Insurance Claims
Cases Claims
Regina Fur Co Ltd v Bossom
[1958] 2 Lloyd’s Rep 425
LORD EVERSHED MR
I think that a defendant-whether he is an underwriter or any other kind of defendant-is entitled to say, by way of defence, ‘I require this case to be strictly proved, and admit nothing’. Where such is the defence, the onus remains throughout upon the plaintiffs to establish the case they are alleging. Where such is the form of the pleading, it is not only not obligatory upon the defendants but it is not even permissible for them to proceed to put forward some affirmative case which they have not pleaded or alleged; and it is not, therefore, right that they should, by cross-examination of the plaintiffs or otherwise, suggest such an affirmative case. The defendants are acting correctly if they follow the course adopted in this case-that is, so to challenge, at each point, and by proper evidence, where it is admissible, and by cross-examination, the case which the plaintiffs seek to make good.
London Assurance v Clare
(1937) 57 LIL Rep 254
GODDARD J
….. argues that there is an implied term of the contract even if there is not an express term, that the assured should put in an honest claim and not a fraudulent claim, and he says, therefore, that if it turns out that a person has put in a fraudulent claim, the insurers are entitled to recover all the expenses to which they have been put in investigating that claim, as damages for a breach·of contract.
With regard to that, I have great difficulty in seeing how that can be so. The claim was a claim which the [insure ) was entitled to put in because he had had a fire, and it is not suggested that it was an incendiary fire. Once the claim was in, the assurance companies could decide for themselves whether they would pay or whether they would not. They chose-rightly, as it has turned out-to investigate it, and by the investigation which they made they discovered that the claim was fraudulent. They repudiated the contract, and they did not pay, thereby getting, of course, a great advantage because they did not have to pay what they would have had to pay if the claim had not been fraudulent. They pay nothing,and any part of the expenses that they have been put to which is properly regarded as costs, no doubt the Taxing Master will take into account when he is dealing with the question of costs; but to treat this sum as damages for a breach of contract seems to me to be going beyond anything that has ever been done before, and no authority has been suggested or cited to me which would suggest that the Courts have ever applied the principle of damages for breach of contract to such a matter.
Magee v Pennine Insurance Co Ltd
[1969] 2 Lloyd’s Rep 378
LORD DENNING MR
Accepting that the agreement to pay £385 was an agreement of compromise, is it vitiated by mistake? The insurance company were clearly under a mistake. They thought that the policy was good and binding. They did not know, at the time of that letter, that there had been misrepresentation in the proposal form. If Mr Magee knew of their mistake-if he knew that the policy was bad-he certainly could not take advantage of the agreement to pay £385. He would be ‘snapping at an offer which he knew was made under a mistake’: and no man is allowed to get away with that. But I prefer to assume that Mr Magee was innocent. I think we should take it that both parties were under a common mistake. Both parties thought that the policy was good and binding. The letter of 12 May 1965, was written on the assumption that the policy was good whereas it was in truth voidable.
What is the effect in law of this common mistake? (Counsel] said that the agreement to pay £385 was good, despite this common mistake. He relied much on the case of Bell v Lever Bros Ltd11 and its similarity to the present case. He submitted that, inasmuch as the mistake there did not vitiate that contract, the mistake here should not vitiate thisone. Idonot propose today to go through the speeches in that case. They have given enough trouble to commentators already. I would say simply this: A common mistake, even on a most fundamental matter, does not make a contract void at law: but it makes it voidable in equity. I analysed the cases in Solle v Butcher,18 and I would repeat what I said there:19
‘A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to facts or as to their relative respective rights, provided that the misapprehension was fundamental and that the party seeking to set it aside was not himself at fault ‘
Applying that principle here, it is clear that, when the insurance company and Mr Magee made this agreement to pay £385, they were both under a common mistake which was fundamental to the whole agreement. Both thought that Mr Magee was entitled to claim under the policy of insurance, whereas he was not so entitled. That common mistake does not make the agreement to pay £385 a nullity, but it makes it liable to be set aside in equity.
