaworthiness survey. Captain Gohssurvey looked at the vessels condition for thespecific purpose of ascertaining whether shecould make a particular voyage: in effect, he wassaying that his purpose was to assess the seawor-thiness of the vessel for that voyage. Further, theinsurers had not shown that a seaworthiness sur-vey had to include an examination of inacces-sible parts: it was for Captain Goh to decidewhether a survey of the portions of the vessel thatwere accessible to him was sufficient for him toform his opinion on her seaworthiness, and hehad no difficulty in coming to his conclusion onthe basis of what he was able to see. Finally, thewarranty did not call for the survey to be con-ducted by a classification society surveyor orsomeone representing the flag state: by phrasingthe warranty in the way that they did, the insurerswere saying that the survey had to be provided bya surveyor from TG Marine and it was not nowopen to them to reject that survey because the TGMarine surveyor did not also represent a classifi-cation society or the Panamanian authorities (seeparas 75, 76 and 77).


Marina Offshore Pte Ltd v China Insurance CoSing CA]


4/20

Haridass Ajaib, Augustine Liew and SubashiniN, instructed by Haridass Ho & Partners, for theappellant; Lim Tean, Shem Khoo and Marcus Lee,instructed by Rajah & Tann, for the respondents.

Monday, 11 September 2006

JUDGMENT

Justice JUDITH PRAKASH:

Introduction

1. On the night of 26/27 December 2003, a fewhours into her voyage from Kobe to Singapore,

Marina Iris, a tugboat, sank. All her crew membersperished. Some managed to leave the vessel beforeshe capsized but, rescue efforts proving futile, eventhey unfortunately drowned subsequently.

2. The appellant, Marina Offshore Pte Ltd(MOPL), the owner of the tug, brought thisaction against her insurers, China Insurance Co(Singapore) Pte Ltd (CIC) and AXA InsuranceSingapore Pte Ltd (AXA) (collectively theinsurers) to recover the sums insured under therespective policies. Tan Lee Meng J (the judge)

dismissed MOPLs claim with costs. MOPL hasappealed.

Background

3. The story of the loss really starts in October2003 when MOPL was investigating the possibilityof purchasing the vessel to add to its existing fleet.For this purpose, it sent one Captain Tony Goh ofTG Marine Service Pte Ltd (TG Marine) to theshipyard in Kobe, where the vessel had been laid upfor some ten months, to examine and report on hergeneral condition. Captain Goh found the vessel to

be a small tugboat constructed in Japan in 1982,basically for coastal operations. She was 26.5mlong, 8.5m wide and 3.89m deep. Her gross tonnagewas 139 tons and her deadweight tonnage was 231tons. According to Captain Goh, the vessel was in afair condition but he stated that, considering herage, additional repairs and modifications mighthave to be carried out in order to enable the vesselto be entered with an international classificationsociety. He also advised that certain equipment besupplied in order to equip the vessel for herintended operations.

4. MOPL went on to purchase the vessel. Its

intention was to have the vessel classed withBureau Veritas, register her as a Singapore flagvessel and then operate her within Singapore home

trade limits (including Indonesian waters). Whilstsome of the repair work recommended by CaptainGoh was undertaken in Kobe, not enough was donefor class or Singapore flag registration purposes.MOPL decided that the vessel should come to Sin-gapore for the rest of the work. In the meantime, inorder to enable the vessel to sail on her own steamfrom Kobe to Singapore, MOPL procured her regis-tration as a Panamanian vessel.

5. Concurrently, negotiations were going onbetween MOPLs insurance brokers and brokersrepresenting the insurers in relation to the terms ofinsurance of the vessel. Whilst the insurers wereinitially reluctant to cover the vessel in view of herage, it was eventually agreed that the vessel wouldbe insured for $800,000 for a period of one year

from 24 December 2003 to 23 December 2004(both dates inclusive) and that CIC would cover upto 60 per cent of the insured sum while AXA wouldcover the remaining 40 per cent. The insurancepolicies themselves were actually issued after theloss of the vessel but nothing turns on this.

6. Each of the policies contained a warrantystating:

Warranted satisfactory vessel seaworthiness/condition survey for her safe voyage to Singa-pore by appointed surveyor TG Marine and allrecommendations to be complied [sic] at ownersexpenses [sic] before her sailing from Kobe toSingapore.Accordingly, a further survey was required. The

insurers were persuaded by MOPLs broker toappoint Captain Goh for this purpose.

7. Captain Goh attended on the vessel on 19December 2003 and other subsequent dates,according to his certificate of inspection dated 25December 2003, for the purpose of examining andreporting on the general condition [of the vessel] inorder to proceed on a single voyage from Kobe,Japan to Singapore . . . in fair weather condition.At this time, the vessel was no longer laid up. Shewas examined at the Kobe dockyard and during asea trial in waters outside the port of Kobe. The fullreport of the survey was released on 31 December2003. The contents and effect of this survey were amatter of contention during the trial. The vesselwith six crew members on board, three being deckcrew and three being engine crew, departed fromKobe at about 1400 on 26 December 2003. Theexact time that the vessel sank is not known but itwas sometime in the early hours of 27 December2003.

The action

8. The suit was commenced in December 2004.In its statement of claim, MOPL alleged that the


JUDITH PRAKASH J] Marina Offshore Pte Ltd v China Insurance Co [Sing CA


5/20

vessel was totally lost by reason of perils of the sea.The particulars given of this assertion were brief.They were first, that upon the completion of hersurvey and sea trial, the vessel had departed Kobefor Singapore at 1400 on 26 December 2003. Thesecond particular was that she had encounteredheavy weather later the same day and at 0200 on 27December 2003, the Japanese coastguard hadreceived the vessels distress signal. The third alle-gation was that the Japanese coastguard had con-ducted an air search by helicopter after they failedto despatch their rescue boat due to the prevailingheavy weather. The final and fourth particular wasthat the vessel was subsequently reported to havesunk at about the position 3353N, 13457.5Eand that the bodies of five of the crew were even-

tually retrieved but the sixth body could not befound.

9. The insurers denied liability under the policieson several grounds. First, they contended thatMOPL had breached express and implied warran-ties under the policies, thereby discharging themfrom all liability. Secondly, they argued that the lossof the vessel had not been due to perils of the seabut had been due to unseaworthiness of the vesselfor which they were not liable. Thirdly, they werenot liable because of want of due diligence on thepart of MOPL in failing to ensure that the vesselcomplied with the voyage recommendations of

Captain Goh.10. In his judgment [2005] SGHC 238 at [10],

the judge stated that the main issues before thecourt were as follows:

(a) Did MOPL comply with the warranty sur-veyors recommendations before Marina Irissailed from Kobe, as was required by thepolicies?

(b) Did MOPL prove that the loss of MarinaIris was caused by an insured peril?

(c) Was Marina Iris seaworthy when she leftKobe and if not, what is the effect of this on the

policies?11. In relation to the first issue, the judge heldthat a recommendation made by Captain Goh as tothe route to be followed by the vessel on her voyageto Singapore was a warranty that had to be strictlycomplied with, failing which no cover was affordedby the policies. On the evidence he then held thatthe vessel did not follow the surveyors recom-mended route across the Inland Sea and thereforeMOPL was not entitled to an indemnity under thepolicies.

