Causation Promet Engineering v. Sturge (The “Nukila”) [1997] 2 Lioya’s Rep. 146 Court of Appeal ‘The defendants insured the plaintif’s accommodation platform in the 4131 terms of the Institute time clauses, including the Inchmaree and additional perils clause. The claim was for the cost of repairing fatigue cracks in the platform legs, which had developed in the circumferential weld and ‘extended to such a degree that the platform was in dunger of collapsing. Two issues arising were whetber the platform had been damaged and, if so, whether it had been caused by an insured peri It was decided at first instance that if all that had happened was that a latent defect had become patent, there was no cover under the Inchmaree clause, and the additional perils clause did not cover the cost of replacing the defective part itself, but only if it had caused damage to the vessel. ‘The plaintiff had failed to establish that there was damage to the vessel; but had established that there was something defective with the welds; they ‘were badly profiled so that fatigue cracks developed more rapidly than they should. The defect was latent and within the bull, so it was an insured peril within the Inchmaree clause. The cracks were not ordinary wear and tear. However, although there was a latent defect in the hull, it did not cause damage to the vessél and the insured could not recover the costs of repair. The plaintiff appealed, the issue being whether what had been observed by the surveyors was damage to the vessel caused by a latent defect. Held: Application of the language of the Inchmaree clause to the facts was straightforward: at the commencement of cover, there was a latent defect in the welds joining the underside of the top plate of each spud can to the external stirface of the leg tube. By then the latent defect had also given rise to minute fatigue cracks which could also be described as latent defects These features caused extensive cracks in the full thickness of the tube extending above and below the defective weld, and extensive fractures in the top plating and bulkheads of the spud cans as well as fractures at other locations. This was, on any ordinary use of language, damage to the subject ‘matter insured, namely the hull and machinery of the vessel. [twas caused by the latent defects. Having read the survey report, it would be an abuse of language to describe the legs and spud cans as merely defective. They were damaged by being subject to stresses which they were unable to resist due to the latent defects, namely the wrongly profiled welds and the incipient fatigue cracks. Use of the word “part” in the additional perils cause provided no criterion for distinguishing between what was and what was not damage. The word was capable of being used in a variety of ways depending on the context. The weld was a part just as much as a bracket or bulkhead. It provided no guidance to the construction to be put on the Inchmaree clause beyond emphasising the need to prove that damage to the subject matter insured was, mused. The questions to be asked were whether there was damage to the subject matter insured, whether it occurred during the period of the policy, and whether it was caused by a latent defect in the machinery or hull. Each was answered in the affirmative, and the plaintiffs were entitled to indemnity. ‘The appeal would be allowed. 4067. |NEXT PAGE 407] Insurance R.29: December 1997CONSTRUCTION Starfire Diamond Rings v. Angel [1962] 2 Lloyd's Rep. 217 Court of Appeal Policyholder dealt in precious stones and had a policy covering inter alia, theft of stones from his car while in transit. The policy contained an exclusion if stones were stolen from a car which had been “left unat- tended”. A theft occurred while the policyholder was some 37 yards away, though he claimed that he had the car in view et all material times. Heid, that the car was left unattended for the purposes of the exclusion. The purpose of this clause was to ensure that there would at all times be someone close enough to the car to give effective protection against the risk of theft, and that requirement was not satisfied here. Grundy (Teddington) Ltd v. Fulton [1983] 1 Lloyd’s Reports 16 Court of Appeal The policy covered “theft of goods in enclosed yards”. Goods disap- peared while in transit between two depots belonging to the policyholder. ‘Held: That where a policy uses a word which has a technical legal meaning that meaning is normally to be ascribed to the word. Thus, “theft” must be construed in accordance with section 1 of the Theft Act 1968. On the facts the dishonest appropriation of the goods had taken place when the driver of the lorry carrying them deviated from his proper route. Accordingly, this was not a case of theft in an enclosed yard, and the claim failed. Athens Maritime v. Hellenic Mutual [1983] 1 All E.R. 590 ‘Staughton J. ‘This case concerned a marine policy which covered, inter alia, “piracy and riot”. The insured vessel was raided while anchored in territorial waters, and property was stolen. However, violence and/or threats of violence were used only when the raiders were discovered in the course of making their getaway. Held: (1) that piracy can take place within territorial waters, but involves some element of force in the commission of the theft. This was lacking in the present case, since the theft was complete before any element of force intruded. (2) That riot also involves force, and the loss was not caused by riot for the reasons given in the previous paragraph. 