THE OFFICIAL REPOSITORY OF
MALAYSIAN JUDGMENTS & RULINGS

[2018] MYCA 164 ENGLISH

Muhamad Haqimie Bin Hasim and Another v Pacific & Orient Insurance Co Berhad
Suit Number: Civil Appeal No. W-04(NCC)(W)-15-01/2017 

Insurance – Insurance policy – Motor vehicle accident – Alleged transfer of interest in the insured motor vehicle before the accident – Whether the alleged transfer of interest legally effected – Whether the alleged transfer of interest had the effect of rendering the insurance policy ineffective or causing it to lapse – Whether a term in an insurance policy avoiding liability for unauthorised drivers valid under the Road Transport Act 1987

Insurance – Insurance policy – Liability of the insurer of a motor vehicle – Whether the insurer liable even if there was a transfer of interest before the accident

JUDGMENT

[1] This is an appeal against the decision of the High Court affirming the decision of the Sessions Court in dismissing the plaintiff’s claim for damages arising out of a motor vehicle accident. The High Court however did not give effect to the benefit of a declaration obtained by the insurer of the motor vehicle under the proviso to section 96(3) Road Transport Act 1987 (“RTA”). This is because the cause papers relating to the originating summons seeking a declaration were not served on the plaintiff. However the learned Judge affirmed the decision of the Sessions Court Judge (“SCJ”) in relation to liability of the insurer, which was that the insurer was not liable by reason of the insured having contravened a term of the policy of insurance.

[2] Essentially the SCJ found that the driver of the vehicle at the time of the accident, namely one Lalmiya binti Shukur was not authorised by the insured, Normala Binti Abdullah Malasamy to drive the vehicle. The vehicle in question is a motorcycle No. WBQ 9192. The accident was at Batu 91/2, Jalan Gombak Kuala Lumpur and occurred on 23 June 2011.

[3] In the course of the trial the evidence adduced disclosed that Normala the insured, had purchased the vehicle and allowed an Indian national one Latif to utilise the vehicle. It is unclear when she purchased it and for what length of time Latif utilised the same with her permission. Next Latif apparently onsold the vehicle, without Normala’s knowledge, to one Lalmiya, who is Myanmarese, in or around 2010.

[4] It is pertinent that the insurance policy in the instant case was taken out by Normala on 4 September 2010 until 4 September 2011. It is equally significant that Normala’s name is on the registration card as the legal owner of the vehicle. This was confirmed by the witness from the Jabatan Pengangkutan Jalan (“JPJ”), Puan Hariyati binti Aziz, SP-3.

[5] Essentially the appellant’s complaint is that the insurance company is liable and not absolved by this alleged sale of the vehicle. The reason for so contending, is that the transfer of ownership pursuant to the alleged sale of the vehicle was not registered as required under section 13 of the RTA.

[6] The appellant also relies on section 109 of the RTA which provides:

(1) For the purpose of any prosecution or proceedings under this Act, the registered owner of a motor vehicle shall be deemed to be the owner of that motor vehicle.

(2) Except where otherwise required by this Act, any act or omission by whoever was the driver of a motor vehicle at the material time, shall for the purpose of any prosecution or proceedings under this Act, be deemed to be the act or omission of the registered owner unless he satisfies the court that he took all reasonable steps and precautions to prevent such act or omission:

Provided that this sub-section shall not apply to an act or omission of a person in driving a motor vehicle in contravention of sections 41 to 49.

[7] In essence therefore the appellant’s contention is that as the alleged sale of the vehicle was not registered with the JPJ as required by law, Normala is deemed to be the owner and the insurer accordingly remains liable to compensate the plaintiffs who are the third parties.

[8] As against this, learned counsel for the respondent maintained that there was clear evidence of a sale of the subject vehicle, which resulted in an effective transfer of interest rendering the insurance policy ineffective for having lapsed. Further there could not be an assignment of the policy to a third party because an insurance policy is a contract of personal indemnity and the insurers cannot be compelled to accept liability in respect of a third party who may be unknown to them.

[9] The respondent further contended that Lalmiya was not an authorised driver because Normala did not know that he was driving the vehicle. Neither was he a servant or agent of Normala. The policy of insurance only covers the insured and the authorised rider.

[10] Learned counsel also referred to a plethora of other authorities which we do not propose to deal with in any detail here.

Our Decision

[11] We have given anxious consideration to the competing claims of the parties. Having done so we are of the unanimous view that the appeal ought to be allowed for the following reasons:

(i) The central issue for consideration here is whether the alleged transfer of interest from Normala to Lalmiya had the effect of rendering the policy ineffective or causing it to lapse.

(ii) Section 13 of the RTA sets out the procedure to be adopted upon change of possession upon transfer pursuant to a sale. It requires that the new possessor or new owner register himself within seven days of such change of possession. This was not done in the instant case.

(iii) Section 109(1) deems the registered owner to be the owner of that vehicle for the purpose of any inter alia proceedings under the RTA. The current proceedings fall within the RTA.

(iv) Accordingly Normala is deemed to be the registered owner of the vehicle, not Lalmiya. There is therefore no transfer of interest from Normala to Lalmiya by operation of law.

(v) Therefore Normala remains the insured for the purposes of the accident. As such it would follow that the insurer remains liable to compensate the plaintiffs for any injuries suffered as a consequence of the accident. That is the primary function of this part of the RTA.

(vi) We are fortified in our decision by sections 94 and 95 of the RTA which provide that conditions in a policy of insurance are deemed to be of no effect, again by operation of law, in relation to liability of the insurers to third parties.

(vii) Section 94 provides that any condition in a policy issued providing that no liability shall arise under that policy or that any liability so arising shall cease in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy shall be of no effect in connection with claims under section 91(1)(b).

(viii) Section 91(1)(b) relates to third party claims such as the present.

(ix) It follows from these sections that any term in the policy of insurance avoiding liability for unauthorised drivers is of no effect under section 94 and 91(1)(b).

[12] In The Law of Motor Insurance by Santana Dass the learned author has taken a similar view stating that the insurer of a motor vehicle will be liable even if the vehicle has been sold before the accident and there was a transfer of interest in the vehicle which the insurance purports to cover unless subsequent insurance has been effected or the insurance was cancelled prior to the accident. There is in effect a letter dated 18th January 1985 from MIB which lays down that for all accidents occurring after 30 August 1984 involving a transfer of interest the claims would become the liability of the insurance companies concerned. That would include the present respondent.

[13] For these reasons we are of the unanimous view that the learned Judge erred in relying on a specific term in the policy of insurance to enable the respondent to avoid liability for a third party claim. We therefore allow the appeal with costs.

Signed

Nallini Pathmanathan
Judge
Court of Appeal
Malaysia

Dated: 9 April 2018

COUNSEL

For the Appellants: V.K. Dasaratharaj, Messrs. Abdul Rahim & Co, Advocates and Solicitors, 12A-07 & 12A Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur

For the Respondent: R. Kamalanathan (Vinod Kamalanathan with him), Messrs. Vinod Kamalanathan & Associates, Advocates and Solicitors, Suite 501, 5th Floor, Loke Yew Building, 4 Jalan Mahkamah Persekutuan, 50500 Kuala Lumpur

Legislation referred to:

Road Transport Act 1987, Sections 13, 41, 42, 43, 44, 45, 46, 47, 48, 49, 91(1)(b), 94, 95, 96(3), 109, 109(1)

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