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

• Judgment Date: 30 December 2005
• Date: 30 December 2005
• Docket Number: Suit No 970 of 2004
• Court: High Court (Singapore)

Marina Offshore Pte Ltd

Plaintiff

and

China Insurance Co (Singapore) Pte Ltd and another

Defendant

[2005] SGHC 238

Tan Lee Meng J

Suit No 970 of 2004

High Court

Admiralty and Shipping–Insurance–Shipowner seeking indemnity from assurers for loss of vessel during sea voyage–Whether vessel lost as result of perils of sea–Section 39 (4) Marine Insurance Act (Cap 387, 1994 Rev Ed)–Admiralty and Shipping–Insurance–Whether marine insurance policies time policies or mixed policies–Whether vessel sent to sea in unseaworthy state with privity of shipowner–Whether assurers entitled to avoid liability for loss of vessel at sea–Sections 39 (1), 39 (5) Marine Insurance Act (Cap 387, 1994 Rev Ed)–Admiralty and Shipping–Insurance–Whether terms of marine insurance policy requiring compliance with warranty surveyor's recommended voyage route constituting insurance warranty–Whether shipowner complying with recommended route and entitled to indemnity for loss of vessel at sea

The plaintiff's (“MOPL”) tug, the Marina Iris, which was built to operate in Japanese coastal waters, sank while on a voyage from Kobe, Japan, to Singapore. MOPL sued its assurers, the first and second defendants, to recover an indemnity for the loss on the ground that the Marina Iris was lost as a result of perils of the sea.

The assurers denied liability asserting, inter alia: (a) MOPL's non-compliance with the two marine insurance policies' terms to comply with all the warranty surveyor's recommendations, which included a recommended voyage route; and (b) that the cause of the loss of the Marina Iris was not within the ambit of the policies as the tug was woefully unseaworthy when she set sail and should not have sailed considering the fact that gale warnings had been issued for the Kobe area. The assurers relied on s 39 (1) Marine Insurance Act (Cap 387, 1994 Rev Ed) (“the Act”), which provided for an implied warranty in a voyage policy that the ship shall be seaworthy for the purpose of the particular adventure insured, and alternatively on s 39 (5) of Act, which absolved an assurer under a time policy from liability if the vessel had, with the privity of the shipowner, been sent to sea in an unseaworthy state, and was lost as a result of the unseaworthiness. MOPL claimed that s 39 (1) of the Act did not apply because the policies in question were time policies, while the assurers claimed to have issued mixed policies to MOPL.

Held, dismissing the claim:

(1) The assurers had been willing to afford cover to an unclassed tug, built for operations in coastal waters, to undertake a voyage across the Pacific Ocean. Both policies expressly required the warranty surveyor's recommendations to be complied with before the tug sailed from Kobe. In light of these considerations, the recommended route for the delivery voyage from Kobe to Singapore had to be regarded as an insurance warranty. It followed that the recommended voyage route had to be strictly complied with, failing which no cover would be afforded by the assurers either because the survey report was rendered void or because of a breach of warranty with respect to non-compliance with the surveyor's recommendations: at [12].

(2) The Marina Iris was woefully unseaworthy for its voyage from Kobe to Singapore. The Marina Iris was improperly manned, the master was not provided with the requisite information on the stability of the tug for the long voyage from Kobe to Singapore across the Pacific Ocean, and the stability booklet was not on board the tug. The Marina Iris further lacked the necessary pilot books and possibly important charts to sail across the Inland Sea as recommended by the warranty surveyor, and the safety equipment required on board the Marina Iris was not adequately checked: at [37], [46], [58], [59], [61] and [64].

(3) With respect to its contention that the Marina Iris was lost as a result of perils of the sea, MOPL did not prove the pleaded material particulars of the loss. In view of the fact that she was improperly manned and insufficient attention was paid to her stability for the delivery voyage, it could not be said that it was more probable than not that the Marina Iris was lost as a result of perils of the sea. MOPL did not establish that the loss fell within the scope of the policies: at [33] and [66].

(4) There were “two separate and distinct phases to the insurance of” the Marina Iris: first, a voyage from Kobe to Singapore, which was a “voyage risk”, and, secondly, trading activities within the limits of the “Singapore home trade including Indonesian waters”, which was a risk covered by the time policies. The policies were thus mixed policies. As such, a warranty of seaworthiness was implied under s 39 (1) of the Marine Insurance Act for the voyage from Kobe to Singapore. As the Marina Iris was clearly unseaworthy when she left Kobe, the assurers were entitled to avoid liability: at [74].

