1.21 for saturated condition. It is evident that during failure there are NO surcharge acting. 2# - The tensile yielding of the bars has exceeded by 1.96% at the 6th facial unit from the top and normally in engineering practice up to 5% is accepted. Nevertheless, this happens only when the soil is fully saturated condition and full height of water pressure acts on the wall. **- The figures are taken from the defendant’s expert affidavit report page 15 16 [61] Where both the experts seem to be at variance is with respect to the Factor of Safety (“FOS”) against sliding as prescribed by BS 8006:1995 of > 1.2 under a fully saturated condition. PW 2 was candid in stating that the FOS was 1.14 against the prescribed 1.20 which makes it less by 5.0%. As explained by PW 2 this happens only when the soil is in a fully saturated condition with the full height of water pressure acting on the wall and with surcharge. When there is no surcharge the FOS is 1.21 for saturated condition. PW 2’s evidence was that there was no surcharge acting during the failure and this had not been challenged by DW 1. [62] However the Retention Wall was still stable when the backfill soil behind the wall was in full saturated condition with hydrostatic pressure. As explained by PW 2 the whole Wall did not fail by sliding forward but only a localized portion. Whilst a fully saturated condition is used for the purpose of calculation of the FOS yet in reality it was not a case of fully saturated wall of water. Water, tending to find its own level, would have seeped through to other portions of the backfill along the remainder length of the Wall. As such I would not place too much weight on some of the weep holes been clogged. Moreover the collapse was on the upper part of the Wall without any impact on the lower part of the Wall, which remained intact. See para 6.0 at page 12 ER-PW2. [63] I can accept the Plaintiff’s expert’s conclusion at para 4.3 ii) page 9 of ER-PW2 that “...it does not mean that the wall will fail by sliding. The reduction of the FOS is only 5.0% which did not make the whole wall to slide forward. Hence even after the re-analysis with full water pressure the wall is found to be stable.” [64] I can accept the explanation of PW 2 at para 5.5 of his Expert Report in ER-PW2 that when a proper drainage system is implemented behind the 17 retaining wall system, there is no necessity to design the Retaining Wall for full saturation condition. In fact according to PW 2 there was an absence of water marks on the Wall indicating that there was no full water pressure on the Wall (para 5.2ii) at page 11 ER-PW2). Nowhere in the Standards is it stated that full water conditions should be accounted for and DW 1 had not challenged this. I can appreciate the opinion of PW 2 that only the engineer should use his engineering judgment to design for full height or whichever height the situation calls for. [65] The expert witness for the Defendant in DW 1 also referred to the backfill material as being composed of mainly clay which allows water to be retained instead of mainly silky soil which allows water to be drained. However such a conclusion was based on his physical examination of the backfill soil still left behind after the incident. I do not think it is safe to conclude from a naked eye examination the type and composition of the soil in the absence of a soil test result which could easily have been taken by soil experts through the boring method. At any rate the examination was based on the soil condition a week after the failure incident and much of the backfill would have been drained away or mixed with some other soil and hence unreliable with respect to the type and composition of the backfill soil. [66] Based on PW 2’s explanation at para 5.0 of pages 10-12 of his Expert Report marked ER-PW2 I am satisfied on the balance of probabilities that the design of the Retaining Wall had complied with the BS 8006:1995 and that there is no evidence of poor workmanship. [67] It was also argued that Ir Wong Mok Fah, a Geotechnical Consultant and Engineer, whom the Plaintiff had earlier engaged to assist them in their claim, should have been called by the Plaintiff as a witness. As the 18 Defendant had raised this in the context of relying on their exclusion clause in arguing that there were “inherent defects” in the Wall, the evidential burden of proof is on them and they were perfectly entitled to call him if they were so minded to. All that Ir Wong had suggested was that the integrity of the whole Wall should be restudied and gave his recommendations. [68] I am not persuaded that there was any suppression of evidence by the Plaintiff in choosing not to call Ir Wong and indeed if the Defendant had wanted a copy of his report they could have applied for discovery of the documents which they had not. There is no basis for the Court to make an adverse inference under section 114(g) Evidence Act 1950 in this case. See Juahir bin Sadikon v Perbadanan Kemajuan Ekonomi Negeri Johor [1996] 3 MLJ 627 at page 635, para C-F. [69] Learned counsel for the Defendant made a vigorous submission that when, at the very least, there were 2 independent causes operating at the same time, one covered and the other excluded, then the insurer would not be held liable. The 2 causes here referred to was the “water” in the heavy rain and the “inherent defect” in the Wall. It is said that if the loss was caused by two