NEW ZEALAND MARITIME LAW

Womersley v Peacock

IN THE HIGH COURT OF NEW ZEALAND
CP 24/98
CHRISTCHURCH REGISTRY

BETWEEN
CHRISTOPHER PETER WOMERSLEY
Plaintiff

AND
MURRAY PEACOCK
First Defendant

AND
MARINE & INDUSTRIAL SAFETY INSPECTION SERVICES LIMITED
Second Defendant

AND
INSURANCE (IMC) MANAGEMENT CENTRE LIMITED
Third Defendant

AND
FAI (NZ) GENERAL INSURANCE COMPANY LIMITED
Third Party

Hearing: 5 - 9 July 1999

Counsel: P M James and D Lester for the Plaintiff
G M Brodie and A K Dunbar for the First & Third Defendants
P M Fee and M A E Sullivan for the Second Defendant
P R Rzepecky for the Third Party

Judgment: 8 September 1999

JUDGMENT OF PANCKHURST J

Solicitors: Saunders & Co, Christchurch, for the Plaintiff
Anthony Harper, Christchurch, for the First and Third Plaintiffs
Jones Fee, Auckland, for the Second Defendant
McElroys, Auckland, for the Third Party

Introduction:

1. The "Mataitai" is a 14 metre aluminium fishing boat. She was purchased by Mr Womersley in Perth, Australia in March 1995. His intention was to use her as a mussel farm work boat in the Marlborough Sounds. Certain modifications were made to the vessel for that purpose. In September 1995 the "Mataitai" commenced work at Mr Womersley's mussel farm in Picnic Bay. She also undertook contract work for other farmers. The skipper was Jonathon Campbell who held a commercial launch-master's qualification.

2. On the morning of Sunday 8 October Mr Campbell agreed to transport about twelve tonnes of mussels from Squally Cove to Okiwi Bay for another farmer. The mussels were in new one tonne bags, about 1 metre square and 1.7 metres in height. The weather was ideal. Nevertheless at the entrance to Okiwi Bay the "Mataitai" encountered difficulties. The mussel bags on deck were unstable, commenced to lean, and produced a serious list. The skipper and his one crew member attempted to right matters but within a very short period the vessel capsized and was left floating hull uppermost.

3. The "Mataitai" was insured. Mr Womersley arranged cover through the first defendant, Mr Peacock, an insurance broker who traded through his company Insurance (IMC) Management Centre Limited ("IMC"). The policy was with FAI (NZ) General Insurance Company Limited ("FAI"). Liability under the policy was denied in part because the "Mataitai" was not in survey at the time of the accident. Marine and Industrial Safety Inspection Services Limited ("M & I") had been retained by Mr Womersley to complete the survey, but aspects of the work remained outstanding at the date of the accident.

4. In February 1996 Mr Womersley accepted an ex gratia payment of $55,000 from FAI. He considers that to reinstate the "Mataitai" will cost a further $127,000. Mr Womersley also considers he lost income over the period the vessel was out of service. In this proceeding he seeks to recover a total of about $210,000 plus general damages of $25,000. In broad terms it is alleged that Mr Peacock arranged inadequate insurance cover and M & I failed in relation to their survey obligations. Mr Peacock issued a third party claim against FAI. He alleges that the cover effected under the particular marine policy was misrepresented to him.

Background Facts:

5. Mr Womersley paid $A125,000 for the then "Miss Tootsie Babe", a cray fishing boat. Both the purchase price and the cost of modifications was borrowed. Mr Womersley and his wife operate a ski hire business in Methven. They owned a family home at Hobbs Road, Methven and two further investment properties in the town. They owned a further property in Strowan Road, Christchurch and the mussel farm at Picnic Bay. These assets were used as security to borrow from the bank to purchase and refit the "Mataitai". Modifications to the vessel cost about $91,000. Prior to the refit the vessel was valued at $195,000, subject to survey and being made ready for sea. After the refit the value of the "Mataitai" was $270,000.

6. With reference to insurance for the 'Mataitai" Mr Womersley sought advice from Mr Peacock in arranging transit cover for the vessel's transportation from Perth to Wellington, cover for the trip by sea to Nelson and cover during the refit. The refit included installation of an auxiliary motor and hydraulic system, three davits to the port side, a small crane and improvements to the crew facilities. Thereafter an annual marine policy was required. Mr Peacock was likewise retained with reference to that.

7. During July and August Mr Womersley and Mr Peacock were in contact concerning the annual cover. By letter dated 4 August 1995 Mr Peacock advised that he had received two quotations based on a sum insured of $268,000. One was $6,700, while the second quotation from FAI was $3,172. Mr Peacock commented: "The FAI cover is the same as that provided by MMI and we could see no impediment not to proceed with this quotation. The policy covers the hull, fixtures, fittings and machinery and anything attaching to it." The quotations were obtained with reference to Institute of London Underwriters (ILU) clauses. Mr Peacock sought "Institute fishing vessel clauses", but FAI quoted on the basis of ILU yacht clauses, with certain deletions because the "Mataitai" was a work boat rather than a fishing vessel. Mr Womersley was unaware that the prospective insurers quoted with reference to different ILU clauses. Indeed, although a careful man with reference to his business affairs, including insurances, Mr Womersley was not familiar with marine insurance terminology. He looked to Mr Peacock to obtain comprehensive cover suitable for the "Mataitai's" intended use as a mussel farm work boat. Cover was effected with FAI from 2 August 1995. Subsequently FAI noted the change in the vessel's name and the interest of the National Bank, which had provided finance.

8. Mr Womersley visited the. Nelson office of M & I with reference to survey aspects. He dealt with Mr Terry Reynolds, an experienced ship surveyor who had formerly worked for the Marine Division of the Ministry of Transport. Broadly there were three aspects to be considered: plan approval for the modifications, the production of a stability book, and the obtaining of a survey certificate. The former was referred to M & I's Wellington office. Mr Reynolds recommended Mr John Harrhy, a Nelson marine architect, to undertake the stability work. That left M & I's Nelson office responsible for the final element, a survey certificate.

