Actual Total Loss

80m.

No attempt was made to recover the vessel or cargo by military intervention. Nor were there any diplomatic or other such attempts to obtain their release but the vessel, her crew and cargoes were released on 29 September, less than six weeks after her capture, on payment of a ransom of US2m by MISC. The voyage to Rotterdam was completed on 26 October 2008. The Bunga Melati Dua reached Rotterdam on 26 October 2008. The cargo had not deteriorated during the delay, but it had missed its market in the meantime. The market for biofuel is seasonal, and effectively closes after the end of September. The insured’s two parcels therefore had to be stored until the following year, when it was sold at a price substantially less than its insured value. The insured gave credit for the recovery made on re-sale, less expenses, and claimed the balance in the sum of 7,608,845.30. The insured value had been 13,326,481.75 (including freight). Piracy was an insured risk.⁵³ At first instance the cargo owner alleged that the cargo became ATL and CTL. With regard to the claims for ATL, David Steel J found the actual fact of recovery within a short period not directly material or decisive but ‘may assist in showing what the probabilities really were, if they had been reasonably forecasted’.⁵⁴ This was the case for the reasons that both the contemporaneous correspondence and the information in the public domain showed that all interested persons were fully aware that the cargoes were likely to be recovered. Other vessels seized by Somali pirates had been promptly released following negotiations over a relatively short period and it took 11 days for the vessel and cargo to be released after notice of abandonment was given. David Steel J said ‘an assured is not irretrievably deprived of property if it is legally and physically possible to recover it (and even if such recovery can only be achieved by disproportionate effort and expense)’.⁵⁵ In the Court of Appeal the cargo owner claimed only a CTL which will be discussed in Chapter 9.

As stated above, in Stringer, recovery was not beyond the assured’s or the insurer’s control and the court still held that the cargo was a total loss. In Masefield v Amlin, Rix LJ distinguished Stringer for the reason that in the latter what created the ATL was the sale itself, which forever dispossessed the plaintiff in that case of his cargo. As described by Rix LJ in Masefield, the issue in Stringer was not whether there was a total loss or not, but what had caused it. In Masefield, payment of a ransom always rendered the recovery of the cargo possible. If in Stringer the bail had been given, however unreasonable the price of it was, there would have been no sale and (subject to the decision of the Supreme Court on the prize issue) no total loss. Moreover, in Masefield, the cargo owners had lost only possession and not dominion over (or property in) their goods.⁵⁶ It was not an irretrievable deprivation, it was a typical ‘wait and see’ situation.⁵⁷

Two cases should be noted here: Cologan v London Assurance Company⁵⁸ and Dean v Hornby⁵⁹ in which it was held that capture operates as a total loss, unless it be redeemed by subsequent events to the assured’s free control.⁶⁰ In Cologan while a cargo of wheat, fish and staves were on board to be carried to Teneriffe, the Friendship was captured by an American privateer. She was then recaptured by another warship and was sent to Bermuda. On her passage to Bermuda she took water in her hold and 471 staves were overboard. Some of the wheat had to be destroyed for not being suitable for public health, some was damaged and the rest of the cargo was warehoused. The fish was sold to a profit. The vessel was permitted to sail to Madeira, not to Teneriffe due to embargo. Teneriffe was the destination whereas after the recapture the vessel was sent to Bermuda where she was placed under an embargo. She was released from the embargo upon condition of altering her destination to Madeira. The object of the policy was, as the Court stated, to insure the risk against the failure, by reason of any of the perils mentioned in the policy, of the cargo reaching the port of destination.⁶¹ The voyage in this case however was defeated.⁶² Therefore, it was held that there had been no restitution of any part of cargo as the ship and cargo never were effectually redeemed from capture. The goods were not entirely annihilated but there was a total loss because capture and recapture and being forwarded to Madeira rendered the goods of no use whatever.

