The Court held that the damage by shipworms to the insured’s wooden-hulled vessel was considered “ordinary wear and tear” and was not occasioned by a “peril of the sea”

566935 BC Ltd. (c.o.b. West Coast Resorts) v. Allianz Insurance Co. of Canada, [2005] B.C.J. No. 2145, British Columbia Supreme Court

The insured’s wooden barge sank while moored at a facility. The Court found that the cause of the sinking was the ingress of sea water into the hull due to (1) existing chronic leakage in the hull and (2) the failure of the stern plank which allowed a sudden and substantial flow of water. The failure of the stern plank occurred as a result of the wooden hull being weakened by the actions of shipworms. Furthermore, the Court found that the presence of shipworms within the wooden hull was directly attributable to the absence of any effective use of anti-fouling paint.

The Court held that while the accident was “of the seas”, it was not a “peril of the sea”. To be a “peril of the sea”, the entry of sea water must be fortuitous. The Court noted the known prevalence of shipworms in the area where the ship sank and the virtual certainty that shipworms would attack unprotected wooden hulls. The loss could not reasonably be characterized as “fortuitous”. The Court held that the loss was occasioned by “ordinary wear and tear” and by the action of “vermin”. As such, coverage was excluded under s. 53(2)(b) and (c) of the Marine Insurance Act.

The Court further held that the Inchmaree clause did not apply. Where recovery for the loss is precluded as having been found to be caused by ordinary wear and tear or by the action of vermin, there can be no recovery under the Inchmaree clause. The Court further dismissed the insured’s claim under the negligence aspect of the Inchmaree clause.

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