GE Frankona Reinsurance Ltd v CMM Trust No.1400 the 'Newfoundland Explorer', Court of Appeal - Admiralty Division, March 22, 2006, [2006] EWHC 429 (Admlty)

Resolution Date:March 22, 2006
Issuing Organization:Admiralty Division
Actores:GE Frankona Reinsurance Ltd v CMM Trust No.1400 the 'Newfoundland Explorer'
 
FREE EXCERPT

Neutral Citation Number: [2006] EWHC 429 (Admiralty)

Case No: 2004/457

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMIRALTY COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 22nd March 2006

Before :

THE HON MR JUSTICE GROSS

- - - - - - - - - - - - - - - - - - - - -

Between :

| |G.E. Frankona Reinsurance Limited |Claimant |

| |- and - | |

| |CMM Trust No.1400 |Defendant |

| |The “NEWFOUNDLAND EXPLORER” | |

- - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - -

Dominic Kendrick QC and David Bailey (instructed by Barlow Lyde & Gilbert) for the Claimant

Bernard Eder QC (instructed by Ince & Co.) for the Defendant

Hearing dates: 16 December 2005

- - - - - - - - - - - - - - - - - - - - -

Judgment

Mr Justice Gross :

  1. This trial has raised a short point as to the true construction of the express term “Warranted fully crewed at all times” (“the warranty”), contained in a contract of marine insurance for a yacht, valued at US$3 million.

  2. The Claimant is a company engaged in the business of insurance and reinsurance.

  3. By a contract of marine insurance, policy no. 04YSP0005 (“the contract”), the Claimant insured the motor yacht “NEWFOUNDLAND EXPLORER” (“the vessel”) with effect from 5th November, 2003, for an initial period of 3 months and, thereafter, by various endorsements, for further periods up to either the 4th or 5th May, 2004. The contract was governed by English law.

  4. The Defendant was initially the mortgagee of the vessel; it had, in the event, become the legal and beneficial owner of the vessel, following a judicial sale.

  5. As appears from the Agreed Statement of Facts (see below), on the 25th April, 2004, the vessel was severely damaged by fire (“the casualty”). At the time, she was laid up alongside a berth in the marina at Fort Lauderdale, USA. The cause of the fire was the overheating of the vessel’s starboard side John Deere generator. No crew members were aboard the vessel at the time of the casualty; the master was at home, some 15 miles and (ordinarily) 30 minutes, away.

  6. Disputes have arisen between the Claimant and the Defendant under the contract.

  7. Pursuant to the order of Aikens J, dated 17th October, 2005, the following Preliminary Issues have been before the Court for trial:

    “ (1) On the proper construction of the contract of marine insurance, policy number 04YSP0005 (“the contract of insurance”), does the express warranty ‘Warranted vessel fully crewed at all times’ oblige the Defendant to keep at least one crew member on board the vessel the whole time, as opposed to intermittently or at intervals?

    (2) On the proper construction of the contract of insurance, do the words ‘at all times’ in the warranty mean 24 hours per day, and, if not, what do they mean?

    (3) On the proper construction of the contract of insurance, what was required in order to comply with the warranty ‘Warranted vessel fully crewed at all times’ when (a) the yacht was performing a coastal voyage; (b) the yacht was performing an ocean voyage; (c) the yacht was laid up alongside a berth; and (d) the yacht was laid up alongside a berth with the generator running?”

  8. At the trial, both parties were content, rightly in my view, that Preliminary Issues 3(a) and (b) need not be answered. I shall not, therefore, do so.

  9. The Preliminary Issues were fought on the basis of an Agreed Statement of Facts (“the SoF”). The SoF included the following:

    “COMMON GROUND

  10. The contract of insurance contained the following express term: ‘Warranted fully crewed at all times’.

  11. The contract of insurance also incorporated the Institute Time Clauses Hulls Port Risks including Limited Navigation (20/7/87) CL.312.

  12. The Defendant owed the Claimant the duties of utmost good faith…..with regard to disclosure of material facts known to it and the truth of representations made by it on its behalf.

  13. For the purpose of the placement of the contact of insurance, a proposal form (‘the Proposal Form’) was completed and signed on behalf of the Defendant.

  14. Section III of the Proposal Form stated that the vessel had one full time crew member and two occasional crew members. The full time member of the crew was Captain Sergio Criado.

  15. By an endorsement to the Policy dated 5 March 2004…, the Claimant authorised the Defendant to move the Vessel from Miami to Fort Lauderdale with effect from 15 March 2004. The Vessel departed Miami under tow on 23 March 2004.

  16. At the time of the casualty, the Vessel was laid up.

  17. On 25 April 2004, the Vessel was severely damaged by fire (‘the casualty’).

  18. The casualty was caused by the overheating of the Vessel’s starboard side John Deere generator.

  19. No crew members were aboard the Vessel at the time of the casualty.

  20. On the day of the casualty, Captain Criado attended the Vessel from about 7 am until 2.30 pm, when he drove to his home some 15 miles from where the Vessel was berthed. After he left the vessel at 2.30 pm on 25 April 2004, none of the crew were on board the Vessel until Captain Criado returned (having been alerted to the casualty) at about 6.30 pm.

  21. The Vessel’s starboard side John Deere Generator had been running under load since about noon on 23 April 2004 and was left running when Captain Criado departed the vessel at 2.30 pm on 25 April 2004. This was because only ‘two phase’ electricity was available at Fort Lauderdale. In order to keep the vessel’s systems running (in particular the air conditioning units), ‘three phase’ electricity was required, alternatively it was necessary to run one or more of the vessel’s generators.

  22. Captain Criado’s home was….approximately 15 miles from...

To continue reading

REQUEST YOUR TRIAL