2013 MarsdenLR 1215
COURT OF APPEAL PUTRAJAYA
MODIPALM ENGINEERING SDN BHD & ANOR – Appellant
Versus
ALLIANZ GENERAL INSURANCE COMPANY (MALAYSIA) BERHAD – Respondent
[Civil Appeal No: Q-02-194-01/2012]
The insurer must prove the insured's knowledge of unseaworthiness to deny liability under the policy, emphasizing the importance of consent regarding cargo conditions.
Headnote:(A) Marine Insurance Act 1906 - Clause 5 - Appeal following rejection of claim for damaged cargo - Appellants claim for loss of cargo valued at RM5,933,762.70 under marine cargo insurance policy - Respondent asserted unseaworthiness due to overloading as grounds for non-liability - Court ruled Appellants had right to sue and found the Respondent failed to prove Appellants' knowledge of unseaworthiness - Subsequent judgment for Appellants of RM5,933,762.70 with interest awarded. (Paras 1-22)
(B) Insurance principles - Unseaworthiness - Under Clause 5 of the policy, claimants are not responsible for unseaworthiness unless they have knowledge of it - Court emphasized significance of knowledge in assessing liability concerning overloading. (Paras 9-13)
Facts of the case:
The Appellants, manufacturers of the cargoes, had sold them to a subsidiary who shipped the cargoes, which were subsequently compromised due to rough seas and alleged overloading of the vessel. (Paras 3-5)
Findings of Court:
The learned Judge in the High Court failed to adequately address whether the Appellants were privy to the alleged breach of warranty and hence did not satisfy the prerequisite for non-liability under the policy. (Paras 11-13)
Issues: The main issues examined were the Appellants' standing to sue under the insurance policy and the coverage of loss given the Respondent's claim of unseaworthiness due to overloading. (Paras 6-8)
Ratio Decidendi: The court held that knowledge of the vessel's unseaworthiness must be proven to establish liability; the Respondent's evidence did not adequately support claims of privy knowledge by the Appellants regarding the overloading. (Paras 10-12)
Result: Appeal allowed; judgment for Appellants for RM5,933,762.70 with interest awarded.
| Table of Content |
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| 1. overview of claim and shipment details (Para 1 , 3) |
| 2. conclusion of appeal ruling (Para 2) |
[1] This is an appeal against the decision of the High COURT in which the learned Judge held that the Respondent/Defendant was not liable for a claim made by the Appellants/Plaintiffs pursuant to a marine cargo insurance policy (the policy) in respect of loss of 289 packages of oil palm machineries with accessories (the cargoes).
[2] We heard the appeal and after giving due considerations to respective submissions from both counsels, we allowed the appeal and now give our reasons for our decision.
Background Facts
[3] The 1st Appellant is the manufacturer of the cargoes and had sold them to the 2nd Appellant which is a subsidiary of the 1st Appellant. The cargoes were shipped to Bintulu in Sarawak by way of a barge, "Bina II" which was towed by a tugboat "Bina I".
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