1. MUSTAFA KAMAL, J.---The measure of indemnity in respect of claims for unrepaired damage to a ship caused by a peril insured against in a Marine Hull Policy of Insurance is the central theme of this appeal by leave by defendant Sadharan Bima Corporation from the judgment and decree of the Admiralty Court of the High Court Division dated 9-12-1991 in Admiralty Suit No.9 of 1988. The suit was decreed for U.S. $16,20,000 against the appellant with cost.
2. The substance of the plaintiff-respondent's case in the plaint is that the plaintiff, a limited liability company of Bangladesh, purchased the vessel M.V. Bengal Pride for U.S. $2.5995 million (we were told by the learned advocate for the respondent that the actual figure is U.S. $2.790 million),out of which U.S. $2.3175 million was financed by plaintiff No.2, Sonali Bank- through its London Office, with which the vessel was mortgaged. The vessel was insured with the defendant-Corporation under Marine Hull Policy No. SBC/M (Hull) HO/POL/04/86 dated 8-4-1986 effective for 3 months from 30- 3-1986, which was extended till 29-9-1986 on due payment. Of further premium. The ship was a grounded from S-4 anchorage at the fore part on the west bank of Passur River at Chalna Port on 7-9-1986 at 20-50 hours when her anchor dragged in strong ebb tide. She was refloated using her engine and was re-anchored at S-5 anchorage. On 8-9-1986 at 08-15 hours she dragged both the anchors and went aground in the shallow water of the east side of the channel. She was further refloated using her engine but again went aground owing to undesirable response from her helm.
3. Finally she was refloated using two tugs and her engine and was re-anchored at S-4. The accident caused damage to the rudder and rudder stock and as she had full cargo on board the Hull was badly damaged. She went out of commission altogether. There was no place of repair in Bangladesh or India. The nearest place of repair was in the Port of Singapore or Korea or Japan.
4. The ship had no power of her own. She had to be towed to any of those places for repair. To keep her afloat some repairs were needed to be done locally as well. The plaintiff was advised that while towing the ship to a port of repair she might sink. The costs of maintenance being heavy the plaintiff finally with the leave of the Court sold the ship as scrap for U.S. $6,10,000. The plaintiff filed a claim of total loss with the defendant. The defendant did not dispute the accident, but it refused to pay the claim of total loss by telex dated 12-4-1987. By a further telex dated 17-4-1987 the defendant denied claims of total loss, constructive total loss or unrepaired damage.
5. The plaintiff therefore filed the suit with three alternative prayers:---(a) The vessel was a total loss and the claim for total loss is U.S. $19,11,000 (vide paragraph 13 of the plaint). (b) Alternatively, the vessel, was a constructive total loss and on that account the claim is for U.S. $18,25,000 (vide paragraph 14 of the plaint). (c) The claim is in the third alternative for unrepaired damage, counted by two alternative methods, viz. (i) value of the vessel less depreciation plus overhead costs incurred (vide paragraph 15 of the plaint). The amount calculated this way will be a claim for U.S. $17,92,000. (ii) The alternative method of calculation in paragraph 16 of the plaint listed 22 heads of hypothetical expenditure if the vessel had been repaired amounting to U.S. $24,42,174 (which figure is wrong on calculation. It shall be U.S. $24.41,974).
6. Deducting the value of scrap U.S. $6,10,000 therefrom, the claim on this method of calculation comes to U.S. $18,12,174 (which is also a wrong sum arrived at. It should be U.S. $18,31,974). In paragraph 17 of the plaint and in the prayer portion, however, the plaintiff claims U.S. $18,21,000 on this method of calculation.
7. Alongwith these alternative claims the plaintiff prayed for interest at 10% with yearly rests from the date of accident till realisation and costs.
8. Besides taking some usual defences like maintainability, lack of cause of action, bar of waiver, estoppel, acquiescence and limitation, the crux of the defendant's case is that the claim of the plaintiff is not covered by the terms and conditions of the policy and hence the plaintiff is not entitled to any decree as prayed for. The ship was not a total loss as she was refloated and sold as scrap. The total repair costs submitted by the plaintiff was U.S. $3,38,000. Other items of costs are not admissible under a Marine Hull Policy, but even if crew wages and bunkers consumed during removal of the vessel from Chalna to a suitable port of repair and port charge at the port of repair are added to this sum, the total repair costs would not exceed U.S. $2,25,00,000 and hence there could not be any constructive total loss of the vessel. In paragraph 21 of the written statement, the claim for unrepaired damage was rejected in the following terms:--- "The correct method in accordance to (sic) the policy condition is that the measure of indemnity in respect of claims for unrepaired damage shall be the reasonable depreciation in the market value of the vessel at the time the insurance terminates arising from such unrepaired damage. It may be stated that the vessel was built in 1962 and given the age of the vessel its sound market value as at Chalna in December, 1986 (when the policy terminated) would be its scrap value."
