Lloyd (J.J.) Instruments Ltd v Northern Star Insurance Company Ltd (Miss Jay Jay)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LAWTON,LORD JUSTICE SLADE,LORD JUSTICE CROOM-JOHNSON |
| Judgment Date | 15 October 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J1015-5 |
| Docket Number | 86/0889 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 October 1986 |
[1986] EWCA Civ J1015-5
Lord Justice Lawton
Lord Justice Slade
Lord Justice Croom-Johnson
86/0889
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR. JUSTICE MUSTILL)
Royal Courts of Justice
MR. GEOFFREY BRICE Q.C. and MISS BELINDA BUCKNALL (instructed by Messrs. Ingledew Brown Bennison & Garrett) appeared for the Appellants (Defendants).
MR. ADRIAN HAMILTON Q.C. and MR. JEFFREY GRUDER (instructed by Messrs. Ince & Co.) appeared for the Respondents (Plaintiffs).
At about 1.30 p.m. on 15 July 1980 the plaintiffs' motor cruiser, Miss Jay Jay, with two experienced yachtsmen on the flying bridge, started from Deauville a return passage across the English Channel to Hamble. A course was set for the Le Havre buoy at the mouth of the Seine Estuary. There was a head wind. As the cruiser approached the buoy at a speed of about 15 knots, it ran into a choppy, confused sea with waves about three metres high, maybe a little more. Once in this sea the helmsman, a Lieutenant in the Royal Navy, slowed down. He found it advisable to go through this sea at a speed which would ensure planing as far as possible from wave to wave. About every two minutes the cruiser fell into a trough because the waves were not evenly spaced. Whenever it did so, it hit the water with a bang, producing a slamming effect on the hull. No criticism has been, or could be, made of the helmsman's seamanship when passing through this sea. The cruiser duly arrived at Hamble. It was then discovered that, as a result of the passage through the choppy, confused sea, the floor of the cruiser had cracked and part of the skin of the hull on the port side was missing from chine to topside. The cost of repairing the hull was about £30,000.
The plaintiffs claimed that their insurers, the defendants, should indemnify them against this loss under a time marine policy for the period from 1 August 1979 to 31 July 1980. The policy, subject to specified exclusions and conditions, indemnified the plaintiffs "against all loss of or damage to the insured craft…which is directly caused by external accident means". The defendants said that it had not been so caused. There had been nothing exceptional about the sea at the material time. The damage had been done by the ordinary and to be anticipated action of the sea on the hull. There was nothing accidental about the loss. Anyway, what had caused the loss was the admitted faulty design of the cruiser. It was never suitable for use in the kind of sea which was running in the mouth of the Seine Estuary on 15 July 1980. It was unseaworthy for a cross-Channel passage during which seas of this kind could be anticipated. Such loss as the plaintiffs had sustained could have been recovered under a products liability policy, if they had had one, not under a marine policy. The defendants, as marine insurers, were concerned at the prospect of claims of this kind being made against them under their standard form of policy for pleasure craft. It was commercially impractical for them to carry out surveys of such craft, many of which (but not this cruiser) belong to classes many thousands strong.
Litigation resulted. The action was tried by Mustill J. (as he then was). He delivered judgment on 29 November 1984 (see (1985 1 Lloyd's List Reports 264) in favour of the plaintiffs. The detailed history of the litigation is set out in that judgment and need not be repeated.
The defendants have appealed on three grounds: first, that the loss was not caused by "accidental external means"; secondly, that the trial judge misdirected himself by excluding from consideration the fact, not challenged by the plaintiffs, that the loss would not have occurred but for the cruiser's unseaworthiness due to design defects; and, thirdly, that the design defects, not the adverse sea, were the dominant and effective cause of the loss. The plaintiffs joined issue on all three submissions. As to the second one they submitted that the judge did take into account the unseaworthiness of the cruiser due to the design defects; but, even if he did not, it was irrelevant if the adverse sea was an effective, and therefore proximate, cause of the loss. Anyway, on the evidence, there were two concurrent and effective causes of the loss. One was the unseaworthiness due to the design defects, the other the action of the adverse sea.
