Tribunal: The Appellate Division of the High Court of the Republic of Singapore.

Date of the decision: May 3, 2023.

Appellant (Original Defendant): Chubb Insurance Singapore Ltd. (hereinafter referred to as “Chubb”).

Appellee (Original Plaintiff): Sizer Metals Pte. Ltd. (hereinafter referred to as “Sizer”). Sizer is involved in the business of trading base metals.

Claim: this appeal arises from the judgment where Chubb was held liable for the loss of four shipments of tin concentrate in drums (hereinafter referred to as the “Four Shipments”). According to the trial court, this was because Chubb insured the Four Shipments and because the loss of the Four Shipments was due to the theft that had occurred during the insured voyage. Dissatisfied with this decision, Chubb appealed.

Factual history

On September 16, 2013, Sizer and Chubb entered into a Marine Cargo Open Insurance Policy (hereinafter referred to as the “Policy”).

Pursuant to the Policy, Chubb agreed to insure Sizer’s purchases comprising base metals including tin concentrate against any loss, damage, or expense arising out of their transportation from Rwanda to various inland destinations (e.g., Tanzania), and thereafter by sea carriage to overseas destinations (e.g., Malaysia).

On September 15, 2017, and May 30, 2018, Sizer entered into two sale and purchase contracts with Excellent Mining Co Ltd (hereinafter referred to as “Excellent Mining”), a company incorporated in Rwanda, for the purchase of tin concentrate.

The cargo was transported from Rwanda to Malaysia as per the following route: Excellent Mining’s premises in Rwanda → Warehouse in Kigali, Rwanda → Port at Dar es Salaam, Tanzania → Penang, Malaysia.

Upon the delivery of the cargo to Malaysia, it was discovered that in the Four Shipments, tin concentrate was replaced with iron oxide. The replacement of tin concentrate in the drums by substitution was due to a fortuitous casualty, namely theft.

Pursuant to the Policy, the insurance attaches “from the time the goods leave the warehouse or place of storage named herein for the commencement of the transit, continues during the ordinary course of transit and terminates … on delivery to the Consignees’ or other final warehouse or place of storage at the destination named herein.”

The parties disputed whether the theft occurred at Excellent Mining’s premises, i.e., prior to the commencement of the transit period, or during the transit period:

• Sizer argued that the theft occurred during the period of insurance coverage, i.e., during the transit period.

• Chubb argued that the burden was on Sizer to show how and when the thefts occurred and that Chubb was not required to show on a balance of probabilities that the thefts had happened at Excellent Mining’s premises. Chubb pointed to the lack of evidence that would confirm that the thefts had occurred after the commencement of transit.

The trial court held that the theft had taken place during the period of insurance coverage, i.e., during the transit period. Accordingly, Chubb was held liable. The Judge found that it was “clearly logistically impossible for the thefts to have taken place at Excellent Mining’s premises, especially with the several layers of checks and surveillance at Excellent Mining.” The Judge noted that he was presented with an “almost binary choice” for his consideration, which was whether the thefts had taken place during the period of insurance cover or not.

Chubb appealed. Chubb argued that the Judge erred in holding that the loss of the Four Shipments occurred during the transit period. Specifically, Chubb argued that while there was a lack of evidence showing where and when the thefts had occurred, the Judge should not have adopted a process of elimination in concluding that the thefts had occurred during the transit period. In this regard, Chubb argued that the Judge erred in holding that he had an “almost binary choice” between finding that the thefts had occurred at Excellent Mining’s premises or during the transit period, as there was a third possibility—that the theft had occurred in the place of delivery in Penang, Malaysia. Accordingly, Chubb argued, it was Sizer’s burden to show that the losses did not occur in Penang.

Issues

(a) Whether the Judge reversed the legal burden of proof; and if he had not:

(i) Whether Sizer had prima facie discharged its burden of proof that the losses occurred during the transit period;

(ii) If so, whether Chubb had discharged its evidential burden to discredit Sizer’s evidence on (i) above and/or prove Chubb’s counter theory that the thefts had occurred at Excellent Mining’s premises; and

(iii) If Chubb’s counter theory was established, whether Sizer had disproved the counter theory put forward by Chubb.

(b) Whether the Judge erred in holding that Sizer had proved its case on the balance of probabilities that the thefts occurred during the transit period.

Rulings & Rationale

(a) The Judge did not reverse the legal burden of proof. The Judge was always alive to the fact that the legal burden was on Sizer to prove its case. “[T]he legal burden of proof is on the plaintiff to show on a balance of probabilities that a particular event is more likely to have occurred than not.”

The Judge had to decide whether the thefts occurred prior to or after the risk had attached under the Policy. If the Judge found that it was not possible for the thefts to have occurred at one of these periods, then it stood to reason that he must be satisfied that the theft was more likely than not to have occurred during the alternative period. When applying a “method of eliminating possibilities to determine the true state of affairs,” the court must pay attention to: (1) whether the full spectrum of facts that could explain the occurrence is before the court; and (2) whether the occurrence of an event, on the evidence and on the application of common sense, can be said to be proved on a balance of probabilities.

(i) Sizer has prima facie discharged its burden of proof on the balance of probabilities by showing that the losses occurred during the transit period. Sizer has established that: (1) tin concentrate (as the insured subject matter) was packed into the drums at Excellent Mining’s premises; (b) the losses suffered were a result of fortuitous casualty; and (3) the fortuitous casualty occurred after the risks insured under the Policy had attached.

(ii) Chubb has failed to rebut Sizer’s case on the merits.

(iii) Chubb’s counter theory that the thefts had occurred at Excellent Mining’s premises is not viable. Having considered the evidence from the various witnesses, the Judge agreed that it was “clearly logistically impossible for the thefts to have taken place at Excellent Mining’s premises.” As such, the only way for the thefts to have occurred at Excellent Mining’s premises was with the complicity of Excellent Mining’s staff, for which there was no evidence.

(b) It was not wrong of the Judge to conclude that Sizer had proved its case on the balance of probabilities that the thefts had occurred during the transit period based on the evidence it presented. Accordingly, the appellate court found no reason to set aside the Judge’s decision in favor of Sizer and dismissed Chubb’s appeal. ■