NTUC Income Insurance Co-operative Ltd v Toh Kheng Boon

• Jurisdiction: Singapore
• Judge: Tan Lee Meng J
• Judgment Date: 23 July 2007
• Neutral Citation: [2007] SGHC 117
• Docket Number: District Court Appeal No 32 of
• Date: 23 July 2007
• Year: 2007
• Published date: 26 July 2007
• Plaintiff Counsel: Madan Assomull, Vivian Chew, Muna Talib and Chong En-Lai (Assomull & Partners)
• Citation: [2007] SGHC 117
• Defendant Counsel: Andrew Hanam (Andrew & Co)
• Court: High Court (Singapore)
• Subject Matter: General principles,Amendment,Claims,Whether injustice caused to opposing party in manner not compensable with costs,Application for leave to amend defence on first day of trial,Whether insured vehicle used for reward,Insurance,Civil Procedure,Whether insurer entitled to repudiate liability,Pleadings,Whether proposed amendment served to define the issues in dispute

23 July 2007 Judgment reserved.

Tan Lee Meng J:

1 The appellant, NTUC Income Insurance Co-operative Ltd (“NTUC Income”), who issued a motor policy to the respondent, Mr Toh Kheng Boon (“Mr Toh”), with respect to his motor vehicle, SFQ 8349K (“the insured vehicle”), repudiated liability to the latter after the said vehicle was involved in an accident on 3 August 2005 (“the accident”). NTUC Income, which pointed out that the motor policy did not cover the use of the insured vehicle for hire or reward, alleged that the said vehicle was being used for reward when the accident occurred. The district judge held that NTUC Income was required to indemnify not only Mr Toh but also the other parties involved in the accident. NTUC Income appealed against the decision of the district judge.

Background

2 On 8 January 2005, Mr Toh purchased the insured vehicle on hire purchase terms. He took a ten year loan to finance the purchase of the said car and obtained from NTUC Income the requisite insurance cover.

3 It was not disputed that Mr Toh had an arrangement with his “god-niece”, one Ms Cookie Wong Wai Che (“Ms Wong”), under which the latter would have the use of the insured vehicle but had to pay the down payment for the insured vehicle, the monthly instalments to the finance company and the miscellaneous outgoings in relation to the purchase and maintenance of the insured vehicle. According to both Mr Toh and Ms Wong, this arrangement was made because Ms Wong was unable to obtain a loan for the insured vehicle in her own name.

4 At the time the insured vehicle was purchased in January 2005, Ms Wong had thoughts about going to Hong Kong for further studies. When she finally made up her mind to go to Hong Kong for three years, she wanted to hand over the insured vehicle to her boyfriend’s brother, Mr Teo Kai Meng (“Mr Teo”), who offered to give her around $568 per month to help pay for the monthly instalments for the said vehicle. Ms Wong, who said that she refused to accept the offer, brought Mr Teo to meet Mr Toh at a restaurant to obtain Mr Toh’s consent for the insured vehicle to be used by Mr Teo while she was in Hong Kong. Mr Toh gave his consent.

5 On 3 August 2005, while the insured vehicle was being driven by Mr Teo along Changi Coast Road, it was involved in the accident with two motor lorries, bearing numbers YL 2689R and YZ 8898A.

6 Mr Toh’s insurer, NTUC Income, repudiated liability under the motor policy issued to him on the ground that his motor policy did not cover any use for hire or reward. In a letter dated 7 September 2005, NTUC Income informed him as follows:

Our finding shows that the insured vehicle has been used for hire and reward at the time of accident. This was not made known to us at the time of purchase. In this instance, we regret to advise that we would not be handling the third party claim against you. Please make arrangement to settle the claim with the third party owner.

7 Mr Toh instituted DC Suit No 3979 of 2005 against NTUC Income. In the meantime, the owners of the two lorries involved in the accident instituted suits, namely MC Suit No 26675 and MC No 2704 of 2005, against Mr Teo, the driver of the insured vehicle at the time of the said accident, to recover compensation for the damage caused to their lorries in the accident. Mr Teo denied that he was at fault. To date, the suits instituted by the lorry drivers have not been heard.

