Marine insurance – assured – revocation of notice abandonment – before or after commencement of action – effect : Marine insurance – assured – declaration of intention not to make claim for total loss – recovery of property – effect : Marine insurance – ‘waived claim’ – recovery in sue and labour – English law – claim – valid and lawful contract – unenforceable – tainted by collateral contract or conduct – connection – Beresford and Bowmakers principles : illegality defence – relevance of foreign law – doctrine of Foster v Driscoll, Regazzoni v Sethia : Marine insurance – valid English agreement – reliance on collateral foreign agreement – infringement of public policy – Lemenda Trading principle – extension : Marine insurance Act 1906 – defences – section 41 – lawfulness of adventure : Marine Insurance Act 1906 – defences – section 55 – wilful misconduct : defence – section 78(1) – expenses properly incurred : Marine Insurance Act 1906 – duty of good faith – avoidance – section 17 – claims – scope – fraudulent claims : Marine insurance – doctrine of materiality – fraudulent claim – no additional test for materiality – implied term of forfeiture : Marine insurance – post-contractual duty of good faith – remedies.
Rix J said that abandonment of a ship is: ‘A cession or transfer of the ship to the underwriter, and of all his property and interest in it with all the claims that may arise from its ownership, and all the profits that may arise from it, including the freight then being earned. Its operation is as effectually to transfer the property of the ship to the underwriter as a sale for valuable consideration, so that of necessity it vests in the underwriter a chattel of more or less value, as the case may be.’ and
‘Normally, the assured must indicate his election to abandon by giving a notice of abandonment, which thus becomes a condition precedent to the right to claim a CTL (Section 62(1)), but exceptionally a notice of abandonment may be dispensed with (Section 62(7), (8), (9)). The underwriter is not obliged to accept the notice, and thus the abandonment, but if he does the abandonment is irrevocable (Section 62(6)). It seems to follow, as Atkinson J. held, [in PYSBE v. Beer] that an unaccepted notice of abandonment is revocable. An underwriter may pay the claim without accepting the abandonment: he is not obliged to take over a wreck, which may be a damnosa hereditas – see Allgemeine Versicherungs-Gesellschaft Helvetia v. Administrator of German Property [1931] 1 KB 672 at 687/88 per Scrutton L.J. If, however, he wishes, he is ‘entitled’ to take over the assured’s interest in the property (Section 63(1)). That is in any event the right of any underwriter who pays for a total loss, whether or not there is abandonment (Section 79, which repeats the language found in Section 63(1) to the effect that the insurer is entitled ‘to take over the interest of the assured in whatever may remain of the subject matter’).’
Rix J considered the effect of a falsehood in the claim. He said that the claim for sue and labour costs was entitled to succeed irrespective of the matters which the owners had concealed: ‘Whatever be the precise definition and ambit of the concept of a fraudulent claim, there was no such claim here. I am in the process of finding that the sue and labour claim was and is a good and valid claim. It is not a false or fraudulent claim. It is totally unlike those instances of fraudulent claim to be found in the authorities, such as claims in respect of deliberately self-inflicted or pretended losses, or claims in amounts which are knowingly or recklessly exaggerated: see, for instance, Goulstone v The Royal Insurance Co, (1858) 1 F and F 276, where, in the context of a claim for inter alia the loss of furniture whose value was exaggerated four-fold, Pollock CB glossed a fraudulent claim as one ‘wilfully false in any substantial particular’ at p 279; or Chapman v Pole, (1870) 22 LT 306, where again in the context of exaggerated value Cockburn, CJ spoke of one who ‘knowingly preferred a claim he knew to be false or unjust’ at p 307; or The Captain Panagos DP, [1986] 2 Lloyd’s Rep 470, where Mr Justice Evans defined a fraudulent claim as ‘one which is made on the basis that facts exist which constitute a loss by an insured peril, when to the knowledge of the assured those alleged facts are untrue’, at p 511. It seems to me that even if one assumed, for instance, that the representation over the existence of any record of the finalization agreement was made fraudulently, that would not make the claim in question a fraudulent claim within these definitions of that expression.’
Judges:
Rix J
Citations:
Unreported, 18 December 1995, [1997] 1 Lloyd’s Rep LR 523
Statutes:
Marine Insurance Act 1906 64(2) 41 55 78(1)
Jurisdiction:
England and Wales
Cited by:
At ComC – Royal Boskalis Westminster NV and others v Mountain and others CA 28-Feb-1997
Effect of illegality on a contract.
Held: Reversed . .
Cited – Versloot Dredging Bv and Another v Hdi Gerling Industrie Versicherung Ag and Others SC 20-Jul-2016
The ‘DC MERWESTONE’ suffered a water ingress of water flooding the engine room. This resulted from (i) the negligence of the crew in failing to close the sea inlet valve of the emergency fire pump and drain down the system, after they had used the . .
Lists of cited by and citing cases may be incomplete.
Insurance
Updated: 22 May 2022; Ref: scu.185997