DMC Category Rating: Confirmed

Facts
In January 2002, the defendants, Alstom Power Plants, shipped a large electrical transformer from Ellesmere Port in the UK to Lumut in Malaysia. The first leg of the voyage, from Ellesmere Port to Rotterdam, was performed by the Eliane Trader, a small vessel about 80 metres in length with a beam of about 10 metres and a speed in the region of 9 knots. At Rotterdam, the transformer was transhipped onto the P&O Nedlloyd Southampton for the remainder of the voyage to Malaysia. On her voyage to Rotterdam, the Eliane Trader encountered waves of a height of 6 metres or more for a near continuous period of 45 hours.

The P&O Nedlloyd Southamton herself encountered over 24 hours of very rough weather in the Western Approaches to the English Channel. There was no evidence that the transformer shifted in stow on either ship but on arrival at the power-station construction site at destination, the transformer was found damaged to the extent of over £1m. It had to be returned to Alstom’s works for repairs.

Alstom were convinced that the damage to the transformer had been caused by some unusual event in the course of transit and made a claim under their insurance policy, which was on "All Risks" terms. The insurers, however, considered that the damage resulted from the inherent inability of the transformer 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 damage was caused by "inherent vice" and then brought these proceedings seeking a declaration that they were not liable to indemnify Alstom under the policy.

Judgment
The judge found that it was common ground between the parties that the immediate cause of the damage to the transformer was the violent movement of the vessel, particularly the Eliane Trader, due to the actions of wind and sea. They were certainly, he said, events of a fortuitous nature and they were external to the cargo but were they the real cause of the loss? "The action of the winds and waves", he continued, "is, of course, an inevitable incident of any voyage and is therefore a hazard to which all goods carried by sea are necessarily exposed. Goods tendered for shipment must therefore be capable of withstanding the forces that they can ordinarily be expected to encounter in the course of the voyage and these may vary greatly depending on the route and time of year."

In the present case, he continued, "perils of the sea and inherent vice are to a large extent on the opposite sides of the same coin… If… 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".

Whilst the judge accepted that it was unusual for a vessel making this kind of passage to encounter such a long continuous spell of such adverse weather conditions, he did not think that a commercial man, with experience of short sea voyages along the West coast of the UK, would regard it as falling outside the range of what could reasonably be expected at that time of the year. "In other words, he would not regard it as anything other than an ordinary incident of the voyage, for which the vessel and cargo ought to be prepared."

The damage to the transformer was due to the prolonged working of the joints between certain vertical and horizontal parts of its structure. 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 encountered similar conditions.

The judge therefore concluded that, in the light of the evidence as a whole, the damage in the present case was caused by the inability of the transformer to withstand the ordinary conditions of the voyage and not by the occurrence of conditions on the voyage which it could not reasonably have been expected to encounter. As a result, the insurers were entitled to the declaration that they sought, to the effect that they were not bound under the policy to indemnify Alstom against the loss it had suffered in repairing the transformer.