IN THE HIGH COURT OF KIRIBATI

HIGH COURT CIVIL CASE 78 OF 2016

		BETWEEN:		Nicholas Jong t/s Rose Shipping Services
					Plaintiff

		AND:			Kiribati Insurance Corporation 
Defendant

Date of Hearing:			12 March, 24 April, 1 May, 8 May 2025
Date of Judgment:			3 July 2025

Appearances:				Mr. Banuera Berina for the Plaintiff
Mr. Tabibiri Tentau for the Defendant

JUDGMENT - LIABILITY

Introduction:
1.	By Writ of Summons dated December 1, 2016, the plaintiff seeks compensation for $100,000, which represents the insurance coverage he purchased for his vessel ‘Itoman Raoi.’ The defendant has refused to pay the insurance claim, citing a breach of the policy terms. If the court finds them liable, they further allege that the plaintiff contributed to the damage sustained by his vessel.

Issues

2.	Parties agree on the following issues for determination;
a)	Whether or not the Policy was covered by Australian law.
b)	Whether or not the defendant had acknowledged that the plaintiff complied with the condition of a Class 5 Master Certificate.
c)	Whether contributory negligence was a condition, and if so, whether the plaintiff contributed to the cause of the accident.
d)	Whether or not the plaintiff is entitled to more than $100,000 in damages.

Agreed Fact

3.	The vessel “Itoman Raoi’ was owned by the plaintiff. The defendant is a statutory body established under the Kiribati Insurance Corporation Act, 1981, and is empowered to provide insurance services throughout Kiribati. The plaintiff purchased insurance for his vessel, ‘Itoman Raoi’, from the defendant, and his insurance number is MHCS13140, dated August 1, 2013, which covered one year. During this period, the defendant agreed to insure the vessel for $100,000.

4.	The vessel was involved in an accident on or about March 7, 2014, while anchoring in Kuria, when strong southwesterly winds caused it to be dragged onto the reef after experiencing anchor breakage. The vessel suffered irreparable damage, resulting in its total loss. The plaintiff filed an insurance claim and received an email from the defendant, dated June 2, 2014, stating that the company was waiting for the Marine Report to proceed with the claim. In a subsequent email, the defendant, through its lawyer, informed the plaintiff that there was an issue of contributory negligence and a breach of the insurance policy on the plaintiff's part. Knowing that their insurance claim would not be approved, the plaintiff filed this case.

Submissions and Analysis

5.	Regarding whether Australian law applies, the plaintiff does not dispute this. However, the plaintiff asserts that the relevant requirement of Australian law is already included in the defendant’s Proposal Form, specifically that the insurance agreement is based on ‘good faith.’ Section 24 of the Marine Insurance Act 1909 requires the insured to disclose every material fact to the insurer before the insurance contract is concluded.

6.	For ease of reference, the provision is quoted below;

24. Disclosure by assured

(1)	Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him or her. If the assured fails to make such disclosure, the insurer may avoid the contract.

(2)	Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he or she will take the risk.

(3)	In the absence of inquiry the following circumstances need not be disclosed, namely:

(a)	Any circumstance which diminishes the risk;
(b)	Any circumstance which is known or presumed to be known to the insurer. The insurer is presumed to know matters of common notoriety or knowledge, and matters which an insurer in the ordinary course of his or her business, as such, ought to know;
(c)	Any circumstance as to which information is waived by the insurer;
(d)	Any circumstance which it is superfluous to disclose by reason of any express or implied warranty.
(4)	Whether any particular circumstance, which is not disclosed, be material or not is, in each case, a question of fact.

(5)	The term circumstance includes any communication made to, or information received by, the assured. 

7.	By refusing to pay the insurance claim, the defendant claims the plaintiff did not disclose a key fact: that the vessel would be operated by a Class 6 Master Certificate, which contradicts the information provided in their Proposal Form. The defendant relies on the insured's obligation to act in good faith, as per section 24. This is stated in the affidavit of Koura Rokeatau, the defendant’s witness.

