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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Kelway v Guardian Insurance Ltd [2001] EWCA Civ 1605 (26 October 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1605.html Cite as: [2001] EWCA Civ 1605

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
(His Honour Judge Hallgarten QC)

		Royal Courts of Justice Strand London WC2 Friday, 26th October 2001

Friday, 26th October 2001

1. LORD JUSTICE PETER GIBSON: I will ask Potter LJ to give the first judgment.
2. LORD JUSTICE POTTER: The applications before us arise out of a claim brought by the claimant, Jonathan Kelway, a litigant in person, in the Central London County Court (Business List) against the defendants, Guardian Insurance Ltd, the insurers of his yacht Inheritance which suffered extensive damage in extreme weather conditions on the night of 3rd/4th January 1998 when it was afloat and moored alongside a flat-bottomed tug in a half tide slipway in the Medway.
3. The claimant sought to recover £62,600 as the insured value of the yacht under the policy issued by the defendants, together with certain other costs and expenses which brought the total of his claim up to £75,400. The claim was heard by His Honour Judge Hallgarten, who on 14th July 2000 gave judgment dismissing the claim and ordering the claimant to pay seven-eighths of the defendant's costs. He refused the claimant permission to appeal on the grounds that there was an unanswerable defence under Head 4 of his judgment headed "Site and Place of Layout".
4. The point was a very simple one. Under Clause 1 of the policy headed "Scope of Cover" it was provided that the vessel was covered while "in commission" on terms that are not of immediate concern on this point and, while "laid up out of commission", as provided for in the schedule to the policy.
5. In the definition section of the policy (Clause 3) the state of being "in commission" was defined as the period when the vessel is fitted out and available for the owner's immediate use. The expression "laid up out of commission" was defined as follows:

"The period when the vessel is dismantled, not fitted out or available for immediate use. During the laid up period the vessel must not be used for any purpose whatsoever, other than dismantling, fitting out or customary overhauling."

6. Under the "Scope of Cover" section, by clause 1, it was provided:

"(a)The insured vessel is covered subject to the provisions of this insurance:-

(i)In Commission

...

(ii)Laid Up Out of Commission

while laid up out of commission as provided for in the Schedule, including hauling out and launching, striking over, dismantling, fitting out, overhauling or while under survey (also to include docking and undocking and periods laid up afloat incidental to laying up or fitting out and with leave to shift in tow or otherwise to or from her layout berth but not outside the limits of the port or place in which the insured vessel is laid up), but excluding unless notice be given to and an additional premium agreed by the Company, any period for which the insured vessel is used as a houseboat or is under major repair or undergoing alteration."

7. The Schedule itself provided under the heading "Cover Details" that the yacht was laid up between

"1 October to 1 April

mud berth - River Medway".

Since at the time of the casualty the yacht was not laid up in a mud berth, but afloat and moored as I have described, it was not within the cover provided by the policy. I shall refer to the defence raised under that head as Ground 4 in order to follow the pattern of Judge Hallgarten's, and an earlier judgment of Rix LJ on 9th February 2001, the first hearing of the claimant's oral application for permission to appeal. On that occasion Rix LJ adjourned the hearing of the application to be heard before three Lord Justices, with a direction that the hearing of the appeal should immediately follow if permission to appeal were granted. Rix LJ pointed out to the claimant that any appeal which he sought to bring would be hopeless unless he applied to amend his notice of appeal to include an appeal in relation to a further ground of defence which had been asserted by the defendants and upheld by the judge under Head 1 of his judgment entitled "The Claims Record". I shall refer to that ground in relation to which the claimant took the advice of Rix LJ as Ground 1. That issue relates to a plea of material misrepresentation (which the defendants raised and the judge upheld) in relation to the claimant's previous claims history which was not disclosed to the underwriter in the proposal on the basis of which the policy was issued.

The claimant's applications are brought out of time. They were made on 27th November 2000, Judge Hallgarten having granted 56 days for the making of an application, such period expiring on 8th September 2000.

