Mrs McKeever, the owner of a 15m sailing yacht, Creola, obtained a yacht policy from a Uruguayan insurance company, Northernreef Insurance Co SA. On 19 March 2014, the insured yacht grounded on a reef in the Sulu Sea. The assured and her friend’s attempts to refloat the insured yacht were unsuccessful and they had to abandon her as the waves were becoming stronger. Having secured and padlocked the hatches, they were picked up by a fishing vessel which responded to their mayday signal. The next day, they returned to the yacht with the coastguard to find that the windows had been broken and the yacht had been looted. Various valuable items including electronic navigation aids had been stolen. The assured engaged a firm to guard the yacht and also a salvage company to move her to a place of safety. The salvage company found flooding to a depth of six inches in the portside midsection. On 7 April 2014, the salvage company managed to refloat the yacht and tow her to the Penuwasa boatyard.

The policy covered marine risks, including perils of the seas, piracy, malicious acts and theft. The policy also stated that the cover was “subject to the provisions of this insurance and that it is maintained in a condition conductive to its use”. The assured’s numerous attempts to claim from the insurer failed. The current proceedings were issued against the insurer in the UK and served on its UK agent. The insurer failed to engage with any of the litigation process save for filing a defence, and did not attend trial. The assured’s claim included: (i) damage to the yacht; (ii) indemnity for the items stolen; and (iii) recovery of the sums paid for guarding the yacht and sums paid for refloating and towing the yacht (as sue and labour expenses).

Decision: The assured was awarded the diminution in the market value of the yacht, owing to the totality of the damage suffered, the value of the stolen items and the sue and labour expenses in the amount of US$361,710.64.