9. On 29 August Mr Harrhy conducted stability tests on the "Mataitai". The skipper, Mr Campbell, and Mr Womersley were present. This involved analysis of the hull characteristics of the vessel and calculation of its stability given the weight and positioning of fuel and equipment on board. Thereby the load capacity of the "Mataitai" could be established. In general terms the load a vessel can carry is dependent not only upon weight, but upon its position on the vessel. A load above deck, particularly a high load, has greater stability implications than a load at a lower level. On the day of the tests Mr Harrhy issued an interim stability certificate, which authorised the "Mataitai" to operate for a period of two months pending the issue of a full stability booklet. The certificate was expressed to be "subject to a maximum mussel load of 3 tonnes in the hopper and 3 tonnes on the deck". This was a preliminary and conservative assessment, since when after the capsize Mr Harrhy completed the stability booklet he certified that the "Mataitai" could carry a maximum mussel load of 9.5 tonnes provided the hopper was empty, the mussels were in 500 kg bags not more than one metre high, and the bags were stowed on the aft deck.

10. Approval for the modifications was forthcoming and the work was nearing completion by the end of August. A final safety inspection was arranged for Friday, 1 September. Mr Womersley discussed this with Mr Bob Browne of M & I, Nelson. Mr Browne was in the process of obtaining practical experience to complement his qualifications in order to qualify as a ship surveyor. At the relevant time he worked under the supervision of Mr Reynolds. When he went on board the "Mataitai" at the wharf Mr Browne found there were still men working on her and, as he put it, "there were wires everywhere". Nevertheless he was satisfied that the bulk of the requirements for the issue of at least an interim survey certificate were met. He noted however, that it remained for him to test the fire pump, sight the radio certificate, test the anchor and emergency steering, and hear the engine running. It was common ground that each requirement was able to be satisfied, in that the requisite equipment was present and functional. The only difficulty was in testing the various items when workmen involved with the modifications were still on board, and there was no convenient source of power to conduct the tests. It being towards the end of the ski season, Mr Womersley was occupied in Methven. Nor was the skipper on board the "Mataitai" at the time of Mr Browne's visit.

11. The following Wednesday, 6 September, the "Mataitai" left Nelson for the Marlborough Sounds. Mr Womersley was on board. Over the next month she was in work, mainly laying and preparing mussel lines and seeding them. This work was both at Mr Womersley's farm and on a contract basis for other mussel farmers. Mr Womersley journeyed from Methven to deal first hand with routine teething problems the "Mataitai" experienced. On 22 September he telephoned Mr Browne in Nelson because he "had not heard about the safety check". Moreover, Mr Womersley was aware that neither an interim nor a final survey certificate had been issued when the "Mataitai" sailed on 6 September. He understood following the discussion with Mr Browne that the outstanding issues were minor and could be attended to when "marking and carving" of the "Mataitai" for registration purposes was completed.

12. Matters had not advanced by Sunday 8 October, the date of the capsize. That morning the skipper Mr Campbell had another commercial launchmaster as his crew. They departed Okiwi Bay and initially worked at Mr Womersley's farm. At about 10 am they received a radio call to go to a mussel barge and assist in the transportation of a tonnage of mussels. This had been discussed with the farmer concerned on the previous Friday. Mr Womersley was unaware that his vessel was to be used for transporting mussels. He contemplated it would only be used for laying lines and general maintenance work. Twelve one tonne mussel bags were transferred from the mussel barge onto the "Mataitai". The mussels had been freshly harvested. The bags were new and wet. Six were positioned on the stern deck in two rows of three bags. Three further bags were positioned towards the bow just forward of the wheelhouse, and the final three in the vicinity of the wheelhouse. After loading Mr Campbell checked the loadlines and. noted that the starboard loadline was "just visible" while the loadline on the port side was "well clear of the water". It follows that the vessel had a list. However, the skipper considered that "at no stage did the boat feel tender (or) give any cause for concern".

13. The "Mataitai" headed for Okiwi Bay about 20 minutes away. At the entrance to Okiwi Bay it encountered what Mr Campbell described as a "ground swell coming towards us from the north west". He decided to correct the list before continuing. The port davits were connected to three of the bags which were positioned to the starboard side or on about the centre line. The tops of these bags were pulled across so that each leaned to the port side. Tension from the davits was maintained. The list was corrected and the "Mataitai" was turned to head into the wharf at Okiwi Bay. But, a wave caught the stern, the vessel rolled to the port side, one of the bags under tension moved, and the "Mataitai" resumed a significant list to port. It worsened with the wave action and as much of the mussel cargo commenced to move to the port side. In a desperate attempt to right matters the skipper and his crewmen cut the tops of some of the bags in an endeavour to jettison mussels, but it was too late. The list increased and within about a minute the "Mataitai" had rolled 180 degrees. The crew escaped onto the keel and noticed that the engine continued to function for a time despite being submerged. A short time later the "Mataitai" was towed into safer waters and an attempt made to right it. This was unsuccessful and the vessel sank in about five metres of water.

14. With regard to his decision to load the "Mataitai" with twelve tonnes of mussels, Mr Campbell explained that it was his understanding Mr Harrhy had indicated on the day of the stability test the vessel would be able to carry a load of this order. Hence, although the skipper knew the load considerably exceeded the maximum prescribed in the interim stability certificate, he anticipated the stability booklet would support a load of the order of twelve tonnes. Mr Harrhy however, had no such understanding with regard to the discussion on 29 August.

15. A number of qualified persons gave opinion evidence concerning the cause of the capsize. There was no material difference between them. The weight of the load was not so much the determinative factor, as its height. The use of 1.7 metre high bags, designed for use on mussel barges, meant that not only was the load a heavy one, but it was stowed high above deck level. Thereby stability was compromised and the other factors described by Mr Campell in evidence conspired to cause the capsize.

16. The "Mataitai" was refloated and towed to Nelson. FAI appointed an experienced marine assessor, Mr Rutherford of Blenheim. On investigation he soon concluded that the capsize was due to the negligence of the skipper which he assumed was covered under the policy. That a survey certificate had not been issued by M & I was recognised. In addition to the safety tests which Mr Browne was unable to conduct on 1 September, Mr Reynolds also explained there were deficiencies in the paperwork in that he did not have on file a copy of the plan approval for the modifications, nor of the interim stability certificate. In fact, both were in existence before 1 September, but due to a breakdown in communication and the absence of any demand for them, the documents did not find their way to M & I's office.

17. In these circumstances, on 12 October, Mr Reynolds provided a letter addressed To whom it may concern, in these terms:

"We believe that the intent of the Chris Womersley (owner of the above vessel) was to follow all of the correct criteria required to put a vessel of this sort into survey, this had been completed up to about 98% with only one or two minor safety issues remained to be tested.

