MARINE INSURANCE BILL [LORDS]. (Hansard, 12 May 1903)

§ MR. CALDWELL
said he was glad to have that opportunity of examining a Bill of a very technical character, but still one of considerable importance. The question was whether marine insurance ought to be codified or to remain, as it had been for centuries, under the common law. He contended that there was no justification for the change proposed under the Bill, as marine insurance was not a difficult or complicated subject. With the exception of three statutes, which were incorporated in the Bill, the law of marine insurance stood entirely upon the common law of England. Marine insurance dated back as far as the Lombards, who, 500 or 600 years ago, were the first to undertake insurance risks in this country. In those days men who sent their merchandise across the seas were subjected to exceptional risks, and the loss of a ship frequently meant ruin. It was soon discovered, however, that it was possible to calculate the risks, and someone, by going into the question of averages, was able to fix a premium which would cover the average loss and save the trader from absolute ruin. Marine insurance, therefore, arose out of the necessities of commerce, but it had never been thought necessary to place it under statutory law; it had always been dealt with under the general principles of common law. There were other interests to be considered besides insurance against loss; care had to be taken that a man should not insure for such an amount as to make it to the interest of the ship owner to see the vessel go to the bottom of the sea. Life, as well as property, was at stake, and therefore it was felt better that marine insurance should be dealt with by common law.
493 Marine insurance was not like an ordinary contract; it was a contract of indemnity which implied the utmost good faith on the part of the persons concerned. There was an obligation to communicate to the insurer everything material to the risk which was known to the insured. The only statutes which had been passed during the last 200 years dealing with marine insurance—the statutes of 1746, 1789, and 1867 were embodied in the second Schedule of the Bill. With the exception of those statutes marine insurance was subject solely to the common law of England, and Parliament had not thought it necessary at any time to place it under statutory law. There was a great advantage in having the law as to marine insurance quite distinct from ordinary statute law. Judges of eminence had dealt with the subject upon common law principles untrammelled by definition, those principles adapting themselves automatically to change of circumstances. One advantage of common law principles as applied to contracts of indemnity was that they embraced everything that it was necessary to embrace. The common law followed every change and every new circumstance that arose in connection with insurance, and automatically adapted itself to alterations effected by modern inventions; consequently, new legislation was not needed to meet new conditions of things. The law of marine insurance had been most carefully defined and settled; its principles and their interpretation had been decided by the highest courts. It was not pretended that this was a Bill to amend the law, it was simply to codify the law.
The House was now asked to take the law from the principles which had been enunciated by the highest legal authorities, to leave the old landmarks, and to put upon the Statute-book a definition of statute law, drawn by a draftsman and a committee. The result would be that fresh definitions would have to be given, and the judges would have to interpret the statute anew. It was a most dangerous policy to embark upon without good reason. It was surprising out of what trivial matters great results sometimes arose. This Bill owed its existence to the fact that a certain Judge 494 Chalmers, of Birmingham, in his leisure time had taken an interest in helping to codify the law relating to bills of exchange. The Bill had no resemblance to an Act of Parliament; it was more like a treatise such as would be found in any law text-book. There was no analogy between the law relating to bills of exchange and the law relating to marine insurance. A bill of exchange dealt with a contract, which was a very different thing. As this was the ninth Bill which had been introduced into the House of Lords, and it had taken about nine years to reach the House of Commons, it would be seen that the codification of the law was not so simple a matter as some might imagine. The original Bill, drafted by Judge Chalmers, and introduced by Lord Herschell, was remitted to a Committee in 1894. As a result of the revisals of that Committee a new Bill was brought in in 1895, but it was so changed as to be hardly recognisable, although it dealt with a law which admitted of no doubt, and of which the principles were well known. Another Bill, which again was different from its predecessors, was introduced in 1896, but still it failed to pass. Lord Herschell was not then Lord Chancellor, and if he had thought the subject was suitable for codification he had ample leisure to press the Bill through the House of Lords. Further attempts were made in 1897 and 1898, but without success. A curious thing about the 1898 Bill was that up to Clause 29 there was the usual mass of amendments as compared with the preceding Bill, but after Clause 29 there was not a single alteration. The obvious inference was that the man who started to amend the Bill became convinced, as everyone who looked into the law must be convinced, that the common law of England with regard to marine insurance could net be put into statute form, and that it was a most dangerous thing to attempt to take it out of the definition of common law. The fact that Lord Herschell would not take the responsibility of pressing it through the House of Lords at once showed the intricacy and difficulty of the subject. In 1899 the present Government tried its hand, and the Lord Chancellor brought in another amended Bill, in which the definitions laid down 495 by previous Committees were reversed by a new Committee. Other amended Bills were introduced in 1901 and 1902, and in July of the latter year, for the first time, it reached the House of Commons. Notwithstanding the fact that the Bill had not been considered in the House of Commons, and that it had taken nine years to get through the House of Lords, an attempt was made to press it through the House after midnight. It was in consequence of that that he had given the matter his careful consideration. The proceedings on the Third Reading of the Bill in the other House showed that the Lord Chancellor had not considered the Bill, and knew nothing at all about it. On the 26th March of this year, when Earl Russell had moved an Amendment, the Lord Chancellor made a statement which showed he had not really considered the matter.

