The Abt Rasha was carrying 312,424 tonnes of crude oil from Saudi Arabia to Rotterdam. Two of its hydraulic steering pumps were damaged during transit. It anchored off Durban to have them replaced before resuming its voyage. It encountered severe weather shortly after and these replacements became heavily damaged. Repair attempts achieved limited success and the Abt Rasha could no longer navigate. To protect the safety of the ship and cargo, the Abt Rasha deviated to Port Elizabeth as a port of refuge. The cargo was transhipped onto another vessel, the Hellespont Capitol, which proceeded to Rotterdam for discharge. The Abt Rasha was towed to a dry dock facility in Dubai for repairs.

The claimants, Comatra Ltd and Arabian Bulk Trade Ltd (owners and managers of the Abt Rasha), entered into a number of non-separation agreements with cargo interests before transhipment operations commenced. Each of the non-separation agreements contained a clause stipulating that the rights and liabilities in general average should not be affected by cargo forwarding (para 1), a clause defining the basis of contribution to general average of the property (para 2) and the Bigham clause (para 3). These clauses had equivalents in the York-Antwerp Rules 1994, but not the York-Antwerp Rules 1974 as amended in 1990. The equivalent provisions of paras 1 and 3 of the non-separation agreement were found in the additional paras 3 and 4 of r G of the York-Antwerp Rules 1994. The equivalent provision of para 2 of the non-separation agreement was found in the additional paragraph in r 17 of the York-Antwerp Rules 1994.

Manley Hopkins (the average adjusters) made a preliminary assessment of the respective contributions. The claimants' hull underwriters (the defendants) disputed this adjustment because it did not treat the cost of towing the Abt Rasha to Dubai for repairs as general average pursuant to para 1 of the non-separation agreement. The adjusters transferred the sum in respect of the towage costs from particular average to general average, added general average commission and interest, and introduced this sum to the amended second adjustment. However, this amendment increased the potential contribution of the cargo owners. Meanwhile, it improved the position of the defendants by deducting the sum which they would otherwise have been liable for particular average, subject to the applicability of paras 1 and 2 not only between the claimants and the cargo owners but between the claimants and themselves.

Significantly, the figures set out in the ship and cargo part of the second adjustment did not refer to the effect of para 3 of the separation agreement and so did not refer to the Bigham cap. The adjusters only calculated the effect of the Bigham clause in the final part of the adjustment entitled 'Policy'. This resulted in a difference amounting to the sum of USD 787,426.28 between the cargo owners' contribution without the Bigham clause and the cargo owners' contribution capped by the Bigham clause (excess Bigham amount).

The claimants thus claimed the excess Bigham amount plus interest from the defendants. The underwriting terms were evidenced by a cover note and the insurance was subject to the Institute Time Clauses - Hulls. The defendants argued that the cargo owners' contribution would not be capped by the Bigham clause, relying on cl 11.2 which provided that adjustment should be according to the York-Antwerp Rules 1974 as amended in 1990. The defendants also contended that wages and maintenance were excluded from particular average, relying on cl 16, and formed part of general average, relying on cl 11.1. It was not in dispute that the loss was caused by an insured peril (cl 11.4).

The claimants relied on the wording 'the proportion of the loss which falls upon [them]' within the meaning of s 66(4) of the Marine Insurance Act 1906 (UK) (the Act) in support of their claim. The defendants interpreted this provision as referring to a 'rateable proportion'.

The issue was whether the claimants could recover the excess Bigham amount from the defendants pursuant to cl 11.1 of the Institute Time Clauses - Hulls and/or s 66(4) of the Act as part of their proportion of general average. The trial Judge's answer to that question was in the negative.

Among the defendants' successful submissions was that the claimants and cargo interests could not, by a cap of their choosing, reallocate general average exposure to achieve a result that called into question the reasonableness of the non-separation agreement. The underwriters were required to meet what is adjusted as general average and not the sum which the owners and cargo interests limited by capping what would otherwise be general average.

The claimants appealed.

Held: Appeal allowed.

The claimants were entitled to recover the whole of their share or proportion of general average under the non-separation agreement, including the Bigham excess. The general average loss was both reasonably incurred and proximately caused by an insured peril. In such a case, a non-separation agreement with a Bigham clause was in principle a reasonable agreement for the claimants and cargo owners to make, as also evidenced by the addition of paras 3 and 4 of r G and r 17 into the York-Antwerp Rules 1994.

All three paragraphs of the non-separation agreement were part of one indivisible agreement. Both paras 1 and 2 of the non-separation agreement were effective as between the claimants and the cargo owners and as between the claimants and the defendants. Paragraph 3 should therefore not be treated differently from paras 1 and 2 and was just as much part of the whole agreement.

There was also no reason to restrict the ordinary meaning of the word 'proportion' in s 66(4) of the Act to a rateable proportion.

The correct approach to assess the respective contribution between the claimants and the cargo owners and also between the claimants and the defendants was to access the claimants' proportion of the general average expenses by taking the whole of the expenses defined as general average expenses by para 1, assessing which proportion of those expenses were attributable to the ship and to the cargo and dividing them between ship and cargo in accordance with the formula in para 2, unless cargo's proportion would be more than the Bigham cap, in which case the cargo's share would be the amount of the cap and the ship's share the remainder.