concurrent and interdependent proximate causes, then the entire loss must be excluded: Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corp Ltd [1974] QB 57. [70] In the Singapore Court of Appeal case of Siang Hoa Goldsmith Pte Ltd v The Wing On Fire and Marine Insurance Co Ltd [1998] SGCA 31, page 425, it was held that: “[63] … At its highest, British Airways and the fraud of Samuel Lustig both combined to cause the loss to the appellants. Applying the settled law in this area, where in general the loss was caused by 19 two causes effectively operating at the same time, and one was expressly excluded from the policy but the other covered, the insurer was not liable to pay: see Kin Yeun Co Pte Ltd v Lombard Insurance Co Ltd [1994] 2 SLR 887.” (emphasis added) [71] Learned counsel for the Defendant submitted that though Siang Hoa Goldsmith (supra) is a Singapore Court of Appeal’s decision and is only of a persuasive authority, other part of Siang Hoa Goldsmith’s judgment had also been considered by the Malaysia Court of Appeal in the case of Malaysian Newsprint Industries Sdn Bhd v Perdana Cigna Insurance Bhd & Ors [2008] 2 MLJ 256. [72] Assuming for a moment that there were 2 causes for the collapse of the Retaining Wall, I would say here that the trigger and predominant and proximate cause is in the heavy rain and the other so-called defective design, if at all it is relevant, is only a distant contributing and subsidiary cause. So the 2 causes are not independent effective causes operating at the same time. [73] One can appreciate the force of nature and when fully unleashed, no human structure, no matter how strong and well-designed, can stand in the face of the wrath of nature as we know it. [74] Commercially that is why people take up insurance to cover for such a contingency and calamity. [75] I would find for the Plaintiff where the Defendant’s liability is concerned on a balance of probabilities. Whether the Retaining Wall was under-insured by the Plaintiff Insured [76] At first blush I had thought that since the Plaintiff’s original claim amounted to RM1,704,456.75 and the reduced amended claim of 20 RM1,162,956.75 is way below the insured sum of RM3 million, the question of under-insured does not arise. [77] However upon a closer scrutiny of the relevant Clause, I can appreciate where the Defendant Insurer is coming from where the premium of the Policy will be adjusted upwards accordingly if the proper total replacement costs of the whole of the collapsed Wall is higher than the amount insured against. [78] The Defendant had pleaded the issue of the Retaining Wall being underinsured at paragraphs 17 to 19 of the Defendant’s Defence as follows: 21 [79] As pointed out by learned counsel for the Defendant, it is one of the agreed issues between parties under Issue no.6(c) (see Appendix A) that in the event that the Policy is found to be engaged for the Plaintiff’s claim, whether any sums required to be paid under the Policy is subjected to and is to be reduced based on “Memo 1 – Sums Insured” to the Provisions of the Policy. I am satisfied that it was a live issue to be decided by this Court and not an abandoned issue as the Plaintiff had tried to assert. [80] I agree with learned counsel for the Defendant that what is relevant would be whether all the items claimed are related to the repair of the Retaining Wall, whether the rate used was excessive or not in accordance with market rate or CIDB rate and whether the quantum is subjected to the application of “Memo 1”. These sub issues had been agreed by parties as agreed issues (see Appendix A). [81] There is a contractual basis for learned counsel for the Defendant to assert that the alleged costs of RM1.162 million was only a sum used to rebuild the collapsed portion and on the issue of under-insurance, the value to be looked at is the value of the whole of the Retaining Wall itself and not just the value of the collapsed portion. [82] Memo 1 and Memo 2 in the Provisions to the Policy are reproduced as follows: 22 [83] I accept the proposition put forth by learned counsel for the Defendant that the basic rule of construction of a policy insurance is the same as the rules of construction as in any other written contract. The words used in it must be given their plain, ordinary meaning as was held in Provincial Insurance Co. Ltd v Yeo Chee Swee [1984] 2 MLJ 60, FC, at page 61. [84] Learned counsel for the Defendant submitted that although the wording in Memo 1 and Memo 2(i) is different, i.e. Memo 1 – “cost of replacement of the insured items by new items of the same kind and capacity inclusive of all materials, wages, freight, customs duties and dues” 23 Memo 2(i) – “cost of repairs necessary to restore the item to their condition immediately before the occurrence of the damage less salvage (excluding cost of debris)”, they are essentially referring to similar type of costs. [85] I agree with the Defendant that Memo 1 is generally known as an under-insurance clause or an average clause. Such a clause effectively provides that the insured could only recover the proportion that his loss bears to the risk known to the insurer, and upon which the insurer assessed the premium. Authority for this is found in Dirby C. Jess (1993) The Insurance of Commercial Risks : Law And Practice (Second Edition), Butterworths, London, Dublin and Edinburgh at page 326. [86] In order to prevent the insured from having