8.	At the time of the incident, the vessel was operated by a Class 6 Master Certificate. When the plaintiff filled out their Proposal Form on 11 August 2011, it was stated that the vessel would be operated by one Teweia Tabaia, a holder of a Class 5 Master Certificate. 

9.	The plaintiff asserts that the insurance contract did not specify a requirement for the vessel to be operated at all times by a Class 5 Master Certificate, nor did it state that any change in the master from one Teweia Tabaia to another must be communicated to the defendant. The plaintiff is concerned only with complying with the laws and regulations of Kiribati, which require that the vessel be seaworthy and operated by a qualified captain. The plaintiff claims the change in the vessel master is not a material circumstance that is worth reporting. He argues that the Class 5 Master Certificate is not the overarching requirement, as long as the master is qualified, similar to a Class 6 Master Certificate.

10.	In support of this argument, the plaintiff refers this court to the Proposal Form. Question 12 of the Proposal Form asks the following questions;

“12. Others Navigating
(a)	Will others be permitted to navigate the vessel? No
(b)	…
(c)	…
(d)	Will vessel operate without a qualified officer in command? No

11.	 The plaintiff argues that there are concerns under 12(d) regarding the requirement for the vessel to always be operated by a qualified officer, which was true at the time of the accident. To the plaintiff, the only obligation they have is to ensure that a qualified officer operates the vessel in command as per 12(d), which includes a captain with a Class 6 Master Certificate.  

12.	 Conversely, the defendant relies on 12(a), which states that the plaintiff (insured) will not hire others to operate the vessel beyond what was specified in the Proposal form; that the vessel will be operated by Teweia Tabaia, a Class 5 Master Certificate holder. The plaintiff argues that the form does not specify that a Class 5 Master Certificate must always operate the vessel or require notification of any change in the master. The plaintiff contends that 12(a) is irrelevant to the current issue because it pertains to navigators, which includes not only the vessel's master. Since the term 'others' is used in the plural, it implies more than one navigator, which does not necessarily refer solely to the master.  

13.	The Re-Insurance Placing Slip (Exhibit KR3 of Koura Rokeatau) that covered the period of 01 August 2013 to 01 August 2014 states the following;

“CONDITIONS: To follow the full wording, clauses and conditions of the original policy as far as applicable.

It is warranted that the reinsured shall at all material times comply with the appropriate regulations currently in Kiribati. i.e:
	. Compliance with the License to Trade.
. Compliance with all the Kiribati Regulations on an ocean-going vessel.
. Only the master as declared on a Class 5 Master Certificate shall be navigating the insured vessel at all times.

14.	 The plaintiff argues that the intention is for the conditions to derive from Kiribati laws and regulations, and that the insurer assumed the three conditions listed originated from Kiribati laws and regulations. He further argues that had the condition that only the Class 5 Master Certificate been mandatory, it could have been listed by itself and not tied to the opening paragraph- “It is warranted that the reinsured shall at all material times comply with the appropriate regulations currently in Kiribati. i.e…”

15.	 The plaintiff supports his position by reference to page 3 of the Re-Insurance Placing Slip, which lists the additional information as follows;

“Additional Information

The following information is hereby deemed seen and noted by the Reinsurer herein:
-	Captain’s license
-	Receipt for License to trade
-	Kiribati Insurance Proposal Form
-	Certificate of Seaworthiness
-	Master Certificate Class 5
-	Seamaster’s record”

16.	 The plaintiff claims that all listed conditions, except for the Proposal Form, are regulatory requirements in Kiribati for operating a vessel. The defendant is presumed to have seen these documents when approving the plaintiff’s insurance, demonstrating that the plaintiff fulfilled these requirements. The plaintiff argues that the defendant cannot now deny that the plaintiff failed to comply with these conditions. The plaintiff also maintains that this requirement was not included in the Proposal Form and Insurance Certificate, and since it was only stated in the insurer’s conditions, it does not require strict compliance on the part of the insured.

