Case Studies

542. Navelmar UK Ltd v Kale Maden Hammaddeler Sanayi Ticaret AS (“the MV Arundel Castle”) [2017] EWHC 116 (Comm)

Port charterparty – “within port limits” defined.

The Facts

A fixture recap contained the following clause:

15. Notice of readiness to be tendered at both ends even by cable/telefax on vessel’s arrival at load/discharging ports within port limits. The notice of readiness not to be tendered before commencement of laydays.

  1. … Otherwise Gencon 94 printed form charterparty with logical amendments on the terms as per fixture recap.

Clause 6(c) of Gencon 94 included the following under the sub heading “commencement of laytime (loading and discharging)”.

If the loading/discharging berth is not available on the vessel’s arrival at/off the port of loading/discharging, the vessel shall be entitled to give notice of readiness within ordinary office hours on arrival there … laytime or time on demurrage shall then count as if she were in berth and in all respects ready for loading/discharging provided that the master warrants that she is in fact ready in all respects. Time used in moving from the place of waiting to loading/discharging berth shall not count as laytime”.

Due to congestion, the vessel anchored outside the port limits of Krishnapatnam as depicted on the relevant Admiralty Chart.

Despite this, owners tendered notice of readiness and claimed demurrage.


Messrs Williamson and Schofield found for the charterers.

Owners were given permission to appeal on the definition of “port limits

Referring to Johanna Oldendorff, and the Martha Envoy, Mr Justice Knowles CBE, upheld the arbitrators’ award.

He held that where there is a national local law that defines the limits of the port in question, those are the limits that will apply in the case of that port. Where there is not such a law, then a good indication of what the port limits are is given by the area of exercise by the port authority of its powers to regulate the movements of conduct of ships.

Here the arbitrators did the best they could with material offered to them: the Admiralty Chart.


The outcome seems fairly obvious.

The value of “port limits” as a criterion for an arrived ship remains questionable.

All that should matter is the quality of the vessel’s position and the readiness of access to a berth when one becomes available.


541. Patel v Mirza [2016] UK SC 42

Claim for recovery of money paid under an illegal contract

The Facts

Patel paid £620 000 to Mirza to bet on Royal Bank of Scotland shares, using inside information.

The purpose of the contract was never carried out and Patel sued for the return of his money.


Deputy Judge David Donaldson QC refused the claim on the ground that it was based on an illegal agreement.

The Court of Appeal (Rimer, Vos and Gloster LJJ) found in favour of Patel. Gloster LJ found that in reality, Patel was not relying on the illegal contract but seeking to undo it. Rimer and Vos LJJ held that they had a discretion to allow the claim to carry out justice even if Patel was relying on an illegal contract.

A nine member panel of the UKSC was divided: Lords Toulson, Kerr, Wilson, Hodge, Neuberger and Lady Hale wished to lay down rule that the courts had a discretion to allow claims tainted with illegality, while Lords Sumption, Clarke and Mance favoured a stricter approach referred to as the “reliance rule”: the court would only assist those litigants who could base their claim on a separate untainted ground e.g. ownership. All agreed that Patel should succeed.


Those in favour of a discretion were of the view that the situations which arose were too diverse to be solved by the reliance rule. Lord Toulson (who delivered the main judgment): “The rule as stated [does] not permit differentiation between minor and serious illegality and between central or peripheral illegality.

On the other hand, Lord Sumption: “[there is a] tendency of any test broader than the reliance test to degenerate into a question of instinctive judicial preference for one party over another.


Although Lord Toulson considered other common law jurisdictions: Australia, New Zealand, Canada and the USA, he did not consider South Africa where the leading judgment is Jajbhay v Cassim.

In Jajbhay v Cassim the Roman Law roots of the complementary maxims, ex turpi causa non oritur actio and in pari delicto potior conditio defenditis were considered.

In Jajbhay v Cassim the state of English Law, as it then was, was criticized for blurring the distinction between the two maxims.

In Jajbhay v Cassim, a landlord entered into a lease prohibited by law. Without cancelling the lease, he sought to recover possession by asking the court to, in effect, undo the illegal contract.

The Court applied the maxim, in pari delicto and refused the relief.

In so doing, Watermeyer JA examined Roman law and Roman Dutch Authorities as well as English Law. He concluded that in our law there should be a discretion based on public policy to administer simple justice between man and man.

