PARTIES: H I H CASUALTY & GENERAL INSURANCE LIMITED

INSURANCE CONTRACT - proximate cause of loss - competing proximate causes of loss MARINE INSURANCE ACT 1909 - wear and tear outside cover

On 24 July 1994 the Alpha Kilimanjaro sank at berth at Mbaraki River in Kenya. The vessel sank because the starboard sea suction valves were left open and the wall of strainer box, which was part of the sea water circulation system of the ship, failed due to corrosion. Sea water then flooded the bilges and engine room ultimately leading to sinking.

The vessel was owned by the first respondent and mortgaged to the second respondent. It was insured, when lost, with the appellant for $US1,200,000.

The respondents claimed against the appellant to recover the insured value from the appellant. The trial Judge gave judgment for the respondents in an amount of $US1,395,953 which included interest.

The issue on appeal was whether negligence was the proximate cause of the loss. The appellant submitted that the proximate cause was ordinary wear and tear, or alternatively, wear and tear and negligence. Section 61(2) (c) of the Marine Insurance Act 1909 provided that:

"unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils."

Therefore, the appellant submitted that in either case the appellant was not liable under the policy.

1. The question of proximate cause must be made by commonsense standards: Yorkshire Dales Steamship Co Limited v Minister of War Transport ("The Coxwold") (1942) 72 LlL Rep 1, Wayne Tank & Pump Co Limited v Employers Liability Assurance Corporation Limited [1974] 1 QB 57.

2. The qualities of reality, predominance and efficiency of a cause prevail over proximity in time in determining what cause or causes are proximate: Leyland Shipping Company Limited v Norwich Union Fire Insurance Society Limited [1918] AC 350.

3. There was no error in the trial Judge's reasoning in reaching the conclusion that the proximate cause of the sinking was the negligent failure of the Master, Officers or Crew to guard against the risk of failure of the sea water circulation system due to corrosion.

4. Where there are competing proximate causes and loss from one is insured against and none of the others is expressly excluded, the insured is entitled to recover: JJ Lloyd Instruments Limited v Northern Star Insurance Co Limited ("The Miss Jay Jay") [1987] 1 LlL Rep 32.

5. Neither at common law or under the Marine Insurance Act 1909 would the general words of Clause 6 of the Fishing Institute Clauses extend to make the insurer for ordinary wear and tear. The meaning of ss61(1) and 61(2) of the Marine Insurance Act 1909 is that wear and tear was not expressly excluded by the policy. Rather, it was outside the cover. Therefore, if the loss of the vessel was proximately caused both by wear and tear and negligence, the insurer was liable because one cause was covered and the other was not expressly excluded.

Board of Trade v Hain Steamship Co Limited [1929] AC 534

City Centre Cold Store Pty Limited v Preservatrice Skandia Insurance Limited (1985) 3 NSWLR 739

JJ Lloyd Instruments Limited v Northern Star Insurance Co Limited ("The Miss Jay Jay") [1987] 1 LlL Rep 32

Leyland Shipping Company Limited v Norwich Union Fire Insurance Society Limited [1918] AC 350

P Samuel & Co Limited v Dumas [1924] AC 431

Petersen v Union Des Assurances (1995) 8 ANZ Ins Cas 61244

Smith, Hogg & Company Limited v Black Sea and Baltic General Insurance Company Limited [1940] AC 997

Thames and Mersey Marine Insurance Company Limited v Hamilton Fraser Co [1887] LR 12 App Cas 484

Thomas Wilson, Sons & Co v The Owners of the Cargo per the `Xantho' [1887] LR 12 App Cas 503

University of Newcastle v GIO General Limited (1995) 8 ANZ Ins Cas 61281

Wayne Tank & Pump Co Limited v Employers Liability Assurance Corporation Limited [1974] 1 QB 57

Yorkshire Dales Steamship Co Limited v Minister of War Transport (`The Coxwold') (1942) 72 LlL Rep 1

On 24 July 1994 the "Alpha Kilimanjaro" sank at berth at Mbaraki River, Mombasa in Kenya. The vessel which was owned by the first respondent, Waterwell Shipping Inc (Waterwell), a wholly owned subsidiary of Southern Engineering Company Limited (SECO), was registered in Liberia and operated through a Liberian company. It was mortgaged to the second respondent, Export Finance Insurance Corporation (EFIC) and insured, when lost, in the name of Waterwell and EFIC with the appellant, HIH Casualty & General Insurance Limited (HIH), for an agreed value of $US1,200,000.

