PHOON LEE PILING COMPANY LIMITED v. THE MING AN INSURANCE COMPANY (HONG KONG) LIMITED

1995, No.A12827

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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J U D G M E N T

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1. The Plaintiff is a company incorporated in Hong Kong with limited liability which carries on business as a piling contractor. The Defendant is an insurance company incorporated under the laws of Hong Kong. The Plaintiff claims against the Defendant under a policy of insurance which it entered into with the Defendant, in respect of loss or damage occasioned to a pile hammer which was the subject of the insurance. The Defendant has at all material times denied that it is liable to indemnify the Plaintiff in terms of the said Policy of insurance.

2. On 22 April 1993, the Plaintiff entered into a hire-purchase agreement, which is described as a "lease agreement" with Wayfoong Credit Limited, in terms of which the finance company leased to the Plaintiff a new diesel pile hammer for a period of three years from the date of the agreement, in consideration of the lessee paying a rental in the total amount of $2,138,500, by way of a deposit and monthly payments as set out in the agreement. A clause in the agreement headed "Option to purchase/terminate", provides that : "subject to one month's prior written notice, the lessee has the option at the expiry of the primary period or at any time during the continuation period to terminate the lease and effect sale of the equipment as agent for the lessor. 100% of the proceeds of any such sale shall be returned to the lessee by way of sales commission and rebate of rentals, less any expenses and any sums due to the lessor." The Plaintiff duly took possession of the said pile hammer.

3. Thereafter by a Plant and Machinery Insurance Policy dated 11 May 1994 entered into between the Plaintiff and the Defendant, the Defendant, in consideration of the premiums stipulated in the policy, agreed for the period of one year, from 15 April 1994 to 14 April 1995, to indemnify the Plaintiff if at any time during the period of insurance the pile hammer "shall suffer any unforeseen and sudden physical loss or damage from any cause, other than those specifically excluded, in a manner necessitating repair or replacement", up to an amount not exceeding $1,600,000 (subject to a deduction of 5% of the adjusted loss in respect of each and every loss).

4. Subsequently by an agreement between the Plaintiff and Gammon Construction Limited ("Gammon") dated 10 April 1995, the Plaintiff hired the pile hammer to Gammon for a period of seven months commencing with effect from 1/2/1995 to 31/8/1995, in consideration of the rentals stipulated in the agreement. The agreement records that the hiring of the pile hammer to Gammon is in connection with Gammon's operations at Stonecutters Island Naval Base - Seawalls and Reclamation. The pile hammer was duly delivered to Gammon's construction site at Stonecutters Island Naval Base, in pursuance of the agreement.

5. On 22 March 1995, during the currency of the Insurance Policy, the Plaintiff alleged that while the pile hammer was being used to drive a steel pile into the seabed at the said construction site, the lower cylinder of the pile hammer suddenly cracked and fell down from a height, as a result of which the pile hammer was damaged and its replacement became necessary. By letter dated 23 March 1995, the Plaintiff duly notified the Defendant of the said damage to the pile hammer, and lodged a claim for compensation under the Policy of insurance.

6. Upon receipt of the Plaintiff's claim, the Defendant instructed Roger Houghton Loss Adjusters Limited to investigate the matter. Eventually, the loss adjusters engaged several experts to advise on the matter, and the Defendant, having considered their advice, decided to reject the Plaintiff's claim on the basis that it was excluded under one or other of the Exclusion Clauses in the Policy, and duly notified the Plaintiff thereof.

7. The Defendant's Defence as pleaded alleged that the Plaintiff's action was commenced outside of the time periods specified in Condition 8(b) of the Policy, and that the Plaintiff had thereby, in terms of the said condition, forfeited all benefit which would otherwise accrue to it under the Policy. At the outset of the hearing, however, Mr Yuen, who appeared on behalf of the Defendant, informed me that the Defendant was no longer seeking to rely upon Condition 8 of the Policy.

Whether the Plaintiff had an Insurable Interest

8. The first point taken by Mr Yuen on behalf of the Defendant, which logically calls for consideration at the outset, is that the Plaintiff's claim should be dismissed on the ground that the Plaintiff has failed to show that it had any insurable interest in the pile hammer at the time that it was damaged.