He rejected the reliance theory in English Law, noting that it was confined to enforcement of collateral transactions connected with the illegal contract and, of uneven application, because of the rules of pleading: a plaintiff who had to rely on an illegal contract to rebut a plea of illegality would fail.

Watermeyer JA quoted Wilmot LCJ as follows: “All writers upon our law agree on this, no polluted hand shall touch the pure fountains of justice. Whoever is a party to an unlawful contract, if he hath once paid the money stipulated to be paid in pursuance thereof, he shall not have the help of a court to fetch it back again. You shall not have a right of action when you come to a court of justice in this unclean manner to recover it back – “procul, o procul, este profani”.

He also quoted Street, quoting Reynell v Sprye: “where the parties to a contract against public policy or illegal are not in pari delicto (and they are not always so), and where public policy is considered as advanced by allowing either, or at least the more excusable of the two, to sue for relief against the transaction, relief is given.

Jajbhay v Cassim overruled and earlier Cape Case, Brandt v Bergstedt where the in pari delicto rule was strictly applied which had the result of allowing a party to an illegal sale to retain the purchase price without delivering the cow sold.

On the development of the common law, Stratford CJ in Jajbhay v Cassim said as follows:

Now the Roman Dutch Law, which we must apply, is a living system capable of growth and development to allow adaptation to the increasing complexities and activities of modern civilized life. The instruments of that development are our own courts of law. In saying that of course I do not mean that it is permissible for a court of law to alter the law; its functions are to elucidate, expound and apply the law. But it would be idle to deny that in the process of the exercise of those functions rules of law have slowly and beneficially evolved. That evolution, to be proper, must come from, and be in harmony with, sound first principles which are binding upon us.” In these sentiments, he echoes the insight of Cardinal Newman in the Development of Christian Doctrine, where he compares development of a system of thought to that of a human being: the baby grows into an adult but remains the same person.

Lord Sumption said as follows:

“[This case] raises one of the most basic problems of a system of judge-made customary law such as the common law. The common law is not an uninhabited island on which judges are at liberty at to plant whatever suits their personal tastes. It is a body of instincts and principles which, barring some radical change in the values of our society, is developed organically, building on what was there before. It has a greater inherent flexibility and capacity to develop independently of legislation than codified systems do. But there is a price to be paid for this advantage in terms of certainty and accessibility to those who are not professional lawyers. The equities of a particular case are important. But there are pragmatic limits to what law can achieve without becoming arbitrary, incoherent and unpredictable even to the best advised citizen, and without inviting unforeseen and undesirable collateral consequences.

In Patel, as in Brandt v Bergstedt, Lord Mansfield’s dictum in Holman v Johnson is repeated:

The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident if I may so say. The principle of public policy is this; ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, on plaintiff’s own stating or otherwise, a cause of action appears to arise  ex turpi causa, or the transgression of a positive law of this country, there the court says he has no right to be assisted.

An inconsistent aspect of Lord Sumption’s speech is his reference to St. Thomas Aquinas’ solution in the case of serious illegality e.g. conspiracy to murder: the proceeds are forfeited to the state irrespective of whether the contract is carried out.

The degrees of illegality which inevitably arise, is a factor which militates against a fixed rule, one size fits all, and is, as pointed out by Lord Toulson, one of the reasons why a discretion is necessary.

Also, it usually involves some artifice to separate out one good element and to ignore an unlawful fundamental purpose.



540. Transgrain Shipping (Singapore) Pte Ltd v Yangtze Navigation (Hong Kong) Co Ltd (the “MV Yangtze Xing Hua”) [2016] EWHC 3132 (Comm)

Interpretation of clause 8(d) of the Inter-Club Agreement, 1996

The Facts

Soya bean meal was shipped from South America to Iran under a trip time charter on the NYPE form.

The vessel arrived off the discharge port in Iran in December 2012. Not having been paid for the cargo, charterers ordered the vessel to wait off the discharge port for over 4 months.

Upon discharge, part of the cargo in holds 5 and 6 was found to be damaged. The cause of the damage was the prolonged delay ordered by the charterers themselves.

