BETWEEN : ALLISON PTY LTD (ACN 056 940 437) t/as PILBARA MARINE PORT SERVICES

Marine insurance - Insured vessel lost in cyclone - Mooring line parted during passage of cyclone - Warranty that mooring complied fully with requirements of the local statutory authority - Mooring approved by Harbour Master informally but not in writing as required by regulation - Warranty mooring to be cyclone proof - Alleged breach of warranties - Alleged non-disclosure of facts material to risk - Whether sufficient under keel clearance at mooring site - Whether D shackle in mooring line had sufficient strength - Vessel shifted from usual mooring when cyclone imminent to non-approved mooring site honestly and reasonably believed to be safer - New mooring site not approved - Tied astern of another vessel - Marine Insurance Act (Cth) s 84(4) - Suing and labouring clause - Institute Time Clauses Hulls Port Risks - Justification for moving vessel in the face of approaching cyclone when honestly and reasonably believed this necessary for safety of vessel

Dampier Port Authority Regulations 1989 (WA)

Marine Insurance Act 1909 (Cth)

Judgment for plaintiff for $216,620.50 plus interest

Defendant : Mr G R Hancy (with Mr P G McGowan also appearing on 5 April 2005)

Australian Agricultural Co v Saunders (1875) LR 10 CP 668

Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd (The "Good Luck") [1992] 1 AC 233

Becker Gray & Co v London Assurance Corporation [1918] AC 101

Berns & Koppstein Inc v Orion Ins Co Ltd [1960] 1 Lloyd's Rep 276

British and Foreign Marine Insurance Co v Gaunt [1921] 2 AC 41

Butler v Wildman (1820) 3 B & Ald 398

Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55

Emperor Gold Mining Co Ltd v Switzerland General Insurance Co Ltd [1964] NSWR 1243

Gaunt v British and Foreign Insurance Co [1920] 1 KB 903

Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604

Glen Falls Insurance v Spencer (1956) 3 DLR (2D) 745 (Can)

Greenock SS Co v Maritime Insurance Co Ltd [1903] 1 KB 367

Handelsbanken v Dandridge [2002] EWCA Civ 577

Hong Kong Nylon Enterprises Ltd v QBE Insurance (Hong Kong) Ltd (2002) HCCL 46/1999

Johnson v American Home Assurance Co [1998] HCA 14; (1998) 192 CLR 266

Kuwait Airways Corporation v Kuwait Insurance Co SAK & Ors [1999] UKHL 12; [1999] 1 Lloyd's Rep 803

Lind v Mitchell (1928) 98 LJKB 120; [1928] All ER 447

Mahony v J Kruschich (Demolitions) Pty Ltd [1985] HCA 37; (1985) 156 CLR 522

Mentz, Decker & Co v Maritime Insurance Co [1910] 1 KB 132

Mercantile Mutual v Gibbs & Paraglide Pty Ltd [2001] WASCA 271; (2001) 24 WAR 453

N E Neter & Co v Licenses and General Insurance Co Ltd [1944] 1 All ER 341

Phillips v NZI Insurance Australia Ltd [1999] NSWSC 845

Provincial Insurance Co Ltd v Morgan [1933] AC 240

QBE Insurance v Moltoni Corporation Pty Ltd [2001] HCA 73; (2001) 205 CLR 149

Quebec Marine Insurance Co v Commercial Bank of Canada (1870) LR 3 PC 234

Re Mining Technologies Australia Pty Ltd [1999] Qd R 60

Simmonds v Cockell [1920] 1 KB 843

Skandia Insurance Co Ltd v Skoljarev [1979] HCA 45; (1979) 142 CLR 375

St John Shipping Corporation v Joseph Rank Ltd [1957] 1 QB 266

State of Netherlands (Minister of Defence) v Youell & Ors [1997] EWCA CIV 2715; [1998] 1 Lloyd's Rep 236

The Gold Sky [1972] 2 Lloyd's Rep 187

The Knight of St Michael [1898] P 30

The Vasso [1993] 2 Lloyd's Rep 309

Western Australian Bank v Royal Insurance Co [1908] HCA 11; (1908) 5 CLR 533

Whitehouse Hotels Pty Ltd v Lido Savoy Pty Ltd (1975) 49 ALJR 93

Wilson, Sons & Co v Owners of the Cargo of Xantho (The "Xantho") (1887) 12 App Cas 503

Woolmer v Muilman [1763] EngR 40; (1763) 3 Burr 1419

Yorkshire Insurance Co Ltd v Campbell [1916] HCA 75; (1916) 22 CLR 315

Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd (1999) 21 WAR 425

Akedian Co Ltd v Royal Insurance Australia Ltd (1997) 148 ALR 480

Anderson v Fitzgerald [1853] EngR 872; (1853) 4 HL Cas 484

Attorney General v Wright [1897] 2 QB 318

Australian Casualty Co Ltd v Federico [1986] HCA 32; [1986] 160 CLR 513

Banque Financiers de la Cite SA v Slandia (UK) Insurance Co Ltd; Westgate Insurance Co Ltd [1991] 2 AC 249

Bates v Hewitt (1867) LR 2 QB 595

British Traders Insurance Co Ltd v Monson [1964] HCA 24; (1964) 111 CLR 86

CIC Insurance Ltd v Barwon Region Water Authority [1998] VSCA 77; [1999] 1 VR 683

Commercial Union Assurance Co of Aust Ltd v Ferrcom Pty Ltd & Anor (1991) 22 NSWLR 389

Eastman v Director of Public Prosecutions (ACT) [2003] HCA 28; (2003) 214 CLR 318

GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631

Hammer Waste Pty Ltd v QBE Mercantile Mutual Ltd [2002] NSWSC 1006; (2003) 12 ANZ Ins Cas 61-553

Harper v Pelican Trucking Company Inc (1965) 176 50 2d 767

Homestate Australia Ltd v Metana Minerals NL (1991) 11 WAR 435

Integrated Container Service Inc v British Traders Insurance Co Ltd [1984] 1 Lloyd's Rep 154

Kelly v New Zealand Insurance Co Ltd (1996) 130 FLR 97

Khoury v Government Insurance Office (NSW) [1984] HCA 55; (1984) 165 CLR 622

Kidsbone v Empire Insurance Co (1867) LR 2 CP 357

Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404

Komorowski v Australian Associated Motor Insurers (1996) 9 ANZ Ins Cas 61-303

Lasermax Engineering Pty Ltd v QBE Insurance (Australia) Ltd [2005] NSWCA 66; (2005) 13 ANZ Ins Cas 61-643

Mackay v Dick (1881) 6 App Cas 251

Manifest Shipping Co v Uni-Polaris Insurance Co (The "Star Sea") [2003] 1 AC 459

Marist Brothers Community Inc v Shire of Harvey (1994) 14 WAR 69

McCann v Switzerland Insurance Australia Ltd & Ors [2000] HCA 65; (2000) 203 CLR 579

Netherlands Insurance Co Est 1845 Ltd v Karl Ljunberg & Co AB (The "Mammoth Pine") [1986] 2 Lloyd's Rep 19

Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501

President of India v Lips Marine Corporation [1987] 2 Lloyd's Rep 311

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Re Zurich Australian Insurance [1999] 2 Qd R 203

Robertson & Thomas v French [1803] EngR 639; (1803) 4 East 130

Royal Boskalis Westminster v Trevor Rex Mountain [1999] QB 674

Secured Income Real Estate (Australia) Ltd v St Martin's Investments Pty Ltd [1979] HCA 51; (1997) 144 CLR 596

Smith v Wyong Shire Council [2003] NSWCA 322; (2003) 132 LGERA 148

Sprung v Royal Insurance (UK) Ltd [1999] 1 Lloyd's Rep 111

Stringer & Ors v English and Scottish Marine Insurance Co Ltd (1869) LR 4 QB 676

Ventouris v Mountain (The "Italia Express") (No 2 ) [1992] 2 Lloyd's Rep 281

Vermeulen v SIMU Mutual Insurance Association (1987) 4 ANZ Ins Cas 60-812

1 EM HEENAN J: In this case the plaintiff sues for an indemnity under the terms of a marine insurance policy for the loss of its vessel the "Pilbara Pilot" or, alternatively, for damages for breach of that policy by alleged wrongful repudiation by the insurer. The insurer claims that there was a material non-disclosure by the plaintiff at the time the policy was issued, and that there were breaches of express warranties by the insured relating to the requirement for the vessel's mooring to be cyclone proof and also by a failure to comply fully with the requirements of the "local statutory authority". The insurer asserts that it was discharged from any liability under the policy by reason of the breaches of warranty - Marine Insurance Act 1909, s 39(3) and, or alternatively, that it was justified in rescinding the policy once it became aware of the non-disclosure. The alleged non-disclosure also raises the issues of whether or not the mooring complied with the requirements of the "local statutory authority" and was "cyclone proof".

2 The "Pilbara Pilot" was lost in Hampton Harbour, Dampier, sometime during 24 or 25 February 1995 during the passage of Tropical Cyclone "Bobby" down the Western Australian coast. Tropical Cyclone Bobby approached the coastline from a generally north-easterly to northerly direction, passing about 85 kms offshore west of Dampier and eventually crossing the coast further south at Onslow where there was loss of life when other vessels also foundered.

3 The layout of Hampton Harbour, Dampier, is depicted on the Naval chart (Exhibit 7) in these proceedings. To the north lie the waters of Mermaid Sound, bounded by East Lewis Island offshore to the west. The coastline of the mainland runs in a north-easterly direction to the Burrup Peninsular and the off-lying islands of the Dampier Archipelago further to the north-east. At the inner reaches of Mermaid Sound, East Intercourse Island lies between the mainland and East Lewis Island to the north-west. A man-made causeway runs from the mainland to the south-east end of East Intercourse Island, upon which is constructed a roadway and railway line for the transport of iron ore by rail to the stockpile at a deepwater port at the north-west of East Intercourse Island. This causeway is a barrier to the sea and effectively turns the waters between East Intercourse Island and the mainland into a sound and it is part of these waters which comprise Hampton Harbour. At the north-east entrance to the harbour the waters are bound by Ledge Point at the north-east of East Intercourse Island, by the small Tidepole island and by Parker Point on the mainland. Apart from a dredged channel running from the causeway north-east through Hampton Harbour to Mermaid Sound east of Ledge Point, the waters generally are much shallower than Mermaid Sound and, to an extent, lie in the lee of East Intercourse Island. The whole area comes under the control of the Dampier Port Authority, established under the Dampier Port Authority Act 1989, and is subject to the control of a Harbour Master appointed under that legislation.

4 The usual mooring of the "Pilbara Pilot" was at a point to the south of Boat Rock in approximately 1.8 metres of water at Australian Low Water Datum ("ALD") in or near an area of approved anchorage for small craft. There was another area for small craft anchorages south of Channel Island. Both of these were inshore of the dredged channel running north-east from the causeway. To the north-west of that channel however, lay an area of deeper water in the lee of East Intercourse Island in which there were other small craft moored at approved moorings. One of these was the vessel "Pilbara Jarrah", also owned by the plaintiff, in water of 4 metres depth ALD.

5 In circumstances which it will be necessary to describe more fully later, the plaintiff, as a result of judgments formed by three of its experienced marine captains, believed that the "Pilbara Pilot" would be at risk if left at its usual mooring as Tropical Cyclone Bobby approached and, for the safety of the vessel, decided to shift her to another mooring in the lee of East Intercourse Island and did so, tying her astern of the "Pilbara Jarrah". The justification for moving the "Pilbara Pilot" in these circumstances with the result that she was tethered, not to a mooring but, unwisely as it turned out, to the rear of another vessel exposing her to greater shock loads in the developing weather conditions, goes to the heart of this case. The decision was taken, and the vessel was moved only very shortly before Dampier Harbour went onto red cyclone alert which meant that, from the time of the declaration of that alert, no movements of vessels or personnel in the harbour would be permitted.

6 On the morning of 25 February 1995, after the passage of the cyclone, the "Pilbara Pilot" could not be seen behind the "Pilbara Jarrah" and her mooring lines were found to have parted. Later in the day a search of the harbour revealed debris from the "Pilbara Pilot" on the north-eastern banks of the causeway and further investigation showed that the vessel had sunk after apparently being battered against the rocks comprising the causeway. The Harbour Master ordered that the wreck be removed and that was done some days later. The wreck of the vessel was taken ashore and photographed by the defendant's investigating advisor Captain Ollivier and these photographs comprise Exhibits 82 (1 to 14).

7 At the bow of the "Pilbara Pilot" there is a metal fairlead with protruding cow horns which was bolted to the upper deck. The mooring lines passed between the cow horns over this fairlead to a Sampson post on the foredeck. There was no significant damage to the Sampson post found on the wreck of the vessel, but the forward edges of the base plate of the fairlead were found to have been turned up where the leading bolts had become dislodged. The general consensus of all investigators and observers is that the forward bolts of the fairlead had worked loose and had been dislodged by various pressures of the mooring lines under the cow horns. This pressure was caused by the motions of the vessel in the severe weather conditions experienced. These resulted in the turning up of the metal edge of the fairlead plate, thus providing a friction or cutting edge for the mooring ropes when under tension. At some point in the storm this process of abrasion of the ropes caused the mooring lines to part leaving the "Pilbara Pilot" adrift. She was then driven, under the prevailing north-easterly wind waves and swell, onto the rocks of the causeway where she was badly battered and eventually sank.

8 It is in these circumstances that the plaintiff, as owner of the vessel, claims for a loss of $200,000 plus salvage expenses under the policy plus interest from the date when the claim was refused. As already mentioned, the defendant insurer has refused the claim and rescinded the policy relying upon alleged breaches of express warranties made by the insured in the policy and upon non-disclosure. These grounds for refusal relate not only to the act of mooring astern of the "Pilbara Jarrah" from where the "Pilbara Pilot" was lost but, more particularly, to the condition of the usual mooring south of Boat Rock from which she had been moved during the approach of the cyclone.

9 While the defendant does not allege that breaches of warranty in respect of the condition of the usual mooring led to the loss of the "Pilbara Pilot", it maintains that any breach of warranty under a policy of marine insurance, unless waived, discharges the insurer entirely from any liability under the policy notwithstanding that the breach or breaches of warranty concerned were not causative of the loss - see Marine Insurance Act, s 39(3) and Quebec Marine Insurance Co v Commercial Bank of Canada (1870) LR 3 PC 234; Woolmer v Muilman [1763] EngR 40; (1763) 3 Burr 1419; Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd (The "Good Luck") [1992] 1 AC 233; Yorkshire Insurance Co Ltd v Campbell [1916] HCA 75; (1916) 22 CLR 315; Mercantile Mutual v Gibbs & Paraglide Pty Ltd [2001] WASCA 271; (2001) 24 WAR 453 par 119 (affirmed in Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604). The Insurance Contracts Act 1984 (Cth) and, in particular, the provisions of s 54, do not apply to contracts of marine insurance - QBE Insurance v Moltoni Corporation Pty Ltd [2001] HCA 73; (2001) 205 CLR 149.

