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These cases are from the lawindexpro database. They are now being transferred to the swarb.co.uk website in a better form. As a case is published there, an entry here will link to it. The swarb.co.uk site includes many later cases.  














Insurance - From: 1985 To: 1989

This page lists 28 cases, and was prepared on 08 August 2015.

 
Phoenix General Insurance Co of Greece SA -v- Halvanon Insurance Co Ltd [1985] 2 Lloyds Rep 599
1985
ChD
Hobhouse J
Insurance
The court was asked to consider preliminary issues concerning facultative obligatory (fac. oblig.) reinsurances of a variety of business. The issues included whether the reinsured was obliged to keep a retention and whether the writing of its business was subject to implied terms. Both parties were suggesting that terms were to be implied. Held: Hobhouse J accepted an implied term into contracts of reinsurance, which extended to the obligation to keep proper accounting records and to make them reasonably available to reinsurers as being something which "would probably be imported anyway by the duty of good faith".
Hobhouse J set out the pleaded implied terms and said: "The implication of these terms was not controversial before me. Both [expert] witnesses thought them appropriate. Even though the opinion of the witnesses as to what is appropriate and reasonable does not itself suffice to show that such terms should be implied, I am satisfied that such terms are necessary in the present transactions. The fac. oblig. nature of the transaction which imposes no restriction on the reassured's right to chose whether to cede or not to cede, without giving the reinsurer any equivalent right, does necessitate that the reinsured should accept the obligation to conduct the business involved in the cession prudently, reasonably carefully and in accordance with the ordinary practice of the market. In the general formulation the word "reasonable" is to be preferred to "due" and the duty to act prudently as if not reinsured is not an alternative but it is really a restatement of the same obligation, provided it is realised that the obligation does not preclude the plaintiffs from taking into account the added capacity to write business that the availability of the reinsurances give them. Such is, after all, one of the important purposes of any reinsurance. In general terms, it must also be pointed out that the overrider commission being paid to the plaintiffs in part specifically covers the cost of carrying out these obligations."
1 Citers


 
Insurance Co of Africa -v- SCOR (UK) Reinsurance Co Ltd [1985] 1 Lloyd's Rep 312
1985
CA
Robert Goff LJ, Fox LJ
Insurance, Contract
An underlying insurance policy covered a warehouse in Liberia against fire, including $500,000 for buildings and $3 million for contents. The warehouse became a total loss. The owners of the warehouse brought proceedings in the Liberian courts. The insurers unsuccessfully defended, and as well as the sum insured, they had to pay general damages of $600,000 and $58,000 costs. The insurers could recover a proportion of the damages and costs from the re-insurers under an implied term of the re-insurance contract. Held: There was no basis to imply a term that the re-insurers should bear a proportion of the costs of defending the claim on the ground of business efficacy. The contract worked effectively without any such implication, and if such a term was implied, the re-insurers' potential liability would be increased beyond, and possibly far beyond, the sum insured under the contract of re-insurance. The effect of the words in the policy "to pay as may be paid thereon" was to bind reinsurers to a compromise by the insurers of the question of the amount of a claim so that, provided that the insurers could establish a loss of the kind insured and reinsured, and that the reinsured had acted honestly and had taken all proper and businesslike steps to have the amount of the loss fairly and carefully ascertained, reinsurers were obliged to indemnify the insurers in respect of that amount.
1 Citers


 
J J Lloyd Instruments Ltd -v- Northern Star Insurance Co Ltd "The Miss Jay Jay" [1985] 1 Lloyd's Rep 264
1985

