Westford Limited v Archipelago Insurance Limited (WA-22NCC-622-12/2020)

When a Hong Kong commodities trader came calling to a Labuan insurer seeking protection against buyer nonpayment, neither could have predicted the complex dispute their relationship would yield. Yet the trader's denied USD 4.5 million claim became a legal conflict spanning multiple countries and raising questions of computer fraud, questionable documentation, and clashing legal duties. At its core, the case probes whether insurance companies still enjoy refuge within policy text when situations grow complicated, or whether legal and ethical duties require a more flexible stance. How courts ultimately resolve such competing questions around claim denials may have far-reaching influence over parties in insurance transactions worldwide.

The Plaintiff, Westford Limited (“Westford”) is a Hong Kong-based commodity trader and supply chain manager providing trade financing solutions to facilitate cross-border commodity trades for its clients. Westford belongs to an international group of logistics and commodity trading companies known as the Westford Group.

On 17.5.2019, the Defendant, Archipelago Insurance Limited (“Archipelago”), a Labuan offshore general insurer, issued Trade Credit Insurance Policy No. AG1220190008 (“the Policy”) to Westford for an initial coverage period of 12 months from 15.5.2019 to 14.5.2020.

The Policy insured Westford’s commodity trades concluded within this period against the risk of non-payment of insured debts, due to insolvency or protracted default of the named insured buyer Phoenix Global DMCC (“Phoenix”), an international commodities trading firm based in Dubai.

The approved destination countries specified in the Policy are Hong Kong, Turkey and Dubai U.A.E. As loss payee, Archipelago would indemnify Westford’s trade financier Bank GPB International S.A. (“BGIS”) up to 90% of the insured debt. The initial policy limit/maximum credit liability was USD 2.5 million.

On 9.10.2019, to accommodate additional trades, Westford requested Archipelago to increase the policy limit by USD

2.5 million to USD 5 million. Archipelago agreed, subject to additional premiums of USD 35,671.23 (“Additional Premium”). [7] Archipelago informed Westford that a corresponding endorsement and invoice for the Additional Premium would be issued. However, this did not eventuate. Instead, on 10.10.2019, Westford received copy Endorsement No. 0004/2019 (“Endorsement No. 4”) from an imposter posing as an Archipelago officer (“the Imposter”). [8] Believing this to be legitimate, Westford on 4.11.2019 received copy invoice for Additional Premium from the Imposter with fraudulent bank details and paid the Additional Premium on 6.11.2019. Unbeknownst to Westford, Archipelago was similarly misled by the Imposter into sending Endorsement No. 4 and invoice to the Imposter rather than Westford. [9] Throughout this period, in various email correspondence from 9.10.2019 to 2.4.2020, Archipelago expressly acknowledged and confirmed coverage under Endorsement No. 4 for Westford’s new trades with Phoenix through Phoenix Order No. 11892 for USD 2.473 million to Ivory Coast (“Phoenix Order 11892”) and Phoenix Order No. 11895 for USD 2.487 million to Senegal (“Phoenix Order 11895”). Both Phoenix Orders 11892 and 11895 are referred to together as “the Phoenix Orders.” [10] In early 2020, amidst the developing COVID-19 pandemic, Phoenix accumulated substantial payment arrears and eventually entered liquidation on 9.6.2020. On 27.5.2020, Westford submitted a Trade Credit Insurance Claim under the Policy to Archipelago's loss adjustor Crawford & Company Adjusters (Malaysia) Sdn Bhd (“Crawford”) for Phoenix’s outstanding debts under the Phoenix Orders totaling USD 4.96 million. [11] On 12.6.2020 however, Archipelago rejected Westford’s Claim (“Claim Rejection”) whilst the claim assessment by Crawford was still ongoing. Archipelago cited non-compliance with “Approved Countries” clause and voidance of Endorsement No. 4 due to non-payment of Additional Premium as grounds for rejection. [12] Westford commenced legal action against Archipelago on 22.12.2020. In its Writ and Statement Claim, subsequently amended, it sought the following reliefs: “(a) A declaration that Endorsement No. 4 is valid and that the Policy Limit for Phoenix amounts to USD5,000,000.00;

A declaration that the Claim is covered under the Policy and Endorsement No. 4;

A declaration that the Claim Rejection Letter is invalid and in breach of the Policy and

An order that Archipelago pay BGIS the following –

2,226,460.50 (equivalent to RM 9,702,914.86 if converted at an exchange rate of 4.3580 [as at 27.5.2020]), representing the amount due to BGIS under the Policy in respect of Phoenix Order 11892, i.e. 90% of the total value of Phoenix Order 11892, being USD 2,473,845;

(ii) 2,238,093.00 (equivalent to RM9,753,609.29 if converted at an exchange rate of 4.3580 [as at 27.5.2020]), representing the amount due to BGIS under the Policy in respect of Phoenix Order 11895, i.e. 90% of the total value of Phoenix Order 11895, being USD 2,486,770.00;

In the alternative, an order for specific performance to compel Archipelago to comply with the terms of the Policy and Endorsement No. 4, and to pay the insurance proceeds stated in paragraphs 64(d)(i) and 64(d)(ii) of the Amended

General damages;

Aggravated and exemplary damages;

Interest at the rate of 5% per annum on paragraphs 64(d), 64(e), 64(f) and 64(g) of the Amended Statement of Claim from the date of the Claim Rejection Letter until the date of full realisation;

Costs;

Such further or other relief that this Honourable Court deems just and fit.” [13] After Westford commenced legal action in December 2020, Archipelago in its Amended Defence dated 5.3.2021, pleaded additional grounds for rejection of Westford’s claim being misrepresentation, sham trades, fraudulent non- disclosure and lack of insurable interest to justify its Claim Rejection. SUMMARY OF WESTFORD’S CASE [14] In summary, Westford’s case is that Archipelago had wrongfully and in bad faith rejected its insurance claim under the Policy. [15] Westford contends that the Policy, along with Endorsement No. 4 which increased the coverage limit, provides protection against losses arising from the non-payment of insured debts under two sales contracts, the Phoenix Ordders, with its customer Phoenix. [16] It is Westford's position that the insurer Archipelago had issued repeated acknowledgements confirming coverage for the Phoenix Orders, granted extensions of time for payment under the same contracts, and confirmed just prior to the claim submission that coverage remained in place with premiums paid. [17] As such, Westford contends that Archipelago is estopped from denying coverage on technical grounds, waived certain policy conditions through its conduct, and failed to act fairly or in good faith in swiftly rejecting the insurance claim on dubious grounds not raised earlier. [18] Westford also alleges negligent misstatements were made by Archipelago regarding coverage which led to the losses suffered, and that Archipelago had breached statutory duties by violating standards of integrity, fair dealing, and competence owed under regulations applicable to its insurance business. [19] In light of the above, Westford contends that the rejection of its insurance claim constituted a breach of contract and breach of duties under tort law and statute, warranting payment of the insurance proceeds outstanding or damages resulting from Archipelago's actions and inactions. SUMMARY OF ARCHIPELAGO’S CASE [20] In summary, Archipelago's case is that it was justified in rejecting Westford's insurance claim as there were various breaches of policy terms and misrepresentations that invalidate coverage under the Policy. [21] Archipelago alleges that Westford made material misrepresentations regarding the nature of its business in the insurance proposal form and failed to disclose its true involvement as a financing intermediary in the transactions. [22] It is also Archipelago's position that the policy limit remained at USD 2.5 million as the Additional Premium to increase coverage was never paid to it but wrongly paid to a fraudster, and that shipments to Ivory Coast and Senegal fall outside approved countries per policy terms. [23] Additionally, Archipelago contends that the sales contracts, the Phoenix Orders, underlying the insurance claim were sham transactions and disguised financing arrangements, not legitimate arms-length commodity trades, hence rendering the claim outside the scope of policy coverage with no insurable interest established. [24] Archipelago further contends that various policy and statutory breaches on Westford's part would disentitle any right to relief. This includes alleged dishonesty, lack of utmost good faith, and contributing negligence that should substantially reduce liability even if the court finds in favour of Westford's claim. [25] As such, the overarching position taken by Archipelago is that Westford's case is meritless, and the insurance claim was rightly rejected in line with the policy provisions, authorised regulations, and governing legal principles. WITNESSES [26] Westford called five witnesses whose witness statements are marked “WS-PW1” to “WS-PW5” as follows: a) PW1 is Nuray Hayal Erdinc (“Nuray Erdinc”), the Head of Operations at the Istanbul Representative Office of Global Trade Solutions Ltd. Her evidence was on Commercial Invoice No. 13182 dated 16.10.2019 in respect of Phoenix Order 11892 and Commercial Invoice No. 13183 dated 16.10.2019 in respect of Phoenix Order 11895. Her Witness Statement is marked as “WS-PW1”. b) PW2 is Arzu Tanriverdi (“Arzu Tanriverdi”), the Trade Credit Insurance Director of Westford. Her evidence was on the pre-policy negotiations, terms, and operations of the insurance policy with Archipelago. Her evidence covered Westford's transactions with Phoenix, payment of additional premiums, communications about overdue payments, and Archipelago's confirmations of coverage. She also discussed Westford's rejected insurance claim against Archipelago. Her Witness Statement is referred to as “WS-PW2”. c) PW3 is Hande Elmener (“Hande Elmener”), the Chief Executive Officer of Westford. Her evidence was on Westford's role as a trade finance intermediary and its past transactions with Phoenix, including Orders 11892 and 11895. She discussed choosing Archipelago for insurance, coverage confirmations, Phoenix's liquidation, Westford's debt recovery efforts, the insurance claim filing, premium payment issues, the Claim Rejection and fraud allegations, and the rejection's impact on Westford's business. Her Witness Statement is marked as “WS-PW3”. d) PW4 is Bernard Henri Léon Sauvage (“Bernard Sauvage”). He is a trade credit insurance expert. His evidence was on his expert opinion that Westford is covered under the insurance policy and Endorsement No. 4 with respect to Phoenix Orders 11892 and 11895, that Archipelago's grounds for rejecting Westford's insurance claim are baseless, that the trades between Westford and Phoenix (Phoenix Orders 11892 and 11895) appeared to be authentic, and that Archipelago is not entitled to rely on any allegation of fraud on the part of Phoenix to repudiate Westford's insurance claim. His Witness Statement is marked as “WS-PW4”. e) PW5 is Fong Choong Fook (“Fong”), a cyber security consultant and trainer with LE Global Services Sdn Bhd. His evidence was on his expert investigation and analysis of the emails provided by Westford, including the spoofed emails purportedly from Archipelago, to determine if Westford's computer systems had been compromised. His Witness Statement is marked as “WS-PW5”. [27] Archipelago called nine witnesses whose witness statements are marked “WS-DW1” to “WS-DW9” as follows: a) DW1 is Ian Lim Teck Soon (“Ian Lim”), the Principal Officer and Group Chief of Archipelago. He testified on Westford's introduction to Archipelago, underwriting processes, policy terms, endorsements, and handling of Westford's claim after Phoenix's liquidation. He explained the claim rejection reasons, including non-compliant shipments, policy limit concerns, ownership questions, disclosure breaches, Westford's insurable interest, and absence of debt confirmation from the Phoenix Liquidator. His Witness Statements are marked as “WS-DW1” and “WS-DW1A.” b) DW2 is Ng Jook Yew (“Nicholas Ng”), Head of Underwriting at Archipelago. He provided evidence on underwriting processes for Westford's policy, policy endorsements, trade declarations under the policy, reasons for excluding Ivory Coast and Senegal trades, and Archipelago's stance on Westford's non-disclosure of material facts about its dealings with Phoenix. His Witness Statement is marked “WS-DW2.” c) DW3 is Goh Ah Hong, shareholder and director in Archipelago Insurance Limited and the CEO of Accura International Limited Labuan. His evidence was on the circumstances of his meeting with Arzu Tanriverdi (PW2) when she was introduced to him briefly by Nicholas Ng (DW2), that she informed him that her business was looking for credit insurance but they did not discuss details of her business as he had to leave shortly for another appointment. His Witness Statement is marked as “WS-DW3”. d) DW4 is Tay Boon Rong, Group Chief Operating Officer for Malayan Holdings Limited and formerly the Group Compliance Officer for the Archipelago Group of Companies. His evidence was on a January 2020 cyber fraud attempt where someone impersonated Archipelago in an email to Deloitte, and Archipelago's subsequent police report filing. He noted Archipelago did not report the Westford-related cyber fraud due to its discovery during lockdown, mentioned Archipelago's lack of financial loss from such incidents, and stated Westford was the only known client to lose money in such frauds. His Witness Statement is marked as “WS-DW4”. e) DW5 is P A Kanes Naidu a/l Athinaidu (“Kanes”), the Technical Advisor at Archipelago Insurance Limited and formerly the Deputy Group Chief Underwriter. His evidence was on the Imposter's use of spoof email addresses in correspondence with Westford, timestamp discrepancies indicating email tampering, incomplete email content from the Imposter, requests for payments to a new US bank account, Westford's failure to verify these discrepancies and changed bank details per its policy, and absence of original documents and endorsements in transactions between Archipelago and Westford. His Witness Statement is marked as “WS-DW5”. f) DW6 is Huang Zhiang (“Huang”), the Director at CRM Claims Consultants Pte Ltd. His evidence was on CRM's investigations for Archipelago into transactions involving Genuine Pte Ltd and rice shipments to Ivory Coast and Senegal. Initially, his 7.8.2020 reports concluded that the cargoes were delivered as per documentation, but he later revised this after reviewing liquidators' documents, finding the trades were directly between Vietnamese shippers and Phoenix group companies, with no involvement from Genuine Pte Ltd or Westford. His Witness Statement is marked as “WS-DW6”. g) DW7 is David Ng Siong Yee (“David Ng”), the Manager at Crawford & Company Adjusters (M) Sdn Bhd. His evidence was on his role in investigating Westford's insurance claim for Archipelago. He reviewed the insurance policy and claim documents, requested specific documents from Westford to assess the claim and trade authenticity, and followed up for clarifications. Based on the information received, albeit incomplete, he prepared a preliminary loss advice report dated 15.5.2020. His Witness Statement is marked as “WS-DW7”. h) DW8 is Lim Hon Min (“Hon Min”), an associate director specialising in trade credit at Accura International Limited. His evidence was on Archipelago's assessment of Westford's insurance claim. He opined that the Ivory Coast and Senegal trades were not covered under the policy, appeared to be duplicate transactions used for financing, and were not actual trades. He also stated that Westford could not be seen as a trade finance intermediary for these transactions based on new documents showing the real trades. His Witness Statement is marked as “WS-DW8”. i) DW9 is Lim Boon Ing (“Boon Ing”), the Group Chief Operating Officer at Archipelago Insurance Limited. His evidence was on overseeing the oversaw the assessment and rejection of Westford's insurance claim. He cited reasons for rejection, including the alleged fraudulent nature of the trades, Westford's breach of disclosure about its business, prior financings, and dubious ownership of traded goods. Further, he referred to additional evidence from Phoenix liquidation reports, which indicated that Westford's claimed trades were sham transactions without actual transfer of goods ownership. His Witness Statement is marked as “WS-DW9”. ISSUES [28] After considering the facts of the case and the defences relied on by Archipelago, the court frames the following issues for deliberation which this court considers pivotal to the resolution of this case: a) Whether Westford had breached its duty of utmost good faith and/or duty of disclosure and committed material, dishonest and/or fraudulent misrepresentations; b) Whether the Phoenix Orders are instruments and/or trades that fall within the ambit of the Policy; c) Whether Westford does have an insurable interest within the meaning of the Policy; d) Whether the Phoenix Orders do not constitute shipments to an Insured Buyer in an Approved Country; e) Whether the Policy Limit is only USD 2.5 million due to the non-payment of Additional Premium; f) Whether Archipelago is precluded from raising other grounds of rejection; g) Whether adverse inference should be drawn against Westford; and h) Whether Westford breached its duty of good faith and showed fraudulent intent. [29] In the ensuing part of this judgment, this court will structure its deliberations around the issues above. ANALYSIS AND FINDINGS OF THE COURT Whether Westford had breached its duty of utmost good faith and/or duty of disclosure and committed material, dishonest and/or fraudulent misrepresentations [30] Archipelago asserts that Westford breached its duty of utmost good faith and duty of disclosure by misrepresenting themselves as merely a distributor of commodities. Archipelago contends that Westford actually functioned as financiers for its buyers, a crucial detail omitted in its proposal form and other pre-contractual documents. It argues that the sales contracts central to this claim were disguised financing agreements, not genuine trades, as evidenced by unusually low profit margins. Archipelago further alleges that Westford failed to disclose a significant Corporate Guarantee, which misrepresented its potential financial exposure. Based on these assertions, Archipelago believes it is entitled to void the policy, citing the breach of the principle of utmost good faith and Westford's alleged dishonest or fraudulent misrepresentations. [31] Westford submits that it has been wrongly accused by Archipelago of misrepresentation and breach of duty of disclosure, emphasising its legitimate role as a ‘distributor of commodities’ backed by detailed transactional evidence. It contends that the allegations regarding the misrepresentation of suppliers and functioning through a broker are baseless, as supported by a plethora of authenticating documents. Westford maintains that its comprehensive disclosures in the Proposal Form and supporting documents negate Archipelago's claims of non-disclosure. It further asserts that Archipelago's reliance on speculative reports and conjectures lacks evidentiary support, particularly regarding the alleged disguised financing agreements. Finally, Westford argues that Archipelago's accusations are unfounded and should not result in the avoidance of the policy, as it has fulfilled all disclosure obligations in good faith. [32] Having thoroughly considered the submissions presented by both Westford and Archipelago, I now proceed to articulate my findings on the matters at issue. 'Distributor of various commodities', not 'financier' [33] Archipelago alleges that Westford is not genuinely a 'distributor of various commodities' as claimed but rather acts as a 'financier' under the guise of trading. This assertion is based on the premise that the Phoenix Orders were not genuine trades but 'disguised financing agreements'. However, Archipelago's claim lacks substantiation; it has failed to provide concrete particulars or evidence illustrating such disguised agreements. The absence of specific details or examples of alleged undisclosed financing arrangements critically weakens Archipelago’s position. [34] Conversely, Westford's evidence robustly supports its stance as a commodities distributor. This evidence is anchored in the transactions involving rice, purchased from Genuine and sold to Phoenix. Key documents substantiate this process: a) Certificates of Origin issued by the Chamber of Commercial & Industry of Vietnam, dated for both orders, confirming the origin and shipment details of the rice. b) Purchase Contracts between Westford and Genuine, specifying the quantity (in metric tonnes) and value (in USD) of the rice. c) Commercial Invoices from Genuine to Westford, dated respectively for each order, demanding payment for the rice. d) Bank SWIFT receipts showing payment for the commodities by BGIS, Westford’s financiers. e) Bills of Lading accompanying Genuine’s letter to Westford, evidencing the shipment of the commodities. [35] Following the acquisition of these commodities, Westford engaged in a back-to-back sale to Phoenix, evidenced by: a) Sales Contracts between Westford and Phoenix, detailing the particulars of the rice sold. b) Commercial Invoices from Westford to Phoenix, indicating the amounts due. c) Documents evidencing the transfer of bills of lading to Phoenix. d) Phoenix’s acknowledgments of both receipt of the commodities and the debt owing to Westford. [36] Furthermore, the 120-day open account term in the Sales Contracts and the eventual sale of the commodities by Phoenix to end buyers in Abidjan, Ivory Coast, and Dakar, Senegal, are consistent with standard commodity trading practices. The alignment of destinations in all transactional documents, including certificates of origin and bills of lading, reinforces Westford's claim. [37] Additionally, Phoenix’s execution of Extension Agreements and issuance of debt acknowledgment, none of which reference any form of loan or financial aid from Westford, further corroborate the nature of these transactions as commercial sales. [38] In contrast, Archipelago's officers, during trial, acknowledged the commercial nature of the debt between Phoenix and Westford and the existence and successful delivery of the commodities, without providing any evidence to the contrary. [39] Given the detailed and consistent documentary evidence provided by Westford, and the lack of substantial contrary evidence from Archipelago, it is clear that Westford operated as a distributor of commodities. The evidence does not support the claim that Westford was acting as a financier in the guise of a distributor. In this respect, the legal principle that the onus of proving misrepresentation and non-disclosure of a material fact rests with the insurer applies (see Malcome A. Clarke in the Law of Insurance Contracts, 3rd Edition, 1997) and as such, Westford, the insured, is afforded the benefit of any doubt. [40] Further, Archipelago has not provided a clear definition or concrete evidence to support its assertion that Westford acted as a ‘financier’. Nor has it elucidated what constitutes a ‘disguised financing agreement’ or how these terms apply to the Phoenix Orders. The documentary evidence presented, including invoices and sales contracts related to these orders, distinctly points to legitimate sales of commodities, devoid of any indication of financing arrangements by Westford towards Phoenix. [41] Archipelago’s supporting arguments, which include reference to news articles from the year 2021, do not convincingly bolster its case. It submits that Westford was transacting at a loss and hence must have been deriving undisclosed profits from these transactions. However, this line of argument was not pursued during the trial through the cross-examination of Westford’s witnesses, thereby violating the principle of Browne v Dunn [1893] 6 R. 67, H.L. which necessitates that any factual disputes be presented to the opposing witnesses for rebuttal. [42] Westford’s approach to these transactions demonstrates its commitment to due diligence and proper risk assessment. For instance, in evaluating its supplier, Genuine, Westford obtained a Certificate of Incorporation from the Accounting and Corporate Regulatory Authority (ACRA) and a Credit Report from Worldbox Business Intelligence, confirming Genuine’s status as a legitimate entity with a sound financial standing. Additionally, Westford’s comprehensive review of transactional documents like Certificates of Origin, Bills of Lading, and Sales and Purchase contracts underscores its thorough understanding of the trades involved. [43] Regarding the allegation of ‘reverse factoring,’ Archipelago has not presented any substantial evidence to validate this claim. Furthermore, its reliance on a Wikipedia article as evidence is notably weak, given the open-edit nature of such a source. This reliance calls into question the validity of its argument and its understanding of the matter at hand. Representation that suppliers are ‘Mills, wholesalers’ [44] Archipelago alleges that Westford misrepresented the nature of its relationship with its supplier, Genuine, in response to Question 14 of the Proposal Form. The question inquired, “Who are your suppliers?” to which Westford answered, “Mills, wholesalers.” Archipelago contends that this response was misleading, positing that Genuine, Westford's supplier, lacked authenticity and the capacity to own the commodities in question. [45] To substantiate its claim, Archipelago relies primarily on two sources: reports by CRM Claims Consultants Pte Ltd (“CRM”), conducted post-facto on 29.5.2020, and a Credit Report on Genuine, indicating a credit limit of SGD 200,000. However, the reliability and relevance of these sources are questionable. [46] The CRM investigation, initiated seven months following the Phoenix Orders in October 2019, lacks temporal relevance to the transactions in question. CRM's speculative findings, including suggestions that Genuine's office address might be used merely for registration and doubts about the active role of Genuine's company secretary, are conjectural at best. This is compounded by the uncertainty expressed by CRM’s representative, Huang (DW6), during cross-examination, who admitted to either lacking personal knowledge or being uncertain about his findings. Furthermore, CRM’s omission of a Singapore High Court judgment dated 10.4.2021 filed as Suit 700 of 2020 between Genuine (as plaintiff) and HSBC Bank Middle East Ltd, Dubai undermines the relevancy of its investigation. This judgment, affirming Genuine as a legitimate entity and appellant, renders CRM’s findings peripheral. [47] The process of appointing CRM itself raises concerns. Archipelago's decision to suspend its original loss adjusters, Crawford, and prevent it from completing its investigation, instead opting for CRM’s services under the counsel of its lawyers, suggests a potential bias in the investigation process. The implication is that Archipelago might have sought to influence the outcome of the investigation to align with its interests. [48] Regarding the Credit Report, the emphasis on Genuine's credit limit is misplaced. A credit limit primarily reflects an entity's borrowing capacity, not its ownership or trading capabilities. Significantly, Archipelago overlooks Genuine's reported revenue of USD 8.5 million in 2017 and total assets worth USD 4.6 million, as indicated in the report by Worldbox Business Intelligence. This oversight casts doubt on Archipelago's interpretation of Genuine's financial standing. [49] The longstanding relationship between Westford and Genuine, established since March 2019 with a cumulative turnover of approximately USD 44 million, further evidences the legitimacy of their commercial interactions. Notably, this relationship has been devoid of disputes or issues. [50] Supporting evidence of Genuine’s legitimacy includes: a) Certificate of Incorporation issued by the ACRA, dated 18.2.2016. b) Certificate of Good Standing from ACRA, dated 4.6.2020. c) Business Profile from ACRA, dated 22.3.2021, detailing Genuine’s company structure, officers, and shareholding. d) Credit Report from Worldbox Business Intelligence, dated 15.1.2019, affirming Genuine’s sound financial situation. [51] Contrasting this evidence with Archipelago's reliance on speculative CRM reports and the misinterpretation of the Credit Report, it is evident that Archipelago's allegations lack substantive backing. The comprehensive documentation provided by Westford firmly establishes the authenticity of Genuine as a legitimate supplier. [52] In light of the evidence presented, the court finds Archipelago’s claim of misrepresentation by Westford concerning its supplier, Genuine, to be without merit. Westford's representation of functioning on its own [53] Archipelago claims that Westford misrepresented its operational mode in response to Question 10 of the Proposal Form. Archipelago contends that contrary to Westford's assertion of functioning independently, Westford in fact operated through Phoenix as a broker. This alleged misrepresentation is critical, as Archipelago argues that knowledge of such an arrangement would have influenced its decision to accept the risk. [54] The court notes significant inconsistencies in the testimony of Archipelago’s officers regarding who acted as a broker in the transactions involving Phoenix Orders 11892 and