10 While it is often said that the Marine Insurance Act 1909 (and its UK predecessor the MIA 1904) has codified the law of marine insurance, as in for example, Skandia Insurance Co Ltd v Skoljarev [1979] HCA 45; (1979) 142 CLR 375 per Mason J at 384, Kuwait Airways Corporation v Kuwait Insurance Co SAK & Ors [1999] UKHL 12; [1999] 1 Lloyd's Rep 803 per Lord Hobhouse; and State of Netherlands (Minister of Defence) v Youell & Ors [1997] EWCA CIV 2715; [1998] 1 Lloyd's Rep 236 per Phillips LJ, as observed by the Australian Law Reform Commission in its report on the review of the Marine Insurance Act 1909 (Report 91, April 2001) that is only true in part because s 4 specifically preserves the rules of the common law "including the law merchant" except to the extent that it is inconsistent with express provisions of the Act. Furthermore, in par 4.5 of that report, the ALRC observes that in many places the Act specifically preserves the parties' ability to agree on terms other than those set out in the legislation and that this often has the effect of permitting contracts which are more favourable to the insured.

11 Accordingly, a warranty in a policy of marine insurance is a contractual term of unique significance in that any breach of the warranty automatically terminates the contract regardless of materiality and, in this way, the effect of a warranty is even more far reaching than that of a condition in another commercial contract because, even in the case of breach of condition, termination of a contract depends upon the election of the innocent party to do so. As summarised by the ALRC in its report at par 4.31:

"A warranty must be exactly complied with, whether or not it is material to the risk. If there is a breach, the insurer is automatically discharged from liability from the date of the breach although without prejudice to any liability that may have been incurred by the insurer before that date. The insurer is not required to elect to be discharged from liability but it may waive the consequences of the breach. There need be no link, causative or otherwise, between the breach and any loss or claim under the policy. The breach cannot be remedied with the result or purpose of putting the policy back on foot before any loss occurs. It matters not if the breach is trivial; the consequences remain the same."

These consequences also led the authors of the ALRC report to observe (at par 9.10) that "the peculiar impact of a warranty in marine insurance would surprise many not familiar with it, and concerns many who are".

12 Any express or implied warranty may be excluded by the express terms or clauses in the policy itself (s 41(3)) and so a particular warranty, including the implied warranty of seaworthiness, may be restricted or neutralised by an appropriate "held covered" clause in the policy such as "held covered in case of any breach of warranty at a premium to be hereinafter arranged" - Greenock SS Co v Maritime Insurance Co Ltd [1903] 1 KB 367 and Mentz, Decker & Co v Maritime Insurance Co [1910] 1 KB 132.

13 At one point, in the course of submissions advancing the proposition that the terms of a warranty may be modified by other express terms of the marine insurance policy, counsel for the plaintiff referred to the decision of Stone J in Hong Kong Nylon Enterprises Ltd v QBE Insurance (Hong Kong) Ltd (2002) HCCL 46/1999 where the provisions of cl 8.3 of the Institute Cargo Clauses (A) provided that the insurance should remain in force during delay beyond the control of the assured, any deviation, forced discharge, reshipment or trans-shipment during any variation of the adventure arising from exercise of the liberty granted to ship owners or charterers under the contract of affreightment. In that case, one of the carriers, in the course of a multi-stage trans-shipment of the cargo, transported the cargo otherwise than within a container which, prima facie, appeared to be in breach of an express warranty that the cargo would be shipped in containers. However, the bill of lading for that stage of the journey authorised that carrier to carry the goods in any commercially reasonable manner, including by trans-shipment or by the use of other carriers. Stone J held that cl 8.3 of the ICC (A) was equivalent to a "held covered" provision and was within the scope of the liberty granted to the ship owner so that the insurance remained in place. The breach of warranty was one which occurred within the parameters contemplated by cl 8.3 and, therefore, did not discharge the policy. It was not submitted that there was a "held covered" clause in the policy of marine insurance for the "Pilbara Pilot" or in the incorporated Institute Cargo Clauses Hulls but, Mr Stone, for the plaintiff, did submit that the combination of s 84(4) of the Marine Insurance Act, cl 14 of the Institute Cargo Clauses Hulls, as incorporated into the policy, and the master's/owner's duty to take steps to protect the vessel in the face of impending harm meant that the move of the "Pilbara Pilot" on the afternoon of 23 February 1995 from its usual mooring to the position on the western side of Hampton Harbour astern of the "Pilbara Jarrah", did not constitute a breach of the warranty to moor the vessel at a cyclone proof mooring.

14 For this reason the greater part of the evidence and the submissions in this case concerned the features of the usual mooring of the vessel south of Boat Rock and, in particular, whether this mooring complied with the warranties given by the insured under the policy, even though the vessel was not at that mooring when it went adrift and was lost in this cyclone.

15 The plaintiff's case is that the usual mooring of the "Pilbara Pilot" at all times satisfied the warranties in the policy. One qualification admitted by the plaintiff is that, contrary to the belief of its personnel and of the Harbour Master at Dampier at the time of the cyclone, there was in fact no original written approval for that mooring in terms said by the defendant to be required by the Dampier Port Authority Regulations and, in particular, reg 39. The plaintiff's position, however, is that the requirements of that regulation did not extend to the plaintiff who acquired that mooring from a former owner. A closer consideration of the requirements of those regulations will therefore be undertaken after more details of the circumstances leading to the loss have been described.

16 The plaintiff also contends that the decision to move the vessel in the face of the approaching cyclone was a decision honestly and reasonably taken by experienced marine officers in the course of an acknowledged duty to act to preserve the safety of the vessel when threatened. That, in hindsight, the "Pilbara Pilot" might have safely ridden out the passage of the cyclone if it had remained moored at its usual mooring, is not to the point on the plaintiff's case.

17 Further, the plaintiff acknowledges that tying the "Pilbara Pilot" astern of the "Pilbara Jarrah" at the latter's mooring closer to East Intercourse Island did not constitute an approved mooring which would satisfy the requirements of the Dampier Port Authority nor was it, as events proved, a cyclone proof mooring. It was, nevertheless, the plaintiff asserts, a reasonable precaution, and the only available practical option, for the preservation of the vessel once it was decided that it should be moved from its usual mooring. According to the plaintiff, such a step, including non-compliance with the express warranty in the insurance policy, is justified in the face of such an emergency by reason of the general duty on ship owners and masters to preserve the safety of their vessels and, more particularly, by the provisions of s 84(4) of the Marine Insurance Act and cl 14 of the "Institute Time Clauses Hulls Port Risks" which, so it is submitted, created an obligation more extensive than merely to sue or to labour once a loss has been suffered.

18 There are four features of the usual mooring which were identified by the defendant as resulting in breaches of the express warranties in the policy and justifying rescission of the policy. These are:

(1) the original mooring was never the subject of a written application for approval by the Dampier Harbour Master as required by reg 39 and no written approval as required by reg 40 was ever granted;

(2) for a vessel with the draft and dimensions of the "Pilbara Pilot" there was insufficient under keel clearance of the seabed in the area at which she would be expected to swing on that mooring;

(3) there were breaking waves at the usual mooring during cyclone conditions; and

(4) one of the components in the mooring line at this mooring, namely a D shackle, is alleged to have had insufficient capacity to withstand the expected forces on the line which would be caused by the winds anticipated in such a cyclone upon this particular vessel.

19 Having made these preliminary observations it is necessary to set out the precise details of the "Pilbara Pilot" and the material provisions of the policy of marine insurance.

20 The "Pilbara Pilot" was a 14.6 metre seagoing, covered pilot/personnel vessel. Her beam was 4.3 metres and she was built in 1983 of fibreglass and was of hard Chine type and design. She was powered by two 260 BHP Volvo engines. According to the proposal for this particular insurance (Exhibit 73) the draft was put at 1.5 metres and she had last been overhauled in 1994.

21 She was under contract by the plaintiff to the Dampier Port Authority to act as a pilot boat to carry pilots to and from large iron ore carrying vessels entering and leaving the port. There is some uncertainty about her draught, with estimates varying from 1 metre to 1.4 metres, although much of the evidence indicated that she was of about 1.2 metres draught. Before the vessel was acquired by the plaintiff in November 1993 she was owned and operated in the Dampier Harbour under the name of "Burrup Pilot".

22 After her loss in this storm, the wreck was raised and put on shore where the photographs (Exhibits 82 (1 to 14)), already described, were taken. Since then the hull was disposed of and taken to Fremantle where it has undergone repairs and the vessel is now known under the name "Second Chance". It is this repaired vessel which was inspected and measured by Mr R K Leslie in order for the area of her front profile to be calculated so that wind forces on the vessel when moored could be estimated. These measurements were done in March/April 2005 and conveyed to the plaintiff's engineer, Mr Siragusa, who incorporated them in the calculations which he prepared to estimate the forces on the mooring line and, in particular, upon the D shackle.

23 The value of the "Pilbara Pilot" at the date of the loss was $250,000 (Exhibit 19, par 114B) but it was insured only for $200,000 (Exhibit 1). It is agreed that the vessel should be treated as a constructive total loss. There were also salvage expenses of $16,620.50 for its removal from the seabed near the causeway. The defendant accepted at the trial that this additional sum would be recoverable in the event that it were liable to indemnify the plaintiff under the policy - cl 10 of the Institute Time Clauses Hulls applies.

24 The plaintiff's claim for indemnity under the policy was rejected by the defendant after investigation into the circumstances of the loss had been conducted for the defendant by Captain Ollivier. The reasons given by the defendant at the time for rejecting the claim are set out in Exhibit 21, a letter from the insurer's solicitors dated 10 May 1995. This date is significant because it is from then that the plaintiff claims to be entitled to interest on the indemnity payable under the policy if it should succeed in the action. The reasons then given for refusing the claim were:

1. Failure to comply with the warranty that the vessel was to be moored on cyclone proof moorings.

2. Failure to comply with the warranty that the vessel would be operated strictly in accordance with the local statutory requirements. The Authority requirement is that during a cyclone each vessel is to be secured to its own mooring, one vessel per mooring.

Later, by letter dated 7 December 1995 (Exhibit 22) the defendant's solicitors claimed that the insurer was entitled to rescind the insurance contract for non-disclosure arising from the same factors. At this point no issue was raised by the insurer concerning alleged inadequacy of the D shackle in the mooring line at the usual mooring. An amendment to raise that issue was only introduced by the defendant during the course of the trial, although the possibility of such an allegation had been foreshadowed earlier and there had been some consideration of that possibility by experts on both sides before then.

25 The mooring usually employed to secure the "Pilbara Pilot" had been acquired by the plaintiff from Mr R B Vitenbergs in January 1993. It was Mr Vitenbergs who had installed that mooring himself in or about 1987 (replacing an earlier smaller mooring) and it had been used by him, until it passed to the plaintiff, to moor his vessel the "Early Bird". This mooring position is situated at Lat 20 deg 39.561 min, Long 116 deg 42.128 min.

26 To comply with the requirements of the Dampier Harbour Authority, the plaintiff undertook an inspection of the mooring and provided a written report on this inspection to the Harbour Master in September 1994. In that report of 12 September 1994 (Exhibit 6), the Manager of Pilbara Marine Port Services of the plaintiff advised:

"This mooring position ... was inspected on 21 August 1994, by lifting the mooring using the Pilbara Jarrah, the mooring consists of three railway wheels with a length of 30 mm chain as the ground chain with a length of 16 mm chain as the riser chain to the buoy. The buoy and pennant line was replaced on 21/8/94, the chain and shackles inspected and found to be in good condition not needing replacement."

27 The marine hull policy between the plaintiff and the defendant issued on 13 December 1994 - Policy No 7H-1402226 and is Exhibit 1. The period of insurance was from 9 December 1994 to 9 December 1995 and was in respect of voyage warranties in Western Australian inland and coastal waters. This policy also covered two other vessels owned by the plaintiff, namely the "Pilbara Moonlight", a 16.38 metre personnel/supply vessel and the "Pilbara Mercury", a 12.41 metre pilot vessel. The conditions attaching included provisions for navigating limits and use as:

"Whilst used as above in Western Australian inland and coastal waters as permitted per local statutory authority."

The conditions also adopted the Institute Time Clauses Hulls Ports Risks Limited Navigation 20/7/87. The policy was signed by an agent for the defendant on 11 January 1995 and it included the following express warranties:

(i) ...

(ii) Vessel in survey, manned, crewed & operating strictly in accordance with Local Statutory Authority requirements.

(iii) Vessels are moored on cyclone proof moorings."

Annexed to the policy and incorporated in it is a document "Institute Time Clauses Hulls Port Risks including Limited Navigation" and, among other things, this enumerates the perils insured against and, in this regard, includes:

5.1 This insurance covers loss of or damage to the subject-matter insured caused by:

5.1.1 perils of the seas, rivers, lakes or other navigable waters."

28 Subject to the obligations of disclosure and compliance with warranties contained in the policy, the parties are agreed that this policy covers the insured for the risk of the loss of the vessel due to it breaking its moorings, and sinking or otherwise becoming lost by reason of adverse weather including cyclones: Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55 per Lord Wright at 67 - 70 and per Lord Herschell in Wilson, Sons & Co v Owners of the Cargo of Xantho (The "Xantho") (1887) 12 App Cas 503 and N E Neter & Co v Licenses and General Insurance Co Ltd [1944] 1 All ER 341.

29 In the Institute Times Clauses Hulls Port Risks there is to be found the following clause upon which the plaintiff relies:

14.1 In the case of any loss or misfortune it is the duty of the Assured and their servants and agents to take such measures as may be reasonable for the purpose of averting or minimising a loss which would be recoverable under this insurance.

14.2 Subject to the provisions below and to Clause 13 the Underwriters will contribute to charges properly and reasonably incurred by the Assured their servants or agents for such measures. General average, salvage charges (except as provided for in Clause 14.5) collision defence or attack costs and costs incurred by the Assured in avoiding, minimising or contesting liability covered by Clause 10 are not recoverable under this Clause 14.

14.3 Measures taken by the Assured or the Underwriters with the object of saving, protecting or recovering the subject-matter insured shall not be considered as a waiver or acceptance of abandonment or otherwise prejudice the rights of either party.

14.4 ...

14.5 ...

14.6 The sum recoverable under this Clause 14 shall be in addition to the loss otherwise recoverable under this insurance but shall in no circumstances exceed the amount insured under this insurance in respect of the Vessel."

This provision is an addition to s 84(4) of the Act which the plaintiff submits gives statutory force to similar obligations.

30 The soundings on a Naval Chart (Exhibit 7) for Hampton Harbour and all areas of the sea depicted are shown in metres and are reduced to Chart Datum which is approximately the level of the Lowest Astronomical Tide ("LAT"). This was explained in evidence as being the lowest sea level experienced at the lowest tide at a time when the astronomical conditions were such as to produce the lowest tide experienced. It would only be on very rare occasions that the sea level would drop to that recorded for the LAT. In more usual conditions of tide, even at low tide, the sea level would be significantly above the LAT reading. Measures of tide recorded in charts, meteorological and other data sources are given in dimensions above LAT so that if, for example, at low tide the tide was 0.9 metres at an area where the LAT was 1.8 metres that would mean that the still water depth at that point would be 2.7 metres. Corresponding additions to the LAT level for tidal or other increases in sea water levels need to be made for water depths at high tide or when there are storm surges or other factors influencing the sea level.

31 As well as the effects on still water level produced by the tides, it is accepted by mariners and hydrographers that the still water level will be affected by atmospheric (barometric) pressure at any particular location. So, if the atmospheric (barometric) pressure is low at any particular point, the sea level will be higher. Conversely, if the atmospheric (barometric) pressure is high at any particular point the sea level will be lower. There is an accepted relationship between the local prevailing barometric pressure and the sea level - namely, that for every 100 Kilo Newtons (millibars) change in barometric pressure there will be a 10 cm change in sea level. So, for a high pressure system of 1090 Kilo Newtons (1090 millibars), the water level in that area will be 10 cms lower than it would be at that point in a low pressure system of 990 Kilo Newtons (990 millibars).