9. This point was not expressly pleaded by the Defendant, though Mr Yuen asserts that the issue was sufficiently raised by paragraph 3 of the Amended Defence, in which the Defendant, save for admitting that the Plaintiff was the lessee under the Lease Agreement with Wayfoong Credit Limited, expressly did not admit the Plaintiff's allegations in paragraph 3 of its Amended Statement Of Claim, to the effect that it was at all material times the owner or entitled to the possession of the diesel pile hammer.

10. In my view the Defendant did thereby put in issue the question of the Plaintiff's interest in the property insured; in any event, Mr Cheung who appeared on behalf of the Plaintiff, did not claim to have been taken by surprise, and did not object to Mr Yuen arguing this issue. Furthermore the law appears to be clear that in relation to contracts of indemnity insurance, which the subject policy is, it is open to the Insurer at any time to raise the question of insurable interest, upon which it is for the insured to aver and prove that he had such interest at the time of the loss, failing which he is not entitled to benefit under the Policy.

(See Macaura v. Northern Assurance Company, Limited and others [1925] A.C. 619 (House of Lords), at 631-2.)

(See also Chitty On Contracts 27^th Edition, Vol. 2, Para. 39-006, 39-013.)

11. To constitute an insurable interest in property, the insured must have some legal or equitable interest in the property insured at the time of the loss. A mere expectation by a person that he will acquire a legal or equitable interest in the property insured in the near future does not suffice to confer an insurable interest in the property insured, nor is it sufficient that the insured will suffer loss following upon the happening of the event insured against.

(See Law of Insurance, 3rd Edition, by Poh Chu Chai, pages 9-11.)

12. On the facts of the present case, Mr Yuen has submitted that the Plaintiff was neither the owner nor entitled to possession of the pile hammer at the time the loss was sustained. The Plaintiff's pleaded case, and the evidence of its witness, Mr Chung Kau, was to the effect that the Plaintiff was, at the material time, subject only to the interest of Wayfoong Credit Limited, the owner of the pile hammer. Mr Yuen submits that on a proper construction of the lease/hire-purchase agreement between the Plaintiff and Wayfoong Credit Limited, since the Plaintiff was still leasing the pile hammer from the Finance Company at the material time, and had not exercised its option to purchase/terminate the lease as provided under the agreement - whatever the Plaintiff's future intention may have been - the Plaintiff remained at all material times, vis-a-vis the Finance Company, the lessee of the pile hammer.

(See Diamond - Introduction to Hire-Purchase Law, 2nd Edition, pages 11 and 66-67.)

13. The Plaintiff as lessee of the pile hammer was of course entitled to possession of it, but it had voluntarily surrendered such possession to Gammon when it had subsequently hired the pile hammer to Gammon in terms of the agreement dated 10 April 1995, and duly delivered it to Gammon's construction site in pursuance of that agreement.

14. Mr Yuen submitted that the Plaintiff's lack of any insurable interest in the pile hammer thereafter is emphasized by the terms of Special Condition 9 of the agreement of hire concluded with Gammon which provided that : "The property of the plant shall pass from the owner (Plaintiff) to the hirer (Gammon) immediately upon its arrival at site and shall be passed from the hirer to the owner upon its removal from site ........". (This type of clause which vests ownership of the plant in the hirer is apparently common in the construction industry, and, if the intention of the parties is clearly expressed, it will validly achieve the intended effect of passing the property in the plant upon its delivery to the site.

See Keating on Building Contracts, 16^th Edition, page 263-5.)

15. Thus at the time of the damage to the pile hammer, Mr Yuen submitted, the Plaintiff had neither any legal or beneficial title in the pile hammer, since these remained with the Finance Company, nor did it have either possession or the right to possession of the pile hammer, which it had voluntarily surrendered to Gammon in terms of the hire agreement until 31/8/1995. Therefore, it lacked any insurable interest at the material time.

16. Mr Cheung submits that the Plaintiff's reversionary rights to the return of the pile hammer upon the expiry of the hire agreement with Gammon Limited constituted an insurable interest in it at the time of the loss.

17. There can be no doubt, upon the application of the relevant legal principles, that as lessee of the pile hammer from the Finance Company, and prior to its hiring the pile hammer to Gammon, the Plaintiff did have an insurable interest in the property. Although the Plaintiff did thereafter, for a temporary and finite period surrender its possession of and rights in the pile hammer to Gammon, it did not thereby intend to give up all its rights and interest in the hammer. Notwithstanding its hiring of the hammer to Gammon, the Plaintiff remained subject to all its rights and duties under the lease/hire-purchase agreement with the Finance Company : liable to continue paying the rentals as they fell due, and meanwhile entitled to the continued possession and use of the pile hammer, and in due course to exercise its option to purchase/sell the hammer upon the expiration of the Primary Period in terms of that agreement, namely as from 21 April 1996, some 8 months after it was due to recover possession of the pile hammer from Gammon. I note that the lease agreement between the Finance Company and the Plaintiff did not prohibit sub-letting of the property by the Plaintiff.

