1997 PLP 1758 (MLD)

(From the Judgment and order, dated 9‑12‑1991 passed by the High Court Division in Admiralty Suit No.9 of 1988). (a) Insurance‑‑‑ ‑‑‑‑Marine insurance‑‑‑Measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against a Marine Hull Policy of Insurance‑‑‑Law to be followed in determining issues of marine insurance in general and the issue of unrepaired damages in particular‑‑‑Insurance Policy postulated that insurance was subject to Bangladesh law and practice and in absence of the same English law and practice‑‑‑No law on marine insurance existed in the statute book of Bangladesh‑‑‑Effect‑‑‑Held, in such a situation English law and practice will be applied for under private international law, the parties had the liberty to choose the law under which their contract will be governed‑‑‑English Marine Insurance Act, 1906, S.69(3) as modified by Institute Time Clauses (Hull) Cl.(IB)‑‑‑[Private International Law.]. Eagle Star Insurance Co. Ltd. v. Rahmania Trading Co., Chittagong, 28 DLR (AD) 109 distinguished. Cheshire's Private International Law, 7th Edn., pp.213‑214 and Compania Maritima Astra, S.A. v. Archdalf, known as The "Armar" Case, (1954) 2 Lloyd's Rep. 95tref. (b) Insurance‑‑‑ ‑‑‑‑Marine Insurance Policy‑‑‑Interpretation‑‑‑Measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against a Marine Hull Policy of Insurance‑‑‑Lapses on the part of Insurance Corporation in the filling up the columns of Marine Insurance Policy‑‑‑Effect‑‑‑Held, Commercial instrument must be construed against the party by whom same was drafted‑‑‑Insurance Policy being the language of the Insurance Corporation must, if there be any ambiguity in it, be taken most strongly against the. Corporation. ‑‑‑[Interpretation of document]. Norman v. Anchor insurance (1958) 4CB (NS) 476 ref. (c) Insurance‑‑‑ ‑‑‑‑Marine insurance‑‑‑Measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against a Marine Hull Policy of Insurance‑‑‑Dual valuation clause in insurance Policy‑‑‑Total loss, constructive total loss or partial loss‑‑‑Manner of measuring the indemnity‑‑‑Principles. It does not stand to reason that in case of total loss, constructive total loss or partial loss, the indemnity will be measured only in respect of the different components of the insured vessel and not of the vessel herself. It is customary in a Marine Policy to mention the lower insured amount for total loss of the vessel and a higher amount as insured value for partial loss (average) purposes, because the cost of repairs often exceeds the sound value of the vessel. The third amount mentioned in the Schedule of the Insurance Policy is the maximum amount that the insured can recover by way of one‑time repair or several repairs during the currency of the policy. The question of unrepaired damage, when the ship has not been sold in her damaged state during the risk, as in the present case, arises only after the policy terminates. It is a matter of calculation and it can never be the subject‑matter of a pre‑determined amount in the policy. On a true construction of the Schedule to the policy therefore, the first amount represents the maximum amount payable for partial loss caused to all or any of the subject‑matters of the vessel insured, the second amount represents the maximum amount payable for total loss of the vessel herself and the third amount represents the maximum amount payable for repairs done during the currency of the policy. In view of the attachment of a Dual Valuation Clause, the question arises, what, is the value of this valued policy? The short answer is, it will be determined by the clauses of the Dual Valuation Clause, one valuation (the lower) determining total loss and the other (higher) determining other than total loss. Admiralty Court is not required to determine whether "the insurer is liable to pay the compensation for damages for the accident of the vessel in question. A contract of marine insurance is a contract of indemnity, i.e., the amount recoverable is measured by the extent of the assured's pecuniary loss. It is never a contract of guarantee or a contract of "compensation for damages" Clause (18) of the Institute Time Clauses (Hulls) however, will be applied in a