§ MR. SPEAKER
Is the hon. Member referring to a speech made upon the Bill of this year?

§ MR. CALDWELL
Yes.

§ MR. SPEAKER
Then it is quite out of order.

§ MR. CALDWELL
said he would at once leave that point. The whole motive power behind the Bill was the pressure of certain insurance people under a complete misapprehension as to the effect of codification. The matter became twenty times more complicated than if they simply read Arnold on Insurance. It had been urged that underwriters and owners of ships were all agreed as to the Bill, and that it ought therefore to be allowed to pass. But there were other parties involved in a marine insurance. The underwriters had no interest except that of taking an average of the losses, and fixing their premiums accordingly. The owners paid the premiums and had no further interest. But besides the interests of the insurers and the assured, there was the safety of the crew and passengers to be considered. These people must not be allowed to make an insurance to any extent they pleased. The Bill would so open the door that if a vessel, although worth only £1,000, was valued at £5,000, an insurance 496 might be made for the larger amount, whereas that could not be done under the common law at present. The persons who were most anxious for this material change were the very men who were daily breaking the law by issuing honour policies, which were absolutely illegal, and were nothing but a system of gaming and wagering. This country had such an enormous amount of shipping that the House should be very chary of doing anything to change the law so clearly stated in Arnold on Insurance and in the judgments of the courts. Great pressure had been used to force this Bill through Parliament, and because he declined to allow it to go through after midnight without discussion he had been pilloried in all the newspapers controlled by these underwriters. Even Chambers of Commerce had passed resolutions in which he was mentioned by name. It was scarcely necessary to say that the greater the pressure the more determined he became. It was the duty of the Opposition to examine and criticise every Bill brought forward by the Government, and outsiders had no right to attempt to turn them from their duty. He did not intend to move the rejection of the Bill. He had done his duty by bringing the matter before the House and explaining the nature of the proposals; he would therefore leave to the Attorney-General and the Government the responsibility of passing the measure if they chose.