Clause 8 of the ICA provided as follows:

“(8) Cargo claims shall be apportioned as follows: …

(d) All other cargo claims whatsoever (including claims for delay to cargo):

50% charterers;

50% owners.

Unless there is clear and irrefutable evidence that the claim arose out of the act or neglect of one or the other (including their servants or subcontractors) in which case that party shall then bear a 100% of the claim


Colin Sheppard, Roger Rookes and Michael Baker-Harber, found that the charterers were 100% liable insofar as their “act” in delaying discharge was the cause of the damage.

Teare J agreed.

He rejected an argument that the phrase in question should be interpreted as it was in Anglian Water Service v Crawshaw Robins, where Burnton J, in the context of a civil engineering contract, said that the word “act’ must take its colour from the context and that the act needed to be culpable.

On the other hand, in the Fiona, HHJ Diamond QC came to a different conclusion in the context of the shipment of dangerous goods.

The Inter-Club Agreement was intended to be a pragmatic division of risk and liability. As such, there was no reason to limit the operation of the word “act” to culpable acts.


The decision appears to be clearly right.

539. Volcafe Ltd v Compania Sud Americana de Vapores SA (trading as “CSAV”) [2016] EWCA Civ 1103

Hague Rules – proof of excepted peril in Article IV rule (2) shifting burden to cargo to prove negligence of the carrier

The Facts

Nine consignments of washed Columbian green coffee beans were carried in 20 dry, unventilated 20 foot containers, each loaded with 275 hessian 70kg bags from Buenaventura, Columbia to Northern Germany.

The bare corrugated containers were lined with kraft paper and stuffed by the carrier’s stevedores before being loaded onto the vessels.

The bills of lading incorporated the Hague Rules and recorded the shipment in apparent good order and condition.

On outturn, the bags in all the containers, save two, suffered some degree of condensation damage.

Condensation was the natural and inevitable effect of transporting the beans from a warm to a cold climate.

The overall loss was agreed at 2.6% of the total value of the consignments.

Owners pleaded inherent vice (Article IV rule (2)(m)), alternatively, inevitability of damage i.e. a denial of causation.


David Donaldson QC, sitting as a deputy High Court Judge, found that on proof of delivery of the goods in a damaged condition, the onus of disproving negligence was on the carriers which they failed to discharge.

Flaux J, sitting in the Court of Appeal with Gloster and King LJJ, held that on proof of the excepted peril, inherent vice, the full onus shifted to cargo to prove negligence, which cargo failed to do. In any event, the defence of inevitable damage would have succeeded.

Flaux J relied on a number of authorities for his finding on onus including the judgment of Lord Esher MR in the Glendarroch, 1894.

On the facts, which included photographs, he held that he was in as good a position as the judge to make a finding.

He held that the judge had erred in not accepting unchallenged evidence that an industry standard existed in terms of which raw coffee beans were stuffed in unventilated containers, lined with absorbent paper. This was a less expensive alternative to using ventilated containers which were preferable.

The judge also erred in not finding that the carrier had met the standard.


Flaux J held that the judge was right on one point (of academic interest in this case) that the carrier’s liability included the activity of its stevedores which occurred before the containers passed the ship’s rail. He quoted Devlin J in Pyrene v Scindia as follows:

the division of loading into two parts is suited to more antiquated methods of loading than are now generally adopted and the ship’s rail has lost much of its 19th century significance. Only the most enthusiastic lawyer could watch with satisfaction the spectacle of liabilities shifting uneasily as the cargo sways at the end of the derrick across a notional perpendicular projecting from the ship’s rail.

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538. Marks & Spencer PLC v BNP Paribas Securities Services Trust Company (Jersey) [2015] UKSC 72

Implied terms – Lord Hoffmann’s analysis is Belize Telecom qualified – scope for implying terms in a comprehensive written agreement is limited

The Facts

A written lease between the parties gave the tenant the option of premature termination on a certain date.

Rent was to be paid quarterly in advance.

A condition for the exercise of the option was that the rent payments were to be up to date.

As matters turned out, the tenant terminated shortly after paying its quarterly payment of rent in advance.

It sought to recover a portion of the advance payment for that period for which it would have no enjoyment of the premises.


Tenants’ argument for an implied term succeeded at first instance but not in the Court of Appeal and not in the Supreme Court.

