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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Amlin Corporate Member Ltd & Ors v Oriental Assurance Corp  EWCA Civ 1135 (07 August 2014)
Cite as:  2 Lloyd's Rep 561,  EWCA Civ 1135,  WLR(D) 373
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
MR JUSTICE FIELD
2010 Folio 1383.  EWHC 2380 (Comm)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE DAVIS
LADY JUSTICE GLOSTER
|(1) AMLIN CORPORATE MEMBER LTD
(on its own behalf and on behalf of all other members of Syndicate 2001 at Lloyd's in relation to policy reference B0738MC000720B)
(2) TALBOT 2002 UNDERWRITING CAPITAL LTD
(on its own behalf and on behalf of all other members of Syndicate 1183 at Lloyd's in relation to the aforesaid policy)
(3) LIMIT (No.2) LIMITED
(on its own behalf and on behalf of all other members of Syndicate 1036 at Lloyd's in relation to the aforesaid policy)
(4) AEGIS ELECTRIC & GAS INTERNATIONAL SERVICES LTD
(on its own behalf and on behalf of all other members of Syndicate 1225 at Lloyd's in relation to the aforesaid policy)
(5) NOAVE CORPORATE UNDERWRITING LTD
(on its own behalf and on behalf of all other members of Syndicate 2007 at Lloyd's in relation to the aforesaid policy)
(6) BRIT UW LTD
(on its own behalf and on behalf of all other members of Syndicate 2987 at Lloyd's in relation to the aforesaid policy)
| Claimants/ Respondents
|ORIENTAL ASSURANCE CORPORATION
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
for the Appellant
Mr Peter MacDonald Eggers QC (instructed by Norton Rose Fulbright LLP) for the
Hearing dates: Monday 17th March 2014
Tuesday 18th March 2014
Crown Copyright ©
Lady Justice Gloster:
3. The issues in the case relate to the construction of the relevant typhoon warranty clause and whether, in the events which happened, Oriental was in breach of warranty.
"TYPHOON WARRANTY CLAUSE
Notwithstanding anything contained in the Policy or Clauses attached hereto, it is expressly warranted that the Vessel carrying subject shipment shall not sail or put out of sheltered Port when there is a typhoon or strom [sic- should be "storm"] warning at that port nor when her destination or intended route may be within the possible path of a typhoon or storm announced at port or [sic - should be "of"] sailing, port of destination or any intervening point. Violation of this warranty shall render this policy "VOID".
However, should the vessel have sailed out of port prior to there being such a warning, this warranty, only in so far as the particular voyage is concerned, shall not apply but shall be immediately reinstated upon arrival at safe port."
"PHP 450,000,000 covering all vessels, excess of PHP 50,000,000 any one accident or occurrence each vessel each section inclusive of original policy deductible of PHP 2,500,000 anyone [sic] accident or occurrence each vessel."
"To follow all terms, conditions and settlements of the original policy issued by the Reinsured to the Insured, for the period specified herein, in respect of sums and interests hereby insured."
"Notwithstanding anything contained in this policy or clauses attached hereto, it is expressly warranted that the carrying vessel shall not sail or put out of Sheltered Port when there is a typhoon or storm warning at that port nor when her destination or intended route may be within the possible path of the typhoon or storm announced at the port of sailing, port of destination or any intervening point. Violation of this warranty shall render this policy void."
"In the event of a claim arising under the Original Policy the Reassured shall give immediate notice thereof to the Underwriters and the Reassured shall not make any settlement of any claim without the consent of Underwriters hereunder."
"W E A T H E R R E P O R T
SEVERE WEATHER BULLETIN NO.8
TYPHOON FRANK ISSUED AT 445PM JUNE 20/2008
TYPHOON FRANK HAS MADE LANDFALL OVER EASTERN SAMAR AND IS NOW HEADING TOWARDS BICOL REGION.
AT 4PM TODAY THE EYE OF TYPHOON WAS LOCATED AT THE VICINITY OF WESTERN SAMAR OR 50KMS SE OF CATBALOGAN CITY COORDINATE 11.5N 125.1E WITH MAX SUSTAINED WINDS OF 140KPH NEAR THE CENTER AND GUSTINESS OF UP TO 170KPH. IT IS FORECAST TO MOVE WNW AT 19KPH.
