Macaura owned the large majority of shares in a limited company, trading in timber. The company also owed him substantial sums. He kept on the insurance of timber and other assets within the business but in his own name. When he came to claim, his claim was refused by the insurers.
Held: His appeal failed. An insurable interest in property could only arise where the insured held a legal or equitable interest in the insured property.
Neither a shareholder nor a simple creditor of a company had any insurable interest in any particular asset of the company because as such he had no legal or equitable interest in it.
Lord Buckmaster said: ‘Turning now to his position as shareholder, this must be independent of the extent of his share interest. If he were entitled to insure holding all the shares in the company, each shareholder would be equally entitled, if the shares were all in separate hands. Now, no shareholder has any right to any item of property owned by the company, for he has no legal or equitable interest therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplus assets when the company is wound up. If he were at liberty to effect an insurance against loss by fire of any item of the company’s property, the extent of his insurable interest could only be measured by determining the extent to which his share in the ultimate distribution would be diminished by the loss of the asset – a calculation almost impossible to make. There is no means by which such an interest can be definitely measured and no standard which can be fixed of the loss against which the contract of insurance could be regarded as an indemnity . . In the present case, though it might be regarded as a moral certainty that the appellant would suffer loss if the timber which constituted the sole asset of the company were destroyed by fire, this moral certainty becomes dissipated and lost if the asset be regarded as only one in an innumerable number of items in a company’s assets and the shareholding interest be spread over a large number of individual shareholders.’ and ‘No shareholder has any right to any item of property owned by the company, for he has no legal or equitable interest therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplus assets when the company is wound up.’
Lord Sumner also said that the appellant had no insurable interest: ‘It is clear that the appellant had no insurable interest in the timber described . . He had no lien or security over it and, though it lay on his land by his permission, he had no responsibility to its owner for its safety, nor was it there under any contract that enabled him to hold it for his debt. He owned almost all the shares in the company, and the company owed him a good deal of money, but, neither as creditor nor as shareholder, could he insure the company’s assets. The debt was not exposed to fire nor were the shares, and the fact that he was virtually the company’s only creditor, while the timber was its only asset, seems to me to make no difference. He stood in no ‘legal or equitable relation to’ the timber at all. He had no ‘concern in’ the subject insured. His relation was to the company, not its goods, and after the fire he was directly prejudiced by the paucity of the company’s assets, not by the fire.’
Lord Wrenbury said: ‘My Lords, this appeal may be disposed of by saying that the corporator even if he holds all the shares is not the corporation, and that neither he nor any creditor of the company has any property legal or equitable in the assets of the corporation.’
Lord Buckmaster, Lord Wrenbury, Lord Sumner
 AC 619, (1925) 133 LT 152,  All ER 51,  AC 619,  All ER Rep 51, 94 LJPC 154, 133 LT 152, 41 TLR 447, 69 Sol Jo 777, 31 Com Cas 10 HL
England and Wales
Distinguished – Sharp v Sphere Drake Insurance plc (The Moonacre) 1992
S, a retired businessman, had bought a vessel and insured it in his name, but registered it in the name of company, R. In the winter, the boat was laid up, but occupied by a workman who maintained it and kept it secure. The boat was destroyed by a . .
Cited – Feasey v Sun Life Assurance Company of Canada and Another: Steamship Mutual Underwriting Association (Bermuda) Ltd v Feasey ComC 17-May-2002
The fact that there was more than one insurance policy in place for the same interest would not preclude a claim under one of them. A mutual underwriting group insured members against personal injury and so forth through ‘lineslip’ policies. The . .
Cited – Ben Hashem v Ali Shayif and Another FD 22-Sep-2008
The court was asked to pierce the veil of incorporation of a company in the course of ancillary relief proceedings in a divorce. H had failed to co-operate with the court.
After a comprehensive review of all the authorities, Munby J said: ‘The . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 November 2021; Ref: scu.184482