David M'Cowan v Baine and Johnston (The “Niobe”) [1891] A.C. 401

David M'Cowan v Baine and Johnston (The “Niobe”) [1891] A.C. 401

Insurance (Marine)—Collision Clause—Vessel under Tow—Collision with Tug—Construction of Policy.

By a policy of marine insurance the underwriters insured the ship Niobe from the Clyde (in tow) to Cardiff and/or Penarth while there and thence to Singapore, and while in port for thirty days after arrival; and agreed “if the ship hereby insured shall come into collision with any other ship or vessel and the insured shall in consequence thereof become liable to pay, and shall pay, to the persons interested in such other ship or vessel, any sum or sums of money,” &c., to pay the assured a certain proportion of the sum so paid.

While the Niobe was being towed to Cardiff her tug came into collision with and sank another vessel, whose owners recovered damages both from the Niobe and the tug.

In an action by the owners of the Niobe upon the policy against one of the underwriters for payment of his proportion of the sum paid by such owners on account of the collision, the underwriter pleaded that under the policy he was only liable for damage arising from collision with the Niobe :—

The question is whether the collision with the tug was a collision with the Niobe, the vessel in tow, within the meaning of the policy.

Held, affirming the decision of the Court of Session (17 Court Sess. Cas. 4th Series (Rettie) 1016) (Lord Bramwell dissenting), that the collision of the tug with the damaged vessel must be taken to have been a collision of the Niobe with another vessel within the meaning of the policy, and that the underwriters were liable.

EARL OF SELBORNE

My Lords, I cannot help thinking that in construing such a mercantile contract as this, there is as much danger of error in extreme literalism as in too much latitude; and though I do not adopt the argument that a contract of indemnity against the consequences of collision can be extended to a case in which there has been no collision, but only damages caused by measures properly taken to avoid a collision, I think a construction which makes it cover all damages consequent upon an actual collision, for which the assured is liable, is more reasonable and more in accordance with the probable intention of the parties (if the words will bear it) than one which does not.

In the present case, the Valetta was sunk by an actual collision, for which the owners of the Niobe have been held liable. But the impact which caused the loss of the Valetta was not of the hull of the Niobe, but of the steam-tug Flying Serpent, which was towing the Niobe on a part of her insured voyage, described in the policy of insurance as “in tow from the Clyde to Cardiff or Penarth.”

The words of this contract are: “If the ship hereby insured shall come into collision with any other ship or vessel, and the insured shall, in consequence thereof, become liable to pay to the persons interested in such other ship or vessel, or in the freight thereof, or in the goods or effects on board thereof, any sum or sums of money, not-exceeding the value of the ship hereby assured.” If a ship cannot be said to “come into collision with any other ship” except by direct contact, causing damage, between the two hulls (including under the term hull all parts of a ship's structure) there was in this case no such contact, and the appellants ought to succeed.

But I cannot adopt so narrow a construction of those words. I should hold them to extend to cases in which the injury was caused by the impact, not only of the hull of the ship insured, but of her boats or steam launch, even if those accessories were not (as in this case) insured as being, in effect, parts of the ship. I should also hold them to cover an indirect collision, through the impact of the ship insured upon another vessel or thing capable of doing damage, which might by such impact be driven against the ship suffering damage. I should take the same view, as against insurers in similar terms, of a tug towing one or more barges (in which case the barge owners would not be liable for a collision) if damage to any vessel were caused by the barge or barges being driven against it through the improper navigation of the tug, although there might have been no impact of the tug itself upon the injured vessel. And, after full consideration, it seems to me to be no more than a reasonable extension of the same principle to include within them such a case as the present.

Where a ship in tow has control over, and is answerable for, the navigation of the tug, the two vessels—each physically attached to the other for a common operation, that of the voyage of the ship in tow, for which the tug supplies the motive power—have been said, by high authority, to be for many purposes properly regarded as one vessel.

