Supreme Court clarifies the costs of repair which count towards a Constructive Total Loss in The Renos

News / / Supreme Court clarifies the costs of repair which count towards a Constructive Total Loss in The Renos

The Marine Insurance Act 1906 provides that in the case of damage to a ship, there is a CTL where she is so damaged by a peril insured against that the cost of repairing the damage would exceed the value of the ship when repaired nbspThe Institute Clauses, on which the vessel's hull and machinery insurance was written, substitute the vessel's insured value (here US12m) for the sound market valueThe dispute before the Supreme Court revolved around which items could be included within the meaning of the cost of repairing the damage Insurers, who had lost in both the Commercial Court and the Court of Appeal, sought to exclude two types of cost from this calculation firstly, costs incurred prior to the service of a Notice of Abandonment (NOA), and secondly, Special Compensation Protection and Indemnity Clause (SCOPIC) remuneration under the Lloyd's Open Form 2011On the first question, the Supreme Court upheld the decisions of the courts below and found that pre-NOA costs were properly within the cost of repairing the damage This question was determined on the basis that the insured loss occurs (and is complete) at the time of the casualty, even if the extent of the loss develops thereafter, and that a CTL is simply a partial loss which is financially equivalent to a total loss Whether a vessel was a CTL was therefore an objective fact from the time of the casualty Contrary to the insurers' submissions, it was not possible for a vessel which was a CTL to cease being so simply because the shipowners incurred some of the costs of repair before they served the NOA The fact that a vessel could cease to be a CTL where the loss was adeemed', for instance where a hijacked vessel was returned, was not analogous and did not support the insurers' caseOn the second question, however, the Supreme Court agreed with the insurers The objective purpose of the SCOPIC remuneration was to reduce the shipowner's (and ultimately their PI Club's) exposure to third party liabilities in respect of environmental damage That was not a cost of repairing the damage, even if those services were performed by the same salvors who brought the vessel to a place of safety (which is a cost of repair) Unlike the Courts below, the Supreme Court found that the SCOPIC charges were separable from traditional salvage chargesThe case was remitted to the Commercial Court judge to decide whether, with the SCOPIC charges excluded from the calculation, the vessel was in fact a CTLRead the full articlenbsphereThis article was co-authored by Keith Rowbory, trainee solicitor at Ince

Related sectors:

Related services:

Related news & insights

Insights / Success with subrogation in the UAE

25-05-2021 / Insurance

Insurers often perceive subrogated recoveries as challenging and uncertain in this region and that can be true to some extent. 

Success with subrogation in the UAE

Insights / Insurance & Reinsurance guide 2021

25-01-2021 / Insurance

We are pleased to share with you Chambers and Partners 'Insurance & Reinsurance guide 2021', of which Simon Cooper is the contributing editor.

Insurance & Reinsurance guide 2021

Insights / Supreme Court checks out of Orient Express Hotel

19-01-2021 / Insurance

On 15 January 2020, the Supreme Court handed down its judgment in this test case that was initiated by the Financial Conduct Authority (“”FCA”) in order to determine a number of common coverage issues pertaining to the correct response of non-damage business interruption policies to the Covid-19 pandemic.

Supreme Court checks out of Orient Express Hotel

Insights / Decennial Liability in the UAE

05-10-2020 / Insurance

At its core, decennial liability is a form of strict liability imposed on architects, engineers and contractors in the case of total or partial collapse of a building or structure or defects found in the building or structure that threaten the structural integrity of the building.

Decennial Liability in the UAE

Insights / The Insurance and Reinsurance Law Review Eighth Edition

16-06-2020 / Insurance

We’re pleased to share with you the eighth edition of The Insurance and Reinsurance Law Review. Ince is a member of The Law Reviews (TLR) leading panel of contributors and the team this year led by Peter Rogan as the Editor, contributed to the following topics:

The Insurance and Reinsurance Law Review Eighth Edition

Insights / Chapter 15 - England and Wales

16-06-2020 / Insurance

The UK insurance and reinsurance industry is the largest in Europe and the fourth-largest in the world.

Chapter 15 - England and Wales

Quick links

The Legal 500 2021

“Very available and responsive to company developments in real time. Frank, clear advice – not just the ‘easy’ answer.”

The Legal 500 2022

“The solicitors who have handled our employment related issues are of the highest quality in terms of their specialist area of expertise, their professionalism and their approach to us as clients and as people. Special mention has to be made of Laura Livingstone. Laura became a key member of our team and felt more like a colleague than an external adviser – a colleague you could rely upon. Laura’s attention to detail, professionalism and responsiveness was second to none. Laura has come to know and understand us as individuals and this has enabled her to personalise her advice and even sometimes to preempt our future requirements. We have a very special and extremely valuable relationship with her and the firm.”

- The Legal 500

The Legal 500 2022

“Ince are an excellent “fit” with our specific needs. The firm has consistently provided a broad range of personnel-related advice and in our experience that advice has been consistently of the very highest professional standard: it has been timely, comprehensive, accurate and at a cost which is commensurate with the budget of an organisation of our size.”

- The Legal 500

The Legal 500 2022

“The firm has an unusually high degree of insight into the practices and policies required by the Gambling Commission as regards compliance with its own requirements and conditions – particularly Andrew Tait, derived from his previous in-house experience.”

- The Legal 500