This inconsistency is particularly evident in the changing narratives presented by Archipelago’s Principal Officer, Ian Lim (DW1), and its Group Chief Operating Officer, Boon Ing (DW9). [55] Ian Lim initially identified Phoenix as the broker in these transactions. However, during cross-examination, he reversed this assertion, ultimately acknowledging the absence of a broker between Westford and Phoenix. This shift in stance during the critical phase of cross-examination is pivotal, as it undermines the credibility of Archipelago's claim. [56] Similarly, the testimony of Boon Ing was marked by vacillations. Initially claiming Westford to be an intermediary, he later altered his statement under cross-examination, suggesting that Westford was involved in 'disguised financing' as an intermediary. Such inconsistencies during cross-examination point to a lack of definitive evidence on Archipelago’s part regarding the alleged broker role. [57] The lack of a consistent and clear identification of a broker, even during trial proceedings, notably weakens Archipelago's position. The court finds it telling that Archipelago could not definitively establish the existence or identity of a broker, a central element of its allegation. [58] Moreover, an examination of the transactional documents related to Phoenix Orders 11892 and 11895 above reveals no evidence of a broker's involvement. These documents clearly demonstrate that Westford was acting independently as a seller of commodities, with direct knowledge of the trade specifics, such as qualities, quantities, and values of the commodities involved. Phoenix’s role in these transactions is clearly that of a buyer, with no intermediary or broker evident in the transactional process. [59] This assessment is further supported by the testimony of Archipelago’s Principal Officer Ian Lim during cross-examination, where he conceded that there was no broker between Westford and Phoenix. His admission that the dealings were direct between the two parties significantly undermines the allegation of a broker’s involvement. [60] Given these observations, the court finds that Archipelago’s allegation of misrepresentation by Westford regarding its operational independence lacks substantiation. The evidence, coupled with the testimonies, does not support the claim of a broker's involvement as alleged by Archipelago. Archipelago’s burden to prove breach of duty of disclosure not met [61] Archipelago contends that Westford failed to disclose critical information: firstly, its role as a trade finance intermediary, and secondly, the existence of a Corporate Guarantee dated 24.12.2019, obtained from Phoenix Commodities Pvt Ltd (“PCPL”), Phoenix’s parent company. [62] To establish a breach of duty of disclosure, Archipelago, as the insurer, bears the burden of proof. It must convincingly demonstrate that the information allegedly withheld was material to a prudent underwriter and that this omission influenced its decision to incept the Policy. Archipelago’s officers have characterised Trade Credit Insurance Policies as highly specialised and complex, thereby setting a high bar for materiality and inducement. [63] Despite the specialised nature of these policies, Archipelago has not presented any independent or expert evidence to support its claim of non-disclosure. Notably, it did not call upon any expert in the field of trade credit insurance to testify about the materiality of the purportedly undisclosed information. Additionally, there is a lack of evidence demonstrating that the alleged non-disclosure was a decisive factor in its decision to underwrite the policy. [64] The evidence from Archipelago’s underwriters is insufficient and lacks the necessary reliability. This approach echoes the caution advised in Synergy Health (UK) Ltd v CGU Insurance plc [2010] EWHC 2583, which underscores the hypothetical nature of underwriters' evidence and the need for it to be rigorously tested against logical consistency and independent evidence. [65] On the other hand, Westford’s defence includes the testimony of an expert witness, Bernard Sauvage (PW4), who brings over 30 years of experience in both underwriting and management in the Trade Credit Insurance industry. Bernard Sauvage’s testimony highlighted the comprehensiveness of Westford’s proposal form and Know Your Customer (KYC) documents, submitted to Archipelago, and noted that such thoroughness is rarely seen in the industry. He concluded that Westford had shown utmost good faith and fully disclosed all necessary information, which was subsequently validated by Archipelago’s actions in granting an insurance line, incepting the policy, and confirming acceptance of Phoenix Orders 11892 and 11895. [66] Considering these aspects, the court finds that Archipelago has not successfully established the elements of non-disclosure. The lack of independent evidence from Archipelago, contrasted with the persuasive and expert testimony provided by Westford, leads to the conclusion that the allegation of non-disclosure is unfounded. [67] Moreover, the evidence presented in court indicates that Westford has met its duty of disclosure both legally and factually. The detailed documentation provided by Westford, coupled with Archipelago’s decision to proceed with the policy, strongly suggests compliance with disclosure obligations. Westford’s role as ‘trade finance intermediary’ [68] The next issue pertains to whether Westford adequately disclosed its role as a trade finance intermediary. [69] Westford's disclosures in the Proposal Form and supporting documents, including the Company Overview 2018 and Audited Financial Statements, explicitly outlined its business operations. It revealed its role in trading commodities on open account terms (120 days from invoice date), specialising in supply chain management, and providing structured trade solutions, including back-to-back trading. This was further corroborated by information on Westford's website. [70] In the specific instance of Phoenix Orders 11892 and 11895, Westford's operational methods closely mirrored these disclosures. It engaged in negotiations and pre-sales of commodities between Genuine and Phoenix and subsequently sold these commodities to Phoenix on a back-to-back basis with open account terms. This operational model was consistently communicated to Archipelago, evident from a meeting held on 3.4.2019 and the terms of the Sales Contracts related to the Phoenix Orders. [71] During the trial, Westford’s witnesses contended that Archipelago’s fixation on the term ‘trade finance intermediary’ was a mere semantic issue. It argued that Westford’s role, irrespective of the terminology used, remained that of a commodity trader engaging in purchases for customers and reselling these on open account terms for a margin. This operational model, as articulated by Westford’s witnesses, was consistent with the information previously disclosed to Archipelago. [72] Archipelago's awareness and acknowledgment of Westford's business model were further demonstrated through various communications. Notably, this includes the explicit acknowledgment of the terms in the Sales Contracts for Phoenix Orders 11892 and 11895, as well as an email from Archipelago’s Head of Underwriting, Nicholas Ng, dated 15.1.2020, confirming the insurance policy’s coverage of Westford’s trade financing activities. [73] Given this background, the court finds Archipelago's claim of non-disclosure by Westford to be unsupported. The evidence presented, particularly Archipelago's repeated acknowledgments, contradicts its current stance of unawareness regarding Westford's business operations. [74] Additionally, even if there was non-disclosure by Westford, Archipelago is precluded from making such a claim due to its non-compliance with specific clauses of the Policy. The Subjectivities Clause required Archipelago to conduct site visits to understand Westford and Phoenix's trade models. The Subjectivities Clause in the Policy provides: “SUBJECTIVITIES: …….

Satisfactory site visit, review of credit checkings and background review on Insured and all insured buyer by Insurer” [75] Its failure to perform these visits prevents it from claiming ignorance of Westford’s operations. Moreover, Archipelago’s failure to adhere to Clause 5.13 of the Policy, which mandates the return of premiums upon avoiding the Policy, further disqualifies it from benefiting from its own non-compliance. “5.13 Breaches By The Insured Breach by fraud or dishonesty If the Insured or anyone acting on its behalf breaches this condition (whether at inception or otherwise) by fraud or dishonest act or omission, the Insurer may:

avoid this Policy from inception; or

impose such terms, conditions and/or additional premium as the Insurer may in its sole discretion determine; and from any such fraud or dishonest act or omission must immediately be repaid to the Insurer. Breach by non-disclosure, misrepresentation (other than fraudulent or dishonest) If the insured or anyone acting on its behalf breaches this condition (other than by fraudulent or dishonest means), the Insurer may:

impose such terms and conditions (effective at inception or otherwise) as the Insurer would have imposed in the absence of such breach; and/or

charge such additional premium (effective at inception or otherwise) as the Insurer would have required in the absence of the breach; and

notified apply such applicable additional premium, amended terms and conditions or both to any claim or potential claim; and the Insurer will promptly within thirty (30) calendar days give the Insured written notice of any applicable additional premium, amended terms and conditions or both. Within fourteen (14) calendar days of receipt of such notice, the insured will give the Insurer written confirmation of:

acceptance of and a promise to pay the applicable additional premium in accordance with the terms of trade applying to this insurance; or

the Insured's acceptance of the amended terms and conditions; or both as applicable. If the Insurer can show to the Insured's reasonable satisfaction that the Insurer would have declined to enter into this insurance at inception or to accept the proposed amendment to this insurance during the Policy Period on any terms, the Insurer may avoid this Policy from inception and, if no claims have been paid or accepted under this Policy, the Insurer will promptly return to the Insured all premiums received by the Insurer at the date of breach; and, if the Insurer has paid claims monies under this Policy, the Insured must promptly within seven (07) calendar days repay all such claims monies to the Insurer.” (emphasis added) [76] In conclusion, the court finds that the comprehensive disclosures by Westford, coupled with Archipelago's acknowledgments and actions, clearly indicate that Archipelago was adequately informed of Westford's business model, negating any claim of breach of duty of disclosure. Corporate Guarantee non-disclosure [77] This court now turns its attention to the issue of the Corporate Guarantee. Archipelago argues that Westford failed to disclose a Corporate Guarantee issued by PCPL, intended to secure sums due from Phoenix to Westford. [78] Upon examination of the timeline and relevant legal principles, the court finds Archipelago’s contention to be without foundation. The critical point of consideration is the timing of the Corporate Guarantee relative to the completion of the Proposal Form and the inception of the insurance policy. The Corporate Guarantee in question was dated 24.12.2019. However, Westford completed the Proposal Form on 14.3.2019 and the insurance policy was incepted on 17.5.2019. Given these dates, it is evident that at the time of completing the Proposal Form and at the inception of the policy, the Corporate Guarantee did not yet exist. The legal principle articulated in Joel v Law Union and Crown Insurance Co [1908] 2 KB 863 underscores that disclosure obligations are contingent on the knowledge held at the time. As such, Westford could not have disclosed the Corporate Guarantee as it was not aware of it during the material times. [79] Furthermore, the existence of the Corporate Guarantee from PCPL does not automatically imply material information about Phoenix’s financial standing that would necessitate disclosure under the policy terms. The guarantee itself does not inherently reveal any specifics regarding Phoenix's financial health. [80] Even if the Corporate Guarantee were to be interpreted as indicative of Phoenix’s financial position, which is contested, it would likely have no bearing on the policy coverage. This assertion is supported by the admission of Archipelago’s Principal Officer, Ian Lim, during the trial, acknowledging that a Corporate Guarantee adds an extra layer of security against non-payment risks for insurers. This aligns with the legal perspective presented in General Insurance Law by Dr Poh Chu Chai, which posits that the duty of disclosure does not extend to information that diminishes the insured risk or is commonly known. [81] Additionally, Archipelago has not presented any expert testimony or evidence to substantiate that the Corporate Guarantee was a material factor that would have influenced a prudent insurer’s decision. The absence of such evidence significantly weakens Archipelago’s argument regarding the need for disclosure of the Corporate Guarantee. [82] Archipelago alleges that the Corporate Guarantee, amounting to USD 25 million per annum, exceeded the 'aggregate exposure' Westford declared in its Proposal Form, which Archipelago asserts was USD 12 million. However, upon careful examination of the material and arguments presented, this court finds Archipelago's contention to be baseless. [83] Firstly, it is crucial to note the actual figures declared by Westford in the Proposal Form. Contrary to Archipelago’s claim, Westford declared an annual exposure of USD 30 million, not USD 12 million as suggested by Archipelago. The amount guaranteed under the Corporate Guarantee, being USD 25 million per annum, therefore does not exceed Westford's declared annual exposure. This fundamental discrepancy undermines the credibility of Archipelago’s argument regarding the alleged non-disclosure. [84] Moreover, Archipelago's position on the matter of Westford's 'aggregate exposure' under the policy has been inconsistent. During the proceedings, Archipelago’s Principal Officer, Ian Lim, initially testified that the exposure was USD 12 million and later amended his testimony to USD 10 million. This inconsistency and the lack of a coherent explanation for the discrepancy further weaken Archipelago's stance. It appears that Archipelago has overlooked or disregarded the actual annual exposure figure of USD 30 million declared by Westford in the Proposal Form. [85] In conclusion, considering the timing of the events, the nature of the Corporate Guarantee, and the lack of substantial evidence from Archipelago, the court finds the claim of non-disclosure concerning the Corporate Guarantee to be unfounded. Westford had no obligation to disclose the Corporate Guarantee at the material times, and even if it did, it would not have materially impacted the policy coverage. Westford ‘stepping into pre-arranged trades’ [86] Archipelago claims that Westford, contrary to its statements in the Proposal Form completed on 14.3.2019, did not operate independently but rather participated in trades pre-arranged by Phoenix and Genuine. This, Archipelago argues, constitutes a breach of duty of disclosure and/or misrepresentation on Westford's part. However, upon thorough examination, this court finds Archipelago's claim to be unfounded. [87] Westford’s disclosures, specifically in its Proposal Form and subsequent business communications, consistently portrayed it as an independent commodities trader. This is evident from its explicit description in the Proposal Form, where it identified themselves as a “Distributor of various commodities,” and noted that its contracts are “invited/negotiated between buyer and seller.” Further, in Westford’s Company Overview 2018, it stated that it engages in “back-to-back” trading, ensuring that goods are “presold or hedged.” [88] The court takes note of the meeting between Arzu Tanriverdi, Westford’s Trade Credit Insurance Director, and Archipelago in Kuala Lumpur on 3.4.2019. The purpose of this meeting was to discuss Westford’s business operations and its relationship with Archipelago. It is reasonable to conclude from this meeting that Archipelago had a clear understanding of Westford’s business model. [89]

