Board of Management of Agricultural Bank of Tasmania v Brown

Board of Management of Agricultural Bank of Tasmania v Brown - [1957] HCA 57 - HCA 1957 case summary — Zoe

[18]

Upon this construction of the endorsement it becomes necessary to consider the issue of fact raised by the respondent's cross-appeal for, upon this construction, the right of the appellant to recover an amount in excess of that already awarded depends upon whether the stranding of the vessel resulted in a total loss. The learned trial judge was of the opinion that it did and there can be no doubt that there was sufficient evidence to support such a finding. Indeed, it may be said, there was sufficient evidence to support either that or the contrary conclusion for there was a sharp conflict on this issue. The conflict which arose upon the evidence was of such a character as to present the learned trial judge with a problem of unusual difficulty and, in the circumstances, to make the issue in dispute appear as one particularly unsuitable to be disposed of merely upon consideration of the written transcript. Nevertheless, upon the appeal, cogent arguments against the finding of the trial judge were advanced, but after a careful reading of the transcript we are satisfied that it should stand. It is, we think, possible to say that in the end the finding resulted from his Honour's declared preference for the evidence and conclusions of Captain McKay, a witness called for the appellants, as against the evidence given by Mr. Tucker who was called as a witness by the respondent. It seems from his Honour's reasons that, apart from the evidence of the former witness, he would not have been prepared to find that the stranding resulted in a total loss. Whether or not it did appears to depend upon the degree of damage done to the timbers of the vessel in the vicinity of the keel and the stern. Mr. Tucker, who saw and examined the vessel shortly after the casualty was firmly of the opinion that no irreparable damage had occurred but when he saw the vessel its keel was still in the water and his examination was conducted in circumstances in which it was possible that the starting of the vessel's timbers could have escaped detection. Moreover, the vessel was ballasted with some forty tons of concrete and an internal inspection in the vicinity of the keel was quite impossible. On the other hand, Captain McKay did not see the vessel, or, rather, its remains, until some four years later and at this stage little remained of the hull above the concrete ballast. Yet he was prepared to say that the damage which he then observed indicated that the stranding, and the consequent pounding which the vessel had received, had caused her timbers to start from the keel structure and had so damaged her stern timbers as to make it impossible for her to be made seaworthy again. It was, of course, urged with considerable force that it would be unsafe to rely upon this view formed, as it was, upon an examination made at such a remote stage and after a disastrous fire had occurred and the remains of the vessel had for so long been exposed to the elements. But the criticism inherent in this observation is deprived of much of its force if the character of the damage then apparent could point only to one conclusion. This was the view formed by Captain McKay and nothing appears in his cross-examination which would entitle us to say that he reached it upon considerations that are seriously open to question. Moreover, it should be observed, the learned trial judge inspected the remains of the vessel and was, therefore, in a much more advantageous position than this Court in seeking to evaluate the criticism that Captain McKay's opinion was formed upon unsatisfactory material and in deciding between the views expressed by that witness and Mr. Tucker. In these circumstances, his Honour's finding on this point is not open to question and accordingly the appeal of the appellants should be allowed and the cross-appeal dismissed. Judgment should be directed for the appellants for the respondent's due proportion of the sum of £8,200 but since this result follows because of the appellants' success on a point not taken below there should be no order as to the costs of either the appeal or the cross-appeal.

[23]