M & I Ltd were waiting for some necessary paperwork to come through before an interim could be issued, the owner was under the impression that we had already received these from the other parties concemed, so had not forwarded them himself.

An interim could not be issued until we had received this outstanding paperwork, not through any problems with the vessel. This paperwork has now been sighted and found to be in order."

No doubt this document was intended for use in relation to any insurance claim.

18. Mr Womersley arranged a quotation for the repair of the "Mataitai". It was $184,047, inclusive of GST. He arranged for sufficient work to be undertaken to prevent further deterioration to the vessel. However, its reinstatement was dependent upon acceptance of liability by FAI. This was not forthcoming. By letter dated 23 November FAI's solicitors advised that as the "Mataitai" was not in survey at the time of the accident it was operated illegally. Therefore insurance cover was not available, whether by virtue of an express warranty in the policy that the insured would comply with requirements of the Ministry of Transport and Marine Safety Authority, or an implied promissory warranty pursuant to s42 of the Marine Insurance Act 1908 as to lawful operation. Moreover, the letter continued, s11 of the Insurance Law Reform Act 1977 did not avail the insured, since there was New Zealand authority to the effect that s42 of the Marine Insurance Act was unaffected by s11.

19. An exchange of correspondence ensued between Auckland solicitors acting for FAI and Nelson solicitors engaged by Mr Womersley. In the result on 7 February 1996 an ex gratia payment of $55,000 was made in final settlement. Mr Womersley, on 8 February, signed a discharge agreement which included the recital that "FAl has no liability to me under its policy...". The money was applied towards essential repairs to the "Mataitai". But of course it was not enough. Mr Womersley's financial position was precarious. Income from the ski hire business was seasonal. A considerable sum had been borrowed to purchase and modify the "Mataitai". To service that commitment of about $2,000 per month Mr Womersley was dependent upon contract income from the vessel. Ongoing financial accommodation from the bank was seriously in issue.

20. Mr and Mrs Womersley decided that their only option was to sell certain of their assets. First to go was the family home at Methven. It was sold in April 1996 for $225,000. The Womersley family, parents and two sons, moved into a lesser property at Methven which previously was used as accommodation for ski hire staff over the winter months. Inevitably the bank had first access to the sale proceeds. Mr Womersley was left with insufficient to reinstate the "Mataitai". Matters did not improve. Next a decision was taken to sell the Strowan Road property in Christchurch, which was intended as a family home for when the boys undertook their secondary education in the city. It was sold in December 1996 for about $250,000, with settlement in January 1997. These funds enabled the reinstatement of the "Mataitai" to proceed in earnest. However, funds ran out before all of the work was completed. Moreover, by the time the "Mataitai" was back in service in early 1997 Mr Womersley could not obtain mussel seeding equipment to replace that which had previously been available to him on lease. Hence the work capacity of the "Mataitai" continued to be affected.

21. The damages claim has several facets. Most significant is the cost of repair and salvage, $184,047. The ex gratia sum from FAI was set off against this figure. There is also a claim for $26,403 on account of sale expenses incurred in relation to the Methven and Christchurch properties and early termination payments incurred in relation to mortgage borrowings. Next is a claim for lost income of $42,961. This represents income from contract work which Mr Womersley considers was lost during the enforced lay up of the "Mataitai" throughout 1996 and until the vessel was back in service early the following year. There is also a claim for $14,008 for the hire of other contractors to undertake work on Mr Womersley's mussel farm during the lay off period. Lastly there is a general damages claim of $25,000. The sale of the family's long-standing home, Mrs Womersley's enforced return to teaching at a distance from the family, and financial stress and anxiety are the basis of this claim. In a number of respects the damages claim is challenged.

The Respective Allegations:

22. The first claim is against Mr Peacock and his company for a failure to obtain comprehensive insurance cover for the "Mataitai". Mr Womersley gave evidence that the ex gratia payment from FAI was accepted, not out of a concern that the absence of a survey certificate relieved the insurer of liability, but because the policy negotiated by Mr Peacock contained an exclusion with reference to the cost of repairs to the vessel's engine, mechanical and electrical systems if negligence of the crew caused the loss. In short he alleged the policy did not provide comprehensive cover for a working boat. In the result three causes of action were raised against Mr Peacock and his company IMC. These were that the broker was in breach of contract in failing to obtain adequate insurance cover, guilty of a misrepresentation in terms of the Fair Trading Act 1986 by saying that cover under the FAI policy was the same as that available from its competitor, and lastly that these same failings constituted a breach of a tortious duty of care.

23. Against M & I Mr Womersley relied upon a single cause of action: that the surveyors owed him a duty of care "to advise (him) as to whether the requisite inspections to allow the "Mataitai" to legally operate as a survey vessel had been carried out", that such duty was breached by a failure to advise "that the requisite safety inspection had not been completed" and that, if the absence of the certificate of survey avoided the policy, M & I was responsible for Mr Womersley's losses.

24. The third party claim by Mr Peacock and IMC against FAI asserted three causes of action: that an officer of FAI made a negligent misstatement in asserting that ILU yacht and fishing vessel clauses were of similar effect, that the same assertion was actionable in terms of the Fair Trading Act, and alternatively that if the ex gratia settlement between Mr Womersley and FAI was misconceived on the insured's part, Mr Peacock and IMC could obtain relief "by subrogation", or as a party entitled to relief "through or under" Mr Womersley pursuant to s7(1) of the Contractual Mistakes Act 1977.

25. A raft of defences were raised by the various defendants and the third party. In essence Mr Peacock alleged that Mr Womersley was the author of his own misfortune in that FAI was entitled to avoid the policy for the lack of a certificate of survey or on account of the skipper's failure to exercise due diligence. But counsel for these defendants also argued that the loss was covered under the policy, specifically under the "perils of the sea" clause, and hence that the cover effected by Mr Peacock was indeed comprehensive. This meant that any losses arose from acceptance of the ex gratia payment in settlement, when in reality the policy was adequate.

26. The surveyors M & I denied the existence of a duty of care as alleged, alternatively denied any breach, or that a breach if proved occasioned loss. Further, if Mr Womersley's claim against the surveyors was established, contributory negligence was asserted and a limitation of liability in the survey contract relied upon.

