Teams of barristers from 7KBW appeared on both sides of Commercial Court litigation concerning the loss of grain stored in Ukrainian warehouses and insured under a marine cargo insurance policy. The decision is of particular interest for its consideration of the circumstances in which an insured purchaser may have an insurable interest in property. It is also the first reported decision to consider the application of section 13A of the Insurance Act 2015.
The insured claimant purchased cargoes of grain under various contracts and paid for the same against the presentation by the sellers of warehouse receipts issued by Ukrainian warehouses. Those warehouses were, however, participating in a fraud whereby multiple warehouse receipts in respect of the same goods were issued to different buyers. When it came to the point of executing physical deliveries against those warehouse receipts, there was not enough grain to go round.
Following the loss of the grain for which it had paid, the claimant sought an indemnity from its cargo insurers. The insurers resisted liability on the basis inter alia that there was no loss of physical property, alternatively it was not property in which the claimant could show it had any insurable interest.
Mr. Justice Butcher found for the insured claimant. In summary:
The claimant’s separate claim for damages pursuant to section 13A of the Insurance Act 2015 was dismissed. Two distinct questions arose: (i) what was a reasonable time within which insurers should have paid; and (ii) were there reasonable grounds for disputing the claim? Mr. Justice Butcher concluded that a reasonable time was not more than about a year from the notice of loss; that there were reasonable (albeit mistaken) grounds for disputing the claim; and that, although there was some delay in certain aspects of the defendants’ investigations of the claim, those features of insurers’ handling of the claim still occurred within a reasonable time for payment. There was accordingly no breach of the section 13A implied term.
The insured was represented by Jawdat Khurshid QC and Anna Gotts who were instructed by Kyri Evagora and Elizabeth Farrell of Reed Smith LLP.
The insurers were represented by Peter MacDonald Eggers QC and Sandra Healy who were instructed by Christopher Pratts and Daniel Jennings of Clyde & Co LLP.
To view a copy of the judgment, please click here.