The Commercial Court has just upheld a successful avoidance defence by London market marine insurers (represented by Alistair Schaff Q.C.) in a case in which a super yacht (the Galatea) was badly damaged by fire while berthed at a marina. The Galatea had been over-insured for an agreed value of 13m euros in circumstances where the insured and its yacht managers knew that she had previously been valued at about 7-8m euros and that she had just been put up for sale at a price of 8m euros. Mr Justice Leggatt accepted insurers’ case that although the over-valuation had occurred by oversight, there was non-disclosure of material facts which had induced the writing of the policy for the agreed but inflated insured value. This provided insurers with a complete defence to the claim. Importantly, the policy was subject to the Marine Insurance Act 1906; as the Judge observed, if the new Insurance Act 2015 had been in force and had applied, the claim would have succeeded, albeit in a reduced sum of 8m euros, this sum corresponding with the lower and more representative insured value at which the underwriters would have written the risk, had the relevant disclosure been given.
In the alternative, the insured sued its producing and placing brokers for negligence, claiming as damages any shortfall in its recovery against insurers. The Greek producing brokers were held liable in damages for part of the loss. However, the Lloyd’s placing brokers, OAMPS Special Risk Limited (represented by James Brocklebank and Sushma Ananda) successfully resisted the claim against them, the Judge holding that the Lloyd’s placing brokers neither owed any relevant duty directly to the insured, nor were in breach of any such duty.
To view the judgment, please click here.