The Forwarding Shipping and Bagusia Cases: A Perilous Approach by the Malaysian Judiciary to 'Perils of the Seas' in Marine Insurance?

• Author: Irwin Ui Joo Ooi
• Position: Law Lecturer, MARA University of Technology, Shah Alam
• Pages: 31-41

THE FORWARDING SHIPPING AND BAGUSIA CASES:

A PERILOUS APPROACH BY THE MALAYSIAN JUDICIARY TO

‘PERILS OF THE SEAS’ IN MARINE INSURANCE?

Irwin U J Ooi*

1 Introduction

There has been a dearth of reported marine insurance cases in Malaysia. However, in 2005 three cases were

reported by one of Malaysia’s oldest and arguably most prestigious law reports series, the Malayan Law

Journal.1 Prior to 2005, the last reported domestic case on substantive marine insurance was Lin Lin Shipping

Sdn Bhd v Govindasamy Mahalingam,2 a decision by Judicial Commissioner Richard Malanjum (as he then

was),3 more than ten years ago. In chronological order, the three cases reported in 2005 are Forwarding

Shipping Sdn Bhd v Nusantara Worldwide Insurance (M) Bhd,4 Bagusia Sdn Bhd v Malaysia Assurance

Alliance Bhd,5 and Kotak Malaysia (KOM) Sdn Bhd v Perbadanan Nasional Insurans Sdn Bhd (Formerly

Known as Union Insurance Malaysia Sdn Bhd).6 As the subject matter of this article is confined to the issue of

‘perils of the seas’, only the Forwarding Shipping and Bagusia cases will be subjected to critique. The Kotak

Malaysia case concerns marine open cover. In this article, the decisions of Abdul Aziz J and Abdul Wahab J in

Forwarding Shipping and Bagusia respectively will be examined in the context of a claim for losses due to

‘perils of the seas’ and the impact of the importation of a codifying Act such as the Marine Insurance Act 1906

(UK) (‘MIA 1906’) directly into Malaysian law, as well as the Malaysian judiciary’s preference for case law

from various Commonwealth jurisdictions. A further analysis will also be made of the impact of previously

reported Malaysian cases on the litigation in Forwarding Shipping and Bagusia, the important evidentiary

requirements and the relevance of seaworthiness in both these cases.

2 Forwarding Shipping Sdn Bhd v Nusantara Worldwide Insurance (M) Bhd

2.1 The Facts

The plaintiff owned a dumb barge named Autorex 6 which was 140 ft long, 40 ft wide and about 10 ft in depth.

On board, she was equipped with a P and H 330 crane7 that was positioned in the centre of the barge and

occupied about 20 ft of deck space. The Autorex 6 was insured for RM 200,000 and her crane for RM 180,000

under a Marine Hull Insurance Policy No 99BTDH000004/HHHI/R100 dated 26 March 1999. Th e marine risks

for this policy were ‘perils of the seas, river, lake or other navigable waters’. On 24 October 1999, timber logs

were loaded on board the Autorex 6 over a period of six hours at Bintulu, Sarawak, for delivery to a ship that

was anchored at Kuala Semanok.8 The logs were stacked in two compartments on board the flat deck of the

Autorex 6. Large logs were stacked up to 14 ft in the front deck, while the shorter ones were stacked up to 16 ft

at the hind deck. The logs were lashed with ropes and tied to six stentions at the front deck and seven stentions

at the hind deck. In order to prevent the logs from rolling, the stentions were extended by using log poles up to

18ft in height. The crane remained on board the Autorex 6 after the loading as it would be needed for loading the

logs onto the ship anchored at Kuala Seman ok.

* Law Lecturer, MARA University of Technology, Shah Alam.

1 Reported cases in the Malayan Law Journal predate Malaysia’s independence in 1957 by more than 20 years.

2 [1993] 2 MLJ 474 (High Court, Kuching, Sarawak). The author does not regard the case of Kementrian Pertahanan Malaysia v Malaysia

International Shipping Corp Bhd [2003] 2 MLJ 226; [2007] 5 MLJ 393 (Court of Appeal, Putrajaya) as a ‘marine insurance’ case. The

matter in Kemetrian Pertahanan Malaysia concerned striking out proceedings where subrogation was not pleaded and is therefore more

accurately classified as a case on civil procedure.

3 His Lordship was promoted to the Court of Appeal, then to the Federal Court, and is now one of the most senior members of the Malaysian

judiciary, after being appointed as the Chief Judge of Sabah and Sarawak. (For non-Malaysian readers of this article, a Judicial

Commissioner is a person who is under probation pending a formal appointment to the High Court bench. Appeals from the High Court are

made to the Court of Appeal, and appeals from the Court of Appeal are heard by the highest court of Malaysia, the Federal Court. When a

judge is appointed to the High Court, he is known as a Justice of the High Court, or simply as ‘J’. Those who sit on the bench of the Court of

Appeal are known as Justices of Appeal, or ‘JA’. Members of the judiciary at the Federal Court are identified as Federal Court Judges, or

‘FCJ’).

4 [2005] 1 MLJ 373 (High Court, Bintulu, Sarawak).

5 [2005] 2 MLJ 605 (High Court, Kuala Lumpur).

6 [2005] 4 MLJ 402 (High Court, Kuala Lumpur).

7 This is a heavy duty crane manufactured by a subsidiary of Hamischfeger Industries.

8 For non-Malaysian readers of this article, Kuala Semanok is an anchorage place close to Bintulu.

(2008) 22 A&NZ Mar LJ 31