4083 Insurance R.2I: January 1994 4181 4.182 183 4183Fine InsuRaNce FIRE INSURANCE Austin v. Drewe (1816) 6 Taunt. 436 Court of Common Pleas ‘The plaintiff owned an eight-storey building used for refining sugar. To 4-801 impart the necessary heat, a chimney ran up the side of each storey. At the top of the chimney was 2 register which was shut at night to retain heat but opened each morning when the fire was built up. One morning, an employee forgot to open the register. Asa result, intense heat damaged sugar being refined, but the fire did not escape from the chimney. The plaintiff had insured the sugar against Joss by fire and claimed for the damage done to the sugar. Held: The insurers were not liable. There was no loss by fire as there had been no ignition of the sugar and the fire was only where it should have been. ‘Re Wright and Pole (1834) 1A. & E. 621 ‘Court of King’s Bench An innkeeper insured his inn against loss by fire. Following a fire, he made a 4-802 claim which included a sum in respect of loss of profits, Held: A fire policy on property did not insure against loss of profits con- sequent upon the destruction of the property. Profits had to be separately insured. Everett v. The London Assurance (1865) 19 CB. (w.s.) 126 Court of Common Pleas The plaintiff insured his premises against “oss or damage occasioned by 4-503 fire.” Gunpowder exploded and caused a fire ina factory more than half @ mile from the plaintiff's premises. The explosion shattered windows and damaged the structure of the premises, but there was no fire thereat, Held: As the premises did not catch fire, there was no loss caused by fire and the plaintiff was not entitled to recover from his insurers. Marsden v. City and County Assurance Co. (1865) LR. 1. CP. 232 Court of Common Pleas ‘The plaintiff, a draper, sured the plate glass in his shop front against ‘all 4-504 loss or damage originating from any cause whatsoever except fire...." A fire 4-804 4213Isuraste INTEREST INSURABLE INTEREST ‘The Sadlers Co. v. Badcock (1743) 2 Atk. 554 Court of Chancery (Lord Hardwicke L.C.) ‘The tenant of a house insured it under a contract which was expressed to run 4-801 for longer than the period of her unexpired lease. After the lease expired, but before the end of the policy, the house was destroyed by fire. Subsequently, the insured purported to assign the policy to her former landlords, the plaintiffs The policy provided that if it shouid be assigned, the assignment must be entered in the books of the insurers within 21 days. The latter refused to enter the assignment and the plaintifis’ claim was refused, Held: The plaintiffs were not entitled to recover because at the time of the loss, the insured had no: insurable interest. The purported assignment was ineffective because the insured had nothing to assign, having suffered no loss, and the assignment of a fire policy required the consent of the insurers. It was also stated, obiter, that the insured must have an insurable interest at the time of insuring ‘Smith v. Lascelles (1788) 2 T.R. 187 Court of King’s Bench ‘The case concerned a mortgagor of goods suing the mortgagee for failing to. +802 effect insurance as agreed. ‘Held: inter alia, that a mortgagee was entitled to insure the equitable interest remaining in the mortgagor as well as his own legal interest. Reed v. Royal Exchange Assurance Co. (1795) Peake Ad. Cas. 70 Court of King’s Bench Held: Every wife is presumed to have an interest in the life of her husband; 4803 there is no need to prove pecuniary interest. Lucena v. Craufurd (1806) 2 B. & P.N.R. 269 House of Lords Commissioners appointed by the Crown insured certain ships and their +804 cargoes on a voyage from St. Helena to Great Britain. The ships were Dutch ships seized by Bniish vessels because Holland was occupied by France with 4-804 4333‘Motor VEHICLE INSURANCE MOTOR VEHICLE INSURANCE ‘Monk v. Warbey [1935] 1 K.B. 75, Court of Appeal ‘The plaintift was injured in a road accident caused by the negligence of M.M ‘was driving a car on behalf of K. The car was owned by the defendant who had lent it to K, The defendant