Marina Offshore PTE Ltd v Chine Insurance Company (Singapore) PTE Ltd

• Jurisdiction: Singapore
• Judgment Date: 11 September 2006
• Date: 11 September 2006
• Docket Number: Civil Appeal No 6 of 2006
• Court: Court of Appeal (Singapore)

Marina Offshore Pte Ltd

Plaintiff

and

China Insurance Co (Singapore) Pte Ltd and another

Defendant

[2006] SGCA 28

Chan Sek Keong CJ

,

Andrew Phang Boon Leong JA

and

Judith Prakash J

Civil Appeal No 6 of 2006

Court of Appeal

Admiralty and Shipping–Insurance–Whether loss of vessel caused by unseaworthiness of vessel or perils of the sea covered by marine insurance policies–Whether shipowner privy to sending vessel to sea in unseaworthy state–Whether insurers entitled to avoid liability for loss of vessel at sea–Sections 39 (5), 55 (1), The Schedule r 7 Marine Insurance Act (Cap 387, 1994 Rev Ed)–Admiralty and Shipping–Insurance–Whether marine insurance policies subject to implied routing warranty–Whether policies containing implied warranty of seaworthiness at commencement of voyage–Whether marine insurance policies time policies or mixed policies–Sections 25, 39 (1) Marine Insurance Act (Cap 387, 1994 Rev Ed)

The appellant (“MOPL”) wanted to purchase the Marina Iris, a tugboat, to add to its existing fleet. For this purpose, it sent a surveyor (“Capt Goh”) from TG Marine Services Pte Ltd (“TG Marine”) to the shipyard in Kobe, where the vessel had been laid up for some ten months, to examine and report on her general condition. According to Capt Goh, the vessel was in a fair condition but additional repairs and modifications had to be carried out in order to enable the vessel to be entered with an international classification society. MOPL went on to purchase the vessel and decided that the vessel should come to Singapore for some of the repair work recommended by Capt Goh in order for her to be classed with Bureau Veritas and registered as a Singapore flag vessel.

In order to enable the vessel to sail on her own steam from Kobe to Singapore, MOPL procured her registration as a Panamanian vessel. To insure the vessel, MOPL took up two insurance policies with China Insurance Co (Singapore) Pte Ltd (“CIC”) and AXA Insurance Singapore Pte Ltd (“AXA”) (collectively “the insurers” or “the respondent-insurers”), for the sums of $420,000 and $280,000 respectively. Each of the policies required that a further survey of the vessel be conducted by Capt Goh, and that all his recommendations were complied with before the vessel sailed from Kobe to Singapore. The contents and effect of this survey were a matter of contention during the trial.

The vessel, with six crew members on board, departed from Kobe at 2.00pm on 26 December 2003. Unfortunately, the vessel sank while on this voyage and all her crew members perished. MOPL brought this action against the respondent-insurers to recover the sums insured under the respective policies. The trial judge dismissed MOPL's claim with costs. MOPL appealed against the trial judge's decision.

Held, allowing the appeal and setting aside the judgment below:

(1) Under s 33 (3) of the Marine Insurance Act (Cap 387, 1994 Rev Ed) (“the Act”), if a warranty contained in a policy of insurance was not exactly complied with, the contract of insurance was void and no cover was provided by the insurers even though the breach of the warranty was not causative of the loss. Such a warranty had to be express, specific and clear so that there was no doubt in the mind of the insured as to what he had to comply with. In the circumstances, there was no express warranty on the route of the vessel. Such a warranty also could not be implied into the policies. The normal contractual test relating to the implication of terms did not apply to a marine policy: at [22], [24] and [25].

(2) The rules of construction that applied to any commercial contract applied also to the construction of a policy of marine insurance. Any policy was to be looked at as a whole in order for its meaning to be understood. The argument that the policies covered both a period of time and a voyage and were therefore mixed policies was based on a strained interpretation of the language of the policies. The words that made reference to a voyage from Kobe to Singapore merely modified or extended the trading limit so that the vessel would be covered on her voyage to Singapore but did not alter the nature of the policy as a time policy. Thus, there was no implied warranty at the time the vessel left Kobe that she was seaworthy: at [30], [34] and [43].

(3) There were no separate and distinct phases of insurance of the vessel although it was contemplated that there would be various voyages during the period of cover. The use of the words “voyage risk” in the trading limits clause of the CIC policy, the differing deductibles that the policies imposed for various risks and the trial judge's finding that the insurers quoted different rates to MOPL for the two phases of insurance cover did not affect the nature of the policies as time policies: at [39] and [40].

