Subrogation is the act of one party acquiring the legal rights of
another after one has reimbursed them
for the losses. Subrogation occurs in property/casualty insurance when Insurer
indemnifies the policy holder for the loss or damage and then proceed against
the party causing the loss – the tort-feasor.
More often it is recovery pursued against the errant Carrier.
The
“Ocean Victory” ran aground during a
terrible storm at Kashima, Japan on 24 October 2006. The Supreme Court in
London published its judgment on the final appeal on 10 May 2017. The Court held that the port of Kashima was not at the
relevant time an unsafe port (despite the judge at first instance finding
otherwise). Like most commercial
vessels, “Ocean Victory” was the subject of a chain of charterparties. Her Owners, bareboat chartered her to a
related entity, on a standard BIMCO form of charter. They then time-chartered
her another entity who sub-time
chartered her and thus there were many charterers. Each charter contained a “safe port”
warranty, so (in effect) when the vessel was lost one sued in chain reaction to
another. Will try and post this
interesting case in a separate post.
The
movement of goods is an important and integral part of the economic development
of the country and is of great relevance to transport industry as also
Insurers. For long remained Carriers Act 1865 – the statute governing the
rights and liabilities of common carrier. Very many years have rolled by since
and from pure carriers, market came tobe dominated by middlemen in various avatars
called freight brokers, agents and so on. The Act held the liability of common
carrier at Rs.100/- which was utopian.
After decades, Carriage by Road Bill was introduced in the Parliament
which inter-alia prescribed : mandatory registration of common carrier,
liability of carrier to have regard to value, freight and nature of goods,
consignors having to execute Goods forwarding note, single registration for a
common carrier, common carrier liable for overloading inviting penalty under
Sec 194 of MV Act, force majeure clause exonerating the carrier from
liabilities etc.,
Carriage
by Road Act, 2007 : Sec 10. Liability of common carrier. –
The
liability of the common carrier for loss of, or damage to any consignment,
shall be limited to such amount as may be prescribed having regard to the
value, freight and nature of goods, documents or articles of the consignment,
unless the consignor or any person duly authorized in that behalf have
expressly undertaken to pay higher risk rate fixed by the common carrier under
section 11.
2. The liability of the common carrier in
case of any delay up to such period as may be mutually agreed upon by and
between the consignor and the common carrier and specifically provided in the
goods forwarding note including the consequential loss or damage to such
consignment shall be limited to the amount of freight charges where such loss,
damage or delay took place while the consignment was under the charge of such
carrier.
Sec
12 of the new rules (the Carriage by
Road Rules 2011) deal with the liability of Common carrier for loss of or
damage to any consignment. Under this : 1) Liability of common
carrier under Sec 10 for total loss shall be limited to ten times the freight
paid or payable. Provided that the amount so calculated shall not exceed
the value of the goods as declared in the goods forwarding note.
To understand its grave implication : for example, in respect of a consignment of machinery worth 10 crores ( freight depends on the size and weight of the
material or the volume that it would occupy) – freight for a distance say from
Chennai to Bangalore is not going to be Rs. 1 lakh. If it is going to be say Rs.15000/- then the
maximum of carriers’ liability would Rs.1,50,000/- . For a mischief or negligence of the carrier,
the owner of the goods is going to incur a huge loss, if their goods are not
insured. And when Insured, the poor
Insurer pays upto SI of agreed value which could be Invoice value + a % markup,
but in recovery would not be in a position to realize value restricted to 1.50
lakhs !!!
So from Road, we move on to Rail ~ Railways, the Nationalised
Career has a statue and does carries animals too .. .. the Railways responsibility
as a carrier of animals is as per Indian Railways Act 1989, Sec 101.
Responsibility as a carrier of animals.-A railway administration shall not be
responsible for any loss or destruction of, or injuries to, any animal carried by
railway arising from freight or restiveness of the animal or from overloading
of wagons by the consignor.
Where
%age charge is not paid; where value of the consignment booked has not been
declared by the consignor and percentage charge not paid on excess value, the
monetary liability of the railway has been limited to: a) Rs.100 per kg. In case of baggage and
luggage b) Rs. 50 per kg. In case of
other items of parcel/goods 3) No
compensation is payable in the case of luggage or baggage which is not booked
and is in the custody of the passenger.
For
Animals: it is Rs.6000 for Elephants;
3000 for horses; 800 for mules, horned cattle or camels, measly 120 for dogs,
donkeys, goats, pigs, sheep or any other animals not mentioned above or birds
!! !!
