Polurrian Steamship Company v Young
| Jurisdiction | England & Wales |
| Judgment Date | 05 February 1915 |
| Date | 05 February 1915 |
| Court | Court of Appeal |
Insurance (Marine) - Warranty of Freedom from Capture - Capture of Neutral Ship by Belligerents - Constructive Total Loss - “Unlikely that he can recover the ship” -
A neutral ship carrying a cargo of coal and insured against the consequences of warlike operations was captured by a belligerent, deprived of her cargo, and detained for about six weeks, when she was released. In an action claiming to recover on the policy:—
Held, on the facts, affirming the decision of Pickford J., that if the present action had come on for decision before the Marine Insurance Act, 1906F1, the owners would have been entitled to recover upon the policy of insurance as for a constructive total loss; that before 1906, if the taking of the vessel out of the possession of the owners continued in operation at the commencement of the action and the owners' loss, once total, was one which might be permanent and was at any rate of uncertain continuance, they were entitled to recover for a constructive total loss; but that by the Act of 1906 the test of “unlikelihood of recovery” had been substituted for “uncertainty of recovery”; and that the owners had not shown that there was more likelihood that they would not, than that they would, recover the ship, and their claim failed.
APPEAL from a decision of Pickford J.
By a Lloyd's policy of insurance of October 2, 1912, the steamship Polurrian was insured for 23,000l. “against the risks of capture seizure and detention and the consequences thereof or any attempt thereat, piracy excepted, and also from all consequences of hostilities or warlike operations, whether before or after declaration of war.”
On October 9, 1912, the Polurrian sailed from Newport with a cargo of coals consigned to English merchants at Constantinople. On October 17, 1912, war was declared between Greece and Turkey; and on the 28th the Greek Government declared fuel to be contraband of war. On the 25th the ship was captured by Greek men-of-war and her cargo was removed from her and used for coaling the Greek fleet. On the 26th notice of abandonment in writing was given by the plaintiff company to the insurers. The ship was detained by the Greek Government until December 8, 1912, when they released her. The facts are fully stated in the judgment of Kennedy L.J.
The plaintiffs brought this action against the underwriters for 23,000l. as and for a constructive total loss and damages. It was agreed that October 26 should be taken as the date of the issue of the writ. The defendants admitted that the ship was detained but denied that she was captured, and contended that at no material time was it unlikely that the plaintiffs would recover her.
Pickford J. decided in favour of the defendants, and the plaintiffs appealed.
Adair Roche, K.C., and A. Neilson, for the appellants. Pickford J. has held that where there is a capture the prospect and chances of condemnation ought to be considered. In the case of a capture there is an apparent loss which gives right to abandonment, and in this case the subsequent release of the vessel enured for the benefit of the underwriters: Goss v. WithersF2; Andersen v. Marten.F3 The ship is constructively lost when captured, although there may be a chance of getting her back. This case comes within s. 60 of the Marine Insurance Act, 1906 (6 Edw. 7, c. 41), the “actual total loss appearing to be unavoidable” (sub-s. 1), and the recovery being “unlikely” within sub-s. 2. Pickford J. has introduced the examination of future prospects by the application of s. 91, sub-s. 2, which provides that “the rules of the common law including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, shall continue to apply to contracts of marine insurance.” The old law is not inconsistent with the provisions of s. 60, and is to be found in the following cases:— Goss v. WithersF4; Hamilton v. MendesF5; Cologan v. London Assurance Co.F6; Dean v. HornbyF7; Lozano v. JansonF8; Shepherd v. HendersonF9; Cory v. BurrF10; Ruys v. Royal Exchange Assurance Corporation.F11
[KENNEDY L.J. referred to M'Iver v. HendersonF12 and Phillips' Law of Insurance, 5th ed., vol. ii., ss. 1530, 1620, 1621 and 1704.]
The capture or detention of a vessel for a temporary purpose gave no ground for abandonment, but if the loss of the ship was of uncertain continuance the owner who had given notice of abandonment was entitled to recover for a constructive total loss. The Act of 1906 was not intended to make any difference in the existing law: Sailing Ship “Blairmore” Co. v. MacredieF13; Bank of England v. Vagliano BrothersF14; Phillips' Law of Insurance, 5th ed., vol. ii., s. 1903. The question was whether there was a seizure with intent to confiscate: Robinson Gold Mining Co. v. Alliance Insurance Co.F15 In the present case the Greeks intended to keep the ship, so there was a complete seizure, and it was uncertain whether the owners would recover her. That was sufficient under the old law to constitute a constructive total loss. The words in s. 60, sub-s. 2 (i.), of the Act of 1906 “unlikely that he can recover” mean the same as uncertainty. That Act does not profess to be an exhaustive code of law on the subject, and the old rule applies.
