JUDGMENT

Gunn Chit Tuan CJ (Malaya):

[1] Syarikat Pembinaan Lida Sdn Bhd ("the appellant") had appealed against the inadequacy of the sum of RM25,000 awarded to it by the High Court under a fire insurance policy issued by Talasco Insurance Sdn Bhd ("the respondent"). The respondent, in turn, had crossappealed against the whole of the decision of the High Court including the award of RM25,000 on the ground, inter alia, that it should not have been held liable at all as the insurer. We dismissed the appeal of the appellant and allowed the cross-appeal of the respondent and now give our reasons for our decision.

[2] The said sum of RM25,000 was awarded in pursuance of the said fire insurance policy issued by the respondent to the appellant to cover damage from fire at Bukit Mertajam in respect of "building in course of construction" and "building materials and site office" in connection with the business and work of the appellant as building contractor for a housing developer called Duniaga Sdn Bhd.

[3] The said fire insurance policy under which the award of RM25,000 was given was a renewal of a similar fire policy which had expired on 31 December 1981. When that policy expired on 31 December 1981, it was not renewed at or before the time of its expiry. Then on 9 February 1982, a fire, which was a risk which would have been covered by the earlier policy if it had been validly renewed for another year on or before 31 December 1981, occurred causing some damage to the appellant's building materials and site office.

[4] On 10 February 1982 the branch manager of the respondent insurer at Alor Setar, one Abdul Salam bin Pani, issued a cover note to the appellant and premium was then paid on 11 February 1982. It is to be noted that the cover note thus issued in renewal of the earlier policy purported to cover retrospectively the period from 1 January 1982 to 30 June 1982, thus covering the fire and the consequential damage in question retrospectively. The learned Judge on the evidence adduced before him came to the finding that "On the facts before me, I find that there are ample evidence to show that Salam knew of the fire before he issued the cover note on behalf of Talasco...". However, with respect, we found that the learned Judge had erred when he also stated that Salam was authorised to issue the cover note to cover the risk and concluded that the respondent was liable on the claim. We agreed with the main thrust of the argument advanced by Counsel for the respondent that the learned Judge was wrong in law in holding that the respondent was liable under the cover note dated and issued on 10 February 1982, which purported to effect renewal of the earlier policy of insurance which had expired on 31 December 1981, and which cover note on the fact of it afforded cover to the appellant from 1 January 1982 to 31 June 1982 although the fire had occurred on 9 February 1982.

[5] It must be noted that at the time of the issue of that cover note, there was already no property to insure nor any policy in force. It must also be remembered that contracts of insurance, like wagering contracts, are aleatory contracts and that being so it is considered by the world that "betting on a certainty renders the wager invalid". (See p 97, Spencer Bower on Actionable Non Disclosure).

[6] Policies on insurance against fire are made on the implied condition that the description of the property inserted in the policy is true at the time of the making of the policy (Silem v. Thornton [1854] 3 E & B 868) and where the policy is retrospective, the duty of disclosure applied not only to such facts as were material at the date from which the policy is to take effect, but also to all facts becoming material down to the actual date on which the contract is made. The position of the case in the present appeal is that there was in fact no property to insure at the date of the issue of the cover note purporting to renew the old fire insurance policy.

[7] Although the subject