Mustill J
Insurance
Mustill J considered liability under a marine insurance where damage was suffered when the sea state was within what might reasonably be anticipated: "The cases make it quite plain that if the action of the wind or sea is the immediate cause of the loss, a claim lies under the policy notwithstanding that the conditions were within the range which could reasonably have been anticipated".
Mustill J said: "Assuming, therefore, that the cases on "perils of the seas" may properly be cited in the present context, what principles do they lay down? I think it helpful, when approaching this difficult area of the law, to draw two sets of distinctions. The first relates to weather conditions, which for present purposes may be divided into three categories: (i) "Abnormally bad weather". Here the weather lies outside the range of conditions which the assured could reasonably foresee that the vessel might encounter on the voyage in question. (ii) "Adverse weather": namely, weather which lies within the range of what could be foreseen, but at the unfavourable end of that range. In effect, the weather is worse than could be hoped, but no worse than could be envisaged as a possibility. (iii) "Favourable weather": namely, weather which lies within that range, but is not bad enough to be classed as "adverse". At the other extreme of the range from "adverse" weather can be found what may be called "perfect" weather.
The assignment of the conditions of wind and sea encountered on any particular occasion to one of these categories will vary according to the nature of the voyage: what is abnormal weather for a short passage in sheltered waters may well be commonplace on a winter voyage in the North Atlantic. Similarly, the nature of the vessel will have to be taken into account. Some craft are not intended to endure conditions which would be trivial for a more robust vessel.
"The second distinction relates to seaworthiness, and is one of degree. A vessel is "unseaworthy" if it is unfit to face all the hazards which "a ship of that kind, and laden in that way, may fairly be expected to encounter" on the voyage: Steel v. State Line S.S. Co., (1877) 3 App. Cas. 72, at p. 77. Thus the vessel must be fit to deal adequately with adverse as well as favourable weather. Moreover, quite apart from mere unseaworthiness, there may be instances in which the ship is in such a weak condition that it cannot withstand even perfect weather. Borrowing a word from Wadsworth Lighterage & Coaling Co. v. Sea Insurance Co., (1929) 34 Ll.L.Rep. 98 at p. 105, the ship may be said to suffer from "debility". All debilitated ships are unseaworthy, but the contrary is not the case.
"With these distinctions in mind, I believe that the effect of the authorities, so far as material to the present case, may be quite briefly stated as follows.
First, as to "perils of the seas". The definition contained in r. 7 of the rules for the construction of policy set out in the first schedule to the Act excludes "the ordinary action of the winds and waves". While it is tempting to deduce from these words that a loss is not recoverable unless it results from weather which is extraordinary (namely, what I have referred to as abnormal weather conditions) this interpretation is mistaken. The principal object of the definition is to rule out losses resulting from wear and tear. The word "ordinary" attaches to "action", not to "wind and waves". The cases make it quite plain that if the action of the wind or sea is the immediate cause of the loss, a claim lies under the policy notwithstanding that the conditions were within the range which could reasonably have been anticipated. All that is needed is (in the words of Lord Buckmaster in Grant, Smith & Co. v. Seattle Construction and Dry Dock Co., [1920] A.C. 162 at p. 171)—
. . . some condition of sea or weather or accident of navigation producing a result which but for these conditions would not have occurred.
See also Hamilton, Fraser & Co. v. Pandorf & Co., (1887) 12 App. Cas. 518 at p. 527; Canada Rice Mills v. Union Marine and General Insurance Co., (1941) 67 Ll.L.Rep. 549; [1941] A.C. 55 ; N. E. Neter & Co. v. Licences and General Insurance Co., (1944) 77 Ll.L.Rep. 202 at p. 205.
Second, as to causation. It may be that the doctrine of proximate cause has undergone some reassessment since the days when the most important cases on the present topic were decided. In those days the ultimate cause was more readily identified as the proximate cause than might be the case today. Nevertheless, it is clearly established that a chain of causation running — (i) initial unseaworthiness; (ii) adverse weather; (iii) loss of watertight integrity of the vessel; (iv) damage to the subject-matter insured — is treated as a loss by perils of the seas, not by unseaworthiness: see, for example, Dudgeon v. Pembroke, (1874) 9 Q.B. 581, per Mr. Justice Blackburn at p. 595, and (1877) 2 App. Cas. 284 , per Lord Penzance at p. 296, and Frangos v. Sun Insurance Office, (1934) 49 Ll.L.Rep. 354, at p. 359.
Third, as to "debility". Where a ship sinks through its own inherent weakness, there is no loss recoverable under the ordinary form of policy. It is not enough for this purpose that the vessel is unseaworthy. The loss must be disassociated from any peril of wind or water, even if these form the immediate context of the loss, and constitute the immediate agency (for example, the percolation of water through an existing flaw in the hull) by which the loss takes place. As Lord Buckmaster said in Grant, Smith v. Seattle Construction, sup., the policy is not a guarantee that a ship will float. See also Fawcus v. Sarsfield, (1856) 6 E. & B. 192, in relation to the first loss; Merchants' Trading Co. v. Universal Marine Insurance Co., (1870) 2 Asp. M.L.C. 431, the direction of Mr. Justice Lush approved by the Court of Common Pleas; Ballantyne v. Mackinnon, [1896] 2 Q.B., 455; Sassoon v. Western Assurance Co., [1912] A.C. 561.
Finally, as to the requirement that a loss by perils of the seas shall be "fortuitous". There may be philosophical problems here, possibly compounded by the placing of more weight than it was intended to bear on the apophthegm of Lord Herschell in Wilson, Sons & Co. v. Owners of Cargo per the "Xantho", ((1887) 12 App. Cas. 503 at p. 509) that—
. . . the purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen.
There can be few losses of which it can be said that they must happen, in the sense that this accident is bound to happen in this way at this time. Indeed, in some of the leading cases it could hardly have been predicted that the loss was bound to happen at all, whilst the policy was on risk. It is, however, unnecessary to enter into this problem. When the vessel succumbs to debility, the claim fails, not because the loss is quite unattended by fortuity, but because it cannot be ascribed to the fortuitous action of the wind and waves. A decrepit ship might sink in perfect weather tomorrow, or it might not sink for six months. To this extent a loss tomorrow is not inevitable. But if the ship does sink, there is no external fortuitous event which brings it about. In respect of such losses, the ordinary marine policy does not provide a remedy.
"In the light of these propositions, I now return to the facts of the present case. Miss Jay Jay was plainly unseaworthy, but can it be said that the craft suffered from debility in the sense to which I have referred? It seems to me that the answer must be — "No". There is no reason to suppose that the boat would have sunk at her moorings, or while under way in a millpond sea. Indeed, she had only recently completed a Channel crossing. Conversely, if one asked whether the loss was due to the fortuitous action of the wind and waves, the answer must be — "Yes". True, the weather was not exceptional, but this is immaterial. Whichever of the expert witnesses may be right as to the mechanism of the structural failure, the immediate cause was the action of adverse weather conditions on an ill-designed and ill-made hull. The cases show that this is sufficient to bring the loss within the words of a time policy in the standard form. Since I consider that there is, for present purposes, no material distinction between "perils of the seas" and "external accidental means", I hold that the plaintiffs establish a prima facie loss under section 1 (a) of the policy."
Marine Insurance Act 1906 55(1)
1 Cites

