Environmental Testing Services Ltd et Al v Edinburgh Insurance Company Ltd et Al

• Jurisdiction: British Virgin Islands
• Court: Court of Appeal (British Virgin Islands)
• Judge: Peterkin, C.J
• Judgment Date: 16 January 1981
• Neutral Citation: VG 1981 CA 1
• Docket Number: Civil Appeal Nos. 1 and 2 of 1980
• Date: 16 January 1981

Court of Appeal

Peter Kin, C.J.; Berridge, J.A.; Robotham, J.A. (Actg.)

Civil Appeal Nos. 1 and 2 of 1980

Environmental Testing Services Ltd. et al

and

Edinburgh Insurance Co.Ltd. et al

Appearances:-

M. Riegels for both plaintiff/appellants.

J. Smith Hughes for first defendants/respondents.

McW. Todman, Q.C. for second defendant/respondent.

Insurance - Marine — Interest

Facts: Appellants were owners and charterers of motor vessel. Vessel plying trade between Miami and ports thereabout and Caribbean. Vessel insured with first respondent. Vessel sank 36 days after being repaired in second respondent's ship yard. First respondent denied liability. Trial Judge found that vessel was seaworthy and held that second respondent had fulfilled their obligations.

Held: Court not satisfied that on balance of probabilities sinking was not caused by “perils of the seas”. Judgment against insurance company sustained with addition of $36,00 as interest. Appeals against shipyard dismissed.

Peterkin, C.J

1 These two appeals are taken together by consent. Both plaintiff/appellants have appealed from the judgment of Arrindell, J.

• (a) dismissing their claim against the second defendant/respondent for negligence and/or breach of contract, and

• (b) disallowing their claim against the first defendant/respondent for an additional $36,000 as interest.

2 There is also an appeal by the first defendant/respondent from

• (a) the judgment and award of damages made against the company in favour of the two plaintiff/appellants jointly in the sum of $108,800.00 on a policy of insurance, and

• (b) indirectly, the dismissal of the action against the second-named defendant/respondent

3 The first and second plaintiff/appellants were the owners and charterers respectively of the wooden motor vessel “Taurus”, converted from a World War Two minesweeper to a cargo vessel, and plying trade between Miami and Ports thereabouts, and the Caribbean. The vessel was insured with the first defendant /respondent. The second defendant/respondent operates a ship-building and repairing shipyard at Nassau in the Bahamas.

4 This appeal is concerned with the sinking of the vessel “Taurus” about 36 days after being repaired in the shipyard of the second defendant/respondent. The Insurance Company denied liability claiming that the vessel was unseaworthy. The learned trial judge made a finding that the vessel was seaworthy, and held that the shipyard had fulfilled their obligation. He accordingly entered judgment against the insurance company and dismissed the claim against the shipyard.

5 The facts and circumstances as found by the trial judge are as follows:–

6 The vessel was purchased from owners in the U.S.A. in a condition described as being decrepit, with the intention of having it repaired and refurbished in a manner suitable to the cargo trade under the operation of the second plaintiff/appellant as charterers. The Managing Director and Principal Shareholder of both plaintiff /appellant companies was Anthony John Price. The second defendant/respondent had solicited his patronage in a letter advertising their facilities.

7 The repairs were performed at Nassau in their shipyard, and was based on a report by a firm of Marine Surveyors and Consultants, W.Z. Chadwick Inc. of Florida. In the words of the trial judge, “this report of survey bespeaks a very detailed and exhaustive examination of the vessel.”

8 Prior to taking the vessel to the shipyard the plaintiff/appellants through their representative Anthony John Price had written to the insurance company informing them of the plans contemplated, and had sent along a copy of the Chadwick report. The company replied stipulating that they would require to be sent a surveyor's report as to the vessel's condition after the repairs before they could issue a navigation operational policy.

9 The repairs were duly carried out, and certain additional repairs were also done beyond those mandated in the Chadwick report. These additional repairs became necessary as, when the vessel's hull was opened up to effectuate the planned repairs, it became evident that other unexpected and hitherto inaccessible areas also needed to be repaired. Ultimately, the job came to some $29,000.00, twenty-nine thousand dollars beyond the originally agreed figure. Upon completion of the repairs at Nassau, a condition and survey report was forwarded to the insurance company, as requested by them dated 2nd June, 1976. The Surveyors, Nelson & Associates Inc., of Florida, found the vessel in good order in the main, and certified that the vessel was now a “good fire and marine risk”. The insurance company then put the insurance coverage into effect in favour of both plaintifff/appellants and sent a telegram to this effect dated 16th June, 1976, to Price at Miami. It read,

“Re M/V Taurus. We have effected Hull and P and I coverages on the above vessel as of 16th June 1976 and will transfer the policies to you upon arrival in Tortola.”

10 It was a “time policy” covering the vessel for the period 16th June, 1976 to 16th June, 1977. The policy was never in fact seen by the plaintiff/appellants until the arrival in Tortola of Price following the foundering of the vessel off the Dominican Republic an 1st July, 1 976. The document when handed to Price in Tortola after the incident was seen to contain an express warranty of seaworthiness requiring that the vessel be seaworthy at the outset of its voyage to the Caribbean from Miami after its repairs. The plaintiff/appellants contend that no such condition had been communicated to them by the insurers at any ties before the sinking of the vessel. The insurance company contends that the warranty of seaworthiness clause was a normal condition in marine insurance policies, and that the plaintiff/appellants were bound by it. It forms the plinth of their defence and goes to the heart of this appeal because their allege that the vessel Taurus was in fact...