(5) There could be no doubt that MOPL was privy to the Marina Iris's improper manning and to many other aspects of her unseaworthiness. It was more probable than not that the Marina Iris was lost as a result of her unseaworthiness. The assurers were thus also entitled to rely on s 39 (5) of the Marine Insurance Act to avoid liability to MOPL: at [77] and [78].

Benoi VI, The [1985-1986] SLR (R) 1068; [1986] SLR 138 (folld)

Compania Maritima San Basilio SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1977] 1 QB 49 (folld)

Dawsons, Limited v Bonnin [1922] 2 AC 413 (folld)

Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 (folld)

Lamb Head Shipping Co Ltd v Jennings (The “Marrel”) [1994] 1 Lloyd's Rep 624 (folld)

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

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

Standard Oil Co of New York v Clan Line Steamers, Limited [1924] AC 100 (folld)

Thomas Wilson, Sons & Co v The Owners of the Cargo per The “Xantho” (1887) 12 App Cas 503 (folld)

Thomson v Weems (1884) 9 App Cas 671 (folld)

Marine Insurance Act (Cap 387, 1994 Rev Ed) ss 39 (1), 39 (4), 39 (5) (consd)

Haridass Ajaib, Augustine Liew and Subashini Narayanasamy (Haridass Ho & Partners) for the plaintiff

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

Judgment reserved.

Tan Lee Meng J

1 The plaintiff, Marina Offshore Pte Ltd (“MOPL”), whose steel-hulled coastal tug, the Marina Iris, sank some 50 miles off Kobe, Japan, while on a voyage from that port to Singapore, sued its assurers, the first defendant, China Insurance Co (Singapore) Pte Ltd (“CIC”), and the second defendant, AXA Insurance Singapore Pte Ltd (“AXA”), to recover an indemnity for the loss. CIC and AXA denied liability on, inter alia,the grounds that the terms of the policy were not complied with and that MOPL did not establish that the cause of the loss of the Marina Iris was within the ambit of the policies.

Background

2 In November 2003, MOPL purchased the Marina Iris,formerly the Gion Maru No 2, a tug constructed in Japan in 1982 in accordance with “JG Coastal Class” rules and not rules for ocean-going vessels as she was intended to operate in Japanese coastal waters. The tug's overall length was 26.5m, her breadth was only 8.5m, her depth was 3.89m, her gross tonnage was 139 tons and her deadweight was 231 tons. She had been laid up for about nine months before MOPL took delivery on 25 December 2003.

3 Prior to the finalisation of the purchase, MOPL instructed Capt Tony Goh of TG Marine Services Pte Ltd (“TG”) to conduct a pre-purchase condition survey in October 2003 while the Marina Iris was moored at a local shipyard in Kobe. In his report, Capt Goh stated that, “Considering the age of the vessel, additional repairs and modification may have to be done for entry into International Classification Society.”.He also listed a fairly comprehensive list of matters that required MOPL's attention before the Marina Iris could begin trading operations in Singapore or within South-East Asia. Satisfied with the potential of the tug, MOPL proceeded with its plans to acquire her.

4 Although some of the repair work recommended by Capt Goh was undertaken in Kobe, MOPL decided to have a large part of the repair work done in Singapore before the Marina Iris could be classed by Bureau Veritas and registered as a Singapore ship. Pending such classification and registration in Singapore, MOPL registered the Marina Iris as a Panamanian vessel. Although it might have been more prudent to have had the Marina Iris shipped to Singapore on board a large carrier, MOPL decided that she should sail on her own propulsion from Kobe across the Pacific Ocean to Singapore. The result was that the Marina Iris,which was still unclassed, would proceed on her most dangerous voyage to date, one that would take the tug, which was constructed for coastal trade, across the Pacific Ocean to Singapore during the December monsoon.

5 MOPL insured the Marina Iris for a period of one year, for $800,000, with an excess of $100,000. CIC provided cover for up to 60% of the insured sum and AXA afforded cover for up to 40% of the insured sum. The cover afforded by them included the delivery voyage from Kobe to Singapore. MOPL contended that the policies were time policies whereas CIC and AXA asserted that they had issued mixed policies to MOPL.

6 Both CIC and AXA required a condition survey to be carried out before the Marina Iris sailed from Kobe. Both parties also accepted that a seaworthiness survey was called for. Without disclosing to the assurers that TG had already done a pre-purchase survey of the tug, MOPL's broker, Ms Vinna Yeung of LCH (S) Pte Ltd, persuaded the assurers to allow TG to conduct the requisite survey. What was disconcerting was that she saw no reason why she should have disclosed the pre-purchase survey by TG...