27. FAI denied that in the circumstances of this case it owed Mr Peacock, an experienced broker, obligations of the kind asserted, and further, denied that any misrepresentation was made during negotiation of the marine policy. It contended the case was a plain one where cover was not available because the "Mataitai" was not in survey and was therefore operated illegally.

28. As the case unfolded it became increasingly apparent that two issues were of first importance, namely:

(a) whether the loss was covered by the "perils of the sea" clause in the policy, and

(b) if so, whether nevertheless Mr Womersley lost the benefit of the policy for breach of an express warranty to comply with statutory requirements or for breach of s42 of the Marine Insurance Act 1908; or alternatively whether s11 of the Insurance Law Reform Act disentitled FAI to decline liability.

The resolution of these questions may render certain of the claims and cross claims between the parties more theoretical than real.

Was the Loss Within the "perils of the sea" Clause?

29. The policy itself was not signed and issued by FAI until 6 November 1995, almost a month after the accident. However, nothing turned on that circumstance since the period of insurance was from 2 August 1995 for an initial period of twelve months. Moreover, the terms of cover were agreed and defined by reference to ILU clauses from inception. The subject-matter of the policy and the risk were defined in these terms:

"VESSEL

Vessel means the hull, machinery, boat(s), gear and equipment, such as would normally be sold with her if she changed hands."

"PERILS

Subject always to the exclusions in this insurance

9.1 this insurance covers loss or damage to the subject-matter insured caused by

9.1.1 perils of the seas rivers lakes or other navigable waters

9.1.2 fire

9.1.3 jettison

9.1.4 piracy

9.1.5 contact with dock or harbour equipment or installation, land conveyance, aircraft or objects falling therefrom

9.1.6 earthquake volcanic eruption or lightning

9.2 and, provided such loss or damage has not resulted from want of due diligence by the Assured Owners or Managers, this insurance covers

9.2.1 loss of or damage to the subject-matter insured caused by

9.2.1.1 accidents in loading, discharging or moving stores, gear, equipment, machinery or fuel

9.2.1.2 explosions

9.2.1.3 malicious acts

9.2.1.4 theft of the entire Vessel or her boat(s), or outboard motor(s) provided it is securely locked to the Vessel or her boat(s) by an anti-theft device in addition to its normal method of attachment, or, following upon forcible entry into the Vessel or place of storage or repair, theft of machinery including outboard motor(s), gear or equipment

9.2.2 loss of or damage to the subject-matter insured excepting motor and connections (but not strut shaft or propeller) electrical equipment and batteries and connections, caused by

9.2.2.1 latent defects in hull or machinery, breakage of shafts or bursting of boilers (excluding the cost and expense of replacing or repairing the defective part broken shaft or burst boiler)

9.2.2.2 the negligence of any person whatsoever, but excluding the cost of making good any defect resulting from either negligence or breach of contract in respect of any repair or alteration work carried out for the account of the Assured andlor the Owners or in respect of the maintenance of the Vessel."

It was common ground that clause 9.1 was a "perils of the seas" clause and clause 9.2 an "Inchmaree" clause: Temms & Mersey Marine Insurance v Hamilton Fraser & Co (the "Inchmaree") (1887) 12 ASC 484 (HL). As to the interpretation of, and relationship between, the two there was anything but agreement. Before I turn to the respective arguments, I note s55 to the Marine Insurance Act 1908 and rule 7 of the Second Schedule to the Act which contains "Rules for the Construction of Policies". Section 55 relevantly provides:

"Included and excluded losses - (1) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against; but, subject as aforesaid, he is not liable for any loss not proximately caused by a peril insured against.

(2) In particular-

(a) The insurer is not liable for any loss attributable to the wilful misconduct of the assured; but, unless the policy otherwise provides, he is liable for any loss proximately caused by a petil insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew.

(b) ...

(c) Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject-maffer insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils.

And rule 7:

"7. The term 'perils of the seas' refers only to fortuitous accidents or casualties of the seas. It does not include the ordinary action of the winds and waves."

Cases abound throughout the common law world in which "perils of the seas" clauses have fallen for interpretation in various factual situations.

30. Mr Brodie, for Mr Peacock and IMC, contended that the capsize of the "Mataitai" was due to a peril of the sea. He stressed that there were two aspects: a peril and that it was of the sea. Put another way, there must be both an event or accident, coupled with the intervention or action of the sea which produced the loss. On the other hand Mr James for the plaintiff, argued that the capsize was not within the terms of the clause. He stressed that the dominant and proximate cause of the mishap was the action of the skipper in so loading the "Mataitai" that she was top heavy and unstable. Counsel continued that "if there is nothing unusual about the sea or weather conditions that causes the loss then it cannot be a case of peril of the sea ...". This submission was made subject to the exception that where a vessel was in calm seas, but through negligent navigation was put onto rocks and sank, such would be within the clause. Later in submissions the matter was put in these terms: "no peril of the sea intervened between the negligent loading and the capsize. Therefore the negligent loading remained the proximate cause of the loss".

31. I doubt that it would be helpful to cite from numerous authorities. Many of the cases relate to the loss of sailing vessels and were decided a good time ago. All were ultimately decided on their particular facts. The commentary in Arnould's Law of Maritime Insurance and Average, vol 2, 16th ed, at para 791-8 provides, I think, a comprehensive general summary of the law. From it I derive some statements of general principle:

(a) the term "perils of the seas" does not cover every accident or casualty which may happen to a vessel on the sea,

(b) there must be something fortuitous and unexpected, in the nature of a mishap or accident; coupled with the effects of the sea itself,

(c) extreme, even unusual, weather or sea conditions are not required,

(d) where there has been a deliberate act (for example the scuttling of a vessel by its crew), there is no fortuitous event or accident, albeit that the incursion of sea water caused the vessel to sink,

(e) where the loss is due to unseaworthiness occasioned by normal wear and tear, as opposed to some fortuitous and unexpected event, there is no peril in terms of the clause, and

(f) whether the loss or damage was caused by a peril of the seas is a question of fact to be decided upon a broad common sense view of the whole situation.

