Ocean Steamship Co Ltd v Liverpool and London War Risks Association Ltd

 

Ocean Steamship Co Ltd v Liverpool and London War Risks Association Ltd

INSURANCE: SHIPPING

KING’S BENCH DIVISION

ATKINSON J

23, 24, 25 OCTOBER, 16 NOVEMBER 1945

Insurance – Marine insurance – War risks – Warlike operations – Ship carrying urgently needed war material including deck cargo – Damage caused by

effect of heavy seas on deck cargo and aggravated by reason of speed of ship – Damage resulting from additional risks incurred by reason of warlike

operation – Damage consequence of warlike operation.

The Priam, which was requisitioned by the Government, was insured by war risks insurers against the consequences of warlike operations. On 2 December

1942, she sailed from Liverpool for Alexandria, via the Cape, with a very heavy cargo of war material urgently needed by the Army in Egypt. So much had to

be taken that part of the cargo had to be carried on deck. But for the urgent military necessity, the master would have refused to carry deck cargo on a voyage

across the Atlantic at that time of the year. Between 7 and 12 December, the ship encountered very heavy weather. The deck cargo, which had been securely

lashed to the hatch covers, became loose and caused part of the hatch covers to be stripped away, with the result that the holds were flooded. In spite of the

heavy seas and the damage suffered, the ship continued at the maximum speed possible because of the urgent need for the cargo. She thereby suffered still

further damage. In an action against the war risks insurers, it was contended by the shipowners (i) that the damage caused by the weather to the ship while she

was engaged on a warlike operation was a consequence of the operation; (ii) that the nature of the operation created additional risks and perils which were the

effective cause of the damage:—

Held – (i) Damage resulting from heavy weather while a ship was engaged on a warlike operation was not a consequence of that operation.

(ii) the damage to the ship was the result of the additional perils incurred 􀂭 123􀀉 by her owing to the nature of the operation. The damage was, therefore,

the consequence of the warlike operation and the war risks insurers were liable on the policy.

Hindustan SS Co v The Admiralty and Reischer v Borwick applied.

Notes

It was laid down in the Yorkshire Dale case that a casualty befalling a vessel engaged upon a warlike operation is not a consequence of that operation when it

is the result of some external event in which the damaged vessel was not an active participant. This applies particularly to heavy weather, and Atkinson J,

accordingly holds that this, per se, would not make the loss one due to warlike operation. It seems, however, that there may be more than one proximate cause

of a loss and since the heavy weather encountered on the voyage in question would not have caused injury but for the exceptional carriage of deck cargo and

the necessity for speed, both being incidental to the warlike operation undertaken, the case is held to come within the decision of the House of Lords in the

Yorkshire Dale, that “the totality of the facts must be looked at.”

As to War Risks, see Halsbury, Hailsham Edn, Vol 18, pp 314–318, paras 439–442, and Supplement; and for Cases, see Digest, Vol 29, pp 226–230, Nos

1836–1861, and Supplement.

Cases referred to in judgment

Hamilton, Fraser & Co v Pandorf & Co (1887), 12 App Cas 518, 29 Digest 203, 1624, 57 LJQB 24, 57 LT 726.

Yorkshire Dale SS Co Ltd v Minister of War Transport, The Coxwold [1942] 2 All ER 6, [1942] AC 691, 111 LJKB 512, 167 LT 349, revsy, [1941] 3 All ER

214.

Clan Line Steamers Ltd v Board of Trade, The Clan Matheson [1929] AC 514, Digest Supp, 98 LJKB 408, 141 LT 275.

Hindustan SS Co v The Admiralty [1921] 8 Lloyd LR 230, Digest Supp.

Reischer v Borwick [1894] 2 QB 548, 29 Digest 206, 1650, 63 LJQB 753, 71 LT 238.

Action

Action by shipowners to recover on a war risks insurance policy. The facts are fully stated in the judgment.

Owen L Bateson KC and A J Hodgson for the shipowners.

F A Sellers KC and Patrick Devlin KC for the insurers.

Cur adv vult

16 November 1945. The following judgment was delivered.

ATKINSON J. The question in this case is whether certain damage suffered by the motor vessel Priam was the consequence of a warlike operation. The ship

was insured by the defendants from 30 June 1942, to 29 December 1942, against King’s enemy risks. The expression “King’s enemy risks” was defined in cl

1 in this way:

‘This insurance is only to cover the risks (in this policy referred to as “King’s enemy risks”) of capture … [and] of the consequences of hostilities or

warlike operations by or against the King’s enemies.’

