Tomlinson (A.) (Hauliers) Ltd v Hepburn

The judgment of Lord Justice Pearson reviews the facts and issues and as I agree with his conclusions affirming the judgment of Mr. Justice Roskill and also those of Lord Justice Russell whose judgment I have also had the advantage of reading I will state my own views briefly.

The learned judge was clearly correct in finding that the goods were on risk at the time of the loss. The policy covered the goods "whilst being carried and/or in transit - including loading and unloading. Including risk during halts and/or whilst garaged and/or elsewhere overnight". At the time of the loss the goods were still on the lorry, still not completely uncovered of their tarpaulins and were to be unloaded early the next morning. The lorry was garaged or housed for the night. All that can be said on the other side is that the lorry had reached the place where it was to be unloaded. It was admitted that the policy cover commenced when loading commenced and I think clearly that it continued until the goods were unloaded.

The policy without doubt is a policy on goods and is in a form which I would regard as an over-insurance if all that the plaintiffs had to insure in order to protect themselves was their own liability as carriers.

But the plaintiffs were in the position where they had to do more. By reason of their agreement with Players they had to protect Players' interest on the basis of "all risks of loss or damage however arising" up to a specified maximum. The aim of Players was to effect economy in premiums and consequently in haulage charges. A benefit to the plaintiffs was given by the so-called proviso, whereby they had no need to insure for any liability beyond the stipulated maximum because Players themselves took the burden of all loss beyond that figure to the relief of the plaintiffs from liability.

The policy does not state the interest insured and to do so was not necessary. There is no doubt that both the plaintiffs and Players had an insurable interest and for the reasons sofully given by my brethren the plaintiffs intended to insure and I did in fact insure by this policy the proprietary interest in the goods for the benefit of the owners of them, Players.

The commercial relationships between the plaintiffs and Players were both close and of long standing. The plaintiffs' lorries were appropriated to the carriage of Players' goods and it would seem convenient and commercially probable for the Plaintiffs as bailees to insure the goods in transit to the full proprietary interest of the owners as well as their own interest. Any proceeds recovered under the policy over and above the plaintiffs' own loss, if any, would be held in trust for Players.

Although the policy does not expressly state the. interests insured, in my view, it gives on its face indications of a wider cover than the ordinary common law liability of a carrier to consignors. I refer to the term "all risks - however arising". The extent of the plaintiffs' obligations to Players necessitated and was responsible for these wide terms and I am not satisfied (as was I think to some extent contended for the underwriters) that the risk would have been differently stated or the premium enlarged if the policy had expressed the interest of Players.

I would dismiss the appeal.

The plaintiffs are claiming against the defendant as one of the underwriters of a policy of insurance on tobacco, the property of Imperial Tobacco Company (Great Britain & Ireland) Limited (whom I shall call "Imperial"), carried by the plaintiffs from Imperial's factory premises at Nottingham to their London depot in City Road. The plaintiffs' lorries with the loads of tobacco arrived at the London depot after working hours. They were taken into the depot, but were not unloaded. They were under the protection of Imperial's night watchman. According to the usual course of business the lorries would have remained there through the night, and in the morning they would have been unloaded by Imperial's men with assistance from the plaintiffs' driver and mate, and the tobacco would have been checked by Imperial'schecker as it came on to the platform of the unloading bay, and delivery notes would have been signed on behalf of Imperial and given to the plaintiffs' driver. However those things did not happen, because while the plaintiffs' driver and mate were away having a meal in the evening, the lorries with their loads of tobacco still on board were stolen and, though the lorries were afterwards recovered, the tobacco was not. The plaintiffs' claim under the policy is for the value of the lost tobacco.

The defendant has put forward, both in the court below and in this court, three defenses, namely (1) that the goods were at the time of the theft "off risk", because the transit had come to an end when the loaded lorries had arrived at the depot and been taken into it; (2) that the policy on its true construction did not cover the proprietary interest of Imperial but only the Plaintiffs' legal liability for loss or damage due to their negligence, and the loss in this case was not due to any negligence on the part of the plaintiffs; (3) that the plaintiffs insured only for themselves in respect of their own interest as bailees, and did not insure for the benefit of Imperial in respect of Imperial's proprietary interest, and therefore the plaintiffs, having no right under the policy except to be indemnified, are not entitled to recover in respect of the loss suffered by Imperial.

As to the first defense, the details of the facts have been sufficiently stated by the learned judge, and he has set out the arguments and has given his conclusion in favour of the plaintiffs. I agree with his conclusion and with his reasoning based on the special provisions of this policy. The words of the policy which are material for this point are "whilst being carried and/or in transit anywhere in the United Kingdom including loading and unloading. Including risk during halts and/or whilst garaged and/or elsewhere overnight". In any ordinary case at any rate (and this was an ordinary case) the goods would remain on risk until completion of the unloading. The loaded lorries were within the meaning of the policy being garaged overnight at the CityRoad premises until they could be unloaded on the following morning.

As to the second defence, I agree with the learned judge's view that this policy is as a matter of construction plainly a policy on goods and not merely a policy on liability. It is so worded as to be capable of covering the whole proprietary interest. On the first page of the policy the underwriters "agree to insure against loss, damage or liability to the extent and in manner hereinafter provided", and a little later they say that they "bind themselves….to pay or make good to the Assured….or to indemnify him….against all such loss, damage or liability as herein provided…." In the schedule the insurance is said to be "on tobacco and/or manufactured goods and/or machinery the property of" Imperial "including general merchandise whilst being carried" (and so on as set out above). Then the "Conditions" are stated as follows: "All risks of loss or damage however arising. Including strikes, riots, civil commotions and malicious damage risks. Excluding war and civil war as per policy. Not subject to average. Excluding deterioration through delay and loss or market etc. Machinery subject to Institute Replacement Clause". It is to be noted that in the schedule there is mention of risks of loss or damage, but no mention of liability or the risk of it. If the intention had been to limit the risk to a risk of liability being incurred by the assured, that could and should have been stated. Moreover the details of the "Conditions" are in several respects more naturally related to a risk of loss of or damage to goods than to a risk of the bailees incurring liability in respect of them.

There remains however the third defence, which arises the substantial issue in the case. Although the policy as a matter of construction is capable of covering the proprietary interest in the goods, the plaintiffs were only bailees and did not themselves have the proprietary interest, and therefore the plaintiffs are prima facie not entitled to receive payment in respect of Imperial's loss of tobacco. The plaintiffs' answer, acceptedby the learned judge, is that the plaintiffs took out the policy not only for their own benefit as bailees but also for the benefit of Imperial as owners, and consequently the plaintiffs held the policy both on their own behalf and as trustees for Imperial, and in the events that happened the plaintiffs, not having themselves suffered any loss, are entitled to receive the proceeds solely as trustees for Imperial.

The plaintiffs rely on the principles stated in Waters and Steel v. The Monarch Fire and Life Assurance Company (1856) 5 Ellis & Blackburn page 870, The London & North Western Railway Company v. Glyn (1859) Ellis & Ellis page 652 (especially the judgment of Mr. Justice Wightman at pages 660-1) and Castellain v. Preston (1883) 11 Queen's Bench Division page 380 (especially the judgment of Lord Justice Bowen at pages 398-9). Where goods are on bailment to a carrier, at least two parties have insurable interests. One is the carrier himself, who has a lien on...