In the case of (1) Sealion Shipping Limited (2) Toisa Horizon Inc v Valiant Insurance Co  EWHC 50 (Comm), Mr Justice Blair held that a marine insurer could not avoid liability for machinery breakdown under a loss of hire policy.
The claimants sought an indemnity under the policy following a propulsion motor breakdown, after which the vessel was placed offhire.
The defendant contended that it was entitled to avoid the policy for material non-disclosure, because the claimants had disclosed only one of two hull claims, and had also failed to disclose that the vessel had experienced approximately 10 days offhire in 2004. Regarding the hull claims, the defendant argued that if one hull claim had been disclosed, then so too should the other. Blair J agreed that disclosure of both hull claims would have been good broking practice. However, he held that non-disclosure of a hull claim did not make it material, if it would not otherwise have been material. If the hull claims were immaterial they remained immaterial even if one was mentioned and one was not. In relation to the undisclosed loss of hire, Blair J held that 10 days loss of hire experienced in 2004 was not material when compared to a 21 day excess under the relevant 2008 policy. He noted further that 10 days was not a particularly long period, that the offhire period was nearly four years previous to the placing of the policy and that it had not resulted in a claim.
In the alternative, the defendant attempted to rely on a policy defence. By a so-called "Inchmaree" clause in the policy, the defendant agreed to undertake the risk of machinery breakdown, provided that any loss or damage had not resulted from the claimants' "want of due diligence". The claimants contended that the standard of care required was recklessness. However, in a useful clarification of the law, Blair J held that the defendant insurer only needed to prove negligence, and that "want of due diligence" meant a lack of reasonable care. On the facts, Blair J held that the failures on the part of the claimants alleged by the defendant did not amount to negligence.
This case demonstrates that even where the court considers that making a particular disclosure would have been good broking practice, the court will not necessarily hold that non-disclosure to be material.