an advantage when there is a partial loss (where the insured is entitled to recover to the full extent of his loss, subject to the maximum limit as set out in the policy) and to discourage under-insurance, insurers would insert an average clause into the policy, which is intended to make an insured who under-insures his property his own insurer for the insured portion of the risk when there is a partial loss. See Poh, Chu Chai, Law of Insurance (3rd Edition), Longman at page 682. [87] I agree with the Defendant that the value of the insured property, as envisaged in Memo 1, refers to cost of replacement of the insured item with new item of the same kind and capacity, inclusive of all materials, wages, freight, customs duties and dues. The sum insured under a civil engineering completed risks policy as the Policy in question is, by way of comparison to a contractors all risk insurance which bears same wording, other than the Policy does not cover all risk but only the named perils, such sum insured in these policies actually meant to indemnify what represent 24 the value of the contract work on completion of construction inclusive of all cost of material, wages, freights custom dues, construction cost and material or items. [88] As submitted by the Defendant, the term “materials” in Memo 1 has the meaning of things used to construct the building – bricks, sand and cement, timber screws and etc in the building practice. See Chappell, David and 3 others, Building Contract Dictionary, 3rd Edition, Blackwell Science at page 272. “Wages” has the meaning of compensation paid for manual labour or services or could be known as salary or fees. See Price, Miles O., A Practical Manual of Standard Legal Citation, page 367. “Freight” has the meaning of amount payable under a contract (of affreightment) for the carriage of goods by sea. Martin, Elizabeth A. and Law, Jonathan, A Dictionary of Law, 6th Edition, Oxford University Press at page 234. “Custom duties” have the meaning of tax or charges imposed by the customs department. See Black, Henry Campbell (1968) Black’s Law Dictionary, 4th Edition, St. Paul, Minn, West Publishing Co, page 595. The word “Due” means essentially a debt that is owing or payable. See Greenberg, Daniel (2006) Stroud’s Judicial Dictionary Words and Phrases, 7th Edition, London, Sweet & Maxwell at page 779. [89] I accept the reasonableness of the Defendant’s argument that in view of the fact that the insured item is a folder plate retaining wall, for the calculation of the cost of replacement of a folder plate retaining wall as at January 2015, it must also include the material costs, labour and manpower costs, and any other amount incurred and due to construct the retaining wall, including all the supply of equipment, machinery, crane and vehicle required in the construction of the retaining wall. 25 [90] Based on such interpretation, certain items like items B1 to B8 (there are 2 items 7 and 8 and the Defendant referred to both) of the Plaintiff’s Table of Claim on page 61 of CBOD must be taken into consideration in determining the repair and replacement costs of the collapsed portion of the Wall being items under “Temporary support during Rectification Works.” [91] I can take certain figures and support documents of the Plaintiff to arrive at the replacement cost of the Wall and from there determine the replacement costs for the whole Retaining Wall for it was the whole Wall that was insured. [92] Items 1 to 3 of the Plaintiff’s Table of Claim on page 62 of CBOD being Costs of excavating and carting away all unsuitable earth (item 1), Construction costs of new Reinforced Concrete Wall as per Engineer’s details (item 2) and Costs of backfilling of crusher run (item 3) must also be taken into consideration in calculating the cost of repair and replacement of the Retaining Wall under Memo 1, as these items are considered as material costs, labour and manpower costs, and any other amount incurred and due to construct the Retaining Wall. [93] As for items A1 to A9 of the Plaintiff’s Table of Claim on page 61 of CBOD, I agree that these are expenses to prevent loss or damage of the unaffected area and/or expenses to minimize the extent of loss or damage to be borne by the insured under clause 3 and 5 of the General Conditions to the Policy. They are all items under “Temporary support immediate after collapse.” [94] With respect to items B4 and B5 at page 62 these are for reinstating roadworks and drainage works which are not covered under the Policy. These items should not be in the discussion for the cost of replacement or repair of the retaining wall either under Memo 1 or Memo 2. 