Law: Problem Solving Task

Issue

  • Whether European Spirits can recover loss against the insurance company.

  • Whether the claim can be made against the insurance policy.

  • Whether the insured will be indemnified for all the parts of losses suffered by him.

  • Whether there is an exception to the liability in the present case.

  • Whether the insurance company can recover the money from Rebel distillery

Rule

  • International commercial law

  • Carriage of Goods by Sea Act 1991 (Cth).

  • Marine Insurance Act 1909 (Cth)

  • Sale of Goods Act 1958

Application

According to the United Nations Convention regarding the contracts for the International Sale of Goods, there are certain obligations imposed upon the seller under article 30-44. Apart from this also under the United Nations Convention on International Multimodal Transport of Goods 1980, it is the responsibility of the seller to deliver the goods to the buyer in an appropriate manner that by ensuring the proper safety of the goods. In the light of the present facts and circumstances of the case, it is very evident that the facts clearly state that Rebel distillery loaded around two thousand bottles of whiskey on the ship into boxes made up of wood. It must be noted that the bottles of whiskey were not put into the individual cylinder tubes by the seller which would have in short the safety of the bottles during the period of transit. Therefore it is clear that the seller in this present case did not abide by the obligation imposed upon him under the conventions and had not relied upon following the due diligence for the goods.

Apart from this while ensuring the duties of the carrier in this present revolves around the Hague Visby Rules, which talk about the liability of carrier regarding the risk of goods during the carriage of goods. According to the Hamburg rule in the case of Cabot Corp v The Mormacscan1 article 1 sub-clause 3, the shipper will be considered as a career in a particular case. In the lights of the present circumstance, the speedy couriers will be considered as carriers as per Hamburg rule. In the case of Tasman Express line limited versus JI case Private limited2, the general duties of the carrier are discussed. The important ground of liability is the absence of due diligence according to the Hague Visby rule.

In the light of the present case, it can be seen that the bottles of whiskey were stored on the deck of the vessel and were not stored in any particular room due to which it was extremely exposed to the heat during the entire course of the voyage. This contributed to the damage of the whiskey which occurs due to the absence of due diligence on the part of the carrier in the present case. According to the case of Johnston v Endeavour Energy3, It is the responsibility of the carrier to provide refrigerating and cool chambers in every part of the ship which carries goods. It can be seen that even after knowing that the goods were whiskey bottles and it needs to be stored in a cooling environment, still it was exposed to heat over the Deck of the vessel.

Therefore, the carrier in this present case will be liable for the damage and loss that arose due to his unworthiness of the ship and his lack of care regarding handling the goods. Apart from this, it is the application of the carrier to deliver the goods in the exact condition as mentioned and noted in the bill of lading to the consignee of the bill of lading which is absent in the present case. This makes the carrier liable to pay the loss and damages suffered by the European spirits. However, it must be noted that there are certain exceptions provided to the liability imposed upon the carrier depending upon the facts and circumstances of the case.

According to the Hague Visby rules of article 4(2), general exceptions regarding the liability of career have been discussed under which he can be exempted from any liability caused due to the loss or damage suffered to the goods. It is the responsibility of the carrier to prove that the loss or damage caused to the goods is caused due to the contributory negligence and lack of care on the part of the seller4. The UN seaworthiness caused due to the lack of due diligence on the part of the other party will exempt the carriers to suffer any loss or damages occurred to the goods. Article 4 of the Hague Visby rules clearly state that the carrier will not be held responsible if there is an act of neglect or default by the master, pilot, or any servant of the carrier.

In the light of the present science and circumference of the case, it is real that the seller had not properly stored the bottles of whiskey and had only loaded them into wooden boxes while not putting any individual cylinder tubes to the bottles which had contributed to the damages suffered to the goods. The fact is undeniable that even the carrier in the present case had not fulfilled the due diligence on his path as he had not stored the goods in a proper place, so under such circumstances liability will be limited but not completely exhausted.

According to Holler & Rouse v Osake & Anor5, to identify the claim for insurance in the present case, it must be noted that the marine insurance is referred as a contract of indemnity which is enforceable only when there is a contract between the insurance as well as the insured unless the same is extended to the third party keeping in mind the right of subrogation. Subrogation is a legal right that is provided to the insurance carriers to legally pursue any third party. In the present case, the insurance taken by the Rebel distillery from the insurance company was formulated to provide insurance to the goods of the third party which is the European spirits in the present case. The damage to the goods had not only affected the seller in this present case but also the third party.

Therefore it can be said that under the Marine Insurance Act of 1909 (Cth), the contract of indemnity is extended to the third party in this present case. The goods in the present case were of perishable nature which got damaged during the entire course of the voyage. Section 8 of the marine insurance act clearly expresses that by the usage of any trade, the insurance is extended to protect the insured against any loss or damage to the goods on inland waters which may be incidental to any sea voyage6. In light of the present case, it is clear that the European spirits can claim insurance from the insurance company on the grounds of section 8 of the marine insurance act7.

