JUDGMENT

Ramly Ali JC:

The Plaintiff's Claim

The plaintiff is the insured in a fire insurance policy and the defendant is the insurer. The plaintiff's claim against the defendant in this action is under a Fire Insurance Policy No: N86100 A03380 dated 6 February 1986, issued by the defendant to the plaintiff to cover the plaintiff's stock-in-trade stored in a warehouse situated at Lot 174, Jalan Kemajuan, Labuan, for a sum of RM1,000,000. The policy was valid for the period of 12 January 1987 to 12 January 1988. Fire occurred at the warehouse on 29 January 1987 and thus destroying all stock-in-trade stored therein. The plaintiff's case is that, at the time of the fire, there were, inter alia, 1090 bales of Chinese Cotton in the warehouse worth more than the sum insured. The plaintiff is claiming the insured sum.

The Defendant's Defence

The defendant, on the other hand, has raised two points in its defence, namely:

i) the plaintiff was in breach of Warranty 9(a) of the policy in that the plaintiff did not, on the date of the fire, hold any valid trading licence from the Labuan Local Authority to operate its business; and

ii) the stock-in-trade in the warehouse, particularly the number of cotton bales destroyed, at the time of the fire was less than what is claimed by the plaintiff.

Breach Of Warranty Of The Policy

The preamble of the relevant insurance policy provides as follows:

The company agrees (subject to the Conditions contained herein or endorsed or otherwise expressed hereon which conditions shall so far as the nature of them respectively will permit be deemed to be conditions precedent to the right of the Insured to recover hereunder) that if the property insured described in the said Schedule or any part of such property be destroyed or damaged by FIRE ... the Company will pay or make good to the Insured the value of the property at the time of the happening of its destruction or the amount of such damage.

Warranty 9(a) of the same policy provides:

Warranty that during the currency of this policy the Insured shall hold such Licence or Licences as is or are required by the Local Municipal or other Authorities and shall fully comply the conditions and requirements thereof at all times.

By virtue of the preamble of the policy, Warranty 9(a) of the policy shall be deemed to be condition precedent to the right of the insured to recover any sum insured claimed thereunder. Warranty 9(a) clearly shows that the plaintiff was required at all relevant times, to have a valid trading licence from the Labuan Local Authority to carry on its business. This is so required under s. 3(1) of the Trade Licensing Ordinance (Cap. 144) (Sabah), the relevant applicable laws relating to the matter, which says:

No person shall carry on in Sabah, whether as principal or agent, any business in respect of which a valid trading licence is not for the time being in force or carry on any such business in any place other than that specified in such licence.

Even though Labuan was already a Federal Territory at the relevant times, but the applicable laws relating to trades licensing in Labuan at the material times was still the Trade Licensing Ordinance (Cap. 144) (Sabah).

Section 6 of the said Ordinance provides:

A trading licence shall continue in force until the thirty-first day of December next following the date of commencement.

Based on these two sections, it is clear that application and issuance of trading licence under the said Ordinance is an annual affair. This means that a trading licence issued under the said Ordinance is valid only from the date of its issuance (not the date of its application) to the 31st day of December the same year.

In the present case, the fire occurred on 29 January 1987. The plaintiff's trading licence for 1986 had already expired on 31 December 1986 by operation of law. The plaintiff applied for the renewal of its trading licence on 2 January 1987 (after the expiry of the 1986's licence). The plaintiff did not obta