With these principles in mind I am in no doubt that the capsize of the "Mataitai" was within the perils of the seas clause. The skipper was undoubtedly guilty of a serious error of judgment. He loaded the vessel with such quantity of cargo, and so distributed, as to make the vessel unstable. His actions were not deliberate. Obviously the mishap occurred at sea and was, in my view, of the sea. Although the conditions were calm, it is a peril of the sea that a vessel which is unstable through its loading, may capsize. Such happened here. As a matter of common sense I consider this was an accident of the very kind covered by a perils of the seas clause.

32. An observation made in the British Columbia Court of Appeal in Case Existological Laboratories Ltd v Foremost Insurance Co (1982) 133 DLR (3d) 727 by Lambert J at 735 is apposite:

"An act is not negligent in itself but only in relation to a foreseeable risk of harm. ff that foreseeable risk of harm is a peculiarly marine risk, then the act, coupled. with its foreseeable consequence, is a fortuitous accident of the seas and a peril of the seas and a proximate cause of the loss."

The passage was approved by the Supreme Court of Canada, in upholding the decision below. Applying it to the facts of the present case, the negligent act was that of overloading which caused instability. The foreseeable risk was that the "Mataitai" might capsize. Such risk was peculiarly a marine risk and therefore "of the seas".

33. It follows that, in my view, the loss suffered by Mr Womersley was covered under the FAI policy, subject to the question whether cover was lost on account of the "Mataitai" going to sea when not in survey. Significantly this was not the view of Mr Womersley's then advisors when the ex gratia payment was accepted in settlement of the claim. Apparently they considered cover was only available in terms of clause 9.2 of the policy, the "Inchmaree" clause, and moreover that such cover was inadequate because a "machinery extension" term was not included in the policy. Mr James adhered to this approach. As noted above he argued that the capsize was not due to a peril of the sea and therefore clause 9.1 did not apply. He pointed out that Mr Peacock's obligation was to secure comprehensive cover suitable for a work boat. He drew attention to clause 9.2.2 whereby cover was extended to loss or damage caused by "the negligence of any person whatsoever" (9.2.2.2), but this extension was subject to the exception in clause 9.2.2 itself, namely that the motor and connections and electrical equipment were excluded. Hence, the policy was deficient in the absence of a machinery extension clause which would have reversed the offending exception to clause 9.2.2. It followed that Mr Peacock had failed in his obligation to obtain comprehensive cover for a working boat. An obvious risk, loss by negligence, was inadequately insured against.

34. Mr Brodie did not seek to refute these propositions, save for the fundamental submission that clause 9.2 was irrelevant in this case. He characterised it as an "Inchmaree" clause which extended the cover effected under clause 9.1 to the various further defined risks. However, if clause 9.1 covered the loss, resort to clause 9.2 was simply unnecessary. Such was the case here because the loss was a peril of the sea. Accordingly even if it was accepted Mr Peacock should have obtained a machinery extension clause with reference to the negligence cover effected by clause 9.2.2, such failure was in the event irrelevant. I agree with this analysis. My earlier finding that clause 9.1 covered the loss rendered any inadequacy in relation to the "Inchmaree" clause of no moment.

Breach of Warranty?:

35. The FAI policy contains an express warranty, the relevant part of which provided:

"Warranted that the Assured will comply at a# times with all Acts, Regulations, Rules, Orders, Notices to Mariners and any other requirements issued and/or notified and/or administered by the MOT, Maritime Safety Authofity or any other Govemment or Local Body Agency relating to the construction, sea-worthiness, surveying, outfitting, manning, use, operation or navigation of the vessel"

Further, the Marine Insurance Act 1908 effects an implied warranty in relation to marine insurance contracts:

"s42. Warranty of Legality - There is an implied warranty that the adventure insured is a lawful one, and that, so far as the assured can control the matter, the adventure shall be carried out in a lawful manner."

For completeness I note that s36(3) of the same Act provides that the existence of an express warranty does not exclude an implied warranty, unless there is inconsistency.

36. As at 8 October 1995 the "Mataitai" required a certificate of survey pursuant to s144(2) of the Maritime Transport Act 1994. The specific obligation was not to "proceed on any voyage" unless a certificate was in force. Any breach of that obligation rendered both the owner and the master liable to prosecution s144(5). Further, s150 required that the certificate of survey "together with any documents forming part of the certificate, ... be posted up in a prominent and accessible place on board the ship, and ... be kept so displayed while the certificate remains in force"; with failure to constitute an offence by both the owner and the master: s151.

37. The "Mataitai" was not in survey when it left Nelson on 6 September 1995. A certificate had not been issued by 8 October. It was common ground that its operation on that day was in breach of the relevant survey requirements. Assuming s42 of the Marine Insurance Act is relevant, whilst the "adventure" in which the "Mataitai" was involved was lawful, the manner in which it was carried out was not.

38. Counsel for both Mr Womersley and for M & I argued there was no breach of either warranty, or if there was, s11 of the Insurance Law Reform Act 1977 applied because the absence of a certificate did not cause or contribute to the loss. With reference to the illegality point two Australian cases were cited. In Ocean Trawling & Anor v Fire & All Risks Insurance Co Ltd [1965] WAR 65 at 69 Hale J made the observation:

"Now no doubt the defendant (the insurer) could not escape liability if there had been a satisfactory survey and the formal certificate had not issued only because of departmental delay..."

But this comment was clearly obiter, since the case was one where a satisfactory survey had not been completed and hence administrative delay was not the gist of the case. Reliance was also placed upon the decision of the Full Court of the Supreme Court of Western Australia in Norwest Refrigeration Services v Bain Dawes Pty Ltd & Anor (1983) 2 ANZ Insurance Cases 77, 877. There the issue was whether a fisherman's co-operative had adequately assisted a member with reference to the member's insurance requirements for a fishing vessel. The vessel had fished while not in survey, but the loss occurred subsequently while the vessel was awaiting repairs. Wickham J made certain observations concerning whether the evidence justified the inference that the insured intended to operate the vessel in breach of an implied warranty of legality, similar to s42 of the New Zealand Marine Insurance Act. I have considered these observations, but do not find them of assistance. Further, I consider the two cases of limited help since the facts of this case are distinguishable and the Australian equivalent to our s11 of the Insurance Law Reform Act does not apply to marine insurance policies. The latter is, I think, a significant difference which colours, and affects, any value the cases might otherwise have. In my view the "Mataitai" was at the relevant time operated illegally. The real question is whether the illegality, the absence of a certificate of survey, caused or contributed to the capsize.

