1. Marine insurance claim — Rice cargo damaged by heating — Ventilators closed to prevent seawater incursion during storms — Dispute over perils of the sea. (Para 10 )
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1940 Supreme(SC) 48
Privy Council At British Columbia
Porter, Wright, Lords Russell of Killowen, Justice Viscount Maugham, JJ.
Canada Rice Mills Ltd. -Appellant
Versus
Union Marine and General Insurance Co. Ltd. -Resopndent
Privy Council Appeal No. 25 of 1939
Decided On : 24-09-1940
Advocates Appeared:
Gard Lyell and Co., Charles Rusell and Co., C. Hillyer, H. Willinck, Valentine Holmes
Gard Lyell and Co., Charles Rusell and Co., C. Hillyer, H. Willinck, Valentine Holmes
Damage caused by reasonable and necessary actions taken to prevent a "peril of the sea" (such as closing ventilators during a storm) is recoverable as a loss due to that peril, as the action is a matter of routine seamanship and not an independent intervening cause.
Headnote:(A) Marine Insurance Act - Perils of the seas - Interpretation of "perils of the seas" as fortuitous accidents or casualties of the seas, not limited to extraordinary violence of wind or waves. A fortuitous incursion of seawater, or the threat thereof, constitutes a peril of the sea.
(B) Insurance Law - Causa Proxima - The proximate cause is not necessarily the cause last in time but the cause that is "in substance" the cause, to be determined by common sense principles.
(C) Marine Insurance - General Words - The phrase "all other perils, losses and misfortunes" covers losses that are consequences of justifiable acts done under the expectation of destruction or damage by a specific peril.
Facts of the case:
The appellant insured shipments of rice under a floating marine insurance policy covering perils of the seas and other misfortunes. During the voyage, the vessel encountered heavy winds and high seas. To prevent seawater from entering the holds, the master closed the cowl ventilators. This interruption of ventilation caused the rice to heat and ferment, leading to damage. A jury found the rice was in sound condition upon shipment and that the damage resulted from the closing of ventilators during weather constituting a peril of the sea.
Findings of Court:
The closing of ventilators was a necessary act of seamanship to prevent the incursion of seawater. The damage caused by this action is recoverable as a loss due to the peril of the sea or, alternatively, falls within the general words of the policy.
Issues: Whether the weather conditions encountered constituted a "peril of the sea" and whether damage caused by the deliberate act of closing ventilators to avoid such peril is recoverable as a loss by that peril under the doctrine of proximate cause.
Ratio Decidendi: "Perils of the sea" includes fortuitous accidents; the fortuitous entry of seawater, or the threat thereof, constitutes such a peril. Where action is reasonably and necessarily taken to prevent a peril of the sea from affecting the goods, the resulting damage is regarded as a direct result of that peril. The doctrine of causa proxima in insurance law refers to the cause that is "in substance" the cause, determined by common sense, rather than the last event in time.
Result: Appeal allowed.
Legal Category Hierarchy
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insurance law
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marine insurance
- perils of the sea
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causation
- proximate cause
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policy interpretation
- general words
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marine insurance
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practice and procedure
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appellate jurisdiction
- drawing inferences of fact
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appellate jurisdiction
Table of Contents
Lord Wright:-
The appellants claimed in this action as assured under a floating policy of marine insurance dated 19th December 1929, upon shipments of rice imported by the appellants to their rice mills in British Columbia, as from time to time declared under the policy. The policy covered (among other risks) perils of the seas, and also, under what are often described as the general words, all other perils, losses and misfortunes that have or shall come to the hurt or damage of the subject-matter of the insurance. The goods were warranted free of particular average under 3 per cent. on each package. The seaworthiness of the ship as between the assured and the assurers was admitted. Under this policy the appellants duly declared a full cargo of 50,600 bags of rice weighing 5080 tons shipped on or about 23rd April 1936, in the motor vessel and at RangoonfortheirdockontheFraserRiver.Thebagswerevaluedinallat$191,922.Includedintheshipmentsodeclaredwere7500bagsofbrownricevaluedat$30,798marked163and102.TheshipperswereBlackwoodRalliand Segundo" at Rangoon for their dock on the Fraser River. The bags were valued in all at $191,922. Included in the shipment so declared were 7500 bags of brown rice valued at $30,798 marked 163 and 102. The shippers were Blackwood Ralli and Co. of Rangoon. The claim is made in respect of the rice declared under these two marks which are compendiously referred to as 163. No claim is made in respect of the other marks shipped, which bore respectively the marks K.G., A.L.Z. and N.L.Z. The respondents issued a certificate of insurance in respect of the whole shipment.
The and was a motor vessel of 4414 tons gross and 2668 tons net, registered at Oslo. She had five holds. The bags of the marks 163 and 102 were stowed, partly in No. 2 hold, which was forward of the engine and boiler space and partly in No. 3 hold which was aft of that space. The cargo throughout was well dunnaged and was stowed with adequate air spaces. There were also vertical wooden trunk ventilators and ordinary wooden rice ventilators in each hold. The system of ventilators throughout consisted of cowl ventilators with in addition Samson post ventilators at each hold. These latter were always open, but it was necessary that the cowl ventilators should be also open to ensure a through current of air in the holds. There is no complaint of the sufficiency of the ventilation system.
The "Segundo" arrived at Fraser River on 28th May 1936. It was then found that all the rice had heated, but by reason of the franchise of 3 per cent. in the case of particular average and also because the rice in the bags marked 163 and 102 was of finer quality, it was decided that the claim against the respondents as insurers should be limited to these marks.
A primary issue in the action was what was the condition of the rice on shipment, since it was contended that the damaged condition of the rice was not due to perils insured against but to the inherent vice of the goods when shipped. On that issue a commission to take evidence went to Rangoon where a large number of witnesses gave evidence. At the trial which took place in the Supreme Court of British Columbia before the Honourable Robertson J. and a special jury and lasted for seven days, the jury, as will appear later, found that the rice was in good and sound condition when shipped. No complaint has been made of the summing-up. There was abundant evidence to justify the jury's finding on that issue, which was accordingly concluded in the appellants' favour. The question therefore remained whether the appellants had established that the damage was due to perils insured against. The appellants' case was that the damage was due to interference with the ventilation consequent on bad weather during the voyage which caused the closing of the cowl ventilators which it was necessary to keep open to ensure through ventilation. The evidence was that rice is a commodity very liable to heat if not fully ventilated while b
