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Unrepaired Damage
Two other points can be shortly considered: unrepaired damage claims and Constructive Total Loss. All of the above comments have assumed the damage is repaired. What if it is unrepaired? The wording in Clause 20.1 of the new clauses in this respect is unchanged from the Institute Time Clauses. The measure of indemnity under that Clause for an unrepaired damage claim is the reasonable depreciation in the market value arising from such unrepaired damage but not exceeding the reasonable cost of repairs. However, no reference is made to how the new words in Clause 2.2.2 are to be applied in this context, if at all. Is the recovery limited to the reasonable cost of repairs of the damage caused by the latent defect as implied by Clause 20.1? Or only to the extent by which these costs exceed those that would have been incurred to correct the latent defect as referred to in Clause 2.2.2.? That question is not answered in the Clauses. The answer obviously makes a difference to the monetary amount of any such claim but could also make a difference as to whether an Owner repairs or not. Similarly the position should the owner have Additional Perils Coverage under Clause 44 is neither explained nor clear. It would seem that Clause 44.1.2 ought to entitle the owner to the cost that would have been incurred to correct the latent defect regardless of the question of depreciation in market value or what the actual costs of repair would have been.
Constructive Total Loss
A similar point arises in relation to Constructive Total Loss, now dealt with in Clause 21 of the new clauses. This provides that no claim for constructive total loss of the vessel based upon the cost of recovery and/or repair of the vessel shall be recoverable unless such cost would exceed 80% of the insured value of the vessel. In the case of latent defect what is the cost for the purposes of s.60 (2) (ii) of the Marine Insurance Act, that is the cost of recovery and/or repair, which is to be compared to 80% of the insured value of the vessel under Clause 21.1 in order to establish whether or not there is a constructive total loss claim? Nothing is mentioned in the Clauses and again the issue is unclear.
If the owner has Additional Perils Coverage under Clause 44.1.2 how is that coverage meant to apply in the case of a constructive total loss claim? It would seem to be clearly arguable here also that applying this new Additional Perils wording gives the assured an additional recovery on top of the insured value for constructive total loss?
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