General Division of the High Court · Decided 30 April 2025

The increased value part of a marine insurance was void as a wager, capping the claim

Oversea-Chinese Banking Corp Ltd v Argoglobal Underwriting Asia Pacific Pte Ltd and others

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[2025] SGHC 82Case no. Suit No 814 of 2021

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The increased value part of a marine insurance was void as a wager, capping the claim

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Introduction
[1] This is a claim by the Plaintiff (“OCBC”) against the Defendants (the insurers) for US$70m, pursuant to a marine insurance policy for the loss of a vessel. The Defendants raised a wide variety of defences, including that OCBC has not proven that the vessel was a constructive total loss, that the loss was not caused by an insured peril under the marine insurance, that OCBC has not proven that it had disbursed the loan, that OCBC was in breach of its duty of fair presentation, that OCBC was in breach of warranties of the marine insurance and that part of the marine insurance is void as gaming or wagering contract.
Facts
[2] OCBC was the mortgagee of the vessel “TERAS LYZA” (the “Vessel”). OCBC was co-assured under a hull and machinery marine insurance policy (the “MI”) issued by the Defendants in respect of the Vessel, alongside vessel owner Teras Lyza Pte Ltd (“TLPL” or the “Vessel Owner”) and vessel manager Teras Offshore Pte Ltd (“TOPL” or the “Vessel Manager”). Collectively, TLPL and TOPL will be referred to as the “Teras Entities”.
The Marine Insurance Policy
[3] The MI contains a “Cover Note” issued by marine insurance broker LCH Lockton Pte Ltd (“LCH”) to TLPL on 13 June 2017. Two sections of the Cover Note are material to OCBC’s claim:
(a) under “Section [A]”, the Defendants undertook to insure the hull and machinery of the Vessel up to an insured value of US$56m (“Section [A]”); and
(b) under “Section [B]”, the Defendants undertook to insure the Vessel for increased value and/or excess liabilities up to a value of US$14m (“Section [B]”).
In other words, and in the event of a total loss of the Vessel, any payout under Section [A] of the MI would be capped at US$56m while any payout under Section [B] would be capped at US$14m.
[4] The Cover Note also sets out the Defendants’ respective interests in Sections [A] and [B] of the MI, as follows:
The 4th Defendant, “MS First”, holds the largest share of coverage under the MI and is the lead insurer under the MI.
[5] LCH also issued an “Addendum No. 1” to the Cover Note on 13 June 2017. This Addendum arose from two Deeds of Assignment and Charge (“DOACs”) entered into between each respective Teras Entity and OCBC on 12 June 2017. By way of cl 3.1 of the DOACs, each Teras Entity assigned its rights, title and interest in the MI to OCBC. OCBC was further named as “sole loss payee” in respect of the Vessel’s Insurances at cl 6.1.1 of the DOACs. To give effect to the DOACs, Addendum No. 1 incorporated the relevant notice of assignment and loss payable clause into the MI.
[6] On 29 August 2017, the 4th Defendant issued a renewal certificate to the parent company of the Teras Entities (the “Renewal Certificate Policy”). This confirmed the marine insurance for the period of 1 August 2017 to 31 July 2018 (both dates inclusive). Collectively, the Cover Note and Renewal Certificate Policy set out the conditions and warranties operative in the MI.
[7] As will be detailed further, the Vessel was subsequently prepared to embark on a tow voyage. On 22 May 2018, LCH informed TLPL that the Defendants had agreed to insure the Vessel for this tow voyage, for an additional premium of US$18,200 and on a set of agreed terms. This agreement was formalised in the following manner: (a) an “Addendum No. 3” was issued to the Cover Note on 6 June 2018; and (b) an Endorsement No. 18183166/7 was issued to the Renewal Certificate Policy on 20 June 2018. Collectively, these additional terms are the “Towage Addendum”.
Preparation for the Tow Voyage
[8] In early May 2018, a set of charterers informed TOPL of their intention to award a contract for charter of the Vessel, together with the towing tug “TERAS EDEN” (the “Tug”). At that point, the Vessel was laid-up in Vung Tau, Vietnam. It would have to be towed to Taichung, Taiwan for delivery to the charterers (the “Tow Voyage”).
[9] In light of this, the Teras Entities undertook an internal feasibility study to consider whether a wet tow of the Vessel would be feasible. This survey was conducted by then-Deputy Director of Fleet Operations of TOPL, Captain Bjarke Norby Pedersen (“Cpt Pedersen”). His initial feasibility study concluded that a wet tow was feasible, subject to the flag state and other approvals as required. On this basis, a representative of the Teras Entities wrote to the Vietnam office of the American Bureau of Shipping (“ABS”) to seek advice on the intended wet tow of the Vessel, including the steps that would need to be taken to obtain approval from the Maritime and Port Authority of Singapore (“MPA”).
[10] On 12 May 2018, the ABS informed the Teras Entities that the MPA had “no objection to the unit tow voyage”, subject to a set of conditions being verified to the satisfaction of ABS (the “12 May Email”):
[11] To satisfy the first condition at para 3 of the 12 May Email, an ABS surveyor attended the Vessel on 25 May 2018. On the same day, TOPL was issued a Certificate of Fitness to Proceed under Tow (“ABS Fit-for-Tow Certificate”), a Short-Term International Load Line Certificate (“ABS Load Line Certificate”), a Class Survey Report (“ABS Class Survey Report”), and a Statutory Survey Report (“ABS Statutory Survey Report”).
The Marine Warranty Survey
[12] The last condition at para 3 of the 12 May Email required the Vessel to be surveyed to the satisfaction of a competent marine warranty surveyor (“MWS”). Prior to receiving the MPA’s directions on 12 May, the Teras Entities were in contact with one MWS, that being Braemar Technical Services (Offshore) Pte Ltd (“Braemar”). The Teras Entities initially intended to engage Braemar as MWS. Its engagement was also pre-approved by the Defendants.
[13] However, a series of events ensued, leading to Techwise Offshore Consultancy Pte Ltd (“Techwise”) being hired as MWS instead of Braemar:
(a) On 8 May 2018, TOPL wrote to Braemer’s Head of Geotechnical Department Mr Budiawan Paulus Handidjaja (“Mr Paulus”), requesting a meeting to discuss the Tow Voyage. Mr Paulus replied on the same day, requesting for a proposed plan for towing. This was sent over to Mr Paulus on 10 May 2018. On 11 May 2018, there were two meetings between: (i) Mr Paulus and Cpt Pedersen, and (ii) Mr Paulus and TOPL’s then-Chief Executive Officer Mr Peter Lee.