32 Cyclones, of course, are low pressure systems and Tropical Cyclone Bobby was a severe cyclone. During the period from 24 February 1995 at 2 am until 25 February 1995 at 8 am its central pressure (in hectopascals) was 955 or less reaching a minimum of 925 hectopascals on 24 February at 5 pm. At its closest it passed 85 kms west of Dampier but during the time of these recordings it was 120 kms, closing to 85 kms and then increasing to 158 kms, away from that town (see meteorological report - Exhibit 34, Table 1). In such conditions all the experienced marine captains who gave evidence accepted that the effect of the low pressure cyclonic system, among other things, would be to elevate the sea level because of the low atmospheric pressure.

33 In addition to tidal and barometric forces having an effect upon sea levels, the evidence from the marine and expert witnesses was to the effect that the sea level could also be expected to be elevated because of "storm surge". In this context "storm surge" was described as the effect upon sea levels at a coast, and more particularly in closed waters such as a sound, produced by the effects of swell and wind combining to push up the waters against a shoreline or in an enclosed bay. Such a surge effect would be expected in an area such as Hampton Harbour, which is enclosed to the east by the mainland, by the west to East Intercourse Island and to the south by the causeway so that, with heavy weather comprising swell and wind from the north or north-east there would be a piling up effect or surge of the sea within the confines of Hampton Harbour.

34 There was a difference of opinion between the expert witnesses, however, upon whether any allowance, let alone what allowance, should be made or calculated for increased water levels due to storm surge in these conditions. Those experts who rejected the approach that one could or should allow for increased water levels due to storm surge in an area such as Hampton Harbour during a cyclone did so on the basis that the extent of this effect is unpredictable, seldom if ever uniform, and would be affected by timing so that if, for example, the maximum adverse weather conditions occurred at low tide, particularly an abnormally low tide, it would be erroneous and misleading to assume or calculate its effects. At this point it is sufficient to note the existence of this controversy about the effect and extent of storm surge and to defer more detailed discussion until evaluation of the evidence on this issue is undertaken.

35 The effect of tide, atmospheric (barometric) pressure and storm surge on sea levels in an area such as Hampton Harbour has so far been described solely in relation to still water level. However, there will seldom be still water in Hampton Harbour and certainly not during bad weather or when an offshore cyclone is approaching. The water level at any point will obviously fluctuate under the effect of waves and swell and more so when waves are breaking. Swell is determined by the effect of wind over a very large expanse, or "fetch" of sea and an area may be exposed to significant swells well before, and long after, a storm or cyclone comes close. The sea conditions, in contrast to the swell, will be formed by more local forces such as wind and the configuration of shorelines, islands, rocks or other physical features. The direction of the sea may or may not be the same as the direction of the swell and the two combine to produce variations in the still water levels at any particular place, depending upon local conditions and the prevailing sea and swell patterns.

36 The height of a wave (whether produced by swell, sea or a combination of both) is measured, or estimated as the vertical distance between a crest and the trough of the wave. In deep water it is usually the case that the crest and the trough are, respectively, equi-distant from the still water level. But this is not the case in shallow water. As a wave formed by swell or sea, or both, approaches a coast, or some other area of shallow water, more of the crest of the wave and less of its trough will be above or below, respectively, the still water level. The higher the crest the closer the wave comes to breaking. There is an established relationship known as the "breaking index" for waves in shallow water, deriving from observations, which predicts that a wave will break when the height of its crest to the still water depth of the sea in that area reaches a ratio of 70 per cent. This means, effectively, that there is a maximum height for any wave in shallow water before it begins to break and, consequently, a minimum water depth produced by the trough of an approaching wave. These are all considerations which should be taken into account when considering the sufficiency of the depth of the water at a mooring site for any particular vessel.

37 The following extracts are taken from the Australian Government Bureau of Meteorology Report prepared by the Severe Weather Section for the plaintiff's solicitors dated 10 February 2005 (Exhibit 34). That report includes:

"TC Bobby developed from a tropical low that moved westwards across the Timor Sea during 20-21 February. It was named as a Category 1 cyclone at 7 am on Wednesday 22 February when located about 500 km north of Port Hedland. Bobby continued to intensify, reaching Category 3 status by the morning of the 23rd when it was about 250 km to the north of Karratha.

The cyclone commenced a more southerly track and slowed down during the 23rd and 24th as it moved closer to the West Pilbara coastline. The cyclone was very near the coast to the west of Mardie by late afternoon on the 24th and had further intensified to Category 4 status. The path of the cyclone was very erratic during the evening of the 24th as it moved along the coastline towards Onslow. It eventually crossed the coast just to the east of Onslow between midnight and 1 am on the 25th, then moved slowly southward over land and began to weaken. By the morning of the 26th it was located just to the southeast of Gascoyne Junction and had been downgraded to Category 2 intensity. Bobby weakened to a rain-bearing depression as it moved across the Gascoyne and Goldfields during the 26th and 27th.

... "

Turning to the impact of Tropical Cyclone Bobby at Dampier, the report said:

"Gale-force winds (at least 34 knots or 63 km/h) commenced on the morning of the 23rd at Dampier (from 9 am), Legendre Island (from 5 am) and Karratha (from 10 am). The wind direction at this stage was easterly. By 2 pm Bobby was less than 200 km to the north of Dampier and moving to the south/south-east. Winds gradually backed to the east/north-east overnight and to the northeast by 6 am. At this time Dampier reported average winds of 45 knots (83 km/h) but no further observations are available until midnight. At Karratha winds briefly reached storm-force at 12:37 pm (52 knots or 96 km/h) when the highest wind gust was recorded to 63 knots (117 km/h). As the wind speed was not continuously measured at Dampier, it is possible that slightly higher wind gusts occurred. At about this time the wind direction was from the north/north-east and Bobby was less than 100 km from Dampier. Winds at Legendre Island reached storm force (sustained winds of at least 48 knots (89 km/h)) at 3 am on the 24th and lasted for 11 - 12 hours. Legendre Island's winds peaked at 61 knots (112 km/h) at 11 am.

During the afternoon on the 24th Bobby tracked to the south/south-west away from Dampier and eventually crossed the coast near Onslow just after midnight. The midnight to 6 am observations on the 25th at Dampier showed gales from the north/north-west. The next observation at 3 pm showed winds below gale-force from the north-west. At Karratha the winds eased below gale-force on the afternoon of the 24th, much earlier than at either Dampier or Legendre Island.

The measured wind speed tended to be higher at Dampier than at Karratha Airport because of several factors:

1. Dampier is more exposed to the ocean in the north to north-easterly airflow than Karratha being on the coast, whereas Karratha is at the Airport further inland. This means the Dampier site experiences higher winds than Karratha Airport.

2. The Dampier anemometer is on an 11m mast and the site is elevated at 48m above sea level on the edge of an escarpment, whereas the Karratha anemometer is on a 10m mast and the site is at 7m above sea level.

3. Bobby was closer to Dampier than Karratha.

In summary, it is likely that gales occurred at Dampier Port from about 9 am on the 23rd to about midday on the 25th a period of about 50 hours. A period of storm-force winds is likely on the 24th. The actual time can only be estimated as there were no observations at Dampier between 9 am and midnight. The most likely period of storm-force winds is mid-morning to mid to late afternoon or possibly early evening. The wind direction during this period would have been north/north-easterly initially to north/north-westerly in the evening.

Although Dampier was within 85 kilometres of Bobby at its closest point, at no time was it within the area of maximum winds nor did it experience hurricane-force winds (sustained winds of at least 120 km/h)."

The meteorological report goes on to deal with wave height in Hampton Harbour and observes that on the information available it appeared that significant wave height in Mermaid Sound reached 3 to 4 metres at the height of the winds. Significant wave height is defined as representing the average of the highest one third of the combined swell and wind waves. The author of the report remarked that, given the geography of the area, it is likely that waves would have been less at Hampton Harbour compared to the more exposed parts of Mermaid Sound and that wave heights would have been much less in the lee of the islands in the vicinity of the harbour.

38 Turning to the unusual features of Cyclone Bobby, the report said:

"TC Bobby was noted for its movement prior to crossing the coast. The detailed track shown in figure 2 highlights the change of movement before coastal crossing. At 2 pm on the 24th Bobby was moving to the south at 15 km/h but by 11 pm it had slowed to just 6 km/h. The slower movement meant that severe winds were maintained along the coast longer than if the cyclone had moved faster. Gale-force winds were maintained at Dampier for about 50 hours. Although it is difficult to make comparisons with historical events, this duration of gales is likely to be one of the longest since cyclone records commenced.

Otherwise the winds at Dampier were not unusual either in terms of direction or intensity. The wind direction as shown in figure 3 is what would be expected for a cyclone in that location. Winds rotate clockwise around the centre of a tropical cyclone with a slight inward bias. At figure 3a at 9 am on February 23 Bobby was located north of Dampier and so winds were from a generally easterly direction. This easterly direction was maintained during the identified period of 10.30 am to 12.30 pm on 23rd. As Bobby moved to the south/south-west, Dampier became located in the south-east quadrant relative to the system's centre. So by late on the 23rd and on the morning of the 24th winds at Dampier shifted more to the north-east (as in figure 3b). As Bobby went south of the latitude of Dampier (as in figure 3c), the wind at Dampier shifted to the north then north-west. From then on Bobby was in the north-east quadrant of Bobby and Dampier winds remained a general north-westerly as shown in figure 3d.

Summary

Winds at Dampier during TC Bobby are estimated to have reached storm-force possibly for a period of approximately 12 hours. The period of gales appears to be about 50 hours. A distinguishing feature of Bobby's impact on Dampier was the duration of the gale-force winds. The maximum wind gust at Dampier was not recorded. At Karratha Airport the maximum recorded wind gust was 117 km/h. The maximum gust at Dampier would have exceeded that at Karratha Airport, possibly reaching about 140 km/h. Dampier was outside the zone of maximum winds of TC Bobby and did not experience hurricane-force winds (wind gusts of 170 km/h and greater)."

39 This report of the significant wave height in Mermaid Sound reaching 3 to 4 metres at the height of the winds assumes importance in relation to the defendant's contention that the usual mooring for the "Pilbara Pilot" was not cyclone proof because it was located in an area of breaking waves. I accept the evidence which suggests that waves of this magnitude could be expected to break when reaching the shallow water at the entrance to Hampton Harbour at a line running from Ledge Point to the north-east point of Tidepole Island and thence to Parker Point. The usual mooring was a significant distance to the south-west of this line. There was no direct evidence that waves had been seen during the passage of the cyclone breaking in or around this area.

40 There was evidence that waves were seen breaking on the eastern shore of Tidepole Island toward the northern end, but this is consistent with the larger sea and swell coming down Mermaid Sound breaking at the entrance to Hampton Harbour. There were other vessels moored in the vicinity of the "Pilbara Pilot's" usual mooring which rode out the passage of the cyclone without harm and without breaking their moorings. There is no evidence of direct observation that waves were breaking in the vicinity of the usual mooring during the passage of Cyclone Bobby and the defendant's evidence in this regard consists only of inferences which could be drawn from expert evidence about wave shape and height, and the breaker index in waters near the usual mooring based on assumptions about the depth of water in that area during the passage of the cyclone.

41 In this regard it is necessary to consider closely the effect of the evidence of Captain Douglas, and other experienced masters, that in cyclones, particularly in areas of confined waters, the problem is too much water rather than not enough. This evidence, coming from years of maritime experience in many locations, was to the effect that it is notorious that during the passage of cyclones the waters in areas such as Hampton Harbour would inevitably rise significantly with the combined effect of wind, sea, swell, storm surge and low atmospheric pressure. This was borne out by a photograph (Exhibit 48) taken during the passage of another cyclone, Cyclone "Olivia" (February 1996), showing that the sea levels and swells were so high that they threatened to wash over the jetty and meant that it could not be used for any purpose. This was said by Captain Douglas and Captain Every (Exhibit 109) to be typical of the passage of any cyclone. The significance of these observations for the plaintiff's case is that, whatever the problems which could be expected to be experienced by the passage of Cyclone Bobby, it was unlikely that shallow water in the area of the usual mooring would be one of them.

42 This general description of the characteristics of Cyclone Bobby as it approached Dampier and during its passage past the town to the west, also confirms that when the winds were initially from the north-east and gradually backing northerly and to the north-west, it would be the eastern-most regions of Hampton Harbour which could be expected to be the most severely affected. The meteorological report confirms that the waters in the inner or southern reaches of Hampton Harbour could be expected to experience less severe conditions, particularly so the area in the lee of East Intercourse Island where the mooring of the "Pilbara Jarrah" was located.

Preparations made on the approach of a cyclone

43 Due to the prevalence of cyclones in the area, particularly in the summer months, Dampier and other north-west ports have very detailed and carefully prepared cyclone plans. Very large vessels are sent far out to sea or kept at sea in deep waters from the earliest sign of an approaching cyclone. Smaller vessels are recalled from sea or from less sheltered anchorages and are moored at cyclone-proof moorings within the particular harbour, as far as possible. All loading and transport activities within the port are ceased, all other operations are suspended and the population is advised, by a series of publications through radio, television and local outlets, warning of the imminent cyclone and the classification of various phases. The final and highest stage of these warnings is the "Red Alert" which is announced by the Port Authority. On the sounding of the "Red Alert" all activity within the harbour and in the vicinity must stop, no further movements of vessels are permitted (save in the most exceptional and necessitous circumstances), personnel must all come ashore and take shelter. No movements of vehicles or other transport are permitted, except for emergency personnel, as the town waits for the passage of the worst of the weather.

44 On the morning of 23 February 1995 the plaintiff had other vessels which had been operating at Karratha and which were usually moored at the Burrup Peninsula. In view of the weather forecasts it decided that it would not be acceptable to leave those vessels in the more exposed waters at Burrup Peninsula and that they should be sailed down to Hampton Harbour to await the passage of the storm. This was done and while making the journey the captains of two of these vessels, Captain Seed and Captain Curyer were experiencing the early bad weather which was developing in Mermaid Sound. They radioed through to Mr Hawes, the plaintiff's manager at Dampier, and advised that in their view it would be dangerous to leave the "Pilbara Pilot" moored at its usual mooring because with the developing weather which they were experiencing they thought the vessel would be at risk at its usual mooring because of insufficient underwater clearance. It is now acknowledged on all sides that this opinion was mistaken and that, with the wisdom of hindsight, the "Pilbara Pilot" may have fared better if at its usual mooring. Nevertheless, the opinion of these experienced masters was as described and Mr Hawes quickly came to the same view. It was this unanimity of opinion among these three experienced mariners that led to the decision being taken to shift the "Pilbara Pilot" from its usual mooring to its position astern of the "Pilbara Jarrah" on the western side of the harbour, relatively close in under the lee of East Intercourse Island.

45 In the course of the case great attention was given to this decision to shift the "Pilbara Pilot" from its ordinary moorings. The advice about the need to move the vessel was given and received while Dampier was on "Yellow Alert" and when announcements had been made that the area would go to "Red Alert" only an hour or so later. This meant that, once the "Red Alert" had been sounded, there would be no further opportunity to move the "Pilbara Pilot" or to take other steps to safeguard it. It was in these circumstances of apprehended imminent peril that the decision was taken to move the vessel. No one disputes that this was a conscientious decision made in good faith by Captain Hawes on the advice of two other masters of significant maritime experience and competence and that, although it has subsequently turned out to have been unsuccessful, it was nevertheless a reasonable and responsible decision taken at the time. Moreover, the Dampier Harbour Master at the time Captain James Hammonds, and Captain Douglas and other witnesses, including Mr S A Waltham and Mr Stewart, all expressly accepted that it was the duty of a master or other person in charge of a vessel at all times to decide and act to preserve the vessel and that this was a justifiable decision taken to protect the ship against real and imminent risks. There could not be the slightest doubt that it was within the competence and the responsibility of Captain Hawes to make this decision. Notwithstanding that it turned out badly, it was a decision which a reasonable and experienced captain in those circumstances could take.