single valuation policy. Where there is a Dual Valuation Clause, as in the present case, the provisions of section 69(3) (English) Marine Insurance Act, 1906 will apply. ‑‑‑English Marine Insurance Act, 1906, S.69(3). Analysis of Marine and other Insurance Clauses by Victor Dover, 8th Edn. H. F. &G. Witherby Ltd., London, pp.112‑113; Irvine v. Hine (1950) 1 LR 555 K.B. = (1949) 2 All ER 1089; Marine Insurance Claims, 1st Edn., 1974, Witherby & Co. Ltd., p.279 and Marine Insurance Law and Policy' by Donald O'May (1993), p. 446 ref. (d) Insurance‑‑‑ ‑‑‑‑Marine insurance‑‑‑Measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against a Marine Hull Policy of Insurance‑‑‑Vessel was not repaired and was not sold in its damaged state during the risk while the insurance policy terminated‑‑‑Provision of S.69(3) of the (English) Marine Insurance Act, 1906 would be applicable subject to Cl. (18) of the Institute Time Clauses (Hulls). (e) (English) Marine Insurance Act, 1906‑‑‑ ‑‑‑‑S.69(3) read with Time Clauses (Hulls), Cl. 18‑‑‑Departure from S.69(3) of the (English) Marine Insurance Act, 1906 by introducing Cl. 18 in the Institute Time Clauses (Hulls)‑‑‑Rational behind such departure elaborated and discussed. (f) Insurance‑‑‑ ‑‑‑‑Marine insurance‑‑‑Measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against a Marine Hull Policy of Insurance‑‑‑ Termination of policy‑‑‑" Market value" and the "insured value"‑‑?Determination‑‑‑ Principles. The market value and insured value of a vessel may be the same in some rare cases, as when a newly‑built ship is insured for the first time and meets with an accident during the currency of the policy. But as the ship ages, her market value declines. The insured value will not represent her sound market value, because there are other considerations which weigh with both the insured and the insurer in putting an insured value on a vessel. The legal position is that the market value of a vessel will not be presumed to be her insured value, except in rare cases and the burden of proving the sound market value of the vessel at the termination of the policy will be on the party who claims on the policy. The burden is not discharged by just proving the insured value. (g) Insurance‑‑‑ ‑‑‑‑Marine insurance‑‑‑Measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against a Marine Hull Policy of Insurance‑‑‑Admiralty suit‑‑‑Reports of surveyors and average adjusters‑‑?Admissibility‑‑‑Both sides of the suit had established telexes from Surveyors and Average Adjusters without objection from either side‑‑‑Plaintiffs in the plaint or P.W. in his evidence had not challenged the contents of such telexes‑and no case was made by plaintiff for cross‑examination of the senders of or the feeders of the telexes‑‑‑Admiralty Court's rejection of telexes etc. as not admissible, held, was illegal in circumstances. (h) Insurance‑‑‑ ‑‑‑‑Marine insurance‑‑‑Measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against a marine Hull Policy of Insurance‑‑‑Sound market value‑‑‑Determination‑‑‑Opinion of ship valuers‑‑?Admissibility. (i) (English) Marine Insurance Act, 1906‑‑‑ ‑‑‑‑S.57‑‑‑Marine insurance‑‑‑Measure of indemnity in respect of clauses for unrepaired damage of a ship caused by a peril insured against a Marine Hull Policy of Insurance‑‑‑Actual total loss‑‑‑Omission to give finding by Admiralty Court on actual loss in terms of S.57 of the (English) Marine Insurance Act, 1906‑‑‑Effect. (j) Insurance‑‑‑ ‑‑‑‑Marine insurance‑‑‑Measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against a Marine Hull Policy of Insurance‑‑‑ Admiralty suit‑‑‑Reasonable cost of repairs is the second higher water mark in measuring the indemnity in respect of unrepaired damage‑‑‑Such is a necessary and inevitable exercise, unless the parties had already arrived at a negotiated figure‑‑‑Plaintiff, however, is entitled to inflate its claim if a lower amount claimed earlier before filing the suit is rejected by the insurer‑‑‑Plaintiff has the burden of proving each and every item of the inflated claim‑‑‑Convenient mode of such claim is by procuring a report from an approved ship‑repairer whose hypothetical estimates may have to be proved in Court, if challenged.