(b) In the evening of 11 May 2018, and subsequent to these two meetings, TOPL wrote to Braemar to request a quotation for its service. On 14 May 2018, Mr Paulus replied stating that there were several issues that needed to be resolved. He suggested a further meeting to discuss and resolve these issues. As the scope of work was likely to increase after the discussion, he suggested quoting thereafter.
(c) On 16 May 2018, Cpt Pedersen arrived in Vietnam to prepare for sail away of the Vessel and the Tug. He met with Braemar’s personnel on the same day. According to Cpt Pedersen, he started to grow concerned with several of Braemar’s suggestions for the Tow Voyage, such as that it should adopt a coastal route and that it should be manned. Neither had Braemar provided its quotation by that meeting. Given that the Vessel’s initial intended departure date of 23 May 2018 was drawing close, Cpt Pederson decided to contact a potential alternative MWS – Techwise – to discuss the Tow Voyage.
(d) On 18 May 2018, Cpt Pedersen obtained documents from Techwise, stating its qualification to act as MWS. Cpt Pedersen sent these documents to LCH and the Defendants via Ms Sharleen Cheng (“Ms Cheng”), who was LCH’s administrative point of contact for the MI. Ms Cheng emailed Cpt Pedersen on the same day to say that she had spoken offline with LCH, with the initial feedback being that there would be no issue approving Techwise as MWS.
(e) On 20 May 2018, Cpt Pederson emailed Mr Peter Lee, providing his comments on both proposed MWS. On the same day, Cpt Pederson also received an email from Braemar, where Braemar set out further comments on the proposed Tow Voyage. The 20 May Emails will be further particularised at [195] below.
(f) Mr Peter Lee sent an email to LCH and the Defendants via Ms Cheng on 22 May 2018, seeking confirmation of the Defendants’ acceptance of Techwise’s hire as MWS.
[14] Following these events, Techwise was officially hired as MWS. Between 26 and 31 May 2018, Techwise issued a Certificate of Fitness for Towage (“MWS Fit-for-Tow Certificate”), a Certificate of Approval for the Tow Voyage (“MWS Certificate of Approval”), a Suitability Survey Report (“MWS Suitability Survey Report”), and a Sailaway Attendance Report (“MWS Sailaway Attendance Report”).
The Tow Voyage
[15] On 30 May 2018, the Vessel sailed away from Vung Tau, Vietnam under tow of the Tug. On 5 June 2018 at about 3.45pm, the Vessel developed a list to port and trimming by the stern. At 5.50pm on 5 June 2018, the Vessel capsized.
Events after the capsize of the Vessel
[16] The following events ensued subsequent to the Vessel’s capsize:
(a) On 15 June 2018, salvors were contracted to salvage the Vessel..
(b) Between 23 and 27 July 2018, an underwater inspection of the Vessel was carried out. On 25 July 2018, the Vessel Owner tendered a Notice of Abandonment under the MI on the basis that the Vessel was a constructive total loss (“CTL”).
(c) The Defendants rejected the Notice of Abandonment on 26 July 2018.
(d) On 18 August 2018, the Vessel Owner informed the Defendants that no scrap buyers were interested. The Vessel could only be disposed of. The Vessel was then disposed of and submerged by salvors in deep waters off Philippines on 20 August 2018.
(e) On 6 November 2020, the assureds formally presented a claim against the Defendants under the MI. No payment was made.
(f) The present suit was commenced by the Teras Entities and OCBC as co-plaintiffs on 30 September 2021.
[17] The Teras Entities went into liquidation in 2022. The liquidators of the Teras Entities did not wish to continue their participation in this action and they were struck out as parties. This action continued with OCBC as the sole plaintiff.
OCBC’s Case
[18] OCBC claims that the capsize and/or loss of the Vessel was caused by “perils of the seas” pursuant to cl 6.1.1 of the Institute Time Clauses (Hulls) 1.10.83 CL 280 (“ITC”). The MI incorporates the ITC, subject to specified amendments which are not presently relevant. OCBC’s primary claim is that there was a CTL of the Vessel quantified at US$56m and US$14m, being the respective insured values under Section [A] and Section [B] of the MI (see [3] above). Alternatively, OCBC seeks payment for unrepaired damage to the Vessel in a sum to be assessed by the court, or for damages for breach of the MI.
Defendants’ Case
[19] The Defendants adopted what appeared to be an evolving kitchen sink approach, raising a wide range of defences, dropping some and then raising new ones along the way. This occurred even after the end of trial. I set out the Defendants’ case as was eventually presented in their Closing Submissions dated 24 January 2025:
(a) OCBC has not proven that the Vessel was a CTL;
(b) the loss was not caused by an insured peril under the MI;
(c) OCBC has not proven that it disbursed the loans or the interest and late charges due;
(d) OCBC was in breach of its duty of fair presentation under s 3 of the United Kingdom’s (“UK”) Insurance Act 2015 (“UK IA 2015”);
(e) OCBC was in breach of Warranties 1, 2 and 4 of the MI and that the Defendants are in any event not liable for loss as the Vessel was sent to sea in an unseaworthy state per s 39(5) of the UK’s Marine Insurance Act 1906 (“UK MIA 1906”); and
(f) section [B] of the MI is void as a gaming or wagering contract under s 4 of the UK MIA 1906.
Issues to be Determined
[20] The following main issues arise for determination:
(a) First, whether OCBC has proven that the Vessel was a CTL.
(b) Second, whether the loss of the Vessel is covered by the MI, in particular, whether the loss of the Vessel was caused by perils of the seas.
(c) Third, whether OCBC has proven the quantum of its loss.
(d) Fourth, whether OCBC was in breach of its duty of fair presentation under s 3 of the UK IA 2015.
(e) Fifth, whether OCBC was in breach of Warranties 1, 2 and 4 of the MI and whether the Defendants may rely on s 39(5) of the UK MIA 1906 to avoid liability for payment.
(f) Sixth, whether Section [B] of the MI is void as a gaming or wagering contract under s 4 of the UK MIA 1906.
Constructive Total Loss
[21] The first main issue is whether OCBC has proven CTL. Clause 6.1.1 of the ITC, upon which OCBC relies, states as follows:
OCBC’s Case
[24] As of 6 June 2018, the day after the capsize, the Vessel was completely submerged, with the bottom of its hull just barely visible above the water surface:
[26] On 11 July 2018, Ms G Neelamalar (acting on behalf of the Defendants), emailed Vessel Owner (“11 July Email”), stating:
[27] On 16 July 2018, and at the Vessel Owner’s request, Ms Neelamalar provided a Certificate of Valuation for the Vessel dated 22 June 2018 (the “Certificate of Valuation”). The Certificate of Valuation provided details as to why the value of a new build of a similar vessel was estimated to be about US$40m.
