CLASSIC PALM OIL MILL SDN BHD v BERJAYA SOMPO INSURANCE BERHAD

Case Significance

Illustrates that while an insurer's repudiation of a fire claim may be held unlawful, the insured must still strictly prove the quantum of its loss: unsupported particulars are insufficient, and failure to produce documents invites an adverse inference under section 114 illustration (g) of the Evidence Act 1950, reducing the recoverable amount.

This High Court decision at Kuala Lumpur, delivered after a four-day trial, concerns a claim under a fire insurance policy for damage to a palm oil mill's boiler, and turns on whether the loss was an insured fire or an excluded explosion, and on proof of quantum. The plaintiff, Classic Palm Oil Mill Sdn Bhd, had suffered damage to the furnace area and biogas burner of a water-tube steam-generating boiler at its premises, and claimed under a fire policy issued by the defendant insurer, Berjaya Sompo Insurance Berhad, for property loss and the costs of two forensic reports. The plaintiff contended the incident was a flash fire; the insurer repudiated the claim, asserting it was an explosion of the boiler, which was excluded under the policy's explosion extension (which extended cover to explosion damage but excluded damage to boilers and pressure vessels resulting from their own explosion). The court examined the competing accounts and held that the insurer's repudiation was unlawful and wrong. On quantum, however, it applied the principle that a plaintiff claiming damages bears the burden of proving both the damage and its amount, and that particulars are not enough — the loss must be proved — and drew an adverse inference under section 114 illustration (g) of the Evidence Act 1950 where supporting documents were not produced. It therefore did not award the full RM347,864 claimed for property loss, allowing indemnity to the extent of RM220,725. The court allowed the costs of the two forensic reports, RM52,526.10 and RM15,600, the quantum of which was not disputed. It granted declarations that the repudiation was unlawful and that the plaintiff was entitled to be indemnified, ordered payment of RM220,725 plus the forensic-report costs with interest at 5% per annum from the date of repudiation and from judgment until settlement, and awarded costs of RM150,000, subject to allocatur. The defendant appealed.