Transcript What is a policy of marine insurance? Gibbs v MMI [2003

What is a policy of marine
insurance?
Gibbs v MMI [2003] HCA 39
Dr Sarah C Derrington
CML Interest Group Lecture
23 October 2003
The Australian Insurance Law
Framework
• Insurance Contracts Act 1984
– does not apply to contracts of insurance to
which the MIA applies (s.9(1)(d))
– but does apply to pleasure craft (s.9A(2))
• a ship that is used or intended to be used:
(a)
(b)
wholly for recreational activities, sporting
activities, or both; and
otherwise than for reward…
• Marine Insurance Act 1909
s.7
s.9(1)
s.9(2)
A contract of marine insurance is a contract
whereby the insurer undertakes to
indemnify the assured, in manner
and to the extent thereby agreed, against
marine losses, that is to say the losses
incident to marine adventure
Every lawful marine adventure may be the
subject of a contract of marine insurance
In particular there is a marine adventure
where:…
(c) any liability to a third party may be
incurred by the owner of, or other person
interested in or responsible for, insurable
property, by reason of maritime perils
“maritime perils” means the perils consequent on,
or incidental to, the navigation of the sea, that is
to say, perils of the seas, fire, war perils, pirates,
rovers, thieves, captures, seizures, restraints,
and detainments of princes and peoples,
jettisons and barratry, and any other perils,
either of the like kind or which may be
designated by the policy.
“perils of the seas” refers only to fortuitous
accidents or casualties of the seas. It does not
include the ordinary action of the winds and
waves (Schedule 2 Rules for Construction of
Policy)
s.8(1)
(2)
A contract of marine insurance may, by its
express terms, or by usage of trade, be
extended so as to protect the assured against
losses on inland waters or on any land risk
which may be incidental to a sea voyage
Where a ship in course of building, or the
launch of a ship, or any adventure analogous
to a marine adventure, is covered by a policy
in the form of a marine policy, the provisions
of this Act, in so far as applicable, shall apply
thereto; but, except as by this section
provided, nothing in this Act shall alter or
affect any rule of law applicable to any
contract of insurance other than a contract of
marine insurance as by this Act defined
Does it matter which Act applies?
• Gibbs was insured on a “Marine Pleasurecraft
Policy” which
– covered third party liabilities
– Extended to any person navigating or in charge of the
vessel
– Extended to cover commercial paraflying
– Contained a navigation warranty of “Protected waters
of WA as per permit”
• Mrs Morrell was injured
• Gibbs claimed on the policy
• MMI alleged certain matters had not been
disclosed and that there had been some
material misrepresentations
• If the MIA applied, MMI was entitled to
avoid the policy
• If the ICA applied, Gibbs may have been
able to avail himself of the ameliorating
provisions in ss. 28 and 54
The Marine Insurance Act
applies…but why?
• S.9A(2) of the ICA was not in force at the
•
•
relevant time; nonetheless it would not have
applied because the “pleasure craft” in this case
was used for reward
The ICA would, therefore, only apply if the
policy was not one to which the MIA applied
High Court 3:2 said the policy was one of marine
insurance…but not for the same reasons
The reasoning of the majority
Gleeson CJ
• The “sea” is not limited to the
open ocean
• It extends to waters within the
ebb and flow of the tide (as
would be included in the
definition of ‘sea’ in the
Admiralty Act & the
Navigation Act
• The accident occurred in
estuarine waters of the Swan
River and was, therefore, a
“peril of the sea”
Hayne & Callinan JJ
• Maritime perils are not limited
to perils occurring while the
vessel is at sea
• No need to determine
whether the event took place
on “the sea”
• What is determinative is the
nature of the risk…the
insured losses were losses
incident to marine adventure
– careless operation of marine
craft is a peril properly
described as a peril
“consequent on, or incidental
to, the navigation of the sea”
– The relevant marine
adventure was exposing the
owner of the craft to liability
by reason of maritime perils
The reasoning of the minority
McHugh J
• Swan River is not the
“sea” in ordinary parlance
• The MIA does not cover
policies in respect of risks
in relation to ships never
intended to go on
voyages in the open sea
– Refers to the amendments
to the hull clauses in
support
– BUT Phillips v Barber
Kirby J
• The policy was a business
third party liability
insurance policy and
therefore was not within
the MIA
• The court should give the
“sea” its ordinary
meaning, particularly as
the MIA draws a
distinction between the
sea and inland waters
• ALRC report supports the
view that the MIA does
not apply to inland waters
Conclusion
• The two conflicting legislative regimes in Australia
•
continue to promote uncertainty in relation to the
governing law
The ALRC proposed that the MIA be amended to make
clear that it covers risks on inland waters by inserting in
s.8 two new subsections:
(3) Unless it expressly provides otherwise, a contract of marine
insurance protects the assured against losses on all inland waters
(4) Unless the contract expressly provides otherwise or the context
requires otherwise, all references in this Act and in a contract of
marine insurance to the “sea” and the “seas” include references to
inland waters
• Were these sections in force, it is likely the decision
would have been 4:1 in favour of the insurer!