§ SIR ALBERT ROLLIT (Islington, S.)
said the hon. Member for Mid Lanark had dealt with some centuries of legislation upon this subject, but he had omitted to take into consideration that most of those centuries were very different to the one in which they lived. He hoped the Attorney-General would not again attempt to pass a Bill after twelve o'clock at night, and he must feel that the hon. Member had now been most amply avenged. He did not think that his hon. friend had given undue emphasis to this subject, which was of very great importance from a shipping and commercial point of view and was one which deserved the attention of the House. He could not, however, congratulate his hon. friend upon the very impotent conclusion to his speech. The 497 various judgments he had referred to, if compiled, would be far more bulky and difficult to interpret than the Bill before the House. His hon. friend took exception to the Bill as containing a statement of the effect of the decided cases, but that was the object of codification. The object of consolidation and codification was to place those decisions within reach and make them intelligible to those who read. He hoped they would not always have to have recourse to Scotch law books to interpret their laws, which were sufficiently confused already, and if they were obliged to refer to such compendiums as the hon. Member had referred to the law upon this question would be more complicated than ever. He spoke on behalf of the Chambers of Shipping and Commerce, and they had the very strongest feeling in favour of the Bill. The need of it was shown by the very large array of cases which had to be consulted before one was able to arrive at a conclusion as to some of the complex and difficult situations which arose under marine insurance law. References to judgments and text books meant a considerable loss of time and great expense. We assumed that every man knew the law, and if he disobeyed it he was punished for his disobedience. But our custom appeared to be to bury the law deep in judgments and text books, where it was absolutely inaccessible. The Roman Emperor Caligula hung his laws high on lamp-posts so that the people could not read them and then punished them for their disobedience of them. But we were more ingenious. There was the greatest need of law reform, and there was no direction in which that reform was more required than in the codification and consolidation of marine insurance law. Under this Bill litigation and expense might be avoided by having a clear statement of the law. Take for example the system adopted in the French Code. By reference to the French Code and Commentaries even a lay person could decide for himself what was the state of the law before going to any French tribunal; and when that tribunal was appealed to the arguments were invariably shorter than where numbers of cases had to be referred to as in this country. The Partnership Act and the Arbitration Act were admirable examples of codified law, and in framing 498 these the London Chamber of Commerce had taken a leading part. It was impossible to understand the law while it was scattered through various decisions and text-books, and it should be brought within a much narrower compass. Then again codification often led to a more rapid amendment of the law. He thought this Bill was a step in the direction of those law reforms which were so urgently needed, and this was a measure which was urgently desired by the Chambers of Commerce and Shipping and all those engaged in trade.

§ MR. CHARLES MCARTHUR (Liverpool, Exchange)
said the hon. Gentleman opposite was, so far as he knew, the only objector to the Bill, and now that he had spoken so fully on the subject and acquainted the mercantile world so fully with his views on the subject, it was to be hoped he would allow it to pass. Its passing was desired by every one connected in any way with the law of marine insurance. The hon. Member for Mid Lanark had told the House that the law of marine insurance was composed of very small statute laws and the greater portion of them was common law. He need not say how that common law had been formed. It had been largely derived from the custom of Lloyd's, but now the time had arrived when the evolution of the law of marine insurance might be completed by combining the various principles and judgments into codes of law. This Bill was desired by everybody connected with marine insurance The hon. Member for Mid Lanark had said that the law of marine insurance was absolutely settled and defined. If that were so he saw no objection to it being formed into a code. That was not the case, because at present there was a large amount of litigation, and shipowners were anxious to have an authorized statement of the law of marine insurance in order to satisfy themselves as to what the law really was. Lord Herschell formed a Committee of shipowners, underwriters and merchants, and they went through this Bill line by line. This measure had gone through various editions, and it had now been brought to the House of Commons in a form which satisfied all the parties 499 concerned. Resolutions in favour of this measure had been passed by Lloyd's, by the various Chambers of Commerce, and the associations interested in shipping, and he hoped the House would do nothing to prevent them having this handbook of the law of marine insurance which was so much desired.

§ THE ATTORNEY-GENERAL (Sir ROBERT FINLAY,) Inverness Burghs
said the House had listened with interest and sympathy to the speech of the hon. Member for Mid Lanark, and he thought he might congratulate him upon the spirited way in which he had resisted the outside pressure which he alleged had been put upon him. He must, however, differ from the hon. Member in regard to many of the things he had said both upon the general question and also with regard to this particular matter. The hon. Member for Mid Lanark seemed to regard any attempt at the codification of the law as a sort of crime.

§ MR. CALDWELL
explained that his remark applied only to this Bill.

