Ahmed Mohamed Eid Al Yahad Al Zaabi v Al Buhaira National Insurance Company [2025] DIFC TCD 002 (28 August 2025)

Ahmed Mohamed Eid Al Yahad Al Zaabi v Al Buhaira National Insurance Company [2025] DIFC TCD 002 (28 August 2025) [ Home ] [ Databases ] [ World Law ] [ Multidatabase Search ] [ Help ] [ Feedback ] [ DONATE ] The Dubai International Financial Centre You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Ahmed Mohamed Eid Al Yahad Al Zaabi v Al Buhaira National Insurance Company [2025] DIFC TCD 002 (28 August 2025) URL: https://www.bailii.org/ae/cases/DIFC/2025/DTCD_002.html Cite as: [2025] DIFC TCD 2, [2025] DIFC TCD 002 [ New search ] [ Help ] Ahmed Mohamed Eid Al Yahad Al Zaabi v Al Buhaira National Insurance Company [2024] DIFC TCD 002 August 28, 2025 TECHNOLOGY AND CONSTRUCTION DIVISION - JUDGMENTS Claim No: TCD 002/2024 THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS IN THE COURT OF FIRST INSTANCE BETWEEN AHMED MOHAMED EID Al YAHAD AL ZAABI Claimant and AL BUHAIRA NATIONAL INSURANCE COMPANY Defendant Hearing : 28 July 2025 to 29 July 2025 Counsel : Ahmed Mohamed Eid Al Yahad Al Zaabi as a litigant in person for the Claimant Ishfaq Ahmed instructed by Fichte & Co Legal Consultancy for the Defendant Judgment : 28 August 2025 JUDGMENT OF H. E. JUSTICE ROGER STEWART KC UPON the amended Case Management Order of H. E. Justice Roger Stewart KC dated 29 April 2025 AND UPON hearing the Claimant, assisted by a non-certified translator, and the Defendant’s counsel at the Pre-Trial Review before H. E. Justice Roger Stewart KC on 14 July 2025 AND UPON hearing the Claimant, assisted by a non-certified translator, and the Defendant’s Counsel at the Trial held on 28 and 29 July 2025 before H. E. Justice Roger Stewart KC (the “Trial”) AND UPON review of all submission on the Court file AND UPON reviewing the Rules of the DIFC Courts (the “RDC”) IT IS HEREBY ORDERED THAT: 1. The claim is dismissed. 2. It is declared: (a) That the Defendant was and is entitled to avoid and/or repudiate and/or cancel the insurance contract; (b) That the Defendant has validly avoided and/or repudiated and/or cancelled the insurance contract; 3. The Claimant shall pay the Defendant’s cost which will be immediately assessed. 4. The Defendant is to produce a schedule of its costs by no later than 7 days from the date of this Order. 5. That the Claimant may comment upon the same by no later than 14 days from the date of this Order. Issued by: Hayley Norton Assistant Registrar Date of issue: 28 August 2025 At: 4pm SCHEDULE OF REASONS Part 1 - Introduction 1. In this case the Claimant seeks the sum of AED 1,365,000 plus interest from the Defendant insurance company pursuant to a policy of insurance dated 9 June 2023 following a fire and explosion on the yacht Dazaz on 26 June 2023. 2. The parties agree that as a result of the Law and Jurisdiction clause in the policy schedule: (a) The policy is to be governed by and construed in accordance with English law; and (b) The parties submitted to the jurisdiction of the courts of the DIFC. 3. As a result of the application of English law: (a) The Marine Insurance Act 1906 applies to the extent still in force together with the Consumer Insurance (Disclosure and Representations) Act 2012 (“CIDRA 2012”) and the Insurance Act 2015 (“IA 2015”); and (b) A potentially important question arises as to whether or not the Claimant is a consumer in determining the proper effect of the legislation. 4. The Defendant defends the claim on the basis of alleged misrepresentations, failures to make fair presentation of the risk, non-disclosures and breaches of warranty relating to the purchase price of the yacht and/or the sum insured, the condition of the yacht, the intended use of the vessel and a survey and inspection report. 5. The Claimant is a litigant in person. The Defendant maintains that he has been guilty of a series of serious procedural failures, in particular in relation to document production as a result of which inferences should be drawn against him. 6. This Judgment takes the following form: (a) Part 1 – This Introduction; (b) Part 2 – The Evidence; (c) Part 3 – The Policy; (d) Part 4 – The Facts; (e) Part 5 – The Issues; (f) Part 6 – Has the Claimant established that the Claim falls within the Primary Insuring Clause? (g) Part 5 – Is the Claimant a Consumer? (h) Part 6 – The Alleged Breaches of Warranty; (i) Part 7 – The Alleged Misrepresentations and Breaches of Duty of Fair Disclosure; (j) Part 8 – Conclusion and Disposition. Part 2 – The Evidence 7. The bundle for the trial runs to 1774 pages. References to page numbers are bundle references. As described below, the Defendant disputes the genuineness of some of the documents. 8. The Claimant submitted one witness statement (186) and was cross-examined. The Defendant called: (a) Mr Deepak Chhibber, a principal consultant with DDC Maritime Consultancies Services LLC who gave evidence as to investigations after the explosion; and (b) Mr Mahmoud Shalab, the Defendant’s head of marine underwriting and claims who gave evidence both as to the actual claim and its circumstances together with what the Defendant would have done if provided with different information; and (c) Mr Salim Shah, the “Claims Incharge” for the Defendant. 9. Making all due allowances for the fact that the Claimant was a litigant in person, he was an unsatisfactory witness. This may have been, at least in part, due to language difficulties. He failed to comply with the requirement, despite repeated reminders, to engage a certified translator so as to give evidence to best effect and gave evidence in a mixture of English and Arabic using the services of a friend of his. However, it was apparent that very frequently, when asked a straight-forward question admitting of a simple answer he would fail to answer it and instead make repeated refrains that the Defendant had all the information required, that he had been made ill by the process of litigation and that he was tired. 