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Millers Marine War Risks


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CHAPTER 19

… Or any person acting maliciously or from a political motive

Malice and maliciously

19.1 This element of war risks cover has generated a steady trickle of disputes in the English courts. A number of key issues have been identified in recent litigation, and these provide the focus for this chapter. The courts have identified four main sources of ambiguity within the “malicious acts” cover, and these are taken in turn. 19.2 First, the extent to which “malice” requires some personal spite targeted at the owner or operator of the property damaged, rather than some more generalised mental element. This has been considered in some depth by Colman J. in The Grecia Express 1 and in The North Star,2 by the Court of Appeal (in relation to non-marine losses) in Tektrol,3 and by the Supreme Court in The B Atlantic.4 This edition therefore concentrates in detail on the judicial reasoning adopted in those cases, and readers interested in the historic position are directed to the Third Edition of this work. 19.3 Second, where the burden of proof lies in respect of identifying the instigator of the malicious damage. In practice, whether the insured that it was not complicit in the infliction of deliberate damage to insured property as a component of the insured peril. The alternative is that the underwriter would be required to raise complicity by way of a positive defence, such as wilful misconduct. 19.4 Third, the relationship between the positive cover for “malicious acts” and potentially overlapping excluded perils, such as barratry and detention for customs infringements. This has arisen in particular in respect of standard war risks cover for Hull & Machinery. This point of construction was considered at all levels in The B Atlantic,5 including at the Supreme Court stage. Linked to this is the application of the proximate cause doctrine to “malicious acts” cases where “overlapping” excluded perils might be found to have had significant causal effect. This was also considered in The B Atlantic.

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Malice as “targeted” or “wanton” vandalism

19.5 On the question of targeted spite, Lord Mance in The B Atlantic 6 drew a distinction between the case law on this question, those predating the drafting of the Institute Time Clauses (Hulls) 1983, and a series of subsequent first instance decisions. The historic case law can be read as providing a more restrictive interpretation of malicious acts, requiring some degree of targeted ill-will towards the insured property. The more recent case law had adopted a wider approach under which acts of untargeted vandalism could still fall within the peril. Lord Mance evidently preferred the narrower test, but his judgment requires careful consideration to establish the precise position in law. 19.6 The B Atlantic concerned the deliberate planting of a substantial quantity of narcotics on board a vessel in harbour in Venezuela. On discovery of the drugs, the vessel was impounded as part of judicial proceedings. The wider issues in this case are discussed elsewhere in this book,7 but one question was whether secreting the drugs constituted a malicious act. The dispute in The B Atlantic progressed to the Supreme Court on the basis that planting the drugs was a malicious act, but the Supreme Court was not prepared to hear the case on this basis, and requested submissions on this point.8

The “targeted malice” test

19.7 In The Mandarin Star,9 the Court of Appeal was faced with a marine cargo policy over goods which the master of the vessel refused to deliver to the consignees, but instead mortgaged them with a third-party, as a form of security for unpaid freight. The perils insured included theft and “loss or damage by persons acting maliciously”. 19.8 Lord Denning M.R. treated “maliciously” as requiring “spite or ill-will”.10 His formulation evidently required some motivation beyond personal gain, but did not resolve whether some degree of personal animus was required, such that it was action not merely against the property but against the owner. Edmund Davies L.J. agreed with Denning M.R.,11 and Phillimore L.J. read the peril as restricted to incidences of civil disturbance and the like.12 19.9 This ambiguity was identified but not resolved by Mustill J. in The Salem in determining that the “malicious acts” clause was inapplicable on the facts.13 Mustill J.’s approach to the malicious acts issue was not tested in the subsequent appeals to the Court of Appeal or House of Lords. His initial approach was to assume, consistent with a narrow reading of The Mandarin Star, that personal malice was required:

The conspirators were not inspired by personal malice against [the owners of the cargo]; they simply wished to steal the cargo, the identity of the owner being immaterial. The same is the case as regards the destruction of the cargo remaining on board when the vessel sank.14

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