[28] On 22 July 2018, the Vessel Owner sent an email to the Special Casualty Representative (“SCR”) and the Defendants (the “22 July Email”). The Vessel Owner narrated the state of “impasse” between the Protection and Indemnity Club (the “Club”), the Vessel Owner and the Defendants in relation to whether the Vessel was a CTL. In this email, the Vessel Owner restated its position, which was supported by the Club, that the casualty was a CTL.
[29] From 23 to 25 July 2018, there were SCR Situational Reports (“SCRS Reports”) issued by Solis Marine Consultants (“Solis”) and sent to the Teras Entities and the Defendants. These SCRS Reports set out various observations about the extent of damage suffered by the Vessel, including cracks, breaks, and shearing in the Vessel’s legs.
[30] On 25 July 2018, the Vessel Owner tendered a Notice of Abandonment (“Notice of Abandonment”) under the MI on the basis that the Vessel was a CTL. The Vessel Owner stated that:
(a) initial sue and labour costs of US$522,001.24;
(b) salvage costs of US$26m;
(c) heavy lift transport costs of between US$740,000 and $1m;
(d) repair and refurbishment costs of between US$50,039,552.93 and $56,100,000; and
(e) costs of inspection/testing by Class of between US$1.5m and $2m.
[33] On 26 July 2018, Ms Neelamalar replied on behalf of the Defendants to decline the Notice of Abandonment (“26 July Email”). She did not provide a reason. Her email did not respond to the estimates provided by the Teras Entities, nor did it address the results of the underwater inspection. Ms Neelamalar agreed, however, that the question of whether the Vessel was a CTL, was to be determined as of that date, ie, 26 July 2018.
[34] On 4 August 2018, the salvors, Resolve Salvage & Fire (Asia) Pte Ltd (the “Salvors”), issued a dive inspection report (“Dive Inspection Report”). This set out a more extensive list of findings concerning the damage to the Vessel, including:
(a) One hydraulic line to the jacking system was found to be damaged and broken.
(b) The structural condition of the port stern leg was very poor, cracks and complete breaks were found at multiple locations on all chords of the leg. The inboard chord at the second X-bracing location from the spud can had been completed sheared.
(c) Two hydraulic pipelines were completely sheared and found to be hanging free.
(d) The machinery house of the pedestal crane appeared to have completely detached from its foundation, falling into the gantry above it. The hydraulic lines were observed to be pulled apart and damaged.
(e) The hydraulic power units had the top-mounted heat exchanges fall, ripping the manifolds away from the top hydraulic tanks. The tanks were also observed to have shifted.
(f) The boom of the port bow crane appeared to have fallen out of the rest and was hanging vertically.
[36] On 18 August 2018, the Vessel Owner informed the Defendants by letter that there were “no parties interested in purchasing the [Vessel] in her current condition, even as scrap”. The Vessel Owner also stated that they were “left with no viable alternative but to scuttle the [Vessel]”, and that this would occur on or about 20 August 2018 (the “18 August Letter”).
Defendants’ case
[38] The Defendants submit that the documents relied on by OCBC are inadmissible. They were not adduced through any witnesses and are hearsay. They cite Jet Holding Ltd and others v Cooper Cameron (Singapore) Pte Ltd and another and other appeals [2006] 3 SLR(R) 769 (“Jet Holdings”) at [76], where the Court of Appeal held that it is “trite law that even where there is an agreed bundle of documents, the truth of the contents of the [d]ocuments nevertheless remains at issue and is subject to, inter alia, objections centring on the doctrine of hearsay”.
[39] In Keimfarben GmbH & Co KG v Soo Nam Yuen [2004] 3 SLR(R) 534 (“Keimfarben”), the High Court at [13] held that a letter from a Malaysian company offering to buy paint at certain prices the company was agreeable to, was hearsay and inadmissible. The maker of the offer was not in court to confirm that the written offer was made in those terms, that it was a genuine offer from the company Sui Hup or that the prices indicated were what Sui Hup was prepared to pay. The Defendants also rely on English Exporters v Eldonwall Ltd [1978] 1 Ch 415 (“English Exporters”), in which the court drew a distinction between an expert’s opinion on one hand and the factual evidence led by the expert on the other. In so far as an expert purports to provide factual evidence to the court which he or she has no first-hand knowledge of, this will be equally subject to a hearsay objection: English Exporters at 421.
[41] In their further reply submissions dated 24 March 2025, the Defendants expanded on their hearsay objection by arguing that the notice requirement in s 32(4)(b) of the Evidence Act 1893 (2020 Rev Ed) (“EA”) was not fulfilled. The Defendants argued that OCBC had made no mention of the documents on which it relied to prove that the Vessel was a constructive total loss, in any of its witness statements, in its opening statement, or even at trial. It was only in closing submissions that OCBC first made reference to these documents. As a result, the Defendants were denied of a fair opportunity to challenge the veracity and/or reliability of these documents.
Decision
Admissibility of the CTL Documents
[45] To summarise, OCBC relies on the following documents to demonstrate that the Vessel was a CTL (“the CTL Documents”):
(a) the 10 July Letter sent by the Vessel Owner to the Defendants, setting out the initial estimated cost of repair and/or recovery of the Vessel (between US$76m and US$82m) and enclosing documents to support the costs estimates (see [25] above);
(b) the 11 July Email from the Defendants to the Vessel Owner, stating that there appears to be no structural damage to and no internal flooding of the Vessel, and putting forth figures of US$25m for repairs and US$17m–20m for salvage operations (see [26] above);
(c) the 22 July Email from the Vessel Owner to the Defendants, stating the Vessel Owner’s position that the Vessel was a CTL (see [28] above);
(d) the SCRS Reports sent between 23 July 2018 and 25 July 2018 from Solis to the Vessel Owner and the Defendants, setting out Solis’ observations regarding the extent of damage suffered by the Vessel (see [29] above);
(e) the Notice of Abandonment from the Vessel Owner dated 25 July 2018 to the Defendants, stating that the Vessel was a CTL, and providing costs estimates of around US$76m to US$85m, taking into account repair and salvage costs (see [30] above);
(f) the 26 July Email reply from the Defendants to the Vessel Owner rejecting the Notice of Abandonment, without responding to the Vessel Owner’s costs estimates or the observations made in the SCRS Reports (see [33] above);