Both at the trial and in this court many authorities were relied upon by both sides. This was due, in part, to counsel equating the risk insured against in the policy in suit with that insured in the well-known and long-used Lloyd's S.G. policy, namely "the adventures and perils…of the seas". That which under Lloyd's S.G. policy was a loss caused by a peril of the seas would almost certainly be a loss caused by "accidental external means"; but it is clear from other provisions in the policy in suit that the defendants intended to indemnify the plaintiffs against losses which were more than "perils of the seas", for example, losses caused by "contact with aircraft or other aerial devices".
It follows that consideration of the issues in this appeal must start with the construction of the relevant part of the policy. The three words which identify the risk insured against are words of ordinary usage in English. Impacts of the adverse sea upon the cruiser's hull were clearly external. So far as the plaintiffs were concerned, they did not intend them to happen and they were unexpected because nothing of the kind had happened on the passage from Hamble to Deauville or at the start of the return passage or during the last part of it. Further, as the judge found, a cruiser of this size and configuration ought not, if properly designed and built, to have suffered the kind of damage it did in the conditions it encountered. In my judgment, this was enough to make what happened "accidental". The fact, as the judge found, that the sea was not exceptional and could have been anticipated, does not stop the loss from being adjudged to have been caused by "external accidental means". It was not caused by "the ordinary action of the wind and waves" (see Rule 7 of the Construction Rules in the First Schedule to the Marine Insurance Act 1906) but by the frequent and violent impacts of a badly designed hull upon an adverse sea. This fact, however, did not make the defendants liable under the policy unless the loss was "proximately caused by a peril insured against": see section 55(1) of the 1906 Act. Most of the argument was directed to this issue.
Mustill J. also found that the cruiser "was in such a condition, by reason of defects in design and construction, as to be unseaworthy for a passage from Deauville to Hamble". If the defects in design and construction had been the sole cause of the loss, then the plaintiffs would not have been entitled to claim either at common law (see Ballantyne v. Mackinnon (1896) 2 Q.B. 455) or because of an express exclusion in the policy. On the facts, as the judge found, the unseaworthiness due to design defects was not the sole cause of the loss. It now seems to be settled law, at least as far as this court is concerned, that, if there are two concurrent and effective causes of a marine loss, and one comes within the terms of the policy and the other does not, the insurers must pay. In the last three editions of Halsbury's Laws, the law has been stated in these terms:
"If one of these causes is insured against under the policy, and none of the others is expressly excluded from the policy, the assured will be entitled to recover".
In the fourth edition see Volume 25 paragraph 181. All the relevant authorities were considered by this court in Wayne Tank and Pump Co. Ltd. v. Employers Liability Assurance Corporation Ltd. (1974) Q.B. 57. In that case there were two causes of a fire, one was within the terms of an insurance policy, one within an exception. This court adjudged that the dominant cause came within the exception. All three members of the court, however, considered what should happen when there were two causes which were equal or nearly equal in their efficiency in bringing about the damage, one being under the general words so as to make the insurers liable and the other within the exception so as to exempt them from liability. They all agreed that the exception applied. Roskill L.J. (as he then was) stated at page 74 that in marine insurance law the position was clear. In this case the evidence proved that there were two causes. I will consider later whether both were proximate or only one was. The exclusions in the policy only applied if "any loss or expenditure (was) incurred solely in remedying a fault in design or in the event of damage resulting from faulty design". On the facts as found this exclusion did not apply.
The plaintiffs were not privy to the defects in design (see section 39(5) of the 1906 Act) nor to the fact that at the material time the cruiser was not seaworthy. They had not impliedly warranted that it was (see the same sub-section of the 1906 Act) nor had they failed to take reasonable steps to maintain and keep the cruiser in a proper state of seaworthiness as they were required to do under the policy. The loss was not caused by wear or tear so as to cause "debility". Since the defendants did not exclude unseaworthiness or design defects which contributed to a loss without being the sole cause (as they could have done) the plaintiffs' claim falls within the policy provided that what happened in the sea conditions was a proximate cause of the...
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