Seashore Marine SA v Phoenix Assurance Plc [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Aikens J. |
| Judgment Date | 16 May 2001 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 16 May 2001 |
Queen's Bench Division (Commercial Court)
Aikens J.
Stephen Hofmeyr QC and Stephen Kenny (instructed by Hill Taylor Dickinson) for the claimant.
Michael Thomas QC and David Foxton (instructed by Ince & Co) for the defendants.
The following cases were referred to in the judgment:
Sassoon (E D) & Co v Western Assurance CoELR [1912] AC 561.
Lloyd (J J) Instruments Ltd v Northern Star Insurance Co Ltd (“The Miss Jay Jay”)UNK [1987] 1 Ll Rep 32.
Mountain v WhittleELR [1921] 1 AC 615.
Marine insurance — Salvage — Peril of the seas — Negligence of master, officers and crew — Vessel took on list and crew abandoned ship — Salvage liabilities were a loss within Institute Time Clauses (Hulls) — Whether claimant entitled to recover salvage liabilities from hull and machinery insurers — Whether claimant could show loss incurred avoiding peril insured against — Cause of list — Whether vessel if not salvaged would have capsized and been lost by reason of negligence of crew and peril of the seas.
This was a claim by owners against insurers and underwriters under policies of marine insurance on the hull and machinery of the vessel Vergina.
The vessel was on a voyage from Abidjan to Europe laden with a cargo of containers. Off the coast of west Africa the vessel developed a list to starboard of 23° and the crew abandoned ship. The crew was picked up by the MT Seaford and the Vergina was salvaged by another vessel and a professional salvage tug. Salvage contracts on Lloyd's Open Form 1990 were concluded with each of the three salvors. The vessel was insured under hull and machinery policies which were subject to the terms of the Institute Time Clauses (Hulls) dated 1.10.83 (“the ITC”). The claimant shipowner claimed on the insurance for its share of salvage liabilities under cl. 11.1 and 11.4 of the ITC on the basis that if the vessel had not been salvaged she would have been lost by either perils of the sea or negligence of master, officers or crew within cl. 6.1.1 and 6.2.3 of the ITC. The defendant insurers resisted liability on the basis that the salvage liabilities were incurred in connection with the avoidance of a loss which would not have been proximately caused by an insured peril.
Held, giving judgment for the claimant:
1. The claimant could not succeed simply by proving that the salvage liabilities had been incurred, even though the defendants advanced no positive case as to how the casualty occurred. It was not for underwriters to prove that the loss in cl. 11.4, which included the salvage liabilities, was not incurred to avoid a peril insured against. It was for the insured to prove a proximate link between the cl. 11 loss and a cl. 6 insured peril. Accordingly the claimant had to prove that the salvage liabilities were incurred to avoid loss caused by a cl. 6 peril or in connection with the avoidance of a loss so caused.
2. It was accepted that the vessel was stable on leaving Abidjan and that if the salvage services had not been rendered the vessel would eventually have capsized. The cause of the initial increase in the list to 5° or 8° remained uncertain. Thereafter water was pumped into the centre stabiliser tank as a result of the acts of the chief engineer in the ballast control room. That was either incompetent or negligent. Further the No. 3 double bottom port tank had been emptied of ballast water as a result of the deliberate or accidental actions of the chief engineer. That resulted in an increase in the list of the vessel beyond 10° after which water could enter the vessel's holds via an open scupper valve, leading to eventual capsize. The actions of the chief engineer were negligent. Therefore the claimant had proved that, but for the salvage operations, the vessel would have been lost by the negligence of the master, officers and crew within clause. 6.2.3 of the ITC.
3. Further the entry of seawater into the open scupper valve would also have been a proximate cause of the vessel capsizing. It would also have been fortuitous because it was the result of the valve being defective or accidentally left open and the list of over 10° caused by the abnormality in the vessel's ballast arrangements. Therefore the entry of seawater would be a peril of the seas within cl. 6.1.1.
Aikens J:
A. Synopsis of the case
1. The claimant is the former owning company of the ro-ro/container vessel “Vergina” (“the vessel”). She was managed by Good Faith Shipping Co SA. The claim is brought against the insurers and underwriters under four policies of marine insurance on the hull and machinery of the vessel for the period 11 June 1993 to 12 May 1994. The policies were all subject to the terms of the Institute Time Clauses (Hulls) dated 1.10.83 (the “ITC”).