Lord Neuberger relied principally on the approach set out by Sir Thomas Bingham in Phillips Electronique Grand Public SA v British Sky Broadcasting Ltd as follows:

The Courts’ usual role in contractual interpretation is, by resolving ambiguities or reconciling apparent inconsistencies, to attribute the true meaning to the language in which the parties themselves have expressed their contract. The implication of contract terms involves a different and altogether more ambitious undertaking: the interpolation of terms to deal with matters for which, ex hypothesi, the parties themselves have made no provision. It is because the implication of terms is so potentially intrusive that the Law imposes strict constraints on the exercise of this extraordinary power …

[It is] difficult to infer with confidence what the parties must have intended when they entered into a lengthy and carefully drafted contract but have omitted to make provision for the matter in issue [because] it may well be doubtful whether the omission was the result of the parties’ oversight or of their deliberate decision [or indeed the parties might suspect that] they are unlikely to agree on what is to happen in a certain eventuality and may well choose to leave the matter uncovered in their contract in the hope that the eventuality will not occur …

The question of whether a term should be implied, and if so what, almost inevitably arises after a crisis has been reached in the performance of the contract. So the Court comes to the task of implication with the benefit of hindsight, and it is tempting for the Court then to fashion a term which will reflect the merits of the situation as they then appear. Tempting but wrong … [I]t is not enough to show that had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred.

Lord Hoffmann’s statement in Belize Telekom that deciding on implied terms was an exercise in construction was superficially wrong – construction decides what terms mean that are there – implication, on terms that are not there.


The test was put in a nutshell by Lord Sumption during argument as follows: “a term can only be implied if, without the term, a contract would lack commercial or practical coherence.

The tenant’s argument was weakened by the fact that the common law in England is that rent paid in advance (as opposed to rent paid in arrears where the position is regulated by Statute) is not apportionable in respect of time.

While a strong argument that rent paid in advance should be apportionable in respect of time, can be made, this cannot affect the context in which the argument for an implied term had to be considered in this case.

Lord Carnwarth was unwilling to criticize Lord Hoffman in Belize Telekom.

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537. Geys v Société Générale, London Branch [2012] UKSC 63

Contract of employment providing for payment in lieu of statutory minimum period of notice – employee dismissed summarily in breach of contract – payment directly into employee’s bank account unaccompanied by any form of notice held not sufficient to constitute proper notice of termination.

The Facts

The employee was employed in 2005 in terms of a written contract of employment with the following provisions:

Paragraph 13: “Your employment can be terminated on the expiry of 3 months’ written notice of termination given to you by to the company or by the company to you.;

Paragraph 5.14: “The Company will, within 28 days after such termination of your employment, make a payment to you (the “termination payment”) as specified in paragraph 5.15.

Paragraph 8.3: Termination by SG and payment in lieu of notice

SG reserve the right to terminate your employment at any time with immediate effect by making a payment to you in lieu of notice (or, if notice has already been given, the balance of your notice period) based upon the value of your basic salary, flexible benefits allowance…

A staggered bonus clause had the effect that termination before or after 31 December 2007 made a substantial difference to the value of the bonus.

The employer purported to dismiss the employee summarily on 29 November 2007 in breach of the provisions set out above: no written notice or payment in lieu of notice was made.

The employee was immediately escorted from the premises after clearing his desk.

On 18 December 2007, the employer paid a sum of money directly into the employee’s bank account amounting to 3 months’ salary in lieu of notice as required by clause 8.3.

The employee became aware of the payment, by his own admission, before 31 December 2007.

Throughout December 2007 and until a written notification from the employer on 4 January 2008, the employee contested the lawfulness of his dismissal.

On 4 January 2008 the employer formally advised the employee of his dismissal in writing.


A divided Court: Lords Hope Wilson, Carnwath and Baroness Hale of Richmond against Lord Sumption held that the summary dismissal was a repudiation which did not end the contract without acceptance by the injured party; that payment on its own on 18 December 2007 was insufficient notice, and the contract only came to an end on formal notification by the employer on 4 January 2008.

As set out above, this made a substantial financial difference to the parties.

Lord Sumption relied on Lord Reid’s dictum in White and Carter to the effect that in some circumstances, the injured party is obliged to accept repudiation and is confined to a claim for damages.

