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DMC/INS/04/07
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):
LOSS OF CARGO FROM BARGE : WHEN
LOST: WHETHER
INSURABLE INTEREST: PROXIMATE CAUSE: "REASONABLY
ATTRIBUTABLE
TO": WHETHER COVERED UNDER "WASHING
OVERBOARD" PERIL: MEANING OF
"WASHING OVERBOARD":
BURDEN OF PROOF
Summary
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
Facts
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.
Judgment
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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