Cl 7(b) runs:

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‘If the ship is requisitioned by or on behalf of His Majesty [and this ship was] this policy so long as the requisitioning remains effective shall have

effect subject to the following modifications … (3) “War risks” means the risks of war which would be excluded from an ordinary English policy of

marine insurance by the following, or similar, but not more extensive clause “warranted free of capture … also from the consequences of hostilities or

warlike operations.“’

On 2 December the ship sailed from Liverpool for Alexandria with a cargo of which 78.5 per cent consisted of war stores. It is conceded that the voyage

was a warlike operation. Between 7 and 12 December she encountered very heavy weather and sustained damage and thereby expense to the extent of £1,632

10s 10d. The plaintiffs claim that damage resulting from heavy weather while a ship is engaged on a warlike operation is a consequence of that operation or,

at any rate, that under the special circumstances of this case it was such a consequence.

The facts are as follows. The Priam is a motor vessel of 10,829 gross tonnage, 486ft long with 66ft beam. She was practically a new ship in 1942,

capable of 17 knots. The draught forward was 29ft 4ins, and aft, 30ft 9ins. She was under requisition by the Minister of War Transport and was ordered to

proceed, in December 1942, from Liverpool to Alexandria. She was to sail independently and her route was dictated, north of Ireland then slightly north of

west until she reached latitude 58 degrees and longitude 35 degrees west, and then she was 􀂭 124􀀉 to proceed south passing to the west of the Azores direct to

the Cape. She was to zigzag continuously. A glance at the map will show what an indirect course she was to take. But for the war, the route would have been

east of Ireland and by the Mediterranean. The Battle of Alamein having just been fought the cargo was of great military importance. It consisted of

aeroplanes, tanks, guns, etc, things which were urgently needed, and time was of the utmost importance. So much cargo had to be taken that the master was

asked to carry cargo on deck. But for the fact that the cargo was of vital military importance, he would have refused; on principle, he disapproved of all deck

cargo on a voyage across the Atlantic at that time of the year. He said that he had never before been asked to carry deck cargo under such conditions, and I am

satisfied that, but for the requirements of the operation, he would not have carried deck cargo. The cargo carried on the forward well deck included two cases

containing aeroplane bodies, weighing, the one, 3 tons 10 cwts, and the other, 2 tons 15 cwts, and a tank bridge layer weighing over 21 tons. The two cases

were firmly lashed in position on the hatch covers of No 2 hold and the tank was firmly lashed in position on the starboard side of the vessel immediately

opposite to the said hatch covers. The Priam sailed on 4 December, put into the Clyde to renew a cast iron T piece on the starboard main engine, left the

Clyde on 5 December and for two days all went well. Then followed a period of exceptionally heavy weather. There was a succession of gales from 7

December until 13 December. A new gun platform had been mounted on the forecastle head. On the night of 7 December the wind reached gale force; at 11

am on 8 December the cases of aeroplanes began to seesaw across the tarpaulins owing to their being struck by a sea which caused the cases partly to collapse

and so slackened the lashings. By 6 pm, the tarpaulins were badly damaged. There was a head wind from the southwest and the ship was shipping water. On

Tuesday night (ie, 8 December) the tarpaulins were badly torn. At dawn on the Wednesday, it was seen that a few of the short hatch covers were missing, and

the 21 ton bridge layer was adrift on the starboard side of the deck. Its wings had evidently come into contact with the tarpaulins and cut them. The bridge

layer was relashed and the damage to the hatch covers was made good; but there was 11ft of water in No 2 hold, and the evidence was that the weight of this

water would be round about 800 tons. The effect of this was to increase the mean draught by 14 1/2ins, and the draught forward by 3ft 6ins. On the

Wednesday afternoon, although there was 10ft of water in that hold, the engines were turning at the rate of 100 revolutions per minute, which meant that she

was going almost full speed. On Wednesday night there was, again, a strong west wind and the speed had to be reduced, but on Thursday at 7 am, although

there was 9ft of water in the hold, the ship was going at full speed. On the Thursday morning, it was observed that the windlass motor room had been flooded.

The electrical equipment there was saturated with sea water and a considerable amount of damage had been done. I accept the evidence that that damage

would not have happened unless the vessel had been down by the head and been driven unduly fast against the seas. There was more trouble on Friday, but

Saturday 12 December was the more important day. There was a very high cross sea and at 2.30 am the bridge layer again came adrift, and crashed across No

2 hold—the aeroplanes too, were at large, being washed about—and it was seen that the hatch was stripped completely of 2 1/2 sections of hatch covers.

