AP Muktamad 5 - 8 - 2022 - Insurance Appeals

IN THE FEDERAL COURT OF MALAYSIA
(APPELLATE CIVIL JURISDICTION)

CIVIL APPEAL NO: 02(F)-75-10/2019(W)
BETWEEN
AMGENERAL INSURANCE BERHAD … APPELLANT
AND
SA’ AMRAN A/L ATAN & 2 ORS … RESPONDENTS
HEARD TOGETHER WITH

BETWEEN
PACIFIC & ORIENT INSURANCE CO

BERHAD & ANOR … APPELLANTS
AND
MOHAMAD RAFIQ MUIZ

BIN AHMAD HANIPAH … RESPONDENT
1
HEARD TOGETHER WITH
CIVIL APPEAL NO: 02(F)-97-12-2019(W)
BETWEEN
JESUDAS A/L PALANISAMY … APPELLANT
AND
PACIFIC & ORIENT INSURANCE

CO BERHAD … RESPONDENT
HEARD TOGETHER WITH

BETWEEN
MOHAMAD ZULKARNAIN
BIN MUSTAFA … APPELLANT
AND
ALLIANZ GENERAL INSURANCE

COMPANY (M) BHD & 2 ORS … RESPONDENTS
2
HEARD TOGETHER WITH
CIVIL APPEAL NO: 02(F)-08-01/2020(B)
BETWEEN
MALAYSIAN MOTOR INSURANCE

POOL … APPELLANT
AND
AQMAL BIN DAKHIRUDDIN … RESPONDENT
HEARD TOGETHER WITH

CIVIL APPEAL NO: 02(F)-30-07/2020(K)
BETWEEN

CO. BERHAD … APPELLANT
AND
ARNANDAN A/L SORIA DEMADU … RESPONDENT
3
HEARD TOGETHER WITH
BETWEEN

AND
YEAP TICK IN … RESPONDENT
HEARD TOGETHER WITH

BETWEEN

AND
SHAHRUL IMAN BIN ABDULLAH &

2 ORS … RESPONDENTS
4
CORAM
ABDUL RAHMAN SEBLI, FCJ
HASNAH MOHAMMED HASHIM, FCJ
RHODZARIAH BUJANG, FCJ
GROUNDS OF JUDGMENT
[1] There were eight appeals heard together before us, namely:
1. Appeal No. 02(F)-75-10/2019(W) between Amgeneral

Insurance Berhad v. Sa’ Amran a/l Atan & 2 Ors;
2. Appeal No. 02(F)-90-11/2019(W) between Pacific & Orient

Insurance Co Berhad v. Mohamad Rafiq Muiz bin Ahmad
Hanipah;
3. Appeal No. 02(F)-97-12-2019(W) between Jesudas a/l

Palanisamy v. Pacific & Orient Insurance Co Berhad;
4. Appeal No. 02(F)-05-01/2020(W) between Mohamad

Zulkarnain bin Mustafa v. Allianz General Insurance
Company (M) Bhd & 2 Ors;
5. Appeal No. 02(F)-08-01/2020(B) between Malaysian Motor

Insurance Pool v. Aqmal Dakhiruddin;
6. Appeal No. 02(F)-41-08/2020(W); between Pacific & Orient

Insurance Co Berhad v. Yeap Tick In.
5
7. Appeal No. 02(F)-30-07/2020(K) between Pacific & Orient
Insurance Co Berhad v. Arnandan a/l Soria Demadu; and
8. Appeal No. 02(F)-28-04/2021(W) between Pacific & Orient

Insurance Co Berhad v. Navin Naicker & Anor.
[2] Of the eight appeals, five involve Pacific & Orient Insurance
Co Berhad, four as appellants and one as respondent and all five
represented by the same counsel. The other three appeals involve
Amgeneral Insurance Berhad, Allianz General Insurance Company
(M) Bhd and Malaysian Motor Insurance Pool, each represented
by different sets of counsel. Some of the appeals involve common
issues of law but we shall deal with them separately as the facts
and arguments are not exactly the same.
APPEAL NO. 1
AMGENERAL INSURANCE BERHAD V. SA’ AMRAN A/L ATAN
& 2 ORS
[3] We shall begin with Appeal No. 1. The 2nd and 3rd
respondents were not represented in this appeal and did not file
any written submissions. There is only one leave question posed
for our determination and the question is as follows:
“Whether the registration imposes liability on the insurer notwithstanding the

insured ceased to have insurable interest in the motor vehicle, at the time of
the accident?”
6
[4] Implicit in the question is the proposition that the insurer’s
liability under the third party risks insurance policy lapses if the
motor vehicle is sold to a third party by the insured without the
insurer’s knowledge notwithstanding the fact that the insured is still
the registered owner of the motor vehicle and notwithstanding the
fact that the policy in respect of the motor vehicle has not expired
at the time of the accident. The following submissions by learned
counsel captures the pith and substance of the appellant’s
argument:
“There is a stark difference between the legal concept of “transfer of interest”

and “transfer of ownership” in the law of insurance. The meaning of “transfer
of interest” or in colloquial terms “sambung bayar” basically means the
insured has sold the motor vehicle to a third party without the knowledge of
the insurer the consequence of which is that the insured ceased to have any
insurable interest, possession, care, custody and control of the motor vehicle.
The issue of transfer of ownership on the other hand means removing the
name of the previous owner from the register and substituting it with the name
of the new owner.”
[5] The contention was that the 2nd respondent’s (the insured)
act of selling the motor vehicle (“the car”) to a third party rendered
the third party risks insurance policy issued in her name null and
void and unenforceable against the appellant. It was submitted that
by selling the car to the third party without the appellant’s
knowledge, the 2nd respondent had divested herself of her
“insurable interest” in the car, thereby absolving the appellant of all
liability to indemnify her for any claim of loss and damage suffered
by the 1st respondent (the accident victim and third party claimant)
arising from the road accident involving the car, effectively
7
meaning that the 1st respondent had no cause of action against the
appellant as the insurer of the car.
[6] It is an argument that leans heavily in favour of protecting the

insurer’s interest and ignoring the plight of the 1st respondent who
suffered loss and damage as a result of the accident through no
fault of his. This begs the question what Parliament’s intention was
in enacting the law on third party risks insurance policy if, in a
situation such as the one obtaining in the present appeal, the
insurance policy is rendered void, thus depriving the innocent third
party accident victim of the benefit of the statutory third party risks
insurance policy, which is meant to protect him against risks
arising out of the use of motor vehicles.
[7] Considerable importance was placed by learned counsel for

the appellant on the issue of insurable interest and the doctrine of
uberrimae fidei or the duty of “utmost good faith”. The term
“insurable interest” is not found in the Road Transport Act, 1987
(“the RTA”) and learned counsel relied on two textbook authorities
as his reference material, the first of which is Halsbury’s Laws of
Malaysia, Volume 4, Malayan Law Journal SB2000 which the High
Court in Lonpac Insurance Berhad v Mohamad Hakim bin Zulkifli &
Ors [2017] MLJU 1835 referred to, where the learned authors said
at page 37:
“With regards to an insurable interest in property, the general principle for

Malaysia would be that an insurable interest should exist at the time the event
causing the loss occurs. Thus, an owner of a car who has sold it, would not be
8
able to recover from a motor policy which has not expired if the car is
damaged in the hands of new owner.”
[8] The second authority is The Law of Motor Insurance (2nd

Edition, Thomson Reuters 2015) by Robert Merkin and Maggie
Hemsworth where the following passages at pages 62-63 were
reproduced by learned counsel in his written submissions:
“Insurable interest rests upon two pillars. The first, which requires insurable
interest at the date that a policy is taken out…is based on the need to stamp
out wagering disguised as insurance…
The same cannot be said of the second pillar, the principle of indemnity under
which the assured can recover only what has been lost. If the assured has no
insurable interest at the date of loss, then there can be no claim against the
insurers. Insurable interest is, however, concerned with the existence of an
interest and not its value…
It is undoubtedly the case that the assured, by selling the insured subject
matter of the policy and handing the subject matter to the purchaser deprives
himself of any insurable interest in the subject matter…If the seller no longer
has any interest in the vehicle, it follows that the seller cannot give any
permission to the purchaser to use the vehicle: there is no right possessed by
the seller in respect of which permission can be given. Accordingly, any use of
the vehicle by the purchaser cannot be covered by the seller’s insurance, and
the purchaser will be insured if at all under his own policy. This was held to be
the case in Peters v General Fire and Life Assurance Corp Ltd. (1938) 60 Ll,
L.R. 312 and Smith v Ralph [1963] 2 Lloyd’s Rep. 439.”
[9] As for the doctrine of uberrimae fidei, eight authorities were

cited in support and they were the following: Asia Insurance Co Ltd
v Tat Hong Plant Leasing Pte Ltd [1992] 1 CLJ 330; United
9
Malayan Insurance Co Ltd v Lee Yoon Heng [1964] MLJ 453;
Peters v General Accident & Life Assurance Corpn Ltd [1937] 4
AER 628; Etiqa General Takaful Bhd v Habibah Bt Hashim & 3
Ors, KLHC OS No. WA-24NCC-388-08/2018 dated 25.1.2019
(unreported); Pacific & Orient Insurance Co Bhd v Hameed
Jagubar Syed Ahmad [2018] 6 MLRA 85 FC; Goh Chooi Leong v
Public Life Assurance Co Ltd [1964] 30 MLJ 5; Carter v Boehm
[1766] 97 ER 1162 and Tan Jin Jeong v Allianz Life Insurance
Malaysia [2012] 7 MLJ 179.
[10] We were also referred to section 96(5) of the Road Transport

Act, 1987 (“the RTA”) which is a codification of the requirement to
make full and frank disclosure on the part of the insured. The
section reads:
“(5) In this section, the expression “material” means of such a nature as to

influence the judgment of a prudent insurer in determining whether he will
take the risks, and if so at what premium and on what conditions, and the
expression “liability covered by the terms of the policy” means a liability but for
the fact that the insurer is entitled to avoid or cancel or has avoided or
cancelled the policy.”
[11] We must say at the outset and with due respect to learned
counsel that his reliance on the authorities and on section 96(5) of
the RTA is misconceived as the doctrine of uberrimae fidei has no
application to the factual matrix of the present case. This is not a
case where the insured (2nd respondent) failed to make full and
frank disclosure at the time of entering into the policy agreement
with the appellant. Nor is this a case where, during the subsistence
of the policy agreement, the insured (2nd respondent) committed
10
fraud or dishonesty in submitting a claim for indemnity under the
insurance policy.
[12] In any case, the doctrine of uberrimae fidei is a common law

doctrine that is only applicable between the insured and the insurer
and does not affect the rights of third parties under the provisions
of sections 94 and 95 of the RTA, which protect third parties
against risks arising out of the use of motor vehicles.
[13] The present appeal is simply a case of a claim by an

innocent third party accident victim (1st respondent) against the
driver (3rd respondent) and the insured (2nd respondent) for the
loss and damage that he suffered as a result of the road accident
involving the car. We have not been shown which clause of the
third party risks insurance policy was the 2nd respondent in breach
of that rendered the policy null and void. The policy does not even
contain a clause that requires the 2nd respondent to notify the
appellant of the sale of the car, not that the existence of such
clause will absolve the appellant of liability in the event of an
accident involving the car.
[14] The background facts are these. On 6.9.2014, the 1st

respondent Sa’ Amran a/l Atan was involved in a road accident
with the car, which has registration No. JFS 3133 driven by the 3rd
respondent Nakiuddin bin Ahmad. Pursuant to a search made by
the 1st respondent at the Road Transport Department, the
registered owner of the car was found to be the 2nd respondent
Fazlina binti Mihad and the appellant as the insurer. The insurance
11
policy was valid for the period from 8.11.13 to 7.11.2014, which
therefore covered the date of the accident on 6.9.2014.
[15] Having obtained the information, the 1st respondent filed an