TYPHOON FRANK IS EXPECTED TO CROSS SAMAR TODAY AND WILL BE OVER CAMARINES NORTE BY TOMORROW AFTERNOON. BY SUNDAY AFTERNOON IT WILL BE AT 50KMS NW OF BALER AURORA AND AT 30KMS NW OF LAOAG CITY BY MONDAY MORNING.
PSWS NO.3 - OVER CAMARINES NORTE, CAMARINES SUR, ALBAY, INCLUDING BURIAS ISLAND SORSOGON, CATANDUANES, MASBATE, SAMAR PROVINCES, LEYTE, INCLUDING BILIRAN ISLAND.
PSWS NO.2 - OVER QUEZON, INCLUDING POLILIO, MARINDUQUE, ROMBLON, NORTHERN CEBU AND SOUTHERN LEYTE.
PSWS NO.1 - OVER AURORA, RIZAL, LAGUNA, BATANGAS, CAVITE, MINDORO PROVINCES, METRO MANILA, ANTIQUE, AKLAN, CAPIZ, ILOILO, REST OF CEBU, BOHOL, NEGROS PROVINCES, GUIMARAS, DINAGAT AND SIARGAO ISLAND.
E N D
((PAGASA WEATHER FORECAST JUNE 20/2008))
"No. 1 - winds of 30-60 kph expected in locality in at least 36 hours.
No. 2 - winds of greater than 60-100 kph up to 100 kph expected in locality in at least 24 hours.
No. 3 - winds greater than 100 kph up to 185 kph expected in locality at least 18 hours usually accompanied by heavy rains.
No. 4 - winds greater than 185 kph expected in locality in at least 12 hours usually accompanied by heavy rains."
The various proceedings in the Philippines
i) A Board of Marine Inquiry ("the BMI") which was constituted immediately after the casualty on 21 June 2008. This investigated the cause of the casualty and issued its report on 18 August 2008. It was constituted by, amongst others, two master mariners and two chief engineers; its report was based on a hearing at which a number of witnesses were heard; the report's findings were adopted by the Decision of the Commandant of the Philippine Coast Guard on 26 August 2008. The BMI concluded, amongst other things, that the Master intended to take the Vessel's usual route from Manila to Cebu (as to which see below) and failed to fully assess the weather conditions and to follow the general policy of a circular HPCG Memorandum 04-07 issued, as to which also see below. Mr Roger ter Haar QC, leading counsel for Oriental, pointed out that, whilst the BMI had the advantage of investigating immediately after the incident, the BMI was not focussed on the insurance issues the subject of this appeal, Oriental was not represented at the BMI and the gathering of evidence was in the control of the Board.
ii) The Department of Transport and Communications ("DOTC") reviewed and modified the findings of the BMI by a resolution issued on 28 August 2009. Although the DOTC found, without the benefit of any oral evidence, that the Master intended to take an alternate route from Manila to Cebu (as to which see below) it also found that the Master "with erroneous judgment and lack of sufficient foresight took a calculated option of maintaining [the usual route] while the vessel was already underway".
iii) The National Prosecution Service of the Department of Justice ("DOJ") issued a resolution on 22 June 2009. This resolution was based on a hearing at which a number of witnesses were heard. By this resolution, it was recommended that the Master (posthumously) and Mr Edgar S. Go, one of the owners, and a Vice-President, of Sulpicio (and others), be indicted for reckless imprudence resulting in multiple homicide, physical injuries and damage to properties.
iv) However, on appeal, on 22 March 2013, the Philippine Court of Appeals (15th Division) granted a petition to review by Mr Go and annulled and set aside the DOJ resolution insofar as it recommended the indictment of Mr Go, on the ground that there was insufficient evidence that Mr Go had participated in the decision allowing the Vessel's departure and that the Master in any event had the overriding authority to decide whether or not to sail. The posthumous indictment of the Master was not disturbed. We were informed that, despite that dismissal, there is currently an appeal by interested parties against such dismissal.
The Commercial Court proceedings
The trial before Field J
i) limb 1: "the vessel shall not sail or put out of Sheltered Port when there is a typhoon or storm warning at that port "; and
ii) limb 2: "the vessel shall not sail or put out of Sheltered Port when her destination or intended route may be within the possible path of the typhoon or storm announced at the port of sailing, port of destination or any intervening point."
