Mr John Pratt v Aigaion Insurance Company Sa
| Jurisdiction | England & Wales |
| Judgment Date | 27 November 2008 |
| Neutral Citation | [2008] EWHC 489 (Admlty) |
| Docket Number | CASE NO: 2007 FOLIO 968 |
| Court | Queen's Bench Division (Admiralty) |
| Date | 27 November 2008 |
[2008] EWHC 489 (Admlty)
His Honour Judge Mackie Qc
(Sitting as a Judge of the High Court)
CASE NO: 2007 FOLIO 968
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
Mr Michael Nolan (instructed by Hill Dickinson LLP) appeared for the Claimant
Mr David Bailey QC (instructed by Marine Law Solicitors) appeared for the Defendant.
JUDGMENT 14 MARCH 2008
This is a short point of construction of a clause in a policy of marine insurance brought as a Part 8 claim. It concerns the meaning of “at all times” in the context of this case.
Background and Policy wording
The Claimant Mr John Pratt owns the fishing trawler mfv “RESOLUTE”, a 21 metre steel stern trawler with a gross tonnage of 117 tonnes. Mr Pratt took out a policy of marine insurance with the Defendant Aigaion Insurance Company SA (“Aigaion”) through brokers. The period of cover was for 12 months and ran from 23 June 2006. The insurance value of the vessel was given as £120,000. The living accommodation on the vessel comprises a crew cabin 6 foot by 9 foot and a galley 6 foot by 6 foot.
The policy is apparently in Aigaion's Standard Trawler wording with the following additional express provisions described as “CONDITIONS”.
“Aigaion's Trawler Wording with the following Endorsements; Endorsement C – Crew Liability for 4 men.
Machinery Damage included subject to Machinery undergoing a full overhaul by manufacturers representative and certified by a qualified marine surveyor.
Warranted Machinery Breakdown is covered for the main engine only, but no cover shall apply following damage as a result of, or caused by, failure of any associated ancillary parts, pumps, generators, writing or peripheral equipment of any kind.
Subject to MCA or appropriate Licences to be held and in force. A copy required for Underwriters files.
Warranted Owner and/or Owner's experienced Skipper on board and in charge at all times and one experienced crew member.
Warranted the vessel is to be maintained to MCA or equivalent authority requirements.
Warranted any piece of Equipment valued in excess of GBP 500 to be specifically declared failing which Underwriters maximum liability will not exceed GBP 500 per item.
Subject to sight of current MCA survey and Ultrasonic thickness Test that has been carried otherwise full Out of Water survey to be carried out prior to attachment and all recommendations to be complied with within the time frame set by surveyor. All survey costs to be for Owners account”.
Facts
The relevant facts should not be much in dispute in a Part 8 claim. There is however extensive material in the bundle including witness statements from Mr John Hulmes, a partner in Hill Dickinson LLP the Claimant's solicitors, Dr Barrie Deas, Chief Executive of the National Federation of Fishermen's Organisations, and Mr Joseph Crewdson of the Defendant's solicitors. Much of this material is irrelevant. As I see it the salient facts are as follows.
The RESOLUTE is based at Fleetwood but in December 2006 was fishing from North Shields for prawns. On 11 December Mr Pratt and his crew of three took the vessel to fish for a day and it returned to North Shields where it was all fast at about 20:00 hours. The crew landed the catch and at 20.30 Mr Pratt went to file the vessel's fishing log sheet at the Fisheries Office. The crew readied the vessel for fishing the next day before one of them, who lived in North Shields, went home and another visited a pub some 200 yards from the vessel. At 22:00 Mr Pratt left the vessel to meet a friend at a café in Tynemouth and a few minutes later the fourth crew member also went to the pub. At about 22.20 Mr Pratt received a telephone call informing him that the vessel was on fire. When he and the crew members returned to the vessel the Fire Brigade was there putting out a fire which was extinguished by about 00:45.
The vessel was inspected by Burgoynes on 15 January. Their report concluded that the fire started in the galley/mess room, but because of the severity of the fire it was not possible to identify the precise location of the seat or the cause with any certainty. Loss by human agency could not be completely ruled out but did not appear the most likely cause. On the evidence available it was plausible that the fire was caused by operation or malfunction of the deep fat fryer or the fridge. The fryer was used by unplugging the fridge and placing the fryer plug in the socket. The fryer's on/off switch was stuck in the on position so temperature was controlled by unplugging it when necessary. As was usual when crew were to return to the vessel for the night the generator was left running while they were ashore.