10. In several important respects his evidence changed in order to seek to meet difficulties in his case. Thus although both the claim form and his witness statement (17, 187 and 190) were clear as to his intended commercial use of the vessel, in his oral evidence he said that he had no fixed intention, that commercial use was only a possibility and that he would have changed the form of insurance if he had proceeded to use the vessel for commercial purposes. Similarly when challenged as to why no records had been produced for the alleged payment of AED 950,000, he said he had made the payment in cash and could produce bank records evidencing such cash. No such bank records have been produced despite the Court’s orders in relation to documents. 11. I formed the impression that the Claimant was unwilling to accept or admit anything which he considered might give rise to difficulties in relation to the success of his claim. Nevertheless I consider that the Claimant had a genuine belief that he was entitled to redress. 12. I consider that all three of the witnesses called on behalf of the Defendant were seeking to give honest and reliable evidence and to assist the Court. Part 3 – The Policy 13. The Pleasure Yachts Insurance Policy with Number P/SH/HULL/2023/001615/VAA between the Claimant and the Defendant dated 9 June 2023 in respect of the Vessel is at [234]. The Claimant’s interest is described as “HULL & ENGINES/ THIRD PARTY & PASSENGER'S LEGAL LIABILITY” and it expressly stated that purpose of use as being “PLEASURE BOAT” , with the sum insured for “MARINE HULL AND ENGINE” being stated as AED 1,365,000.00. The period of insurance was 13 months from 9 June 2023 to 8 July 2024 (both days inclusive). The premium was AED 9,000 and the Policy stated that the warranties and exclusions were as per the schedule which was attached. There was a deductible of AED 20,000.00 for each and every loss (subject to Clause 12.1 of the IYC and hence not applied to a claim for a total or constructive total loss or to any associated claim under Clause 15). 14. The Policy schedule has two sections marked “warranties” and “exclusions” [235] . It stated as follows [237]: “The due observance and fulfilment of the terms, provisions and conditions hereof or attached hereto by the Insured insofar as they relate to anything to be done or complied with by the Insured and the truth of the statements and answers in the proposal shall be conditions precedent to any liability of the Company to make any payment under this policy, No waiver of any on the terms., provisions or limitations contained in this Policy or attached hereto shall be valid unless made in writing by the Company. If the Insured shall make any claim knowing the same to be false or fraudulent as regards amount or otherwise this Policy shall become void and all claim hereunder shall be forfeited.” [this last paragraph was in red ink in the original] 15. The Policy incorporates the Institute Yacht Clauses (CL.328) of 1/11/85. It expressly states that Clause No. 5.1 of the IYC is deleted and Clause 19 is to apply. A copy of the IYC appears at [1095] and was disclosed by the Claimant. 16. Within the Policy there is included third party and passenger legal liability limited up to AED 1,000,000/- (with a sublimit of AED 200,000/- person) combined single limit any one accident or occurrence and in the annual aggregate in respect of bodily injury and property damage. 17. The cover provided by the IYC is against named perils, which include perils of the seas, fire and piracy. The IYC clauses provide for a defined list of perils subject to certain exclusions. The IYC also include a number of specific exclusions at clause 10. The list of insured perils is as follows: “9 PERILS Subject always to the exclusions in this insurance 9.1 this insurance covers loss of 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 similar objects 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 and/or the Owners or in respect of the maintenance of the vessel, 9.3 this insurance covers the expense of sighting the bottom after a stranding, if reasonably incurred specially for that purpose, even if no damage be found.” 18. The Policy contains the following relevant terms: a. “Warranted Yacht maintained in seaworthy condition throughout the policy period. … Condition Survey Warranty: Warranted full condition & evaluation survey for the yacht to be conducted by ABL and/or or Aries Marine at owner's cost prior attachment of cover & all recommendations to be complied with by time frame as stipulated by the surveyor.” b. The Schedule: “Warranted craft will be used for private pleasure purposes only The Institute Yacht Clauses: 3 NAVIGATING AND CHARTER HIRE WARRANTIES … 3.2 Warranted to be used solely for private pleasure purposes and not for hire charter or reward, unless specially agreed by the Underwriters.” c. “Warranted Marina based, alternatively yacht must be securely moored at a safe assigned place and not exposed to open sea and not to be left unattended whilst not in use.” d. Clause 19.1 of the IYC states that: “19.1 It is a condition of this insurance that when the Vessel concerned is under way the Assured named in the Schedule to the policy or other competent person(s) shall be on board and in control of the Vessel” e. Clause 5 of the IYC states as follows: “5 SPEED WARRANTY 5.1 Warranted that the maximum designed speed of the Vessel, or the parent Vessel in the case of a Vessel with boat(s), does not exceed 17 knots. 5.2 Where the Underwriters have agreed to delete this warranty, the conditions of the Speedboat Clause 19 below shall also apply.” f. The effect of Clause 5.1 is that if the yacht has a maximum designed speed in excess of 17 knots, the insurance does not attach. However, as page [1095] and the Insurance schedule shows the speed warranty has been deleted and Clause 19 is to apply. g. The Policy (in its schedule) has the following clauses in respect of firefighting [72] : “Warranted portable fire extinguishers installed on board and in engine room and periodically serviced as per the manufacturers recommendations. .. Warranted smoke/ heat detectors installed in the engine room (engine spaces) tanks spaces recommended by the manufacturers. Warranted no liability shall attach to this insurance in respect of any claim caused or arising through fire or explosion unless the Yacht equipped in the engine room (or engine space) tank space and galley, with a fire extinguishing system automatically operated or having controls at the steering position and maintained in efficient working order. …” h. Clause 19.4 of IYC states as follows: “If the vessel is fitted with inboard machinery no liability shall attach to this insurance in respect of any claim caused by or arising through fire or explosion unless the Vessel is equipped in the engine room (or engine space) tank space and galley, with a fire extinguishing system automatically operated or having controls at the steering position and properly installed and maintained in efficient working order.” Part 4 – The Facts 19. The Dazaz was a 13.11m (43 foot) wooden power boat with a fibreglass hull originally built in 2016 with a 10 tons gross tonnage. 