26 [95] As submitted by the Defendant, a perusal of Memo 2 would show that it is to provide the basis of loss settlement which the insured is entitled to claim as indemnity under the Policy if Policy liability is triggered. [96] I agree that Memo 1 and Memo 2 are not mutually exclusive and are to be read conjunctively, as they address different aspects of the Policy. The former (Memo 1) applies at the policy level on adequacy of sum insured whereas the latter (Memo 2) applies at the loss level, and the loss will be subject to the adequacy of the sum insured under the policy, where “average condition” would apply to limit the eventual loss settlement should there be an under-insurance resulting from the discovery from the nature and amount of claim submitted. [97] I can follow the Defendant’s submission that such an indemnity of loss would also be subject to other provisions in the Policy, like clauses 3 and 5 of the General Conditions to the Policy which provide that the insured is to bear any expenses to prevent loss or damage and expenses to limit the extent of damage. [98] I can accept the proposition that under Memo 2(ii), in the case where damage could be repaired, the insurer would indemnify the insured for the cost of repairs necessary to restore the items to their condition immediately before the occurrence of the damage less salvage (excluding the cost of clearance of debris). [99] Such temporary support immediately after the collapse (item A1 and A9 of the Plaintiff’s Table of Claim) is to be borne by the Plaintiff under clause 3 and 5 of the General Conditions to the Policy to preserve the existing structure and to mitigate damage. Therefore they should not be considered as a necessary cost to repair or to restore the collapsed portion. 27 [100] The total sum of items B1 to B8 including 2 items of B7 and B8 amounted to RM235,131.75. [101] The Plaintiff had themselves revised item 2 at page 62 to RM208,500.00 instead of RM750,000.00 after appreciating that the Retaining Wall to be replaced must be calculated based on the same type of Wall. Based on the Plaintiff’s claim, the cost of replacing 300m² of the retaining wall is RM707,631.75 [taking into account items B1 to B8 (there are 2 items 7 and 8) of the Plaintiff’s Table of Claim at page 61 of CBOD and items 1 to 3 of the Plaintiff’s Table of Claim at page 62 of CBOD] which works out to RM2,358.77 per meter square. [102] As the total area of the Retaining Wall is 4,315.34m², the cost of replacement under Memo 1, based on the Plaintiff’s claim on page 61 and 62 CBOD as explained above in paragraphs 15 and 17, would amount to RM10,178,905.30. [103] As the sum insured was only RM3,000,000.00, the risk under the Policy is under-insured by 70.5%. Whether the Plaintiff had proved on the balance of probabilities the sum claimed [104] Much of the sting in the Defendant’s argument that the Plaintiff had not proved the quantum of their claim had been lost altogether in view of the Defendant’s stand in using those self-same figures to persuade the Court that the subject matter of the Wall was under-insured. [105] It was a double-edged argument that learned counsel for the Defendant must be taken to have been fully conscious of. One cannot have the cake and eat is the aphorism we are acutely aware of in a claim of this nature. 28 [106] Applying to the sum claimed of RM707,631.75 there could only be claimed the sum after multiplying by 29.5% = RM707,631.75 x 29.5% = RM208,751.36. [107] It is agreed that there is the “excess clause” where the sum of RM25,000.00 is to be borne by the Plaintiff. Therefore after minusing RM25,000.00 (excess clause) the sum allowed is RM183,751.36. Pronouncement [108] Therefore I had allowed judgment to be entered by the Plaintiff against the Defendant for the sum of RM183,751.36. [109] As it had not been pleaded when interest should run, this Court had exercised discretion and allow interest at 5% per annum on the above amount from date of judgment (see O42 r12 Rules of Court 2012). [110] As this is a matter that should have been commenced in the Sessions Court, the Court had granted costs based on the lower scale of costs in the Sessions Court of RM10,000.00 to the Plaintiff. Postscript [111] I must make one final observation about insurance contracts and policies in general. The way insurance policies have developed as part of the antiquities of history and anachronism of the law is such that we are ingrained in settling for and accepting without question that the insurance contract would be in unusually small fonts and running into many pages of fine prints. [112] It is as if the contract is drafted by the insurance companies with a view to discourage reading such that upon receipt of it, one is consigned to assigning it for storage until the insured event has happened. 29 [113] This has to change and the movement worldwide is towards making contracts in plain language and it is only too true that the more the words the less the meaning and more convoluted sentences can only lead to more obscurity. [114] It is time for the Director General of Insurance to intervene in the interest of consumer protection where the fonts must be perhaps at least of size 14 and that anything more than 2 pages shall have an executive summary stated in plain simple English where an insured is alerted on what is covered and more importantly, what is not covered under the policy. Some questions and answers as in the Mandatory Malaysian Bar Professional Indemnity Policy would go a long way in helping the insured understand what they are covered. [115] After all insurance is such a wonderful invention of man, each contributing a premium to insure against a risk that may happen in the case of accidents of this nature, such that when it happens, the burden is shared out and there is enough money to go round to buffer against the exigencies and eventualities of life and business. Dated: 21 September 2018. - signed - Y.A. LEE SWEE SENG Judge Construction Court High Court, Kuala Lumpur 30 For the Plaintiff : Paari Perumal and K.Jayaratnam (Messrs Jayaratnam & Partners) For the Defendant : Gan Khong Aik and Lim Bee San (Messrs Gan Partnership) Date of Decision: 12 June 2018.