Daxon Technology Sdn Bhd V Mui Continental Insurance Berhad & 1 Lagi

  

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MALAYSIA

 

IN THE HIGH COURT IN KUALA LUMPUR (COMMERCIAL DIVISION)

 

SUIT NO. D-22NCC-73-2009

 

Between

 

DAXON TECHNOLOGY SDN BHD

 

(Company No: 568331-M) … PLAINTIFF

 

And

 

MUI CONTINENTAL INSURANCE BERHAD (Company No: 29123-D)

 

JERNEH INSURANCE BERHAD

 

(Company No: 9827-A) . DEFENDANT

 

BEFORE THE HONOURABLE JUDGE Y.A. DR. HAJI HAMID SULTAN BIN ABU BACKER

 

IN CHAMBERS

 

JUDGMENT

 

1. This is my judgment in respect of the parties’ application to dispose of the matter pursuant to Order 14A of RHC 1980. And the prayer reads as follows:

 

l.That by consent, the plaintiff’s claim be fixed for final disposal (without full trial or oral evidence) on the questions of law in paragraph 1.1s to 1.16 below, the Statement of Agreed Facts and the construction of documents in the Agreed Bundle of Documents.

 

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1.1. Whether the plaintiff had any insurable interest in the insured cargo at the time of its loss on or about 8.5.2007 whilst on overland transit from the warehouse in Aarhus Denmark to the premises of the consignee at San Nicola, La Strada Caserta, Italy;

 

1.2. Whether the plaintiff, as required under the Voyage Clause under the Open Cover Policy for overland shipments to Europe, if applicable, declared the transporter and the transit warehouses that will be used, and if not, what is the effect of the plaintiff’s failure to declare the same;

 

1.3. Who is responsible for arranging the overland transport of the cargo from Aarhus, Denmark to San Nicola, La Strada, Italy under the DDU term in the invoice No.40008808;

 

1.4. Has the plaintiff completed its obligation of delivery under the invoice when the cargo arrived at Aarhus, Denmark;

 

1.5. Whether the insured cargo was insured for the full transit until the premises of the consignee at San Nicola, La Strada, Caserta, Italy or did it terminate when the insured cargo arrived at the warehouse in Aarhus, Denmark;

 

1.6. Whether clause 16 of the Institute cargo Clauses (A) is applicable and if so does clause 16 provide the defendants’ with a complete defence;

 

1.7. what is the scope of the plaintiff’s duties under clause 16;

 

1.8. whether the plaintiff carried out their duties under clause 16 in

 

a) taking the necessary steps to obtain settlement for the full invoice value of USD68,040.00

 

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b) claiming for the loss of the cargo from the transporter concerned

 

1.9. have the defendants waived their rights under clause 16 of the ICC (A);

 

1.10. whether the First Defendant’s letter dated 5.3.2008 contains an admission of the Defendants’ liability in the sum of USD74,693.35;

 

1.11. when did the plaintiff know of the settlement offers in respect of the loss of the insured cargo;

 

1.12. when did the plaintiff inform the First Defendant on the settlement offer;

 

1.13. whether the plaintiff took the necessary steps to preserve the offer of settlement in respect of the stolen cargo;

 

1.14. whether the plaintiff failed to observe their duty of utmost good faith when the plaintiff failed to make full and frank disclosure of the settlement offer when it submitted its claim to the broker on or about 16.7.2007;

 

1.15. whether the plaintiff in not taking any steps to achieve settlement for the full invoice value have breached the duties of the insured;

 

1.16. whether the CMR Convention (Convention on the Contract for the International Carriage of Goods by Road) applies to the present dispute.

