A brief study of the economic history of shipping will reveal that in a deflated shipping market with excess tonnage, when freight rates hit bottom, vessels regularly do likewise. The practices of the depressed 1920s1 can be taken as an example of the modus operandi employed by certain shipowners, in a parlous condition faced with a deflationary market. The loss of a vessel from a peril insured against meant to its owner, particularly the mortgaged owner, with an over-insured vessel, the difference between solvency and financial ruin. Rather than trust to divine providence the solution employed by certain fraudulent shipowners was to cast away2 their vessels and claim the insurance moneys.3 In the last decade economic history has repeated itself and the shipowner’s route to salvation remains the same. Having scuttled his ship, the assured shipowner must establish a prima facie case of a loss by a peril insured against. In the claims which have come before the courts the most popular perils relied upon have been “perils of the seas” or “barratry”.

The fair-minded and rigorous justice which characterises the English administration of law inflicts an immense task upon underwriters when seeking to deny a claim for a loss which has undeniably occurred. Nevertheless, in defending these claims, the underwriter has always had two strings to his bow; as indeed has any defendant in any civil action. First, he can put the assured to strict proof of the peril relied upon and traverse what is alleged in the points of a claim, contending that the plaintiff has failed to make out a prima facie case to answer. In addition, the underwriter can go further and plead an affirmative defence or exception4 to liability—notably casting away with privity.5 The evidence in support of the exception may be sufficient only to cast doubt upon the assured’s claim, but sufficient to prevent the court being convinced, on a balance of probabilities, that a prima facie case has been made out by the plaintiff assured. Should the exception in s. 55(2)(a) of the Marine Insurance Act 1906 be fully made out, as well as avoiding liability for the loss of the vessel, the underwriter will have branded the assured a scuttler and a criminal. In the latter instance it may