Section 55(2) of the Marine Insurance Act 1906 provides the broad framework for both included and excluded losses, within which the Institute Hull Clauses and the Cargo Clauses are supplementary and not in conflict. In addition, the Rules for Construction, contained in the Act, provide definitions for some of the marine risks: ‘perils of the seas’, ‘pirates’, and ‘thieves’ are given some clarification.
Traditionally, insurable marine risks have included perils of the seas, fire, theft, jettison, and piracy, and, as would be expected, these perils are provided for in cl 6.1 of the ITCH(95) and cl 4.1 of the IVCH(95). But, the Institute Hull Clauses also make provision for other risks, not strictly marine risks as such, but nonetheless risks or hazards associated with the sea and ships. Thus, cl 6.1 of the ITCH(95) and cl 4.1 of the IVCH(95) also include, as insurable risks, loss or damage caused by ‘contact with land conveyance, dock or harbour equipment or installation…earthquake, volcanic eruption or lightning… accidents in loading, discharging or shifting cargo or fuel’.
The insurable perils contained within the Inchmaree Clause (cl 6.2 of the ITCH(95) and cl 4.2 of the IVCH(95)) are, by definition, additional to the conventional marine risks and, as such, are dealt with separately in another chapter.1
With respect to cargo, the ICC (A), being an all risks policy, has no requirement to list the perils insured against. However, both the ICC (B) and (C), in cl 1, enumerate the covered risks, and it is significant that the broad based and long established term ‘perils of the seas’ is omitted. Instead, the insured perils, usually associated with perils of the seas, are itemised specifically.
Finally, the meaning and significance of the ‘all risks’ (the ICC (A)) policy of insurance is considered. An all risks policy of insurance provides cover against all marine perils, but does not provide protection against eventualities and certainties. The indemnity provided by the insurer remains an indemnity against fortuitous or unexpected loss or casualty and, thus, does not provide cover, for example, against inherent vice, wear and tear and unseaworthiness. However, of particular significance with an all risks policy is the fact that the burden of proof placed upon a claimant is less rigorous, in the sense that he does not have to identify a specific event as the cause of the loss, only that a loss occurred, and that it was a casualty and not a certainty. This, and other aspects of the all risks policy of insurance, is discussed in detail at the end of the chapter.
PERILS OF THE SEAS
Provision for this insurable peril is allowed for in cl 6.1.1 of the ITCH(95) and cl 4.1.1 of the IVCH(95), which state that:
This insurance covers loss of or damage to the subject matter insured caused by: perils of the seas, rivers, lakes or other navigable waters.
With respect to cargo, the ICC (B) and (C) itemise a list of risks covered and ‘perils of the seas’ is not specifically mentioned as an insured peril. The ICC (A), being an all risks policy of insurance, has no need to enumerate the perils insured against.
Perils of the sea defined
The statutory definition of ‘perils of the seas’ can be found in r 7 of the Rules for Construction, the first part of which confines ‘perils of the seas’ to ‘fortuitous accidents or casualties of the seas’ and the second states that ‘It does not include the ordinary action of the winds and waves.’ For the purpose of clarity, it is necessary to divide the ensuing discussion on the subject into its two natural parts.
Fortuitous accidents or casualties of the seas
The fortuitous element and the words ‘of the seas’ of the first part of the statutory definition have opened up several areas of discussion in case law. First, the requirement of ‘fortuity’ has, inevitably, generated consideration of matters pertaining to the condition of the ship, such as wear and tear, inherent vice and unseaworthiness: such qualities in a ship would obviously take the fortuitous feature out of the claim of a loss by ‘perils of the seas’. Naturally, it has also raised issues pointing to the conduct (or more accurately misconduct) of the master and crew, and of the assured. In this regard, scuttling, if committed with the connivance of the assured, is likely to be pleaded as a defence: as the element of fortuity is, in such a case, negatived by the wilful nature of the act of the assured, the loss is not recoverable. Furthermore, s 55(2)(a) expressly bars indemnity for ‘any loss attributable to the wilful misconduct of the assured’. But, should the scuttling be committed without the connivance of the assured, then, the loss would be caused by barratry, and not a peril of the sea. That scuttling is not a peril of the sea is now firmly established by the House of Lords.
Secondly, the phrase ‘of the seas’ has brought about debate on the question of whether a collision (caused by either the negligence of the master or crew of the insured vessel or by a third party) and other accidents occurring on board ships are ‘perils of the seas’. To facilitate a proper understanding of this aspect of the term, judges have drawn the distinction between marine and land risks.
Pre-statute case law has also provided its own definitions of the term; these can be derived, in particular, from the judgments of Lord Bramwell and Lord Herschell in the earlier cases of Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser and Co, ‘Inchmaree’ (1887) 12 AC 484, HL, and Wilson Sons and Co v Owners of Cargo per ‘Xantho’ (1887) 12 App Cas 503, HL, respectively. In attempting to give the expression ‘fortuitous’ a meaning, it can be seen that some of the judges, in both old and recent cases, have unavoidably found themselves having to eliminate from the equation obvious defences, such as delay, inherent vice, wear and tear, unseaworthiness, and the wilful misconduct of the assured. It is observed that Popham and Willett v St Petersberg Insurance Co (1904) 10 Com Cas 31 simply endeavours to provide a definition of the term ‘perils of the seas’ by comparing accidental, fortuitous and unexpected events with ordinary, expected and regular conditions, whereas the recent Canadian case of CCR Fishing Ltd and Others v Tomenson Inc and Others, ‘La Pointe’  1 Lloyd’s Rep 89 is particularly useful for the purpose of illustrating the variety of defences that may be raised in a claim of a loss by ‘perils of the seas’.
Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser and Co, ‘Inchmaree’ (1887) 12 AC 484, HL
In his summation, Lord Bramwell considered other suitable definitions of ‘perils of the seas’, including two by other eminent judges, before suggesting one himself.2
Lord Bramwell: [p 492] …Definitions are most difficult, but Lord Ellenborough’s seems right: ‘…all cases of marine damage of the like kind with those specially enumerated, and occasioned by similar causes.’ I have had given to me the following definition or description of what would be included in the general words: ‘Every accidental circumstance not the result of ordinary wear and tear, delay, or of the act of the assured, happening in the course of the navigation of the ship, and incidental to the navigation, and causing loss to the subject matter of insurance.’ Probably a severe criticism might detect some faults in this. There are few definitions in which that could not be done. I think the definition of Lopes LJ in Pandorf v Hamilton very good: ‘In a seaworthy ship damage to goods caused by the action of the sea during transit not attributable to the fault of anybody’, is a damage from a peril of the sea.
…I have thought that the following might suffice: ‘All perils, losses and misfortunes of a marine character, or of a character incident to a ship as such.’
The following case, Xantho, is not actually a marine insurance case but comes, rather, under the head of carriage of goods by sea. Nevertheless, the deliberations of the court and, in particular, those by Lord Herschell on ‘perils of the seas’, are equally relevant to marine insurance.
Wilson, Sons and Co v Owners of Cargo per ‘Xantho’ (1887) 12 App Cas 503, HL
The appellants were the owners of the steamship Xantho, which sank after a collision, in fog, with another vessel whilst on a voyage from Cronstadt to Hull. The owners lodged their appeal against the cargo-owners on the basis that, inter alia, the loss of the ship was due to a collision, which was an excepted peril, namely, a peril of the seas.
The House of Lords, in reversing the decision of the Court of Appeal, decided that collision was, in fact, a peril of the seas and ruled in favour of the appellants.
Lord Herschell: [p 509] …I think it clear that the term ‘perils of the sea’ does not cover every accident or casualty which may happen to the subject matter of the insurance on the sea. It must be a peril ‘of’ the sea. Again, it is well settled that it is not every loss or damage of which the sea is the immediate cause that is covered by these words. They do not protect, for example, against the natural and inevitable action of the winds and waves, which results in what may be described as wear and tear. There must be some casualty, something which could not be foreseen as one of the necessary incidents of the adventure. The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen. It was contended that those losses only were losses by perils of the sea, which were occasioned by extraordinary violence of the winds or waves. I think this is too narrow a construction of the words, and it is certainly not supported by the authorities, or by common understanding.
Popham and Willett v St Petersberg Insurance Co (1904) 10 Com Cas 31
The plaintiffs dispatched five steamers on an expedition to Northern Russia with the intention of exporting goods into Siberia at a low rate of duty. The goods aboard the vessels and the freight were insured under a floating policy of insurance with the defendants. On entering the Kara Sea in July 1899, a large amount of ice was unexpectedly encountered, which caused damage to all the vessels and one, in fact, was wrecked. The vessels then returned to London and the goods were returned to their respective owners. Some of the goods belonging to the plaintiffs were sold, whilst the remainder were warehoused before being sent again to Siberia by rail at a later date, but at a much higher rate of duty. The plaintiffs claimed on their policy of insurance for the loss of goods and freight as well as the extra expenditure brought about by the warehousing and forwarding costs and the increased rate of duty.
The court ruled that the losses incurred were suffered as a consequence of encountering ice in the area at a time of the year when it would not have been expected. The losses were, therefore, losses brought about by a peril insured against, that is, a peril of the seas.
Walton J: [p 34] …The first question which has been raised is whether the obstruction to these steamers by ice in the Kara Sea was or was not a peril of the seas within the meaning of the policies. It was said to be analogous to the closing of the port by ice in the winter and the obstruction so created to a vessel arriving at her destination at that port. In such a case, the annual regular obstruction of the port by ice in the winter is in no sense an accident; it is part of the ordinary course of things, like the ebb and flow of the tides. It is scarcely necessary to say that difficulties arising merely from the ordinary closing of the port, which is subject to be closed, and is always closed, in the winter months, do not amount to a peril of the seas within the ordinary meaning of a policy of marine insurance. But that was not this case. The obstruction by ice in this case was accidental and unexpected. As far as I can understand, there had been no obstruction to the expedition in either 1897 or 1898. The unexpected prevalence of certain winds and currents in the Arctic Seas in August 1899, created an extraordinary difficulty and danger, for this ice was not only an obstruction, it was also a danger; one vessel was wrecked and the others were more or less damaged. The conclusion which I have come to is that the obstruction and danger and difficulty from the ice which these vessels met with was a peril of the sea, and one of the perils covered by the policies.
CCR Fishing Ltd and Others v Tomenson Inc and Others, ‘La Pointe’  1 Lloyd’s Rep 89, Supreme Court of Canada
La Pointe was a black iron hull which had been used in the cod fishing industry and was insured with the defendant insurers. In 1981, La Pointe was surveyed and, later in the year, her owners employed some repairers to rectify the faults highlighted in the survey report, with a view to selling her. The following year, without any warning, La Pointe developed a list at her moorings and sank in a few hours. The owners claimed that the loss was attributable to a peril of the sea in that, inter alia, the loss had been caused by the wrong type of bolts being used on some valve flanges which had later failed. The underwriters rejected the claim, citing ordinary wear and tear as the cause of loss.
The Supreme Court of Canada ruled that the loss was due to the failure of the bolts which had been negligently fitted and was, therefore, fortuitous and a peril of the seas.