20. In the claim form, the Claimant asserts (14) that he: (a) Purchased the hull (only) at the beginning of 2023 from Mr Khalid Hamad Nasser Al Mazruei of the Plosi Marine Company for AED 950,000; (b) Purchased 2 engines under a contract dated 15 March 2023 from Mr Mohamed Ali Ahmed Al Zeera Al Shamsi for AED 165,000; and (c) Contracted with the Al Nashimi company for installation of sonar devices, water desalination, life boat as well as an electric motor, anchorage, security and safety equipment, first aid, umbrellas and display ropes for AED 180,000; (d) Contracted with the same company for boat repair and other costs including maintenance for AED 160,000; and (e) Installed various insulation and upholstery for AED 23,500. 21. In support of these assertions the Claimant produced the following documents: (a) A statement dated 21 February 2023 on the writing paper of Blue Sea Marine Equipment Service in Abu Dhabi that the Dazaz was sold to the Claimant for AED 950,000 (369). The statement is not in the form of a receipt and does not contain any details of payment. (b) A declaration (367) with a receipt date of 22 February 2023 by Mr Khalid Hamad Nasser Hamad Al Kulaibi Al Mazrouei that the Dazaz had been sold to the Claimant. No price is shown. (c) 2 tax invoices from Supermarine Equipment (953-955) for various items of boat equipment to a total value of AED 4,914 dated 22 and 25 February 2023; (d) An engine sale agreement dated 15 March 2023 for 2 outboard 225 HP Mercury engines for a price of AED 165,000 acknowledging transfer but with no details of when or if payment had been made; (e) 3 further invoices from Supermarine Equipment dated 2 April, 30 April and 9 May 2023 for various items totaling AED 11,365; (f) 2 invoices from Al Khaimah Furniture Upholstery dated 15 May 2023 for AED 23,500 for upholstery and insulation; and (g) An invoice dated 12 June 2023 from Al Nashme Boats Maintenance for a total of AED 234,000 being AED 74,000 for mechanical works and installation of devices in the yacht and the use of cranes and trucks for lifting, transport and unloading at sea and AED 160,000 for an annual maintenance contract. 22. In the course of his evidence, the Claimant asserted that the boat had been purchased for cash and that he had not made payments for the two outboard engines and that he still owed money for them. No records of the obtaining or handing over of any cash were produced for the boat purchase although at one point in his evidence the Claimant appeared to suggest that they were available. He also stated that he had gathered money from his family and sold assets in order to buy the yacht and finance expenditure on it. Again no records of this process were produced. 23. Two photographs of the Dazaz were supplied by the Claimant dated 6 June 2023 showing the vessel on dry land with two outboard engines (348). One of the photographs shows the engines as apparently being not Mercury 225 HP engines but with legends stating “450” and “Racing 450” suggesting that they were 450 HP engines. The Claimant stated that he had placed stickers on the engines and that the engines were indeed Mercury 225 HP engines. 24. On 7 June 2023: (a) An approach was made to the Defendant who discussed indicative terms by email (229) of a premium of AED 9,000 with a deductible of AED 20,000, warranted trading within UAE waters only and used for private pleasure only with a pre-inspection report to be provided and asked that the Claimant fill out a proposal form; and (b) The Claimant filled out a proposal form (232) which gave details of the vessel, identified the value of the yacht as AED 1,365,000 which was also the total sum insured and stated that the purpose of use was private and that the vessel had fire extinguishers and lifesaving equipment which was duly sent by email on 8 June to the Defendant. 25. The precise process by which the Defendant was contacted by or on behalf of the Claimant is not clear. The Claimant was assisted by Mr Badr who acted on his behalf but Mr Badr did not give evidence. The Claimant stated that the boat was inspected by a Mr Adam who he claimed acted on behalf of the Defendant and had given assurances as to the availability of insurance and made suggestions as to the amount for which the boat was to be insured. Mr Shalab denied that the Defendant engaged Mr Adam but said that he understood that he was a freelancer who subsequently became a broker. Mr Shalab said that there were no records of any communications with Mr Adam by or on behalf of the Defendant. 26. I accept the Defendant’s evidence that Mr Adam was not acting on his behalf in any dealings with the Claimant. It may well be that the Claimant was confused about the process by which insurance was obtained, and it is possible that Mr Adam or Mr Badr played a part in this confusion. It may also be that it is this confusion which has led to the Claimant’s apparently unshakeable belief in the justice of his claim. 27. On 8June: (a) indicative non-binding terms were provided (226); (b) a condition and value survey was issued by BIL Surveyors and Loss Adjusters which was provided to the Defendant (38) which: i. stated on the front page that the date of assessment was 6 June 2023; ii. said that a survey and inspection took place at Creek Deira, Dubai on 16 March 2023; iii. set out information concerning the vessel including that she had 2 225HP Mercury diesel engines with 2 handheld fire extinguishers on the main deck; iv. provided a valuation on what was referred to as the cost approach of AED 1m “subject to sea worthiness” and that the replacement value of a similar boat was AED 1.5m to 1.6m; 28. On 9 June, the policy, certificate of insurance and associated documents were issued (233- 238) together with an invoice for the AED 9,000 premium (239). 