12. On the cause of the loss, the judge noted that,as the claimant, MOPL had to establish that the

vessel was lost as a result of perils of the sea, acause of loss within the ambit of the policies. Hav-ing considered the evidence, the judge held that

MOPL had not proved the pleaded material partic-ulars of the loss as set out in para 8 above. Nosatisfactory evidence of the alleged heavy weatheror of an air search by the Japanese coastguard wasfurnished. The judge considered that no one knewfor certain how the vessel was lost and, in view ofthis, whether it might be concluded that the vesselwas lost as a result of perils of the sea depended onpresumptions that might be made by a court withrespect to the cause of an unexplained loss. As suchpresumptions depended to some extent on whetherthe vessel was seaworthy when she sailed fromKobe, the judge went on to consider the question ofthe vessels seaworthiness.

13. The judge held that the vessel was not sea-worthy when she sailed from Kobe. There wereseveral reasons for this. First, the judge found thatthe vessel did not have a competent master. Sec-ondly, the judge considered that the vessels stabil-ity for an ocean voyage was also an issue. He foundthat the vessel was not seaworthy because the mas-ter was not provided with the requisite informationon the stability of the vessel for the long voyagefrom Kobe to Singapore across the Pacific Oceanand the stability booklet was not on board the vesselwhen she departed Kobe. He also noted that thevessel lacked the necessary pilot books and, possi-bly, important charts to sail across the Inland Sea.As the vessel was unseaworthy, the judge con-

sidered that it could not be said that it was moreprobable than not that she was lost as a result ofperils of the sea. MOPL had not established that theloss fell within the scope of the policies and there-fore its claim had to be dismissed.

14. The judge also considered the nature of theinsurance policies issued in order to determinewhether the implied warranty under section 39(1)of the Marine Insurance Act (Cap 387, 1994 RevEd) (the Act) (ie that the vessel was seaworthy atthe commencement of the voyage) applied to thiscase. MOPL had submitted that this warranty wasirrelevant because the policies in question were

time policies. The insurers claimed, however, thatthey had issued mixed policies, ie that the policiescovered the risks of both the voyage policy, whichhad relevance to the voyage from Kobe to Singa-pore, and a time policy that covered the vesselwhen she began trading activities after reachingSingapore. The court held that the policies weremixed policies and therefore the warranty of sea-worthiness had been implied under section 39(1) ofthe Act for the voyage from Kobe to Singapore. Asthe vessel was clearly unseaworthy when she leftKobe, the insurers were entitled to avoid liability.

15. The judge also considered what the position

would have been under section 39(5) of the Act, thesection that would have applied had the policiesbeen found to be time policies. In that connection,


[JUDITH PRAKASH JMarina Offshore Pte Ltd v China Insurance CoSing CA]


6/20

the judge held that the vessel had been sent to sea inan unseaworthy state with the privity of MOPL, andtherefore the insurers were entitled to rely on sec-tion 39(5) to avoid liability to MOPL.

The appeal

16. On the appeal, counsel for MOPL canvassedall the issues that had been decided against it.MOPL did not accept any of the findings of thejudge. In response, naturally, the respondents sup-ported the judges findings. They also referred toother pleaded defences that the judge had notneeded to consider in view of his main findings.

17. The issues that arise in the appeal fall underthree main heads. The first head relates to the war-ranties imposed by the policies, the second headrelates to the cause of the loss and the third headinvolves whether, at this stage, the insurers can relyon the other defences that they had put forward tothe claim but which were not considered by thejudge. Under the first head, the points to be con-sidered are whether the policies were subject to arouting warranty and if, on their true construction,the policies were mixed policies or time policies.Under the second head, we will consider whetherMOPL was able to establish that the loss wascaused by a peril insured against or whether unsea-worthiness caused or contributed to the loss. In

relation to the issue of unseaworthiness, we alsohave to deal with MOPLs responsibility andknowledge of the vessels condition. Finally, if theholdings on the foregoing issues do not dispose ofthe appeal, we will consider whether the insurersmade out the other defences pleaded.

The nature of the policies and the warranty issues

18. It is necessary, because of the findings belowand the detailed arguments addressed to us on theseissues, to set out the terms of the policies at somelength. For this purpose we will use, mainly, the

policy issued by CIC as it was the lead insurer andthe essential terms of both policies were the same.Where there are differences, we will indicatethem.

19. Both policies are in the modern form and,accordingly, each comes in several parts. The firstpart is a schedule that sets out the main terms of thepolicy and states the various clauses that apply to it.The schedule is signed for and on behalf of therelevant insurer and it is the document that has beenspecifically prepared for the particular policy. Theschedule is followed by all the relevant clauses. Inthe case of the CIC policy, after the schedule, there

is a printed set of

Institute Time Clauses Hulls

(sometimes referred to as the ITC). Then, thereare some seven additional pages containing the var-

ious other clauses, express warranties and endorse-ments that apply to the policy.

20. For present purposes, the material provisionsare in the schedule. Taking the CIC policy as asample, the schedule is divided into sections. Thetop section contains various identifying informationincluding the policy number, the agency reference,the class of policy (in this case Marine Hull) andthe issue date of the policy (in this case31/12/2003). The second section is brief. It con-tains only the following important words Period ofInsurance from 24/12/2003 to 23/12/2004, bothdates inclusive. The next few sections contain thenames and details of the insured and these arefollowed by a section describing the risk that con-tains the name of the vessel, her description and the

amount that has been insured. Below this is a sen-tence stating The following clauses and conditionsapply to this policyand that is followed by a longlist of clauses and conditions. The relevant onesare:

Institute Time Clause Hulls 1.10.83 withclause 8 and clause 1.2 deleted.

. . .

Warranted satisfactory vessel seaworthiness/condition survey for her safe voyage to Singa-pore by appointed surveyor TG Marine and allrecommendations to be complied at ownersexpenses before her sailing from Kobe toSingapore.

. . .

Warranted vessel BV classed & class main-tained before vessel start trading.

. . .

Then come two further important clauses thatread:

DEDUCTIBLE: (1) As per clause 12 (I)S$100,000.00 for the voyage risk.

(II) S$55,000.00 for hull & machinery risk

Applicable on any one claim including total&/or constructive total loss.

. . .

TRADING: Singapore home trade includingIndonesian waters and inclusion of one voyagerisk from Kobe to Singapore.

21. The schedule of the AXA policy follows thesame general pattern as that of the CIC policy. Inthe third section, the words that appear are Periodof insurance: from 24/12/2003 to 06/08/2004 bothdates inclusive. In the fourth section after thedescription of the risk, the insured value is stated tobe $320,000 and the deductibles are set out includ-ing the phrase S$100,000 clause 12 for deliv-

ery voyage risk

. Then appears the followingstatement: Trading limit: Singapore home tradeincluding Indonesia waters, including one delivery




7/20

voyage from Kobe to Singapore and/or held cov-ered.The schedule also refers to the clauses, war-ranties and endorsements that are applicable to theinsurance and are attached to the policy. Among thewarranties specifically mentioned in the scheduleare the same warranties relating to the seaworthi-ness survey and the vessels classification status asappear in the CIC policy.

Was there a routing warranty?

22. As the judge pointed out, if a warranty con-tained in a policy of insurance is not exactly com-plied with, the contract of insurance is void and nocover is provided by the insurers even though thebreach of the warranty was not causative ofthe loss. This is provided for under section 33(3) ofthe Act. As seen from the wording above, theexpress warranty in the schedule called, inter alia,for all recommendationsmade by the surveyor tobe complied [with] . . . before [the vessels] sail-ing from Kobe to Singapore. In Captain Gohscertificate of inspection issued on 25 December2003, there was a section entitled Voyage Recom-mendations containing six recommendations forthe conduct of the voyage including things likebunkering and ballasting requirements, dailyreports and keeping a lookout. His third recom-

mendation read as follows:Route to follow to be tracking along nearest

coast of Japan, Philippines, Sabah unless weatherpermitted, and to seek shelter if weather isb a d . . .