accident suit in the Sessions Court at Kuantan seeking for
damages in respect of the accident by naming the 2nd and 3rd
respondents as defendants. In the suit, the Kuantan Sessions
Court found both the 2nd and 3rd respondents 100% liable for the
accident.
[16] While the Kuantan Sessions Court suit was ongoing, the
appellant filed an originating summons in the High Court at Kuala
Lumpur seeking for a declaration that the insurance policy was null
and void pursuant to section 96(3) of the RTA, which provides as
follows:
“(3) No sum shall be payable by an insurer under subsection (1) if before the
date the liability was incurred, the insurer had obtained a declaration from a
court that the insurance was void or unenforceable:
Provided that an insurer who has obtained such a declaration as aforesaid in

an action shall not become entitled to the benefit of this subsection as
respects any judgment obtained in proceedings commenced before the
commencement of that action unless, before or within seven days after the
commencement of that action, he has given notice to the person who is the
plaintiff in the said proceedings specifying the grounds on which he proposes
to rely, and any person to whom notice of such an action is so given shall be
entitled if he thinks fit to be made a party thereto.”
12
[17] The basis for the application was the following affirmation by
the 2nd respondent (the insured) in her statutory declaration which
she provided to her insurer:
(a) In November 2007, she sold the car to a man by the name
of “Zul” who was a salesman at Tetuan Dijadi Auto. She did
so as part of a trade-in transaction to obtain a Honda Civic
car.
(b) She surrendered the car to Zul and gave him RM7,000.00 to
settle the balance of the car loan for the car with CIMB Bank
and signed a transfer form.
(c) Until now the ownership of the car has not been transferred
to the new owner.
[18] It can thus be seen that the only reason why the appellant
repudiated the insurance policy was because the 2nd respondent
was no longer the owner of the car after selling it to Zul in
November 2007. On 31.7.2017, the Kuala Lumpur High Court
allowed the appellant’s application for the following reasons:
(a) The application by the appellant to nullify the insurance

policy was made before the date the liabilities of the 2nd and
3rd respondents were incurred, i.e. before judgment was
delivered in the accident suit at the Kuantan Sessions Court;
(b) The appellant’s application was not time barred;
13
(c) There was a transfer of interest in the vehicle although there
was no formal transfer of ownership of the car to the new
owner in accordance with the procedure laid down in section
13 of the RTA.
[19] The ratio of the decision is that the insurer ceased to be

bound by the insurance policy once the insured ceased to have
insurable interest in the motor vehicle after selling it to a third
party.
[20] Dissatisfied with the decision, the 1st respondent appealed to

the Court of Appeal and succeeded. His appeal was allowed on
20.2.2018 on the following grounds:
(a) There was insufficient evidence to show that property in the

car had passed to the driver premised solely on the
registered owner’s (2nd respondent) statutory declaration;
(b) The Adjusters’ report conflicted with the genuine

documentary evidence, i.e. the JPJ registration card and the
insurance policy;
(c) The transfer was not done pursuant to section 13 of the

RTA;
(d) The registered owner (2nd respondent) is deemed to be the

owner and remains liable for any proceedings by virtue of
section 109 (1) of the RTA;
14
(e) The conditions in a policy of insurance are deemed to be of
no effect in relation to the liability of the insurer to third
parties pursuant to section 94 and section 95 of the RTA.
[21] It was a rejection by the Court of Appeal of the appellant’s

argument that it was not liable to the 1st respondent on the ground
that the insured (2nd respondent) had no insurable interest in the
car after selling it to Zul in November 2007.
[22] Before us, learned counsel for the appellant advanced the
following arguments in persuading us to answer the leave question
in the negative, i.e. that the registration does not impose liability on
the insurer if the insured ceased to have insurable interest in the
car at the time of the accident:
(1) The Court of Appeal was wrong in allowing itself to be

influenced by its own decisions in Zainuddin Mat Isa &
Anor v Pacific & Oriental Insurance [2017] 1 LNS 1979 and
in Muhamad Haqimie Hasim & Another v Pacific & Oriental
Insurance Co Berhad [2018] 1 LNS 627. It was argued that
the Court of Appeal should not have followed Zainuddin
Mat Isa as the Court of Appeal in that case misdirected
itself in dealing with the issue of transfer of interest and the
issue of transfer of ownership. It was contended that the
issue at the forefront of the present appeal is whether
there was a transfer of interest, pointing out that the
statutory declaration affirmed by the registered owner (2nd
respondent) was unequivocal and the Court of Appeal had
15
no reason to doubt the veracity and authenticity of the
statutory declaration;
(2) The Court of Appeal misdirected itself in holding the view

that the register of title is paramount evidence of
ownership;
(3) The Court of Appeal’s reliance on Muhamad Haqimie was

misconceived as the facts are distinguishable from the
facts of the present appeal. It was argued that in the
present appeal, the 2nd respondent as the insured had not
allowed and could not possibly have allowed the 3rd
respondent (de facto owner) to buy any policy under her
name and to drive the car with her permission, consent,
knowledge and approval. It was contended that the Court
of Appeal in Muhamad Haqimie made the wrong deduction
that since the previous owner remained as the registered
owner, the insurer became liable by virtue of section 109
of the RTA;
(4) Section 109 of the RTA only deals with some form of
offence under the Act and as such the meaning ascribed
to the word “proceedings” in the section must be read
subject to the word “prosecution” as the Act has a penal
and quasi-penal consequences for summons cases. As
such, applying the ejusdem generis principle, the word
“proceedings” must be read together with prosecution or
species of prosecution, viz for summons cases. In other
words, the word “proceedings” in section 109 refers only to
16
criminal or quasi-criminal proceedings and not to
proceedings such as a claim for damages arising from a
road traffic accident. Reliance was placed on the High
Court cases of Zulkiflee bin Mohamad v Mahmudin bin
Arshad [1998] MLJU 180 and The Pacific Insurance Bhd
(Dahulunya dikenali sebagai MCIS Zurich Insurance Bhd)
lwn Ishak bin Md Hanafiah dan lain-lain [2017] MLJU 434;
(5) The statutory declaration of the insured (2nd respondent) is

the best evidence, and the insured and the buyer (de facto
owner) had not come to challenge the originating
summons and the admission in the statutory declaration,
citing Habibah Bt Hashim;
(6) The registration is not an issue document of title. The mere

fact that there is no transfer recorded on the registration
does not mean that the vehicle cannot be sold or
transferred. Once the vehicle is sold, and the registered
owner ceases to have possession of the vehicle, the policy
automatically lapses unless there is novation as the
insurance policy is concerned with transfer of interest in
the motor vehicle and not with de facto transfer appearing
on the record of registration;
(7) Section 13 of the RTA imposes a duty on the registered

owner and the new owner to effect registration. It also
imposes a duty on the registered owner and the new
owner not to use the vehicle until all the relevant
processes are completed [section 13(1)(c)]. The act of not
17
registering the transfer will be a breach of the Hire
Purchase Act 1967 (Section 38). In the present case, there
had been a clear and blatant breach of the law with penal
consequences;
(8) Section 13 of the RTA merely promulgates the procedure

on how a transfer is effected and nowhere in the Act is it
mentioned that it is the duty of the insurer to effect
transfer. In fact, the insurer has no knowledge of the
dealings until it is informed by the registered owner who
intends to sell or has sold the motor vehicle;
(9) It cannot be the intention of Parliament to hold innocent

parties liable for an act of a third party that is not within
their knowledge. It was submitted that the appellant is an
innocent party;
(10) The Road Transport Department registration is not a

conclusive issue document of title and as such the court
should look and deliberate on the statutory declaration
deposed to by the insured: Mohamed Mydin v Ramiah
[1965] 1 MLJ 33; MBF Finance Bhd v Low Ping Ming T/A
Low Peng Enterprise [2005]; Muraly Varataa Raju v Allianz
General Insurance Company [2019] MLRHU 1270. The
court cannot overlook and underestimate the importance
of the statutory declaration as it attracts criminal penalty if
it is made fraudulently;
18
(11) In Malaysia, a vehicle can be sold without the need to
have it registered as the sale and purchase is governed by
the Sale of Goods Act 1957 - that a sale of a motor vehicle
is completed once possession is transferred to the new
owner and there is no requirement that the sale is only
completed once the name of the new owner is imprinted
on the registration card, as the registration card is not an
instrument of title: Mohamed Mydin (supra), a Federal
Court decision which was applied in MBF Finance Berhad
v Low Ping Ming T/A Low Peng Enterprise (supra);
(12) Just because one is a registered owner, it does not make

him liable and that in any event the appellant had rebutted
the presumption of ownership based on the statutory
declarations of both parties. Reference was made to
Muraly Varataa Raju v Allianz General Insurance
Company [2019] MLRHU 1270;
(13) The Court of Appeal in Aqmal Dakhairuddin v Azahar

Ahman & Anor [2019] 5 MLRA 510 was wrong in adopting
the Zainuddin Mat Isa and Muhamad Haqimie approach;
(14) The Court of Appeal’s reliance on this court’s decision in

Nanyang Insurance v Salbiah & Anor [1967] 1 MLJ 94 was
misconceived as the facts are distinguishable in that the
insured in that case only intended to lend the car until the
full amount was paid up, meaning the insured still retained
care, custody, control and possession of the vehicle, unlike
the present case where the insured had surrendered the
19
care, custody, control and possession of the car in
question to a third party;
(15) The Court of Appeal was wrong in Zainuddin Mat Isa,

Muhammad Haqimie and Aqmal in not discussing this
court’s decision in Roslan bin Abdullah v New Zealand
Insurance Company Ltd [1981] 1 MLRA 445. In that case
the truck was sold and the insurance policy lapsed unless
there was novation of the policy, of which there was none.
Accordingly, it was held that the driver of the truck was not
covered by the insurance policy.
(Note: The case of Roslan bin Abdullah is irrelevant as

there was no insurance policy in force at the material time
as it had lapsed, unlike the present appeal where the
policy was valid and subsisting at the time of the accident);
(16) The law of insurance is concerned with transfer of interest

as opposed to the fact of actual registration. Once the
property that is insured has been transferred or where the
insured has given up possession of the motor vehicle, then
he is deemed to have no interest in the said vehicle the
consequence of which is that the policy will lapse
automatically: Peters v General Accident & Life Assurance
Corpn Ltd [1937] 1 AER 628; Watkins v O’Shaughnessy
[1939] 1 AER 385; Bibendum Sdn Bhd v Amanah Scott
Properties (KL) Sdn Bhd [2011] AMCR 792:
20
“With regards to an insurable interest in property, the general
principle for Malaysia would be that an insurable interest should
exist at the time of the event causing loss occurs. Thus, an
owner of a car who has sold it, would not be able to recover
from the policy which has not expired if the car is damaged in
the hands of the new owner.”
(Note: Bidendum is irrelevant as it involved a claim by the

registered owner of the car himself, unlike the claimant (1st
respondent) in the present appeal who is a third party
accident victim and not the registered owner and insured
of the motorcar)
(17) Since the 2nd respondent had sold the car before the date
of the accident, there was no insurable interest at the time
of the accident, and the issued policy was void and
unenforceable.
[23] The last ground above sums up neatly the appellant’s

argument that it should not be held liable for the loss and damage
suffered by the 1st respondent even though the 2nd respondent (the
insured) was the registered owner of the car at the time of the
accident on 6.9.2014 and even though the third party risks
insurance policy issued in her name had not expired at the time of
the accident, which the appellant of course contended otherwise
on the ground of lack of insurable interest.
[24] The 1st respondent’s reply to the appellant’s submissions

was that the Court of Appeal was correct in finding that the
appellant failed to prove lawful transfer of ownership of the car and
21
she therefore remains the registered owner. Reliance was placed
on the following authorities:
(1) Pengarah Jabatan Pengangkutan Jalan Negeri Selangor &