This brings me to a question which has caused me much difficulty. Is this a case in which we ought to set the agreement aside in equity? I have hesitated on this point, but I cannot shut my eyes to the fact that Mr Magee had no valid claim on the insurance policy: and, if he had no claim on the policy, it is not equitable that he should have a good claim on the agreement to pay £385, seeing that it was made under a fundamental mistake. It is not fair to hold the insurance company to an agreement which they would not have dreamt of making if they had not been under a mistake.
Moore and Gallop v Evans
(1918) 117 LT 761
LORD ATKINSON
I do not think the principles of the law of marine insurance apply, or that the numerous authorities which have been cited, other than two with which I shall presently deal, afford any help to the construction of this non-marine policy, or to the ascertainment of the true meaning of the word ‘loss’ used in it, for this reason. Marine insurance grew out of the necessities of maritime trade and commerce. It dealt with the hazardous enterprise of the navigation of the sea by ships carrying cargo for reward. The law dealing with it is a branch of the Law Maritime as well as of the Law Merchant. It is founded upon the practices of merchants who were themselves for long the expounders of its principles, which principles general convenience had established in order to regulate the dealings of merchants with each other in all countries. Its utility, according to Marshall on Shipping, vol 1, pp 3 •et seq, cannot be better expressed than in the words of the preamble of a very early statute, 43 Eliz I c 12, which recites ‘that by means of policies of insurance it cometh to pass that upon loss or perishing of any ship there followeth not the undoeing of any man, but the loss lighteth rather easy upon many than heavy upon few, and rather on them that ventureth not than upon those that do adventure, whereby all merchants, especially the younger sort, are allured to adventure more willingly and more freely’. One can readily understand that those willing to adventure, who had possessed themselves of expensive but money-making chattels like ships for the purpose of their adventures, should, if they insured, be protected as far as possible from having their capital locked up unprofitably in ships whose fate they were unable actually to ascertain and prove. Hence it was that ships which had sailed and had not been heard of for a length of time were presumed not merely to have been lost, but to have foundered at sea, so that the owner would be at once entitled to recover the full amount under his policy.
So, also, as soon as these marine policies came to be regarded as
indemnities and not wagering policies, the law of constructive total loss based upon notice of abandonment was shaped and moulded by decisions of Lord Mansfield at the beginning of the nineteenth century. The doctrine had its origin in cases of the capture. Goss v Witheri1D and Hamilton v Mendes1 were both cases of capture and recapture, and were apparently based upon the principle that the assured should not be obliged to wait till he had definitely ascertained whether his ship had been recaptured or not, but might upon capture proceed at once, and, after notice of abandonment, recover his capital, the value of his ship from the underwriters, provided he was not aware of her recapture when he commenced his action.
I am quite unable to follow the line of reasoning by which the principles of a body of laws having such an origin, and directed to such an end, can be applicable to the insurance of a jeweller’s stock-in-trade, or that the language used to describe what amounts to the loss of a ship or her cargo under a marine policy is necessarily adequate to describe a loss of this stock-in-trade under a non-marine policy.
Cases Causation
Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd
[1918-19] All ER Rep 443
LORD SHAW
The doctrine of cause has been since the time of Aristotle, and the famous category of material, formal, efficient and final causes, one involving the subtlest of distinctions. The doctrine applied in these to existences rather than to occurrences. But the idea of the cause of an occurrence or the production of an event or the bringing about of a result is an idea perfectly familiar to the mind and to the law, and it is in connection with that that the notion of proxima causa is introduced. Of this, I will venture to remark that one must be careful not to lay the accent upon the word ‘proximate’ in such a_sense as to lose sight of or destroy altogether the idea of cause itself. The true and overruling principle is to look at a contract as a whole, and to ascertain what the parties to it really meant. What was it which brought about the loss, the event, the calamity, the accident? And this not in an artificial sense, but in that real sense which parties to a contract must have had in their minds when they spoke of cause at all. To treat proxima causa as the cause which isnearest in time is out of the question. Causes are spoken of as if they were as distinct from one another as beads in a row or links in a chain, but-if this metaphysical topic has to be referred t it is not wholly so. The chain of causation is a handy expression, but the figure is inadequate. Causation is not a chain but a net. At each point influences, forces, events, precedent and simultaneous, meet, and the radiation from each point extends infinitely. At the point where these various influences meet it is for the judgment as upon a matter of fact to declare which of the causes thus joined at the point of effect was the proximate and which was the remote cause.