The judge held that as both policies expresslyrequired the surveyors recommendations to becomplied with before the vessel sailed from Kobe,the recommended route for the voyage to Singaporemust be regarded as a warranty. In MOPLs sub-mission, this holding could not be sustained as thepolicies did not contain any express statementrequiring a particular route to be followed and itwas not open to imply a warranty of that nature intothe policies.

23. To illustrate a situation in which the assuredhad to comply with a routing warranty, MOPLscounsel, Mr Haridass, cited three examples of pre-vious policies issued by CIC that had containedsuch express warranties. Each of these had involvedvoyages from Japan to Singapore. Going by theexamples given, the typical wording of such a war-ranty would be as follows:

Warranted condition and crew competencysurvey and tug/tow, towage and routing survey to

be conducted . . . prior to sailing from . . . andall recommendations to be complied with atinsureds expense.

In the present case, however, the warranty onlystated satisfactory vessel seaworthiness/conditionsurvey . . . by . . . TG Marine . . . before her sail-ing. A seaworthiness survey, argued Mr Haridass,would include crew competency but would not dealwith the route. If the insurers had required a routingsurvey for theMarina Iris voyage, they should havespecifically stated so in the warranty clause. Addi-tionally, the warranty in the policies stated that thesurveyors recommendations were to be compliedwith before sailing. Obviously, a routing warrantywas not one that could be complied with prior tosailing and therefore the warranty had not beenintended to cover routing.

24. MOPLs arguments relating to the properconstruction of the warranty provision in this caseare compelling. As has been pointed out, the conse-quences of not complying with an express warrantyare draconian. Further, by section 33(1), the Actmakes clear that in marine insurance terms, a war-ranty is a promissory warranty . . . by which theassured undertakes that some particular thing shallor shall not be done. There is therefore a positiveobligation on the insured to fulfil a warranty. Giventhat warranties are to be complied with exactly andthe serious consequences of breach, such warrantiesmust be express, specific and clear so that there isno doubt in the mind of the insured as to what hehas to comply with. The Act states (in section

35(2)) that express warranties must be written onthe policy or contained in a document incorporatedby reference into the policy. We are not able to findan express warranty on the route of the vessel. First,the written warranty did not expressly mention theroute or contain any language relating or referringto the course of the voyage. Secondly, its terms, byproviding that the surveyors recommendations hadto be complied with before the vessel left Kobe,made it clear that any recommendations that thesurveyor had as to what had to be done once thevessel was en route would not be part of the war-ranty requirements. This was in contrast with the

wording of the sample clauses that mandated thesurvey to be carried out before the vessel concerneddeparted port but did not impose any such timelimit in relation to the requirement to comply withthe surveyors recommendations. Thus, we couldnot, here, incorporate the recommendation byreference.

25. We do not find it possible either to imply intothe policies a warranty that any particular routewould be followed simply because Captain Gohhad made a routing recommendation. This isbecause the Act makes it clear (in sections 33 to 41)that implied promissory warranties are only those

warranties implied by law through the various sec-tions of the Act that impose them (see also Hals-burys Laws of England, volume 25 (LexisNexis




8/20

UK, 4th Edition, 2003 reissue) (HalsburysLaws) at para 235). For the purposes of marineinsurance, the court cannot find that an impliedwarranty is contained in a policy simply becausethe circumstances might make it important or rea-sonable that certain conditions be followed toreduce the risk. The normal contractual test relatingto the implication of terms does not apply to amarine policy. In this case, had the insurers wantedto impose the condition that the vessel should fol-low the particular route, if any, recommended bythe surveyor, they should have stated so in clearwords as part of the language of the express war-ranty in the schedules. They did not do so. Conse-quently we must, with respect, differ with thejudges finding on this ground.

Nature of the policies did they contain an

implied warranty of seaworthiness at thecommencement of the voyage?

26. Under section 39(1) of the Act, there is animplied warranty in a voyage policy that at thecommencement of the voyage, the vessel shall beseaworthy for the purpose of the particular adven-ture insured. No such warranty is implied into theterms of a time policy. Thus, in order to determinewhether the policies concerned contained animplied warranty of seaworthiness, it is necessary

to first determine whether they were time or voyagepolicies.

27. The Act provides the following definitions ofvoyage and time policies by section 25:

Voyage and time policies.

25. (1) Where the contract is to insure thesubject-matter at and from, or from one placeto another or others, the policy is called a voy-age policy, and where the contract is to insurethe subject matter for a definite period of time thepolicy is called a time policy.

(2) A contract for both voyage and time may

be included in the same policy.28. In the court below, the insurers claimed tohave issued mixed policies. The expression mixedpolicyis not used in the Act. The Court of Appealin Lombard Insurance Co Ltd v Kin Yuen Co Pte

Ltd[1995] 1 SLR 643 (Kin Yuen) used the termto mean a policy in which a vessel is insured in thesame policy for a voyage at and from or fromone place to another or others and also for a definiteperiod of time. We shall adopt the sameterminology.

29. The insurers asserted that the cover providedfor the voyage from Kobe to Singapore was by way

of a voyage policy whereas a time policy applied tothe vessel when she began trading activities afterreaching Singapore. The judge considered this

argument in the light of two previous decisions ofthis court,Malayan Motor & General Underwriter(Pte) LtdvMH Almojil [19821983] SLR 52 (The

Al-Jubail IV) and Kin Yuen. In The Al-Jubail IV,the relevant policy was held to be a mixed policywhereas in Kin Yuen, the policy was construed to bea time policy. The court below considered that thefacts in Kin Yuen were distinguishable from those inthe present case which were more akin to those inThe Al-Jubail IV. Additionally, the use of the wordsvoyage risk in the policies in relation to thevoyage from Kobe to Singapore and the differingrates of premium and deductibles quoted by theinsurers were deemed significant indicators of thenature of the policies.

30. The rules of construction that apply to anycommercial contract apply also to the constructionof a policy of marine insurance. This means that thecourts task is to give effect to the parties inten-tions as expressed in the contract by construing itaccording to its sense and meaning as objectivelyunderstood from the language of the contract. Theterms of the contract are to be understood in theirplain, ordinary and popular sense unless by reasonof usage of the trade they have a particular meaningor the context indicates a special meaning in anyparticular case (see Halsburys Laws ([25] supra )at para 226). The circumstances surrounding the

making of the contract must also be looked at toestablish the meaning of the contract but it is onlywhere the words of the contract are ambiguous thatthe acts, conduct and course of dealing of the par-ties before and at the time they entered into it mayand should be considered in order to discover theparties intentions (see Halsburys Laws at para228). In the present case, in this task of construc-tion, we are also aided by section 25 of the Actwhich indicates the general nature of time and voy-age policies.

31. If section 25 of the Act were to be determi-native of the nature of the policies concerned, they

would both be construed as time policies simpli-citer. This is because both policies provide for theduration of the risk to be determined by a period oftime which begins and ends on specified dates.There is no indication next to the dates providedthat the policies are issued in respect of any specificvoyage so as to make the policies mixed or hybridpolicies. InHalsburys Laws, at para 305, examplesare given of policy language which usually indi-cates that the policies concerned are mixed policies.Wording such as at and from London to Cadiz forsix months or from 1 January 1994 to 1 June1994, at and from Bristol to Marseilles etc, indi-

cate the issue of a mixed policy. Such languagecontains descriptions of both a time period and avoyage in immediate juxtaposition to each other.




9/20

This did not happen in the present case. The essen-tial words at and fromor the indication that therisk is froma particular place to another do notappear in the relevant section of the schedule ofeither policy. This section is the section where thecoverage of the risk is generally indicated andwhere it would be appropriate to mention the voy-age concerned if the policy is intended to be eithera voyage policy simpliciter or a mixed policy.Instead, in this case, no mention of any voyage ismade until further down in the schedules and suchmention is within a clause dealing with the tradingarea of the vessel.

