JUDGMENT

Nik Hashim FCJ:

The Questions

[1] On 18 April 2006, this court granted leave to appeal on the following questions:

(i) Whether it is opened to an appellate court to totally disregard (in the sense of not adverting at all to) the evidence and findings of two (2) experts one of whom was a Senior Government Chemist and Director of the Chemistry Department, Perak, Mr. Amar Singh (PW9) and the other a respected retired Professor of Chemistry at the University Malaya, Professor Dato' (Dr.) Chan Kai Cheong (PW11) who both conducted investigations and tests of the site on the issue of arson, which issue is the most crucial in these proceedings and that significantly their evidence and findings had cast serious doubts that the fire was a result of arson and that it could have been caused by "spontaneous combustion" and whether it is competent for the Court of Appeal to rely more on the so called circumstantial evidence as opposed to the direct and scientific evidence in reversing a decision of a trial court.

(ii) Whether it is competent for the Court of Appeal to hold that the acts of a single shareholder/Director binds the company when the shareholder/Director was not acting in the course of his employment.

Background

[2] The appellant known as Asean Security Paper Mills Sdn. Bhd. (ASPM), is a joint venture project approved by the Asean Economic Ministers and includes shareholders from Asean member countries, namely Philippines, Singapore, Thailand, Brunei and Malaysia and other non-Asean countries like India and United Kingdom. (see PW1 pp 560-561 record of appeal jilid 3). ASPM at all material times was involved in the purchase and sale of various categories of papers including security paper. Pursuant to its business activities, it stored its goods initially at a KTM warehouse in Kuala Lumpur, and later at a warehouse in Kg. Acheh, Sitiawan.

[3] On 23 July 1989 the appellant obtained a fire insurance cover from the respondent, who were co-insurers, for a sum of RM14.932 million in respect of the goods stored at its warehouse. Later on 29 August 1989 the sum insured was increased to RM32.431 million with effect from 30 August 1989.

[4] On 11 September 1989 a fire occurred at the warehouse in Kg. Acheh, Sitiawan resulting in the loss of all the stocks of a variety of papers stored in the warehouse. Apart from the stocks being burnt, the warehouse and a forklift were also burnt. The appellant made a claim against the respondent for a sum of RM16,124,500 pursuant to the policy. The respondent refused to pay on the ground that the claim was fraudulent under condition 13 of the policy, the material part of which reads:

If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the insured or any one acting on his behalf to obtain any benefit under this Policy; or, if the loss or damage be occasioned by the wilful act, or with the connivance of the insured ... all benefit under this Policy shall be forfeited.

On the respondent's refusal to pay, the appellant commenced a suit against them. The respondent's defence was that the claim was fraudulent on the ground that the fire was a result of deliberate acts of arson. After a trial at which viva voce evidence was taken, the High Court found for the appellant. The Court of Appeal however disagreed with the High Court, reversed the judgment of the latter and dismissed the appellant's suit with costs (see [2006] 3 MLJ 1; [2006] 2 CLJ 409).

[5] Before directing our minds to the two questions, it is pertinent that we set out briefly the relevant findings of the High Court in giving judgment for the appellant and the reasons for the reversal of the judgment by the Court of Appeal.

High Court

[6] This is what the learned High Court judge said of the appellant's case:

The plaintiff's (appellant's) case is that the fire occurred due to 'spontaneous combustion', natural, or other causes, but not