Mr Pratt obtained quotes for repairs. One estimate was £142,500, the other £135,000 both higher than the £120,000 insured value of the vessel. The insurers declined to pay citing the 'at all times' warranty mentioned above.
The dispute between the parties
In essence the Defendant says that the clause means what it says and that it owes no liability because there was no owner or experienced skipper on board and in charge “at all times” or specifically at the time of the fire. The Claimant submits that this construction ignores the fact that the clause is obviously directed to periods when the vessel was navigating or working and, if applied literally, would lead to absurd results. It is not how a reasonable person having the background knowledge available to both parties would understand it and it is not how it was understood by those in the industry at the time. The Claimant also submits that the other terms of the contract show that the clause does not have the meaning contended for by the insurers.
Submissions of the Claimant
Mr Nolan for the Claimant takes as his starting point the very well-known principles of construction set out by Lord Hoffmann in ICS v West Bromwich [1998] 1 WLR 896 at 912 to which the court was taken in rather more detail than is usual. He also put forward the following submissions about the approach to construction which I take from his skeleton argument.
“The apparently literal meaning of the words of a warranty must be restricted if they produce a result inconsistent with a reasonable and businesslike interpretation. The words used ought to be given the interpretation which, having regard to the context and circumstances, would be placed upon them by ordinary men of normal intelligence conversant with the subject-matter of the insurance.
MacGillivray on Insurance Law (10 th Edn) paragraph 10.50.
Thus a warranty in a burglary policy that the insured premises would be “always occupied” meant not that there should always be someone on the premises but that they should be used as a residence as opposed to a lock up left unoccupied after business hours.
Simmonds v Cockell [1920] 1 KB 843 .
Whether or not there is ambiguity the court seeks to avoid a literal construction of warranties which would give absurd results. To that extent at least the courts put upon words a reasonable construction.
Clarke – The Law of Insurance Contracts para 20–4B
A continuing warranty is a draconian term. If insurers want such protection it is up to them to stipulate for it in clear terms.
Per Saville LJ in Hussain v Brown [1996] 1 Ll. Rep. 627 at 630.
Any ambiguity in the terms of the policy must be construed against the insurer. The principle rests in part on the general contra proferentem rule but also on the court's sympathy for ordinary people unaccustomed to legal documents who find it difficult to relate the different parts of a complex policy and understand what is being asked of them, especially when insurers could with more care remove the ambiguities present in it.
MacGillivray on Insurance Law (10 th Edn) paragraph 10–54”.
Mr Nolan next identified a significant number of matters taken from the statements of Mr Hulmes and Mr Deas as being relevant background facts against which to construe the wording. These matters included the fact that the insurers insured much of the UK fleet of trawlers and have their own policy wording, that vessels like RESOLUTE put to sea for a day or so at a time after which they have to return to port for the usual reasons, that the EU limits the number of days that the vessels can remain at sea (in the case of the RESOLUTE limited to 227 days in a relevant year), and that the skipper and crew of fishing vessels do not usually live on board except when at sea. Further as vessels are usually tied up for days between trips, it would put an intolerable strain to require an owner/skipper and one crew member to remain on board in the cramped confines of the vessel. It is outside the expectations of the industry that a policy term would include such a requirement. The crew and skipper often have to go ashore on duty when the vessel is in port and also have duties such as attending fish auctions and the harbour master's office essential to running the vessel. The cost of employing a relief skipper and an experienced crew member for a UK trawler would be prohibitive.
Mr Nolan submits that when the legal principles are applied to these facts it becomes clear that the clause does not require an owner or skipper together, depending upon how one approaches the construction of the remainder of the clause, with an experienced crew member to be on board the vessel 24 hours a day, 7 days a week even when it is in port. He says the meaning contended for by the insurers is not the one which the policy would convey to a reasonable person. The expression “at all times” is sensitive to syntax and context in the sense identified by Lord Hoffmann in Charter Reinsurance Co Limited v Fagan [1997] AC 313 at 391 where he observed that “In some cases the notion of words having a natural meaning is not a...
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