Incidental to the carrier’s liability as an insurer
From fundamental rule insisting on delivery of the goods carried by sea undamaged, it followed that the shipowner’s obligation to furnish a seaworthy ship is incidental to his liability as an insurer of safe delivery of the goods and subject only to the excepted perils. Because of this, the said duty is not a superadded to, and exceeding the terms of his contract of carriage but is implied and independent of any other contractual term the carrier may have. Actually, the condition of the vessel is generally immaterial so far as the ship has arrived at her destination and the goods are safe, therefore question of her seaworthiness can only arise where the immediate cause of the loss is an excepted peril, or where for some other reason the contract to insure does not apply.
The law of marine insurance attaches great importance to the matter of seaworthiness and generally adopts common law phraseology, e.g. s 39 Warranty of seaworthiness of ship, of the Marine Insurance Act 1906 (MIA 1906) states:
(1) In a voyage policy there is an implied warranty that at the commencement of the voyage the ship shall be seaworthy for the purpose of the particular adventure insured.
(2) Where the policy attaches while the ship is in port, there is also an implied warranty that she shall, at the commencement of the risk, be reasonably fit to encounter the ordinary perils of the port.
(3) Where the policy relates to a voyage which is performed in different stages, during which the ship requires different kinds of or further preparation or equipment, there is an implied warranty that at the commencement of each stage the ship is seaworthy in respect of such preparation or equipment for the purposes of that stage.
(4) A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured.
(5) In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness.
Extent of shipowner’s liability under insurance contract defined in s 33 (Nature of warranty) of MIA 1906, which provides that, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date. Since seaworthiness relates to the state of the ship at the commencement of the risk, breach of this warranty discharges the underwriter from liability on the policy, ab initio.
The burden of proving unseaworthiness rests upon the party who asserts it, i.e. cargo owner or insurer has to prove that the cause of the loss was unseaworthiness of the ship. Only in cases where a ship, shortly after leaving port and without any apparent reason sinks or leaks, the mere facts afford prima facie evidence of unseaworthiness.
… while the presumption of law was prima facie in favour of seaworthiness, and the burden of proving unseaworthiness was in consequence, in the first instance, on the insurers, yet that if the inability of a ship to proceed on the voyage become evident in a short time after her sailing, the presumption of law is that the inability arose from causes existing before she set sail; and that in such event the burden of proof becomes shifted … But this is not by reason of any legal presumption or shifting of the burden of proof, but simply as matter of reason and common sense brought to bear upon the question as one of fact, inasmuch as in the absence of every other possible cause the only conclusion, which can be arrived at, is that inherent unseaworthiness must have occasioned the result.
Pickup v Thames and Mersey (1878) 3 Q.B.D. 594 at p.597-598 by Cockburn C.J.
But so far as the onus of proof concerned, presumption mentioned by Cockubrn CJ in Pickup v Thames and Mersey(above) remains a mere prima facie presumption, as Devlin J. held in Waddle v Wallsend Shipping Company, Ltd  2 Lloyd’s Rep. 105, if there were two explanations equally consistent and one involved no liability on defendants, the onus was on plaintiff to prove the cause of the loss, and the burden was not transferred to defendants unless the nature of the loss and its relationship to defendants’ negligence was first ascertained and proved.
In the same case Devlin J. ventured to say that:
…in a case where all direct evidence is missing, there is no ground for saying that the most plausible conjecture must perforce be the true explanation. The answer that may well have to be given is that not enough is known about the circumstances of the loss to enable the inquirer to say how it happened. All that he can say is that no theory advanced has been able to collect enough support from the facts to make it more likely than not that it happened in that way and not in any other.
Accordingly, in cases when no apparent cause for the damage was discovered the courts will be slow to accept "the most plausible conjecture" as sufficient explanation for the purpose of discharging the burden of proof.
In CHS Inc Iberica Sl & Anor v Far East Marine SA (The Devon)  EWHC 3747 (Comm) the owners withhold crucial evidence to avoid liability for unseaworthiness, apparently believing that an absence of disclosed documents discussing the cause of the damage, could have brought them under the rule "that no theory advanced has been able to collect enough support from the facts to make it more likely than not that it happened in that way and not in any other". In that case the owners’ vessel suffered main engine breakdown when she was only few hours on her way from Varna to Tarragona with the cargo of corn on board. This breakdown resulted in lengthy delay in performance of the voyage and in damage to the cargo. The owners argued that, no one was able to come up with a cause of the said breakdown, that neither expert has found the root cause of the problem. In such circumstances the court would have to find that the cause of the breakdown, on the material available, incapable of satisfactory explanation with the result that cargo owners would fail to prove its case on unseaworthiness.
The judge, however, found that absence of documentation discussing the cause of the damage bear unfavourably upon owners because the most obvious and realistic explanation was that such documents did exist but have not been disclosed, because they must have involved some unseaworthiness of the vessel at the commencement of the voyage from Varna. The judge also found that absence of document in part proves unseaworthiness because it points out to the of that lack of system for the proper monitoring of the engine parameters, which led to the chain of failures in the cooling system and later to the main engine damage.
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