MARINE INSURANCE CLAIM

Rats gnawed through a pipe in a ship. During the voyage, sea water entered the holds through the broken pipe and damaged cargo stowed there.

The Marine Insurance Act 1906 under Section 55 (2) (c) excludes any loss proximately caused by rats or vermin. The underwriter rejected the claim citing the exclusion in the MIA.

Applying the principle of proximate cause, what do you think was the proximate cause of the loss? The policy covers loss or damage caused by perils of the sea.

Let us try to find the answer.

• Aaron Torres I wonder what kind of pipe is that? Just curious.
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  Subedha Osman Rats easily entered thru the pipes and caused sea water comes in. Meaning to say d pipes of d vessel could rusted or wear n tear due to poor maintenance. Usually Ins co do asked, the age of vessel/year of manufacture of vessel for underwritting purpose.
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  Julian Teoh I believe the rats are the proximate cause. Similar facts in Leyland Shipping v Norwich Union. A vessel was torpedoed and later sank. The House of Lords held that the proximate cause was the torpedo (excluded war risk) not the sinking (insured peril of the seas). The inundation of water was the natural and inevitable consequence of the torpedoing, and the torpedoing was therefore the continuing and effective cause of the loss. If the entry of water through the broken pipe was the natural consequence of the pipe damage, the rats will be the proximate cause.
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  Raymond Huang Julian Teoh - Let me try to remember the facts of the case. The ship was hit by an enemy torpedo and was taking in a lot of sea water. The crew worked the pumps to get the sea water out to keep the ship afloat. This went on for quite a while until one day during a storm, the ship took in more water than the pumps could cope. The ship finally sank. Proximate cause means the most direct, active, effective, efficient and dominant cause of the loss. The original cause may set in motion an unbroken chain of events leading to the final loss. I think the case you quoted falls within this definition. As for the rats case, the court took the view that the action of the rats was not the proximate cause but the ingress of sea water. It ruled that 'perils of the sea' was the immediate cause of the damage to the cargo. This shows how difficult it is to determine the proximate cause of some losses. Common sense must prevail in some cases. If this question was asked in the rats case - Would you say the action of the rats had directly and actively caused the damage to the cargo? I would hesitate to give a definite answer but think it should not.
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  Julian Teoh Thanks Raymond. I am not familiar with this case, but if the court reached the decision it did in Norwich Union, and the water ingress was the natural and inevitable cause of the water ingress in the rats case, I find it difficult to see how perils of the sea can be the proximate cause based on the brief facts presented. Perhaps you can give me the case reference?
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  Richard Foong I believe the captain of the ship was unaware that the pipes was already damaged by the rat. As a result while at sea, the sea water began to seep in and as the pressure of the sea water getting stronger it causes the inundation, thereby damaging the cargo. If the court viewed the proximate cause was not the rats, then marine policy have to respond. There is a failure on the owner of the ship for failing to maintain the ship in sea worthy conditions. Hope I am right, RH.
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  Raymond Huang Hamilton Fraser & Co v Pandrof (1887).

  August 22 at 1:38pm · Like
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  Raymond Huang RF - This case did not touch on the issue of sea worthiness but on proximate cause. I agree with you on why sea worthiness of the ship is important. It is an implied condition in marine insurance that the ship employed must be sea worthy.