Globe Trawlers Pte Ltd v National Employers` Mutual General Insurance Association Ltd and Another

• Jurisdiction: Singapore
• Judge: L P Thean J
• Judgment Date: 17 January 1989
• Neutral Citation: [1989] SGHC 6
• Citation: [1989] SGHC 6
• Defendant Counsel: KK Tang (Tang & Partners),Cheong Yuen Hee (YH Cheong)
• Published date: 19 September 2003
• Plaintiff Counsel: John Thomas QC and Balachandran s/o Ponnampalam (P Balachandran)
• Date: 17 January 1989
• Docket Number: Suit No 4179 of 1981
• Court: High Court (Singapore)
• Subject Matter: Words and Phrases,Substantial damage caused,Whether damage caused by plaintiffs' wilful act,Material misdescription,Whether material misdescription of property to be insured exists,Fire,Property insurance,Insurance,Occurrence of fire,'Complete unit'

Cur Adv Vult

The plaintiffs, a company now in liquidation, were incorporated on 2 March 1981 with the objects of, inter alia, building coastal fishing trawlers and other vessels. Initially, the shareholders of the plaintiffs were Fritz H Schneppe and Ingrid Schneppe, who are husband and wife, and one Oliver Koh Kok Geang. They were subscribers to the memorandum of association; they subscribed one share each in the capital of the company and were named the first directors in the articles of association. Immediately after the plaintiffs were incorporated, Fritz Schneppe and Ingrid Schneppe each subscribed for further shares for cash in the company and the total number of shares held by them is 349,999 of $1 each plus one share held by Oliver Koh, presumably as their nominee. Later, another couple, Vinayak Chaudhari and Bridgitte Chaudhari, each subscribed 12,500 shares at a premium of $1 per share for cash in the capital of the company. In consequence, these two couples, Mr and Mrs Schneppe and Mr and Mrs Chaudhari hold or own the entire issued share capital of the plaintiffs.

Soon after the incorporation, the plaintiffs embarked on the construction of two fishing trawlers and for that purpose rented from the Port of Singapore Authority (PSA) a workshop, which was a cover shed, situated in an enclosed area known as the Royal Navy Arms Depot (East), Godown 218, Sembawang. The enclosed area was a protected area which was accessible through a gate or entrance manned by guards. The two fishing trawlers were called `Super Trawl` and `Coastal Monitor II`; of the two the `Super Trawl` was the bigger one.

The two trawlers were designed by Fritz Schneppe (Schneppe) and were made mainly of wood with the exception of the superstructure parts such as trawling masts and supporting items. In connection with their construction, the plaintiffs applied to Germanischer Lloyd of West Germany for classification, and submitted to them the requisite drawings of the trawlers. A classification, `+100 A4K (Coastal Service) Fishing Vessel/ Exp`, was approved. Germanischer Lloyd had an office in Singapore, and one Artur Guenter Foedish (PW2) is the principal surveyor of Germanischer Lloyd here and is responsible for the society`s activities in South-cast Asia. He is qualified both as a naval architect and a naval engineer. While the construction of the trawlers was in progress he went to the worksite frequently and supervised the works. The construction had been concentrated on the `Super Trawl` as the plaintiffs intended to complete it by the end of May 1981 hoping to have it in time for the Asian Fishing and Aquaculture Exhibition and Conference 1981 which was scheduled to be held in early June at the World Trade Centre.

The plaintiffs took out the following insurance policies with the first defendants, namely, a workmen`s compensation policy, no SW/8008, a fire policy noS/55259, and a burglary policy no SB/5126. The second defendants are insurance brokers, and they assisted the plaintiffs in effecting all the three policies with the first defendants. The workmen`s compensation policy was dated 2 March 1981 and was expressed to cover the period from 26 February 1981 to 25 May 1981 but was subsequently extended, with a reduction of the number of workers, to 25 June 1981. The fire and burglary policies were both dated 23 May 1981 and were expressed to cover the period from 25 May to 25 June 1981. Initially, only the `Super Trawl` was insured in both the policies and was described as follows:

On one complete unit of wooden fishing trawler with engine motor and accessories and equipment, the property of the insured or held by them in trust for which they are responsible in the event of loss or damage by fire or lightning whilst contained in the building constructed wholly of corrugated iron sheets occupied as workshop and store situate and known as godown 218 RNAD (east), Sembawang Wharves Singapore.