Ors v Sin Yoong Min [2015] 1 MLJ 1 where this court in
dealing with section 13 of the RTA observed as follows:
“Under s. 13(1) of the Act the existing registered owner, on any change
of possession of a motor, is required to forward to the director a
statement in the prescribed form within seven days after such change
of possession. The new owner is also required to forward to the
director a statement in the prescribed form together with the
registration certification and the prescribed fee within seven days. After
they complied with the requirements the new owner is entitled to be
registered as the new owner of the motor vehicle.”
(2) The Court of Appeal case of Zainuddin Mat Isa (supra),

which decided that the name that appears in the registration
is evidence to show ownership. This is what the court said in
that case:
“[17] The critical evidence pertaining to title and ownership which is the
JPJ registration card and the insurance policy are directly at odds or
contrary to the two SDs provided in support of the 1st Respondent’s
case. Weighing up the evidence, it is not possible to conclude, on a
balance of probabilities, that the ownership of the vehicle had passed
from R3 to R2’s brother and then R2. There is simply insufficient
evidence to support that conclusion. If at all, weight ought to be
accorded to the official documents which support the appellant’s case.”
22
(3) Muhamad Haqimie (supra), where the Court of Appeal
through the judgment of Tengku Maimun Tuan Mat JCA (as
the Right Honourable the Chief Justice then was) explained
the effect of a transfer of interest in the vehicle:
“[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 present case.”
(4) The Indian Supreme Court case of Pushpa @ Leela & Ors v
Shakuntala & Ors [2011] 2 S C 240, which held as follows:
“11. It is undeniable that notwithstanding the sale of the vehicle neither

the transferor Jitender Gupta nor the transferee Salig Ram took any
step for the change of the name of the owner in the certificate of
registration of the vehicle. In view of this omission Jitender Gupta must
be deemed to continue as the owner of the vehicle for the purposes of
the Act, even though under the civil law he ceased to be its owner after
its sale on February 2, 1993.”
(5) Section 109(1) of the RTA deems the appellant to be the

owner of the car. The subsection reads:
23
“(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.”
(6) Since the insured (2nd respondent) in her statutory declaration

admitted that the car was still under hire purchase with CIMB
Bank, any right, title and interest under the hire purchase
agreement could only be done with the consent of CIMB
Bank. Section 12(1) of the Hire Purchase Act 1967 is relevant
and provides as follows:
“(1) The right, title and interest of a hirer under a hire purchase
agreement may be assigned with the consent of the owner, or if his
consent is unreasonably withheld, without his consent.”
(7) The Court of Appeal in Affin-ACF Finance Bhd v Phang Ngan

Heong [2010] 7 CLJ 592 had decided as follows in dealing
with the issue of hire purchase:
“As such, the key issue to be determined by the court is whether the
defendant could have and did pass a good and valid title to the plaintiff
following the sale of the vehicle. The defendant has argued that it did
pass a good title at that time as the vehicle was successfully registered
in the name of the hirer by the Road Transport Department. With
regret, the court does not find that the registration of the vehicle in the
name of the hirer amounts to a passing on a good and valid title. To
discharge that responsibility, the plaintiff should have continued to have
a good and valid title so that at the end of the hire purchase period,
when the hirer has completed paying all the installments under the hire
purchase agreement, the plaintiff would be able, in turn, to pass a good
and valid title to the hirer. The seizure of the vehicle by the Police and
24
its subsequent return to the rightful owner meant that the plaintiff no
longer had physical possession of the vehicle and would be in no
position to pass on any title to the hirer.”
(8) The principle governing a vehicle under hire purchase had

also been set out by this court in Ong Siew Hwa v UMW
Toyota Motor Sdn Bhd [2018] 5 MLJ 281, as follows:
“Under this hire purchase agreement, the plaintiff is ‘the hirer’ of the car
and the second defendant is ‘the owner’. Under the law what was
obtained by the plaintiff under P5 was possession, not ownership of the
car which remained with the second defendant…
Applying Ahmad Ismail to the facts of this case, whatever contractual

relationship between the plaintiff and the first defendant was
superseded by the hire purchase agreement (exh.P5). The first
defendant completely faded out of the picture, and the only contract
that remained was the hire purchase agreement (exh.P5) entered into
between the plaintiff and the second defendant.”
[25] Having considered the rival arguments and the authorities

carefully, we are inclined to agree with the 1st respondent that the
Court of Appeal was right in finding that the appellant failed to
prove transfer of ownership of the car. First of all, transfer of
interest is not transfer of ownership. A valid transfer of ownership
can only be effected by following strictly the procedure laid down
by section 13(1) of the RTA and not merely by selling the car to a
third party. Section 13(1) stipulates as follows:
“13(1) On any change of possession of a motor vehicle upon a voluntary

transfer made by the registered owner –
25
(a) the registered owner shall within seven days after such change of
possession, forward to the Director of a registration area a
statement in the prescribed form, and shall deliver to the new
possessor or the new owner the registration certificate relating to
the motor vehicle and, unless he is surrendering the licence under
section 19, the licence;
(b) the new possessor or new owner shall, within seven days after such
change of possession, forward to such Director a statement in the
prescribed form together with the registration certificate and the
prescribed fee; and
(c) the motor vehicle shall not be used for more than seven days after
such change of possession unless the new possessor or the new
owner is registered as the owner thereof and, if the licence has
been surrendered by the registered owner, it shall not be used until
the new owner or new possessor has taken out a new licence:
Provided that this subsection shall not apply in any case where the
change of possession is consequent on a contract of hiring and the
period of hiring does not exceed one month.”
[26] The procedure is mandatory and is meant to ensure that

there is a proper transfer of the motor vehicle from the registered
owner to the purchaser. This in turn will ensure that if the new
owner is involved in an accident with other road users, the victim
will be able to identify who the registered owner of the motor
vehicle is for the purpose of maintaining an action against the
tortfeasor.
[27] In Naveen Kumar v Vijay Kumar & Ors [Civil Appeal No.
1427 of 2018], the Supreme Court of India held that a claimant for
26
compensation ought not to be burdened with following a trail of
successive transfers which are not registered with the registering
authority as to hold otherwise would be to defeat the statutory
object and purpose of the relevant Indian Road Transport Act.
Section 2 of the RTA defines “owner” as follows:
“(a) in relation to a motor vehicle registered or deemed to be registered

under this Act, means the registered owner of such vehicle; and
(b) in relation to any other motor vehicle, means the person in possession
of or using or having the use of the motor vehicle;”
[28] In the present case, it is undisputed that there was non-

compliance with the requirements of section 13(1) when the car
was sold by the 2nd respondent to Zul in November 2007. The 2nd
respondent therefore remained the registered owner of the car at
the time of the accident and even to this day.
[29] Being the registered owner of the car at the time of the
accident, the 2nd respondent was deemed by section 109(2) of the
RTA to be liable for the act or omission of the 3rd respondent
(driver of the car) in causing the accident. She could only absolve
herself of liability if she could satisfy the court that she had taken
all reasonable steps and precautions to prevent such act or
omission by the driver. There is no such evidence before the court.
Therefore, the third party risks insurance policy, which was issued
to indemnify her in the event of an accident involving the car, was
in full force at the time of the accident.
27
[30] It cannot be the intention behind the proviso to section
109(2) that the exemption from liability of the registered owner
extends to tortious acts of the driver, such as negligent driving
causing loss and damage to other road users. The fact that the
proviso only refers to sections 41 to 49, which are penal in nature,
dispels any notion that the exemption from liability extends to the
civil liability of the registered owner.
[31] Clearly the proviso is only intended to shield the registered

owner from prosecution for the driver’s contravention of sections
41 to 49, and not for the driver's tortious acts such as negligent
driving. The registered owner is still liable for the negligent act or
omission of the driver. Section 109(2) of the RTA is reproduced in
full below:
“Liability of registered owner and others

(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 subsection shall not apply to an act or omission of a person
in driving a motor vehicle in contravention of sections 41 to 49.
(3) In the event of any act or omission by whoever was the driver of a motor
vehicle at the material time, which would have been an offence against this
28
Act if committed by the registered owner, such driver will also be guilty of that
offence.”
[32] As can be seen, two things are deemed by section 109,

namely: (1) the registered owner is the owner of the motor vehicle;
(2) subject to the qualification mentioned in subsection (2), the act
or omission of the driver of the motor vehicle is the act or omission
of the registered owner of the motor vehicle for the purpose of any
prosecution or proceedings under the Act.
[33] It is interesting to note in passing that when the RTA

repealed the Road Traffic Ordinance 1958 (“the RTO”), it retained
the deeming provisions of section 138(1) of the RTO through
section 109(1). There are however material differences in the
wordings of subsections (2) of the two provisions. While section
109(2) of the RTA speaks of “the driver of a motor vehicle”, section
138(2) of the RTO speaks of “the servant, agent or partner of the
registered owner”.
[34] Thus, while under section 109(2) of the RTA it is the act or
omission of the driver that is deemed to be the act or omission of
the registered owner for the purpose of prosecution or proceedings
under the Act, under section 138(2) of the repealed RTO, it is the
act or omission of the servant, agent or partner of the registered
owner that is deemed to be the act or omission of the registered
owner. This is reflective of Parliament’s intention through section
109(2) of the RTA to widen the scope of the deeming provision by
not confining it to the servant, agent or partner of the registered
29
owner for the purpose of prosecution or proceedings under the
Act.
[35] Therefore, the law as it presently stands is that the act or

omission of the man behind the wheels or behind the handle bars
as the case may be is to be taken as the act or omission of the
registered owner for the purpose of prosecution or proceedings
under the Act. It needs to be mentioned that the repealed RTO
provides for subsection (4) whereas section 109 of the RTA ends
with subsection (3). We reproduce below section 138 of the RTO
for purposes of comparison:
“138. (1) For the purpose of any prosecution or proceedings under this
Ordinance 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 Ordinance any act or omission
by the servant, agent or partner of the registered owner shall for the purpose
of any prosecution or proceeding under this Ordinance be deemed to be the
act or omission of the registered owner unless he shall satisfy 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 35 to 42
inclusive of this Ordinance.
(3) In the event of any act or omission by a servant, agent or partner of the
registered owner which would have been an offence under this Ordinance if
committed by the registered owner, that servant, agent or partner shall also
be guilty of that offence.
30
(4) Where the registered owner is a body corporate, any person who at the
time of the commission of such offence was a director, general manager,
secretary or other similar officer of the body corporate, or who was purporting
to act in any such capacity, shall be deemed to be guilty of that offence unless
he proves that the offence was committed without his consent or connivance,
and that he exercised such diligence to prevent the commission of the offence
as he ought to have exercised having regard to the nature of his functions in
that capacity and to all the circumstances.”
[36] The effect of a deeming provision has been explained by the

