On 1 July 2016, Knowles J handed down judgment following a three week trial in a substantial marine insurance dispute.
The claim was for an indemnity of around US$15 million for the alleged constructive total loss (“CTL”) of a vessel following an engine room fire. The insurers defended the claim on the grounds (inter alia) that (a) the owners had failed to serve a notice of abandonment “with reasonable diligence after receipt of reliable information of the loss”, as required by s.62(3) of the Marine Insurance Act 1906, and that (b) in any event the Vessel was not in fact a CTL.
In the event, the claim succeeded. In reaching this decision, the judge held that, as a matter of law, expenses incurred prior to a notice of abandonment could be counted towards a CTL calculation, declining to follow in this regard two previous first instance decisions which had held the opposite. The judge also held that SCOPIC expenses paid to salvors can be counted towards the CTL clause, notwithstanding paragraph 15 of the SCOPIC clause which precludes owners from making any claim (whether direct, indirect, by way of indemnity or recourse or otherwise) against hull and machinery insurers relating to such payments.
The judgment of Knowles J is also of interest for his approach to s.62(3) of the Marine Insurance Act 1906. Although previous authorities had suggested that notices of abandonment must be served very quickly indeed following a casualty in order to be valid, the Judge held that a notice of abandonment served five months after the casualty, during which period the owners and insurers spent considerable time on board the vessel investigating the nature of the damage and the costs of repairs, was served in time.
Michael Ashcroft QC and Luke Pearce appeared on behalf of the defendants, instructed by Thomas Cooper.