Insurance Law

Citation(2018) 19 SAL Ann Rev 568
Published date01 December 2018
Date01 December 2018

18.1 In August 2016, the UK Insurance Act 20151 took effect in the UK. The Singapore Academy of Law formed a Law Reform Subcommittee (Insurance) in 2017 to study the changes introduced by the UK Insurance Act and to evaluate if Singapore ought to adopt these changes. The subcommittee's report has been delayed but is expected to be issued in early 2019. In the meantime, in 2018, there are four reported cases which make for interesting reading.

Premature application/jumping the gun?

18.2 In DNKH Logistics Pte Ltd v Liberty Insurance Pte Ltd,2 DNKH Pte Ltd (“DNKH”), whose principal business activities were freight forwarding, transport and warehousing, packing and crating of goods and providing services as general contractors for non-building construction, leased several warehouses for storage of its customers' equipment and goods. In relation to one of its warehouses at 8 Tuas Avenue 20, DNKH purchased a fire-warehouse risk insurance policy (“the Fire Policy”) against any liability for fire damage to all real and personal property on the warehouse premises, including customer's machinery, plant and equipment as well as, under “Risk No 2”: “On customers' stock (other than stocks already insured by customers (including containers owned by insured or held by them in trust or on commission)”.

18.3 The sum insured for Risk No 2 was $10m.

18.4 A fire broke out at the warehouse in August 2015 and resulted in, inter alia, damage to goods/stock belonging to DNKH's customers. A number of these customers presented claims against DNKH. DNKH duly filed claims under the Fire Policy with Liberty Insurance Pte Ltd (“Liberty”), who agreed to indemnify DNKH for only one such claim. On 10 November 2017, DNKH filed an application for:

(a) a declaration that the containers, goods and/or stocks belonging to DNKH's customers and affected by the fire are covered by the Fire Policy; and

(b) an order that Liberty indemnify DNKH for all costs, expenses and damages incurred and/or to be incurred by DNKH in respect of the claims of DNKH's customers arising out of the Fire.

18.5 DNKH took the position that the prayers in its application could be granted based simply on an interpretation of the terms of the Fire Policy, and the arguments it presented embarked on an exercise in construction, which included a contention that Risk No 2 was ambiguous and thus the contra proferentum rule applied such that it ought to be construed against Liberty. DNKH reiterated that it was not seeking a determination of fact. On the other hand, Liberty took the position that a decision on the prayers could only be made after determining the factual matrices of the claims brought by DNKH's customers that DNKH sought an indemnity on from Liberty. The principal contention by Liberty was that under Risk No 2, the policy excluded and did not cover goods/stocks that were already insured by DNKH's customers.

18.6 While noting that under s 18 of the Supreme Court Judicature Act,3 read with para 14 to the First Schedule thereto and O 15 r 16 of the Rules of Court,4 the court is empowered to grant declaratory judgments and that the grant of such a remedy is discretionary in nature (see Karaha Bodas Co LLC v Pertamina Energy Trading Ltd),5 Belinda Ang Saw Ean J refused to exercise her discretion to make any declaration or order on DNKH's application. The judge cited, inter alia, the decision in Tan Eng Hong v Attorney-General6 where the Court of Appeal set out three basic propositions:

(a) The applicant must have a “real interest” in bringing the action.

(b) There must be a “real controversy” between the parties to the action for the court to resolve.

(c) The declaration must relate to a right which is personal to the applicant and which is enforceable against an adverse party to the litigation.

Her Honour was of the view that there was no real controversy for the court to resolve in this case.

18.7 In fact, DNKH had agreed at the outset that the cause of the fire had not, at time of the application, been established, so DNKH's liability to its customers had not been ascertained. At law, an insurer is liable to indemnify the insured only if the liability of the insured was established – see Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd.7 The judge accepted that the following issues formed the real controversies and involved fact-specific inquiries:

(a) whether the goods/stocks of DNKH customers damaged in the fire that were separately insured were also covered by the Fire Policy; and

(b) Liberty's extent of liability in relation to these goods/stocks.

18.8 Factual evidence would have to be adduced, apart from DNKH's liability for the cause of the fire, as to whether the alleged customers were in fact actual customers of DNKH; whether these customers' goods/stocks were in fact those that fell within the property covered by the Fire Policy; what the terms of the contracts between DNKH and its customers were in relation to insurance of the goods/stocks; and, of course, whether these had been separately insured and the terms of such insurance.

