China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (formerly known as Liberty Citystate Insurance Pte Ltd)

JudgeAndrew Phang Boon Leong JC
Judgment Date28 February 2005
Neutral Citation[2005] SGHC 40
Docket NumberOriginating Summons No 1272 of 2004
Date28 February 2005
Published date03 March 2005
Plaintiff CounselEdwina Fan (Kelvin Chia Partnership)
Citation[2005] SGHC 40
Defendant CounselM Ramasamy and Hemalatha Silwaraju (William Chai and Rama)
CourtHigh Court (Singapore)
Subject MatterContribution and average,Plaintiff insurer claiming defendant insurer legally obligated to contribute towards any payment made by plaintiff to common insured,Evidence,Plaintiff insurer and defendant insurer having common insured under separate insurance policies,Whether doctrine of double insurance applicable,Parol evidence rule,Insurance,Whether such evidence admissible,Defendant insurer seeking to adduce affidavit evidence to show that coverage under its policy dissimilar to that of plaintiff insurer's policy,Sections 93, 94 Evidence Act (Cap 97, 1997 Rev Ed),Admissibility of evidence,General principles

28 February 2005

Andrew Phang Boon Leong JC:

Introduction and facts

1 These proceedings involve two insurance companies. The plaintiff claims against the defendant for contribution under the doctrine of double insurance.

2 The factual background is relatively straightforward.

3 BT Engineering Pte Ltd (“BT”) procured a Workmen’s Compensation – Industrial Risks Policy from the defendant for the period 1 April 2002 to 31 March 2003. This policy was later extended to include Keppel Shipyard (“Keppel”) as well.

4 BT subsequently obtained a Workmen’s Compensation Policy from the plaintiff for the period 19 April 2002 to 19 July 2002. This particular policy was intended to cover work to be done on board two vessels situated at Keppel (the FPSO Falcon and FPSO Brasil, respectively). It also embraced both BT and Keppel as the insured.

5 On or about 22 June 2002, one of BT’s employees, Sim Cheng Soon (“the employee”), was involved in an accident whilst working on board one of the two vessels referred to in the preceding paragraph – the FPSO Falcon. The employee subsequently commenced proceedings against both BT and Keppel for damages arising from his personal injury.

6 The plaintiff does not dispute that it is liable under its policy to indemnify both BT and Keppel in the personal injury claim should the employee succeed in his action. The claim has yet to be resolved. Not content with awaiting the outcome of the claim, the plaintiff initiated these proceedings to obtain a declaration that the defendant is legally liable to indemnify the plaintiff to the extent of 50% of any amount which the plaintiff is liable to pay BT and Keppel apropos their potential liability to the employee in the personal injury claim. The plaintiff based its claim to such contribution under the doctrine of double insurance.

A preliminary point

7 As the personal injury claim was still in progress, I queried counsel about the pressing need for the present action. Counsel for the plaintiff replied that the present proceedings had been initiated in order to preclude any assertion that it had waived its right of contribution vis-à-vis the defendant. Counsel for the defendant, in turn, accepted that there were no procedural impediments to adjudicating on the contribution claim before the personal injury claim had been resolved.

8 In the circumstances, I proceeded to hear arguments with regard to the relevant legal issues.

The legal issues

9 As adverted to at the outset, the main issue in these proceedings was whether or not there was a situation of double insurance, which would entail a legal obligation on the part of the defendant to contribute towards any payment made by the plaintiff to BT and Keppel.

10 The broad principles underlying double insurance in general and the requirement for contribution thereunder in particular are not controversial.

11 In Insurance Law in Singapore (Butterworths Asia, 2nd Ed, 1997), Professor (now Justice) Tan Lee Meng observes at p 488, as follows:

An insurer cannot look towards another insurer for contribution towards a loss unless the latter has covered the same insured against the same risk which has materialised.

12 And, in Principles of Insurance Law (Butterworths, 5th Ed, 2000), Assoc Prof Poh Chu Chai observes at p 805, as follows:

To constitute double insurance, the second or subsequent insurance policies taken out by an insured must cover substantially the same risk as the first policy. The mere fact that there is an incidental or some overlap between two or more insurance policies taken out by an insured will not by itself constitute double insurance.

13 Again, it is observed by the same author (at p 1177):

An insurer’s right to seek contribution from another insurer only arises if there is double insurance, namely, where the risk insured and the person insuring are the same.

