Court of Appeal Reviews the Doctrine of Actual Total Loss and Legality of Ransom: Masefield AG v Amlin Corporate Member Ltd

AuthorLyn Seo
SSLR Court of Appeal reviews the doctrine Vol 1(2)
Court of Appeal Reviews the Doctrine of Actual Total Loss
and Legality of Ransom: Masefield AG v Amlin Corporate Member
Ltd [2011] EWCA Civ 24
Lyn Seo
The facts
he claimant and appellant was Masefield AG, the owner of two parcels
of biodiesel and the insured under a cargo policy on Institute Cargo
Clauses (A) terms covering loss by piracy. The cargo was carried by the
vessel Bunga Melati Dua, and the voyage was from Malaysia to Rotterdam.
On 19 August 2008, the vessel was seized by Somali pirates in the Gulf of
Aden. The defendant and respondent was Amlin Corporate Member Ltd, the
insurer of the cargo.
Negotiations for the payment of a ransom for the release of the vessel, her
crew and cargoes were commenced promptly by the owner of the vessel, MISC.
On 18 September 2008, the claimant sent a notice of abandonment which was
rejected by insurers. On or around 29 September 2008, the payment of
ransom was made, and the vessel and the cargoes were released. The voyage
was completed on 26 October 2008.
The claimant, at the outset, argued that upon capture there was an actual total
loss of the cargo because the event resulted in the insured being irretrievably
deprived of its possession; s 57 of the Marine Insurance Act 1906.
Alternatively, it was contended that there had been a constructive total loss in
terms of s 60(1), since the cargo was reasonably abandoned on account of its
actual total loss appearing to be unavoidable. Furthermore, they alleged that
the payment of ransom could not be a factor to determine the irretrievable
deprivation, since it was undesirable from the point of view of public policy.
The Judgment at first instance
The High Court considered three issues; (1) whether or not the capture of the
cargo by the pirates was an actual total loss in spite of the possibility of
recovery by the payment of ransom, (2) whether the aforementioned event
could be considered a constructive total loss and, (3) whether or not the
payment of ransom was made in breach of public policy.
Mr Justice Steel rejected all of the claimant’s arguments on the following
(1) As for whether the cargo had been an actual total loss, the judge considered
that in the light of the evidence, the claimants must be taken to have been
aware that the cargo was likely to be released following negotiations and the

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