Judgment

Richard Malanjum, J

1. This is the judgment of the court.

2. This is an appeal by the appellant. He was the first plaintiff in the court below. He is appealing against the decision of the learned Sessions Court judge (SCJ) dismissing his claim and one other.

3. There were two suits, namely Nos 52-03-96 and 52-04-96 before the learned SCJ with several plaintiffs involved. However at the commencement of the hearing their learned counsel applied to discontinue the action of the others.

4. Hence, in suit No 52-03-96 the remaining plaintiffs were the appellant and Sri Gemawan Sdn Bhd. As for suit No 52-04-96 only the appellant is left as the plaintiff. It was also disclosed that since January 1996 Sri Gemawan Sdn Bhd had been wound-up.

5. The facts of the case were well covered by the SCJ. There were also agreed facts submitted by learned counsel for the parties at the commencement of the trial. Thus it would be sufficient if the gist is reproduced herein. There were two logging trucks with trailers. One was a Kenworth Logging Truck bearing registration No SK1921 whilst its trailer bore the registration No SK1922. For convenience these are collectively referred to herein as "KLT". The other truck was known as the Pacific Logging Truck and its registration number was SU3187 while its trailer was registered with number SU3189. And for ease of reference these are also collectively referred to as "PLT". At all material times both KLT and PLT ("the trucks") were used to carry logs in Ng Gaat, Kapit, Sarawak. The condition of the road on which these trucks operated was severe. The gradient was steep besides being winding in most part. And as was the practice in the logging industry the trucks were insured with the respondent under Special Perils Policy.

6. On or about November 17, 1993 while KLT was going on a slope and laden with logs the brakes failed. As a result its driver took an evasive action by driving it to the side of the road. However the slope did not help and thus the truck went forward in downhill direction. At the same time the cables that held the logs snapped due to the sudden thrust. And even though the truck did not go further downhill as it was caught by an area of soft mud the momentum and sudden thrust made the logs to damage extensively the safety barrier tank, the truck's cabin, the engine bay, steering and radiator of KLT. Hence the claim under the Suit No 52-03-96.

7. As for PLT the damage was caused in a similar fashion although it was not on a downhill direction at that time. Again it was due to brakes failure that the driver had to take an evasive action and the sudden halt of the truck caused the logs to thrust forward thereby causing extensive damage to the front axle and engine. The gear box was also ripped off the chassis. Accordingly the claim was made under Suit No 52-04-96.

8. At the outset of the hearing learned counsel of both parties agreed to seven issues to be considered by the SCJ. And they are reproduced as follows:-

   1. Whether the plaintiffs or anyone of them have/has any insurable interest as at the date of the cover note NG 92-003985 dated December 17, 1992? If the answer to this question is answered in the negative, then both the summons must ipso facto be dismissed with costs to be taxed. If however, the court should find that all or anyone of the plaintiffs have/has insurable interest, then the rest of the issues must be considered. In respect of any plaintiff who is found to have no insurable interest, the claim by any such plaintiff must be dismissed with costs to be taxed;

   2. Whether the plaintiffs are the legal owners of the KLT and the PLT in order to sustain their cause of action?;

   3. Whether all the plaintiffs or anyone of them have/has any locus standi to legal interest to commence the summons against the defendants?;

   4. Whether the defendants are entitled to avoid the special perils policy and repudiate liability on given grounds, inter alia:-

      Ground 5:

      that the plaintiffs or anyone of them had obtained the special perils policy by a misrepresentation or non-disclosure of a material fact in relation to question 3 of the defendants' special perils proposal form dated December 17, 1992 when the plaintiffs suppressed the plaintiffs' previous claims history in relation to their previous claims for any loss resulting from any of the contingencies required to be insured by the defendants;

   5. Whether, if the plaintiffs' claims are covered under the special perils policy, what is the nature and quantum of indemnity to be recovered from the defendants and whether such claims are subject to deductibles and policy endorsement 9P19 (replacement parts clause); and

   6. Whether, in amplification of issue E hereof, in the event that any indemnity or compensation is recoverable from the defendants, is such indemnity or compensation subject to reduction on account of negligence and/or contributory negligence on the part of the driver of the logging trucks.

9. After reviewing the evidence adduced and having considered the respective submissions of learned counsel for the parties the learned SCJ ruled that the answers to the first three issues were in the negative. And as for the fourth issue he deliberated on Ground 5 and came to a finding that indeed there was suppression of the previous claims in the proposal form for the special perils policy.

10. In this appeal the appellant submitted several grounds. One complaint was that the learned SCJ erred in law and in fact when he concluded that the appellant failed to establish on the balance of probabilities the elements required to succeed.