 

2. Statement of Agreed Issues inter alia reads as follows:

 

1. Whether the plaintiff had any insurable interest in the insured cargo at the time of its loss on or about 8.5.2007 whilst on overland transit

 

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from the warehouse in Aarhus Denmark to the premises of the consignee at San Nicola, La Strada Caserta, Italy;

 

2. Whether the plaintiff, as required under the Voyage Clause under the Open Cover Policy for overland shipments to Europe, if applicable, declared the transporter and the transit warehouses that will be used, and if not, what is the effect of the plaintiff’s failure to declare the same;

 

3. Who is responsible for arranging the overland transport of the cargo from Aarhus, Denmark to San Nicola, La Strada, Italy under the DDU term in the invoice No.40008808;

 

4. Has the plaintiff completed its obligation of delivery under the invoice when the cargo arrived at Aarhus, Denmark;

 

5. Whether the insured cargo was insured for the full transit until the premises of the consignee at San Nicola, La Strada, Caserta, Italy or did it terminate when the insured cargo arrived at the warehouse in Aarhus, Denmark;

 

6. Whether clause 16 of the Institute cargo Clauses (A) is applicable and if so does clause 16 provide the defendants’ with a complete defence;

 

7. what is the scope of the plaintiff’s duties under clause 16;

 

8. whether the plaintiff carried out their duties under clause 16 in

 

a) taking the necessary steps to obtain settlement for the full invoice value of USD68,040.00

 

b) claiming for the loss of the cargo from the transporter concerned

 

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9. have the defendants waived their rights under clause 16 of the ICC (A);

 

10. whether the First Defendant’s letter dated 5.3.2008 contains an admission of the Defendants’ liability in the sum of USD74,693.35;

 

11. when did the plaintiff know of the settlement offers in respect of the loss of the insured cargo;

 

12. when did the plaintiff inform the First Defendant on the settlement offer;

 

13. whether the plaintiff took the necessary steps to preserve the offer of settlement in respect of the stolen cargo;

 

14. whether the plaintiff failed to observe their duty of utmost good faith when the plaintiff failed to make full and frank disclosure of the settlement offer when it submitted its claim to the broker on or about 16.7.2007;

 

15. whether the plaintiff in not taking any steps to achieve settlement for the full invoice value have breached the duties of the insured;

 

16. whether the CMR Convention (Convention on the Contract for the International Carriage of Goods by Road) applies to the present dispute.

 

3. Statement of Agreed Facts inter alia reads as follows:

 

1.By a Marine Open Cover Policy No.PG-S-Z7-000001 the defendants agreed to insure various shipments effected by the plaintiff against the risks enumerated in the said insurance policy and the trems of the cover being set out therein and in a schedule attaching and

 

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forming part of the policy from 1.01.2007 until such time the policy is cancelled;

 

2. By a “Co-Insurance” clause in the said insurance policy the First and Second defendants have agreed to indemnify the plaintiff in the proportion of eighty percent (80%) by the First defendant and twenty percent (20%) by the Second Defendant and that the First defendant will be the Leading Underwriter;

 

3. The terms of the insurance contract are inter alia as follows:

 

a) coverage is from the insured’s premises/or its suppliers/or places as declared in Malaysia and Singapore to final destination and until unloaded anywhere in the world and vice versa including shipments to Europe where shipments are un stuff and unloaded at designated warehouses and then re-loaded at designated warehouses and then reloaded into designated road or land conveyances until unloading at the respective customer’s final destination.

 

b) The insurance policy incorporates various Institute Clauses which are subject to English law and practice;

 

4. On or about 31.3.2007 the insured cargo was loaded onto the vessel “Pacific Express” at Penang for onward carriage to Port Klang, Malaysia;

 

5. The insured cargo was trans-shipped to the vessel “Xin Shanghai” at Port Klang for carriage to the Port of Aarhus, Denmark;

 

6. The vessel “Xin Shanghai” arrived at the discharge Port Aarhus, Denmark where the insured cargo was discharged and kept at a

 

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warehouse in Aarhus, Denmark for onward carriage to the ultimate consignee at San Nicola, La Strada, Caserta, Italy;

 

7. On or about 8.5.2007 the insured cargo was reportedly stolen and completely lost whilst being transported overland from the warehouse in Aarhus, Denmark to the consignee’s premises in San Nicola, La Strada, Caserta, Italy.

