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 result of which the profit was lost. But before action was brought against the insurer, the ship was stranded and abandoned on the coast of Denmark while in the charge of her German prize crew, and recovered by salvors employed by the shipowner.
Held: the plaintiffs were entitled to succeed. This was because the rule was that: ‘restoration precludes recovery, not because in such a case there never was a constructive total loss, but because an assured cannot, under a contract of indemnity, although he may at one time have suffered a loss, recover in respect of such loss if before action it has already been made good to him.’
The recovery of the ship by her owners did not therefore mean that the vessel was no longer to be regarded as having suffered a constructive total loss.
Roche J observed: ‘I have already held that there was a constructive total loss of the Igotz Mendi by her capture, and before the ship was restored to the owners such capture resulted in a total loss to the plaintiffs of their rights and profit under the charter. In short, the event agreed upon as necessary to give a right to indemnity had happened, and had irrevocably caused the loss of the subject-matter of the insurance. In these circumstances, as the restoration of the vessel itself to its owners did nothing to extinguish or minimise the plaintiffs’ loss, so also it cannot, in my judgment, operate to extinguish or to bar the plaintiffs’ claim.’
Judges:
Roche J
Citations:
[1919] 1 KB 189
Jurisdiction:
England and Wales
Cited by:
Approved – Robertson v Nomikos HL 1939
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 – 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
Updated: 04 April 2022; Ref: scu.675525