CASE BRIEF:Mr. Macaura owned an estate and some timber. He agreed to sell all the timber on the estate in return for the entire issued share capital of Irish Canadian Saw Mills Ltd. The timber, which amounted to almost the entire assets of the company, was then stored on the estate. On 6th February 1922 Macaura insured the timber in his own name. Two weeks later a fire destroyed all the timber on the estate. Mr. Macaura tried to claim under the insurance.
The Insurance Company refused to pay arguing that he had no insurable interest in the timber as the timer belonged to the company. In 1925 the issue arrived before the House of Lords who found that the timber belonged to the company and not to Mr. Macaura. Even though he owned all the shares in the company, Mr. Macaura had no insurable interest in the property of it.
In this case was the court decision justified?
Here is my view: While this case is normally referred to as a clear illustration of lifting the veil of ownership and corporate as a legal separate entity, it is somehow unfair to have dismissed Macura's claims based on these stand.
Macaura insured the timber as a personal property, at that time he owned it and never did he transfer its ownership, all that happened was value it in terms of shares and allow a company to use it, thereby making it his property, he had a limited liability as to the value of those shares/timber value as hence there was insuarable risk to him in the sense that anything that happened to the timber meant he was bound to lose, or his share value was going to decline, and it was this that the insurance company was bound to compensate him for.
It is for this that i think the court should have ruled in favour of Mr Macaura or atlist based on the facts of the case and some flaws which happened, with Mr Macaura failing to change the insurance to that of the company, they should have awarded him part of the damages.