Mme Justice McLachlin: [p 91] …In the case at bar, the loss resulted from the sinking of the ship due to the ingress of seawater. This loss would not have occurred on land. The requirement that the accident be ‘of the sea’ is therefore met. The respondents argue that the cause of the loss was corrosion and that could have occurred anywhere, including on land. But, the test is not whether the defect which started the causal chain that led to the loss is one that could occur exclusively at sea, but rather whether the accident itself—in this case, the sinking of the ship—is one which could only occur at sea. Many sinkings result from causes which could occur on land—for example, the piercing of the hull of the ship with a rock could occur on land. No one would suggest that coverage under insurance for ‘perils of the sea’ would not lie where a ship founders and sinks at sea for that reason. I conclude that this accident was ‘of the sea’.
The real issue in this case, as I see it, is whether the cause of the accident was ‘fortuitous’. It is fortuitous if it was neither intentional nor inevitable and does not fall within any of the exclusions referred to in s 56 of the Act and the Act’s definition of ‘perils of the sea’.
…I turn, first, to the question of whether the failure of the bolts can be viewed as ‘ordinary wear and tear’. In my view it cannot. There was nothing ordinary about the failure of the cap screws. Their failure was extraordinary, resulting, as the trial judge found, from the negligent act of the repairers who installed them.
The next question is whether the failure of the screws can be considered due to an inherent vice…The concept of inherent vice in the context of marine insurance refers to loss stemming from qualities inherent in the thing lost. The failure of the cap screws in the case at bar cannot be said to result from purely inherent qualities of the ship. The unfortunate installation of these parts in the ship was a result of the negligence of the repairers, an external cause unrelated to those qualities. The loss was fortuitous, in the sense that it was not the inevitable product of a quality inherent in the vessel. I conclude that even if one were to assume that the proximate cause of the sinking was the failure of the cap screws, that would not assist the respondents, since the cause of the failure was not ordinary wear and tear or inherent vice, but the fortuitous negligence of the repairers.
In Hamilton, Fraser and Co v Pandorf and Co (1887) 12 App Cas 518, a carriage of goods by sea case, rats gnawed a hole in a pipe aboard the ship, allowing seawater to escape and damage the cargo of rice. A clause on the bill of lading which excepted ‘dangers and accidents of the seas’ was held to be applicable and the carrier was not liable.
Lord Fitzgerald: [p 528] …The accident was fortuitous, unforeseen, and actually unknown until the ship reached her destination and commenced unloading. I do not, however, mean to suggest that to constitute a peril of the sea the accident or calamity should have been of an unforeseen character. The remote cause was in a certain sense the action of the rats on the lead pipe, but the immediate cause of the damage was the irruption of seawater from time to time through the injured pipe caused by the rolling of the ship as she proceeded on her voyage.
Scuttling is not a peril of the sea
Recovery under a policy of marine insurance when there has been wilful misconduct committed by the assured is excluded by s 55(2)(a) of the Marine Insurance Act 1906. By definition, any act of a wilful nature must necessarily remove the basic requirement of fortuity. The absence of fortuity in the event of a loss caused by wilful misconduct of any person (the assured, master or crew) renders the loss irrecoverable as a loss by a peril of the seas.
Similarly, as a barratrous scuttling is an intentional act committed by the master or crew without the connivance of the shipowner, ‘barratry’ and ‘perils of the seas’ must, therefore, also be mutually exclusive: a loss caused by a barratrous act, though it may be recoverable under the insurable risk of barratry (if it is an insured risk under the policy in question) is not recoverable as a loss by a peril of the seas.3
The case of Samuel v Dumas (1924) 18 LlL Rep 211, HL, established, in overturning the ruling in Small v United Kingdom Marine Mutual Insurance Association  2 QB 311, CA,4 that scuttling a ship, with the connivance of the owner, is not a loss recoverable under the head of ‘perils of the seas’. In this instance, an innocent mortgagee was barred from recovery, even though he was in no way a party to the conspiracy.
Viscount Cave: [p 215] …the word ‘fortuitous’ …involves an element of chance or ill-luck which is absent where those in charge of a vessel deliberately throw her away…the expression ‘perils of the sea’, while it may well include a loss by accidental collision or negligent navigation, cannot extend to a wilful and deliberate throwing away of a ship by those in charge of her.
Viscount Finlay: [p 217] …The scuttling of this vessel occurred on the seas, but it was not due to any peril of the seas; it was due entirely to the fraudulent act of the owner. The scuttling was not fortuitous, but deliberate, and had nothing of the element of accident or casualty about it. Storms are fortuitous; the ordinary action of the waves is not; and the fraudulent scuttling is even more decisively out of the region of accident. The entrance of the seawater cannot, for this purpose, be separated from the act which caused it.
The position of the cargo-owner
The Institute Cargo Clauses do not employ the term ‘wilful misconduct’. Instead, cl 4.7 of the ICC (B) and (C) state, as an exclusion, that: ‘In no case shall this insurance cover…deliberate damage to or deliberate destruction of the subject matter insured or any part thereof by the wrongful act of any person or persons.’ The ICC (A), being an all risks policy, is silent on this matter.
The prickly question which does not appear to have been put before a court for consideration is, whether loss or damage to cargo is recoverable when the carrying ship is scuttled by the shipowner. The wording of cl 4.7 of the ICC (B) and (C) is probably wide enough to exclude such a loss. The ICC (A), however, is for all risks and whether recovery for such a cause of loss may be regarded as a ‘risk’, is arguable. The fundamental question is: is a cargo-owner, under an all risks policy, insured against the fraudulent casting away of his goods by shipowners? The same dilemma will also arise in the case of cargo which is lost or damaged as a result of a barratrous act.
