Grounding of MV Sagar Kirti: Sue and Labour Versus Particular Average
MV Sagar Kirti, a 2011-built 28,000 DWT bulk carrier, is insured under an Indian H&M policy with sum insured INR 42 crore, deductible INR 20 lakh each accident, class maintained and ISM certified. On 4 August she grounded on a soft bank near Paradip after the second officer plotted a course too close to a shoal. The master attempted refloating for nine hours; the main engine overheated when the sea-water cooling intake choked with mud, damaging bearings. A tug refloated her on the next tide. Survey finds bottom plating dented and one double-bottom tank cracked; the bottom plating also had 15% wastage and was due for special survey in four months. Repair estimate: INR 1.30 crore bottom repairs and INR 55 lakh engine repairs. Owner claims the full INR 1.85 crore as a single accident, plus tug hire. How do you assess?
1. Classify the bottom damage, engine damage and tug hire under the H&M policy. Which are particular average, which (if any) are sue and labour, and why?
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Bottom damage. The dented plating and cracked tank are direct physical damage caused by grounding, a peril insured against. They are particular average, subject to the deductible and to exclusion of pre-existing wastage.
Engine damage. The bearings were damaged by the master's attempt to refloat. The proximate cause is the grounding and the reasonable attempt to avert further loss, not ordinary wear and tear. Under ITC-Hulls wording, negligence of master is covered, so this is also particular average as damage to the insured property. It should not be presented as sue and labour: sue and labour covers expenses incurred to avert or minimise a covered loss, not damage to the vessel itself.
Tug hire. This is a classic sue and labour expense if the tug was reasonably engaged to refloat the vessel and prevent further damage. Under ITC-Hulls Clause 13 it is payable in addition to the sum insured, but the deductible clause must be checked because some wordings aggregate Clause 13 expenses with other claims from the same accident.
Report. The surveyor should separate physical damage from mitigation expense, state the causation chain, and avoid presenting the whole INR 1.85 crore as one undifferentiated particular average claim.
2. How should the 15% wastage and the imminent special survey affect quantification of the bottom repair claim?
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The policy covers damage caused by the grounding, not the cost of renewing steel that was already wasted. The surveyor should obtain the class survey status, ultrasonic thickness readings and the yard's repair specification, then apportion the bottom repair invoice between:
- renewal of plating required solely because of the grounding damage; and
- renewal of plating that was due anyway because of the 15% wastage or the forthcoming special survey.
Under ITC-Hulls wording, claims are generally payable without deduction new for old, so the surveyor should not apply a blanket depreciation to legitimate accident repairs. The correct adjustment is to exclude the pre-existing wastage element, not to deduct a new-for-old percentage from the whole repair bill. If the class society would have required the wasted plating to be renewed at the special survey in any event, the owner obtains no indemnity for that portion. The surveyor should state the excluded amount and the basis clearly, and should ask the yard to price the accident-related and class-related work separately.
3. What deductible and documentary issues arise, and what should the surveyor's report conclude?
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The deductible is INR 20 lakh for each accident. The grounding and the refloating attempt are one accident, so the particular average claims should be aggregated and one deductible applied, unless the policy wording specifically applies a separate deductible to sue and labour or collision liability. The tug hire should be shown separately and the deductible treatment confirmed against the wording.
The report should identify:
- the cause of grounding, including the plotted course, bridge records and any navigational warning;
- the engine damage mechanism, with the engine-room log, cooling-water records and repair yard findings;
- the pre-existing wastage, with gauging reports and class records;
- the tug engagement terms and whether the expense was reasonable and incurred to avert a covered loss;
- the repair specification, invoices and betterment/wastage apportionment.
The conclusion should state the admissible particular average, the admissible sue and labour expense, the deductible application and any exclusion. It should reserve the insurer's rights if the course plot, ISM records or class status suggest unseaworthiness or want of due diligence.