Notice of abandonment was given on the 26th October, 1912, which thus became the material date for determining the conditions of her capture and the prospects of her recovery. The owners contended that at that date they had been deprived of the possession of the ship and that it was uncertain whether they would recover her, but Kennedy L.J. in a judgment finished two days before his death and concurred in by Lord Cozens-Hardy M.R., and Warrington L.J. held, affirming the decision of Pickford J., as he then was, that the Act of 1906 had substituted for the former test to be applied in loss by deprivation of possession, 'viz. uncertainty of recovery,' a new statutory test of 'unlikelihood of recovery'; the owners could have satisfied the old test of uncertainty, but had not proved that the chances of recovery were against them and so failed in their action1.

Then one of the first of the insurance cases2 arising out of the recent war afforded Bailhache J. an opportunity of answering an important question affecting the insurance of goods on land. Timber in warehouse at Antwerp upon the outbreak of war was insured for three months against 'loss directly caused by war, military or usurped power.... No claim to attach for delay, deterioration and/or loss of market...' On the 9th October, 1914, Antwerp was occupied by the German forces; on the 14th October the plaintiffs, the owners of the timber, a Japanese company, gave notice of abandonment and claimed to recover as for a total loss. Now the principles of Constructive Total Loss have been worked out in connexion with marine insurance. Here there was no physical loss or destruction of the timber which at any rate until immediately before the trial of the action remained intact in the custody of the plaintiffs' agent in Antwerp. They were therefore at pains to plead actual or constructive total loss, and Bailhache J., though deciding against them on the fact that there was at the date of the writ or trial no loss of the timber either actual

1 The distinction between uncertainty and unlikelihood was applied later by Bray J. in Campbell v Denman (1915) 21 Com. Cas. 357. See also the decision of Roche J. in Roura & Forgas v. Townend [1919] 1 K. B. 189. 2 Mitsui v. Mumford [1915] 2 K. B. 27.

or commercial, expressed his opinion that the doctrine of constructive total loss is not confined to a marine policy. "The result is that although I think it is wrong to use the expression constructive total loss" in connection with this policy, and unnecessary to allege notice of abandonment, yet it is right in considering whether there has been a loss under this policy to take into account considerations similar to those which one would take into account in determining a question of constructive total loss under a marine policy1.'

Earlier he said:

'Abandonment and notice of abandonment are of course quite different things. The former is common to all contracts of indemnity, the latter as giving special rights to the assured in particular to marine insurance. Notice of abandonment would not be a condition precedent to the plaintiffs' right to recover for a commercial loss under this policy; but it would be none the less a prudent and businesslike step to take2.'

If the foregoing views are correct3, it seems that in the case of a policy upon goods on land, which are the subject of a commercial venture, we should use the expression 'commercial loss' instead of 'constructive total loss' but nevertheless apply the considerations underlying that doctrine of marine insurance except the necessity of notice of abandonment as a condition precedent to a claim. This is an important point of permanent value in time of peace as well as of war1.

We now come to Sanday's case5 in which the decision of the judge of first instance, Bailhache J., probably caused more intense consternation in the limited community which it affected than any other decision during the recent war has given rise to in that or any other section of the mercantile community. The plaintiffs were the British owners of cargo laden on board two British vessels on the high seas upon the outbreak of war and consigned to Hamburg. One vessel on the 9th 1 [1915] 2 K. B. at p. 32. 2 [1915] 2 K. B. at p. 31.

3 Lord Atkinson in Moore v. Evans [1918] A. C. at p. 196 was unable to accept them.

♦ Other insurance cases arising out of the German occupation of part of Belgium are Campbell v. Denman (supra) and Moore v. Evans (supra).

[1915] 2 K. B. 781 (decisions of Bailhache J. and Court of Appeal); affirmed [1916] A. C. 650.

August was 'stopped by a French cruiser and told to go to Falmouth for security'; the other in response to a pre-war suggestion from the Admiralty was on the 7th August diverted by her owners to a British port. The plaintiffs warehoused the goods and on the 7th September gave notice of abandonment and claimed as for a constructive total loss. The usual F.C. and S. clause had been deleted in consideration of an extra premium, and the material perils insured against in the body of the policy were 'takings at sea, arrests, restraints, and detainments of all kings, princes and people of what nation, condition, or quality soever.' The first point taken by and decided against the underwriters was that the Marine Insurance Act, 1906, had not abrogated the old rule that 'upon an insurance on goods...the frustration of the adventure by an insured peril is a loss recoverable against underwriters, though the goods themselves are safe and sound1.'

There was nothing startling about that. But upon the second question whether the loss was by a peril insured against—it was contended by the underwriters that the restraint clause in the policy must be taken to exclude restraints, or at any rate proper and legal restraints, by the British Government, but that even if the 'municipal law of this country and the authoritative acts of the British Government' were covered, restraint connoted the actual use of physical force and did not comprise mere voluntary compliance with the law of the country or the commands of the Government, i.e. did not include self-restraint.