learned authors of N.S. Bindra’s Interpretation of Statutes (12th
Edition) in the following terms:
“Deeming provision
The word ‘deemed’ is used a great deal in modern legislation. Sometimes, it is
used to impose for the purpose of a statute an artificial construction of a word
or phrase that would not otherwise prevail. Sometimes, it is used to put
beyond doubt particular construction that might otherwise be uncertain or to
give a comprehensive description that includes what is obvious, what is
uncertain and what is, in the ordinary sense, impossible. However, the mere
use of the word ‘deemed’ is not in itself sufficient to set up a legal fiction.
Legal fiction is treating something not done as done and this requires
legislative authority. Courts cannot set up legal fictions without such authority.
Where the legislature says that ‘something should be deemed to have been
done’ which in truth has not been done, it creates a legal fiction and in that
case, the court is entitled and bound to ascertain for what purposes and
between what persons the statutory fiction is to be resorted to and full effect
must be given to the statutory fiction and it should be carried to its logical
conclusion.
In the words of Lord Asquith:
31
“If you are bidden to treat an imaginary state of affairs as real, you must
surely, unless prohibited from doing so, also imagine as real the
consequences and incidents which, if the putative state of affairs had in
fact existed, must inevitably have flowed from or accompanied it. The
statute says that you must imagine a certain state of affairs, it does not
say that having done so; you must cause or permit your imagination
to boggle when it comes to the inevitable corollaries of that state of
affairs.”
(emphasis added)
[37] In The Construction of Statutes (3rd Edition) the learned

authors hold the following views at page 131:
“There is only one rule in modern interpretation, namely courts are obliged
to determine the meaning of legislation in its total context, having regard to
the purpose of the legislation, the consequences of proposed
interpretation, the presumptions and special rules of interpretation, as well
as admissible external aids. In other words, the courts must consider and
take into account all relevant and admissible indicators of legislative
meaning. After taking these into account, the court must then adopt an
interpretation that is appropriate. An appropriate interpretation is one that
can be justified in terms of (a) its plausibility, that is, its compliance with the
legislative text; (b) its efficacy, that is, its compliance with the legislative
text; and (c) its acceptability, that is, the outcome is reasonable and just.”
[38] We accept the 1st respondent’s argument that read as a

whole and in the right context, the language of section 109(1), (2)
and (3) leaves no room for doubt that it applies to civil and criminal
proceedings alike and not only to criminal or quasi criminal
prosecutions under the Act as contended by learned counsel for
the appellant. In Black’s Law Dictionary (Ninth Edition) the word
“proceeding” is defined in items 1 and 2 as follows:
32
“1. The regular and orderly progression of a lawsuit, including all acts and
events between the time of commencement and the entry of judgment. 2. Any
procedural means for seeking redress from a tribunal or agency.”
[39] The word “prosecution” on the other hand is given the

following meaning:
“2. A criminal proceeding in which an accused is tried.”
[40] A claim for damages by a third party claimant arising from a

road accident involving a motor vehicle covered by a third party
risks insurance policy issued pursuant to section 90 of the RTA is
a ‘lawsuit’ and not a prosecution under the Act. It is therefore a
“proceedings” within the meaning of section 109(2) of the RTA.
[41] There was no necessity for Parliament to use the word

“proceedings” in section 109(2) if the intention was to restrict its
application to criminal prosecutions under the Act and to exclude
all forms of civil proceedings. Clearly, proceedings under section
96(3) is civil in nature, and so are proceedings contemplated by
sections 96(1), 19(2), 22(7), 68(1), 77(8), 82(7), 84(5), 85(4) and
87. All these are “proceedings” under the Act. There is therefore
no basis to interpret the word “proceedings” in section 109(2) to be
synonymous with the word “prosecution” in same section based on
the ejusdem generis rule as contended by learned counsel for the
appellant.
33
[42] Learned counsel’s submission on section 109 in so far as it
relates to the appellant’s liability under the insurance policy was
two-fold, namely:
(1) the appellant had rebutted the deeming provision of subsection

109(1) through the statutory declaration affirmed by the insured
(2nd respondent);
(2) the provision only applies to criminal or quasi criminal

proceedings and not to civil proceedings.
[43] We have just dealt with ground (2) and we shall not repeat it.
With regard to ground (1), we are unable to accede to learned
counsel’s argument that the presumption under subsection 109(1)
of the RTA had been rebutted by the appellant through the 2nd
respondent's statutory declaration. Firstly, the presumption can
only be rebutted by proof that the 2nd respondent was not the
registered owner of the car at the time of the accident. There is no
such proof. Secondly, the 2nd respondent’s statutory declaration
merely proved that she had sold the car to a third party. It is not
proof that legal ownership of the car had passed to the third party.
As we said, a lawful transfer of ownership can only be established
by proof of registration under section 13(1).
[44] As for the issue of insurable interest which forms the basis of
learned counsel’s argument that the insurance policy had been
nullified by the sale of the car to the third party, we need only
reiterate what we have just said a short while ago that liability for
34
the negligent act of the 3rd respondent (the driver) is imputed to the
registered owner of the car by section 109(2) of the RTA.
[45] In any case, the fact that the 2nd respondent’s interest in the
car had passed to a third party does not change anything as far as
the appellant’s liability under the statutory third party risks
insurance policy is concerned as the whole purpose of the policy is
to indemnify the 2nd respondent (the insured) as “owner” in the
event of a road accident involving the car and third parties.
[46] The court in dealing with a claim for damages by a third party
accident victim must not close its eyes to the fact that the insurer
has received payment for issuing the third party risks insurance
policy to the insured. Having received such payment, the insurer
cannot look the other way and resile from its promise to indemnify
the insured when indemnity became due by raising the technical
ground that the insured had no insurable interest in the motor
vehicle at the time of the accident, unless the insurance policy had
expired or had been lawfully terminated.
[47] The doctrine of “mutual benefit and burden” demands that a

person cannot take the benefit of a deed without subscribing to the
obligations under it: See Halsall v Brizell [1957] Ch. 169. The truth
is, the real beneficiary of the statutory third party risks insurance
policy is the third party accident victim and not the insured. The
insured of course benefits by being indemnified by the insurer for
any judgment sum obtained against him by the third party accident
victim.
35
[48] There is authority to say that the insured is not required to
have insurable interest in the motor vehicle before he is covered
by a third party risks insurance policy, and this renders the whole
substratum of the appellant’s argument unsustainable in law: See
Boss and Another v Kingston [1963] 1 All ER 177 where Lord
Parker CJ expressed his views as follows:
“The conclusion of the justices was based on the fact that, once the Triumph
motorcycle was sold, the appellant Boss had no insurable interest in it. That
being so, they were of opinion, following the reasoning in Rogerson v Scottish
Automobile and General Insurance Co., Ltd. (1) and Tattersall v Drysdale that
the whole policy lapsed, including the further cover provided in respect of
other cycles not owned by or under hire to the assured. It is to observed,
however, that, in the present case, unlike the cases referred to, the
policy is in respect of third party risk only and, accordingly, that there is
no necessity for the assured to have insurable interest in the vehicle. He
could in law at any rate, and possibly in practice, be able to get cover against
damage caused by his driving of any vehicle whether or not he had any
insurable interest in them. Accordingly, as it seems to me, these cases are
not, at any rate directly, relevant and the justices’ reasoning was wrong.”
(emphasis added)
[49] Similarly, the insurance policy that we are concerned with in

the present appeal is in respect of third party risks only. We find
nothing in the RTA that can be construed to mean that a third party
risks insurance policy lapses upon sale of the motor vehicle to a
third party if otherwise the policy is valid and subsisting, i.e. has
not expired at the time of the sale. It needs to be borne in mind
that insurance coverage for third party risks is compulsory under
the RTA and failure by any person to comply with the requirement
constitutes an offence punishable with fine or with imprisonment or
36
with both, in addition to an order of disqualification from holding or
obtaining a driving licence for a specified period. This is made
clear by section 90(1) and (2) which read:
“90. (1) Subject to this Part, it shall not be lawful for any person to use or to
cause or permit any other person to use, a motor vehicle unless there is in
force in relation to the user of the motor vehicle by that person or that other
person, as the case may be, such a policy of insurance or such a security in
respect of third party risks as complies with the requirements of this Part.
(2) If a person acts in contravention of this section he shall be guilty of an

offence and shall on conviction be liable to a fine not exceeding one thousand
ringgit or to imprisonment for a term not exceeding three months or to both
and a person convicted of an offence under this section shall, unless the court
for special reasons to be specified in the order thinks fit to order otherwise
and without prejudice to the power of the court to order a longer period of
disqualification, be disqualified from holding or obtaining a driving licence
under Part II for a period of twelve months from the date of the conviction.”
[50] The provision is in keeping with the second of five objects of

the RTA as expressed in the preamble to the Act, which is:
“to make provision for the protection of third parties against risk arising out of
the use of motor vehicles;”
[51] Where it concerns the liability of insurers, section 91(3) of the

RTA which takes colour from the preamble is relevant and
provides as follows:
“(3) Notwithstanding anything in any written law, a person issuing a policy

of insurance under this section shall be liable to indemnify the person or class
37
of persons specified in the policy in respect of any liability which the policy
purports to cover in the case of that person or class of persons.”
[52] In the context of the present case, the person whom the
appellant “shall be liable to indemnify” under section 91(3) is the
2nd respondent as the insured and registered owner of the car. It is
a mandatory requirement of the law which parties to the insurance
policy cannot contract out of. This is reflected in section 94 which
provides as follows:
“94. Certain conditions in policies or securities to be of no effect.
Any condition in a policy or security issued or given for the purposes of

this Part providing that no liability shall arise under the policy or security 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 or security shall be of no effect in connection with
such claims as are mentioned in paragraph 91(1)(b):
Provided that nothing in this section shall be taken to render void any
provision in a policy or security requiring the person insured or secured to
repay to the insurer or the giver of the security any sums which the latter may
have become liable to pay under the policy or security and which have been
applied to the satisfaction of the claims of third parties.”
[53] Section 95 further lists out factors that the insurer cannot use
as excuses to avoid liability to pay. The section reads:
“95. Where a certificate of insurance has been delivered under subsection

91(4) to the person by whom a policy has been effected, so much of the policy
as purports to restrict the insurance of the persons insured by reference to
any of the following matters:
38
(a) the age or physical or mental condition of persons driving the motor
vehicle;
(b) the condition of the motor vehicle;
(c) the number of persons that the motor vehicle carries;
(d) the weight or physical characteristics of the goods that the motor
vehicle carries;
(e) the times at which or the areas within which the motor vehicle is
used;
(f) the horsepower or value of the motor vehicle;
(g) the carriage on the motor vehicle of any particular apparatus;
(h) the carriage on the motor vehicle of any particular means of
identification other than any means of identification required to be
carried under Part II;
(i) the driver of the motor vehicle at the time of the accident being
under the influence of intoxicating liquor or of a drug;
(j) the driver of the motor vehicle at the time of the accident not holding
a licence to drive or not holding a licence to drive the particular
motor vehicle;
(k) the motor vehicle being used for a purpose other than the purpose
stated in the policy,
shall, as respects such liabilities as are required to be recovered by a policy

under paragraph 91(1)(b), to be of no effect:
Provided that nothing in this section shall require an insurer to pay any
sum in respect of the liability of any person otherwise than in or towards the
discharge of that liability, and any sum paid by an insurer in or towards the
discharge of any liability of any person which is covered by the policy by virtue
only of this section shall be recoverable by the insurer from that person.”
[54] S. Santana Dass in his book “The Law of Motor Insurance”

reads section 95(k) of the RTA to mean:
39
“Under section 95(k), any condition in the policy that excludes the liability of
the insurer, if the vehicle is used for any purposes than for social, domestic,
pleasure purposes e.g. racing, motor sports etc. will be ineffective and cannot
be used by the insurer to exclude liability insofar as bodily injury or death
claims are concerned. This should include use of the motor vehicle for
unlawful purposes or acts as well. In any event, the law is that ‘criminal acts’
of the insured in the use of the motor vehicle are insured under section 91 and
the insurers cannot have the liberty to exclude this statutory requirement to
insure against unlawful or criminal acts or purposes of their insured to escape
their statutory obligation to satisfy the judgments of third parties.”
[55] In Malaysia National Insurance Sdn Bhd v Lim Tiok [1997] 2

