Federal Insurance Co v Nakano Singapore (Pte) Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong J
• Judgment Date: 30 December 1991
• Neutral Citation: [1991] SGCA 48
• Docket Number: Civil Appeal No 109 of 1990
• Date: 30 December 1991
• Published date: 19 September 2003
• Year: 1991
• Plaintiff Counsel: NK Pillai (Harry Elias & Partners)
• Citation: [1991] SGCA 48
• Defendant Counsel: Kelvin Chia (Chor Pee & Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: Public,Saving of time and cost,Trial,O 33 r 2 Rules of the Supreme Court 1970,Preliminary issue to be tried,Principles applicable,Court's discretion,Substantial disputes of fact,Making a claim,Civil Procedure,Liability insurance,Essential element,Construction of document,Construction of term of policy,Insurance

On 5 September 1985, the scaffolding at the construction site of the building called Chinatown Centrepoint collapsed causing loss of life, personal injury and damage to property. The construction works were insured under a public liability policy issued by the appellants in the names of the developers as principal, Sanpete Builders (S) Pte Ltd (`Sanpete`) as contractor, their consultants and sub-contractors (including the respondents), for their respective rights and interests.

On 6 September 1985, Sanpete notified the appellants of the accident. On the same day, the appellants appointed their loss adjusters, Graham Miller (Singapore) Pte Ltd (`GM`), to assess the losses. It would appear that at the outset, it was agreed between all the affected parties that Sanpete would co-ordinate all aspects of the claim documentation.

Up to 2 May 1986, Sanpete had not submitted details of their losses to the appellants. Neither had the respondents submitted details of their losses to Sanpete. On 15 August 1986, Sanpete sent a letter to their insurance brokers, Sale-Tilney Wong (`ST-W`), a breakdown of their claim totalling $503,037.61 under the policy, together with supporting documents. It has been alleged by GM that on 21 August 1986 ST-W passed to them the said letter and the supporting documents. It was also the appellants` case that Sanpete`s claim included the whole or part of the respondents` claim.

On 4 November 1986, the appellants wrote to the respondents and repudiated liability under the policy on the ground that the respondents had breached the terms and conditions of the policy in that they had failed to take all reasonable precautions to prevent loss, damage or liability and to comply with statutory requirements and manufacturers` recommendations.

The respondents ignored the purported repudiation. On 26 June 1987, they, through their solicitors, submitted in writing a claim for $226,371.70. On 29 June 1987, the respondents commenced this action to claim a loss to property in the amount of $226,371.70. On 30 June 1987, the appellants` solicitors replied to the letter of 26 June 1987 to reiterate their clients` stand that they had repudiated liability on 4 November 1986. The respondents` claim was increased to $227,072.54 on 23 July 1988.

The appellants filed their defence and counterclaim on 24 July 1987 and pleaded, in defence to the claim, that the respondents had (i) breached condition 3 of the policy in failing to take reasonable precautions to prevent loss, damage or liability at the work site and to comply with statutory requirements under the Factories Act 1973 and The Factories (Building Operations and Works of Engineering Construction) Regulations 1985, and (ii) failed to commence the action within three months as required under condition 8 of the policy. The appellants also counterclaimed against the respondents in the amount of $243,078 which they had paid to injured workers under a workmen`s compensation policy issued by them on the grounds, inter alia, that the respondents had also breached the terms of the said policy. The defence and counterclaim was amended on 29 January 1987.

On 2 June 1988, the appellants took out a notice for further directions for an order of court that a preliminary issue be tried, the issue being `Whether upon the facts pleaded in paras 8 and 9 of the amended defence and counterclaim, the defence alleged therein disclosed a good defence in law to all the claims and causes of action pleaded by the respondents in the statement of claim`. Paragraphs 8 and 9 read:

(8) Further or in the alternative, the defendants say that they are not liable to the plaintiffs as the plaintiffs` claim herein is time-barred under Condition 8 of the General Conditions. Condition 8 provides as follows:

`If a claim is in any respect fraudulent, or if any false declaration is made or used in support thereof, or if any fraudulent means or devices are used by the insured or anyone acting on his behalf to obtain any benefit under this policy, or if a claim is made and rejected and no action or suit is commenced within three months after such rejection or, in case of arbitration taking place as provided herein, within three months after the arbitrator or arbitrators or umpire have made their award, all benefit under this policy shall be forfeited.` (Emphasis added.)

(9) The plaintiffs` claim herein was rejected by the defendants in their letter addressed to the plaintiffs dated 4 November 1986. No action or suit including this action was commenced by the plaintiffs within three months after the date of the said rejection. By reason thereof the plaintiffs have lost all benefit under the said policy and the defendants are thereby not liable to the plaintiffs for their claim herein.

The application was supported by an affidavit from the appellants` solicitor, the material portions of which read:

(7) The preliminary issue raises a crucial defence for the defendants. If found favourable, the preliminary issue will determine decisively this action and in my respectful view, this is an appropriate matter to be tried as a preliminary issue in view of the saving in time and costs. It is also my respectful and humble view that there are no questions of fact which must be first determined before the consideration of the preliminary issue. The plaintiffs in para 7 of their reply and defence to counterclaim admit that the defendants sent the said letter referred to hereinabove.

(8) All the other defences will involve consideration of documentary and/or oral testimony of various witnesses. The full trial involving consideration of these matters over and above the simple preliminary issue will involve the defendants in a large amount of expense and preparation which would be totally unnecessary if the question, as framed, in the preliminary issue is found in favour of the defendants.

The respondents filed an affidavit in which they listed the following disputes of fact and law: (1) when the respondents made their claim under the policy; (2) when the appellants rejected the respondents` claim; (3) the construction to be placed on the appellants` letter of repudiation dated 4 November 1986; (4) the construction to be placed on condition 8 of the policy; and (5) whether condition 8 was void as a penalty clause. In our view, only issues (1) and (4) were material to the respondents` case.

The application was heard and dismissed by an assistant registrar. The appellants appealed to the judge who, in dismissing the appeal, said:

Generally speaking, the kind of case in which an order of this sort can usefully be made is one in which the matter directed to be tried first will, when decided one way or the other, really be likely to dispose of the case. The order for the trial of a preliminary point of law should not be made where there are facts in dispute.

In the present case, there are substantial disputes of facts involved which must first be determined even before the issue of law arises.

The appellants appealed to this court. Their first ground of appeal was that the judge erred in law in holding that a preliminary issue to be tried could only be made in a case which would, when decided one way or the other, be likely to dispose of the action. Counsel for the appellants submitted that the correct approach was set out in the following passage from the judgment of Romer LJ in Everett v Ribbands , at p 206:

I think where you have a point of law which, if decided in one way, is going to be decisive of litigation, then advantage ought to be taken of the facilities afforded by the rules of court to have it disposed of at the close of pleadings or very

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