(g) the Dive Inspection Report issued on 4 August 2018 by the Salvors, setting out a more extensive list of findings concerning the damage to the Vessel (see [34] above);
(h) the 18 August Letter sent by the Vessel Owner to the Defendants stating that there were no buyers interested in purchasing the Vessel, even as scrap (see [36] above); and
(i) the Ship Brokers’ Replies, compiled by the Vessel Owner, and which indicate that there were no potential buyers for the Vessel in her current condition. One shipbroker stated that he had no interest in the Vessel given the “general concern about the state of the unit, and what the Philippine Coastguard are willing to consider”. A shipbroker also stated that “no scrap cash buyers will take delivery of the vessel at present location and condition” (see [35] above).
In its further reply submissions dated 17 March 2025, OCBC placed particular emphasis on the documents listed at (c), (e) and (g)–(i) above to establish that the Vessel was a CTL.
[46] The CTL Documents are in the Agreed Bundle of Documents. There is no dispute over the authenticity of these documents. However, the documents were not adduced by any witnesses. The Court of Appeal has held in Jet Holdings that even where there is an agreed bundle of documents, the truth of the contents of the documents nevertheless remains at issue and is subject to objections centring on the doctrine of hearsay (at [44] and [76]).
[47] OCBC submits that the hearsay exception found in EA s 32(1)(b)(iv) applies (hereinafter referred to as the “business records exception”). Keimfarben and English Exporters, which the Defendants cite, pre-dates the amendments made to s 32 of the EA, including the introduction of the hearsay exceptions therein.
[48] The exception in s 32(1)(b)(iv) of the EA provides that the following evidence may be admissible notwithstanding that it is hearsay evidence:
[50] In Gimpex Ltd v Unity Holdings Business Ltd and others and another appeal [2015] 2 SLR 686 (“Gimpex”), the Court of Appeal approached the inquiry in three steps. For the first step, the Court of Appeal considered if the evidence was hearsay. For the second step, it considered if the hearsay evidence was admissible pursuant to the exception in s 32(1)(b)(iv) of the EA. With respect to this provision, the court cited (at [94]), Prof Jeffrey Pinsler SC, Evidence and the Litigation Process (LexisNexis, 4th Ed, 2013) (“Pinsler”) at para 6.008 which states:
[51] For the third step, if it is found that the hearsay exception in s 32(1)(b)(iv) of the EA applies, the court is to consider if it should exercise its discretion to exclude the evidence in the interest of justice. This is pursuant to s 32(3) of the EA, which states:
[52] At this stage, the court would balance the significance of the evidence (ie, its probative value) against any factors that militate against its admission (eg, the danger of unreliability or other harm which might compromise fair adjudication): Gimpex at [106] and [108]. The court should not normally exercise its discretion to exclude evidence that is declared to be admissible by the EA: Gimpex at [109]. The court should carefully consider whether the evidence is so deficient that it should be excluded under s 32(3) of the EA, or whether it should be admitted under s 32(5) of the EA but accorded less weight in light of its potential unreliability: Gimpex at [108] and [130].
[53] With the above principles in mind, I consider if the CTL Documents should be admitted into evidence in this case. As a starting point, OCBC does not dispute that the CTL Documents are hearsay evidence. No witnesses were called to testify to the truth of the contents of the Documents at trial.
[54] I note that the Defendants’ hearsay objection only surfaced in its reply submissions dated 27 February 2025, which was some months after the close of trial. Our Court of Appeal has frowned upon belated hearsay objections which come after the close of trial and which relate to evidence that was in fact marked and admitted: see Brian Ihaea Toki and others v Betty Lena Rewi and another [2021] SGCA 37 (“Brian Toki”) at [13]. In this case, however, the Defendants’ belated objection was arguably caused by the fact that OCBC had only made clear reference to the CTL Documents in its first set of closing submissions dated 24 January 2025. I thus turn to consider the merits of the Defendants’ objection on the basis of hearsay.
(1) Section 32(1)(b)(iv) of the EA
[55] The first question is whether the hearsay exception in s 32(1)(b)(iv) of the EA is engaged, viz, whether the CTL Documents satisfy the business records exception. I reiterate that Defendants did not dispute, throughout the course their written submissions, that the CTL Documents are authentic (see [46] above). In addition, almost all of the CTL Documents were sent contemporaneously to the Defendants (see the documents listed at [45(a)]–[45(h)] above). Only the Ship Brokers’ Replies were not sent directly to the Defendants (see [45(i)] above); and even then, the 18 August Letter set out a summary of the Vessel Owner’s findings as derived from the Ship Brokers’ Replies. In the circumstances, the Defendants would have been in the best position to dispute the authenticity of the CTL Documents. The Defendants have not made any such argument against the authenticity of these documents, over the course of the trial and in their subsequent written submissions.
[56] The 10 July and 18 August Letters, the 22 July Email and the Notice of Abandonment were prepared by the Vessel Owner in the ordinary course of their trade or business, as a follow up to the capsize of the Vessel. The 11 and 26 July Emails from Ms Neelamalar on behalf of the Defendants, were also made in the ordinary course of their trade or business, in response to the Vessel Owner’s 10 July Letter and Notice of Abandonment. The SCRS Reports and the Dive Inspection Reports were prepared by the Salvors in the ordinary course of their business. The Ship Brokers’ Replies were received and compiled by the Vessel Owner in their ordinary course of business, ie, in searching for potential buyers for the Vessel subsequent to her capsize. It is also clear from Gimpex at [94] and from the statutory wording of the EA, that there is no express requirement in s 32(1)(b)(iv) that the compiler and the persons who supplied the information included in the record, must have personal knowledge of that information.
[57] The Defendants argue that the statements and information contained in the CTL Documents are “unilateral and self-serving” assertions that the Vessel was a constructive total loss. Arguably, admission of such documents would cut against the rationale underlying the business records exception (ie, that a statement made in the course of business is a record of historical fact made from a disinterested standpoint: Orion-One at [22]).