The majority saw the dispute as a contest between two rival approaches, in employment law specifically: does repudiation by either party automatically end the contract or does the injured party have an election? The rationale for the first alternative would be the fact that, generally, there is no specific performance in employment contracts.


Lord Sumption remarked: “Rarely can form have triumphed so completely over substance.

The correct answer would appear to be that this case should be confined to its facts: the circumstances were such that the employee had no real choice in keeping the contract alive. On the exception in White and Carter, he should have been confined to damages and it should have been found that his contract terminated when he was escorted from the building with no prospect of return.

Put differently, this was not straight contest between two rival positions but the application of a general principle (albeit an exception) valid for all contracts. Compare Mediterranean Shipping v Cottonex Anstalt.

Baroness Hale’s judgment contains a useful discussion on the executory requirements of a termination mechanism. She quotes Lord Steyn in Mannai Investment Co Ltd as follows:

Making due allowances for contextual differences, such notices [under a break clause in the lease] belong to the general class of unilateral notices served under contractual rights reserved, eg notices to quit, notices to determine licenses and notices to complete … To those examples may be added notices under charterparties, contracts of affreightment, and so forth. Even if such notices under contractual rights contained errors they may be valid if they are sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when they were intended to operate … The test postulates that the reasonable recipient is left in no doubt that the right reserved is being exercised. It acknowledges the importance of such notices. The application of that test is principled and cannot cause any injustice to a recipient of the notice.

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536. Effort Shipping Co Ltd v Linden Management SA (the “Giannis NK”) [1998] 1 Lloyds Rep 337

Hague Rules – “dangerous goods” include those dangerous to the venture, not only vessel – shippers strictly liable – right to sue transferred by Bills of Lading Act 1855 not affecting liability of shippers – carrier’s liability for dangerous cargo at common law also strict.

The Facts

On 18 November 1990, a cargo of ground-nut extractions was loaded at Dakar, Senegal, for carriage to Rio Haina in the Dominican Republic. The cargo was infested with khapra-beetle. The vessel had previously loaded a cargo of wheat pellets in separate holds for carriage to San Juan, Puerto Rico and Rio Haina. There was no danger of beetle infestation spreading from the ground-nut cargo to the wheat cargo.

After discharging part of the wheat cargo at San Juan, the vessel proceeded to Rio Haina where she was placed in quarantine after the discovery of the insects.

After fumigation, the vessel was ordered to leave the port.

The vessel went back to San Juan and was ordered by the US authorities to leave the port and either to return the cargo to its country of origin or to dump it at sea.

The owners had no practical alternative but to dump the whole of the cargo at sea including the wheat cargo.

On returning to San Juan the vessel was further fumigated. Eventually it was cleared to load, after a delay of 2½ months.


Longmore J and the Court of Appeal (Hirst, Morritt and Ward LJJ) and the House of Lords (Lords Goff, Lloyd, Steyn, Cooke and Clyde) held that the shippers were liable under art.IV(r)6 of the Hague Rules.

Even though beetle infestation was not dangerous to the vessel or the other cargo on board its presence was the direct cause of the other cargo being dumped at sea and it was therefore dangerous cargo for the purposes of art.IV(r)6.

Art.IV(r)6 was not qualified by art.IV(r)3 requiring fault on the part of the shipper.

The Bills of Lading Act extended the right to sue, but did not limit, the obligations of the original shipper.

At common law, the shippers would also have been strictly liable.


The speech of Lord Lloyd contains a useful illustration of the distinction between ratio decidendi and obiter dictum.

He mentions the reluctance of the House to decide obiter points such as the 4th point – common law liability. He justifies making the decision nevertheless by the fact that the point was fully argued.

Lord Steyn’s speech contains reference to an article by Lord Roskill in (1992) 108 LQR 501 in which Lord Roskill describes the evidence given by Scrutton LJ and MacKinnon QC to a British Parliamentary Committee in regard to the adoption of the Hague Rules:

They (Scrutton and MacKinnon) gave dire and, in the event, wholly unwarranted warnings of the problems which would arise as to their construction, with uncertainty and endless litigation replacing what they saw as the clarity of the existing law based upon freedom of contract. In truth, as every commercial lawyer knows, it is remarkable how few cases there have been in this country upon the construction of the Rules.”