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Mark Rowlands -v- Berni Inns Ltd [1986] 1 QB 211; [1985] 3 All ER 473; [1985] 2 Lloyds Rep 437; [1985] 3 WLR 964; [1986] ANZ Conv R 501
1985
CA
Kerr LJ
Insurance, Landlord and Tenant
The plaintiff owned the freehold and had let the basement to the defendant. The plaintiff insured the building. The defendant covenanted to pay to the plaintiff an insurance rent equal to the proportionate cost of insuring the part of the building occupied by the defendant, and did pay such rent. The building was destroyed by fire caused by the negligence of the defendant. The insurer paid the plaintiff the sum due under the policy and brought an action in the name of the plaintiff to recover its outlay from the defendant. The defendant was not named as a co-insured in the relevant insurance policy. The issue came to whether the tenant had an interest in the landlord’s fire insurance policy and an insurable interest in the premises which were destroyed by fire. Held: “this ancient statute”, Section 2 of the 1774 Act (which makes it unlawful not to name, as the tenant was not named, “the person interested” in a policy to which the Act applies) had no application to indemnity insurance but only to insurances which provide for the payment of a specified sum upon the happening of an insured event. Lucena was the classical definition of an insurable interest.
Kerr LJ said: "The intention of the parties, sensibly construed, must therefore have been that in the event of damage by fire, whether due to accident or negligence, the landlord’s loss was to be recouped from the insurance moneys and that in that event they were to have no further claim against the tenant for damages in negligence. Another way of reaching the same conclusion, on which Mr. Harvey also relied, is that in situations such as the present the tenant is entitled to say that the landlord has been fully indemnified in the manner envisaged by the provisions of the lease and that he cannot therefore recover damages from the tenant in addition, so as to provide himself with what would in effect be a double indemnity. Although the receipt of insurance moneys by an innocent party is of course normally no defence to a wrongdoer (see Bradburn v. Great Western Railway Co. (1874) LR 10 Ex 1), Mr. Harvey relied on a number of passages in Parry v. Cleaver [1970] AC 1, 13 to show that considerations of "justice, reasonableness and public policy" (per Lord Reid) may require exceptions to this general principle. I do not think it necessary to elaborate upon this line of argument in the present case save to say that I accept it and regard it as complementary to the conclusion which is to be derived from the construction and effect of the terms of the lease itself, as indicated above." and (after citing canadian authorities) "In each of the cases the minority concluded that the absence of any provision expressly or impliedly exonerating the tenant from negligence was fatal, but the majority view was that there was no need for any such provision, since it was sufficiently clear from the terms of the leases and the landlords' covenant to insure against fire, including fire caused by the tenants' negligence, that the landlord could not maintain an action for negligence against the tenants, and that the landlords' insurers' right of subrogation could therefore equally not be enforced."
Insurance Act 1774 2
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Pioneer Concrete (UK) Ltd -v- National Employers Mutual General Insurance Association Ltd [1985] 1 Lloyds Rep 274; [1985] 2 All ER 395
1985