46 Nevertheless, the defendant maintains that the decision to move the "Pilbara Pilot" in the face of the approaching cyclone reveals significant inadequacies about the usual mooring. First, according to the defendant, it demonstrates that the plaintiff had fears about the safety of the usual mooring and, accordingly, and by definition, it was not, and could never have been regarded by the plaintiff, as a "cyclone proof" mooring. Second, the reason given by Captains Seed and Curyer to recommend that the "Pilbara Pilot" should be moved, namely the risk of insufficient under keel clearance, showed concern about one of the very features of the mooring which, as a result of independent analysis, meant that it was not cyclone proof. Third, and perhaps most significantly, the defendant argued that to form a view about the unsuitability of the usual mooring as a place for the "Pilbara Pilot" to ride out the cyclone, made at virtually the last moment, meant that no reasonable or adequate attention could have been given by the plaintiff before then to a consideration of whether or not the mooring was cyclone proof and that this simply revealed such a belated attention to the possibility of danger or peril, that the decision to shift the vessel could not be regarded as reasonable or responsible.

The second mooring and the "Pilbara Jarrah"

47 The "Pilbara Jarrah" was a much larger vessel than the "Pilbara Pilot" shaped like a barge. Its mooring, on the western side of the harbour near East Intercourse Island, was in about 4 metres of water. There is no suggestion that the combination of this greater water depth and the structure and design of this particular mooring as it was embedded in the seabed meant that it was anything other than a cyclone proof mooring for the "Pilbara Jarrah" or that it was not duly approved as required under the Dampier Port Authority Regulations. Because of the presence of deeper water and the protection offered by East Intercourse Island, this area on the north-western side of Hampton Harbour was in great demand for the mooring of vessels. Most of the moorings for the tugs owned or chartered by Hamersley Iron were in this locality and it was difficult to obtain moorings in this area. There was none available in the months leading up to the passage of Cyclone Bobby and certainly none available at the time the "Pilbara Pilot" was moved.

48 Consequently, the choices facing the plaintiff's manager, Captain Hawes, when deciding to consider the safety of the "Pilbara Pilot" at its usual mooring as Cyclone Bobby approached were, to say the least, limited. The vessel could have been left where it was, notwithstanding the real concerns which had been expressed and which were then accepted by Captain Hawes about its safety if left in that position. Second, but only as a theoretical possibility, the vessel could be taken to sea in the hope of riding out the cyclone in deep water. No-one suggested that that would be a wise or reasonable precaution because of the small size of the vessel, the very bad weather that could be expected, and the severe risk of the loss of the vessel with the loss of life of the crew through foundering in open water. Nevertheless, the potentiality for the vessel to be taken to sea in such circumstances as a measure to avoid what was anticipated to be a real peril was instanced as a circumstance where the loss of the vessel could occur through a peril of the sea for which the policy would be obliged to respond, because of a decision taken by a master in good faith to move the vessel from an area of anticipated risk. Third, or realistically, the only other choice, was to move the vessel to the western side of the harbour and moor it to the stern of the "Pilbara Jarrah" in deeper water and in a more sheltered anchorage as was done.

49 Mooring the "Pilbara Pilot" behind the "Pilbara Jarrah" did not mean that the vessel was at an approved or cyclone proof mooring. The particular mooring was, as already noted, both approved and regarded as cyclone proof but only for the "Pilbara Jarrah". It is generally accepted that it is most undesirable to tie one vessel astern of another in the face of bad weather because the combination of movements of the two vessels, frequently in opposing directions, will inevitably place shock loads on the lines connecting them. Furthermore, one of the features of an approved cyclone proof mooring is that the mooring lines are attached to heavy chains which run some distance to the fixed submarine mooring point. Because of its weight much of this chain line will normally lie on the seabed but, if the moored vessel drifts down wind and extends the mooring line, the chain will be raised progressively from the seabed and the catenary of the chain and its weight will produce a substantial dampening effect upon the loads, particularly shock loads, on the mooring line (see Exhibit 95). The dampening effect of being connected to a submarine cable or chain does not exist when a vessel is tied astern of another.

50 The details of the connections between the "Pilbara Jarrah" and the "Pilbara Pilot" were that the "Pilot" was connected by three lines comprising: 20 metres of 56m diameter 8 strand polyester line; together with two 20 metre 45mm 3 strand polyester lines in the form of a bridle. These three lines ran from the stern of the "Pilbara Jarrah" about 20 metres to the "Pilbara Pilot" where, as already described, they threaded through the cow horns on the fairlead at the stem of the vessel and were then affixed to the Sampson post on the upper foredeck. The investigations conducted after the vessel had been lost showed that all three lines had parted, apparently due to fraying, at a point where they passed over the fairlead before the Sampson post and, with the distorted shape of the fairlead discovered once the sunken vessel had been raised, this was attributed to chaffing and fraying at that point.

51 Following the loss of the "Pilbara Pilot" in the cyclone the Deputy Harbour Master of the Port of Dampier, Captain S James, sent by facsimile to Captain Hawes of the plaintiff on 7 March 1995 (Exhibit 20), the following:

"Cyclone Moorings in Dampier

It has been brought to my attention that during 'Cyclone Bobby' two of your vessels were made fast to the stern of other vessels on cyclone moorings. This is a contravention of Port Regulations.

I will require by the 10th March 1995 an explanation as to why this occurred together with full report of all your moorings in the Port. Please be advised that each vessel should have its own cyclone mooring.

Regards.

Captain S James

Deputy Harbour Master - Port of Dampier"

The plaintiff replied to this by letter dated 15 March 1995 from Captain Glen A Hawes the manager (Exhibit 16) and marked attention to Captain James. It read:

"Dear Sir,

Further to your facsimile of 7/3/95.

The vessels 'Pilbara Moonlight' and 'Pilbara Pilot' were moved from their operational moorings due to insufficient under keel clearance in Hampton Harbour which was caused by the large swell and high condition during Cyclone 'Bobby'. It was suggested by Masters to move these vessels because they believed that as the cyclone moved closer and the swell condition and wind strength increased, the vessels would most certainly suffer structural damage or running gear damage and after inspecting the situation on site first hand, I concurred (copy of the Masters' reports are enclosed).

Further to our subsequent discussions including yourself, Captain Hammonds and myself regarding cyclone moorings and in view of the fact that there is no mooring areas left in Hampton Harbour with sufficient under keel clearance to cope with the extremes experienced during cyclonic conditions, Pilbara Marine Port Services has positioned additional cyclone mooring facilities behind Mistaken Island where five metres of water is available at chart datum.

A full report on materials used and the exact position of these moorings will be forwarded in due course.

Yours faithfully,

Glen A Hawes"

Mistaken Island is to the south-west of the usual mooring point of the "Pilbara Pilot", that is, to the west of the causeway and off East Intercourse Island. It is in Mermaid Sound itself and is less sheltered than Hampton Harbour.

52 The report of the plaintiff to the Dampier Port Authority was considered by Captain Hammonds himself who wrote in reply to Captain Hawes on 21 April 1995 (Exhibit 17):

"Dear Sir,

'Cyclone Bobby' - Moorings Hampton Harbour

Thank you for your recent letter regarding the circumstances which led you to remove vessel 'Pilbara Moonlight' and 'Pilbara Pilot' from their moorings in Hampton Harbour and to moor them astern of 'Pilbara Jarrah' and 'Trisha Kate' during the passage of 'Cyclone Bobby'.

Given the prevailing conditions the Authority accepts that this removal was made in the interests of safety and good seamanship and will take no further action.

Yours faithfully,

Captain G F Hammonds

Harbour Master - Port of Dampier"

53 In addition, as previously noted, the "Pilbara Pilot" was a pilot boat which the plaintiff had contracted to provide to the Dampier Port Authority for the provision of pilot boat services in the vicinity of the Port of Dampier during the period commencing on 1 March 1993 and ending on 28 February 1995 but with capacity for extension to 28 February 1997 (see Deed of 6 April 1993, Exhibit 65). As such, the "Pilbara Pilot" was regularly used to ferry officers of the DPA to and from large vessels entering or leaving the Port of Dampier and, in this regard, was used frequently by the Deputy Harbour Master Captain James. The evidence of the Harbour Master, Captain Hammonds, was that he was aware of the "Pilbara Pilot", and the location of its mooring at all times and always accepted and believed that it was both an approved mooring and a cyclone proof mooring. It is inconceivable that the Deputy Harbour Master Captain James was ever of any contrary view. Indeed the evidence of Captain Hammonds was that all the moorings in Hampton Harbour and at Dampier were approved moorings and that all were cyclone proof.

54 The DPA had set criteria for the requirements for an approved mooring in a statement of its mooring policy which was available to the public and which was in force at the time. This document (Exhibit 91) adopted criteria which had been set by Captain Hammonds himself. It stated, among other things, that:

"The Authority will normally approve the installation of a mooring provided:

1. The mooring has been designed by an appropriately qualified person for the vessel intended to use it.

2. The mooring has been designated for a minimum criteria of:

3. The mooring to be installed in an acceptable position.

4. The mooring has undergone annual inspection as required under Regulation 45."

55 I accept the evidence of Captain Hawes and Captain Hammonds that they each regarded, and that the Dampier Port Authority regarded, the usual mooring for the "Pilbara Pilot" as an approved mooring and that neither was aware, before February 1995, that there had been no formal written application for its approval originally by Mr Vitenbergs or no written approval granted for its use. Their treatment of the mooring as an "approved mooring" came from the Harbour Master's knowledge of the existence of the mooring, its proximity to other approved moorings, their knowledge of the mooring of the "Pilbara Pilot" and similar vessels at this particular mooring, the approval of the locality for other similar vessels, the general scrutiny of all moorings in the harbour by the DPA and the written annual reports by the plaintiff to the DPA on the condition of the mooring at annual reviews. The mooring was also plotted and noted on the charts of the harbour kept by the DPA itself for the control and supervision of moorings. Notwithstanding this the defendant maintains that this was not an "approved mooring" and that, consequently, the plaintiff was in breach of the second warranty in the policy that the vessel should be "operating strictly in accordance with Local Statutory Authority requirements".

Control of moorings by Dampier Port Authority

56 Because the Port of Dampier was initially established for the export of iron ore from inland mining operations conducted by Hamersley Iron Ltd, the initial control and operation of the Port was conducted by Hamersley Iron Ltd. This company engaged the Harbour Master and established rules and regulations for the control of shipping in the Port and had powers conferred upon it under the applicable legislation. As time passed other exploratory activities leading to substantial exports from the harbour developed, including salt works and natural gas development. These were subject to the Iron Ore (Hamersley Range) Agreement ratified by the Iron Ore (Hamersley Range) Agreement Act 1963; the Dampier Solar Salt Industry Agreement Act 1967 and the North West Gas Development (Woodside) Agreement Act 1979. As the area developed and shipping operations in the port diversified the harbour and shipping operations were placed under statutory control by the Dampier Port Authority Act 1985. The Dampier Port Authority established under that legislation became an independent statutory corporation which took over the entire control of the harbour. Pursuant to that legislation regulations were made. The first of these "the Shipping and Pilotage (Port of Dampier) Regulations 1984" provided, among other things, for the control of moorings in the harbour. These were replaced by the Dampier Port Authority Regulations 1989 which were in effect at the time of the passage of tropical Cyclone Bobby.

57 It was Mr Vitenbergs who replaced the mooring south of Boat Rock which became the usual mooring for the "Pilbara Pilot". He did so in early 1987 or thereabouts (Exhibit 66 - pars 21 - 25) at a time before the operation of the Dampier Port Authority Regulations 1989 and his evidence, now accepted by all the parties, was that he never sought or obtained approval from the Harbour Master for this mooring. He used the mooring to tether his vessel the "Early Bird" but he claims to have used it as a "day mooring" or a fair weather mooring. His evidence was that on the approach of bad weather, and certainly before cyclones, he would take his vessel to a landing ramp and have it pulled out of the water by trailers and put on hard standing until after the passage of the storm. He says that it was never intended that this should be a cyclone proof mooring and that he never regarded it as one.

58 It was in early 1993 when Vitenbergs gave this mooring to Pilbara Marine Port Services and it was then used by the plaintiff to moor a series of its vessels. Before or after it was used to moor the "Pilbara Pilot" it was at times used to moor the "Pilbara Moonlight", the "Pilbara Calaveras", the "Seawest" and the "Sampson Explorer". Each of these was larger than the "Pilbara Pilot" and each had a deeper draught - the dimensions of two of these vessels are set out in Exhibit 25 ("Pilbara Calaveras") and Exhibit 26 (the "Seawest"). Each of these vessels, when tied to that mooring, was in full view of the shore and, in particular, of the Port Authority officers.

59 The Harbour Master for the Dampier Port Authority and the Deputy Harbour Master in 1994 and early 1995 treated this mooring as an approved mooring and as a cyclone proof mooring. They regarded all the moorings within Hampton Harbour as being cyclone proof and there was a routine established for the recording of all approved moorings and to obtain annual reports upon their condition. Captain Hammond, the Harbour Master at the time, certainly believed that this was an approved mooring and attributes the lack of any written record of an application for original approval or for the grant of original approval as due to some unexplained mishap with the DPA records. He and his deputy, Captain James, were aware of the existence of this mooring, its use by the "Pilbara Pilot" and earlier vessels owned by the plaintiff and the existence of other approved moorings for vessels of a similar or greater size nearby. They sought and obtained annual reports from the plaintiff upon the conditions of the mooring and regarded those as acceptable. Those reports were in evidence as Exhibit 2, letter of 7 June 1993, Exhibit 3, facsimile transmission of 25 October 1993, Exhibit 8, letter of 19 March 1994, Exhibit 5, letter of 5 September 1994, Exhibit 4, copy of letter of 5 September 1994 addressed to Mr Vitenbergs, Exhibit 6, report to the Harbour Master of 12 September 1994, Exhibit 29, letter of 9 December 1994.

60 By letter dated 1 November 1995 (Exhibit 11) Captain Hammonds writing in his capacity as Harbour Master of the Port of Dampier to the defendant's marine surveyor, in response to a query about the status of the "Pilbara Pilot's" usual mooring, advised:

"The Port Authority does accept that despite lack of documentation the abovementioned mooring was an approved mooring."

61 After investigating the circumstances of the loss the defendant caused its solicitors to write to the plaintiff's solicitors on 10 May 1995 rejecting the plaintiff's claim for indemnity under the policy. This letter from the defendant's solicitors (Exhibit 21) is as follows:

"10 May 1995

MV 'Pilbara Pilot'

We refer to our previous correspondence.

We have received our client's instructions to respond to you concerning your client's claim for indemnity for the loss of the vessel.

Our client does not consider your client is entitled to indemnity and rejects the claim on the following grounds:-

1. your client failed to comply with the warranty that the vessel was to be moored on cyclone proof moorings;

2. your client failed to comply with the warranty that the vessel would be operated strictly in accordance with the local statutory Authority requirements. The Authority requirement is that during the cyclone each vessel is to be secured to its own mooring, one vessel per mooring.