18. It was clear from the evidence of Mr Chung Kau, a director of the Plaintiff, that the Plaintiff considered itself at all material times to be the owner of the pile hammer (having purchased it with a loan from the finance company), and that it intended to re-possess it from Gammon in due course.

19. Furthermore, in terms of its hire agreement with Gammon, the Plaintiff remained at a high degree of risk in relation to the pile hammer during the period of hire, and notwithstanding the passing of the property in the plant to Gammon while it remained on Gammon's site. Special Condition 7(b) provided that the Plaintiff remained responsible for all stoppages due to breakdown of the hammer, and responsible to carry out immediate repairs to it at its sole cost and expense, and was obliged to make full allowance in the hire charges in respect of such stoppage. Special Condition 7(d) provided that in the event of the breakdown time lasting more than 4 hours, the Plaintiff was obliged to replace the hammer with a substituted hammer of the same description as required by Gammon, and in good working order and condition, and that the cost of transporting, loading and unloading such shall all be borne by the Plaintiff.

20. In all these circumstances, it is clear, in my view, that the Plaintiff retained sufficient equitable and legal interest in the pile hammer, notwithstanding that it had temporarily surrendered possession of and the property in the hammer to Gammon in pursuance of the lease agreement dated 10 April 1993, to vest in the Plaintiff an insurable interest in the pile hammer at the time that the damage occurred while it was being used by Gammon on its construction site. (I note in passing that prior to the institution of these proceedings, the Defendant appears to have dealt with the Plaintiff's claim purely on its merits, without at any time suggesting that it had been prejudiced by, or that the Plaintiff had acted wrongly by, sub-letting the pile hammer to Gammon.)

Exclusions in the Insurance Policy

21. The Defendant maintained at all times in its dealings with the Plaintiff that any liability on its part for the damage to the pile hammer was excluded under one or other of the Exclusions contained in the insurance policy. It relies in particular upon Exclusion (b) and Exclusion (q). Under the heading Exclusions, the policy provides as follows :

"The insurers shall not be liable for

...

(b) Loss or damage due to electrical or mechanical breakdown, failure, breakage or derangement, freezing of coolant or other fluid, defective lubrication or lack of oil or coolant, but if as a consequence of such breakdown or derangement an accident occurs causing external damage, such consequential damage will be indemnifiable.

.....

(q) Loss or damage for which the supplier or manufacturer is responsible either by law or under contract;

in any action, suit or other proceeding where the Insurers alleged that by reason of the provisions of Exclusions (m) - (q) above, any loss, destruction or damage is not covered by this policy, the onus of proving that such loss, destruction or damage is covered shall be upon the Insured".

Mr Yuen accepted that the onus was on the Defendant in relation to Exclusion (b), in the normal way, to prove that its liability is excluded by the provisions of that section; however he submitted that in view of the contractual provisions quoted above, the onus in respect of Exclusion (qhas effectively been shifted to the Plaintiff to prove that the damage in question is covered by the Policy.

22. That such contractual provisions do effectively shift the onus onto the insured appears to be clearly established.

(See Levy v. Assicurazioni Generali [1941] A.C. 791 (Privy Counsel).)

The Cause of the Damage to the Pile Hammer

23. Surprisingly, no eye-witness evidence was led to establish the circumstances in which the damage to the pile hammer was sustained. I was informed by counsel that no eye-witnesses to the accident could be located. Both parties therefore rely entirely upon expert evidence to establish the cause of the damage to the pile hammer.

24. Messrs Scott and O'Donnell Ltd., Consulting Engineers and Surveyors, were initially instructed by the Plaintiff to inspect the pile hammer following the accident. They did so on 27 March 1995, and submitted a very short one-page Survey Report dated 31 March 1995 in which they stated that the pile hammer was said to have fallen from the piling rig, and upon inspection they noted cracks at the lower part of the hammer which led them to the conclusion that the damage was caused by the falling of the pile hammer from the piling rig.

