Malayan Motor and General Underwriters (Pte) Ltd v Abdul Karim and Another

• Jurisdiction: Singapore
• Judge: D C D'Cotta J
• Judgment Date: 13 October 1981
• Neutral Citation: [1981] SGCA 11
• Docket Number: Civil Appeal No 46 of 1980
• Date: 13 October 1981
• Year: 1981
• Published date: 19 September 2003
• Plaintiff Counsel: DH Murphy (Godwin & Co)
• Citation: [1981] SGCA 11
• Defendant Counsel: Haridass Ajaib (Netto Low & Partners)
• Court: Court of Appeal (Singapore)
• Subject Matter: Indemnity,Bills of lading,Removal of words 'said to contain' from bill of lading,s 50(2) Marine Insurance Act 1906 [UK],Bills of lading containing words '132 bundles said to contain 5,893 pieces of sawn Keruing Timber',Insurance,General principles,Vendors paid for loss to purchasers,Claims,Admiralty and Shipping,Whether purchasers as assignees of marine policy could sue underwriters,Letter of indemnity,Claim for loss of missing timber,Expedient method

When this action came on for hearing before the learned Chief Justice, no evidence was led as the parties had agreed on the following facts.

The plaintiffs purchased 5,893 pieces of sawn keruing timber from Pacific Corp Traders (the vendors) on cif terms for shipment to Hodeidah on the vessel Supreme Trader. Upon arrival and after discharge 1,768 pieces valued at $17,757.40 were found missing. The shipment was insured in the name of the vendors with the defendants under an all risks policy of marine insurance for US$25,734.

When the loss was discovered, the vendors who had been paid by their Bank for the timber, for good business relationship, settled the plaintiffs` claim for the value of the missing timber. There is this letter from the plaintiffs to the vendors which speaks for itself.

Our Ref: CL/47

Date 20 May 1976

Messrs Pacific Corp Traders,

GPO Box No 1322,

Singapore.

Dear Sirs,

Re: Policy No 1075C4607 per mv `SUPREME TRADERS`

We would be obliged if you could act for us and appoint solicitors in Singapore to recover our loss suffered as a result of short landing of 1811 pcs of sawn timber. In view of our good business relationship, please also let us have a reduction of the invoice by the said sum of $24,965.02. When you recover the said loss from the insurance company on our behalf you may retain this amount as due from us to you in your invoice no 786/110/307/75.

You may also come to best settlement with insurance company.

Thanking you,

Yours faithfully,

for ABDUL KARIM AR FARA & CO

(Sgd) AMIN AR FARA ALASWADI

Managing Director.

The way the settlement was put through by the vendors was that they instructed their Bank who had purchased the bill of lading relating to the shipment to accept from the drawees in full settlement a lesser sum than the amount of the bill. The Bank having received from its correspondent Bank that lesser sum, the shortfall from the amount of the bill and the amount received was debited by the Bank to the account of the vendors.

The plaintiffs then brought this action against the defendants under the policy for the value of the missing timber. At the trial the defendants contended that as the marine policy was a policy of indemnity, and as the plaintiffs have suffered no loss, their claim for the value of the missing timber having been settled by the vendors, the defendants were not liable under the policy. The learned Chief Justice rejected the contention for the defendants. He gave judgment for the plaintiffs for the agreed sum of $17,757.40 and costs. Against this judgment, the defendants appeal.

It is clear from the grounds of decision of the learned Chief Justice that he fully appreciated that in the instant case the marine policy, being a value policy, is a policy of indemnity, and of indemnity only. That the policy is a contract of indemnity is explained in his statement that `There was on the undisputed facts no money or other benefit received by the assured which ought to be taken into account in diminishing the loss against which the contract of indemnity is given.` So it would have been that if the vendors (the assured) have brought this claim, the defendants (the insurers) on the facts admitted by them would have been bound to indemnify the vendors for the loss of the missing timber. The defendants would then, as the learned Chief Justice has observed, as underwriters be subrogated to the assured`s right to recover the value of the missing timber from the carriers.

The question now is whether it makes any difference, as regards the case for the defendants, that the present claim is not by the vendors but by the plaintiffs.

It was never in dispute that the plaintiffs are the assignees of the marine policy. Under s 50(2) of the Marine Insurance Act, 1906 of England which is applicable in Singapore, by the assignment, there is vested in the plaintiffs the beneficial interest in the said policy, and the plaintiffs are entitled, as they have done, to sue thereon in their own name. So then, on the facts, as the defendants had admitted the loss of 1,768 pieces of timber, and the value thereof was agreed between the parties in the sum of $17,757.40, the learned Chief Justice properly gave judgment for the plaintiffs for the said sum.

But it is said for the defendants that the plaintiffs have in effect been indemnified, that any payment made to them would be an additional payment, and therefore judgment ought not to be given in their favour. With due respect to counsel, we are of the view that the submission is misconceived as it...