29. On 14 June the Coast Guard’s inspection, the Vessel’s Certificate of Registry and the Boat License were issued (823, 142 and 826). 30. According to information provided to Mr Chhibber after the casualty by the Claimant or Mr Badr, the vessel was slipped into the water around 15 June 2023 and secured at berth 1 at Al Qawasim Corniche Road opposite RAK Khor Port and was taken to sea on a few occasions without incident prior to 20 June. Mr Chhibber was told that she was left unattended apart from a few hours when representatives attended to clean the vessel and charge her batteries. 31. The casualty occurred on 26 June. The Claimant subsequently informed Mr Chhibber that the circumstances were: (a) That he had been on holiday in Georgia at the relevant time; (b) That Mr Badr had attended the vessel in the morning with cleaners to clean the vessel and charge the batteries for which purpose they had started the deck generator before disembarking shortly before noon leaving the generator operating; (c) That there had been a loud sound from the vessel at about noon followed by a fire which engulfed the vessel; and (d) That attempts to control the fire had been unsuccessful with the vessel sinking and causing damage to the boat landing and a navigational buoy 32. The Claimant reported the casualty to the Defendant on 5 July 2023 and obtained certificates from the police and the Civil Defence Authority at about the same time. The latter certificate showed the cause of the incident as being unknown. 33. Thereafter: (a) On 5 July the Defendant requested details including an evaluation certificate and inspection report; (b) On 6 July the Defendant instructed ABL Marine Service LLC to attend the site of the vessel and carry out a survey and report; (c) On 14 July, the Defendant obtained a valuation certificate from MVS International Broker LLC (370) which assumed the engines and main equipment were in good condition and put a value of between USD 80,000 and USD 100,000 on her. (d) On 24 August 2023, ABL sought information from the Claimant including a bill of purchase and quotations and invoices for work done to the vessel and followed up on the request on 4 October 2023; and (e) On 20 October, ABL produced its report to the Defendant having not received much of the requested documentation; (f) On 21 December 2023, the Defendant was provided with what was said to be a Condition & Value Report dated 8 June 2023 from BIL Surveyors and Loss Adjusters LLC (“the BIL Report”). This: (i) Was dated 8 June 2023 and had a picture of the boat on its front cover dated 6 June 2023 with the date of assessment being given as the same date; (ii) Had two different report numbers on the front page; (iii) Stated in the first paragraph that the boat was surveyed and inspected at Creek, Deira, Dubai on 16 March 2023; (iv) Gives details of the vessel and stated that the vessel is refurbished and used for “pleasure boat and float” within the RAK sea water and that the boat will conduct short range cruising within RAK Marine; (v) States that the vessel has two Mercury 225 HP diesel engines; (vi) Identifies firefighting appliances as 2 handheld extinguishers on deck; (vii) States that the subject boat is offshore and grounded with the proposer advising that they are awaiting insurance to proceed with registration “after the boat test by the authorized company”; (viii) States that an opinion on value has been reached on a cost basis and that reliance has been placed to a considerable extent provided by the owner of the boat; (ix) That the fair market value is AED 1m “subject to sea worthiness” and that the new replacement value of a similar boat is AED 1.5m – 1.6m. 34. I consider it clear that the Claimant, whether acting on his own behalf or with or on behalf of others, did buy the vessel in order to start a commercial venture. His intention to carry out a commercial venture was fixed rather than putative as is shown: (a) By the various statements that he has made and in particular his repeated evidence that everything he had was in the boat, which is scarcely consistent with the purchase of a pleasure craft; (b) The statements in the BIL report reflecting the anticipated commercial purpose; and (c) By the course of buying and fitting out the yacht for commercial use. 35. So far as other matters in dispute are concerned: (a) I do not accept that the Claimant purchased the hull of the boat for a cash price of AED 950,000. This is because: (i) I consider that AED 950,000 would have been a very high price to pay for the hull alone when substantial refurbishment was required; (ii) No records have been produced to justify the payment of such a substantial sum which suggests either that no such sum was paid or that lesser sum was paid or that there were some deferred terms; (iii) The last possibility is supported by the Claimant’s evidence as to the purchase of the engines where it appeared from his evidence at trial (but not before) that some form of deferred purchase was involved; (b) On balance I consider that the most likely position is that the boat was purchased using some cash with deferred terms and that the combined amount is likely to have been less than AED 950,000 although there may have been some element of profit share involved; (c) I accept that the engines on the yacht were 2 x 225 HP Mercury engines at the time of the casualty and that the Claimant had placed stickers on them as he asserted. The probable reason for this was to impress potential customers of the Claimant’s commercial venture; (d) No cash payment was made for the engines but there were deferred terms although I am not certain as to the price for the same; (e) I accept that the invoices for the relatively small sums at sub-paragraphs 21 (c), (e) and (f) reflected genuine items for which payment was made; and (f) In relation to the Al