2. The claim is for damages for failing to hold the claimant harmless for its liability to pay salvage as a result of an incident on 10 February 1994 off the coast of west Africa. The vessel was on a voyage from Abidjan to Europe laden with a cargo of containers. She developed a list to starboard of 23° and the crew abandoned ship. The crew were picked up by the “MT Seaford”, who stood by for some time. The vessel was then salved by the “Happiness II”, on which a “salvage team”, organised by the managers of that vessel, had been placed. On 13 February 1994 Happiness II was joined by the professional salvage tug “Leopard”, operated by the salvage contractors Alexander G Tsavliris & Sons (“Tsavliris”). Salvage contracts on Lloyd's Open Form 1990 (“LOF 1990”) were concluded with each of these three salvors.
3. The salvage operations continued until 17 February 1994. The vessel then continued her voyage to Lisbon with five of the salvage team on board. The vessel hove to off Las Palmas on 20 February 1994 for preliminary surveys to be performed. The vessel arrived at Lisbon on 23 February 1994, where further surveys were carried out and the crew was interviewed.
4. The claimant now claims from each of the defendants its proportion of the salvage liabilities that the claimant has had to pay. The salvage claim of the Seaford was settled by the claimant for $34,000 plus costs. That of the Happiness II was also eventually settled (in respect of the claimant's liability) for £185,908.62 plus costs. The claim of Tsavliris went to arbitration and then to the Lloyd's appeal arbitrator. He awarded Tsavliris £446,027.51, inclusive of interest up to 20 October 1996, interest at a daily rate of £106.92 thereafter and costs.
5. The claim is made under cl. 11.1 and 11.4 of the ITC (set out at para. 30 below). The claimant contends that the salvage liabilities were incurred in connection with the avoidance of a loss of the vessel by insured perils. The claimant says that if the vessel had not been salved then she would have been lost by either “perils of the seas” or negligence of “master officers [or] crew…”. These are both insured perils under cl. 6 of the ITC.
6. The claimant's case is that the list developed as a result of the negligence of the chief engineer in operating the vessel's ballast system during the evening of 10 February 1994. Alternatively it is said that the master was negligent in permitting the chief engineer to operate the ballast system without the supervision of the chief officer or in not stopping the chief engineer when it became clear that his operation of the ballast system was causing the list to increase. The claimant contends that once the list of the vessel had increased to over 10° water entered No. 3 hold through one or more open or defective scupper valves. Therefore, the claimant submits, the result of that ingress would have been that the vessel would have been proximately lost by “perils of the seas” or crew negligence, but for the salvage operations.
7. The defendants contend that the salvage agreements were entered into to avert a loss which would not have been proximately caused by an insured peril. The defendants accept that if there had been no salvage operations then the vessel would eventually have capsized. But the defendants deny that the crew operated the vessel's ballast system negligently. They also deny that this was the proximate cause of the list or that it would have been a proximate cause of the loss that would have occurred if there had been no salvage operations. Further, they deny that the vessel would have been lost (proximately) by “perils of the seas”. Therefore, they submit, as there would have been no loss by an insured peril, but for the salvage operations, the claimant cannot recover under cl. 11 of the ITC.
8. The defendants do not advance any positive case as to the cause of the list or what would have been the cause of the loss of the vessel had there been no salvage operations. The defendants raised some subsidiary points on quantum, although most of these had been resolved by the end of the trial.
9. The trial took place between 5 and 12 February 2001. The claimant called two witnesses of fact, the chief officer, Mr Angelides, and the leader of the “salvage team” placed on board the Happiness II, Captain John Filipis. The claimant also relied upon signed witness statements from various other factual witnesses. There was a dispute as to which witness statements or parts of them the claimant was entitled to rely upon, in the light of a ruling I made on the second day of the trial, to which I refer below. The defendants called no factual witnesses. The claimant called two experts. The first was Mr Joshua Levy of Marine Consulting Ltd, a naval architect and marine engineer. The second was Captain Bliault of Brookes Bell Jarrett Kirman, a master mariner. The defendants called Mr Ken Abel, the well-known marine engineer and consultant.
10. The Vergina was a combined container/ro-ro vessel of 26,409 GRT. The vessel was scrapped in September 2000. She had been built in France in 1977 and then...
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