In the Court of Appeal, in Samuel v Dumas  1 KB 592, CA, Scrutton LJ remarked that he knew of no case (p 620) ‘where an owner of goods has recovered for damage to his goods by seawater intentionally admitted by the owner of the ship, either for perils of the sea or barratry’. This comment is correct, for the judge was referring to specific perils under which the element of fortuity is not an essential ingredient.5 But whether the same may be applied to an all risks policy is, it is submitted, doubtful.
It should be borne in mind that the ICC (A) insure against ‘all risks’, and not against specified events, such as ‘barratry’ or ‘perils of the seas’, and this term has its own special qualities and requirements. Provided that the loss may be regarded as a ‘risk’ vis a vis the assured cargo-owner and does not fall within any of the exceptions, there is no reason why such a loss should not be allowed. Support for this may be drawn from the judgment of Lord Sumner, albeit the dissenting judge, in Samuel v Dumas (1924) 18 LlL Rep 211, HL, who felt that: [p 224] ‘…it is the business of an underwriter to take risks, and the risk, an inconsiderable one, of the shipowner’s wilful misconduct can be considered in the premium as well as the risk of negligent navigation.’ He expressed his unease for not allowing recovery for such a loss in the following terms: ‘…I find it impossible not to be influenced by the consideration that, if a scuttled ship is not proximately lost by perils of the seas, then every cargo-owner, who loses his goods with her, is as uninsured as the scuttling shipowner. Curious results may follow.’
Further reinforcement for this point of view may be drawn from the comments of Goddard LJ, in London and Provincial Process Ltd v Hudson  3 All ER 857, in relation to a cargo claim (brought under an all risks policy) resulting from the insolvency of the shipowner.6 Referring to the general statement of law that there must be an ‘accident or fortuitous casualty’ before a loss may be recoverable under an all risks policy, the judge added that such a policy covered more than an accidental fire or the destruction of goods by the forces of nature. He was clear in his mind that theft, ‘a conscious and wilful act of another person’, is recoverable under an all risks policy. It is thus contended that, by parity of reasoning, scuttling, a wilful act committed with or without the connivance of the shipowner, should also be recoverable.
In conclusion, it is safe to say that an innocent mortgagee (suing as an assignee or as original assured under the Institute Hull Clauses) and an owner of cargo which is insured under either the ICC (B) or (C) would not be able to recover for loss or damage caused by scuttling perpetrated with the connivance of the shipowner. The position under an all risks policy (the ICC (A)) is, however, not so clear.
Collision is a peril of the sea
In the case of Xantho  12 App Cas 503, Lord Herschell stated:
[p 509] …It is beyond question, that if a vessel strikes upon a sunken rock in fair weather and sinks, this is a loss by perils of the sea. And a loss by foundering, owing to a vessel coming into collision with another vessel, even when the collision results from the negligence of that other vessel, falls within the same category.
Although the Xantho case is generally acknowledged as having established the principle that collision is a peril of the sea, there is a much earlier case which also deliberated on this matter.
Smith and Others v Scott (1811) 4 Taunt 126
This was an action upon a policy of insurance on two ships, Helena and Merlin ‘at and from’ Honduras to Britain. On the voyage to Britain, Helena, through no fault of her own, was run down by another vessel, Margaret, as a result of the gross neglect of Margaret’s crew. After the collision, the crew of Helena boarded Margaret and found only one man on deck, and he was asleep. The plaintiff claimed for the loss of Helena as being due to a peril of the seas. The insurers cited the loss to be attributable to the gross negligence of the crew of Margaret and not perils of the seas.
The jury found for the plaintiff, and Mansfield CJ made some early observations about collision being considered a peril of the seas.
Mansfield CJ: [p 127] …I do not know how to make this out not to be a peril of the sea. What drove Margaret against Helena? The sea! What was the cause that the crew of Margaret did not prevent her from running against the other, their gross and culpable negligence? But still the sea did the mischief.
Negligence of the master and crew
It should be noted that, in the Xantho case, the court only pronounced about a collision where there was negligence on the part of the other vessel. However, s 55(2)(a) of the Marine Insurance Act 1906 clearly does not exclude an insurer’s liability where there is negligence aboard the insured vessel when it states that: ‘The insurer is not…unless the policy otherwise provides…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.’ This allows the assured to claim for a loss proximately caused by a peril insured against (perils of the seas), but remotely caused by the negligence of the master or crew.
It is only the provision within the Inchmaree Clause which provides cover for ‘the negligence of Master Officers Crew or Pilots’ as a proximate cause of the loss: thus, should a loss by collision be held to have been proximately caused by the negligence of the master, officers, crew or pilots, it is recoverable under cl 6.2.2 of the ITCH(95) and cl 4.2.2 of the IVCH(95).
The case of Walker v Maitland, below, provides an early, but vivid example of a loss proximately caused by a peril of the sea, but remotely caused by the negligence of the master and crew
Walker v Maitland (1821) 5 B&Ald 171
The sailing ship Britannia was chartered for a voyage from St Kitts in the West Indies to Britain. By the custom of the trade, when loading ships at St Kitts, where the cargo was brought from the shore by boat to be loaded into the larger vessel, it fell upon the owner and not the charterer to effect a policy of insurance to cover such loading operations.7 A sloop called Vigilant was duly employed at St Kitts to bring the cargo from shore to ship but, because of the negligence of the crew of the sloop, who were asleep at the time, the sloop was blown ashore and wrecked. Part of the cargo of sugar was lost and the rest was damaged. The owner of Britannia, who had effected the policy of insurance, claimed upon it under the head of peril of the seas.
