Garnat Trading & Shipping (Singapore) Pte Ltd & Anor v Baominh Insurance Corporation

Under Marine Insurance Act 1906, an assured need only make a fair presentation of material facts sufficient to enable a prudent insurer to form a proper judgment or ask further questions. An insurer that is put on inquiry, or indicates reliance on an approved towage plan rather than on disclosure of its contents, may waive further disclosure. Avoidance also requires proof that the non-disclosure induced the actual insurer.

Seaworthiness is judged flexibly by reference to the insured adventure and the nature of the ship. The insurer bears the burden of proving unseaworthiness at the relevant stage. Temporary defects capable of prompt remedy, or defects not shown to render the vessel unfit for the voyage, do not establish breach of the implied warranty.

Garnat Trading & Shipping (Singapore) Pte Ltd and Vung Tau Shipbuilding Industry Joint-Stock Company claimed under a hull policy issued by Baominh Insurance Corporation after a floating dock and workshop sank during towage from Vladivostok to Vietnam.

Baominh sought to avoid the policy for alleged non-disclosure of wave-height limitations in the towage plan and alleged unseaworthiness concerning the dock’s draft, pontoon lashings, pumping systems, manhole covers and watertight subdivisions. The central issues were whether the material information had been fairly disclosed or waived, whether any non-disclosure induced the insurance, and whether the dock was seaworthy at the relevant commencement of the voyage.

1. Claim allowed. The claimants were entitled to recover under the policy. Baominh’s defences of non-disclosure and unseaworthiness failed.
2. Applying section 18 of the Marine Insurance Act 1906, the court held that the information about the towage plan and its maximum wave-height limitation had been disclosed through the documents supplied, the discussions with Baominh, and the presentation of the plan’s key materials. The assured was not required to provide minute disclosure of every technical detail where the presentation was sufficient to enable a prudent insurer to assess the risk or ask questions.
3. Alternatively, Baominh had waived further disclosure under section 18(3)(c). It knew that the towage plan contained technically important limitations and chose to rely on approval by GMB rather than scrutinise the plan itself. If the information had not already been disclosed, a reasonably careful insurer would have asked for it.
4. Any non-disclosure was not shown to have induced the actual insurance. Baominh was prepared to insure if GMB approved the towage plan, and the plan had been approved. The evidence did not establish that Baominh would have declined the risk or altered its terms.
5. Under section 39, seaworthiness was assessed by reference to the insured towage adventure and the relevant stage of the voyage. The dock’s temporary 4.4 metre draft while leaving Vladivostok was justified to reduce windage in sheltered waters, and the draft could be reduced promptly for ocean towage. The court considered that the voyage could in any event be divided into distinct stages.
6. The evidence did not establish that the pontoon lashings, pumps, manhole covers, watertight subdivisions or other alleged defects rendered the dock unfit to encounter the ordinary perils of the insured voyage at its commencement. The extreme weather that later caused the loss did not itself prove initial unseaworthiness.