Bingham J
Insurance
The case concerned the construction of a policy containing terms requiring the insured to notify the insurers "immediately" if he had knowledge of any accident, claim or proceedings. Held: In any case where an insurer is entitled to rely on breach of a condition precedent in his policy, there is no requirement for him to establish prejudice as a result of the breach. The policy "expressed in clear terms" that the notice provision was a condition precedent upon which the insurers were entitled to rely.
1 Citers



 
 Eagle Star Insurance Company Limited and Others -v- National Westminster Finance Australia Limited and Others; PC 24-Jan-1985 - [1985] UKPC 2; Privy Council Appeal 16 of 1984

 
 Rhesa Shipping Co SA -v- Edmonds (The Popi M); HL 16-May-1985 - [1985] 2 All ER 712; [1985] 1 WLR 948; [1985] 2 Lloyds Rep 1; [1985] UKHL 15

 
 Jones -v- Mrtin Bencher Ltd; 1986 - [1986] 1 Lloyds Reports 54

 
 Socony Mobil Oil Co Inc and others -v- West of England Ship Owners Mutual Insurance Association Ltd (the "Padre Island") (No 2); 1987 - [1987] 2 Lloyd's Rep 529
 
The Miss Jay Jay [1987] 1 Lloyds Rep 32
1987
CA
Slade LJ
Insurance

1 Cites

1 Citers



 
 Firma CF-Trade SA -v- Newcastle Protection and Indemnity Association (the 'Fanti'); QBD 1987 - [1987] 2 Lloyd's Rep 299

 
 J J Lloyd Instruments Ltd -v- Northern Star Insurance Co Ltd (The "Miss Jay Jay"); CA 1987 - [1987] 1 Lloyd's Rep 32
 
