JUDGMENT

Salleh Abas CJ:

On 20 November 1977 the respondent, an Australian, who is a sailing enthusiast arrived in Kuantan waters in his boat called "Melanie", which he personally built and navigated single-handed from his hometown Burnside, South Australia. Upon arrival at Kuantan, he did not enter the Pahang river but dropped anchor outside the river mouth at a point about 500 yards to the south. He left the boat and went ashore by getting a lift in a passing fishing boat. During the night the sea dragged the anchor and the boat closer to the shore and left it grounded in low waters. With the help of a fishing boat the "Melanie" was set free and finally towed into the river and safely anchored in deep waters at the fishermen's jetty.

At the suggestion of his friend named Cassidy, a fellow Australian who had a similar boat and had earlier insured his boat with the appellant company, the respondent insured the "Melanie" with the appellant company through the latter's sales representative named Thandayuthapany (referred to as Pany), (PW2), who came to see him with a proposal form on 8 December, 1977. With Pany's help the respondent filled up the form, signed it and returned it to P