It was also common ground that, in the event of a breach of either limb 1 or limb 2, the policy was rendered void.
i) constituted a breach of limb 1 of the typhoon warranty in that there was a typhoon or storm warning at Manila, namely PSWS No 1, announced in SWB No 8, issued at 4:45 pm on 20 June 2008 by PAGASA ("the relevant Storm Warning"), a copy of which was in the Master's hands before the Vessel departed for Cebu at 8:04 pm; and
ii) constituted a breach of limb 2 of the typhoon warranty in that the Vessel's intended route was within the possible path of the typhoon or storm announced at the port of sailing.
i) as to limb 1:
a) the typhoon warranty had to be construed in the context of "Revised Guidelines on Movements of Vessels During Heavy Weather" issued by the Headquarters of the Philippine Coast Guard ("HPCG") applicable to each level of PSWS, as contained in HPCG Memorandum Circular 04-07 issued on 27 June 2007 ("the Circular") (as described in paragraphs 10-12 of the judgment), and in the light of how an experienced insured under the Original Policy would have understood the relevant Storm Warning at the port of sailing;
b) because there was no storm or typhoon warning "prohibiting" or "advising against" the Vessel's departure, limb 1 of the typhoon warranty had not been breached, as an experienced insured under the Original Policy would not have understood the relevant Storm Warning at the port of sailing as prohibiting departure from Manila;
ii) as to limb 2:
a) as a matter of construction of limb 2, the word "announced" qualified the words "the possible path", so that regard had to be had to the announced predicted path of the typhoon or storm when determining whether the intended route of the Vessel might have been in the possible path of the typhoon or storm;
b) that the intended route of the Vessel on 20 June 2008 was not its usual route from Manila to Cebu (namely, east of Banton and Tablas Islands, through the strait of Romblon, and directly south towards Cebu, but approaching the port of Cebu from the North) ("the Usual Route"); but rather an alternate route (passing west of Tablas Island and down the western coast of Panay so that the Vessel would approach the port of Cebu from the South) ("the Alternate Route");
c) since the announced predicted path of the typhoon or storm was Northwest, not West Northwest, the intended route of the Vessel, namely the Alternate Route, was not in the "possible path" that the typhoon or storm might take; and
d) that, accordingly, there had been no breach of limb 2 of the typhoon warranty.
i) (as here) when a PSWS of whatever level was hoisted or expected to be hoisted within the origin, route or destination of the Vessel; and/or
ii) (as here) if the area of origin, route or destination of the Vessel was within the "Danger Sector" as defined in the Circular; and/or
iii) (as here) the Master of the Vessel decided to depart from the area of origin in circumstances where it was imprudent and/or unreasonable for the Master so to do, having regard to the safety of the lives on board on the Vessel and the property at risk.
In the circumstances Reinsurers argued that, on that alternate basis, there had been a breach of the typhoon warranty.
i) What was the path of Typhoon Frank as forecast by PAGASA?
ii) What was the Master's intended route when the Vessel departed from Manila on 20th June 2008; was it the Usual Route or the Alternate Route?
Field J's judgment
"The meaning and effect of limb 1 of the Warranty
28. Lord Hoffmann's first rule of construction in Investors Compensation Scheme Ltd v West Bromwich Building Society  1 WLR 896, at 912-913 was:
"Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract."
29. In this case the relevant background knowledge includes: (i) the prevalence of typhoons in the Philippines from the end of May to October; (ii) the grave danger typhoons pose to shipping; (iii) the routine issuance by PAGASA of PSWSs [Public Storm Warning Signals] and SWBs [Severe Weather Bulletin]; and (iv) guidelines issued by HPCG from time to time on movements of vessels when there are warnings of storms and typhoons.
30. The words of the warranty must be given their ordinary and natural meaning unless the background indicates that such meaning was not the intended meaning . It also has to be remembered that a continuing warranty is a draconian term: its breach produces an automatic cancellation of the cover, regardless of whether a loss is causally connected to the breach of warranty; accordingly, it is up to the underwriters in whose favour the warranty has been included to ensure that the protection they want is expressed in clear terms. Also, where the language used has more than one potential meaning, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other, see Rainy Sky SA & Ors v Kookmin Bank  1 Lloyd's Rep 34 at paras 21 and 30. However, where the parties have used unambiguous language, the court must apply it, however improbable the result.