The defendants take no separate point of objection in relation to such delay and are content that the application for an extension of time should stand or fall with the applications for permission to appeal. However the defendants do oppose the application of the claimant to amend his notice of appeal so as to pursue an appeal on Ground 1, because they complain that he has failed to comply with the order of the court below to deposit funds with the court and to pay interim sums ordered to be paid by the judge on account of costs and in respect of which no stay was sought or granted pending the hearing of this appeal.

I would not refuse permission to amend on those grounds, in the light of the advice given by Rix LJ that the defendant apply for such permission. However, again, it seems to me sensible that the outcome of the application should stand or fall upon the question whether or not this court considers that there is any prospect of success in the appeal. Thus if Ground 4 is hopeless, and in any event the casualty was not within cover, it will not be necessary to consider the additional head of appeal under Ground 1. I would add that in the court below there were other defences taken and subsidiary issues raised, in respect of a number of which the judge found in favour of the claimant. However those too are not matters with which this court need concern itself if we form the view that the claimant's appeal has no realistic prospect of success on Ground 4.

I say at once that having considered the notice of appeal, the lengthy skeleton argument of the claimant and his oral submissions to us, I have formed the view that that is indeed the position, that is to say that the appeal on Ground 4 has no realistic prospect of success. I shall therefore limit myself to consideration of that ground, which I consider was clearly and correctly decided by a judge who has very long experience in the field of shipping and marine insurance, including construction of contracts of insurance of this kind.

Before I do so, I would only add for completeness that, by their respondent's notice the defendants seek permission, in the event that the claimant is successful in his application for leave to appeal, to cross-appeal, principally upon the ground that the judge erred in rejecting a plea of the defendant's that irrespective of their defence under Ground 1 they were also entitled to avoid the policy on the ground of an additional misrepresentation by the claimant as to the price which he had paid for the yacht Inheritance.

Because of the conclusion which I have reached as to the correctness of the judge's finding on Ground 4, it is similarly unnecessary for me to deal with the issues raised by the respondent's notice.

Turning now to Ground 4

In the proposal form dated 23rd September 1997 the claimant stated that he intended to lay up the yacht in a mud berth from 1st October 1997. The defendants alleged before the judge that that was a misrepresentation giving rise to an avoidance defence, but the judge rejected that allegation of misrepresentation, holding that the claimant's intention was genuine at the time. Nonetheless the result of the statement in the proposal was that it became a term of the policy via the schedule, as I have already indicated, that cover during lay up extended only to lay up in a mud berth. Thus the defendants were not on risk on 3rd/4th January 1997 for the simple reason that Inheritance was not at a place or laid up in a manner in respect of which the policy provided cover.

The judge's findings on this, as I have already indicated, were made under the heading "Site and Place of Lay Up." That was at pages 22 to 24 of his judgment. His findings involved a question of pure construction of the policy and in my view they were correct.

By paragraph 4 of the claimant's draft amended appellant's notice and paragraphs 30 to 38 and 44 of his very clear skeleton argument, he takes a number of points as to materiality and inducement which were relevant to the avoidance issue on which he succeeded below, but which do not affect the scope of cover. However the claimant also raises two points which require me to refer back to the terms of the policy under scope of cover.

I should first make clear that the state of the evidence accepted by the judge was that, at the time of the casualty, Inheritance was not laid up and she was not on a mud berth. The evidence was that she had been moved to the half tide slipway from her moorings afloat on 17th December 1997 for work of cleaning off prior to moving to a mud berth. She remained there at all times until the casualty. She was not available for the claimant's immediate use because of the manner of her mooring to a barge and the fact that there was a large hole in her deck. Thus she was not "in commission". She was not "laid up out of commission" as set out in the policy schedule, because she was not on a mud berth. Nor was she docking or undocking or laid up afloat. As the judge found at page 24, she was at a half tide slipway, lying periodically afloat or on a hard bottom. The judge also found that Inheritance was not shifting "in tow or otherwise". That was also correct because she had been moored at the slipway since 19th December where she had been placed as a result of a deliberate decision to leave her there until after the New Year, at which stage it was intended to shift her to the mud berth.

