Richard Talalla J:

The plaintiffs were the owners of the Asia Hotel, Batu Pahat and had insured their hotel with the defendants against fire and consequential loss as evidenced by 2 policies both dated 25 February 1985, one a fire policy and the other a consequential loss policy as they were popularly known. On 11 May 1985 the hotel was damaged by fire. The plaintiffs claimed indemnity under both policies. The defendants repudiated liability and refused to pay contending that both policies were obtained by misrepresentation, non-disclosure and concealment of a material fact, in that, the plaintiffs failed to disclose that one Dragon Nite Club (the Nite Club) of which one Mr. Lim Ah Kow, the plaintiffs' managing director (the managing director), was the managing or active partner, had lodged a fire claim with one Safety Life & General Insurance Sdn. Bhd., as effectively pleaded in para. 12 of the statement of defence.

It is common ground that each policy, being a contract between the plaintiffs and the defendants, was issued on the basis of a proposal, which was in the defendants' standard form, executed by the plaintiffs by hand of the managing director, that in each propo