“1 PERILS Subject always to the exclusions hereinafter referred to, this insurance covers loss of or damage to the Vessel caused by: ... 1.2 capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat ... 1.5 any terrorist or any person acting maliciously or from a political motive ... 1.7 violent theft by persons from outside the Vessel 1.8 piracy ... 2 INCORPORATION The Institute Time Clauses - Hulls 1/10/83 ... are deemed to be incorporated in this insurance in so far as they do not conflict with the provisions of these clauses ...”
“9 CONSTRUCTIVE TOTAL LOSS 9.1 In ascertaining whether the vessel is a constructive total loss, the insured value in the insurance on hull and machinery shall be taken as the repaired value and nothing in respect of the damaged or break-up value of the vessel or wreck shall be taken into account. 9.2 No claim for constructive total loss based upon the cost of recovery and/or repair of the vessel shall be recoverable hereunder unless such cost would exceed the insured value in the insurance on hull and machinery ...”
“Including War Loss of Hire cover, conditions: This policy to pay up to total amounts as above, fixed and agreed, chartered or unchartered for up to 180 days in all each vessel. Excess 7 days any one accident each vessel, but nil where deductible is applied. Underwriters hereby agree to include the risks of Piracy and Mutiny herein in respect of Loss of Hire. Subject to Loss of Charter Hire Insurance as LPO454 and LPO444 as far as applicable but this policy only to pay claims in consequence of Loss, Damage or occurrence covered by Institute War Strikes Clauses - Hulls (01.10.83) Clause 3 period and that in LPO444 amended to pay after the expiry of 180 days and cover continues whether vessel(s) chartered or unchartered - Clause 4 amended to permit above trading ... It is hereby noted and agreed that in the event that a vessel is hijacked or detained by Pirates with or without damage, this policy will respond in respect of Loss of Hire for the period of hijack or detainment by pirates up to policy limits ... No claim to attach to this insurance if the occurrence in respect of which such claim arises the cause of the vessel becoming a Total Loss (Actual or Constructive) excluding however, Constructive Total Loss covered by Institute War Strikes Clauses - Hulls (1.10.83) Clause 3 as amended by London Blocking and Trapping Addendum LP0444 …”
“very realistic prices in China only”
“As vessel is presently not in a safe position and condition Owners in this respect have, upon termination of the LOF, simultaneously engaged the two tugs presently alongside in a Tow Hire Standby / Towage Agreement.”
“After completion of the STS operation, the vessel will remain anchored off Khor Fakkan…escorted by one tugboat [identified in the ‘Existing Control Measures’ as of 90 tonnes minimum bollard pull] which will be alongside the vessel. The vessel should always be safely anchored in position and her accommodation and cargo spaces in such condition as to prevent the risk of fire or explosion. The vessel has no power (black out condition) and no crew on board. Therefore the vessel needs the assistance of the tugboat…to heave her anchor, to move or for any other work on board…”
“An additional tugboat, with at least 40 tons bollard pull, should be engaged and be stand-by, in order to assist vessel’s towage in this congested area if for any emergency reason vessel’s movement is required, i.e. anchor dragging, emergency evacuation of the anchorage area for any reason etc.”
“Emergency towing tug assistance (Caribbean Fos and Debba V)”
“Cargo and slop tanks contain about 1056.28 m2 un-pumpable oil/sludge – E/R contains about 300 tons FO and lubricant spillage which has become rubberized sludge – Bilges found with about 1,000 tons oily, Contaminated water – Bunker Tanks contain approximated 700T of FO”
“1 As a result of the survey now held the ship has been found in severely damaged condition with heavy damages of items subject to technical supervision of the Class. 2 Class of the ship is suspended.”