By an amended summons filed in the Commercial Division the respondents claimed against the appellant to recover the insured value from the appellant. The appellant accepted that the vessel was a constructive total loss. Giles CJ CommD heard the proceedings and on 19 September 1997 gave judgment in an amount of $US1,395,953.64 which included interest. The appellant appeals from that decision.

The policy was one of marine insurance described as "Insurance Policy - Hull" which incorporated the Institute Fishing Vessel clauses 20/7/87 amended in ways which are not presently material. The Institute Fishing Vessel clauses were subject to Australian law and practice. Clause 6 "Perils" provided as follows:

"6.1 This insurance covers loss of or damage to the subject matter insured caused by

6.1.1 perils of the seas rivers lakes or other navigable waters

6.1.3 violent theft by persons from outside the Vessel

6.1.6 breakdown of or accident to nuclear installations or reactors

6.1.7 contact with aircraft or similar objects, or objects falling therefrom, land conveyance, dock or harbour equipment or installation

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

6.2.1 accidents in loading discharging or shifting catch fuel or stores

6.2.2 bursting of boilers breakage of shafts or any latent defect in the machinery or hull

6.2.4 negligence of repairers or charterers provided such repairers or charterers are not an Assured hereunder

provided such loss of damage has not resulted from want of due diligence by the Assured, Owners or Managers."

THE MARINE INSURANCE ACT 1909

Beginning with Part 2, the Marine Insurance Act 1909 (C'th) (the Act) takes the form of the Marine Insurance Act 1906 (Imperial) (the Imperial Act), the long title of which was "An Act to codify the Law relating to Marine Insurance". Section 4 of the Act provides that the rules of the common law, including the law merchant, save in so far as they are inconsistent with the express provisions of the Act, shall apply to contracts of marine insurance. There was no suggestion the Act did not apply to the insurance the subject of these proceedings; compare s6 of the Act.

"61 (1) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against.

(a) the insurer is not liable for any loss attributable to the wilful misconduct of the assured, but, unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew;

(b) unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss proximately caused by delay, although the delay be caused by a peril insured against;

(c) unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils."

"The `Alpha Kilimanjaro' was manned by three officers and eighteen crew. The master was Captain Mangalath Thomas, who was assisted as chief officer by Mr Parappuzhathu Shaji. The chief engineer was Mr Nalillakaren Appu, under whom were three greasers. On-shore management of the fleet of fishing vessels was the responsibility of Mr Woong Lee, the general manager of the fishing division of SECO, and under him Mr Salay Sait, the operations manager of the fishing division.

On 21 July 1994 the vessel arrived at the SECO shipyard at Mombasa after a lengthy fishing trip. Its cargo of prawns was discharged but a cargo of fish remained on board. The vessel bunkered and routine maintenance was carried out. The vessel berthed bows-on to SECO's wharf, flanked by two other vessels in the fleet, the `Alpha Tsavo' to starboard and the `Alpha Serengeti' to port.

The vessels in the fleet were fumigated for cockroaches about every six months, and arrangements were made for fumigation of the `Alpha Kilimanjaro' and the `Alpha Tsavo' for cockroaches on the afternoon of 23 July 1994. The fumigation involved spraying a chemical in the accommodation section of the vessel, but not elsewhere, and the departure of the crew for a period. Captain Thomas placed Mr Shaji in charge of the fumigation and instructed him to ensure that the vessel was properly locked up and secured upon the departure of the crew; he gave instructions to Mr Appu to shut down and secure the vessel but did not specifically direct what was to be done in that regard.

By about 5.00pm or a little later on 23 July 1994 the vessel was shut down and secured. A member of the crew, from about 6.00pm Mr David Wambua, was left on the vessel as a watchman. The engines had been stopped, all power had been cut off, the accommodation section of the vessel had been locked, and the engine room had also been locked. The keys were not left with the watchman, but were taken ashore. Captain Thomas gave evidence that `we' took the keys, that he did not check the locking but `told the chief officer check everything and I left' and then left the vessel before Mr Shaji and Mr Appu, and that he was later told by Mr Shaji and Mr Appu that `everything is locked'. Although in submissions it was common ground that Captain Thomas took the keys they were probably taken by Mr Shaji; perhaps even Mr Shaji took the keys to the accommodation section and Mr Appu took the keys to the engine room, since there was evidence that Mr Appu locked the engine room on the particular occasion. The crew had instructions to return by 7.00am on 24 July 1994, and it was intended that the vessel should sail early on 25 July 1994.