14 Counsel also helpfully cited a number of cases illustrative of these general principles, for example, the oft-cited English Court of Appeal decision of North British and Mercantile Insurance Company v London, Liverpool, and Globe Insurance Company (1876) 5 Ch D 569.

15 It bears mentioning at this juncture that counsel for both parties accepted the fact that there was no “non-contribution clause” involved on the facts of the present case. Where there is such a clause, it will operate to exclude or limit, as the case may be, the amount of contribution otherwise claimable, assuming that a situation of double insurance can be established in the first instance: see, for example, the Singapore High Court decision in Liberty Citystate Insurance Pte Ltd v AXA Insurance Singapore Pte Ltd [2001] 2 SLR 593.

16 Turning to the facts of the present case, it should be noted at the outset that it was assumed throughout by both parties’ counsel that the plaintiff’s and the defendant’s policies covered the same insured.

17 What was at issue in the present case, however, was the question whether the plaintiff’s policy covered the same subject matter and risk as the defendant’s policy. This was, in fact, common ground between counsel.

Counsel’s arguments

The plaintiff’s arguments

18 Counsel for the plaintiff, Ms Fan, argued that the plaintiff’s policy indeed covered the same subject matter and risk as the defendant’s policy. She premised her case on a construction of the relevant documents themselves. In particular, she argued that the defendant’s policy was broad enough to cover the same subject matter and risk as that contained in the plaintiff’s policy. She pointed to the defendant’s policy where there was a reference to “any other place in Singapore” as part of the description of the place or location of the insured which was covered under the policy. Hence, counsel argued, the coverage under the defendant’s policy could not be confined to BT’s fabrication yard but must also have covered the vessel on which the employee had been injured.

19 Ms Fan also contended that the defendant’s policy did not contain a clause which excluded work on board ships. Hence, the defendant’s policy must have concurrently covered the more specific risk which also constituted the subject matter of the plaintiff’s policy.

20 However, counsel for the plaintiff did have one major difficulty. The defendant denied that the coverage was similar. This was expanded upon in all three affidavits filed by Low Hwee Huan, Gay Siew Fong and Margaret Tan, who were, respectively, the Assistant General Manager (Underwriting) of the defendant, a director of BT, and a senior broking executive with Newstate Stenhouse, the insurance brokers/agents for BT. The general thrust of these affidavits was as follows. The defendant’s policy, it was asserted, only covered industrial – as opposed to marine-related – risks. In particular, the defendant’s policy excluded risk relating to work upon vessels – specifically, with respect to the project to fabricate modules on the two vessels mentioned in [4] above from 19 April 2002 to 19 July 2002 (“the specific project”). The defendant, in fact, communicated this to BT who duly sought additional coverage for the specific project by way of another insurance policy. Margaret Tan sourced for quotations from two other insurers, American International Group and the plaintiff, respectively. The plaintiff’s quotation was found more attractive and upon BT’s instructions, additional coverage solely for the specific project was obtained from the plaintiff.

21 It may now be seen why counsel for the plaintiff sought vigorously to exclude these affidavits from evidence. If those facts were accepted, it would follow that the subject matter and risk covered by the defendant’s and plaintiff’s policies were quite different. Indeed, according to this affidavit evidence, the sole purpose for obtaining the plaintiff’s policy was due to the fact that insurance coverage for the specific project was not covered under the existing policy with the defendant.

22 Counsel for the plaintiff sought to rely upon s 94 of the Evidence Act (Cap 97, 1997 Rev Ed) to argue that evidence from the above-mentioned affidavits was inadmissible. Section 94 is, of course, one of the provisions in the Evidence Act which embodies, in statutory form, the parol evidence rule, and reads as follows (illustrations omitted):

When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to section 93, no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying, adding to, or subtracting from its terms subject to the following provisions:

(a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, the fact that it is wrongly dated, want or failure of consideration, or mistake in fact or law;

(b) the existence of any separate oral agreement, as to any matter on which a document is silent and which is not inconsistent with its terms, may be proved; in considering whether or not this proviso applies, the court shall have regard to the degree of formality of the document;

(c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract, grant or disposition of property, may be proved;

(d) the existence of any distinct subsequent oral agreement, to rescind or modify any such contract, grant or disposition of property, may be proved except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents;

(e) any usage or custom by which incidents not...

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