the application of the principle of indemnity is concerned in juxtaposition to that of
subrogation.
46
In commenting on Yorkshire v. Nisbett, the court in a subsequent case opined that
the pound sterling must always be treated as a pound in essence, without regard to
such things as its exchange rate or its purchasing power. In that vein, the court held:
A pound is always a pound: so that whatever the exchange rates between the pound and any
or all other currencies; and whatever may happen between one date and another to the
internal purchasing power of the pound, in the eye of the law a pound today is the same as it
was yesterday or a year ago or ten years ago.
47
The decision seems rather parochial and without regard to the realities of the
financial world where the vagaries of currency fluctuation in certain circumstances
may well be the order of the day dictating the norm, which can neither be categorically ignored by the “eye of the law”; nor can the law lead to inequity. In that case,
the court went on to say:
If it were otherwise, I could see strong ground for the argument that the guarantors were not
fully indemnified by receiving in 1968 the same number of pounds as they had paid out in
1966. But as the law stands, they must be regarded as having been fully indemnified.
48
In light of the above, the rule enunciated in Yorkshire v. Nisbett may be construed
as meaning that the party entitled to subrogation can recover only exactly what he
paid; and no more than that, not even interest, even though in numerous other
English cases interest payments have been awarded to the party entitled to subrogation.
49 If Yorkshire v. Nisbett is so construed, the decision would be contrary to and
inconsistent with those cases, which certainly would not reflect rationality of the law.
Viewed from a different perspective, decisions in cases like Yorkshire and Livingstone also, perhaps unwittingly, point to a pro-assured judicial bias. There seems to
be a general revulsion towards insurers getting more into their coffers through
subrogation than what they paid by way of indemnification; and that sentiment
may well be justified from the viewpoint of legal policy, but in appropriate cases,
“double dipping” by the assured is also not desirable, which is what subrogation was
designed to prevent. As remarked by one commentator:
“Yorkshire is one case in which payment of an excess to the insurer would have been
justified by principles basic to subrogation. By deciding that the insurance company was
entitled to only what it had paid, the court allowed
Nisbett Shipping to benefit from the insurance and the tortfeasor’s payment”.
50
The defendant Nisbet Shipping in that case received £ 72,000 in 1945 for the loss
of their ship and enjoyed the use of those funds for 13 years until in 1958 it received
46 See Bybee (1979), p. 148, in particular, footnote 16 at that page.
47 L. Lucas Ltd. v. Export Credits, [1973] 2 All E.R. 984 (C.A.); [1974] 2 All E.R. 889 (HL).
48 Ibid.
49 See Bybee (1979), p. 150.
50 Bybee (1979), p. 151.
574
P. K. Mukherjee
subrogation.
46
In commenting on Yorkshire v. Nisbett, the court in a subsequent case opined that
the pound sterling must always be treated as a pound in essence, without regard to
such things as its exchange rate or its purchasing power. In that vein, the court held:
A pound is always a pound: so that whatever the exchange rates between the pound and any
or all other currencies; and whatever may happen between one date and another to the
internal purchasing power of the pound, in the eye of the law a pound today is the same as it
was yesterday or a year ago or ten years ago.
47
The decision seems rather parochial and without regard to the realities of the
financial world where the vagaries of currency fluctuation in certain circumstances
may well be the order of the day dictating the norm, which can neither be categorically ignored by the “eye of the law”; nor can the law lead to inequity. In that case,
the court went on to say:
If it were otherwise, I could see strong ground for the argument that the guarantors were not
fully indemnified by receiving in 1968 the same number of pounds as they had paid out in
1966. But as the law stands, they must be regarded as having been fully indemnified.
48
In light of the above, the rule enunciated in Yorkshire v. Nisbett may be construed
as meaning that the party entitled to subrogation can recover only exactly what he
paid; and no more than that, not even interest, even though in numerous other
English cases interest payments have been awarded to the party entitled to subrogation.
49 If Yorkshire v. Nisbett is so construed, the decision would be contrary to and
inconsistent with those cases, which certainly would not reflect rationality of the law.
Viewed from a different perspective, decisions in cases like Yorkshire and Livingstone also, perhaps unwittingly, point to a pro-assured judicial bias. There seems to
be a general revulsion towards insurers getting more into their coffers through
subrogation than what they paid by way of indemnification; and that sentiment
may well be justified from the viewpoint of legal policy, but in appropriate cases,
“double dipping” by the assured is also not desirable, which is what subrogation was
designed to prevent. As remarked by one commentator:
“Yorkshire is one case in which payment of an excess to the insurer would have been
justified by principles basic to subrogation. By deciding that the insurance company was
entitled to only what it had paid, the court allowed
Nisbett Shipping to benefit from the insurance and the tortfeasor’s payment”.
50
The defendant Nisbet Shipping in that case received £ 72,000 in 1945 for the loss
of their ship and enjoyed the use of those funds for 13 years until in 1958 it received
46 See Bybee (1979), p. 148, in particular, footnote 16 at that page.
47 L. Lucas Ltd. v. Export Credits, [1973] 2 All E.R. 984 (C.A.); [1974] 2 All E.R. 889 (HL).
48 Ibid.
49 See Bybee (1979), p. 150.
50 Bybee (1979), p. 151.
574
P. K. Mukherjee