9. The defendant claimed that the sound value of the vessel in December, 1986 would be U.S. $5,20,940 and its reduced value after damage would be U.S. $5,08,130. The difference in value amounts to U.S. $12, 810 which was below the policy deductible of U.S. $20,000 and therefore there could not be any claim for unrepaired damage either.
10. The Admiralty Court framed five issues. The plaintiff examined its Managing Director as P.W.1 and two other witnesses and the defendant examined one. Both sides exhibited some documents to which we shall refer in due course.
11. To compress the lengthy judgment of the Admiralty Court to its essentials, it does not appear to have decided, although urged by the plaintiff, that the vessel was either a total loss or a constructive total loss. The Court rested its considerations solely on unrepaired damage and proceeded on the assumption and maintained it throughout the judgment that in the insurance policy as well as in the plaint, the unrepaired insurance value was shown at U.S. $22,50,000. It decided that "the only point (that) is to be considered and decided in this case (is) as to whether ....The insurer is liable to pay the compensation for damage for the accident of the vessel in question". The Court obliquely accepted the defendant's contention in paragraph 21 of the written statement, as quoted above, as to the correct method of measuring unrepaired damage. It rejected as "absurd" the defendant's contention that the market value of the vessel on the expiry of the policy will be its scrap value, namely, U.S. $5,20,940. The defendant relied upon the telexes sent by Richard Hogg International, London, Average Adjuster, appointed by the plaintiff, Exhs. 7(5)-7(7), same as Exhs.E(2)-E(4) by the defendant, but the Admiralty Court held that the said telexes "cannot be taken as admissible and conclusive evidence for market value of the vessel as the so-called experts are not before this Court and cannot be put to cross-examination. However, it was their mere opinion upon certain reports". M.V. Bengal Pride was a seaworthy vessel in running condition.
12. P.W.1 stated that the market value of the vessel at the relevant time was the value as shown in the insurance policy. The Admiralty Court held, "There might be some variation in actual price, but of the purpose of insurance it should be presumed that value given in the policy itself shall be taken as the market value of the vessel in law". Then again, "For all legal and reasonable purpose the market value of the vessel will be determined from the value given in the insurance policy itself unless some other materials can be produced before the Court to the contrary". It then held that the market value of the vessel was "the value shown for unrepaired damage in the policy", i.e., U.S.$22,50,000. The scrap value of the vessel was U.S.$6,10,000. U.S. $20,000 is to be compulsorily deducted as per policy "at the time of assessing the compensation". So, a total sum of U.S.$6,30,000 will be deducted from the insurance as well as the market value of the vessel and thus the plaintiff's suit was decreed for U.S.$16,20,000 "with costs, but without interest". There were other subsidiary findings on other disputed matters as well, but those findings are not necessary to be noticed for the disposal of this appeal.
13. We shall now advert to the grounds on which leave has been granted and at the same time explain certain preliminary postulates relating to the policy to avoid any misunderstanding in future litigations of this nature.
14. As to the law to be followed in determining issues of marine insurance in general and the issue of unrepaired damage in particular, uptill now, there is no law on marine insurance in the statute- book in Bangladesh. Although it has been held by this Division in the case of Eagle Star Insurance Co. Ltd. v. Rahmania Trading Co., Chittagong, 28 DLR (AD) 109, that "Marine Insurance contract is governed by the general principles of contract and also the English principles. The general principles embodied in English Marine Insurance Act, 1906 are also applicable", no reason has been assigned therefor. We think that in this particular case, the English law and practice will be applied as the Institute Time Clause (Hull) attached to the policy clearly stipulates: "This Insurance is subject to Bangladesh Law and Practice and in absence of the same English law and practice".
15. Under Private International Law, the parties have the liberty to choose the law under which their contract will be governed. (See Cheshire's Private International Law, 7th Edn., pp.213-214). In respect of marine insurance in general, the Courts of Bangladesh will follow the English law and practice, because, as an American Judge, Judge Rabin, pointed out in the American (New York Supreme Court) case of Compania Maritima Astra, S.A. v. Archdalf, known as The "Armar" Case, 1954(2)
16. Lloyd's Rep. 95(101), ... In cases of marine insurance it is highly desirable that our decisions be kept in harmony with those of England, "the great field of this business".