32. That, however, is not all. Any policy must belooked at as a whole in order for its meaning to beunderstood. In this case, the initial impression givenby the period of insurance stated in the policies isfollowed and reinforced by the specific incorpora-tion of the ITC as essential terms of the policy.Significantly, not even one of the Institute VoyageClauses is incorporated as part of the terms of thepolicies let alone the whole set of such clauses.Further, there is the warranty that a satisfactoryseaworthiness or condition survey of the vessel willbe provided before the sailing of the vessel fromKobe to Singapore. Such a warranty would not berequired if the policies were not pure time policiesbut were voyage policies in respect of the journeyfrom Kobe as, in that case, the law would imply a

warranty that the vessel would, at the commence-ment of the voyage from Kobe, be seaworthy forthe purpose of the voyage to Singapore. It bearsrepeating that in the CIC policy, the warrantyexpressly provides that the purpose of the seawor-thiness survey was for her safe voyage to Singa-pore. That wording indicates beyond doubt thatthe insurers were concerned that the vessel be or bemade seaworthy for the voyage to Singapore andknew that if they did not impose such an expresswarranty, there would be no such obligation onMOPL under this policy. That each policy alsocontains a clause entitled trading limitsor trad-

ing

is also an indication that it is a time policy.This is because trading limits are a feature oftime policies and not of voyage policies since thelatter spell out from the very beginning the geo-graphical route that cover is being provided for.

33. In Kin Yuen ([28] supra), the court was facedwith a policy which was for the period from 30 May1985 to 28 December 1985 and was also subject tothe ITC. The policy, however, contained a warrantyreading warranted trading Far East and Pacific notWest of Cape Town, not North of Vladivostok, notEast of Japan and not South of Australia, butexcluding Iran, Iraq, Vietnam and Kampuchea

including one delivery voyage from Montevideo totrading area. There was no specific clause entitledtrading limitsand it was the warranty that per-

formed the function of delineating the geographicalarea within which the vessel was permitted to ply. Itwas contended that this was a mixed policy. G PSelvam J, in the court of first instance (see Kin YuenCo Pte LtdvLombard Insurance Co Ltd[1994] 2SLR 887), noted that the words at and fromdidnot appear in the policy and that it was in themodern simple form used for a time policy ratherthan the Lloyds Ship and Goods (SG) form ofpolicy, and that the ITC were incorporated into it. Inhis view, that was conclusive of the matter and thedelivery voyage was included in the policy to mod-ify the trading limit and not the nature of the policyas a time policy. His decision was upheld by theCourt of Appeal which also went on to examine thecircumstances of the policy before holding that one

must take a common-sense approach in character-ising the policy and, using such an approach, theonly sensible construction that one could give to thewords of the warranty in the policy including onedelivery voyage from Montevideo to trading areawas that the geographical trading area limited in thepolicy was being extended to cover the vesselsvoyage from Montevideo to Vitoria into the tradingarea (perKarthigesu JA, delivering the judgment ofthe Court of Appeal, at 651 [19]).

34. Here, what the insurers relied on to argue thatthe policies are mixed policies was the wording thatappears against the rubric trading in the CIC

policy and the rubric trading limitsin the AXApolicy. Because the description of the trading limitsincludes the phrase inclusion of one voyage riskfrom Kobe to Singaporein the CIC policy and thephrase including one delivery voyage from Kobeto Singapore and/or held covered in the AXApolicy, the argument was made that the policiescovered both a period of time and a voyage andwere therefore mixed policies. On the face of thepolicies, it appears to us that this is a strainedinterpretation of the language. The phrases con-cerned indicate that while generally the policieswould only answer for incidents occurring while

the vessel plied within Singapore home tradewaters, the policies would also cover the vesselwhilst she was on one trip from Kobe to Singaporeduring the period of the insurance. In our judgment,as in the Kin Yuen case, the words relied on mod-ified or extended the trading limit so that the vesselwould be covered on her voyage to Singapore butdid not alter the nature of the policy as a timepolicy. No doubt the facts of this case are somewhatdifferent from those in Kin Yuen in that the firstvoyage of the vessel was supposed to be from oneport to another rather than, as in Kin Yuen, from oneport to a trading area. That distinction does not,

however, in our view, mean that we should throwout the common-sense interpretation of a clauserelating to trading limits and find that simply




10/20

because it refers to a voyage from port A to port B,the whole policy becomes a mixed policy.

35. The insurers submitted that the facts of thiscase were more akin to those of The Al-Jubail IVthan they were to those of the Kin Yuen case. The

Al-Jubail IVwas, until the decision below, the onlycase in Singapore where a mixed policy had beenfound. The facts of that case were that the owner ofthe vessel concerned had had her refitted in Singa-pore. She was a vessel intended for work in pro-tected waters and the owner wanted to employ heras a ferry in the Persian Gulf. The vessel sailed onher own steam from Singapore for Damman onwhat was referred to as a delivery voyage. She ranaground some 15 miles off the coast of Iran. Thecourt commented that in view of the size and typeof the vessel, the delivery voyage over the IndianOcean during a period of the year in which turbu-lent weather could be expected was a factor ofcrucial importance to owners and underwriters. Thecourt was of the view that the policy was not a timepolicy simpliciterbut was a mixed policy affordinga cover of 12 months and attaching as from and onthe voyage from Singapore to the Persian Gulf.

36. The policy in The Al-Jubail IVwas, however,a very different one from those that are before us.That policy, effected in 1975, was in the LloydsSG form, a multi-purpose form which was used formany years but is no longer popular. In F D Rose,

Marine Insurance: Law and Practice (LLP, 2004),the author comments (at para 10.5) that a questionof interpretation as to whether a policy is a timepolicy or a voyage policy was more likely to havearisen in days when parties used and adapted amulti-purpose form such as the Lloyds SG policywhereas [i]n modern times, once the slip is prop-erly completed, the appropriate standard formclauses adopted and the policy drawn up accord-ingly, there is unlikely to be any doubt whether thepolicy is either a voyage or time policy, though itmay still need to be resolved whether it is a mixedpolicy. The wording of the The Al-Jubail IVpolicy

itself shows why the Lloyds SG form gave rise todifficulties of interpretation. As regards the periodof cover, the material words were at and from orfor the period: From 21 April 1975 to 20 April 1976(both days inclusive). In addition, it contained thetouch and stay at any ports or placeclause whichis a clause that is used in voyage policies rather thanin time policies. The policy also contained what thecourt described as a crucial warranty that read:

Warranted:

(a) Trading within Persian Gulf but includingone delivery from Singapore to Persian Gulf onits own steam sailing on or about 21 April

1975.

(b) Panamanian Loadline and Maintained.

(c) Subject to satisfactory condition survey byapproved surveyors.

Significantly, the warranty in The Al-Jubail IVrequired a condition survey and not a seaworthinesssurvey. That underwriters regard a condition surveyand a seaworthiness survey as two completely dif-ferent things was made plain by the insurers in thiscase when they put forward the argument that thesurvey done by Captain Goh was a condition surveyand not a seaworthiness survey.

