Macaura V Northern Assurance Ltd

MACAURA V NORTHERN ASSURANCE LTD (1925)

(for illustration purpose)

Macaura own land on which stood timber. Macaura had insured the timber against loss of by fire in his own name. He then sold the whole of the timber thereon to a timber company in consideration of fully paid up shares in the company. But he had not transferred the insurance policy to the company name. The company carried the business of felling and milling timber. A fire destroyed all timber which had been felled and he sued the insurance companies to recover the loss, but the actions were stayed and the matter was referred to arbitration in pursuance of the conditions contained in the policies. The claimant was the sole shareholder in the company and was also a creditor of the company to a large extent.

ARGUE :

• The insurance company does not want to pay the insurers' claimed, insurers' is not liable.
  
• that the claimant had not either as shareholder or creditor any insurable interest in the goods
• Only the company, and not Macaura, could insure its property against loss or damage. Shareholders have no legal or equitable interest in their company’s property. Such property belongs to the company which had a legal personality.

VERDICT :

• Northern Assurance Ltd won. The property named should be transferred to the company's name instead of Macaura's name.

References :

• http://www.vanuatu.usp.ac.fj/Courses/LA313_Commercial_Law/Cases/Macaura_v_NAC.html
• Business Law class, Lectured by Mr Sonny Zulhuda