The court held that an insurer can repudiate liability for an exaggerated claim where fraudulent intent can be inferred, notwithstanding subsequent amendments to the claim amount.

[1] The appellant in this appeal, ALW Car Workshop Sdn Bhd (the Insured) is appealing against the decision of the Court of Appeal dated 13 April 2016 in deciding that the respondent, AXA Affin General Insurance Berhad (the Insurer) was entitled to deny liability and repudiate the fire-policy insurance on a claim submitted by the Insured on the ground that the claim was exaggerated and fraudulent.

[2] The Insured filed its claim in the High Court at Kuala Lumpur. The claim was allowed. On appeal to the Court of Appeal by the Insurer, the decision was reversed and set-aside; and judgment was entered in favour of the Insurer.

Brief Facts

[3] The Insured, at all material time, owned and operated a car repair workshop in Malacca. The Insured had taken a fire insurance policy offered by the Insurer, entitled "Motor Repairers Protection Plan Policy" (the Policy). The effective duration of the Policy was from 20 December 2012 to 19 December 2013. It provides, among others, insurance coverage in case of fire to the workshop with a maximum insured sum of RM1.4 million.

[4] On 21 May 2013 (at about 8.40pm), a fire broke out at the workshop and destroyed the workshop and some of the Insured items. The Insured sought indemnity for the losses from the Insurer under the Policy. On 24 June 2013, the Insured submitted a claim amounting to RM1,699,850.00 (the 1st Claim). On the next day (25 June 2013), the Insured submitted an amended claim to the Insurer. Losses were not quantified. Later (on 9 July 2013) the Insured submitted a revised claim amounting to RM1,712,560.00 for all the losses and damage suffered due to the fire (the Revised Claim). By a letter dated 4 March 2014, the Insurer repudiated liability on the grounds that the Insured's claim had been grossly exaggerated and tainted with fraud.

[5] The reasons for the repudiation of liability were detailed by the Insurer as follows:

(i) most of the 69 vehicles claimed as 'customers' vehicles' were in doubt because these vehicles did not have valid insurance policies;

(ii) the Insured had submitted false claims in respect of a few vehicles which were not affected or damaged by the fire;

(iii) some of the vehicles were claimed as being in normal working condition were observed to have violent accident wreckage marks;

(iv) there were vehicles devoid of ownership details;

(v) exaggerated claims were made for several vehicles which were in fact in a crumpled/wrecked state prior to the fire; and

(vi) a least three vehicles were falsely claimed as 'customers' vehicles' when in fact the Insured had purchased them as scrap/wreck from the insurers of those vehicles.

[6] The Insured filed its claim against the Insurer at the High Court. Just before the trial started, with leave of the Court, the Insured amended its statement of claim, to include a claim for the sum of RM237,452.11 only for the total loss and damage suffered due to the fire to reflect the losses assessed by the adjuster appointed by the Insurer.

[7] On 13 May 2015, the learned Judicial Commissioner (JC) allowed the Insured's claim and ordered the Insurer to pay a sum of RM237,452.11 (as claimed) and interests at 5% pa from 21 May 2013 until the date of its full payment. In coming to that decision the learned JC made the following findings:

"that the defendant (the Insurer) was not able to prove that:

(i) the Insured has the