[59] All things considered, I find that the CTL Documents are prima facie admissible as they fulfil the business records exception set out in s 32(1)(b)(iv) of the EA.
(2) Sections 32(3), 32(4)(b) and 32(5) of the EA
[60] The next question is whether the court should exercise its discretion to exclude the evidence in the interest of justice, as is permitted under s 32(3) of the EA. There is also the related question of whether OCBC had sufficiently complied with the requirement to give notice of its reliance on the CTL Documents under s 32(4)(b) of the EA, and if not, the consequences of such a failure. As observed by the Court of Appeal in Gimpex, and more recently by Giles IJ in Kiri Industries Ltd v Senda International Capital Ltd and another [2021] 3 SLR 215 (“Kiri Industries”), the considerations underlying both inquiries often overlap to a substantial degree: see Gimpex at [139]; Kiri Industries at [122].
[62] Turning to the requirement of notice, s 32(4)(b) of the EA prescribes that “evidence may not be given under [s 32(1)] … unless [there is compliance with] such notice requirements … as may be prescribed in the Rules of Court”. This section is to be read in conjunction with O 38 r 4 of the Rules of Court (2014 Rev Ed) (the “ROC”) which sets out the procedure and the prescribed form for the notice to be served: Gimpex at [136].
[63] It would have been more prudent for OCBC to have given notice to the Defendants of its reliance on the CTL Documents. Nevertheless, and as stated in Gimpex at [137], it remains open to this court to exercise its discretion under O 2 of the ROC to cure the non-compliance. The question is whether such a discretion should be exercised in the present case.
[65] In Gimpex, the plaintiff had not provided notice of its intention to rely on a report which was an instance of hearsay evidence. Nevertheless, the Court of Appeal found it appropriate to exercise its discretion under O 2 of the ROC to cure this non-compliance. It was difficult to see how the defendants in Gimpex were prejudiced by the lack of notice, especially given that they had taken full advantage of the opportunity to discredit the reliability of the report and that they had been allowed to cross examine several relevant witnesses: at [141].
[66] Relying on Gimpex, the Defendants argue that the court’s discretion to cure a non-compliance with the notice requirement, may only be exercised where there is “sufficient … opportunity being given to the opposing party to question the witness and challenge the hearsay evidence during the trial”. I do not accept this argument. In Kiri Industries, Giles IJ was satisfied that the non-compliance with the notice requirement should be cured, notwithstanding that the makers of the hearsay statements in that case were not available for cross examination: at [80(a)]. In that case, Giles IJ observed that the defendant “could have been in no doubt” that the relevant hearsay evidence would be relied on by the plaintiff in making its case and of its significance: at [123]. It was also relevant to consider the logistical difficulty in calling all the relevant statement makers to testify at trial. On balance, Giles IJ was of the view that there would be no real prejudice caused to the defendants in curing the plaintiff’s failure to give notice: at [124]. For completeness, the majority in Kiri Industries were of the view that the evidence only constituted general hearsay; the rule against hearsay thus did not apply with full rigour: at [87], [100]–[101].
[67] As a broader observation, it will often be an inevitable consequence of admitting hearsay evidence, that the maker of that statement will be unavailable for cross examination at trial: Tan Hui Meng v Public Prosecutor and another appeal [2025] SGHC 2 at [32]. Although this may cause a degree of prejudice to the opposing party, this prejudice “comes inherent with the admission of any hearsay evidence”: Jiangsu New Huaming International Trading Co Ltd v PT Musim Mas and another [2024] SGHC 81 at [56]. The amendments made to the EA in 2012 make clear that the unavailability of the statement maker at trial, is no longer a condition for admissibility of hearsay evidence under s 32(1) of the EA: Pinsler at para 6.002. In other words, the hearsay exceptions in s 32 of the EA do not – and indeed, logically, cannot – fail to operate simply because the relevant statement makers were not called to trial. With that said, any party’s decision not to call the relevant witnesses to trial, will necessarily expose it to the risk of a potential hearsay objection and an argument on prejudice. This is a risk that the party (like OCBC) will have to bear.
[68] Having considered all factors, I exercise my discretion under O 2 of the ROC to cure OCBC’s non-compliance with the notice requirement in s 32(4)(b) of the EA, read with O 38 r 4 of the ROC, as was requested by OCBC. On balance, I find that there is no prejudice caused to the Defendants in curing the non-compliance.
[69] Following from the observations made by Giles IJ in Kiri Industries (see [66] above) and keeping in mind the rationale for the notice requirement in s 32(4) of the EA (see [64] above), one key consideration regarding cure of lack of notice and prejudice, is whether the Defendants would have been aware of the CTL Documents and their significance, and further that OCBC would in all likelihood rely on them to make its case that the Vessel was a CTL.
[71] While the Defendants initially filed a notice of non-admission to various documents sought to be adduced by OCBC, which included all the CTL Documents, this objection was subsequently withdrawn. While the withdrawal goes towards the issue of authenticity rather than hearsay, the filing and withdrawal of such notice further reinforces that the Defendants were fully aware of such documents and of their contents. The CTL Documents were therefore marked and formed part of the Agreed Bundle of Documents for trial.
[73] The Defendants argue that although some of the Documents above were introduced by the Defendants’ expert witnesses, that this cannot be taken as an admission to the truth of their contents. This is because experts can, and do, produce their opinion based on certain assumptions of fact which must then be admissible and proven separately: see, eg, Anita Damu v Public Prosecutor [2020] 3 SLR 825 at [30]; Pinsler at paras 8.044–8.049. In my judgment, this argument misses the point. The material issue here is not whether the Defendants’ experts were giving opinion evidence or otherwise. Ultimately, the question of whether the CTL Documents are admissible, is governed by the hearsay regime and the provisions of the EA. The CTL Documents are not admitted solely because the Defendants’ witnesses introduced such documents. The fact that the Defendants’ witnesses had referred to certain CTL Documents is nevertheless relevant to considering whether there is prejudice caused by curing the non-compliance with the notice requirement. It goes towards suggesting that the Defendants had been well aware of the CTL Documents all along in spite of OCBC’s failure to provide notice of its reliance on the same.