17. It is necessary to examine the marine policy in question (Exh. 1) to understand the assumption of the Admiralty Court that unrepaired damage was insured for U.S.$22,50,000. The three relevant columns of the Schedule to the policy read as follows:--- "VESSEL M. V. "Bengal Pride"
18. SUBJECT-MATTER INSURED Hull and Materials, Engines and Machinery and everything connected therewith.
19. AMOUNT INSURED HEREUNDERU.S.$2,250,000 U.S.$1,500,000 U.S.$2,250,000"
20. Another relevant column of the Schedule entitled "Clauses, Endorsements, Special Conditions And Warranties" read in part as follows:--- "Institute Dual Valuation Clause amended (a altered to b) in second and third paragraphss"
21. And the attached Institute Dual Valuation Clause reads as follows:--- "INSTITUTE DUAL VALUATION CLAUSE:
(a) Insured value for purposes of 'Total Loss (Actual or Constructive) .. .. .. --- AS
(b) Insured value for purposes other than Total Loss --- Policy in the event of a claim for Actual or Constructive Total Loss (a) shall be taken to be the insured value and payment by the underwriters of their proportions of that amount shall be for all purposes payment of a total loss.
22. No claim for Constructive Total Loss based upon the cost of recovery and/or repair of the Vessel shall be recoverable hereunder unless such cost would exceed the insured value as in (b).
23. Unfortunately, the insured value for purposes of Total Loss and other than Total Loss have not been indicated either in the Policy or in the Dual Valuation Clause as can be clearly seen from the above, which is a serious lapse on the part of the defendant and is an illustration of callousness and negligence with which a serious business like Marine Insurance is being conducted by a statutory corporation. The defendant must realise that one of the canons of construction is that commercial instruments must be construed against the party by whom they are drafted. In Norman v. Anchor Insurance, (1858) 4CB (NS) 476, Cockburn, L.C.J. .Said, "The policy being the language of the company must, if there be any ambiguity in it, be taken most strongly against them".
24. For better or for worse, there is no ambiguity in the drafting of the policy, but only some omissions in filling up the columns, but that did not prevent Mr. Ajmalul Hossain, learned Advocate (introduced by his senior Mr. Asrarul Hossain to argue the appeal on behalf of the respondents and who argued the case most eloquently, thoroughly and persuasively for several days), from submitting that in the absence of any indication in the policy and Dual Valuation Clause, U.S.$2,250,000 in the Schedule represents the insured value for Hulls and Materials, U.S.$1,500,000 represents the insured value for Engines and Machinery and U.S.$2,250,000 represents everything connected therewith.
25. We, find that this submission militates against all canons of interpretation of a Marine Policy. The subject-matters insured are in respect of the vessel M.V. "Bengal Pride" and it does not stand to reason that in case of total loss, constructive total loss or partial loss, the indemnity will be measured only in respect of the different components of the insured vessel and not of the vessel herself. It is customary in a Marine Policy (see Analysis of Marine and other Insurance Clauses by Victor Dover, 8th Edn. H.F.&G. Witherby Ltd., London, pp.112-113 on Institute Dual Valuation Clause) to mention the lower. Insured amount for total loss of the vessel and a higher amount as insured value I for partial loss (average) purposes, because the cost of repairs often exceeds the sound value of the vessel. Mr.A.R. Yusuf, learned Advocate for the appellant, arguing briefly but to the point, rightly submits that the third amount of U.S.$2,250,000 mentioned in the Schedule is the maximum amount that the insured can recover by way of one-time repair or several repairs during the currency of the policy. The question of unrepaired damage, when the ship has not been sold in her damaged state during the risk, as in the present case, arises only after the policy terminates. It is a matter of calculation and it can never be the subject-matter of a pre-determined amount in the policy.
26. On a true construction of the Schedule to the policy, therefore, in our opinion, the first amount of U.S.$2,250,000 represents the maximum amount payable for partial loss caused to all or any of the subject-matters of the vessel insured, the second amount of U.S.$1,500,000 represents the maximum amount payable for total loss of the vessel herself and the third amount of U.S.$2,250,000 represents the maximum amount payable for repairs done during the currency of the policy. Accordingly, in the Dual Valuation Clause the insured value in (a). Is U.S.$1,500,000 and the insured value in (b) in U.S.$2,250,000. That is how both the plaintiff and the defendant understood the policy in their respective plaint, written statement and evidence and it is too late in the day to put a different interpretation to it.
27. On the Admiralty Court's basic assumption that the insured value of unrepaired damage in the policy is U.S.$22,50,000, learned advocates of both sides are unanimous that the assumption is fallacious, wrong and unwarranted, because it was neither the plaintiff's case in the plaint, nor the defendants in the written statement. We refrain from proceeding further on this issue, as we have no doubt in our mind that the Admiralty Court was thoroughly mistaken in proceeding with this assumption. This is the second ground on which leave was granted and the appellant succeeds on this ground.
28. Was the Admiralty Court required to determine whether "the insurer is liable to pay the compensation for damages for the accident of the vessel in question"? The answer is, no. A contract of marine insurance is a contract of indemnity, i.e., the amount recoverable is measured by the extent of the assured's pecuniary loss. It is never a contract of guarantee or a contract of "compensation for damages".
29. These are some of the conceptual clouds hovering over the impugned judgment of the Admiralty Court and those were needed to be cleared to put the appeal in its true perspective.