 

4. Summary of Plaintiff’s case inter alia reads as follows:

 

1. By a Marine Open Cover (Policy No.PG-S-Z7-000001) the defendants agreed to insure various shipments effected by the plaintiff against the risks enumerated in the said insurance policy;

 

2. The terms of the cover are set out in the insurance policy and in a schedule attaching and forming part of the policy. The insurance policy incorporates various Institute Clauses where English law and practice applies;

 

3. On 2.4.2007 a marine certificate was issued under the insurance policy in respect of a shipment of 648,000 pieces of blank optical storage discs for the sum of USD78,408.00 for a voyage from the plaintiff’s premises in Penang to the premises of the consignee in San Nicola, La Strada (Caserta), Italy;

 

4. On or about 31.3.2007 the insured cargo was loaded on to the feeder vessel “Pacific Express” for carriage to Port Klang where the insured cargo was trans-shipped to the vessel “Xin-Shanghai” for onward carriage to the Port of Aarhus, Denmark;

 

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5. On or about 27.4.2007 the insured cargo was discharged from the vessel “Xin-Shanghai” and was kept at a local warehouse for onward carriage to the ultimate consignee’s premises in San Nicola, La Strada (Caserta), Italy;

 

6. On or about 16.5.2007 the insured cargo was reportedly stolen by the transporter and/or their servants and/or agents and was completely lost whilst on overland transit from the warehouse in Aarhus to the consignee’s premises in San Nicola, La Strada (Caserta), Italy;

 

7. The loss of the insured cargo took place during the currency of the insurance and at all material times the plaintiff had an insurable interest in the said insured cargo;

 

8. In breach of the insurance contract the defendants’ have failed to settle the plaintiff’s claim of USD74,844.00 under the said insurance policy.

 

5. Summary of defendants’ case inter alia reads as follows:

 

l.The defendants’ case is that the plaintiff’s claim is not claimable under the plaintiff’s insurance policy on the following grounds:

 

a. the loss of cargo claimed by the plaintiff in this action took place at Verona, Italy on or about 8 May 2007;

 

b. the interest and voyage insured is the voyage for which the plaintiff is responsible under the plaintiff’s invoice No: 40008808 dated 27 March 2007 which provided that the insured cargo was sold by the plaintiff to Fortis Technology Co. Ltd of Taiwan with delivery to Aarhus, Denmark on DDU terms;

 

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c. the coverage under the policy ends with the termination of the transit for which the plaintiff was responsible under the invoice i.e. at Aarhus, Denmark on or about 27 April 2007;

 

d. the plaintiff was required to declare any designated warehouse and designated road or land conveyances if the insured transit involved land conveyance in Europe. No such designation or declaration was made;

 

e. before the plaintiff can claim under the policy it must have insurable interest at the time of the loss. The plaintiff has no insurable interest in the cargo beyond Aarhus, Denmark;

 

2. The plaintiff insured the cargo at the invoice plus a 10% insurance uplift.

 

3. In the alternative, even if the loss was covered under the policy the plaintiff had failed to mitigate loss, which is required as a condition of duty of assured under the policy:

 

a. the plaintiff had a real prospect of obtaining the settlement of the full invoice value from the transporter used by the plaintiff’s buyer as early as one month from the loss but negligently and recklessly failed to conclude the settlement;

 

b. additionally the plaintiff had also failed to exercise its duties of utmost good faith by not notifying the defendants of the offer;

 

c. the plaintiff had also failed to file any claim against the transporter to ensure that the claim did not lapse from applicable time bar.

 

4. The plaintiff’s failure to mitigate the loss meant that the plaintiff’s loss was due to the plaintiff’s own negligence. The defendants aver

 

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that this failure was also a failure by the plaintiff to exercise the duties of the assured under the policy and provides the defendants a full defence to the claim, in addition to the grounds in paragraph 1 above.

