In the Court of Appeal, Waller LJ, having identified the questions that required consideration, stated: In considering these questions, which I have found far from easy, I should immediately record my gratitude to Professor Bennett and an article he wrote in Lloyd's Maritime and Commercial Law Quarterly 2007 page 315, from which I shall unashamedly borrow.īoth appellate courts rejected any idea that inherent vice required the insured property to be fit to withstand the reasonably foreseeable perils of the insured transit (such as the leg-breaking wave, which was of a normal force for such waters at that time of year), as suggested by an earlier first instance decision. The insured's claim therefore succeeded.īoth the Court of Appeal and the Supreme Court referred to Professor Bennett’s article 'Fortuity in the Law of Marine Insurance' Lloyd's Maritime and Commercial Law Quarterly 315. In circumstances where factually a loss was caused by a combination of the insured property's own characteristics and an external fortuity, in law the only operative cause would be the external fortuity because the definition of inherent vice as a legal concept required the absence of any operative external fortuity. The Supreme Court adopted a similarly restrictive but different approach, namely that inherent vice afforded an insurer a defence only where it constituted the sole proximate cause of the loss. The Court of Appeal confined inherent vice to damage sustained even though the insured property had encountered only such 'wind or wave which, it would be the common understanding, would be bound to occur as the ordinary incidents on any normal voyage of the kind being undertaken' (Waller LJ). Significantly, a restrictive view was taken of the scope of the inherent vice defence, commensurately increasing the utility of cargo insurance for cargo owners, and thereby also supporting the cargo insurance market. The ensuing litigation became a leading authority on the scope and operation of this important limitation on cover. An inherent vice defence is stated expressly in various sets of Institute cargo clauses and in any event is implied, subject to contrary intention, by virtue of the Marine Insurance Act 1906, s 55(2)(c). The ensuing claim on the cargo policy was met by a defence of inherent vice.
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