8 On the first day of the trial, NTUC Income unsuccessfully sought to amend its defence to include non-disclosure and misrepresentation, without specifying the alleged non-disclosure or misrepresentation. This application was not allowed.

9 The district judge held that NTUC Income was liable to indemnify Mr Toh under the terms of the motor policy. She ordered NTUC Income to pay for repairs to the insured vehicle, the towing costs incurred as a result of the accident, loss of use of the insured vehicle, damages for personal injury and legal costs. Surprisingly, she also accepted Mr Toh’s contention that NTUC Income was liable for the repairs, loss of use, damages for personal injury and legal costs in respect of the two lorries involved in the accident.

10 NTUC Income appealed against the decision of the district judge on a number of grounds. First, it asserted that Mr Toh’s claim for damages for personal injury and towage charges should have been dismissed because there was no proof that he had suffered any personal injury or had incurred towing charges. Secondly, it argued that the district judge should not have made a ruling on its liability to the owners of the lorries that were involved in the accident because that issue was outside the ambit of the case before her. Thirdly, it alleged that the district judge erred when she did not allow it to amend its pleadings on the first day of the trial. Finally, it contended that the district judge erred when she held that this was not a case of hire or reward.

Mr Toh’s claim for towage charges and damages for personal injury

11 As for NTUC Income’s contention that the respondent is not entitled to towage charges and damages for personal injury, Mr Toh’s counsel, Mr Andrew Hanam, confirmed at the hearing of the appeal that his client had agreed to withdraw his claim for towage charges as well as damages for personal injury. That being the case, the appeal with respect to Mr Toh’s claim for towage charges and damages for personal injury need not be further considered.

NTUC Income’s liability to the lorry owners

12 NTUC Income asserted that the issue before the district judge was whether or not it had the right to repudiate the motor policy and there was no basis for the district judge to order it to indemnify the owners of the two lorries involved in the accident for, inter alia, repairs, loss of use, damages for personal injury and legal costs arising from the accident.

13 At the outset, it must be noted that the owners of the two lorries involved in the accident are not parties to the present action and no evidence was tendered at the trial on the cause of the accident and who was to blame for it. In fact, as mentioned earlier, the owners of the two lorries in question have sued Mr Teo in the Subordinate Courts with respect to the accident. It cannot be overlooked that in both these cases, which have not been heard, Mr Teo has denied liability to the owners of the lorry drivers and has commenced third party proceedings against NTUC Income to indemnify him in the event that the court finds that he is liable to the owners of the said lorries. It is in these two MC suits that the extent of Mr Teo’s responsibility, if any, for the damage caused to the lorries in question will be determined.

14 NTUC Income’s counsel, Mr Madan Assomull, rightly pointed out that even if the motor policy issued to Mr Toh had not been validly repudiated, NTUC Income’s liability to indemnify the owners of the lorries does not arise until the extent of Mr Teo’s liability for the said accident has been determined in the two MC suits. It follows that the ruling in the court below that NTUC Income is liable to indemnify the owners of the lorries involved in the accident must be overruled.

NTUC Income’s application to amend its pleadings

15 Whether or not NTUC Income should have been allowed to amend its pleadings on the first day of the trial will next be considered. NTUC Income had sought to amend its defence to include a new paragraph 6, which was as follows:

In the alternative, the defendants are not liable to the plaintiff for the sum claimed thereunder or for any other sum

PARTICULARS

(a) The Plaintiff failed before the conclusion of the contract for insurance to disclose fully and faithfully material facts relating to the matter to the Defendants. This was not disclosed in the Proposal for Insurance dated 8 January 2005 (“the Proposal”).

(b) The representations in the Proposal was material in that it would have influenced the judgement of a prudent insurer and did influence the judgment of the Defendants in fixing the premium and/or determining whether they would take the risk.

(c) The Defendants will rely on the said Proposal for insurance for its meaning and effect at trial or earlier hearing of this matter.

16 Why material non-disclosure, which is so widely relied on by insurers that Lord Sumner warned in Niger Co Ltd v Guardian Assurance Co Ltd (1922) 13 Ll L R 75 at 82, that this indispensable shield for an...