Other Exclusions - Consequential Loss - Part II

In MacKenzie

In MacKenzie. Whittvorth (1875) LR 10 EXD 36, the Court said: "Lucena v. Crawford and Others (1806) 2 Bos & Pul (NR) 269, has always been treated as deciding that although profits may be insured, they must be described as such." This was followed in Maurice v. Goldsborough Mort & Co. [1939] AC 452, where the court stated that an insurance described as an insurance on goods does not cover loss of profits. Therefore, in that particular case, the policy in question covered damage to the wool, not loss of profits resulting from damage to the wool.

These cases do not analyse why loss of profits or similar consequential loss are not covered.

In Shelborne & Co. v. Law Investment Insurance Corporation Limited [1898] 2 QB 627, certain barges were insured against loss or damage and the barges were damaged in a collision. The insured claimed damages for loss as a consequence of detention of the barges during the repairs. The court considered that the damages were not recoverable. From the point of view of causation, the court agreed that the loss was not proximately caused by the collisionthe damages were too remote. If this is the appropriate way of considering the issue of consequential loss then, with or without an exclusion, a fact inquiry would have to be made in each case deciding whether or not the loss was so remote as to warrant the label "consequential" and it would not necessarily exclude any particular type of loss or damage.

However, in Lewis Emanuel & Son Ltd. and Another v. Hepburn [1960] 1 Lloyd's Rep 304, the court was required to consider a policy effected by fruit importers which provided specific cover against "physical loss or damage or deterioration caused by or arising out of riots, strikes and civil commotions and delay consequent thereon". The fruit importers suffered a loss of market as a result of delay caused by strikes. The court decided that despite the reference to delay in the insuring clause, the loss of market would have had to have resulted from physical loss or damage or deterioration before the assured could claim for delay.

Other Exclusions - Consequential Loss - Part II

By: Willis J. Watson

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