North Star Shipping Ltd. & Ors v Sphere Drake Insurance Plc & Ors

A claim for sue and labour expenses under a marine insurance policy is a distinct cause of action, separate from a claim for the insured vessel’s loss. It must be pleaded independently, with the measures taken, the facts supporting their reasonableness, and the cost of each measure identified. A general reference to such expenses, or reliance on a constructive total loss as the factual basis, is insufficient. Where a claim has remained inadequately pleaded for many years, allowing a late amendment may be refused if it would cause serious disruption and unfairness to the opposing party.

The claimants sought indemnity under war risks policies following damage to the vessel NORTH STAR. Their claim included the vessel’s constructive total loss and, in general terms, salvage, protection and sue and labour expenses.

The proceedings had been issued in 1996. Despite an earlier letter referring to expenses and the disclosure of supporting documents, the claimants had not served the promised particulars or adequately pleaded the factual basis, measures, reasonableness and costs of the sue and labour claim. During the trial they sought to maintain or regularise that claim. The issue was whether it had been sufficiently pleaded or whether it was too late to permit amendment.

1. The sue and labour claim was distinct. A claim under the sue and labour clause in clause 13 of the Institute Time Clauses – Hulls, incorporated into the Institute War and Strike Clauses by clause 4.2, constituted a separate cause of action. It was not ancillary to the claim for the vessel’s constructive total loss. Such a claim could arise even where there was no other insured loss.
2. The pleading was inadequate. A proper pleading had to identify the measures taken to avert or minimise an insured loss, the grounds relied upon to establish that each measure was reasonable, and the cost of each measure. The claimants’ pleading did none of these things. Treating the constructive total loss as the factual basis of the sue and labour claim was misconceived, and the pleading did not refer to the earlier letter or provide the promised particulars.
3. Late amendment was refused. Allowing the claim to be reformulated after eight years would introduce a previously unformulated issue into the trial. It would require substantial investigation, potentially further evidence and cross-examination, and probably an adjournment. The balance of fairness and justice was heavily in favour of the insurers.
4. A defendant is entitled to decline to seek further particulars where the claimant has expressly promised to provide them and has failed to do so. A witness statement cannot substitute for a pleading; its function is to give evidence relevant to matters already properly pleaded.
5. The part of paragraph 10 of the Re-Amended Points of Claim referring to sue and labour expenses was struck out.