Tay Eng Chuan v Ace Insurance Ltd

JudgeAndrew Ang J
Judgment Date27 June 2008
Neutral Citation[2008] SGCA 26
Docket NumberCivil Appeal No 95 of 2007
Date27 June 2008
Published date02 July 2008
Plaintiff CounselAppellant in person
Citation[2008] SGCA 26
Defendant CounselTeo Weng Kie and Lorraine Ho (Tan Kok Quan Partnership)
CourtCourt of Appeal (Singapore)
Subject MatterInterpretation,Contra proferentem rule,Scott v Avery clauses,Particular pertinence of contra proferentem rule to insurance policies,Agreement,Arbitration,Whether loss of lens and loss of sight separate types of loss,Insurance,Contract,General principles,Agreement to refer matter to arbitration,Contractual terms,Policyholders,Claims,Double recovery,Protection,Whether reference of dispute to arbitration is condition precedent to liability of insurer,Duty of insurers to inform policyholders of areas insurance cover did not extend to

27 June 2008

Judgment reserved.

Chan Sek Keong CJ (delivering the judgment of the court):


1 This is an appeal against the decision of the High Court judge (“the Judge”) dismissing the action of Tay Eng Chuan (“the appellant”) in Originating Summons No 859 of 2007 (“OS 859/2007”) against Ace Insurance Limited (“the respondent”) to be indemnified, under an insurance policy known as a “Double Guarantee Protector Policy”issued by the respondent (“the Policy”), in the sum of $300,000 for the alleged total loss of sight in his left eye (see Tay Eng Chuan v Ace Insurance Limited [2007] SGHC 212 (“the GD”)).

2 The action in OS 859/2007 was commenced following a comment made by V K Rajah J in an earlier proceeding by the appellant against the respondent, viz, Originating Summons No 2254 of 2006 (“OS 2254/2006”). That was an application by the appellant for, inter alia, an extension of time to commence arbitration proceedings against the respondent under the Policy. In dismissing the application on the ground that the appellant had not made out a case for extension of time, the learned judge made an observation (“the Note”), which was recorded in the certified transcript of the notes of arguments of the hearing (at p 5) as follows:[note: 1]

Note: It remains open to [the appellant] to argue that his right to maintain an action in law in the courts survive the extinction of the right to proceed by way of arbitration …

3 On the basis of the Note, the appellant commenced OS 859/2007 for the following prayers:

(a) that, pursuant to the Note and the Policy, he “be allowed to proceed by way of an action in law … to claim from the [respondent] the insurance benefit under the [Policy] for the loss of sight in his left eye”[note: 2]; and

(b) that, pursuant to the Policy, “the [respondent] do pay [him] the sum of S$300,000 being the insurance benefit for the loss of sight in … [his] left eye”[note: 3].

The action in OS 859/2007 was commenced on the basis that the appellant had suffered a total loss of sight in his left eye. The respondent contested this contention on the ground that the medical reports dated 16 May 2003, 13 August 2003 and 29 October 2003 by Dr Khoo Chong Yew (“Dr Khoo”), the ophthalmologist whom it appointed to examine the appellant’s left eye, indicated that, as at 14 May 2003 (the date on which Dr Khoo examined the appellant), the appellant could, via his left eye, perceive light and hand movements at a distance of 6ft, although he could not count the number of fingers on Dr Khoo’s hand. A further medical report dated 5 February 2004 by Dr Tong Heng Nam, who had examined the appellant on 3 February 2004 in relation to the latter’s claim against another insurer for the injury to his left eye, described the appellant’s vision in that eye as good enough for “counting fingers at a distance of five feet”[note: 4].

4 This factual dispute as to the extent of the loss of sight (if any) in the appellant’s left eye (“the Dispute”) was not taken up further by the respondent in the court below. Instead, it made an application (via Summons No 2829 of 2007 (“SUM 2829/2007”)) to strike out OS 859/2007 on the grounds set out in O 18 rr 19(1)(a), 19(1)(b), 19(1)(d) and 19(3) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed), viz, that the originating summons: (a) disclosed no reasonable cause of action; (b) was scandalous, frivolous or vexatious; and (c) was otherwise an abuse of the process of the court. The Judge agreed with the respondent’s submission and struck out OS 859/2007 without considering the Dispute.