 

6. The plaintiff and defendants relied on the following cases namely: Noble resources Ltd. And Unirise Development Ltd. V George Albert Greenwood [1993] Vol. 2 Q.B. (Com. Ct.) 309; Astrovlanis Compania Naviera S.A. v Linard [1972] Vol.2. Q.B. (Com.Ct.) 187; Quantum Corp Inc & Ors v Plane Trucking Ltd & Anor [2002] 2 Lloyd’s Rep 25; TNT Global SpA & Anor v Denfleet International Ltd & Anor [2007] 2 Lloyd’s Rep 504; Kotak Malaysia (KOM) Sdn Bhd v Perbadanan Nasional Insurans Sdn Bhd [2006] 5 CLJ 398; Ngo Chew Hong Edible Oil Pte Ltd v Geoffrey Kenneth Knight [1988] 3 MLJ 145; Dusun Desaru Sdn Bhd & Anor v Wang Ah Yu & Ors [1999] 2 CLJ 749; Sitra Wood Products Pte Ltd v Royal & Sun Alliance Insurance (S) Pte Ltd [2001] 4 SLR 121.

 

Preliminaries

 

7. In the instant case the dispute is related to liability only and there is no real dispute as to quantum. The most essential documents which are necessary to determine the issue of liability in the agreed bundle of documents are as follows:

 

(i) Marine Open Cover – pg 4 (ii) Pro-Forma Invoice pg 51 (iii)

 

Purchase Order pg.52 (iv) Purchase Order pg.54 (v) Commercial

 

Invoice pg.58 (vi) Bill of Lading pg.59 (vii) Marine Certificate (viii)

 

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Letters at pgs. 70, 71, 77, 79, 81, 83, 84, 85, 86. And one document which was introduced at the stage of submission by the defendant with no objection from the plaintiff which is referred to as A, and attached to the submission.

 

8. The application poses a number of questions and both parties have submitted on the issues in length and I do not wish to repeat the same save as to answer the real issue whether there is a liability on the part of the defendant, taking into consideration the admissions of the new document at the stage of submission.

 

9. I have read the application, affidavits and submissions of the parties in detail. I take the view the plaintiff’s claim must be dismissed. My reasons inter alia are as follows:

 

(a) It is not in dispute that the loss of cargo took place in Italy. However, the plaintiff’s commercial invoice clearly says that (i) the goods is sold to Fortis Technology Ltd (ii) Shipment to AARHUS Denmark with a statement DDU AARHUS. And the defendant has produced a document referred to as A, a pro forma invoice by Fortis to show that Fortis has taken steps to transport the cargo to Italy. In consequence I find no merit in the plaintiff’s argument that the goods were insured until Italy even though there are some evidence to show that the defendants’ obligation was to cover until Italy.

 

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(b) In my view from the primary documents it is clear that the defendants’ responsibility ends at Aarhus Denmark. And there is much merit in the defendants’ argument that (i) the plaintiff had failed to declare any designated warehouse and designated road or land conveyances if the insured transit involved land conveyance in Europe (ii) the plaintiff has no insurable interest beyond Aarhus Denmark.

 

(c) In the instant case the defendants had at an earlier stage admitted liability to plaintiff’s claim subject to certain condition and that too, on a without prejudice basis, based on the fact that they were responsible until Italy, and in consequence plaintiff’s lost, an opportunity to recover from a third party. The conduct of the defendants, though may not create liability pursuant to the policy terms, does not mean the plaintiff’s may not have a good cause of action against the defendants in negligence. For the purpose of this action I have taken note of the conduct of the defendants to decide on the issue of costs and I take the view that the defendants must bear the costs of the action.

 

10. For reasons stated above I hold that:

 

(i) The defendants are not liable to the plaintiff on the insurance policy;

 

(ii) The defendants to pay the plaintiff’s costs in the sum of RM 20,000.00.

 

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I hereby order so.

 

(Y.A. DR. HAJI HAMID SULTAN BIN ABU BACKER)

 

Judge

 

High Court (Commercial Division)

 

KUALA LUMPUR

 

Date:14th April 2010

 

For the Plaintiff: Mohan Das; M/s Mohan Das & Associates For the Defendant: Philip Teoh; M/s Philip Teoh & Co.

 

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