Eurodale Manufacturing Ltd. v Ecclesiastical Insurance Office Plc

Under an express transit policy clause providing that cover attaches when the assured accepts delivery, insurance can begin when goods are received into an intermediate warehouse before physical onward transit, where the dealings form a single transit venture. Temporary storage, including goods placed “on hold” pending onward instructions, may be incidental to that venture where on-sale contracts have already been made. Typed terms prevail over incorporated printed clauses to the extent of inconsistency. Limitation and invoice-based premium provisions may remain consistent with cover for contemplated and invoiced sendings. The court left open the position where goods remain in storage for an indefinite period.

Wholesale mobile telephones were delivered to an intermediate warehouse after the insured had arranged their resale. The goods were placed in a secure cage on hold pending onward delivery and were stolen during a bank-holiday weekend by violent and forcible entry. The insurer denied cover under a marine cargo transit policy, relying on the requirement that cover continue during the ordinary course of transit and on incorporated Institute Cargo Clauses (A).

Mr Justice Andrew Smith held that the typed Voyages clause extended cover from acceptance of delivery at the warehouse. The insurer appealed, arguing that cover could not begin before physical transit and relying on limitation and premium clauses. The central issue was whether the policy covered the loss while the goods were held at the intermediate warehouse.

The appeal was dismissed with costs.

1. The typed Voyages clause provided that cover attached when the assured accepted delivery of the insured goods and continued during the ordinary course of transit. Because Eurodale had arranged the on-sale of the telephones before making the purchase contracts and before delivery, the transaction constituted a single transit venture with intermediate storage at the warehouse where delivery was accepted for Eurodale’s account.

2. The approach in Crows Transport v Phoenix Assurance Co Ltd [1965] 1 WLR 383, treating temporary storage awaiting onward loading as an incident of transit, supported that construction. The fact that the goods were placed “on hold” pending instructions did not alter the analysis. The absence of onward-delivery instructions before the theft was immaterial because contracts for resale had already been made.

3. As a typed term, the Voyages clause took precedence over the incorporated and printed Institute Cargo Clauses (A) to the extent of any inconsistency. The policy’s description as transit insurance did not displace the ordinary meaning of the typed clause.

4. The limitation clause could be read as applying to contemplated and invoiced sendings. The invoice-based premium was also consistent with that construction, since invoices had already been raised and the premium had been calculated and paid.

5. The court left open whether goods accepted into a warehouse and left there for an indefinite period would remain covered. The insurers’ wider submission concerning valuable goods at an unsurveyed warehouse over a bank-holiday weekend could not succeed, since intermediate storage after transit had started was accepted to be covered where, as here, there had been violent and forcible entry.

The order was appeal dismissed with costs. Costs were to be assessed on the standard basis by the costs judge if not agreed, with no increase allowed merely because assessment became necessary.

• Court of Appeal (Civil Division): In [2003] EWCA Civ 203, the insurer’s appeal was dismissed with costs.
• High Court of Justice, Queen’s Bench Division: Mr Justice Andrew Smith held that the policy covered the stolen goods while they were held at the intermediate warehouse.