Halvanon Insurance Co Ltd -v- Central Reinsurance Corporation [1988] 1 WLR 1122; [1988] 1 QB 216
1988
CA
Kerr LJ, Parker, Balcombe LJJ
Insurance, Contract
The fact that a contract was made by an unauthorised insurer contrary to the 1974 Act, which was silent as to the effect of a breach of this statute, did not render the contracts made by the unauthorised insurer void. Rendering transactions void affects both the guilty and the innocent parties. Kerr LJ said: "Where a statute prohibits both parties from concluding or performing a contract when both or either of them have no authority to do so, the contract is impliedly prohibited . . But where a statute merely prohibits one party from entering into a contract without authority, and/or imposes a penalty upon him if he does so (i.e. a unilateral prohibition) it does not follow that the contract itself is impliedly prohibited so as to render it illegal and void. Whether or not the statute has this effect depends upon considerations of public policy in the light of the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations. The statutes considered in Cope v Rowlands, 2 M & W 149 and Cornelius Phillips [1918] AC 199 fell on one side of the line; the Food Acts 1984 would clearly fall on the other."
Insurance Act 1974
1 Citers



 
 Circle Freight International Ltd -v- Medeast Gulf Imports Ltd; CA 1988 - [1988] 2 Lloyds Reports 427
 
Forsikringsaktieselskapt Vesta -v- Butcher [1988] CLY 413; [1989] AC 852; [1989] UKHL 5; (1988) 2 All ER 43; [1989] 1 Lloyds Rep 331; [1989] Fin LR 223; [1989] 2 WLR 290
1988
HL
Lord Bridge of Harwich, Lord Templeman, Lord Griffiths, Lord Ackner, Lord Lowry
Damages, Insurance, Contract
A contract of insurance and a facultative reinsurance, under which part of the original risk was reinsured, contained warranties in identical terms. Held: The warranty in the reinsurance policy, which was governed by English law, should be construed so that it had the same effect as the warranty in the insurance which was governed by Norwegian law which required the breach to be causative of the loss.
A defendant to an allegation of breach of contract was entitled to a defence of contributory negligence if his position as a contract breaker was, by reason of the agreement between the parties, the same as his position as a common law tortfeasor. The definition of fault in the 1945 Act comprises two limbs. The first, referable to the defendant's conduct, comprises various acts or omissions which give rise to a liability in tort. The second limb, is referable to the plaintiff's conduct, and deals with acts or omissions which would, but for the Act, have given rise to the defence of contributory negligence.
Law Reform (Contributory Negligence) Act 1945 4
1 Citers

[ Bailii ]
 
Wasa Liv Omsesidigt -v- Sweden 13013/87
14 Dec 1988
ECHR
CA Norgaard P
Human Rights, Insurance
Commission
1 Citers



 
 Esso Petroleum Co Ltd -v- Hall Russell & Co Ltd (The Esso Bernicia); HL 1989 - [1989] AC 643; [1989] 1 All ER 37; [1989] 1 Lloyds Rep 8
 
Davitt -v- Titcumb [1990] Ch 110; [1989] 3 All ER 417
1989
ChD
Scott J
Wills and Probate, Insurance, Equity
The defendant bought a house in joint names with the deceased, but was subsequently convicted of her murder. The house was purchased with the assistance of an endowment life policy in their joint names. Whilst he was imprisoned, the policy was used to pay off the mortgage, and the house sold. The issue was how to calculate any share he had in the proceeds. Held: The fund would not have come into existence but for his criminal act. He was barred by public policy from benefiting under it. The equity of redemption in the policy enured to the personal representatives of the deceased., who were to be treated as having provided the proceeds of the policy for the calculation.
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The Fanti and The Padre Island [1989] 1 Lloyds Rep 239
1989
CA

Insurance

1 Cites

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Suttle -v- Simmons [1989] 2 Lloyds Rep 227
1989


Insurance

1 Citers



 
 Meadows Indemnity Co Ltd -v- The Insurance Corporation of Ireland plc & Another; CA 1989 - [1989] 2 Lloyds Rep 298