Lord Kingsdown's words, in the case of The Independence ⁹, were, that the tug “may, for many purposes, be considered as a part of the ship to which she is attached”; and he went on to repeat the reason given in the earlier judgment reported in the same volume: The Cleadon ¹⁰, to which he was also a party, where it was said: “The Cleadon being in tow of the tug, it is admitted she and the tug must be considered to be one ship; the motive power being in the tug and the governing power in the ship that was being towed.” I think the Flying Serpent and the Niobe may be so regarded for the purpose now in question. The principle on which the Niobe has been held liable for the collision seems to me to go far towards that conclusion. That the Niobe should be in tow from the Clyde to Cardiff or Penarth was, in the present case, part of the contract. I think the construction ought to be the same, so far as relates to that voyage, as if the words in the margin had been: “If the ship insured, while in tow between the clyde and Cardiff or Penarth, shall come into collision with any other vessel,” &c. If the contract had been so expressed, I should have thought it arbitrary and not reasonable to exclude a collision by the impact of the tug during that voyage upon another vessel, for the consequences of which the owners of the Niobe were liable.

I am, for these reasons, of opinion that the interlocutors appealed from are right, and ought to be affirmed.

LORD WATSON

My Lords, the Niobe, a sailing ship belonging to the respondents, was covered by a policy of insurance at and from “the Clyde (in tow) to Cardiff and/or Penarth, while there, and thence to Singapore, and while in port for thirty days after arrival.” Provision was made for indemnity against liabilities arising from collision by a marginal clause, upon the construction of which the result of this appeal must depend.

Whilst the Niobe was on her way to Cardiff in tow of the Flying Serpent, her tug came into collision with the Valetta, causing her serious damage. The Valetta, after colliding with the tug, also came into contact with the Niobe, but without receiving any injury. In a suit before the Admiralty Court of England, it was decided by Lord Hannen, that the collision was due to the fault of the tug in not porting her helm, in terms of the regulations, and that the Niobe was likewise to blame, in respect of her failure to keep a look-out, and to control the steerage of her tug. The respondents have, in consequence, paid £12,909 odd to the owners of the Valetta, and they now sue one of the underwriters of the policy, for his proportion of the sum which they claim by way of indemnity.

The legal liability of the Niobe, and the facts upon which it rests, as these were found by the President of the Admiralty Court, are matter of mutual admission in this case. Whether the collision between the Flying Serpent and the Valetta was a collision within the meaning of the marginal clause of the policy, is the only subject of controversy.

The material part of the clause is in these terms: “And it is further agreed, that if the ship hereby insured shall come into collision with any other ship or vessel, and the insured shall in consequence thereof become liable to pay, and shall pay, to the persons interested in such other ship or vessel, or in the freight thereof, or in the goods or effects on board thereof, any sum not exceeding the value of the ship hereby assured, we will severally pay the assured such proportion,” &c. Then follows a stipulation that, in the same events, in cases where the liability of the ship has been contested with their consent in writing, the insurers will also pay a proportion of the expenses incurred or paid by the insured. Lastly, there is a proviso to the effect that the clause shall not extend to any sum which the assured may become liable to pay or shall pay “in respect of loss of life or personal injury to individuals for any cause whatsoever.”

The clause is certainly not conceived in the terms which one would have expected the parties to employ, if, as the Attorney-General argued, it was their intention to include in the indemnity all liabilities arising from collision which the Niobe could possibly incur. The condition, which must be purified before any obligation can attach to the underwriters, is “that the ship hereby insured shall come into collision with” another ship or vessel. These words, in their literal sense, import that there must be contact between the Niobe and such other ship or vessel, causing damage to the latter.

So far as I can discover, none of the learned judges of the Court of Session indicated an opinion that the clause was so expressed as to cover every kind of liability for collision. They based their decision upon a special rule of law, which has admittedly no application except as between a ship and her tug. They held that the identity which that rule establishes between tow and tug is so complete, that the Niobe herself must be considered to have come into collision with the Valetta within the meaning of the policy.

A sailing vessel, and the steam-tug which has her in tow, have frequently been described by eminent judges as, for certain purposes, constituting “one ship,” an expression which has been borrowed by text-writers, and is familiar to persons conversant with maritime law. The expression is figurative, and must not be strained beyond the meaning which the learned judges who have employed it intended that it should bear. As I understand their use of the expression, it signifies that the ship and her tug must be regarded as identical, in so far as the two vessels, with their connecting tackle, must be navigated as if they were one ship, and, the motive power being with the tug, must, in order to comply with the regulations for preventing collision at sea, be steered and manoeuvred as if they formed a single steamship; and also, in so far as the ship towed, when she has (as in this case) the control of the tug, and the duty of directing the course of the tug in accordance with these regulations, is responsible for the natural consequences of the tug being wrongly steered, through the neglect of her officers or crew to perform that duty.