Three inlets in the vessel's hull (the sea suction inlets), two on the starboard side and one on the port side, permitted the intake of seawater for purposes such as cooling of the main and generator engines and hosing down the decks. The sea water circulated via a network of pipes and pumps, much of which was below the waterline. Immediately inboard of the inlets were valves (the sea suction valves, also called sea inlet valves), by which the ingress of water could be closed off. Inboard again from the sea suction valves were strainer boxes (the sea suction strainer boxes, also loosely called strum boxes and mud boxes), intended to retain objects which might clog or damage the pumps. The piping then led to the pumps, usually with another valve between the sea suction strainer box and the pump.

The `Alpha Kilimanjaro' sank because the starboard sea suction valves were left open when the vessel was shut down and secured on 23 July 1994 and a wall of the outer starboard sea suction strainer box failed as a result of corrosion. Sea water was then free to enter the vessel, flooding the bilges and engine room and leading to loss of buoyancy and stability and ultimately to sinking. The failure of the wall of the sea suction strainer box probably occurred early in the evening of 23 July 1994. Mr Wambua noticed that the stern was in the water at about 11.00pm (although there is some doubt about that time and it may have been later), and seems to have raised the alarm about midnight. Personnel from the adjoining vessels and on shore were alerted and the vessel's officers were informed at about 2.00pm, but it was then too late to prevent the sinking. The vessel sank at about 4.00am on 24 July 1994."

In accordance with accepted terminology Giles CJ CommD referred to the vessel when shut down and secured, that is, berthed, with mechanical and other systems shut down, with accommodation and engine room locked, and manned only by a watchman, as a "dead ship".

(a) Whether the sinking of the vessel was caused by negligence within cl 6.2.3 of the Institute Clauses;

(b) if so, whether that negligence was the proximate cause of the loss; and

(c) again, if so, whether the loss resulted from want of due diligence within the proviso to cl 6.2 of the Institute Clauses.

Giles CJ CommD found that the negligence of "the Master, Officers [or] Crew" in omitting to close the sea suction valves rather than the failure of the wall of the strainer box as the result of corrosion was the proximate cause of the sinking of the vessel and that the loss did not result from want of due diligence by the "Assured, Owners or Managers". The appellant does not challenge the trial Judge's conclusions on issues (a) and (c). In substance the appellant's submissions were directed to whether negligence was the proximate cause of the loss or, to follow the language of s61 (1), the loss of the vessel was "proximately caused" by negligence. The appellant argued that the loss was proximately caused by ordinary wear and tear or, alternatively, by wear and tear and negligence. In either case, since s61 (2) (c) was said to exclude ordinary wear and tear, the appellant was not liable for the loss under the policy.

In dealing with the question whether negligence was the proximate cause of the loss the trial Judge said:

"The failure was predictable, in that corrosion was a known process affecting the integrity of the sea water system, and closing the sea suction valves was dictated in order to guard against the consequences of just such an event. On that analysis, it seems to me that the negligence is rationally to be regarded as the real cause of the sinking, because the sea suction valves should have been closed in order that an event such as the failure should not lead to sinking. The negligent omission to close the sea suction valves when the vessel was shut down and secured allowed the failure, an event the happening of which was predictable in the sense mentioned above and the consequences of which adherence to proper practice should have nullified, to lead to the sinking. In my opinion the negligence rather than the failure was the proximate cause of the sinking of the `Alpha Kilimanjaro'."

There is a powerful argument for saying this was a finding of fact on contested oral evidence with which this Court would interfere only if it were shown to be glaringly improbable or to involve some error of principle. In my opinion, neither has been demonstrated.