“The vessel had a substantial amount of asbestos present”
“…all cargo tanks, pump room, engine room and accommodation spaces must be cleaned and gas freed so that they become safe for hot works. All cargo tanks and slop tanks…must be cleaned, sludges removed and tanks be prepared for hot works. It has not been possible to ascertain the exact amount of sludges that need to be removed but as vessel’s last cargo was removed by emergency equipment without any COW operations a big amount of sludge remaining on board is anticipated.”
“consciously or unconsciously the specifications provided [by Mr Paikopoulos and Tecnitas] to the yards contained exaggerations in relation to the extent of the damage with a view to increasing the quotation figures”
“The principle laid down in these latter cases is this: that the question of loss, whether total or not, is to be determined just as if there was no policy at all; and the established mode of putting the question, when it is alleged that there has been, what is perhaps improperly called, a constructive total loss of a ship, is to consider the policy altogether out of the question, and to inquire what a prudent uninsured owner would have done in the state in which the vessel was placed by the perils insured against.”
“The proper approach to the question of what was the cost of repairs is, as I understand the law, what would be their cost to a prudent uninsured shipowner. In Roux v Salvador, (1836) 3 Bing NC 266, 286 (cited in Arnould (loc cit) para 28-020,) Lord Abinger CJ put it in terms of whether "… a prudent man, not insured, would decline any further expense in prosecuting an adventure, the termination of which will probably never be successfully accomplished".”
“Precise estimates are, of course, impossible, and it seems to me that, unless the insured shipowner is to take upon himself risks which ought not to be borne by him (such as the risk whether the ship will be got afloat at all, or, having been got afloat, will arrive at a port for temporary repairs, and ultimately at home for permanent repairs), a large margin ought to be added to the figures of cost of repair to cover risks of this sort—risks which a “prudent uninsured owner” would certainly take into consideration in determining whether he should repair or sell … Now in my judgment the “prudent uninsured owner” test was clearly accepted as the proper test at least down to 1873. The recognition of the test in Irving v. Manning 1 HL Cas 287 and in Rankin v. Potter LR 6 HL 83 puts the matter, to my mind, beyond argument. Nor do I think that it is possible to say that Moss v. Smith 9 CB 94, which was cited in Rankin v. Potter, had then been recognised as substituting for the “prudent uninsured owner” test an arithmetical test turning on the difference between estimated totals. The prudent uninsured owner test was, I think, adopted for the very purpose of covering considerations which cannot be embodied in the figures of an arithmetical calculation.”
“Phillips, 5th Ed., Sect. 1548, founding himself upon the American authorities, seems to assume that the usual port of repair is the port of necessity, but that it is a question of fact in each case what a prudent uninsured owner would do-see American Insurance Company v. Center, 4 Wend. N.Y. 45; Hall v. Franklin Insurance Company, 9 Pick. Mass. 466; Orrok v. Commonwealth Insurance, 21 Pick. Mass. 456. All three, of course, are American reports. I think that Phillips expresses the true view, and that in determining at what port to repair all the circumstances must be taken into consideration, including the loss of time necessary to reach the substituted port, the expense of reaching it, and the lack of facility to obtain freights there as compared with the port of refuge. But I think, myself, that at any rate, provided the repairs can be effected at the port of necessity, the assured is entitled to regard that port as the natural place of repair and to regard the cost of repair at any other port as substituted expenses, i.e., he would be entitled to be recouped (a) the necessary cost of temporary repairs at the nearest port; (b) the necessary cost of any further temporary repairs at the nearest repairing port; (c) the cost of permanent repairs at the ultimate repairing port, together with the necessary cost of getting to and from the various ports. ”
“The cylinder heads were visibly heat damaged from the exhaust valves at the very top as far down at least as the entablature. Discolouration of paint from scorching was evident across all six cylinders, becoming progressively more severe towards the aft”
“I was there. I saw these things. I also have a great deal of experience in engine room fires … I’ve never seen a cylinder or an engine top as badly damaged as this that was ever repaired”
“… this fire was not a kind of polite drawing room fire which strayed somehow out of its grate and licked paint here and there with flame. This was a raging inferno that started with an explosion, and spread throughout the engine room at temperatures, at the hottest parts of the flame, probably 800 or 900 degrees centigrade, and created an oven the whole of the top of this engine room, where the ambient temperature for several hours was probably in excess of 600 degrees … At 500 degrees carbon steel starts to re-crystallise, which means that the smooth molecular structure starts to break down, it loses its tensile strength and its hardness, and increases its ductility; that’s one thing. But the other thing that's going on at the same time, and is more germane to the top of this engine, is expansion. At 500, 600 degrees, all of these pieces that are bolted together expand at different rates, differential expansion. I would expect to find, when these places were taken apart, that there were multiple fractures, that there was extension of the studs and the bolts and the tie rods, and that this engine was certainly at the top no longer fit to carry the loads and the pressures it’s required.”