CLJ 351, the then Supreme Court endorsed the view that the
underlying purpose of compulsory motor insurance against third
party risks was to ensure that innocent third parties who were
injured in vehicular accidents were given full and effective
protection, regardless of the private insurance arrangement
between the insurer and the insured.
[56] On section 91(3) of the RTA, this court in Malaysian Motor

Insurance Pool v Tirumeniyar Singara Veloo [2019] 10 CLJ 731
made the following pertinent observations at paragraph 47:
“The effect of the above provision is to bypass the requirement of privity of

contract. Before the existence of such a provision, such an arrangement vis-à-
vis an authorized driver would have been unenforceable for want of privity of
contract. (See: Vanderpite v Preferred Accident Insurance Corporation of New
York [1933] A.C. 70, at page 81-82). However, after the introduction of the
above provision, an authorized driver gained the right to claim indemnity
notwithstanding that he has paid no consideration towards the policy. See:
Tattersall v Drysdale [1935] 2 KB 174, at page 182. That is the general rule.”
40
[57] In Digby v General Accident Accident Fire and Life
Assurance Corporation Ltd [1942] 2 All ER 319 this is what Lord
Atkin said:
“It will be noticed that there is no reference to policy holder or insured, but
merely to “such person, persons or classes of persons as may be specified in
the policy” and by sub-s (4) a person issuing a policy of insurance under this
section shall be liable to indemnify the persons or classes of persons
specified in the policy in respect of any liability which the policy purports to
cover in the case of those persons or classes of persons.”
[58] Lord Wright in the same case went further and elaborated:
“It involves three parties, the insurer, the insured and the third party who is
making the claim. The insured is not entitled under this section to an
indemnity against direct loss or damage suffered by himself, but only against
liability to pay compensation to a third party who is claiming against the
insured.”
[59] In Rikhi Ram and Anor v SMT Sukhrania & Ors [Case No:
Appeal (Civil) 1578 of 1994] the Supreme Court of India
interpreted sections 94 and 95 of the Indian Motor Vehicles Act,
1939 which are similar though not identical to sections 90(1) and
91(3) of the RTA as follows:
“Whenever a vehicle which is covered by the insurance policy is transferred to

a transferee, the liability of the insurer does not cease so far as the third
party/victim is concerned, even if the owner or purchaser does not give any
intimation of transfer to Insurance Company as required under the provisions
of the Act. The reasons being as below:-
41
Insurance against third party is compulsory, and once the insurance
company had undertaken liability to third party incurred by the persons
specified in the policy, the third party’s right to recover any amount is not
affected by virtue of the provisions of the Act or by any condition in the policy.
Further the liability of an insurer does not come to an end even if the owner of
the vehicle does not give any intimation of transfer to the insurance company.
A perusal of sections 94 and 95 would further show that the said provisions
do not make compulsory insurance to the vehicle or to the owners. Thus, it is
manifest that compulsory insurance is for the benefit of third parties. The
scheme of the Act shows that an insurance policy can cover three kinds of
risks, i.e. owner of the vehicle; property (vehicle) and third party. The liability
of the owner to have compulsory insurance is only in regard to the third party
and not to the property. Section 95(5) of the Act shows that it was intended to
cover two legal objectives. Firstly, that no one who was not a party to a
contract would bring an action on a contract, and secondly, that a person who
has no interest in the subject matter of an insurance can claim the benefit of
an insurance. Thus, once the vehicle is insured, the insured, the owner as
well as any other person can use the vehicle with the consent of the owner.
Section 94 does not provide that any person who will use the vehicle shall
insure the vehicle in respect of his separate use.
On analysis of Ss. 94 and 95, it is found that there are two third parties
when a vehicle is transferred by the owner to a purchaser. The purchaser is
one of the third parties to the contract and the other third party is for whose
benefit the vehicle is insured. So far as the transferee who is the third party in
the contract he cannot get any personal benefit under the policy unless there
is a compliance of the provisions of the Act. However, so far as third party
injured or victim is concerned, he can enforce liability undertaken by the
insurer.”
(emphasis added)
42
[60] In United India Insurance Co Ltd v Santro Devi & Ors 2009 3
MLJ 130 (SC) the Supreme Court of India was again called upon
to consider whether insurers were liable to indemnify the insured
when the vehicle was sold but the insured remained as the
registered owner when there was a claim for personal injury by a
third party. This was how the Indian apex court dealt with the
issue:
“The provisions of compulsory insurance have been framed to advance a

social object. It is in a way part of the social justice doctrine. When a
certificate of insurance is issued, in law, the insurance company is bound to
reimburse the owner. There cannot be any doubt whatsoever that a contract
of insurance must fulfill the statutory requirements of formation of a valid
contract but in case of a third party risk, the question has to be
considered from a different angle.”
(emphasis added)
[61] The position in Australia can be discerned from the following

views held by the learned authors of Kenneth Sutton in Insurance
Law in Australia (2nd Edition) at page 371 paragraph 6.24 under
the heading “Presumption of insurable interest”:
“In Stock v Inglis [1884] 12 QBD 564 at 571 Brett M.R. sought to mitigate the
arbitrariness and harshness of the common law by stating that it was the duty
of a court always to lean in favour of an insurable interest, if possible, for after
the insurer had received the premium the objection that there was no
insurable interest was often a technical objection without any real merit as
between insurer and assured. This dictum has been referred to in a number of
subsequent decisions but it is submitted that there will be fewer occasions on
which to invoke it in the future in the light of the expanded definition of
insurable interest contained in s. 17 of the Insurance Contracts Act 1984.”
43
[62] In Siu Yin Kwan & Anor v Eastern Insurance Company
Limited [1993] 1 LNS 65, a case that emanated from Hong Kong,
the Privy Council had occasion to consider whether insurable
interest is a requirement for a valid indemnity policy. The Privy
Council held that for indemnity insurance, there is no requirement
for insurable interest. To better appreciate the context of the
decision, we are taking the liberty to quote in extenso the following
passages in the judgment of Lord Llyod:
“They now turn to consider the second main defence, based on s. 2 of the Life
Assurance Act 1774. It can be dealt with shortly. Mr. Thomas submits, and the
majority of the Court of Appeal have held, that the policy is payable on the
happening of an event, within the meaning of s. 2 of the Act, that event being
the insured’s liability to pay compensation in respect of injury to his
employees. Since the name of the person interested, that is to say Axelson,
was not inserted in the policy, the insurance is unlawful and void.”
The meaning of s. 2 of the Act was considered by the Court of Appeal in Mark
Rowlands v Berni Inns Limited [1986] 1 QB 211, a case of fire insurance. The
plaintiff was a freeholder of the premises. The defendant was a tenant of the
basement. The question was whether the policy taken out by the plaintiff
endured for the benefit of the defendant, although his name did not appear in
the policy. It was held that the policy did not infringe s. 2 of the 1774 Act since
the Act was not intended to apply to indemnity insurance.
On the other hand, in Re King, Robinson v Gray [1963] Ch. 459 Lord Denning
said at p. 485.
You must remember that when you take out a policy of fire insurance of a
building (as distinct from goods), you must insert in the policy the names of all
the persons interested therein, or for whose benefit it is made. No person can
recover thereon unless he is named therein, and then only to the extent of his
44
interest. That is clear from the Life Assurance Act, 1774, ss. 2, 3 and 4, which
by its very terms applies to any other event as well as life. If the tenant
insures, therefore in his own name alone, it is only good to the extent of his
interest.
Faced with this conflict of authority their Lordships prefer the decision of the
Court of Appeal in the former case. In Re King the point was not argued. The
observation of Lord Denning was obiter and is not reflected in the judgments
of the other two members of the Court. Some doubt as to the correctness of
Mark Rowlands Limited v Berni Inns Limited is expressed in MacGillivray and
Parkington (supra) at para. 154. But their Lordships do not share these
doubts.
There are two reasons why their Lordships prefer the decision in Mark
Rowlands Limited v Berni Inns Limited. In the first place the words “event or
events” in s. 2, while apt to describe the loss of the vessel, are hardly apt to
describe Axelson’s liability arising under the Employees Compensation
Ordinance, or at common law, as a consequence of the loss of the vessel.
Secondly, s. 2 must take colour from the short title and preamble to s. 1. By
no stretch of the imagination could indemnity insurance be described as a
“mischievous kind of gaming”. Their Lordships are entitled to give s. 2 a
meaning which corresponds with the obvious legislative intent.”
[63] Another case beyond our jurisdiction which may shed some
light on the issue is the case of Austin v Zurich General Accident
And Liability Insurance Co Ltd [1945] 1 All ER 316 (“Zurich”). In
that case, the appellant who was the driver of the car of the
insured party with the latter’s permission sued the insurance
company (respondent) for indemnity under the insurance policy.
The English Court of Appeal comprising Lord Greene M.R.,
McKinnon LJ and Uthwatt J held that the appellant’s rights against
the respondent company under the insurance policy arose out of
45
section 36(4) the UK Road Traffic Act, 1930-34 (“the 1930 Act”)
and not by reason of any contract. In other words, the right given
by section 36(4) of the 1930 Act is a statutory right having no
connection with contract.
[64] The appellant’s claim against the insurer in that case was
however dismissed on the basis that he failed to serve notice to
the insurance company that he had been served with summonses
for dangerous and careless driving as required by the policy.
[65] The court in Zurich emphasised the point that section 36(4)
of the 1930 Act deals with the liability of the insurer who issues the
policy and not the terms of the policy which is covered by another
section, namely section 10(1) of the 1930 Act which is in pari
materia with section 96(1) of the RTA. Lord Greene M.R. made the
following pertinent observations at page 318:
“Here is a case where Austin, a stranger to the policy altogether, paying no

part of the premium and not being a party in contractual relations with Zurich
at all, seeks to take the benefit of a clause in Aldridge’s policy which he can
only obtain by reason of a certain statutory provision. I do not think it can be
suggested at this day that, apart from statute, any contract could be spelt out
in circumstances such as this between Austin and Zurich.
It is sufficient to refer to a passage in the judgment of GODDARD, J., as he

then was, in Tattersall v Drysdale (1). The passage is at p. 181 and starts with
a quotation from GREER, L.J., in an earlier case:
But GREER, L.J., says: “I think it is quite clear that the section was intended
to meet the difficulty that was patent: first, that nobody who was not a party to
a contract could bring an action on the contract; and secondly, by reason of
46
the statutory and well known law that a person who has no interest in the
subject-matter of an insurance cannot claim the benefit of that insurance.” I
read that passage as meaning that in his opinion the section was not only
intended to effect but has effected a change in the law and gives a cause of
action which hitherto did not exist to a person indicated in the policy but not a
party to it, and I respectfully agree with that view.”
[66] The appellant complained that the Court of Appeal in

Zainuddin Mat Isa, Muhammad Haqimie and Aqmal was wrong in
not discussing the decision of this court in Roslan bin Abdullah v
New Zealand Insurance Company Ltd [1981] 1 LNS 40; [1981] 1
MLRA 445 which referred to Peters v General Fire and Life
Assurance Corp Ltd. (1938) 60 Ll, L.R. 312 where it was held by
the English Court of Appeal that any use of the vehicle by the
purchaser cannot be covered by the seller’s insurance and that the
purchaser will be insured if at all under his own policy.
[67] First of all, as we have indicated earlier in this judgment,