Your client is required to strictly comply with warranties pursuant to s 39 of the Marine Insurance Act 1909. The failure to comply with those warranties means that our client is discharged from liability as from the date of the breach of warranty on 24 February 1995.

Our client reserves the right to raise and rely upon any other breach of warranty, condition, non-disclosure or misrepresentation or any other matter which may be available to it.

Yours faithfully"

62 Then, on 7 December 1995, the solicitors for the defendant wrote again to the plaintiff's solicitors purporting to avoid the policy on the grounds of non-disclosure. This letter (Exhibit 22) said:

" 'Pilbara Pilot'

We refer to the above matter.

In addition to the breach of the express warranty, our client considers:

1. that your client's failure to disclose to it that the vessel did not have a cyclone mooring was a material non-disclosure that entitles it to avoid the contract pursuant to s 24(1) in the Marine Insurance Act; and/or

2. that your client made a representation to it that the vessel's mooring was a cyclone mooring, that that representation was material and was not true. That entitles our client to avoid the contract pursuant to s 26(1) of the Marine Insurance Act.

The above entitles our client to avoid the Policy from inception. Please advise your client that our client avails itself of that right and hereby avoids the Policy from inception pursuant to s 24(1) and s 26(1) of the Marine Insurance Act.

Underwriters continue to rely on their rights in respect of the breach of the express warranty to the extent necessary.

Further, our client reserves the right to raise and rely upon any other breach of warranty condition, non-disclosure or misrepresentation or any other matter that comes to light in further support of its position.

Our client is currently arranging for a refund of the premium to be made to your client. We will forward you the cheque shortly.

Yours faithfully"

63 Consequently, on 20 December 1995, the defendant's solicitors wrote to the plaintiff's solicitors again referring to earlier correspondence, and enclosing the defendant's cheque for $10,887.84 "being for the refund of total premium in relation to this policy" (Exhibit 23). This letter repeated the defendant's stance that the policy was void ab initio on the grounds of non-disclosure and misrepresentation. Later, in January 1996, the parties agreed that the plaintiff could bank the cheque for the refund of the premium in an interest bearing trust account without prejudice to its client's claim pending the resolution of the action and that was then done and the money continues to be held under these terms.

64 Neither Exhibit 21 nor Exhibit 22 makes express reference to any alleged defect in the apparatus of the mooring line at the usual location arising from alleged deficiencies in the D shackle. As noted, this allegation was introduced by an amendment to the defendant's defence early in the trial, but had evidently been the subject of correspondence between the solicitors for parties for some time before then. Its late introduction is consistent with the defendant's stance of preserving the availability of all other grounds for denying the claim or avoiding the policy but, in substance, it is simply another aspect of the defendant's broad allegation that the mooring was not cyclone proof. The allegation concerning alleged deficiencies with the D shackle will be examined separately later.

65 The cause of action by the plaintiff is for payment of an ascertainable sum under the terms of the contract of insurance or for damages for breach of that contract. As it is a contract for indemnity, the obligation of the defendant insurer is to indemnify the insured for losses caused by risks covered by the policy up to the limits and upon the agreed terms of the policy. For an indemnity to be achieved the plaintiff would be entitled to payment of the amount of the loss sustained, up to the limits of the policy, from the time when the insurer received the claim and had a sufficient opportunity to consider it, including by the conduct of reasonable investigations where these were thought to be necessary. From that point on there is a contractual obligation by the insurer to pay a proper claim and this should date from the date by which a reasonable period for the investigation and consideration of the claim, having regard to its complexities, had passed. However, there may be some losses, particularly out of pocket expenses, such as salvage expenses which had been met by the insured before that time had passed. From the time of payment of those outlays the insured would be out of pocket and the principles of indemnity appear to require that the insured should, in a proper case, be compensated for the effective delay in receiving payment for the indemnity in respect of those losses. So, although this is not such a case, there may well be instances in which it would be proper to allow interest on some or all of a proper claim from a date before the completion of a reasonable period for the due consideration of the claim by the insurer had passed. A claim for loss of profits, or for the cost of obtaining replacement equipment, for lost or damaged equipment under different policies of insurance which cover such losses will readily provide examples for this approach.

66 The defendant's position is that in the event that it might be found liable to indemnify the plaintiff under the policy any entitlement to interest on moneys due should accrue from 10 May 1995 (Exhibit 21), being the date of the first denial of the claim, and not before. This is based on the contention that the insurer was entitled to a reasonable period to investigate the claim for indemnity before paying and that no interest until that point should be allowed. The defendant's submission in this respect is based by analogy on the provisions of s 57(2) in the Insurance Contracts Act 1984 (Cth) which provides that an insurer who is liable to pay interest is liable to pay from when it became unreasonable to withhold payment. The parties accept that the Insurance Contracts Act 1984 does not apply to cases arising under the Marine Insurance Act 1906 and that, accordingly, the date for the commencement of any entitlement to interest remains in the discretion of the court in this case. Generally speaking, I would be inclined to exercise this discretion by analogy with s 57(2) of the Insurance Contracts Act and, if the claim is payable, award interest from the time when the insurer had had a sufficient opportunity to investigate and consider the claim. In this case that is not later than 10 May 1995 and, therefore, in the absence of dispute over the issue, that is the date upon which any entitlement to interest should commence.

67 In this case I am satisfied, that in the event that the plaintiff demonstrates an entitlement to an indemnity or for damages in this action, it should be entitled to interest at the statutory rate contemplated by s 32 of the Supreme Court Act and the regulations made under that Act from 10 May 1995 until judgment.

68 Under the Dampier Port Authority Regulations the control of moorings is set out in Div 3, of which the following regulations are material:

"37 Interpretation

In this Division, unless the contrary intention appears -

'mooring' means a structure or apparatus used, or proposed to be used, to secure any vessel whether or not that structure or apparatus is, or is proposed to be, used for any other purpose;

(a) the person to whom approval for the installation or use of a mooring is granted under regulation 40; and

(b) where the mooring is sold or otherwise disposed of, the person to whom it is sold or otherwise disposed of.

Installation or use of mooring to be approved

38(1) A person shall not -

(a) install a mooring; or

(b) use an existing mooring,

within the Port unless that installation or use is approved by the Harbour Master.

Penalty: $2000.

(2) Notwithstanding sub-regulation (1) a person may use an existing mooring within the Port for the period of 21 days immediately after the commencement of these regulations.

39. Application for approval

An application for approval of the installation of a mooring or the use of an existing mooring within the Port shall be made to the Harbour Master in an approved form and shall contain the following information -

(a) the full name, residential address and telephone number of the applicant;

(b) the location of the mooring;

(c) the purpose for which the vessel to be placed on the mooring is to be used, whether private or commercial;

(d) the type, size and tonnage of the vessel to be placed on the mooring; and

(e) construction specifications of the mooring.

40. Approval for mooring

On receipt of an application under regulation 41, the Harbour Master may, if he is satisfied that -

(a) the location of the mooring is appropriate;

(b) the mooring is generally suitable for the vessel to be located thereon; and

(c) the vessel to be located on the mooring will not constitute a danger or interfere with the navigation of other vessels in the Port,

grant approval of the installation of the mooring or the use of an existing mooring by notice in writing to the applicant.

41 Revocation of approval

The Harbour Master may by notice in writing served on the mooring owner revoke an approval granted under regulation 40 if -

(a) the mooring owner has failed to supply an inspection report in accordance with regulation 45; or

(b) he considers that it is desirable in the public interest to do so.

42 Repair

A mooring owner shall -

(a) keep and maintain the mooring in good and substantial condition and repair; and

(b) cause regulations 43 and 44 to be complied with at all times in respect to the mooring.

Penalty: $2000

43 Requirement for floats

The float or buoy connected to a mooring within the Port shall be -

(a) of sufficient size to provide buoyancy when supporting the rope, chain or other connection between the mooring block and the surface float, with at least half of the mooring float projected above the water line at all times;

(b) of a colour designated by the Harbour Master;

(c) spherical, with minimum diameter of 300 mm; and

(d) legibly marked with such means of identification as the Harbour Master may require.

Unless the Harbour Master otherwise permits in a particular case, every mooring apparatus shall be of such a design, material, dimensions, size, type and construction as in the opinion of the Harbour Master will provide a secure mooring for the vessel to be placed thereon during cyclone conditions.

45 Inspection reports

A mooring owner shall provide the Harbour Master with an inspection report by an approved person as to the condition of the mooring upon installation and thereafter by 1 November in each year.

Penalty: $2000.

46 Mooring not to be used by other vessel

A person shall not secure a vessel to a mooring within the Port without the consent of the mooring owner and the Harbour Master.

Penalty: $2000.

47 Sale or disposal of mooring

A mooring owner shall notify the Harbour Master of the sale or other disposal of the mooring.

Penalty: $2000."

69 As these regulations reveal, and as was agreed by the parties in the action, there are no criteria or standards established or recognised for what is meant by a "cyclone proof mooring". Clearly enough, one can infer that a "cyclone proof mooring" means a mooring which is of sufficient strength and appropriately located, to allow the particular vessel for which its use has been approved, to ride out safely a cyclone of the type which might reasonably be expected to descend on the area. At that level of abstraction there is no issue taken with such a definition by either party to this action. However, differences develop when attempts are made to identify practical content in the definition. For example, when contemplating the type of cyclone which may have to be endured by the vessel at the mooring is one to select a 50 year cyclone or a 100 year cyclone, recorded by available meteorological data for the area, or must one have regard for a cyclone of even greater severity, although never experienced within the area over the period when reliable records have been kept?

70 Similarly, when having regard to the available under keel clearance between a moored vessel and the seabed at the site of the mooring, is one to have regard to desirable clearances which would be considered acceptable if there were sufficient protected deep water anchorages available, or can one have regard to the limited characteristics of a particular harbour and, in particular, to the relatively shallow reaches of Hampton Harbour which are the only practicable sites for moorings in the environs if extended passages over open waters to deeper moorings are to be avoided because of the risks associated with crew moving from shore in small dinghies, rafts or similar craft? Thirdly, when selecting the strength of the components in the mooring apparatus, such as for example a D shackle, or other component, what degree of safety margin should be built into the design of the implement when, as in this case, there is a clear and conscientious difference of reputable engineering opinion on the issue from witnesses such as Mr N Siragusa for the plaintiff and Mr K Stewart for the defendant?

71 These differences of opinion reflect differing degrees of conservatism when it comes to building in a failsafe reserve for an apparatus or where to locate the mooring. They also reflect differing balances which might be struck between the practical limitations applying in the confines of a waterway, such as Hampton Harbour, and the most desirable safety margins which could be specified if there were no such practical or physical limitations. This is a particularly significant issue in the present case where it must be acknowledged that there are marked practical limitations in selecting mooring points in Hampton Harbour because of the generally shallow water in large areas of the harbour. The locations in which deeper water, more desirable for safe anchorages, may be found are quite limited and are obviously insufficient to cater for the demand of vessels which must necessarily be accommodated. Placing mooring points further to sea in deeper water exposes the vessels to a far more unprotected influence of sea, swell and wind and, as already mentioned, would require crew members to make a passage from the shore point to the moored vessel over exposed waters in small and vulnerable craft.

72 Selecting suitable mooring positions in such circumstances is obviously a matter which calls for experienced and responsible judgment which must take into account the exigencies of the particular location. There are very few anchorages anywhere for ocean-going vessels as ample or protected as Sydney Harbour and none so commodious or protected on the north-west coast of this State. A Harbour Master must take his port as he finds it and exercise a professional judgment in approving locations having regard to the characteristics of the area. Not only is this a conclusion which is prompted by an independent examination of the factors at play, but I consider that it has been endorsed and adopted by reg 44 which, effectively, confers the judgment upon the sufficiency of the design type and construction of the mooring to the opinion of the Harbour Master.

73 The judgment of the Harbour Master about the suitability and sufficiency of any particular mooring is also the touchstone test accepted by those familiar with the maritime and marine insurance practices of the industry. This was the approach regarded as generally accepted by Captain Douglas, and by the experienced marine underwriters Mr S A Waltham and Mr T F Hart and I accept that view.

74 As a consequence I conclude that, in the Regulations and in the insurance policy, a cyclone proof mooring must be regarded as meaning a mooring which meets the proper requirements of the responsible Harbour Master or other authority for the locality. No doubt, if a particular Harbour Master were to be so irresponsible as to neglect his duties, his endorsement of a particular mooring as cyclone proof, although it failed to meet criteria which had been properly or reasonably specified for the location in hand, would not render a mooring cyclone proof. Nothing of that kind has been suggested here and it is quite apparent that Captain Hammonds, Captain James and the other Harbour Masters were assiduous and responsible in their supervision of moorings within the Dampier Port Authority area and cognisant of and satisfied with the location and components of this particular mooring. Significantly, this approach to the meaning of a "cyclone proof mooring", as satisfying the requirements of the local lawful authority acting competently, was the approach taken by the London underwriter, Mr T F Hart, who gave evidence by video link of the practices followed by marine underwriters on the London and Australian market within his knowledge.

75 However, before one can conclude that the usual mooring for the "Pilbara Pilot" was "cyclone proof", one has to have regard to the evidence about the sufficiency of underwater keel clearance in the vicinity of that mooring, the allegations about the prevalence of breaking waves in the locality and the strength of the D shackle which had been raised by the defendant.

76 The difference of opinion between the maritime engineers, Mr Siragusa, for the plaintiff, and Mr Stewart for the defendant essentially comes down to different criteria selected by each to determine the sufficiency of the strength of the shackle in the mooring line for the "Pilbara Pilot" at its usual mooring. At this point it is necessary again to stress that nothing in the insurance policy, nor in the Dampier Port Authority Regulations provides any specific criteria for the nature, design or strength of a shackle or other component in the mooring line. Consequently, the issue of the adequacy or sufficiency of any component in the mooring line becomes a part of, or is a derivative of, the judgment of the Harbour Master as to whether any particular mooring is an "approved mooring" which, in the circumstances of this case amounts to a "cyclone proof mooring". The closest any of the evidence comes to specifying the components of a mooring is Exhibit 91 (the Dampier Port Authority's mooring policy document) which, in par 2, prescribes the minimum criteria of wind speed, swell, sea, current and tide range for which any mooring must be designed.

77 The issues dividing the two expert marine engineers in their opinions about the adequacy of the D shackle in this mooring relate to the factor of safety which should be included in the design strength of the component. As their evidence demonstrates, there is undoubtedly scope for divergence of opinion on that issue without that divergence being determinative of the adequacy of any particular component. D shackles such as were used in this mooring line, apart from varying in size and strength, come in three different grades - grades S, L and M and each of the grades has different qualities.

78 The process of estimating the necessary strength of any shackle followed by these two engineers was first to estimate the maximum load which may be imposed on the component by a vessel moored to the line and experiencing cyclonic weather conditions. The forces creating the load are a combination of the sea and swell effects at the mooring point, together with the added effect, if any, of breaking waves at the mooring. In addition, and in at least one view more significant, there is the wind force acting on the profile of the vessel facing the wind at the mooring.

79 Mr Siragusa accepted the wind profile area of the "Pilbara Pilot" calculated from the measurements made by Mr R K Leslie to reach his conclusions about the wind force operating on the vessel. In doing so he also used published data for a 50 year cyclone as the base for estimating the maximum wind force likely to be experienced by a vessel. That is, the maximum wind velocities were taken from published figures, not from any estimate of the wind forces operating during Cyclone Bobby, and must be regarded as being greater than the actual wind force on this occasion (see meteorological report (Exhibit 34)). Mr Stewart, on the other hand, estimated a slightly greater exposed wind profile for the "Pilbara Pilot" and thus calculated a wind force approximately 10 per cent greater than that adopted by Mr Siragusa. Mr Stewart also indicated that he would prefer to accept figures for a 100 year cyclone as giving a better indication of the maximum wind conditions which the components of the mooring should withstand.

