Mayban v. Alstom
In this case, insurers were held not bound to indemnify the insured against damage to a transformer, carried by sea from the UK to Malaysia, where that damage was caused by its inability to withstand the normal incidents of the voyage in question and not by the occurrence of weather conditions that it could not reasonably have been expected to meet.
DMC Category Rating: Confirmed
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.
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.
These Case Notes have been prepared with care, but neither the Editor nor the International and other Contributors can guarantee that they are free from error, nor that they contain every pertinent point. Reliance should not therefore be placed upon them without independent verification. The Editor and the International and other Contributors disclaim all liability for any loss of whatsoever nature and howsoever arising as a result of others acting or refraining from acting in reliance on the contents of this website and the information to which it gives access. The Editor claims copyright in the content of the website.