Bayswater Carriers Pte Ltd v QBE Insurance (International) Pte Ltd

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 29 September 2005
• Neutral Citation: [2005] SGHC 185
• Date: 29 September 2005
• Subject Matter: General principles,Insurance,Whether piracy or violent theft by persons from outside assured's vessel proximate cause of assured's loss,Whether negligence of master of vessel and lack of due diligence by assured proximate cause of loss,Whether loss suffered by assured covered under marine hull policy,Claims,Whether assured taking reasonable measures to avert or minimise loss,Marine insurance
• Docket Number: Suit No 1220 of 2003
• Published date: 03 October 2005
• Defendant Counsel: Leonard Chia and David Gan (CCH Leo and Co)
• Court: High Court (Singapore)
• Plaintiff Counsel: Ramesh Appoo and Brij Raj Rai (Just Law LLC)

29 September 2005

Belinda Ang Saw Ean J:

1 The plaintiff, Bayswater Carriers Pte Ltd (“Bayswater”), as registered owner and named assured, claims against the defendant, QBE Insurance (International) Limited (“QBE”), as hull and machinery underwriter for the loss of its Singapore registered tug, the BW Wisdom, to armed intruders. The area in which the events took place on 28 January 2003 was said to be within the port limits of Batu Ampar, Batam.

2 By marine hull policy No ZH1001235 dated 2 January 2003 (“the Policy”), which was largely subject to the Institute Time Clauses, Hulls (1.10.83) (“ITC”), the BW Wisdom was insured for $730,000 against, inter alia, loss by piracy or violent theft by persons from outside the tug (hereinafter referred to as “theft by violence”). Risk of piracy and theft by violence are marine perils in the ITC. Clause 6.1 covers loss or damage to the BW Wisdom caused by:

6.1.3 violent theft by persons from outside the Vessel

…

6.1.5 piracy

3 By an amendment at the start of the hearing, as a further and alternative claim, Bayswater pleaded that the loss of the BW Wisdom was caused by the negligence of the master or crew, an insured peril under cl 6.2.3 of ITC, provided such loss or damage was not the result of want of due diligence on the part of the assured, owners or managers. Plainly, cl 6.2.3 is framed as Bayswater’s fallback position in the event it is adjudged that the master or crew were negligent as alleged in the Re-Amended Statement of Claim. Clause 6.1.1 of ITC on perils of the seas was not pursued in Bayswater’s closing submissions.

4 Section 55(2)(a) of the Marine Insurance Act (Cap 387, 1994 Rev Ed) (“the Act”) provides that:

[T]he insurer is not liable for any loss attributable to the wilful misconduct of the assured, but, unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew.

5 As the Policy does not state otherwise to the contrary, no difficulty is experienced in the application of s 55(2)(a) of the Act together with either of the two marine risks identified in [2] above or the alternative claim made under cl 6.2.3. Pertinent to recovery under the Policy is the notion that the insured peril must be the proximate cause of the loss. That is a causation question. Courts have ruled that proximate cause is to be determined by applying common-sense standards to find the cause predominant in efficiency. The Policy pays where piracy or theft by violence is the proximate cause of the loss despite the negligence of the master or crew. In this situation, the negligence of the master or crew is a remote cause of the casualty. The converse situation is where negligence is an insured peril and it results in a loss by an uninsured peril. The loss may be indemnified as having been proximately caused by the insured peril of negligence and provided the loss did not result from want of due diligence on the part of the assured, owners or managers: see F D Rose, Marine Insurance: Law and Practice (LLP, 2004) paras 15.17 to 15.19.

6 A principal question for determination is whether the incident on 28 January 2003, which was during the currency of the Policy, was a loss by piracy or theft by violence. There are two stages of the enquiry. First, the court has to construe the Policy. Next, it has to consider causation, and in that connection, the alleged failure of the crew to keep watch whilst at anchorage as a result of which the intruders boarded the tug undetected.

7 QBE denies liability. It contends that the loss of the BW Wisdom was not covered by the Policy. Counsel for QBE, Mr Leonard Chia, who is assisted by Mr David Gan, submits that in order to come within the Policy meaning of piracy, the BW Wisdom must be “at sea” and she was not given her location at the material time. Furthermore, no force was used to steal the tug as she was already under the control and possession of the intruders before they sought to apprehend the crew. Similarly, theft by violence was not on the same facts established. QBE took the position that the predominant cause of the loss was the negligence of the master, but there is no liability under the Policy as the loss resulted from want of due diligence on the part of the assured.