The court ruled in favour of the owner, in that the loss arose immediately from a peril of the sea, but remotely from the negligence of the master and crew.
Bayley J: [p 175] …Here, the loss arose from the sloop with the goods on board having been beat to pieces by the force of the wind and waves; and the question in this case is, whether the underwriters are exonerated from the loss, by proving negligence on the part of the crew, although the damage was occasioned by the perils of the sea. It is the duty of the owner to have the ship properly equipped, and for that purpose, it is necessary that he should provide a competent master and crew in the first instance; but having done that, he has discharged his duty, and is not responsible for their negligence, as between him and the underwriters. If that were not considered to be the law, the question must have frequently arisen, whether there had been proper care and attention by the master and mariners. It is now, however, raised almost for the first time. I am of opinion, that in this case the underwriters were liable.
This principle of negligence by the master and crew is affirmed in Dixon v Sadler (1839) 5 M&W 405, where, in his judgment, Parke B stated:
[p 415] …The great principle established by the more recent decisions, is that, if the vessel, crew, and equipment be originally sufficient, the assured has done all that he has contracted to do, and is not responsible for the subsequent deficiency occasioned by the neglect or misconduct of the master or crew: and this principle prevents many nice and difficult inquiries, and causes a more complete indemnity to the assured, which is the object of the contract of insurance.
The same approach that the loss was proximately caused by a peril of the sea and only remotely caused by the negligence of the crew is also evident in the case of Davidson and Others v Burnard, below.
Davidson and Others v Burnard (1868) LR 4 CP 117
The plaintiffs effected a policy of insurance on goods ‘at and from’ Jamaica to New York aboard Montezuma. The day after loading, it was found that seawater had penetrated the hold of the vessel and damaged the goods. A survey confirmed that a discharge pipe in the engine room had inadvertently been left open, with the result that, as the cargo was loaded and the vessel’s draught increased, seawater entered Montezuma and contaminated the goods. The plaintiffs claimed on their policy of insurance.
The court ruled that the damage done to the goods was due to the negligence of the crew, but was, nevertheless, a peril of the sea and, therefore, the plaintiffs could recover.
Willes J: [p 121] …Then, unless some distinction can be made between a loss from an accident happening through the negligence of the crew of another vessel and a loss from an accident happening either in the way it has been suggested it did in the present case, from a splinter getting into the valve, or from such negligence of the crew, as was suggested in the report of the survey, the loss would be a loss occasioned by the perils of the sea. As to there being any such distinction between a loss caused by the negligence of the crew of the vessel insured and one caused by the negligence of another vessel, all such distinction has been swept away by the judgment of Lord Wensleydale, as I understand it, in the case of Dixon v Sadler. On the whole, it is not necessary, I think, to say whether these goods were damaged by perils of the sea, as the damage to them was clearly caused by perils of the sea or the like within the words of the policy. I wish to add, that my judgment adopts the report of the survey itself, as to the accident probably arising from a negligence referable to leaving cocks and valves open, rather than the evidence suggesting that the accident might have happened by a splinter getting into the valve, and I only referred to that last by way of illustration.
The following case, The Stranna, is a carriage of goods by sea case, where, in his deliberation, Scott LJ elaborated on why the negligence of the assured’s servants did not lessen the unexpected or fortuitous nature of an accident that was deemed a peril of the seas. The judge also pointed out that the general principles enunciated are also applicable to marine insurance.
The Stranna  1 All ER 458, CA
Whilst loading a deck cargo of timber, The Stranna suddenly heeled over and part of her cargo shot overboard, drifted away in the fog and was never found. The question before the Court of Appeal was whether the loss was by a peril of the sea, an excepted peril in the bill of lading.
The Court of Appeal adjudged that it was a peril of the sea and, therefore, the shipowner was not liable for the loss.
Scott LJ: [p 465] …In my view, what happened was a loss by a peril of the sea, and none the less so because it was the negligence of those who were concerned with the work of loading the ship that brought the peril into operation. It was argued by Sir Robert Aske that, if the listing of the ship was caused by bad loading, that very fact excluded the idea of a peril of the sea, his contention being that the meaning of that phrase in the English language, or at any rate as judicially defined, restricts it to cases where the damage to ship or cargo by the sea, or seawater, arises through external causes, such as wind and weather, or striking a rock, or where seawater actually gets into the ship. I do not agree. Even apart from the wider expressions in the clause which come after ‘perils of the sea’, it is, in my opinion, an appropriate use of the English language to say that, on the facts of the present case, the timber was lost by a peril of the sea. The fortuitous aspect of the meaning of the word ‘peril’ in a contract either of carriage or of insurance is plainly satisfied by the evidence. As the judge points out, so far as the defendants’ servants were concerned, the event was wholly unexpected; it was just an unfortunate accident. But it was also a peril of the sea, not merely a peril on the sea. It could not have happened on land. It was a happening which is characteristic of the sea, and of the behaviour of ships.
In Baxendale v Fane, ‘Lapwing’ (1940) 66 LlL Rep 174,8 where a large yacht was damaged on being placed in a dry-dock, no mention was made of s 55(2)(a). Though emphasis was placed on the negligence cover of the Inchmaree Clause, nevertheless, recognition was given to the fact that the acting master’s negligence provided the necessary fortuity rendering the loss recoverable also the under the head of a marine peril. In the words of Hodson J [p 181], ‘the intervention of the negligence of those responsible for the docking provides the fortuitous circumstances which entitles the plaintiff to recover under the terms (“perils of the seas and all other perils”) of the policy’.
Negligence of the assured acting as master
An assured could well act as the master of his own ship: in such an event, he would, in a manner of speech, be wearing two hats. Although Westport Coal Co v McPhail  2 QB 130, CA was a carriage of goods by sea case, it graphically illustrated the distinction between the duties of the assured as master, and the assured as owner. The principle enunciated in the case is equally pertinent to marine insurance.
