Case Details
- Citation: [2026] SGCA 14
- Court: Court of Appeal of the Republic of Singapore
- Court of Appeal / Civil Appeal No: Civil Appeal No 18 of 2025
- Date of Judgment: 19 March 2026
- Date Judgment Reserved: 21 January 2026
- Judges: Sundaresh Menon CJ, Steven Chong JCA and Hri Kumar Nair JCA
- Appellants / Plaintiffs: Argoglobal Underwriting Asia Pacific Pte Ltd & 4 Ors
- Respondent / Defendant: Overseas-Chinese Banking Corporation Limited
- Parties (High Court suit): OCBC v Argoglobal Underwriting Asia Pacific Pte Ltd & 4 Ors (Suit No 814 of 2021)
- Appellants’ role: Insurers under a hull and machinery marine insurance policy
- Respondent’s role: Mortgagee and co-assured / sole loss payee under the policy
- Vessel: “TERAS LYZA” (“Vessel”)
- Policy type: Hull and machinery marine insurance policy (“MI”)
- Coverage relevant to appeal: Section [A] (insured value US$56m); Section [B] (increased value/excess liabilities up to US$14m) held void as gaming/wagering (not challenged on appeal)
- Voyage: Tow voyage from Vung Tau, Vietnam to Taichung, Taiwan (“Tow Voyage”)
- Event: Vessel developed a list to port and capsized on 5 June 2018; remained afloat for weeks; later scuttled
- Salvage arrangements: SCOPIC clause invoked; salvors contracted to salvage the Vessel while capsized
- Core insurance concepts in dispute: Perils of the sea; constructive total loss (“CTL”); evidential burdens and presumptions
- Statutes referenced: (Not specified in the provided extract; however, the judgment discusses s 32(4)(b) of the Evidence Act)
- Cases cited: [2003] SGHC 80; [2026] SGCA 14
- Judgment length: 72 pages; 23,177 words
Summary
This Court of Appeal decision concerns a marine insurance claim arising from the capsize of a jackup rig, “TERAS LYZA”, during its maiden tow voyage. The insured parties (through the mortgagee OCBC as co-assured and sole loss payee) sought to recover under a hull and machinery policy by asserting that the loss was caused by “perils of the sea” and that the vessel was a constructive total loss (“CTL”). The High Court judge had found for the insured on both issues, even though the trial record did not include witness evidence specifically proving CTL.
On appeal, the Court of Appeal disagreed with the High Court on both findings. The court held that OCBC did not discharge its burden to prove that the loss was caused by perils of the sea. In particular, OCBC failed to propound a cause of the seawater ingress and could not rely on the rebuttable presumption of loss by perils of the sea because the factual prerequisites were not satisfied. The court further held that OCBC did not establish that the vessel was a CTL, including because key CTL documents were not shown to be business records and did not prove that recovery/repair costs exceeded the insured value. The Court of Appeal therefore allowed the insurers’ appeal and reversed the High Court’s decision.
What Were the Facts of This Case?
OCBC was the mortgagee of the vessel “TERAS LYZA”. Under a hull and machinery marine insurance policy issued by five insurers (the appellants), OCBC was a co-assured and also the “sole loss payee”. The policy was originally evidenced by a cover note issued by a marine insurance broker, LCH Lockton Pte Ltd, on 13 June 2017. The cover note insured the hull and machinery up to an insured value of US$56m under Section [A]. Section [B] provided for increased value and/or excess liabilities up to US$14m, but the High Court held Section [B] void as a gaming or wagering contract; that finding was not challenged on appeal, leaving Section [A] as the operative coverage.
By Addendum No 1 dated 13 June 2017, the Teras Entities (the vessel owner Teras Lyza Pte Ltd and the vessel manager Teras Offshore Pte Ltd) assigned their rights, title and interest in the policy to OCBC, incorporating the notice of assignment and a loss payable clause. The policy was renewed for the period 1 August 2017 to 31 July 2018 by a renewal certificate issued on 29 August 2017. The vessel was then prepared for a tow voyage from Vung Tau, Vietnam to Taichung, Taiwan for delivery to charterers—its maiden voyage.
