JUDGMENT

Salleh Abas CJ:

On 20 November 1977 the respondent, an Australian, who is a sailing enthusiast arrived in Kuantan waters in his boat called "Melanie", which he personally built and navigated single-handed from his hometown Burnside, South Australia. Upon arrival at Kuantan, he did not enter the Pahang river but dropped anchor outside the river mouth at a point about 500 yards to the south. He left the boat and went ashore by getting a lift in a passing fishing boat. During the night the sea dragged the anchor and the boat closer to the shore and left it grounded in low waters. With the help of a fishing boat the "Melanie" was set free and finally towed into the river and safely anchored in deep waters at the fishermen's jetty.

At the suggestion of his friend named Cassidy, a fellow Australian who had a similar boat and had earlier insured his boat with the appellant company, the respondent insured the "Melanie" with the appellant company through the latter's sales representative named Thandayuthapany (referred to as Pany), (PW2), who came to see him with a proposal form on 8 December, 1977. With Pany's help the respondent filled up the form, signed it and returned it to Pany, who in turn handed it to the branch office of the appellant company at Kuantan. Having received the completed proposal form, Peter D'Cruz (DW2), who is the local senior branch manager of the appellant company, issued a Cover Note on 10 December, 1977 insuring the hull and the machinery on board for RM50,000 for a year with effect from 15 December 1977. The premium was fixed at RM2,000, payable in two instalments. The first instalments of RM1,000 was paid on 13 December 1977, i.e. three days after the issue of the Cover Note and the balance of RM1,000 was to be payable on or after the issue of the Policy.

On 30 December 1977 at about 1.00 p.m. the respondent took out the "Melanie" from her mooring place at the jetty to sea with two other persons on board. On her return journey at about 3.30 p.m. on the same afternoon as she was approaching the river mouth the "Melanie" had an accident. She struck a portion of a submerged sandbar which, according to the charts, was marked as a sea-lane, whose depth ought to be about 9½ feet. She got stuck fast on it and the waves kept on pushing her to shallow waters. When the tide ebbed the "Melanie" was left securely grounded and forlornly listing on one side. Attempts to release her were unsuccessful because the sea was too rough.

The respondent could find no one to pull out the boat and by 3 January 1978, i.e. 4 days later he came to the conclusion that the boat was beyond salvage. He therefore made out a statement of facts and submitted it together with a sketch location plan to the appellant company and to the Kuantan Marine Department for the purpose of claiming the benefit under the insurance. The appellant company refused to entertain the claim and so the respondent started a civil suit, which is the subject matter of the present appeal, on 22 February 1978.

The trial was held before George J who gave judgment in favour of the respondent and hence this appeal.

In the appeal before us, Counsel for the appellant company raised the same issues as he did in the Court below and we will deal with these issues one by one.

Non-disclosure:

It is the submission of Counsel for the appellant company that a contract of insurance being an uberrima fides contract, they are entitled to repudiate their obligations because the respondent had been guilty of a non-disclosure for failing to disclose to them that the "Melanie" had an accident on 20 November 1977 (referred to in the judgment as "the earlier mishap"). Counsel for the respondent on the other hand submitted that the respondent was not guilty of any such non-disclosure because in the first place none of the questions in the proposal form which the respondent completed and signed required him to disclose such accident and in the second place the appellant company's agent, Pan