What does ‘proximate’ here mean? To treat proximate cause as if it was the cause which is proximate in time is, as I have said, out
· of the question. The cause which is truly proximate is that which is proximate in efficiency. That efficiency,may have been preserved although other causes may meantime have sprung up, which have yet not destroyed it, or truly impaired it, and it may culminate in a result of which it still remains the real efficient cause to which the event can be ascribed. I illustrate that by the present case. Did the vessel perish because she was torpedoed or by a peril of the sea apart from that? It is replied: ‘She perished by a peril of the sea because sea water entered the gash in her side which the torpedo made.’ Certainly the entry of sea water was a peril of the sea, and certainly that entry of sea water was proximate in time to the sinking. But how could there be any exception in the case of a vessel lost in harbour or at sea to a loss by perils of the sea, if the proximate cause in the sense of nearness in time to the result were the thing to be looked to? It is hardly possible for the mind to figure anything which would interfere with or be an exception to a cause so proximate as the entry of sea water into or over the hull as the vessel sinks in· the waves. The result of this is that the consideration of the exception of the consequences of hostilities, or indeed any other exception so far as I can at present figure, if that consideration be limited to a cause proximate in time, destroys the exception altogether. It might as well never have been written. In my opinion, accordingly, proximate cause is an expression referring to the efficiency as an operating factor upon the result. Where various factors or causes are concurrent, and one has to be selected, the matter is determined as one of fact, and the choice falls upon the one to which may be variously ascribed the qualities of reality, predominance, efficiency. Fortunately, this much would appear to be in accordance with the principles of a plain business transaction and it is not at all foreign to the law.
In my opinion, the real efficient cause of the sinking of this vessel was that she was torpedoed. Where an injury is received by a vessel, it may be fatal or it may be cured: it has to be dealt with. In so dealing with it there may, it is true, be attendant circum stances which may aggravate or possibly precipitate the result, but are incidents flowing from the injury, or receive from it an operative and disastrous power. The vessel, in short, is all the time in the grip of the casualty. The true efficient cause never loses its hold. The result is produced, a result attributable in common language to the casualty as a cause, and this result, proximate as well as continuous in its efficiency, properly meets, whether under contract or under the statute, the language of the expression ‘proximately caused’.
Coxe v Employers’ Liability Assurance Corporation Ltd
(1916) 114 LT 1180
SCRUITON J
What I have to see is whether the wording of this policy has got beyond the maxim of causa proxima non remota spectatur and excludes it. The words ’caused by’ and ‘arising from’ I do not think give difficulty. They are words which always have been construed as relating to the proximate cause. I am not sure whether the words ‘traceable to’, by themselves, would necessarily have taken me any further. They are very vague words, and I should have been disposed to have said, if those were the only words, that if the company choose to put very vague words of this sort in the policy, they must be read strictly against the company, and in accordance with the ordinary maxims. But the words which give me the greatest possible trouble and which I find it impossible to get over, are the words ‘directly or indirectly’. Neither Counsel has been able to find, and I have not been able to find, any authority in which those words have been considered, and I find it impossible to reconcile those words with the maxim causa proxima non remota spectatur. If you are to say that the proximate cause, whether direct or indirect, is to be looked at, it does not appear to me that you are making a consistent and intelligible result. I do not understand what is the indirect cause, and the only effect one can give to these words is to say that the maxim causa proxima non remota spectatur is excluded, and you may go further back in the chain of causation than the proximate and immediate cause.
