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2023 MarsdenLR 1038
HIGH COURT MALAYA KUALA LUMPUR
LDP PROMOTION FAIR SDN BHD – Appellant
Versus
CHUBB INSURANCE MALAYSIA BERHAD – Respondent
[Civil Appeal No: WA-12BNCC-2-02-2023]
A valid insurance contract was established despite the Appellant's rejections, as the insurer assumed risks during the holding over period, and the Premium Warranty Clause did not contravene statutory provisions.
Headnote:(A) Financial Services Act 2013 - Section 84 - Contracts Act 1950 - Section 7 - Interpretation of insurance contract - Court finds that a valid contract of insurance existed despite the Appellant's contention of non-acceptance of terms, as the Respondent had assumed risks during the holding over period and the Appellant did not object to terms. The Premium Warranty Clause does not contravene Section 84 of the FSA 2013 as the contract remains valid under Section 270 of the FSA. (Paras 30, 46, 84)
Facts of the case:
The Appellant, a company providing exhibition spaces, appealed against a judgment ordering payment of RM130,382.09 in outstanding insurance premiums for a holding over cover after its previous fire insurance policy lapsed. The Appellant contended there was no valid contract as it rejected multiple insurance options and the premium was not disclosed timely. (Paras 1-7, 59)
Findings of Court:
The court found that the Respondent had assumed risks and a contract existed despite the Appellant's rejections. The Premium Warranty Clause was valid, and the contract was not rendered void due to any alleged contravention of statutory provisions. (Paras 86-89)
Issues: The main issues addressed included the existence of a valid insurance contract, compliance with conditions precedent, and the validity of the Premium Warranty Clause under the FSA 2013. (Paras 30, 43, 68)
Ratio Decidendi: The court reasoned that the Appellant's actions indicated acceptance of the terms, and the Respondent's assumption of risk during the holding over period constituted a binding contract. The Premium Warranty Clause did not violate the FSA as the contract was protected under Section 270. (Paras 84-86)
Result: Appeal dismissed with costs.
| Table of Content |
|---|
| 1. factual background of the case (Para 1 , 2 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28) |
| 2. appellant's arguments against judgment (Para 3 , 29 , 30) |
| 3. existence of contract and acceptance (Para 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41) |
| 4. compliance with conditions precedent (Para 43 , 44 , 45 , 46 , 47 , 48 , 49) |
| 5. existence of insurance coverage (Para 51 , 52 , 53 , 54 , 56 , 57) |
| 6. disclosure requirements for insurance (Para 58 , 59 , 60 , 61 , 62 , 63) |
| 7. validity of premium warranty clause (Para 68 , 69 , 70 , 71 , 72 , 73) |
| 8. statutory provisions and contract validity (Para 78 , 79 , 80 , 81 , 82 , 83 , 84) |
Introduction
[1] This is the Appellant's appeal after full trial against the judgment dated 3 February 2023 by the learned Session Court Judge granting the Respondent's claim for outstanding insurance premium in the sum of RM130,382.09 with interests at 5% per annum and costs in the sum of RM6,000.00.
[2] This judgment deals with the interpretation of a premium warranty clause which permits the Respondent to charge pro rata premium for providing fire risks cover under a 'holding over' policy whilst parties negotiated over the renewal of an expired policy.
[3] More specifically, it was contended that since under s 84 of the Financial Services Act 2013 , no insurer is permitted to assume any risks unless the premium is paid, the Respondent was not entitled to claim for the pro rata premium under the premium warranty clause which allowed the Appellant a period of 60 days to pay the premium and unless such premium was paid, there could be no valid assumption of risks to entitle the demand for the pro rata premium.
Background Facts
[4] The Respondent is an insurance company and its business is regulated by Bank Negara Malaysia under the Financial Services Act 2013 (" FSA 2013").
[5] The Appellant is a company in the business of providing exhibition spaces for furniture.
[6] The Respondent's action against the Appellant was for a sum of RM130,382.09 being insurance premium due for assuming fire risks for the period from 12 March 2019 until 11 May 2019 ("holding over period").
[7] In the past, the Appellant had purchased several fire insurance policies from the Respondent and those insurance policies lapsed on 11 March 2019.
[8] Before the expiry of the lapsed policies, the Appellant had sought quotations with the view to renew its fire insurance for some of its premises. More specifically, in early 2019, the Appellant appointed several insurance brokers to obtain quotations on its behalf from various insurers. Among the insurance brokers appointed by the Appellant was one State Insurance Brokers Sdn Bhd ("the Broker") vide a letter of appointment dated 27 February 2019.
[9] The Broker had sought quotations from the Respondent.
[10] On 11 March 2019, the Respondent offered a Fire and Consequential Loss Insurance ("First Option") at a premium price of RM750,197.00.
[11] Pending negotiations of the terms of the First Option, the Broker requested for a holding over cover in respect of the subject premises on the same day.
[12] On the holding over cover, by the Broker's email to the Respondent on 11 March 2019, the Broker stated:
"Hi Amanda
Client has confirmed that you hold cover on both the Insureds as insurances are expiring midnight on 12.3.19. Thanks"
[13] On 12 March 2019, the Respondent replied with confirmation of the holding over cover based on the following terms and conditions:
"The risk to be holding cover wef 12 February 2019 (sic) as attached subject to:
• Management is positive and committed to fully comply with Chubb's risk improvement or we reserve the right to off risk with 14 days written notice
• To furnish us with the latest financial report
• All other terms and conditions are followed RFT
• No deterioration of loss till policy expiry
• To conduct survey to each of the location
• Client is required to comply with a