Nashme invoice at sub-paragraph 21 (g), this was a genuine invoice although it only reflected AED 74,000 of immediate works and I am not satisfied that it was paid. Part 5 - The Issues 36. There are a large number of issues on the pleadings. It is convenient to organise them in the following categories (a) Has the Claimant established that the claim is brought within the primary insuring clause? Unless this is the case, there is no claim. (b) Is the Claimant a consumer for the purposes of the relevant legislation? This affects the remedies available to him. (c) Has the Defendant established the breaches of warranties upon which it relies and, if so, what is the effect of such breaches? The Defendant has made it plain that the alleged breaches of warranty are at the heart of its case. (d) Has the Defendant established the misrepresentations and/or the breaches of duty of fair disclosure and, if so, what is the effect of the same? Part 6 - Has the Claimant established that the claim falls within the primary insuring clause? 37. As set out above, the policy covers loss or damage caused by fire and, provided that the loss of damage has not resulted from want of due diligence by the owners or managers, loss or damage caused by explosions. 38. There is limited evidence available as to the course of the actual event by which the yacht was destroyed. Such evidence as exists is (at least) hearsay and contained to a large extent in the reports made to the Defendant’s representatives after the casualty. It suggests that there was a sudden explosion followed by a fire [336] . This appears consistent with the damage which was suffered. 39. The word “explosions” is to be given its ordinary and natural meaning (see Arnould at 23- 30). This involves a violent, noisy and destructive event caused by a very rapid chemical or nuclear reaction or the bursting caused by a sudden loss of pressure. 40. There is, as the Defendant points out, no investigation as to cause here but it appears very likely that the explosion in this case related to the petrol kept on board the vessel. It appears that there was a 3,500 litre tank with approximately 400 litres in it together, possibly, with additional containers of petrol. Given the volatility of petrol together with the fact that the explosion occurred in the middle of the day, it seems very likely that the explosion related to the petrol and led to the fire. 41. The Defendant suggests: (a) That the Claimant did not co-operate in establishing the cause of the explosion; (b) That the Claimant can only make a claim if the vessel was seaworthy relying on a warranty to that effect and the decision in The Milasan [2000] 2 Lloyds 458; (c) That there was a failure to exercise due diligence; and (d) That the claim accordingly fails. 42. I consider that these submissions confuse the requirement for establishing a loss for perils of the sea (where the fact that the vessel is seaworthy is likely to be a pre-condition to establishing such loss) with that for establishing a loss by explosion (which is subject to a requirement that the loss was not caused by a lack of due diligence by the owners or managers). These requirements are of different sorts. The fact that a vessel is seaworthy makes it unlikely that its loss will be other than by a peril of the sea. There is no such direct link here. Of course, the Defendant may be able to rely on a breach of warranty in respect of seaworthiness but that is a different consideration as to whether the insuring clause applies. 43. The Defendant made only tentative submissions as to the explosion resulting from a want of due diligence on the part of the Claimant. This no doubt resulted from the scanty state of the evidence. I do not consider that it is appropriate to draw an inference that the casualty resulted from a want of due diligence as a result of the Claimant’s failure to co-operate in investigating the cause of the explosion. First there was no positive obligation upon him to carry out a forensic analysis. Secondly, I do not consider that the Defendant was prevented from investigating the evidence if it wished to do so. Thirdly it is very far from clear that any further investigation would have established the precise cause of the explosion. 44. As to whether the explosion did result from a lack of due diligence on the part of the owners or managers: (a) Boats should not explode – so it is likely that something went wrong and was probably the fault of someone. However the fault has to be that for which the Claimant is responsible. If, for example, there were a defect in the manufacture or installation of the engines, the Claimant would be unlikely to be responsible. (b) I accept that leaving a petrol engine running on board a vessel in order to charge batteries whilst the vessel is unattended is not exercising due care. I also accept that this increased the risk of explosion. If, for example, there were a fault it might have developed slowly so as to give warning of problems and led to the engine being shut down had there been someone on board. (c) I do not, however, accept that the absence of anyone on board the boat made the boat more likely than not to explode. The explosion could have been caused suddenly and without warning or could have been caused by something where the presence or absence of a person on board was irrelevant. (d) It follows that the Claimant succeeds in showing that the loss resulted from an insured peril. Part 7 - Was the Claimant a Consumer for the Purposes of the Relevant legislation? 45. CIDRA 2012 replaces the duty of utmost good faith for consumers with an obligation to take reasonable care not to misrepresent the risk. It may, accordingly, be of importance as to whether or not the Claimant was a consumer for the purposes of the relevant legislation. 46. Section 1 of CIDRA 2012 and section 1 of IA 2015 define a consumer insurance contract as a contract of insurance entered into by an individual for purposes “wholly or mainly” unrelated to the individual’s “trade, business or profession” with a person who carries on the business of insurance and enters into the contract in the course of that business. 