CTL—HIT AND MISS IN THE SUPREME COURT
If the cost of repairing a ship after a casualty exceeds the insured value, her owners may claim for a constructive total loss. In The Renos, a ship was salved on Lloyd’s Form incorporating SCOPIC. It was common ground that the cost of salvage which enabled the ship to be taken to port and repaired could in principle be brought into the calculation as an expense necessary to achieve the repair. Hull insurers contended that SCOPIC payments were to be excluded from the calculation because (i) they were incurred before the Notice of Abandonment was given, and (ii) in any event they were not true salvage expenses. They failed on the first question, but succeeded on the second. This article argues that the Supreme Court was right on the first question and wrong on the second.
There were two questions for decision by the Supreme Court in The Renos . 1 One of them related to the effect of the date on which a Notice of Abandonment is given and which the Court decided, with respect, 2 in an unexceptionable fashion; the other resulted (as is submitted below) in a congeries of errors about the nature of salvage awards and of the SCOPIC clause and their respective relationships with constructive total loss.
The situation which gave rise to the questions was a commonplace one. In August 2012, the Renos (“the Vessel”) suffered an engine room fire while on passage in the Red Sea in the course of a laden voyage. The shipowners engaged salvors on the terms of Lloyd’s Open Form 2011, incorporating the SCOPIC clause. The Vessel was towed to one port for temporary repairs and another for final repairs. There was conflicting information as to whether the Vessel was a constructive total loss (“CTL”) or not. Broadly speaking, a ship is a CTL if the cost of repairing her after a casualty brought about by an insured peril
* QC, Quadrant Chambers; Consultant, Tatham & Co. I am grateful to Belinda Bucknall QC, John Knott and Geoffrey Sellers CB, who looked at various drafts of this article, identified errors and helped me to clarify my views, though they are not to be taken as responsible for or agreeing with them. My thanks also to Professor FD Rose, who suggested the title.
1. Sveriges Anfartygs Assurans Förening (The Swedish Club) v Connect Shipping Inc ( The Renos )  UKSC 29;  2 Lloyd’s Rep 78 ;  Bus LR 1584. See also J Thomson  LMCLQ 489 . The judgment of the Supreme Court was given by Lord Sumption, with whom the other members of the Court agreed. References hereafter to paragraph numbers without more are references to that judgment.
2. It would make for tedious reading if the expression “with respect” were repeated every time this article advances the view that some conclusion or other of the Supreme Court is wrong, and it ought therefore to be taken as applying to the whole of the part of the article which deals with the SCOPIC clause.
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