Argo Systems Fze v Liberty Insurance (Pte) and another
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE MACKIE QC |
| Judgment Date | 21 February 2011 |
| Neutral Citation | [2011] EWHC 301 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2009 Folio 236 |
| Date | 21 February 2011 |
[2011] EWHC 301 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON MERCANTILE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Mackie Qc
Case No: 2009 Folio 236
Mr Richard Lord QC and Mr Colin West (instructed by Michael Bynane) for the Claimant
Mr Michael Davey (instructed by Bugden & Co) for the First Defendant
Hearing dates: 12 and 13 January 2011
This is the trial of preliminary points about a marine insurance claim arising out of the total loss of the vessel Copa Casino in March of 2003. The points concern construction of a warranty and claims that the defences put forward by the First Defendant are no longer open as a result of affirmation, waiver or estoppel.
Background
The vessel was a floating casino which had been purchased for scrap and was to be towed as a dead ship from the U.S. Gulf to India. The Claimant ("Argo") owned the vessel and obtained insurance for the voyage with the First Defendant ("Liberty") through a U.S. producing broker DeWitt Stern ("DSI") and an English placing broker the Second Defendant ("LSR"). The voyage began on 3 March 2003 but on the twelfth day the vessel developed a list which increased and on 16 March the vessel sank in 8,000 ft of water in the Caribbean Sea. Argo's claim on the policy was declined in July 2003 and the parties have been in litigation in the United States and more recently in England since May 2004.
The Policy
The policy dated 11 March 2003 incorporated the Institute Voyage Clauses, provided cover for total loss of the vessel caused by perils of the sea and was subject to English law and practice. The Schedule described the Period of insurance as "from time of taking in tow by tug "Fair Play xiv" at Gulfport, Mississippi, in single tow on or about date to be agreed to Alang, India and until safe arrival there."
The warranties included:-
"Warranty no release, waivers or "hold harmless" given to Tug and Towers."
The insuring conditions were "as per Institute Voyage Clauses as modified in certain respects." The clauses adopted were those in the edition of 1 October 1983.
Clause 1.1 of the Institute Voyage Clauses headed "NAVIGATION" reads as follows:
"The Vessel is covered subject to the provisions of this insurance at all times and has leave to sail or navigate with or without pilots, to go on trial trips and to assist and tow vessels or craft in distress but it is warranted that the Vessel shall not be towed, except as is customary or to the first safe port or place when in need of assistance, or undertake towage or salvage services under a contract previously arranged by the Assured and/or Owners and/or Managers and/or Charterers. This Clause 1.1 shall not exclude customary towage in connection with loading and discharging."
The 1995 Edition, which Argo's Counsel originally relied on in the U.S. proceedings believing it to be applicable was the 1995 form which after 1.1 provides as follows:
"This insurance shall not be prejudiced by reason of the Assured entering into any contract with pilots or for customary towage which limits or exempts the liability of the pilots and/or tugs and/or towboats and/or their owners when the Assured or their agents accept or are compelled to accept such contracts in accordance with established local law or practice."
The sum insured was $1,225,000. The premium was substantial, a basic rate of 12%, some $160,000 in all.
Facts Agreed or not greatly in dispute
The contract for the tow was unsurprisingly made subject to the "Towcon" International Towage Agreement (Lump Sum). Clause 18 of this standard form agreement provides as follows:-
"1.(a) The Tugowner will indemnify the Hirer in respect of any liability adjudged due or claim reasonably compromised arising out of injury or death occurring during the towage or other service hereunder to any of the following persons:
(i) The Master and members of the crew of the Tug and any other servant or agent of the Tugowner;
(ii) The members of the Riding Crew provided by the Tugowner or any other person whom the Tugowner provides on board the Tow;
(iii) Any other person on board the Tug who is not a servant or agent of the Hirer or otherwise on board on behalf of or at the request of the Hirer.
