As regards public policy, the Claimant’s restrictive submission was that the payment of a ransom amounted to a submission to extortion and was so undesirable from the point of view of the public interest and universal principles of morality, that it could be no part of an assured’s duty to preserve his property from loss by succumbing to a ransom demand: and that being the case, the property concerned must be considered to have been irretrievably lost, physically and/or legally, where the only means of recovering it was to do something which an assured could not reasonably be expected or required to do.
It necessarily followed that if payment of a ransom could not be required, an underwriter could not assert that the assured had not suffered an ATL. Here the Claimant’s counsel placed heavy reliance on s 78(4) of the MIA which provides that it is the duty of an assured to take such measures as may be reasonable for averting or minimising loss. In common with Steel J, the Court of Appeal relied on the decision in Fender v St John-Milway which laid down fundamental guidance as to the circumstances in which public policy could be invoked by a court. In citing the guidance established by the Court in Fender, the Court of Appeal reiterated that, when determining public policy:
... the doctrine should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds.
Rix LJ also noted that Parliament had intervened by way of repeal of the Ransom Act 1782, which in any event only outlawed the payment of a ransom in respect of British ships taken by the King’s enemies. Notwithstanding legislative intervention, the Court of Appeal noted, as had Steel J, and by way of reference to the decision in Royal Boskalis Westminster NV v Mountain, that the payment of a ransom can be recovered as a sue and labour expense pursuant to s 78(4) of the MIA. It logically followed that the payment of a ransom could not be against public policy.
The Claimant also submitted that it could not or should not be under a duty of sue and labour to make a ransom payment meaning that capture, which could only be resolved by way of a ransom payment, fulfilled the test of an ATL. This argument was dismissed by the Court. According to Rix LJ,
The fact that there may be no duty to make a ransom payment does not turn a potential total loss which may be averted by the payment of ransom into an actual total loss: any more than the fact that there is no duty to spend an extravagant sum seeking to save a vessel driven onto the rocks means that there is an ATL (as distinct from a potential CTL) if, quite sensibly, the money and effort are not expended on such a forlorn and in every way undesirable venture. In any event, all such questions of reasonableness are pertinent to CTL, but not to the incidence of ATL.