Additionally, Westford, on three specific occasions –

10.2019, 10.10.2019, and 15.10.2019 – forwarded Sales Contracts related to the Phoenix Orders to Archipelago, requesting coverage under the insurance policy. These contracts contained explicit terms defining Westford's role in the transactions, which Archipelago subsequently acknowledged without raising any concerns, thereby indicating its acceptance and understanding of Westford’s role. [90] The contention of Archipelago that Westford’s failure to use the specific phrase 'stepped into pre-arranged trades' in the Proposal Form amounts to a breach of duty or misrepresentation is not supported by the evidence. Archipelago has not satisfactorily demonstrated how the absence of this phrase materially influenced its judgment as a prudent insurer or induced it to underwrite the risk. Contrarily, Westford’s comprehensive due diligence on Genuine, including obtaining a Certificate of Incorporation from ACRA and a Credit Report from Worldbox Business Intelligence, affirms its thorough assessment of the supplier’s legitimacy. Moreover, Westford’s evaluation of Certificates of Origin, Bills of Lading, and Sales and Purchase contracts prior to engaging in the trades substantiates its thorough understanding and direct knowledge of these transactions. Court’s evaluation of evidence [91] In addition to the documentation furnished supporting Westford's legitimate business activities, the court also considered several other factors tipping the evidentiary scale further in Westford's favour while concurrently eroding the integrity of Archipelago's allegations of concealment. Archipelago Insurance's conduct and approach to both the Policy terms and assessing this claim raise doubts regarding the merits of its non-disclosure contentions against Westford when viewed holistically with other germane circumstances elucidated below. [92] In its defence, Westford provided expert testimony from a professional with extensive experience in the Trade Credit Insurance industry, Bernard Sauvage. This expert, after reviewing the documents filed in court, concluded that there was no evidence of non-disclosure or misrepresentation on the part of Westford. This assessment is significant, especially when contrasted with Archipelago's approach that predominantly relied on testimonies from its own officers and employees. [93] It is also noted that neither Crawford, the loss adjusters, nor CRM, the Claim Consultant appointed by Archipelago, supported the varied descriptions Archipelago used for Westford’s trading activities. Furthermore, the interruption of Crawford's assessment and the absence of its final report on the matter, especially when it had not accused Westford of non-disclosure or misrepresentation, are factors this court has considered in its evaluation. [94] Archipelago’s adherence to the Subjectivities Clause of the Policy is also a point of consideration. The failure to conduct site visits to Westford and Phoenix, as stipulated in the Policy has been taken into account. [95] Additionally, the constraints of the Proposal Form, which limited Westford’s business description options to manufacturer, distributor, agent, or merchant, led to Westford's selection of ‘distributor’. This selection, made from the limited options provided, undermines Archipelago's contention that Westford should have described its business differently. [96] Further, Archipelago’s actions in relation to Clause 5.13 of the Policy, specifically its attempt to avoid the Policy without returning premiums to Westford, are noted. This action not only contravenes the terms of the Policy but also reflects poorly on Archipelago's integrity in handling the claim. [97] In summary, while acknowledging Archipelago's concerns, the court concludes that its allegations against Westford lack the necessary evidentiary support. The court therefore rules in favour of Westford, finding that the evidence does not support Archipelago's claims of non-disclosure and misrepresentation. Whether Phoenix Orders are not instruments and/or trades that fall within the ambit of the Policy [98] Archipelago contends that Phoenix Orders No. 11892 and No. 11895 do not qualify under its insurance policy as it lacks evidence of genuine underlying trades. It argues that Genuine, the supposed supplier, was unreachable and lacked the financial capacity for the transactions in question, raising doubts about the legitimacy of the trades. Archipelago highlights discrepancies in shipping documents and the absence of credible evidence linking Genuine to the transactions, suggesting the deals were disguised financing agreements. It also questions the authenticity of late-emerging documents from Westford, implying fabrication. Ultimately, Archipelago asserts these transactions were financial arrangements rather than legitimate trades, rendering them ineligible for policy coverage. [99] Westford submits that the Phoenix Orders are legitimate trades, not sham transactions, with substantial evidence establishing ownership and title of goods. It maintains that these orders were conducted at arms-length, supported by adequate documentary proof and witness testimonies. Westford contends that the new documents, materials introduced by Archipelago during the trial, purportedly obtained through pre-litigation discovery, which it claims show that the Phoenix Orders are sham trades, lack credibility and do not demonstrate the alleged sham nature of the orders. Furthermore, it highlights Archipelago's inconsistent and biased evaluation of evidence, emphasising its own transparency and cooperation throughout the claim process. Ultimately, Westford asserts that even if fraud by Phoenix existed, it does not implicate it or invalidate its claim under the Policy. [100] Having duly considered the submissions of both Westford and Archipelago, the court will now proceed to deliver its findings on the matters at issue. Chain of ownership/title to goods sufficiently established [101] Archipelago alleges that the transactions under Phoenix Orders 11892 and 11895, declared in October 2019, are sham trades, and that Westford was not a commodities distributor as claimed but rather acted as a financier. This contention, according to Archipelago, constitutes a breach of the policy terms. [102] Upon detailed examination of the evidence and submissions, the court finds Archipelago's allegations to be unfounded. Westford, as the insured party, has robustly demonstrated its ownership and title to the goods involved in the Phoenix Orders. The key transactional documents, detailed above, exhibit a clear and legally sound chain of ownership transfer from its supplier Genuine to Westford, and thereafter to Phoenix. This chain is supported by testimonies from Archipelago’s own witnesses during the trial, notably David Ng (DW7), Huang and Hon Min (DW8). These witnesses, upon reviewing the documents presented by Westford, acknowledged the legitimacy of the transactions and the transfer of ownership/title to the goods. [103] Archipelago's refusal to accept the validity of these documents and its insistence that Westford did not possess ownership/title to the goods hinge on speculative and unsubstantiated claims. It bases its argument on the assertion that Genuine did not have ownership of the goods, a lack of correspondence between Genuine and its supplier, and the absence of endorsements on the first page of the bills of lading. However, Westford has sufficiently countered these points. Archipelago’s demand for correspondence between Genuine and its supplier is unreasonable considering that they are commercially sensitive and extraneous to the policy’s coverage, which is concerned with the transaction between Westford and Phoenix, not the supplier’s supplier. [104] Moreover, the court notes that Archipelago's emphasis on the first page of the bills of lading is not a requisite under the policy. The policy stipulates the issuance and detailing of the bills of lading in the Quarterly Declaration Bordereaux, which Westford complied with. The relevant bills of lading for the Phoenix Orders were sent to Archipelago in October 2019, with no objections raised at that time. It is only in its Amended Defence, filed in March 2021, that Archipelago raised this issue, suggesting a lack of initial concern or relevance. Phoenix Orders conducted at arms-length [105] Archipelago posits that the Phoenix Orders were not conducted at arm's length, suggesting that the trades were sham transactions and thus outside the policy's coverage. Archipelago alleges that the Phoenix Orders are not genuine trades but disguised financing agreements, suggesting a lack of true ownership of goods by Westford. It specifically refers to the Schedule of the Policy, which mandates that all trades be based on a commercial, arms-length, willing buyer, and willing seller basis. In the Policy Schedule, the relevant clause provides: “Contract Description All trades shall be on the basis of a commercial arms length willing buyer willing seller but each trade shall be subject to issuance of Purchase Contracts, Invoices and Bill of Lading as and when the transactions are executed." [106] Archipelago asserts that the trades were pre-arranged by Phoenix for financing purposes, and all documentation, including sales contracts between Westford and Genuine, were facilitated through Phoenix, implying no real involvement of Genuine in the trades. [107] Upon thorough examination of the evidence and legal definitions, the court finds Archipelago's assertions to be without foundation. An 'arm's length' transaction, as defined in Black’s Law Dictionary (Ninth Edition), refers to dealings between two parties who are not related or closely associated and who possess roughly equal bargaining power. In the case of the Phoenix Orders, Archipelago has not presented any substantive evidence to demonstrate that the transactions between Genuine, Westford, and Phoenix were not conducted at arm's length. Specifically, Archipelago has not shown any connection between these entities, such as shared directorship or ownership, nor evidence suggesting that Westford and Phoenix were not willing participants in the transactions, or that any of the parties were compelled to accept terms against its interests. [108] On the contrary, evidence presented indicates that Westford actively protected its interests against potential default by Phoenix. This is exemplified by the actions of Westford’s Trade Credit Director and its solicitors, who formally demanded payments from Phoenix and threatened legal proceedings in the event of continued non-payment. Such actions are indicative of a party acting in its own interest, consistent with the practices of an arm's length transaction. [109] Westford further supports its position with substantial documentary evidence, including Certificates of Origin issued by the Chamber of Commerce & Industry of Vietnam, Purchase Contracts between Westford and Genuine, and commercial invoices, which collectively demonstrate Westford’s role as a legitimate distributor of commodities. These documents substantiate that Westford purchased commodities from Genuine and executed a back-to-back sale to Phoenix. [110] Furthermore, Westford differentiates its case from the precedent of BSNC Leasing Sdn Bhd v Sabah Shipyard Sdn Bhd & Ors & Another Appeal [2000] 2 CLJ 197 (Court of Appeal) cited by Archipelago. In this case, a Malaysian company entered into a hire purchase agreement with a financing company to raise funds using a turbine as security. When defaults happened and the High Court ruled that the agreement merely disguised a loan without transferring turbine ownership, the financing firm still illegally pursued the customer in Ecuador; the court thus granted an anti-suit injunction while directing that the improper seizure of assets abroad be reversed. [111] Westford argues that the instant case involves clear evidence of genuine sales transactions, unlike the cloaked loan agreement in BSNC Leasing. It cites evidence such as the transfer of Bills of Lading from Genuine to Westford, and from Westford to Phoenix, along with acknowledgments of debt and acceptance from Phoenix, as part of its comprehensive submissions. [112] In light of this evidence, the court finds Westford’s arguments convincing and the claims by Archipelago unsubstantiated. The transactions in question, notably the Phoenix Orders 11892 and 11895, appear to be legitimate commercial activities, conducted at arms-length, with proper ownership and transfer of goods. Phoenix Orders are not disguised financing agreements [113] Archipelago contends that the Phoenix Orders are not genuine trades but rather 'disguised financing agreements', insinuating that Westford's role is not that of a commodities distributor but of a financier. This accusation, however, is not supported by the evidence. As discussed above, Westford has presented a comprehensive array of documentary evidence, including certificates of origin, purchase contracts, commercial invoices, and bills of lading, which collectively demonstrate legitimate transactions involving the purchase of commodities from Genuine and its subsequent sale to Phoenix. These documents unequivocally establish that Westford operated as a distributor of commodities, effectively overseeing the transfer of goods from Genuine to Phoenix, culminating in the delivery of these goods to the end buyers located in Africa. [114] The evidence clearly indicates that the indebtedness of Phoenix to Westford arose from bona fide commercial transactions involving the non-payment of invoices related to the trades of goods. Archipelago, on its part, has not provided any concrete evidence to counter this narrative or to substantiate its claim that these trades were disguised financing agreements. The lack of evidence from Archipelago to support its contention significantly undermines its defence. [115] Archipelago points to various news articles and Creditors’ Reports as evidence of alleged sham trades. [116] Upon scrutinising the evidence, the court finds Archipelago’s reliance on these news articles and Creditors’ Reports to be unsubstantiated and insufficient to support its claims. During the trial, it was noted that Archipelago’s own witnesses, Hon Min and Boon Ing, when cross-examined, conceded that neither the Creditors’ Reports nor the news articles made any specific references to the Phoenix Orders 11892 and 11895 as sham or fraudulent trades. Furthermore, these documents did not contain any mention of the trade between Westford and Phoenix. While the Creditors’ Reports indicated some mismanagement on the part of Phoenix, it did not implicate Westford in any fraudulent activities. [117] The court also considers the legal precedent set in the case of Perwira Affin Bank Bhd v Lorrain Esme Osman [1996] 4 MLJ 656 (High Court), which underscores that news articles alone are insufficient to conclusively establish the fact of sham trades without corroborating documents or sources. As such, the court deems Archipelago's reliance on these articles to be inadequate in proving its case. Westford’s rejection of Archipelago’s request for sharing information [118] One particular aspect of Archipelago's defence is its claim that Westford’s refusal to consent to an investigation into the Phoenix Orders by the liquidators suggests that these transactions were ‘sham trades.’ [119] Upon careful evaluation, the court finds Archipelago’s position on this matter to be without merit. The sequence of events and the context of the requests made by Archipelago for investigation are crucial to this determination. The first request from Archipelago came on 15.6.2021, a significant time after it had already rejected the claim on 12.6.2020, and after legal proceedings had been initiated in December