25. It is clear that the Report was based upon an assumption that the hammer had fallen from the rig. For this reason, and the apparent superficiality of the investigation which was conducted, the Report is of minimal probative value, and can effectively be discounted for present purposes. (This is not intended in any way to be a criticism of the company which prepared this report : they were simply acting upon the information and instructions provided to them by the Plaintiff at the time.)

26. The Plaintiff also called Dr Hans Reimers, a German citizen who came to Hong Kong specifically to give evidence in this matter, as one of its expert witnesses. It was clear from both his Report and his evidence that he also based his investigations upon an assumption that the hammer had fallen from the rig. He testified that he had in the past from time to time been consulted by the manufacturer of the hammer when a problem had arisen in relation to the materials used in the manufacture of the hammer, and in relation to the present case he was again instructed by the manufacturer to submit a report to it. In the opening paragraph of his Report, he states : "For reasons not known to us a pile-driving device of one of your customers in Hong Kong plunged from a height and the cylinder bases consisting of perlitic sphero casting was broken. Even though the cause of the damage has already been identified the user and his insurance respectively wish the broken piece to be examined on (sic) the material used". It was evident from the above, as elaborated in his evidence, that Dr Reimers' investigations were conducted upon the assumption that the cause of the damage had already been established, and his investigations were confined to testing the materials which had been used to manufacture the pile hammer.

27. Dr Reimer's tests were conducted upon a sample which had been cut out from the damaged cylinder base of the pile-hammer and sent to him in Germany : he reported that the material was appropriate for manufacturing the cylinder base, and after he had carried out a tension test on such material he stated that the cylinder "would have fulfilled its function for an unlimited time had it not been exposed to extremely high and sudden usage due to the working accident." His final conclusions were as follows :

"The pile driver ... plunged from a large height with the result of damage to the cylinder base. Cause of the damage was not - as a thorough testing of the material showed - a material defect but an extreme strain on the material caused through the plunge of the unit."

28. Since Dr Reimers' investigations were conducted upon the firm assumption that the damage had been caused by the plunge of the unit from a large height, for which there was no basis in the evidence, his Report and conclusions as to the cause of the damage were also of limited probative value. When it was put to him in cross-examination that there was no evidence to support the assumption that the pile-hammer had fallen from a height, he frankly stated : "Then I would look for another reason." (Again, my remarks are not intended to be in any way critical of the approach or findings of Dr Reimers, since his investigations were necessarily limited by the instructions which he received from the manufacturer.)

29. The Defendant called Mr Kwan Pui Sing to give expert evidence on its behalf. His qualifications and expertise are largely in mechanical and marine engineering, and also include specifically metal properties, stress analysis and chemical analysis of metals. At the time he conducted his investigations in this matter he was a lecturer in the Department of Mechanical and Marine Engineering at the Hong Kong Polytechnic University, though at the time of giving evidence he was a managing director of EverCrete (HK) Limited. In the preamble to his Report he stated :

"It was told that the diesel hammer failure occurred in a sudden while performing marine piling work to a depth of three metres. The schedule piling depth was supposed to be 30 metres at the same spot."

He concluded that :

"The machine failure is highly likely to be an 'elevated-temperature' metal fatigue case caused by a combination of factors such as stress concentrations, manufacturing imperfections and its high working temperature."

In paragraph 6 of his Report he elaborated that :

"The possible causation of the occurrence of this elevated-temperature fracture failure is a combination of stress concentration, low cycle fatigue and high working temperature."

Stress Concentration

30. A high stress concentration would occur in and around an area such as the grease nipple hole identified in photographs 13 and 14 of his Report, and upon close examination of the fracture surface he found distinct characteristics of semi-herringbone marks which pointed towards the grease nipple hole. "The bottom portion of this hole, with its minimum metal thickness and high temperature on the inner cylinder surface, could be the nucleus location of the fracture."

Fatigue fracture

31. There are three stages of fatigue fracture : namely, initiation, propagation and final rupture.

32. Stage I - initiation

"If casting imperfections occurred in this cylinder body around the nipple hole, then internal stress concentration zone would be formed. Simultaneously, the sharp edge and corner of the nipple hole ... is considered a high stress concentration zone - i.e. external stress concentration - in association with the internal one. Given the two stress concentrations happened at the same time, the cast steel crystalline structure of the cylinder body was undergoing an irreversible change caused by the repetitive shear stress during operation. A cumulative damage, generated from these stresses, would occur in the crystalline structure due to the accumulation of micro-changes over a large number of low applications ... and could also lead to fatigue fracture."

