Mayban General Assurance Bhd v Alstom Power Plants Ltd [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr. Justice Moore-Bick,Mr. Justice Moore-Bick |
| Judgment Date | 07 May 2004 |
| Neutral Citation | [2004] EWHC 1038 (Comm) |
| Docket Number | Case No: 2002 Folio 1267 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 07 May 2004 |
[2004] EWHC 1038 (Comm)
Queen's Bench Division (Commercial Court).
Moore-Bick J.
Luke Parsons QC (instructed by Clyde & Co) for the claimants.
Roger Stewart QC (instructed by Masons) for the defendants.
The following cases were referred to in the judgment:
British and Foreign Marine Insurance Co Ltd v GauntELR [1921] 2 AC 41.
Soya GmbH Mainz KG v WhiteUNK [1983] 1 Ll Rep 122.
TM Noten BV v HardingUNK [1990] 2 Ll Rep 283.
Insurance — Shipping — Perils of the sea — Inherent vice — Whether insurers liable for damage suffered by electrical transformer on sea voyage to Malaysia — Whether loss caused by perils of the sea — Whether damage the result of bad weather ordinarily to be expected on such a voyage at that time of year — Whether loss caused by inability of transformer to withstand ordinary conditions of the voyage.
This was a claim by insurers for a declaration that in the circumstances which had happened they were not liable to indemnify the defendants for the damage suffered by an electrical transformer on a sea voyage to Malaysia.
The transformer was shipped on board the vessel Eliane Trader at Ellesmere Port by the first defendant for carriage to Rotterdam on the first stage of its journey by sea to Malaysia. The transformer had been manufactured by the second defendant as part of the equipment required for a new power station being built at Manjung. At Rotterdam it was transferred to a container vessel on which it was carried to Lumut before being carried on to the construction site at Manjung. When it arrived at the site it was found to be seriously damaged and had to be returned to the second defendant's works for repairs. The cost of those repairs and associated expenses was in excess of £1-million. The defendants were convinced that the damage to the transformer had been caused by some unusual event in the course of the voyage from the UK to Malaysia and made a claim under the policy of insurance covering equipment being supplied to the power station. The insurers considered that the damage had resulted from the transformer's inability to withstand the ordinary incidents of carriage by sea from the UK to Malaysia during the winter months. They therefore rejected the claim on the grounds that the loss was caused by inherent vice and brought proceedings seeking a declaration of non-liability.
Held, giving judgment for the claimant insurers:
1. The damage to the transformer was probably caused by the prolonged “working” of its joints brought about by the motion of the vessels in which the transformer was being carried during heavy weather. The question was whether the damage was caused by an unusual event or was simply the result of one episode, or a series of episodes, of bad weather of a kind that might ordinarily be expected to occur in the course of such a voyage at that time of year. If the conditions encountered by the vessel were more severe than could reasonably have been expected, it was likely that the loss would have been caused by perils of the sea. If, however, the conditions encountered by the vessel were no more severe than could reasonably have been expected, the conclusion must be that the real cause of the loss was the inherent inability of the goods to withstand the ordinary incidents of the voyage.
2. The conditions encountered by the vessel on the voyage were neither extreme nor even unusual, in the sense that they were encountered often enough for mariners to regard them as a normal hazard. Conditions or events which were well known to occur from time to time but which were nonetheless relatively uncommon might properly be regarded as ordinary incidents of the voyage. The conditions encountered were not outside the range of what could reasonably be expected at that time of year and were therefore an ordinary incident of the voyage for which the vessel and cargo ought to have been prepared.
3. The evidence suggested that the joints were liable to begin working loose when subjected to stresses and strains of the kind that could be expected to be encountered in the ordinary course of carriage and that once the integrity of the joints had been compromised the damage would progress whenever the vessel again encountered similar conditions. Even if it was extraordinary for the vessel to have encountered a prolonged period of heavy weather when and where she did, it was likely that the same or similar damage could as easily have occurred if the vessel had encountered two or three shorter spells of similar weather at different stages in the voyage.
4. A cargo that could not withstand prolonged exposure to conditions of the kind encountered in this case could not be regarded as fit for the voyage. The fact that many other transformers of a similar design had been carried without apparent mishap did not enable the court to conclude that something extraordinary had happened in this case. The loss in the present case was caused by the inability of the transformer to withstand the ordinary conditions of the voyage rather than by the occurrence of conditions which it could not reasonably have been expected to encounter. It followed that the insurers were not liable to indemnify the defendants in respect of the damage suffered.
Moore-Bick J:
1. On 25th January 2002 a large electrical transformer was shipped on board the vessel Eliane Trader at Ellesmere Port by the first defendant, Alstom Power Plants Ltd, for carriage to Rotterdam on the first stage of its journey by sea to Malaysia. The transformer had been manufactured by the second defendants, Alstom T & D Ltd (“Alstom”), as part of the equipment required for a new power station being built at Manjung. At Rotterdam it was transferred to a container vessel, the P & O Nedlloyd Southampton on which it was carried to Lumut before being carried on to the construction site at Manjung. When it arrived at the site it was found to be seriously damaged and had to be returned to Alstom's works for repairs. The cost of those repairs and associated expenses was in excess of £1-million. Alstom was convinced that the damage to the transformer had been caused by some unusual event in the course of the voyage from the United Kingdom to Malaysia and made a claim under the policy of insurance covering equipment being supplied to the power station. However, the insurers considered that the damage had resulted from the transformer's inability to withstand the ordinary incidents of carriage by sea from the United Kingdom to Malaysia during the winter months. They therefore rejected the claim on the grounds that the loss was caused by inherent vice and brought these proceedings seeking a declaration that they were not liable to indemnify Alstom in respect of it.
2. The transformer was the second of three 3-phase 5 limb transformers designed and manufactured by Alstom specifically for the Manjung project. It was made up of five vertical limbs joined at the top by a steel beam known as a “yoke”, all contained within an enclosed bell tank. The three central limbs each consisted of a steel core which carried the copper windings necessary to convert the low voltage supply from the power station generators into a high voltage supply necessary for the efficient distribution of electricity by power transmission cables. The additional limb at each end (together known as the “fifth limbs”) consisted of a steel core without any windings, the purpose of these limbs being to contain the magnetic flux generated within the transformer.
3. Each of the steel cores was of a laminated construction, that is, it was composed of a very large number of thin vertical sheets of steel held tightly together by horizontal steel bands. The yoke was of a similar laminated construction with its plates running longitudinally. The joint between each limb and the yoke took the form of a classic mitre joint, the alternate laminations of the two sections being offset so as to produce something akin to a dovetail joint. At the joint the alternate laminations of the fifth limb and the yoke overlapped by about 20 cm. which, as a result of the pressure exerted by the bands holding the laminations together and the other securing arrangements designed to hold the assembly in place, provided the friction by which the joint was maintained. The bottom of each limb was secured to the base plate of the tank and steel plates known as “flitch plates” helped to hold each of the cores and the yoke in place. Finally, a steel girder ran along the top of the yoke to which were attached tie bolts securing the whole assembly in place. The base plate formed part of the tank which was intended to be filled with coolant when the transformer was in operation, but which remained empty for the purposes of transportation to Malaysia.
4. The transformer was insured in the course of...
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