(a) The following shall be for the sole account of the Tugowner without any recourse to the Hirer, his servants, or agents, whether or not the same is due to breach of contract, negligence or any other fault on the part of the Hirer, his servants or agents:
i) Loss or damage of whatsoever nature, howsoever caused to or sustained by the Tug or any property on board the Tug.
ii) Loss or damage of whatsoever nature caused to or suffered by third parties or their property by reason of contact with the Tug or their property by reason of contact with the Tug or obstruction created by the presence of the Tug.
iii) Loss or damage of whatsoever nature suffered by the Tugowner or by third parties in consequence of the loss or damage referred to in (i) and (ii) above.
iv) Any liability in respect of wreck removal or in respect of the expense of moving or lighting or buoying the Tug or in respect of preventing or abating pollution originating from the Tug.
The Tugowner will indemnify the Hirer in respect of any liability adjudged due to a third party or any claim by a third party reasonably compromised arising out of any such loss or damage. The Tugowner shall not in any circumstances be liable for any loss or damage suffered by the Hirer or caused to or sustained by the Tow in consequence of loss or damage howsoever caused to or sustained by the Tug or any property on board the Tug.
(b) The following shall be for the sole account of the Hirer without any recourse to the Tugowner, his servants or agents whether or not the same is due to breach of contract, negligence or any fault on the part of the Tugowner, his servants or agents:
i) Loss or damage of whatsoever nature, however caused to or sustained by the Tow.
ii) Loss or damage of whatsoever nature caused to or suffered by third parties or their property by reason of contact with the Tow or obstruction created by the presence of the Tow.
iii) Loss or damage of whatsoever nature suffered by the Hirer or by third parties in consequence of the loss of damage referred to in (i) and (ii) above.
iv) Any liability in respect of wreck removal in respect of the expense of moving or lighting or buying the Tow or in respect of preventing or abating pollution originating from the Tow.
The Hirer will indemnify the Tugowner in respect of any liability adjudged to a third party or any claim by a third party reasonably compromised arising out of such loss or damage but the Hirer shall not in any circumstances be liable for any loss or damage suffered by the Tugowner or caused to or sustained by the Tug in consequence of loss or damage, howsoever caused to or sustained by the Tow.
Save for the provisions of Claues 11,12, 13 and 16 neither the Tug owner nor the Hirer shall be liable to the other party for loss of profit, loss of use, loss of production or any other indirect or consequential damage for any reason whatsoever. "
On 28 March 2003 following a request from Insurers, Argo warranted as follows:
"With respect to the above claim.
The Copa Casino was being towed as a single tow only;
The Copa Casino had no cargo on board;
No release, waivers or hold harmless has been given to Tug or Towers;
The above warranties have been fully complied with."
On 11 June 2003 insurers sought and later received documents from Argo including the towage contract. On 18 July 2003 Fowler Rodriguez & Chalos attorneys for the insurers, wrote rejecting the claim. This is an important letter. The attorneys although based in New Orleans have an office in London and were writing, without hesitation, about an English law policy. I see no reason to make any allowances for the words chosen in this letter. The letter states that Liberty (although in practice Marine Insurance Services) ("MIS") "hereby denies coverage for claims by the assured arising from the sinking" and then puts forward a number of grounds. First "Initially it is the assured's burden to demonstrate a loss of an insured peril. None of the information provided to us by the assured's offer any indication as to the cause of the sinking, much less that the sinkingwas due to an insured peril. Absent such evidence there is no basis to support a claim under the policy." Secondly there is reliance on the weather state warranty. Thirdly the lawyers state that the information that they have received "also indicates that the assured made several misrepresentations through their dealing with MIS. The misrepresentations include but are not limited to the following:" There follows a list of six alleged misrepresentations including what is said to be an omission from the attestation of warranties of 28 March (but not about the question of release, waivers or hold harmless). After drawing attention to various matters MIS therefore "reserves the right to alter its position in light of discovery of previously undisclosed information which would materially alter the facts and circumstances presently known… the foregoing is without prejudice to all the remaining terms and conditions of the policy, along with any other defences which may be discovered after further investigation."
There is no suggestion that information has since come to light which had been previously undisclosed. On 24 November 2003 Bynane & Co. wrote to Liberty making a detailed claim under the policy. Fowler Rodriguez replied on 3 February 2004 rejecting the claim on the same grounds as set out previously and in May 2004. Argo sued Liberty DSI in...
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- Argo Systems Fze v Liberty Insurance (Pte) and another