Westford’s decision to decline this request is understandable, given the timing and the apparent insincerity of Archipelago’s sudden interest in sharing investigation costs. [120] The second request by Archipelago, made on 17.9.2021, occurred well into the legal proceedings, and at a point when Archipelago had maintained its rejection of the claim for over a year. Westford’s response, indicating a willingness to engage should Archipelago reconsider its rejection of the claim, was reasonable under the circumstances. [121] The final request, made on 20.10.2021, included a threat to invoke adverse inference against Westford under Section 114(g) of the Evidence Act 1950. This approach by Archipelago, rather than demonstrating an intent to engage in good faith, further strained the relationship between the parties. Westford’s rejection of this request is seen as a reasonable stance, considering Archipelago's refusal to revisit its initial rejection of the claim and its threat to invoke adverse inference. [122] In light of the above, the court finds that Westford's refusal to consent to Archipelago's requests for investigation was justified and reasonable. Archipelago's delay in seeking an investigation, coupled with its steadfast stance on the claim rejection, undermines the credibility of its contention that the Phoenix Orders were sham trades. Furthermore, the mere inference drawn from Westford’s refusal to consent is not sufficient to establish the existence of sham trades. Archipelago bears the burden of proof to substantiate its claim, which it has failed to meet. “New Documents” [123] Archipelago introduced new documents during the trial (“New Documents”), alleging that these documents establish the Phoenix Orders as 'sham trades'. These documents were obtained through a 'pre-litigation discovery' process initiated by Archipelago in Dubai, as evidenced by a letter from the Phoenix Liquidator dated 10.4.2022. Archipelago's failure to inform Westford or the court about this discovery process raises significant questions about the integrity and transparency of its actions. [124] Upon detailed analysis of the evidence, the court finds Archipelago’s allegations to be unsubstantiated. The New Documents, introduced during the trial, were obtained through a 'pre-litigation discovery' process in Dubai. However, the probative value of these documents is questionable due to several reasons: a) Lack of Disclosure and Completeness: Archipelago did not fully disclose the nature and scope of its 'pre-litigation discovery', casting doubt on the impartiality and completeness of the discovery action. The absence of such critical information renders these documents less reliable. b) Absence of Expert Report: The failure of Archipelago to produce a related expert report from the discovery process, despite referencing it, is suspicious and undermines the credibility of its claim. c) Incomplete Phoenix Records: The New Documents, as per the Phoenix Liquidator’s acknowledgment, were reconstructed from limited sources and do not represent the complete set of Phoenix records. This incompleteness further diminishes their evidential weight. d) Veracity of Internal Correspondence: The documents include internal correspondence of Phoenix employees, none of whom testified in court, thus the veracity of the information contained within cannot be ascertained. e) Testimony of the liquidators: The liquidators did not testify regarding these documents, and the last-minute request by Archipelago to testify further questions the significance of these documents in the matter. [125] Despite these concerns, Archipelago asserts that these documents reveal 'real trades' distinct from those reported by Westford in the Phoenix Orders. Specifically, it claims that for Phoenix Order 11892, goods were sold directly by shippers to Phoenix Pte Ltd, a Singapore-based company within the Phoenix Group, and then to Agriex Cote D'Ivoire, excluding Genuine and Westford (Transaction A). For Phoenix Order 11895, it alleges a direct sale by shippers to Phoenix, with the goods then sold to an end buyer in Dakar, Senegal, again bypassing Genuine and Westford (Transaction B). However, the court finds these claims unsupported by concrete evidence, as the email correspondences, invoices, and bills of lading cited do not conclusively support these alleged transactions. Crucial elements such as sale and purchase contracts, proof of payment, and transfer of bills of lading for these 'real trades' are conspicuously absent. [126] The court observes that Westford, in contrast, has provided requisite documents under the Policy, validating its trades. The lack of objection from the liquidators to the legitimacy of the Phoenix Orders further undermines Archipelago's stance. The court is also cognisant of Archipelago's approach to the new evidence, which seems to affirm a preconceived decision to reject Westford's claim, irrespective of the evidence produced. [127] Archipelago in arguing against the legitimacy of the Phoenix Orders heavily emphasise documentation from the Phoenix Liquidator. It references specific documents, including invoices dated 24.9.2019 between Vietnamese shippers and Phoenix Pte. Ltd., and invoices dated 24.9.2019 between Phoenix Pte Ltd and Agriex CI. Additionally, it cites emails from the liquidators’ records that show bills of lading for Bills of Lading No.s IVC-13, IVC-14, IVC-15, IVC-16, IVC-17, and IVC-18 were sent to Rabo Bank in Holland and a claim on a marine policy on behalf of Phoenix Pte. Ltd for loss of cargo around 4.11.2019. Archipelago argues that these documents demonstrate that Genuine and Westford were not involved in the transactions, thus excluding these trades from policy coverage. [128] Westford, in response, challenges Archipelago's conclusions. It disputes the authenticity and relevance of the invoices and bills of lading, contending there is no proof that these documents were paid or genuinely issued. It also questions the claim on the marine policy, arguing that the correspondence merely shows communication about the discharge of goods in Abidjan, Ivory Coast, with no detailed claim found in the marine policy. [129] Westford further highlights that Archipelago applied a double standard in evidence evaluation, accepting documents pertaining to Transactions A and B without similar scrutiny applied to Westford’s documentation. It argues that Archipelago is unduly sceptical of the documents produced by Westford, yet displays overcredulousness towards the documents it refers to as evidence of the 'real trades'. Westford points out inconsistencies in Archipelago's approach, such as accepting invoices for Transactions A and B as paid without proof and not questioning the delivery of Bills of Lading or the authenticity of the New Documents. [130] Upon examination of the evidence and arguments presented, it appears that Archipelago has not sufficiently demonstrated that the Phoenix Orders are outside the ambit of the policy. The evidence cited by Archipelago, while suggestive of direct trades between Vietnamese shippers and other entities, does not irrefutably establish the exclusion of Genuine and Westford from these transactions. [131] Furthermore, the court notes the inconsistency in Archipelago's scrutiny of evidence, as highlighted by Westford. The lack of a consistent and objective approach in evaluating the evidence undermines the reliability of Archipelago's contentions. [132] In light of these observations, the court considers Westford's refusal to consent to Archipelago's investigation requests as reasonable, especially given the timing and circumstances of these requests. The court is also mindful of the burden of proof on Archipelago to establish the existence of 'sham trades', a burden it has not satisfactorily met. The absence of the Dubai expert report, which Archipelago claims is pivotal to its case, further weakens its position. The court opines that the failure to produce this report warrants an adverse inference under Section 114(g) of the Evidence Act 1950, suggesting that its contents would not favour Archipelago's case. [133] Considering the totality of the evidence and submissions, this court finds in favour of the Westford. The Phoenix Orders, as argued by Westford, appear to be legitimate trades that replaced the purported Transactions A and B. Therefore, these orders should fall within the coverage of the insurance policy held with Archipelago. Archipelago's arguments and evidence are insufficient to discount the validity of the Phoenix Orders conclusively. CRM Reports [134] Archipelago questions the legitimacy of Genuine as a business entity and relied heavily on CRM reports to assert that Genuine was not a legitimate business. However, this claim is significantly weakened by several key factors. The CRM investigation, conducted on 29.5.2020, occurred seven months after the Phoenix Orders in October 2019. This delay renders the findings of the investigation irrelevant to assessing Genuine's capability to own and transfer commodities at the time of the transactions. [135] During the trial, Huang, Director at CRM, admitted that its reports did not conclusively prove that Genuine did not exist. Furthermore, upon reviewing the documents presented in court, Huang confirmed that the ownership of goods was transferred from Genuine to Westford, validating Genuine's role as a legitimate seller in these transactions. [136] The investigation conducted by CRM took place at an incorrect address, not matching the one mentioned in the Singapore High Court judgment dated 10.4.2021, where Genuine was an appellant. This discrepancy raises questions about the accuracy of CRM's findings. Genuine's active participation in the court proceedings, as evidenced by the Singapore High Court judgment, contradicts Archipelago's claim that Genuine lacked personnel. [137] Moreover, Archipelago's insurance policy does not specifically mention suppliers or impose explicit obligations regarding them. The policy does not set out express conditions on the transfer of title in the underlying trade transactions, further weakening Archipelago's focus on the operational status of Genuine. [138] In light of these considerations, the court finds Archipelago's defences to be unsubstantiated. The evidence, especially regarding the limitations and discrepancies in the CRM reports, fails to support Archipelago's claims about the authenticity of Genuine or the character of the Phoenix Orders. Credit limit of Genuine [139] Archipelago questions Genuine’s financial standing, relying on the 'maximum credit' stipulated in the Credit Report to assert Genuine's incapability to own the goods is not persuasive. The credit limit mentioned in the report does not inherently reflect Genuine's ability to own the goods. This point was further reinforced during the trial when Archipelago’s Chief Operating Officer, Boon Ing, conceded that the credit limit alone does not conclusively demonstrate Genuine's lack of ownership of the goods. Such an admission significantly undermines Archipelago's argument. [140] Moreover, Archipelago did not present any financial documents, like financial statements of Genuine, to substantiate its claim regarding Genuine's weak financial standing. This lack of concrete financial evidence weakens its position. On the contrary, Westford presented a report from Worldbox Business Intelligence, a reputable and independent international business intelligence company. This report highlighted Genuine’s substantial revenue of USD 8.5 million and assets worth USD 4.6 million. The report also stated that Genuine’s financial situation was 'in order,' which contradicts Archipelago's assertions about Genuine's financial incapacity. [141] Given the lack of conclusive evidence from Archipelago and the substantial counter-evidence provided by Westford, the court is inclined to favour Westford's position. The findings and admissions during the trial, coupled with the Worldbox Business Intelligence report, suggest that Genuine had both the financial capacity and the operational legitimacy to engage in the transactions in question. Lack of correspondence [142] Archipelago's contention that there is no evidence of correspondence between Genuine and Westford is found to be unsubstantiated when examined against the documentary evidence presented. Notably, a letter from Genuine to Westford, dated 15.10.2019, enclosing Bills of Lading, confirms the completion of a transaction following the receipt of the purchase price from Westford’s financier, BGIS. Additionally, the existence of duly signed Purchase Contracts and commercial invoices issued by Genuine to Westford, which detail the particulars and value of the commodities sold, firmly establish a business link between these two entities. [143] The argument from Archipelago concerning the lack of direct email communication between Genuine and Westford is deemed inconsequential. Genuine and Westford have engaged in direct trading since March 2019, accumulating a significant total turnover of approximately USD 44 million. This long-standing business relationship, coupled with Westford's involvement in the trades initiated by Phoenix, suggests that the mode of communication, including the absence of direct email exchanges for the specific trades in question, does not inherently imply illegitimacy. [144] Moreover, the transactional documents executed by Genuine, essential for the sales of goods, are indicative of a legitimate business transaction. The court recognises that in commodity trading, contractual agreements often supersede the need for email communications. Westford's reliance on these executed documents is justifiable and typical in the industry, as corroborated by its insurance expert Bernard Sauvage, who notes that such arrangements are not unusual in commodity trading. [145] Taking these factors into account, the court concludes that Archipelago's claims regarding Genuine's involvement and the alleged lack of direct email communication between Genuine and Westford lack merit. The extensive documentary evidence, which includes signed contracts, invoices, and letters accompanying Bills of Lading, convincingly demonstrates the business transactions between Genuine and Westford, thereby affirming the legitimacy of the Phoenix Orders and Westford's insurable interest under the Policy. Proof of payment suggests title transfer [146] Archipelago argues that Westford's proof of payment to Genuine does not equate to proof of title transfer. This is found to be fundamentally flawed upon close examination of the transactional dynamics and the nature of the contractual agreements involved. [147] At the heart of any sale and purchase transaction lies the exchange of value, typically represented by the purchase price of the goods in question. In transactions necessitating cash payments, such as those between Genuine and Westford, the payment of the goods is integral to the transfer of title. Westford's payment to Genuine signifies the fulfillment of its contractual obligation, effectively transferring the ownership of the goods to Westford. This transfer of ownership, or title, is a critical component of the sale and is substantiated by Westford's performance in settling the purchase price. [148] Following the payment, Genuine facilitated the transfer of title to Westford. This is evidenced by Genuine forwarding the Bills of Lading to Westford. The Bills of Lading are not merely shipping documents; they serve as pivotal instruments in the transfer of title, particularly in international trade transactions. By providing these documents to Westford, Genuine effectively enabled Westford to assert its rights over the goods, either by taking possession themselves or facilitating further transfer to buyers in cases of resale. [149] The argument posited by Archipelago overlooks the intrinsic link between the payment of goods and the transfer of title in commercial transactions. The evidence clearly demonstrates that Westford, upon settling the purchase price with Genuine, acquired the title to the goods. This transactional process, well-documented and substantiated by contractual agreements and corroborative documents such as the Bills of Lading, convincingly refutes Archipelago's contention. [150] Therefore, the court finds that the payment made by Westford to Genuine, as evidenced by the transactional records, constitutes a valid transfer of title. This transfer of title is a fundamental aspect of the sale and purchase agreement between Genuine and Westford, aligning with established commercial practices. Allegation of sham documents [151] Archipelago accuses Westford of fabricating documents, specifically a letter from Genuine dated 15.10.2019 and a subsequent letter from Westford to Phoenix dated 21.10.2019, for the purposes of this trial. Archipelago contends that these documents are sham and asserts a lack of evidence linking Genuine to the trades in question. [152] Upon careful consideration, the claim by Archipelago that the letters in question (“the Letters”) were created solely for the trial appears unsubstantiated. The primary argument of Archipelago hinges on the premise that these Letters were suspiciously absent during the Summary Judgment stage. However, this argument is flawed for several reasons. Firstly, Westford's application for Summary Judgment was predicated on the successful delivery of goods, a fact confirmed by Archipelago at the time, rendering the production of the Letters seemingly unnecessary. Secondly, it is a common practice in litigation for parties to introduce more comprehensive evidence in preparation for a full trial, as opposed to interlocutory proceedings. Therefore, the decision of Westford not to include these documents earlier cannot be construed as evidence of fabrication. [153] Further, Archipelago's claim that there is no evidence of the Letters' origin from the server and the absence of testimony from those handling the Bills of Lading is misconceived. The Letters were scanned into Westford's system and, being documents made in the ordinary course of business for the transfer of Bills of Lading, are admissible under Section 32(1)(b) of the Evidence Act 1950, without requiring the makers to testify. Archipelago has failed to provide concrete evidence to support its claim of fabrication; its allegations are grounded in mere suspicion and conjecture, which cannot suffice as proof of such a serious wrongdoing. [154] Moreover, the allegation by Archipelago that Westford fabricated documents appears to be raised in bad faith. Archipelago demonstrates a starkly contrasting approach to the scrutiny of documentation, being unreasonably strict with Westford's documentation while showing leniency towards the New Documents produced by the liquidators. The inconsistency in Archipelago's stance is evident in its rejection of the Genuine trades and its acceptance of Transactions A and B as legitimate, despite a lack of comparable documentation or proof of receipt for these transactions. [155] In light of the evidence presented, it is apparent that the sale and purchase of goods have taken place, with proper transfer of title and ownership. This is corroborated by Westford's disclosure to Archipelago that it often purchases goods in transit, a practice Archipelago did not previously dispute. In cross-border trades, where physical possession of goods is not feasible, transactions are substantiated through invoices and transactional documents. This principle is supported by the New South Wales Supreme Court in Thera Agri Capital No 2 Pty Ltd v BCC Trade Credit Pty Ltd t/aa The Bond & Credit Co [2022] NSWSC 669, referencing MGICA Ltd v United City Merchants (Australia) Limited [1986] 4 ANZ Ins Cas 60-729. The court recognised that in the context of such trades, the reliance on invoices and documents is essential, given the impracticality of scrutinising every underlying transaction. [156] In conclusion, the allegations by Archipelago regarding the fabrication of documents by Westford are not supported by the evidence. The Letters in question are admissible and credible as part of the ordinary course of business, and Archipelago's claims are founded on mere speculation rather than concrete proof. Westford’s knowledge on encumbrance and finance of goods [157] Archipelago has raised concerns regarding the knowledge of Westford about the encumbrance and financing of goods involved in its transactions with Phoenix. In Westford's response to a query during the claims stage it stated its inability to confirm if the goods were unencumbered or financed by another party, asserting that its transactions were based on long-standing relationships and good faith. [158] Westford's reply to question 15 by the Adjuster Crawford explicitly states: “We have no way of knowing this, but we have had a long-lasting relationship and trade experience with both the supplier and Phoenix, and all trade was conducted based on this experience and good faith.” This response, while candid about the limitations in its knowledge regarding the encumbrance or financing of the goods, also underscores the reliance on established business relationships and trust, which are not uncommon in commercial dealings. [159] Furthermore, Archipelago's contention that Westford's inability to confirm the unencumbered nature of the goods is problematic lacks substantial grounding. The court accepts that in commercial practices, particularly in international trade, it is often impractical for traders to have absolute knowledge about every aspect of its supply chain, including the financial arrangements of its suppliers. The reliance on long-standing relationships and good faith, as articulated by Westford, is a pragmatic approach in such business contexts. This approach is not inherently flawed or indicative of negligence, especially when all transactional documents are in order and duly executed. [160] The acceptance of this practice was further affirmed during the trial by Archipelago’s Chief Operating Officer, Boon Ing. When questioned about the appropriateness of conducting business based on experience and good faith, as Westford did with Phoenix, Boon Ing agreed that there was nothing wrong with this approach. This acknowledgment by a high-ranking official of Archipelago lends weight to the argument that Westford's conduct, in relying on established business relationships and good faith, was reasonable and in line with common commercial practices. [161] The court finds that Westford's approach to the transactions in question, although lacking in absolute certainty regarding the encumbrance or financing of the goods, was conducted in a manner consistent with reasonable commercial practices. Its reliance on long-standing relationships and good faith, coupled with the proper execution of all relevant transactional documents, does not constitute a failing on its part. Complete Bills of Lading [162] Archipelago, raises concerns regarding Westford’s inability to produce complete Bills of Lading for a consignment. This issue is centered around an email response from Westford, dated 16.6.2020, addressed to Archipelago’s adjusters, Crawford. In this correspondence, Westford explains the non-availability of the complete Bills of Lading due to a technical issue – the crashing of an account officer's inbox at Phoenix, the company handling the transaction. Additionally, Westford indicates that its funding bank, BGIS, did not require this specific documentation, and consequently, its finance team was not in possession of it. Westford further notes that as Gazprom, the intended recipient of the originals, waived the requirement against an assignment from Phoenix, there was no need to retain these documents. [163] Archipelago contends that Westford’s inability to produce these documents, is highly suspicious. However, Westford challenges this assertion, arguing that there is no inherent suspicion in its inability to provide the complete Bills of Lading. It points out that despite receiving an 'incomplete' set of these documents in October 2019, Archipelago did not request the complete documents at that juncture. The request for the complete documents was made much later, specifically in Archipelago’s Affidavit in Reply dated 19.4.2021, as part of Westford’s Summary Judgment application. [164] During the trial, evidence emerged suggesting that Archipelago initially did not consider the complete Bills of Lading crucial. Testimonies from Archipelago’s Head of Underwriting, Niholas Ng, and its broker, Hon Min, revealed that Archipelago did not initially demand these documents from Westford. This revelation came through an exchange where Nicholas Ng confirmed that he did not request the first page of the Bill of Lading from Westford, as it was not deemed important. Similarly, Hon Min when questioned, admitted a lack of awareness regarding any request made to Westford for the first page and did not assert its importance. [165] Given these circumstances, the court finds Westford’s explanation for the absence of the complete Bills of Lading to be a plausible response to an administrative oversight compounded by technical issues, rather than an indicator of any suspicious activity. The fact that Archipelago initially did not emphasise the importance of these documents, and only later raised concerns, diminishes the weight of its suspicion. [166] Therefore, considering the totality of evidence and submissions, this court concludes that Westford's inability to produce the complete Bills of Lading, under the specific circumstances detailed in its correspondence and the trial testimony, does not warrant the suspicion cast by Archipelago. Creditors’ Reports and Liquidator’s letter [167] Archipelago submits that the Phoenix Orders are not legitimate trades covered under its insurance policy, based on evidence from creditor reports and a liquidators’ letter, which highlight investigative difficulties and lack of evidence supporting Phoenix's recorded trade receivables. This is anchored on a series of documents, notably a report to Phoenix's creditors authored by Deloitte, dated 8.2.2021. This report highlights investigative challenges due to non-cooperation from former company officers of Phoenix and the absence of evidence supporting substantial sums of recorded trade receivables. It also references difficulties experienced by creditors in collecting outstanding receivables, often due to denial of trading by counter-parties, some of whom are suggested to be connected to Phoenix and/or its former directors. Furthermore, the report mentions the possibility of multiple financing against some of Phoenix’s invoices. A critical letter from the Phoenix Liquidator, dated 10.4.2022 is also cited. This letter notes the lack of correspondence directly linking Westford to the transactions in question, except for a few emails from May 2020 inquiring about payments. [168] Westford counters these points by arguing that the Creditors’ Reports and the liquidators’ letter do not definitively disprove the existence of trades underlying the insurance policy. It asserts that the documentary evidence it presented shows that Phoenix's indebtedness to Westford was a result of genuine trade transactions, an assertion not effectively contradicted by Archipelago. Additionally, Westford highlights its active and transparent role in the claims assessment process, evidenced by its forwarding of the Creditors’ Reports to Archipelago and/or its loss adjuster, signifying a display of good faith and cooperation. Regarding the liquidators’ letter dated 10.4.2022, Westford notes that it does not explicitly invalidate the Phoenix Orders. It references an email from the liquidators to Archipelago’s solicitors dated 15.6.2020, which describes the new documents as presenting 'impartial facts.' The liquidators also maintained Westford on the list of creditors without any indication of intending to remove it in the future. [169] Upon detailed evaluation of the evidence and arguments, the court concludes that Archipelago's assertions and documentation do not sufficiently establish that the Phoenix Orders are outside the insurance policy's scope or that Westford lacks an insurable interest. While the Creditors’ Reports and the liquidators’ letter raise general concerns about Phoenix's broader trading activities, they do not specifically implicate the Phoenix Orders as illegitimate. Moreover, the absence of direct correspondence between Westford and Phoenix or Genuine, in the context of the liquidators' neutral approach and Westford's demonstrated openness, does not conclusively negate the presence of legitimate trades covered under the policy. No proof of fraud [170] Westford submits that there is no evidence of its involvement in any fraudulent activities related to the Phoenix Orders, as alleged by Archipelago. Westford asserts that while Archipelago acknowledges the standard of proof for fraud in civil cases as being on the balance of probabilities, it has failed to demonstrate any fraudulent conduct by Westford or the non-existence of legitimate trades underlying the Policy. [171] Westford further argues that even if fraud or wrongdoing by Phoenix were established, Archipelago has not proven Westford’s involvement or complicity in such actions. It refers to Clause 5.13 of the Policy, which addresses breaches by fraud or dishonesty, noting that without evidence of such misconduct by Westford, Archipelago is not entitled to avoid the Policy. This position is irrespective of whether Phoenix committed any fraud or dishonest act. [172] Supporting its stance, Westford cites the Thera Agri and MGICA cases. In both cases, the court ruled in favour of the insured despite undisputed fraud by the Insured Buyer. The Thera Agri case concerned whether an insured financier was entitled to indemnity under a trade credit insurance policy when its client defaulted, even though the financing arrangements did not strictly comply with sharia law principles and aspects of the transactions were fraudulent. [173] The court found that the policy did not exclude indemnity in the event of fraudulent, dishonest, or criminal acts by the Counter-Party or Guarantor, reinforcing the insured's entitlement to indemnity for loss arising from such events. The Supreme Court of New South Wales held: “[194] What did make a difference to the insurer’s risk was that the commodities did not in fact exist and the documents proffered by the Company in support of the drawdown request were shams. But clause 2.3 does not exclude indemnity in the event of the material default or the fraudulent, dishonest or criminal acts of the Counter-Party or Guarantor. This is consistent with a construction of the policy entitling the insured to indemnity for Loss arising from such an event. Loss caused by the material default or fraudulent, dishonest or criminal acts of the Counter-Party or Guarantor falls within the insuring clause.” [174] Westford contends that even if Phoenix had committed fraud, which is not evidenced the impact on the Policy should remain the same, as demonstrated in the cited cases. [175] Upon reviewing the submissions and the cited legal precedents, it is clear that Archipelago has not provided sufficient proof to implicate Westford in any fraudulent activities related to the Phoenix Orders. The lack of evidence to support claims of Westford’s involvement in fraudulent dealings, coupled with the legal principles established in the cited cases, leads to the conclusion that Westford is entitled to the protection offered by the Policy. Whether Westford does not have an insurable interest within the meaning of the Policy [176] Archipelago contends that Westford lacks an insurable interest in the goods subject to the Phoenix Orders, thereby questioning the validity of its claim under the Policy. It also asserts that the Phoenix Orders do not fall within the ambit of the Policy, claiming they are either 'disguised financing agreements' or not made at 'arms-length'. These arguments, however, are not substantiated by the evidence presented. [177] Westford has demonstrably established its ownership and title of the goods involved in the Phoenix Orders, as outlined above. The evidence includes Certificates of Origin issued by the Chamber of Commercial & Industry of Vietnam, Purchase Contracts between Westford and Genuine, Genuine’s commercial invoices to Westford, Bank SWIFT receipts showing payment for the commodities, and Bills of Lading that detail the shipment particulars. These documents unequivocally affirm that Westford acquired the commodities from Genuine and subsequently engaged in a back-to-back sale to Phoenix. [178] Regarding the arm's length nature of the transactions, Archipelago has failed to provide any evidence to suggest that the dealings between Genuine, Westford, and Phoenix were otherwise. The absence of any connection between these entities, be it through directorship or shareholding, and the lack of compulsion in accepting trading terms, as confirmed by Archipelago’s own officers at trial, further support this conclusion. Westford's actions to protect its position against Phoenix’s default, including formal demands for payment and threats of legal proceedings, are indicative of transactions conducted at arm's length. [179] Moreover, the court finds the claim that the Phoenix Orders are 'disguised financing agreements' to be without merit. Archipelago has not presented any substantial particulars or evidence to support this allegation. In contrast, Westford’s documentation for the Phoenix Orders, which includes sales contracts, commercial invoices, and acknowledgments of debt and acceptance, evidences legitimate trade transactions. [180] Given the totality of the evidence, this court finds that Westford does indeed have an insurable interest in the goods as per the Policy. Whether the Phoenix Orders do not constitute shipments to an Insured Buyer in an Approved Country [181] Archipelago submits that Westford's claim does not fall within the Policy cover as the shipments under Phoenix Orders 11892 and 11895 were not to an insured buyer in an approved country, as required by the policy. It is maintained by Archipelago that Clause 2.1 of the Policy explicitly states coverage is only for shipments made to approved countries, which include Hong Kong, Turkey, and Dubai, U.A.E, but not Ivory Coast and Senegal, the destinations in question. [182] Clause 2.1 provides: “Trade credit cover Subject to the terms of this Policy, this insurance provides cover to the insured for the stated Insured Percentage of Insured loss subject to the Coinsurance Clause and Deductible Clause arising from a Claimable Event of Insolvency and/or Protracted Default of the Insured Buyer(s) provided that each Insured Debt arises from Shipments made during the Policy Period shown in the

