CLEAR

Inherent vice does not only refer to the natural deterioration of the defective goods themselves as exemplified by above cited cases (such as decay, heating, rotten and internal combustion), but also include inadequate or bad packaging of cargo. For example, in Gee & Garnham, Ltd v Whittall,311 _{the assured bought and insured a large quantity of aluminium}

kettles which were carried in numerous consignments from Hamburg to the United Kingdom. The policies covered against all risks except for inherent vice. A proportion of the kettles were found dented and/or water-stained at discharging port. The insurers rejected liability

309 _{Supra 7, p 585} 310 _{Ibid p 570}

311 _{[1955] 2 Lloyd’s Rep. 562; see also F.W. Berk & Co., Ltd. v Style [1955] 2 Lloyd's Rep. 382 ,}

for damage owing to inherent vice in the form of inadequate method of packing. The court approved the submission of the underwriters in respect of inherent vice on the basis of a handful of scientific evidence, demonstrating the defective method of packaging and excluding bad weathers, moving of cargo and other external causes. The judge reasoned that “inadequate packing, of course, brings the case under the plea of inherent vice in the goods.” [Emphasis added]

By the same token, the American Maritime Cases included a case report concerning inherent vice, which was decided by the court of South Africa.312 _{In the absence of South African}

authority relating directly to the issues in the claim, the Judge made the decision based upon numerous English cases of persuasive authority. The assured purchased a second- hand printing machine and insured it against all risks with an exception of inherent vice. The machine was transported and shipped from Norway to South Africa. On arrival it was found that it was unpacked and extensively damaged. It turned out the proximate cause of the damage was “the movement of various parts of the machine in the containers and crate occasioned by reason of defective packing”. In answering the question whether defective package is within the meaning of inherent vice, the Judge agreed with the view of Donaldson, L.J. in Soya v White:

… I also disagree with their view that to regard the unfitness of the packing of goods as constituting inherent vice is an unjustifiable extension of the concept. The subject-matter of the insurance includes the materials in which the goods are packed. A bagged cargo is wholly different from a bulk cargo, and it would be absurd to contend that where a bagged cargo ends the voyage as a bulk cargo, the subject-matter insured has suffered no loss.

Consequently, the Judge declared that defective packing of the machine amounted to inherent vice, upon which the underwriters were not liable. Therefore, from the English judicial view in the marine insurance law, the concept of inherent vice also embraces the inadequate or defective package of the goods insured. Nonetheless, it should be noted that the Institute Cargo Clauses (A) both 1982 and 2009 versions separate the defence of insufficient packing from inherent vice in Clause 4.3 and 4.4 respectively. It indicates to the Courts that they should be treated separately and therefore that insurers could not avail themselves of inherent vice to avoid a claim where any insufficiency of packing lay outside the scope of Clause 4.3. 313

312 _{Blackshaws (PTY) Ltd. v. Constantia Ins. Co., Ltd.1984 A.M.C. 637 Sup, 1982} 313 _{Clause 4.3 of the Institute Cargo Clauses (A, B and C) reads:}

In no case shall this insurance cover loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject matter insured …

Moreover, compared with insufficient packing or coverage of goods, it may go further to the extent that the condition and method to carry the cargo, for instance, containerization, on- deck and refrigeration, may not be as seriously defective as unseaworthiness (uncargoworthiness) which constitutes an implied warranty under cargo policies in accordance with s 40(2) in the Act, but is remarkably inappropriate so as to facilitate the effect of its natural defects. Often, the underwriters may allege it is the manner of transportation that leads proximately to the result of loss or damage for which they should not be liable, as it is suggested that

What the underwriter in a policy of this sort insures against is the physical happening. He is not insuring against the risk of a shipper miscalculating the degree of safety which he should exact in the goods, or the degree of their adaptability to the adventure on which he is embarking them, still less would he be insuring the shipper against a conscious shipment of goods which were unfit.314

From the perspective of construction of intention of underwriters, there may be a sound reason for explaining their unwillingness to cover certain types of incidents or risks. So far as causation is concerned, the underwriters are required to identify an uninsured or excepted peril and establish its proximate causal link to the loss in order to discharge their indemnity liability. Thus, in the case of the inappropriate methods of transport of certain types of cargo, the prevailing view of English courts seems to recognise the peril as inherent vice unless there is intervention of fortuitous external causes such as perils of sea, and without reference to the assured’s fault or negligence. It is worth mentioning in particular that Donaldson LJ in the Court of Appeal of Soya v White distinguished the condition in which the cargo has been carried as an external cause from inherent vice. This conclusion was not affirmed when the case came to the House of Lords. In contrast, the case was eventually considered as a leading authority of the loss caused by inherent vice. The current position in the law of marine insurance in respect of an improper choice of manner of transport is not regarded as a prevailing external cause over the efficiency of inherent vice. This view leads to a result which is essentially in line with the underwriters’ intention not to insure against the loss purely arising from what the cargo is in essence.