National Employers' Mutual General Insurance Association Ltd v Globe Trawlers Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 26 March 1991
• Neutral Citation: [1991] SGCA 4
• Citation: [1991] SGCA 4
• Defendant Counsel: Philip Jeyaretnam and David Liew (Robert WH Wang & Wu)
• Published date: 19 September 2003
• Plaintiff Counsel: Patrick Twiff QC and KK Tang (Tang & Partners)
• Date: 26 March 1991
• Docket Number: Civil Appeal No 13 of 1989
• Court: Court of Appeal (Singapore)
• Subject Matter: Property insurance,Insured signed proposal form,Material misdescription,Whether insurance agent had authority to bind insurer,Fire,Whether agent acting for insured,Whether there was material misdescription in proposal form,Insurance agent,Whether insurer entitled to avoid policy,Agency,Meaning of 'complete' and 'unit',Filling of proposal form and fixing of rates by insurance agent,Third party and principal’s relations,Insurance

Cur Adv Vult

This appeal raises primarily a point of construction as to whether there was a material misdescription in the proposal for an insurance cover against fire.

The respondents (the plaintiffs in the action) were a company incorporated in Singapore with the object, inter alia, of building coastal fishing trawlers and other vessels. The respondents were towards the end of February 1981 engaged in the building of two trawlers, `Super Trawl` and `Coastal Monitor II` which they hoped would be completed in time for the Asian Fishing & Aquaculture Exhibition and Conference scheduled to be held at the World Trade Centre between 2 and 6 June 1981. The construction of the trawlers was undertaken at a workshop at Sembawang which the respondents had rented from the Port of Singapore Authority.

The respondents applied to the appellants (the first defendants in the action) for the issue of a workmen`s compensation policy for 20 workers covering a period of three months from 26 February 1981 to 25 May 1981. The respondents estimated that the two trawlers would be completed within that period. However, the construction was delayed and on an application by the respondents the workmen`s compensation policy was, on 23 May 1981, extended by one month to 25 June 1981 but the number of workers covered was substantially reduced to only four.

On 22 May 1981 the respondents applied to the appellants for the issue of a fire policy and a burglary policy in respect of `one complete unit of wooden fishing trawler with ...` and that was intended to be `Super Trawl`. The fire and burglary policies issued were dated 23 May 1981 and were expressed to cover that one complete unit of fishing trawler for a period of one month, from 25 May to 25 June 1981. The insured amount was $600,000. On 5 June 1981, the respondents applied for fire and burglary insurance cover for two additional items of property for the period 5 June 1981 to 5 August 1981. The first item was `one complete unit of wooden fishing trawler with ...` and that was intended to be `Coastal Monitor II`, and the second item was `Machinery, utensils and hand tools including materials, the property of the insured while contained in the building ...`. The cover for these two additional items was eventually effected by way of separate endorsements on the earlier fire and burglary policies.

At about 6pm on 6 June 1981, a fire broke out on `Super Trawl` and substantially destroyed it. `Coastal Monitor II` was, however, not burnt, but it sustained cracks on the glue at the timber joints and hull. The German Classification Society, Germanischer Lloyd, after inspection, found both vessels unacceptable for classification. The respondents made a claim for both vessels on the basis of a total loss. The appellants rejected the claim; thus the institution of the action by the respondents.

At the hearing below, Tan Brothers Insurance Agencies Pte Ltd were brought in later in the proceedings as the second defendants. The second defendants were insurance brokers and they had assisted the plaintiffs in effecting the three policies with the first defendants/appellants. The plaintiffs`/respondents` claim against the second defendants was dismissed and no appeal was filed against that part of the judgment. Accordingly, the second defendants are not a party to this appeal.

As found by the learned trial judge, immediately before the fire, `Super Trawl` and `Coastal Monitor II` were not completed. The respondents nevertheless participated in the exhibition and rented a stand at the exhibition site, where photographs of the semi-completed `Super Trawl` were exhibited.

The respondents were effectively owned by one Fritz Schneppe and his wife. Fritz Schneppe was a qualified civil engineer from West Germany. He had worked overseas for some years. One of his interests was to design fishing vessels. The two trawlers in question were designed by him.

At the trial three defences were raised by the appellants. First, there was a material misdescription in the proposal form. Second, the claim by the respondents was fraudulent. Third, the damage was caused by the respondents` wilful act or with their connivance. The learned trial judge dismissed all the three defences and gave judgment in favour of the respondents for the sum of $600,000 being the insured sum for `Super Trawl`. This is an appeal against that judgment. The claim in respect of `Coastal Monitor II` was not accepted by the learned judge.

Before us, the appellants no longer pursued the third ground.

We will now examine the first ground of the appeal which is the question of material misdescription. In the proposal form dated 22 May 1981 for `Super Trawl` the following particulars were entered and declared as correct by Fritz Schneppe:

1 Address of property to be insured: Gdn 218 RNAD (East), Sembawang Wharves, Singapore

(2) Construction of four main walls and roof: Corrugated iron sheets throughout

(3) No of storeys: Single storey

(4) How are premises occupied: Workshop and storage

Property to be insured:

One complete unit of wooden fishing trawler with engine, motor and accessories and equipment.

Pursuant to the proposal, a fire policy was issued and the property insured was described in the said terms. As stated above, the policy was on 5 June 1981, on a further proposal by the respondent, extended to cover another `1 complete unit of wooden fishing trawler ...` for a value of $500,000. It is not in question that if there was a misdescription, it was a material one. The relevant provision in the policy governing material misdescription reads as follows (condition 1):

If there be any material misdescription of any of the property hereby insured, or of any building or place in which such property is contained, or any misrepresentation as to any fact material to be known for estimating the risk, or any omission to state such fact, the Association shall not be liable upon this policy so far as it relates to property affected by any such misdescription, misrepresentation or omission.

From the evidence there cannot be any doubt that the appellants knew that the respondents were in the business of building trawlers. As was mentioned above, the appellants had issued a workmen`s compensation policy in favour of the respondents effective from 26 February 1981 to 25 May 1981 covering a total of 20 skilled and unskilled workers. The policy was on 23 May 1981 extended for a further period of one month up to 25 June 1981 but the extent of coverage was substantially reduced to cover only four workers.

On the evidence before the court below it is equally clear that the two trawlers were not yet completed on the respective dates of the proposals. Indeed the precise finding of the learned judge on the state of construction of the two trawlers on the date of the fire is as follows:

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 the photographs produced only a skeleton of the hull had been built.

The evidence also shows that on the date...