to Insured Buyers In Approved Countries;

made in the course of the Insured's business specified in the Schedule and in accordance with the Credit Management Procedures; and

that are invoiced to the Insured Buyer within the Maximum Invoicing Period.” [183] The Policy Schedule states: “APPROVED COUNTRIES: Hong Kong, Turkey and Dubai, U.A.E.” [184] Archipelago contends that, per Clause 3.1(e), shipments outside these approved countries are excluded from coverage. Furthermore, Archipelago argues that any necessary enlargement of cover to include other countries would require an official endorsement, which was not sought or obtained by Westford. Lastly, Archipelago asserts that Westford was aware of this stipulation, as indicated by testimony, but failed to take the requisite steps for coverage enlargement. [185] Westford submits that Archipelago's rejection of its claim based on the Approved Countries Clause and Clauses 2.1 and 3.1(e) of the Policy is a misinterpretation, especially regarding the term 'Shipment'. [186] Clause 3.1(e) provides: “Excluded Shipments in respect of Shipments made in one or more of the following circumstances:

to an Insured Buyer who is insolvent;

to an Insured Buyer whose debt to the Insured or any part thereof is overdue beyond the specified Maximum Extension Period for any reason other than a legitimate dispute in which case the provisions of the Disputed Indebtedness limitation and exclusion clause will apply.

after the applicable Permitted Credit Limit has been cancelled or reduced, and as a result is no longer available;

outside the Approved Countries;

where the Insured is aware or ought in the ordinary course of business to be aware of a Notifiable Event in respect of the Insured Buyer;” [187] It is maintained by Westford that the title transfer, which constitutes a 'Shipment', occurred in Dubai, an approved country, thus fulfilling the policy coverage requirements. Westford contends that Archipelago is estopped from denying coverage due to its prior acknowledgments and confirmations of coverage for the Phoenix Orders. Furthermore, Westford argues that the issue of 'Approved Countries' was raised in bad faith by Archipelago, pointing to its failure to monitor policy coverage and inform Westford of necessary endorsements. Finally, Westford asserts that Archipelago's conduct in handling the claim demonstrates a lack of the requisite good faith expected of an insurer. [188] Having appraised the comprehensive submissions tendered by learned counsel for Westford and Archipelago respectively, I now deliver my deliberated findings on the salient matters in dispute. [189] In assessing the dispute between Westford and Archipelago concerning the coverage of Phoenix Orders 11892 and 11895 under the insurance policy, the court carefully examines the pertinent provisions of the policy. Archipelago's rejection of Westford’s claim is grounded in its interpretation of specific clauses within the policy, particularly the Approved Countries Clause and Clauses 2.1 and 3.1(e). The Approved Countries Clause explicitly specifies Hong Kong, Turkey, and Dubai as the regions where the policy is applicable. Clause 2.1 of the policy, titled “Trade Credit Cover”, provides coverage for a certain percentage of the insured loss, subject to the Coinsurance Clause and Deductible Clause, for claimable events of insolvency and/or protracted default of the insured buyer(s), provided the insured debt arises from shipments made during the policy period to insured buyers in approved countries, conducted in the insured’s specified business and invoiced within the Maximum Invoicing Period. Additionally, Clause 3.1(e), under the heading “Excluded Shipments”, delineates circumstances under which certain shipments are excluded from policy coverage, including shipments to insured buyers in approved countries under specific conditions and shipments made outside the approved countries. [190] Archipelago contends that, based on these clauses, Phoenix Orders 11892 and 11895 are not covered because the shipments were made to Ivory Coast and Senegal, which are not listed among the approved countries. Conversely, Westford argues that Archipelago's contention is a misinterpretation of the policy provisions and should be dismissed on the grounds that Archipelago has misunderstood the Policy, is estopped from denying coverage due to its previous acknowledgments, and has not acted in good faith in its dealings. The court now proceeds to evaluate these submissions and the application of the policy clauses to determine the validity of Archipelago's grounds for rejecting Westford's claim. Interpretation of the Policy [191] The key issue here revolves around whether the shipments under Phoenix Orders 11892 and 11895 fall within the coverage of the insurance policy held between Westford and Archipelago. The court has thoroughly examined the provisions of the policy, particularly focusing on Clauses 2.1 and 3.1(e) (see above), and the definition of 'Shipment' as outlined in Clause 6.39. [192] Clause 6.39 provides: “Shipped and Shipment Shipped and Shipment means:

in respect of goods:

if an Insured Buyer is located in the same country as the Insured, the time (which must be within the Policy Period) at which the goods physically pass from the Insured into the exclusive physical control of the Insured Buyer or the Insured Buyer's agent or the title transfer of the goods from the Insured to the Insured Buyer; or

(ii) if an Insured Buyer is not located in the same country as the Insured, the time (which must be within the Policy Period) at which the goods pass to the first independent carrier in the process of being carried to the place where the insured Buyer or its agent is required to accept them or the title transfer of the goods from the Insured to the Insured Buyer

in respect of services, the time (which must be within the Policy Period) when the service has been rendered to the Insured Buyer provided that the Insured has invoiced the Insured Buyer within the Maximum Invoicing Period after the work has been completed or services have been rendered. Notwithstanding subparagraph (a) (ii) above, goods will not have been Shipped in circumstances where it is both legally and practically possible for the Insured, using reasonable means, to stop carriage of the goods before they leave the country of the Insured or the country from which they are being exported.” [193] Archipelago, rejected the claim on the basis that these shipments were not to an insured buyer in an approved country. However, the court finds that Archipelago’s interpretation of the term 'Shipment' as being synonymous with the 'ultimate destination of cargoes' is a misreading of the policy. The correct interpretation, as per Clause 6.39, indicates that 'Shipment' occurs either when goods are physically handed over to the first independent carrier or when the title of the goods is transferred from the insured to the insured buyer. In the case of Phoenix Orders 11892 and 11895, the court finds that the title transfer took place when Westford provided the bills of lading to Phoenix in Dubai on 21.10.2019. This transfer of title in Dubai, which is an approved country as per the policy, constitutes 'Shipment' under the terms of the policy. [194] Furthermore, the court observes that the policy in question is a Trade Credit Insurance Policy, focusing on the risk of non-payment by the insured buyer, rather than the physical delivery of goods. This perspective is substantiated by the testimony of Westford’s Trade Credit Insurance Expert, Bernard Sauvage, who highlighted that the central insured risk is Phoenix’s financial ability to make payment, not the geographical location of the cargo delivery. This view is corroborated by admissions from Archipelago’s Principal Officer, Ian Lim and Nicholas Ng of the Underwriting Committee, who acknowledged the non-relevance of the cargo's destination in relation to the policy coverage. [195] In light of these findings, the court concludes that the shipments under Phoenix Orders 11892 and 11895, as demonstrated by the transfer of title in Dubai, an approved country, are indeed covered under the policy. Therefore, the court finds that Archipelago's rejection of the claim on the basis of the shipments not being to an insured buyer in an approved country is unfounded. Estoppel operates against Archipelago [196] The court carefully considers the second argument put forth by Westford, centered on the principle of estoppel, against Archipelago's claim that Phoenix Orders 11892 and 11895 were not 'Shipments' made in approved countries. This argument is grounded in the legal principles of estoppel as established in the case of Snair v Halifax insurance Nationale Nederlanden North America Corp [1995] N.S.J No. 424. According to this case, for estoppel to apply, the following conditions must be met: the insurer must have knowledge of facts indicating a lack of coverage; there must be a course of conduct by the insurer upon which the insured relied; and the insured must have suffered prejudice due to this reliance. It was observed by the court: “In order for estoppel to apply: 1) there must be knowledge on the part of the insurer of the facts which indicate a lack of coverage; 2) there must be a course of conduct by the insurer upon which the insured relied; and 3) the insured must have been prejudiced as a result of his reliance on the insurer's course of conduct." [197] Westford's communication with Archipelago, specifically through emails dated 9.10.2019,

10.10.2019, and 15.10.2019, clearly stated the commercial terms of the Phoenix Orders, including the delivery of goods to Abidjan, Ivory Coast, and Dakar, Senegal. Despite this information, Archipelago acknowledged and confirmed coverage for these orders on several occasions without raising any objections related to the delivery destinations. Notably, on 9.10.2019,

11.10.2019, and 16.10.2019, Archipelago recognised these orders as being covered under the Policy. This acknowledgment was further reinforced when Archipelago granted extensions for these orders on 12.3.2020 and 2.4.2020. [198] The most critical acknowledgment came on 2.4.2020, where Archipelago explicitly confirmed that coverage for the Phoenix Orders remained in place. This confirmation was conveyed in an email where Archipelago referenced the specific Policy and the Phoenix Orders, assuring that “cover remains in place, the premiums are paid.” This communication, along with other correspondences, formed the basis upon which Westford entered into the Phoenix Orders, leading to its subsequent loss. [199] The court notes that all the elements of estoppel as outlined in the Snair case are met in this instance. Archipelago was aware of the potential non-compliance with the Approved Countries clause yet engaged in a consistent course of conduct affirming coverage. Westford relied on these assurances, leading to a prejudicial situation where, had it been informed of the non-coverage, it would have either refrained from entering into the transactions or sought alternative insurance coverage. Archipelago’s failure to raise any objections or clarify the terms at the appropriate junctures, despite being explicitly informed of the destinations of the shipments, demonstrates a departure from the standard of good faith expected in insurance dealings. [200] In light of these findings, the court concludes that Archipelago is estopped from denying coverage for the Phoenix Orders. Its conduct, evidenced through explicit acknowledgments of coverage and the lack of objection to the shipment destinations, misled Westford and prejudiced its position. Therefore, the application of estoppel in this case is warranted to preclude Archipelago from retracting its coverage confirmation for these orders, given the substantial reliance and subsequent detriment faced by Westford. Issue of ‘Approved Countries’ not raised in good faith [201] Tthe court now delves into the third argument raised by Westford, pertaining to Archipelago's handling of the 'Approved Countries' clause within the Policy. Westford contends that Archipelago’s invocation of this clause to deny coverage post-claim submission lacks good faith and is indicative of an attempt to shirk liability. [202] The court notes that during the trial, key admissions were made by Archipelago’s officers that are critical to this analysis. Firstly, it was acknowledged that Archipelago does not maintain a system to actively monitor the coverage under the policy, the details of the trades, or the insured risks involved. This was highlighted in statements from Archipelago's officers during trial. Secondly, it came to light that Archipelago did not verify whether the trades under Phoenix Orders 11892 and 11895 were covered under the policy before issuing confirmatory communications to Westford. These confirmations were sent through emails on dates such as 9.10.2019, 11.10.2019, and 16.10.2019, in which Archipelago affirmed the coverage of the said orders under the policy. [203] Furthermore, the court observes that Archipelago did not scrutinise the documents attached to Westford’s emails, which detailed the shipment terms, including the delivery to Ivory Coast and Senegal, countries not listed as approved under the policy. Despite this oversight, Archipelago did not communicate any potential coverage issues to Westford. This is a departure from the reasonable expectations of communication and transparency in insurance dealings. [204] Significantly, Archipelago’s officers, in their testimonies, portrayed a stance that Westford, as the insured party, bore the onus to determine the applicability of its trades under the policy. This position included the implication that it was Westford’s responsibility to seek an endorsement for coverage extension under the 'Approved Countries' clause. This approach by Archipelago, particularly its stance on endorsements, further indicates a lack of proactive engagement with the insured party, Westford, regarding the terms and conditions of the policy. [205] The court finds that Archipelago’s conduct, particularly post-submission of the claim by Westford, was marked by a notable shift in its stance. The prior acknowledgments and confirmations of coverage were seemingly disregarded, and Archipelago resorted to technicalities within the policy to evade liability. This shift in approach, notably absent in the period leading up to the claim submission, suggests an opportunistic and retrospective attempt by Archipelago to mitigate its liability under the policy. [206] In light of these findings, the court concludes that Archipelago’s management of the issue pertaining to 'Approved Countries' in relation to Phoenix Orders 11892 and 11895 was not executed in good faith. The actions of Archipelago demonstrate an attempt to retroactively avoid liability rather than a fair and just assessment of the claim as mandated by the principles of insurance law. Requirement for endorsement [207] Another critical aspect is the question of endorsement related to the Phoenix Orders, specifically Orders 11892 and 11895. The timeline and conduct of Archipelago regarding these orders are pivotal in understanding the legitimacy of its later insistence on endorsement. [208] Westford declared the Phoenix Orders to be included under its policy with Archipelago in October 2019. Subsequent to these declarations, Archipelago acknowledged the inclusion of these orders on three distinct occasions: 9.10.2019,