And the amount insured was $600,000. Both the policies were extended with effect from 5 June 1981 to 5 August 1981 by an endorsement to cover two other items of property for the amounts as follows:

Item no 2: On machinery, utensils and hand tools including materials, the property of the insured whilst contained in the building referred to and described in item no 1 ... S$50,000

Item no 3: On one complete unit of wooden fishing trawler with engine, motor, accessories and equipment, the property of the insured whilst contained in the building referred to and described in item no 1 ... S$500,000

By early June 1981 the `Super Trawl` was substantially built but not wholly completed; the hull had been completed, and certain equipment, machinery and engine had been installed. The `Coastal Monitor II`, however, was still at an initial stage of construction, and from photographs produced only a skeleton of the hull had been built. The Asian Fishing and Aquaculture Exhibition and Conference was held between 2 June and 6 June 1981 at the World Trade Centre, and the plaintiffs participated in the exhibition; they rented a stand at the exhibition, and exhibited, amongst other things, photographs of the `Super Trawl`. The exhibition ended in the afternoon of 6 June 1981.

In the early evening, at about 6pm on 6 June 1981, a fire broke out on the `Super Trawl` and substantially destroyed or damaged the bow, the forward deck and the cabin of the vessel. The `Coastal Monitor 11`, however, was not burnt. After the fire both the vessels were declared by Germanischer Lloyd to be unacceptable for classification. Foedish who inspected the vessels twice after the fire reported in writing on the extensive damage in the `Super Trawl`. As for the `Coastal Monitor II` he reported that there were cracks on the glue at the timber joints and hull. The plaintiffs treated the damage to each of the vessels a total loss and made a claim therefor under the fire insurance policy. The first defendants did not settle or meet any part of the claim and, in consequence, the plaintiffs instituted these proceedings against the first defendants claiming for an indemnity under the fire insurance policy. Liability was disputed.

The first defendants raised three defences: (i) there was a material misdescription of the property to be insured in the proposal forms submitted for insurance; (ii) the claim by the plaintiffs is fraudulent, and (iii) the damage was caused by the plaintiffs` wilful act or with their connivance. Initially, only the first defendants were sued in this action, but in view of the defence of a material misdescription in the proposal forms the plaintiffs joined the second defendants in this action. The claim against the second defendants is that if the first defendants should succeed in the defence of a material misdescription, the second defendants were guilty of negligence in failing to advise the plaintiffs in effecting the insurance policy. The defence of the second defendants is merely one of denial of negligence.

I propose to consider first the claim of the plaintiffs against the first defendants and the defences raised by the latter, and thereafter the claim by the plaintiffs against the second defendants. The claim of the plaintiffs against the first defendants is simple and straightforward. They had insured their vessels against the risk of fire, and a fire had occurred which destroyed or damaged their vessels. It is not in dispute that the fire insurance policy no S/55259 had been issued by the first defendants and was in force at the material time; nor is it in dispute, though the first defendants did not admit it in their defence, that a fire on the `Super Trawl` did take place on 6 June 1981 and damage was caused by the fire. Hence, unless the first defendants succeed in establishing any one or more of the three defences they are liable to the plaintiffs under the policy. I now turn to consider the three defences seriatim.

In respect of the first defence, the first defendants relied on condition 1 of the policy which provides that if there is any misdescription of, inter alia, the property insured the defendants shall not be liable on the policy so far as it relates to the property affected by such misdescription. In the proposal forms dated 22 May and 5 June 1981 submitted by the plaintiffs to the first defendants through the second defendants the property to be insured was described as `one complete unit of wooden fishing trawler with engine motor and accessories and equipment`. It is contended by the first defendants that the words `complete unit of wooden fishing trawler` means a completed trawler and not one under construction and therefore that was a material misdescription. It is not, however, the case of the first defendants that the plaintiffs should have expressly described the unit as one `under construction` and that the failure to insert these words amounts to a misdescription. As a matter of strict construction, the words `complete unit` do not mean a completed unit but the whole or the entirety of the unit. Construed in this way, there was, therefore, no misdescription.

I propose to consider this question on a broader basis. In my view, the proposal forms submitted to the first defendants through the second defendants should be looked at and the descriptions of the vessels therein should be construed against the `factual matrix of the background` at the relevant times. The first defendants had in early March 1981 issued to the plaintiffs a workmen`s compensation policy and they knew that the plaintiffs were engaged in the business of building wooden trawlers at the latter`s workshop in Sembawang. This was stated in the policy. At the time when the fire and burglary policies were issued the workmen`s compensation policy was extended, though with a reduced number of workmen. They certainly knew at that time, if they had not known earlier, that the plaintiffs were building fishing trawlers. This knowledge was...