Westport Coal Co v McPhail  2 QB 130, CA
A part owner of Gainsborough, serving as master, signed bills of lading for the carriage of a cargo of coal from Westport to San Francisco. Gainsborough stranded on a reef due to the negligent navigation of the master, and the plaintiff cargo-owners sued the shipowners for their losses on the basis that the negligence of the part owner (acting as master) precluded the shipowners from seeking the protection of the exception clause which excluded them from liability for the negligence of the master but not of a part owner, albeit acting in the capacity of master.
The Court of Appeal ruled that, as the master’s actions in negligently navigating the ship were separate from his liability as part owner the exception clause applied and, therefore, the cargo-owners could not recover their losses under the bill of lading.
Collins LJ: [p 133] …But, it is at this point that the real difficulty arises. The captain is excused; the owner is not…it was the negligence of the master in the sphere of his duty as master which caused the loss…The plaintiffs seek to make him liable by viewing him in two different capacities—that is to say, they distinguish his capacities for the purpose of limiting the exception, but they mix them up again for the purpose of fixing him with liability as owner. But does it follow that because one and the same is captain and part owner, negligence in either capacity is to be deemed negligence in both? Or does not this question involve an examination of what his duty is in each capacity, so as to see whether there was in fact negligence in both? So far as the navigation of the ship is concerned, the duty of the owner, as distinguished from the master, would be to take due care to appoint a competent person; and, therefore, the defendants’ co-owners in this case having discharged that duty, and being protected against the master’s negligence, are not now charged with negligence as owners.
It seems to us that it would be simpler and more in accordance with common sense to hold that the negligence which caused the damage was exclusively master’s, as distinguished from part owner’s, negligence, within the meaning of the exception.
See, also, Trinder, Anderson and Co v Thames and Mersey Marine Insurance Co  2 QB 114, CA, where it was held that the fact that the master was a part owner of the vessel did not prevent the owners from recovery under the negligence cover of the Inchmaree Clause.9
Accidents on board ship
The following cases which have distinguished marine risks from land risks illustrate the point that it is not always easy to discern whether a loss or damage sustained by a ship arising from an accident occurring on board ship whilst she is at sea is recoverable as a loss by ‘perils of the seas’.
In the case of Thames and Mersey Marine Insurance v Hamilton, Fraser and Co, ‘Inchmaree’  12 App Cas 484, HL, Lord Bramwell considered whether an accident to a donkey engine on board the ship constituted a marine risk.
Lord Bramwell: [p 493] …The damage to the donkey engine was not through its being in a ship or at sea. The same thing would have happened had the boilers and engine been on land, if the same mismanagement had taken place. The sea, waves and winds had nothing to do with it.
In the following case, Lord Buckmaster, in determining between a marine risk and a risk which can happen anywhere, quoted from two other significant cases concerned with this issue, namely, Xantho (discussed earlier) and ED Sassoon v Western Assurance Co  AC 561.
Grant, Smith and Co v Seattle Construction and Dry Dock Co  AC 162, PC
This was a case originally heard in the courts of British Columbia, and finally brought before the Privy Council. The appellants were a large firm of contractors engaged in the construction of a breakwater at the port of Victoria, British Columbia. To facilitate the building process, the appellants hired a large wooden floating dry-dock, valued at $34,500, from the respondents. Part of the lease agreement was that the appellants would insure the dock for $75,000 against marine risks and fire, which they failed to do. Whilst working near the breakwater, the dry-dock took on a list as it was being submerged, and eventually foundered. The respondents sued the construction company for, inter alia, failure to insure the dry-dock against marine risks.
The Privy Council ruled that the loss of the dry-dock was not attributable to a marine risk and, therefore, the respondents were only entitled to recover the actual value of the dry-dock, and not the larger amount stipulated in the proposed contract of insurance.
Lord Buckmaster: [p 170] …It [the covenant of insurance] was to insure against ‘marine risk’, which cannot be better described than as against ‘the hazards of the sea’. If, while in dock, either while the caissons were being built or while the dock was being submerged, owing to any marine risk the dock had been lost, this loss the policy would have covered; but, in truth, no such risk or peril caused its destruction. The harbour was peculiarly quiet, and it is plain that it was no conditions of wind or wave that caused the dock to capsize. It was destroyed because of its own inherent unfitness for the use to which it was put—an unfitness which the appellants have prevented themselves from raising by reason of their own covenant.
It is not desirable to attempt to define too exactly a ‘marine risk’ or a ‘peril of the sea’, but it can at least be said that it is some condition of sea or weather or accident of navigation producing a result which, but for these conditions, would not have occurred.
…The words there occurred in a bill of lading, and the claim arose with regard to the loss of goods covered by the document. But Lord Herschell [in Wilson, Sons and Co v Owners of Cargo per ‘Xantho’] points out that the phrase has no different meaning whether it occurs in the insurance of the ship or of the goods.
In the case of ED Sassoon and Co v Western Assurance Co, a store of opium was lost in a hulk moored in a river by the percolation of water through a leak caused by the rotten condition of the boat. The decay was so covered by copper sheathing that, although the vessel was properly inspected, it was not, and it could not, be detected. It was held by this Board that the loss was not a loss within the phrase ‘perils of the sea and all other perils’, and Lord Mersey, in delivering the opinion of the Board, states: ‘There was no weather, nor any other fortuitous circumstance, contributing to the incursion of the water; the water merely gravitated by its own weight through the opening in the decayed wood and so damaged the opium. It would be an abuse of language to describe this as a loss due to perils of the sea.’ Their Lordships can see no difference between the circumstances of this case and the principle there enunciated. It is just as though a vessel, unfit to carry the cargo with which she was loaded, through her own inherent weakness, and without incident or peril of any kind, sank in still water. In such a case, recovery under the ordinary policy of insurance would be impossible. An insurance against ‘the perils of the sea and other perils’ is not a guarantee that a ship will float, and in the same way, in the present case, had such a policy been effected it would not have covered a loss inevitable in the circumstances due to the unfitness of the structure, and entirely dissociated from any peril by wind and water.