11. Now, in arriving at his decision the learned SCJ only considered the first four issues. And on the fourth issue he only referred to the given Ground 5. However, due to the proviso in the first issue it is not surprising that the learned SCJ did not find it necessary to go any further on the other issues submitted to him for consideration. Hence in dealing with this appeal this court should also be guided by such proviso. And below are some of the pertinent findings of the learned SCJ.

12. On the issue of insurable interest the learned SCJ held it to be a legal question to be determined on the facts and circumstances of the case. And he also restated the law that insurable interest should exist on goods insured 'at the time when the event causing the loss occurs' (see Halsbury's Laws of Malaysia, vol 4). Thus in respect of KLT it was his finding that at the material time there were serious ambiguities as to who was the actual legal owner of the said truck 'particularly in the context of accounting and company law'. Such doubts therefore affected the question of who had the insurable interest. Further, the finding came with factual reasons based on the evidence before him, inter alia:-

    1. That it was only on March 20, 1995 that the second plaintiff, Sri Gemawan Sdn Bhd became the registered owner of KLT. And as the accident happened on November 17, 1993 the second plaintiff did not have the necessary insurable interest in the said truck;

    2. That prior to the transfer of KLT to the second plaintiff and based on the registration card its owner was Perusahaan Far (Sabah) Sdn Bhd. At the same time there was an endorsement wherein B-Trak Sdn Bhd claimed ownership until full payment was effected;

    3. That the basis of appellant to claim ownership was the purported sales agreement dated December 1, 1987. Yet there was no claim of ownership endorsed on the registration card; 

    4. That in the special perils proposal there were three names entered as proposers, namely, the appellant but trading as Sri Gemawan Sdn Bhd, Chung Chao Lung Timber (Contracting) Company Sdn Bhd and Rapid Growth Sdn Bhd. And in the cover note the same three names appeared. There were 16 logging trucks insured including KLT and PLT. Nothing to state that the appellant was an owner in his personal capacity;

    5. That when cross-examined as to the ownership of KLT the appellant claimed to be his yet he could not recall how much was his personal contribution to the purchase price;

    6. That even after the transfer of ownership of KLT to the second plaintiff the appellant continued to maintain that he transferred the said truck to another party, namely Sri Sangitan Sdn Bhd;

    7. That it was the evidence of the appellant that the purchase price for the truck was paid by him and his companies. However he could not tell the amount of his personal contribution which would be an essential element to the claim under such circumstance; and

    8. That the claim of ownership by the appellant was not supported by the documentary evidence. For instance in the sales agreement it appeared that the appellant was the sole purchaser of 10 logging trucks. However in his testimony he said that he and his companies paid for the trucks.

13. The learned SCJ gave similar reasons for his findings in respect of PLT. And he went on to say that legal ownership would not be proved simply by showing the registration card. And it was also ruled that there should have been corroboration to the claim by the appellant that he paid the purchase price for the PLT since the documents showed that he was trading under the name of the second plaintiff.

14. The findings as summarized above are factual in nature based on the evidence adduced. It is also obvious that the learned SCJ did not accept wholesale the testimony of the appellant. He gave his reasons. Accordingly this court as an appellate court should be slow to interfere with the findings of fact. That is a settled law. In Sivalingam Periasamy v Periasamy [1999] 3 AMR 3506; [1995] 3 MLJ 395 the Court of Appeal said:

    It is trite law that this court will not readily interfere with the findings of fact arrived at by the court of first instance to which the law entrusts the primary task of evaluation of the evidence. But we are under a duty to intervene in a case where, as here, the trial court has so fundamentally misdirected itself, that one may safely say that no reasonable court which had properly directed itself and asked the correct questions would have arrived at the same conclusions. (See also Boonsom Boonyanit v Adorna Properties Sdn Bhd [1997] 2 AMR 1813; [1997] 2 MLJ 62)

15. In any event having reviewed the findings and the reasoning of the learned SCJ in the present case I find no reason to interfere.

16. As to the inferences made by the learned SCJ based on those findings of fact I do not think they are unjustified or beyond the ambit of the evidence adduced. For instance on the issue of insurable interest) as a starting point, one has to consider its definition or meaning. It has been said that 'legal ownership is not necessary for insurable interest. So to confine it would be adding a restriction to a contract of insurance which does not arise out of its nature. To be interested in the preservation of a thing is to be so circumstanced with respect to it as to have benefit from its existence, prejudice from its destruction. If there is a legal certainty of loss arising from the destruction of the property insured then there is an insurable interest.' — per Lord Buckmaster in Macaura v Northern Assurance [1925] AC 619.