80 To this product each engineer added the calculated or estimated forces of sea waves and swell to reach a force figure which could be expected to be acting on the mooring line. Each of the engineers then explained that the safe working load limit (SWL) of any particular shackle which was to be used in the mooring configuration should exceed the maximum estimated forces applying to the line by a substantial factor. At this point it is important to note that the SWL of a shackle, or other component, is different from and less than its breaking strength, and it is chosen because of the well-established engineering practice that a component should be expected to operate and sustain its SWL by a comfortable margin over the entire duration of its working life.

81 It is at this point that the approaches of the two expert engineers diverge. Mr Siragusa considered that a factor of three times, or possibly four times, the maximum force likely to be experienced in practice should determine the choice of the component. That is, that the SWL of a shackle should be three or four times greater than the maximum force likely to be experienced in use, but he stressed that this was very much a counsel of perfection and that a factor of safety of 2, rather than 3 or 4, would still be quite acceptable. On the other hand, Mr Stewart conducted his calculations on the basis that a factor of safety of 4 would be necessary for components in a cyclone area and applied that to his higher estimate deriving from the greater wind force which he had calculated in this instance.

82 Both Mr Siragusa and Mr Stewart agreed that if the D shackle used in the mooring array in this case were an "S" grade then, on any view, such a shackle would be adequate in the circumstances. There was little evidence as to whether the particular shackle used was of S, L or M grade but Mr Siragusa said that, in his experience, "S" grade shackles are usually supplied by dealers for this type of use. Furthermore, Mr Siragusa said, and I accept, that for any of the three grades of shackle, possibly used in this array, S, L or M, the actual breaking load was never exceeded by the forces expected to be working on this line, even taking into account the need to build in additional factors of safety. Mr Stewart accepted that his criteria were very conservative and he certainly cannot be criticised for adopting, as desirable, that degree of precaution. However, I am satisfied on the evidence of Mr Siragusa that the shackle in this array was probably an S shackle.

83 In addition, as Captain Hawes related, this mooring had been inspected by a diver in or about November 1994 in order for the annual report upon its adequacy to be made to the DPA. It was found to be in good condition and was reported accordingly without any doubt or reservation being expressed by the diver, the plaintiff's officer or the DPA.

84 In this respect the onus of proof that the D shackle was inadequate or otherwise deficient rests upon the defendant: Skandia Insurance Co Ltd v Skoljarev (supra) per Mason J at 387. There is nothing in the evidence, except the different assumptions made by the defendant's engineer Mr Stewart, to justify a conclusion that it was in any way inadequate. Quite the contrary, I am satisfied on the evidence that this D shackle was adequate as a component in this mooring line for the forces reasonably to be expected to be exerted by the "Pilbara Pilot" or any similar vessel in the course of a 50 year cyclone. No suggestion was made to Captain Hammond that he might have been, or was, dissatisfied with the mooring in light of the criticisms which the defendant advanced about the D shackle.

85 In Cyclone Bobby, which was typical of most cyclones in this location, the weather, sea and swell came from the north and north-east. As the chart (Exhibit 7) demonstrates, the fetch of sea to the north is vast leading directly to the open waters of the Indian Ocean. Mermaid Sound, although a confined waterway is, by comparison with Hampton Harbour, much broader, longer and deeper but the depth decreases markedly in a line approximately from Ledgepoint on East Intercourse Island to Parker Point on the mainland, south of which are shallower waters of Hampton Harbour, also protected, to varying extents, by the mainland and the islands. Consequently, the evidence was that one would expect waves to break at the point where the water depth diminished at the transition from Mermaid Sound to Hampton Harbour, that is along the line already described. Furthermore, waves and swell which were on the southern side of this division could be expected to be much smaller and to exert smaller forces.

86 On the question of wave breaking pattern, I am not satisfied that there is any evidence to conclude that waves were breaking in the vicinity of this mooring during the passage of the cyclone. Nor am I satisfied that any water turbulence was other than the crests of waves being whipped by the wind. All the evidence from observers is to the effect that the incoming seas were breaking at the mouth of Hampton Harbour and upon Tidepole Island. The survival of other craft moored in the mooring area south of Boat Rock and near to the point of the "Pilbara Pilot's" usual mooring also tells against breaking waves in the vicinity or at least against any significant menace from breaking waves which would negate the suitability of this location as a cyclone proof mooring.

87 Furthermore, the scientific evidence which I accept is that the breaker index for waves in shallow water is 0.7 or 70 per cent so that in water of a depth of 2.2 metres waves would break if the crest was more than 1.54 metres above still water level, that is, if the distance between crest and trough was 2.2 metres (1.54 = 70% of amplitude of wave). This itself makes it most unlikely that there was a 3 metre wave pattern at this location (whether as a combination of sea and swell or whether due to the maximum impact of one of those factors). The scientific evidence was that, in shallow water, the major component of the wave height or amplitude will be above the still water level with approximately only 10 per cent of the amplitude being below it. This suggests even smaller waves.

88 At this point it is necessary to introduce the distinction between "plunging breakers" and "spilling breakers" because "spilling breakers" exert much less horizontal force and probably no greater force than a swell.

89 The evidence of the plaintiff's expert, Mr Byrne, was to the effect that only "spilling breakers" would be experienced in the lower reaches of Hampton Harbour and in the vicinity of the usual mooring. Mr Stewart, giving evidence for the defendant, accepted that waves which broke at the entrance to Hampton Harbour would largely have dissipated their force before reaching the point of this mooring and that any waves breaking at the mooring site would be "spilling breakers". Although each of Captain Hammonds, Captain Douglas and Captain Every, acknowledged that in their experience there could be breaking waves in Hampton Harbour, none suggested that such wave action was likely to be dangerous for vessels moored at any of the moorings or was a reason to conclude that moorings exposed to such action were not "cyclone proof". The combination of this evidence with the observations that the main area in which waves were seen to break during this cyclone was on the north-eastern end of Tidepole Island, and that other vessels of similar or larger dimensions than the "Pilbara Pilot" moored in the vicinity on the eastern side of the harbour survived the cyclone, in my view, leads to the rejection of the submissions by the defendant that the usual mooring was not cyclone-proof because of its degree of exposure to breaking waves during cyclone conditions.

Adequacy of under-keel clearance and usual mooring

90 The allegation in the defence that there was insufficient under-keel clearance for the "Pilbara Pilot" at its usual mooring is but another aspect of the defendant's case that the usual mooring was not "cyclone proof". In one sense this allegation has already been rejected by my earlier conclusion that this mooring had the actual approval of the Harbour Master and the Dampier Port Authority. However, in view of the controversy in the evidence on this particular sub-issue, it is necessary to examine it briefly.

91 To an extent, the question of the adequacy of the under keel clearance of the "Pilbara Pilot" in this location depends upon the conclusions which are reached about whether or not waves were breaking in the vicinity of the mooring. There is also a difference of view about the draught of the "Pilbara Pilot" but the most common figure advanced for the draught was 1.2 metres, although there was at least one specification showing a draught of 1.4 metres. Taking all the evidence in this regard I consider that the most probable draught for the vessel was 1.2 metres, largely because of the frequency with which that statistic can be found in the several descriptions of the vessel and its dimensions. The depth of the vessel as given by Captain Hawes, the person in the best position to know, was 1.2 metres and in conjunction with the other evidence I accept that as the most probable figure for the vessel's draught. Again, as it is the defendant who alleges that there was insufficient underwater keel clearance, the onus of establishing that contention rests upon it and I am not at all persuaded that the draught of the vessel was 1.4 metres or greater.

92 That particular contention therefore needs to be examined in the light of the conditions prevailing or expected to prevail as a cyclone approaches and passes the Port of Dampier. I have no hesitation in concluding, on the basis of the evidence of Captain Douglas, Captain Hawes and Captain Hammonds that in the case of Tropical Cyclone Bobby, and in the case of other cyclones in this area, there would inevitably be an influx of water into Mermaid Sound and Hampton Harbour resulting in a storm surge which, together with the effects of low barometric pressure, would produce a substantial elevation in sea levels even if the passage of the cyclone were to coincide with a period of low tide.

93 Among the experts, Captain Douglas and Captain Hammonds each supported the plaintiff's case that there was at all times, an adequate depth of water at this mooring. I place special reliance upon their evidence, not only because Captain Hammonds was the responsible Harbour Master at Dampier at the time and was thoroughly familiar with all aspects and operations in his area of responsibility, but because of the impression which he created in me of balance, experience, independence and practical working responsibility. Captain Douglas also demonstrated these qualities in very marked degree and, in my view, was the most experienced and convincing of all the experts on questions of maritime practice, safety and seamanship. The opinions to the effect that there was inadequate under-keel clearance at the usual mooring were expressed by Captain Ollivier, Captain Spencer and Mr Stewart but, with all respect, I regarded the evidence of Captains Hammond and Douglas as being more practically based and persuasive. Influential in this preference are other factors which appear to be largely common ground, namely that all the experts acknowledge that the water level of the sea in an area like Hampton Harbour will rise during a cyclone (even Captain Ollivier and Captain Spencer acknowledged this). In Exhibit 54 Mr Byrne explained that for 98 per cent of the time the water depth at the area of this mooring would be above 2.5 metres and that all the cases which he examined demonstrated that there would be more than adequate depth below a wave trough for this vessel even in a 3 metre wave (which, for other reasons examined earlier, I have concluded was unlikely at that site in these conditions). Furthermore, larger vessels with deeper draughts were permitted by various Harbour Masters to be moored nearby, both before and after Cyclone Bobby.

94 For the defendant, Mr Stewart said that the "Pilbara Pilot" should have at least 3 metres of under-keel clearance at LAT and this led him to accept that, taking into account the effect of cyclonic waves, the vessel would still require 1.5 metres of water below her keel during a trough. However, such a view would effectively exclude most of Hampton Harbour as a suitable mooring point for vessels the size of the "Pilbara Pilot" or bigger.

95 In the course of their evidence Captain Ollivier and Captain Spencer each disclaimed their earlier opinions that under-keel clearance for the "Pilbara Pilot" at this mooring was insufficient.

96 In other words, the evidence is compelling that the water depths in Hampton Harbour and, at the usual mooring point, would be significantly greater than usual and much greater than the chart datum level. I am satisfied on the evidence in this case that with a chart datum level of 1.8 metres at this mooring point the probable depth of water (still water level) during the passage of this cyclone would have not been less than 2.2 metres. That would leave an underwater keel clearance of 1 metre for this vessel which, while not great, has not been suggested to be inadequate or insufficient.

97 In all the circumstances I am satisfied that the evidence establishes, on the probabilities, that there was more than sufficient under-keel clearance for the "Pilbara Pilot" at this mooring. However, speaking strictly, the onus is on the defendant to prove the contrary and, in my view, it has not done so.

98 None of the possible conclusions which could be drawn from the scientific evidence about the probable wave height, in combination with sea surge and elevated sea levels due to low barometric pressure could lead to a positive finding, on the probabilities, that there was inadequate under keel clearance in this locality and for that reason I reject the defendant's contention in this respect.

99 Nevertheless it remains clear that, comparatively speaking, water at this mooring point was relatively shallow and for that reason it was a much less desirable anchorage during rough weather than any master or owner would have preferred. This realisation by itself would be more than sufficient to cause anxiety for the vessel's owner or master when a cyclone was approaching and to raise the very real question of whether the vessel would be safer in another position if one were available. I consider that it is no more than natural that anxieties of this kind prompted Captains Hawes, Curyer and Seed to entertain apprehensions about the safety of the "Pilbara Pilot", and its sister vessel the "Pilbara Moonlight" during the approach of tropical Cyclone Bobby shortly before the Port of Dampier was to go to Red Alert. These anxieties were, I am satisfied, prompted only by understandable caution by Captain Hawes and the other staff of the plaintiff responding to the most appropriate way to deal with the dangers which were obviously imminent. The decision to move the vessel does not mean, nor does it connote, any acceptance or acknowledgement that the usual mooring was not cyclone proof, or was not believed by the plaintiff to be cyclone proof, then or before. Rather, it reveals an apprehension that it would be more prudent and responsible to shift the vessel from that mooring to the deeper water in the lee of East Intercourse Island, notwithstanding that it would then have to be tied behind the "Pilbara Jarrah".

100 Finally, on this issue, one cannot leave the subject without recognising that it involves something of a paradox in the circumstances of this case. Although the preponderance of the evidence, and my finding, is that there was sufficient under-keel clearance for the "Pilbara Pilot" at this mooring site, it was fear of the inadequacy of the water depth at that point which prompted Captains Hawes, Seed and Curyer to decide to move the "Pilbara Pilot" and tether her astern the "Pilbara Jarrah". What is to be made of this apprehension by experienced captains of the plaintiff before the vessel was lost? One possible explanation is that the plaintiff's masters were simply mistaken and unduly concerned about the water depth at this site and unnecessarily so. Another possible explanation is that despite its approval as a cyclone proof mooring, the plaintiff's masters, and indeed all seamen experienced in the conditions of Dampier Harbour, realised that the anchorages on the eastern side of Hampton Harbour in the shallower water there were verging towards the marginal and that in a big storm a vessel would be better off in deeper water. A third possible explanation is that, assuming the adequacy of the components in the mooring line and array, the most obvious danger to a vessel at a mooring during a cyclone is that it may suffer damage through grounding on the sea-bed during possible large fluctuations in water depth due to wave, sea and swell action. It may be that it is a combination of some or all of these factors which induced Captain Hawes and his colleagues to fear for the condition of the "Pilbara Pilot" if left on this mooring but, whatever the reason, and however genuine the apprehensions, none of that leads to a conclusion that the under-keel depth of water was, in fact, inadequate.

101 For these reasons I find that within the meaning of reg 44, and of warranty No 3 in the policy, and by the judgment of the Harbour Master at the Port of Dampier, this was a cyclone proof mooring.

102 That leaves the question of whether or not the lack of written approval means that it was nevertheless not an approved mooring so that there was a breach of warranty No 2. The plaintiff's argument in this respect contains, with respect, a number of untenable propositions.

103 Firstly, the plaintiff submitted that warranty No 2 in the policy requiring the insured vessel to be "operating strictly in accordance with Local Statutory Authority requirements" on its proper construction did not refer to the Dampier Port Authority but, rather, referred to the State of Western Australia. This construction is urged on the basis that other provisions in warranty No 2 requiring the vessel to be in survey, and to comply with manning and crewing requirements must relate to the Uniform Shipping Laws Code ("USL Code") administered by the State under the Marine Act 1909. A similar submission was made in relation to the requirement imposed by the warranty for the vessel to be in classification which again involves compliance with the provisions of the Marine Act 1909 and the USL Code as administered by the State. Furthermore, the navigating limits and use of the insured vessel are defined as the Inland and Coastal Waters of Western Australia as permitted by Local Statutory Authority which is said to be a plain reference to the State Government. In the plaintiff's submissions the Dampier Port Authority Regulations do not deal with survey, manning or crewing of a vessel and, therefore, should not be taken as the Local Statutory Authority to which those other provisions of the policy refer.