“Those turbochargers, in common with all the other areas from the third deck upwards, were subjected to very high temperatures, and you may think I am not an expert in this field and shouldn’t mention temperatures, but I disagree with you. These temperatures were in excess of 500 degrees. Turbochargers rotate at 16,000 plus revs per minute. The elevated temperatures in that engine room, ambient, would be enough to distort these turbocharger casings, even if they didn’t cause actual damage to the rotors which they would of course and the aluminium would have softened at the compressor ends. Those turbochargers were not fit to be ever used again, in my opinion.”
“when you are talking about degrees of heat exposure, it’s a little bit like saying that somebody is less dead than somebody else, even though they are both in the graveyard. The position is that that machine had to expand for that paint to crack. So the parent metal underneath that paint, which is quite thick, because these are 20-year-old machines that have been originally coated to a high standard and then coated many times since by the crew, has cracked, which means that the casing has expanded.”
“From our experience on similar incidents the 3 auxiliary engines and 1 main engine are beyond economical repair in order to ensure reliable operation standards and replacement of all 4 engines is considered as the most economical repair solution”
“I can’t say for sure, no, I just don’t think it’s enough, from what I’ve seen, that it warrants renewal”
“but after that you just don’t know… unless and until you actually open them up and carry out some strength tests, you wouldn’t know”, in other words, even on his evidence, the turbochargers may have been damaged beyond repair. In relation to the alternators forming part of the generator sets, whilst his opinion was that they could simply be re-wound, he accepted that this was “another example of something where, unless you stripped it down, you wouldn’t know” and whether it would require replacement or rewinding is “one of those things where you don’t know until you open it up.”
“The entire area of the Second Deck suffered severe heat damage up to and including the deck head at Main Deck level. From the Second Deck upwards the fire had consumed virtually all combustible materials that had been present …Therefore, the engine control room and all installed equipment…were destroyed.”
“All combustible material within the Engine Control Room, on the 2nd Deck, had been fully consumed by fire with only the outer steel casings remaining for the control equipment ... The heat was also evidently intense outside the Engine Control Room on this level on the Starboard side ...”
“The main deck within the accommodation was also the deck head of the engine room and was subjected to fire attack from both sides. It was seen to have been heat damaged in areas such as the cross alleyway...[T]he deck plating between the accommodation and engine casing superstructures also formed a section of the engine room deckhead and was seen to be distorted…Very severe heat damage was evident internally throughout all the decks in the accommodation block, extending from frame 32 to 51, with virtually all combustible materials having been consumed. All levels of the accommodation block had been totally gutted by fire.”
“to the extent that there was extensive fire damage to the second deck below, then ... that would indicate that there would have been heat damage to the main deck above, and buckling therefore of the main deck above as a consequence of that heat from below”
“Progressing up through the Funnel Casing via the access ladders on the Port side ... it was clear that the heat had been intense in this area. The Composite Boiler ... had suffered from intense heat and fire, as evidenced by the discolouration and the burning of all combustible material. The steel walkways and bulkheads, particularly the forward facing bulkhead, were also found to be distorted.”
