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 the actual market value when repaired, and so the owner elected to treat the loss as a partial loss, and keep the vessel. He therefore served no notice of abandonment. The repairs prevented the performance of the charter under which the insured freight was to be earned. When the owner sought to recover on the freight policy, the underwriter said there had been no constructive total loss of the ship because there had been no notice of abandonment.
Held: The existence of a constructive total loss was different and anterior to the right to abandon and claim for a total loss.
Lord Wright said: ‘The appellant’s argument confuses two different concepts, because it confuses constructive total loss with the right to claim for a constructive total loss. The right to claim except in certain cases depends on due notice of abandonment under s. 62 of the Act. The distinction is explicitly stated in s. 61 [which] makes it clear that the right to abandon only arises where there is a constructive total loss in fact. That is the necessary precondition to a right to abandon.
It is a superimposed right of election where there is a constructive total loss . . ‘
Otherwise: Robertson v Petros M Nomikos Ltd
Judges:
Lord Atkin, Lord Wright, Lord Porter
Citations:
[1939] AC 371
Jurisdiction:
England and Wales
Citing:
Approved – Roura and Forgas v Townend 1919
The plaintiffs were the voyage charterers of the ‘IGOTZ MENDI’. They insured their anticipated profit on the voyage against the actual or constructive total loss of the vessel. The vessel was captured by a German cruiser in the Indian Ocean, as a . .
Cited by:
Cited – Kastor Navigation Co Ltd and Another v AGF M A T and others (‘Kastor Too’) ComC 4-Dec-2002
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 . .
Cited – Sveriges Angfartygs Assurans Forening (The Swedish Club) and Others v Connect Shipping Inc and Another SC 12-Jun-2019
The Court was asked as to the construction of the phrase ‘constructive total loss’, and in particular the calculation the expenditure to be taken into account in computing the cost of recovery and or repair, where notice of loss had been served . .
Lists of cited by and citing cases may be incomplete.
Transport, Insurance
Leading Case
Updated: 04 April 2022; Ref: scu.251752