33. Stage II - propagation

"After the initial crack was formed, it became an extremely sharp stress concentration spot ... During the propagation of the crack, physical features such as striations, tiny ridges and semi-herringbone marks (chevron marks) were then created ..."

34. Stage III - Final rupture

"With the propagation of the fatigue crack persisted, this could gradually reduce the cross-sectional area ... of the machine part. Consequently this weakened the machine part to such an extent that a final complete fracture happened at a last load application which is greater than the metal ultimate tensile strength."

35. Working temperature

"In the course of operation at an elevated temperature, the working life of a metal component is predictably limited ... Since this is an air-cooled diesel hammer, heat was generated during explosion stroke and then dissipated to the lower cylinder block."

36. Mr Kwan's initial Report (Exhibit 4) which was submitted to the Defendant before the Plaintiff's expert, Mr Dennis Fan of Eastern Technical Services Ltd., submitted his Report to the Plaintiff, is in identical terms to paragraphs 1-6 of his final Report which he submitted : the only difference between the two being that before he submitted his final Report he had read the Reports by Dr Reimers and Mr Dennis Fan, and in paragraphs 7-9 he included detailed comments upon their Reports, and reiterated the conclusion which he had come to in his initial Report.

37. If Mr Kwan's conclusions were correct that the failure of the pile-hammer was the result of metal fatigue caused by manufacturing imperfections combined with the high working temperature of the machine, the Defendant's liability would be excluded under Exclusion (q) in the Policy.

38. Mr Dennis Fan was called as an expert witness on behalf of the Plaintiff, and he adopted and elaborated upon his Report dated 22 September 1995 which he submitted to the Plaintiff. His qualifications are in metallurgical engineering, and he worked as a Metallurgist and Chemist for various companies in Hong Kong before occupying his present position as Laboratory Director and Senior Metallurgist of Eastern Technical Services Ltd. He testified that for the last 40 years he has specialized in metal testing, and between 1957 and the present he has conducted failure investigations relating to metals in over 900 cases.

39. Mr Fan initially inspected the broken lower cylinder at the Wah Keung Machining Workshop; subsequently he went to the site to inspect the remainder of the pile-hammer, whereafter he returned to the workshop and conducted further detailed inspection of the broken part, and marked pieces of it to be cut by the workshop, which he subsequently studied further in the laboratory of Eastern Technical Services, and which he caused to be photographed for the purposes of his Report.

40. As noted in paragraph 1 of his Report, his visual inspection of the broken portion of the hammer revealed "characteristic instant brittle failure" on the full face of the fracture. He explained in evidence that brittle or instant fractures, which occurred suddenly as a result of impact, are different from fatigue fractures, namely fractures caused by metal fatigue, which take time to develop. He further elaborated that to his mind it was very obviously a case of a brittle fracture, and that he could find no signs of metal fatigue present. In particular, he could find no "beach marks", which would have been present and clearly visible even to the naked eye, if the fracture was the result of metal fatigue.

41. In his Report Mr Fan went on to state that at least seven fracture origins were noted on the fracture face, however the primary fracture origin was determined to be at the fracture lubricating hole, where very clear radiating marks were present. (This confirmed Mr Kwan's finding that the same lubricating hole was the primary fracture origin).

42. Mr Fan subjected five samples taken from the hammer, which determined that the broken lower portion of the cylinder was made of ductile iron, not steel, which he said should have been obvious to any expert in this field. (It will be recalled that Mr Kwan had stated in evidence that he assumed that the broken portion of the hammer was made of steel. He accepted under cross-examination that the micro-structure of the material, as illustrated in the micrographs provided by Mr Fan, did clearly indicate that the material was cast iron rather than steel. He explained that he had not had a chance to analyze the material, and had simply assumed that it had been made of steel.)

43. After conducting microscopic examinations of the various samples that he had taken, Mr Fan concluded that the broken portion of the hammer was "free from significant defects i.e. shrinkage or unsound conditions". In other words, "the fracture initiation point was free from any structural abnormalities". Another sample (Specimen No.4) which represented another fracture origin in the location adjacent to the bracket, did reveal general unsoundness in terms of shrinkage porosities. Other samples which were located away from the primary fracture origin "showed normal spheroidization with sound metal structure ..."