 
 Inversiones Manria SA -v- Sphere Drake Insurance Co. plc (The Dora); 1989 - [1989] 1 LI LR 69

 
 M/S Aswan Engineering Establishment Co Ltd -v- Iron Trades Mutual Insurance Co Ltd; 1989 - [1989] 1 Lloyd's Rep 289
 
Re Cavalier Insurance Co Ltd [1989] 2 Lloyd's Rep 430
1989


Insurance
The court considered the effect on a transaction of rules which prohibited the actions of both parties, in this case a prohibition on effecting and carrying out contracts of insurance.
1 Citers



 
 T M Noten BV -v- Hardin; 1989 - [1989] 2 Lloyd's Rep 527

 
 Bradley -v- Eagle Star Insurance Co Ltd; HL 1989 - [1989] AC 957; [1989] 1 All ER 961; [1989] 1 Lloyds Rep 465; [1989] 2 WLR 568

 
 North River Ins Co -v- American Home Assurance Co; 15-Mar-1989 - (1989) 210 Cal App 3d 108
 
Socony Mobil Oil Co Inc and others -v- West of England Ship Owners Mutual Insurance Association Ltd (the "Padri Island") (No 2); Firma CF-Trade S.A -v- Newcastle Protection and Indemnity Association (the 'Fanti') [1989] 1 Lloyd's Rep 239
30 Nov 1989
CA
Lord Justice O'Connor, Lord Justice Bingham and Lord Justice Stuart-Smith
Insurance
The court considered appeals from conflicting interpretations of the effect of s1(3) of the 1930 Act on pay to be paid clauses in the event of the insolvency of the insured. Held: The condition did not purport to avoid the contract or to alter the rights of the parties under the contract in the event of the insured company's insolvency. The rights of the company and the insurers remained the same after a winding up as they had been before winding up. Lord Justice Stuart-Smith: "What is affected or altered by the insolvency or winding up is the ability to enjoy the rights, but not the rights themselves, which remain the same before and after the event, save that upon the winding up the rights are transferred to the third party." Lord Justice Bingham set out principles for the interpretation of the 1930 Act: "(1) Its primary purpose was to remedy the injustice highlighted in Re Harrington (In re Harrington Motor Co Ltd [1928] Ch 105). Had the 1930 Act governed that case the pedestrian would have been able to enforce his claim directly against the insurer (and he could have done so even if the insurer had already paid the liquidator). But had the Act stopped there it would have been open to the parties to agree that the right to indemnity should cease on bankruptcy or winding up, so that there would be no rights in the insured to be transferred to the injured third party. It was accordingly necessary for the Act to invalidate avoidance clauses of this kind, and that was duly done. . . . (7) As Mr Justice Slade (as he then was) put it in The Allabrogia [1979] 1 Lloyd's Rep. 190 at p.198: 'The manifest purpose of s.1(3) is to make certain that, in any of the events specified in s.1(1), the third party shall be able to take the full benefit of the rights against the insurer, unaltered and undiminished by any provision in the contract which is designed directly or indirectly to cancel, prejudice or reduce such rights in the event of one or more of such events taking place.' Section 1(3) accordingly provides that the insurance contract shall be of no effect in so far as it purports directly or indirectly to avoid the contract or alter the rights of the parties under it upon the happening to the insured of any of the specified events. This seems to me to be an almost standard provision prohibiting parties from, in effect, contracting out of a statutory requirement. The application of the sub-section requires one to construe the insurance contract between insurer and insured to ascertain whether the rights of the contracting parties are determined or altered under the contract on the happening of one of the specified events. (8) . . . The question posed by Mr Justice Slade in The Allobrogia (sup) (at p.198) was whether the provision under review has the substantial effect of avoiding the contract between the member and the club or altering the rights of the parties upon the happening to the member of any of the events mentioned in s.1(1) of the 1930 Act, and I did not understand any of the parties before us to challenge that approach. In my opinion it is correct."
Third Parties (Rights Against Insurers) Act 1930 1(3)
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