[75] For these reasons, I do not find that OCBC’s failure to give notice would have affected the Defendants’ right to carry out their own investigations in relation to the significance and veracity of the CTL Documents and I do not find that the Defendants would be prejudiced by the admission of the CTL Documents. I thus exercise my discretion under O 2 of the ROC to cure the non-compliance with the notice requirement in s 32(4)(b) of the EA read with O 38 r 4 of the ROC. For the reasons provided here and above, I also find that the CTL Documents should be accorded full weight: s 32(5) of the EA.
Whether the Documents prove that the Vessel was a CTL
[77] The basis for the Defendants’ initial rejection of the Vessel Owner’s estimates, in the 11 July Email, is that there might not have been any structural damage of the Vessel (see [26] above). However, the Defendants themselves also noted in that email, that Salvors would be undertaking a comprehensive inspection of the Vessel in the coming days, and that it would be premature to conclude at that point of time that the Vessel was a CTL. The Defendants’ initial view that there was no structural damage was undermined by the findings later made in the Dive Inspection Report. While the Defendants now point to the Report having observed no damage to the hull of the Vessel, the Report did cite multiple other forms of extensive damage to the Vessel.
[83] In the present case, I observe that the Vessel suffered a significant loss of buoyancy on 20 August 2018, and that the Vessel was scuttled as a result. In light of her scuttling, it would have been impossible for OCBC to conduct any further study into the condition of the Vessel beyond what was contained in the CTL Documents. Applying the “large margin of error” as set out in Brillante Virtuoso thus further supports my earlier conclusion that there is prima facie evidence, that the Vessel was a CTL. As stated, the evidential burden shifts to the Defendants to demonstrate why the Vessel was not a CTL. As I have earlier explained, the Defendants’ submissions do not go towards discharging this burden (see [79] above).
[85] On a related note, I reject the Defendants’ argument that the scuttling of the Vessel was “deliberate” and that this had “removed any opportunity for determining the extent of the loss, whether CTL or Partial Loss”. In the 18 August Letter, OCBC first informed the Defendants that the Vessel may have to be scuttled due to her poor condition and the lack of interested parties in purchasing her (see [36] above). By way of a report dated 20 August 2018, the Vessel was observed, with the salvage team on-site, to have suffered a “[v]ery noticeable change in [her] buoyancy status / condition” (at 8:15am), and to have “[l]ost buoyancy on aft and midship section” (at 8:18am). The decision to release the Vessel was made shortly after at 8:30am. It did not appear, based on the contemporaneous evidence available to the court, that the decision to scuttle the Vessel was deliberately made to conceal evidence on the state of the Vessel. As OCBC point out, it would not have made sense for the Teras Entities to pay to carry out extensive studies on the state of the Vessel in July 2018 and/or to contact ship brokers in relation to sale or disposal of the Vessel, if it had been their intention to scuttle the Vessel all along.
[86] For the foregoing reasons, I find that OCBC has satisfied its legal burden of proving that the Vessel was a CTL under s 60(2)(ii) of the UK MIA 1906 and cl 19 of the ITC.
Whether the loss of the Vessel is covered by the Marine Insurance
[87] The second main issue is whether the loss of the Vessel is covered by the MI. As reproduced at [21] above, cl 6.1.1 of the ITC provides that the MI “covers loss of or damage to the subject-matter insured caused by… perils of the seas rivers lakes or other navigable waters” [emphasis added].
[88] As the MI is governed by English law, the term “perils of the seas” is to be interpreted by reference to English law.
[89] In this regard, OCBC’s English law expert, Mr Blackwood KC, opined that the term “perils of the seas” means:
(a) Where there is an accidental unexpected ingress of seawater into a vessel causing loss or damage, prima facie there is a loss by perils of the seas; see decision of the Privy Council in Canada Rice Mills v Union Marine and General Insurance [1941] AC 55 (“Canada Rice Mills”) at [1826]–[1827].
(b) It is only if the loss could be said to be due to uneventful decrepitude of a vessel in the prevailing conditions or to inherent characteristics of the vessel not involving any fortuitous external accident or casualty, that the Defendants would have a defence based on ordinary action of wind and waves.
(c) The burden of proving that some fortuity occurred would be on OCBC and the burden of proving loss by way of an inherent vice, here decrepitude, would be on the Defendants. However, if OCBC can prove any fortuity the Defendants’ defence based on ordinary action of wind and waves would fail.”
[90] The Defendants’ English law expert, Mr Berry KC, agrees with Mr Blackwood regarding the meaning of “perils of the seas”.
[91] With this in mind, I turn to address the specific arguments raised by the Defendants which relate to whether the loss of the Vessel was covered by the MI.
Burden of Proof
[92] The parties do not dispute that the burden of proving that the loss of the Vessel was due to “perils of the seas” is on OCBC as the assured and that the burden of providing decrepitude is on the Defendants. This also coheres with the opinion of both English law experts.
[93] After the close of trial, the Defendants raised the argument that if OCBC cannot explain how the Vessel capsized, it fails to prove that the loss was due to “perils of the seas”. I directed the Defendants to flesh out this new argument, so that parties could properly respond to it in their closing submissions. When the Defendants did so, they cited Rhesa Shipping Co. S.A. v Herbert David Edmunds, The Popi M [1985] 1 WLR 948 (“The Popi M”), for the proposition that if on the evidence, OCBC cannot explain how the vessel capsized, it fails to prove fortuitous accident or casualty.
