NEGLIGENCE AND THE CASUALTY

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NEGLIGENCE AND THE CASUALTY

• How relevant in the real world?
• NIGEL CHAPMAN
• 28th October 2005

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REAL WORLD?

• . of English Marine Insurance!
• A specialised world

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ANSWER

• Of course its relevant - but not always and
• Whose negligence are we talking about?
• At what stage in the casualty?

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A COUPLE OF UNCERTAIN CONCEPTS

• Due diligence.
• Negligent response to casualty and the effect of
  S78(4) MIA 1906.

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CASUALTY RESULTING FROM PERIL IN 6.1 ITC

• S.55(2)(a) MIA 1906
• The insurer is not liable for any loss
  attributable to wilful misconduct of the assured,
  but, unless the policy otherwise provides, he is
  liable for any loss proximately caused by a peril
  insured against, even though the loss would not
  have happened but for the misconduct or
  negligence of the master or crew

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EXAMPLES

• 1. Trinder v. Thames Mersey Marine 1898
• Stranding caused by negligence of master who is
  also a part owner.
• 2. Lind v. Mitchell 1928
• Perils of the sea, followed by premature
  abandonment. Finding that the proximate cause
  was the peril of sea.

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ANY QUALIFICATIONS?

• IN A TIME POLICY, ONLY QUALIFICATION IS S39(5)
  MIA 1906
• with privity of assured, the ship is sent to
  sea in an unseaworthy state, the insurer is not
  liable for any loss attributable to
  unseaworthiness.

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WHAT IS THE STANDARD?

• NB This is not a negligence standard but closer
  to
• deliberate.
• not ought to have known
• but didnt want to know.

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COMPARE NORWEGIAN PLAN

• All risks cover but limited by
• - considerations of causative unseaworthiness
• - discretionary reduction for gross negligence
  whether before or after the casualty.
• Gross negligence lies somewhere between ordinary
• negligence and intent - Commentary to plan.

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WHERE NEGLIGENCE ITSELF IS THE INSURED PERIL

• e.g.
• ITC HULLS 6.2.2 6.2.3
• Master, Crew, Pilots, Repairers Charterers.
• ADDITIONAL PERILS CLAUSE
• Negligence, incompetence or error of judgment of
  any person whatsoever.
• NB Both are subject to the Due Diligence Proviso.

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DUE DILIGENCE

• What does it mean?
• Who has to show it?
• Who has the burden of proving presence/ absence?

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WHAT IS THE STANDARD?

• cf Shipping cases concerning Hague/Hague Visby
  rules
• EURASIAN DREAM (2002)
• lack of reasonable care.
• KAPITAN SAKHAROV (2000)
• confined to matters that should have been or
  were within knowledge of the assured.

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TO DO WHAT?

• ARNOULD - Para 832
• Failure to prepare, equip, man and train etc
• as opposed to seagoing or operational negligence
  in course of voyage.

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WHO HAS TO DO IT?

• SPOONER v. CONNECTICUT FIRE (US 1963)
• purpose is to exclude from cover damage due to
  shoreside failure of shipowners managerial staff
  properly to prepare or equip the vessel for the
  voyage or service she is about to perform.
• NB 1995 ITC HULLS
• Assured, managers and
• superintendents and onshore management.

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BURDEN OF PROOF

• BRENTWOOD (Canada 1973)
• onus of proof is on the assured.
• but
• It is for insurers to put point in issue in the
  first place.
• NB Assured still has to prove negligence by
  crew.

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HOW DOES THIS ALL FIT TOGETHER?

• eg VERGINA (2001)
• - listing container vessel.
• - abandoned and then salved.
• - negligent operation of ballast system?
• - peril of the sea?
• - was salvage expense incurred to avoid covered
  loss?

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NEGLIGENT RESPONSE TO THE CASUALTY

• S78(4) MIA 1906
• It is the duty of the assured and his agents,
  in all cases, to take such measures as may be
  reasonable for the purpose of averting or
  minimising a loss.
• Clear consensus that this must be after casualty
  has occurred.
• NB ITC HULLS 11.1 mirrors S78(4) but extends
  duty to assured, their servants and agents.

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APPLICATION OF THE PRINCIPLE

• The duty is concomitant with right to recover for
  sue and labour and/or salvage.
• Netherlands v. Youell 1997
• Rare for breach to displace insured peril as
  proximate cause (viz. Lind v. Mitchell).
• Unlikely to form separate peril when acts of
  negligent crew are covered.
• Scope of this rule very limited. Gets very close
  to wilful misconduct. Viz GOLD SKY 1972.

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NEGLIGENCE AND THE CASUALTY - IS IT RELEVANT?

• 1. Doesnt enter equation where loss is by named
  peril. Only qualifications are wilful misconduct
  and unseaworthiness.
• 2. Where the assured has to rely on operational
  negligence, considerations of management
  negligence arise.
• 3. Negligent failure by the assured to take steps
  to minimise can break chain of causation in
  either case.
• 4. Scope to defeat insurance claim under 2 or 3
  is very limited.