Mr Street SC, who appeared for the appellant, emphasised that the choice of the proximate cause must be made by applying commonsense standards, what the person in the street or the seafarer would understand to be the cause of the loss; Yorkshire Dales Steamship Co Limited v Minister of War Transport (`The Coxwold') (1942) 72 LlL Rep 1 at 10 per Lord Wright. In Wayne Tank & Pump Co Limited v Employers Liability Assurance Corporation Limited [1974] 1 QB 57 the causes of a fire, which destroyed a factory, were, first, the use of unsuitable and dangerous plastic material coupled with a useless thermostat in an installation in the factory and secondly, the conduct of the factory owner's servant in switching on a heat controlling tape and leaving it unattended when the installation had not been tested. Lord Denning MR at 67 posed the question, as a matter of commonsense, what was the effective or dominant cause of the fire and said:

"To that question I would answer that it was the dangerous installation of a pipe which was likely to melt under heat. It seems to me that the conduct of a man in switching on the heating tape was just the trigger - the precipitating event - which brought about the disaster. There would have been no trouble whatever if the system had been properly designed and installed."

Mr Street submitted that as a matter of commonsense, for like reason, the failure of the strainer box proximately caused the loss of the vessel.

Mr Street referred to the evidence of the managing director of SECO at the time, Mr Kurji. Mr Kurji said that the failure of the mud (strainer) box was what was found to have sunk the vessel and conceded in cross-examination that no steps had been taken to discipline the chief engineer, Mr Appu, who had allowed the valve to remain open.

On the other hand, Mr Hutley SC, who appeared for the respondents, referred to the evidence of Mr Bennett, a marine engineering consultant, called by the appellant, who agreed that for all any prudent engineer knew there could have been a number of serious corrosive defects anywhere in the sea water system in the vessel and that for all Mr Appu knew, as he was about to leave the vessel, that system was on the verge of collapse. Potentially, there was unobserved corrosion at a point or points in the system which could fail at any time. Mr Bennett gave the following evidence in cross-examination:

"Q. You agreed with me that the engineer leaving this vessel must know, if he knows he has left the sea valves opening, the following, that there could well be points within the exposed seawater system which could fail at any time, correct? A. Correct.

Q. And would he know, knowing that that if you locked up the vessel and left the vessel in the way that occurred here, and there was such a failure this vessel, in all likelihood, would sink, correct? A. Correct.

Q. You say a prudent marine engineer could do that and not be grossly negligent, in your view? A. Correct.

Q. But you see he is just gambling that an eventuality which he can clearly foresee, doesn't occur, correct? Correct."

In his submissions Mr Hutley emphasised the difference, in this respect, between a "dead ship" and a ship not so secured.

The qualities of reality, predominance and efficiency of a cause prevail over proximity in time in determining what cause or causes are proximate. In Leyland Shipping Company Limited v Norwich Union Fire Insurance Society Limited [1918] AC 350 the owners of a ship which had been torpedoed by a German submarine and then sank, after having been brought to harbour with the aid of tugs, grounded and refloated, sued underwriters to recover as for a loss by perils of the sea. Underwriters were protected by a warranty against all consequences of hostilities. At 362-3 Lord Dunedin said:

".......we have had a large citation of authority in this case, and much discussion on what is the true meaning of causa proxima. Yet I think the case turns on a pure question of fact to be determined by commonsense principles. What was the cause of the loss of the ship? I do not think the ordinary man would have any difficulty in answering she was lost because she was torpedoed. ...... The solution will always lie in settling as a question of fact which of the two causes was what I will venture to call (though I shrink from the multiplication of epithets) the dominant cause of the two. In other words, you seek for the causa proxima, if it is well understood that the question of which is proxima is not solved by the mere point of order in time."

"To treat proxima causa as the cause which is nearest in time is out of the question. Causes are spoken of as if they were as distinct from one another as beads in a row or links in a chain, but - if this metaphysical topic has to be referred to - it is not wholly so. The chain of causation is a handy expression, but the figure is inadequate. Causation is not a chain, but a net. At each point influences, forces, events, precedent and simultaneous, meet; and the radiation from each point extends infinitely. At the point where these various influences meet it is for the judgment as upon a matter of fact to declare which of the causes thus joined at the point of effect was the proximate and which was the remote cause.

What does `proximate' here mean? To treat proximate cause as if it was the cause which is proximate in time is, as I have said, out of the question. The cause which is truly proximate is that which is proximate in efficiency. That efficiency may have been preserved although other causes may meantime have sprung up which have yet not destroyed it, or truly impaired it, and it may culminate in a result of which it still remains the real efficient cause to which the event can be ascribed.

