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England and Wales High Court (Admiralty Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Admiralty Division) Decisions >> GE Frankona Reinsurance Ltd v CMM Trust No.1400 the "Newfoundland Explorer"  EWHC 429 (Admlty) (22 March 2006)
Cite as:  EWHC 429 (Admlty)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
|G.E. Frankona Reinsurance
|- and -
|CMM Trust No.1400
The "NEWFOUNDLAND EXPLORER"
Bernard Eder QC (instructed by Ince & Co.) for the Defendant
Hearing dates: 16 December 2005
Crown Copyright ©
Mr Justice Gross :
" (1) On the proper construction of the contract of marine insurance, policy number 04YSP0005 ("the contract of insurance"), does the express warranty 'Warranted vessel fully crewed at all times' oblige the Defendant to keep at least one crew member on board the vessel the whole time, as opposed to intermittently or at intervals?
(2) On the proper construction of the contract of insurance, do the words 'at all times' in the warranty mean 24 hours per day, and, if not, what do they mean?
(3) On the proper construction of the contract of insurance, what was required in order to comply with the warranty 'Warranted vessel fully crewed at all times' when (a) the yacht was performing a coastal voyage; (b) the yacht was performing an ocean voyage; (c) the yacht was laid up alongside a berth; and (d) the yacht was laid up alongside a berth with the generator running?"
5. The contract of insurance contained the following express term: 'Warranted fully crewed at all times'.
6. The contract of insurance also incorporated the Institute Time Clauses Hulls Port Risks including Limited Navigation (20/7/87) CL.312.
7. The Defendant owed the Claimant the duties of utmost good faith…..with regard to disclosure of material facts known to it and the truth of representations made by it on its behalf.
8. For the purpose of the placement of the contact of insurance, a proposal form ('the Proposal Form') was completed and signed on behalf of the Defendant.
9. Section III of the Proposal Form stated that the vessel had one full time crew member and two occasional crew members. The full time member of the crew was Captain Sergio Criado.
10. By an endorsement to the Policy dated 5 March 2004…, the Claimant authorised the Defendant to move the Vessel from Miami to Fort Lauderdale with effect from 15 March 2004. The Vessel departed Miami under tow on 23 March 2004.
11. At the time of the casualty, the Vessel was laid up.
12. On 25 April 2004, the Vessel was severely damaged by fire ('the casualty').
13. The casualty was caused by the overheating of the Vessel's starboard side John Deere generator.
14. No crew members were aboard the Vessel at the time of the casualty.
15. On the day of the casualty, Captain Criado attended the Vessel from about 7 am until 2.30 pm, when he drove to his home some 15 miles from where the Vessel was berthed. After he left the vessel at 2.30 pm on 25 April 2004, none of the crew were on board the Vessel until Captain Criado returned (having been alerted to the casualty) at about 6.30 pm.
16. The Vessel's starboard side John Deere Generator had been running under load since about noon on 23 April 2004 and was left running when Captain Criado departed the vessel at 2.30 pm on 25 April 2004. This was because only 'two phase' electricity was available at Fort Lauderdale. In order to keep the vessel's systems running (in particular the air conditioning units), 'three phase' electricity was required, alternatively it was necessary to run one or more of the vessel's generators.
17. Captain Criado's home was….approximately 15 miles from the location of the Vessel's berth….By car, in normal traffic, it takes approximately 30 minutes to get from Captain Criado's home to the Vessel's berth.
18. Captain Criado's office was ….less than 400 metres from the location of the Vessel's berth….However, it is the Claimant's case that Captain Criado would not have been able to see the Vessel from his office.
19. At the time of the casualty Captain Criado was at home.
20. The crew members employed by the Vessel's previous owner were dismissed by the Defendant in February 2004. Thereafter, no crew member lived aboard the Vessel.
27. The true factual position with regard to the crewing of the Vessel at any particular time."
THE RIVAL CASES
" subject to (i) emergencies rendering his departure necessary or (ii) necessary temporary departures, but within the vicinity of the vessel, for the purpose of performing his crewing duties."
DISCUSSION AND CONCLUSIONS
i) Emergencies can arise, requiring the evacuation of the vessel or even the area. Take, for instance, a bomb scare or similar alert. It is inconceivable that the parties are to be understood as intending that the absence of crew from the vessel for the duration of such an emergency could place the Defendant in breach of warranty.
ii) It may be necessary for certain crewing duties to be performed ashore or otherwise than on board the vessel. For instance, adjusting moorings, working on a fouled propeller, or painting the outside of the hull. Given the Claimant's acceptance that a one-man crew would be sufficient while the vessel was laid up alongside a berth, it could not sensibly be said that the absence of any crew member on board the vessel while such duties were performed, would result in a breach of warranty.
iii) On the premise that a one-man crew suffices, the context tells against certain other situations resulting in a breach of warranty. By way of example, consider the purchase of food or other supplies for the vessel. Necessarily, the single crew member will be absent while undertaking such tasks. I am not inclined to think that the parties could realistically have intended that in these circumstances there would have been a breach of warranty. To cater for such eventualities, I would amend Mr. Kendrick's (alternative) formulation by adding the words "or other related activities" – lest it be said that these were not, strictly, crewing duties. Further and with respect to Mr. Kendrick's formulation, I am unable to accept that such temporary departures must be within "the vicinity of the vessel"; could it, for example, make all the difference to insurance cover that the chandlery was in one part of the marina or another? To my mind, it is the purpose of the departure, rather than the distance travelled from the vessel, which is critical. I would therefore delete the words "within the vicinity of the vessel".