8 The BW Wisdom is a steel pusher tug with an overall length of 21.76m and moulded depth and breadth of 3.20m and 7.32m respectively. Built in 2000 by Tuong Aik (Sarawak) Sdn Bhd, a Sibu shipyard, it is powered by two Caterpillar diesel engines and has an estimated speed of 10 knots. Bayswater is in the tug and barge business since 1985. Its tugs and barges operate between Singapore and Batam. The hijacking of the BW Wisdom was the first of its kind experienced by the assured. Bayswater and its associated companies had employed the Indonesian master of the BW Wisdom for the past 15 years. He was appointed master of the BW Wisdom on 4 October 2001.

9 On 28 January 2003, the tug with the barge Bayswater 228 laden with cargo in tow was on a voyage from Jurong port, Singapore, to Batu Ampar, Batam. Typically, the tug and barge would return to Singapore with cargo either on the same day or the following day. It was not unusual that on this occasion, after completion of discharge of some containers and general cargo, the tug waited at anchorage with the barge Bayswater 228 for loading of outbound cargo scheduled for the following day. On board the tug at the material time were the master (Karno Muchyani), the second engineer (Tubgatisiladias Nursusandi), and two able-bodied seamen (Burhannudin and Suardi). Earlier on, the chief engineer (Hatta) and chief officer (Akmad Nurun) had left the tug on shore leave. They were to return to the tug the next morning. At the material time, the tug was moored to the starboard side of Bayswater 228 and was secured by the fore and aft mooring ropes of the tug to the bollards of the barge.

10 About 1900 hours (local time), armed men with hoods over their faces boarded the tug. The intruders were armed with parangs. Earlier on, a stranger had suddenly appeared at the port entrance to the mess room where the master and second engineer were resting. The stranger had asked for the chief engineer, under pretext of wanting to buy fuel. The second engineer followed after the stranger when he moved away from the main port entrance as if to leave. Some three minutes later, the master heard the second engineer outside shouting “rampok” (“pirates” in Bahasa Indonesia). Through the entrance, the master saw the second engineer running away from two of the intruders towards the mess room. As he tried to shut the door, it was pushed opened on the other side by one of the intruders. In the commotion, the master started to head for the bridge to raise the alarm but was stopped halfway up the stairs leading to the bridge from the mess room by one of the intruders who held his parang to the master’s neck. He was ordered not to move. The master was escorted to the eight-man cabin below deck. The second engineer and Burhannudin were already there in the cabin with three other armed men. All three had their hands tied and “were forced to lie [on the floor of the cabin] face down on their stomachs”. In his written statement, the master recounted that they were “all threatened with the parang, which had been put to our necks and we were told not to make any noise or resist or retaliate in any way”. The engine started and the tug moved away. The master reckoned that the tug was full ahead for a long time.

11 Chay Choon Chong (“Chay”), a marine surveyor and director of CC Chay Associates Pte Ltd (“CCCA”), was appointed by QBE to investigate the incident. At the trial, Chay also testified as QBE’s expert. Chay’s colleague Gan Kee Giap interviewed the crew at Batam on 14 February 2003. CCCA’s report of 17 February 2003 which was signed by Chay stated:

As soon as [the master and crew] were captured, they could hear the mooring ropes being hacked by the parangs. Engines were also started. Once the ropes were cut loose, the tug moved forward. … The tug surged ahead at full power …

The second engineer, Burhannudin, and Gan Kee Giap did not testify at the trial. Nevertheless, the report of 17 February 2003 and the crewmembers’ joint statements dated 12 February 2003 were by conduct of the parties accepted in evidence. That must be so as Chay’s expert report of 31 August 2004 containing his assessment and evaluation of the evidence and his conclusions were based on a review of the 17 February 2003 report and the joint statements amongst others. QBE also relied on the joint statements in its closing submissions. A converse reading of the situation would mean allowing QBE to cherry-pick the evidence. The sole consideration is the weight to be given to such evidence.

12 The crew was abducted and held captive in a cabin guarded by armed intruders for two nights. They were not allowed to leave the cabin to go to the toilet. On one occasion, the engine broke down and the second engineer left the cabin escorted by one of the intruders to repair the engine. After the engine trouble had been remedied, the second engineer returned to the cabin with his hands bound again.

13 The captives were eventually freed on 30 January 2003. The tug stopped about 50m from the uninhabited island of Pulau Penggegar near Natuna Islands, Indonesia. With life jackets on, they were ordered to jump into the sea. Life buoys were thrown overboard. Fortunately for the crew, the Indonesian Navy rescued them from the island the next day.

14 Meanwhile, Suardi was spotted and rescued. He had earlier escaped from the intruders through the access hatch leading directly from the cabin to the forward winch deck from where he jumped overboard. He hid below the bow fender until the tug moved away. He later reported the incident to the tug’s Batam...