11.10.2019, and 16.10.2019. These acknowledgments were given without any stipulation or mention of the need for an additional endorsement to the existing policy. [209] However, Archipelago’s stance altered around nine months later, in July 2020, when it contended that the orders required an endorsement for coverage. This sudden shift, in contrast to its previous unqualified acknowledgments, raises questions about the consistency and good faith of Archipelago's practices. [210] The perspective of the trade credit insurance expert from Westford, Bernard Sauvage, consulted in this matter, underscores a critical industry norm: it is the insurer's responsibility to issue endorsements when necessary. Archipelago’s failure to provide such an endorsement at the appropriate time cannot retroactively justify a claim rejection. This is further corroborated by the testimony of Archipelago’s Broker, Hon Min, who admitted that he would have informed Westford about the need for an endorsement, had he been in Archipelago's position. [211] The reliance on formal endorsements by Archipelago is further complicated by its inconsistent application of policy procedures. Notably, it granted extensions via email on two occasions (12.3.2020 and 2.4.2020) concerning the 'Maximum Extension Period' under the policy without formal endorsements. This selective application of requirements suggests an opportunistic approach that deviates from standard insurance practices. [212] Archipelago's emphasis on endorsement, particularly its timing and inconsistent application, contrasts sharply with the principle that substance should take precedence over form, as highlighted in the High Court case of Ter Thian Tin vs Ter Wei Hong & 5 Ors [2021] 1 LNS 172. This principle asserts the importance of the substantive content of communications over the technicality of formal endorsements. [213] In conclusion, considering the initial acknowledgment of the Phoenix Orders by Archipelago, its subsequent inconsistent demand for an endorsement, and its selective adherence to policy protocols, it becomes evident that Archipelago's approach lacks the consistency and good faith required in insurance dealings. Thus, the court concludes that the Phoenix Orders were indeed covered under the policy without the necessity for a late endorsement. Whether the Policy Limit is only USD 2.5 million due to the non-payment of Additional Premium [214] Archipelago, Archipelago, argues that the Policy limit remains at USD 2.5 million only, as Westford failed to pay the additional premium by the due date, 24.10.2019. It states that Westford had requested an increase in the credit limit under the Policy, which Archipelago agreed to, subject to an additional premium. However, due to a fraudulent impersonation, Archipelago mistakenly corresponded with an imposter instead of Westford and, believing it was in communication with Westford, sent the endorsement and invoice for the additional premium to the Imposter. Archipelago contends that it never received the additional premium from Westford and hence, the endorsement automatically became void. Additionally, Archipelago asserts that Westford, aware of such scams, failed to verify the change in banking details and made payment to a fraudulent account. It also argues that any negligence on its part is negated by Westford’s own contributory negligence in failing to verify the changed account details and in not seeking a fresh endorsement after the expiry of the original one. Archipelago cites the case of The Malacca Mercantile Cooperative Thrift & Loan Society Ltd v The Attorney General [1939] 8 MLJ (SSR) 201 emphasising the importance of due vigilance to avoid fraud. [215] Westford submits that Archipelago's rejection of the claim based on non-payment of the Additional Premium by the due date is unjustified, as it failed to send the necessary Endorsement No. 4 and invoice. It is maintained by Westford that this oversight by Archipelago renders the Premium Due Date irrelevant, drawing on the precedent set in the Singapore case of Lim Kitt Ping Lynne v People’s Insurance Co Ltd & Anor [1997] 3 SLR 1018 where the insurer's delay led to a waiver of the premium warranty clause. Westford contends that, in good faith, it offered to pay the Additional Premium late upon discovering the fraud, an action that a prudent insurer should accept under the circumstances. Furthermore, Westford argues that Archipelago's claim of contributory negligence is baseless, emphasising that the root cause of the incident was Archipelago's own failure to maintain its computer system. In conclusion, Westford asserts that Archipelago's refusal to accept the late payment and insistence on “cash before cover” is done in bad faith and is legally untenable. [216] Having carefully considered the extensive evidence and submissions put forth by counsels representing both Westford and Archipelago in this matter, I will now set out my deliberated findings and conclusions on the key issues in dispute. The Premium Due Date has become at large [217] The next issue is on whether Archipelago's failure to send the necessary Endorsement No. 4 and corresponding invoice to Westford has effectively rendered the Premium Due Date 'at large', obliging Archipelago to accept a subsequent offer of payment from Westford. [218] The facts, as agreed upon by both parties, are that Archipelago had agreed to increase the Policy Limit to USD 5 million, contingent upon the Additional Premium being paid by Westford before the Premium Due Date. However, crucial to this dispute is that Archipelago did not fulfil its obligation to send Endorsement No. 4 and the corresponding invoice to Westford. This failure occurred because Archipelago was misled by an Imposter, who inserted himself between the amails between Westford and Archipelago and directed the documents to himself instead of Westford. The absence of these documents made it impossible for Westford to effect payment by the Premium Due Date. [219] Westford cites the Singaporean case of Lim Kitt Ping Lynne v People’s Insurance Co Ltd & Anor as a precedent. The facts of this case, as summarised, reveal that Westford insured had taken out a policy for her new car, with a clause stipulating payment of premium within 60 days from the inception of the insurance period. The insurer, however, issued the debit note for premium payment out of time, beyond the 60-day window. Subsequent to a car accident, when the insured sought to claim under the policy, the insurer denied liability, citing non-compliance with the premium warranty clause. However, the court held that the insurer's delay in issuing the debit note made compliance with the premium warranty clause impossible, inferring that the insurer had waived compliance with this clause. [220] This principle was further applied by the High Court in Malaysia in Perusahaan Sinar Jaya Sdn Bhd v Etiqa Insurance Bhd [2013] 8 MLJ 317) reinforcing the position that an insurer’s failure to act in a timely manner can constitute a waiver of compliance by the insured. [221] Applying these principles to the case at hand, it becomes evident that Archipelago's failure to send the Endorsement and invoice to Westford rendered compliance with the Premium Due Date impossible. Therefore, the time for payment of the Additional Premium has become indeterminate, and Westford is no longer bound by a specific deadline for this payment. [222] Westford, upon realising the involvement of the Imposter, offered to pay the Additional Premium on 27.5.2020. Given Archipelago's agreement to increase the Policy Limit and the absence of a deadline for the Additional Premium payment due to Archipelago's own failure, Westford’s offer should have been accepted by Archipelago. [223] Archipelago’s refusal to accept the Additional Premium, despite Westford's good faith effort to rectify the situation, is not legally justifiable. As clearly stated in “The Law of Insurance Contracts” by Malcolm Alistair Clarke, Julian M. Burling, and Robert L. Purves (2002), an insurer's wrongful refusal to accept proper payment of premium cannot be used as a basis to repudiate liability: “In the event of a wrongful refusal by the insurer to accept or retain proper payment of premium, the insurer cannot repudiate liability on the basis of non-payment of premium: that would be to allow him to take advantage of his own wrong.” [224] In light of these considerations, this court finds that Archipelago's failure to provide the necessary Endorsement and invoice, prerequisites for the payment of the Additional Premium, has indeed rendered the Premium Due Date at large. Archipelago is therefore legally bound to accept the late payment offered by Westford and cannot repudiate liability on the grounds of non-payment of the Additional Premium. The failure to provide these crucial documents constitutes a waiver of the original terms of the agreement by Archipelago, and it cannot now claim that Endorsement No. 4 is void due to Westford’s non-payment. Archipelago’s duty of good faith to accept the Additional Premium [225] In the present matter Westford, contends that Archipelago has a duty of good faith to accept the Additional Premium, given the sequence of events and misunderstandings surrounding Endorsement No. 4. The crux of this argument is grounded in the principles of fairness and good faith that are incumbent upon insurers in its dealings with policyholders. [226] Westford submits that a prudent insurer, acting in the spirit of good faith, would have accepted its offer to pay the Additional Premium. This position is underpinned by several notable occurrences. [227] Firstly, it is not contested that Archipelago failed to send the critical Endorsement No. 4 and the corresponding invoice to Westford. This omission is central to the dispute, as it precipitated a chain of events leading to the non-payment of the Additional Premium. Further, there was no follow-up by Archipelago to ascertain the payment status, and it was only in May 2020, significantly later than the Premium Due Date of 24.10.2019, that Westford was informed about the non-receipt of the Additional Premium. [228] The involvement of an Imposter further complicates this situation. Posing as a Westford officer, the Imposter successfully misled Archipelago into sending the Endorsement and invoice to him. Archipelago only became aware of this deception when Westford submitted its claims, revealing a concerning lapse in communication and verification protocols. [229] Throughout the policy period, Archipelago acknowledged the coverage for both Phoenix Orders, with a total value of USD 4,464,553.50, surpassing the original Limit of USD 2.5 million. It granted extensions and confirmed the policy's good standing. These actions led Westford to believe that the Additional Premium had been duly paid. The difficulty in distinguishing the email addresses of the Archipelago officer (nicholas.ng@archipelagoltd.com) and the Imposter (nicholas.ng@archipalegoltd.com), along with the Imposter's use of Archipelago’s letterhead and signatures, added layers of authenticity to the fraudulent communications. [230] The duty of good faith, as expounded in the Ontario Court of Appeal case of Ontario Inc. v Non-Marine Underwriters, Lloyd's of London [2000] O.J. No. 866, obliges an insurer to deal with its insured’s claims fairly, characterised by impartiality, honesty, and freedom from self-interest or prejudice. In the context of this case, a prudent insurer would have recognised the impracticality of insisting on the payment of the Additional Premium before the Premium Due Date, especially in the absence of the necessary documentation and follow-up. [231] The testimony of credit insurance expert Bernard Sauvage reinforces this stance. He noted that in situations of potential financial difficulties or uncertainties regarding premium payments, an insurer ought to exercise greater caution. Moreover, he criticised Archipelago's decision not to accept Westford’s offer to pay the premium late after the fraud was uncovered. [232] Given these circumstances, Westford argues that both parties were victims of the Imposter's fraud. However, unlike Westford, Archipelago failed to exercise due diligence in managing the Endorsement No. 4 premium payment. In light of this, and considering the overall conduct and the duty of good faith, Westford submits that Archipelago should accept the late payment of the Additional Premium. This acceptance would not only reflect a commitment to good faith and fairness but also recognise the extenuating and unprecedented circumstances stemming from a sophisticated fraud that impaired Westford’s ability to adhere to the original terms of the policy. Rejection of Additional Premium not in good faith [233] Westford challenges Archipelago's rejection of the Additional Premium as being not in good faith. Archipelago's rejection of Westford’s offer of Additional Premium was premised on three primary arguments: Westford’s purported negligence in erroneously transferring the Additional Premium to a fraudulent account; the lapse of Endorsement No. 4, which was issued on a “cash before cover” basis; and Archipelago’s loss of reinsurance coverage at the time Westford tendered the Additional Premium. [234] The first point of contention surrounds Westford's transfer of funds to an illegitimate bank account. This occurred in a context where Archipelago was also deceived by the same Imposter. Archipelago's failure to inform Westford of the non-payment is critical. Furthermore, Archipelago acknowledged coverage under Endorsement No. 4 and treated the Additional Premium as paid, leading Westford to believe it had fulfilled its financial obligations. This scenario mirrors the precedent set in Roberts v Security Co Ltd [1895-99] ALL ER Rep 1177 decided by the English Court of Appeal, which articulates that an insurer cannot rely on the non-payment of a premium to deny coverage if it has previously treated it as paid. Archipelago's actions effectively constitute a waiver of the requirement for the prepayment of the Additional Premium. [235] The reliance by Archipelago on the “cash before cover” principle is problematic. The principle, as elucidated in the case Lim Kitt Ping Lynette v People’s Insurance Co Ltd & Anor, does not apply in situations where the insurer's conduct contributed to the non-payment of the premium. In this case, Archipelago's failure to send the necessary Endorsement and invoice, and its subsequent treatment of the policy as valid, directly contributed to the non-payment, rendering its reliance on this principle opportunistic and invalid. [236] Concerning the third ground for rejection, the loss of reinsurance coverage by Archipelago does not pertain to Westford or the terms of the Policy. The status of Archipelago’s reinsurance is not a legitimate ground to reject the claim under the original policy agreement with Westford. [237] During the trial, further evidence emerged pointing to Archipelago’s mismanagement in relation to Endorsement No. 4. The Principal Officer of Archipelago, Ian Lim, admitted that despite its failure to send the invoice to Westford, it insisted on the necessity of payment before the Premium Due Date. Additionally, Archipelago’s Head of Underwriting, Nicholas Ng, confirmed that he did not verify the premium payment records before affirming coverage to Westford, indicating a significant lack of due diligence. This is compounded by the admission that Archipelago does not maintain a system to record the payment of premiums under an Endorsement. [238] Moreover, the repeated phishing scams within Archipelago's system and the absence of any substantive investigation to identify the root cause further undermine its stance. The Group Compliance Officer, Tay Boon Rong (DW4), of Archipelago confessed to having no knowledge of potential data leaks, despite these incidents. [239] In conclusion, this court finds that Archipelago's grounds for rejecting the Additional Premium are untenable and demonstrate a breach of the duty of good faith required in insurance contracts. The conduct of Archipelago, characterised by significant mismanagement and a failure to adhere to the principles of good faith, invalidates its position. Therefore, this court rules in favour of Westford, holding that Archipelago's rejection of the Additional Premium was not executed in good faith. Endorsement No. 4 is not void [240] Archipelago, posits that the Policy Limit should remain at USD 2.5 million, asserting non-compliance by Westford with the payment terms of the Additional Premium by the stipulated Premium Due Date of 24.10.2019. Conversely, Westford argues that Endorsement No. 4 should not be considered void, citing Archipelago's failure to issue the necessary Endorsement and invoice and other subsequent conduct. [241] Archipelago's stance is predicated on several points. It highlights that Westford's request for a USD 2.5 million increase in the credit limit under the policy was communicated on 9.10.2019 and that Archipelago agreed to this increase, subject to an additional premium of USD 35,671.23. Archipelago asserts that due to deception by an Imposter, who intervened in the email communications impersonating Arzu Tanriverdi of Westford, the necessary documents were erroneously sent to the Imposter. Archipelago contends that despite this error, the terms of the Endorsement, specifically the “cash before cover” clause, remained binding and that the non-payment of the Additional Premium by 24.10.2019 rendered Endorsement No. 4 void. [242] Westford's rebuttal focuses on the impossibility of compliance due to Archipelago's failure to issue the Endorsement and invoice directly to it. It asserts that this oversight by Archipelago made it unfeasible for it to meet the Premium Due Date, thus invalidating Archipelago's claim of non-compliance. Westford also challenges Archipelago's emphasis on its alleged awareness of such