31. Mr MacDonald Eggers QC for the claimants submitted that the Warranty was clearly and simply phrased. If a scheduled vessel sailed from a port where there was a typhoon or storm warning, the warranty was breached. PSWS No 1 is the lowest of the four Storm Warning Signals issued by PAGASA, but the PSWS No 1 at Manila issued at 4:45 pm on 20 June 2008 was nonetheless a "public storm warning"; indeed, in the context of Typhoon Frank, it was a warning of a typhoon rather than a storm and as such was to be taken seriously. It predicted winds of 30-60 knots within 36 hours. When it was issued at 4:45 pm Typhoon Frank was approximately 310 miles away from Manila. When the Princess of the Stars departed for Cebu at 8:04 pm, the typhoon had moved approximately 40 miles closer to Manila. The PSWS No 1 was a clearly a "typhoon or storm warning at that [sheltered] port" within limb 1. Accordingly, there had been a clear breach of limb 1.
32. Mr ter Haar QC for Oriental argued that the Warranty had to be construed in the context of the Circular and in the light of how an experienced insured under the original policy would understand the warning at the port of sailing. If, having regard to the Circular, such an insured would have understood the warning as prohibiting or advising against setting sail in the circumstances, there would be a breach of the Warranty if the vessel set sail; if, on the other hand, he would have understood the warning as in no way advising against or prohibiting setting sail, then there would be no breach of limb 1.
33. Mr ter Haar submitted that the claimants' interpretation would lead to absurd consequences. Thus, on their construction, there would be a breach where: (i) a PSWS No 1 signal had been hoisted and a scheduled vessel left port intending to make a voyage of one hour's duration even though no bad weather was expected until the next day or the day after; and/or (ii) a vessel of more than 2000 gross tons (like the Princess of the Stars) sailed from a port where there was a PSWS No 2, even though under the specific guidelines putting out of the port in these circumstances was not forbidden.
34. I prefer Mr MacDonald Eggers' submissions to those advanced by Mr ter Haar, notwithstanding that the claimants' construction may mean that to avoid a breach of the Warranty some of the scheduled vessels might have to remain in a port for some hours when the port is not predicted to be in imminent danger from a typhoon. The manifest object of the Warranty is to protect the reinsurers from liability arising from the grave danger of typhoons that can travel at varying speeds and in directions that cannot be reliably predicted. A PSWS No 1 at a particular location can be followed in a matter of hours by a PSWS No 2 at the same location, as evidenced by the issuance of SWB No 9 at 11.00 pm on 20 June 2008, 6 % hours after the earlier PSWS No 1 was announced for Manila. It follows that the underlying policy of the Warranty is "safety first" and the possible commercial consequences for scheduled vessels of the claimants' construction are not such, in my opinion, as to show that the guidelines in the Circular were intended to be the touchstone for determining a breach of the Warranty.
35. I would add that if it had been the parties' intention to prohibit a scheduled vessel from departing only when the Circular prohibited or advised against it, they could have easily so provided, and the fact that they did not tells strongly against Oriental's construction, even though the Circular is part of the contractual background. Also, the issuance in the Philippines of public storm and typhoon warnings by PAGASA on which limb 1 of the Warranty is predicated, is a phenomenon that exists independently of the Circular and the HPCG, and thus the Warranty's reference to storm and typhoon warnings is not a strong pointer to an intention to incorporate the Circular's guidelines.
Conclusion on limb 1
36. Accepting as I do the claimants' interpretation of limb 1, and it not being disputed that on 20 June 2008 the Princess of the Stars sailed out of Manila bound for Cebu at a time when there was at Manila the PSWS No 1 referred to in SWB No 8, I find that the Warranty was thereby breached and in consequence the reinsurance contract was avoided.
 Investors Compensation Scheme Ltd v West Bromwich Building Society  1 WLR 896 at 913, per Lord Hoffmann.
 Hussain v Brown  1 Lloyd's Rep 627 at p 630, per Saville LJ.
 Cooperative Wholesale Society Ltd v National Westminster Bank plc  1 EGLR 97, approved by the Supreme Court in Rainy Sky SA & Ors v Kookmin Bank  1 Lloyd's Rep 34 at para 16.
 The specific guideline in the Circular for a PSWS No 2 forbids all vessels of 2000 gross tons or less from leaving port except to take shelter.""