Therefore the European spirits can claim under the insurance policy on the grounds of subrogation under the International commercial law. It is mentioned under the facts of the case that when Jean Claude telephone the seller which is the Rebel distillery they had told him that Rebel distillery had entered into a contract of insurance with insurance company name sleep easy. The company had promised to cover all the losses against the damage that occurred to the wine bottles during the entire course of transit in the sea for the third party in the present case which is the European spirit. Therefore, it is true that a claim can be made against the insurance company by the European spirits on the grounds of subrogation under the marine insurance act of 1909.

It must be noted that according to the Insurance Contract Act of 1984 (Cth), the right of the insurance regarding the subrogation rest upon the contract of indemnity in a particular case, it is the provisions of the contract which will determine whether the rights of recovery exist in a particular situation or not and in which it will operate8. The right of the insurance regarding the subrogation can be modified by the express terms in the contract. However, according to the landmark case of (TM) BV v Harding9, it must be noted that in the present case, there was no clause strictly avoiding the class of subrogation when the contract of insurance was entered between the Rebel distilleries and the sleep easy insurance company.

However, it must be noticed that according to the Marine Insurance Act of 1909, there are certain defences provided to the insurance under the act10. According to section 61 of the marine insurance act, the insurance will not be liable for the inherent vice or defects to the goods caused by inadequate packing the same has been stated in the case of Johnston v Endeavour Energy11. In the light of the present case and circumstances, it is very clear that it was the responsibility of the Rebel distillery to adequately package the bottle of wines into the vessel. It was very clear through the facts that the Rebel distillery had stored 2000 bottles of wines into a wooden box without any cylindrical case upon the bottles of wine.

If the seller would have exercised its due diligence by adequately packing the bottles of wine then and there is a potential chance that the bottles of wine would not have damage to the extent it has damaged. However, it must be noticed that the parties must agree upon the contract of insurance regarding the risk of inherent vice under the contract which is absent in the present case. Therefore the insurance company in this present case had to cover the risk of damage and loss to the bottles of wine for European spirits which are the third part in the present case.

As per Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Pty Ltd12, it is an undeniable fact that the insurance company had to provide indemnity to the European spirits. As far as recovering of loss from the Rebel distillery is a concern, the same can be recovered and this right is known as a right of recovery under the subrogation under the marine insurance act. All parts cannot be insured for the loss as there was a contributory lack of care from the seller in the light of the present case therefore only the party insurance will be provided by the sleep easy insurance company to be European spirits.

Therefore the compensation for the partly loss can be recovered from the Rebel distillery in the present case because the insurance company is entitled to have all the benefits regarding the potential rights that the insured might have against the third party to compensate for the loss. It must be noted that in the present facts and circumstances of the case, the insured which is the Rebel distillery, in this case, has a right and benefit against the third party as the insured was the seller and will recover money for his bottle of wines. Under the common law, however, this right is restricted to some extent, as against recovery depends upon the clause inserted in the contract of insurance between both the parties.

Conclusion

Apart from this, it must be noticed that in the right of recovery by the insurance can be modified by the contract which is not there in the present case and other than this the insurance has whatsoever no right to subrogate itself to its insured’s right regarding the claim under the contract of insurance. it can be seen from the facts and circumstances of the case that the contract of insurance between the Rebel distillery and the sleep easy insurance company does not have any clause of waiver of subrogation in their contract of insurance, therefore, the same cannot be waived by any of the parties. This made both the seller as well as the insurance company liable to pay for the damages suffered by the European spirits.

Therefore in the light of the present facts and circumstances of the case, Rebel distillery was responsible for the bottles of whiskey during the transit by seeing the present case. Apart from the seller in this situation, the carrier equally played an important role where it had not obliged with its duty with due diligence. It can be seen that according to the act the carrier was negligent enough and had not properly stored the goods in the refrigerating or any cooling chambers the perishable goods as per article 3 sub-clause 1 of the Hague Visby Rules. After taking the precedence of various cases it can be e inferred that there are various exceptions to the liabilities in this present case as the seller was equally at fault where he had not carefully and adequately packaged the bottles of wines which had contributed in the damage of the same during the transit by sea.

As Rebel distillery entered into an agreement of insurance with sleep easy insurance, the European spirits can claim under the insurance policy on the same grounds. In the present facts and circumstances of the case, the insurance company has the right to recovery against the Rebel distillery based on the doctrine of subrogation. As there was a contributory fault on the part of the seller in the present case, therefore, the insurance provided to the European spirits by the insurance company will be partly in nature and the same amount only can be recovered as a recovery by the Rebel distillery. It depends upon the facts and circumstances of the case as to whether any party can recover laws against the insurance company or not.

However, in this present case, the European spirit has a strong case against the insurance company in terms of recovering loss or damage caused to the goods which were damaged during the transit by sea. In this present case, the role of the contract of insurance played a major role in determining whether the European spirit can claim damages against the insurance company as well as the right to recovery against the Rebel distillery on the grounds of subrogation by the insurance company. In this present case, various defences and exceptions to the liabilities can also be taken into account due to the carelessness by different parties.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Commercial Law Assignment Help

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