This leaves two questions to be argued on the merits. Firstly, whether the learned trial judge was wrong in holding that the loss was not covered by the endorsement and secondly, if this is answered in favour of the appellants, whether he was right in holding that the vessel became a constructive total loss on 24th October 1950. If she did not become a constructive total loss until 31st December 1950, the loss would have occurred beyond the period of the endorsement. The second question naturally is raised not by the appellants but by the respondent. It involves an issue of fact, and it is unnecessary to deal with it if the first question is resolved adversely to the appellants. In my opinion the first question should be so resolved. The answer depends upon the true meaning of the endorsement read with the policy of which it forms part. The perils against which the vessel is insured by the policy include, subject to certain exceptions, the perils of the sea and certain specific perils of which fire is one. The cruising limits are Tasmanian coastal waters. One of the warranties is that the vessel, whilst it has leave to assist and tow vessels or craft in distress, will not undertake towage or salvage services under a contract previously arranged by the owners and or managers and or charterers. The vessel is however held covered in case of any breach of warranty as to, inter alia, salvage services provided notice be given immediately after receipt of advices and any additional premium required be agreed. It is common ground that at the date the endorsement was entered into the vessel was about to proceed to Macquarie Harbour on the west coast of Tasmania to engage in pile-driving there and that the seas off that coast can be very rough and the entrance to the harbour which is known as Hell's Gates dangerous to navigate. The endorsement states that in consideration of an additional premium having been paid the vessel is covered for the period 5th September 1950 to 5th November 1950 inclusive whilst engaged in pile-driving and salvage work. It does not appear to have been contemplated that the vessel would engage in salvage work in this period and it is difficult to understand why salvage work was included as well as pile-driving. Pile-driving was presumably work which the parties thought might expose the vessel to more danger of becoming a total or constructive total loss that she would be exposed to in the course of her normal cruising. It may have been expressly mentioned because it was thought that the vessel could be lost in the course of doing this work from a peril not covered by the policy, although the policy covers the risk of explosions on shipboard or elsewhere. The specific mention of pile-driving indicates an intention to extend the cover so as to include any total or constructive total loss of the vessel from any cause whatsoever whilst engaged in pile-driving. The specific mention of salvage similarly indicates an intention to extend the cover so as to include any such loss whilst engaged in salvage work although the salvage was of such a nature that it would not have fallen within the somewhat limited cover contained in the policy.

[24]

The argument before us proceeded to a considerable extent upon the basis that the true scope of the endorsement depended entirely upon whether the words "whilst engaged in Pile Driving and salvage work" were words of condition or were merely descriptive of the work upon which the vessel was about to engage. I am unable to read those words as other than words of condition. They cover the vessel whilst engaged upon one or other of these works. The loss of the vessel whilst not so engaged would not be covered by the endorsement and she would be uninsured unless covered by something in the policy. But this still leaves open the question whether the second sentence in the endorsement "it is further noted and allowed that the sum insured is increased to £8,200 for the above-mentioned period only" refers only to the particular coverage whilst the vessel is engaged in pile-driving and salvage work provided for in the endorsement. The sentence is open to the construction that the sum insured by the policy, that is £4,200, is increased to and replaced by the sum of £8,200 for the period 5th September 1950 to 5th November 1950, so that the latter sum would be payable if the vessel became a total or constructive total loss in this period from any peril covered by the policy or the endorsement. It was urged for the appellants that the parties must have contemplated that the vessel would be exposed to greater perils of the sea whilst voyaging off the west coast of Tasmania or navigating Hell's Gates than she would encounter on her normal cruising. But the evidence is that the vessel was in the habit of going ten miles out to sea on these cruises. There does not appear to be any reason why the parties should have contemplated that the perils of the sea off the west coast of Tasmania or in passing through Hell's Gates should have been such that the higher insurance was required whilst the vessel was simply navigating these waters. But it may have been contemplated that if the vessel was engaged in salvage work the risks from the perils of the sea particularly if she were towing another vessel in such seas or through the entrance would be appreciably increased and this may explain the particular provisions of the policy relating to this work. The endorsement must be read as a whole and, when this is done, it seems to me that it is dealing with one subject matter and one subject matter only, that is, the provision of a particular coverage for a limited period and that the second sentence should be construed as referring and referring only to this particular subject matter. In other words, the effect of the endorsement is to insure the vessel against a total or constructive total loss for £8,200 provided the loss occur between the dates in question and whilst the vessel is engaged in pile-driving or salvage work.

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Court

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Before

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Judgment (40 paragraphs)

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