There were 32ft 6ins of water in the hold, and the evidence was that the weight of that water would be 2,243 tons, or thereabouts. The ship was down by the

head by 10ft 5ins. At 11 pm she safely reached Pontadelgada and the danger period was over.

I am satisfied that, except for the damage to the gun platform, the damage suffered would not have been suffered but for the tearing of the tarpaulins and

the stripping of the hatch covers. It was due to the stripping of the hatch covers that at first the 11ft of water and later the 32ft 6ins of water got into the hold.

The weight of the water in the hold inevitably caused the ship to be deeper in the water and to be very materially down by the head. The ship thereby lost

buoyancy and finally the well decks were awash and the ship became a very easy prey to the violence of the waves. But for the urgency of the operation, the

master would have, when necessary, hove to or run before the wind. At times he did, but the urgency for speed induced him to forge ahead in the teeth of the

gales, when he would not have done so had he but to 􀂭 125􀀉 consider the safety and wellbeing of the ship and not the urgency of the operation.

The question for decision in these cases is often put in this way: Would an underwriter insuring against the perils of the sea, but warranted free from the

consequences of warlike operations, be liable for this loss. The provision is a limitation of liability in respect of loss caused by the insured perils. The

underwriter is not to be liable for loss, albeit caused by perils of the sea, if that loss is in truth a consequence of a warlike operation. Doubtless, the damage

would be covered by a policy against perils of the sea without any relevant exception. The sea did the damage. The fact that it did the damage because of the

destruction of hatch covers would not prevent the loss being caused by a sea peril: see Hamilton Fraser & Co v Pandorf & Co, where a cargo was damaged by

sea-water escaping from a pipe on board the ship owing to the pipe having been gnawed through by rats. But that does not settle the question whether the

damage was, or was not, caused by perils of the sea in consequence of a warlike operation. In the Yorkshire Dale case Lord Wright said ([1942] 2 All ER 6, at

p 15):

‘The stranding in this case was undoubtedly a peril of the seas, but we must look behind the stranding in order to ascertain whether the cause of the

casualty was a peril which could be described as a consequence of warlike operations.’

If the charterparty in Hamilton v Pandorf had contained an exception of consequences of damage done by rats the result would have been different.

In this case the plaintiffs submit two contentions. The first is the broad proposition, that damage caused by weather to a ship while engaged on a warlike

operation is a consequence of that operation, even though the character of the operation has nothing to do with the damage suffered. The second contention is

that, on the facts in this case, the nature of the operation created additional risks and perils which were the effective cause of the damage done. True, heavy

weather was the immediate cause in point of time, but the heavy weather only caused the damage by reason of the extra risks and perils entailed by the warlike

nature of the operation. It is plain, it is said, that the bulk of the damage to the ship would not have been suffered if there had been no deck cargo, or if the

deck cargo had been of a lighter and more easily controlled character. The warlike operation demanded running the risks of heavy deck cargo and also the

navigational risk of forcing the ship through the waves instead of heaving to or running before the gales.

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As to the general submission, it is true that in the Yorkshire Dale case Lord Wright and Lord Porter left the question open ([1942] 2 All ER 6, at pp 18

and 21) but I have the view of MacKinnon LJ strongly expressed in the Court of Appeal decision in that case ([1941] 3 All ER 214, at p 220) against the

contention and then the present, though not final, view of Lord Wright. Humbly, I share that view. To my mind there is a clear distinction between a loss

caused by a collision, or a stranding, and a loss caused by heavy weather. A collision or a stranding is due to something done by the ship in, and for the

purpose of, the carrying out of the operation. Damage through heavy weather is due to something done to, not by, a ship while carrying out the operation.

Would a collision caused by a ship not engaged on a warlike operation being driven into a ship engaged on a warlike operation but, for the time, stationary

discharging her war stores, come within the reasoning in the Yorkshire Dale case? The answer is, surely, given by Lord Wright when, speaking of the Clan

Line case, he said ([1942] 2 All ER 6, at p 17):

‘Nothing done or not done by the Western Front could be regarded as the cause of the casualty.’

Illustrations seldom help, but I suggest one which illustrates the distinction I have in mind. If, while hurrying in the blackout on a dark night, I collide with a

shelter built on the footpath and hurt myself, I may fairly claim, according to the Yorkshire Dale case, that my injury is a consequence of my expedition; but if,

while I am hurrying along, a slate falls from a roof and hits me, can I make the same claim? In the Yorkshire Dale case Lord Porter seems to deal with this

point ([1942] 2 All ER 6, at p 21):

‘It may be that, if a vessel, even when engaged on the warlike operation of proceeding from one war base to another, suffers damage by a definite

external event, unexpected and unavoidable, in which the damaged vessel was not an active participant but a 􀂭 126􀀉 quiescent sufferer, the loss should

be attributed to that event and not to the passage of the ship through the water.’