47. For the reasons already stated, I consider that the Clamant intended to use the vessel at least mainly for business purposes. I consider that this was a fixed intention. It is, of course, possible that he would have used the vessel for some private use, but its main use would have been for business purposes. As such he was not a consumer for the purposes of the relevant legislation. Part 8 -The Alleged Breaches of Warranty 48. Section 33 of the Marine Insurance Act 1906, which is still in force to the extent set out, provides as follows (1) “A warranty, in the following sections relating to warranties, means a promissory warranty, that is to say, a warranty by which the assured undertakes that some particular thing shall or shall not be done, or that some condition shall be fulfilled, or whereby he affirms or negatives the existence of a particular state of facts. (2) A warranty may be express or implied. (3) A warranty, as above defined, is a condition which must be exactly complied with, whether it be material to the risk or not.” 49. The IA 2025 substantially changed the law relaying to warranties so that; (a) By sub-section 10(1), any rule of law that breaches of an express or implied warranty discharges the insurer’s liability under the contract is abolished. (b) By section sub-section 10(2) an insurer will have no liability in respect of any loss occurring or attributable to something happening after a warranty in the contract has been breached but before the breach has been remedied. (c) By sub-section 10(3), sub-section 10(2) will not, however, apply if the warranty ceases to be applicable to the circumstances of the case owing to a change in circumstances, or if compliance with the warranty is rendered unlawful by any subsequent law, or if the insurer waives the breach of warranty. (d) By sub-section 10(4) any breach of warranty will not affect the liability of the insurer for any losses occurring or attributable to something happening before the breach of warranty or, if the breach can be remedied, after it has been remedied. (e) By sub-sections 10(5) and 10(6) for a warranty which requires that something be done (or not done) by an ascertainable time or requires a condition to be fulfilled or that something be (or not be) the case, a breach of warranty will be taken as remedied if the risk to which the warranty relates later becomes essentially the same as that originally contemplated by the parties. In any other case, the warranty will be treated as remedied if the insured ceases to be in breach of warranty 50. Further Section 11 of the IA 2015 applies to terms of the contract including warranties (other than terms defining the risk as a whole) if compliance with it would tend to reduce the risk of one or more of (i) loss of a particular kind, (ii) loss at a particular location, and (iii) loss at a particular time. If a loss applies and the term has not been complied with, the insurer cannot rely on non-compliance to exclude, limit or discharge its liability under the contract for the loss if non-compliance with the term could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred. The burden of proof is on the insured. 51. Thus, in relation to each of the warranties relied on by the Defendant it is necessary to consider: (a) Whether the term is properly a warranty; (b) Whether it has been breached and, if so, remedied or ceased to be applicable; (c) Whether the term defines the risk as a whole; (d) Whether compliance would tend to reduce risk as set out in sub-section 11(1) and, if so, whether the insured can show that non-compliance could not have increased the risk of the loss which actually occurred. 52. The Defendant relies on four classes of warranties as follows (a) The seaworthiness and condition survey warranty “Warranted Yacht maintained in seaworthy condition throughout the policy period. Condition Survey Warranty: Warranted full condition & evaluation survey for the yacht to be conducted by ABL and/or or Aries Marine at owner's cost prior attachment of cover & all recommendations to be complied with by time frame as stipulated by the surveyor” and (b) The private purposes warranties The Schedule: “Warranted craft will be used for private pleasure purposes only” The Institute Yacht Clauses: 3 “NAVIGATING AND CHARTER HIRE WARRANTIES 3.2.1 Warranted to be used solely for private pleasure purposes and not for hire charter or reward, unless specially agreed by the Underwriters.” (c) The left unattended warranty “Warranted Marina based, alternatively yacht must be securely moored at a safe assigned place and not exposed to open sea and not to be left unattended whilst not in use.” Clause 19.1 of the IYC states that: “19.1 It is a condition of this insurance that when the Vessel concerned is under way the Assured named in the Schedule to the policy or other competent person(s) shall be on board and in control of the Vessel;” (d) The warranties concerning fire equipment (i) Clause 5 of the IYC states as follows: 5 SPEED WARRANTY 5.1 Warranted that the maximum designed speed of the Vessel, or the parent Vessel in the case of a Vessel with boat(s), does not exceed 17 knots. 5.2 Where the Underwriters have agreed to delete this warranty, the conditions of the Speedboat Clause 19 below shall also apply (ii) Page [1095] and the Insurance schedule shows the speed warranty has been deleted and Clause 19 is to apply. (iii) The Policy (in its schedule) has the following clauses in respect of firefighting [72]: “Warranted portable fire extinguishers installed on board and in engine room and periodically serviced as per the manufacturers recommendations. .. Warranted smoke/ heat detectors installed in the engine room (engine spaces) tanks spaces recommended by the manufacturers. Warranted no liability shall attach to this insurance in respect of any claim caused or arising through fire or explosion unless the Yacht equipped in the engine room (or engine space) tank space and galley, with a fire extinguishing system automatically operated or having controls at the steering position and maintained in efficient working order. …” Clause 19.4 of IYC states as follows “If the vessel is fitted with inboard machinery no liability shall attach to this insurance in respect of