Non-Disclosure and want of due diligence - Loss of Hire

Sealion Shipping Ltd & Anor v Valiant Insurance Co [2012]
Commercial Court, 20 January 2012

This case concerned a loss of hire claim by the owners of the “TOISA PISCES”, a support vessel used in connection with drilling operations in the Gulf of Mexico, and which at the relevant time was under charter to the Mexican oil company, Pemex. The vessel was capable of dynamic positioning, enabling her automatically to maintain her position above a wellhead, with the aid of computer controlled rotating bow and stern thrusters. The thrusters, in turn, were driven by electric motors, of which a key component was a cylindrical stator core, containing insulated copper wires.

On 25 February 2009, the vessel suffered a motor breakdown in one of the thrusters, caused by a short circuit in the port motor stator core. Pemex placed the vessel off hire, for which the Claimant owners pursued a corresponding claim under their loss of hire policy, equivalent to the policy limit of 30 days.

Insurers denied the claim and contended that they were entitled to avoid the policy on grounds of material non-disclosure and/or misrepresentation. In the alternative, they relied upon a policy defence of want of due diligence by the assureds.

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Lawyers Anthony Menzies, James Crabtree, Susannah Wakefield