"G. Was the usual route the intended route?
38. The usual route for a trip by the Princess of the Stars to Cebu from Manila took the vessel through the Verde Islands passage, east of Banton Island, through the Sibuyan Sea, the Visayan Sea and the Camotes Sea, crossing west of Marinduque, Romblon, Masbate and Leyte before proceeding to Cebu. It is not in dispute that if the usual route was the vessel's intended route, then that route was within the possible path of Typhoon Frank and there was a breach of limb 2 of the Warranty. The first question therefore is whether the usual route was the intended route.
39. One of the procedures to be completed by a master of a vessel before it leaves port in the Philippines is the swearing of an Oath of Safe Departure based on a proforma document which states, inter alia, that his vessel is seaworthy in all respects to sail for the stated destination. Captain Marimon swore an Oath of Safe Departure for the trip to Cebu on 20 June 2008 and wrote under the attestation clause: "ETA 1645 hrs", indicating that the expected arrival time at Cebu City was 16:45 hours the following day.
40. The BMI report states that Petty Officer (First Class) Felix Sardan of the Philippine Coast Guard testified as follows. He inspected the Princess of the Stars in Manila port at 7:30 pm on 20 June 2008 to verify Captain Marimon's Oath of Safe Departure and he advised the Master of the prevailing weather condition along the route of the vessel. The Master informed him about an alternate route he would use for the intended voyage west of Tablas, South of Negros Oriental and Southern Cebu. PO1 Sardan said that in this alternate route no PSWS No 3 had been hoisted and hence there was no prohibition against the vessel sailing. PO Sardan informed the Commander of the Coast Guard at Manila of the Master's intention to depart and use the alternate route.
41. Sulpicio's Port Captain at Manila, Captain Eugenio, testified before the BMI that at about 6:00 pm he discussed the weather report with Captain Marimon on board the Princess of the Stars and when he asked him what he thought about the weather, Captain Marimon replied that if the weather is really, really bad he had another plan to pass West of Tablas Island. Captain Marimon added that the captain has the final decision for anything on the ship when the ship travels.
42. Sulpicio's Port Captain at Cebu, Captain Ponteres, testified to the BMI that Captain Marimon told him by radio at 11:00 pm on 20 June 2008 that he was going to pass Western Tablas because of the prevailing Typhoon Frank at Eastern Samar.
43. It is common ground that the first 150 nautical miles of both the usual route and the alternate route followed the same path and that Captain Marimon would have had to choose between the usual route and the alternate route between 03:00 and 04:00 hours on 21 June 2008 when the vessel was off Dumali Point.
44. At 10:00 pm on 20 June 2008, after the vessel's departure two hours earlier, the Master informed Sulpicio by telegram that the ETA at Cebu was 17:45 hours on 21 June 2008. This ETA and the ETA noted in the Oath of Safe Departure are consistent only with vessel taking the usual route. The alternate route would have taken five hours longer than the usual route.
45. There is no documentary evidence of a voyage plan for the alternate route. Further, a survivor of the casualty testified that no announcement was made to the passengers before departure that arrival would be delayed.
46. When the Princess of the Stars sailed into the eye of Typhoon Frank it was well past Dumali point and proceeding along the usual route.
47. In my judgment, given the above matters, it is to be safely inferred that Captain Marimon intended to follow the usual route but would depart from it if the weather became really, really bad before the latest point when the vessel could take the alternate route west of Tablas Island. Does it follow that the usual route was the intended route for the purposes of limb 2? In my opinion it does. As I have said, the policy of the Warranty is "safety first" and a route intended to be taken subject only to the possibility of a change of course if the weather is going to be bad, is, in my view, the intended route for the purposes of limb 2.
48. Accordingly, I find that limb 2 of the Warranty was also breached. "
The course of the appeal
"1. In construing the Reinsurance Policy [the judge] failed to give any or any sufficient weight to the way in which Typhoon Warnings were understood and acted upon by the maritime community in the Philippines; and
2. In failing to give any or any sufficient weight to the need in construing the Reinsurance Policy to arrive at a construction which was likely to be the same as the construction to be given to the underlying Insurance Policy in the Philippines;
3. In holding that [Oriental] was in breach of Limb (1) of the Typhoon Warranty in the Reinsurance Policy by reason of the fact that there was a storm warning in place at the Port of Manila without having regard to how that Warning would and should be understood and acted upon by the shipowner insured under the underlying policy;
7. In holding that even if the Master's intention was to take the Alternate Route, there was a breach of the Typhoon Warranty either by reference to a Danger Sector determined in accordance with Circular 04-07 or by reference to a West North West path of Typhoon Frank particularly when neither of these were points raised as points of criticism of the Master or shipowner by any of the parties in any of the proceedings in the Philippines, from which the learned Judge should have inferred that the Philippine maritime community would not have understood or acted upon the Typhoon Warning in the way contended for by Reinsurers and upheld by the learned Judge."