....... In my opinion, accordingly, proximate cause is an expression referring to the efficiency as an operating factor upon the result. Where various factors or causes are concurrent, and one has to be selected, the matter is determined as one of fact, and the choice falls upon the one to which may be variously ascribed the qualities of reality, predominance, efficiency."

Giles CJ CommD accepted the opinions of the respondents' experts that a vessel should be as water tight as possible when left unattended or attended only by a watchman. As one of the appellant's experts agreed, "good practice recognised the risk of failure of a vessel's equipment in board of sea suction valves and consequent water entry and was required to `ensure at all costs, in that regard, that the integrity of the hull is not compromised, such as to lead to a sinking'." His Honour said:

"The risk is recognised, apart from other reasons, because the periodical hull surveys do not extend inboard of sea suction valves. While a vessel is manned water entry can be detected, by the senses or by a bilge alarm (the `Alpha Kilimanjaro' was fitted with such an alarm), and will probably be detected well before the vessel's mechanical and other systems are affected so that it can be controlled by pumps and the cause rectified: it is otherwise when the vessel is unattended or attended only by a watchman. I prefer the opinions of Messrs Highfield and Ashworth that good practice requires that sea suction valves in a dead ship be closed, and the basis for that applies to fishing vessels as to other vessels and whether the vessel is undergoing fumigation or not."

His Honour accepted that corrosion was a known process affecting the integrity of the seawater system and that closing the sea suction valves was dictated in order to guard against the consequences of just such an event. In short, where the risk of a failure due to corrosion was known or should have been known, the failure to guard against that risk was the efficient and hence the proximate cause of the loss not the state or condition of corrosion which created the risk.

Not only do I think that no error has been disclosed in the trial Judge's reasoning, but with respect I entirely agree with his conclusion. This makes it unnecessary to consider the case that there were two competing proximate causes of loss. However, in deference to the detailed argument addressed to this case, I propose to deal with it.

In City Centre Cold Store Pty Limited v Preservatrice Skandia Insurance Limited (1985) 3 NSWLR 739 at 745 Clarke J, as his Honour then was, accepted that there might be two or more efficient causes of the collapse of a wall in the insured's cold storage unit. His Honour adopted Cairns LJ's dictum in Wayne Tank at 68-69 that the Court should not strain to find a dominant cause if there were two causes both of which could properly be described as effective causes of the loss. His Lordship said: "I should prefer to say that unless one cause is clearly more decisive than the other, it should be accepted that there are two causes of the loss and no attempt should be made to give one of them the quality of dominance."

Mr Street submitted that the proper construction of s61 (1) of the Act required the identification of "the" proximate cause and did not allow recovery, as I would understand the submission, because one amongst a number of equally efficient proximate causes was covered, with the corollary that unless one of such proximate causes was excluded under the policy, the insurer was liable for the loss. The submission was that this Court should not follow recent English authority, particularly JJ Lloyd Instruments Limited v Northern Star Insurance Co Limited ("The Miss Jay Jay") [1987] 1 LlL Rep 32, or Clarke J's decision in City Centre Cold Store or Rolfe J's decisions in Petersen v Union Des Assurances (1995) 8 ANZ Ins Cas 61244 at 75750-75751 and University of Newcastle v GIO General Limited (1995) 8 ANZ Ins Cas 61281 at 76115. This Court dismissed an appeal from Rolfe J's decision in Petersen (1997) 9 ANZ Ins Cas 61-366. At 77,034 Priestley JA, with whose judgment the President and Powell JA agreed, observed that "........ Rolfe J applied a line of authority for which Wayne Tank is usually cited which supports the rule that were there are two causes, one covered and the other excluded, then the insurer is not liable."

The appellant's argument was said to be based on earlier authority (see, for example, Smith, Hogg & Company Limited v Black Sea and Baltic General Insurance Company Limited [1940] AC 997 at 1006, Colinvaux's Law of Insurance, 7th ed, (1997) at 106) and upon the assertion that in none of the cases had s61 or its equivalent in the Imperial Act (s55) been thoroughly analysed. As a fall back argument Mr Street said that perforce of s61 (2) there was an exception or exclusion for loss caused by ordinary wear and tear and that exclusion applied; Board of Trade v Hain Steamship Co Limited [1929] AC 534 at 541 per Lord Sumner.

