DMC/INS/04/01
Glowrange Ltd v. CGU Insurance Plc
English High Court: QBD Commercial Court: Colman J:
Unreported: 26 June 2001
HULL FAILURE : UNEXPLAINED : TOTAL LOSS : INSTITUTE YACHT CLAUSES 1.11.85 : CAUSATION : INSURED PERIL : PERILS OF THE SEAS : VESSEL IN GOOD CONDITION : BALANCE OF PROOF : THE POPI M : THE MAREL : REASON FOR WATER INGRESS : SUMMARY JUDGMENT
Where a vessel sank as a result of water entering through the hull, in circumstances where the reason for the ingress of water was unexplained, it was inappropriate to give summary judgment in the claimants’ favour. Given the various possible explanations for the water ingress, it was impossible to state with certainty in advance of the full trial of the case, that the trial court would attribute the loss of the vessel to an insured peril as opposed to an uninsured one.
DMC Classification: Confirmed
FactsThe Claimants were the owners of a motor yacht, the ‘Moana’, that sank off the port of Lae, in Papua New Guinea, on 21 May 1999. The yacht was insured under a marine policy issued by CGU, incorporating Institute Yacht Clauses 1.11.85. The insurance covered ‘loss of or damage to the subject-matter insured by…. perils of the seas rivers lakes or other navigable waters’. The yacht was lost in the following circumstances. On the evening of 20 May 1999, she was moored off Lae, with a professional crew of three on board her. During that night the on-shore swell increased and a number of craft were having difficulties with the conditions. The skipper of the Moana decided to leave the moorings and head for the open sea. After being under way for about 20 to 30 minutes at a speed of about 3 knots, the skipper noticed that the steering was not responding as it should. On checking, the steering compartment was found to be full of water. Neither the submersible pumps in the steering compartment, nor the emergency pump on the main port engine, which was also brought into service, could cope with the water ingress, which then entered the cockpit deck, as the bulkheads were not water tight. The yacht settled heavily by the stern and developed an increasing list to starboard. In these circumstances, the crew abandoned ship and the Moana eventually sank in deep water. No member of the crew could offer any explanation for the ingress of water into the steering compartment. The surveyor appointed by CGU to investigate the sinking reported that the Moana was in good condition and well maintained. He added further that no evidence of moral hazard had been discovered and ‘on the basis of what we have discovered, suspect that no obvious motive for the scuttling of the vessel will be found.’
The
claimants sought a summary judgment on the grounds that ‘on the balance of
probabilities, the vessel sank because her steering gear and the through hull
fitting relating thereto were damaged by contact with floating debris as she
pitched and rolled in very heavy sea conditions, causing breach of her
watertight integrity…. which consequential flooding could not be controlled by
pumping. Alternatively, the vessel’s watertight integrity ….. was breached
from within by a heavy object …. being thrown against the hull in consequence
of the violent movement of the vessel in the swell, with the same consequences’.
As a result, they claimed the cause of the yacht sinking was a peril of the sea.
The CGU denied liability on the grounds that none of the possible explanations
for the loss of the Moana advanced by the claimants could be correct and that
therefore the claimants had failed to establish that the loss was caused by an
insured peril. The CGU did not advance a positive case that the loss was caused
by an uninsured peril.
The judge held that ‘an assured who puts forward a claim under the policy must establish that it is more probable than not that the proximate cause of the loss was a peril within the scope of the cover. Where it is alleged that the vessel has been totally lost by perils of the seas, the assured must adduce evidence which either explains the precise mechanism of failure of the vessel to withstand the sea conditions or from which it can be inferred that some such failure, must, on the balance of probabilities, have occurred…. it is not enough for a claimant to prove simply that water has entered his vessel in the course of a voyage and that in consequence it has sunk. This is because the scope of perils of the seas does not include ‘the ordinary action of wind and waves’….. That, however, does not mean that a loss by perils of the seas does not occur where a vessel sinks because of the loss of water-tight integrity due to the impact of adverse, but not exceptionally severe, weather on the vessel.’ The judge referred to the judgment of Mustill J, as he then was, in The ‘Miss Jay Jay’ [1985] 1 LR 264. That judgment showed that there will not be a loss by perils of the sea where the vessel’s condition is so weak that, not only can it not withstand adverse weather, but it cannot withstand even perfect weather because it suffers from ‘debility’.
The judge then examined the cases of the The ‘Popi M’ [1985 1 WLR 948 and The ‘Marel’ [1994] 1 LR 624 and concluded ‘In many cases there may be primary evidence which, although suggesting from where water entered a vessel, does not indicate why the entry occurred. In such cases, if the assured is to establish a case of loss by perils of the seas strong enough to displace all other uneliminated but uninsured perils as possible causes of the loss, he will need to advance a cogent explanation for the seawater entry on which he relies. Omission to do so may lead to the court being left in such doubt that it is unable to infer that the loss was more probably caused by perils of the seas than by an uninsured peril. That was the case in the Popi M and the Marel.’
In the present case, the evidence presently before the court indicated a number of various theoretically possible reasons for the Moana sinking:
- It might have sustained some damage to its hull while still at the mooring of which the crew were unaware and due perhaps to contact with some fixed object….
- There might have been some defect in the hull in way of the steering compartment which was so serious as to amount to debility of the hull;
There
might have been some defect in the hull in the way of the steering
compartment of which the owners were unaware and which amounted to
unseaworthiness but was not serious enough to amount to debility of the
hull;- The vessel’s hull might have been damaged by external impact with a floating object after it had left the mooring or by an internal impact by an oil container while at the mooring or at sea;
- The vessel might have been deliberately cast away by one or all of the crew or by or with the connivance of the owners.
The judge continued ‘Whereas it is true that there are on the face of it strong grounds for regarding the possibility as extremely small in the case of some of these…. it is necessary for the purposes of the present application that I should be completely confident that there is no real likelihood that after a full trial the court will be able to infer that water ingress was more probably caused by 1), 3) or 4), than by 2). [Doesn’t he mean that the other way round? Ed.]In my judgment, it is, on the evidence before me, quite impossible to be confident that such an inference will be drawn.’
The court therefore refused to give summary judgment in the claimants’ favour. In conclusion the judge said ‘I invited counsel to say whether there was any case known to either of them in which summary judgment had been obtained against underwriters in respect of the total loss of a ship. Neither knew of any such case and I have never known this to be attempted, let alone achieved. Indeed, where the cause of water ingress is in doubt, it is hard to envisage a case where it would ever be appropriate to apply for [summary judgment]’.
The owners’ claim for summary judgment therefore failed.