Tay Eng Chuan v Ace Insurance: Arbitration Clauses, Insurance Policy Interpretation & Double Recovery

Tay Eng Chuan appealed the High Court's decision to dismiss his claim against Ace Insurance Ltd for $300,000 under a "Double Guarantee Protector Policy" for total loss of sight in his left eye. The Court of Appeal allowed the appeal, finding that the arbitration clause in the policy did not preclude legal action and that the appellant could claim for loss of sight even after being compensated for loss of lens, as they are distinct losses. The case was remitted to the High Court to determine whether the appellant had indeed suffered a total loss of sight.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding insurance claim for loss of sight after lens loss. Court of Appeal addressed arbitration clauses, policy interpretation, and double recovery.

1.7 Decision Date

26 June 2008

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Tay Eng Chuan	Appellant	Individual	Appeal Allowed	Won	Tay Eng Chuan of Independent Practitioner
Ace Insurance Ltd	Respondent	Corporation	Appeal Dismissed	Lost	Teo Weng Kie of Tan Kok Quan Partnership Lorraine Ho of Tan Kok Quan Partnership

3. Judges

Judge Name	Title	Delivered Judgment
Andrew Ang J	Judge	No
Chan Sek Keong CJ	Chief Justice	Yes
Andrew Phang Boon Leong JA	Justice of the Court of Appeal	No

4. Counsels

Counsel Name	Organization
Tay Eng Chuan	Independent Practitioner
Teo Weng Kie	Tan Kok Quan Partnership
Lorraine Ho	Tan Kok Quan Partnership

4. Facts

Appellant's left eye was struck by wire mesh, causing cornea laceration, iris laceration, and traumatic cataract.
Appellant underwent an emergency operation and a subsequent operation to remove the lens in his left eye.
Respondent admitted liability for 'Accidental Hospital Income Benefit' and paid the appellant $3,300.
Respondent paid the appellant $300,000 for the total loss of the lens in his left eye.
Appellant claimed an additional $300,000 for the alleged total loss of sight in his left eye, which the respondent denied.
The insurance policy contained an arbitration clause and a condition precedent clause.
The High Court struck out the appellant's claim, finding that compliance with the arbitration clause was a condition precedent and that allowing the claim would result in double recovery.

5. Formal Citations

Tay Eng Chuan v Ace Insurance Ltd, CA 95/2007, [2008] SGCA 26
Tay Eng Chuan v Ace Insurance Limited, Originating Summons No 859 of 2007, [2007] SGHC 212

6. Timeline

Date	Event
2002-11-12	Appellant's left eye struck by wire mesh, causing cornea laceration, iris laceration, and traumatic cataract.
2002-11-12	Emergency operation performed on appellant's left eye.
2002-11-20	Appellant discharged from hospital.
2002-12-09	Appellant re-admitted to hospital.
2002-12-12	Appellant undergoes another operation to remove the lens in his left eye.
2002-12-26	Respondent received appellant's written proof of claim.
2003-05-23	Dr Yii Hee Seng's e-mail stated that the condition of appellant's left eye fulfilled the criteria of 'Loss of Sight' as defined in Part 3 of the Policy.
2003-05-16	Dr Khoo's medical report indicated appellant could perceive light and hand movements at 6ft via his left eye.
2003-07-29	Respondent admitted liability for 'Accidental Hospital Income Benefit' and paid the appellant $3,300.
2003-08-13	Dr Khoo's medical report indicated appellant could perceive light and hand movements at 6ft via his left eye.
2003-10-29	Dr Khoo's medical report indicated appellant could perceive light and hand movements at 6ft via his left eye.
2003-12-11	Respondent paid the appellant $300,000 for the total loss of the lens in his left eye.
2004-02-05	Dr Tong Heng Nam's medical report described appellant's vision in his left eye as good enough for 'counting fingers at a distance of five feet'.
2006-01-01	Appellant commenced Originating Summons No 2254 of 2006.
2007-01-01	Appellant commenced Originating Summons No 859 of 2007.
2007-07-02	Lim Lay Yan's affidavit filed.
2008-03-27	Respondent's skeletal arguments filed.
2008-06-27	Judgment reserved.
2008-06-27	Decision Date