I find the first of these submissions unpersuasive. In the "Miss Jay Jay" the competing causes of damage to a motor cruiser were the insured peril "external accidental means" and defective design. At 38 Slade LJ said that the defendant insurer's case relied heavily on ss55 (1) and (2) (c) of the Imperial Act (s61 (1) and (2) (c) of the Act. In particular it was submitted that the loss in question was not "proximately caused" by the weather conditions, assuming these to be a peril insured against. At 39 his Lordship observed:

"The authorities relating to proximate cause in marine insurance policies are therefore of some importance. These authorities show that the question of proximate cause has to be determined according to `a broad commonsense view of the whole position': see Canada Rice Mills Limited v Union Marine & General Insurance Co Limited [1941] AC 55 at 69 per Lord Wright. The modern cases also show that the cause of damage which is the latest in point of time is by no means necessarily the proximate cause."

His Lordship referred to what was said by Lord Shaw of Dunfermline in the Leyland Shipping Company Limited case at 369. At 40 Slade LJ said that on a commonsense view of the facts both causes were, in his opinion, equal, or at least nearly equal, in their efficiency in bringing about the damage and that, in these circumstances, if the policy had contained a relevant express exception which related to loss caused by the unseaworthiness of the vessel, the plaintiffs' claim might well have been unsustainable: Arnould's Law of Marine of Insurance and Average (16th ed) at para 776; P Samuel & Co Limited v Dumas [1924] AC 431 at 467 per Lord Sumner; Wayne Tank & Pump Co Limited at 75 per Roskill LJ. Since the policy contained no relevant exception relating to loss caused by unseaworthiness of the vessel, different principles applied. At 40 Slade LJ quoted the following passage from Halsbury's Laws of England (4th ed) Vol 25, para 181 which related to marine insurance policies:

"It seems that there may be more than one proximate (in the sense of effective or direct) cause of a loss. If one of these causes is insured against under the policy and none of the others is expressly excluded from the policy; the insured will be entitled to recover."

"No authority has been cited to us which leads me to suppose that this passage incorrectly states the relevant law relating to marine insurance policies and, in my judgment, it incorporates the principle applicable to the present case. The crucial point is that in the contingencies envisaged in the passage, for the purpose of applying the provisions of the policy and s55 of the Act, the loss is treated as proximately caused by the cause insured against, notwithstanding the presence of a concurrent cause not covered by the policy.

The Act was a codifying statute and we may, I think, consider both post 1906 and pre 1906 authorities for the purpose of obtaining guidance as to the meaning of the phrase `proximately caused' in s55. A particularly illuminating authority is the decision in Dudgeon v Pembroke [1877] 2 App Cas 284 referred to by the learned judge. In that case, the House of Lords was prepared to assume in favour of the underwriters that the vessel in question -

`......... was not seaworthy and that its want of seaworthiness caused it to be unable to encounter successfully the perils of the sea, and so to perish ..... (see at p 295 per Lord Penzance, with whose speech of their Lordships concurred.)'

Nevertheless, Lord Penzance pointed out that the immediate cause of the loss of the vessel was undoubtedly `the action of the wind and waves' and (at p 297) that a long course of decisions has established that -

`....... any loss caused immediately by the perils of the sea is within the policy, though it would not have occurred but for the concurrent action of some other cause which is not within it.'

In reliance on this principle, the House of Lords, while assuming that the ship was in fact unseaworthy, still decisively rejected the underwriter's plea ....... that the loss was not covered by the policy because it was caused by the ship's unseaworthiness. The House of Lords thus felt able to reach this conclusion without the benefit of any findings of fact as to the nature and extent of the ship's unseaworthiness. It may well be that such findings, if made, would have revealed that the state of the vessel was of equal efficiency in causing the loss. Nevertheless, for the purpose of applying the provisions of the policy, the House of Lords was prepared to treat the loss as proximately caused by the action of the wind and waves. This decision, which was followed by Mr Justice Roche in a post 1906 case, Frangos v Sun Insurance Office (1934) 49 LlL Rep 354 (see at p359) therefore lends strong implicit support to the passage from Halsbury cited above.