17.	The plaintiff also argues that if any doubt arises from these relevant insurance documents, namely, the Proposal Form and Re-insurance Placing Slip, the interpretation that favors the insured should be preferred according to the ‘contra preferentem rule’ stated in the Fijian case tendered. The only Fijian case that I received from Counsel is Kumar v Sun Insurance Company Ltd [2012] FJCA 11; ABU0006.2011 (9 March 2012), such case does not seem to have the following passage that Counsel quoted;

“A policy of insurance is subject to the same rules of construction as any other written contract. The words used in it must be given their plain, ordinary meaning in the context of the policy looked at as a whole, subject to any special definitions contained in the 389 1 FLR 378 SAKIUSA SOLI v RAIWAQA BUSES LTD (Amaratunga M) policy. In cases of ambiguity, the contra proferentem rule will apply, but apart from this, there is no rule of law which requires me to strain the language of the policy favour for against the insured person.’ 5 10 15 20 25 30 40 45 50.” (Jason v Batten (1930) Ltd; British Traders Insurance Co Ltd [1969]1 Lloyds’s Rep 281 at 290 referred to in Fiji High Court case of SAKIUSA SOLI v RAIWAQA BUSES LTD, KAMINIELI TUIMAVANA AND THE NEW INDIA ASSURANCE CO LTD (HBC0351 OF 2009S-copy attached).

18.	I have found another relevant Fijian case, Gurbachans Foodtown Ltd v New India Assurance Company Ltd [2012] FJHC 977; HBC29.2003 (23 March 2012). The relevant passage from this case is as follows;

“Due to the forgoing reasons, I am of the opinion that the special condition at clause 1(b)(i) is ambiguous and I am unable to give a proper construction to the clause. In the circumstances, it is my considered opinion that this is a fit case for me to apply the contra preferentum rule of construction.
[51] In Fai Insurance (Fiji) Ltd v Prasad's Nationwide Transport Express Courier Ltd, supra) their Lordships considered the rule and said (for clarity, I have maintained the same numbering):
[58] The contra preferentum rule only has application when a clause or provision in a document is truly ambiguous, in which case the interpretation which is against the interests of the party who proferred the document. In other words, against the interest of the party who drafted or presented the document to the other party, the other party having no input into the drafting or revising of the provision.
[59] It is a rule of construction by which an exclusion clause is construed against the party for whose benefit it is intended to operate: McRae v Commonwealth Disposals Commission [1951] HCA 79; [1951] 84 CLR 377.
[60] The rule, as Kirby J says in McCann v Switzerland Insurance Australia Ltd & Ors [2000] HCA 65; [2000] 203 CLR 579, is now generally regarded as one of last resort.
[61] It is true that an exclusion clause is "ordinarily construed strictly against the proferens": Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd [1966] HCA 46; (1966) 115 CLR 353 at 376.
[71] Any clause purporting to have the construction that the appellant contends for clause 2.2 would need to be in clear and unambiguous terms, and if there was any ambiguity the contra proferentem rule would come into play: Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (supra).
[52] In the circumstances, I conclude that on an application of the ' contra  preferentum rule' of construction, the special condition 1(b)(i) in Insurance Policy No. 1 should be construed in favour of the plaintiff.”

19.	Having considered the plaintiff's argument, I do not believe that the principle of contra preferentem applies between multiple documents if they contain conflicting terms. In this case, the Proposal Form and the Re-Insurance Placing Slip do not share the same terms because the latter specifies that only a Class 5 Master Certificate holder must always operate the vessel. The contra preferentem rule is used to interpret ambiguous terms within a single document. It is employed as a last resort if ambiguity persists, and typically, the interpretation is construed in favor of the party who did not draft or own the document—in this case, the insured. Furthermore, the terms of the Proposal and the Reinsurance Placing Slip are clear and unambiguous; therefore, there is no need to apply the contra preferentem rule to either of these documents. 