According
to Carriage of goods by Sea Act, Clause (5) of Article IV, limits the liability
of the carrier to 666.67 Special Drawing Rights per package or unit or two
Special Drawing Rights per kilogram of the gross weight of the goods, unless
the nature and value of goods have been declared by the owner of the goods
before shipment and inserted in the Bill of Lading. However, this limitation does not apply in
cases of proven acts or omissions of the carrier done with
the intent to cause damage, or recklessly and with knowledge that damage would
probably result.
Race horses are costly – their owners spend handsomely for their
upkeep and maintenance – they are transported in air-conditioned coaches,
provided rich food, have good Veterinary care and handled with lot of care
….all their needs are minutely taken care of by a team which attends to it
regularly ……. A royal life one tends to think !! ~ the position rather the liability of
Carrier is far different in UK as read in this article in MailOnline.
A
family whose prized horse was killed when it fell through the floor of a 'death
trap' £65,000 lorry have received a five-figure settlement. MailOnline reports
that Carole Mutch was transporting eventer Gorsehill Echo to a friend's farm
when it fell through the horsebox's 1.8cm plywood flooring in March 2015. The
horse, thought to be worth £35,000, became trapped between the double wheels -
breaking its leg and severing its hoof and had to be euthanized while still
stuck inside the vehicle.
It was
claimed by Ms Mutch that Alexanders
Horseboxes, who built the £65,000 lorry, murdered the horse, having cut corners
when fitting the 18mm wooden flooring without the correct support. Ms Mutch, whose son Harry is a professional
event rider, is now calling for the law to be changed so all horse vehicles are
required to have sturdy aluminium floors. Alexanders Horseboxes said they do
not accept liability and said it was important vehicles are correctly
maintained and not neglected. The goriness of the accident was highlighted
stating that the fire service that
attended that day had to use 400 gallons of water to clean the blood from the
back of the lorry.
To its
owner, 'He was a horse of a lifetime when he had finished his job with Harry he
would never have been sold, he would have stayed with our family. He was a
horse in a million; she further added - 'I struggled for a long time afterwards
and couldn't leave the house or sleep. Even crossing the road sent me into a
panic.' Now reports state that for their
beloved horse, the Mutch family received a five-figure out of court settlement.
Ms Mutch added: 'I believe they cut corners putting a plywood floor in. Why
plywood was ever on the floor is beyond me, the advert the horsebox was built
from states alloy plank flooring as a standard feature. 'My horse trusted me
with his life and I thought I was doing the right thing by spending so much
money on the lorry. 'I loaded Echo and another horse onto that death trap that
morning. I really had no idea there was only 1.8cm between them and the road.'
Ms
Mutch had been taking her son's two horses to her friend's farm in Jedburgh,
near the Scottish Border, so they could be exercised when she felt a bang and
thought the lorry had blown a tyre. She was quickly flagged down by a passerby,
who informed her she could see the horse's tail lying on the ground and it
looked like it had fallen through the floor. Echo's hind leg had fallen through
the floor and between the double wheels, causing a fracture above the hock, its
hoof to become dislodged and extensive bleeding. A local farmer friend who was
close by had to put the nine-year-old event horse down after it became clear
the animal would not recover and was suffering.
Ms
Mutch said of the lorry: it started giving trouble from the time it arrived. 'Five
months in it was off the road. It was disgustingly built - it was hardly used
in the two and a half years we had it and six weeks before the accident it had
a mechanical fault' 'My horse trusted me
with his life and I thought I was doing the right thing by spending so much
money on the lorry'
After
the loss of their beloved horse, the Mutch family received a five-figure out of
court settlement. Alexanders Horseboxes said the horsebox was kept in a poor
condition and accepted no liability for the tragedy but Ms Mutch claimed the
floor was tested for traces of urine that could have caused the floor to rot,
and none were found. A spokesman for Alexanders
Horseboxes said: 'Despite the very poor condition the vehicle had been kept in,
the claimant sought damages and, after due legal process, a commercial decision
was made by our insurers to make an out-of-court award of less than 20 percent
of the original claim. 'The
horsebox was manufactured by another company, with whom we no longer work, and
Alexanders Horseboxes acted only as the distributor in this case. 'While we
have made absolutely no admission of any liability, all parties have accepted
the judgment.
Another case, another time, when there could be so many ‘if and
buts’ of how the accident occurred, whether it was negligence, poor
maintenance, improperly built, not adhering to laws, or adhering to law but
still inadequate – end result, Insurers liable under their policy – make a
settlement. For sure, this case too, offers lot of learning for all concerned.
With
regards – S. Sampathkumar
27th
July 2018.