Discussion and determination in relation to the construction of limb 1
1. . Movements of any craft/vessel is left to the decision and responsibility of its master/shipowner if PSWS number 1 is hoisted within the vessel's point of origin, the route, and destination.
2. No vessel of 2,000 gross tons or below shall sail except to take shelter if PSWS number 2 is hoisted within its point of origin, the route, and point of destination.
3. No vessel shall sail except to take shelter if PSWS number 3/PSWS Number 4 is hoisted within its point of origin, the route, and point of destination.
4. Vessels allowed to sail or to take shelter or ride out the storm as covered by paragraphs 2 and 3 of this section, shall depart without passengers or cargo on board.
5. The Boarding Team must advise the vessel on the current weather report and forecast prior to departure of the vessel."
"13. ……… It is not for a party who relies upon the words actually used to establish that those words effect a sensible commercial purpose. It should be assumed, as a starting point, that the parties understood the purpose which was effected by the words they used; and that they used those words because, to them, that was a sensible commercial purpose. Before the Court can introduce words which the parties have not used, it is necessary to be satisfied (i) that the words actually used produce a result which is so commercially nonsensical that the parties could not have intended it, and (ii) that they did intend some other commercial purpose which can be identified with confidence. If, and only if, those two conditions are satisfied, is it open to the court to introduce words which the parties have not used in order to construe the agreement. It is then permissible to do so because, if those conditions are satisfied, the additional words give to the agreement or clause the meaning which the parties must have intended."
"it is expressly warranted that the carrying vessel shall not sail or put out of Sheltered Port when there is a typhoon or storm warning at that port ..".
i) a typhoon or storm warning applicable to Manila; or
ii) a typhoon or storm warning issued or available at Manila relating to the contemplated voyage,
that is not a relevant ambiguity for the purpose of the issue under consideration, namely whether the warranty has to be construed in the context of the Circular. In my view the point does not matter but, if it does, I take the view that the first meaning is the correct one since, if the second meaning were correct, there would be considerable, if not complete, overlap or duplication with limb 2.
"Also, the issuance in the Philippines of public storm and typhoon warnings by PAGASA on which limb 1 of the Warranty is predicated, is a phenomenon that exists independently of [the Circular] and the HPCG, and thus the Warranty's reference to storm and typhoon warnings is not a strong pointer to an intention to incorporate [the Circular's] guidelines".
"I prefer Mr MacDonald Eggers' submissions to those advanced by Mr ter Haar, notwithstanding that the claimants' construction may mean that to avoid a breach of the Warranty some of the scheduled vessels might have to remain in a port for some hours when the port is not predicted to be in imminent danger from a typhoon. The manifest object of the Warranty is to protect the reinsurers from liability arising from the grave danger of typhoons that can travel at varying speeds and in directions that cannot be reliably predicted. A PSWS No 1 at a particular location can be followed in a matter of hours by a PSWS No 2 at the same location, as evidenced by the issuance of SWB No 9 at 11.00 pm on 20 June 2008, 6 % hours after the earlier PSWS No 1 was announced for Manila. It follows that the underlying policy of the Warranty is "safety first" and the possible commercial consequences for scheduled vessels of the claimants' construction are not such, in my opinion, as to show that the guidelines in the Circular were intended to be the touchstone for determining a breach of the Warranty.
