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You are here: BAILII >> Databases >> England and Wales High Court (Admiralty Division) Decisions >> Pratt v Aigaion Insurance Company SA [2008] EWHC 489 (Admlty) (14 March 2008) URL: https://www.bailii.org/ew/cases/EWHC/Admlty/2008/489.html Cite as: [2008] 2 All ER (Comm) 574, [2008] Lloyd's Rep IR 610, [2008] 1 CLC 512, [2008] EWHC 489 (Admlty) |
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QUEEN'S BENCH DIVISION
ADMIRALTY COURT
B e f o r e :
(Sitting as a Judge of the High Court)
____________________
MR JOHN PRATT | Claimant | |
-and- | ||
AIGAION INSURANCE COMPANY SA | Defendant |
____________________
Mr David Bailey QC (instructed by Marine Law Solicitors) appeared for the Defendant.
____________________
Crown Copyright ©
Background and Policy wording
"Aigaion's Trawler Wording with the following Endorsements; Endorsement C – Crew Liability for 4 men.
Machinery Damage included subject to Machinery undergoing a full overhaul by manufacturers representative and certified by a qualified marine surveyor.
Warranted Machinery Breakdown is covered for the main engine only, but no cover shall apply following damage as a result of, or caused by, failure of any associated ancillary parts, pumps, generators, writing or peripheral equipment of any kind.
Subject to MCA or appropriate Licences to be held and in force. A copy required for Underwriters files.
Warranted Owner and/or Owner's experienced Skipper on board and in charge at all times and one experienced crew member.
Warranted the vessel is to be maintained to MCA or equivalent authority requirements.
Warranted any piece of Equipment valued in excess of GBP 500 to be specifically declared failing which Underwriters maximum liability will not exceed GBP 500 per item.
Subject to sight of current MCA survey and Ultrasonic thickness Test that has been carried otherwise full Out of Water survey to be carried out prior to attachment and all recommendations to be complied with within the time frame set by surveyor. All survey costs to be for Owners account".
Facts
The dispute between the parties
Submissions of the Claimant
"The apparently literal meaning of the words of a warranty must be restricted if they produce a result inconsistent with a reasonable and businesslike interpretation. The words used ought to be given the interpretation which, having regard to the context and circumstances, would be placed upon them by ordinary men of normal intelligence conversant with the subject-matter of the insurance.
MacGillivray on Insurance Law (10th Edn) paragraph 10.50.
Thus a warranty in a burglary policy that the insured premises would be "always occupied" meant not that there should always be someone on the premises but that they should be used as a residence as opposed to a lock up left unoccupied after business hours.
Simmonds v Cockell [1920] 1 KB 843.
Whether or not there is ambiguity the court seeks to avoid a literal construction of warranties which would give absurd results. To that extent at least the courts put upon words a reasonable construction.
Clarke – The Law of Insurance Contracts para 20-4B
A continuing warranty is a draconian term. If insurers want such protection it is up to them to stipulate for it in clear terms.
Per Saville LJ in Hussain v Brown [1996] 1 Ll. Rep. 627 at 630.
Any ambiguity in the terms of the policy must be construed against the insurer. The principle rests in part on the general contra proferentem rule but also on the court's sympathy for ordinary people unaccustomed to legal documents who find it difficult to relate the different parts of a complex policy and understand what is being asked of them, especially when insurers could with more care remove the ambiguities present in it.
MacGillivray on Insurance Law (10th Edn) paragraph 10-54".
Submissions of the Defendant
: "The Defendants are in reality seeking not to construe but to contradict the wording of the … clause. This is illegitimate in the context of custom and practice in the strict legal sense. It is a fortiori impermissible in so far as they seek to rely on the weaker conception of a suggested matrix of usual attitudes or behaviour. The only matrix of any real relevance in the material before me is, in my view, to be found in the obvious commercial purpose of the clause …".
He next submits that I should bear in mind that the crewing warranty is a "delimiting" clause rather than a "promissory" one and the vessel is therefore off risk only when the warranty is not being complied with. That debate is not however necessary for my decision.
The Milasan and the Newfoundland Explorer
"They are also to be "in charge" of the vessel together "all the time". The last phrase is, in my view, 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. All these requirements for the warranty are cumulative and must all be complied with".
The judge held that the rationale for the warranty was to ensure that the vessel was properly looked after all the time both winter and summer and whether cruising or in a marina.
"17. The context powerfully reinforces the impression, based on language alone, that the warranty ordinarily requires the presence of at least one crew member on board the vessel. This was a valuable yacht. It can readily be understood that the presence of a crew member on board affords some protection or safeguard against such risks as vandalism, fire pollution, the onset of bad weather or theft. While it is true that there are circumstances in which human presence can increase some risks to a vessel (see The Moonacre [1992] 2 Lloyd's Rep. 501, at page 507), I do not think that the tail should be allowed to wag the dog. The briefest consideration of the context serves to explain why the warranty should focus on the need for an on board "watchman", a fortiori if and when machinery was running. Moreover, in the context of a valuable yacht, that a crew member should be required on board 24 hours a day is in no way surprising.
18. However, as foreshadowed, it seems to me that considerations of commercial common-sense also point to the need for some qualification of the literal meaning of the wording "at all times". So:
(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 or 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 with respect to Mr Kendrick's formulation, I am unable to accept that such temporary departments 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".
Decision
"There comes a point at which the court should remind itself that the task is to discover what the parties meant from what they have said, and that to force upon the words a meaning which they cannot fairly bear is to substitute for the bargain actually made one which the court believes could better have been made. This is an illegitimate role for the court".
We all make unwise bargains from time to time but the fact that we incur burdens that later seem folly does not relieve us from our legal obligation. As I see it the qualification to make is the same as or in substantially similar terms to that set out by Gross J in The Newfoundland Explorer. In the case before me the skipper and crew were reasonably and no doubt deservedly ashore when the fire broke out but their absence was due neither to an emergency nor a requirement of crewing duties. The qualification would have to be a wide one to cover the fire and the absence in this particular case. I have already explained that I do not see the clause as being in any way ambiguous and the fact that its provisions are in a sense inconsistent with some of the standard terms of the policy is, for the reasons given by the Mr Bailey, of little weight. So this claim fails.
The use of the wording "at all times"
Claimant's brokers
Conclusion
GH010323/SCW