For the purposes of Preliminary Issues (1), (2) and (3)(c) – (d): The warranty obliged the Defendant to keep at least one crew member on board the vessel 24 hours a day, subject to (i) emergencies rendering his departure necessary or (ii) necessary temporary departures for the purpose of performing his crewing duties or other related activities.
" …the mere use of the word 'warranted' in a policy is not conclusive of the legal effect of what follows. Generally it is used in the sense defined in the Marine Insurance Act s.33…i.e. as equivalent to a condition precedent. But it is also used to indicate an exception to the general cover provided by the policy, for example, 'warranted free of capture and seizure' or 'warranted free of average'….It has been suggested that warranties in insurance policies fall into two classes, namely those which delimit or describe the risk, and are not of a promissory character, and promissory warranties, breach of which entitles the underwriter to terminate the risk….."
For my part, I agree with the parties that in the present case it is unnecessary to resolve the question of whether the warranty was "delimiting" or "promissory" in nature. I therefore express no final conclusion on this topic. My inclination, however, would be to hold that this was a delimiting warranty; the Claimant would be off-risk in the event that a casualty occurred at a time of non-compliance with the warranty. That, to me, seems to meet the commercial purpose of the warranty. I can see no good commercial reason why, if the breach of this warranty was once remedied, the Claimant should not be liable for a subsequent casualty, causally unconnected to the prior breach. I would accordingly have been reluctant to go further and hold that this was a promissory warranty, so that any breach would discharge the insurer from liability automatically, as from the date of the breach.
i) I am not, for my part, persuaded that there is any ambiguity in or doubt as to the wording of the warranty, so as to bring the maxim into play. In my judgment, the wording of the warranty is clear.
ii) However, assuming in Mr. Eder's favour without deciding, that the maxim is applicable, even on a strict construction of the warranty as against the Claimant, I see no proper foundation for reconsidering my provisional view as to the true construction of the warranty. If it matters, then, as may be noted, that construction already allows for the need to qualify the literal meaning of the wording "at all times" - therefore giving to the Defendant the benefit of any ambiguity in this regard.
iii) Insofar as Mr. Eder's submission involved the proposition that different wording could and should have been used if the Claimant required a crew member to be on board 24 hours a day, I am unable to accept it. As expressed in Clarke, The Law of Insurance Contracts, at para. 15-5C, this is tantamount to the "construction of hindsight". See too, the observations of Mance LJ (as he then was) in Dodson v Dodson Insurance  1 Lloyd's Rep 520, at 531 (cited in Clarke, ibid), where he said:
"It is almost always possible to say after the event that the point could have been put beyond doubt, either way, by express words."
"By a policy of insurance the contents of premises used for business and residential purposes by the assured and his wife were insured against loss by housebreaking or theft. The policy contained a clause: 'Warranted that the said premises are always occupied.' [Italics added] During a temporary absence of some hours of the assured and his wife on a Sunday the premises were left unattended and were broken into and some of the contents were stolen. In an action on the policy,
Held, that the warranty did not mean that the premises should at no time be left unattended, but that they should be continuously occupied as a residence; that there had in the circumstances been no breach of the warranty, and that the assured was therefore entitled to recover the loss on the policy."
Furthermore, Roche J went on to remark (at p.845) that if insurers had wanted a "continuous presence of some one in the premises", they could have stipulated that "the premises were never to be left unattended".
"(1) I accept….that a practical construction must be given to the words of the warranty. I think it is clear that the insurers were concerned to ensure that the vessel was properly looked after all the time, both winter and summer, and wherever she was – whether cruising or in a marina for the winter months….
(2) ….The 'skipper' together with the 'crew' has to be 'in charge' of the vessel 'at all times'. In my view the wording 'professional skippers and crew to be in charge' means that the skipper and the crew' together are to take care of and manage the vessel; that is the sense in which they are to be 'in charge' of her. They are also to be 'in charge' of the vessel together 'all the time'. The last phrase is …quite clear. It means that there must be a professional skipper and a crew that looks after the vessel the whole time, as opposed to intermittently or at intervals….."
As the claimants had not employed anyone who was a "professional skipper" over a period of time, they were in breach of warranty. Later in the judgment, when summarising his conclusions, Aiken J said this, at p.498, para. 162(2):
"On the proper construction of the 'professional skipper warranty' the claimants were obliged to keep a suitably qualified skipper on board the yacht at all times….."
(1) Yes, subject to (i) emergencies rendering his departure necessary or (ii) necessary temporary departures for the purpose of performing his crewing duties or other related activities.
(2) As in (1).
(3) (c) and (d): As in (1).