“these boilers, subjected as they were for several hours to abnormally high temperatures, could not be re-used.”
“the primary route for the escape of hot gases from the engine room fire was up the funnel casing and out through the ventilation grilles…and this caused extensive paint loss and substantial damage to the funnel casing…”
“The physical risks are obviously the risk of towage over a very long distance, which I think is fairly obvious to most people, the perils of the sea, and so on. The commercial risk is being trapped there. Dockwise had experience of having a ship in COSCO for a damage, and the period under repair overran – this was a favour to them, I think, and the period under repair overran, and I think they were charged upwards of$80,000 a day for dock dues for the extra days. It’s not unknown, that. That’s the worst I’ve come across, but it’s not unknown, but that’s one of the commercial risks. The other is that if you are in a shipyard for a year, people lose interest, the shipyard loses interest, there is no guarantee that they will have a steady flow of workers on the job, something new comes in, they take away the people, the thing breaks down, the times goes down, and the site team is there for a long time, there is friction, they fall out with the yard managers, everybody blames everybody else and work goes downhill. Then there is the low level corruption that just poses a risk to everything, to try and keep the wheels oiled. Those are the sorts of things that Dockwise took into account.”
“But I also need to say something which is common knowledge in the trade, that when a vessel goes to China for a project, let’s say 1 [million], then it always becoming something more, 3.5 million. And you can cross-check this with everyone in the trade.”
“At the beginning of last year, or the end of 2012, I was asked by the North of England P&I Club to attend in a German owner’s office with respect to a relatively newish – by which I mean under two years old, I don’t remember exactly – ship that had been built in China, and had suffered a grounding damage, I think off the mouth of the Yangze, somewhere like that, and it was salved, and on the basis of a quotation from the local shipyard, underwriters had agreed to place the repairs in hand. As it happens, the overall cost turned it into a CTL, mostly because – not mostly perhaps – but largely because of the extended time.”
“In my opinion it is not sufficient to just look at China and to dismiss other repair areas without due consideration. As with shipbuilding, where it is well documented in online articles by Reuters … and others that new ship deliveries can be long delayed in China and quality is not uniform. As with new build so too with repairs and so there are many factors an owner must weigh in making the decision on where to carry out major repairs …”
“the vessel cannot proceed to any port / berth even to a demolition yard before such cleaning procedure takes place”
“Following the delivery of the vessel from the Sellers, extensive cleaning works including the necessary gas-freeing of the vessel, neutralisation and disposal of dirty sea ballast water, removal of hazardous materials, oily waste and cargo residues etc. were carried out.”
“It should be noted here that none of the yards (those which quoted for repairs or any others) will allow hot work to begin until a thorough cargo and slop tank cleaning is carried out”
“Ships and shipyards become integral. When you look at the risk in a shipyard, you have to look at the - I am talking about property risk here now, not commercial risk - what the ship can do to the shipyard and what the shipyard can do to the ship in way of damage. I am not aware of anywhere in the world, nowhere in my experience can you put a tanker with dirty tanks in a shipyard for a year, at the minimum, for any time but let’s just say a year. There are lots of reasons for this. One is if you have only cleaned for gas free man entry, which I think nobody would argue with is at least a prerequisite, in order to maintain that gas free status - and, as you have seen, every yard wants to check every tank every day with a chemist and charge you a vast amount of money for it, then you have to have the tank lids open on the main deck. You cannot maintain a gas free status if the lids are closed. So there has to be ventilation. If you have got oil residues in the tanks, then you are at risk, all the time you are at risk. Not just the work on your own ship, though that’s part of it, here we are cutting huge amounts of the accommodation off, there is hot work everywhere. But other ships, if I have a ship in the shipyard for a year or more it’s going to be shifted from one berth to another, there will be ships outside it, there will be ships – maybe it will be outside another. There will be hot work everywhere in the shipyard, and I don’t think, it’s certainly not my experience, that any shipyard in the 21st century will accept a dirty ship in its shipyard ... [E]ven if you could find a shipyard that would allow that, then no prudent owner would allow his ship to be in that condition, and no professional person in my position could ever put their name to such a practice, it is not right, it’s an ethical engineering point, as I say.”
