Bayview v. Mitsui M&F

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Note: the decision in this case has been upheld by the Court of Appeal in a judgment delivered on 7 November 2002. See Mitsui v. Bayview Motors for a note of the Court of Appeal decision

Bayview Motors Ltd. v. Mitsui Marine & Fire Insurance Co Ltd. and Others

English Commercial Court: Steel J.: [2002] EWHC 21 (Comm): 23 January 2002
Michael Nolan, instructed by Swinnertons, for Bayview Motors
S. J Phillips, instructed by Waltons & Morse, for the defendant insurers.

This case established, in the context of claims for the loss of cargo insured on Institute Cargo Clauses 1/1/63 ‘All Risks’ terms, that a parking lot controlled by Customs was not a "final warehouse or other place of storage at the destination named in the policy" within clause 1(a) of the Clauses and that theft of cargo by customs officers could not be categorised as "confiscation" or "seizure" within the exception in clause 12 of the Clauses.

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 [1960] 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 [1883] 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


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