[94] In their closing submissions, the Defendants took this argument a step further. They submitted that OCBC must not only show that water entered the ship, but also that there was an aperture that permitted water to enter the ship in the first place, and what created it.
[95] This submission of the Defendants relates to the burden of proof regarding “perils of the seas”, which parties have agreed is an English law matter. Hence, the Defendants should have raised this to the English law experts when they were preparing their reports and/or during their experts’ conference during the trial. However, the Defendants did not do so. Nevertheless, I note that OCBC did not object to the Defendants’ The Popi M argument, on this ground, but submitted on the merits.
[96] Having considered the parties’ submissions and the relevant authorities, I find that The Popi M does not support the Defendants’ case. The Defendants cite Lord Brandon at 953–954:
[97] With respect, the Defendants’ submission is based on a misreading of The Popi M. As can be seen from the passage relied on by the Defendants, the reasoning was fact-centric. Lord Brandon did not state that test in Canada Rice Mills was to be changed. Nor did Lord Brandon state the general proposition which the Defendants submit, namely that if a shipowner cannot explain how the Vessel capsized, it fails to prove that the loss was due to “perils of the seas”.
[99] The above reading is fortified by the analysis of The Popi M by Colman J in Glowrange Ltd v CGU Insurance plc [2001] All ER (D) 339 (“Glowrange”), at [26]:
[100] Colman J’s reading of The Popi M is consistent with the long-established line of authorities on this issue, which were cited in The Popi M. In Goolam Hossen & Co v Union Marine Insurance Co Ltd [1900-03] All ER Rep Ext 1506 (“Goolam”), it was held that the defence of unseaworthiness cannot be established unless “the balance of evidence warrants the conclusion that the ship was unseaworthy when she sailed”, even in a case where the assured is unable to prove the proximate cause of the loss; at 1509. In other words, a plaintiff’s failure to establish the cause of capsize does not warrant a finding that the ship was unseaworthy. The court held at 1511:
[101] In Anderson v Morice [1874] LR 10 CP 58 (“Anderson”), the court considered the burden of proof to be as follows (at 67–68)
[102] The position in Goolam and Anderson, is consistent with Canada Rice Mills and as explained above, The Popi M. In addition, it was also recently observed by our Court of Appeal in Re Fullerton Capital Ltd (in liquidation) [2025] SGCA 11 (“Re Fullerton”) at [78] that the balance of probabilities test does not entail the court choosing between two alternatives advanced by the parties. Instead, The Popi M stands for a more general proposition, viz, that it is open to a court to find that “neither party’s theory is more probable than not and [to] decide the issue based on the incidence of the burden of proof”.
[103] Goolam, Andreson and Glowrange were brought to the attention of the Defendants by the court. The Defendants did not contend that these authorities were wrong; they instead submitted that the scenario that Colman J was considering in Glowrange is far from this case, as there cannot be an assumption that the Vessel was seaworthy.
[104] In summary, and contrary to the Defendants’ submission, I find that there is no burden on OCBC to show that there was an aperture that permitted water to enter the ship in the first place, and what created it. The burden of proof regarding “perils of the seas” and “decrepitude” is as set out and agreed to by both English law experts (see [42] above). In other words, where there is an accidental unexpected ingress of seawater into a vessel causing loss or damage, prima facie there is a loss by perils of the seas. It is only if the loss could be said to be due to uneventful decrepitude of a vessel in the prevailing conditions or to inherent characteristics of the vessel not involving any fortuitous external accident or casualty, that the Defendants would have any defence based on ordinary action of wind and waves.
Evidence on the state of the Vessel
[105] With that, I turn to consider the evidence on the state of the Vessel.
OCBC’s case
[106] OCBC highlight that the Vessel was a newbuild at the time of the capsize and that the Tow Voyage was the Vessel’s maiden voyage. Prior to departure, the Vessel obtained all relevant certifications from the MWS and the ABS. In addition, the Defendants acknowledged that the hull remained intact, and that “no damage to the hull structure was observed” based on the underwater dive inspection.
Defendants’ case
[107] The Defendants submit that the Vessel was a debility or a decrepitude, based on the following:
(a) The Vessel failed to comply with the Operations Manual (“OM”) requirement that it lower the legs by 18.4m as soon as the water depth permitted. This resulted in it being in a configuration that would fail to meet a minimum wind velocity of 70 knot. As the Vessel failed its intact stability criteria with the legs fully retracted, it was unseaworthy at the commencement of the voyage.
(b) The Vessel failed to comply with the OM which mandated the Vessel to be dry towed if it involved an ocean passage.
(c) The Vessel’s low freeboard of 0.9m would have and was exposed to shipping seas. Such shipping of green water on deck is a clear violation of the OM.
(d) The fitting of the securing appliances, at least some of which were in the locked position, to the freeing ports was a clear breach of the International Convention on Load Lines (“ICLL”).
Following from the above, there is a probability – or at the very least, the probability could not be eliminated – that the Vessel was inherently unstable, and accordingly unseaworthy (based on the Defendants’ expert evidence).
Decision
[108] As agreed to by both English law experts, the Defendants would only have a defence based on the ordinary action of the wind and waves if they are able to demonstrate that the Vessel was a “decrepitude” (see [89(b)] above).
[109] Popplewell J identified in Versloot Dredging BV and another company v HDI Gerling Industrie Versicherung AG and other companies [2013] EWHC 1666 (Comm) (“The DC Merwestone”) at [56]–[57], two themes in the authorities where “debility” as a form of unseaworthiness defeats a time policy. The first is debility associated with normal wear and tear, whether caused by the sea or otherwise. The second is associated with cases where there has been no more than the ordinary action of wind and waves, as contrasted with some external fortuitous event which has allowed the ingress of seawater. The debility here is sometimes paraphrased as inherent weakness, the distinction being between a deficiency that is inherent and that which arises from an external event. As observed by the learned authors of Arnould, the distinction is to be drawn between damage caused by any external occurrence, and damage resulting solely from the nature of the thing itself: at para 22-41; see also Global Process Systems Inc and another v Syarikat Takaful Malaysia Bhd [2011] UKSC 5 (“Cendor MOPU”) at [113].