“[I]n these days of crude oil washing and other things, people load cargo on top of cargo, and you could have fuel oil, you could have light Iranian crude, you could have all sorts of things down there, as residue ... I don’t know any chemist that would tell you there is no risk of explosion with a dirty tank, I’ve never met one.”
“No shipyard will accept a vessel with oil residues in it, or a vessel which is not very well cleaned, according to the hot works standards. So the rule is that the ships and tankers in particularly have to be cleaned, they have to be gas free not only for people or entry man, but also for hot work… You never know what the workers will do inside the vessel, inside the hull. You cannot know what they are going to touch or what part of the structure might be overheating, and then convey the heat further inside the vessel. All this is common knowledge and people in trade are aware of that. And this is why, if a tanker is to stay in a drydock, shipyard still demands that tankers be cleaned for hot work, unless you go to a place where people respect no standards and no laws… There are so many objects that get carried in order to - over the hull. All this is very risky, and that is why shipyards do not undertake such repairing projects unless the vessel is thoroughly clean and is gas free for hot work”
“the vessel should be in the condition of gas free approved by yard and ready for hot works”
“I expect you could argue that, yes”
“we attempted to make an inspection of the ballast tanks, we started with the aft ballast tanks, I mean, I don’t remember now the exact number, so we opened up the manhole, and it was by smelling and seeing a shine surface in one or two of these ballast tanks, so we stopped this effort, because for us it was not of use any more, so we decided then to amend the ballasting sequence in such that only ballast is going to be filled in and not being taken out.”
“MR JUSTICE FLAUX: I understand your opinion to be, though, that you would still, if there was dirty ballast water in the ballast tanks, never mind where it came from, but assuming there was, that that's something that any prudent yard would also require to be -- or need to be dealt with? A. Oh, there is no question about that, my Lord. If this ship has to go into drydock then you have to deballast or part deballast or shift, and if you have to deballast and there is any suggestion of dirty ballast, then it has to be disposed of and cleaned, otherwise you can't reballast.”
“Asbestos removed after a fire incident is a very special and expensive procedure. Qualified personnel and continuous attendance is needed”
“Asbestos is excluded and will be removed/disposed by specialists”
“I wouldn’t rule it out, but it’s never been my experience that the crankshaft can be recovered from immersion, corrosion with hand polishing. I wouldn’t rule it out but it’s not very likely.”
“Mr Templeman based another argument on this email: that, if she were not repaired by the section method, the "Irene EM" would not have been given classification, that therefore she could not have been insured, and so that she could not have been operated. In other words, for practical purposes the position adopted by BV and stated in the email took out of the claimants' hands any decision about how the repairs might be done. I reject that argument: as I have said (at para 197), I accept Mr Templeman's interpretation of what BV meant in their email, but it does not follow that after further inspection of the damage, in particular the damage to the double bottomed structure, they would not have agreed to another method of repair; nor that, if the claimants had adopted another method of repair, BV would not have accepted the vessel back into class when they saw the results. While the claimants were contemplating the section method, BV had no reason to object to it even if they thought that the claimants were being more cautious than necessary. It does not mean that, if the claimants had re-assessed the damage and had proposed less expensive repairs, BV would not have considered them. After all, it was not for a classification society to insist on particular repairs: their role was to survey the vessel after repairs had been done and to decide whether to accept the vessel back into class. Of course, it was sensible for the claimants to seek BV's views about what repairs might be acceptable to them, and for BV to give them guidance. But in the end, if the vessel was to be repaired, it was for the claimants to decide what repairs would (i) restore the vessel to her pre-incident condition and (ii) meet classification requirements. Indeed, if the claimants had had the vessel properly repaired to their surveyor's satisfaction but BV declined to classify her, the claimants were entitled under BV's rules to challenge the decision.”
“Mr Cuffe uses a lump sum quote from Mr Chen at USD 100,000 whereas I estimate that some 2000m 2 of sheet insulation will be required at up to USD 100/m 2 as per my first report and in addition there will be approximately 1600m of pipe insulation making a total figure of USD 450,000 in China. I note that, on the basis of the area which I have calculated to be 2000 m 2 Mr Chen’s figure of USD 100,000 would be the equivalent of about USD 5 per m 2 which I regard as quite unrealistic.”
“[This figure is] for the cost of the sea trials and also the cost of commissioning various items of equipment not only at sea trials but, if it’s done before then, then before then. It includes the attendance of Class at that commissioning and the attendance of specialists at that commissioning… Part of the problem is that, when you are doing a repair in China with a lot of stuff from elsewhere, be it Japan or Korea or wherever, you have to bring in specialists. Some of them might be local, but there is a lot of specialists travelling in and out… And besides, the COSCO view of this was 900,000, and it seemed to me that they had not included everything, or at least I inferred that they hadn’t included everything, so I moved it up a bit.”
“I mean, the cost of all of these things for all of those cases was high, very high in fact. The Class involvement in doing these drawing approvals – and the older the ship, the worse it gets – can be$100,000 on its own. Every system that’s going to be recommissioned here, every drawing has to be redone, everything has to be approved, all of the new equipment that replaces obsolete equipment, or change of style, the insulation, the soundproofing, the anti-vibration, all of this stuff has to be re-approved by Class. So that’s what goes into that, that and the planning, the procurement. Trying to find out where you can buy a similar engine or engine parts or boilers that need to be renewed, all of that stuff takes time and planning. I have included there in the planning things like Mr Paikopoulos, and myself to some extent, and other things, and all of these fees add up.”
“Of this, some USD 1.5 million is the cost of modular cabin construction with bathrooms to be fitted with a constructed framework, USD 250,000 to construct and outfit the wheelhouse (excluding the cost of navigation equipment, USD 125,000 for the galley and USD 1.6 million for the internal build of partition and framework and all other spaces ...”
“No claim shall in any case be allowed in respect of scraping or painting the Vessel’s bottom, Roskill J said: “Underwriters are therefore not liable for the cost of repainting the vessel’s bottom. Item 42 is thus wholly disallowed”
“Mr Smith submitted that some of these items, namely office expenses, costs for consulting and attendances, and adjusters' fees, would not have been recoverable from insurers, and so should not be brought into account when deciding whether the vessel was a CTL. This point was not expanded in submissions before me, and no authority was cited about it. On a simple reading of section 60 of the 1906 Act, the relevant costs are not defined by what would be recoverable from insurers: subject to the policy terms, in cases of damage to a ship what matters is "the cost of repairing the damage". The policies in this case referred to "the cost of recovery and/or repair of the vessel". However, my decision does not depend upon this point, and I do not determine it: it is better decided in a case in which there have been full submissions from the assured and the underwriters.”
“Of the vessel’s bottom, yes. You can’t do less, you can’t just strip off the anti-fouling and [paint] underneath. So, yes, to do a proper job, you grit blast, prime, paint.”
“30 odd years of experience, most of it working for The Salvage Association, great lumps of it as a warranty surveyor. I know towing, I know ships, and I can tell you that to do a trip like this with a 125 tonne bollard pull in all of those miles of mostly adverse currents, is asking for trouble. If you were to look at the documents surrounding the tow to Pakistan, in that case with very light ballast, ballast suitable for beaching, they chose a smaller tug and they managed to achieve 3.5 knots as a voyage average over several days. That’s not enough at sea. To do 3.5 knots between Khor Fakkan and China, you would be doing it for, I don’t know, 69 days, 65 days, in that region. ... I’m telling you categorically to do that trip you need deep ballast. With a 125 tonne bollard pull with an average of seven to nine metres draught with a trim, you would be struggling to do four knots. It’s not enough.”