20.	According to the plaintiff, the conflicting terms in these two documents concern whether the Class 5 Master Certificate is a condition or whether the laws of Kiribati existing at the time of the accident are applicable. The plaintiff’s case is that the laws of Kiribati must be followed—as long as a vessel is seaworthy and operated by a qualified master—but they do not require that only a Class 5 Master Certificate always operate the vessel.
  
21.	Regarding contributory negligence, the plaintiff argues that it is not applicable. Contributory negligence is not mentioned anywhere in the insurance contract as a relevant factor. Furthermore, there was no evidence of contributory negligence, as a peril of the sea caused the incident. The plaintiff also claims that the defendant did not attribute willful misconduct to them and contends that the damage was caused by the peril of the sea, which directly aligns with section 6(2) of the Marine Insurance Act 1909. This section states that the defendant is liable for any loss proximately caused by a peril insured against, which is precisely the cause of the damage in this case.

22.	 The defendant firmly based their argument on the claim that a breach of the insurance contract occurred when the plaintiff changed their master from Teweia Tabaia, a Class 5 Master Certificate holder to another who possessed a Class 6 Master Certificate and failed to notify them; the plaintiff had acted in bad faith, which contravenes section 24 of the Marine Insurance Act 1909. This requirement was expressly stated in the Reinsuring Placing Slip under the following condition: Only the master as declared on a Class 5 Master Certificate shall be navigating the insured vessel at all times. This breach had deprived the defendant of knowing a material circumstance that would have allowed them to reach an informed decision when fixing the premium or determining whether to take the risk.

23.	The defendant also submits that the vessel was anchored in a location that was neither ideal nor safe, as it was not plotted as a safe anchorage spot. The defendant further argues that the vessel did not have a Safe Operational Plan on board; however, even if this Plan had been in place, it was evident that it was neither observed nor executed properly to prevent the accident. This evidence is stated in the affidavit of the witness, Toromon Katua. Additionally, the Master of the vessel, who held a Class 6 Certificate, was found not to be on the vessel at the time of the accident.

24.	After evaluating the arguments put forth by both parties, it is my conclusion that the primary issue pertains to whether the insurance contract mandates that only a holder of a Class 5 Master Certificate operate the vessel at all times. I concur that this requirement was not explicitly articulated in the Proposal Form, the initial contractual document signed by the parties on 11 August 2011 when the plaintiff initially sought insurance coverage. In that document, the plaintiff specified that the vessel would be operated by Teweia Tabaia, who possesses a Class 5 Master’s Certificate. Additionally, the plaintiff clarified that the vessel would not be navigated by others nor operated without the presence of a qualified officer in command.  

25.	The Re-Insurance Placing Slip No 43504001 issued to him upon renewal of the coverage stipulates a condition on page 2 that a vessel master must possess a Class 5 Master Certificate prior to the vessel's departure as follows;

Conditions:	To follow the full wording, terms, clauses and conditions of the original policy/ies as far as applicable.

	It is warranted that the Reinsured shall at all times comply with the appropriate regulations currently in place in Kiribati ie:
		
-Compliance with the License to Trade

		-Compliance with all Kiribati regulations on ocean going vessels.

-Only the master as declared on the Class 5 Master Certificate provided shall be navigating the Insured Vessel at all times

26.	Consequently, the plaintiff argues that this requirement—that only a master holding a Class 5 Master Certificate shall be navigating the Insured Vessel at all times—and the other two conditions are what Faber believes to be the appropriate regulations currently in Kiribati. However, the vessel did not have to be commanded by a Class 5 Master Certificate at all times, as a Class 6 master can also operate the vessel as per the laws of Kiribati, which also satisfies the requirement in question 12(d) of the Proposal Form that the master operating the vessel must be qualified. 

