Elizabeth M. Chapman JC:

The 1st plaintiff in this case is the administratrix of the estate of Lau Lip Guan (deceased). By a policy of insurance dated 6 September 1989 between the said Lau Lip Guan (the deceased) and the defendants, Asia Insurance Company Ltd. the defendants in consideration of a premium of RM368/- insured the deceased in the sum of RM200,000/- against death by accident. The 2nd plaintiff is the beneficiary named in the said policy of insurance.

On 24 April 1990 the deceased died at the Sarawak General Hospital as a result of a motor accident at the kuching by-pass at Sungai Apong junction on 23 April 1990.

The plaintiffs furnished proof of the death of the deceased and requested the said sum of RM200,000 but the defendants repudiated liability through their solicitors vide their letters dated 16 January 1992.

The claim against the defendants now is by the 1st plaintiff as administratrix and the 2nd plaintiff as beneficiary.

The defendants contend that the said policy of insurance is void ab initio because of non-disclosure by the said deceased of material facts in the proposal form in respect of the deceased's medical health. The particulars of non-disclosure are as follows:

(a) Failing to disclose the deceased's history of diabetes mellitus and/or hypertension.

(b) Failing to declare that the deceased was suffering from ischaemic heart disease.

The defendants further contend that the truth of the information regarding the deceased's health is warranted and forms the basis of the contract by virtue of the basis clause in the proposal form. The basis clause states as follows:

I hereby declare that the particulars of the proposal form are true, and I agree that this proposal shall form the basis of the contract between myself and the Asia Life Insurance Company Ltd.

The bottom of the proposal form reads as follows:

N.B. When filling in this form, please see that all questions are answered fully and actually.

Further, at the top of the proposal form the following words appear:

Pursuant to s. 16(4) of the Insurance Act, 1963, you are to declare in this proposal form, fully and faithfully all the facts which you know or ought to know otherwise the policy issued hereunder may be void. (See D1 - 11 of defendant's bundle).

The agreed issues to be tried are:

1. Whether the basis clause applies to the second policy.

2. Whether there was non-disclosure and/or misrepresentation and/or breach of contract by the insured.

It is conceded by the defence that the deceased insured died on 24 April 1990 as a result of a road accident and that the validity period of the second policy is from 24 August 1989 till 23 August 1990.

The defence case is that the second policy is a renewal policy and hence, it is entitled to avoid the second policy on the ground of non-disclosure of material facts in the proposal form which formed the basis of the contract contained in the second policy. Shortly before the trial of this case began, a rejoinder was filed by the defendants which raised for the first time the duty to disclose material changes in circumstances upon renewal. The alleged breach of duty of non-disclosure of material facts before the formation of the contract in the second policy was not specifically pleaded.

It is a general principle of insurance law that an insured is under a duty to disclose material facts and the absence of a proposal form does not modify the assured's duty.

In Ivamy's General Principles of Insurance Law [5th Edn.] it is stated at p.122:

It is the duty of the proposed assured to disclose to the insurers all material facts within his actual knowledge. The special facts distinguishing the proposed insurance are, as a general rule, unknown to the insurers who are not in a position to ascertain them. They lie, for the most part, solely within the knowledge of the proposed assured.

However, such a breach of duty to disclose is distinct and separate from the duty to disclose material facts. There is no du