Malayan Motor & General Underwriter (Pte) Ltd v MH Almojil

• Judge: Chua F A J
• Judgment Date: 31 March 1982
• Neutral Citation: [1982] SGCA 3
• Citation: [1982] SGCA 3
• Defendant Counsel: NA Phillips QC and J Grimberg (Drew & Napier)
• Published date: 19 September 2003
• Plaintiff Counsel: AGS Pollock QC and AP Godwin (Godwin & Co)
• Date: 31 March 1982
• Docket Number: Civil Appeal No 36 of 1981
• Court: Court of Appeal (Singapore)
• Subject Matter: Effect,Surveyor's report on sufficient compliance with warranty (c),Marine insurance,Insurance,Whether 'seaworthiness' warranty implied into contract,ss 25, 39(1), (5) & 52 Marine Insurance Act 1906,Hull policy,Carriage of goods by sea,'Approved surveyor',Whether issue of policy and collection of premium constituted an estoppel or waiver of breach of warranty,Mixed policy,Admiralty and Shipping,Words and Phrases,Implied warranty of seaworthiness,Whether warranty breached,General principles,Voyage charterparties

This is an appeal against a judgment in which the appellants as underwriters were ordered to pay to the respondent the sum of $1,250,000 and costs for the total loss of the respondent`s vessel AL-JUBAIL IV (the vessel) under a policy of marine insurance dated 19 April 1975.

Several issues were canvassed before the learned judge who decided in favour of the respondent on all of them. In deciding, inter alia, that the vessel was seaworthy at the commencement of the voyage from Singapore to Damman, Saudia Arabia, the learned judge had proceeded on the basis that there was an implied warranty of seaworthiness under the policy but in view of his findings the respondent was not in breach of the same.

Against this judgment, this appeal was brought before us. By a respondent`s notice, the respondent sought to support the judgment by contending in the first place that the policy was either a time policy or, alternatively, a mixed time and voyage policy such that there should not have been implied a warranty of seaworthiness. In effect, the respondent was saying before us that it was unnecessary for the learned judge to consider and decide as to whether or not the vessel was seaworthy.

The facts giving rise to the claim are as follows. In early 1975 the respondent bought the vessel from Singapore Shipping Industries (Pte) Ltd (SSI) for $1.25m. The vessel was one of the `Ford Class Seaward Defence Boats`, which was a class of British naval vessels built post World War II for coastal defence. SSI had bought the hull and pursuant to their agreement with the respondent they had it completely refitted in Singapore in accordance with the drawings of a naval architect. The respondent, who was engaged in Saudi Arabia in the business of construction of oil refineries and off-shore installations, required the vessel to ferry 30 to 40 persons to and from platforms at sea covering distances of about 50 to 60 kilometres. It was a small vessel intended for work in coastal areas. Its freeboard was just over four feet amidship. After its refitting, it was propelled by two diesel motors of 600 horse power each. After all the usual trading certificates were obtained, the vessel was registered as a Panamanian vessel on 19 May 1975.

Pursuant to their agreement, SSI arranged for the delivery of the vessel to the respondent from Singapore to Damman and also effected on behalf of the respondent a hull policy on the vessel dated 19 April 1975 with the appellants. The sum insured was $1.25m. The policy was in the usual form and as regards the period of cover the material words were: `at and from or for the period: From 21 April 1975 to 20 April 1976 (both days inclusive).` The 12-month period of cover was later amended to commence from the date the vessel left Singapore.

SSI delivered the vessel to the respondent on or about 23 May 1975 and the vessel sailed from Singapore for Damman on 30 May 1975. The vessel intended to proceed directly to Damman. But on reaching the Indian Ocean, the vessel encountered stormy winds and high seas. The vessel pitched and rolled. The seas were shipped on board. The radar ceased to function. There was too much deviation in the steering. The electrical wirings became soaking wet. The main engines were malfunctioning and were over heating. So the vessel, after 14 days at sea, had to put in at Colombo, Sri Lanka, for repairs.

In Colombo, it was found that the vessel had suffered two serious heavy weather damages. The main engines were misaligned due to the heavy pounding of the vessel at sea. Gunawardena, the Government Engineer and Ship Surveyor in Colombo who surveyed and supervised the extensive repairs, was of the view that the misalignment of the main engine could not have existed when the vessel left Singapore. There would have been excessive overheating of the stern tubes and vibrational stresses would have been so noticeable that no master or engineer of a vessel would have allowed the vessel to sail. Repairs were carried out to the engines, the propeller shafts and the steering gear. The port and starboard intermediate shafts of the vessel were replaced. The other serious defect was the deterioration of the electrical insulations which had taken in sea water in the exposed parts. It was also a heavy weather damage suffered in transit at sea.

The repairs in Colombo took more than two months. After the repairs, sea trials were carried out. On 28 August 1975 Gunawardena certified that the vessel was in a seaworthy condition and that it was permitted to undertake the second leg of the voyage from Colombo to Damman, `calling at intermediate ports as found necessary.`

The vessel left Colombo the next day for Damman. According to Tanagavelu, by then the first officer of the vessel, the vessel was sailing well although after Bombay, India the weather was worse than the bad weather which was experienced between Sumatra and Colombo.

On 8 September 1975 the vessel was some 15 miles off the coast of Iran. That night, heavy weather was again encountered by the vessel. No lights were visible from the shore. The radar was again out of order. Just before midnight, the vessel ran aground three times. On the last grounding, the vessel listed to portside and eventually capsized. The crew abandoned the vessel and after going through some harrowing experience, they reached Teheran. A week later, they were repatriated to Singapore. It is not in dispute that the vessel was totally lost as a result of the perils of the sea but the appellants as underwriters denied liability under the policy.

As the major issues raised in this appeal turn on the true construction of the policy, it is necessary to quote the exact terms of the other material parts of the policy. It contains the usual `touch and stay at any ports or place` clause. It is subject to the Standard Institute Total Loss Only clause (1 October 1970) including sue and labour, salvage and salvage charges.

There is the crucial warranty in three paragraphs, namely:

Warranted:

(a) Trading within Persian Gulf but including one delivery from Singapore to Persian Gulf on its own steam sailing on or about 21 April 1975.

(b) Panamanian Loadline and Maintained.

(c) Subject to satisfactory condition survey by approved surveyors.

In the law of marine insurance, it is well known that in a voyage policy there is a warranty by the insured that a ship would be seaworthy on sailing but not if it is a time policy: see s 39(1) and (5) of the Marine Insurance Act 1906 (the Act). Unseaworthiness therefore will only be a defence available to underwriters if the ship is insured under a voyage policy and not a time policy. Section 25 of the Act also provides:

Voyage and time policies

Where the contract is to insure the subject matter `at and from` or from one place to another or others, the policy is called a `voyage policy`, and where the contract is to insure the subject matter for a definite period of time the policy is called a `time policy`. A contract for both voyage and time may be included in the same policy.

The first question in this appeal, which was raised by the respondent`s notice, is whether the policy in question is a time policy or, alternatively, whether it is only such a mixed policy that the respondent had not warranted that the vessel would be seaworthy on sailing from Singapore. If the answer to this question is in the affirmative, obviously, there is no question of the respondent having warranted that the vessel would be seaworthy on sailing from Singapore...