(delivering the decision of the Board): There is before their Lordships an appeal from a judgment of the Court of Appeal of the Republic of Singapore. The subject of the appeal is a claim by the respondents, Karl Ljungberg & Co., against the appellants, the Netherlands Insurance Co. Est. 1845 Limited, under a policy of marine insurance. Under that policy, a consignment of plywood was insured by the appellants for a voyage from Singapore to Esbjerg in Denmark. The policy incorporated the Institute Cargo Clauses (All Risks) in the edition dated January 1, 1963. On discharge of the goods at Esbjerg, some were found to be missing and others to be damaged. The respondents, as consignees of the goods and assignees of the policy, claimed against the appellants in respect of both the shortage and the damage, but the appellants denied liability.

The goods had been discharged at Esbjerg in March 1980. Any claim against the carriers would become time-barred in March 1981. The respondents' claim against the appellants under the policy was made in January 1981, and liability was denied by them shortly afterwards. If the claim against the carriers was to be preserved, it was plain that proceedings must be commenced against them without delay. Following correspondence between the parties, in the course of which the appellants through their solicitors asserted that the respondents were bound by the terms of the bailee clause in the policy (the terms of which their Lordships will set out in a moment) to preserve the claim against the carriers, the respondents commenced proceedings against the carriers in Japan in order to preserve the time-bar.

The respondents also commenced proceedings in Singapore against the appellants, claiming their losses under the policy. They obtained summary judgment in respect of the short-delivery. Thereafter their claim in respect of the cargo damage was compromised. But there remained outstanding the question of the costs incurred by the respondents in commencing proceedings against the carriers in Japan. For these, the respondents claimed that the appellants were responsible; the appellants denied liability, asserting that the bailee clause in the policy imposed upon the respondents the obligation to preserve the claim against the carriers for the benefit of the appellants but at the respondents' expense. The matter came before Wee Chong Jin C.J., who dismissed the respondents' claim for these expenses, but without giving any reasons. The respondents then appealed to the Court of Appeal (Kulasekaram, Chua and Rajah JJ.) who allowed the appeal, on the ground that, in the correspondence which had passed between the parties, the appellants had required the respondents to commence the proceedings against the carriers and that, on that basis, the appellants were bound to indemnify the respondents against the expense incurred by them, to the extent that the appellants had thereby benefited — i.e., in the proportion that the appellants had been held, or had agreed, to be liable to the respondents for the insured loss. From that decision the appellants now appeal, with the leave of the Court of Appeal.

It is at this stage desirable to set out the relevant provisions of the policy. The policy incorporates the hallowed wording of Lloyds' standard form, including the sue and labour clause which is in the following terms:

"… and in case of any Loss or Misfortune, it shall be lawful to the Assured, their Factors, Servants and Assigns, to sue, labour and travel for, in and about the Defence, Safeguard and Recovery of the said Goods and Merchandises or any Part thereof without Prejudice to this Assurance and to be reimbursed the Charges whereof by the Assurers."

The policy is expressed to be subject to certain clauses, including the Institute Cargo Clauses (All Risks). As already stated the relevant Institute Clauses are in the edition dated January 1, 1963, and these include clause 9 (the bailee clause),