On 27th September 1983 the Supreme Court of Canada, in Century Insurance Co. of Canada v. Case Existological Laboratories Ltd. (The Bamcell IT)1, handed down a decision on the liability of underwriters for a sinking which occurred when a barge, which was designed to be supported by compressed air, sank due to the negligence of an employee in leaving a valve open and allowing too much air to escape and water to enter the vessel. This case is of considerable importance to all parties involved in the marine insurance industry in Canada for two reasons: first, the finding that a negligent act of a crewman which allows the entry of water into the vessel is a peril of the sea, even under circumstances when the Tnchmaree clause would not apply; and, secondly, the finding that a “warranty” which required a watchman to be on board between 22 00 hours to 06 00 hours, and which “warranty” was breached by the assured discharging the watchman the day after the inception of the risk, was not a warranty at all but was simply a “limitation of the risk insured against”.

The vessel concerned, the Bamcell II, was a converted chip barge with a hull divided into six compartments, of which only the two forward compartments were watertight, and these had been weighted with 70 tons of concrete. The two midships compartments and the after compartments were completely bottomless. The four flooded compartments maintained their buoyancy by compressed air which could be admitted or released through valves on deck. Raising or lowering the air pressure caused the stern of the barge to rise or fall, thus allowing the Bamcell II to float on or float off certain “modules” used in oceanographic experiments. It was agreed that the air valves had been deliberately opened by an employee of the insured and that the barge sank because he negligently failed to close one or more of these valves.