Roslan bin Abdullah is of no relevance as in that case there was
no insurance policy in force at the time of the accident as the
policy had lapsed, unlike the present appeal where the insurance
policy had not expired at the time of the accident. Secondly, this
court in Roslan bin Abdullah was not called upon to consider
provisions like section 13 of the RTA which prescribes the
procedure to effect change of ownership, and section 109(1) which
deems the registered owner to be the “owner” of the motor vehicle.
Thirdly, no judgment was entered against the insured in that case
in order for section 9(1) of the Sarawak Motor Vehicles (Third
Party Risks) Ordinance (Cap. 130) (“the Sarawak Ordinance”),
which is similar to section 96(1) of the RTA, to take effect.
47
Fourthly, Roslan bin Abdullah was decided in the context of the
Sarawak Ordinance, which has been repealed by the RTO, which
itself has been repealed by the RTA.
[68] As for the case of Peters (supra) which the appellant relied
heavily on, we do not find the case to be of any assistance to the
appellant as it was a decision based on the 1930 Act which does
not contain any provision similar to section 13(1) or section 109(1)
and (2) of the RTA. The definition of “owner” in the 1930 Act (read
together with the UK Road Traffic Act 1934) is also materially
different from the definition of “owner” in the RTA. Furthermore, the
court in that case was more concerned with section 10(1) of the
1930 Act which is the equivalent of section 96(1) of the RTA which
reads:
“96(1). If, after a certificate of insurance has been delivered under subsection
91(4) to the person to whom the policy has been effected, judgment in respect
of such liability as is required to be covered by a policy under paragraph
91(1)(b) (being a liability covered by the terms of the policy) is given against
any person insured by the policy, then notwithstanding that the insurer may be
entitled to avoid or cancel, or may have avoided or cancelled the policy, the
insurer shall, subject to this section, pay to the persons entitled to the benefit
of the judgment any sum payable in respect of costs and any sum payable in
respect of interest on that sum by virtue of any written law relating to interest
on judgments.”
[69] For all the reasons aforesaid and on the authorities, our
answer to the leave question is in the affirmative, that is to say, the
registration does impose liability on the insurer notwithstanding the
48
fact that the insured ceased to have insurable interest in the motor
vehicle at the time of the accident.
APPEAL NO. 2
PACIFIC & ORIENT INSURANCE CO. BERHAD & ANOR V.
MOHAMAD RAFIQ MUIZ BIN AHMAD HANIPAH
[70] Four leave questions were posed in relation to this appeal,
and they are:
Leave question 1
“Is an insurer bound to serve the cause papers relating to the application for a
declaration pursuant to section 96(3) of the Road Transport Act 1987 upon
the 3rd party claimant, every time that an insurer finds it necessary to make
the said application or is the insurer only bound to serve the said cause paper
relating to the application for a declaration pursuant to section 96(3) of the
Transport Act 1987 upon the 3rd party claimant, only when the 3rd party
claimant had already obtained judgment against the insured/rider since by
obtaining the said judgment the 3rd party claimant has then obtained a legal
interest as against the insurer?”
Leave question 2
“Is the Court of Appeal correct in law in Pacific & Orient Insurance Co Berhad
v Rasip Bin Hamsudi & Ors [2017] 2 MLRA 659 when it failed/refused to refer
to the decision of another Court of Appeal in Letchumanan a/l Gopal
(representative for the estate of Rajammah a/l Muthusamy; deceased) v
Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788 (although referred to it) and
which judgment in Letchumanan held that whilst an insurer has a right to
disclaim liability as against the insured for breach of policy conditions, whether
the 3rd party claimant’s right as against the said insurer are protected by the
3rd party claimant’s rights in filing proceedings for the damages awarded
49
against the said insured based on the 3rd party claimant’s vested right
pursuant to section 96(1) of the Road Transport Act 1987?”
Leave question 3
“Whether registration imposes liability on an insurer notwithstanding the
insured having ceased to have an insurable interest in the vehicle at the time
of accident”?
Leave question 4
“Is the Court of Appeal in Muhamad Haqimie Hasim & Ors v Pacific & Orient
Insurance Co Berhad [2018] MLRAU 1 correct in law in applying section 13
and section 109 of the Road Transport Act 1987 to civil liability of an insurer
pursuant to section 96(1) of the Road Transport Act when the said sections
are applicable to criminal prosecutions pursuant to the Road Transport Act
1987?”
[71] The facts are as follows. On 30.1.2014, the respondent as

rider of motorcycle registration No. WRP 8601 was involved in an
accident with motorcycle registration No. JMJ 5436 ridden by one
Mohd Faiz bin Muhammad Nazri, the insured’s rider (not party to
this action). JMJ 5436 was registered in the 2nd appellant’s name
and was insured by the 1st appellant. The insurance policy for JMJ
5436 covered third party risks for the period between 17.6.2013 to
16.6.2014, which therefore covered the date of the accident on
30.1.2014.
[72] The respondent commenced a tortious claim for special and

general damages against the insured rider of JMJ 5436 and its
registered owner (2nd appellant) at the Bandar Baru Bangi
Magistrates Court.
50
[73] Upon notification of the accident, the 1st appellant appointed
Jaya Adjusters Sdn Bhd (“the Adjusters”) to investigate the
accident. The Adjusters’ investigation report revealed the following:
(a) on 27.10.2011 the registered owner of JMJ 5436 (2nd

appellant) sold the motorcycle to one Nor Mohammed bin
Mohd Yusof for a cash consideration of RM5,000.00 but
failed to register the transfer of ownership to the new owner
at the JPJ.
(b) the registered owner of JMJ 5436 (2nd appellant) was not
aware of the accident.
[74] Based on the Adjusters’ report, the 1st appellant commenced

an action under section 96(3) of the RTA at the Kuala Lumpur High
Court naming the owner and insured of JMJ 5436 (2nd appellant)
as parties to the proceedings. However, the respondent as the
accident victim was not named as a party. Nor was he served with
the cause papers of the action.
[75] On 26.10.2016, the 1st appellant successfully obtained a

declaratory order under section 96(3) of the RTA from the Kuala
Lumpur High Court which declared the insurance policy to be void
and unenforceable for the following reasons:
(a) the registered owner of JMJ 5436 (2nd appellant) failed to

disclose to the 1st appellant the sale of the motorcycle to
Nor Mohammed bin Mohd Yusof;
51
(b) there was absence of insurable interest at the time of the
accident due to the sale of the motorcycle by the owner (2nd
appellant) to Nor Mohammed bin Mohd Yusof;
(c) at the time of the accident, the motorcycle was ridden by

the insured’s rider (not party to this action) without the
consent or authorization of the owner of JMJ 5436 (2nd
appellant).
[76] In the circumstances, it was held by the Kuala Lumpur High

Court that the 1st appellant was not liable to satisfy the judgment
sum obtained by the respondent against the insured from the
Bandar Baru Bangi Magistrates Court. The 1st appellant relied on
the decision of the High Court in Yeap Tick In v Pacific Orient &
Insurance Co Bhd [2020] 3 MLJ 449 to submit that the High Court
order under section 96(3) of the RTA operated as a complete
defence to the respondent’s claim.
[77] After obtaining the order, the 1st appellant then instructed its
solicitors defending the insured (2nd appellant) and rider of JMJ
5436 at the Bandar Baru Magistrates Court to discharge
themselves on the basis of a transfer of interest.
[78] The respondent however proceeded with his claim in the

Bandar Baru Bangi Magistrates Court, and on 17.7.2017 the
Bandar Baru Bangi Magistrates Court allowed his claim and found
liability to be 100% against the owner (2nd appellant) and the rider
of the motorcycle involved in the accident.
52
[79] Thereafter the respondent commenced proceedings in the
Kuala Lumpur High Court for an order to quash the declaratory
order obtained by the 1st appellant and to declare the policy issued
by the 1st appellant to be valid and that the 1st appellant shall be
liable to pay the judgment sum obtained by the respondent from
the Bandar Baru Bangi Magistrates Court.
[80] The High Court granted the order sought for by the
respondent, relying on the decision of the Court of Appeal in
Pacific & Orient Insurance Co Bhd v Rasip bin Hamsudi & Ors
[2017] 4 CLJ 572; [2017] 2 MLRA 659. Being dissatisfied with the
decision of the High Court, the 1st appellant then appealed to the
Court of Appeal. Its appeal was dismissed with costs, hence the
present appeal before us.
[81] The 1st appellant’s argument in relation to leave question 1

was as follows:
(1) The application by the respondent for a declaration that the

policy issued by the 1st appellant to be valid and that the 1st
appellant shall be liable for the judgment obtained by the
respondent from the Bandar Baru Bangi Magistrates Court
should not have been granted by the Kuala Lumpur High
Court as it is a vested right of the 1st appellant pursuant to
section 96(3) of the RTA to apply for and to obtain the order
and only the insured (who was served with the application
and who refused to attend) had the right to apply to set aside
the order dated 26.10.2016 since the respondent had the
remedy to file recovery proceedings;
53
(2) The declaratory order was only effective between the
insured (2nd appellant) and the 1st appellant and did not bind
the respondent, relying on the unreported decision of the
Court of Appeal in Pacific & Orient Insurance Co Berhad v
Kumari a/p Nadason and Anor [Mahkamah Rayuan Civil No.
W-02(IM)(NCVC)-2433-11/2013];
(3) By asking for a general order that the policy be declared

valid and enforceable against all persons at large, the prayer
asked for was totally wrong as it applied even to bind the
insured who himself did not apply to set aside the order, and
by having granted the order prayed for by the respondent,
the High Court had deprived the 1st appellant of the right to
recover from its insured (2nd appellant) a claim to indemnity
as provided for under the contract, citing Muhammad
Zaihasri bin Hassan v Pacific Orient Insurance Co Berhad
[2018] 8 MLJ 739;
(4) The Court of Appeal was wrong in accepting the Court of

Appeal’s decision in Rasip bin Hamsudi and rejecting the
decision of the High Court in Pacific & Oriental Insurance Co
Berhad v Azhar bin Azizan (Mohd Ashraf Yusoff, as
Intervener) [2015] 10 MLJ 532 (“Azhar bin Azizan”) which
was upheld by both the Court of Appeal and the Federal
Court. It was submitted that this court should endorse Azhar
bin Azizan which decided that since the insurer had obtained
a declaratory order to declare the policy void, the defendant
could not apply to set it aside;
54
(5) The decision of the High Court in Azhar bin Azizan was
accepted as correct by the Court of Appeal in Mohamad
Asyraf bin Yusoff v Pacific & Orient Insurance Co Berhad
and Azhar bin Azizan [Mahkamah Rayuan Civil Appeal No.
W-02(IM)(NCVC)-2713-12/2013] when it dismissed the
appeal against the decision. The 3rd parties’ applications for
leave to the Federal Court in Mohamad Asyraf bin Yusoff v
Pacific & Orient Insurance Co Berhad and in Azhar bin
Azizan [Mahkamah Persekutuan Permohonan No. 08(i)-458-
09/2014(W)] were refused by the Federal Court;
(6) Based on the decision in Scott & English (M) Sdn Bhd v
Yung Chen Wood Industries Sdn Bhd [2018] 5 MLJ 204 the
decision of the High Court in Azhar bin Azizan has now
become the decision of the Federal Court and the Court of
Appeal in Rasip bin Hamsudi ought not to have interfered
and refused to follow the decision in Azhar bin Azizan;
(7) Just as in Scott & English where the leave application to the
Federal Court was dismissed, the Court of Appeal ought not
to have rejected the decision of the Federal Court in Azhar
bin Azizan on the basis that there was no written grounds of
judgment which was what was held in Rasip bin Hamsudi;
(8) Based on the binding authority of this court in Scott &

