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57
AVERAGE

Rule VIII. allows as G.A. any damage sustained by cargo when discharged and, say, lightered for the purpose of getting the ship off a strand. And the corresponding damage in the case of cargo discharged at a port of refuge to enable repairs to be done to the ship is allowed by Rule XII. But in the latter case the allowance does not expressly extend to damage sustained while stored on land. Whether the law would require contribution to a loss of goods, say, by thieves or by fire, while landed for repairs, is not clear. Where the landing has been necessitated by a G.A. act, as cutting away masts, it would seem that the loss ought to be made good, as being a result of the special risks to which those goods have thereby been exposed. The risks which they would have run if they had remained on board throughout are taken into account, as will presently appear, in estimating how much of the damage is to be made good.

Where cattle were taken into a port of refuge in Brazil, owing to accidental damage to the ship, with the result that they could not legally be landed at their destination (Deptford), and had to be taken to another port (Antwerp), at which they were of much less value, this loss of value was allowed in G.A. (Anglo-Argentine &c. Agency v. Temperley Shipping Co., 1899, 2 Q.B. 403).

The case of a stranded ship and cargo often gives rise to difficulty as to whether the cost of operations to lighten the ship, and afterwards to get her floated, should be treated as G.A. expenditure, or as expenses separately incurred in saving the separate interests. The true conclusion seems to be that either the whole operation should be treated as one for the common safety, and the whole expense be contributed to by all the interests saved, or else the several parts of the operation should be kept distinct, debiting the cost of each to the interests thereby saved. Which of these two views should be adopted in any case seems to depend upon the motives with which the earlier operations (usually the discharge of the cargo) were presumably undertaken. It may, however, happen that this test cannot be applied once for all. Take the case of a stranded ship carrying a bulky cargo of hemp and grain, but carrying also some bullion. Suppose this last to be rescued and taken to a place of safety at small expense in comparison with its value. It may well be that that operation must be regarded as done in the interest simply of the bullion itself, but that the subsequent operations of lightening the ship and floating her can only be properly regarded as undertaken in the common interest of ship, hemp, grain and freight. In such a case there will be a G.A. contribution towards those later operations by those interests. But the bullion will not contribute; it will merely bear the expense of its own rescue (Royal Mail S. P. Co. v. English Bank of Rio de Janeiro, 1887, 19 Q.B.D. 362).

The York-Antwerp Rules have not only had the valuable result of introducing uniformity where there had been great variety, and corresponding certainty as to the principles which will be acted upon in adjusting any G.A. loss, but also they have introduced greater clearness and definiteness on points where there had been a want of definition. Thus Rule XIII. has laid down a careful and definite scale to regulate the deductions from the cost of repairs, in respect of “new for old,” in place of the former somewhat uncertain customary rules which varied according to the place of adjustment; while at the same time the opportunity has been taken of adapting the scale of deductions to modern conditions of shipbuilding. And Rule XVII. lays down a rule as to contributory values in place of the widely varying rules of different countries as to the amounts upon which ship and freight shall contribute (cf. Gow, Marine Insurance, 305).

It may be of interest to refer briefly to one or two main principles which govern the adjustment (q.v.) of general average, i.e. the calculation of the amounts to be made good and paid by the several interests, which is a complicated matter. The fundamental idea is that the several interests at risk shall contribute in proportion to the benefits they have severally received by the completion of the adventure. Contributions are not made in proportion to the amounts at stake when the sacrifice was made, but in proportion to the results when the adventure has come to an end. An interest which has become lost after the sacrifice, during the subsequent course of the voyage, will pay nothing; an interest which has become depreciated will pay in proportion to the diminished value. The liability to contribute is inchoate only when the sacrifice has been made. It becomes complete when the adventure has come to an end, either by arrival at the destination, or by having been broken up at some intermediate point, while the interest in question still survives. To this there is one exception, in the case of G.A. expenditure. Where such expenditure has been incurred by the owner of one interest, generally by the shipowner, the repayment to him by the other interests ought not to be wholly dependent upon the subsequent safety of those interests at the ultimate destination. If those other interests or some of them arrive, or are realized, as by being landed at an intermediate port, the rule (as in the case of G.A. sacrifices) is that the contributions are to be in proportion to the arrived or realized values. But if all are lost the burden of the expenditure ought not to remain upon the interest which at first bore it; and the proper rule seems to be that contributions must be made by all the interests which were at stake when it was made, in proportion to their then values.

Again, the object of the law of G.A. is to put one whose property is sacrificed upon an equal footing with the rest, not upon a better footing. Thus, if goods to the value of £100 have been thrown overboard for the general safety, the owner of those goods must not receive the full £100 in contribution. He himself must bear a part of it, for those goods formed part of the adventure for whose safety the jettison was made; and it is owing to the partial safety of the adventure that any contribution at all is received by him. He, therefore, is made to contribute with the other saved interests towards his own loss, in respect of the amount “made good” to him for that. The full £100 is treated as the amount to be made good, but the owner of the goods is made to contribute towards that upon the sum of £100 thus saved to him.

The same principle has a further consequence. The amount to be made good will not necessarily be the value of the goods or other property in their condition at the time they were sacrificed; so to calculate it would in effect be to withdraw those goods from the subsequent risks of the voyage, and thus to put them in a better position than those which were not sacrificed. Hence, in estimating the amount to be made good, the value of the goods or property sacrificed must be estimated as on arrival, with reference to the condition in which they would probably have arrived had they remained on board throughout the voyage.

The liability to pay G.A. contributions falls primarily upon the owner of the contributing interest, ship, goods or freight. But in practice the contributions are paid by the insurers of the several interests. Merchants seldom have to concern themselves with the subject. And yet in an ordinary policy of insurance there is no express provision requiring the underwriter to indemnify the assured against this liability. The policy commonly contains clauses which recognize such an obligation, e.g. a warranty against average “unless general,” or an agreement that G.A. shall be payable “as per foreign statement,” or “according to York-Antwerp Rules”; but it does not directly state the obligation. It assumes that. The explanation seems to be that the practice of the underwriter to pay the contribution has been so uniform, and his liability has been so fully recognized, that express provisions were needless. But one result has been that very differing views of the ground of the obligation have been held. One view has been that it is covered by the sue and labour clause of an ordinary policy, by which the insurer agrees to bear his proportion of expenses voluntarily incurred “in and about the defence, safeguard and recovery” of the insured subject. But that has been held to be mistaken by the House of Lords (Aitchison v. Lohre, 1879, 4 A.C. 755). Another view is that the underwriter impliedly undertakes to repay sums which the law may require the assured to pay towards averting losses which would, by the contract, fall upon the underwriter. Expenses voluntarily incurred by the assured with that object are expressly made repayable by the sue and labour clause of the policy. It might well be implied that payments compulsorily required from the assured by law for contributions to G.A., or as salvage for services by salvors, will be undertaken or repaid by the underwriter, the service being for his benefit. But the decision in Aitchison v. Lohre negatives this ground also. The claim was against underwriters on a ship which had been so damaged that the cost of repairs had exceeded her insured value. A claim for the ship's contribution to certain salvage and G.A. expenses which had been incurred, over and above the cost of repairs, was disallowed. The view seems to have been that the insurer is liable for salvage and G.A. payments as losses of the subject insured, and therefore included in the sum insured, not as collateral payments made on his behalf. This bases the claim against the insurer upon a fiction, for there has been no loss of