 The specific guidelines in the Circular for a PSWS No 2 forbids all vessels of 2000 gross tons or less from leaving port except to take shelter. "
"37. What was put in answer to this was that the typhoon clause does not contemplate such an exercise involving judgment on the part of the master based on experience of the behaviour of these cyclonic systems. It will be recalled that the clause requires an assessment to be made at the time of sailing of the likely behaviour of the typhoon and its proximity to the vessel, assuming she follows her projected voyage. It may be supposed that no competent master would put to sea in circumstances where he or she expected that the vessel would encounter a typhoon, so that the clause seeks to protect the underwriters from the claim where the master, having received an applicable typhoon warning as to the future position of the cyclonic system, nevertheless puts to sea on the basis of a judgment, based on his or her own experience or some other information, that the warning will prove to be inaccurate. In such an event, the clause operates, so that the risk of such a judgment is not borne by the underwriters. Moreover, the clause should be construed so that the master making the decision to sail should be able to know with a reasonable degree of certainty that the ship is or is not then off risk. This is not achieved by construing the typhoon clause to involve a conclusion which an experience and competent mariner might reasonably draw by the application of his or her meteorological experience and expertise to the published information. Typhoons are notoriously erratic and their future movements are difficult to predict.
38. ….. It is true that Captain Sampan and his officers did undertake the task of attempting to predict the likely future movements of the typhoon before leaving port, using only the three surface analysis reports which they had received. It may be supposed that he and they brought to bear their collective experience and expertise in so doing. Captain Sampan said that, having done this, he felt comfortable in putting to sea for an encounter between his intended path and the typhoon was possible, but not probable. If he had been asked and if he had thought about it, he may have considered that the information in the three charts did not give rise to a conclusion that his projected voyage might be expected to encounter the storm force winds produced by the typhoon. He may have been wrong in so concluding, even negligently wrong. This is not for me to say. It is, to my mind, wholly unsatisfactory that a construction of the typhoon clause should involve such an assessment, usually after the event, in order to determine whether the vessel was off risk when it left port." [My emphasis.]
Discussion and determination in relation to limb 2 - the intended route of the Vessel
i) evidence from a Captain Ponteres, Sulpicio's Port Captain in Cebu, that he spoke to the Master at about 17:35 (ahead of the Vessel's departure at 20:04) and was told by the Master that he was going to pass Western Tablas because of the prevailing Typhoon Frank at the Eastern Samar, which was evidence of an intention to take the Alternate Route;
ii) evidence from PO 1 Sardan of the Philippine Coast Guard that the Master told him that he intended to take the Alternate Route, given the terms of PAGASA's SWB no. 8;
iii) evidence from PO Sardan that he reported that that was the Master's intention to his superior, Commodore Tuason;
iv) other evidence from Captain Eugenio as to a conference on board the vessel at 18:00 on 20 June 2008 prior to departure, to the effect that he understood that the Master would pass west of Tablas.
i) The Vessel in fact pursued the Usual Route, not the Alternate Route, in that after the first 150 nautical miles, at the point of divergence between the two routes, the Master directed the vessel to take the Usual Route, not the Alternate Route. It was common ground that the Vessel's location at the time of her sinking was on the Usual Route after it and the Alternate Route had diverged at approximately 03:00 -04:00 on 21 June. That demonstrated, at the least, that at some stage, either when the Vessel originally sailed, or subsequently, the Master had the intention to take the Usual Route.
ii) Other evidence strongly supported the conclusion that the Master's intention to take the Usual Route was formed before the Vessel left Manila. Of particular importance were the estimates of time of arrival ("ETAs") given by the Master, which were recorded in documentary form or referred to in reports of the Phillipine proceedings.
iii) The Alternate Route would have taken the vessel 6 hours longer to complete than the Usual Route. The Master's Oath of Safe Departure sworn and signed by the Master and countersigned by the Philippine Coast Guard on 20 June 2008 and timed at 20:00 stated that the vessel's ETA at Cebu would be 16:45 (the following day). Indeed, the Master had informed Captain Ponteres, in Cebu, of this ETA as early as 18:00, even though, on Captain Eugenio's and Captain Ponteres' evidence, the Master was then aware of the SWB no. 8. The experts agreed that this ETA was consistent only with the Master having intended to take the Usual Route, not the Alternate Route. If the Master had intended to pursue the Alternate Route, the Vessel's ETA at Cebu would have been 22:00 (the following day).
iv) In addition, at 22:00 on 20 June 2008, two hours after the Vessel's departure, the Master signalled Sulpicio by telegram stating that the vessel's ETA at Cebu was 17:45 on 21 June 2008 ("LEFT MANILA 2004HRS TONIGHT ETA CEBU 1745 HRS TMRW.."). This was referred to in the DOJ resolution. This estimate was consistent only with the Master having intended to pursue the Usual Route, not the Alternate Route, as from the time of departure from Manila. There was no information received by the Master between the Vessel's departure at 20:04 and 22:00 which would have caused the Master to change his route.