(4) The trial judge's finding that no acceptable evidence of the heavy weather but only hearsay had been tendered at the trial was against the weight of the evidence. Adequate and acceptable evidence of heavy weather had indeed been presented at the trial. There was ample evidence that supported a finding that the vessel faced adverse weather conditions prior to her becoming a casualty. Although MOPL could not state or establish exactly what had caused the ingress of water into the vessel, that did not mean that it had not proved the cause of the loss on the balance of probabilities. An incursion of seawater was a peril of a marine character. The fact that bad weather may have been anticipated did not mean that there was no element of fortuity when it actually occurred and had a devastating effect on the vessel. Thus, perils of the sea were, at least, one of the proximate causes of the loss: at [47], [48], [54] to [58].

(5) The insurers had the onus of proving that the vessel was unseaworthy. The issues of stability and lack of pilot books or charts were not before the trial court for consideration. On the evidence adduced, the trial judge's finding that there was no competent master of the vessel could not be said to be against the weight of the evidence. Therefore, the vessel was unseaworthy on her departure from Kobe: at [61] and [64].

(6) There had been no finding by the trial judge as to how the crew's incompetence had, on its own, operated as a proximate cause of the loss. MOPL, in spite of its knowledge of the lack of certification of the crew, believed that they would be competent to bring the vessel to Singapore. Since MOPL had acted on the basis of the expert's opinion that the crew was capable of sailing the vessel to Singapore at that time of year, it had not knowingly concurred in sending the vessel out to sea in an unseaworthy state nor had it recklessly closed its eyes to a condition of which it should have been well aware. The insurers did not establish that unseaworthiness to which MOPL was privy was a cause of the loss: at [65], [67] to [69].

(7) The certificate of inspection was issued by Capt Goh on the basis that the vessel was fit to proceed in fair weather conditions. There was no recommendation that the vessel should proceed in fair weather conditions that formed a part of the express warranty in the policies that MOPL had to comply with before the vessel left Kobe: at [92], [94] and [96].

(8) Capt Goh did not look at the general condition of the vessel for general purposes but looked at her condition for the specific purpose of ascertaining whether she could make a particular voyage. The survey was considered a seaworthiness survey although it did not cover the inaccessible parts of the vessel. The warranty asked for a satisfactory seaworthiness survey to be provided by TG Marine. It was not open to the insurers now to reject that survey because Capt Goh did not also represent a classification society or the Panamanian authorities. The insurers' argument that Capt Goh was not competent to carry out the survey was also not available to them as they had not pleaded this assertion: at [75] to [78].

(9) Seaworthiness had to be judged in relation to a particular voyage and the fact that a vessel was not classed did not mean that she was ipso facto unseaworthy for the purposes of the voyage: at [81].

Canada Rice Mills, Limited v Union Marine and General Insurance Company, Limited [1941] AC 55 (folld)

Empire Jamaica, The [1955] 1 Lloyd's Rep 50 (refd)

J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1985] 1 Lloyd's Rep 264, HC (refd)

J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyd's Rep 32, CA (refd)

Kin Yuen Co Pte Ltd v Lombard Insurance Co Ltd [1994] 1 SLR (R) 964; [1994] 2 SLR 887, HC (folld)

Lombard Insurance Co Ltd v Kin Yuen Co Pte Ltd [1995] 1 SLR (R) 219; [1995] 1 SLR 643, CA (folld)

Malayan Motor & General Underwriter (Pte) Ltd v M H Almojil [1981-1982] SLR (R) 432; [1982-1983] SLR 52 (distd)

Manifest Shipping & Co Ltd v Uni-Polaris Insurance Co Ltd and La Réunion Europèene (The Star Sea) [1995] 1 Lloyd's Rep 651 (refd)

Marine Insurance Act (Cap 387, 1994 Rev Ed) ss 25, 39 (1), 39 (5), 55 (1), The Schedule r 7 (consd);ss 33 (1), 33 (3), 35 (2)

Haridass Ajaib, Augustine Liew and Subashini N (Haridass Ho & Partners) for the appellant

Lim Tean, Shem Khoo and Marcus Lee (Rajah & Tann) for the respondents.

Judgment reserved.

Judith Prakash J

(delivering the judgment of the court):

Introduction

1 On the night of 26/27 December 2003, a few hours into her voyage from Kobe to Singapore, the Marina Iris,a tugboat, sank. All her crew members perished. Some managed to leave the vessel before she capsized but, rescue efforts proving futile, even they unfortunately drowned subsequently.

2 The appellant, Marina Offshore Pte Ltd (“MOPL”), the owner of the tug, brought this action against her insurers, China Insurance Co (Singapore) Pte Ltd (“CIC”) and AXA Insurance Singapore Pte Ltd (“AXA”) (collectively “the...