Sealion Shipping Ltd v Valiant Insurance Company (The "Toisa Pisces")
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BLAIR,Mr Justice Blair |
| Judgment Date | 20 January 2012 |
| Neutral Citation | [2012] EWHC 50 (Comm) |
| Docket Number | Case No: 2010 FOLIO 818 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 January 2012 |
[2012] EWHC 50 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Blair
Case No: 2010 FOLIO 818
Mr Steven Berry QC and Mr Nathan Pillow (instructed by Lax & Co LLP) for the Claimants
Mr Robert Bright QC and Mr Richard Sarll (instructed by Swinnerton Moore LLP) for the Defendant
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Hearing dates: 28, 29 and 30 November, 1, 2 and 6 December 2011
This is the trial of a claim for an indemnity under a policy of marine insurance which gave Loss of Hire cover in respect of m.v. "TOISA PISCES" for the year commencing 20 May 2008. The policy was issued by the defendant, Valiant Insurance Company, which is an insurance company operating so far as relevant from New York. The claim is brought by Sealion Shipping Ltd, the vessel's operator and manager, and by Toisa Horizon Inc. the vessel's registered owner (nothing turns on the distinction between the two claimants). The claim arises from a propulsion motor breakdown which happened on 25 February 2009, after which the vessel was placed offhire by her charterers, the Mexican oil company, Pemex. The claim is for US$ 2,100,000, the equivalent of 30 days' offhire at US$ 70,000 per day (30 days being the limit under the policy). In summary, the defendant contends that it is entitled to avoid the policy for material non-disclosure and/or misrepresentation, or alternatively to rely upon a number of policy defences, including what it says was a failure on the claimant's part to exercise due diligence. If liable, it maintains an alternative defence to the effect that the full period of 30 days is not payable because there was not just one breakdown, but three breakdowns, and the agreed excess period of 21 days under the policy applies to each.
The trial
The issues can broadly be split into insurance issues (misrepresentation and non-disclosure) and engineering issues concerning the vessel's motors (e.g. the cause of the breakdown). Both parties called factual and expert evidence. As factual witnesses, the claimants called Mr Ged Murray, presently its Senior Superintendent Engineer, Mr Robin Lanigan, presently its Technical Manager together with Mr Graham Findlay, its broker at Price Forbes & Partners Ltd, which was involved in placing the policy. The defendant called Mr John Moy, a colleague of the underwriter who wrote the policy (and who has since left the defendant's employment). Each of these was a good witness, though each was at some distance removed from the events at issue, and their evidence has to be considered in this light.
In terms of engineering evidence, the claimants relied upon the evidence of Mr Alex Sinclair. The defendant relied upon the evidence of two experts, Mr Raymond Luukas, on general engineering issues, and Mr Howard Harper, on vibrations. Each was helpful, though none had actually inspected the motors or any of their parts, so was dependent on conclusions drawn from the available contemporaneous materials. I shall say more about the limitations of their evidence later.
In terms of underwriting evidence, the claimants relied upon the evidence of Mr Nigel Russell, a broker, and the defendant relied upon the evidence of Mr Bernard Devereese, an underwriter. Again, each is very experienced in his respective field, and their evidence was of assistance, though as I shall explain, the parties have acknowledged that some issues arise as to the approach that they adopted to the questions on which they were expressing their opinions.
The facts
The facts as I find them are as follows. M.v. "TOISA PISCES" was built in 1997, and prior to acquisition by the claimants was owned by France Telecom, which used her in cable laying. At all material times, she was classed by Det Norske Veritas ("DNV", or "Class") and flew the Liberian flag. There has been some dispute as to the history of the vessel during her France Telecom period. It is common ground that she would have endured high loads whilst pulling a cable-laying plough at least in the early years of service with France Telecom. A pre-acquisition report dated 15 November 2002 by Mr Robin Lanigan (the first claimant's technical manager) based on the classification records, describes various mechanical failures of the propulsion units. The problems related particularly to the gearing systems. This was raised in the defendant's expert underwriting evidence in connection with the claimants' disclosure duties in 2008 when the policy incepted, but has not been pursued as a separate issue. In any case, I accept Mr Lanigan's evidence to the effect that the claimants believed that the problems had been resolved prior to their acquisition of the vessel in 2003.
After acquisition by the claimants, the vessel was used for support activities in connection with oil drilling in the Gulf of Mexico under long term charter to Pemex. She is capable of what is called "dynamic positioning" (DP), which allows her automatically to maintain her position above a wellhead. This is done through the computer-controlled use of bow and stern thrusters. At stern, there are two main propulsion thrusters at starboard and port, known as Azimuth thrusters or Azimuth pods. Azimuth thrusters are steerable propellers capable of 360° rotation, making the conventional propeller/rudder configuration unnecessary.
The port and starboard Azimuth thrusters were driven by large electric motors manufactured by the French company, ABB Industrie ("ABB"). The key components of the motors for the purposes of understanding the issues in this action are as follows. Each motor is bolted to the floor of the vessel's engine room. A cylindrical stator core (which I shall refer to as the stator) is fixed within a stator housing (variously called housing, frame, casing or tube) which forms part of the motor frame. The stator accommodates insulated coils containing copper wires (themselves insulated) which sit in slots in the stator core. These slots are capped with strips of insulation called top-sticks. It was a short circuit within one of these coils that gave rise to the February 2009 breakdown.