30. Mr. A.R. Yusuf contends that the Admiralty Court wrongly interpreted section 69(3) and failed to read clause 18.1 of the Institute Time Clause and wrongly treated the insured value as the market value of the vessel. He submits that the measure of indemnity in respect of an unrepaired damage is contained in section 69(3) of the (English) Marine Insurance Act, 1906 and the entire section 69 runs as follows:--- "69. Partial loss of shin.--Where a ship is damaged, but is not totally lost, the measure of indemnity, subject to any express provision in the policy, is as follows:
(1) Where the ship has been repaired, the assured is entitled to the reasonable cost of the repairs, less the customary deductions, but not exceeding the sum insured in respect of any one casualty.
(2) Where the ship has been only partially repaired, the assured is entitled to the reasonable cost of such repairs, computed as above and also to be indemnified for the reasonable depreciation, if any, arising from the unrepaired damage, provided that the aggregate amount shall not exceed the cost of repairing the whole damage, computed as above.
(3) Where the ship has not been repaired, and has not been sold in her damaged state during the risk, the assured is entitled to be indemnified for the reasonable depreciation arising from the unrepaired damage, but not exceeding the reasonable cost of repairing such damage, computed as above."
31. Mr. Yusuf next submits that the above statutory provision in section 69(3) has been modified by clause 18 of the Institute Time Clauses (Hulls) (introduced on 1-10-1983) which is as follows:--- "
18. Unrepaired damage: 18.1 The measure of indemnity in respect of claims for unrepaired damage shall be the reasonable depreciation in the market value of the vessel at the time this insurance terminates arising from such unrepaired damage, but not exceeding the reasonable cost of repairs.
32. 18.2 In no case shall the Underwriters be liable for unrepaired damage in the event of a subsequent total loss (whether or not covered under this insurance) sustained during the period covered by this insurance or any extension thereof.
33. 18.3 The Underwriters shall not be liable in respect of unrepaired damage for more than the insured value at the time this insurance terminates. "
34. Mr. Yusuf submits that since section 69(3) of the English Act is "subject to any express provision in the policy", clause 18 of the Time Clauses will prevail over section 69(3) if there is any inconsistency between them.
35. Mr. Ajmalul Hossain does not dispute the contention of Mr. Yusuf in the preceding paragraph, but he submits that the penultimate decision which the Admiralty Court arrived at does not suffer as a consequence of the preponderance of clause 18 over section 69(3), because the insured value of a vessel is still the market value, notwithstanding clause 18.1 Mr. Yusuf submits that it does, and does so because of the Admiralty Court's inability to understand the difference between the market value and the insured value of a vessel.
36. There is no dispute that subject to clause 18 of the Time Clauses section 69(3) is attracted in this case. It is agreed that M.V. Bengal Pride was not repaired and was not sold in her damaged state during the risk the policy terminated on 29-10-1986).
37. Section 69(3) came to be interpreted in Irvine V. Hine, 1950(1) L.R. 555 K.B. = 1949(2) All E.R. 1089 by Mr. Justice Delvin (Later Lord Delvin). A damaged vessel was sold for --685 under an order of the Court which was accepted as her value after the damage. She was insured for --9,000. In an action by the owner on the policy evidence was given for the underwriters that her true value before the damage was --3,000 and it was found as a fact that the cost of repair of damages could have been --4,620. The case was decided on the basis of section 69(3). Relying upon section 27(3) of the Marine Insurance Act, 1906 which provides that the value fixed by the policy is conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial, the learned Judge held that either (i) the true damaged value must be subtracted from the conventional undamaged value (--9,000---685=--8315) or (ii) the proportion of her actual depreciation must be applied to her conventional value:---- [3,000-685 [--------------------X 9,000 = --6944.99 [3000 The learned Judge refrained from making the second exercise, because in either case, the result exceeded --4,620, the reasonable cost of repairs. It was held that the assured was only entitled to recover that sum, viz. --4,620.
38. The second method of calculation was followed in some fire insurance cases, on the analogy of marine insurance. In the previously-cited American case of marine insurance, the Armar Case, the second method was followed, but the first method created dissatisfaction among the Underwriters, which can best be described in the language of J.K. Goodacre in his book 'Marine Insurance Claims', Ist Edn.,, 1974, Witherby & Co. Ltd., p.279:--- "Since the reasonable cost of repairs can be claimed for damage which has been repaired without resort to the insured value except for purposes of limiting the amount recoverable, the idea of relating unrepaired damage to the unsured value seems strangely unrealistic. It is a recognised fact that the market value of a vessel is often different from her insured value and in an extreme case like the Medina Princess (1965(1) Lloyd's Rep.961) the true value was --65,000 as compared with her insured value of --3,50,000. The disparity between these two figures is so large, that a simple deduction of the damaged value from the insured value, which was one of the alternatives propounded by Mr. Justice Delvin in Irvin v. Hine, can hardly be found to be acceptable to Underwriters whose contract is founded on the principle of indemnity. "
39. That comment was made in 1974.
40. While the English Underwriters continued to doubt the soundness of section 69(3) and its interpretation in Irvine v. Hine, the American Underwriters stole a march on their English counterparts by introducing Lines 117 to 119 in the American Institute Hull Clauses on June 2, 1977, incorporating the concept of market value and avoiding altogether the rigors of the decision in the Armar's Case. The English case of The "Star Sea", 1995(1) Lloyd's Rep.651, noticed these revised terms of American Hull Clauses.