37. The court in The Al-Jubail IVdetermined theissue of whether the policy was a mixed policy byconstruing the policy and ascertaining the intentionof the parties from, inter alia, all the surroundingcircumstances known to the parties at the time the

contract of insurance was made. Reference to thecircumstances was particularly necessary in view ofthe ambiguity of the policy. The policy containedboth at and fromand a definite period of time forthe insurance cover but did not in that same sen-tence indicate the starting and ending termini of thevoyage to which it referred. It also contained aclause that applied to voyage policies. It was onlyin the warranty which dealt with the trading limit ofthe vessel that there was reference to the deliveryvoyage from Singapore to the Persian Gulf and thusan indication of a voyage component. The courtsdecision that the policy was a mixed policy came

under criticism from the counsel who appeared inKin Yuen. Those criticisms were rejected by thiscourt on the basis that in The Al-Jubail IV, thereclearly were two separate and distinct phases to theinsurance of the vessel namely, the delivery voyageand thereafter, the time policy for restricted tradinglimits (Persian Gulf). Karthigesu JA stated (at 650[15]) that while the decision in The Al-Jubail IVwas correct on the facts and circumstances of thatcase, it had to be confined to those facts and cir-cumstances and was not of universal application.

38. As counsel for MOPL submitted, this was awarning. The Lloyds SG form was originally a

voyage form only as it catered for the merchantadventurer and the same form of policy was avail-able to cover both the ship and the goods to becarried (see N Geoffrey Hudson, The InstituteClauses (LLP, 2nd Edition, 1995) at page 79). Sub-sequently, with the expansion of commerce, itbecame used for time policies as well. In The Al-Ju-bail IV case, the use of the words at and fromindicated that the basic policy was a voyage policyand a time cover was then included thereon by theinsertion of the words or for the period: From 21April 1975 to 20 April 1976after the words atand from. In this light, there were two separate

and distinct phases to the insurance of The Al-Jubail IV. The court in that case was, therefore,concerned with two separate and distinct phases to




11/20

the insurance of the vessel. Every voyage is a sepa-rate and distinct phase, but that is not a reason tofind that a voyage policy has been provided for (andthat hence the policy is a mixed policy). The voy-age may be covered by the time policy and, if so,the policy remains a time policy simpliciter. In The

Al-Jubail IV, the voyage was covered by a separatevoyage policy when the phrase at and fromwasused and a definite period of time was also providedto indicate that the vessel would be covered on atime basis after that voyage concluded.

39. The judge considered that there were twoand distinct phases to the insurance ofthe vesselin this case. He said at [74]:

First, there was a voyage from Kobe to Singa-

pore, which was a voyage risk. Secondly, afterbeing repaired and classed in Singapore, insur-ance cover was afforded for trading activitieswithin the limits of the Singapore home tradeincluding Indonesian waters, which was a riskcovered by the time policies.

With respect, we do not agree. The interpretationgiven by the judge would mean that there would bea period of time when the vessel was in Singaporebeing repaired and classed during which she wouldhave, on this interpretation, no insurance cover.That would not, in our view, be the way that thepolicies worked. The insurers issued a time policy

which attached on 24 December 2003 (the date ofthe attachment was chosen as it was the intendeddate of departure from Kobe and was required asthis was a time policy, since a voyage policy wouldhave started on departure without the need for aspecific date to be specified) and which covered thevessel until 23 December 2004 (in the case of CIC)and until 6 August 2004 (in the case of AXA).During that period, the vessel was on riskas longas she was within the trading limits and that wouldinclude being in Singapore during the periodrequired for repair work and classification surveys.It was contemplated that there would be variousvoyages during the period of cover but there was noseparate phase of insurance.

40. We now turn to other matters relied on by thejudge in his finding that the policies were mixed.These were the use of the words voyage risk inthe trading limits clause of the CIC policy, thediffering deductibles that the policies imposed forvarious risks and the judges finding that the insur-ers quoted different rates to MOPL for the twophases of insurance cover. In our judgment, withrespect, these matters do not affect the nature of thepolicies as time policies.

41. First, the words voyage risk do not indi-

cate a separate phase of insurance as had beenargued below. According to the definition given inEric Sullivan, The Marine Encyclopaedic Diction-

ary (LLP, 3rd Edition, 1992), the word risks iswidely used in the insurance industry to mean thehazards or losses to which a venture may be unex-pectedly exposed. Formerly known as Perils. Theword riskstherefore does not refer to the type ofcover or the phase of insurance. It refers to perils.The perils of the voyage may be covered by avoyage policy or a time policy. A time policy cov-ers a series of voyages or voyage risks within thestipulated time. In the present case, as the firstvoyage was outside the trading limits, it was spe-cially covered by an extension of the trading limitsto include this voyage risk. Hence, the use of thatphrase cannot lead to the conclusion that the policyis a mixed policy. Additionally, if the words voy-age riskwere intended to change the nature of thepolicy from a time policy to a mixed policy, theywould have been used by both insurers. Yet, they donot appear in the AXA trading limits clause. Therethe phrase used is including one delivery voyageand the word risk is omitted. This must havebeen because the insurers were aware that thewords voyage riskread literally do not alter thenature of the policy. At this point, it may also berelevant to mention that the words and/or heldcovered that appear after one delivery voyagefrom Kobe to Singapore in the AXA tradingclause also indicate that the policy was a timepolicy. Had the policy been a voyage policy as welland subject to the Institute Voyage Clauses, a heldcovered clause would have been included auto-matically and there would have been no need forthe express reference to held covered.

42. Secondly, in our opinion, the employment ofvarious deductibles and the indication given by theinsurers to MOPL as to how the premium rate hadbeen arrived at did not indicate that the insurerswere covering the trip from Kobe to Singapore byway of a voyage policy. The breakdown in thepremium rate does not appear in either policy. AXAdid issue a payment plan in respect of the premium

but whilst that specifi

es that the premium is to bepaid in three instalments and gives the date andamount of each payment, it does not allocate anypart of the premium to any phase of insurance. Thiswas consistent with what was in fact quoted by CICto MOPL in its letter of 2 December 2003, ie asingle composite rate of 2.060 per cent althoughwithin parentheses CIC had indicated how thatcomposite rate had been calculated. The letterstated Premium rate: 2.060 per cent (H&M 1.48 per cent and Voyage 0.58 per cent). Thata composite rate was given was consistent with theintended issue of a time policy. As far as the differ-

ing deductibles are concerned, we accept the sub-mission of MOPL that these did not indicate theissue of a voyage policy. They merely reflected the




12/20

reality that the risks were different when the vesseloperated outside the trading area.

43. For the reasons given above, we must, withrespect, differ from the court below on the truenature of the policies issued. Accordingly, we alsoconclude that there was no implied warranty at thetime the vessel left Kobe that she was seaworthy. Ifthe vessel was unseaworthy at the time of depar-ture, that would not prevent the policies fromattaching and the insurers from being at risk.Unseaworthiness of the vessel would only absolvethem from liability if they could show that thevessel was sent to sea in an unseaworthy state withthe privity of the insured and that the loss for whichthe insured claimed was attributable to that unsea-worthiness (see section 39(5) of the Act).

Cause of the loss: was it attributable to perils of

the sea or unseaworthiness?

44. Before we consider the arguments and evi-dence in relation to the cause of the loss, a briefaccount of the applicable principles of law in rela-tion to a claim for a loss arising out of alleged perilsof the sea may be helpful. Some of the principlesare set out in the Act itself. The relevant provisionsare rule 7 of the Construction Rules in the scheduleto the Act and section 55(1) of the Act. By rule 7,

we are told that the term perils of the seasrefersto fortuitous accidents or casualties of the seas anddoes not include the ordinary action of the windsand waves. By section 55(1) of the Act, unless thepolicy otherwise provides, the insurer is liable forany loss proximately caused by a peril insuredagainst. Thus, in this case, MOPL, having claimedthat the loss was due to perils of the sea, had theburden of proving that that was the proximate causeof the loss.