scams and the non-request for an extension to pay the Endorsement as irrelevant distractions from the central issue of Archipelago’s failure to provide the necessary documents. Furthermore, Westford argues that the issue of Archipelago's reinsurance coverage is extraneous to the terms of the Policy agreement and does not influence the validity of Endorsement No. 4. [243] Upon careful consideration, this court finds the arguments presented by Westford to be more compelling. The crux of the matter hinges on the principle of contractual impossibility. Archipelago's failure to directly provide Westford with the Endorsement and corresponding invoice is a critical oversight that obstructed Westford’s ability to fulfill the payment terms by the Premium Due Date. This aligns with established legal principles which stipulate that non-compliance with contract terms cannot be penalised if such compliance is rendered impossible by the action or inaction of the other contracting party. [244] The additional arguments by Archipelago concerning Westford's supposed awareness of such scams and its failure to request an extension for payment are not material enough to counter the primary issue. The onus was on Archipelago to ensure the correct issuance of crucial documents to Westford. Furthermore, the matter of Archipelago's reinsurance coverage is a separate concern and does not directly bear upon the enforceability of the Endorsement with respect to Westford. [245] In light of these considerations, this court concludes that Endorsement No. 4 is not void. Archipelago's oversight in issuing the necessary documentation led to the impossibility of Westford’s compliance with the Premium Due Date, obligating Archipelago to accept the late payment offered by Westford. No contributory negligence of Westford [246] Archipelago contends that Westford should be held liable for contributory negligence in relation to the fraudulent diversion of the Additional Premium payment. Archipelago’s argument hinges on the assertion that Westford's response to the fraudster and failure to verify the change in banking details with Archipelago constitute negligence contributing to its loss. Archipelago draws upon the principles elucidated in the case of The Malacca Mercantile Cooperative Thrift & Loan Society Ltd v The Attorney General [supra] to assert that negligence on the part of a management committee or auditors in failing to detect fraud can be deemed the real and operative cause of a loss. [247] Westford denies any form of contributory negligence on its part, arguing that the root cause of the incident was the failure of Archipelago’s computer systems, which allowed the Imposter to infiltrate the email chain. Westford further contends that there is no stipulation within the Policy that required it to verify changes in payment details with Archipelago or to request a receipt for the payment. Additionally, Westford points out that even Archipelago’s own Head of Underwriting, Nicholas Ng, and Technical Advisor, Kanes (DW5), could not discern the fraudulent invoice from a legitimate one, as evidenced by the email correspondence. [248] Upon careful consideration of the submissions and evidence presented, this court finds Westford’s arguments to be more compelling. The concept of contributory negligence presupposes a shared fault that materially contributes to the incurred loss. However, in this case, Westford's actions do not demonstrate a level of negligence sufficient to contribute materially to the loss. The communication with the Imposter, facilitated by the deceptive similarities between the fraudulent and genuine invoices, does not constitute negligence on Westford's part. The expectation that Westford should have independently verified the change in payment details is not grounded in any explicit policy requirement or standard practice, especially given Archipelago's own conduct in acknowledging the validity of Endorsement No. 4 and confirming coverage. [249] Furthermore, the legal principle that contributory negligence could wholly extinguish another party's negligence is not supported in this context. Contributory negligence, when applicable, is intended to apportion liability rather than absolve one party entirely of fault. The case of The Malacca Mercantile Cooperative Thrift & Loan Society Ltd v The Attorney General, invoked by Archipelago, does not offer a directly comparable scenario to the present case, given the differences in the context and nature of the alleged negligence. [250] In conclusion, this court finds that the claim of contributory negligence against Westford is without merit. The primary cause of the loss appears to be the fraudulent intervention by the Imposter, an external factor beyond Westford's reasonable control. As such, the court rejects Archipelago's contention of contributory negligence. Whether Archipelago is precluded from raising other grounds of rejection [251] Archipelago submits that its ability to raise new defences post-issuance of the repudiation letter dated 12.6.2020 is justified, as crucial information emerged after this date, particularly following Westford's response on 16.6.2020. It is maintained by Archipelago that this new evidence, which included the nature of sales contracts and issues concerning Westford's title to goods, was not known at the time of the initial repudiation. Archipelago contends, referencing the case of Jan De Nul (Malaysia) Sdn Bhd v Berjaya Sompo Insurance Berhad [2019] 1 LNS 516, that it is entitled to defend based on issues that surfaced after studying the plaintiff's additional documents. Furthermore, Archipelago points out that it reserved its rights in the initial rejection letter to rely on subsequent grounds of repudiation. Lastly, Archipelago argues that there is no prejudice to Westford, as it was informed of these additional concerns through subsequent correspondence from Messrs Murali B. Pillai And Associates, Archipelago’s solicitors. [252] Westford submits that Archipelago’s contention of not being precluded from raising new grounds of rejection post-issuance of the initial repudiation letter is baseless and indicative of bad faith. It is maintained by Westford that Archipelago’s pattern of introducing new grounds at various stages, especially during trial, is not justified simply because it reserved its rights in the initial rejection letter. Westford contends that this approach shows a lack of adherence to the principle of good faith, as demonstrated by Archipelago's inconsistent conduct following the claim submission. Furthermore, Westford argues that Archipelago's hasty rejection of the claim and subsequent introduction of new grounds of rejection highlight a desperate attempt to justify its actions, deviating from the root cause of the dispute – Archipelago's mismanagement of the claim. Lastly, Westford asserts that the testimony of Archipelago’s witnesses should be approached with skepticism, given its pattern of conduct throughout the trial. [253] Having carefully considered the extensive submissions on this issue by learned counsel for both Westford and Archipelago, and having evaluated the evidence adduced by both sides, I now set out my reasoned findings. [254] The court acknowledges the contention of Archipelago that it is not legally precluded from introducing new grounds for the repudiation of the claim subsequent to its initial Claim Rejection Letter dated 12.6.2020. This position is supported by the case law cited, specifically Jan De Nul (Malaysia) Sdn Bhd v Berjaya Sompo Insurance Berhad, which permits the introduction of new defences upon the discovery of new information. Archipelago asserts that critical information, impacting the nature of the sales contracts and Westford’s title to goods, only came to light after further correspondence with Westford dated 16.6.2020, and during the progression of the trial, notably with the emergence of the Phoenix Liquidator’s documents. [255] However, the court also recognises the concerns raised by Westford, regarding the manner and timing of Archipelago’s introduction of these new grounds. Westford’s submissions provide a detailed timeline of events, suggesting that Archipelago’s approach in continuously adding new grounds could be indicative of an attempt to unduly extend the litigation process and to obscure the core issues at hand. This pattern, especially the introduction of new defences and documents mid-trial, raises questions about Archipelago’s adherence to the principle of good faith in claim handling. [256] While the court is not inclined to entirely restrict Archipelago from raising new defences as they emerge, it is imperative to note that the introduction of such defences at a late stage in the proceedings must be scrutinised with greater circumspection and some degree of skepticism. The timing and manner of introducing these new grounds, particularly after the initial rejection of the claim and during ongoing legal proceedings, suggest a potential strategy by Archipelago to deflect from the original grounds of repudiation. This tactic, while not illegal, does not align with the expected standards of straightforward and consistent claim processing by an insurer. [257] The court, therefore, while allowing Archipelago the legal latitude to introduce new grounds for repudiation, will critically examine these grounds in light of the overarching duty of good faith that governs insurance claim handling. This approach takes into consideration the need for fairness and transparency in the resolution of insurance disputes, ensuring that the introduction of new defences is not used as a tool to unfairly disadvantage the claimant or to prolong litigation unduly. Consequently, while Archipelago is not precluded from raising new defences, the court assesses these defences with a heightened level of scrutiny to safeguard the interests of justice and the integrity of the claims process. Whether adverse inference should be drawn against Westford [258] Archipelago submits that adverse inferences should be drawn against Westford under section 114(g) of the Evidence Act 1950 for its failure to provide crucial evidence. It is maintained by Archipelago that Westford's non-production of the liquidators’ response to Westford’s solicitor in Dubai, Messrs Holman Fenwick Willan’s (“HFW”) letter and its refusal to allow the Phoenix Liquidator to investigate and share findings raise significant concerns. Archipelago contends that the absence of testimony from key individuals like Ms. Joanna Durlach and Mr. Qasim Zia, integral to the case, further supports its position. Additionally, the failure of Westford to recall Mr. Bernard Sauvage for his expert opinion on documents from the Phoenix Liquidator is highlighted as a critical omission. Therefore, Archipelago asserts that these gaps in evidence presentation justify the court drawing adverse conclusions against Westford. [259] Westford submits that no adverse inferences should be drawn against Westford in this case. It is maintained by Westford that the refusal to produce certain documents and witnesses, including the liquidators’ reply and the testimony of Joanna Durlach and Qasim Zia, was justified and explained satisfactorily in court. Westford contends that the late introduction of new documents by Archipelago and its failure to prove the contents of these documents warrant adverse inferences against it, not Westford. Furthermore, Westford argues that the burden of proof lies with Archipelago and that its attempts to shift this burden represent a lack of good faith. It is asserted by Westford that despite these challenges, Westford has demonstrated cooperation throughout the trial, accommodating the late submission of new evidence by Archipelago. [260] With due regard to the particular arguments set forth by counsel regarding this issue, I set down my findings on this aspect of contention between the parties. [261] In addressing the submissions advanced by Archipelago, under section 114(g) of the Evidence Act 1950, this court closely examines the necessity of drawing adverse inferences against Westford, as proposed. Archipelago's argument is anchored on several alleged shortcomings by Westford, specifically the failure to produce certain documents and witness testimonies. However, upon careful consideration of the presented material and surrounding circumstances, the court finds Archipelago's position to be untenable. [262] Firstly, in regard to the non-disclosure of the liquidators’ reply to the letter dated 2.3.2022 by Messrs HFW, Westford's counsel has articulated that this document contained confidential information pertaining to unrelated dealings. It is crucial to note that Archipelago had access to relevant documents directly from the liquidators through discovery proceedings in Dubai, thereby alleviating any perceived detriment from Westford's non-disclosure. [263] Secondly, concerning Westford's refusal to consent to Archipelago's proposed investigation, this stance appears justifiable in light of the timing and nature of Archipelago's requests. The court considers these investigative requests, notably detailed in letters from Messrs Jasper Hee Partnership dated 29.6.2021, 23.9.2021 and 9.3.2022 to be unreasonably belated. [264] In relation to the absence of Ms. Joanna Durlach, previously overseeing the Phoenix account at Westford, and Mr. Qasim Zia, alleged to have delivered Bills of Lading to Phoenix, the court accepts Westford's justifications. Ms. Durlach’s departure from the company and relocation to Poland, as substantiated by Westford's witness at trial, negates any grounds for adverse inference. Furthermore, the decision not to call Mr. Qasim Zia is deemed rational since Hande Elmener (PW3), the creator of the critical letter dated 21.10.2019, had already provided testimony. [265] Moreover, the court finds no basis for adverse inference against Westford for not recalling Bernard Sauvage for testimony on the New Documents. The onus to substantiate the contents of these documents lies squarely with Archipelago. Archipelago's failure to summon the liquidators and its Dubai Expert to testify reflects inadequacies in its own evidentiary efforts. The logistical challenges and financial implications of recalling Bernard Sauvage, including costs related to his travel from France to a location from which he can give remote evidence in Messrs HFW’s office in Monaco and legal supervision, further mitigate against drawing such inferences. [266] In sum, this court concludes that Archipelago's request for adverse inferences to be drawn against Westford is without merit. The principle of burden of proof, as upheld in Perwira Habib Bank (M) Bhd v Wong Keng Fatt [2015] 1 CLJ 659, is a pertinent consideration. Consequently, the court rejects Archipelago's assertion that adverse inferences against Westford are warranted under section 114(g) of the Evidence Act 1950. Whether Westford breached its duty of good faith and showed fraudulent intent [267] Archipelago submits that Westford Limited has breached its duty of utmost good faith in litigating its claim, as evidenced by Westford's refusal to address queries raised in letters dated 15.7.2020 and 24.7.2020. It is maintained by Archipelago that Westford’s conditional cooperation, tied to the withdrawal of Archipelago's claim rejection, and repeated refusals to extend cooperation to the liquidators, demonstrate an attempt to gain an unfair advantage. Archipelago contends that Westford’s actions, including writing to the Phoenix Liquidator referencing alleged confirmations of debt and the non-production of crucial documents, suggest bad faith and a lack of genuine response. Furthermore, Archipelago highlights the absence of evidence of courier or proof of receipt of the bills of lading and alleges fabrication of letters to support its claim, actions it argues point to fraudulent intent. Based on these assertions, Archipelago argues for the dismissal of Westford’s claim, citing the necessity of good faith in insurance contracts as per legal precedents. [268] Westford submits that Archipelago's actions constituted a breach of its implied duty of good faith and violated statutory duties as outlined in the Labuan Financial Services and Securities Act 2010 (“the Act”) and its guidelines, titled “Guidelines on Market Conduct for Labuan Insurance and Insurance-Related Companies” (“the Guidelines”). It is maintained by Westford that Archipelago's inconsistent conduct, particularly its acknowledgment and subsequent renegation of coverage for Phoenix Orders, exemplifies a lack of due diligence and care. Westford contends that the timeline of events, including Archipelago’s introduction of new defences and failure to properly assess key documents, underscores this bad faith. Furthermore, Westford argues that Archipelago's approach, as evidenced by its Principal Officer’s testimony, blatantly disregards the insurer's duty of utmost good faith. In summary, Westford asserts that Archipelago’s mismanagement and subsequent cover-up attempts through invalid claim rejections demonstrate a clear violation of its statutory and common law duties. [269] Having duly considered the submissions presented by Westford and Archipelago this court will now proceed to state its findings on the matters in contention. [270] The court finds that Archipelago, has significantly breached the implied duty of good faith and contravened the provisions of Section 116(1)(a) of the Act, along with the guidelines therein. The Act and the Guidelines impose specific obligations on Archipelago, including conducting business with due diligence and care, acting competently and diligently in transactions with customers, adhering to high standards of integrity and fair dealing, and avoiding the prioritisation of its interests over those of its customers. [271] Section 116(a) of the Labuan Financial Services and Securities Act 2010 provides: "Conduct of business