There was, therefore, a legal connection betwixt the Niobe and the Flying Serpent which could not subsist between her and any other vessel which her fault might drive into collision with a stranger ship. The Niobe was, in the contemplation of the law, one and the same ship with the Flying Serpent for all purposes of their joint navigation with a view to avoid the risk of collision; and the fault which led to a collision between that legal composite and the Valetta was admittedly the fault, not only of the Flying Serpent, but of the Niobe.

I admit the force of the appellant's argument that contracts ought to be construed according to the primary and natural meaning of the language in which the contracting parties have chosen to express the terms of their mutual agreement. But there are exceptions to the rule. One of these is to be found in the case where the context affords an interpretation different from the ordinary meaning of the words; and another in the case where their conventional meaning is not the same with their legal sense. In the latter case, the meaning to be attributed to the words of the contract must depend upon the consideration whether, in making it, the parties had or had not the law in their contemplation.

The point thus raised appears to me to be a very narrow one. But, in this case, the contracting parties are ship-owners and underwriters; and the clause in question relates to possible legal liabilities of the ship insured, which are entirely dependent upon the rules of maritime law. In these circumstances I have, not without some hesitation, come to the conclusion that they must be presumed to have known the law, and to have contracted on the faith of it.

My Lords, in this case the facts are that the Niobe was insured by the respondents with the appellants and others, by a policy in the ordinary form, from the Clyde (in tow) to Cardiff, or Penarth, and thence to Singapore. In the margin of this policy is this, I believe, usual clause:

“And it is further agreed that, if the ship hereby insured shall come into collision with any other ship or vessel, and the insured in consequence thereof become liable to pay, and shall pay, any money not exceeding the value of the ship hereby assured, we will severally pay the assured such proportion of three-fourths of the sum so paid as our respective subscriptions hereto bear to the value of the ship hereby assured, or if the value hereby declared amounts to a larger sum then to such declared value.”

What happened was this: The Niobe, in tow of a tug, proceeded on her voyage, and, by the negligence of the tug, and of those navigating the Niobe, the tug came into collision with the Valetta, and sank her. There was a collision between the Niobe and the Valetta, which may be disregarded, as it did no damage. In very fact, therefore, the ship has not come into collision with any other ship, and the insured paid something in consequence thereof. The insured, the respondents, have paid to the owners of the Valetta a large sum of money in consequence of the damage to her, owing to the conjoint bad seamanship of the tug and the Niobe, and this is sought to be recovered in this suit.

I say then, in very fact, the Niobe did not come into collision with the Valetta, causing a liability in the appellant, and, according to the ordinary primary meaning of the words used the case is not within them. This is agreed. But it is said that for some reason the primary and natural meaning of the words is to be extended; and that we should hold that there was a collision where there was none. I am at a loss to see why. I think an Act of Parliament, an agreement, or other authoritative document, ought never to be dealt with in this way, unless for a cause amounting to a necessity, or approaching to it. It is to be remembered that the authors of the document could always have put in the necessary words if they had thought fit. If they did not it was either because they thought of the matter and would not, or because they did not think of the matter. In neither case ought the Court to do it. In the first case, it would be to make a provision opposed to the intention of the framers of the document; in the other case, to make a provision not in the contemplation of those framers. Take this very case. Can anyone say that, if the assured had required the insurers to agree to be liable for a collision by the tug (and be it remembered that it is mentioned the Niobe was to be towed to Cardiff), I say if such a requirement had been made, can anyone say that the insurers would have agreed to it without an increase of premium: a liability for any towing till the voyage to Singapore was over? Suppose a suit to reform the document by making the insurers liable for collisions by the tug, could it have succeeded?

Let me examine the reasons given for adding to or altering the meaning of the words used. The Lord Ordinary says if the collision clause is read in the strictest manner he would be of opinion that the defender was not liable, but he thinks it admits of being read in a broader and more comprehensive sense. The superlative “strictest” is a difficult word to deal with. Is it to be read in a way not strict; if so, how far short of it? His Lordship gives his reasons; he says:

“The risk they wished and had an interest to cover was liability arising from collision for which as owners of that particular ship, they might be liable.” “That the defender knew they wished to cover it, and it may fairly be presumed that the clause was intended to cover that particular risk.”