45. The authorities relating to the above provi-sions and the question of proof of perils of the seagenerally were examined in some detail by Selvam

J at first instance in Kin Yuen (see generally [1994]2 SLR 887 at 897902 [37][54]). That was a casein which the loss was alleged to have arisen fromperils of the sea but it was common ground that thevessel concerned was unseaworthy and thereforeone of the most important points in the case was theimpact that the unseaworthiness could have had onthe claim. The judgment drew the following princi-ples from the authorities:

(a) Whilst ordinary action of the winds andwaves is excluded from the definition of perilsof the seas, just because the weather was suchas might be reasonably anticipated, it cannot be

concluded that there was no peril of the sea aslong as there was some element of the fortuitousor the unexpected in the facts causing the loss.

(b) The proximate cause of the loss would bethat which was proximate in efficiency and notsimply that which was proximate in time.

(c) The determination of the proximate causemay not be plain and simple for it is very rarelythat a loss is caused by a simple predominantcause and often two or more circumstanceswhich are not insured perils are at play in combi-nation with an insured peril. If the loss arisesfrom two causes effectively operating at the sametime and one is expressly excluded from thepolicy, the insurer does not pay.

(d) Where, however, there is no expressexemption of a cause, then if there are two ormore equally or almost equally dominant causes,

each of which can be considered to be the prox-imate cause of the loss, and one comes within theterms of the policy and the other does not, theinsurer must pay. The reason is that loss due tounseaworthiness not being excluded from a timepolicy, the only way of giving effect to the inclu-sion of the perils of the sea is to make the policypay.

(e) The applicable rule of causation was thatstated by Mustill J inJ J Lloyd Instruments Ltdv

Northern Star Insurance Co Ltd (The Miss JayJay) [1985] 1 Lloyds Rep 264 at 271, approvedon appeal by the English Court of Appeal (see

[1987] 1 Lloyds Rep 32), ie:[I]t is clearly established that a chain of

causation running (i) initial unseaworthiness;(ii) adverse weather; (iii) loss of watertightintegrity of the vessel; (iv) damage to thesubject-matter insured is treated as aloss by perils of the seas, not byunseaworthiness . . .

46. Selvam J summed up the above principles asfollows at 901 [48]:

The mere fact of unseaworthiness is not byitself a defence to a claim under a time asopposed to a voyage policy. Where adverseweather is shown as an essential step in thesequence of events that lead to the loss the policymust pay. For adverse weather or adverse seaconditions to constitute a peril of the sea theremust be something more than calm weather orsea conditions, something which men in the fieldcommonly understand and accept as such eventhough such conditions could reasonably havebeen anticipated during the voyage.

It should also be noted, however, that in a caselike the present, if the insurers were able to showthat unseaworthiness to which the assured was

privy was the sole or concurrent (with perils of thesea) cause of the loss, then the policies would notpay (seeManifest Shipping & Co Ltdv Uni-Polaris




13/20

Insurance Co Ltd and La R eunion Europeene (TheStar Sea) [1995] 1 Lloyds Rep 651.

Perils of the sea

47. Below, the judge held that none of the partic-ulars of the cause of the loss provided by MOPL(repeated in [8] above) had been proved at trial. Heconsidered that no satisfactory evidence of thealleged heavy weather or of an air search by theJapanese coastguard was furnished. He noted thatalthough there had been gale warnings in the Kobearea at the material time, both MOPLs expert wit-nesses had downplayed those warnings and saidthat the master had acted correctly in leaving Kobeat the material time. Further, the vessel was lostclose to Kobe and not in the Pacific Ocean. In thejudges opinion, some acceptable evidence of theheavy weather and not mere hearsay should havebeen tendered. In our judgment, that finding wasagainst the weight of the evidence.

48. Adequate and acceptable evidence of heavyweather had been presented. First, there was theaffidavit of evidence-in-chief of Hiroshi Hama-moto, a Japanese marine surveyor, who appeared asan expert witness for the insurers. This witnessstated that from the coordinates of the wreck, thevessel had sunk in the middle of the Kii SuidoStrait. Based on this position, his opinion was that

upon departing Kobe, the vessel had passed throughthe Tomogashima Strait and was intending to passthrough the Kii Suido Strait out into the open sea.According to weather reports made by the Tomoga-shima Observatory (copies were attached to theaffidavit) from 1400 on 26 December 2003 to 0200on 27 December 2003, the wind speed ranged from815m/s (metres per second) with the wind speedhitting its highest at around 0200 on 27 December2003. According to the witness, winds of 14m/swould be equivalent to 28 knots and this would beconsidered a force 7 gale. Captain Hamamoto had,therefore, produced credible evidence of bad

weather in the area where the vessel was likely tohave been immediately prior to sinking.

49. The witness also gave evidence on weatherconditions in the Kobe area generally from 26 to 28December 2003 based on weather reports or fore-casts for the period and on weather warningsreleased by the Kobe Meteorological Observatory.These data showed that from the evening of 25December until almost midnight on 27 December2003, based on contemporaneous observations, galewarnings for the area were issued regularly. Forexample, at 1130 on 26 December 2003, there wasa gale warning for the northern part of the sea off

Shikoku Island with wind speed up to 18m/s, whilstin the southern part of the sea, winds of up to 15m/swere forecast. At 1735 the same day, there was

another gale warning for the same area and thewind speed in the northern part of the sea offShikoku Island was forecast to be up to 20m/s. At2335 the same day, there was still a gale warningfor the sea off Shikoku Island with wind speed up to18m/s in the southern part and up to 20m/s in thenorthern part. Then, based on observations made at0300 on 27 December 2003, the forecast issuedat 0535 that day was for gale with wind speeds stillat 18m/s in the south and 20m/s in the north. Whilstthe purpose of the insurers in adducing such evi-dence was to indicate that the weather conditionswere not fair at the time the vessel left Kobe (1400on 26 December 2003), the same evidence alsoshowed that the general weather conditions in thearea around Kobe were adverse throughout 26

December 2003 and the morning of 27 December2003.

50. It was also through Captain Hamamoto thatevidence of contemporaneous newspaper and inter-net reports containing information released by theJapanese coastguards to the press on the actualsinking of the vessel in December 2003 wasadduced in court. The witness used this material topoint out that the Japanese press had criticised whatit saw to be the bad practice of foreigners purchas-ing domestic Japanese vessels and sailing themback under their own steam to the purchaserscountry. The material indicated that a distress call

from the vessel was received by the Japanese coast-guard at about 0139 on 27 December 2003. Thecoastguard deployed four patrol boats and two air-craft in a search and rescue operation and at about0730 they spotted two crew members in a rubberboat. About 30 minutes later the coastguard pickedup one of the crew members but during the rescueattempt, due to the rough sea, the other man fell intothe sea and went missing. An hour later, anotherpatrol boat picked up a man wearing a life jacketand floating in the sea. A few hours later, two othervictims were found. According to the coastguard,the sea in the area was turbulent around 1700 with

wind speed of 20m/s and high waves of 5m/s. Inone report that MOPL emphasised, an official fromthe coastguard was reported as having said that thesea was turbulent with violent winds and highwaves when the rescue boats arrived at the site.Again, while the purpose for which these news-paper reports were introduced was not to establishthe conditions of the sea at the time of the casualty,the witness must have found them to be fairlyreliable as he used them without any critical com-ment as to accuracy. We do, however, recognise thelimitation of evidence of this type which in itsnature is hearsay.

