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Kingdom of Tonga v Allianz Australia Insurance Ltd [2005] TongaLawRp 7; [2005] Tonga LR 196 (25 February 2005)

IN THE SUPREME COURT OF TONGA

Kingdom of Tonga

v

Allianz Australia Insurance Ltd

Supreme Court, Nuku'alofa
Ford J
CV 723/2003

17-19 November 2004; 25 February 2005

Insurance law – maritime insurance – query whether ship was insured – not insured

Tropical Cyclone Ami struck Tongatapu on the night of the 14th and early morning hours of the 15th of January 2003. One of the casualties was the plaintiffs' inter-island ferry MV Olovaha which ran aground on an inner reef and sustained severe damage. The plaintiffs were respectively the owner of the Olovaha and the "Managing Agent" for the owner. The defendant company was a firm of insurance underwriters based in Sydney, Australia. The plaintiff alleged that at all material times the Olovaha was insured with the defendant for Hull and Machinery risk under Insurance Policy number 51--1254329--MCH. The "material time" in that context was defined as on or about the 15th day of January 2003. The defendant admitted that it was the lead underwriter under the policy for the period 31 December 2001 until 31 December 2002 in respect of two of the plaintiffs' vessels --the Fua Kavenga and the Olovaha but, it pleaded that cover for the MV Olovaha was suspended as from 29 July 2002 because, contrary to a warranty in the policy, the vessel was no longer "in class". "Class" referred to the Olovaha's classification by Germanischer Lloyd (one of the world's leading Classification Societies) as a RoRo ferry with restricted international service. A Classification Society would withdraw a ship's class unless the owners have the vessel periodically surveyed and maintained to a satisfactory condition within the Society's rules. The question before the Court was whether the vessel was insured at the time of the cyclone.

Held:

1. A policy of maritime insurance, like any other contract, could be varied by consent. Clause 4.1 of the Marine Policy specifically provided for changes and suspensions.

2. The Court was satisfied that both parties were contemplating that nothing out of the ordinary was going to happen and if, at any stage, insurance cover was going to be sought over the Olovaha then the usual procedures would be followed. The decision regarding the reinstatement of cover could only be made by underwriters after proper consideration of all the material facts.