104 The plaintiff also submits that as the policy provides cover for the use of a vessel in Western Australian on inland and coastal waters it must be regarded as applying to the use of the vessel in other Western Australian ports such as Port Hedland or Cape Lambert or, for that matter, several others. Different regulations for the use of vessels, and the approval of moorings, apply under the different legislation for those other harbours (see Port Hedland Port Authority Regulations and Cape Lambert Port Authority Regulations) and it is submitted that the terms of the policy should not be construed so as to require compliance with the regulations of different authorities in different places.

105 At least, so the plaintiff submits, these considerations give rise to ambiguity or uncertainty in the scope of application of warranty No 2 where it has potential application to more than one statutory authority and that, in such circumstances, the warranty should be construed contra proferentem against the insurer, especially so where even an inadvertent and non-causative breach of warranty would entitle the insurer to reject a claim - Johnson v American Home Assurance Co [1998] HCA 14; (1998) 192 CLR 266 at 274 - 275; Phillips v NZI Insurance Australia Ltd [1999] NSWSC 845 at [14]; Western Australian Bank v Royal Insurance Co [1908] HCA 11; (1908) 5 CLR 533 at 559; and Provincial Insurance Co Ltd v Morgan [1933] AC 240.

106 However, I see nothing ambiguous or uncertain in the use of the term "Local Statutory Authority" as applying to more than one statutory authority, particularly in a policy of marine insurance operating with respect to a vessel used in ports in the north-west of this State where it is well known that each port is administered by a separate statutory authority and that, in a number of respects, another statutory authority or authorities regulate other operations of the vessel such as, for example, crewing classification and manning as the plaintiff itself has instanced. In the setting of this policy I am satisfied that the term "Local Statutory Authority" means and applies to each and all statutory authorities whose jurisdiction or operation extends or applies to the conduct or control of the vessel in its area, whether only occasionally or constantly.

107 Next, the plaintiff submits that there is a distinction between the obligation imposed by the warranty to comply with local statutory requirements and an obligation to comply strictly with all local statutory regulations, or that there is at least an ambiguity or uncertainty in this respect which should lead to a contra proferentem construction of the obligation. In this regard the plaintiff points out that the regulations impose a number of discretionary powers upon the Authority, such as, for example, the power of a harbour master to direct masters to move or otherwise deal with vessels within port boundaries (see Dampier Port Authority Act, s 83). These, it is submitted, may constitute "requirements" by the local port authority and while the power to give such requirements, may derive from statute or regulation, such a "requirement" is not a regulation.

108 A variation on this submission, made in the course of argument, is that if the insured actually satisfies the local authority in the performance of obligations imposed or enforced by that local authority that performance meets the "requirements" of the statutory authority, notwithstanding that the statutory authority would be within its rights to require a stricter or more rigorous compliance with obligations such as regs 39 and 40 for the application and grant of mooring approval to be in writing. An unstated premise for this variation of the submission is that there has been no misrepresentation or non-disclosure by the insured in its dealings with the local authority with respect to the obligation or requirement concerned and certainly none has been suggested in this case.

109 As the obligation to comply with the requirements of a local statutory authority derives from an express warranty in this policy, exact and literal fulfilment of the warranty is necessary: see Arnould: "Law of Marine Insurance and Average", 11th ed, par 682, but there are cases where the literal meaning of the warranty must be rejected in favour of a reasonable interpretation: Berns & Koppstein Inc v Orion Ins Co Ltd [1960] 1 Lloyd's Rep 276; Australian Agricultural Co v Saunders (1875) LR 10 CP 668; Provincial Insurance Co Ltd v Morgan (supra) and Simmonds v Cockell [1920] 1 KB 843.

110 In this regard, it is necessary also to consider that there is an implied warranty of legality in the policy effected by s 47 of the Marine Insurance Act 1909, which provides:

"There is an implied warranty that the adventure insured is a lawful one, and that, so far as the assured can control the matter, the adventure shall be carried out in a lawful manner."

so obliging the insured to comply with all laws and regulations applicable to the operation of the vessel during the period of insurance. Not every incidental breach of the law relating to the operation of the vessel will involve a breach of this warranty. Non-compliance with shipping safety legislation, for example, will usually be treated as collateral (see Arnould at 756, citing Redmond v Smith (1844) 7 M & Gr 456; and St John Shipping Corporation v Joseph Rank Ltd [1957] 1 QB 266). No suggestion of a breach of the implied warranty of legality by the insured was advanced by the defendant in this case, nor did the plaintiff attempt to justify its position of having an informal approval for the mooring from the DPA by reference to any submission that the regulations relating to the formalities for mooring were collateral to laws or requirements which were he subject matter of warranty No 2. Nevertheless, the existence of the implied warranty of legality does have some bearing on the meaning of the warranty requiring compliance with the requirements of the local statutory authority because of the overall rule of construction that separate obligations connote different subject matters. This approach is no more than a recognition that when considering the terms of a contract between parties they are not to be readily attributed with an intention of including two or more different terms to impose the one and the same obligation. For this reason, I conclude that the meaning of the express condition obliging the insured to comply with all the requirements of the "Local Statutory Authority" is different from the implied warranty by the insured that the adventure insured is a lawful one and that, as far as within its control, that it will be carried out in a lawful manner.

111 This consideration adds force to the plaintiff's submission that the warranty by the insured that the vessel would be operated strictly in accordance with local statutory requirements is different in content from an obligation requiring the insured to comply strictly with all laws, regulations or by-laws of any statutory authority which may have jurisdiction over the vessel. In any event, I conclude that an obligation of that latter kind would be more extensive and onerous than the obligation imposed by the warranty now relied on by the defendant. I consider that, in the context of this policy, the requirement, of a local statutory authority to which reference is made, is a direction, order or other command, including any condition imposed on the grant of any statutory licence or permission rather than compliance with some existing law, regulation or by-law of a legislative character. So, in the present case, where there is no doubt that, in a practical sense, the Harbour Master for the time being, Captain Hammonds, and his deputy Captain James were entirely satisfied with the mooring arrangements for the "Pilbara Pilot" at its usual mooring and at all times, before and after the loss of the vessel, treated that as an approved mooring, I consider that the plaintiff complied with the requirement of the local authority with respect to the use and approval of moorings according to the usages and practices of the DPA at the material time.

112 The plaintiff makes a further submission in support of its case that the absence of a written application and a written grant of approval for the use of the "Pilbara Pilot's" usual mooring did not constitute a breach of this warranty. This submission is that where the owner of a vessel desires to use an existing approved mooring within the harbour, he may do so if he has the consent of the mooring owner and the Harbour Master (reg 46), but this consent need not be sought or obtained in writing. In support of this argument the plaintiff further submits that a purposive construction should be given to these regulations (Interpretation Act 1984, s 18) and that, on this basis, no purpose is to be achieved by requiring an applicant for the use of an existing approved mooring to submit details of the vessel to be moored and construction specifications for the mooring, if the vessel is of the same or smaller size than the vessel which had previously been moored to that appliance. As the argument runs, a person seeking the approval of the Harbour Master under reg 46, need only satisfy the Harbour Master that the vessel to be used at that mooring is no larger or is not materially different to the vessel for the use of which the mooring had previously been approved. Despite some initial attraction in this submission, it appears to require an interpretation of the regulations inconsistent with the terms of reg 39 which expressly envisage a written application being made by an applicant for the use of an existing mooring and, with reg 40, which contemplates the grant of approval for the use of an existing mooring by written notice to the applicant. For that reason, therefore, this submission by the plaintiff must be rejected.

Application of express warranties to the usual mooring position

113 It follows from the foregoing examination that the defendant has failed to establish that the plaintiff was at any time before the loss of the "Pilbara Pilot" in breach of the express warranties in this policy of marine insurance in regard to the mooring of the vessel at its usual mooring south of Boat Rock. This disposes of a substantial portion of the defendant's case but leaves the question of whether or not the plaintiff's actions in tying the vessel astern of the "Pilbara Jarrah" constituted a breach of either warranty.

The "Pilbara Pilot" tied astern of the "Pilbara Jarrah"

114 As already noted, when the "Pilbara Pilot" was tied astern of the "Pilbara Jarrah" on the western side of Hampton Harbour closer to East Intercourse Island, she was not moored at an approved mooring and, that being so, neither was she moored at a cyclone proof mooring. The plaintiff does not dispute this characterisation of the position of the vessel once it had been moved to the other side of the harbour. However, it submits that this express warranty does not apply because of the provisions of s 84(4) of the Marine Insurance Act 1909 and cls 14.1 and 14.3 of the Institute Time Clauses Hulls Port Risks. Additionally, or alternatively, the plaintiff submits that, irrespective of s 84(4) and the Institute Time Clauses, the owner and master of a vessel have an acknowledged obligation and right to take steps to protect the safety of a vessel at all times, especially in the face of an imminent peril, and that reasonable precautions taken in good faith in performance of this obligation do not constitute a breach of the warranty.

115 This argument proceeds from the plaintiff's submission that the decision to move the "Pilbara Pilot" from its usual mooring to the position astern of the "Pilbara Jarrah" after advice had been received from the two other captains was a reasonable decision taken for the protection of the vessel. The wisdom of that decision may certainly now be questioned and in hindsight much can be said to criticise it, but I have accepted the evidence of Captain Douglas, and Captain Hammonds, that it was a reasonable decision for Captain Hawes to take and I am quite satisfied that he was acting honestly and reasonably, with the advice of two of his captains, when the decision was taken. It was no doubt a difficult decision but one which had to be made urgently and I am satisfied that it was made entirely out of considerations for the preservation of the safety of the vessel, that is, that it was made in good faith by an experienced and competent officer of the plaintiff who was directly responsible for the safety of the vessel at the time. As observed earlier, once it was decided that it was necessary to shift the "Pilbara Pilot" there were very few alternatives on offer. It would have been an unacceptable peril to the vessel and to its crew to attempt to take it to sea. The only other area in Hampton Harbour where there was deeper water with some shelter was on the western side of the harbour to which the vessel was in fact moved. There, there were no moorings, let alone approved moorings, available for its use but one of the plaintiff's other vessels was secured to an approved mooring and, making the best improvisation practicable in the circumstances, it was decided to tie the "Pilbara Pilot" astern of that vessel. In this regard it should not be forgotten that a similar decision was made with regard to the "Pilbara Moonlight" and that she was also moved from the eastern side of the harbour and tied astern the "Trisha Kate" and that in that situation the "Pilbara Moonlight" safely rode out the passage of Tropical Cyclone Bobby.

Application of s 84(4) of the Marine Insurance Act

116 The plaintiff submits that the suing and labouring provisions of s 84 of the Marine Insurance Act, and the provisions of cl 14 of the Institute Time Clauses Hulls Port Risks apply even before actual damage has been done to the insured property and that the insured may, indeed must, take steps to preserve the safety of the insured property when faced with an imminent peril. There seems to be some conflict of views among the learned text writers in this regard. One approach is to regard the deliberate action taken by the owner or master to avoid imminent perils of the sea then actually operating, and which may be a cause of any ensuing loss to the property insured, as part of the same peril of the sea which the owner or master had sought, by that action, to avoid - see Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55 and Lind v Mitchell (1928) 98 LJKB 120; [1928] All ER 447. Any approach requires consideration to be given to the observations made by Lord Sumner in British and Foreign Marine Insurance Co v Gaunt [1921] 2 AC 41 which would confine the operation of s 84(4) (s 78(4) of the Marine Insurance Act 1906 of the United Kingdom) to actual suing and labouring after the peril had struck and caused damage.

117 This appears to me to be the crucial issue in this case and it is by no means of easy resolution. The plaintiff relies on the New South Wales decision of Emperor Gold Mining Co Ltd v Switzerland General Insurance Co Ltd [1964] NSWR 1243 where Manning J held that expenses incurred by an insured with a view to avoid loss or to minimise loss were recoverable, even in the absence of a sue of labour clause, but that has been doubted by a number of commentators - see Chalmers Marine Insurance Act 1906, 10th ed, par 78 note 8, Arnould op cit par 914A and "Marine Insurance", 4th ed (1985) by Ivamy at 450 - 451. The issue has been more comprehensively examined very recently in The Vasso [1993] 2 Lloyd's Rep 309 at 312 - 313; State of Netherlands v Youell & Ors [1997] EWCA Civ 2715; [1998] 1 Lloyd's Rep 236 at 248 and in Handelsbanken v Dandridge [2002] EWCA Civ 577 at [58]. The plaintiff also relies on an article by Eggers: "Sue and Labour and Beyond: The Assured's Duty of Mitigation" [1998] Lm Clq 228 at 233. In reliance upon these authorities the plaintiff contends that there is a duty to preserve the subject matter of the insurance regardless of the existence of a sue and labour clause and that this obligation is recognised both within and without the law of marine insurance: State of Netherlands v Youell (supra) and Re Mining Technologies Australia Pty Ltd [1999] Qd R 60 at 83 - 84.

118 Counsel for the plaintiff submitted that the effect of s 84(4) of the Marine Insurance Act 1909 and the cl 14 of the Institute Cargo Clauses, incorporated in this policy, was to impose a statutory and contractual duty upon the master and owner of the "Pilbara Pilot" to take reasonable steps to protect the vessel if faced with an imminent peril of the sea, such as Tropical Cyclone Bobby, and that if, in the performance of that duty it was reasonable or proper to move the vessel from a cyclone proof mooring to some other position reasonably thought to be safer that would not constitute a breach of the warranty requiring the vessel to be moored at a cyclone proof mooring. This submission was supported by the further submission that such a statutory-contractual duty necessarily recognised the potentiality that the safety of the vessel might require it to be moved, during the course of some emergency, to a non-complying mooring and this involved a necessary modification of the absolute terms of the express warranty.

119 It is also apparent from the submissions of counsel for the plaintiff that he also advanced the proposition that, regardless of the express terms of the policy, there was a duty on any owner or master to take steps to preserve the safety of a vessel and, if in the course of taking reasonable steps in an attempt to preserve the vessel, it is nevertheless lost, then, so long as the steps taken were reasonable the loss of the vessel should be attributed to the operation of the peril of the sea which prompted the unsuccessful precautions to be taken. In this regard there are some analogies between this submission and the accepted rule that if, in the course of taking steps to mitigate damage, the efforts to do so, cause or enlarge the loss, then the party in breach of duty whose actions have caused the crisis is liable for the whole of the ensuing loss: Whitehouse Hotels Pty Ltd v Lido Savoy Pty Ltd (1975) 49 ALJR 93 and Mahony v J Kruschich (Demolitions) Pty Ltd [1985] HCA 37; (1985) 156 CLR 522.

120 The proposition underlying these submissions is that if a vessel, such as the "Pilbara Pilot" is lying at a mooring which, while complying with the warranties and the applicable policy of insurance, is nevertheless exposed to an imminent hazard because of an approaching cyclone, it will be in the interests of both the owner of the vessel and the insurer if, when it is considered reasonably necessary to do so, she is moved to a safer anchorage, even one not complying with the terms of the warranties in the policy, which is likely to preserve the safety of the vessel or to minimise damage from the impending peril. To do otherwise, and insist that the vessel remain at the anchorage which complies with the warranties in the policy, even though that may be the more dangerous course, would mean that an avoidable risk would have to be run simply because of the terms of the policy to the potential detriment both of the insurer and of the owner of the vessel. If this proposition be sound then if the avoiding action reasonably pursued results in damage or loss of the vessel, that should not result in the discharge of the policy or the rejection of the claim so long as the loss or damage was proximately caused by the peril of the seas or by some other insured risk.