A cylindrical rotor mounted on a solid shaft fits closely inside the stator, separated from it by a narrow air gap of about 2.5 mm. The rotor turns at speed within the stator. The surface of the rotor is interspersed with copper rotor bars. At each end of the rotor, the bars are connected to a ring, involving brazing, which is a type of welding. It is the interaction between the induced magnetism of the rotor and the circulating magnetic field produced by the stator that causes the rotor to turn. This drives the gearbox input shaft, and the gearbox output shaft in turn drives the propeller. The connection of the rotor bars to the ring (and the adequacy of the connection) has been one of the factual issues in the case.
Another factual issue concerns the security of the stator within the frame. It should not of course move at all. There has been debate between the experts about how the stator—which has seven short feet—was or, according to its original design, should have been secured. The candidates are one or more of the following, namely by way of an "interference fit" which is a very tight fit with the frame, the bolting of the foot (or at least some of the feet) to the frame by way of dowel pins, and/or the welding of the foot (or at least some of the feet) to the frame.
The defendant put in late evidence in this regard by way of a letter to the defendant's solicitors dated 22 November 2011 from Preel Hecquet Payet-Godel, which is a firm of French lawyers representing the manufacturers ABB Industrie. It was adduced under the Civil Evidence Act. According to the letter, the lawyers have been informed by ABB that dowel pins rather than welding was used by ABB for this purpose. The defendant says that this material shows that the security of the stator relied upon interference fits. In addition, it says, dowel pins were used, but only to keep the stator feet in place. This founds an argument that the welding of the feet, or some of them, something which is apparent in the available photographs, was not part of the original design. So, the defendant contends as part of its case at trial, modifications to the feet of one the motors should have entailed a similar modification of the other.
It is common ground between the experts based on photographs and reports from 2004 onwards that at least some of the feet were welded at that point, though the precise number is not agreed. Based on the letter dated 22 November 2011 from Preel Hecquet Payet-Godel, the defendant maintained in its opening that they were not welded by ABB upon manufacture, and it is unknown who welded them, when, and why. It would appear, the defendant contended, that there was a problem with the security of the stator prior to the first incident in evidence in these proceedings (which happened in August 2004 and which I describe below). This, the defendant said, would explain why welding was applied.
However as he put it in closing, Mr Robert Bright QC, counsel for the defendant, accepted that he could not press the court too far on this point. The defendant has not contended that the available material justifies a finding that France...
To continue reading
Request your trial
-
AMT Futures Ltd v Marzillier, Dr Meier & Dr Guntner Rechtsanwaltsgesellschaft mbh
... ... 2 The Claimant ("AMT") is a company incorporated under the laws of England and Wales ... ...
-
Versloot Dredging BV and Another v HDI Gerling Industrie Versicherung AG and Others
...requisite elements, namely that the assured was negligent and that such negligence was causative of the loss: see The Toisa Pisces [2012] 1 Lloyd's Rep. 252. Management 71 The Owners bought the Vessel in late 2006, since when she has been managed by Rederij Chr. Kornet & Zonen B.V. ("K&Z")......
-
(Re)Insurance End Of Year Review 2012
...– it may be that the judge felt that the use of the term "excellent" was more of a subjective assessment). Sealion Shipping v Valiant [2012] EWHC (Comm) 50 and [2012] EWCA Civ 1625 Notification Whether claim fell within scope of a public liability policy and notification condition The claim......
-
Aggregation clauses in insurance policies
...insured was therefore only required to bear one per occurrence deductible (instead of three): Sealion Shipping Ltd v Valiant Insurance Co [2012] EWHC 50. Construction works were insured for storm damage. The works were damaged in a storm and while under repair a further storm caused additio......
-
Marine Insurance: High Court rules on issues of non-disclosure and due diligence
...Shipping Ltd and Another v Valiant Insurance Company (The “Toisa Pisces”) [2012] EWHC 50 (Comm), Owners claimed an indemnity under a marine insurance policy with the Defendant Insurers for loss of hire of their vessel. When entering into the policy, Owners did not disclose two previous hull......
-
The Chain Of Causation: 'One Thing Led To Another'
...and its relationship to aggregation of loses and of the difficulty of successfully appealing on issue of fact. Footnotes 1 [2012] Lloyd's Rep IR 141 2 [2013] Lloyd's Rep IR 122 The content of this article is intended to provide a general guide to the subject matter. Specialist advice should......
-
CALL FOR CONSUMER REFORM OF INSURANCE LAW IN SINGAPORE
...Pte Ltd[2008] SGHC 188 at [30]-[31]. These principles were recently affirmed in Sealion Shipping Ltd v Valiant Insurance Co[2012] EWHC 50 (Comm). 24 See English Law Commission and Scottish Law Commission, Consumer Insurance Law: Pre-contract Disclosure and Misrepresentation (Law Com 319; Sc......