41. We asked the learned Advocates of the parties to advise us as to why it was necessary to depart from section 69(3) and introduce clause 18 in the Time Clauses on and from 1-10-1983 and the enterprising Mr. Ajmalul Hossain produced before us a copy of 'Marine Insurance Law and Policy' by Donald O' May (1993), at page 446 of which it is stated: "Underwriters appeared to have a rooted objection to paying the full estimated cost of repairs as the measure of indemnity for unrepaired damage in a market in which the agreed or insured values were likely to' be higher than true sound values, on the grounds that the assured may recover more than an' indemnity for his loss and may never be out of pocket at all when he has no occasion to repair his vessel before relinquishing ownership of it. "
42. Further at page 448, the learned author says: "High insured values are influenced by various features, not the least of which is the high replacement cost of new tonnage, the high cost of repairs, particularly of older tonnage and the need for owners to comply with the requirements of any mortgagees of their vessels who invariably insist on the protection of insurance policies for not less than the mount of the outstanding loan.
43. The artificiality of insured value in Hull policies and need for certainty of interpretation of the Institute Clauses led to the decision to state specifically that the reasonable depreciation arising from unrepaired damage (to which the assured is entitled to be indemnified in accordance with section 69(3) of the Marine Insurance Act) is the 5ril s reasonable depreciation in the sound market value... ".
44. That is then the rationale behind introducing clause 18 in the Time Clauses. The departure from section 69(3) is intentional and deliberate and is a product of protracted negotiations and conferences including UNCTAD Conference, as detailed by Donald O 'May in his book. The effect of clause. 18 is as follows:---
(1) Section 69(3) does not state at what time the calculation of the reasonable depreciation is to be made. Clause 18.1 resolves the problem. It will be "at the time the insurance terminates."
(2) Section 69(3) does not state on-.What date the reasonable cost of repairs is to be determined.
45. Clause 18 is also silent in the matter, but Roskill, J. Says in the Medina Princess (previously cited) that the date will depend upon the nature of the damage, the type of vessel and its trading patterns and the facilities available for repairs.
(3) Section 69(3) was interpreted by Mr. Justice Devlin in Irvine v. Hine to mean that the 'reasonable depreciation' means the difference between the insured value and the damaged value, but clause 18 completely eliminated the concept of insured value and introduced the concept of market value, making the second method of calculation in Irvine v. Hine even more inapplicable.
(4) Clause 18.3 sets the highest water-mark of the insurer's liability in respect of unrepaired damage at "the insured value at the time the insurance terminates". Clause 18.1 sets the next lower water-mark at "the reasonable cost of repairs". Clause 18.1 also sets the lowest water--mark at "the reasonable depreciation in the market value of the vessel at the time the insurance terminates arising from such unrepaired damage." The assured will get the lowest of the sum thus arrived at.
46. Clause 18, however, will be applied in a single valuation policy. Where there is a Dual Valuation Clause, as in the present case, the provisions of the latter clause will apply. Read the fourth paragraph of the said clause, reproduced again as follows:--- "In no case shall Underwriters' liability in respect of a claim for unrepaired damage exceed the insured value as in (a)."
47. We have already found that the insured value in (a) of the Dual Valuation Clause is US $1,500,000.
48. That is the utmost limit of the plaintiff's claim in this suit for unrepaired damage. The Admiralty Court decreed the suit for US $16,20,000 without taking this Dual Valuation Clause limit into consideration.
49. Although Mr. Ajmalul Hossain was persistent in his submission that the market value at the time the policy terminates is the insured value at the commencement of the risk, as held by the Admiralty Court, we have no hesitation in holding that given the history of introduction of Clause 18 in the Time Clauses and language employed therein, the submission is not correct. The market value and the insured value of a vessel may be the same in some rare cases, as when a newly-built ship is insured for the first time and meets with an accident during the currency of the policy. But as the ship ages, her market value declines. The insured value will not represent her sound market value, because there are other considerations which weigh with both the insured and the insurer in putting an insured value on a vessel. The Admiralty Court is basically wrong in holding that in law or for all legal and reasonable purpose the market value of a vessel will be presumed to be the insured value, unless some materials to the contrary are produced before the Court. On the contrary, the legal position is that the market value of a vessel will not be presumed to be her insured value, except in rare cases as indicated above, and the burden of proving the sound market value of the vessel at the termination of the policy will be on the plaintiff who claims on the policy. The burden is not discharged by just proving the insured value. That disposes of the first ground on which leave has been granted and the point is decided in favour of the appellant.