39. Section 11 of the Insurance Law Reform Act 1977 provides:

"11. Certain exclusions forbidden - Where -

(a) By the provisions of a contract of insurance the circumstances in which the insurer is bound to indemnify the insured against loss are so defined as to exclude or limit the liability of the insurer to indemnify the insured on the happening of certain events or on the existence of certain circumstances, and

(b) In the view of the Court or arbitrator determining the claim of the insured the liability of the insurer has been so defined because the happening of such events or the existence of such circumstances was in the view of the insurer likely to increase the tisk of such loss occurring, -

the insured shall not be disentitled to be indemnified by the insurer by reason only of such provisions of the contract of insurance if the insured proves on the balance of probability that the loss in respect of which the insured seeks to be indemnified was not caused or contributed to by the happening of such events or the existence of such circumstances."

For completeness I note that s14 provides that nothing in the Marine Insurance Act 1908 shall override s11.

40. Two issues arise. The first is a factual one, whether Mr Womersley can prove on balance that the capsize of the "Mataitai" was not caused or contributed to by events or circumstances which are the subject of the exclusion. In short, has the plaintiff established that the failure to obtain and display a certificate of survey did not cause or contribute to the capsize of the vessel. Second, does the warranty implied by s42 of the Marine Insurance Act apply where there is a specific express warranty and, if so, can validation pursuant to s11 occur with reference to the statutorily implied warranty? In Harbour Inn Seafoods Ltd v Switzerland General Insurance Ltd (1991) 6 ANZ Insurance Cases 61,048 Fisher J, in passing, expressed the view that s11 could not avail an insured in relation to a statutory warranty.

41. As noted earlier, on 1 September 1995 Mr Browne of M & I endeavoured to carry out a final survey inspection of the "Mataitai". He needed to test the fire pump, sight the radio certificate, test the anchor and emergency steering, and hear the engine running. In the event the tests were not conducted that day due to a difficulty with the power supply. There were also deficiencies in relation to the paperwork for the vessel, in that the responsible surveyor Mr Reynolds did not have on file a copy of the plan approval for the vessel modifications, nor a copy of the interim stability certificate which had been issued by the naval architect on 29 August.

42. Although these outstanding matters prevented the issue of even an interim certificate of survey, pending availability of the stability booklet, it is significant that the fitness of the "Mataitai" was not in question. The equipment which Mr Browne needed to test was on board and functional. Likewise the missing paperwork was in existence, if not in the hands of M & I. This situation was graphically confirmed by the terms of Mr Reynolds' letter, dated 12 October, addressed "To Whom It May Concern" which stated that in substance the "Mataitai" was in a fit state to enable the issue of an interim certificate, but such did not happen for the reasons discussed.

43. In these circumstances only one argument was advanced against the proposition that the insured, in the circumstances of this case, could meet the onus of establishing that the absence of survey did not cause or contribute to the loss. Mr Rzepecky, for FAI, argued that had an interim certificate been issued Mr Reynolds confirmed he would have noted on it the maximum load authorised in terms of the interim stability certificate given by Mr Harrhy. To recap, on 29 August Mr Harrhy authorised the "Mataitai" to carry "a maximum mussel load of 3 tonnes in the hopper and 3 tonnes on the deck". The argument continued, if the interim certificate had been on board and displayed as required by s15O of the Marine Transport Act, the skipper may not have overloaded the "Mataitai" with such disastrous consequences. I do not accept this submission.

44. The evidence of Mr Campbell is clearly against it. He was present when Mr Harrhy conducted the stability test on 29 August. So was Mr Womersley. Mr Campbell was aware of the terms of the interim stability certificate. Indeed, he confirmed that a copy of it was on board the "Mataitai". Nevertheless, on 8 October he loaded the vessel so as to seriously compromise its stability with the result it capsized. In giving evidence, Mr Campbell was frank in saying that he did so on the basis of his understanding of a discussion which occurred with Mr Harrhy on 29 August. He believed the stability booklet, when issued, would authorise a load of the order of that which he carried on the day. His negligence was in ignoring the terms of the interim stability certificate in favour of his belief that the incline tests demonstrated the vessel could safely carry a load greater than 6 tonnes. I accept he was not ignorant of the terms of the interim certificate. In these circumstances I am quite satisfied that, even had an interim certificate of survey endorsed as to the interim maximum loading limit been displayed, it would have made no difference. I conclude the insured has proved that the illegality, operating the "Mataitai" when it was not in survey, did not in the circumstances cause or contribute to the capsize. In short, the vessel was in a fit state. A gross error of judgment on the part of the skipper, quite unrelated to the statutory breach, caused the capsize.

45. That s11 of the Law Reform Act applies in relation to an express warranty, is not in doubt. With reference to the warranty implied by s42 of the Marine Insurance Act the position is less straight-forward. Two pre-conditions are prescribed by s11: that the contract of insurance defines events or circumstances which exclude or limit liability, and that "in the view of the Court ... the liability of the insurer has been so defined because the happening of such events or the existence of such circumstances was in the view of the insurer likely to increase the risk of such loss occurring". In Harbour Inn Seafoods Fisher J considered the wording of precondition (b) fatal to the availability of s11 in relation to the s42 warranty. In that case however, the Judge readily concluded that the insured had not demonstrated that the relevant breach of marine regulations did not cause or contribute to the accident. Nevertheless he continued on:

"Because of that primary finding of fact, it is strictly unnecessary for me to go on to deal with other difficulties in relying upon s11 in the present case. However, I mention in passing that whatever the relevance of s11 to promissory warranties in the defendant's standard policy, that provision could certainly not overcome the independent difficulty the plaintiff faces under s42 of the Marine Insurance Act. Section 11 of the Insurance Law Reform Act in its use of the words 'in the view of the insurer' is, in my view, inconsistent with promises which become part of the contract not because of any view of the insurer but because of the intentions of the legislature."

These obiter remarks, if followed, would render the contrary primary finding which I have made in this case of no help to the insured, assuming the implied warranty is relevant. That, I think, is the first issue.