any claim caused by or arising through fire or explosion unless the Vessel is equipped in the engine room (or engine space) tank space and galley, with a fire extinguishing system automatically operated or having controls at the steering position and properly installed and maintained in efficient working order.” The Condition Survey Warranty 53. The Defendant did not seek to suggest that, in the circumstances of this case, there were relevant separate warranties as to seaworthiness and in relation to the condition survey warranty. I consider that this was correct given the applicable facts here. The Defendant here knew nothing of the condition of the vessel at the time of inception of the insurance. It stipulated for a condition survey prior to inception of cover with recommendations to be complied within time frames stipulated by the surveyor. If this had been done it is, of course, possible that the vessel would still have been unseaworthy which might have led to difficult questions but in the present case there is nothing to show that the vessel would have been unseaworthy in such a situation. 54. As to the nature of the requirement for a condition survey: (a) I consider that it is properly to be regarded as a warranty in that it promises both that a condition survey of a particular sought will be obtained and that all recommendations will be complied with within the time stipulated by the surveyor; (b) It may also be regarded as a condition precedent – in that it promises the survey will be obtained prior to inception of cover which denotes that if not already done, cover will not come into effect until the survey is obtained. 55. I also consider it plain that the warranty was not complied with. Thus: (a) The requirement was for a “full condition and evaluation survey” to be conducted by “ABL and/or Aries Marine at owner’s cost…” (b) Not only did this require a survey by one of two named entities, but the requirement was for a “full” condition and evaluation survey which was intended to lead to recommendations from the surveyor (as is apparent from the rest of the clause); (c) The commercial purpose was to ensure that the vessel was seaworthy and safe given its intended use for the anticipated 13 month length of the insurance (see by analogy the analysis in Kirkaldy v Walker [1999] Lloyd’s Rep I. R. 410 where a similar clause was construed as having a similar effect (d) No survey of any kind was carried out by ABL and/or Aries Marine prior to the casualty; (e) The only report which the Claimant alleges was carried out was the BIL Report which was not sent to the Defendant until long after the casualty (f) There are a number of oddities about this report as identified above which call into question whether it was actually produced before the explosion, but even if it was, it is not a full condition and evaluation survey as required by the policy; (g) Aside from the fact that it was not carried out by the identified entities: i. There is no record of the sort of detailed inspection which would be required for a full condition and evaluation survey; ii. Although it is said that there was a “physical inventory and inspection of the subject equipment/machineries” it is not said that the hull or boat was inspected; iii. The valuation provided was said to be “subject to seaworthiness” which implies that no opinion was being given about seaworthiness which would be an essential aspect of any full survey; and (h) The Claimant himself accepts that the only assessment was as to the value of the boat (see Case Management Information Sheet at 470). 56. Given that no survey was carried out of the sort required by the policy prior to the casualty, the contractual effect of the wording is that cover did not incept. Further no assistance is provided to the Claimant by either section 10 or 11 of the IA 2015: (a) It is plain that the requirement was not and could not be remedied; (b) Equally there was no waiver by the Defendant. (c) The Claimant cannot assert that the breach could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred; (d) In fact, given that the explosion should not have occurred, the likelihood is that a survey would have made recommendations which would have reduced the risk of the same; (e) I also consider that the requirement for a condition survey would be regarded as defining the risk as a whole rendering section 11 inapplicable given: (i) That the commercial purpose of the requirement went to a fundamental requirement as to the seaworthiness and safety of a vessel; (ii) That the insurance of an unseaworthy or unsafe vessel (if obtainable at all) would be of a fundamentally different sort to the insurance of a seaworthy and safe vessel; (iii) That it follows that the requirement underpinned a central feature of the risk (see the view expressed by Arnould at 19-42). 57. It follows that the failure to obtain the required condition survey means that the Defendant has no responsibility for the casualty. The Private Purposes Warranty 58. So far as the private purposes warranty is concerned: (a) The relevant warranties were clear; (b) It is plain that they were breached; (c) I have found that the Claimant intended to use the vessel at least mainly for commercial purposes and that the relevant works were undertaken for this purpose; (d) I consider that it is likely that the vessel was being prepared for commercial use at the time of the casualty – thus cleaners had cleaned the boat, and the batteries were being charged at the time of the explosion. This suggests an anticipated use in the short term – but the Claimant was on holiday in Georgia; (e) Even if the vessel was simply awaiting use however, this period was incidental to the commercial use of the vessel. Most yachts spend large amounts of time tied up awaiting use. They do not change their usage during the period they are moored and inactive – see Murray & Scottish Automobile [1929] S. C 48; (f) There is no question of the breach being remedied given the Claimant’s continuing intention to use the vessel for commercial purposes and the preparatory steps that he took to facilitate this; (g) I consider that the use of a vessel such as this one is one which defines the risk as a whole rendering section 11 inapplicable. The evidence shows that insurance of private use vessels was considered as a different class of business than for commercial use. It is self-evident that the risks are materially different and greater for commercial use – use is likely to be heavier with greater wear and tear and liabilities are likely to be greater. 