v) There was no documentary evidence of a voyage plan for the Alternate Route having been prepared by the Master. No record of such a voyage plan having been prepared by, or provided to, Sulpicio was produced.
vi) There was no contemporaneous documentary evidence (in the form, for example, of records, emails, or internal notes) to support the Master having informed either PO Sardan or Sulpicio of his plan to take the Alternate Route. The only contemporaneous documentary evidence was that of the Master's own estimate of the time of arrival of the vessel at Cebu, which was consistent only with an intention to take the Usual Route.
vii) If the Master had intended, at the time of sailing from Manila, to take the Alternate Route, with the resultant delay to the ETA, one would have expected that an appropriate announcement would have been made to passengers prior to or at departure. There was no suggestion in the evidence from surviving passengers that any such announcement had been made at any time.
viii) If it were the case that the Master had originally intended to take the Alternate Route, then, on that hypothesis, the Master must have changed his mind and decided to take the Usual Route no later than 03:30 or 04:00 on 21 June 2008 (when the Usual and Alternate Routes diverged). However, if, as appeared probable from the evidence, the Master had received SWB no. 9 at 23:00 on 20 June 2008, it would have been foolish for him to have changed from the Alternate Route to the Usual Route, given that there was no further material information in SWB no. 9 that could possibly have caused him to decide to change route from the Alternate Route to the Usual Route. The experts agreed that they did not understand that there could have been anything in the bulletin which would have induced the Master to change to the Usual Route, particularly in circumstances where the bulletin declared that PSWS no. 3 had been hoisted on the Usual Route; Oriental's expert agreed that if the Master had initially decided to take the Alternate Route, the receipt of SWB no. 9 would have discouraged the Master from proceeding on the Usual Route; not encouraged him to do so. Accordingly, the Master must have intended to take the Usual Route in the first place.
ix) When Captain Eugenio filed a marine protest following the casualty on 23 June 2008, he made the following declaration under oath that
"That on June 20, 2008 at around 2004H our M/V PRINCESS OF THE STARS (the "vessel") left the port of Manila on a regular voyage to Cebu after it was inspected and cleared for departure by the Philippine Coast Guard".
Captain Eugenio made no reference to an alternative voyage plan in his protest.
x) Captain Eugenio, Sulpicio's port captain at Manila, gave evidence less than a fortnight after the casualty to the effect that the Master had informed Captain Eugenio that he intended to take the Usual Route, but would change course if the weather substantially deteriorated. Captain Eugenio's evidence was given to the BMI on 2 July 2008 and was as follows:
"CAPT EUGENIO: Before departure I discussed with the master and we plotted the weather report in the chart, the master plotted the weather report in the chart. ATTY LIM: You yourself, does your office has the weather report. CAPT EUGENIO: I have sir presented that to the master, what I mean when he boarded the vessel at about six o'clock in the evening I discussed with the master about the weather and he plotted the course for Cebu and plan, I asked the master what do you think about the weather. ATTY LIM: What was his reply? CAPT EUGENIO: He said if this weather comes into a worst condition I have another plan or course of action. ATTY LIM: Did he indicate to you that other plan? CAPT EUGENIO: Yes, sir. ATTY LIM: What was it? CAPT EUGENIO: To pass west of Tablas Island, if the weather is really bad .."
This was the evidence referred to by the judge at paragraph 41 of the judgment.
i) The contemporaneous documentary evidence was wholly consistent with the Master's intention to take the Usual Route. There was no corroborative contemporaneous documentary evidence that supported the analysis that the Master's initial decision had been to take the Alternate Route.
ii) The passage actually taken by the Vessel in the events which happened strongly supported that analysis.
iii) Captain Ponteres' evidence was based merely on a radio conversation at 17:35 hours, before the Master prepared his ETA in his sworn Oath of Safe Departure.
iv) The evidence of Captain Eugenio relied on by Oriental, given on 3 July 2008, was contradicted by his earlier evidence given on 2 July 2008, which supported the case that the Master intended to take the Usual Route.
Lord Justice Davis:
The Master of the Rolls: