‘12. Cargo … 30,000 MT 10% more or less Owners’ option steel scrap non oily, non radioactive/excluding motor blocks/turnings/boring and cuttings HMS 1/HMS 1+2/ shredded SF … … Additional Clause 51 The scrap mentioned herein only limited to hms 1+2 and/or shredded scrap specifically non-oily/non-radioactive/non-dangerous excluding motor blocks and turnings and also metal borings, shavings and cuttings. …’
‘In addition to the excluded cargoes you mention, DRI, NBI and HBI Fines are also excluded’
‘One more question: In the C/P for the Mv ‘Ali Enciki’ … the cargo is listed as “…steel scrap non oil…” I assume that scrap is always made oil-free before shipping.’
‘… would you please ask Cometsambre the more general question of what the exact description of the cargo is? Ann [Dely of Concordia] previously stated the following in this regard: “shredded steel scrap HMS 1 + HMS 1-2 or ISRI specs. 210/211, min Density 65 LBS/F3 in bulk.” Is that still correct? I ask this specifically because a standard exclusion for scrap is “excluding oily scrap, engine blocks and borings and turnings”, which should also be included in the final policy for the sake of clarity.’
‘Ammonium nitrate, Grain in tankers, Liquid sulphur, Methane and similar liquid gas, Explosives, Livestock, Asbestos, Acids, Calcium Carbide, Naphta, Motor Spirit, Tar, Pitch in bulk, Wet hides, Cement in bulk, Fishmeal, DRI, HBI, HBI Fines.’
‘6. Vessels & Declarations All vessels (whether on time or voyage charter) chartered by the Assured are to be declared to Underwriters prior to inception of risk. Vessels which meet the following criteria are automatically accepted: IACS classification Entry with an International Group P&I club … Vessels of maximum 40 years of age. 7. Limit of Insurance a. Charterers’
‘Turnings or battlefield scrap Manufactured steel goods (Rods, Wire, Sheets etc) inc. Scrap’
‘… a scrap heap caught fire. The burning part was removed with a crane and placed next to the heap. The situation was considered under control, but a final inspection was requested … no smoke or flames visible. Small burnt residues were present among the removed scrap. Thermal camera inspection was carried out and temperatures were acceptable. As a precaution, additional scrap was removed by crane. Further thermal inspection showed no issues. No further action by the fire brigade was required.’
‘At around 9.45 am, the foreman of Sea Invest noticed a release of smoke in hold number 1 (they were loading). Immediately afterwards, flames appeared. It was there that the crew intervened and extinguished the fire in the hold. As a precautionary measure, the Foreman and the Sea Invest crane operator took out the equivalent of 20-25 tons of HMS and placed them on the quay (the fire was out). A Sea Invest truck arrived and sprayed the pile with a lot of water. The pile remained on the quay for more or less 5 hours and 30 minutes and was then reloaded into the hold. The Foreman and the Sea Invest crane operator believe that the product that started burning came from a truck they had just dumped.’
‘During discharging operation supervision, our inspector noted a heavy smoke rising from Hold No. 2. Immediately our inspector headed straight to the mentioned Hold on board MV COMMON SPIRIT to observe that some steel scrap cargo was on fire…’
‘During loading operation (Cargo Scrap) on14 October 2021 / 0015 LT in cargo hold No. 2 ‘Found caught fire due to inherent vice of cargo’ immediately informed the stevedores to take out the fire cargo. The stevedores remove the Cargo from cargo hold and Crew monitoring the Cargo no smoke.’
‘As soon as we observed a more significant development of smoke, we immediately contacted the fire brigade.’
‘The most important note during the cargo inspection is the impurities found in the cargo such as sponge, foam, plastics, tires and closed drums. Handling of the cargo in open areas with high temperature is perhaps the main cause for fire.’
‘At around 17.10 hours, the bulldozer that was trimming in hold number 5 noticed that a fire had broken out…. As the fire hoses had already been connected before loading, the pump only had to be switched on and the fire could be extinguished immediately. After 3 minutes the fire was out….’
‘We can now but remind Cometsambre that it has not given full and frank disclosure to the insurers from the outset of this matter; … -while walking in the yard numerous canisters were observed which were not empty as well as oily rags, motor parts … The cargo that was actually loaded on board is still under investigation. -insurers have not been informed on multiple incidents one of which was considered to be a major fire for which EZZ STEEL put Cometsambre on notice and which was not disclosed to insurers; … AMICA has informed Cometsambre from the outset, at the meeting with Concordia as well as during exchanges afterwards that it is fully free to ship a new cargo to EZZ STEEL under a new contract if that is how Cometsambre wishes to proceed and that such shipment will be covered provided it is within the specifications of the policy. Given the current incident and the previously undisclosed incidents, a pre-loading meeting (viz. between Ship-Owners/master, Cometsambre, Stevedores, EZZ and the respective surveyors) incorporating a risk-assessment of the dedicated cargo with acceptable risk.’
‘The duty of fair presentation (1) Before a contract of insurance is entered into, the insured must make to the insurer a fair presentation of the risk. (2) The duty imposed by subsection (1) is referred to in this Act as “the duty of fair presentation”. (3) A fair presentation of the risk is one— (a) which makes the disclosure required by subsection (4), (b) which makes that disclosure in a manner which would be reasonably clear and accessible to a prudent insurer, and (c) in which every material representation as to a matter of fact is substantially correct, and every material representation as to a matter of expectation or belief is made in good faith. (4) The disclosure required is as follows, except as provided in subsection (5)— (a) disclosure of every material circumstance which the insured knows or ought to know, or (b) failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances. (5) In the absence of enquiry, subsection (4) does not require the insured to disclose a circumstance if— (a) it diminishes the risk, (b) the insurer knows it, (c) the insurer ought to know it, (d) the insurer is presumed to know it, or (e) it is something as to which the insurer waives information. (6) Sections 4 to 6 make further provision about the knowledge of the insured and of the insurer, and section 7 contains supplementary provision.’
‘Knowledge of insured … (3) An insured who is not an individual knows only what is known to one or more of the individuals who are— (a)part of the insured's senior management, or (b)responsible for the insured's insurance. … (6) Whether an individual or not, an insured ought to know what should reasonably have been revealed by a reasonable search of information available to the insured (whether the search is conducted by making enquiries or by any other means). (7) In subsection (6) “information” includes information held within the insured's organisation or by any other person (such as the insured's agent or a person for whom cover is provided by the contract of insurance). (8) For the purposes of this section— … (c) “senior management” means those individuals who play significant roles in the making of decisions about how the insured's activities are to be managed or organised.’
‘Supplementary (1) A fair presentation need not be contained in only one document or oral presentation. (2) The term “circumstance” includes any communication made to, or information received by, the insured. (3) A circumstance or representation is material if it would influence the judgement of a prudent insurer in determining whether to take the risk and, if so, on what terms. (4) Examples of things which may be material circumstances are— (a)special or unusual facts relating to the risk, (b)any particular concerns which led the insured to seek insurance cover for the risk, (c)anything which those concerned with the class of insurance and field of activity in question would generally understand as being something that should be dealt with in a fair presentation of risks of the type in question. (5)A material representation is substantially correct if a prudent insurer would not consider the difference between what is represented and what is actually correct to be material. (6)A representation may be withdrawn or corrected before the contract of insurance is entered into.’
‘[220] The test of materiality under the 2015 Act is substantively the same as under the previous law. It was therefore common ground that Insurers did not need to show that the undisclosed circumstances would have had a decisive effect on the judgment of the hypothetical prudent underwriter, or even that he would probably have regarded them as increasing the risk. It is sufficient that he or she would have wanted to take them into account.’
‘[242] Had it been necessary to decide, I would have held that the charges were material on the basis that a prudent underwriter would have wanted to consider imposing a condition, for example, that Mr Bairactaris should be replaced as a nominee director. Whether or not the prudent underwriter would actually have done so is, of course, irrelevant; I find that he or she would at least have wanted to consider the matter. Accordingly, had I concluded that the Claimants had the requisite knowledge, I find that they should have disclosed the circumstances relied on by Insurers.’
‘Remedies for breach (1) The insurer has a remedy against the insured for a breach of the duty of fair presentation only if the insurer shows that, but for the breach, the insurer— (a)would not have entered into the contract of insurance at all, or (b)would have done so only on different terms. (2)The remedies are set out in Schedule 1. (3)A breach for which the insurer has a remedy against the insured is referred to in this Act as a “qualifying breach”. (4)A qualifying breach is either— (a)deliberate or reckless, or (b)neither deliberate nor reckless. (5)A qualifying breach is deliberate or reckless if the insured — (a)knew that it was in breach of the duty of fair presentation, or (b)did not care whether or not it was in breach of that duty. (6)It is for the insurer to show that a qualifying breach was deliberate or reckless.’
‘the witness will generally have convinced himself that he would not have written the risk and will generally be […] an honest man, his assertion that he would not have done so if a fair presentation had been made will often be made with conviction and will appear plausible. A healthy scepticism is therefore appropriate in evaluating such evidence, together with a proper regard for the burden of proof and an appreciation of where on the wide spectrum of materiality the particular non-disclosure which is relied upon falls.’
‘a. Cleanness. All grades shall be free of dirt, nonferrous metals, or foreign material of any kind, and excessive rust and corrosion. However, the terms “free of dirt, nonferrous metals, or foreign material of any kind” are not intended to preclude the accidental inclusion of negligible amounts where it can be shown that this amount is unavoidable in the customary preparation and handling of the particular grade involved.’
‘If I say that we experience this more often, it may be in one or two out of ten transshipment operations. While we are loading or unloading, we sometimes see a small smoke development, and then immediately remove it. I think we experience this maybe once a month, that something like this happens. Keep in mind that a lot of scrap is handled. … Fire incidents in the handling of scrap metal, that has always been the case, but now in recent years I think it is a bit more common in my opinion. Small incidents I mean, what happened on board was extreme. Sometimes there are also incidents in the stocks, where we are not present. I notice that especially the HMS is fire sensitive, more than for example shredded scrap. I suspect that this is now being dealt with in a different way, but it remains a difficult issue. The traffic of HMS has increased sharply…’
‘No systematic investigation has been conducted into previous incidents, and the evidence available is therefore purely anecdotal. In general, it is very difficult to gain an accurate picture of the extent of the overall problem of fires occurring during the storage and/or handling of scrap metal. There is a subjective feeling among the companies involved, as well as among the fire brigade and other services, that the number of fire incidents is increasing, but there are no objective figures to verify this…’
‘A fire on board is a paradigm example of an incident which can give rise to liability to the shipowner. A prudent underwriter would want to know about every fire on board any chartered vessel before writing a charterers’ liability policy, regardless of whether it gave rise to any loss or claim. Put simply, the existence of previous fires on board vessels would affect the judgment of a prudent insurer because fires on vessels are likely to result in claims by the vessel owner and the insurer is taking the risk of those claims. Any previous fires on board chartered vessels are also relevant because of what they suggest about the nature of the cargo being shipped by the charterer…’
‘Where a fire happens in scrap metal at the port waiting to be loaded, a prudent underwriter would see it as a fire that could just as well have happened on board the ship than on the quayside.’
‘… it is useful to look at the experience of Cometsambre between 2008 and 2020. During this 12-year period Cometsambre did not have any vessel fires and only one/two isolated quayside fires in 2013. … However, between May 2020 and October 2021 (a period of about 18 months), Cometsambre experienced five fires – three on board vessels and two on the quayside in cargoes being loaded or waiting to be loaded. That would suggest to me and a prudent [C/L] underwriter a significant change in the risk profile.’
‘I think he [ie the insured] should be very concerned as to why you can’t identify the cause. He’s put various protocols in place to avoid such incidents, but they’re still having them. Why?’
‘Fires are something that a prudent underwriter would want and expect to be told about, being a paradigm example of an incident capable of giving rise to a claim – and a very large one at that. It is not credible to say that underwriters should wait for a fire claim before the issue of fires becomes material. This seriously risks prejudicing underwriters. … I do not know of any “[C/L] industry practice” that fires are immaterial and not material circumstances. In my view, there is no such [C/L] industry practice at all. On the contrary, the industry practice in marine underwriting generally, and therefore [C/L] underwriting specifically, is that incidents that could have given rise to claims or losses should be disclosed to an underwriter, whether or not such claims or losses in fact materialised. It is the risk that matters and if an insured keeps having incidents which show such risks exist and repeatedly materialise then a prudent underwriter would want to know about the incidents.’
‘… what I find alarming is that there were fires in stockpiles that were destined to be loaded on board a ship and they were catching fire. That, to me, intimates more of a spontaneous combustion situation. Again, I’m no fire expert either, but because it’s on the quayside waiting to be loaded it’s only fortuitous it happens there and not on board the vessel. But it does give me an indication that there’s something in that stockpile that’s not quite right.’
‘Q. Well, I suggest to you that, on this, Mr Jervis is right, isn’t he, that as a general market practice it is simply not the case that a prudent underwriter would regard different risks insured by different insurers to be material to a charterers’ liability underwriter? That’s correct, isn’t it? A.Totally disagree. If it gives me an overall picture of the risk I’m being asked to cover it’s material.’
‘This was a simpl[e] risk to write given the manner in which the cargo was presented. I can see no reason why an underwriter would commission a risk survey to review all risk management controls and procedures – presumably at the sorting plant – when presented with a non-hazardous cargo.’
‘The first reason is simply the fact of the fires themselves. The premium earned on charterers’ liability insurance is low. For example, in the previous policy year of 2021, we earned only USD10,271.68 in premia from the Claimant. It is not commercially viable to write this business if there is a real risk of a fire on board a vessel potentially resulting in a large claim. The rates we were charging for these shipments was just too low to justify such risks. That is why we only insured ‘clean’, non-oily scrap. … I would never have renewed the policy if I had been told by the Claimant that it had so many previous fires. Unlike simple stevedore damage claims, fire claims can result in a vessel being an actual or constructive total loss. The exposure is immense and incomparable to the limited premium we receive. … I can say with absolute certainty that I would not have renewed the policy in January 2022 had I known of the previous fires set out above. It is not a question of me requiring an increase in the premium. Even doubling or tripling the premium would not have persuaded me to do so. I simply would not have been interested in the business at all. The second reason I would have refused to renew the policy relates to the likely cause of the fires (as opposed to the simple fact that they occurred). Had any single fire been previously declared, I would have appointed surveyors to attend and assess the quality of the cargoes shipped by the Claimant and the cause of the fire. … We were unable to carry out contemporaneous investigations, because the previous fires were not declared. However, it is evident that there was a recurring pattern of fires in the scrap metal being shipped by the Claimant, increasing in frequency. It is clear to me that these fires were attributable to the poor quality of scrap cargo being loaded and transported and this was probably due to a failure properly to sort the material before shipment. … The earlier fires would have clearly indicated to me a change in the risk profile, and I would not have been prepared to write the Policy at all. It is not a question of the level of the premium or the deductible. I simply would not have declined the renewal.’
‘… for a few hundred dollars per year I cannot have my claims people deal with five claims. It’s simply uneconomical….’ (3) ‘Aside from that, after 10 or 12 years, it suggests a change in the risk profile. You don’t have 12 years without problems and then have five fires in 20 months.’ (4) ‘Five fires is an accident waiting to happen and I was not going to be there for the future.’
‘BST paid six times more premium than Cometsambre, they pay about 65,000 a year, so their statistic can bear more costs, particularly survey costs.’
‘If there’s one fire, because again for me BST was one fire incident [viz LMZ PLUTO], the other one [viz SOFIA R] I don’t see as a fire incident. BST had one fire incident … That is, for me, the fortuitous incidents for which you insure. Because my surveyor, I will make it specific, did not say the cargo was dangerous, so for that reason also in light of the Pluto where the same conclusion had been drawn, I decided to renew. In this case you are talking about five fires after 12 years of no fires. So not only does that suggest there is a fire risk, which for me is something exceptional and dangerous, it’s not something you except [sic in transcript]. … I only renewed BST because my surveyor said the cargo is okay….’