DMC Category Rating: Confirmed
The claimants, Bayview Motors, were car dealers based in
Providenciales, in the Turks & Caicos Islands. In 1997, they bought two
consignments, each of six vehicles, from Toyota in Japan. These consignments
were duly shipped from Japan to Santo Domingo, in the Dominican Republic, from
where they were to be transhipped to the Turks & Caicos.The first
consignment was discharged at Santo Domingo on August 11 and the second on 14
September 1997. Both consignmentS passed into the hands of the Dominican
Customs, who stored the cars in a fenced off parking area within the port, to
which the Customs controlled access. The documentation in respect of the first
consignment, but not in respect of the second, was defective, since neither the
bills of lading nor the manifest indicated that the cars were to be transhipped.
These defects were quickly addressed by Bayview and their suppliers, but without
reaction from the Customs.
Despite repeated efforts by Bayview and their agents in Santo
Domingo, it proved impossible to obtain the release of the cars from Customs’
control and after some months had passed, it became clear that Customs personnel
had improperly appropriated the cars to their own use. Bayview then claimed for
their loss under the policies, in the total amount of US$174,747, on the grounds
that they had effectively been stolen.
The cars were insured under policies issued by the defendants,
Mitsui Marine and Fire and three other Japanese insurers, for a voyage from
Japan to Santo Domingo, warehouse to warehouse. The policies were on Institute
Cargo Clauses, 1/1/63 ‘All Risks’ terms. Clause 1 of the policy provided:
"1. This insurance attaches from the time the goods leave
the warehouse or place of storage at the place named in the policy for the
commencement of the transit, continues during the ordinary course of transit and
terminates either on delivery:
a) to the Consignees’ or other final warehouse or place of
storage at the destination named in the policy..
c) on the expiry of 60 days after completion of discharge
overside of the goods hereby insured from the overseas vessel at the final port
of discharge whichever shall first occur…
Clause 12 of the policy read: "Warranted free of capture, seizure, arrest, restraint or
detainment and the consequences thereof or of any attempt thereat…."
The defendant insurers resisted the claims on a number of
grounds; in particular that
(i) cover terminated when the vehicles were discharged from the
two vessels because the quay at Santo Domingo was "the final place of
storage" within the meaning of clause 1(a)of the Institute Clauses;
(ii) no loss in the form of an actual or constructive total loss
of the cars occurred until they were removed from the car park, which took place
more than 60 days after the discharge of the cars at Santo Domingo;
(iii) the cars were "confiscated" by the Dominican
customs authority because, in purported contravention of Dominican law, the cars
had not been declared for transhipment at their respective loading ports; such
confiscation amounted to a "seizure" which was an excluded or excepted
peril under the terms of the insurance cover
The judge found in favour of Bayview.
Dealing with the arguments of the insurers, he held as follows.
1) The fenced-off parking lot within the port in which the cars
had been placed was to all intents and purposes a bonded store run by the
customs, which controlled access. It could not, therefore, on the authority of
John Martin v. Russell  1 Ll.Rep. 554, be fairly categorised as the
"final place of storage".
2) Cover extended to 60 days after completion of discharge and
within that time a loss had been sustained by reason of a peril insured under
the all risks policy, namely conversion in the form of an improper refusal by the
customs to release the
goods. It was not material that the constructive total loss later became an
actual total loss, on the removal of the cars from the parking lot and their
distribution to various Customs officials and their families, which the judge
was prepared to accept took place after the expiry of the 60 day period.
3) Seizure was not made out on the facts of the case. It
depended "upon the startling submission that any unlawful misappropriation
by a person spuriously invoking the authority of the state and thereby effecting
a theft constituted a seizure". The case of Cory v. Burr  8 App.Cas.
393 had defined ‘seizure’ as embracing "every act of taking forcible
possession, either by lawful authority or by overpowering force". None of
these elements existed in this case. When the customs officers converted the
cars by refusing to release them, the cars had already been voluntarily placed
in their custody and control in the bonded car park. Misappropriation in this
manner did not constitute the taking of forcible possession. Further, there was
no taking by lawful authority and nor, in their independent capacity, did the customs officers implement their taking by any display
or threat of