JUDGEMENT

Abdul Hamid Mohamad FCJ:

Capital Insurance Berhad, the appellant in this court was the respondent in the Court of Appeal and garnishee in the High Court. Cheong Heng Loong Goldsmiths (KL) Sdn. Berhad, the respondent, was the appellant in the Court of Appeal and also one of the plaintiffs (originally judgment creditor) in the High Court. Chan Kim Swee @ Tung Kim Swi ("the insured") was the judgment debtor and later one of the plaintiffs in the High Court. His position in the Court of Appeal will be stated later. However, he is not one of the Respondents in this court. This appeal is only between Capital Insurance Berhad ("the appellant") and Cheong Heng Loong Goldsmiths (KL) Sdn. Bhd. ("the respondent").

To appreciate the full facts of the case, I shall narrate them in chronological order.

On 16 October 1984, on a consideration of the premium of RM25,802 paid by the insured, the appellant issued a Jeweller';s Block Policy No. 000104 JB 84/CKL/JH. Under the terms of the policy, the appellant agreed to insure and indemnify the insured against, inter alia, loss arising from any hold-up or robbery of stock and merchandise of the insured';s business and bank notes whether the same be the property of the insured or entrusted to him for any purpose whatsoever in the sum of RM600,000. The policy was for a period of one year, ie, from 16 October 1984 to 15 October 1985.

Between 9 November 1984 to 26 November 1984 the respondent sold gold items to the insured totaling RM555,362.97 in value.

On 26 November 1984, about five weeks after the commencement of the policy, and, in fact, on the day the respondent last supplied the goods to the insured, the insured alleged that he was held-up and robbed off goods totaling a sum of RM873,088.66. It was alleged that the robbery happened at 18th milestone, Kuala Lumpur - Seremban road. He was driving his car when a car forced him to stop and he was robbed of his Rolex watch valued at RM1,500, cash of RM18,000 and "barang emas" valued at RM700,000 which apparently he was carrying in his car. No details of the "barang emas" were given in his police report which was only lodged on the following day, more than 24 hours later.

According to Wong Leong Kooi, the Manager of the respondent (SP1), about one week after the alleged robbery, the insured went to see him at his shop. The insured informed him of the alleged robbery, asked for time to pay and promised to pay the respondent RM500,000 after he had obtained the money from the appellant in his insurance claim. The insured would retain RM100,000 for himself.

On 10 December 1984, a claim form was submitted by the insured to the appellant. On the same day, the appellant appointed adjusters to investigate the claim. The adjusters produced a report dated 24 April 1985 (exh. P9).

Again, according to SP1, the last time he met the insured was on 14 August 1985. That was when he (SP1) went to the insured';s house "to serve him a copy of a letter dated 14 August 1985" (marked as ID1), a letter of authority by the insured authorising the appellant to pay the insurance money direct to the respondent.

On 20 August 1985, the respondent obtained a judgment in default of appearance against the insured for the sum of RM555,362.97 with interest thereon at the rate of 8% per annum from 13 February 1985 to date of full realisation and costs.

The respondent, as judgment creditor, then took out garnishee proceedings against the appellant and on 21 November 1985 obtained an ex parte order from the senior assistant registrar attaching all debts due and accruing from the appellant to the insured. The ex parte order also ordered the appellant (as garnishee) to attend before the senior assistant registrar in chambers on 17 January 1986 to show cause why the appellant should not pay the respondent so much of the debt due from the insured to the respondent as might be sufficient to satisfy the judgment together with costs of the garnishee proceedings. The applicat