Gopal Sri Ram JCA:

These appeals are against the decision of the High Court entering judgment for the respondents; in the sum of RM200,000 in favour of the first respondent and in the sum of RM250,000 in favour of the second respondent. The claims arose out of damage caused to the premises and goods of the respondents in a fire which occurred at about 3.30 a.m. on 30 November 1984. The premises and goods in question were insured with the appellant insurer company under two policies of insurance. The first policy was issued on 9 June 1984. It was valid until 9 June 1985. At the date of its issue, the sum assured was RM120,000 for the building and RM30,000 for household effects. The policy in respect of the second respondent (the second policy) was issued on 16 July 1983 and expressed to be valid until 16 July 1985. It was in respect of stock in trade which was housed within the building in question. That stock in trade was valued at RM150,000 for the purpose of the second policy.

On 11 October 1984, that is to say, about four months after the first policy was issued, the amount insured under the first policy was increased. In respect of the building, it was increased from RM120,000 to RM150,000. In respect of the household effects, it was increased from RM30,000 to RM50,000. Simultaneously, the second policy was also increased in value from RM150,000 to RM250,000.

In the fire which occurred, to which we adverted a moment ago, the building, the household effects and the stock in trade were completely destroyed. On that there is no dispute.

Suspicion for the fire naturally fell upon the respondents. Police investigations were conducted and culminated in the two respondents being charged at the Taiping Sessions Court under s. 436 of the Penal Code. At that trial, two witnesses gave evidence. They were the respondents' neighbours. They were both taxi drivers. I will allude to their evidence later when I come to deal with the assessment made by the learned Judge of their testimony.

At the close of the prosecution's case, the learned Sessions Court Judge acquitted both the respondents without calling upon them to enter their defence. An appeal was lodged against this decision, but later discontinued.

In the actions brought by the respondents against the appellant, they claimed for the sums insured under the respective policies. For completeness, I state that the actions had been commenced before the institution of criminal proceedings and were consolidated. The consolidated actions were heard before the High Court over several days in 1993 and mid 1994, that is to say, about ten years after the fire. Both respondents gave evidence. For the defendants, the two neighbours of whom I spoke earlier in the judgment also gave evidence.

It was suggested to the respondents under cross-examination that they had secreted away household and other goods from the premises shortly before the fire. These suggestions were denied by both respondents. A suggestion was also made that there had been an ulterior motive for the increase in the values of the respective insurance policies. However, each respondent gave an explanation, which I propose not to dwell upon, for making the increase. It is common ground between the parties that an insurance agent, Mr. Teo Cheng Chai, negotiated both policies. He also inspected the premises and the contents before the increase were effected. Unfortunately, he could not be traced and could not be called as a witness by either side. The appellant, in resisting the claim, relied primarily on two grounds. It was contended that the appellant was not liable because there had been fraud on the part of the respondents in making the claim. The fraudulent intent relied on was based upon the alleged removal of goods and the close proximity between the increases in the value of the respective policies and the fire.

As I have said, the two neighbours gave evidence for the appellant. Each had given a statement to