Hua Seng Sawmill v. QBE Insurance

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Hua Seng Sawmill v. QBE Insurance (Malaysia) BHD
[2003] 4 SLR 449
Singapore High Court: Justice Belinda Ang: 9 October 2003
Rajah & Tann for Hua Seng Sawmill
Haq and Selvam for QBE
MARINE INSURANCE: Institute Cargo Clauses (C):

Hua Seng Sawmill claimed under an ICC(C) insurance policy issued by QBE 
for loss of their cargo from a barge that was being towed from Singapore to East 
Malaysia. The goods were shipped on 30 November 1999 and the insurance was
arranged on 2 December 1999. Hua Seng warranted that there was no claim from 
30 November 1999 to 2 December 1999. Hua Seng alleged that, on 4 December, 
the goods were lost by "washing overboard", an insured peril. The Defendant insurers
put the claimants to strict proof that the loss had occurred when it did, and that the 
loss was caused by "washing overboard". The court found in favour of the claimants
on the first point, but in favour of the insurers on the second point.

                                                                                                                                                                                                                                                                                    DMC Rating Category: Developed

This Case Note was contributed by Ang & Partners, the Website’s International Contributors 
for Singapore

Hua Seng Sawmill arranged a marine policy on Institute Cargo Clauses (C) "ICC(C)" terms
from QBE on 2 December 1999, 2 days after the tug and barge carrying the goods left Singapore for 
East Malaysia. Hua Seng warranted that there was no claim from 30 November 1999 to 2 December 
1999. The policy added "washing overboard" as an insured peril. On 4 December 1999, those on
board the tug discovered the deck of the barge empty of cargo. The port sidewall was missing. 
Hua Seng alleged that the goods were lost by "washing overboard".

QBE put Hua Seng to strict proof that the goods were loaded on board the barge at Singapore,
that the goods were on-risk at the time of loss, and of Hua Seng’s insurable interest in the goods. 
QBE further alleged that Hua Seng had known that the goods were lost before the policy came 
into effect and this was a fraudulent breach of the ‘no-claim’ warranty. Finally, QBE contended 
that the loss was due to improper stowage, and not by "washing overboard" or any other insured peril.

The judge found in favour of Hua Seng on all issues save the cause of the loss. As Hua Seng did not 
prove that the loss was by "washing overboard", the action was dismissed.

1. On the evidence, the Judge found on a balance of probabilities that the cargo was loaded on board 
the barge at Singapore and that the loss happened on 4 December 1999. There was no evidence of 
fraud on Hua Seng’s part and QBE had not made out a case of breach of the ‘no-claim’ warranty.

2. There was evidence that the goods were sold to Hua Seng and that property in the goods had
passed to Hua Seng before payment. The goods were delivered to the owners of the tug and barge, 
who received and held the goods for Hua Seng as the purchaser who had chartered the barge and 
tug, without reservation of title. Hua Seng had an insurable interest in the goods.*

3. Section 55(1) of the Marine Insurance Act prescribes that the insurer is only liable for a loss 
proximately caused by an insured peril. The ICC(C) provide that the underwriter is to pay for loss 
or damage "reasonably attributable to" the insured risks. There is little difference between the 
practical effect of the two expressions because proximate cause is to be determined by applying 
common sense standards to find the cause predominant in efficiency.

4. There was no obligation on QBE to prove, even on a balance of probabilities, the truth of their 
allegation that improper stowage was a probable cause of loss. This was because the burden of 
proving that the goods were lost by an insured peril was and remained on Hua Seng. But where 
the circumstances suggested that improper stowage could be a probable cause of loss, this would 
be enough to leave the court doubtful as to what was the real cause of loss. To that end, it followed 
that Hua Seng had failed to prove its case. The judge accepted the views of QBE’s experts that if 
the goods were properly fastened for the voyage, they could not have shifted in the weather conditions 
experienced, which was not bad for that time of the year.

5. The occurrence covered by the words "washing overboard" is outside the following range of 
occurrences: (a) deck cargo that falls overboard due to breaking of lashing during heavy weather; 
(b) loss of cargo overboard due to violent rolling of the ship or by sudden listing of the ship; and 
(c) damage to cargo caused by shifting in heavy seas. In ordinary speech, the constituent of "washing 
overboard" is the action of the sea in heavy weather where the force of the waves pushes or sweeps 
the cargo overboard. Looking at the term in its context in the list of perils insured against, it is distinct 
and separate from the risk of jettison and the others. It is also distinct and separate from "perils of the 
sea" under an all risks policy where for higher premium a wider and better coverage is provided. An 
extended meaning canvassed by Hua Seng would blur and render uncertain the various types of 
coverage on offer and for which different premium considerations apply. While the loss might have
been covered under an ICC(A) policy, what was clear here was that the loss was not caused in the 
way required by the specific peril sued upon.

* Section 5 of the Marine Insurance Act provides that a person with an insurable interest is one who
is interested in a marine adventure, namely where "he stands in any legal or equitable relation to the 
adventure or to any insurable property at risk therein, in consequence of which he may benefit by the 
safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, 
or by the detention thereof, or may incur liability in respect thereof."




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