GE Frankona Reinsurance Ltd v CMM Trust No.1400 the "Newfoundland Explorer"

A marine insurance warranty that a vessel is fully crewed at all times ordinarily requires at least one crew member to be on board continuously. The phrase “at all times” means 24 hours a day, not intermittently. The construction is qualified by commercial commonsense: absence is permitted where an emergency requires departure, or where temporary departure is necessary for crewing duties or related activities. The purpose of the warranty, particularly for a valuable yacht, is directed to the vessel’s protection and cannot be satisfied merely by employing sufficient crew. The purpose of a temporary departure, rather than the distance from the vessel, is material.

The claimant insurer sought determination of preliminary issues concerning the construction of an express warranty in a marine insurance policy for the motor yacht Newfoundland Explorer. The warranty stated that the vessel was “fully crewed at all times”. The yacht was laid up alongside a berth when it was damaged by fire. No crew member was on board when the fire occurred, although the master had attended the vessel earlier and had left a generator running.

The central questions were whether the warranty required at least one crew member to remain on board continuously, what “at all times” meant, and what compliance required while the yacht was laid up, including while its generator was running. The parties agreed that questions concerning coastal and ocean voyages need not be answered.

1. Construction. The warranty was construed according to the natural and ordinary meaning of “fully crewed at all times”, read in its commercial context. A vessel is crewed by crew performing the duties required on board. It is not crewed, still less fully crewed, when no crew member is on board, subject to exceptional circumstances.
2. While the yacht was laid up alongside a berth, “fully crewed” required at least one crew member to be on board 24 hours a day. The expression “at all times” meant the whole time rather than intermittently. The valuable nature of the yacht and the protective purpose of an on-board watchman reinforced that construction, especially where machinery was operating.
3. The literal requirement was qualified by commercial commonsense. Departure was permitted where an emergency made it necessary, or where temporary departure was necessary to perform crewing duties or other related activities. Examples included adjusting moorings, working on a fouled propeller, painting the hull, and obtaining supplies. The relevant consideration was the purpose of the departure, not whether the crew member remained within the vicinity of the vessel.
4. The warranty was not confined to the employment of sufficient crew. Employing crew was insufficient by itself; the warranty principally concerned their location. Expert evidence was unnecessary to construe the warranty on the agreed facts, although the question whether it had been breached, and whether expert evidence would be relevant to that question, was left open.
5. The court did not need to decide whether the warranty was delimiting or promissory. The judge’s inclination was that it was delimiting, so that the insurer would be off-risk for a casualty occurring during non-compliance, but would remain liable for a later causally unrelated casualty after compliance had been restored. The contra proferentem argument did not alter the construction.
6. The preliminary issues were answered accordingly: yes, subject to the stated exceptions; “at all times” had the same qualified meaning; and the answers applied to the yacht while laid up and while the generator was running. Costs and the form of order were left for further assistance from counsel.