The appellant’s eye injury and his claims against the respondent

5 The salient facts relating to the appellant’s eye injury and his subsequent claims against the respondent in respect of that injury are simple. On 12 November 2002, a piece of wire mesh which the appellant was carrying in his house got caught between the wall and a pipe in the storeroom and struck his left eye. As a result, that eye bled and the appellant was taken to hospital, where he was found to have suffered cornea laceration, iris laceration and traumatic cataract in his left eye. An emergency operation was performed on the same day. The appellant was subsequently discharged from hospital on 20 November 2002, but was re-admitted from 9 December 2002 to 12 December 2002 for another operation to remove the lens in his left eye. According to the appellant, Dr Khoo had confirmed that his left eye was “non-functional”[note: 5] and “blind by WHO [World Health Organization] definition”.[note: 6] The appellant also deposed that Dr Yii Hee Seng, an eye specialist appointed by yet another insurance company against whom he had made a claim in respect of his eye injury, had advised that insurance company’s loss adjustor that the condition of his left eye fulfilled the criteria of “Loss of Sight” as defined in Part 3 of the Policy.[note: 7]

6 On 29 July 2003, the respondent admitted liability for “Accidental Hospital Income Benefit” under Part 1, cl 3 of the Policy and paid the appellant the sum of $3,300 for 11 days of hospitalisation. Under Part 1, cl 1 of the Policy (“the Accidental Disability Benefit Clause”) (see [38] below), two other types of insurable losses were relevant in cases of eye injury, viz, (a) “Total Loss of Lens in One Eye” and (b) “Total Loss of … Sight in One Eye”. In respect of each of these losses, a sum of up to 50% of the benefit amount specified in the schedule to the Policy (“the Policy Schedule”) was payable. On 11 December 2003, the respondent paid the appellant $300,000 (being 50% of the benefit amount applicable to the latter) for the total loss of the lens in his left eye, but disavowed the latter’s claim for the alleged total loss of sight in that eye. The appellant was asked to sign a discharge voucher waiving all claims whatsoever that he might have against the respondent. The appellant refused to do so because he took the view that he was entitled to make a separate claim for the alleged total loss of sight in his left eye. Eventually, he acknowledged receipt of a cheque for $300,000 from the respondent, but reserved his right to make a claim for his alleged loss of sight.

The issues before the High Court and the Judge’s decision thereon

7 In deciding whether to strike out OS 859/2007 pursuant to the respondent’s application in SUM 2829/2007, the Judge effectively had to rule on two questions, namely:

(a) whether the appellant had lost the right to bring a legal action based on the Policy for the alleged total loss of sight in his left eye since he had failed to refer the Dispute to arbitration under the terms of the Policy (“issue (a)”); and

(b) whether the appellant was entitled to recover for the alleged total loss of sight in his left eye (assuming he could prove such loss) when he had already been indemnified for the total loss of the lens in that eye (“issue (b)”).

8 With regard to issue (a), the respondent relied on Part 10, cl 7 of the Policy (“the Arbitration Clause”) read with Part 9, cl 3 of the Policy (“the Condition Precedent Clause”) to contend that the appellant, having failed to comply with the Arbitration Clause, had thereby lost his right to bring a legal action in respect of the alleged total loss of sight in his left eye. The Arbitration Clause read as follows:


If any dispute or difference arises between the Company [ie, the respondent] and any of the parties hereto concerning any matter arising out of [the] Policy, such dispute or difference shall be referred to arbitration in accordance with the provisions of the Arbitration Act, Chapter 10 of Singapore and any statutory modification or re-enactment thereof then in force within three (3) months from the day such parties are unable to settle the differences among themselves.

As for the Condition Precedent Clause, it stated:

Terms and Conditions

The due observance and fulfilment of the terms, provisions and conditions of [the] Policy insofar as they relate to anything to be done or complied with by the Insured Person, the Policyholder and/or the Policy Payer shall be a condition precedent to the liability of the Company to make any payment under [the] Policy.

9 The appellant, on the other hand, contended that, notwithstanding his breach of the Arbitration Clause, he was still entitled to commence OS 859/2007 in view of Part 10, cl 10 of the Policy (“the Legal Action Clause”) and Part 10, cl 8 of the Policy (“the Governing Law Clause”). These clauses were set out in Part 10 of the Policy as follows:

8. Governing Law

[The] Policy shall be governed by and interpreted in accordance with Singapore Law. The Singapore courts shall have exclusive jurisdiction.

10. Legal Action

Subject to Clause 7 of this Part [ie, the Arbitration Clause], no action shall be brought to recover on [the] Policy prior to the expiration of sixty (60) days after written proof of claim has been filed in accordance with the provisions of [the] Policy.

10 The Judge ruled in favour of the respondent on issue (a). He held that the appellant’s claim was barred as compliance with the Arbitration Clause was a condition precedent to the respondent’s liability to make payment under the Policy and the appellant had not complied with that clause. Reading the Condition Precedent Clause together with the Arbitration Clause (reproduced at [8] above), the Judge held (at [22] of the GD) that:

The [A]rbitration [C]lause is not an option. It is a mandatory requirement before he [ie, the appellant] can compel the [respondent] to pay (assuming of course that he succeeds in the arbitration). Put succinctly, “No arbitration, no liability”.

11 The Judge further rejected the appellant’s arguments that:

(a) the Arbitration Clause did not exclude his right to commence an action in court within the normal six-year limitation period applicable to actions founded on contract;

(b) the Arbitration Clause was inconsistent with the Legal Action Clause; and

(c) the...

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