50. The third ground on which leave has been granted is on the legality of the Admiralty Court's rejection of the defendant's reliance upon Exhs. 7(2) to 7(4), the telexes sent by the plaintiff's own appointed Average Adjusters Richard Hogg International estimating the sound market value of the vessel at US $5,20,940 on the expiry of the policy. Mr. Yusuf submits that all over the world, insurers and the insured rely upon the reports of Surveyors and Average Adjusters. It is simply an unacceptable rewriting of standard international practice to reject their telexes, admitted into evidence by both the parties without any objection from the other and both sides waiving formal proof thereof. In these circumstances it is illegal to reject them as not admissible or conclusive evidence, being mere opinion of so-called experts not exposed to cross-examination. Mr. Ajmalul Hossain submits on the other hand that the Admiralty Court was entitled to reject the opinion expressed in the telexes, because, first, even though the telexes are from the plaintiff's own Average Adjusters the plaintiff apparently cannot be fastened with the contracts thereof, not being the plaintiff's own previous opinion, secondly, the Average Adjusters in their telexes made factual mistakes on the date of expiry of the policy, referred to some reports of some consulting surveyors without disclosing their names and credentials and gave a damaged value of the vessel at US $5,08,130 which proved to be wrong a year later when the vessel was sold as scrap for US $6,10,000, thus rendering their figure of sound market value of the vessel at US $5,20,940 on the expiry of policy unworthy of consideration and finally, the Admiralty Court was entitled to reject the evidence of experts, as it was not binding on it. Mr. Hossain submits further that the Admiralty Court made a finding of fact that the market value of the vessel on the expiry of the policy was US $22,25,000 because it accepted the evidence of P.W.1 on this point. The defendant did not cross-examine him on his said assertion and did not lead any contrary evidence on market value. In the final analysis, he submits, what the Admiralty Court found to be the market value of he vessel was a finding of fact based on evidence and not on surmise.
51. Upon the submissions of two sides we hold that the Admiralty Court's rejection of Exhs. 7(2) to 7(4) as not admissible and as not tested by cross-examination is illegal. Both sides exhibited the same telexes without objection from either side, waiving formal proof. The plaintiff in the plaint or P.W.1 in his evidence did not challenge the contents of these telexes and therefore no case was made out by the plaintiff for cross-examination of the senders or the feeders' of these telexes, but the Admiralty Court's finding that the opinion expressed in the telexes is not conclusive and Mr. Hossain's submission that the experts' opinion is not binding on the Court are both correct. On giving reasons the Admiralty Court rejected the Average Adjuster's estimate of the sound market value of the vessel and accepted the oral evidence of P.W.I who was a claimant, not an expert) that its sound market value was U.S. $22,25,000. P. W.1 was not cross-examined on this assertion and no contrary evidence, except the opinion given in the telexes, was adduced by the defendant. It is usual in such cases to obtain an opinion of a ship-valuer, a class apart from Average Adjusters and Surveyors and we were surprised to hear from Mr. A.R. Yusuf that he had never heard of a "ship -valuer", If he has not, let him hear it for the first time from Roskill, J. In the Medina Express (previously cited) at p.385, "the plaintiffs, in support of their case, called the ship-valuer, Mr. Geoffrey Cook," Then his evidence was summarised and Roskill, J. Accepted his evidence on the sound value of the vessel. In the absence of any.Evidence of such height and stature what else the Admiralty Court could do but to accept the mere word of mouth yet unchallenged evidence of P.W.1 ? We therefore find that the Admiralty Court committed no illegality in finding, in the facts, circumstances and evidence of the present case, that the market value of the vessel on the expiry of the policy was U.S.$22,25,000. Our finding on the third ground of leave is therefore evenly distributed between the appellant and the respondent, the latter being the ultimate gainer.
52. But that does not help the plaintiff-respondent, because the fourth and last ground on which leave has been granted stands in its way of affirming the decree that it obtained in the Admiralty Court.
53. Before the consideration of the last ground Mr. Ajmalul Hossain made a last-ditch attempt to save the Admiralty Court's decree in full by, making the submission that even though the impugned judgment falls short of giving a specific finding that the vessel was an actual total loss, there are suggestive findings and observations to that effect which he read out. Mr. Yusuf on the other hand relied upon section 57 of the (English) Marine Insurance Act, 1906 which reads as follows:--- "57. Actual, total loss.---(1) Where the subject-matter insured is destroyed, or so damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived thereof, there is an actual total loss.
(2) In the case of an actual total loss no notice of abandonment need be given." and then submits that no such finding has been made by the Admiralty Court. We accept the submission of Mr. Yusuf on perusal of the portions of the judgment relied upon by Mr. Hossain. Mr. Hossain submits that if actual total loss is accepted, which this Court has the liberty to find, in spite of non-filing of a cross-appeal by the plaintiff, then the Admiralty Court's decree will stand, taking US$22,25,000 to be the market value of the vessel. That possibility is foreclosed by our finding to the impugned judgment contains no element of finding under section 57.
54. The last ground of leave was that although the plaintiff claimed from the defendant US$7,90,000 as unrepaired damage by Exh. 1(14) dated 31-1-1987, the Admiralty Court wrongly decreed the suit for US$16,20,000. The purport of this ground is that under clause 18,1 of the Time Clauses the claim cannot exceed the reasonable cost of repairs, which, according to the plaintiff's own showing, was only US$7,90,000 and therefore 'no amount exceeding that sum could have been decreed.
55. Mr. Ajmalul Hossain submits that had the defendant accepted the plaintiff's claim as made on 31-1- 1987, that would have been the end of the matter, but since the defendant refused, the plaintiff upon better advice was entitled to claim a higher amount, as it did not in paragraph 16 of the plaint, P. W.1 stated in his evidence that the cost of repair as detailed in paragraph 16 of the plaint would come to US$1.81 million after deducting the scrap value. The Admiralty Court accepted the evidence of P.W.1 in full, without however giving a specific finding on the reasonable cost of repairs, and since the reasonable depreciation of the vessel found by the Admiralty Court at US$16,20,000 was lower than the reasonable cost of repairs at US$1.81 million, there was no necessity to measure the reasonable cost of repairs, no issue was framed thereon, the defendant, too, did not urge before the Admiralty Court to make an exercise of this kind and therefore the decree cannot be frustrated by making a maiden exercise of this kind at the appellate stage.
56. As we observed before the reasonable cost of repairs is the second higher water-mark in measuring the indemnity in respect of unrepaired damage. This is a necessary and inevitable exercise, unless the parties had already arrived at a negotiated figure. The plaintiff is entitled to inflate its claim if a lower amount claimed earlier before filing the suit is rejected by the insurer. But the plaintiff has the burden of proving each and every item of this inflated claim. Again, a convenient mode of such proof is by procuring a report from an approved ship-repairer (we hope that the parties have heard of them) whose hypothetical estimates (because the vessel has not been repaired) may have to be proved in Court, if challenged. The plaintiff has only listed 22 items of repair in paragraph 16 of the plaint without any supporting report and document, except in respect of one item, and contrary to Mr. Hossain's submission, we do not find that the Admiralty Court has accepted specifically anywhere in the judgment the assertion of P.W.1 with regard to his claims under paragraph 16 of the plaint. It was necessary for the Admiralty Court to do this exercise, under Issue No.4 ("Would there be any claim for unrepaired damage? If so, when and what will be the measure of indemnity?") and since the Admiralty Court did not do so, the logical course would have been to send the matter back to the Admiralty Court to frame a specific issue on this point and retry the matter.
57. But our task has been made easier by the readiness of the appellant to consider the respondent's claim item by item in paragraph 16 of the plaint. Except a few items, the plaintiff's claim to the extent of U.S.$5,16,662, as against the plaintiff's total claim of U.S.$18,21,000, stands accepted by Mr. Yusuf, apparently under instructions from his client. Mr. Ajmalul Hossain has made elaborate submissions on the admissibility of the items now rejected by the appellant. The position, thus, including our own decision is best illustrated by the following chart:--- Claim for reasonable cost of repairs in paragraph 16 of the plaint Item.
58. No.Head of claimAmount claimed by the plaintiff in U.S.$Amount admitted by the defendant in U.S.$We allow in U.S.$
1. Towing charge from Chalna to Singapore 1,00,000 1,00,000 1,00,000
2. Cost of Rudder and Rudder Stock 98,000 98,000 98,000
3. Cost of Dry docking 1,40,000 1,40,000 1,40,000 4.Since Rudder could not be made available on the spot had to give order and consequent supply eventually would have taken time for 80 days, 15 days, 104 days @$2800 per day2,91,000 Nil Nil 5.Cost of Bunkers D.O1.5 tons P/day @ 295x142.5 L.O.
