Mayban General Assurance BHD & Ors v Alstom Power Plants Ltd & Anor

Under an all-risks marine insurance policy, the insured must prove loss caused by an accident or casualty, but need not identify the precise event. The policy does not cover loss caused by inherent vice, including the goods’ inability to withstand ordinary incidents of the contemplated voyage. Whether conditions are ordinary incidents is a question of fact and degree assessed by commercial experience, not statistics alone. If the vessel encounters conditions reasonably to be expected on the voyage, damage caused by the goods’ inability to withstand them is attributable to inherent vice. Inadequate packing or internal bracing may likewise constitute inherent vice where it is required to withstand ordinary carriage.

The claimants, insurers under a project policy, sought a declaration that they were not liable to indemnify the defendants for damage to a large electrical transformer carried from the United Kingdom to Malaysia. The policy covered all risks but excluded loss proximately caused by inherent vice, and incorporated the Institute Cargo Clauses (A) CL-252.

The transformer’s internal joints separated after the vessel encountered prolonged heavy weather on the voyage. The central issue was whether the damage was caused by an external fortuitous event, such as an unusual peril of the sea, or by the transformer’s inherent inability to withstand the ordinary incidents of carriage.

1. Insurance principles. An all-risks policy covers loss caused by an insured accident or casualty. The insured need not prove the exact nature of the casualty. It does not cover loss caused by wear and tear or inherent vice, namely deterioration resulting from the natural behaviour of the goods in the ordinary course of the contemplated voyage, without a fortuitous external accident or casualty. The principles in British and Foreign Marine Insurance Co. Ltd v Gaunt [1921] 2 A.C. 41 and Soya G.m.b.H. Mainz K.G. v White [1983] 1 Lloyd’s Rep. 122 were applied.
2. Packing and causation. The insurer may assume that goods are packed so as to withstand ordinary incidents of carriage. Where necessary, packing includes bracing required to prevent movement of internal parts. Inadequate packing may therefore be treated as an aspect of inherent vice. Causation is ordinarily determined by common sense rather than excessively refined analysis, consistent with T. M. Noten B.V. v Harding [1990] 2 Lloyd’s Rep. 283.
3. Ordinary incidents of the voyage. The distinction between perils of the sea and inherent vice depends on whether the conditions encountered were more severe than could reasonably have been expected. The question is one of fact and degree, assessed by reference to commercial experience. Statistical rarity is relevant but does not determine the issue. Conditions may be ordinary incidents even if relatively uncommon.
4. Application. The heavy weather encountered in the relevant waters during winter was within the range reasonably to be expected on the voyage. The transformer’s joints progressively loosened because it could not withstand the totality of the forces ordinarily encountered during carriage. The loss was therefore caused by inherent vice, not an external fortuitous event. The insurers were not liable to indemnify Alstom.