17. Another way of describing it is 'the assured's pecuniary interest in the subject-matter of the insurance' (see Mac Gillivray & Parkington on Insurance Law relating to all risks other than marine, 8th edn, p 7). And the term has covered 'a person entrusted with goods can insure them without orders from the owner, and even without informing him that there was such a policy' (see Waters v Monarch Fire & Life Assurance Co [1856] 5 E & B 870; Tomlinson (A) (Hauliers) Ltd v Hepburn (HL(E)) [1966] AC 451).

18. In the instant case it was highlighted that the testimony of the appellant as well as the letter written by B-Trak Sdn Bhd dated July 5, 1993 and the sales agreements (exhs P17 and P18) should be sufficient for their purpose in particular on the issue of insurable interest of the appellant. With respect such assertion is misconceived. As concluded by the learned SCJ those documents (exhs P17 and P18) also provided the ambiguities. If indeed the appellant had direct personal interest in those trucks at that time there was no explanation as to why the ownership was still claimed by a third party and why his interest was not indicated anywhere such as in the registration card. The appellant seemed to say that the trucks were used by him in his personal capacity. But there was no assertion by him that he was doing the logging business in that capacity and not through companies. Hence in my view the observation of the learned SCJ is justified that there are ambiguities in the ownership of the trucks in the context of accounting and company law.

19. Ownership of course is not synonymous with insurable interest although it is one of the determining factors, yet the burden remains with the appellant to show that the ingredients of such interest have been satisfied. I am therefore inclined to agree that in this case such burden has not been satisfied. The appellant may have interest in the sense of being a major shareholder of the companies having use of these trucks. But the authorities state that that is not an indication of insurable interest on the insured goods. Hence there is no merit in the complaint that the case of Macaura v Northern Assurance, supra, should have been distinguished from the present case. Indeed I would say that the appellant was attempting to say that his shareholding in the companies which paid for the trucks or having the full use of them entitled him to have direct interest in them. That of course would go against the very concept of separate personality of a company.

20. Thus, I find no reason to depart from the conclusion of the learned SCJ in that in the instant case it was not established on the balance of probabilities that the appellant had at the material time insurable interest in KLT and PLT. Accordingly as per the proviso in the first agreed issue the claim of the appellant should therefore fail and a fortiori this appeal should be dismissed.

21. In view of the finding on the first issue being in the negative it follows that the other two issues would have to be answered in the negative as well. There is no basis in law to say that despite the absence of insurable interest the appellant still has a cause of action or the locus standi to initiate the claim against the respondent.

22. I have also deliberated on the other points raised by learned counsel for the appellant in connection with these three issues and it is my view that they are quite immaterial. Any conclusion on them would not alter the decision that I have arrived at herein.

23. On the issue of suppression of the previous claims learned SCJ concluded that the answers given in the proposal form for the Special Perils Policy, the interrogatories as well as the oral testimony of the appellant did not tally. To make matter worse there was no reply from learned counsel for the appellant when in submission that issue was raised by learned counsel for the respondent. Hence it was the finding of the learned SCJ that there was suppression of the previous claims. And since it is a factual finding this court should not interfere without cogent reason and I find none in this case. Further I do not think it would make much difference with the issue of estoppel being raised by learned counsel for the appellant in this appeal. A fact was found that there was no disclosure of the previous claims and this being an insurance claim the requirement of utmost good faith would come into play.

24. Accordingly in my judgment it was justified for the learned SCJ to conclude that the suits also failed due to the suppression of the previous claims. And for that reason as well this appeal fails.

25. The other agreed issues were not considered by the trial court. And before this court learned counsel for the respondent submitted that in view of the approach taken by the trial court his client would be prejudiced in the event that this court finds otherwise on the first four issues. However he hastened to say that the remaining issues were in fact a matter of interpretation of terms and not one of factual findings. In view of the conclusion arrived at on those issues the apprehension of learned counsel should cease. It follows as well that I need not deal with those remaining issues.

26. This appeal is therefore dismissed and the judgment of the learned SCJ affirmed. Costs to the respondent for this appeal to be taxed unless agreed.

Cases

Boonsom Boonyanit v Adorna Properties Sdn Bhd [1997] 2 AMR 1813; [1997] 2MLJ 62, CA; Macaura v Northern Assurance [1925] AC 619; Sivalingam Periasamy v Periasamy [1996] 3 AMR 3306; [1995] 3 MLJ 395, CA; Tomlinson (A) (Hauliers) Ltd v Hepburn (HL(E)) [1966] AC 451; Waters v Monarch Fire & Life Assurance Co [1856] 5 E & B 870

Authors and other references

Halsbury's Laws of Malaysia, vol 4

MacGillivray & Parkington on Insurance Law, 8th edn