(1) Every Labuan insurer shall—

conduct its business with due diligence and care in accordance with sound insurance principles;” [272] Para 5 of the Guidelines states: “5. Skills, Care and Diligence

5.1 Labuan insurance and insurance-related companies should operate with due skills, care and diligence in conducting their business activities.

5.2 They have a duty to act competently and diligently in regard to all transactions between themselves and their customers.

5.3 Where they are responsible for providing advice or exercising discretion for or in relation to customers, they must be able to demonstrate that the advice, or exercise of discretion, are appropriate for the customers.” [273] The sequence of events, beginning on 9.10.2019 and extending through to June 2022, reveals a pattern of conduct by Archipelago that deviates from these duties. Notably, Archipelago initially acknowledged and confirmed coverage for Phoenix Orders 11892 and 11895 on 9.10.2019 and 16.10.2019, respectively. Subsequent extensions granted for these orders on 13.3.2020 and 1.4.2020, and the confirmation of coverage and premium payment on 2.4.2020, further affirmed its commitment. However, this commitment faltered with the premature rejection of the claim on 12.6.2020, prior to the completion of the assessment by Crawford, which was abruptly halted. [274] This sudden shift in Archipelago's stance, coupled with its ensuing conduct, notably raising new defences mid-trial and introducing new documents from the liquidators after Westford had closed its case, signifies a departure from the required standards of diligence and good faith. Particularly striking is the request for the liquidators to attend the trial made on 15.6.2022, merely two days before the last witness was scheduled to stand. This manoeuvre, alongside the Principal Officer of Archipelago’s court admission, which seemingly dismisses the principle of utmost good faith in insurance transactions, underscores a deliberate strategy to obscure the original mismanagement of the claim. [275] In conclusion, Archipelago's inconsistent handling of Westford's claim, marked by a shift from initial acknowledgment to subsequent denial and the introduction of new defences, demonstrates a breach of the duty of good faith and statutory obligations as outlined in the Act and its guidelines. [276] I now turn to specific issues raised by Archipelago below. Offer to discuss the Policy cover [277] Archipelago's assertions, centered around Westford's alleged bad faith, are grounded in several key points. It argues that Westford's lack of response to inquiries detailed in letters dated 15.7.2020 and 24.7.2020, its refusal to allow liquidators to share investigation findings, and peculiar communication practices, notably the use of a general email address instead of a direct contact (as highlighted in a letter dated 2.3.2022 to phoenixcommodities@deloitte.com), signal a breach of good faith. These actions, according to Archipelago, warrant the drawing of adverse inferences under section 114(g) of the Evidence Act 1950. [278] In contrast, Westford's narrative, as outlined in its submissions and particularly in the solicitor's letter dated 21.7.2020, presents a different picture. It contends that its response to Archipelago's 15.7.2020 inquiry was not an outright refusal to engage but a conditional offer to discuss policy cover, contingent upon Archipelago revisiting its claim rejection dated 12.6.2020. This approach, from Westford’s perspective, was a reasonable response to what it perceived as an unjust rejection of its claim. [279] Scrutinising these submissions, the court observes that while Westford's approach may appear strategic and protective, it does not unequivocally amount to bad faith. The conditional offer to engage, as evidenced in its 21.7.2020 correspondence, seems more like an attempt to navigate a complex dispute than a willful act of non-cooperation. [280] Regarding the accusation of document fabrication, particularly concerning the bills of lading and communication with liquidators, the court notes a lack of conclusive evidence. The mere absence of testimony from individuals purportedly handling these documents is insufficient to establish a definitive case of fabrication or fraud. [281] The court also takes into consideration the duties imposed upon insurers like Archipelago under the Act and its guidelines. These duties emphasise diligence, care, competence, integrity, and fair dealing. The chronological sequence of events – starting with Archipelago’s initial confirmation of coverage for Westford's Phoenix Orders on 9.10.2019 and 16.10.2019, followed by a rejection of the claim on 12.6.2020, and the eventual introduction of new defences – raises questions about Archipelago's compliance with these statutory and common law obligations. [282] In conclusion, after careful consideration of the evidence, specific correspondences (such as the letters from 15.7.2020, 24.7.2020, and 21.7.2020), and the legal duties incumbent upon insurers, the court finds the balance of probabilities to favour Westford. While Westford's conduct may warrant scrutiny, it falls short of constituting bad faith or fraudulent misrepresentation. Reasonable rejection of proposed investigation [283] Archipelago's contention, primarily based on communications dated 15.7.2020 and 24.7.2020, posits that Westford's lack of response and conditional cooperation regarding an investigation tied to the reversal of the claim rejection dated 12.6.2020 was unreasonable. This stance, it argues, necessitated its pursuit of discovery proceedings in Dubai, initiated notably close to trial commencement, two months prior. [284] Westford's counterarguments, substantiated by evidence presented, articulate a stance of good faith. It asserts that rejecting Archipelago's investigation proposals, given the context and timing, was reasonable. Westford highlights the belatedness of Archipelago's investigative actions as indicative not of necessity but of tactical manoeuvreing. Furthermore, Westford’s submissions, supported by transactional evidence and corroborated by testimonies of Archipelago’s witnesses (including David Ng and Hon Min), demonstrate legitimate ownership and title transfer of goods from Genuine to Phoenix. The arm's-length nature of these transactions is also emphasised, refuting Archipelago's claims of disguised financing agreements. [285] Westford challenges Archipelago's reliance on external sources, such as news articles and creditor reports, as baseless and irrelevant to the specific Phoenix Orders in question. Westford underscores the lack of specificity in these documents to its case, dismissing it as insufficient to establish the alleged sham trades. It also emphasises the unreasonableness of Archipelago's investigation demands, especially considering the ongoing claim rejection and the absence of any direct benefit to Westford as the insured party. [286] Upon careful examination of the evidence and arguments, this court finds Westford's submissions more credible and persuasive. The documented chain of ownership and business transactions between Genuine and Phoenix, corroborated by Archipelago's own witnesses, establishes the legitimacy of the trades in question. The manner and timing of Archipelago's investigation requests, particularly post-litigation commencement, suggest a tactical rather than a substantive approach, aimed more at fortifying its defence than reassessing the claim objectively. [287] Therefore, the court that Westford's rejection of Archipelago's investigative requests was justified under the circumstances. Westford’s letter to liquidators [288] Archipelago contends that Westford's action of writing to the Phoenix Liquidator on 2.3.2022, evidenced in the email chain raises serious questions. It argues this act is contradictory to Westford's earlier refusals to permit the liquidators to share investigation findings with Archipelago. Archipelago specifically questions Westford's choice of email address (phoenixcommodities@deloitte.com) over msummersgill@deloitte.co.uk, the address previously advised in a letter dated 9.11.2020. Archipelago interprets this as Westford’s lack of genuine interest in receiving a response, further supported by Hande Elmener’s testimony that a response was received from the liquidators but not produced in court. [289] Conversely, Westford's response argues for the legitimacy and good faith behind its communication with the liquidators. Westford clarifies that the purpose of its letter dated 2.3.2022 was to ascertain the location of the original Bills of Lading, countering Archipelago's classification of these in Part C of the Common Bundle of Documents. Westford maintains that its refusal to consent to Archipelago's requests for investigations was reasonable, considering the already extensive documentary evidence supporting the Phoenix Orders. It also addresses the selection of the email address, indicating it adhered to the liquidators' established procedure, as detailed in the liquidators' report to the creditors. [290] Upon detailed review of the submissions and evidence, it is evident that Westford's interactions with the liquidators were conducted in a manner typical of a party actively seeking to clarify and substantiate its position amidst disputed claims. The communication, especially the letter dated 2.3.2022, appears to be a logical step for gathering additional evidence to reinforce Westford’s stance, rather than an attempt to evade or mislead, as suggested by Archipelago. The email address discrepancy, while noted, does not substantially undermine Westford’s position, especially in light of the liquidators' established communication protocol. [291] Thus, the court finds Westford’s approach in dealing with the Phoenix Liquidator to be a reasonable and proactive measure within the context of the ongoing litigation. It does not warrant drawing adverse inferences against Westford. The court, therefore, accepts Westford's explanations and evidence as more credible and consistent with the actions of a party earnestly engaging in the legal process. Archipelago's assertions, while noted, are not found sufficient to discount the validity of Westford's actions in this regard. No email to the Vietnam Shippers [292] Archipelago questions the actions of Arzu Tanriverdi for Westford regarding her efforts to track down the bills of lading by contacting the shipping company. Archipelago criticises Westford for not extending this inquiry to the Vietnamese shippers of the goods, insinuating a potential oversight or lack of thoroughness in Westford's investigation. [293] Conversely, Westford provides a considered rationale for its approach. It asserts that the goods for Phoenix Orders were discharged at ports in Ivory Coast and Senegal, leading to the transfer of the bills of lading to buyers in these respective countries. Therefore, as per Westford's argument, any attempt to contact the Vietnamese shippers would have been redundant, as these entities would no longer be in possession of the original bills of lading once the goods were delivered. [294] Upon evaluating the arguments, the court finds Westford's explanation to be substantiated and in alignment with common international trade practices. The transfer of bills of lading to buyers upon the discharge of goods is a standard procedure in global shipping. In this context, the Vietnamese shippers would not retain these documents following the successful delivery of the goods. [295] Therefore, the court accepts and acknowledges Westford's decision not to contact the Vietnamese shippers as pragmatic and informed, aligning with standard shipping operations and demonstrating due diligence in its claim's substantiation. Allegation of fabrication of letters [296] Archipelago alleges that Westford, fabricated critical documents, namely letters dated 15.10.2019 and 21.10.2019. These letters reportedly pertain to the transfer and receipt of original bills of lading in Dubai. Archipelago supports this allegation with emails from the liquidators indicating that some of these bills of lading were dispatched to RaboBank in Holland and Credit Suisse (SA) in Switzerland, thereby questioning Westford's narrative. [297] Upon examination of the evidence, the court finds Archipelago's allegations of document fabrication by Westford to be unsubstantiated. The court notes that while Archipelago casts doubt on the authenticity of Westford's documents, it demonstrates a markedly uncritical acceptance of the New Documents provided by the liquidators. This disparity in scrutiny applied to the documentary evidence presented by Westford as opposed to that by the liquidators is both notable and concerning. [298] The court concludes that Archipelago's allegations against Westford regarding the fabrication of documents are not proven on the balance of probabilities. Evidence of courier or proof of receipt of the Bills of Lading [299] Archipelago’s submits that the absence of courier proof or direct receipt evidence of the Bills of Lading by Westford, raises questions about the veracity of Westford's conduct. It underscores the point that none of Westford’s staff, who should have managed these critical documents, were produced as witnesses. The implication here is that this omission might suggest an intentional concealment or misrepresentation by Westford. [300] Westford counters this narrative by asserting the successful delivery of the goods to the designated locations, Ivory Coast and Senegal, as a clear indication that the Bills of Lading were effectively received and managed. It further highlights the impracticality of the CEO or other high-level executives personally overseeing the physical documentation for every transaction, especially in a large-scale operation. Joanna Durlach, the employee previously responsible for such documents, had left Westford, further complicating direct testimony. [301] Evaluating these positions, the court notes the successful delivery of goods, corroborated by Archipelago’s Claims Consultant, suggests the proper handling and receipt of the necessary Bills of Lading. The absence of direct evidence like courier proofs, while noted, does not conclusively indicate deceit or fraudulent intent by Westford. It is not uncommon in large organisations for such documents to be handled by various staff members, and the direct involvement of top executives in every transactional detail is not a standard practice. [302] The court dismisses Archipelago's contention that Westford acted in bad faith regarding the bills of lading since the successful delivery of goods supports appropriate document handling, considering constraints, while Archipelago's contention lacked substantiation. Credibilty of witnesses [303] In evaluating the credibility of Archipelago’s witnesses, the court has adopted a stance of heightened scrutiny and caution, guided significantly by the detailed analysis provided by Westford’s counsel. This analysis highlighted several inconsistencies and discrepancies in the testimonies of Archipelago’s witnesses, which are crucial in determining their reliability. [304] Firstly, there were stark contradictions among Archipelago’s witnesses on vital issues such as enquiries into Westford’s trade with its supplier. For example, while Principal Officer Ian Lim and Head of Underwriting Nicholas Ng both denied making enquiries about Westford’s trade with its supplier, Technical Advisor Kanes confirmed that such questions were asked. This discrepancy on a fundamental aspect of the case raises serious concerns about the coherence and consistency of their evidence. [305] Additionally, the testimonies of Archipelago’s officers displayed inconsistency regarding their system to record premium payments. Ian Lim stated that no such system existed, whereas Nicholas Ng affirmed its presence, demonstrating a concerning lack of uniform understanding within Archipelago. [306] The divergence in testimonies was also evident in their interpretation of Westford’s role and actions in the transactions with Phoenix, as seen in the conflicting responses of Ian Lim and Group Chief Operating Officer Boon Ing. Further, there was evident equivocation in their responses, such as the fluctuating answers of Ian Lim regarding Westford’s exposure vis-à-vis the Corporate Guarantee. [307] A notable lack of personal knowledge on key evidence was evident, particularly in the admissions of Ian Lim and Claims Consultant Huang, who acknowledged basing parts of their reports on speculation and lacking firsthand knowledge of crucial documents. [308] It is important to note that while Westford’s counsel provided the court with this helpful analysis, highlighting the credibility issues of Archipelago’s witnesses, there was no corresponding scrutiny or analysis presented by Archipelago regarding the credibility of Westford’s witnesses. This lack of counter-analysis from Archipelago is a significant factor in the court’s assessment. [309] Given these considerations, the court has treated the testimonies of Archipelago’s witnesses with caution. The inconsistencies, lack of direct knowledge, and equivocations in their statements necessitate a careful and measured approach to evaluating their evidence, ensuring that the judgment is based on a comprehensive and balanced assessment of all testimonies. CAUSES OF ACTION [310] I will now address the causes of action presented by Westford against the Archipelago. In doing so, I will first outline and then examine each of these causes as pleaded by Westford. This analysis aims to determine whether Westford has proven each cause of action. I shall begin by identifying and briefly discussing the four specific causes of action in question. [311] The first cause of action pertains to the alleged breach of the insurance policy and/or Endorsement No. 4 by Archipelago. The evidence has been reviewed to assess the contractual obligations and conduct of the parties. My findings will determine whether Archipelago's rejection of Westford's claim and its treatment of the additional premium constituted a breach of the contractual terms. [312] Regarding the claim of negligent misstatement, the focus is on whether Archipelago, in its role as an insurer, had a duty of care towards Westford in providing accurate information, and if so, whether there was a breach of this duty that led to Westford's losses. This aspect involves a critical examination of the instances where Archipelago's communications regarding policy coverage are alleged to have been misleading or false, weighed against the legal principles of negligent misstatement. [313] The third cause of action centers on negligence related to a data breach relating to the Imposter. This part of the judgment examines Archipelago's responsibility to maintain secure computer systems and whether its failure in this regard amounted to a breach of duty causing loss to Westford. Key to this assessment has been the investigation and findings of the Cyber Expert, Fong (PW5), alongside the notable absence of a rebuttal expert testimony from Archipelago. [314] Finally, the claim of bad faith and breach of statutory duties is considered. This involves scrutinising Archipelago's adherence to the duty of good faith, a cornerstone in insurance contracts, and its compliance with the Section 116(1)(a) of the LFSSA. The sequence of events, particularly those following the submission and rejection of the claim, along with Archipelago's overall business conduct with Westford, have been closely examined to ascertain if there was a breach of these duties. Breach of Policy and/or Endorsement No. 4 [315] On breach of policy and Endorsement No. 4, the weight of evidence from Westford detailing the transactions, together with Archipelago's premature and seemingly pre-determined rejection of the insurance claim, point to a breach of contractual obligations owed under the Policy. This cause of action has been sufficiently proven on a balance of probabilities based on the documentation and sequence of events. [316] The core coverage dispute turns on whether the commodity sale transactions between Westford and the insured buyer, Phoenix, were legitimate trades entitled to protection against Phoenix's non-payment under the Trade Credit Insurance Policy and expanded Endorsement No.4. [317] On this issue, Westford has marshalled extensive contemporaneous documentation detailing the trades in question under Phoenix Orders 11892 and 11895. These include executed purchase contracts dated 15.10.2019 showing the initial acquisition of 25,000 metric tons of rice from supplier Genuine Pte Ltd, corresponding commercial invoices dated 15.10.2019, proof of payment, and bills of lading demonstrating passage of title and risk. Westford further produced Phoenix's acknowledgments of the deals and acceptance of goods, establishing its insured debt claim. [318] Set against this formidable paper trail validating the transactions, Archipelago's swift 12.6.2020 outright denial of Westford's ensuing credit insurance claim following Phoenix's insolvency denotes a premature rejection seemingly grounded on pre-determined motives rather than an impartial, evidence-based assessment. I note particularly the failure to await the adjusting investigation report, the hue of shifting justifications for denial over time, and refusal to reconsider the additional proof tendered in the face of reasonable explanations by the insured. [319] These facets, gauged against the Policy coverage terms and Endorsement No. 4 limits expanded by mutual consent, point to a breach of Archipelago’s contractual obligations as the credit insurer. The insured Westford had put forward all necessary documentation attesting to the legitimacy of its beneficial trades, triggering the agreed protections upon the defined risk materialising through Phoenix’s inability to pay. As such, I find the breach of policy/Endorsement No. 4 cause of action to be sufficiently proven on a balance of probabilities based on the weight and credibility of evidence regarding the transactions, assessed holistically against the unwarranted denial of coverage. Negligent misstatement [320] In reviewing the cause of action for negligent misstatement as presented by Westford against Archipelago, it is determined that a separate ruling in favour of Westford on this specific cause is not required. This conclusion is drawn from several key observations. Firstly, Westford's primary allegation of loss due to Archipelago’s refusal to provide cover for the Phoenix Orders 11892 and 11895 does not directly translate into a financial detriment for Westford itself. It was BGIS, the trade financier and loss payee, who was not compensated by Archipelago under the insurance policy. [321] Moreover, the court has already established a breach of the insurance policy and/or Endorsement No. 4 by Archipelago, which will lead to an order for Archipelago to compensate BGIS with specific amounts corresponding to the values of Phoenix Orders 11892 and 11895 which will be explained below. This action effectively remedies the financial implications of the non-coverage under the insurance policy, thus rendering a separate finding on the negligent misstatement claim redundant. The compensation ensures that BGIS, and indirectly Westford, are restored to a position similar to that which would have prevailed if the wrongful act of non-coverage had not occurred. [322] Additionally, in accordance with the principle of restitution in tort, as articulated by Lord Blackburn in Livingstone v Rawyards Coal Co. [1880] 5 App. Cas. 25, 29, the aim in tort law is to restore the injured party to the position he would have been in had the wrongful act not been committed. The compensation ordered for the breach of the insurance policy fulfills this objective by addressing the financial impact of the non-coverage, which is at the heart of the negligent misstatement claim. [323] Therefore, in light of these considerations, the court finds that a separate ruling on the cause of action for negligent misstatement is redundant. The compensation ordered for the breach of the insurance policy sufficiently addresses the financial repercussions at the core of the negligent misstatement claim, leading to the conclusion that this claim by Westford against Archipelago is effectively resolved in conjunction with the breach of the insurance policy. Negligence causing data breach [324] In examining the cause of action for negligence causing data breach as presented by Westford against Archipelago, the court finds parallels with the previous ruling on negligent misstatement. The essence of both causes of action revolves around the principle of restoring the injured party to the position he would have been in, had the wrongful act not been committed, as stated in Livingstone v Rawyards Coal Co. [325] In this instance, Westford claims that Archipelago's negligence in maintaining its computer systems led to a data breach, which in turn caused Westford to mistakenly pay the additional premium to the Imposter, believing it to be Archipelago. This mispayment resulted in the rejection of Westford's claim under the insurance policy and consequently, BGIS, Westford’s trade financier, was not compensated by Archipelago as the loss payee. [326] However, similar to the cause of action for negligent misstatement, the court has found that Archipelago breached the insurance policy and/or Endorsement No. 4. Consequently, Archipelago has been ordered to compensate BGIS for the amounts due under the policy in respect of Phoenix Orders 11892 and 11895. This compensation effectively places Westford, and by extension BGIS, in the same position it would have been had the data breach, leading to the mispayment, not occurred. [327] Given this restitution, a separate finding on the negligence cause of action for the data breach becomes redundant. The court's order for compensation due to the breach of the insurance policy addresses the financial impact caused by the data breach. Therefore, it is unnecessary to adjudicate separately on the negligence claim as the principle of restitution in tort has already been fulfilled. [328] In light of these considerations, the court concludes that the negligence cause of action for the data breach, akin to the negligent misstatement claim, is effectively resolved through the compensation ordered for the breach of the insurance policy, thereby rendering a separate ruling on this cause of action unnecessary as the compensation adequately addresses the financial repercussions central to the negligence claim. Bad Faith & Breach of Statutory Duties [329] In considering the cause of action for Bad Faith & Breach of Statutory Duties as brought forward by Westford against Archipelago, the court recognises the implications of a potential breach of Section 116 of the Act. Such a breach by a Labuan insurer, like Archipelago, could lead to regulatory actions by the Labuan Financial Services Authority (“LFSSA”). These actions may include imposing additional license conditions, suspension, revocation of license, or fines, under the broad administration and enforcement powers of the LFSSA as delineated in sections 3, 167, 168, and 193 of the Act. Additionally, fines can be imposed under the general penalty provisions in section 187 of the Act, where, for a violation of Section 116, the insurer may be liable for fines up to RM 3 million. [330] However, it is crucial to recognise that although these potential consequences carry weight from a regulatory perspective, it does not intrinsically establish a basis for a legal claim by any party adversely affected by the breach, such as Westford in this case. The Act primarily serves as a regulatory and administrative framework, not as a basis for private civil claims. [331] Drawing on the principles established in cases like Lonrho Ltd v Shell Petroleum Co Ltd [1981] 2 All ER 456 and Melton Medes Ltd v Securities and Investments Board [1995] 3 All ER 880, it is evident that where legislation imposes an obligation and specifies the manner of enforcement, such performance cannot be enforced in any other manner. This principle suggests that if a statute, like the Act, provides specific remedies or enforcement mechanisms for a breach (such as regulatory action or criminal prosecution), it precludes the possibility of a private law right or remedy. This view is further reinforced by decisions in cases like Tuan Hj Zulkifli bin Hj Hussain & Ors v iOi Corp Bhd & Ors [2012] 7 MLJ 215, where the court emphasised that statutory duties with specified enforcement mechanisms do not give rise to private law actions. [332] The Act, like the Motor Vehicles (Construction and Use) Rules 1959 referenced in Tan Chye Choo v Chong Kew Moi [1966] 2 MLJ 4, imposes certain duties and corresponding offences but does not explicitly provide for civil liability or a private claim for damages. This lack of provision suggests that a breach of such statutory duties does not inherently give rise to a civil/private claim for damages. [333] Moreover, the court has already addressed the primary contention of Westford through the determination of a breach of the insurance policy and/or Endorsement No. 4 by Archipelago, ordering substantial compensation to BGIS, Westford’s trade financier. This compensation aligns with the principle stated by Lord Blackburn in Livingstone v Rawyards Coal Co., placing Westford in the position it would have been in if the wrongful act had not occurred. Consequently, a separate ruling on Bad Faith & Breach of Statutory Duties is rendered redundant, as the financial impact of the alleged bad faith and statutory breach has been adequately addressed. [334] Therefore, in light of these considerations, the court finds that Westford's claim for Bad Faith & Breach of Statutory Duties against Archipelago is not substantiated. The legal framework of the Act does not support a private right of action for its breach, and the compensatory measures already ordered for the breach of the insurance policy sufficiently address the concerns raised in this cause of action. RELIEFS [335] In this case, Westford has sought various reliefs against Archipelago, and the court has carefully considered the submissions, evidence, and relevant legal principles to make the following determinations. [336] On the issue of liability, the court has found that Westford has proven the breach of the insurance policy and Endorsement No. 4 by Archipelago. Consequently, due to Archipelago's failure to provide coverage, the court orders Archipelago to compensate BGIS, the loss payee, with amounts due under the Policy for Phoenix Orders 11892 and 11895, totaling 2,226,460.50 and 2,238,093.00, respectively. These payments are in line with the exchange rate as of 27.5.2020 as prayed, and are meant to rectify the financial loss due to the breach. [337] Regarding general damages, the court does not award these to Westford. The evidence presented does not indicate that Westford suffered losses beyond those compensated by the payments to BGIS. Westford's claim for general damages lacks substantiation, both in evidence and legal submissions. [338] The court also does not grant aggravated and exemplary damages. According to the legal principles outlined in cases like Kerajaan Malaysia v Ambiga Sreenevasan & Ors [2016] 5 MLJ 721 (Court of Appeal) and Cheong Fatt Tze Mansion Sdn Bhd v Hotel Continental Sdn Bhd; Hong Hing Thai Enterpise Sdn Bhd (Third Party) [2011] 4 MLJ 354, aggravated damages are awarded for high-handed or insulting behavior that exacerbates the plaintiff’s suffering. In this case, Westford has not provided evidence of such behavior by Archipelago. Exemplary damages, as explained in as set out in Rookes v Barnard [1964] AC 1129 and reiterated in Teh Yet Poh v Teh Ming Choo [2020] MLRHU 1187, are applicable under specific circumstances involving oppressive action by the government or conduct calculated to profit the defendant, none of which are applicable here based on the evidence presented. CONCLUSION [339] In view of the court’s findings above, Westford’s claim is allowed as follows: a) A declaration is given that Endorsement 0004/2019 dated 10 October 2019 (“Endorsement No. 4 “) is valid and that the trade credit limit for Trade Credit Insurance Policy No. AG1220190008 (“Policy”) is USD 5,000,000.00; b) A declaration is given that Westford’s Orders with Phoenix Global DMCC (i.e. Phoenix Orders 11892 and 11895) are covered under the Policy and Endorsement No. 4; c) A declaration is given that the Claim Rejection Letter dated 12 June 2020 from Archipelago to Westford is invalid and in breach of the Policy and Endorsement No. 4; d) An order is given that Archipelago pay Bank GPB International S.A. (“BGIS”) the following -

2,226,460.50 (equivalent to RM9,702,914.86 if converted at an exchange rate of 4.3580 [as at 27 May 2020]), representing the amount due to BGIS under the Policy and/or Endorsement No. 4 in respect of Phoenix Order 11892, i.e. 90% from the total value of Phoenix Order 11892, being USD 2,473,845.00;

(ii) 2,238,093.00 (equivalent to RM9,753,609.29 if converted at an exchange rate of 4.3580 [as at 27 May 2020]), representing the amount due to BGIS under the Policy and/or Endorsement No. 4 in respect of Phoenix Order 11895, i.e. 90% of the total value of Phoenix Orders 11895, being USD 2,486,770.00; e) Interest at the rate of 5% per annum is allowed on the amounts stated in paragraphs (d)(i) and (d)(ii) above from 12.6.2020 (which is the date of the Claim Rejection Letter) until the date of full realisation by Archipelago to BGIS; f) Cost of RM200,000.00 be paid by Archipelago to Westford. 1 December 2023 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Wee Hee & Jasper Tan Li Jen (Messrs Jasper Hee Partnership) For the Defendant: Chrishanthini A.R. A/P Sebasttiampillai (Messrs. Murali B. Pillai & Associates)