Cl. 18-55 reads:
After repairs have been completed, the insurer shall only be liable for loss of time:
Cl. 18-52 shall apply correspondingly to loss of time after completion of repairs.
- until the MOU can resume the activity that it was engaged in under the contract of employment that was in force at the time of the casualty, or
- while the MOU moves back to an equidistant position to where it without the casualty would have commenced the move to its next location under a contract of employment that was entered into with binding effect prior to the commencement of the move to the repair location.
Cl. 18-55 is corresponding to Cl. 16-13, but letters (b) and (d) are not deemed relevant to MOUs and are therefore not included in Cl. 18-55. Cl. 18-55 (a) is not substantively amended compared with Cl. 16-13 (a), apart from some editorial amendment to adapt it to the modus of operation of MOUs. Letter (b) is amended as compared with Cl. 16-13 letter (c).
This provision limits the insurer’s liability for loss of time that occurs after repairs have been completed. According to the main rule for calculating loss of time set out in Cl. 18-46, the insurer would have been fully liable for time lost after completion of repairs to the extent that this loss of time was a result of the casualty.
The insurer would, therefore, have had to pay compensation for loss of time until the MOU was again back to its previous employment, as well as for any loss of time resulting from the termination of the contract of work. Thus, Cl. 18-55 involves a limitation on the liability that follows from Cl. 18-46 with regard to time lost after completion of repairs. In accordance with sub-clause 1, first sentence, the insurer is only liable for such loss of time in those cases that are specifically mentioned in letters (a) and (b); in all other cases, the liability of the loss of hire insurer ceases when the repairs have been completed.
Letter (a) deals with the situation where the MOU, after completion of repairs, is to continue to operate under the contract of works that was in effect at the time of the casualty; in such case, the insurer is liable for time lost until the MOU has resumed its former employment. The provision applies irrespective of the type of contract of works concerned. Contractual obligations that are not set out in an actual contract of works must be regarded as equivalent to such a contract in this connection. If, on the other hand, the contract of works is cancelled due to the MOU’s stay at a repair location, the insurer is only liable for the time lost up to the completion of repairs, unless cover is provided under letter (b).
Letter (b) regulates loss of time for a MOU that does not return to the location at which the casualty occurred but moves to another location, either to commence new operations that it was scheduled to move to, after the completion of the operations it was engaged in at the time of the casualty, irrespective of whether the MOU actually completed those operations, or to take up work under a new contract of works that was concluded prior to “the commencement of the move to the repair location”. These words are new as compared with Cl. 16-13 letter (c) which only compensates loss of time after completion of repairs if the contract was entered into prior to the occurrence of the casualty. A contract may be legally binding and therefore concluded even if the contract is not formalized in a written agreement duly executed and signed by the parties. A mere letter of intent, however, will not satisfy the requirement of a binding contract pursuant to letter (b).
The next location may be in a different direction from the repair location than the location at which the casualty occurred, but the insurer’s liability will be limited to the time necessary to move in the new direction for a distance equal to the distance, a return to the casualty location.
Loss of time after completion of repairs covers both the situation where the MOU remains in the repair yard for a while after repairs have been completed and while the MOU moves to a location to resume its normal activity. However, loss of time due to the MOU being unable to find employment immediately after repairs have been completed is not covered. Such loss of time may in certain cases be said to be a consequence of the repairs and hence also a consequence of the damage that was repaired. However, the dominant cause of the loss of time will be the market conditions, or possibly decisions made by the assured, and it is therefore natural that the loss should not be covered.
The reference in sub-clause 2 to Cl. 18-52 is made in respect of its sub-clause 2, second sentence, which establishes that removal time occurring during the deductible period is not to be apportioned, cf. the Commentary on Cl. 18-52.