Marina Offshore v China Insurance (CofA)
MARINE INSURANCE: TOTAL LOSS OF VESSEL: BREACH OF WARRANTY: WHETHER WARRANTY INCLUDED THE ROUTE THE VESSEL SHOULD FOLLOW: WHETHER POLICY WAS TIME POLICY OR MIXED/HYBRID POLICY: WHETHER WARRANTY OF SEAWORTHINESS UNDER VOYAGE POLICY APPLIED, S.39(1) OF MARINE INSURANCE ACT: WHETHER SHIP SENT TO SEA UNSEAWORTHY WITH THE PRIVITY OF THE ASSURED UNDER S.39(5) OF THE ACT
The Singapore Court of Appeal overruled the judgment at first instance and found in favour of the assured shipowners, whose tug vessel had been lost in the course of a delivery voyage from Japan to Singapore. The Court held that, on the wording of the policy, there was no express warranty as to the route the vessel should take, neither could any warranty to that effect be implied in the marine policy. The Court further held that the policy was a time policy, not a voyage policy; therefore, it was not subject to the implied warranty under s.39(1) of the Singapore Marine Insurance Act, to the effect that, at the commencement of the voyage, the vessel shall be seaworthy for the purpose of the particular venture insured. Nor had the vessel been sent to sea in an unseaworthy state with the "privity of the assured", under s.39(5) of the Act. Where, as here, one proximate cause of the loss had been perils of the sea, an insured risk, the claim was recoverable under the policy.
DMC Category Rating: Confirmed
This case note has been contributed by Ang & Partners, the International Contributors to this website for Singapore
The policies contained a warranty requiring a seaworthiness/condition survey and compliance with the conditions before sailing from Kobe – "warranted satisfactory vessel seaworthiness/condition survey for her safe voyage to Singapore by appointed surveyor… and all recommendations to be complied with at owner’s expense before her sailing from Kobe to Singapore". The surveyor made six recommendations in the survey, stating that all his recommendations must be complied with, failing which his report would be void. One of these recommendations concerned the voyage route:
Although gale warnings were given by the Kobe Meteorological Department, the tug departed Kobe in the evening of 26 December 2003. She had gone only 50 miles when she sank. Marina Offshore claimed under the policies. The insurers denied liability.
The main grounds for denial were that:-
The trial judge dismissed the action against the insurers. He held that Marina Offshore was in breach of the warranty by not complying with the surveyor’s recommended route, in heading for the Pacific Ocean via Kii Suido. He also held that the insured had not proved that the loss was caused by a peril of the sea, an insured peril, as there was evidence of unseaworthiness.
The judge also considered the nature of the insurance policies issued, in order to determine whether the implied warranty under s.39(1) of the Marine Insurance Act (the "Act") (namely, that the vessel was seaworthy at the commencement of the voyage) applied to this case. Marina had submitted that this warranty was irrelevant, because the policies were time policies and, under the Act, the warranty applied only to voyage policies. The insurers claimed, however, that the policies were mixed policies, namely that they covered the risks of both a voyage policy, which related to the voyage from Kobe to Singapore, and a time policy that covered the vessel when she began trading activities after reaching Singapore. The judge held that the policies were mixed policies and therefore that the warranty of seaworthiness had been implied under s.39(1) of the Act for the voyage from Kobe to Singapore. As the vessel was clearly unseaworthy when she left Kobe, the insurers were entitled to avoid liability.
The judge also considered what the position would have been under s.39(5) of the Act, the section that would have applied had the policies been found to be time policies. In that connection, the judge held that the vessel had been sent to sea in an unseaworthy state with the privity of Marina, and therefore the insurers were entitled to rely on s.39(5) to avoid liability.
On appeal by the insured, the Court of Appeal reversed the trial judge’s decision and gave judgment for the insured. Prakash J, delivering the judgment of the CA, held that:
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