121 It becomes necessary to examine whether or not it can be accepted that s 84(4) of the Marine Insurance Act and/or cl 14 of the Institute Cargo Clauses impose, as submitted by counsel for the plaintiff, a statutory or contractual duty upon the master or owner of the vessel to "take such measures as may be reasonable for the purpose of averting or minimising a loss".

122 Historically, there has been a long unresolved controversy about whether s 84(4) or its equivalent provision is applicable to anything other than claims for additional expenses or losses incurred by the insured when suing, labouring etc in an attempt to avoid or minimise an actual loss or an imminent and impending peril and, so, is confined to claims for additional expenses or losses beyond the value of the property insured. The controversy is most conspicuous in those cases where an insurer has sought to allege that a claimant may not recover the whole or part of a loss because the insured had failed to take any, or any adequate, steps to avoid or diminish the effects of the loss. An early instance of such an issue being addressed is to be found in British and Foreign Marine Insurance Co v Gaunt (supra) in the speech of Lord Sumner at 65 where his Lordship was addressing an argument that a claim by an insured for damage to a cargo of wool which was carried on deck and damaged while in that position in the course of a voyage, should not be recoverable because the insured or its agents had not taken adequate care to protect the cargo. Referring to s 78(4) of the United Kingdom Act, his Lordship said:

"There remains an argument based on the reading of s 78(4) of the Act which is very novel. It is one of the disadvantages of codification that new terms used or even unfamiliar sequences of propositions suggest that the law has been changed where those familiar with the old decisions would not have suspected it. The argument affords a striking incidence of this. The section obviously refers to suing and labouring. It cannot possibly be read as meaning that, if the agents of the assured are not reasonably careful throughout the transit, he cannot recover for anything to which their want of care contributes. ... "

A similar submission was advanced in Lind v Mitchell (supra) where the insurer was denying a claim for the total loss of a wooden vessel which, taking water heavily because of a collision with ice floes, was abandoned by its crew and, at the time of abandoning was set on fire to prevent the hulk becoming a threat to navigation. The contention, with regard to the equivalent of s 84(4) was that the master and crew had failed to take sufficient care to attempt to save the ship after it began taking water and had abandoned the vessel unnecessarily. With respect to the insurer's argument, relying on s 78(4) of the UK Act, Scrutton LJ said, [1928] All ER 447 at 450:

"It has been argued that, if the agents of the assured do not take all measures that are reasonable, the underwriter is not liable. I agree on that point and, therefore, exclude it from the case, with the view taken by Lord Sumner in British and Foreign Marine Insurance Co v Gaunt, where he says [1921] 2 AC at p 65 ... [the passage already cited above]."

123 More recently, an argument suggesting that an underwriter would not be liable to indemnify under a marine policy where the owner or its agents failed to take adequate steps to protect against the effect of the risk insured against was rejected in State of Netherlands (Minister for Defence) v Youell & Ors [1997] EUCA CIV 2715. In that case Phillips LJ rejected the use of the phrase "statutory duty", as being of any special significance in relation to an allegation that the owners/masters had an obligation by virtue of s 78(4) of the UK Act (s 84(4) of the Australian Act) to avoid or reduce damage. His Lordship referred, with approval, to the passages already cited from British and Foreign Marine Insurance Co v Gaunt (supra) and Lind v Mitchell (supra), and, additionally, to the observations to the same effect by Atkin LJ in the Court of Appeal in Gaunt v British and Foreign Insurance Co [1920] 1 KB 903 at 917. In the State of Netherlands v Youell (supra) Phillips LJ said, with regard to sue and labour provisions:

"The meaning is obvious, that, if an occasion should occur in which by reason of a peril insured against unusual labour and expense are rendered necessary to prevent a loss for which the underwriters would be answerable, and such labour and expense is incurred accordingly, the underwriters will contribute, not a part of the sum insured in case of loss or damage, because it may be that a loss or damage for which they would be liable is averted by the labour bestowed, but as a contribution on their part as persons who have avoided detriment by the result in proportion to what they would have had to pay if such detriment had come to a head for want of timely care."

and went on to demonstrate that the authorities established that such an entitlement under a sue and labouring term, would arise even if there had been no damage or no abandonment. His Lordship then referred to certain references and precedents (Arnould, 8th ed at 969; The Gold Sky [1972] 2 Lloyd's Rep 187 at 221 and The Vasso (supra) at 314) which suggested that s 78(4) (Australia s 84(4)) imposed a positive obligation owed by the assured to the underwriters breach of which sounds in damages before proceeding to reject that proposition. His Lordship said:

"I revert to the fact that there has been no example of s 78(4) providing underwriters with a defence to a claim since 1906. This, of itself, seems clear indication that the Section does not impose a conventional contractual duty which displaces, after a casualty has occurred, the general principle embodied in s 55(2)(a) (s 61(2)(a) of the Australian Act). The approach of treating a breach of duty in s 78(4) as material only in the context of causation provides a satisfactory explanation for the insignificance that s 78(4) has had in practice, if in practice negligence after the casualty will rarely be held to break the chain of causation. Such an approach was evidenced by no lesser an authority than Scrutton LJ in Lind v Mitchell."

"Having considered the authorities and, perhaps more significantly, the lack of them, I align myself with Colman J, Rix J and Arnould in concluding that the principle embodied in s 55(2)(a) applies before and after a casualty and that the duty referred to in s 78(4) will only have significance in the rare case where breach of that duty is so significant as to be held to displace the prior insured peril as the proximate cause of the loss. Even in that rare case, however, the breach of s 78(4) is unlikely in practice to afford a defence to underwriters. This is because such breach is likely to constitute a separate insured peril under the express cover that has, for many years, been given by the standard forms of policies of marine insurance against negligence of the master, officers and crew - see Arnould, 16th edition page 701."

124 With respect, I entirely agree with and accept the analysis undertaken by Phillips LJ in State of Netherlands (Minister for Defence) v Youell & Ors (supra) and conclude that a suggested breach of the obligations imposed by s 84(4) of the Marine Insurance Act 1909, and of equivalent suing and labouring terms, will seldom provide an underwriter with a defence to a claim unless it is established that the proximate cause of the loss of the property insured was not the peril insured against, but the failure of the insured to take reasonable steps to protect it.

125 So much for the suggestion, in other circumstances, of the existence in the Act of a duty by the insured, actionable at the suit of the insurer, to take such precautions. This present case, however, is not about a claim under s 84(4) nor about a claim for any additional entitlement for effort and expense incurred when suing or labouring etc. The real question, as it seems to me, is what are the rights and obligations of an insured to take steps in an attempt to protect the property insured in the face of an impending peril and, in this particular instance, when the reasonable steps which were taken involve placing the vessel astern of another ship, rather than on a cyclone proof mooring. This seems to raise similar, but wider, questions of the rights and obligations of an owner with regard to the protection of his property when faced with a real and imminent threat of loss or damage.

126 Effectively, the plaintiff's submission is that one of the perils covered by the insurance, namely the cyclone, had caused the plaintiff to move the "Pilbara Pilot" from the position in which it complied with the warranties of the policy to another position and, notwithstanding that that other position was one in which there was non-compliance with policy warranties, the real and proximate cause of the loss was the imminent cyclone which caused the plaintiff to shift the vessel from its complying mooring. In Colinvaux's: "Law of Insurance", 7th ed at 4-36, there is the proposition:

"Once the risk operates, damage to the subject matter due to the efforts to check the progress of the casualty, is covered. Thus, in Symington v Union Insurance of Canton (1928) 97 LG KB 646, cork was insured against fire. A fire broke out some distance away and to prevent it spreading local authorities threw some of the cork into the sea. It was held that the loss of this cork was covered, on the ground that damage by water to save a consequence of fire and the destruction of property to prevent it spreading were both proximately caused by the fire (see also Johnston v West of Scotland (1828) 7 Sh (Ct of Sess) 52). The test is, 'is it a fear of something that will happen in the future or has the peril already happened and is it so imminent that it is immediately necessary to avert the danger by action?"

It is only in the latter case that the insurers are liable - Glen Falls Insurance v Spencer (1956) 3 DLR (2D) 745 (Can) - insurance of a car against fire but not collision. (Accident caused by driver attempting to put out fire in dashboard: held accident caused by fire.)

127 It is at this point that the plaintiff employs its hypothesis that the defendant would be obliged to indemnify the loss of the vessel if, in the circumstances which applied on the afternoon of 23 February 1995 the plaintiff had, instead of moving the "Pilbara Pilot" to a position astern of the "Pilbara Jarrah" on the western side of the harbour, taken the vessel to sea in an attempt to ride out the cyclone in deeper water but had lost the vessel or suffered severe damage, that the policy would answer. This elevates the proposition into a broader level that reasonable but unsuccessful attempts to avoid the loss will not jeopardise the entitlement to indemnity even if, in the process, there is non-compliance with an express warranty.

128 As a fall back position, the plaintiff submits that the terms of the express warranties are themselves subject to qualification by reason of the existence of the sue and labour clause in cl 14 of the Institute Time Clauses Hulls Port Risks. On this approach the obligation to comply with the express warranties is itself expressly subject to the obligation to sue or labour or to take steps to preserve the safety of the vessel so that if an occasion arises where it is the duty of the master or the owner to preserve the safety of the vessel he must do so, subject to the exigencies of the situation and, actions taken in that regard will not constitute a breach of the express warranty.

129 One case in which this issue was addressed, although involving facts which were perhaps more clear cut than those in the present litigation, is Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55. That was a case where, under a policy of marine insurance, a cargo of rice being transported by sea was damaged by overheating. The overheating was caused by the closing of ventilators in hatches by the ship's crew owing to rough weather at a time when the weather and sea were such as to constitute a peril of the sea. The contention of the insurer was that it was the deliberate action of the master and crew of the vessel to close off the ventilation to the cargo which was the cause of the loss and not the peril of the sea which was the insured risk. Their Lordships took the view that it was the perilous condition of the sea which led to the closing of the ventilators and so to the damage to the rice cargo, so that the damage should be regarded as the direct cause of the peril. Lord Wright went on to observe that losses resulting from efforts to avoid or contain damage from an insured peril then impending will be regarded as losses due to that peril. After referring to Butler v Wildman (1820) 3 B & Ald 398 and The Knight of St Michael [1898] P 30 Lord Wright said at 72 - 73:

"It is obvious that in these two cases there was no question of turning away to avoid a future peril. If there had been, the loss might properly have been held to be due not to the peril, but to deliberate action to avoid coming into the area of the peril, as in Becker, Gray & Co v London Assurance Corporation [1918] AC 101 and similar cases. But in Butler v Wildman (supra) and The Knight of St Michael (supra) the subject of the insurance was actually in the grip of the peril, enemies in the one case, fire in the other. The correctness of these authorities has not been doubted, and their Lordships think they were rightly decided. Indeed, in Becker, Gray & Co v London Assurance Corporation (supra) at page 118 Lord Sumner expressly cites with approval The Knight of St Michael (supra) as a decision on the general words in the policy and distinguishes it from the case then before him. Similarly in the present case then there was an actually operating peril of the sea. There was accordingly either a loss by perils of the sea or a loss within the general words."

The reference to "loss within the general words" is a reference to provisions often found in a marine policy which, in addition to the specific risks, include "all other perils, losses and misfortunes". No such additional words are to be found in the marine policy which is the subject of this litigation but one of the risks insured against is "perils of the seas, rivers, lakes or other navigatable waters" (Exhibit 1 - Institute Times Clauses Hulls, cl 5.1.1) and there can be no doubt that both the threat to the "Pilbara Pilot" at its usual mooring, and the parting of the lines when she was tethered behind the "Pilbara Jarrah" in the new position were both caused by the extraordinarily rough seas and conditions thrown up by Tropical Cyclone Bobby.

130 Becker Gray & Co v London Assurance Corporation [1918] AC 101 is a case where the German ship, upon which the insured cargo was being carried, upon war breaking out between Great Britain and Germany, put into a neutral port, to avoid the risk of capture and with the intention of suspending the further prosecution of the voyage until after the end of the war, thus destroying the commercial venture for which the cargo was being shipped. The cargo owners claimed under the policy insuring against perils (amongst others, of "men of war ... enemies ... takings at sea, arrest, restraints and detainment of all Kings, Princes and people of what nation, condition or quality so ever" but failed because the ship had put into the neutral port to avoid the risk of capture before she had gone into the zone of immediate danger and, before consequently the risk had begun to operate. In those circumstances the loss could not be regarded as proximately caused by the peril insured against. That was the decision at first instance [1915] 3 KB 410, in the Court of Appeal [1916] 2 KB 156 and in the House of Lords [1918] AC 101. The point of the case is that the deviation by the master of the vessel into the neutral port was not caused or dictated by any actual or imminent threat that the vessel may be captured by the enemy but only because of the decision of the captain that the final stage of the voyage from Malta, west through the Mediterranean and the Straits of Gibraltar to Hamburg, could not be completed without probable interception by British cruisers at Gibraltar or elsewhere. No actual threat or imminent threat of capture existed when the vessel went to the neutral port of Messina.

131 The facts in Becker Gray & Co v London Assurance Corporation (supra) stand in marked contrast to the imminent danger which was facing Captain Hawes and his colleagues on 23 February 1995 at Dampier. By that time a force 4 cyclone was bearing down on the port, which was about to go to condition red which would prohibit any further attempts to safeguard the "Pilbara Pilot". The wind, sea and swell conditions had deteriorated and were expected to deteriorate further. Captain Hawes received advice from experienced and respected captains that it would be prudent to move the "Pilbara Pilot" to a more sheltered anchorage and he went to inspect the condition of the vessel at its mooring and reached the same opinion himself. Shifting her to a position astern of the "Pilbara Jarrah" was the only alternative practically available and it was chosen because of the conclusion that this was necessary and desirable in view of the imminent and unavoidable threat which was then approaching.

132 In these circumstances the decision to move the vessel should, in my view, be regarded as resulting from the peril of the sea then actually impending and it was that same peril which accomplished the loss of the vessel at its new position astern of the "Pilbara Jarrah". As it is acknowledged that it was an honest and reasonable decision to move the "Pilbara Pilot" in those circumstances, I consider that both the movement of the vessel and its subsequent loss were caused by this peril of the sea and that it is not to the point that, at the new temporary position of the "Pilbara Pilot" astern of the "Pilbara Jarrah" she was not moored at a cyclone proof mooring. She had been moored at what I have concluded was a cyclone proof mooring but the decision to shift her from there and her subsequent loss were both caused by the risk insured against. It is not possible, in my view, to regard the move of the vessel from its original mooring as in any way interrupting or avoiding the causative effect of the cyclone which was then developing and which later overwhelmed the vessel. The transfer of the "Pilbara Pilot" to the new temporary mooring was a precaution, unfortunately unsuccessful, taken with a view to preserve the vessel from the developing threat and one which was supported by all the competent marine expertise available at the time.

133 The findings that there have been no breaches of the express warranties in this policy of marine insurance with regard to the conditions of the usual mooring for the "Pilbara Pilot" also dispose of the defendant's allegations of non-disclosure by the plaintiff of inadequacies about that mooring or otherwise which would allow the defendant to avoid the policy. No new issue is raised by this aspect of the defence and it is unnecessary to repeat the basis for those conclusions.

134 In the event of the success by the plaintiff it becomes entitled to judgment for $216,620.50 plus interest from 10 May 1995 at the various rates applicable under the regulations made pursuant to s 32 of the Supreme Court Act. I will give liberty to the plaintiff to bring in a minute of a calculation of the interest claimed for consideration. If that can be agreed it should be added to the amount of the indemnity, failing which I will hear submissions as to the computation of interest.