18.9 The judge pointed to another “stronger reason” for her decision not to grant declaratory relief – there would be no res judicata or finality in the court's declaratory judgment as, in the future, claims against DNKH by its customers in respect of liability might have to be litigated, as well as coverage of the customers' goods/stocks and Liberty's extent of liability.

18.10 The judge made no order on DNKH's application, and ordered DNKH to pay costs. DNKH has lodged an appeal, which is pending before the Court of Appeal.

Concluding remarks

18.11 Why did DNKH attempt such an application? One can only surmise that it was motivated by commercial pressure brought upon DNKH by the claims and repeated demands over time (from August 2015 when the fire occurred to mid-2017) of its customers, the value of

whose goods/ stocks must have been not insignificant, given the sum insured of $10m for Risk No 2.
Work injury compensation scheme – Mismatch between legislation and practice?

18.12 In Temasek Polytechnic v Poh Peng Ghee,8 a claim for compensation was made under the Work Injury Compensation Act9 (“WICA”). Whilst this case does not strictly involve principles of insurance law, it does clarify the role and position of insurers in the context of work injury compensation, a scheme administered by the Ministry of Manpower (“MOM”) and the Commissioner for Labour (“the COL”).

18.13 The facts are straightforward – on 16 January 2017 an administrative manager employed by the first applicant, Temasek Polytechnic (“TP”), was found slumped over her chair on TP's premises and was subsequently pronounced dead. Her husband, daughter and son (“the Claimants”) made a claim for compensation under the WICA. At the material time, TP's insurer was NTUC Income Insurance Co-Operative Ltd (“NTUC”), the second applicant.

18.14 On or around 17 April 2017, Assistant Commissioner for Labour Damien Lim (“ACOL Lim”) issued a notice of assessment of compensation (“NAC”) stating that the claim was found to be valid and assessed the compensation payable to be $204,000.00. The NAC was in fact addressed to NTUC as the payer but was served on T P, NTUC and the Claimants on 19 April 2017 together with Form A – a notice of objection (“NOO”) – which was to be used if there was objection to the NAC. Form A or the NOO was a form prescribed in reg 6 of the Work Injury Compensation Regulations10 (“the WIC Regulations”).

18.15 On 2 May 2017, NTUC submitted the NOO and objected, by ticking the relevant box, on the ground that the death of the deceased was not caused or aggravated by an accident that arose out of and in the ordinary course of employment; and further elaborated that the cause of death as stated on the death certificate was coronary atherosclerosis, which is a hardening of the artery walls due to build-up of calcium deposits over the years – this was a medical condition, and not due to her nature of work since her job scope involved the handling of daily administrative paperwork concerning her employer's operations and

admissions. NTUC further queried why the MOM would deem this to be work-related.

18.16 On 4 May 2017, the COL notified NTUC, TP and the Claimants that a NOO to the NAC had been received, and a series of pre-hearing conferences followed. At the fourth conference, the Claimants argued that the NOO was invalid as it was submitted by NTUC, an insurer, instead of T P, the deceased's employer, as required by s 25 of the WICA. At the fifth conference on 20 November 2017, Assistant Commissioner for Labour Manoj s/o PN Rajagopal (“ACOL Manoj”) heard submissions and decided that the NOO submitted by NTUC was not a valid objection. The COL then issued a certificate of order (which was later amended and dated 18 December 2017) addressed to TP and NTUC but directing only TP to pay the Claimants the compensation sum of $204,000.00.

18.17 Both TP and NTUC appealed to the High Court on 12 January 2018 under s 29 of the WICA against the amended certificate of order and the decision of ACOL Manoj that the NOO was not valid.

18.18 The issue on appeal appeared simple and concerned a narrow point of law – whether the NOO, submitted on prescribed form by an employer's insurer, was valid. However, the mismatch between legislation (the WICA and WIC Regulations) and the work injury compensation scheme as administered by the MOM and the COL was thrown into sharp relief by the facts, simple as they were, and prompted the Attorney-General to intervene in the proceedings on 2 June 2018.

18.19 The appeal was heard before Woo Bih Li J, who had in an earlier decision of MST Ruma Khatun v T & Zee Engineering Pte Ltd11 (“Ruma Khatun”) raised concerns about the mismatch between legislation and practice. This time, however, the judge embarked on a comprehensive scrutiny of the issues...

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