Lord Steyn clarified the correct approach to the travaux préparatoires: reliance on them could be placed only in the clearest of circumstances: “only a bull’s eye counts. Nothing less will do.”

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535. Vinnlustodin HF Vatryggingaffelag Islands HF v Sea-Tank Shipping AS (the “Aqasia”) [2016] EWHC 2514 (Comm)

Hague Rules – package limitation not applying to bulk cargos.

The Facts

Fish oil was carried pursuant to a charterparty on the “London Form”, an old tanker voyage form now replaced in common usage by Intertankvoy 76.

The vessel loaded 2,056,926 kg of fish oil in bulk at Faskrudsfjordur and Vestmannaeyjar.

The vessel sailed to Lovund in Norway and loaded a further cargo of fish oil.

On arrival at the discharge port 547,309 kg/mt of the cargo was found to be damaged.

Claimants claimed $367,836 together with interest and costs. Ship owners sought limit their liability to £54 730 i.e. £100 per metric ton of cargo damaged pursuant to Article IV r.5 of the Hague Rules.

Article IV r.5 provides:

“… neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding £100 per package or unit or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading”.


In an elegant judgment, Sir Jeremy Cooke held that “unit” referred to an item of cargo not suitable for packaging e.g. a motor car.

In reaching his conclusion he referred to the travaux préparatoires and comparative case law. The same conclusion had been reached in Australia by Allsop J in the El Greco.


The historical reason given for not including bulk cargos in the limitation clause was that the value of the standard units of measurement of bulk cargos at the time when the Hague Rules were agreed upon, (1924), were so low that there was no point in making them subject to a unit/ weight limitation.

USA COGSA and the Hague Visby Rules did introduce wording to include bulk cargos.

The judge referred to the Giannis NK where Lord Steyn held that it was permissible to have regard to the travaux préparatoires only in cases where the travaux were so clear that they left no doubt as to what the Convention had decided: “only a bull’s eye count. Nothing less will do”.

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534. Vallejo v Wheeler (the “Thomas and Matthew”) 1 Cowp. 143

Marine insurance

The Facts

On a voyage between London and Seville, the master deviated to Guernsey to smuggle.

The charterer, insured, suffered loss through storm damage.

Storm damage and barratry were insured perils.

Deviation was an exclusion.


Lord Mansfield sitting with two other judges held for the insured.

Deviation could only operate as an exclusion if it occurred with the privity of the insured – here the loss was caused by the barratry of the captain.


The report is archaic and obscure.

Interesting quotes:

Wherever a great nicety does arise, the insured should be entitled to the turn of the scale” – Buller, arguendo.

In all mercantile transactions the great object should be certainty: and therefore, it is of more consequence that a rule should be certain than whether the rule is established one way or another. Because speculators in trade then know what ground to go upon.” – Lord Mansfield.

I have in the meantime considered of it, and consulted with men conversant in mercantile affairs, and I am now very clear.” – Lord Mansfield.

Nothing is so clear as that no man can complain of an act done, to which he himself is a party.” – Lord Mansfield.

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533. Cory v Burr (the “Rosslyn”) (1881 – 82) LR 8 QBD 313; (1882) 9 QBD 463; (1883) 8 App Cas 393

Marine insurance – successive causes – insured peril leading to excluded peril – insurers not liable.

The Facts

A time marine insurance policy contained the usual perils (including “barratry of the master”). The subject-matter of insurance was warranted “free from capture and seizure”.

On the night of 23rd May 1879, the master of the vessel loaded 8 tons of tobacco to be smuggled into Spain.

The ship left Gibraltar with the tobacco on board and was seized and taken to Cadiz where the master and crew were placed under arrest on a charge of smuggling. Proceedings were taken to procure the confiscation of the ship.

Owners were compelled to pay a large sum of money to get back their ship.


All three Courts held that the exclusion prevailed. In the House of Lords, the Respondents were not called upon to argue.

Of the judgments delivered, including those by Brett LJ (later Lord Esher), the Earl of Selborne and Lord Blackburn, the most lucid was that of Field J at first instance.

He held simply that the clauses had to be read together – the natural meaning of the policy was that the exclusion, being the final event, operated to defeat preceding insured perils, no matter how closely connected to the excluded event.


The reasoning was followed in the B Atlantic.

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