Maurice Hill, K.C., and R. A. Wright, for the respondent. The judgment of Pickford J. is right, for there has not been either an actual or a constructive total loss. The ship was only taken for a temporary purpose, and that is not a total loss under the Act of 1906 or under the previously existing law. Even if she was taken as a prize there is no authority that a neutral ship thus taken is a total loss. Under the present Act there must be a taking such as is likely to be permanent. The question depends on the state of affairs on October 26; and subsequent events do not affect the right of action. The test is what were the true facts at that date, not what the assured thought were the true facts: Arnould on Marine Insurance, 9th ed., ss. 1095, 1096; Bainbridge v. NeilsonF16; Sailing Ship “Blairmore” Co. v. Macredie.F17 On October 26 there was not in fact any idea of confiscating the Polurrian; there was no possibility of her being condemned as a prize. The Greeks wanted her cargo of coal, and were entitled to take it on payment: arts. 43 and 64 of the Declaration of London; Castrique v. Imrie.F18 All parties would be bound by the decision of the Prize Court. It is suggested that this was an actual total loss, but there cannot be an actual total loss where the ship is still in existence: Hamilton v. MendesF19; Brotherston v. Barber.F20
[KENNEDY L.J. referred to Cossman v. West.F21]
There is no case which lays down that capture is of itself an actual total loss: Lozano v. JansonF22; Arnould on Marine Insurance, 9th ed., s. 1091. The question is whether there is a constructive total loss: Ruys v. Royal Exchange Assurance CorporationF23; Andersen v. MartenF24; Mansell & Co. v. HoadeF25; Mullett v. Shedden.F26 To enable the appellant to establish constructive total loss he must now show that s. 60, sub-s. 2 (i.), of the Act of 1906 has been complied with and that he was unlikely to recover the ship: Hall v. HaymanF27, which shows that the Act of 1906 has altered the law. There never was any general rule that loss of possession was a constructive total loss without more. The distinction between ship and cargo has long been recognized: Falkner v. RitchieF28; Stringer v. English and Scottish Marine Insurance Co.F29 Events which happened after October 26 are immaterial: Smith v. RobertsonF30; Cologan v. London Assurance Co.F31; Shepherd v. HendersonF32; Dean v. Hornby.F33 This is a taking by belligerents of goods from a neutral, so there was a presumption that the ship would be restored: Rodoconachi v. Elliott.F34 It ought not to have been seized: Cory v. BurrF35; Rotch v. EdieF36; Barker v. BlakesF37; Anderson v. WallisF38; Arnould on Marine Insurance, 9th ed., ss. 829, 832, 1108, 1184; Phillips' Law of Insurance, 5th ed., vol. i., ss. 1108, 1109; vol. ii., ss. 1523, 1525, 1620, 1621; Marshall on Marine Assurance, 4th ed., p. 394. The assured has to give notice of abandonment as soon as he gets information that the ship is in imminent danger: Kaltenbach v. Mackenzie.F39 But that is not all that the appellant now has to do; he has to comply with s. 60, sub-s. 2, and show that he is unlikely to recover the ship as well as that he has been deprived of possession. It is a question of fact and the learned judge has come to a right conclusion. “Recovering” the ship is not limited to recovering her by means within the control of the assured. In a case like this the probability that the ship will be released cannot be excluded from consideration. Everything which may result in recovery must be considered. It is impossible to say that this was a total loss; and inasmuch as the appellant has not proved on a balance of probabilities that he was unlikely to recover the ship it cannot be treated as a constructive total loss.
Adair Roche, K.C., in reply. The respondent's case depends on the assumptions that this was not a capture and that there is a distinction between the taking by a belligerent of an enemy ship and the taking of a neutral ship. No such distinction is to be found in the authorities: Bolton v. GladstoneF40; Powell v. HydeF41; Roux v. Salvador.F42 This case comes within s. 60 sub-s. 1, “actual total loss appearing to be unavoidable,” and the assured is not required to prove that he was unlikely to recover the ship.
1915. Feb. 5. LORD COZENS-HARDY M.R. The judgment which Warrington J. is about to read was Kennedy L.J.'s judgment. The day before his death he told me that he had finished it, and had ordered two copies to be typed for...
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