[110] One clear example of a loss caused by the decrepitude or debility of a vessel, is where the ingress of water into a vessel is caused “wholly due to the rotten condition of [the vessel’s] hulk” and “not in any sense due to sea peril”: see Sassoon (E D) & Co v Western Assurance Co [1912] AC 561 at 563–564. On the other hand, a loss caused by the negligence of the vessel crew is properly classified as loss by an external fortuitous event, not by an inherent weakness of the vessel. The facts of The DC Merwestone are illustrative. Prior to the departure of the vessel in that case, the crew used the vessel’s emergency fire pump and lines to blast away chipped ice on the vessel’s hatch covers. After this was completed, the crew negligently failed to drain the seawater from the emergency fire pump or close the sea inlet valve to the pump before the vessel departed port. This eventually led to an ingress of seawater into the vessel’s engine room, causing the vessel’s main engine to be damaged beyond repair: The DC Merwestone at [21]. The underwriters submitted that this loss was caused by an inherent vice of the vessel, viz, that the damage to the emergency fire pump and the filter lid had already occurred before the vessel’s departure; the ingress of seawater was thus “bound to occur … even in the most benign conditions” of the sea. Popplewell J rejected this argument, finding that the ingress of water was proximately caused by an external fortuitous event, viz, the crew’s negligence in relation to the emergency fire pumping system. It was not caused by any inherent weakness to the vessel that was a result of ordinary wear and tear. In the circumstances, it would have been a “false analogy” [emphasis added] to treat the lack of watertightness of the vessel as falling within the particular kind of debilitative unseaworthiness that would render a casualty other than fortuitous: The DC Merwestone at [60]–[61].
[111] Returning to the present case, it can be seen from the Defendants’ submissions, that they do not argue that there is any inherent defect or weakness with the structure of the Vessel itself. Rather, the thrust of their submission is that the Vessel did not comply with aspects of the OM or the ICLL, which raised the possibility that it was inherently unstable and consequently unseaworthy. None of these allegations, even if they are made out, go towards demonstrating that the Vessel was a decrepitude. In other words, even if the Defendants are able to demonstrate that the capsize of the Vessel was caused by the various alleged instances of non-compliance with the OM or the ICLL, these would still constitute external fortuitous events; the loss would still be one properly caused by the “perils of the seas”.
[112] Even in the case of Glowrange cited by the Defendants, the court made clear that only general debility of the Vessel may give the Defendants a defence based on the ordinary action of wind and waves (at [26] and [33]):
[113] I thus do not find that OCBC’s claim under the MI can be defeated on this basis. Nevertheless, and for completeness, I briefly consider the arguments on lack of seaworthiness raised by the Defendants. In my judgment, there is insufficient evidence to demonstrate that the Vessel was inherently unstable or unseaworthy.
[114] As a starting point, the Vessel was a newbuild at the time of the capsize and that the Tow Voyage was the Vessel’s maiden voyage. Prior to the Tow Voyage, both the ABS and the MWS performed further surveys on the Vessel. Thereafter, the following eight certificates were issued in respect of the Vessel:
(a) By the ABS: (i) the ABS Fit-for-Tow Certificate; (ii) the ABS Class Survey Report; (iii) the ABS Load Line Certificate; and (iv) ABS the Statutory Survey Report (see [11] above);
(b) By the MWS: (i) the MWS Fit-for-Tow Certificate; (ii) the MWS Certificate of Approval; (iii) the MWS Suitability Survey Report; and (iv) the MWS Sailaway Attendance Report (see [14] above).
[115] In addition, prior to departure, the Vessel obtained all relevant certifications from ABS (her classification society). These certificates included (i) the Mobile Offshore Drilling Units (“MODU”) Safety Certificate dated 1 October 2016; (ii) the ABS International Load Line Certificate dated 1 October 2016; and (iii) the ABS Certificate of Classification dated 20 October 2016.
[116] In Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2006] 4 SLR(R) 689 (“Marina Offshore”), Justice Prakash (delivering the judgment of the Court of Appeal) observed at [81] that:
The court went on to find that the vessel in question was seaworthy despite it being reclassed after her voyage (at [81]).
[117] Following Marina Offshore, I do not find that the ABS classifications in themselves equate to seaworthiness of the Vessel, although they form part of the consideration. In this case, besides the ABS classifications, the MWS had also conducted surveys and considered the vessel safe for undertaking the voyage. At trial, I asked both master mariner experts if there would be matters not surveyed by the ABS and the MWS in respect of the preparations and planning for the Tow Voyage. OCBC’s master mariner expert, Captain John Simpson (“Cpt Simpson”) testified that in his view, the ABS and the MWS would between them provide a holistic assessment. The Defendants’ master mariner expert, Captain Nicolas James Allan White (“Cpt White”) then stated that he would not disagree with that.
[118] After the capsize, the underwater dive inspection found that “no damage to the hull structure was observed”. This was a point which the Defendants have acknowledged.

The judgment continues past this page. Read the rest at eLitigation.

The increased value part of a marine insurance was void as a wager, capping the claim

Laws this judgment relies on

Grounds of decision

Introduction

Facts

The Marine Insurance Policy

Preparation for the Tow Voyage

The Marine Warranty Survey

The Tow Voyage

Events after the capsize of the Vessel

OCBC’s Case

Defendants’ Case

Issues to be Determined

Constructive Total Loss

OCBC’s Case

Defendants’ case

Decision

Admissibility of the CTL Documents

(1) Section 32(1)(b)(iv) of the EA

(2) Sections 32(3), 32(4)(b) and 32(5) of the EA

Whether the Documents prove that the Vessel was a CTL

Whether the loss of the Vessel is covered by the Marine Insurance

Burden of Proof

Evidence on the state of the Vessel

OCBC’s case

Defendants’ case

Decision