India International Insurance Pte Ltd v Ho Chai Hong Joanne

• Jurisdiction: Singapore
• Judge: Seah Chi-Ling
• Judgment Date: 28 June 2013
• Neutral Citation: [2013] SGDC 193
• Court: District Court (Singapore)
• Hearing Date: 03 December 2012,07 February 2013,22 March 2013
• Docket Number: MC 23667 of 2010/W
• Plaintiff Counsel: Mr. K Sathinathan [M/s Sathi & Co.] - Plaintiff
• Defendant Counsel: Mr. Cosmas Stephen Gomez [M/s Cosmas & Co] - Defendant
• Published date: 11 October 2013

District Judge Seah Chi-Ling: Introduction

This is a claim by an insurance company against its insured, seeking an indemnification of sums paid by the company to an injured third party under a motor insurance policy. The insurance company claims to be entitled to repudiate liability under the policy by reason of breaches of policy conditions by the insured, a position which the insured disputes.

The Chronology of Events

The Plaintiff is an insurance company. The Defendant had taken out a motor insurance policy (Policy No. M057506) with the Plaintiff (the “Policy”) in respect of her motor vehicle bearing registration no. SGL 9365L. The Policy was issued on 28 September 2007, and covered the period from 2 October 2007 to 1 October 2008.

On 10 November 2007, the Defendant’s motor vehicle was involved in a road accident, in which the Defendant collided into a pedestrian whilst the latter was crossing a roadway (the “Accident”). The Defendant filed a police report on the same day. The Defendant claimed that she notified the Plaintiff of the Accident a day later, by placing a telephone call and faxing a copy of the police report to the Plaintiff.

The Plaintiff denied receiving the aforementioned notification from the Defendant. The Plaintiff contended that it first learnt of the Accident when it received notification of an intended claim from M/s Chiang Wee & Partners, the injured pedestrian’s lawyers, on 12 January 2009, some 15 months after the Accident (see ¶6 below).

Separately, the Defendant was served with a ‘Notice of Traffic Offence’ by the Traffic Police on or around 19 August 2008. In the ‘Notice of Traffic Offence’, the Defendant was charged with inconsiderate driving, and allowed to compound the offence by paying a sum of $200 with 9 demerit points (the “Composition Offer”). The Defendant accepted the Composition Offer on 5 September 2008. The Defendant conceded that she did not inform the Plaintiff prior to, or soon after, accepting the Composition Offer as she was under the impression that such notification was unnecessary, especially since she had already notified the Plaintiff of the Accident.

On 12 January 2009, the injured pedestrian’s (hereinafter, the “third party”) lawyers, M/s Chiang Wee & Partners, gave notice to the Plaintiff under section 9(3) of the of the Motor Vehicles (Third Party Risks and Compensation) Act (Cap. 189) (“MVTP Act”) of the third party’s intended claim in connection with the Accident.

On 9 February 2010, the third party formally commenced an action in DC421/2010/K against the Defendant claiming damages for injuries and losses suffered as a result of the Accident (the “Third Party Suit”). The Defendant immediately forwarded the Writ of Summons to the Plaintiff. The Plaintiff then took conduct of the defence and engaged M/s Tan Lian Ker & Co (“TLK”) to defend the Third Party Suit.

At TLK’s request, the Defendant then attended at TLK’s offices on or around 9 April 2010 for a customary interview on the circumstances of the Accident (the “April 2010 Interview”). It was common ground that the Defendant notified Plaintiff (through TLK), for the first time at the April 2010 Interview, that she had accepted the Composition Offer on 5 September 2008.

Three days later, by a letter dated 12 April 2010 (the “Letter of Repudiation”), TLK notified the Defendant that the Plaintiff would be repudiating liability under the Policy as the Defendant had breached Condition No. 4 of the Policy by failing to inform the Plaintiff before accepting the Composition Offer. By the same letter, the Plaintiff requested the Defendant to instruct her own solicitors to defend the Third Party Suit, failing which the Plaintiff would continue to defend the suit and seek reimbursement from the Defendant (see ¶¶ 43 - 44 below).

Upon receipt of the Letter of Repudiation, the Defendant engaged her own solicitors, M/s Cosmas & Co (“C&C”) to advise her. By a written response dated 30 April 2010, C&C notified the Plaintiff that the Defendant disputed the Plaintiff’s right to repudiate liability, and intimated that the Defendant would not be taking over conduct of the Third Party Suit.

In view of the Plaintiff’s statutory liability under the MVTP Act, the Plaintiff consequently instructed TLK to continue taking conduct of the defence of the Third Party Suit, and to negotiate a settlement of the same. It was not disputed that TLK did not officially discharge themselves as the Defendant’s solicitor, nor was any application taken to add the Plaintiff as a co-Defendant in the Third Party Suit.

