Lloyd's Maritime and Commercial Law Quarterly
HONG KONG MARINE INSURANCE LAW
James Davey*
Case
279. Hua Tyan Development Ltd v Zurich Ins Co Ltd (The Ho Feng 7) 1
Deadweight tonnage warranty—inconsistency with cover—rectification—(non-)disclosure of dead-weight capacity
The claimant insured traded in timber and had purchased marine cargo insurance from the second defendant broker since 2004. It was standard procedure for the claimant to submit a completed application form for each cargo of timber. The broker was authorised to issue cover notes and policies binding on the first defendant insurer up to HK$3m, but would seek approval for cargo valued above this threshold. Since 2004, the insured had purchased more than 70 policies through this broker. The cover note and policy at issue were both signed and countersigned by the broker and insurer (the insured value of US$1.5m being above the threshold) and each contained an express deadweight tonnage warranty: “Warranted DWT not less than 10,000”.
The timber was shipped on board the Ho Feng 7, a vessel of less than 10,000 tonnes deadweight. This vessel had been used on five previous voyages. When the cargo was totally lost in January 2008, the defendant insurer denied liability on the basis of the express warranty. The claimant insured sought to recover from the insurer, or in the alternative from the broker. At first instance Chung J gave judgment against the insurer, but would have found the broker liable had the insurer been able to avoid liability.
Decision: The Court of Appeal overturned the first instance decision against the insurer, and permitted it to avoid liability for breach of warranty. It confirmed the approach at first instance that the broker ought (in absence of insurance cover) to be liable for the loss.
Held: (1) The deadweight warranty was incorporated into the marine insurance contract. It was not inconsistent with cover, because cover was contingent on the warranty being made. To show inconsistency, it would have to be proved that the deadweight capacity of the vessel was known to both parties so as to be part of the “matrix of fact” as considered in ICS v West Bromwich BS.2
(2) The first instance judge had made no finding of fact that the insured and underwriter knew of the deadweight capacity of the Ho Feng 7 at the time of contracting.
(3) The insurer would not be presumed to be fixed with presumed knowledge of the deadweight capacity merely because the information had appeared in Lloyd’s List or
* Senior Lecturer, Cardiff Law School.
1. [2013] HKCA 414; [2013] 2 Lloyd’s Rep 468; [2013] Lloyd’s Rep IR 1.
2. [1998] 1 WLR 896; [1998] 1 All ER 98.
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