51. Additional evidence on the weather condi-tions was, however, adduced through MOPLsexpert witness, Captain Jonathan Mark Walker, a




14/20

master mariner and marine surveyor. He obtainedinformation on the weather provided by weatherobservers in the vicinity of Kii Suido and instructedan organisation called Weathernews Inc to preparea hindcast of the weather experienced in Kii Suidoon the night of 26 December 2003. A copy of thishindcast was annexed to his affidavit. It indicatedthat west-north-west winds of force 6 to force 7 onthe Beaufort scale were experienced at the sinkinglocation at about 2100 that night. According toCaptain Walker, winds of such strength in the opensea would probably mean a wave height of 4m to5m. However, the area concerned was fairly closeto land and therefore the significant wave heightwould only have been between 1.5m and 2m. Cap-tain Walker was of the opinion that if the vessel had

been proceeding in a southerly direction, thesewaves would have generated an uncomfortable rolland pitching motion and the aft deck would bealmost continually awash with water as the midshipfreeboard was only about 30cm in height. He alsoopined from the wave and wind data that he hadcollected that in the area of Kii Suido there was ashort period of stronger winds before and aftermidnight on 26 December 2003 that generatedincreased wave heights at the recording stations.This was close to the approximate time at which thevessel sank.

52. MOPL also relied on the evidence of Michael

Thompson, a casualty surveyor appointed by theinsurers to investigate the loss, and who then testi-fied for the insurers. Mr Thompsons evidence wasinteresting. In his report, he had stated in conclu-sion that the loss was primarily due to the adversesea conditions encountered. Under cross-examina-tion, he changed his position somewhat in that hestated that there were other things that were notright with the vessel. He also stated that his conclu-sion that the loss was due to adverse sea conditionshad been based on reports to him that the waves inthe area where the vessel sank were about 5m to 6min height and it was a possibility that she could have

sunk if she had encountered such conditions. MrThompson qualified that she would not have sunk ifthe significant wave height encountered was only1.5m to 2m. Under further questioning, however, heagreed that winds of force 6 to force 7 on theBeaufort scale were near gale force and that heknew the vessel had encountered bad weather andthat if it had not been for the bad weather then shewould not have sunk. He was aware from his inves-tigations that at the time when the emergency bea-con (the distress call) went off, the Japanesecoastguard could not get to the vessel because ofthe weather conditions. MOPLs Mr Lim had told

him that an air search by helicopter had been con-ducted instead. Finally, Mr Thompson agreed thathis conclusion after his investigations was that the

loss was primarily due to adverse sea conditionsencountered.

53. In their response to MOPLs arguments, theinsurers contended that the evidence given by Cap-

tain Hamamoto was in relation to the gale warningsthat were widely published and transmitted to allvessels in the Kobe regionand that he was simplyconcluding that in the light of these forecasts, acompetent master would not have set sail fromKobe and attempted a voyage to Singapore. He wasnot giving evidence that the vessel actually encoun-tered adverse sea and weather conditions at the timeof the sinking. Further, the Japanese newspaperreport on the sinking, stating that the vessel wasbelieved to have foundered in rough seas and thatthe sea was turbulent with violent winds and highwaves when the rescue boats arrived, was hearsayand shed no light on actual conditions at the time ofsinking. As for Mr Thompson, he had no personalknowledge of the weather and sea conditions andonly reported on what was told to him by membersof MOPLs office.

54. In our opinion, there was ample evidencesupporting a finding that the vessel had facedadverse weather conditions prior to her becoming acasualty. Whatever may have been Captain Hama-motos purpose in adducing them, the weather datathat he produced supported MOPLs contentions onthis point. These also supported the reports in the

newspaper. There was also the data produced byCaptain Walker and the conclusion reached by MrThompson after investigating the loss for the insur-ers, not for MOPL. Mr Thompson was notrestricted to MOPLs personnel as a source of infor-mation and although he did qualify his initial con-clusion somewhat, in the end he accepted that theprimary cause of the loss was the bad weatherconditions.

55. The judge noted that no one knew for certainhow the vessel was lost as she was under the seaand all her crew members had died. Additionally,Captain Walker had stated that there was no con-

clusive proof of how the vessel sank. What thecourt is concerned with is, however, the balance ofprobabilities. That the vessel had sunk was not apoint that was disputed by anyone. As CaptainWalker pointed out in his report, for a vessel to sinkshe has to have a loss of buoyancy and this wouldhave occurred if there had been ingress of waterinto the vessel either from a breach in the under-water hull or through openings in the above waterstructure. In the court below, MOPL had put for-ward a theory by Captain Walker that the engineroom had been flooded and this had led to the lossof buoyancy. The insurers did not accept that and

pointed out that the theory was never pleaded.Whilst that was so, it was also plain from thepleadings that MOPL was asserting that the vessel




15/20

had been overcome by the weather conditions shehad encountered and these had caused her to sink.Necessarily implied in that pleading was that thevessel had lost buoyancy by reason of wateringress. MOPL could not state or establish exactlywhat caused the water to enter the vessel as thewitnesses of the event had all perished but that doesnot mean it did not prove the cause of the loss onthe balance of probabilities. Mr Thompson for onehad no difficulty accepting that a vessel could beovercome by adverse weather and founder eventhough he too did not know how and where thewater had entered the vessel. He theorised thatdownfloodingdue to heavy seas caused the ves-sel to be immobilised and subsequently founder.Echoing, perhaps unconsciously, the views of Cap-

tain Walker, he said in his report that the engineroom access doors were located at the main decklevel and water could have entered the engine roomin heavy seas if these doors were not closed.

56. The insurers then argued that even if thevessel had faced rough seas and weather aroundthe time of her sinking and these conditions causedthe sinking, that loss was not caused by perils of seabecause there was no element of fortuity. The ele-ment of fortuity was missing because MOPL knewthat the vessel was sailing from Kobe to Singaporein the midst of the north-east monsoon, there werenumerous gale warnings and forecasts issued on 25

and 26 December 2003 covering the period inwhich the vessel was to sail and a reasonable ship-owner would have known or expected to face roughseas and weather when sailing at the material time.These arguments are not persuasive. As we havenoted above, the fact that bad weather may beanticipated does not mean that there is no elementof fortuity when it actually occurs and has a devas-tating effect on the vessel. When the vessel leftport, despite the gale warnings, the weather seemedfair and the vessel had been cleared to sail in fairweather. It was not the contention of the insurersthat the vessel was in such a state of general debility

that the ordinary action of the winds and waves inany type of sea was bound to cause her damage.What they had contended as an alternative was thatthe vessel sank because she had poor stability andcould not maintain her buoyancy in the adverseconditions encountered. During cross-examinationMr Lim, counsel for the insurers, spoke of thevessel progressively losing her stability when windsof 30 knots continued to pound on her superstruc-ture and posited the position that once she hadheeled over beyond about 30, the vessel wouldhave capsized and once she capsized, water wouldhave gone into all the openings of the vessel and

that would have been how the vessel wasfl

oodedand sank. If the vessel sank because the badweather acted on her alleged poor stability and

allowed the ingress of water, that would be a perilof the sea.

57. It is clear from the authorities that incursionof seawater is a peril of a marine character. Sea-water is not expected to enter a vessel eitherthrough her deck openings or her hull and if itenters the vessel, it generally enters by accident orcasualty. In Canada Rice Mills Ltdv Union Marineand General Insurance Co Ltd [1941] AC 55, thepoint was put in this way by Lord Wright at6869:

Where there is an accidental incursion of sea-water into a vessel at a part of the vessel, and ina manner, where seawater is not expected to enterin the ordinary course of things, and there isconsequent damage to the thing insured, there is

prima facie a loss by perils of the sea. Theaccident may consist in some negligent act . . .or it may be that sea water is admitted by stressof weather or some like cause bringing the seaover openings ordinarily not exposed to the seaor, even without the stress of weather, by thevessel heeling over owing to some accident . . .These are merely a few amongst many possibleinstances in which there may be a fortuitousincursion of seawater. It is the fortuitous entry ofthe sea water which is the peril of the sea in suchcases . . . There are many deck openings in avessel through which the seawater is not

expected or intended to enter and, if it enters,only enters by accident or casualty . . . If theywere not closed at the proper time to preventseawater coming into the hold, and seawater doesaccidentally come in and do damage, that is justas much an accident of navigation (even thoughdue to negligence, which is immaterial in a con-tract of insurance) as the improper opening of avalve or other sea connection.