Bailhache J., in a decision which was affirmed by the Court of Appeal (Swinfen Eady L.J. dissenting) and by the House of Lords unanimously, held that the proximate cause of the loss was a restraint of princes which 'took the form of the common law, which upon the outbreak of war sprang automatically into force, and of the commands issued by proclamation,' namely, not to navigate a ship or carry goods to a German port. His authority for including in the restraint clause the restraints by the British Government rested almost entirely

1 · [1916] 1 A. C. at p. 656.

upon Marshall's Marine Insurance and Phillips' Insurance, but no authority was necessary, for the words of the clause clearly include the British Government unless some more limited meaning could be given to it by custom or was demanded by some rule of public policy.

The effect of his judgment upon the marine insurance community can only be compared to that of the first German gas attack. It had never been decided, and it had probably never before entered the head of a broker or underwriter that British restraints were included in the ordinary restraints clause in the body of the policy; such a decision upon so venerable a document was equivalent to laying hands upon the ark of the covenant of marine insurance. The ocean suddenly became dense with constructive total losses, and Bailhache J. might readily have been lynched by underwriters-which would have been a mistake as he was about to decide another similar and important case, Becker, Gray & Co. v. London Assurance Corporation, in their favour. As it was, however, Lloyd's underwriters, following the example of the British Government after the first German gas attack, devised an anti-gas mask in the shape of the following clause:

BRITISH AND ALLIES CAPTURE CLAUSE, 1916.

'Warranted free of any claim arising from capture, seizure, arrest, restraint or detainment, except by the enemies of Great Britain or by the enemies of the country to which the assured or the ship belongs.'

Since the Armistice this clause has been superseded by one of a more permanent character as follows:

'Warranted free of any claim based upon loss of, or frustration of, the insured voyage, or adventure, caused by arrests, restraints or detainments of Kings, Princes or Peoples1.'

1 The appropriate method of using the new clause is illustrated by the following extract from Lloyd's List of the 19th June, 1919:

CARGO INSURANCES INCLUDING WAR RISKS

From Lloyd's List, June 19, 1919

'The Chairman of Lloyd's, Mr C. I de Rougemont, presided on Wednesday morning, June 18, at a General Meeting of Members held in order to receive

The new Frustration clause is also being used in the case of insurances on Hulls, and if underwriters are determined to the Annual Report of the Committee, and for other purposes. A large number of Members were present, and the following Resolutions with regard to Cargo Insurances were passed:

'Resolved.—(1) That henceforth all Agreements for Insurance are to be deemed to include and all Policies shall include the clause Warranted free of capture, seizure, arrest, restraint, or detainment, and the consequences thereof or of any attempt thereat (piracy excepted), and also from all consequences of hostilities or warlike operations whether before or after declaration of war," unless an agreement to exclude the said clause (e.g., "No F.C. and S.") be written or printed in the slip or agreement which has been previously signed or initialled by the Underwriters, and

(2) That in the event of such last-mentioned agreement (e.g., “No F.C. and S.") the F.C. and S. clause shall be deleted and the following clause shall then be included in the Policy or Agreement for Insurance :—' -"Warranted free of any claim based upon loss of, or frustration of, the insured voyage, or adventure, caused by arrests, restraints or detainments of kings, princes, or peoples."

'(3) That the Resolution passed by the General Meeting of Members on the Ist March, 1916, be rescinded.

'It was also decided that, on and after the 1st July, 1919, two Forms of Lloyd's Marine Policy be printed, namely:

'Form "A" with the following Clause inserted:

'Warranted free of any claim based upon loss of, or frustration of, the insured voyage, or adventure, caused by arrests, restraints or detainments of kings, princes or peoples.

"Form "B" with the following Clauses inserted:

'Warranted free of capture, seizure, arrest, restraint, or detainment, and the consequences thereof, or of any attempt thereat (piracy excepted), and also from all consequences of hostilities or warlike operations whether before or after declaration of war.

'Should the above Clause be deleted, the following Clause is to operate as part of this Policy:

'Warranted free of any claim based upon loss of, or frustration of, the insured voyage, or adventure, caused by arrests, restraints or detainments of kings, princes or peoples.

'The above Resolutions give effect to the arrangement come to between Lloyd's and the Marine Insurance Company Underwriters of London, Liverpool and Glasgow, as reported in Lloyd's List of 2nd June, under the heading of "Cargo Insurances including War Risks.”

'NOTE.-The Agreement passed by the General Meeting of Members on 1st March, 1916, with regard to the above, is as follows:

'Resolved :— That henceforth all Policies or Agreements for Insurance are to be deemed 'Warranted free of capture, seizure, arrest, restraint, or detainment, and the consequences thereof, or of any attempt thereat (piracy excepted), and also from all consequences of hostilities or warlike operations whether before or after declaration of war,' unless the contrary be written or printed in the slip or agreement which has been previously signed or initialled by the Underwriters; and that the Resolution passed by the General Meeting of Members on the 25th January, 1899, with regard to this matter be rescinded."