I am disposed to agree that that does not mean that you are to go back to the birth of the man which somewhere in the chain of causation has led to his being in the position in which he was killed, and to agree that you must draw the line somewhere; and if I could find a principle which on tht;se facts prevented him ever coming within the clause, I should probably have been able to find that the assured had a claim. But I am unable to find any principle which would exclude these facts from a possible finding by the arbitrator that war was the indirect cause of this accident. If it was merely that war put the man in a position, not specially exposed to any danger, in which a particular danger not connected with war, struck him, I think it would be most probable in that case that the matter would not come within the condition. To take the case which I put during the argument. Supposing, in connection with war, death by lightning, or that the assured had gone to a military camp, not in any way specially exposed to lightning, where lightning had struck him, I should be disposed to think that the war was so remote from the death that, in that case, you could not say that the death was undoubtedly caused by the war; but if the war has put the man in a position specially exposed to danger, as in a place especiaJly exposed to be struck by lightning, if you can conceive such a place, and there lightning has struck him, it appears to be a question of fact, not a question of construction, whether the death is indirectly caused by war.
The arbitrator has found here as a fact that this man’s death was indirectly traceable to war; and the facts are that the deceased was put in a position of special danger, namely, where he had to be about the railway line in the dark, and with the lights turned out because of war, doing his military duties, and, while doing his military duties in that position of special danger, he is killed by the special danger which prevails at that particular place to which he is exposed by reason of his military duties.
I am unable to say that the arbitrator cannot reasonably find, as a matter of fact, in that case that the death was indirectly caused by war.
Oei v Foster (formerly Crawford) and Eagle Star Insurance Co Ltd
[1982] 2 Lloyd’s Rep 170
GLIDEWELL J
So I turn to the first question which [Counsel for the third party] posed. Were the Crawfords, at the relevant time, in occupation of the Oei’s house? The answer to that question, in my view, can only be: ‘Yes, they were’, and, indeed, [Counsel for the defendant] so accepts. I was referred to a number of authorities on the meaning of the word ‘occupation’ and as to the extent to which a person who was in control of premises was in occupation of them or as to the characteristics necessary to constitute occupation. I make no apology for not referring to any of those authorities because they are all decisions upon their own particular facts, as this one is. I find that where a family are living in a house in the sense that they are sleeping there; having most of their meals there; they are watching television; they are there with their own children and they are, incidentally, looking after the children of the owners of the house, they are, while they are there, occupying the house. It is a perfectly ordinary English word, and I am confident that it includes that concept.
The most difficult question is the second question: did the
damage arise directly or indirectly from such occupation? I have to decide whether Mr and Mrs Crawford’s occupation of the house was, to use Mustill J’s phrase,16 merely ‘a part of the history’ which led up to the fire or whether, again on the assumption that the fire was caused by Mrs Crawford’s negligence (which I emphasize has not been proved), that occupation was of itself a cause, albeit an indirect cause, of the damage. I take th view that it was an indirect cause on that state of the facts. I do so r this reason, that in my view cooking meals is a necessary, in eed, inevitable incident of the Crawford’s occupation of the house and thus, in my view, it can properly be said that if the damage was caused by Mrs Crawford leaving the cooker turned on when she went out of the house then that damage did arise indirectly from her, and indeed her husband’s occupation of the Oei’s house. I am seeking to emphasize that there could well be circumstances in which, on the facts, the damage would not arise merely from the occupation by other persons of the house; there might be no sufficiently clear cause or connection between the occµpation and the damage and then it would be purely a matter of history. But on the facts of this case I take the view that such a connection, albeit indirect, is made out.
Cases Subrogation
John Edwards & Co Ltd v Motor Union Insurance Co Ltd
(1922) 128 LT 276
McCARDIE J
The doctrine of subrogation must be briefly considered. It was derived by our English courts from the system of Roman law. It varies in some important respects from the doctrine as applied in that system, and indeed, the actual term ‘subrogation’ does not, I think, occur in Roman law in relation to the subjects to which it has been applied by English law (see Dixon on the Law of Subrogation (Philadelphia, 1862), ch i). The doctrine has been widely applied in our English body of law as, for example, to sureties and to matters of ultra vires as well as to insurance. In connection with insurance it was recognised ere the beginning of the eighteenth century.