On the basis of the learned Judge's finding of fact, I therefore conclude that the loss in the present case is properly to be treated as having been `proximately caused' by a peril insured against (the impact of adverse weather conditions) even though the faulty design and construction of the yacht may have been of equal efficiency in bringing about the damage."

Lawton LJ delivered a separate judgment referring to and applying the same passage from Halsbury with like result. Croom Johnson LJ agreed with both judgments.

If I may respectfully say so, such an approach, in a situation where each of two or more causes may realistically be described as an efficient and, in that sense, proximate cause, prefers commonsense to the artificial exercise of attempting to decide which of two or several is the winner of what in fact may be a dead heat. In my opinion, this Court should follow and apply the decision of the English Court of Appeal in the "Miss Jay Jay". Therefore, where there are competing proximate causes and loss from one is insured against and none of the others is expressly excluded, the insured is entitled to recover.

However this may be, Giles CJ CommD correctly concluded that the proximate cause was the negligence of the Master, Officers or Crew.

Section 61 (1) describes the ambit of the insurer's liability by reference to a particular loss, namely one "proximately caused by a peril insured" and goes on to describe a loss for which the insurer is not liable, namely one "which is not proximately caused by a peril insured against". One limb is the converse of the other; neither intrudes upon the other.

Section 61 (2) begins with the words "In particular". Those words suggest that what follows in subs (2) does not add to or detract from the ambit of the insurer's liability described in subs (1). Rather, it exemplifies losses for which, in accordance with subs (1), the insurer is or is not liable. Paragraphs (a) and (b) speak of liability for loss. Paragraph (c) speaks also of liability "for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject matter insured."

Historically, at common law, the perils against which a marine policy insured never included, by general words, loss the result of ordinary wear and tear; see for example Thames and Mersey Marine Insurance Company Limited v Hamilton Fraser & Co [1887] LR 12 App Cas 484 at 492. In Thomas Wilson, Sons & Co v The Owners of the Cargo per the `Xantho' [1887] LR 12 App Cas 503 at 509 Lord Herschell said of marine policies:

"I think it clear that the term `perils of the sea' does not cover every accident or casualty which may happen to the subject matter of the insurance on the sea. It must be a peril `of' the sea. Again, it is well settled that it is not every loss or damage of which the sea is the immediate cause that is covered by these words. They do not protect, for example, against that natural and inevitable action of the wind and waves, which results in what may be described as wear and tear. There must be some casualty, something which could not be foreseen as one of the necessary ingredients of the adventure. The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen."

No distinction is drawn in these two cases between loss the result of ordinary wear and tear and wear and tear as a loss the result of the natural and inevitable action of the winds and waves. The point is made that, as the long title suggests, the Imperial Act codified the common law and that at common law, prior to its enactment, wear and tear or any loss resulting therefrom was not treated as a peril insured against.

Thus, the respondents submitted that wear and tear or loss the result of wear and tear did not fall within the expression "for any loss proximately caused by a peril insured against" for which the insurer was liable under subs (1) and accordingly subs (2) referred to wear and tear as a particular example of a loss for which the insurer was not liable under subs (1), unless the policy otherwise provided, and therefore, subs (2) did not except or exclude wear and tear. This being so, if there were two proximate causes, one being wear and tear and the other a peril insured against, the insurer remained liable because there was no exclusion.

The effect of s61 was to limit the liability of the insurer in respect of the loss for which it was liable under cl 6 of the Institute Clauses. Neither at common law nor under the Act would the general words of that clause extend to make the insurer liable for wear and tear. Section 61 (2) (c) of the Act states that in particular ordinary wear and tear is not a loss caused by a peril insured against "unless the policy otherwise provides". Mr Hutley accepted, I think correctly, that the expression extends beyond wear and tear, a loss in itself, to "any loss" caused by wear and tear. The insurer is not liable for either. Thus in the present case, if the loss of the vessel was proximately caused by both the negligence of the Master, Officers or Crew and by wear and tear, the appellant was liable under the policy even though the policy did not cover wear and tear or loss the result of wear and tear. No exclusion for wear and tear was called for or to be found. It was simply outside the cover provided.

In my opinion, the appeal should be dismissed with costs.

STEIN JA: I have had the benefit of reading the draft judgment prepared by Sheller JA. I agree with it in every respect. I have nothing to add. As his Honour concludes, the appeal should be dismissed with costs.