27.	 My concern with this argument is that the Re-Insurance Placing Slip clearly states that the vessel must always be navigated solely by a master holding a Class 5 Master Certificate. Although this requirement was not initially included in the Proposal Form, the plaintiff became aware of it upon renewing his insurance coverage and receiving the Reinsurance Placing Slip. The plaintiff should consider that this requirement is incorporated in the Re-Insurance Placing Slip, even if he contends that it was not part of Kiribati’s regulations. The plaintiff did not cite any specific legislation or laws of Kiribati that establish seaworthiness and a qualified master as the exclusive prerequisites. In the absence of references to pertinent laws, I am not convinced that these are the sole requirements. I accept the defendant’s argument that this condition constitutes part of the terms or requirements of the insurance coverage duly agreed upon by both parties. The plaintiff had breached the policy term.

28.	 Furthermore, section 24 of the Marine Insurance Act 1909 explicitly states that the plaintiff has an obligation to disclose any material circumstances to the defendant. This requirement allows the defendant to accurately assess the premium or decide whether to proceed under the current insurance terms. I disagree with the plaintiff’s argument that changing the master does not constitute a material circumstance that requires disclosure. The plaintiff’s reliance on the deeming provision in the Re-Insurance Placing Slip, discussed in paragraphs 15 and 16 above, is valid at the time the proposal was signed in 2011 because, then, the vessel was operated by Tewia Tabaia, who held a Class 5 Master Certificate. This situation changed when a different captain was hired and operated the vessel at the time of the accident, who did not possess a Class 5 Master Certificate. However, the plaintiff submits that his duty to inform ends after the contract has been closed, as per section 24 of the Act, and the change in the master happened after the contract had been signed.

29.	Clearly, the circumstances or qualifications of a master are a material circumstance as they provide vital information for the defendant’s assessment of the premium and associated risk. The obligation to disclose any material circumstance is a critical aspect of the insurance contract, which must be based on the truthfulness of the information and honesty between the insurer and the insured. The gist of this law is that once the contract is sealed, the assured is expected not to make any critical changes to their circumstances. This requirement matches the intention of question 12(a) of the Proposal Form, which asks ‘will others be permitted to navigate the vessel’, in which the plaintiff answered ‘No’. That’s the intention of 12(a), to ensure that no change in the master is allowed once the insurance contract is sealed. Consequently, the plaintiff should not have made any material change; however, since he did by recruiting a different master who did not hold a Class 5 Master Certificate without informing the defendant, it constitutes a clear breach of section 24. Therefore, the duty to disclose under section 24 applies to any changes in material circumstances such as a change in their master, whether this occur before or after the contract has been concluded. The plaintiff had breached their obligations under this provision.

30.	  Regarding contributory negligence, the defendant claims that the plaintiff hired a different captain who lacked a Class 5 Master Certificate and alleges that the vessel was anchored in an unsafe location. Additionally, the defendant states that the captain was not on the vessel at the time of the incident. The plaintiff argues that no public notice was issued about the unsafe areas to avoid. This defendant’s argument will be rejected because there is no evidence showing that the area was officially marked as unsafe or unsuitable for anchoring, and the evidence does not connect the engagement of a Class 6 Master Certificate to the cause of the accident. 

31.	There is also an argument that the Safety Operational Plan (SOP) was not on the vessel at the time of the incident. The defendant's third witness stated that the SOP must be displayed on the vessel because it outlines safety procedures in the event of an accident, and a vessel cannot sail without it. However, the defendant’s witness admitted that he could not confirm whether the vessel had an SOP. The fact remains that the vessel did sail, which implies that the SOP may have been on board. Consequently, this argument will be disregarded.

Outcome

32.	Considering the aforementioned findings, I am not persuaded that the case has been established on the balance of probabilities. Consequently, I hold that the defendant is not liable for the insurance claims asserted against it. The defendant is entitled to recover the costs incurred in these proceedings, which shall be agreed upon by the parties or, failing agreement, subsequently taxed.  

Order accordingly.

THE HON TETIRO SEMILOTA MAATE MOANIBA
Chief Justice