2.3.
In opdracht van Aurora heeft [persoon3] , barrister bij Essex Court Chambers en Queen’s Counsel, op 20 januari 2015 de volgende Legal Opinion uitgebracht over de dekkingsvraag (voetnoten niet weergegeven):
Introduction
1. (…)
2. In this matter, 1 am instructed on behalf of Aurora Investments Estate Ltd (“Aurora”)
to provide an Opinion on the effect of breach of warranty on the liability of insurers
under a combined hull and war policy (unique market reference E-ABS CADf-6BfCf35C-
DDO4, hereafter “the Policy”) covering the yacht “Uisge Beatha” (“the Yacht”)
for the period 16 November 2012 to 15 November 2013, both days inclusive. The
Policy was a valued policy: the value of the Yacht was agreed at Eur. 5,000,000.
3. My Opinion is required for the purpose of proceedings commenced in the Rotterdam
District Court (“the District Court”) by Aurora against the brokers who placed the
Policy, Aon Nederland CV (“Aon”).
4. For the purpose of my Opinion, I have been provided with copies of the Policy, and a
translation of a judgment of the District Court dated 24 December 2014 (“the
Judgment”).
5. The facts giving rise to Aurora’s claim against Aon appear from the Judgment. In
summary:
a. Aurora purchased the Yacht in October 2009 from Jongert Projects BV
(“Jongert”), who I am instructed built her.
b. On 4 October 2010, Aon placed hull cover for the Yacht’s launch voyage to
the Mediterranean, naming Jongert as policyholder. The cover was written
100% by Amlin Corporate Insurance NV (“Amlin”).
c. On 17 November 2010, Aon provided evidence of insurance to Aurora,
naming Aurora as policyholder, and stating that the Yacht was insured by
Amlin for the period 16 November 2010 to 15 November 2011 inclusive. Aon
provided a copy of the corresponding policy to Aurora on 10 January 2011.
d. Thereafter, the policy was extended for two periods of 12 months.
e. The policy included a warranty that the Yacht would be fully classified by a
classification society that was a member of the International Association of
Classification Societies, and was governed by English law. The initial voyage
policy in favour of Jongert had not included a classification warranty. Aon
failed to draw the attention of Aurora to the warranty.
f. On 5 March 2012, Aon asked a crew-member of the Yacht for the name and
address of her classification society. This inquiry appears to have been made
in connection with the Yacht’ s P&I insurance. The crew-member concerned
did not understand the inquiry, and replied, erroneously, that the Yacht was
classed with Germanische Lloyd. In fact, she was not (and never had been)
classed.
g. On 14 June 2013, the Yacht was so damaged by fire as to become a total loss. Amlin declined cover, and has failed to indemnify Aurora.
6. I am instructed that Aurora attempted to claim on the Policy, but that Amlin declined
the claim on the basis of breach of the classification warranty.
The Findings of the District Court
7. On the facts as summarized above, the District Court found that Aon was in breach of
its duty of care to Aurora in failing to draw the classification warranty in the Policy to
Aurora’s attention, even though Aon itself asserted that the warranty was unusual and
should not have been included in the Policy. Further, Aon should not have been
satisfied with the (incorrect) information it received as to class from a crew-member
in March 2012, and should have insisted upon receiving a copy of, or at least
perusing, the vessel’s class certificate. Thus, Aon failed to fulfil its duty of care to
Aurora.
8. However, the District Court also found that any financial loss to Aurora caused by
Aon’s errors was contributed to by the error of Aurora (through the crew-member
who provided to Aon incorrect information as to the Yacht’s class). Accordingly, the
District Court concluded that any loss suffered by Aurora should be born as to 80%
by Aon, and as to 20% by Aurora.
9. The District Court was unable to conclude whether Aurora had or had not suffered
financial loss, because it was not established whether Amlin rightly declined cover
under the Policy or was liable to indemnify Aurora for the loss of the Yacht. The
District Court directed that Aurora should be given the opportunity to state its position
in this regard, accompanied, if desired, by an advice or opinion issued by an expert in
English insurance law (paragraph 4.3 of the Judgment). It is for this purpose that my
Opinion has been requested.
10. The Policy, as the District Court found, contains an express warranty in the following
terms (so far as relevant):
“Warranty: The vessel is to be fully classed by a classification society that is an
IACS member. The vessel shall be classed without overdue or outstanding
recommendations...”
The Policy was also expressly governed by the law of England and Wales, and
disputes were subject to the exclusive jurisdiction of the courts of England and Wales.
11. It is clear, on the facts, that Aurora was in breach of the classification warranty at all
material times: the Yacht was never classed.
Breach of Warranty under English Law
12. Warranties are dealt with in sections 33—41 of the Marine Insurance Act, 1906 (“the
MIA”). Section 33(1) states that a warranty, for the purpose of the relevant sections,
means a warranty by which the assured undertakes that some particular thing shall or
shall not be done, or that some condition shall be fulfilled, or whereby he affirms or
negatives the existence of a particular state of facts. Section 35 States that an express
warranty may be in any form of words from which the intention to warrant is to be
inferred, and must be included in or written upon the policy, or contained in some
document incorporated by reference in the policy.
13. For present purposes, the warranty set out in paragraph 10 above was clearly an
express warranty within the meaning of sections 33(1) and 35 of the MIA.
14. The effect of breach of warranty under a marine insurance policy is clear as a matter
of English law, and is set out in section 33(3) of the MIA, in the following terms:
“A warranty, as defined above, is a condition which must be exactly complied with, whether it be material to the risk or not. If it be not so complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date.”
15. This provision has been authoritatively interpreted (in accordance with its terms) by
the House of Lords in Bank of Nova Scotia v. Hellenic War Risks Association
(Bermuda) Ltd (The Good Luck) [1992] 1 AC 233, as follows:
“So it is laid down in section 33(3) that, subject to any provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty. Those words are clear. They show that discharge of the insurer from liability is automatic and is not dependent on any decision by the insurer to treat the contract of insurance as at an end; though, under section 34(3) the insurer may waive the breach of warranty...
Section 33(3) of the Act reflects what has been described in successive editions of Chalmers, The Marine Insurance Act 1906 as the inveterate practice in marine insurance of using the term ‘warranty’ as signifying a condition precedent...
Once this is appreciated, it becomes readily understandable that, if a promissory warranty is not complied with, the insurer is discharged from liability as from the date of the breach of warranty, for the simple reason that fulfilment of the warranty is a condition precedent to the liability of the insurer. This moreover reflects the fact that the rationale of warranties in insurance law is that the insurer only accepts the risks provided that the warranty is fulfilled. This is entirely understandable, and it follows that the immediate effect of a breach of a promissory warranty is to discharge the insurer from the date of breach…”
16. In consequence, I am of the firm opinion, on the facts as I know them, that the effect
of Aurora’s breach of warranty as to the Yacht’s class was, as a matter of English law,
to discharge Amlin from any liability under the Policy ab initio. Amlin is not liable,
and cannot be made liable, to indemnify Aurora for the loss of the Yacht on 14 June
2013.