The claimant has submitted that the reference in clause 1(a)(ii) to "not outside the limits of the port or place in which the insured vessel is laid up" provides cover at all times, provided the yacht is within the port of lay up. However it is clear that the phrase does not define the scope of cover provided for vessels while out of commission, but simply delimits the cover provided for shifting.

In relation to shifting, the claimant has also argued that he is assisted by the inclusion of the words "with the leave to shift in tow or otherwise to or from her lay up berth", submitting that these words give some sort of blanket licence to shift to and from a lay up berth at leisure when out of commission, which in some way had the effect of providing cover for the yacht in her then situation. He says that the judge wrongly referred to and treated "shifting" as entailing "actual movement through the water". It is true the judge made that reference. However he made it when contrasting the process of shifting with the deliberate placement of a vessel at a spot where she is to remain until a significantly later stage (as in the case of the Inheritance) as opposed to trivial delays or pauses in the course of completing a shifting operation, which short interruptions would still be encompassed within the meaning of "shifting".

8. As the judge remarked, the point is essentially one of impression and does not bear a great deal of elaboration. As Miss Heeley has observed in her lengthy and helpful skeleton argument, a vessel which has been placed or moved on a slipway deliberately for the purposes of carrying out work for a period of two weeks or more prior to moving her to another berth is not in the course of shifting by tow or otherwise to that other berth in any ordinary or commercial sense of the use of those words.
9. Finally, while it may not have been strictly relevant on Ground 4 so far as the question of risk to the vessel was concerned, the judge found at page 24 of his judgment that the location of the half tide slipway was plainly material and that the casualty would not have occurred if Inheritance had been on the mud berth. In my view the judge was right to observe that the defence of the defendants on Ground 4 was unanswerable and the claimant has no prospect whatsoever of persuading this, or any differently constituted Court of Appeal, to the contrary.
10. I turn for a moment to the role of Lambeth Fenchurch ("LF") who acted as brokers in relation to the insurance.
11. The claimant criticised the judge in relation to non-disclosure because he decided the issue of inducement by reference to the evidence of Mr Newton (of Hiller Marine Underwriting) rather than by reference to the evidence of Mr Silcott of LF who, as broker, also held a binder granted by Hiller Marine. He respected that criticism in connection with his assertion that he did not in fact see the relevant policy documents because they had not been forwarded to him by LF. He contended that LF had had them in their capacity as insurers, and therefore he should not be bound by the terms of the insurance of which he was unaware, insofar as they worked unfairly or to his disadvantage.
12. In fact the judge found that, on the balance of probabilities, the claimant did receive the policy schedule and terms and is bound by them in any event. Nonetheless, paragraph 39 of the claimant's skeleton refers to the fact that the policy document was not received and to the claimant's "firm contention" to this effect. It appears that in his closing submissions below the claimant made a somewhat less definite statement concerning the matter. But whatever the position in that respect, the judge heard the evidence and concluded at page 23 of his judgment that the schedule did reach the claimant during October 1997. That was plainly a finding which was open to the judge on the evidence before him and which it is not open to this court to disturb.
13. In the circumstances the judge was correct to conclude that the claimant himself, who is a former underwriter of considerable experience, was bound by the policy terms and should not be permitted to take advantage of his own failure to press for a copy of the policy from LF, who were in fact his brokers, if he did not in fact receive it. As the judge held in any event, there was no question of its being a bare all-risks policy. Although LF acted in a dual capacity as underwriters and brokers in operating the binder for Hiller Marine and placing the insurance for the claimant, their acceptance of the claimant's instructions and the fact that it was necessary for them to refer the risk to Hiller Marine in the first place because it was not covered by the conditions of LF's binder, show clearly that LF were acting as brokers for the claimant in this case. The judge was therefore correct that LF's possession of the policy schedule and the policy terms for onward transmission to the claimant occurred in their role of broker to the claimant.
14. As I have already indicated, I consider that Ground 4 is bound to fail as a ground of appeal. I would therefore dismiss the claimant's applications.
15. LORD JUSTICE KEENE: I agree.
16. LORD JUSTICE PETER GIBSON: I also agree.
Order: Applications dismissed with costs; £500 to be paid out of court to the defendant's solicitors.