Macaura v Northern Assurance Co Ltd

Facts

• Macaura owned a timber estate. He sold the timber to a company in which he held virtually all the shares.
• He then insured the timber in his own name (not the company's).
• The timber was destroyed by fire and Macaura claimed under the insurance policy.

Issue

1. Whether a sole shareholder has insurable interest in property belonging to the company.

Held

• The House of Lords held that Macaura had no insurable interest in the timber. The timber belonged to the company, not to Macaura personally. A shareholder, even one holding all shares, does not own the company's property. Shareholders have rights (dividend, vote, surplus on winding up) but not proprietary interest in company assets.

Ratio Decidendi

Company property belongs to the company, not to its shareholders, regardless of their percentage of shareholding. A shareholder's interest is in the shares (a chose in action), not in the company's assets. This is a direct consequence of Salomon's separate entity principle applied to property ownership.