Macaura v Northern Assurance Co Ltd
A shareholder has no insurable interest in the company's property, because the property belongs to the company and not to its members.
Facts
Mr Macaura owned an estate in Northern Ireland, with a large quantity of timber. He sold the timber to a company, in return for all its shares, and he was also its main creditor. However, he kept the fire insurance on the timber in his own name, rather than the company's. Two weeks later, the timber was destroyed by fire. The insurers refused to pay, on the ground that Mr Macaura had no insurable interest in the timber.
Legal principle
The House of Lords held that the insurers were not liable. Lord Buckmaster said that no shareholder has any right to any item of property owned by the company, because he has no legal or equitable interest therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplus assets when the company is wound up, but the timber belonged to the company. Mr Macaura's interest as a shareholder or creditor was not an interest in the timber itself.
Related cases on separate legal personality and the corporate veil
- Adams v Cape Industries plc [1990] Ch 433
- Chandler v Cape plc [2012] EWCA Civ 525, [2012] 1 WLR 3111
- Re Darby, ex p Brougham [1911] 1 KB 95
- DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852
- Gilford Motor Co Ltd v Horne [1933] Ch 935
- Jones v Lipman [1962] 1 WLR 832
- Lee v Lee's Air Farming Ltd [1961] AC 12
- Okpabi v Royal Dutch Shell plc [2021] UKSC 3, [2021] 1 WLR 1294
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