A similar line had been taken some four years earlier in Stott (Baltic) Steamers Ltd v Marten, below, where the accident aboard ship was held not to be one peculiarly incident to a ship.
The appellants, who were owners of the steamship Ussa, insured her with the respondents under a time policy of marine insurance. Whilst in Liverpool, Ussa was loading a large boiler down one of her hatches by means of a floating crane, Atlas, which was moored alongside. During the loading process, the boiler touched the hatch coamings of the ship, the weight of the load briefly came off the crane, which then listed with the result that the crane’s lifting gear broke, and the boiler fell to the bottom of the ship’s hold and damaged her. The shipowners claimed on their policy of insurance, but the underwriters rejected the claim, on the basis that the accident was not a risk peculiarly incident to a ship.
The House of Lords affirmed the decision of the Court of Appeal and found for the respondent insurers. The loss was not recoverable under the head of ‘perils of the seas’.
Lord Atkinson: [p 311] …A peril whose only connection with the sea is that it arises on board ship is not necessarily a peril of the seas nor a peril ejusdem generis as a peril of the sea. The breaking of the chain of a crane, or of a shackle of that chain, if overloaded or subjected to too severe a strain, is not more maritime in character when it occurs on board a ship than when it occurs on land. Nor is the catching of the ends of a lengthy boiler on the coamings when being lowered into the hold of a ship through a hatchway more maritime than would be the catching on land of any piece of machinery on the sides of an opening shorter than itself through which it was being lowered. Neither the winds nor the waves contributed to the accident. Nor did the fact that the ship on which it occurred was waterborne. The listing of Atlas to port tended to take up the slack of the chain and to diminish the extent of the drop, and therefore of the strain, when the boiler got free, rather than the contrary. The statement of Lord Ellenborough in Cullen v Butler as to the proper construction of general words, such as those used in the present case, in a policy of marine insurance has been many times approved of. He said due effect would be given to them by ‘allowing them to comprehend and cover other cases of marine damage of the like kind with those which are specially enumerated and occasioned by similar causes’. By the words ‘marine damage’, Lord Herschell, in Thames and Mersey Marine Insurance Co v Hamilton, Fraser and Co, took Lord Ellenborough to have meant not only damage caused by the sea, but damage of a character to which a marine adventure is subject. In my view, the present case is covered by this last mentioned case.
And, in Cullen v Butler, below, the loss of a vessel accidentally sunk by another ship’s gunfire was also held not to be a loss caused by a peril of the sea. Nevertheless, the assured recovered under the policy, because of the clause ‘all other perils’ inserted in the policy.
Cullen v Butler (1816) 5 M&S 461
This was a claim upon an insurance policy on goods lost aboard the ship Industry ‘at and from’ London to the Canary Islands. Whilst on the voyage to the Canary Islands, the captain of another British vessel, Midas, mistook her in the dark for an enemy and fired upon her. Industry sank, and the cargo was lost. The plaintiff owner claimed that the loss was caused by, inter alia, a peril of the sea. The underwriters rejected the claim.
The court ruled for the plaintiff, not under the head of ‘perils of the seas’, but on another clause in the policy, namely ‘…all other perils, losses…’.
Lord Ellenborough CJ: [p 464] …If it be a loss by perils of the sea, merely because it is a loss happening upon the sea, as has been contended, all the other causes of loss specified in the policy are, upon that ground, equally entitled so to be considered; and it would be unnecessary as to them ever to assign any other cause of loss, than a loss by perils of the sea. But as that has not been the understanding and practice on the subject hitherto, and insomuch as the very insertion of the general or sweeping words, as they are called, in the policy after the special words, imports that the special words were not understood to include all perils happening on the sea, but that some more general words were required to be added, in order to extend the responsibility of the underwriters unequivocally to other risks not included within the proper scope of any of those enumerated perils, I shall think it necessary only to advert shortly to some of the reasons upon which we think that the general words, thus inserted, comprehend a loss of this nature.
Perils of the seas or unseaworthiness?
‘Unseaworthiness’, like ‘ordinary wear and tear’, is an obvious defence against a claim for a loss by perils of the seas. As in ordinary wear and tear, there is no element of fortuity in unseaworthiness, and, therefore, a loss so caused is not recoverable as a loss by a peril of the seas. In the following case, Merchants Trading Co v Universal Marine Insurance Co, the close relationship between ‘perils of the seas’ and unseaworthiness’ is well illustrated.
Merchants Trading Co v Universal Marine Insurance Co (1870) CP 431, CA
This was a retrial of an action on a voyage policy of insurance ‘at and from’ the Mersey to Cardiff and thence to Alexandria. The plaintiffs’ steamship Golden Fleece loaded some coal in the Mersey and then proceeded to Cardiff to load some more. On leaving Cardiff, in order to avoid bad weather, the master anchored Golden Fleece off Barry Island, but, whilst in this safe anchorage, there was a sudden ingress of seawater into the starboard bunker, which caused the ship to sink in 35 minutes. The plaintiff owners claimed on their policy of insurance, but the underwriters resisted the claim and contested that the vessel was unseaworthy at the commencement of the voyage and that the loss did not arise from a peril insured against.