The insurers agreed to insure the tow voyage under Addendum No 3 issued on 6 June 2018 and an endorsement issued on 20 June 2018. The Owners conducted an internal feasibility study on wet towing, which concluded that a wet tow was feasible subject to flag state and other approvals. An ABS surveyor attended the vessel on 25 May 2018 and issued multiple certificates, including a Certificate of Fitness to Proceed under Tow, a Short-Term International Load Line Certificate, a Class Survey Report, and a Statutory Survey Report. The Owners initially intended to engage Braemar Technical Services (Offshore) as a marine warranty surveyor, but Techwise Offshore Consultancy Pte Ltd was ultimately appointed instead. Techwise issued certificates and reports between 26 and 31 May 2018, including a Certificate of Fitness for Towage and a Certificate of Approval for the Tow Voyage.
On 30 May 2018, the vessel sailed from Vung Tau under tow by the tug “Teras Eden”. On 5 June 2018, the vessel developed a list to port and trimming by the stern. At about 5.50pm the same day, the vessel capsized. After the capsize, salvors from Resolve Salvage & Fire (Asia) Pte Ltd were contracted on 15 June 2018 under the SCOPIC clause of Lloyd’s Standard Form of Salvage Agreement. The vessel was towed to Batangas Bay, Philippines while in a capsized state. Importantly, the vessel did not sink; it remained afloat for a number of weeks and was inspected during that period. Eventually, the Owners scuttled the vessel after serving a notice of abandonment on the insurers, asserting that the vessel was a CTL and that no offer for scrap value was forthcoming.
What Were the Key Legal Issues?
The appeal raised two pivotal issues. First, did OCBC prove that the loss was caused by perils of the sea? This question was not merely about whether some maritime mishap occurred, but about whether the insured could establish the causal link required under marine insurance principles. A related sub-issue was whether the insured could invoke the rebuttable presumption that a vessel’s loss was caused by perils of the sea, a presumption that typically arises where the vessel is seaworthy on sailing and is lost in “wholly unexplained” circumstances.
Second, even if an insured peril were established (thereby engaging the policy), did OCBC prove that the vessel was a constructive total loss? CTL is a legal and factual threshold: it requires proof that the cost of recovery and/or repair would exceed the insured value (or otherwise meet the statutory/contractual CTL criteria). The High Court had found CTL without calling witnesses to prove it, and the Court of Appeal scrutinised whether the documentary evidence was admissible and sufficient to meet the burden of proof.
How Did the Court Analyse the Issues?
The Court of Appeal began by emphasising the evidential and policy rationale behind the presumption of loss by perils of the sea. The court acknowledged the practical difficulty of proving the cause of a sinking vessel, which is why the law developed a rebuttable presumption. However, the presumption was not treated as an evidential “tool of convenience”. The court drew a clear distinction between cases where the casualty is genuinely incapable of explanation and cases where the insured could have investigated but did not. In this case, the vessel did not sink; it capsized and remained afloat for weeks, during which it was inspected. Yet no step was taken to investigate the cause of the capsize, and no evidence was adduced at trial that the cause could not have been ascertained.
On the first issue, the court held that OCBC did not discharge its burden to prove that the loss was caused by perils of the sea. A key point was that OCBC did not propound a cause of the seawater ingress. Without a pleaded and evidenced causal mechanism linking the casualty to a peril of the sea, the court was not prepared to infer causation merely because the vessel suffered a maritime incident. The court also considered whether the rebuttable presumption could be invoked. It concluded that OCBC was not entitled to rely on the presumption because the prerequisites were not satisfied.
Specifically, the court reiterated that the presumption may only be invoked where (1) the vessel is proved to be seaworthy on sailing, and (2) the vessel is lost in wholly unexplained circumstances. The court analysed the genesis and rationale of the presumption, and then applied the conditions to the facts. First, the vessel was found to be seaworthy at the commencement of the voyage. That element did not defeat the presumption. However, the second element did: the vessel was not lost in wholly unexplained circumstances. The court explained that “unexplained circumstances” requires more than the insured’s inability to prove a cause at trial; it requires that the circumstances are truly unexplained in the sense relevant to the presumption. Where the casualty is capable of being explained and the insured elects not to take steps to investigate, the presumption should not be used to fill evidential gaps.