59. It follows that the breach of the private use warranties also means that the Defendant has no responsibility for the loss and damage suffered. The Left Unattended Warranty 60. There is a question of construction as to whether the warranty requires: (a) That the yacht is either: i. Marina based; or ii. Securely moored at a safe assigned place and not exposed to the open sea and not left unattended whilst not in use; or (b) That the yacht is either: i. Marina based; or ii. Securely moored at a safe assigned place; and In either event not exposed to the open sea the not left unattended whilst not in use. 61. Although the Defendant suggested that the second construction is correct, I do not agree. This is because: (a) I reject the Defendant’s argument that a marina may be exposed to the open sea – the whole purpose of a marina is to shelter boats. The first requirement of such shelter is protection from the open sea. The consequence is that the requirement is otiose if a boat is marina based; and (b) The first construction is the more natural construction with the requirements being identified for the alternative to a marina base. 62. To the extent that the clause is ambiguous it is to be construed against the Defendant and the first meaning is more favorable to the Claimant 63. The first question is, accordingly whether the yacht was “Marina based”. “Marina” is an ordinary English word and, particularly in the context of this policy conveys a specially designed safe facility for small vessels with permanent facilities available to support such vessels to allow them to re-fuel and for the crews to wash etc. Fees will usually be charged. The use of the word “based” suggests that the Marina will be a home for the vessel when not in use. A marina is to be contrasted with a mere dock or berthing place which simply provides a method to secure the boat and allows the crew to come ashore. 64. There is limited information as to where the vessel was at the time of the explosion but the ABL report shows she was at berth no 1, Al Qawasim Corniche. This was not in a marina as defined above. It was in a port area but without any special facilities or protection for small vessels. 65. I accept that the berth was a safe assigned place and not exposed to the open sea. However the evidence shows that she was left unattended whilst not in use. Moreover this occurred when her engines were running and it would be expected that she would be crewed. It follows that there was a breach of warranty. 66. As this occurred at the time of the casualty, there was no remedy of the breach. Further there was no waiver and the Defendant cannot show that the breach did not increase the risk. Had the vessel been crewed there is a chance, at least, that the explosion would not have occurred. 67. It follows that the breach of this warranty also absolves the Defendant from liability. The Fire Equipment Warranties 68. The evidence suggests that these warranties were also breached with no evidence, in particular, of an automatic fire extinguishing system in the engine room or the engine room space. There are no records of such a system and it is to be expected that there would be if one existed. Accordingly there was a breach of warranty which was not remedied at the time of the casualty. Further the presence of such a system would tend to reduce the risk of the loss which occurred and the Claimant cannot show that it could not have increased the risk of the loss which actually occurred. 69. Accordingly this breach also means that the Defendant has no liability for the loss. Part 9 - The Alleged Misrepresentations and Breaches of Duty of Fair Disclosure 70. The Defendant made it clear that its main case depended upon establishing one or more breaches of warranty which it has done. It did, however, also allege a series of alleged misrepresentations and breaches of the duty of fair disclosure which it relied upon to the extent necessary. In particular it relied on misrepresentations as to the value of the vessel and the intended use of the vessel (for commercial rather than private use) as having being made deliberately or fraudulently entitling the Defendant to avoid liability for the claim. 71. Given the conclusions in respect of breaches of warranty, it is unnecessary to decide these issues. However, my brief conclusions are: (a) That the Claimant did represent both that the vessel had a value of around AED 1,350,000 and that the vessel was to be used for private purposes; (b) That the policy was not a valued policy; (c) That the yacht was worth significantly less than AED 1,350,000; (d) That, despite this, I would not be prepared to find that the Claimant deliberately overvalued the vessel. The confusion of the Claimant, possibly induced by those who advised him in relation to the insurance, is consistent with him having a genuine belief that the vessel was worth more than it was. (e) With regret, I consider that the Claimant did represent that the vessel was for private use when he knew it was for commercial use. I do not see that there can be any doubt about this given the clear statements as to intended use and the findings I have made as to the Claimant’s fixed intentions to use the boat for commercial purposes. 72. It follows that the Defendant is also not liable as a result of the deliberate statements as to the intended use of the vessel which the Claimant knew to be untrue. Part 10 - Consequences and Disposition 73. It follows that the claim fails and that: (a) A declaration to the effect that the Defendant was and is entitled to avoid and/or repudiate and/or cancel the insurance and has done so is appropriate; and (b) The Defendant is entitled to its costs which will be summarily assessed. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII URL: https://www.bailii.org/ae/cases/DIFC/2025/DTCD_002.html