held a policy of motor insurance against third party risks, but this policy did not cover the accident. Neither K nor M was insured, a fact of which the defendant was probably unaware, nor had they the means to satisfy the damages payable to the plaintiff. The latter sued the defendant for damages for breach of statutory duty, alleging that the cause of action arose because the defendant committed a breach of the duty imposed by section 35 of the Road Traffic Act 1930 (now section 143 of the Road Traffic Act 1972; see para. 2-447) in that he caused or permitted K to use the car without K having the required third party insurance. ‘There was no dispute that the defendant committed a breach of the section, ‘The issue was whether the defendant was civilly liable for such a breach. Held: The defendant was liable. A person injured by breach of a statute has a right to recover damages from the person committing it unless it can be shown by considering the whole of the Act that no such right was intended to be given. Onaconsideration of the Road Traffic Act. including the criminal penalties laid down for a breach of the obligation to insure, there was nothing to show that the ‘exception applied. Barrett v. London General Insurance Co. Ltd. [1935] 1 KB. 238, King's Bench Division ‘The plaintiff was injured by the negligent driving of S against whom he was awarded damages. S held a motor policy issued by the defendants and assigned his claim on the policy to the plaintiff. The defendants repudiated liability relying on a term of the policy which provided: “This policy does not cover or insure against liability in respect of any accident while driving the car in an unsafe or unroadworthy condition.” They argued that as the brakes on the car hhad failed at the time of the accident, the car was therefore unsafe and ‘unroadworthy. Held: “Unsafe” and “Unroadworthy” meant the same in the context of the policy. The requirement of roadworthiness was analogous to the implied ‘warranty of seaworthiness in a marine policy under which a ship is required to ‘be seaworthy only at the time of sailing and not thereafter. By analogy, the car had to be roadworthy only at the beginning of a journey. Asthe defendants had shown only that the brake failed at the time of the accident, they had failed to discharge the burden of proving that the car was unroadworthy before then and were liable to the plaintiff. 4573 126 101 stout dou‘SuaRocATION SUBROGATION Commercial Union Assurance Co. v. Lister (1874) L.R. 9 Ch. App. 483 Lords Justices ‘The defendant owned a mill in Halifax which was destroyed by a fire alleged to have been caused by the negligence of the employees of the corporation of Halifax. The mill was insured for £33,000 but the defendant estimated his loss to bbe £56,000. He commenced proceedings against the corporation. His insurers then claimed a declaration that they were entitled to the benefit of any right of, action vested in the defendant, an injunction stopping him from suing other than for his whole loss and an injunction restraining him from refusing to allow them to use his name for the purpose of any proceedings against the corpora- tion, Held: Affirming the order of Jessel M-R., that the insurers were not entitled to the relief they claimed. Until the right of subrogation vested in them, the insured was dominus lus of his own right of action, as he had undertaken to sue for the whole amount of his loss. In conducting the action and in reaching a ‘compromise, he was bound to act bona fide, bearing in mind the interests of the insurers. ‘Simpson & Co. v. Thomson (1877) 3 App. Cas. 279 House of Lords ‘owned by the same person collided and one of them sank. The insurers paid the owner for a total loss of the latter. As the other ship was ible for the collision, the owner paid a sum of money into court under the procedure laid down in the Merchant Shipping Acts to limit his liability in that respect. Claims against this fund were made by the owner of the cargo ‘which was on board the lost ship, the crew of the latter and the insurers, the latter on the ground that having paid the owner of the lost ship, they were subrogated to his rights including the right to claim against the fund established by the owner of the ship at fault. ‘Held: The insurers had no claim on the fund. Their position was as if they had brought an action against the owner. The right of insurers was merely to make such a claim as the insured could have made and in his name. The claim here ‘would have been tantamount to the insured suing himself, which was impos- sible. Darrell v. Tibbits (1880) 5 Q.B.D. 560 Court of Appeal “The defendant was the successor in ttle 0 F who let a house on terms that the tenant was responsible for repairs other than in circumstances not material 10 4733 +1901 +1902 +1809 41803,