46. The express warranty in the FAI policy is expressed in the widest terms. It requires the insured to comply with "all acts, regulations, rules, orders, notices to mariners and any other requirements ..." issued by any authorised agency relevant to "the construction, seaworthiness, surveying, ouffitting, manning, use, operation or navigation of the vessel". By contrast s42 of the Marine Insurance Act implies a "warranty of legality". Relevantly here, the venture in which the insured vessel was engaged at the relevant time must be "carried out in a lawful manner". In my view the concept of illegality which underpins s42 is of narrower ambit than the obligation cast by the express warranty in the policy. When enacted s42 gave effect to the position at common law. Over many years a number of cases had established that not every illegalit y of operation was relevant for insurance purposes. For example, in Redmond v Smith (1744) 7 Man G 457 the failure to have a crew remuneration agreement, in breach of statute, did not give rise to illegality for insurance purposes. Although the voyage was deemed to be illegal, the purpose of the relevant statutory provision was considered "collateral" in relation to the validity of the insurance policy.

47. Despite the wider ambit of the express warranty I am not confident that its presence necessarily excludes s42 on grounds of redundancy. Section 36(3) of the Marine Insurance Act expressly provides that an implied warranty is not excluded unless there is inconsistency with the express provision. Such is not the case here.

48. Assuming that the implied warranty remains alongside the express warranty, can s11 over-reach a statutorily implied warranty? The notion that an illegal event or circumstances of illegality which derive from a statutory warranty, deny cover, even where the insured can establish an absence of causal connection, is not attractive. Section 11 was introduced following a report of the Contract and Commercial Law Reform Committee on "Aspects of Insurance Law" in 1975. That Committee proposed what is now s11 because of its view that reliance by insurers on "non-causative exemptions" was wrong in principle. Exemptions, or warranties, implied by statute were not seemingly considered when s11 was drafted with reference to the circumstances in "a contract of insurance" (s11(a)) and "the view of the insurer" as to increased risk (s11(b)). As a result, despite my view of the merits of the situation, I think it is doubtful whether s11 can override a statutory warranty. However for reasons to which I will come shortly it is not necessary to reach a final view on the matter in this case.

49. To summarise it is my view that the capsize of the "Mataitai" was covered by the perils of the seas clause. Further, I consider that the circumstance the vessel was not in survey in breach of the Marine Transport Act was not material to the accident. The vessel was, in fact, in a seaworthy condition. However, I am doubtful whether cover under the policy was available on account of breach of the implied warranty, albeit that in my view s11 applied in relation to the express warranty. Against this somewhat lengthy background I turn to consider the specific causes of action against individual parties. That I shall be able to do quite briefly.

Claim against Peacock/IMC:

50. The allegations against Mr Peacock and his company, IMC, were that comprehensive cover suitable for the "Mataitai" was not arranged, that the effect of the cover was misrepresented such as to constitute a breach of the Fair Trading Act 1986, and alternatively that representations made as to the extent of cover constituted negligent misstatements. The essential defence was that clause 9.1 of the FAI policy did cover the particular loss, and accordingly, the policy was adequate in the circumstances. Put another way, the cause of Mr Womersley's difficulties was the decision to accept the ex gratia payment when indemnity cover was available. Mr Peacock and I & M I also raised affirmative defences to the effect that if cover was not available under the policy, such was the result of using the "Mataitai" when she was not in survey and that was a problem of the plaintiff's own making.

51. It is not necessary for me to individually consider the causes of action in detail. The finding that the capsize was within the perils of the seas clause, is decisive. Each of the plaintiff's claims rested on the common premise that cover under the FAI policy was only available pursuant to the "Inchmaree" negligence extension, which did not cover the engine and the electrical systems being the greater part of the loss. That premise was incorrect. All three causes of action must fail as a result.

52. Counsel also made submissions with reference to estoppel although no such cause of action was pleaded. Reliance was placed upon Hutton v Royal Exchange Assurance [1971 ] NZLR 1045. This was also a marine insurance case. The insured successfully raised estoppel against the insurer whose agent had represented that cover would continue to exist under the relevant policy, albeit that the vessel was about to be used as a pleasure craft rather than a fishing boat.

53. The events relevant to this aspect occurred in December 1995. Mr Womersley was then represented by Nelson solicitors, who were in negotiation with FAI's solicitors in Auckland concerning cover under the policy. On 5 December the Nelson solicitor, Mr Stellard, wrote to Mr Peacock to put him on notice that he would be held responsible for any loss arising from a failure to broker suitable comprehensive cover for the "Mataitai". By this time FAI had denied liability, but offered an ex gratia sum of $50,000. The letter set out Mr Stellard's opinion that the policy was deficient, since cover for negligence was only available in terms of the "Inchmaree" clause. The suggestion was made that Mr Peacock should notify his insurers of a possible claim.

54. Following receipt of the letter Mr Peacock made inquiries of FAI in order to better appreciate the basis upon which liability was denied. On 18 December Mr Peacock replied to Mr Stellard's letter. He began by confirming that he had been in discussion with FAI and suggested that a counter offer should be made with reference to the ex gratia proposal. The letter concluded in these terms:

"As mentioned on the wording we do not think their objection would stand up nor do we think FAl would be so pedantic. We do not think emphasis should be placed solely on the skipper negligence, perils of the sea should be mentioned and we refer you also to clause 10.10 which picks up damage to motors and connections should the vessel be immersed."

This paragraph, in particular, was relied upon as the basis for the estoppel claim. It was argued that by words and conduct Mr Peacock engendered the understanding that the policy was indeed deficient, since Mr Peacock did little to point out that clause 9.1, the perils of the sea clause, availed the insured.

55. Somewhat earlier, on 18 October 1995, Mr Peacock had written directly to Mr Womersley setting out his preliminary thoughts concerning cover under the policy. The letter indicated that the absence of a certificate of survey could have important implications, but more relevantly contained the comment "the commercial marine policy covers 'perils of the sea' so if the boat just sinks in fine conditions the claim could not be maintained. The cause of 'Mataitai' capsizing would appear to be not sea conditions but overloading." Hence it was contended Mr Peacock throughout the relevant period failed to alert Messrs Womersley and Stellard to the need to rely on clause 9.1 in their dealings with the insurer. Further, it was argued it was reasonable to rely upon Mr Peacock's views, since he was an experienced insurance broker and had negotiated the policy. Detriment, it was suggested, arose from the circumstance that an ex gratia offer was accepted in full and final settlement of the insurance claim.

