The Chain Of Causation: 'One Thing Led To Another'

In Sealion Shipping Ltd & Anor v Valiant Insurance Company (Toisa Pisces)1the insurers denied liability for the insured's lossof hire claim on various grounds and, in the alternative, argued that three breakdowns suffered by the vessel were three separate occurrences and that the excess period of 21 days applied to each individual breakdown so as to reduce the insured's claim. Mr Justice Blair decided against the insurers on all accounts and the insurers subsequently appealed to the Court of Appeal on certain grounds, including on the issue of causation (Sealion Shipping Ltd & Anor v Valiant Insurance Company2).

The Toisa Picses was a specialist drill-ship vessel propelled by two azimuth thrusters driven by an electrical motor, one on the port side (PAM) and one on the starboard side (SAM). There was an initial breakdown on 25 February 2009 when the PAM failed (the first breakdown). The vessel proceeded to Coatzacoalcos for repair, arriving on 8 March. At this time the SAM was ashore and not in use; a Louis Allis motor was being used in its place. The insured had the SAM sent to the vessel and planned to re-install it and move the Louis Allis motor (which could operate on both sides of the vessel) to the port side. In the meantime the PAM was sent to Alabama for repair.

With both motors removed, maintenance work could be done for which there would not otherwise have been easy access. Whilst this work was being carried out, there was a failure of the starboard azimuth hydraulic system which resulted in the consequential failure of the starboard azimuth thruster. Blair J held that this second breakdown happened on 11 March. The repair work to the hydraulic system and starboard azimuth thruster had to be carried out in dry dock and so on 20 March the vessel left Coatzacoalcos for Mobile, Alabama, arriving on 26 March.

Work commenced on 28 March and on 21 April the vessel left Mobile and headed towards an oilfield. However, on 25 April the SAM failed (the third breakdown). As a result, the vessel proceeded to Brownsville for repair, arriving on 2 May. The SAM was removed for repairs and the Louis Allis motor was moved from the port side back to the starboard side and the repaired PAM (which arrived on 4 May) was re-installed. The vessel left Brownsville on 11 May and was accepted back in to service on 19 May.

The policy provided loss of hire cover at a daily rate of US$70,000 and for a limit of "30 days each accident or occurrence or series of...