I respectfully ask where is the evidence that they wished to cover any risk of collision beyond what they have expressed, or that the defender knew the pursuers so wished? I firmly believe that if the truth were known, neither party had it in mind; and I repeat, I am by no means sure it would have been included for the same premium. The Lord Justice Clerk says: “In certain circumstances the vessel is looked upon as being part of the tug, and the real question here is whether that view applies to such a case as this. I think it would have been far better if the policy had been more clearly expressed.” With submission, that should be not “more clearly” but differently expressed. Nothing can be clearer than it is. It is said that to hold as I do is a “narrow construction.” I respectfully deny it. I do not construe the words. I simply read them as I should “twice two are four.” “Narrow”! Well, if too narrow is wrong so is too wide, which, to my mind, the construction, (for it is a construction), I object to, is. His Lordship came to the conclusion for the pursuer not without hesitation. Lord Young says the collision was just the sort of collision the possibility of which was contemplated by both sides. I should suppose, then, he does not agree with the Lord Justice Clerk, that it would have been far better if more clearly expressed. Lord Rutherfurd Clark doubts if the pursuer is right. Lord Lee agrees with the Lord Ordinary.

It is said that the Niobe was, in the contemplation of the law, one and the same ship with the Flying Serpent for all purposes of their joint navigation with a view to avoid the risk of collision. I respectfully deny it. I deny that it is an intendment of the law. The law does not contemplate anything like it. A most distinguished lawyer, Lord Kingsdown, did once use the unfortunate metaphor, (judges ought to be very careful about using such expressions), that “the tug may for many purposes be considered as a part of the ship to which she is attached.” He says “for many purposes,” not all. He does not say that it is to be so considered that the plain words of a contract are to be misinterpreted. Had he foreseen what use would be made of his words he would not have used them. These two shall be one. And it is said that the parties to this suit knew all about this, and contracted on the footing of it.

Now, my Lords, this seems to me to be a case (too common) in which there is a tendency to depart from the natural primary meaning of words, and add to or take from them—to hold that constructively words mean something different from what they say. It introduces uncertainty. No case is desperate when plain words may be disregarded. I deprecate this in all cases. In this particular one I believe it will be attended with at least this injustice, that the parties did not contemplate the case that has occurred, and perhaps would have raised the premium if they had. That they did not contemplate it I infer from the words they used. Ingenious cases were put in which there might be damage by collision with the Niobe without her touching the vessel damaged, as where she pushed an intermediate vessel against that damaged. I have no doubt that ingenuity might suggest many difficult cases. I content myself with dealing with the present, where the ship did not in any sense come into collision with any other ship and cause damage. I think the judgment should be reversed, but I suppose I must be in the wrong, because four judges of the Court of Session have held differently, and three of your Lordships, I know, will hold differently.

My Lords, in my opinion the contract must be construed as an insurance against risk or liability for payment by collision to be incurred by the Niobe while in tow. What the owners were bargaining for was indemnity against loss or payment which the Niobe might incur while being towed. I consider the tug part of the apparatus for moving the ship Niobe , and that a collision by the tug while so towing the Niobe was a collision of the Niobe within the meaning of the marginal clause of the policy; consequently that the judgment of the Court of Session should be affirmed.

The majority of the judges, in this case, regarded the Niobe and the Flying Serpent as one and the same and came to the conclusion that the fault which led to a collision between that legal composite and the Valetta [the other ship] was admittedly the fault, not only of the Flying Serpent, but of the Niobe. In other words, it was not necessary for there to be actual bodily contact between the vessels that is between the Valetta and the Niobe.

Counsel for the claimant had argued that:

“The term “collision” in this policy ought not to be confined to actual collision with the ship insured. To constitute a collision within the meaning of the instrument, there need not be any actual contact between two vessels; for example, if through the fault of the Niobe another ship was compelled to run ashore to avoid a collision… Secondly, the tug is employed by the tow, and it has been held by Dr. Lushington and Sir James Hannen that tow and tug are to be considered as one ship. And when there is the additional fact that the tug is under control of the tow, as was the case here, collision with the tug is collision with the tow”.

This approached carried the day, but it did not find favour with Lord Bramwell (dissenting), and his arguments deserve careful consideration.

Be that as it may, the broad interpretation, of the term collision, adopted in the Niobe, above, was employed in the Union Marine case below, though, of course, the policy in question was, admittedly broader than that in the Niobe Case.