The court also addressed whether inferential reasoning could be used where the loss did not happen in wholly unexplained circumstances. The court’s approach was that inferential reasoning is not a substitute for the foundational factual requirements of the presumption. While courts may draw inferences from proved facts, the insured must still establish the necessary factual matrix for the presumption or, alternatively, prove causation directly. Here, the absence of investigative steps during the period when the vessel remained afloat undermined any attempt to characterise the circumstances as “wholly unexplained”.
On the second issue—CTL—the Court of Appeal examined the admissibility and probative value of the documents relied upon by OCBC. The court held that OCBC did not establish that the vessel was a CTL. It scrutinised the CTL documents and found that, save for certain reports (including the dive inspection report and SCRS reports), the CTL documents were not business records. This mattered because the evidential rules governing hearsay and documentary admissibility require that documents be shown to fall within recognised exceptions, including those for business records. Where the documents were not made in the ordinary course of trade or business, they could not be treated as reliable proof of the costs and circumstances necessary to establish CTL.
The court further held that OCBC’s lack of notice pursuant to s 32(4)(b) of the Evidence Act should not have been cured by the High Court judge. This indicates that procedural and evidential safeguards cannot be treated as mere technicalities where they affect the fairness of the trial and the reliability of the evidence. In addition, the court found that the CTL documents did not prove that the cost of recovery and/or repair exceeded the insured value of the vessel. Without proof of the cost threshold, the legal definition of CTL was not satisfied.
Finally, the court addressed other related matters, including whether warranties and the duty of fair presentation were breached. While the extract indicates that OCBC had proven indebtedness under the mortgage, the core reversal turned on failure to prove insured peril and failure to prove CTL. The practical effect was that the policy was not engaged in the manner required to support the claim for indemnity based on CTL.
What Was the Outcome?
The Court of Appeal allowed the insurers’ appeal. It reversed the High Court’s findings that OCBC had proved that the loss was caused by perils of the sea and that the vessel was a constructive total loss. The court held that OCBC did not meet its burden of proof on causation and could not rely on the rebuttable presumption because the vessel was not lost in wholly unexplained circumstances, particularly given the opportunity to investigate while the vessel remained afloat and was inspected.
On CTL, the Court of Appeal also reversed the High Court. It held that the relevant CTL documents (apart from specified reports) were not admissible as business records and did not establish that recovery/repair costs exceeded the insured value. As a result, OCBC’s claim for indemnity based on CTL could not succeed, notwithstanding that OCBC had proven indebtedness under the mortgage.
Why Does This Case Matter?
This decision is significant for marine insurance practice in Singapore because it clarifies the limits of the rebuttable presumption of loss by perils of the sea. Practitioners often rely on the presumption in sinking cases, where the insured faces genuine evidential difficulty. The Court of Appeal’s reasoning, however, makes clear that the presumption is not a general substitute for investigation. Where a vessel remains afloat for a period and can be inspected, the insured cannot later characterise the circumstances as “wholly unexplained” if it chose not to investigate the cause when it was feasible to do so.
The case also provides a useful evidential roadmap for CTL claims. It underscores that CTL is not established by assertions or by documents that are not properly admissible. The court’s focus on business record admissibility and on the consequences of failing to comply with notice requirements under the Evidence Act signals that insurers and insureds must treat documentary evidence preparation as a substantive part of the claim. For litigators, the decision highlights the importance of calling appropriate witnesses or ensuring that documentary evidence meets the relevant admissibility criteria and directly proves the cost threshold required for CTL.
More broadly, the judgment reinforces a disciplined approach to burden of proof in insurance disputes: courts will not “fill gaps” by stretching presumptions or by accepting insufficiently reliable evidence. This is likely to influence how marine insurance claims are pleaded, investigated, and litigated, particularly where abandonment and CTL are asserted.
Legislation Referenced
Cases Cited
Source Documents
This article analyses [2026] SGCA 14 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.