“As stated above, owners’ engineering, bidding processes, technical support, site team, procurement services and general input for repairs will cost in the region of USD 10,000 per man per month including expenses. Repairs in the Gulf would require 4 men for say 12 months in the best case and 18 months in the worst case totalling USD 0.5 million to USD 0.75 million…As stated above, repairs in China require more supervision and I would expect there to be 6 people totalling USD 0.9 million for 15 months in the best case and USD 1.2 million in the worst case on the basis of 20 months.”
“if you are in a shipyard for a year, people lose interest, the shipyard loses interest, there is no guarantee that they will have a steady flow of workers on the job, something new comes in, they take away the people, the thing breaks down ...”
“[A]s a matter of good engineering practice and with the vessel in drydock, I would recommend withdrawing the tailshaft for cleaning and to assist with alignment checks and main engine repositioning after repairs.”
“Underwriters wish to put your clients on notice that if they do sell the vessel and, in due course sums become payable to them under the policy then they will have to account for the proceeds of sale.”
“Where a ship is damaged, but is not totally lost, the measure of indemnity, subject to any express provision in the policy, is as follows:— … (3) Where the ship has not been repaired, and has not been sold in her damaged state during the risk, the assured is entitled to be indemnified for the reasonable depreciation arising from the unrepaired damage, but not exceeding the reasonable cost of repairing such damage, computed as above.”
“…express modification of the regime enacted in s69 [in] the reference to market value as a yardstick of measure of depreciation. That has the effect of simplifying the calculation of depreciation by avoiding the double calculation necessary to apply the percentage reduction in market value to the insured value [i.e. method B].”
“The purpose of the proviso is thus to enable the owners to recover for loss of hire resulting from damage during the currency of the policy, provided the repairs are carried out within 12 months of the expiry of the policy. This shows that the parties were contemplating loss of hire resulting from damage to the vessel, and the consequential need for repairs, as being the primary, and I would say only, cover afforded by the policy.”
“The inference is, I think, irresistible that the parties chose the Hulls Clauses because they intended to limit recovery for loss of hire to cases where there had been loss of or damage to the vessel. This makes good commercial sense. Insurance against loss of hire irrespective of loss of or damage to the vessel would no doubt have cost more … Although the words “risks enumerated in the Institute War and Strikes Clauses Hulls Time” may at first sight seem to indicate, and be confined to, the risks in the numbered sub-clauses, it is now accepted that the clause itself is incorporated at least to the extent that the risks are expressly made subject to the exclusions in cl. 4. Moreover there are other indications in the Jardine Glanvill wording which suggests that damage to the insured vessel is a prerequisite. I have in mind in particular provisos (a) and (c). Proviso (c) does not make grammatical sense as it stands. But it should presumably read: Provided that . . . repairs if actually carried out in respect of damage are completed within twelve months of the expiry of this policy. The purpose of the proviso is thus to enable the owners to recover for loss of hire resulting from damage during the currency of the policy, provided the repairs are carried out within 12 months of the expiry of the policy. This shows that the parties were contemplating loss of hire resulting from damage to the vessel, and the consequential need for repairs, as being the primary, and I would say only, cover afforded by the policy. The learned Judge observed that the vessel would not be likely to be damaged by detention. This may be true. But detention is not the only risk covered. Other risks, such as war, mines, torpedoes, bombs and terrorist activity would all be very likely to cause damage to the vessel. In summary I would hold that the parties deliberately chose the Hulls Clauses rather than the Freight Clauses, and that their purpose was to confine the loss of hire policy to loss of hire resulting from loss of or damage to the vessel.”