58. In the light of the evidence and the author-ities, we must therefore hold that perils of the seawere, at least, one of the proximate causes of theloss. What we have to go on to consider is whether

another cause of the loss was unseaworthiness ofthe vessel to which MOPL was privy.

Unseaworthiness

59. The judge found that the vessel was unsea-worthy when she left Kobe for Singapore. Therewere three grounds on which he considered her tobe unseaworthy. The first was that she was improp-erly manned. The second was that the master wasnot provided with the requisite information on thestability of the vessel for her voyage and the stabil-ity booklet was not on board the tug. Thirdly, he

found that she lacked the necessary pilot books and,possibly, important charts needed to sail across theInland Sea. On appeal, MOPL submitted that the




16/20

first ground was not supported by the evidence andthat the findings on the second and third groundsshould not have been made as these were not issuesraised by the insurerspleadings.

60. Dealing with the latter two points first, therelevant pleading is in para 10 of the amendeddefence. This states:

Further and in the alternative, the defendantsaver that even if the plaintiffs warranty of sea-worthiness of the vessel is not implied into thePolicies of Insurance, the defendants aver thatthe vessel was sent to sea in an unseaworthycondition with the privity of the plaintiffs andthat the alleged loss of the vessel was attributableand/or proximately caused by such unseaworthi-

ness, which the plaintiff had expressly warrantedin the Policies of Insurance.

PARTICULARS

(i) The designated lead Master Captain Rudy,and the other two (2) officers Captain DanusGainau and Captain Anthonius Pasampang heldonly Indonesian crew certificates to serve onNear Coastal Voyages and were therefore notproperly certified to serve on board a vessel mak-ing a voyage from Kobe to Singapore;

(ii) The vessel was suitable for use only incoastal waters and was not equipped for ocean-

going voyages. Alternatively, the plaintiffs and/or their managers allowed the Master and/orcrew of the vessel to adopt a route from Kobe toJapan in contravention of the route recommendedby appointed surveyors, TG Marine Pte Ltd(hereinafter TG Marine) in its condition sur-vey report of the vessel dated 26 December2003.

61. It can be clearly seen from the above plead-ing that the insurers did not plead either that thevessel was inherently unstable or insufficiently sta-ble or that the crew had not been provided withinformation on the stability of the vessel for the

voyage to Singapore. Nor did they plead that neces-sary pilot books and charts to sail across the InlandSea had not been provided by MOPL. A pleadingthat a vessel is suitable for use only in coastalwaters and not equipped for ocean-going voyages isa very general pleading and does not allow anargument on lack of stability or the lack of specificpilot books or charts. The insurers had the onus ofproving that the vessel was unseaworthy since thepolicies were time policies and they therefore alsohad the burden of setting out precisely the groundson which the allegation of unseaworthiness wasmade. Since the insurers failed to make their stance

clear in their pleading, the issues of stability andlack of pilot books or charts were not before thecourt for consideration.

62. Turning to the other ground of unseaworthi-ness, ie the incompetence of the crew, the judge,having noted that a vessel must have a competentmaster as well as a sufficient number of competentcrew members, examined the qualifications of thethree deck officers, Mr Danus Gay Nau, Mr Rudyand Mr Anthonius Pasampang. He said that therewas some confusion as to their roles as each ofthem had been referred to as a master in CaptainGohs report but that Mr Danus was regarded as themaster of the vessel by MOPL. The judge found,however, that all three lacked the necessary qual-ifications to be the master of the vessel for thevoyage to Singapore. Mr Rudy had been hired byMOPL as an able-bodied seaman and had no recog-nised qualifications and was not qualified to sail on

board the vessel as a deck officer. Mr Danus wascompetent to sail on Near Coastal Voyageswhich extended to South Vietnam and South Phil-ippines but not to Taiwan and Japan. As such, thejudge found that he should not have been appointedthe master of the vessel for the voyage from Japanto Singapore. The third member of the deck crew,Mr Anthonius, was qualified to be a deck officer buthad no qualifications to be the master of thevessel.

63. On the appeal, MOPL submitted that thecrew were not insufficiently certified as the vesselwas a Panamanian flag vessel and Panamanian law

did not require specific qualifications for the crewfor the voyage in question. That submission, how-ever, did not have a strong evidential base. The onlyevidence given on the Panamanian law require-ments was that of Mr Koh Peck Song, the opera-tions manager of MOPL, who said that he hadasked an agent of the Panamanian registry to makeenquiries on the crew requirements for the voyagefrom Kobe to Singapore and was informed that allhe needed to do was to engage a crew of four. Atbest, this evidence was hearsay. It did not establishthat no certification was required.

64. MOPL also argued that insufficient certifica-

tion of the crew would not render a vessel unsea-worthy, only incompetence would do so. It relied onthe holding in The Empire Jamaica [1955] 1Lloyds Rep 50 that insufficient certification did notnecessarily translate into incompetence. Instead, thecrews competence must be examined in the light ofboth the certification and actual seagoing experi-ence. It was argued that here the crew were notincompetent in view of their previous experience.None of them, however, had previously been mas-ter of a tugboat for a voyage of this nature in theseas between Japan and Singapore. Overall, onthe evidence adduced, we are not able to find that

the judges holding that there was no competentmaster of the vessel was against the weight of the

evidence. The vessel was, accordingly, unseaworthy




17/20

on her departure from Kobe. That, however, is notthe end of the matter.

65. In order to avoid liability, the insurers had toshow not only that unseaworthiness was a cause ofthe loss but that MOPL was privy to sending thevessel to sea in an unseaworthy state. As far as thefirst requirement is concerned, whilst the judgefound that it was more probable than not that thevessel was lost as a result of her unseaworthiness,he did not find in terms that it was the crewsincompetence that caused the loss. Instead, hestated that the insurers expert witness, CaptainPhelan, had summed up the position when he statedin evidence that the cause of the loss was unsea-worthiness, particularly with regard to stability, and

[exacerbated], I suppose, by the incompetence ofthe crew. That statement placed a great deal ofemphasis on the alleged lack of stability of thevessel, a matter that was not in issue and could notbe determinative of the question. There was sig-nificantly, however, no finding as to how the crewsincompetence had on its own operated as a prox-imate cause of the loss. Accordingly, the insurershad some difficulty in meeting this requirement.Their position in relation to the next requirementwas, in our view, even more difficult.

66. In the first instance decision of Kin Yuen ([33]supra), the concept of privity of the assuredwas

discussed by Selvam J at 916 [117][118] in thefollowing terms:

The concept of privity of the assured wasexplained in The Eurysthenes [[1977] QB4 9 ] . . .

Roskill LJ [at 76] added this furtherelucidation:

. . . That must mean that he is privy to theunseaworthiness and not merely that he hasknowledge of facts which may ultimately beproved to amount to unseaworthiness. In otherwords, if the ship is sent to sea in an unseaworthy

state with his knowledge and concurrence andthat unseaworthiness is causative

Date post:	02-Jun-2018
Category:	Documents
Upload:	manojvarrier
View:	230 times
Download:	2 times

Llr Insurance & Reinsurance Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd

Documents