In Dean v Hornby⁶³ the Eliza Cornish was insured on a time policy against perils including ‘pirates’. She was captured by pirates while she was in the Straits of Magellan but then she was recaptured by the Virago, an English warship. A prize master took command and sailed her to Valparaiso. On learning of these facts in April 1852, her owners gave notice of abandonment to the underwriters, apparently under the impression that the vessel had been condemned as a prize at Valparaiso, but that was not in fact the case. She sailed for Liverpool with the remainder of her cargo still under the command of a prize master. On this voyage she met with bad weather, and as a result the surveyors recommended that she was unfit for repairs and she should be sold. However the buyer of the Eliza Cornish repaired her for a trifling sum and she then arrived in England where her old owner, the assured, and his underwriter, by agreement took proceedings (in early 1853) to regain possession of her, without prejudice to their rights inter se. The admiralty court awarded possession to her old owner, she was sold, and her price deposited to await the outcome of the issue between those parties, which appears to have been whether the owner assured was entitled to be paid for a total loss. Lord Campbell CJ stated that when she was taken by pirates a total loss occurred. After that, she was never restored to the owners; nor had they had an opportunity of regaining possession. They had lost possession because of events over which they had no control, and therefore were entitled to the indemnity for which they had paid. Lord Campbell CJ said that if once there has been a total loss by capture, that is construed to be a permanent total loss unless something afterwards occurs by which the assured either has the possession restored, or has the means of obtaining such restoration. His Lordship added that mere right to obtain the vessel is nothing: if that were enough to prevent a total loss, there never would in this case have been a total loss at all, for pirates are the enemies of mankind, and have no right to the possession. The question therefore is, had the owners ever, after the capture, the possession or the means of obtaining possession?

A total loss may be converted into a partial loss if the subject matter insured is restored to the assured’s possession.⁶⁴ In Dean v Hornby, it was held, there never was a restoration, nor the means of regaining possession as what was done after the capture by the pirates was the act of the re-captor, the vessel remained out of the control of the assured, the re-captor brought her to another port where she was sold and she was then brought to England. The possession was taken away by the claimants and never restored to them. The assured, therefore, never had an opportunity of taking possession and consequently there never ceased to be a total loss. ⁶⁵ This was different to Masefield v Amlin as in Masefield there was a reasonable hope if not likelihood of recovery.⁶⁶ David Steel J⁶⁷ found the impact and effect of a capture is very fact sensitive. The judge noted that where a vessel is seized as a prize and condemned in a prize court, property is transferred and on any view the former owner is irretrievably deprived of the vessel. On the other hand mere seizure by pirates without more has no impact on the proprietary interests in a vessel. David Steel J emphasised that what had been transferred in Masefield was possession and not title and the question was whether recovery of possession was legally or physically impossible. Rix LJ⁶⁸ added that in Dean v Hornby the recapture by the Crown was for the purposes of the Crown, not the owner. As the judgments state, the owner never thereafter regained possession or the means of possession.

Dean v Hornby was distinguished in Thornely v Hebson⁶⁹ in which, similar to Masefield, the owners, before they brought the action, had the means of obtaining possession. In Thornely v Hebson the William was insured for £1,200. After leaving Hull she struck on a sandbank, and put into Dover to be repaired. She sailed from Dover on 19 December, 1816, and proceeded on her voyage. After the vessel left Dover she was damaged as a result of having encountered a heavy gale, she leaked so much that the crew left the vessel as they were no longer able to navigate her. Notwithstanding the state of the William, eight men from the Hyder Ali volunteered to go on board the William in the hope of bringing her into port. The Hyder Ali arrived at New York with the late crew of the William on 4 March, and then (the ultimate fate of the William being unknown) an abandonment was made to the underwriters of the vessel which the defendant insurers refused to accept, as intelligence had arrived in England that the men from the Hyder Ali had succeeded in bringing the William into Newport, a port in Rhode Island. The William