English, the decision of the Court of Appeal in Rasip bin
Hamsudi, which refused to follow Azhar bin Azizan and
giving its own interpretation to the proviso to section 96(3)
must, in the words of this court in Scott & English, be held to
55
be decided without jurisdiction and therefore ought not to be
followed;
(9) Rasip bin Hamsudi ought not to be accepted by this court for
the following reasons:
(i) In breach of natural justice the Court of Appeal declined to

consider the irregular judgment of the Sessions Court
obtained against the insurer, but on the contrary
considered the issue whether the declaratory order was
regularly obtained and the Court of Appeal held that
based on the fact that judgment had already been
obtained against the insurer, the declaratory order was
therefore not regularly obtained because the insurer had
failed to comply with the proviso to section 96(3) of the
RTA in failing to serve the declaratory papers on the
claimants since the claimants had already obtained
judgment against the rider and the insured;
(ii) The Court of Appeal misdirected itself in failing to

consider that the initial judgment against the insured at
the Sessions Court was irregular but instead held that
since judgment had already been taken against the
insured and rider, unless stayed or reversed, the
claimants were entitled to immediately enforce the
judgment;
(iii) The law allows an insurer, when dissatisfied with the

conduct of its insured either for fraud or transfer of interest
56
or for whatever reason the insurer decides as giving
grounds, to obtain the declaratory order pursuant to
section 96(3) of the RTA.
[82] We have dealt with the issues raised in leave questions 3

and 4 when dealing with the sole leave question in Appeal No. 1
and we shall not repeat what we have said there save to say that it
applies to the instant appeal. There is therefore only leave
questions 1 and 2 left to be considered.
[83] Before dealing with the two leave questions, we shall first deal
with the 1st appellant’s contention that Rasip bin Hamsudi was
decided without jurisdiction on the ground that it did not follow
Azhar bin Azizan (leave question 2) which according to learned
counsel has now become the decision of this court since the 3rd
party’s application for leave to appeal against the decision of the
Court of Appeal in that case was refused by this court.
[84] With due respect, we do not think that is a correct statement

of the law. First of all, the Court of Appeal in Azhar bin Azizan did
not provide any grounds for affirming the decision of the High
Court and dismissing the intended intervener’s appeal. A decision
without the grounds of judgment cannot be regarded as
authoritative and binding: See Tirumeniyar a/l Singara Veloo
(supra at paragraph 56 above).
[85] Secondly, the refusal of leave by this court does not mean
approval of the decision of the Court of Appeal. For this
proposition, suffice it if we refer to the decision of this court in
57
Datuk Syed Kechik bin Syed Mohamed & Anor v The Board of
Trustees of The Sabah Foundation & Others and another
application [1999] 1 CLJ 325; [1999] 1 MLJ 257 where Edgar
Joseph Jr FCJ delivering the judgment of the court said:
“Having said that, we hasten to add, in the words of Lord Diplock speaking in
the House of Lords in Modern Engineering v Gilbert-Ash [1974] AC 689 at pp
715-716: ‘Refusal of leave to appeal does not imply approval by this House of
a judgment sought to be appealed against. That judgment carries the same
authority as any other unappealed judgment of the Court of Appeal – neither
more or less’. With this statement of principle we respectfully agree. The
natural tendency, therefore, to claim that a judgment of the Court of Appeal
which has been the subject of an unsuccessful application for leave carries
greater authority than one which has gone unchallenged, must be resisted.”
[86] As for the two leave questions, we shall deal with leave
question 2 first before dealing with leave question 1 as it can be
dealt with quite shortly. The answer to question 2 is in the
judgment of this court in Dhalip Bhagwan Singh v Public
Prosecutor [1997] 4 CLJ 645 where the Peh Swee Chin FCJ
delivering the unanimous decision of the court made the following
observations:
“The doctrine of stare decisis or the rule of judicial precedent dictates that a
court other than the highest court is obliged generally to follow the decisions
of the courts at a higher or the same level in the court structure subject to
certain exceptions affecting especially the Court of Appeal.
The said exceptions are as decided in Young v Bristol Aeroplane Co. Ltd
[1944] KB 718. The part of the decision in Young v Bristol Aeroplane in regard
to the said exceptions to the rule of judicial precedent ought to be accepted by
58
us as part of the common law applicable by virtue of Civil Law Act 1956, vide
its s.3.
To recap, the relevant ratio decidendi in Young v Bristol Aeroplane’s case is

that there are 3 exceptions to the general rule that the Court of Appeal is
bound by its own decisions or by decision of courts of co-ordinate jurisdiction
such as the Court of Exchequer Chamber. The three exceptions are first, a
decision of Court of Appeal given per incuriam need not be followed,
secondly, when faced with a conflict of past decisions of Court of Appeal, or a
court of co-ordinate jurisdiction, it may choose which to follow irrespective of
whether either of the conflicting decisions is an earlier case or a later one,
thirdly, it ought not to follow its own previous decision when it is expressly or
by necessary implication, overruled by the House of Lords, or it cannot stand
with a decision of the House of Lords. There are of course further possible
exceptions in addition to the three exceptions in Young v Bristol Aeroplane
when there may be cases the circumstances of which cry out for such new
exceptions so long as they are not inconsistent with the 3 exceptions in Young
v Bristol Aeroplane.
A few words need to be said about a decision of Court of Appeal made per
incuriam as mentioned above. The words “per incuriam” are to be interpreted
narrowly to mean as per Sir Raymond Evershed, MR in Morelle v Wakeling
[1955] 2 QB 379, 406 as a “decision given in ignorance or forgetfulness of
some inconsistent statutory provision or of some authority binding in the court
concerned so that in such cases, some part of the decision or some step in
the reasoning on which it is based, is found on that account to be
demonstrably wrong”. It should be borne in mind that the year of Morelle’s
case is 1955 whereas s. 3 of the Civil Law Act was enacted in 1956. The
ration in Morelle’s case is also part of the common law applicable to us.”
[87] There was therefore nothing wrong for the Court of Appeal in
Rasip bin Hamsudi to refuse to follow or to omit to refer to the
decision of another Court of Appeal in Letchumanan a/l Gopal
59
(representative for the estate of Rajammah a/l Muthusamy;
deceased) v Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788
although referred to it by learned counsel in his submissions.
[88] In any event, we are inclined to agree with the reasoning in

Rasip bin Hamsudi rather than the reasoning in Letchumanan a/l
Gopal. In the first place, the issue in Letchumanan a/l Gopal is
markedly different from the issue in Rasip bin Hamsudi. In
Letchumanan a/l Gopal, the focus of the Court of Appeal's
attention was on the issue of whether the victim of the road
accident was in the employment of the company which owned the
lorry involved in the accident. Since he was not, it was held that
the insurance company was not liable for the negligent act of the
lorry driver.
[89] It will be noted that the insurer in Letchumanan a/l Gopal

relied on an exception to a liability clause in its insurance policy
which stipulated that the insurer would not be liable for the death of
or bodily injury to any person “other than a passenger carried by
reason of or in pursuance of a contract of employment”. This, with
respect, appears to be an attempt to contract out of statute, which
is prohibited by section 94 of the RTA. Further, there was no
mention, let alone a discussion on section 96(3) of the RTA. Rasip
bin Hamsudi on the other hand dealt extensively with both section
96(1) and section 96(3) which are precisely the issues that we are
concerned with in the present appeal.
[90] Letchumanan a/l Gopal is therefore of no assistance to the

appellant. The answer to leave question 2 is therefore in the
60
affirmative, that is to say, the Court of Appeal in Rasip bin
Hamsudi was correct in not referring to Letchumanan a/l Gopal
although referred to it in submissions. At any rate we are not
aware of any law that requires the court to refer to every authority
cited by counsel in submissions.
[91] As for leave question 1, it starts off on a wrong footing by

asking the question whether an insurer is bound to serve the
cause papers relating to the application for a declaration pursuant
to section 96(3) of the RTA upon the third party claimant “every
time that an insurer finds it necessary to make the said
application”, implying that it is up to the insurer to decide whether
and when to serve the cause papers, either before or after
judgment had been obtained against the insured by the 3rd party
claimant.
[92] Section 96(3) is reproduced again below for ease of

reference:
“(3) No sum shall be payable by an insurer under subsection (1) if before the
date the liability was incurred, the insurer had obtained a declaration from a
court that the insurance was void or unenforceable:
Provided that an insurer who has obtained such a declaration as aforesaid in

an action shall not become entitled to the benefit of this subsection as
respects any judgment obtained in proceedings commenced before the
commencement of that action unless, before or within seven days after the
commencement of that action, he has given notice to the person who is the
plaintiff in the said proceedings specifying the grounds on which he proposes
to rely, and any person to whom notice of such an action is so given shall be
entitled if he thinks fit to be made a party thereto.”
61
[93] Perhaps a good starting point in dealing with this issue is the
case of Merchants’ and Manufacturers, Insurance Co., Ltd. v Hunt
and Others [1941] 1 All ER 123 where the English Court of Appeal
was called upon to consider section 10(3) of the 1930 Act which is
substantially similar in purport to section 96(3) of the RTA. This is
how Scott LJ expressed his view in that case:
“This legislation was obviously intended to effect, inter alia, a fair compromise
between the two desirable but conflicting objects – namely on the one hand
that of protecting the public from danger of impecunious tortfeasors on the
roads, and on the other hand, that of avoiding the injustice of putting on a
wholly innocent and misled insurer the whole pecuniary burden of a policy
which, neither in law nor in equity, is his policy.
However, it would have been unfair to confer this relief unconditionally. There
was an obvious danger of the injured party being deprived of the pecuniary
safeguard which was the subject of subsect. (1) through the possibility of the
policy being avoided in the proceedings under the first part of subsect. (3)
without his knowledge, and even by collusion between the insurer and the
insured.
It was essential that he should be given the right to appear in it and there
defend his rights. Both the requisites are met by the proviso to subsect. (3)
which in effect creates two condition precedents to the existence of the
insurer’s right to get this declaration under the first part of the subsect. (3).
The third party gets full notice of the grounds of the insurer’s claim and given
unqualified right to become a party in all the rights of a party to an action
without any qualification upon them.”
[94] Section 96(3) of the RTA speaks of a declaration obtained by

the insurer “before the date the liability was incurred”, meaning to
62
say before judgment in the tortious claim by the 3rd party claimant
is obtained against the insured and the tortfeasor. To that extent
the provision is clear and unambiguous, which explains why the 1st
appellant proceeded with the application under section 96(3) after
the respondent had commenced the tortious claim against the
insured rider and owner of the motorcycle (2nd appellant) in the
Bandar Baru Bangi Magistrates Court and before judgment was
obtained by the respondent as the third party claimant.
[95] The point to note is that while section 96(3) gives the insurer
the right to obtain a declaration that the insurance policy is void
and unenforceable, section 96(1) makes it mandatory for the
insurer to make payment after judgment had been obtained
against the insured by the third party claimant. Judgment here
means judgment in an action for negligence filed by the third party
claimant and not judgment in any other cause of action.
[96] What section 96(3) mandates is that where the insurer

intends to repudiate liability under the policy, it must comply with
the following procedural requirements:
(1) notice must be given to the plaintiff in the tortious claim

action before liability is incurred;
(2) the notice must state the grounds relied on by the insurer to
obtain a declaration;
(3) the notice must be served on the plaintiff in the tortious