It is true that, while engaged on a warlike operation, the ship is regarded as a war vessel but the parallel has so far been limited to cases of collision and

stranding: see per Lord Wright ([1942] 2 All ER 6, at p 18):

However, it is unnecessary to say more on the general contention, because I think the plaintiffs succeed on their second contention. I am satisfied that the

damage in this case, although caused by a marine peril, would not have been caused but for the voyage being a warlike operation: ie, but for the carrying fo

deck cargo of a particularly heavy and warlike character on a voyage in winter across the Atlantic—a voyage during which speed was of great importance

because of the requirements of an army in the field. The nature of the operation required these added perils and they were the real cause of the damage. In so

far as the damage was due to proceeding through the water against the gales at a time when she would, but for the urgency of the operation, have hove to or

run before the wind, the case is covered by the language of Lord Porter, where he said ([1942] 2 All ER 6, at p 21):

‘… I should be prepared to hold that almost any casualty befalling a vessel as a result of her own action in proceeding on a voyage, in a case where

proceeding on that voyage was a warlike operation, was caused by a warlike operation …’

Lord Wright also said the same thing.

There are some interesting remarks by Shearman J, in Hindustan Steam Shipping Co v The Admiralty, where he deals with the question of added risks, ie,

risks and new perils added by virtue of the operation being a warlike operation (8 Ll LR 230, at p 231):

‘No doubt prima facie a fire breaking out from spontaneous combustion is a marine risk and not a war risk, but this case comes under that line which

has been so often discussed, as to whether in the circumstances an entirely new risk was brought about by this ship being engaged in warlike operations.

In my opinion, an entirely new risk did arise, at any rate when she was put under the orders of the captain of the Indefatigable in September. She then

became a combatant ship, and the risk of being kept there is entirely different from the ordinary risk of a marine charterparty if combustion breaks out

… It was the proximate and direct result of the new risk by the ship being required to become practically part of the combatant flotilla …’

Here, there can be no question but that, because of the warlike character of the operation, new and additional risks and perils were incurred, notably by the

carrying of this deck cargo, and also by the necessity for speed.

I am only going to refer to one other case, but it seems very similar to the one with which I have to deal. It is Reischer v Borwick. There, the headnote is

this:

‘A ship was insured against damage from collision with any object, but not against perils of the sea. The ship ran against a snag in a river, and, the

collision causing a leak, the ship was anchored and the leak temporarily repaired, so that the ship was out of immediate danger. A tug was sent to tow

the ship to the nearest dock for repairs; but the effect of the motion through the water was that the leak was opened again, and the ship began to sink,

and was run aground and abandoned:—Held, that inasmuch as the injury to the ship remained throughout, the collision was the proximate cause of the

damage, and that the loss of the ship was covered by the policy.’

Lindley LJ said ([1894] 2 QB 548, at p 550):

‘There is no doubt that, in considering the liabilities of underwriters of marine insurance policies, it is a cardinal rule to regard proximate, and not

remote, causes of loss. This rule is based on the intention of the parties … but the rule must be applied with good sense, so as to give effect to, and not

to defeat, those intentions.’

He then dealt with the facts, and said ([1894] 2 QB 548, at pp 550–552):

‘If the ship had sunk, and been lost under such circumstances as to render the inference unavoidable that the collision caused the loss, it is plain that

the cost of repairing the damage would not be the measure of the liability of the underwriters. The moment however, that this conclusion is arrived at, it

is difficult to see on what principle liability for a loss occasioned by that injury can be excluded, except upon the ordinary principles applicable to

remoteness of damage. The fact that some fresh cause arises, without which the injury would not have led to further loss, is, I think, in such a case far

