S. Rajendran J:

The defendants were at all material times in the business of leasing or hiring cranes to third parties. The standard form of lease agreement used by the defendants in hiring out their cranes included the following provisions:

Clause 2 - All repairs, maintenance, fuel and transportation costs during lease period shall be borne by the lessee.

Clause 5 - The lessee shall be responsible for all damages and losses save for fair wear and tear sustained by the machine from any cause whatsoever after the lessee has taken delivery and such damages and losses shall be made good by the lessee at their expense and rental shall continue to be payable until the lessee have made good such damages and losses. An on-hire inspection at lessor's expense and an off-hire inspection at lessee's expense will be undertaken by an independent surveyor. Any defects/deficiencies etc. constitute fair wear and tear or otherwise, will be decided by the said surveyor.

Clause 6 - The lessor leases the machine without operator. Lessee shall insure each of the machine for the value stated overleaf and the lessor shall be stated in the policy as beneficiary. In the event that the insurance company declines to pay the claims due to negligence on the part of the lessee or due to whatever reasons, the lessee shall compensate the lessor for the full value of the machine or balance thereof. The insurance policy shall be taken out on or before the commencement of this lease.

By a policy of insurance made between the plaintiffs and the defendants dated 5 April 1984, the plaintiffs contracted with the defendants to insure a specific crane against loss or damage. In the schedule to the said policy, the persons insured were stated to be: `Tat Hong Plant Leasing Pte. Ltd. and/or Hirer'. By an endorsement dated 16 April 1984 it was agreed between the parties that the insured named in the schedule to the policy should with effect from 11 April 1984 be the following:

Citibank, N.A. as the Owner and Tat Hong Plant Leasing Pte. Ltd. as the Hirer.

On 27 March 1984 the defendants leased the crane in question to a third party, namely Shinei Engineering Pte Ltd (Shinei). The standard form of lease agreement was used but by a side letter also dated the same day the following amendments to the terms in the standard contract were agreed:

Clause 2 - Lessor shall be responsible for all repairs and maintenance. Lessee shall be responsible for fuel and transportation.

Clause 5 - Shall be deleted.

Clause 6 - The lessor leases the machine with operator. Lessor shall take up all insurances.

In effecting the policy of insurance of the crane, the defendants were not required to fill in any proposal form. According to the representative of the plaintiffs who gave evidence the defendants were such long-standing customers that the plaintiffs did not require a proposal form. The only information asked of the defendants before the policy was issued was the particulars of the machinery concerned. The plaintiff therefore had no knowledge of the specific terms under which the crane was hired out.

On 22 June 1984 whilst the crane was under hire to Shinei, the crane was damaged. As a result of a claim by the defendants under the policy, the plaintiffs engaged their surveyors and adjusters to survey and adjust the defendants' claim under the policy for repairing the said damage. The surveyors in the course of their work requested the defendants for a copy of the lease agreement between the defendants and Shinei. The defendant gave to the surveyors a copy of the lease agreement dated 27 March 1984 but did not give to the surveyor a copy of the side letter of the same date.

On 29 November 1984 the plaintiffs paid to the defendants a sum of $78,287.35 in satisfaction of the defendants' claim under the policy. By Clause 4 of the policy the plaintiffs were entitled to be subrogated in respect of any rights that the defendants may have against third parties. In pursuance of the right