Samuel (P.) & Company Ltd v Dumas

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeViscount Cave, Viscount Finlay, Lord Sumner, .
Judgment Date25 Feb 1924

[1924] UKHL J0225-1

House of Lords

Lord Chancellor.

Viscount Cave.

Viscount Finlay.

Lord Sumner.

Lord Parmoor.

P. Samuel and Company, Limited
and
Dumas.

After hearing Counsel, as well on Friday the 2d, Tuesday the 6th, and Thursday the 8th, days of November last, as on Monday the 10th and Tuesday the 11th, days of December last, upon the Petition and Appeal of P. Samuel and Company, Limited, of 2, Fenchurch Avenue, E.C. 3, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 15th of December 1922, 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 Petitioners 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 H. J. F. Dumas, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

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, of the 15th day of December 1922, 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 Appellants do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.

Viscount Cave .

My Lords,

1

The steamship "Grigorios" (formerly the "Grindon Hall") was purchased by one Denis Anghelatos, a Greek subject, on the 13th September 1920; and on the same day she was removed from the British register and received a provisional certificate of Greek nationality which enabled her to fly the Greek flag pending registration in Greece. On the same day Anghelatos, who was already indebted to his bankers, Messrs. Samuel & Co., in a considerable sum, borrowed from them a further sum of 22,500 l. to enable him to pay off a charge on the "Grigorios" on the terms that he should give them a mortgage on the ship to secure the whole of his current account. Accordingly on the 13th September 1920, Anghelatos executed in favour of Samuel & Co. two documents namely, first a mortgage of the ship in British statutory form to secure his account current, and secondly a deed whereby he assigned the ship as security for the 22,500 l. and all other moneys due or to become due from him and covenanted (among other things) to effect the complete registration of the ship as a Greek steamship and to insure her and her freight against all perils as the mortgagees should approve. While the advance and mortgage were being negotiated Mr. Percy Samuel, who carried on business as Samuel & Co., told Anghelatos that he would have to insure the steamship against all risks through the appellants, P. Samuel & Co., Ltd. (brokers who looked after insurances for the banking firm), for not less than 100,000 l., and in the presence of Anghelatos instructed Mr. Wheler, the manager of the appellant company, to see that this insurance was effected. Anghelatos also desired Mr. Wheler to get the freight insured against all risks for 27,500 l. The appellants accordingly opened three slips and procured them to the underwritten by the respondent Dumas and other underwriters, namely (1) a slip for insuring the hull and machinery of the "Grigorios" against marine risks in a sum of 110,000 l. for a period of 12 months; (2) a slip for insuring the freight of the same vessel against marine risks in a sum of 27,500 l. for the same period, and (3) a slip for insuring the hull and machinery in 110,000 l., the freight (f.i.a.) in 27,500 l. and the disbursements (f.i.a.) in 16,500 l., all against war risks, for a period of 6 months only. In the month of October 1920, policies of insurance in accordance with the above slips were duly issued and delivered to the mortgagee.

2

On the 26th February 1921 the "Grigorios," while on a voyage from Philippeville to the Tyne, foundered in calm weather off the coast of Spain and became a total loss.

3

On the 20th May 1921, the appellants commenced this action against the respondent Dumas on his policies of insurance on the vessel, alleging that the vessel had been lost either by war perils or by ordinary marine perils. Similar actions were commenced against the other underwriters responsible, on their policies. The respondent, among other defences which will be referred to later, pleaded that the loss was due to the wilful misconduct and fraud of Anghelatos and his agents in procuring or conniving at the sinking of the ship; and at the hearing of the action the trial Judge (Mr. Justice Bailhache) found this plea to be proved. He accordingly dismissed the claim on the war risk insurance, but, holding that his finding of fraud against the owner did not prevent the broker from recovering on behalf of the mortgagee under the marine risk insurance, and over-ruling the other defences raised by the respondent, he gave judgment against the respondent on the marine risk policy for his proportion of the loss.

4

On appeal to the Court of Appeal that Court reversed the decision of the trial Judge and dismissed the action. The judgment of the Court of Appeal was founded principally on the ground that there had been a breach of No. 22 of the Institute Time Clauses, which were incorporated in the marine policy. The material parts of that clause were as follows: —

"Warranted that (except as hereinafter mentioned) the amount insured for account of assured and/or their managers on premiums, freight, hire, profit, disbursements, commissions, or other interests (policy proof of interest or full interest admitted), or on excess or increased value of hull or machinery however described, shall not exceed 15 per cent. of the values of the hull and machinery as stated herein, but this warranty shall not restrict the assured's right to cover …

(2) Freight and/or chartered freight and/or anticipated freight on board or not on board, insured for 12 months or other time.—Any amount not exceeding 25 per cent. of the value of hull and machinery as stated herein, but if the insurance be for less than 12 months the 25 per cent. to be proportionately reduced."

5

The value of the hull and machinery as stated in the policy was 110,000 l., and accordingly the maximum amount which the assured was entitled under the warranty to cover by p.p.i. or f.i.a. policies on freight, &c., was, for a 12 months' insurance, 25 per cent. of the stated value, or 27,500 l., and for a six months' insurance one-half of that sum, or 13,750 l.; and as the freight had in fact been insured with the knowledge of the mortgagee for the full 27,500 l. for six months only, the Court held the warranty to have been broken, and dismissed the action on that ground. A plea that the breach of warranty had been waived by the respondent was disallowed. In addition to the above ground Lord Justice Scrutton expressed the opinion that, the ship having been intentionally scuttled with the connivance of the owner, the loss did not fall within the policy either as a loss by perils of the sea or under the general words; but the other members of the Court held themselves precluded by the decision of the Court of Appeal in ( Small v. United Kingdom Insurance Company L.R. 1897, 2 Q.B. 311) from deciding the case on that ground. Thereupon the present appeal was brought.

6

My Lords, it is convenient to deal first with the point upon which all the Judges of the Court of Appeal decided the case against the appellants, as if their decision on that point is right the remainder of the questions argued do not arise.

7

Upon the question whether there was, in fact, a breach of the warranty contained in clause 22 of the Institute Time Clauses, I agree with the unanimous judgment of the Court of Appeal. That clause contained a warranty or condition that the amount insured on freight, etc. (p.p.i. or f.i.a.) should not exceed (in the event which happened) 12½ per cent, of the stated value of the hull and machinery, or 13,75 l., and, as the f.i.a. insurance of the freight against war risks was for 27,500 l. there was a clear breach of the warranty unless the word "insured" in the warranty is to be confined to insurances against the perils insured against by the policy in question, that is to say, to insurances against marine perils only to the exclusion of war perils. I see no sufficient ground for so restricting the meaning of the word. The word "insured" in a policy of marine insurance prima facie covers all insurances against sea risks, including war risks; and there is in the policy in question in this case no context sufficient to cut down the natural meaning of the word. It is true that the insurer of a ship against ordinary marine risks is not directly interested in the amount of the insurance of the freight against war risks. But it is said that an over-insurance of freights by honour policies against war risks may tempt the owner to throw away his ship with a view to claiming under the war risk policies and alternatively under the ordinary marine policies, and so may involve the marine underwriters in litigation and loss; and certainly the course of events in the present case supports that view. Upon the whole I think that the word "insured" must be construed in its natural and ordinary sense, and as including all kinds of marine insurance; and on this point I desire to adopt the reasoning of Lord Justice Scrutton, who said:—

"It is argued by the mortgagees and found by the Judge that, as this is an insurance against war perils, it does not affect a policy on marine perils because, as the Judge says, the marine underwriter...

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