Broadgrain Commodities Inc. v. Continental Casualty Company, 2017 ONSC 4721 (2017-08-03)
Facts: The plaintiff sold 26 containers of sesame seeds to be transported from Nigeria to Xingang, China. The sale was on terms “CIF Xingang” meaning the plaintiff was to obtain insurance but the risk of loss or damage passed to the buyer upon shipment. The goods were insured under an open cargo policy with the defendant and were declared under the open policy. During the course of carriage from Nigeria to China, the goods were damaged. All 26 containers were declared unfit for human consumption and were sold for salvage. Even though the plaintiff had been paid in full by its buyer, it filed a claim with the defendant insurer. The insurer denied the claim on 24 of 26 containers on the basis that the cause of the damage was condensation or sweat, a non-transit related fortuity. The insurer brought this motion for summary judgment on the grounds that the plaintiff had no insurable interest and that the plaintiff had been paid in full by its buyer.
Decision: The defendant insurer is entitled to summary judgment dismissing the claim.
Held:The insurer first argues that the plaintiff has no insurable interest since under the CIF contract of sale the risk of loss and right to claim under the insurance policy passes to the buyer. However, insurable interest is broadly defined in the Marine Insurance Act and recent case authorities support an expansive interpretation. Moreover, a narrow interpretation would undermine an efficient marine insurance market. Accordingly, the plaintiff had an insurable interest in the goods during the entire time they were in transit and even though the risk of loss transferred to the buyer.
The insurer next argues that the plaintiff was paid in full by its buyers and therefore suffered no loss. The plaintiff replies that it is entitled to compensation even if it suffered no loss and, in any event, says it has suffered a loss because the buyer has short paid on subsequent shipments. The first argument is untenable. Insurance is a contract to indemnify against losses. The plaintiff can only claim under the insurance policy to the extent it has suffered a loss. However, the only evidence that the plaintiff has suffered a loss is a single sentence in an affidavit stating that the buyer has short-paid on subsequent shipments. This bald statement is not supported with any documents and is given little or no weight. In contrast, there is undisputed evidence that the plaintiff was paid in full by the buyer.