The Third Party Suit proceeded for court mediation (“CDR”) at the Primary Dispute Resolution Centre of the Subordinate Courts, and was eventually settled by mutual agreement for a global sum of $34,555.74 to be paid to the third party (inclusive of all fees and costs). The settlement amount was paid in full by the Plaintiff.

The Plaintiff’s case

The Plaintiff’s case was that it was entitled to repudiate liability under the Policy by reason of the following breaches of policy conditions by the Defendant: The Defendant’s failure to inform the Plaintiff of the Accident within a reasonable period, in breach of Condition No. 4 of the Policy (the “Accident Notification Event”); and The Defendant’s failure to inform the Plaintiff of her acceptance of the Composition Offer on 5 September 2008, in breach of Condition No. 4 of the Policy (the “Composition Event”).

Having been required under s. 9(1) of the MVTP Act to make payment of the settlement sums to the third party, the Plaintiff then sought to recover the sum of $34,555.74 paid to the third party from the Defendant under the “Avoidance of Certain Terms and Right of Recovery” provision of the Policy, which reads as follows:

“Avoidance of certain terms and right of recovery

If the Company is obliged by virtue of the Legislation [defined as including the Motor Vehicles (Third-Party Risks and Compensation) Act (Chapter 189)] …….. to pay an amount for which the Company would not otherwise be liable under this Policy the Insured shall repay the amount to the Company.”

The Defendant’s case

The Defendant challenged the Plaintiff’s right to repudiate liability under the Policy. In relation to the Accident Notification Event, the Defendant contended that the Defendant did in fact notify the Plaintiff of the Accident a day after its occurrence. In relation to the Composition Event, the Defendant contended the Plaintiff had not been prejudiced in any way by the belated notification of the Composition Event and was accordingly not entitled to repudiate liability on such account. In any event, the Defendant claimed that the Plaintiff had waived the Defendant’s breach of Condition No. 4 arising from the Composition Event.

My decision

At the conclusion of the trial, I found that the Defendant had in fact informed the Plaintiff of the Accident a day after the Accident. Accordingly, the Accident Notification Event could not be relied upon by the Plaintiff for avoiding liability under the Policy.

I, however, found that the Plaintiff could rely on the Composition Event to repudiate liability under the Policy, since the Defendant had admitted that she did not notify the Plaintiff on a timely basis of the receipt and acceptance of the Composition Offer. I held that the authorities were clear that proof of actual prejudice was not a prerequisite before an insurer could repudiate liability based upon the breach of a condition precedent. I further found that the Plaintiff had not waived its right to repudiate liability on account of the Composition Event. I accordingly allowed the Plaintiff’s claim in full.

The Defendant, being dissatisfied with my decision, has appealed against my decision. I now give the detailed reasons for my decision.

Reasoning Whether the Defendant was entitled to repudiate liability on account of the Accident Notification Event.

It was not disputed that the Defendant was required under Condition No. 4 of the Policy to give the Plaintiff timely notice of the Accident. Condition No. 9 of the Policy further provided that the fulfilment of the terms of the Policy by the insured would be a condition precedent to the Plaintiff’s liability. Condition No. 4 and 9 of the Policy, in so far as they are material, read as follows:

“4. Notification of Accidents

In the event of any occurrence which may give rise to a claim under this Policy the insured shall as soon as possible give notice thereof to the Company with full particulars. Every letter claim writ summons and process shall be notified or forwarded to the Company immediately on receipt. Notice shall also be given to the Company immediately the [sic] insured or any person claiming to be indemnified shall have knowledge of any impending prosecution, inquest, inquiry or offer of composition in connection with any such occurrence. ....

…..

9. Condition Precedent to the Company’s Liability

The due observance and fulfilment of the Terms [defined as the “terms, exceptions and conditions” contained in the policy or endorsed thereon] of this Policy insofar as they relate to anything to be done or not to be done by the Insured or any person claiming to be indemnified and the truth of the statements and answers in the proposal shall be conditions precedent to any liability of the Company to make any payment under this Policy.”

When interpreting insurance policies, it is clear that where a clause appearing in one part of an insurance policy is to be read with another clause in a different part of the policy, the clauses should be read jointly so as to give full effect to the intention of the parties. In the present case, Condition No. 4 was clearly meant to be read together with Condition No. 9, thus rendering compliance with Condition No. 4 by the Defendant a condition precedent to the Plaintiff’s liability under the Policy: see Putra Perdana...