59. P/day 0900X95 days50,112 Nil 25,000
6. Chains Port Tug charges 99,758 99,758 99,758
7. Singapore expenses 15,000 Nil Nil
8. Temporary Repair at Chalna 15,000 15,000 15,000 9.Superintendent's travelling (Dhaka/ Khulna/Dhaka)350 350 350 10.Superintendent's Hotel Exp. at Khulna 300 300 300
11. Daily allow, for 10 days for Supdt. 800 800 800 12.Owner's exp. towards travelling hotel and extra 2,000 Nil 2,000 13.Agent's expn. at Chains including Commission 5,000 Nil 5,000 14.Supdt's travellingAir fair (Dhaka/S, Pore/Dhaka), 563 563 563 15.Supdt's hotel charges for 15 days 750 750 750 16.Supdt's daily allow for 15 days 1,000 1,000 1,000 17.Communication expenses 10,000 Nil 5,000 18.Boyd's Fee 10,000 10,000 10,000 19.General expenses 50,000 50,000 50,000 20.Bunkers after repairs 28,000 Nil Nil 21.Revenue loss arising out of casualty/damage leading to scrap of the vessel, informatively (sic) if there would have been no casualty/damage we would employ the vessel for next 5 years and thereby we would have earned a net revenue at the rate of US$800.00 per day, total (1825 days plus 30 days)=1905 days US$800.00 per day.15,24,000 Nil Nil 22.Lloyd's register of shipping Tk.450024,42,174 (sic)
60. Less Scrap 6,10,000 18,32,174(sic)
61. Claiming 18,21,0005,16,662 Less Policy deductible 20,000 ------------ -4,96,6625,53,662 Less Policy Deductible 20,000 5,33,662 Plus Costs at 10% 53,366 5,87,028 We have sustained the appellant's rejection of the claim on items Nos.4 and 21, because we do not think that these items are recoverable under a Marine Hull Policy. Mr. Hossain's submission that these items fall under insurance "against loss damage liability or expense in the proportions and manner hereinafter provided in the Schedule" contained in the policy is self---defeating, because the subject-matter insured is "Hull and Materials; Engines and Machinery and everything connected therewith" and, the words everything connected therewith" have to be read ejusdem generis with the preceding w g words. The waiting time for purchase of rudder and revenue loss arising out of the accident are not of the same kind as loss, damage, liability or expense connected with Hull and Materials, engines and machinery. They are more in the nature of compensation for damages than in the nature of reasonable cost of repairs, Mr. Hossain has invoked sections 73 and 124 of the Contract Act to Justify the inclusion of these two items. The remedy under those sections of the Contract Act lies in the Civil Court, if at all, not under the Admiralty jurisdiction on a Marine Hull Policy.
62. We have allowed cost of bunkers in item 5 partially, because in paragraph 20 of the written statement, the defendant acknowledges, referring to the plaintiff's claim of U.S.$7,90,Opp dated 31- 1a1987, that except for a claim of U.S.$3,3g 000 "the claim for any other allowance would not be allowed to be added with the aforesaid sums excepting crew wages and bunkers consumed during removal of the vessel from Chalna to a suitable repair port and port charge at the suitable port---. To keep the auxiliary engine of the vessel in operation for purposes of light, heat and communication with the towing vessel, bunker charges before repair are admissible, as we so find in the Medina Princess (previously cited). We, however, do not allow the full amount of a U.S.$50,112 claimed on this item, as the plaintiff has failed to furnish any back--up evidence for the same. We flow U.S.$25,000 on this item on a hypothetical balls. We, however, do not allow the plaintiff's claim in respect of item No.20, bunkers after repairs, as there is no explanation why bunkers will be needed after repairs so as to include it within reasonable cost of repairs.
63. We are not allowing the claim in respect of the item No-6, Singapore Expenses, because item No. 19 'General Expenses' is expected to cover this item.
64. We are allowing the claim in respect of items Nos. l2 and 13, because the owner, having a stake in the vessel, has to go to the port of repair to oversee the repair work and the agent's expenses and commission at Chalna are rightful expenditures in connection with repair.
65. Thus on admission by the appellant and on consideration of the submissions of both sides on the items not admitted by the appellant, we find that the gross reasonable cost of repairs comes to US$5,53,662. Deducting the policy deductible sum of US$20,000 therefrom, the not cost comes to US$5,33,662. As this amount is lower than the reasonable depreciation figure of US$16,20,000 decreed by the Admiralty Court, we hold that the decree should be modified and the plaintiff will be entitled to U.S.$5,33,662 as reasonable cost of repairs.
66. The plaintiff claimed for unrepaired damage, by letter dated 31-1-1987, but the defendant plainly refused to pay the same. It is only now that the defendant admits that the plaintiff is entitled to the reasonable cost of repairs and as such we hold that the defendant-appellant should be held responsible for costs which we assess at 10% of the reasonable cost of repairs, viz., US$53,366.
67. Mr. Asrarul Hossain winding up the respondent's case in his brief submission has prayed for awarding interest. Interest was specifically prayed for in the plaint and specifically refused by the Admiralty Court. The respondent filed no cross-appeal. Hence the prayer is rejected.
68. The appeal is allowed in part. The decree passed by the Admiralty Court for U.S.$16,20,000 is modified and the suit is decreed for an amount of U.S.$5,87,028 including cost to the plaintiff- respondent which we assess at U.S.$53,366.