VIKING FISHING V MUTUAL AND FEDERAL, ROUND TWO: SUPREME COURT OF APPEAL CONSIDERS THE MERCHANT SHIPPING ACT WARRANTY

By Jeremy Prain Thursday, May 12, 2016
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Viking Inshore Fishing (Pty) Ltd v Mutual and Federal Insurance Co Ltd (41/2015) [2016] ZASCA 21 (18 March 2016).

Many readers will recall the collision between the fishing trawler Lindsay and the bulk carrier Ouo do Brasil a few miles off the coast near Cape St Francis on 8 May 2005The fishing trawler capsized and sank soon after the collision and fourteen crew members lost their lives in the tragedy which prompted a lengthy Court of Marine Enquiry into the incident.

The tragedy also resulted in litigation between the owners of the Lindsay (Viking Fishing) and their hull underwriters, Mutual & Federal, arising from the repudiation of the claim for the loss of the trawler.

The most recent finding on the claim was handed down by the Supreme Court of Appeal (SCA) on 18 March 2016, which overturned the earlier decision of the Western Cape High Court in favour of the underwriters.

The appeal turned on two issues. The first was the proper application of the so-called “Merchant Shipping Act warranty” in the insurance policy. The other was whether the whether the loss of the Lindsay resulted from “want of due diligence” on the part of Viking Fishing.

The MSA warranty is a common feature of hull insurance policies written in the local market and the clause in the Lindsay policy read as follows:

“Warranted that the provisions of the South African Merchant Shipping Act and the regulations pertaining thereto shall be complied with at all times during the currency of this policy, provided that this warranty shall be effective only to the extent of those regulations which are promulgated for the safety and/or seaworthiness of the vessel(s). It is understood and agreed that this warranty shall in no way be construed to nullify the ‘inchmaree’ Clause, or any part thereof in the Institute Clauses attached to this Policy.”

Lana Jacobs and Jeremy Prain, Bowmans Shipping & Logistics Practice Group