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2000 MarsdenLR 1980
HIGH COURT MALAYA, IPOH
PS GILL J
ASEAN SECURITY PAPER MILLS SDN BHD
versus
COMMERCIAL UNION ASSURANCE (M) SDN BHD
CIVIL SUIT NO: 22-211-90
Decided On : 05-12-00
For the plaintiff - CK Leong; M/s CK Leong & Co, Karpal Singh; M/s Karpal Singh & Co, Christopher Fernando; M/s Aris Rizal & Christopher Fernando
For the defendant - Porres Rayan (T Suther & Micheal Lum); M/s Shook Lin & Bok
Key Points: - The court considered whether the policy was valued or unvalued and the consequences for indemnity (!) (!) (!) . - The court addressed whether the insurers were estopped by their conduct from denying liability and discussed related estoppel principles (!) (!) (!) (!) . - The court ruled on whether fraud was proven beyond reasonable doubt and denied a finding of fraud against the plaintiffs (!) (!) . - The court analyzed compliance with Condition 11 (notice and documentation), found satisfactory compliance, and discussed implications for liability (!) (!) (!) . - The court considered Condition 12 (possessory rights over insured property) and found non-compliance issues due to disagreement over loss adjuster appointment rather than strict non-compliance by the insured (!) (!) . - The court reviewed Condition 19 (time limit) and held that the condition was void under contractual law, affecting timeliness arguments (!) (!) (!) . - The verdict awarded judgment in favor of the plaintiffs for the claimed amount with interest and costs, reflecting the balance-of-probabilities standard rather than beyond reasonable doubt for the main liability issue (!) (!) (!) .
What is the nature of the policy—valued or unvalued—and how does that affect the insurer's liability for the loss?
What is the admissibility and impact of alleged fraud or estoppel on the liability under the policy?
PS Gill J:
The plaintiffs, Asean Security Paper Mills Sdn Bhd (hereinafter referred to as ASPM) is a private limited company incorporated in Malaysia. It was at all material times involved in the purchase and sale of various categories of paper including security paper. Pursuant to its business activities, it stored its goods initially at a KTM warehouse in Kuala Lumpur, and later at a warehouse in Kg. Acheh, Sitiawan. Plaintiffs obtained sometime on 23 July 1989, fire insurance coverage from Provincial Insurance (M) Sdn Bhd and Commercial Union Assurance (M) Sdn Bhd for a sum of RM14,932 million in respect of the goods stored at its warehouse. Later on 29 August 1989 the sum insured was increased to RM32,431 million with effect from 30 August 1989. The items insured were as follows:
Item 1. On stock in trade of brilliant White/security/woodfree Asean Bond Paper, Computer Listing/Computer Forms, Elan Papers, Asean Speciality Papers and Papers of every description.
- RM32,000,000
Item 2. On five (5) steel cabins @ $32,400 each, furniture, fixtures & fittings equipment for $20,000 - RM 182,000
Item 3. On building (Warehouse) - RM 200,000
Item 4. On one (1) unit Forklift - RM 49,000
____________
Total - RM32,431,000
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Commercial Union Assurance (M) Sdn. Bhd. Were co-insurers for the policy Under the co-insurance clause, that forms part of the policy, the following endorsement was made.
The insurance by this Policy is hereby agreed and declared to be limited to One Hundred (100) percent of the Sum Insured as set out below.
The words "The Company" appearing in me Policy shall be substituted for the words "The Insurers" and the Policy shall be construed accordingly.
The words 'The Insurers" shall mean the following Companies which shall be liable for their stated proportion of the Sum Insured.
All extensions, reductions, or cancellations of risks or of conditions, all fixing of premiums, all settlements of claims or contestations whatsoever and in general, all dispositions of whatsoever nature taken by the Leading Co-Insurer will definitely be binding upon all Co-Insurers and carry with them the unanimous consent of all Co-Insurers of this Policy. All Co-Insurers hereby expressly authorise the Leading Co-Insurer to sign Policies and Endorsements for the account, and hereby undertake to consider documents so signed as having signed by themselves.
Co-Insurer Proportion Of Sum Insured Proportion
Provincial Insurance (Malaysia) Sdn Bhd 50%
Commercial Union Assurance 50%
On 11 September 1989, a fire occurred at the warehouse in Kg. Acheh, Sitiawan resulting in the loss of all the stocks of a variety of paper stored in the warehouse. Apart from the stocks being burnt, the warehouse and a forklift were also burnt.
The same day the Managing Director of Amanah Lowndes Lambert Sdn Bhd (the insurance brokers) was informed of the fire by Mr. Balasingam, who was then a Director of ASPM. The next morning on 12 September 1989, Mr. Chan Kien Fatt of Provincial Insurance was also informed about the fire.
After the occurrence of the fire, the plaintiffs made a claim under the provisions of the policy and submitted a number of documents to the Provincial Insurance Company. However, the latter wrote to the plaintiffs on 1 November 1989 wherein they repudiated liability to indemnify the plaintiffs under the terms of the policy.
Consequently, the plaintiffs filed a writ against Provincial Insurance Company in the High Court Kuala Lumpur (CS No. D2-22-2458-89) on 21 November 1989, and later filed a writ against the defendants on 11 September 1990. Counsel for the defendants in his submission stated that the causes of action in both suits are based on the same policy in respect of the same fire. The only difference being the identities of the defendants, and the amount claimed.
In this instant case, the plaintiffs' claim against the defendants, who were the co-insurers, is for a sum of RM16,124,500 pursuant to the policy which they alleg
