AXL Resources Ltd v Antares Underwriting Services Ltd & Anor

Under an all-risks policy, the insured ordinarily establishes an accidental loss, after which the insurer bears the burden of bringing the loss within an exclusion. A mysterious-disappearance clause must be construed according to its ordinary meaning and the context, including the nature of the property and circumstances of the loss. It does not generally require the insured to prove the precise date, circumstances or cause of the loss unless the policy expressly says so. Summary judgment is appropriate where the evidence gives the insurer no real prospect of showing that the loss fell within the exclusion. The insured need not await the conclusion of a related criminal investigation where it cannot realistically affect the coverage issue.

AXL Resources Ltd sought summary judgment against Lloyd’s underwriters for the loss of 20 tonnes of cobalt stored in a bonded warehouse in Antwerp. The policy was an all-risks marine open cargo policy containing an exclusion for mysterious disappearance and stocktaking losses.

The cobalt was discovered missing after a period during which the warehouse alarm had been disabled. Evidence included the physical circumstances of the loss, a Belgian criminal investigation, arrests and subsequent confessions by suspected participants in the theft. The underwriters argued that AXL had to prove theft and that the loss remained sufficiently unexplained to fall within the exclusion. They also argued that the claim should await the Belgian investigation. The issues were the allocation of the burden of proof, the meaning and application of mysterious disappearance, and whether summary determination was appropriate.

1. Summary judgment granted. The claimant established the loss of the cobalt and was entitled to judgment for the principal sum, subject to the acknowledged adjustment for a sample removed in late 2008. The claim for legal costs was unsuitable for determination under CPR 24.
2. On the wording of this all-risks policy, the insured had to establish that the loss was accidental. Once that was shown, the burden lay on the insurers to bring the loss within an exception. The policy contained no wording requiring the insured to prove the date and circumstances of the loss, unlike the policy considered in Widefree Limited v Brit Insurance Ltd [2000] EWHC 3671 (QB).
3. “Mysterious disappearance” bore its ordinary and natural meaning. Its application depended on the nature of the property and the circumstances of the particular loss. It normally involved a loss whose cause could not be identified, or circumstances that aroused speculation or were hard to explain. No more precise definition was necessary.
4. The evidence strongly pointed to theft. There was no realistic evidential basis for misdelivery, unauthorised delivery, mistaken transfer to another warehouse or another form of mysterious disappearance. The defendants therefore had no real prospect of establishing the exclusion at trial. Even if the burden lay on the claimant to prove theft, the only realistic inference from the evidence was that the cobalt had been stolen.
5. There was no compelling reason under CPR 24.2(a)(ii) to postpone determination pending the Belgian criminal investigation. The investigation might assist claims against third parties, but there was no real prospect that it would reveal a basis for invoking the exclusion. Interest was awarded from 1 April 2009, allowing the insurers reasonable time to investigate and consider the claim.

First-instance summary judgment application. No appellate history is stated in the judgment.