Cuff v Commodore Marine Limited

In marine insurance, an assured’s valuation of a yacht or fishing vessel will ordinarily be treated as a statement of honest belief rather than an objectively verifiable statement of fact. A discrepancy from a professional valuation will not normally be material merely because the figures differ.

Non-disclosure of an earlier professional valuation is material only if it would influence a prudent underwriter and, after proper inquiry, would have caused the insurer to decline the risk or offer different terms. Under a time policy, unseaworthiness alone does not defeat cover. Loss may nevertheless be recoverable where a fortuitous event, including grounding, impact or heavy weather, is a proximate cause of the loss, even if pre-existing deterioration contributed.

The respondent insured his fishing vessel with the appellant under a marine insurance policy. After the vessel sank at her moorings, the appellant avoided the policy for alleged non-disclosure and misrepresentation concerning the vessel’s value, and denied that the loss was caused by a peril of the seas.

The county court rejected both defences and awarded the respondent damages and interest. The appellant challenged the findings on materiality and causation. The central issues were whether the earlier professional valuation was material and whether the evidence entitled the judge to find that grounding or other fortuitous events contributed to the sinking.

1. Appeal dismissed. The respondent was entitled to recover under the policy. The order for damages and interest stood, with the respondent’s costs subject to detailed assessment.
2. Under sections 18 and 20 of the Marine Insurance Act 1906, materiality is assessed objectively by reference to the prudent insurer. But the insurer must also establish that, had the undisclosed circumstance or representation been known, it would have declined the risk or agreed different terms.
3. The declared value of a fishing vessel was properly regarded as a representation of belief. The respondent had honestly believed that his vessel was worth the stated sum. The statement therefore complied with section 20. The court also held that any inaccuracy would not have been material in the absence of an intention to deceive.
4. The earlier professional valuation was capable of affecting a prudent underwriter’s mind and of prompting further questions. It did not, however, establish a defence under section 18. The trial judge was entitled to conclude that, after receiving an explanation based on changing fishing conditions and earning prospects, the insurer might still have accepted the risk at the declared valuation.
5. Under a time policy, section 39(5) imposed no implied warranty of seaworthiness. Unseaworthiness alone was therefore insufficient to defeat the claim. Section 55 required the loss to be proximately caused by an insured peril, and excluded losses attributable solely to ordinary wear and tear or inherent vice.
6. The appellate court’s task was to determine whether the trial judge’s factual conclusions were open to him, not to substitute its own view of the evidence. It was open to the judge to find that grounding damage sustained in the inner harbour contributed to the ingress of water and constituted a peril of the seas. The impact of wreckage, heavy weather, or the vessel settling on the grid could also have contributed. The loss remained attributable to earlier fortuitous perils even if progressive deterioration was also present.

• Court of Appeal (Civil Division): Appeal from the judgment of His Honour Judge Roach in the Torquay and Newton Abbot County Court, delivered on 28 February 2001. The appeal was dismissed.