QBE Insurance (Singapore) Pte Ltd v Relax Beach Company Ltd
| Jurisdiction | Singapore |
| Judge | Sundaresh Menon CJ,Tay Yong Kwang JCA,Andrew Phang Boon Leong SJ |
| Judgment Date | 21 December 2023 |
| Docket Number | Civil Appeal No 3 of 2023 |
| Court | Court of Appeal (Singapore) |
[2023] SGCA 45
Sundaresh Menon CJ, Tay Yong Kwang JCA and Andrew Phang Boon Leong SJ
Civil Appeal No 3 of 2023
Court of Appeal
Civil Procedure — Costs — Discontinuance of appeal — Appellants withdrawing from appeal shortly before actual hearing — Whether appellants acknowledged that appeal lacked merit — Whether merits of discontinued appeal relevant in assessing costs
Civil Procedure — Costs — Principles — Respondent seeking costs in excess of costs guidelines and appearing to seek indemnity costs as appellants withdrew appeal belatedly — Whether granting of indemnity costs appropriate — Whether merits of appeal relevant in considering indemnity costs
Contract — Contractual terms — Notification of claim as condition precedent — Insured failing to notify insurers of COVID-19 case on insured premises when making claim — Insured failing to provide sufficient particulars of insurance claim to insurers — Whether insured failed to satisfy condition precedent in notification clause thus providing insurers complete defence to liability
Courts and Jurisdiction — Court judgments — Parties settling before court hearing — Issues in discontinued appeal touching on questions of public importance to wider insurance industry on interpretation of business interruption clauses in wake of COVID-19 pandemic — Discontinued appeal being reported in mainstream media and garnering significant attention — Whether court could issue judgment commenting on merits of discontinued case where it would be in public interest to ventilate legal points of general interest and significance
Insurance — General principles — Business interruption policies covering loss resulting from outbreak of disease at premises — Insured premises being closed due to governmental measures in response to rise in COVID-19 cases leading to business interruption losses — Presence of singular case of COVID-19 at insured premises — Singular case of COVID-19 potentially forming part of statistics leading to governmental measures imposed — Whether singular case of COVID-19 at insured premises constituted “outbreak” under insurance policy — Whether more general COVID-19 statistical figures in area could be regarded as concurrent causes of closure order
Insurance — General principles — Claims for loss suffered in context of COVID-19 pandemic and government measures in response — Government imposing widespread lockdown measures in province — Whether imposition of widespread lockdown measures due to global pandemic combined with singular case on insured premises would be covered even under insurance policy
Held, granting costs on a standard basis in favour of the respondent:
(1) Whilst the main subject matter of the present judgment concerned costs, it was appropriate to provide the court's preliminary views on the merits of the discontinued appeal in CA 3, because this was relevant to the assessment of the respondent's claim for costs and also because these views bore on questions of public importance to the wider insurance community on the interpretation of business interruption clauses in the wake of the COVID-19 pandemic. The long-drawn legal skirmish between the parties had been reported in the mainstream media and garnered significant attention: at [32] and [33].
(2) In the context of a court exercising its discretion to award costs, and especially when considering indemnity costs, the merits of the case could become especially important because it went to the heart of the question of whether the position taken in the proceedings was wholly without basis, thus resulting in a waste of time and resource. It might be appropriate, and indeed necessary, for the court to consider the merits of the case when deciding whether to grant indemnity costs, in so far as a complete lack of merits could indicate that an action was brought in bad faith, as a means of oppression or for other improper purposes, or that the action was speculative, hypothetical or clearly without basis, thus amounting to reasonable conduct: at [35] to [37].
(3) More specifically, even in the context of a discontinued case, the merits could be relevant in considering the issue of costs, particularly where it was possible to discern the likely outcome had the matter been litigated to a conclusion: at [40] and [41].
(4) The court might also issue its judgment commenting on the merits of a discontinued case where it would be in the public interest to ventilate legal points of general interest and significance. A court could set out its views even in the face of a settlement of a pending matter to clarify a legal point of significance: at [43] and [44].