The court ruled in favour of the insurers on the basis that Golden Fleece was unseaworthy when she left the Mersey and unfit to carry her cargo.
Bovill CJ: [p 432] …He [Lush J, the trial judge] further explained to the jury that the terms ‘perils of the sea’ denoted all maritime casualties resulting from the violent action of the elements of the wind and waters, lightning, tempest, stranding, striking on a rock, and so on—all casualties of that description as distinguished from the silent natural gradual action of the elements upon the vessel itself, though the latter properly belonged to wear and tear, and that what the underwriters insured were casualties that might happen, not consequences which must happen, casualties which might occur and were incident to navigation arising from the violent action of the elements upon the ship.
As to the first alleged misdirection, the question at the trial was whether the vessel sank through unseaworthiness or from some extraordinary and unaccountable accident, and the learned judge compendiously expressed this contention in the question which he left to the jury of whether the leak was attributable to injury and violence from without, or to weakness within. It is quite true that the perils mentioned by the learned judge do not include all the risks and perils covered by the policy, but from the nature of the question that was raised in this case, which was as to the cause of the sudden rushing of the water into the vessel, whether it was the inherent weakness of the vessel in consequence of original defects and construction, or neglected rust, or some unaccountable accident resulting in foundering…
In this case, the fact of her sinking in smooth water and calm weather so immediately after leaving Cardiff Docks, was properly treated as strong evidence of inability to carry her full cargo from Cardiff, which was evidence of unseaworthiness at Cardiff, and under the circumstances and according to the sole discussion raised on both sides of the trial, it was equally strong evidence of unseaworthiness at Birkenhead.
The close relationship between ‘perils of the seas’ and unseaworthiness was also raised in the three following cases: Sassoon v Western Assurance; Samuel v Dumas and the Miss Jay Jay case.
Sassoon and Co v Western Assurance Co  AC 561, PC
Opium stored in a wooden hulk, moored in a river, was damaged when water leaked through the hull. The poor condition of the hull had been hidden from view by a layer of protective copper sheathing. The plaintiffs claimed for the damage to the opium, citing perils of the sea. The underwriters rejected the claim and questioned the hulk’s seaworthiness.
The Privy Council ruled that the damage was not caused by a peril of the sea within the meaning of the policy.
Lord Mersey: [p 563] …There was no weather, nor any other fortuitous circumstance, contributing to the incursion of the water; the water merely gravitated by its own weight through the opening in the decayed wood and so damaged the opium. It would be an abuse of language to describe this as a loss due to perils of the sea. Although seawater damaged the goods, no peril of the sea contributed either proximately or remotely to the loss.
The possibility of raising unseaworthiness as a defence to a claim which pleads ‘perils of the seas’ as the cause of loss was considered by Viscount Finlay in the following manner:
Viscount Finlay: [p 217] …The view that the proximate cause of the loss when the vessel has been scuttled is the inrush of the seawater, and that is a peril of the sea, is inconsistent with the well established rule that it is always open to the underwriter on a time policy to show that the loss arose not from perils of the seas, but from the unseaworthy condition in which the vessel sailed (see Arnould on Marine Insurance, s 799). When the vessel is unseaworthy and the water consequently gets into the vessel and sinks her, it could never be said that the loss was due to the perils of the sea. It is true that the vessel sank in consequence of the inrush of water, but this inrush was due simply to the unseaworthiness. The unseaworthiness was the proximate cause of the loss. Exactly the same reasoning applies to the case of scuttling; the hole is there made in order in order to let in the water. The water comes in and the vessel sinks. The proximate cause of the loss is scuttling, as in the other case of unseaworthiness. The entrance of the water cannot be divorced from the act which occasioned it.
Lloyd (JJ) Instruments Ltd v Northern Star Insurance Co Ltd, ‘Miss Jay Jay’  1 Lloyd’s Rep 264,  1 Lloyd’s Rep 32, CA
A yacht, insured under a time policy of insurance which included a clause covering loss by ‘external accidental means’, was adjudged to have suffered damage to her hull by means of a combination of defective design and adverse weather conditions. The seaworthiness of the ship was questioned by the insurers.
Mustill J: [p 272] …I now return to the facts of the present case. Miss Jay Jay was plainly unseaworthy, but can it be said that the craft suffered from debility in the sense to which I have referred? It seems to me that the answer must be– ‘No’. There is no reason to suppose that the boat would have sunk at her moorings, or while under way in a millpond sea. Indeed, she had only recently completed a Channel crossing. Conversely, if one asked whether the loss was due to the fortuitous action of the wind and waves, the answer must be—‘Yes’. True, the weather was not exceptional, but this is immaterial. Whichever of the expert witnesses may be right as to the mechanism of the structural failure, the immediate cause was the action of adverse weather conditions on an ill-designed and ill-made hull. The cases show that this is sufficient to bring the loss within the words of a time policy in the standard form. Since I consider that there is, for present purposes, no material distinction between ‘perils of the seas’ and ‘external accidental means’…
Ordinary action of the winds and waves
The following case from Australia provides a good interpretation of the second part of r 7 of the Rules for Construction, that the term ‘perils of the seas’ does not include the ordinary action of the winds and waves. This, however, does not mean that the action of the wind and waves must be ‘extraordinary’ to be considered fortuitous, for the word ‘ordinary’ qualifies ‘action’ and not ‘winds and waves’.
Skandia Insurance Co v Skoljarev  142 CLR 375, High Court of Australia
The respondents insured their fishing vessel Zadar with the appellants under a time policy of insurance. Soon after leaving Port Lincoln in South Australia, and in calm conditions, Zadar