that the contract was between the third-party and the insurance company to
insure Three Ways Shipping Services Ltd.
Failure to insure the goods can only be a breach of contract with the defendant
or be to the disadvantage of the third-party in that the insurance company will
not come to its rescue to pay all or any sums of money which may be claimed as
a result of the loss of cargo as envisaged by the defendant's contract with the
third-party. Counsel submitted at length that clause 8.3 of the contract should be
struck out. I do not agree. Clause 8.3 of exhibit D1 is consistent with the legal
doctrine that payment by an insurance company cannot be deducted from the
benefit that may accrue to an insured person. In any case it is of no relevance to
those parties who are not privy to the contract of insurance except where they
are third party beneficiaries under the contract. Even then in a case like the
current case only a person who is privy to the contract of insurance between
living persons or persons with legal capacity is the only person who can seek to
enforce the same.
Secondly insurance cover does not limit the liability of the person who is liable
and his or her liability is determined by the law. In this case, because the insured
is allegedly the third-party, any money that the insurance company would pay
would only assist it meet its liabilities under exhibits D1. This is the crux of the
insurance policy if any, to assist the insured against the risk of loss of goods while
in its custody which risk may lead to pecuniary damages or loss. The question of
liability for the loss is considered separately from the question of indemnity and
is based on liability for loss under the general law such as contract or bailment.
On the other hand whether the insurable risk occurred is primarily a question of
construction of the contract of insurance. The award of a court of law in
assessing damages under the general law determining the question of liability
cannot deduct possible money to be paid by insurance that covers the loss from
the quantum of award on the ground that insurance will cover some of the
quantum. Consequently the question of limitation of liability to USD$ 55,000 is
untenable as I shall show below.
As I noted earlier in this judgment, the remedy of the defendant for failure to
insure the goods by the third-party only gives the defendant a right to treat the
contract as breached and a right to avoid the contract. Clause 8.4 clearly
54
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