7. Legal Issues

Interpretation of Arbitration Clause
- Outcome: The court held that compliance with the Arbitration Clause is a condition precedent to only the respondent’s liability to make payment under the Policy, but the appellant still had the right to commence legal action.
- Category: Substantive
- Sub-Issues:
  - Condition precedent to liability
  - Inconsistency with legal action clause
Double Recovery
- Outcome: The court held that the appellant was entitled to recover for the alleged total loss of sight in his left eye, even though he had already been indemnified for the total loss of the lens in that eye, as they are separate and distinct losses.
- Category: Substantive
- Sub-Issues:
  - Recovery for loss of lens and loss of sight
  - Interpretation of Accidental Disability Benefit Clause
Contra Proferentem Rule
- Outcome: The court applied the contra proferentem rule, construing any ambiguity in the extent of insurance coverage provided by the Policy against the respondent.
- Category: Substantive
- Sub-Issues:
  - Ambiguity in insurance policy
  - Interpretation against insurer

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract
Insurance Claim

10. Practice Areas

Commercial Litigation
Insurance Claims
Arbitration

11. Industries

Insurance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Tay Eng Chuan v Ace Insurance Limited	High Court	Yes	[2007] SGHC 212	Singapore	Cited as the decision of the High Court judge which was being appealed against.
Alexander Scott v George Avery	House of Lords	Yes	Alexander Scott v George Avery (1856) 5 HL Cas 811; 10 ER 1121	United Kingdom	Cited as the leading case on Scott v Avery clauses, which make arbitration a condition precedent to bringing an action on an insurance policy.
Viney v Bignold	English High Court	Yes	(1888) 20 QBD 172	United Kingdom	Cited as an example of a valid and effective Scott v Avery clause.
Lim Kitt Ping Lynnette v People’s Insurance Co Ltd	High Court	Yes	[1997] 3 SLR 1018	Singapore	Cited as an example of a Scott v Avery clause in the Singapore context.
NTUC Co-operative Insurance Commonwealth Enterprise Ltd v Chiang Soong Chee	High Court	Yes	[2007] SGHC 222	Singapore	Cited for the principle that insurers should highlight areas which the insurance cover does not extend to.
In re Bradley and Essex and Suffolk Accident Indemnity Society	English Court of Appeal	Yes	[1912] 1 KB 415	United Kingdom	Cited for the principle that insurance companies must clearly state conditions precedent to liability to pay.
Tam Wing Chuen v Bank of Credit and Commerce Hong Kong Ltd	N/A	Yes	[1996] 2 BCLC 69	Hong Kong	Cited for the definition of the contra proferentem principle.
In the matter of an arbitration between Etherington and The Lancashire and Yorkshire Accident Insurance Company	N/A	Yes	[1909] 1 KB 591	United Kingdom	Cited in Bradley for the principle that policies are to be construed 'contra proferentes' against the company.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2006 Rev Ed), O 18 rr 19(1)(a), 19(1)(b), 19(1)(d) and 19(3)

14. Applicable Statutes

Statute Name	Jurisdiction
Arbitration Act, Chapter 10 of Singapore	Singapore
Limitation Act (Cap 163, 1996 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Arbitration Clause
Condition Precedent
Double Recovery
Scott v Avery Clause
Contra Proferentem
Accidental Disability Benefit
Total Loss of Lens
Total Loss of Sight
Insurance Policy
Legal Action Clause

15.2 Keywords

insurance
arbitration
double recovery
policy interpretation
loss of sight
loss of lens
condition precedent
contra proferentem

17. Areas of Law

Area Name	Relevance Score
Insurance	95
Contract Law	85
Arbitration	70

16. Subjects

Insurance Law
Contract Law
Arbitration