56. I do not consider the argument for the plaintiff is tenable. In my view the remarks which Mr Peacock made in his letters of 18 October and 18 December provide no sufficient basis to found an estoppel. The form of estoppel relied upon was not closely analysed by counsel. I think that estoppel by representation was the correct description. Such estoppel was raised not as a cause of action but to prevent Mr Peacock from asserting in defence of himself and IMC that cover was available under the perils of the sea clause, when he had led Mr Womersley and his legal advisors to believe otherwise.

57. Estoppel by representation was considered in N B Hunt & Sons Ltd v Maori Trustee [1986] 2 NZLR 641 (HC) and 651 (CA). In delivering the judgment of the Court of Appeal, Richardson J at 655 defined the estoppel in these terms:

"The doctrine of estoppel by representation precludes a party from acting inconsistently with a representation which he has made to the other party in reliance on which the other party has acted to his detriment. The statement relied on must be precise and unambiguous or, as it is often put in contemporary usage, clear and unequivocal (Low v Bouverie [1981] 3 Ch 82, Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC 741) and it must be a representation of existing fact, not of future intention."

In my view this statement of principle is fatal with reference to the present argument. The relevant representations made by Mr Peacock were neither precise and ambiguous, nor clear and unequivocal. In addition, I doubt that Mr Peacock's remarks could be characterised as representations of existing fact. He expressed no more than opinions, tentative at that, in relation to the correct interpretation of the policy.

58. In relation to estoppel by representation there is also the requirement that the representation be such that a reasonable person would believe that it was intended to be acted upon. A judgment upon this issue requires consideration of all the circumstances, including the language used and the particular relationship of the parties: Commonwealth v Verwayen (1990) 170 CLR 394. In this case I do not consider that the circumstances, viewed objectively, indicate that any representation made by Mr Peacock was intended to be acted upon. At most he preferred suggestions concerning the interpretation of the policy and concerning the conduct of FAI. He did so in the context of a challenge to his performance as a broker. The occasion was not one where his view on the ultimate issue was sought and where reliance on his words was indicated. After all Mr Peacock was not a lawyer, although admittedly an insurance broker of some years experience. At least at the latter stage, December 1995, matters had progressed to the point where Mr Womersley was in the hands of a solicitor. FAI had likewise instructed its solicitors. Professional advisors had exchanged letters in which different interpretations of the policy were advanced. In these circumstances it was not, in my view, reasonable for Mr Womersley to rely upon the views of Mr Peacock in reaching an important decision with reference to FAI's liability under the policy.

Claim against M & I:

59. The claim against this defendant arises in the event that the absence of a certificate of survey prevents recovery under the FAI policy. Although I have concluded that s11 over-reaches any breach of the express warranty, I am in doubt concerning the implied warranty. Breach of it may well have entitled FAI to deny cover. It is therefore necessary to consider the merits of the cause of action.

60. The primary allegation made in the amended statement of claim was that M & I owed Mr Womersley a duty of care "to advise (him) as to whether the requisite inspections to allow the "Mataitai" to legally operate as a survey vessel had been carried out". The breach asserted was a failure to advise that the inspections had not been completed.

61. Mrs Fee for M & I challenged the existence of any duty of care of the kind asserted. In essence she argued that the duties of the respective parties were defined by statute and there was no room to impose on M & I a duty to advise its client of the obvious. The statutory background was therefore of fundamental importance. The key section in the Marine Transport Act in relation to a surveyor's obligation provides:

"137. Duties of surveyor on completion of survey where ship satisfactory - (1) If, on completion of a survey under section 135 of this Act, the surveyor is satisfied that a certificate in respect of the ship can be issued or renewed, -

(a) The Surveyor shall give to the Director a declaration of survey to that effect, and

(b) The Director shall either -

(i) Give to the owner of the ship an interim certificate of survey; or

(ii) Endorse the existing certificate."

The next section imposes a like duty to advise the Director and the ship owner of an unsatisfactory survey, where the surveyor considers a certificate should not be issued or continued in force. Counsel stressed that these duties arose "on completion" of the survey. Next was the basic obligation upon an owner and the master not to proceed on any voyage unless there was in force a certificate of survey appropriate to that voyage: s144(2). Hence it was submitted the terms of the Act were fatal to the existence of a duty of care.

62. In reliance upon Deloitte Haskens & Sells v National Mutual Life [1993] 3 NZLR 1 (PC) at p 7 it was submitted it would be strange indeed if "a common law duty of greater scope [was] superimposed upon the statutory duty contained in the subsection". I agree, the more so in this case where there was a positive duty upon Mr Womersley and his skipper to both hold and display the certificate while at sea. Recognition of the duty contended for would undermine that basic statutory obligation. For these reasons I am unable to accept that a duty to advise existed in a situation where the survey had not been completed.

63. In the alternative a plea of contributory negligence was advanced. Here the argument was that even if IMC was in breach of a duty to advise, the dominant cause of the accident remained the decision to operate the "Mataitai" when she was not in survey. This argument is, I think, unanswerable. I have already referred to the statutory position in the context of whether there was a duty owed. Had it come to it, the assessment of contributory negligence would have been at a significantly high level.

The Third Party Claim:

64. Mr Peacock and IMC raised three causes of action against FAI. The first two centred on the proposition that Mr Peacock sought cover for the "Mataitai" on the basis of "usual ILU fishing vessel clauses". However, FAI offered cover in terms of "Institute yacht clauses with appropriate amendments", in relation to which it was said that the effective cover was the same. In fact, the "Inchmaree" clause in the yacht cover was inferior, in particular where negligence was the cause of the loss and cover for the engine and electrical equipment was excluded. It is unnecessary to resolve this aspect, since my finding that cover was available under the perils of the seas clause has rendered the effect of the "Inchmaree" clause of academic importance.

65. In the course of the hearing a third cause of action was introduced, with leave. This claim was based on the novel proposition that, assuming Mr Womersley was mistaken in his acceptance of the ex gratia payment, because full indemnity cover was available, then Mr Peacock and his company "by subrogation or otherwise" could claim relief pursuant to s7(1) of the Contractual Mistakes Act 1977. Had it come to it, I would not have upheld this claim. But again it is unnecessary to dwell on the matter.

Summary:

66. The claims against all three defendants are dismissed. Likewise, the third party claim against FAI is dismissed. Costs are reserved. The successful parties shall have 21 days within which to file and serve memoranda concerning costs. The memorandum on behalf of Mr Peacock/IMC should address costs in relation to the third party claim. Mr Womersley will have a further 14 days in which to reply.