PUTRAJAYA,MALAYSIA -- An insurance company will have to pay over RM30 million in insurance claims to Asean Security Paper Mills Sdn Bhd (ASPM) for its property destroyed in a warehouse fire more than 10 years ago, the Federal Court ruled Friday. Chief Judge of Sabah and Sarawak Datuk Richard Malanjum and Federal Court judges Datuk Nik Hashim Nik Ab. Rahman and Datuk Hashim Yusoff, who made the decision, held that the decision of the Court of Appeal to reverse the High Court ruling to award insurance claim to ASPM, is wholly unjustified. The Court of Appeal in its decision on Feb 15 last year ruled that the fire which had destroyed the godown was the result of arson and that ASPM's claim for insurance was fraudulent. The Court of Appeal also held that the warehouse was intentionally set fire by two workers of the company who were acting on the instructions of its chairman N.Balasingham. The Federal Court judges also unanimously agreed that this is a proper case for the court to interfere as the Court of Appeal erred when it totally disregarded the evidence of two chemists that did not rule out that the fire could be caused by spontaneous combustion, resulting in a serious and substantial miscarriage of justice. In his 33-page judgment, Nik Hashim said the Court of Appeal was wrong to hold that ASPM was bound by N. Balasingham's act in the destruction of the godown. He said it (the federal court) failed to see how the Court of Appeal could conclude that Balasingham was acting on behalf of ASPM as there was no cogent evidence adduced by CGU Insurance Bhd to show the scope, ambit and the extent of the authority conferred on Balasingham. He said "In the absence of such evidence, the wrongful acts of Balasingham cannot be taken into consideration for attributing legal liability to ASPM, especially so in a criminal offence. "It is unthinkable to suggest that the shareholders of ASPM from the various Asean countries, India and England had connived with Balasingham to burn the warehouse," Nik Hashim said. Nik Hashim said the court agreed with the High Court judge that CGU Insurance had failed to prove fraud against ASPM beyond reasonable doubt. He said, at the most the insurance company succeeded in creating a suspicion in the cause of the fire by arson but suspicion, however great, was insufficient to prove fraud which needed to prove beyond reasonable doubt. Nik Hashim said Balasingham was only a minor shareholder holding a mere 5.28 per cent of the shares in ASPM and there was no evidence to support CGU Insurance's claim that Balasingham was holding a substantial financial interest in ASPM. "In the absence of evidence of absolute management and control of ASPM by Balasingham, the acts of Balasingham cannot become the acts of ASPM. Consequently, ASPM cannot be barred from claiming the sum insured," he said. On May 12, 2000, the High Court ordered CGU Insurance formerly known as Commercial Union Assurance (M) Bhd to pay RM16,124,500 in fire insurance claims to Asean Security Paper Mills for property destroyed in a godown fire in 1989. The High Court had also ordered CGU Insurance to pay ASPM interest at 8 per cent from the date of the filing of the writ on Sept 11, 1990. The fire at the godown of the paper mill at Kampung Acheh Industrial Estate, Sitiawan, Perak, on Sept 11, 1989 destroyed property worth RM32 million.
