Chao Hick Tin J

(delivering the judgment of the court): This appeal raises primarily a point of construction as to whether there was a material misdescription in the proposal for an insurance cover against fire.

The respondents (the plaintiffs in the action) were a company incorporated in Singapore with the object, inter alia, of building coastal fishing trawlers and other vessels. The respondents were towards the end of February 1981 engaged in the building of two trawlers, 'Super Trawl' and 'Coastal Monitor II' which they hoped would be completed in time for the Asian Fishing & Aquaculture Exhibition and Conference scheduled to be held at the World Trade Centre between 2 and 6 June 1981. The construction of the trawlers was undertaken at a workshop at Sembawang which the respondents had rented from the Port of Singapore Authority.

The respondents applied to the appellants (the first defendants in the action) for the issue of a workmen's compensation policy for 20 workers covering a period of three months from 26 February 1981 to 25 May 1981. The respondents estimated that the two trawlers would be completed within that period. However, the construction was delayed and on an application by the respondents the workmen's compensation policy was, on 23 May 1981, extended by one month to 25 June 1981 but the number of workers covered was substantially reduced to only four.

On 22 May 1981 the respondents applied to the appellants for the issue of a fire policy and a burglary policy in respect of 'one complete unit of wooden fishing trawler with ...' and that was intended to be 'Super Trawl' The fire and burglary policies issued were dated 23 May 1981 and were expressed to cover that one complete unit of fishing trawler for a period of one month, from 25 May to 25 June 1981. The insured amount was $600,000. On 5 June 1981, the respondents applied for fire and burglary insurance cover for two additional items of property for the period 5 June 1981 to 5 August 1981. The first item was 'one complete unit of wooden fishing trawler with ...' and that was intended to be 'Coastal Monitor II', and the second item was 'Machinery, utensils and hand tools including materials, the property of the insured while contained in the building ...' The cover for these two additional items was eventually effected by way of separate endorsements on the earlier fire and burglary policies.

At about 6pm on 6 June 1981, a fire broke out on 'Super Trawl' and substantially destroyed it. 'Coastal Monitor II' was, however, not burnt, but it sustained cracks on the glue at the timber joints and hull. The German Classification Society, Germanischer Lloyd, after inspection, found both vessels unacceptable for classification. The respondents made a claim for both vessels on the basis of a total loss. The appellants rejected the claim; thus the institution of the action by the respondents.

At the hearing below, Tan Brothers Insurance Agencies Pte Ltd were brought in later in the proceedings as the second defendants. The second defendants were insurance brokers and they had assisted the plaintiffs in effecting the three policies with the first defendants/appellants. The plaintiffs'/respondents' claim against the second defendants was dismissed and no appeal was filed against that part of the judgment. Accordingly, the second defendants are not a party to this appeal.

As found by the learned trial judge, immediately before the fire, 'Super Trawl' and 'Coastal Monitor II' were not completed. The respondents nevertheless participated in the exhibition and rented a stand at the exhibition site, where photographs of the semi-completed 'Super Trawl' were exhibited.

The respondents were effectively owned by one Fritz Schneppe and his wife. Fritz Schneppe was a qualified civil engineer from West Germany. He had worked overseas for some years. One of his interests was to design fishing vessels. The two trawlers in question were designed by him.

At the trial three def