to a windfall; the assured or the insurer. That said, it is evident that the courts have
allowed the assured to retain windfall on numerous occasions resulting in unjust
enrichment of the assured thus undermining the essence of the doctrine of indemnity.
In these cases, typically, the assured enjoys double recovery; that is, he receives
indemnification from the insurer and also compensation from the wrongdoer or
tortfeasor. In this regard, it must be appreciated that this is predominantly a common
law matter so that the law must be discerned and derived from the case law
jurisprudence.
In terms of English law, there is the Marine Insurance Act 1906 which purports to
be a codification of the law of marine insurance providing the basic legal framework.
In it, section 79 speaks to subrogation and sections 60 to 63 deal with abandonment
which is closely related to subrogation. Aside from that, marine insurance law is
equally strongly based on contracts, which in the current milieu are largely in
standard forms.
Focusing on the subject of windfall in the present context, it is suggested by one
scholar that due consideration should be given to the position of the insurer in a
subrogation situation
65 with which the present author agrees. It is rightly observed
that in most cases the courts have ruled in favour of the assured for the grant of
windfall amounts; however, that judicial stance in some cases, if followed strictly,
could lead to a conflict with the fundamental tenets of the doctrine of subrogation
which are aligned and allied with another indispensable doctrine, namely that of
indemnity under which an assured is not permitted to be over-indemnified so that he
makes a profit from his loss. There should, therefore, be a degree of flexibility
injected into the legal regime governing subrogation and windfall whereby no
rigidity should be imposed on the question of recovery of windfall by an insurer.
It is submitted in unison with the scholar cited above that as decided in the Urban
Industries case, once the assured is properly indemnified, the court should flexibly
adjust the equities among the assured, the insurer and the tortfeasor according to the
circumstances of the case. Be that as it may, one must not lose sight of the
inescapable fact that the Yorkshire Insurance case is the leading authority in terms
of English jurisprudence in the matter of windfall associated with subrogation, and
that the law of marine insurance continues to be in motion.
References
Bybee JS (1979) Profits in subrogation: an insurer’s claim to be more than indemnified. BYU Law
Rev 1979:145. Available at https://digitalcommons.byu.edu/lawreview/vol1979/iss1/3
Gaskell NJJ, Debattista C, Swatton RJ (1987) Chorley and Giles’ shipping law, 8th edn. Financial
Times Pitman Publishing, Upper Saddle River
Gold E, Chircop A, Kindred H (2003) Maritime law. Irwin Law, Toronto
65 Bybee (1979), p. 160.
578
P. K. Mukherjee
allowed the assured to retain windfall on numerous occasions resulting in unjust
enrichment of the assured thus undermining the essence of the doctrine of indemnity.
In these cases, typically, the assured enjoys double recovery; that is, he receives
indemnification from the insurer and also compensation from the wrongdoer or
tortfeasor. In this regard, it must be appreciated that this is predominantly a common
law matter so that the law must be discerned and derived from the case law
jurisprudence.
In terms of English law, there is the Marine Insurance Act 1906 which purports to
be a codification of the law of marine insurance providing the basic legal framework.
In it, section 79 speaks to subrogation and sections 60 to 63 deal with abandonment
which is closely related to subrogation. Aside from that, marine insurance law is
equally strongly based on contracts, which in the current milieu are largely in
standard forms.
Focusing on the subject of windfall in the present context, it is suggested by one
scholar that due consideration should be given to the position of the insurer in a
subrogation situation
65 with which the present author agrees. It is rightly observed
that in most cases the courts have ruled in favour of the assured for the grant of
windfall amounts; however, that judicial stance in some cases, if followed strictly,
could lead to a conflict with the fundamental tenets of the doctrine of subrogation
which are aligned and allied with another indispensable doctrine, namely that of
indemnity under which an assured is not permitted to be over-indemnified so that he
makes a profit from his loss. There should, therefore, be a degree of flexibility
injected into the legal regime governing subrogation and windfall whereby no
rigidity should be imposed on the question of recovery of windfall by an insurer.
It is submitted in unison with the scholar cited above that as decided in the Urban
Industries case, once the assured is properly indemnified, the court should flexibly
adjust the equities among the assured, the insurer and the tortfeasor according to the
circumstances of the case. Be that as it may, one must not lose sight of the
inescapable fact that the Yorkshire Insurance case is the leading authority in terms
of English jurisprudence in the matter of windfall associated with subrogation, and
that the law of marine insurance continues to be in motion.
References
Bybee JS (1979) Profits in subrogation: an insurer’s claim to be more than indemnified. BYU Law
Rev 1979:145. Available at https://digitalcommons.byu.edu/lawreview/vol1979/iss1/3
Gaskell NJJ, Debattista C, Swatton RJ (1987) Chorley and Giles’ shipping law, 8th edn. Financial
Times Pitman Publishing, Upper Saddle River
Gold E, Chircop A, Kindred H (2003) Maritime law. Irwin Law, Toronto
65 Bybee (1979), p. 160.
578
P. K. Mukherjee