litigation costs which could be quite substantial.
61 As it happened in that case, the
litigation costs were borne by the plaintiff insurer at least initially, pursuant to an
agreement reached between the parties in dispute. Indeed, the court expressly
recognized the existence of it and was content to ignore the issue of costs incurred
in the litigation between the assured and the Canadian Government.
62 For the sake of
argument, it could well have been a situation in which the insurers would have had to
bear the litigation costs in the absence of any mutual agreement. In such a hypothetical instance, if the assured was awarded the windfall as it did in the Yorkshire
Insurance case, it would have secured for him a double benefit which, at least
arguably, would be inequitable and contrary to the rationale and principles embedded in the doctrine of subrogation. On the other hand, under a fixed rule devoid of
flexibility, if all available excess amounts would invariably be for the insurer under
subrogation, the assured, even if he suffered directly as a result of the acts of the
tortfeasor, would be deprived of any benefit to be derived from punitive damages if
such damages were to be awarded.
Despite varieties of limitations placed on parties to an insurance contract to
protect the principle of indemnity, problems continue to persist in common law
court decisions. One problem is the failure of the courts to provide a precise
definition of windfall. Courts tend to use terminology such as “profit”, “excess”
and “surplus”,
63 to depict the same notion. According to one author, the use of these
terms is inappropriate and confusing because “profit”, “excess” and “surplus” can all
be distinguished from windfall. The same author also mentions the concept of
windfall sharing; however, it is not clear how that concept is different from windfall
apportionment unless sharing means the apportionment is on an equal basis.
64 The
present author postulates that “windfall” is a term of art which should be used to
signify what can otherwise be stated as “extra benefit” in plain language. This would
foster uniformity of understanding.
4 Conclusion
In this chapter, an attempt has been made to analytically examine the phenomenon of
windfall as it pertains to the application of the doctrine of subrogation in insurance
cases, particularly of the marine insurance variety, in the English and American
jurisdictions. Associated scholarly literature is referred to throughout the discussion.
In some ways, this subject-matter may be characterized as unfinished business
lacking in a definitive pronouncement of the law within the ambit of marine
insurance as there are cases which go both ways in terms of who should be entitled
61 Ibid.
62 Supra, note 22 at p. 338.
63 Odeke (2017), pp. 22–23.
64 Ibid, at p. 27.
Windfall in the Law of Subrogation: Marine Insurance in Motion
577
61 As it happened in that case, the
litigation costs were borne by the plaintiff insurer at least initially, pursuant to an
agreement reached between the parties in dispute. Indeed, the court expressly
recognized the existence of it and was content to ignore the issue of costs incurred
in the litigation between the assured and the Canadian Government.
62 For the sake of
argument, it could well have been a situation in which the insurers would have had to
bear the litigation costs in the absence of any mutual agreement. In such a hypothetical instance, if the assured was awarded the windfall as it did in the Yorkshire
Insurance case, it would have secured for him a double benefit which, at least
arguably, would be inequitable and contrary to the rationale and principles embedded in the doctrine of subrogation. On the other hand, under a fixed rule devoid of
flexibility, if all available excess amounts would invariably be for the insurer under
subrogation, the assured, even if he suffered directly as a result of the acts of the
tortfeasor, would be deprived of any benefit to be derived from punitive damages if
such damages were to be awarded.
Despite varieties of limitations placed on parties to an insurance contract to
protect the principle of indemnity, problems continue to persist in common law
court decisions. One problem is the failure of the courts to provide a precise
definition of windfall. Courts tend to use terminology such as “profit”, “excess”
and “surplus”,
63 to depict the same notion. According to one author, the use of these
terms is inappropriate and confusing because “profit”, “excess” and “surplus” can all
be distinguished from windfall. The same author also mentions the concept of
windfall sharing; however, it is not clear how that concept is different from windfall
apportionment unless sharing means the apportionment is on an equal basis.
64 The
present author postulates that “windfall” is a term of art which should be used to
signify what can otherwise be stated as “extra benefit” in plain language. This would
foster uniformity of understanding.
4 Conclusion
In this chapter, an attempt has been made to analytically examine the phenomenon of
windfall as it pertains to the application of the doctrine of subrogation in insurance
cases, particularly of the marine insurance variety, in the English and American
jurisdictions. Associated scholarly literature is referred to throughout the discussion.
In some ways, this subject-matter may be characterized as unfinished business
lacking in a definitive pronouncement of the law within the ambit of marine
insurance as there are cases which go both ways in terms of who should be entitled
61 Ibid.
62 Supra, note 22 at p. 338.
63 Odeke (2017), pp. 22–23.
64 Ibid, at p. 27.
Windfall in the Law of Subrogation: Marine Insurance in Motion
577