Macaura v Northern Assurance Company, Ltd and Others
| Jurisdiction | UK Non-devolved |
| Judge | Lord Sumner,Lord Wrenbury,Lord Phillimore,Lord Buckmaster |
| Judgment Date | 03 April 1925 |
| Judgment citation (vLex) | [1925] UKHL J0403-1 |
| Date | 03 April 1925 |
| Court | House of Lords |
[1925] UKHL J0403-1
Lord Buckmaster.
Lord Atkinson.
Lord Sumner.
Lord Wrenbury.
Lord Phillimore.
House of Lords
After hearing Counsel for the Appellant, as well on Friday the 6th, as on Monday the 9th, days of March last, upon the Petition and Appeal of Gerald Joseph Macaura, of Lough Inc, Skibbereen, in the County of Cork, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal in Northern Ireland, of the 30th of July 1923, might be reviewed before His Majesty the King in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioner might have such other relief in the premises as to His Majesty the King in His Court of Parliament might seem meet; as also upon the printed Case of the Northern Assurance Company, Limited, the North British and Mercantile Insurance Company, Limited, the Alliance Assurance Company, Limited, the Fine Art and General Insurance Company, Limited, and the Edinburgh Assurance Company, Limited, lodged in answer to the said Appeal; and Counsel appearing for the Respondents, but not being called upon; and due consideration being had this day of what was offered for the said Appellant:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal in Northern Ireland, of the 30th day of July 1923, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellant do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
This Appeal relates to an insurance on goods against loss by fire. It is clear that the Appellant had no insurable interest in the timber described. It was not his. It belonged to the Irish Canadian Sawmill Co., Ltd., of Skibbereen, Co. Cork. 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 lire 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 to its goods, and after the fire he was directly prejudiced by the paucity of the company's assets, not by the fire.
No authority has been produced for the proposition that the Appellant had any insurable interest in the timber in any capacity, and the books are full of decisions and dicta that he had none. ( Paterson v. Harris 1 B. & S. 336) and ( Wilson v. Jones L.R. 2 Ex. 139) are very special cases, and neither is in point here. In the former there was no plea traversing the allegation that the plaintiff had an insurable interest. The Court, construing the policy as one really expressed to be on the cable, dealt with the case as one in which interest was admitted therein, but its decision of the case after this admission of interest is not a decision that a shareholder as such has an insurable interest in a company's assets themselves. In the latter, where the policy described the subject matter of the insurance in a very obscure manner, it was held that the shareholder insured had an interest that he could insure in the profits of the adventure so described, but it was expressly stated that he had no such interest in his shares in the company.
There remains the contention that the Respondents were incompetent to raise the absence of insurable interest upon the arbitration. This seems to me to be a pure misapprehension. It is said that the defendants could not have got the order, which stayed the action and referred the matter in dispute to arbitration, if they had stated that they meant to rely on this point or, rather, if they had not actually intimated that they would not. The argument rests on the contention that to put the plaintiff to proof of an insurable interest is the same thing as pleading the Gaming Act and saying that the policy is null and void, and that there is no contract for arbitration or anything else, but in truth the defendants have said no such thing. The letters written before the order was made did not, either affirmatively or negatively, show anything of the kind. The plaintiff had averred an insurable interest in his pleading. The defendants, who moved for a stay before putting in a defence, simply denied liability, and the issue so raised was the matter in dispute. The case of ( Jureidini 1915, A.C. 499) is not in point. There persons, who had repudiated the whole contract of insurance, afterwards relied on a limited arbitration clause contained in it, which required the amount payable to be determined by arbitration, and said that, until he had obtained such an award, the plaintiff could not complete his case. It was held that the defendants could not both repudiate the contract in toto and require the performance of a part of it, which only became performable when liability was admitted or established. The present case is the converse. Here an arbitration and award are conditions precedent to any action to enforce the policy. The defendants do not repudiate the policy or dispute its validity as a contract; on the contrary, they rely on it and say that, according to its terms, express and implied, they are relieved from liability (see Stebbing's case, 1917, 2 K.B. 433; Woodall's case, 1919, 1 K.B. 593). It is a fallacy to say that they assert the policy to be null and void. They do not plead or mention the Gaming Act, and have no need to rely on it. The contract made in the policy was that, if the plaintiff could prove, among other things, that he had, at the time of loss, such an insurable interest in the timber as the law recognises, the insurers would pay, and not otherwise. No gaming contract was ever made, nor any agreement to pay, interest or no interest. It is we, who would make the contract a gaming contract, if we were to accept the Appellant's contention. The Respondents say, and truly say, that a fire insurance policy is not an aleatory contract, but is a contract of indemnity, under which the assured must aver and prove interest at the time of the loss. This is a part of the law of insurance, quite independently of the Gaming Act, though the consequence of failure to prove interest is the same, namely, that the policy is unenforceable by an uninterested assured. It was open to the defendants to raise this case at any time. Under the policy arbitration was the only legal proceeding open, and the order was made as a matter of course. The insurers gave up nothing in consideration of getting the order, and all the defences remained open to them. Estoppel has been mentioned, but there was none. The defendants did not make any representation, and the plaintiff did not change his position on the faith of one. The case of ( Yorkshire Insurance Co. v. Craine 1922, A.C. 541) is distinguishable. It is a case, in which, under very special circumstances, the Appellants were held to have...
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