“repairs if actually carried out”
“Summarised, the facts seem to me to come to this. After the torpedo struck her she was a doomed ship, unless she could get to a real place of safety. She nearly got to a place of safety, but never quite did so. What happened was in the circumstances the natural sequel to the injury by the torpedo. Water was admitted, at first only so far.”
“There is nothing in the clause or statute which requires the assured to show that a loss would 'very probably' have occurred. There have been very few cases on the effect of the sue and labour clause. I do not think that Lord Justice Brett was choosing words which were intended to be given almost statutory force and to lay down the elements which have to be proved before the assured can recover under the clause. He was dealing with a case where a loss would very probably have occurred and where underwriters would very probably have had to bear it… Those words [of section 78 of the Act] seem to me to impose a duty to act in circumstances where a reasonable man intent upon preserving his property, as opposed to claiming upon insurers, would act. Whether or not the assured can recover should depend upon the reasonableness of his assessment of the situation and the action taken by him. It should not be possible for insurers to be able to contend that, upon an ultimate investigation and analysis of the facts, a loss, where possible or even probable, was not 'very probable'. As the right to recover expenses is a corollary to the duty to act, in my opinion, the assured should be entitled to recover all extraordinary expenses reasonably incurred by him where he can demonstrate that a prudent assured person, mindful of an obligation to prevent a loss, would incur expense of an unusual kind. In my opinion, this is the effect of the sue and labour clause ...”
“[he] emphasised…in giving the judgment of this Court, that the sue and labour clause is concerned with expenses incurred to avert or minimise loss by perils insured against which would very probably fall on the underwriters. The probability of loss is emphasised throughout the judgment.”
“I do not see why the making of a total loss claim should bring the right to sue and labour to an end. It does not in the marine context. The date of payment ushers in the right of subrogation. It might be said that at that date, if the right to sue and labour were still extant, it made way for the insurer's right of subrogation: but that point has not been pressed. The date of issue of a writ for a constructive total loss, however, is a familiar date in the case of marine insurance. Up to that date any recovery by an assured goes to reduce his claim, even though notice of abandonment has already been given; after that date any recovery does not reduce the claim: Polurrian Steamship Co. Ltd. v. Young, [1915] 1 K.B. 922 at pp. 927-928, Rickards v. Forestal Land, Timber and Railways Co. Ltd., [1942] A.C. 50 at pp. 84-85. That suggests that the date of issue of writ is a watershed in respect to not only the effect of recovery but also the right to sue and labour. Mr. Webb submitted that this was some irrelevant peculiarity of the concept of constructive total loss in marine insurance law. It seems to me, however, that if that were so, then the watershed date would be the date of notice of abandonment, rather than of issue of writ. In Ruys v. Royal Exchange Assurance Corporation, [1897] 2 Q.B. 135 at p. 142 Mr. Justice Collins said: '. . .and much might be said for the view suggested by Lord Eldon and adopted in the American and other systems, that the rights of the parties should be finally ascertained upon a proper abandonment. But, the object of litigation being to settle disputes, it is obvious that some date must be fixed upon when the respective rights of the parties may be finally ascertained, and the line of the writ may be regarded as a line of convenience which has been settled by uniform practice for at least seventy years . . .' Moreover, in Roura & Forgas v. Townend, [1919] 1 K.B. 189 at pp. 195-196 Mr. Justice Roche gave as the reason for the rule the general one that "an assured cannot, under a contract of indemnity, recover in respect of a loss if before action it has been made good to him". Although that explanation has been criticised as being circular (see Arnould at par. 1178), it seems to me to emphasize the point made by Mr. Justice Collins that it is at the time of issue of proceedings that the rights of the parties must be viewed as crystallized. Since therefore recovery after action brought does not affect the total loss indemnity to which an assured is entitled as of that date, that also seems to me to be an appropriate date at which to find that an assured's right (and correlative duty under s. 78(4) of the MIA) comes to an end. In the present case that would be on July 30, 1991.”