44. In relation to the "general unsoundness ... in terms of shrinkage porosities" detected in Specimen No.4, Mr Fan explained that it is very difficult to eliminate shrinkage defects in cast iron, and he expected, from his general experience in the field, to find some such shrinkage. The samples, including Specimen No.4, were subjected to hardness testing, which showed that the hardness and structure of the material was all within the acceptable range of tensile strength (BS2789:1985), including the unsound portion which, although at a lower level of tensile strength than the remainder of the hammer, was nevertheless within the acceptable range. He looked for but could not detect any signs of metal fatigue as having caused or contributed to the failure of the hammer.

45. Mr Fan also examined the steel liner of the hammer which revealed that the working surface had been damaged by hard gliding. The severe damage was mainly confined to the middle area, and the absence of any signs of over-heating suggested that the force "had been tremendous and sudden in a split second with the lubricant still running".

46. His Report concluded that :

"(1) The failure is of an instant type ...

(2) Severe gliding marks shown on the hard bracket liner working against the piston strongly suggests a tremendous sudden non-axial loading has been exerted due to some unidentifiable abnormal piling operation.

(3) The primary failure portion (from the lubricating hole to the front end) showed unsoundness. The hardness and structure conformed to BS2788:1985 ...

In a final appraisal of all the above facts it is of the opinion that the abnormal piling operation has acted to be the major contributory factor to this instant failure."

(Mr Fan explained that "axial" simply means vertical, and that the pile-hammer is designed to operate axially; "non-axial" means the application of a sideways force. The bell-bottom effect which had been produced to the bottom of the liner, as depicted in Photograph 19, indicated that an abnormal non-axial loading force had been exerted upon the cylinder liner.)

47. In my view the evidence of Mr Fan was clearly to be preferred to that of Mr Kwan, on the facts of this case. While there is no reason to doubt the high degree of Mr Kwan's qualifications and experience in his field, it was clear to my mind that his conclusions, as expressed in his Report and confirmed in evidence, were based to a significant extent upon theoretical possibilities, whereas Mr Fan's findings were at all times grounded in the hard evidence presented by the detailed and comprehensive tests which he conducted upon the various parts of the pile-hammer. The fact that some of Mr Fan's findings did support some of Mr Kwan's conclusions, taken in isolation, did not however lend support to Mr Kwan's overall conclusion that it was "highly likely to be elevated-temperature metal fatigue" which led to the failure in question.

48. I note that Mr Kwan was unable to identify any hard evidence of manufacturing imperfections in the hammer, nor was he able to say that there was in fact an "elevated" temperature (namely a temperature higher than the machine was designed to withstand) present prior to or at the time that the failure occurred. Mr Kwan frankly conceded that where the fracture has been caused by metal fatigue, features of all three stages whereby metal fatigue leads to such a fracture should be present, and that in the instant case he did not detect any Stage I symptoms to be present : he explained that they "should be" present, because the Stage III symptoms were so clearly visible. In this connection, he conceded that in the statement in paragraph 9.2 of his Report to the effect that : "... further clear identifications on the three stages of fatigue fracture are found", the words "are found" should more correctly read "should be present".

49. Mr Fan specifically looked for signs and symptoms of metal fatigue in the tests which he conducted, and was unable to find any such features, neither upon a visual examination nor by using an electronic scanning microscope.

50. Mr Yuen argued that even if Mr Fan's findings were accepted, namely that a "tremendous sudden non-axial loading" occurred in the course of "some unidentifiable abnormal piling operation", these findings established that the damage was caused by "mechanical breakdown, failure, breakage or derangement ...", which would exclude the Defendant's liability under Exclusion (b). I do not agree that Mr Fan's findings lead to any such conclusion. Nothing in the evidence presented by any of the witnesses indicated that the damage was caused by mechanical breakdown, failure, breakage or derangement, nor indeed that any mechanical malfunction occurred prior to or at the time of the failure.

51. The Plaintiff has satisfied me on the balance of probabilities that the loss or damage to the pile-hammer constituted "unforeseen and sudden physical loss or damage from any cause", which was not excluded by any of the Exclusions in the Policy, and that it is entitled to be indemnified by the Defendant in terms of the Policy. I accordingly order judgment for the Plaintiff, in the sum of $1,520,000, namely $1,600,000 less 5% as provided by the Policy, with an order nisi that the Plaintiff is to have its costs of these proceedings.