References: [2002] EWHC 2601 (Comm), [2003] 1 All ER (Comm) 277, [2003] 1 Lloyd’s Rep 296
Links: Bailii
Coram: Tomlinson J
Ratio: The claimant ship owner and its mortgagee sued the defendant insurer after the loss of the insured vessel, through fire. The insurers replied that the damage by fire was so extensive that the vessel was beyond repair when she sank, and was therefore a constructive total loss (‘CTL’). They said the cause of the loss was not the fire, and the loss was uninsured.
Held: Abandonment of the subject-matter insured will take place by operation of law when the underwriters settle the claim. Section 61 is thus satisfied. The insured has been deprived of his right of choice envisaged by Section 61. He has no option but to treat the vessel as a total loss. Section 62(7) says in terms that notice of abandonment is unnecessary where when the insured receives information of the loss there would be no possibility of benefit to the insurer if notice were given to him. The Claimants were entitled to recover as for a CTL.
Statutes: Marine Insurance Act 1906 6162(7) 77(2)
This case cites:
- See Also – Kastor Navigation Co Ltd and Another v AGF M A T and others ComC (Bailii, [2003] EWHC 472 (Comm), Times 29-Mar-03)
The court was able to make costs orders which differentiated between different stages and elements of a case. This might well result, as here, in a situation of a succesful claimant being ordered to pay 80% of the defendant’s costs, because of costs . . - Cited – Le Cheminant v Pearson ((1812) 4 Taunt 367)
The insured having carried out a partial repair folowing one incident, the vessel was then a total loss.
Held: The insured could recover both losses. . . - Cited – Slattery v Mance ([1962] 1 QB 676)
Where the insured property is damaged in a fire, unless the insurers allege that it had been started deliberately with the connivance of the insured, acceptance that a fire had occurred amounted to admission of the operation of an insured peril. . . - Cited – Robertson v Nomikos HL ([1939] AC 371)
The ship suffered a constructive total loss under the terms of their freight insurance policy, which stipulated that the value when repaired was to be taken as the insured value. The cost of repairs was greater than the insured value, but less than . . - Cited – Bank of America National Trust and Savings Association v Chrismas (‘The Kyriaki’) QBD ([1993] 1 Lloyd’s Rep 137, Times 26-Aug-92)
When a party seeks to add a new defendant by the amendment of a writ, that amended writ must be served within the applicable limitation period. For limitation purposes the assured’s cause of action arose at the date of the CTL casualty, that a . . - Cited – Chandris v Argo Insurance Ltd ([1963] 2 LLoyds Rep 64)
Terms of an insurance policy for the very nature of the loss may require a particular method of computation or process of quantification of loss before payment is due. Ordinarily, the right to the indemnity accrues as soon as the loss has been . . - Cited – Socony Mobil Oil Co Inc and others v West of England Ship Owners Mutual Insurance Association Ltd (Padri Island) (No 2); Firma CF-Trade SA v Similar (The ‘Fant’) HL ([1991] 2 AC 1, Gazette 25-Jul-90, [1990] 2 Lloyds Rep 191)
The House was asked as to the effect of section 1(3) of the 1930 Act on policies including ‘pay or be paid’ clauses.
Held: The central question was whether the condition of prior payment was rendered of no effect by section 1(3) of the Act of . . - Cited – Andersen v Marten CA ([1908] 1 KB 601)
The vessel was first taken captive and then lost. The insurer said that actual loss was caused by the capture, which was excepted.
Held: The right to claim as a constructive total loss had not been affected. . . - Cited – PYSBE v Beer ([1946] 79 LLR 417)
The court considered how an event after the insured event may affect the insurance claim: ‘once you have got a constructive total loss, the mere fact that it may ultimately become an actual loss because of some event that is not within the policy . . - Cited – Andersen v Marten HL ([1908] AC 334)
The ship was a total loss by capture before she became a wreck by perils of the seas. . . - Cited – Livie v Janson ([1810] 12 East 648)
The time to estimate the loss under an insurance claim where the party is put to no expense, as in the case of unrepaired damage, is at the expiration of the risk. In the case of a partial damage short of a total loss left unrepaired, the insured . . - Cited – Kaltenbach v Mackenzie CA ([1878] 3 CPD 467)
The court described the origin of the necessity of giving a notice of abandonment in a shipping insurance claim and explained its function.
Brett LJ said: ‘This case raises the questions of abandonment and notice of abandonment on a policy of . . - Cited – British and Foreign Insurance Co Ltd v Wilson Shipping Co Ltd HL ([1921] 1 AC 188)
The vessel was insured against perils of the sea and suffered damage by a risk covered by the policy. Before the damage was repaired she was lost, still during the currency of the policy, but by a risk which is not covered by the policy.
Held: . . - Cited – Hahn -v Corbett ([1824] 2 Bing 206)
The cargo, Manchester cotton goods, was insured against marine risks from London to Maracaibo ‘warranted free from capture and seizure.’ The vessel was grounded off Maracaibo and became a constructive total loss. Ninety-five per cent of the cargo . . - Cited – Roux v Salvador CeC ([1836] Bing NC 266)
Hides were insured for their journey. Unfortunately they were in a process of putrefaction which would have been complete by the time of arrival at the port of destination, Bordeaux, such that on arrival they could not properly have been described . . - Cited – Rhesa Shipping Co SA v Edmonds (The Popi M) HL ([1985] 2 All ER 712, [1985] 1 WLR 948, [1985] 2 Lloyds Rep 1, [1985] UKHL 15, Bailii)
The Popi M sank in calm seas and fair weather as a result of a large and sudden entry of water into her engine room through her shell plating. The vessel’s owners claimed against her hull and machinery underwriters, contending that the loss was . . - Cited – The Marel CA ([1994] 1 Lloyd’s Law Rep 624)
. . - Cited – The Ikarian Reefer CA ([1995] Lloyd’s Rep 455)
The court reversed the decision of the trial judge that the plaintiff insured shipowners had not deliberately scuttled their vessel or cast her away: ‘(1) The burden of showing that the trial Judge was wrong lies on the appellant . . (2) When . . - Cited – Northern Shipping Company v Deutsche Seereederei Gmbh and others (‘The Kapitan Sakharov’) CA (Bailii, [2000] EWCA Civ 400, [2000] 2 Lloyd’s Law Rep 255)
A carrier: (a) should not be exposed to an infinite liability in time; and (b) is not, without more, liable for latent defects in a vessel before it acquired it. The relevant failure to exercise due diligence must relate to the performance of a . .
(This list may be incomplete)
This case is cited by:
- See also – Kastor Navigation Co Ltd and Another v AGF M A T and others ComC (Bailii, [2003] EWHC 472 (Comm), Times 29-Mar-03)
The court was able to make costs orders which differentiated between different stages and elements of a case. This might well result, as here, in a situation of a succesful claimant being ordered to pay 80% of the defendant’s costs, because of costs . . - Appeal from – Kastor Navigation Co Ltd and Another v Axa Global Risks (Uk) Ltd and others CA (Bailii, [2004] EWCA Civ 277, Times 29-Apr-04)
The Kastor Too had been lost in a fire. After substantial litigation, the insurers now appealed an order finding a constructive total loss (it was beyond economic repair or recovery). They had said that it was already beyond repair immediately . .
(This list may be incomplete)
Jurisdiction: England and Wales
Last Update: 19-Nov-17
Ref: 178942