Lloyd's Maritime and Commercial Law Quarterly
SUE AND LABOUR AND BEYOND: THE ASSURED’S DUTY OF MITIGATION
Peter MacDonald Eggers*
An analysis of the duty to sue and labour and a thesis that the duty is to be regarded as merely an instance of the general “duty” of mitigation of loss at common law. This thesis has the consequence that the assured who has mitigated or averted his loss should be entitled to recover his expenses of mitigation from the insurer.
1. Introduction
The assured bears many obligations to his insurer when he takes out a policy of insurance. Many of these duties are enveloped by the expression “utmost good faith”. Other than these responsibilities, the assured need only ensure that he complies with the terms and warranties of the policy. However, in the trauma or excitement which attends a loss covered by the insurer, the assured should1 seek to act as if he was uninsured and take those steps to avoid the loss or lessen its harmful effect. The phrase “prudent uninsured” is circulated readily on the escalators at Lloyd’s and the underwriting rooms in the City of London and beyond. Much lies behind the phrase, mainly questions.
The nature of the assured’s responsibility and his entitlement to reimbursement if he incurs expense in fighting the fire, or whatever the insured peril may be, are in issue. The decisions of the courts have been few, yet bolstered by some sturdy authorities over the past 15 years. The most recent decision is that of the Court of Appeal in Yorkshire Water v. Sun Alliance & London Insurance Ltd
2, which disowned the thesis put forward in this paper: that the assured under an indemnity policy is constrained to mitigate any losses which are to be recovered from the insurer on pain of being declared unable to recover those losses which he might have avoided if he had taken more felicitous action to mitigate. Furthermore, it will be submitted that, if the assured so acts to mitigate, the costs
* Partner, Hill Taylor Dickinson, London. The author personally was involved in the following recent cases referred to below: Ventouris v. Mountain (The Italia Express) (No. 2)
[1992] 2 Lloyd’s Rep. 281; Royal Boskalis Westminster NV v. Mountain [1997] L.R.L.R. 523; [1997] 2 All E.R. 929. Hill Taylor Dickinson further was involved in: State of the Netherlands v. Youell
[1997] 2 Lloyd’s Rep. 440; aff’d
[1998] 1 Lloyd’s Rep. 236.
The following abbreviations are used:
Arnould: Arnould’s Law of Marine Insurance and Average.
Clarke: M. A. Clarke, The Law of Insurance Contracts, 3rd edn (LLP, London, 1997).
M.I.A.: Marine Insurance Act 1906.
Rose: F. D. Rose, “Aversion and Minimisation of Loss”, ch. 7 of D. R. Thomas (ed.), The Modern Law of Marine Insurance (LLP, London, 1996) 215.
1. As shall be discussed, this is not a positive duty imposed by law: cf. Clarke, para. 28–8G1.
2. [1997] 2 Lloyd’s Rep. 21. In State of the Netherlands v. Youell
[1997] 2 Lloyd’s Rep. 440; aff’d
[1998] 1 Lloyd’s Rep. 236, Phillips, L.J., suggested that the statutory duty under M.I.A., s. 78(4), was limited even within the realm of marine insurance and did not extend to all contracts of marine insurance. This suggestion was disapproved by Buxton, L.J.
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