Introductory Remarks to MLAANZ Marine Insurance Webinar

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Justice Stewart  1 September 2021

I begin by acknowledging the traditional owners of the land on which I am seated as we meet remotely this evening, the Gadigal people of the Eora nation, and I pay my respects to their Elders, past, present and emerging. Gadigal Country takes in the southern reaches of Port Jackson and the shores and waters of Botany Bay.

I wish to thank the New South Wales MLAANZ Committee for inviting me to make a few introductory remarks at this marine insurance seminar. You do me, and more particularly the Court on which I serve, an honour in doing so.

You will be aware that marine insurance is an important area of the work of the Federal Court, marine insurance cases regularly being brought in the Admiralty list as well as in the Chief Justice’s specialist insurance list. There is no other Court in Australia, and probably the world, where litigants could be assured of a more experienced and learned insurance judge at first instance.

The Marine Insurance Act 1909 (Cth) commenced on 1 July 1910. The first case under the Act to reach the High Court of Australia concerned a policy taken out in April the following year. The case goes by the name Campbell v Yorkshire Insurance Co Ltd [(1914) 19 CLR 166]. It concerns a racehorse, which seems apt given the place of horseracing in the Australian identity.

The horse was described in the proposal for insurance for a voyage from Sydney to Fremantle on board a vessel called Karoola as: “Bay Gelding by Soult x St Paul mare”. That description meant that the horse’s sire was Soult and its dam was a mare by St Paul, Soult and St Paul being noted racehorse breeding stallions. Its branding was identified, and it was said to have “2 hind legs white” (I interpose to observe that I would have thought it unnecessary to describe a racehorse as having two hind legs), “blaze on face, slight chip off knee, grey hairs near side belly”.

The horse sadly died from natural causes 12 days into the voyage. The insurer declined the claim on the basis that the horse was not “by Soult x St Paul mare”. The issue was whether that description was recorded only for identification purposes, or whether it was a warranty that had to be exactly complied with under ss 39 and 41 of the Act. The answer to that question really concerned the construction of the proposal document where the description of the horse had been entered across two pre-printed boxes titled “Colour, Brands or Marks etc” and “Description of animals”.

The trial judge in the Supreme Court of Western Australia held that the misstatement of the pedigree of the horse was not material and found for the insured. On appeal, the Full Court reversed the judgment and held for the insurer.

On further appeal, the High Court split 2-1, reversing the decision of the Full Court and restoring the decision of the trial judge.

On yet further appeal to the Privy Council, the High Court was reversed and the decision of the Full Court was restored. The speech of Lord Sumner includes this essential reasoning: [[1917] AC 218 at 225]

If the words in question were left out, there would be nothing to show what kind of horse the animal insured was. It might be anything from a Shetland pony to a Suffolk punch; it might be thoroughbred or cross-bred; it might be any manner of bay gelding, branded as described, which happened to have the white patches and grey hairs in question, and had been let down and chipped off its knee. It was insured against "all risks," including the risk of being slung overboard, and, whilst on board, against all sea risks, including mortality. Their Lordships cannot say that such risks may not be capable of being affected by the circumstances expressed in the words which the respondent seeks to deprive of significance. The courage, the docility, the endurance of the horse, and the consequent likelihood of its making the voyage and being landed safely, may, for all their Lordships know, be affected one way or the other by the pedigree in question; …

The description was thus held to be an warranty as referred to in s 39 of the Act.

The result was that on the insurance of a horse with an insured value of £425, after litigation at trial and three levels of appeal, with alternating success at each stage, the insurer won on the basis that the description of the horse’s pedigree was a warranty. With that much work in the matter, even the lawyers on the losing side could not look that gift horse in the mouth.

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