FIRE CLAIM

An occupier of state land granted under the regulations of Temporary Occupier Licence put up a building which he used as a vermicelli factory. He subsequently sold the building and business which included stock and machinery to another party. The new owner had the building together with contents insured under a Fire policy.

A fire which occurred during the currency of the policy destroyed the building and all the contents. A claim was submitted to the insurer for the loss sustained.

Problems arose and many questions were asked. (1) Can use of state land with TOL status be transferred by the original grantee to another person? The grantee must surrender the land and structures built thereon to the state if he no longer wanted to use the land. (2) Does the new owner have any insurable interest in the building that was acquired from the grantee? (3) What about the contents? - any insurable interest? Remember - the new owner had no legal right to be on or use of the state land. The new owner should have applied to the state for the right to use the land.

How would you deal with the claim?

• Charly Lim 3. New owner have the rights
  2. Depends on number 1 outcome...lol
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  Teh Mi Mi As long the insurance (2 & 3) is under the new owner . Pay the claim ..law. There was no change in the business, i wouldn' t say it illegal only that the TOL name has not being change.
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  Teh Mi Mi After all Fire insurance does cover building n contents. Not the land.
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  Murali Nagalingam I the absence of a contrat with the land owner, any structure built on a land would belong to the land owner. This is stated in the Land Act. Further, as the tol license was not legally transferred to the current insured, the building and contents on the tol land will become illegal. My view is that the claim should not be paid. Correct me if I am wrong.
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  Alan Tang My view is that if the buy-sell agreement is drafted in such a way that all existing rights of the first owner is effectively transferred to the buyer
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  Alan Tang Cont....then the buyer has a right to claim .
  ( assuming the lawyer has drafted the agt properly )
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  Raymond Huang Alan Tang - There may be an agreement but the right to use the land cannot be transferred from the TOL holder to the purchaser without sanction of the state authority. This was what complicated the issue. Insurance cannot support an activity which the law would deem illegal.
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  Alan Tang RH- the buyer may proceed to claim agst wrongful advice from lawyers if the latter had failed to discharge his duty
• Charly Lim Har...means it is not claimable?
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  Suhaily Md Noh Wud the Temporary Occupier License consider as legal transfer or legal usage of the land? If yes, w
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  Suhaily Md Noh If yes, whether it is for industrial use? Any illegal operations or activities will not be covered by the policy - 1 of the normal policy conditions
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  Suhaily Md Noh Agree with Raymond Huang that illegal activities wud make the policy null and void.
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  Damian Tuan how about if activities or land status have been declared prior to inception...?
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  Damian Tuan could anyone comments of the cover if...the tenant did not obtain 1) Local authorities permit to operate 2) BOMBA approval to operate ..would the claim be payble? comments please...?
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  Tutup Kedai In this case the lawyer that has done the S&P will be in trouble for unable to advise the purchaser properly. 
  
  If this is the case, I forsee a lawyer PI claim.
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  Raymond Huang Forget about suing the lawyer. The deal was done through private treaty without a lawyer. So, what would you say about policy liability for the claim?
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  Richard Foong If I remember, the policy does not cover property sold by the insured under conditional sale trust agreement. Thus insurers have the right to decline the claim.