http://www.bailii.org/ew/cases/EWHC/Comm/2016/1580.html

Following a fire on board a vessel on 23rd August 2012, the owners contended that they were entitled to be indemnified on a constructive total loss ("CTL") basis. They gave notice of abandonment (NOA) on 1 February 2013. Insurers agreed that the owners were entitled to be indemnified, but only on a partial loss basis. They argued that the NOA had been given too late.

Section 62(3) of the Marine Insurance Act 1906 provides that a NOA "must be given with reasonable diligence after the receipt of reliable information of the loss, but where the information is of a doubtful character, the assured is entitled to a reasonable time to make inquiry".

Knowles J held that the NOA had been given in time. Achieving reliable information of the loss would be a complex task and take time here: "Broadly speaking, it was not realistic to take one source in isolation; the presence of conflicting information from other sources threw the reliability of any one source into question. The assessment to be made was a major one for any person to make, if it was to be undertaken reasonably and responsibly. It is also important to keep in mind the difference between the calm of the courtroom some years later with the moving situation in Egypt at the time".

He also held that, although it is necessary to distinguish between knowledge of facts and the conclusions to be drawn from them, the task of ascertaining what repairs were needed (and how much they would cost) amounted to "facts" rather than "conclusions".

The judge also considered what costs would be included in the CTL calculation. Amongst other issues, he held that the cost of recovery or repair before NOA was given should be included in the calculation. The policies had incorporated the Institute Time Clauses – Hulls (1/10/83) and the Institute Time Clauses – Hulls Disbursement and Increased Value Clauses (1/10/83) and neither limited the cost or recovery or repair to after NOA (in reaching this decision, the judge departed from part of the decision in the "Medina Princess" (Helmville Ltd v Yorkshire Insurance Company Ltd) [1965]. There are therefore now two conflicting High Court decisions on the point).

It was also held that the owners could not have given a "protective NOA": once a NOA is accepted, the abandonment is irrevocable and binds the insured if accepted (even if the insured has not yet made up its mind on whether to call for a CTL).

The judge also held that the owners should be allowed a 10% contingency in respect of post-NOA repairs (rather than the 5% argued for by insurers).