This judgment is the appeal of the judgment previously blogged on here.

The question was whether insurers could refuse to pay a claim under an All Risks Marine Cargo Open Policy because the insured had no insurable interest in the subject matter of the property cargos of grain. The insured had been a victim of a fraud in which the fraudster obtained grain from local farmers and issued multiple warehouse receipts in respect of the same consignment to different buyers.  The insured made its contracted payment but received no grain consignments. The insured claimed its monetary losses under the policy. 

The insurers argued that there had been no physical loss of property, alternatively that the insured had no insurable interest in any goods that were lost.

The lower court held that grain corresponding to the cargo descriptions was physically present in the warehouses.   And that the insured had an insurable interest because it had paid for the goods and had an immediate right to possession of those goods.  It did not matter that it never held any proprietary interest in the grain.

On appeal it was held that:

There was ample evidence before the court to find that the goods were in fact present and that there were the relevant cargos of grain corresponding in quantity and quality physically present in the relevant warehouses at the time that the goods receipts were issued.  That was sufficient to establish that the insured had an insurable interest by reason of the terms of insurance issued to it.

The case law established that an insured could have an insurable interest in goods even though it had no proprietary interest.  Therefore, it was irrelevant whether the goods formed part of a bulk which was sufficiently identified.

The insured’s payment or part-payment of the contracted purchase price gave the insured a sufficient insurable interest.  In any event under the governing law (in this case Ukrainian law) the insured did have an immediate right to possession of the cargos. 

The court of appeal said that an insurer could not complain after having received the premium if the legal consequence of the policy wording it had chosen to issue ensued.  The insured’s recovery under its policy reflected its own interests in the grain and not any loss sustained by anyone else.

Where an insured has some legitimate, economic or other interest in the subject matter of the insurance, the English courts will now readily find the insured to have the necessary insurable interest to claim under the insurance policy.

The court accepted that English law recognises the principle established in the US judgment of Cumberland Bone Co v Andes Insurance Co 64 Me 466 (1874) that a purchaser has an insurable interest if it makes a payment or part-payment of the purchase price even if neither title nor risk has passes to the purchaser.

The trend and approach by South African courts is in principle no different.