§ SIR ROBERT FINLAY
said there was nothing to differentiate the law of marine insurance from any other law, and if codification was good at all there was no reason why the law of marine insurance should not be codified. The hon. Member implied that any man who attempted to codify the law should present himself to the House with a halter around his neck, and if his measure did not get through that he should suffer the extreme penalty of the law. The hon. Member had attacked Mr. Chalmers for having drawn up this Bill. Mr. Chalmers had already done excellent work in codification which was highly appreciated by everyone connected with the law.

§ MR. CALDWELL
said he did not make any attack upon Mr. Chalmers. He simply read Lord Herschell's opinion.

§ SIR ROBERT FINLAY
said the hon. Member descanted upon the way in which Mr. Chalmers had prepared this measure. Mr. Chalmers had done work for which everyone interested in commercial law was grateful, and in regard to bills of exchange and bills of sale he had done the greatest possible service to mercantile men as well as to the 500 legal profession. Was it quite right to insinuate that such a gentleman had taken up the codification of the law of marine insurance in the mere wantonness of idleness, and by way of riding a hobby? He did not think that any measure had ever undergone more inquiry than the present Bill. The hon. Member opposite had defied him to define what the principle of the common law with regard to marine insurance was, and immediately went on to say that its principles had been clearly defined by the judges, and that no Act of Parliament was required.

§ MR. CALDWELL
said what he argued was that the common law existed in principles, the effect of which they saw in the judgments.

§ SIR ROBERT FINLAY
said that meant that the principle was so infallible that nobody could express it, and they could only realise that it existed in some invisible form.

§ MR. CALDWELL
Not limited by language.

§ SIR ROBERT FINLAY
said a principle was an intellectual conception, and admitted of being put into language.

§ MR. CALDWELL
Not necessarily.

§ SIR ROBERT FINLAY
said that for the convenience of lawyers and the mercantile community interested in understanding what the law was, he confessed that a measure of this kind seemed to be one of public utility. This measure had been drawn by Mr. Chalmers and scrutinised by Lord Herschell's Committee, presided over by the hon. and learned Member for Dumfries, and afterwards by Lord Herschell himself; and on that Committee sat men who were more qualified to give assistance on a matter of this kind than any other men in the kingdom. The Bill had been introduced more than once. It was introduced by the present Lord Chancellor in 1891. It was most carefully considered during the recess by an eminent judge, and improvements were suggested. It was 501 introduced again in 1892, and submitted to a highly representative Committee, over which the Lord Chancellor presided, and alterations were made, and now it came before the House of Commons. The hon. Member opposite said that it was a highly suspicious circumstance that everybody interested was agreed that the Bill should pass. If everybody agreed that it was a good Bill, that fact afforded a very good reason for the House passing the measure and not regarding it with suspicion.

§ MR. CALDWELL
said there were others interested besides the insurers and the insured.

§ SIR ROBERT FINLAY
said the hon. Member had not pointed out one word in the Bill which would trench upon the safety of those who went down to the sea in ships. But if any such word did exist then let it be deleted in Committee. These were matters which ought to be considered in Committee. He would look forward to spending some happy days in Committee with his hon. friend in the consideration of this measure. If there were any flaws in it he was perfectly certain that his hon. friend would be able to find them out and to indicate the best way of meeting them. When the measure had run the gauntlet of his scrutiny the public might feel assured that it was as near perfection as any human measure could be.

§ SIR ROBERT FINLAY
moved that it be referred to the Standing Committee on Trade.

§ MR. CALDWELL
said he would not object to the proposal, but he thought the Government must see that if the Bill was to be revised in any sense or form it should be considered by an expert Committee. If the Attorney-general insisted on the Bill going to the Standing Committee on Trade it might come back in a form which would make it necessary for him to move Amendments.

§ SIR ROBERT FINLAY
said the Bill had already run the gauntlet of several 502 expert Committees, and the consideration it would now receive in the Standing Committee on Trade from those interested in these matters would be sufficient to detect any flaws there might be in the measure.