Misrepresentation, Non-Disclosure and Breach ... - Law Commission

Implied voyage conditions
8.127 There are other provisions within the 1906 Act that operate in a similar way to
warranties. They are expressed as conditions precedent to the attachment of the
risk. 66 For example, section 43 states that
Where the place of departure is specified in the policy, and the ship
instead of sailing from that place sails from any other place, the risk
does not attach.
8.128 This can lead to very technical arguments. For example, in Molinos Nacionales v
Pohjola Insurance Company Ltd, 67 the ship was said to sail from Tallinn, but
instead sailed from Muuga, an adjacent port separated from Tallinn by a
headland only 3 miles across, and managed by the same port authority. The
difference in port had no bearing on the risk. Mr Justice Coleman described the
insurer’s argument that the risk did not attach as having “no merit whatsoever”.
However, the Act and earlier authorities permitted insurers to avoid a voyage
policy for “trivial, entirely immaterial, deviations”. He was therefore forced to
conclude that the insurers should be allowed to defend the claim on these
grounds, and were entitled to proceed to trial.
8.129 Other parts of the 1906 Act raise similar issues. Under section 44, for example,
the policy does not attach if the ship sails to the wrong destination. Under
sections 45 and 46, if the destination is changed or there is a deviation, the
insurer is discharged.
8.130 During consultation, the implied voyage conditions received little discussion. Few
people seemed aware that they existed. Again, we ask whether there are
reasons to retain them, or whether the parties should agree expressly to any
conditions they require.
8.131 We ask consultees whether there are good reasons to retain the implied
voyage conditions contained in sections 43 to 46 of the Marine Insurance
Act 1906.
8.132 If the voyage conditions are to be retained, we provisionally propose that
they should be subject to the same causal connection test as express
warranties.
Should the reforms apply to reinsurance?
8.133 Our view is that unless there are very good reasons to the contrary, the law on
reinsurance should follow, as closely as possible, the law that governs the
original insurance contract.
66 See para 2.53 above.
67
(unreported) High Court, 5 May 1998.
213