In Randal v Cockran, decided in 1748, it was held that the plaintiff insurers, after making satisfaction, stood in the place of the assured as to goods, salvage, and restitution in proportion for what they paid. As the Lord Chancellor (Lord Hardwicke) said: ‘The plaintiffs had the plainest equity that could be.’ It is curious to observe how this doctrine of subrogative equity gradually entered into the substance of insurance law, and at length became a recognised part of several branches of the general common law.
In Mason v Sainsbury,5 Lord Mansfield said: ‘Every day the insurer is put in the place of the insured.’ Buller J, in the same case, in approving judgment for the plaintiff insurer, said: ‘Whether this case beconsidered on strictly legal principles or upon the more liberal principles of insurance law, the plaintiff is entitled to recover.’ The more liberal principles were based on equitable considerations; and in the well-known case of Burnand v Rodocanachi,1 Lord Blackburn said in reference to a marine policy: ‘If the indemnifier has already paid it, then, if anything which diminishes the loss comes into the hands of the person to whom he has paid it, it becomes an equity that the person who has already paid the full indemnity is entitled to be recouped by having that amount back.’ This equity springs, I con ceive, solely from the fact that the ordinary and valid contract of marine insurance is a contract of indemnity only.
Castellain v Preston
[1881-5] All ER Rep 493
BRETT LJ
The doctrine of subrogation is another proposition which has been introduced in order to carry out the fundamental rule. It was introduced in favour of the underwriters, in order to prevent their having to pay more than a full indemnity, not on the ground that the underwriters were sureties, for they are not so always, although their rights are sometimes similar to those of sureties, but in order to prevent the assured recovering more than a full indemnity.
The question is whether the doctrine as applied in insurance law can be limited. Can it be limited to putting the underwriters in the place of the assured in order to enable them to enforce a contract or a right of action? Why should we limit it to this, if the effect of so doing would be to entitle the assured to more than a full indemnity? In order to apply the doctrine properly we must go into the full meaning of subrogation, which is the placing of the assurer in the position of the assured. In order fully to carry out the fundamental principle we must carry the doctrine of subrogation so far as to say that, as between the underwriter and the assured, the underwriter is entitled to every right, whether of contract fulfilled or unfulfilled, or in tort, enforced or capable of being enforced, or to any other right, legal or equitable, which has accrued to the assured, whereby the loss can be or has been diminished. That is the largest form in which I can put the rule. I use the words ‘every right’ because I think the doctrine requires to be carried to that extent.
Scottish Union and National Insurance Co v Davis
[1970] 1 Lloyd’s Rep 1
SALMON LJ
Mr Davis, with his insurers’ approval, settled his claim against the third parties for the damage which they had done to his car at £350 and received that amount from them. The insurers in this action sought to recover the £350 from Mr Davis on the grounds that they are subrogated to his rights against the third parties.
The basis put forward for the alleged subrogation-indeed, the only basis that could be put forward-is that the insurers had fulfy indemnified Mr Davis in respect of the damage for which he had been paid £350. The short answer to that seems to me to be that they had done nothing of the kind. This car, with the approval and consent of both the insurers and Mr Davis, had been sent to Offords for the purpose of having the damage repaired. Offords kept the car for as long as four months. In that time they made three attempts of a kind to carry out the repairs. It is, however, quite plain, not only from what Mr Davis said in evidence and was not challenged about, but also from the report of the insurers’ consulting engineer, that the work carried out by Offords was quite valueless and that, in order to carry out proper repairs, the job would have to be started again from scratch.
The troubles arose here because when, at the beginning of October 1964, Offords sent their account to the insurers, the insurers chose to pay the account without getting a satisfaction note from their assured (which was their usual practice) and without taking any steps whatsoever to discover whether or not the repairs had been properly carried out. They might have done anything else they chose with the money they paid Offords for all the good it did to Mr Davis. Mr Davis had not been asked for a satisfaction note at the time that the insurers made their payment, and the whole trouble stems from their very rash action in paying for the repairs without having any evidence before them that the repairs had been properly carried out; indeed, they were warned in writing by their own engineer before they paid the account that they ought to follow their usual practice of getting a satisfaction note before paying.
In these circumstances, I confess t at I amquite unable to see how a claim based on subrogation gets off the ground.