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from conclusive. Assume that this ship would have floated in calm water notwithstanding the injury she had sustained by the collision, and suppose

that, before such injury 􀂭 127􀀉 could be made good, the water became so rough as to get into her and sink her, by reason only of her injured condition,

such loss would, in my opinion, be proximately, though not exclusively, caused by the collision, and would fall on the underwriters of a policy worded

as this policy is. It may be that such a loss would also be covered by a policy against the perils of the sea in the ordinary form; but this does not, in my

opinion, show that no liability attaches under a policy such as the present. Policies may be so worded as to overlap and cover some risk common to

them all. The sinking of this ship was proximately caused by the internal injuries produced by the collision, and by water reaching and getting through

the injured parts whilst she was being towed to a place of repair. The sinking was due as much to one of these causes as to the other; each was as much

a proximate cause of her sinking as the other, and it would, in my opinion, be contrary to good sense to hold that the damage by the sinking was not

covered by this policy … I feel the difficulty of expressing in precise language the distinction between cause which co-operate in producing a given

result. When they succeed each other at intervals which can be observed it is comparatively easy to distinguish them and to trace their respective

effects; but under other circumstances it may be impossible to do so. It appears to me, however, that an injury to a ship may fairly be said to cause its

loss if, before that injury is or can be repaired, the ship is lost by reason of the existence of that injury—i.e., under circumstances which, but for that

injury would not have affected her safety. It follows that if, as in this case, a policy is effected covering such an injury, it will in the circumstances

supposed extend to the loss of the ship, for in the case supposed the injury will really be the cause of the loss—the causa causans and not merely the

causa sine qua non.’

Then, Lopes LJ said ([1894] 2 QB 548, at pp 552, 553):

‘Damage received in collision must, therefore, in this case be the proximate cause of the loss to entitle the plaintiff to recover. The damage received

in the collision was the breaking of the condenser, and it was the broken condenser which really caused the proximate loss. The tug was continuously in

danger from the time the condenser was broken, and the broken condenser never ceased to be an imminent element of danger, though that danger was

mitigated for a time by the insertion of the plug in the outside of this vessel. The cause of the damage to the condenser was the collision, and the

consequences of the collision—that is, the broken condenser—never ceased to exist but constantly remained the efficient and predominating peril to

which the damage now sought to be recovered was attributable.’

Davey LJ said ([1894] 2 QB 548, at p 553):

‘What is the causa proxima of the damage sustained in this case? The only answer seems to me to be the inrush of the water through the hole in the

condenser. What made the hole in the condenser? The collision made the hole in the condenser, and the broken condenser was a continuing source of

risk and danger.’

It seems to me that almost every word that I have read applies to this case. Here, no harm was done to the ship by the sea until some of the hatch covers

were broken away, first on Tuesday night by the tank bridge layer and, maybe the aeroplanes, and secondly on the 12th, when the hold was completely

stripped of part of its covering. This injury was caused certainly by the tank bridge layer crashing across the deck and doing the damage. It was the bridge

layer which made the hole through which the water came. The damage claimed for was proximately caused by the injuries inflicted by the bridge layer and,

maybe, the aeroplanes, in that water got through the injured parts and caused the ship to settle down in the water and become an easy prey to waves which

would otherwise have been innocuous. To paraphrase Davey LJ the open hold was “a continuing source of risk and danger” and, while open, it never ceased

to be an imminent source of danger. The cause of the open hold was the carrying and breaking loose of the deck cargo, an additional risk imposed by the

necessity of the warlike operation. The open hold “constantly remained the efficient and predominating peril to which the damage now sought to be recovered

was attributable“—directly attributable inasmuch as the damage was done by the 800 tons and 2,000 odd tons of water in the hold, and indirectly attributable

(but none the less naturally and inevitably) to the ship being low in the water and without buoyancy. This effective and predominating peril was aggravated

by the necessity for speed, another attribute of the warlike operation. At the very least, the warlike operation was an effective cause of the loss and would be

covered by what is said in Halsbury, Hailsham Edn, Vol 18, p 306:

‘It seems that there may be more than one proximate … cause of a loss. If one of these causes is insured against under the policy, and none of the

others is expressly excluded from the policy, the assured will be entitled to recover.’

􀂭 128􀀉

Therefore, in my judgment, the damage, with the exception of the damage done to the gun carriage, has been proved to be the consequence of the warlike

operation on which the ship was engaged. I am not satisfied about the gun carriage and, therefore, the defendants have got to have the benefit of that. But, for

the rest, I accept the evidence and I think that the expression of opinion at the end of the report was well founded:

‘In my opinion the primary cause of the above-mentioned incidents [i.e., which endangered the safety of the ship] is the stowage of deck cargo over

the hatches of the fore deck.’

Judgment for the plaintiffs for an amount, failing agreement, to be assessed by the court.

Solicitors: Bentleys, Stokes & Lowless agents for Alsop, Stevens & Collins Robinson, Liverpool (for the plaintiffs); Hill, Dickinson & Co (for the defendants).

P J Johnson Esq Barrister.

[1946] 1 All ER 129