Lim Trading Co v Sinclair

• Jurisdiction: Singapore
• Judge: Buttrose J
• Judgment Date: 21 April 1967
• Neutral Citation: [1967] SGHC 5
• Docket Number: Suit No 1316 of 1965
• Date: 21 April 1967
• Year: 1967
• Published date: 19 September 2003
• Plaintiff Counsel: LAJ Smith (LAJ Smith)
• Citation: [1967] SGHC 5
• Defendant Counsel: AP Godwin (Donaldson & Burkinshaw)
• Court: High Court (Singapore)
• Subject Matter: Whether customer obtained shares by false pretences or by theft,Property insurance,Insurance,Shares paid for with dishonoured cheque,Theft and fraud,Insurance policy indemnified against loss by theft

In this action the plaintiffs, a firm of stock and share brokers, claimed the sum of $69,346.52 from the defendant, a Lloyd`s underwriter, for a loss under an insurance policy covering amongst other perils, loss by theft.

The facts were that one Lim Pow Tian a customer of the plaintiffs came to their office and bought shares to a total value of $69,346.52. He issued three cheques in payment for the shares which he gave to the plaintiffs who in turn issued receipts therefor and handed him the shares. The cheques were dishonoured and it was subsequently discovered that Lim Pow Tian had disposed of the shares and disappeared with the proceeds and the police have been unable to trace him. It was admitted that he had no funds in the bank to meet these three cheques.

On these facts the plaintiffs, by virtue of an amendment to their statement of claim which I allowed at the trial, claimed to be indemnified under the policy for loss sustained by theft by one Lim Pow Tian a customer of the plaintiff firm and the short and only point for decision insofar as the plaintiffs` case was concerned was did the facts constitute a theft within the meaning of the policy.

The policy was the usual Lloyd`s in and out stockbrokers policy effecting insurance against the loss or deprivation of the various securities listed therein which included shares. In so far as is material to the present case the six perils insured against were loss by robbery, theft, fire, explosion, burglary or abstraction whether by officers, clerks or servants of the assured, or by any other person or persons or contributed to by the negligent or fraudulent conduct of the said officers, clerks or servants or other person or persons.

It was contended on behalf of the defendant that the plaintiffs were swindled by their customer who under English law would be guilty of obtaining the shares by false pretences and under the Singapore Penal Code (Cap 119) of cheating the plaintiffs out of their shares. It was submitted that such a transaction was not within the six perils enumerated in the policy and certainly did not amount to theft within the meaning of the policy as contended for by the plaintiffs.

My first instinct was to say that I do not think that anyone would quarrel with this statement as being a correct interpretation of the law as applied to the facts of this case but it was urged upon me that in a policy of insurance the words expressing the risk covered are not always used in the strict technical sense which they bear in relation to a criminal offence. They may be interpreted according to their context in a more popular sense or they may be expressly defined in some less technical sense by the policy itself; that this was a commercial contract between the underwriters and the assured, and to ascertain its meaning the first thing to do is to examine the nature of the document without regard to the niceties of the criminal law.

Lord Sumner however in Lake v Simmons [1927] AC 487, 509 dissents from the view that the criminal law should be treated as irrelevant merely because the document is commercial for after all, as he points out, criminal law is still the law and so are its definitions and rules.

Were it not for the case of Pawle & Co v Bussell (1916) 85 LJ KB 1191 to which I was referred by Mr Smith I should have entertained little doubt that the sale of the shares by the plaintiffs to Lim Pow Tian in exchange for the cheques which were subsequently dishonoured did not constitute a theft within the meaning of the policy.

In that case the plaintiffs, a firm of stockbrokers, insured share certificates against loss by...