Common Sense Restored in Insurance Decision


The recent decision in which the loss of a trawler tied up in port was held to be an uninsured loss, because of the breach of a warranty clause that cover applied only when there was a ‘Warranted Owner and/or Owner's experienced skipper on board and in charge at all times and one experienced crew member’, has been reversed in the Court of Appeal.
The Court considered that the purpose of the clause was to protect the ship from navigational hazards, which were not an issue in this case as the trawler was tied up in port. Also, it was clearly not possible for the owner/skipper to be on board at all times. The clause had to be construed practically, meaning that for the insurance to apply the owner/skipper had to be on board at all times when the ship was being navigated. This interpretation was supported by the presence in the policy of another warranty clause which stated that the vessel had to be manned by at least two medically fit people when being navigated.
The decision shows that whilst the Court will not rewrite a contract, it will enforce a common sense interpretation of the terms of the contract when a strict interpretation would be nonsensical.
Partner Note
Pratt v Aigaion Insurance Company SA [2008] EWCA Civ 1314.

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