MARINE INSURANCE
[1999] FJCA 10; Abu0075u.98s (11 February 1999)
Marine Insurance- Mandatory Arbitration provision- right to arbitration not waived by commencement of proceedings
The defendant insured the plaintiff’s vessels with a standard marine hull policy. The policy included a mandatory provision that provided that all differences be referred to an Arbitrator. Unaware of the provision, the insured filed a writ claiming damages for the sinking of his two vessels. On obtaining a copy of the policy the insured sought a stay of the proceedings so that the matter could be referred to Arbitration. The insurer argued that since the insured had commenced legal proceedings the court could not be satisfied that the plaintiff was prepared to go to Arbitration as required by the Arbitration Act.
DECISION: Matter stayed and referred to Arbitration
HELD: The insured had not waived its rights to Arbitration. In fact, the contract of insurance specified that any waiver or variation of rights must be agreed to in writing. Further, the commencement of an action does not necessarily indicate a lack of readiness and willingness for Arbitration.
Marine Insurance- Voluntary removal from ‘class’- breach of express warrantysuspension of insurance- renewal of insurance constitutes a fresh contract- no automatic renewal
The plaintiff’s vessel, the MV Olovaha sustained severe damage in a cyclone on January 15, 2003. The plaintiff looked to its insurer to cover its loss, but the insurer denied coverage. The plaintiff sued to recover.
DECISION: Action dismissed.
HELD: The defendant was the insurer for 3 of the plaintiff’s vessels including the MV Olovaha. However, in July 2002 the plaintiffs had removed the MV Olovaha from ‘class’, such class referring to a classification by Germanischer Lloyd, a world leading classification Society. A vessel in class is subject to the Society’s rules including periodic surveying and maintenance. The plaintiffs had voluntarily removed the vessel because of its age and were aware that the insurance would be suspended as a result because removal from class was contrary to a warranty in the policy. The defendant claimed that the coverage had not been renewed for 2003, but even if it had, it would have been subject to the same warranty and at the date of the occurrence the vessel was not class. The plaintiffs argued that the defendant had agreed to reinstate cover upon certification that the vessel was up to requisite standard for Local Class certification- a much less stringent classification. The plaintiff’s case relied upon various oral discussions and written communications between the plaintiff’s broker and the defendant’s underwriting manager. The court decided that any decision regarding reinstatement of coverage could only be made by the underwriters after proper consideration of all the material facts and there was no evidence that the underwriter had received a vessel report. Each renewal constituted a fresh contract and any agreement reached in July 2002 would have no relevance to the 2003 contract unless that had been expressly agreed to in the negotiation of the 2003 contract. There was no evidence of a promise to automatically renew coverage in 2003 after the plaintiffs had voluntarily suspended coverage in July 2002. This was especially true where the vessel had been removed from class so the former coverage could not be renewed.
Laho Ltd v QBE Insurance (Vanuatu) Ltd [2001] VUSC 130; Civil Case 24 of 2000 (2 April 2001)
Marine Insurance- Seaworthiness- Presumption of loss due to ‘perils of the sea’ if it can be shown that vessel was seaworthy prior to setting out
The vessel owned by the plaintiff went down with 27 people on board. The events surrounding the sinking were unknown. The plaintiff sought a declaration that the defendant insurer was obliged to indemnify the plaintiff in respect of the loss. The vessel was insured for loss due to ‘perils of the sea’.
DECISION: Action dismissed.
HELD: If it is was known that the vessel was seaworthy when she set out and she disappeared with crew, then on the balance of probabilities she must have sunk, and on the balance of probabilities the sinking must have been due to the perils of the sea. If the vessel is not shown to be seaworthy when she left on her last voyage, the presumption does not apply since it cannot be held on the balance of probabilities that her presumed sinking was due to perils of the sea rather than to her unseaworthy condition. The plaintiff was unable to prove on a balance of probabilities that the vessel was seaworthy when she set out on her last voyage. The court dismissed the action on this point, but went on to consider the defendant’s other claims.
The non-disclosure of material facts will void insurance coverage where the nondisclosure of the material fact has induced the insurer to assume the risk. In this case the vessel had taken on water and there had been substantial work done to the hull after the issuance of the safety certificate which the insured had supplied to the insurer and before the issuance of insurance. The insured had also applied to increase the passenger load form 20 to 25 and this also was not known to insurer. The court found these to be material facts which had not been disclosed to the insurer and would have voided coverage.
The court also found that the insured had breached express warranties in the policy. The express warranties must be exactly complied with whether material to the risk or not. In this case the plaintiffs had not complied with the strict manning of vessel requirements.
Marine Insurance- Carriage of goods by sea- Statutory provision for time for making claim- Indemnity proceedings- Indemnity proceeding barred if claim barred
The plaintiff owned and operated a coastal vessel. In 1978 goods carried by the vessel were damaged in transit and as a result the owner of the goods sued the plaintiff and were awarded damages. The plaintiff claims that at the time of that shipment the defendant was the actual owner of the vessel and brought suit on the basis that the defendant indemnify the plaintiff for damages.
DECISION: Action dismissed.
HELD: The indemnity action by the plaintiff is time barred pursuant to the Sea-Carriage of Goods Act Art. III, r. 6 which provides that suit in respect of loss of or damage must be brought within one year after delivery of goods or when the goods should have been delivered. In the original proceeding the owner of the goods was granted default judgement against the plaintiff here. The 2d defendant in that case was the company that had been formed to buy the vessel. However at the time of the loss the present defendant was the actual owner of the vessel as the corporation had not yet been formed. The personal defendant should have, but was not added as a third party in the original action. Because there was no liability on the part of the defendant to the owner of the goods established within the time limitation period, the plaintiff cannot now seek indemnification outside of the time period. Indemnity may not awarded without the support of liability on the part of the indemnitor to the injured party.
Dominion Insurance Ltd v Westpac Banking Corporation [1998] FJCA 48; Abu0005u.97s (27 November 1998)
Marine Insurance- non payment of premiums does not affect the existence of the contract of insurance- court looks at wording of Renewal notice and history of dealings between the parties
The plaintiffs were the owner of the insured vessel and the bank who held the mortgage on the vessel and was named payee on the policy. The defendant was the insurer. The plaintiff had insured the vessel with the defendant since October 1990. There had been 3 renewals of the coverage in October 1991,1992 and 1993. The vessel was damaged beyond repair in March 1994. The insurer defendant denied coverage on the basis that no insurance premiums had been received since the October 1993 renewal.
DECISION: for the Plaintiff
HELD: The fact that no premiums have been paid does not affect he existence of the contract. The court looked at the Renewal notices and at the history of dealings between the parties. As to the Renewal notices, while they demanded payment, there was no clear statement that coverage would be canceled if payment was not received. As to the dealings between the parties, the court found that previous claims had been paid as credit for owing premiums so clearly in the past it had been the practice to renew without the payment of premiums.