Macaura own land on which stood timber. He sold the land and timber to a company he formed and received as consideration all the fully paid shares. The company carried the business of felling and milling timber. A fire destroyed all timber which had been felled. Macaura had earlier insured the timber against loss of by fire in his own name. He had not transferred the insurance policy to the company.
Macaura owned a tree plantation. The plantation was covered by an insurance policy. He subsequently sold the plantation to a company of which he was the only shareholder, through the purchase money remained owing to him. After the sale, Macaura continued to insure the plantation in his own name. A fire broke out and destroyed the plantation. When Macaura attempted to claim on the policy, the company refused to pay. The issue was whether Macaura had an insurable interest at the time of the loss
Judgement
ReplyDeleteThe insurers were not liable. Only Macaura’s company, as owner of the timber, which had the requisite insurable interest in it. 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. This was despite the fact that he was the sole shareholder and was also a creditor of the company to a large extent