(5) It was appropriate in this case for the court to set out preliminary views on the merits of the discontinued appeal in CA 3 because: (a) the merits were relevant to the exercise of the court's discretion in awarding costs, especially when considering indemnity costs; and (b) the issues raised in CA 3 potentially touched on important questions of wider interests to the insurance community. While there was no disposal of the appeal on the merits, the court had the benefit of the parties' extensive written submissions which had been carefully reviewed in preparing for the appeal: at [45].
(6) The court's preliminary view on the merits was that the Judge below likely erred in at least two material aspects. First, the Judge likely erred in finding that there was no need for the respondent to notify the appellants of the existence of Mr K's case occurring at the Insured Premises in compliance with the Notification Clause. The notification ought to have extended to the facts said to give rise to the underlying insured risk. If the risk encompassed an outbreak of disease at the premises, it was a necessary part of any notification that the existence of Mr K's case be notified to the appellants. As this was not done, the condition precedent in the Notification Clause was probably not satisfied. Further, contrary to the Judge's finding that the appellants' statement in its 29 May 2020 Letter amounted to a summary rejection of the Claim, the letter was not a summary rejection but a request for further information: at [47] to [50].
(7) Second, the Judge likely erred in finding that Mr K's case was a proximate cause of the Closure Order resulting in the closure of the Insured Premises. It was unlikely that Mr K's singular case could be considered an “outbreak” at the Insured Premises under the IDE so as to trigger liability because the usage of the term “outbreak” ordinarily contemplated the infection of more than one person on a plain and commonsensical meaning. Further, it was impermissible to consider the more general COVID-19 statistical figures in Phuket as concurrent causes, because only the cases which occurred “at the premises” ought to be factored in the analysis under the wording of the IDE. On this basis too, the respondent's Claim under the Policy would likely have failed if the court did not change its initial views after hearing counsel: at [53] to [57].
(8) Therefore, the appeal in CA 3 was not an unmeritorious ploy intended to delay and frustrate a valid insurance claim. It was not unreasonable to pursue the appeal such that the granting of indemnity costs would be appropriate. At best, costs should only be granted on a standard basis in favour of the respondent. The court awarded the respondent costs and disbursements in the amount proposed by the appellants: at [58] to [60].
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Bumi Armada Offshore Holdings Ltd v Tozzi Srl [2019] 1 SLR 10 (folld)
Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] AC 649; [2021] 2 WLR 123 (refd)
George Hunt Cranes Ltd v Scottish Boiler & General Insurance Co Ltd [2002] 1 All ER (Comm) 366 (refd)
Great Western Railway Co v Swindon and Cheltenham Extension Railway Co (1884) 9 App Cas 787 (folld)
Karaha Bodas Co LLC v Perusahaan Pertambangan Minyak dan Gas Bumi Negara [2006] SGHC 195 (folld)
Lim Oon Kuin v Ocean Tankers (Pte) Ltd [2022] 1 SLR 434 (refd)
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Ng Eng Ghee v Mamata Kapildev Dave [2009] 4 SLR(R) 155; [2009] 4 SLR 155 (refd)
Ong Chai Hong v Chiang Shirley [2016] 3 SLR 1006 (refd)
Prometheus Marine Pte Ltd v King, Ann Rita [2018] 1 SLR 1 (refd)
PT Adidaya Energy Mandiri v MS First Capital Insurance Ltd [2022] 4 SLR 371 (refd)
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Tecnomar & Associates Pte Ltd v SBM Offshore NV [2021] SGCA 36 (refd)
Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4 SLR(R) 732; [2009] 4 SLR 732 (refd)
United States v Standard Brewery, Inc 251 US 210 (1920) (refd)
Wates Construction Ltd v HGP Greentree Allchurch Evans Ltd [2005] All ER (D) 170 (refd)
The respondent was a company incorporated in Thailand which owned and operated a luxury hotel in Phuket (“the Insured Premises”). The appellants were co-insurers who agreed under a policy (“the Policy”) to indemnify the respondent in respect of business interruption losses suffered at the Insured Premises. One of the events covered by the Policy under cl 87 (the “IDE”) was the closure of the Insured Premises by an order of a public authority as a result of an outbreak of an infectious or contagious disease at the premises. Pertinently, the Policy also provided under “Condition 7” (“the Notification Clause”) that the insured notify the insurers of any claim that might arise and to provide particulars of the claim as a prerequisite to being indemnified. It was not disputed...
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