claim within 7 days after the commencement of the claim;
63
(4) the notice must be served on the parties who have interest
in the proceedings.
[97] In the present case, the 1st appellant knew of the pending
Bandar Baru Bangi Magistrates Court proceedings against the
rider and registered owner of the motorcycle (2nd appellant), yet it
chose not to comply with the statutory requirements laid down by
the proviso to section 96(3). The cause papers which ought to
have been served on the respondent who was the plaintiff in the
Bandar Baru Bangi Magistrates Court proceedings were not
served on him. This was an outright contravention of section 96(3),
rendering the declaration order issued by the High Court irregular,
defective and unenforceable. The 1st appellant had no discretion
not to comply with the proviso to section 96(3). Nor does the court
have the discretion to allow any such application which suffers
from such fundamental defect.
[98] In Pacific & Orient Insurance Co. Bhd v Arnanda a/l Soria
Demadu [2021] 1 MLJ 303 her Ladyship Mary Lim Thiam Suan
JCA (now FCJ) delivering the judgment of the Court of Appeal had
this to say on section 96(3) at paragraph 68-69:
“[68] The appellant was well aware of the procedure in section 96(3) and the
obligation to serve together with the grounds relied on for avoiding its
obligations to satisfy a judgment obtained by a third party. In fact, at no time
did the appellant plead ignorance of that duty; it just takes the position that its
action was valid. Furthermore, this is not a case of timing of such applications,
that is, when such orders ought to be sought. And yet, the appellant failed
and/or ignored that obligation. It has only itself to blame.
64
[69] Thus, we unanimously conclude that the mandatory requirements in
the proviso to section 96(3) have clearly not been met by the appellant. As a
result of that non-compliance, and in relation to the respondent, the appellant
cannot avail itself to the benefit of section 96(3). The appellant is not entitled
to the benefit of section 96(3) of the Road Transport Act 1987.”
[99] Thus, the 1st appellant’s failure to comply with the proviso to
section 96(3) disentitled it to the benefit of the provision. It was
however urged upon us that the High Court case of Azhar bin
Azizan should be accepted as good law, which decided that since
the insurer had obtained a declaratory order to declare the policy
void, the defendant could not apply to set it aside.
[100] With due respect, we do not see how Azhar bin Azizan is
relevant to the issue before us as the facts are poles apart from
the facts of the present case. In the first place, no judgment had
been obtained against the insured in that case to entitle the
intended intervener to enforce payment of the judgment sum
pursuant to section 96(1) of the RTA. The predominant issue in
that case was whether the claimant or the plaintiff in the tortious
claim proceedings was entitled to intervene and set aside the
declaratory order obtained by the insurer after the declaration
proceedings had ended.
[101] Of more significance to note is that the learned judge in that

case failed to direct his mind to the mandatory requirements laid
down by the proviso to section 96(3). The judgment was therefore
made per incuriam. It is trite law that a judgment that is made per
incuriam has no binding effect and need not be followed: See
65
Young v Bristol Aeroplane Co. Ltd [1944] KB 718 cited with
approval by this court in Dhalip Bhagwan Singh (supra). The
proviso to section 96(3) must be read having regard to the section
itself: See Chor Phaik Har v Farlim Property Sdn Bhd [1994] 3 MLJ
345 FC.
[102] The 1st appellant had another argument. It was contended

that the respondent as the 3rd party claimant could not apply to set
aside the order pursuant to Order 35 Rule 1(2) of the Rules of
Court 2012 because he had a specific remedy provided by section
96(1) of the RTA to file for recovery against the insurer. The
argument must fail. There is nothing in section 96(1) to say that the
third party claimant must first obtain another judgment against the
insurer before he could proceed to enforce the judgment that he
had earlier obtained against the insured. After all, the judgment
debt of the insured becomes the judgment debt of the insurer: See
Pacific & Orient Insurance Co Bhd v Kamacheh Karuppen [2015] 4
CLJ 54. The insurer is bound to settle the judgment sum without
the need for another action by the third party claimant, i.e.
recovery action against the insurer once the conditions in section
96(2) and (3) are fulfilled.
[103] Therefore, the question of the respondent having to file for

recovery proceedings under section 96(1) against the 1st appellant
as contended by learned counsel does not arise at all: See also
the decisions of the Court of Appeal in Pacific & Orient Insurance
Co Bhd v Muniammah Muniandy [2011] 1 CLJ 947 and Yeap Tick
In (supra) which decisions on this point we are in agreement with.
66
In Muniammah Muniandy, this is what Ramly Ali JCA (as he then
was) said:
“[21] Nowhere does s. 96(1) of the Road Transport Act 1987 say that the
respondent must first obtain another judgment against the appellant before
she can proceed to enforce the judgment earlier obtained by the respondent
against the insured. Therefore, the question of the respondent having to file a
recovery proceedings under s. 96(1) against the appellant, as contended by
the appellant in its memorandum of appeal, does not arise at all. In short, the
respondent, who had obtained a monetary judgment against the insured
which has not been stayed, has the right under s. 96(1) to enforce the said
judgment against the insurer without having to first file a recovery proceedings
against the insurer.”
[104] In an application for a declaratory order under section 96(3),

the insurer must confine itself to the particulars it sets out in the
notice served on the plaintiff in the tortious claim proceedings. The
reason for this according Lord Greene in Zurich is this:
“True it is that the proviso to sub-s. 3 does not in terms say that, as against
the third party, the insurer is to be confined to the particulars set out in the
notice. The reason for this is that it was quite unnecessary for it to do so. If the
insurer could as against the third party, bring forward matters not specified in
the notice the protection which the proviso gives could be rendered
completely abortive..
If I am right in thinking that only matters referred to in the notice can be relied
on, it seems to me to follow that the question whether such matters are
material and whether the policy was obtained by them must be examined on
the artificial basis that, as between the insurer and the third party, all other
material facts as having been disclosed. The result is to prevent the insurer
from relying either directly or indirectly on any other matter not specified in the
67
notice as a ground or part of a ground for avoiding the policy as against the
third party.”
[105] Goddard LJ in the same case emphasised the importance of

time within which the notice must be served other than the content
of the notice, and he went on to say:
“It seems to me that what the legislature had in mind was that, if an insurer
was intending to repudiate a policy, it was only fair that the injured party
should know the grounds on which reputation was sought before he went to
the expense of endeavouring to establish his claim against the insured, who, if
not entitled to indemnity, might be unable to satisfy a judgment. It was to
prevent an injured party incurring further useless expense. Hence, the
necessity of the notice prescribed by the proviso to the subsection. The
protection afforded is little enough.”
[106] In the present case, neither the notice nor the cause papers
for the section 96(3) application were served on the respondent by
the 1st appellant, in breach of the proviso to section 96(3), which as
we said makes the 1st appellant’s repudiation of the insurance
policy based on the declaration order it obtained from the High
Court unsustainable in law.
[107] In the premises, the answer to leave question 1 is this: The

insurer is bound to serve the cause papers relating to the
application for a declaration pursuant to section 96(3) of the RTA
on the 3rd party claimant before the 3rd party claimant obtains
judgment against the insured and the tortfeasor.
68
APPEAL NO. 3
JESUDAS A/L PALANISAMY V. PACIFIC & ORIENT
INSURANCE CO BERHAD.
[108] For this appeal, the question for determination is as follows:
“Whether the insurer is entitled to derive the benefit of their declaration

obtained by them pursuant to section 96(3) of the Road Transport Act 1987
against the 3rd party when they failed to comply with the proviso of section
96(3) of the Transport Act 1987?”
[109] The answer to the leave question is obvious from our answer
to leave question 1 in Appeal No. 2. It follows that the answer to
the leave question is in the negative, that is to say, the insurer is
not entitled to the benefit of the declaration order it obtained under
section 96(3) when it failed to comply with the proviso to the
section.
[110] That disposes of the appeal, but for context it is necessary to

set out the facts of the case. They are as follows. On 3.6.2016, the
respondent insurer obtained an order in terms for its application by
way of originating summons filed at the Kuala Lumpur High Court
to declare the policy of insurance issued to the insured as null and
void. The application was to state that being the insurer to
motorcycle bearing registration No. PFK 1477 it would not provide
any coverage for the road accident which occurred on 14.1.2015.
[111] The respondent’s solicitors Messrs K Suganthi & Co who

was appointed by the respondent to defend the defendants in the
tort action to act as defence counsel on 1.9.2016 obtained an
69
order to withdraw itself from acting for the defendants in the tort
action. This would mean that the owner and rider of the motorcycle
bearing registration No. PFK 1477 were left in the lurch so to
speak and told to fend for themselves, despite the existence of a
valid insurance policy issued by the respondent.
[112] The tort action however proceeded on the issue of liability

and quantum, at the conclusion of which the Jawi Magistrates
Court found liability to be 100% against both the owner and rider of
motorcycle registration No. PKF 1477. The learned magistrate
awarded a sum of RM54,000.00 for general damages and a sum
of RM21,921.00 for special damages.
[113] Since the judgment could not be enforced against the

respondent, the appellant filed for a declaration order at the Kuala
Lumpur High Court but the High Court held that the appellant
should file recovery proceedings so that the respondent could re-
ventilate the allegation of fraud.
[114] Dissatisfied with the outcome of the declaration application,

the appellant filed an appeal to the Court of Appeal on the ground
that the respondent failed to comply with the mandatory procedural
requirements of section 96(3) of the RTA and because of that
failure, the respondent could not derive the benefit of section 96(3)
of the RTA.
[115] The appellant’s appeal was dismissed by the Court of

Appeal. No grounds were given by the Court of Appeal. It was
70
against that decision of the Court of Appeal that the appellant filed
the present appeal to this court.
[116] There were other issues of law raised by learned counsel for
the respondent in opposing the appellant’s appeal, including the
issue of fraud, the doctrine of uberrimae fidei and whether the
question of law raised is premature both in his written submissions
and in his oral argument, but given the respondent's breach of
section 96(3) for failing to comply with the proviso to the section,
which is fatal, we do not find it necessary to deal with any of those
questions.
[117] In any event, the questions do not come within the ambit of
the single leave question. It is true that this court being the court of
last resort has a discretion to permit the respondent to argue
grounds which fall outside the scope of the leave question in order
to avoid a miscarriage of justice but the discretion must be
exercised judiciously and sparingly and in very limited
circumstances in order to achieve the ends of justice: See
Melawangi Sdn Bhd v Tiow Weng Theong [2020] 4 CLJ 1; [2020] 3
MLJ 677 FC. We do not find this to be a fit and proper case for us
to exercise the discretion in favour of the respondent. What needs
to be appreciated is that it is not a right for a party to the appeal to
pursue its case on questions of law for which no leave had been
granted by this court.
71
APPEAL NO. 4
MOHAMAD ZULKARNAIN BIN MUSTAFA V. ALLIANZ
GENERAL INSURANCE COMPANY (M) BHD & 2 ORS.
[118] There were three leave questions posed for our
determination in this appeal. They are as follows:
Leave question 1
“Whether in allowing the section 96(3) application dependent on core issues
for negligence which was yet to be determined by another forum (a trial court),
the High Court breached the victim-Appellant’s right to equality enshrined in
Article 8 of the Federal Constitution?”
Leave question 2
“Where an insurer’s section 96(3) RTA application turns on whether an
insured (Defendant) was ever involved in an accident (in tort complained of)
as “a matter of policy-or-law-should” the High Court dismiss the application on
the grounds that a separate tribunal is about to determine the issue by way of
viva voce evidence?”
Leave question 3
“Whether a section 96(3) application is only to determining the issue of
“voidness and unenforceability” of an insurance contract on the grounds of
established contractual principles and are not to be exploited to determine
core factual issues in the tort of negligence which is a matter entirely outside
the grounds contemplated by section 96(3) RTA?”
[119] The facts are bizarre we must say. Thirty minutes past
midnight on 21.12.2015, a road accident occurred between the
appellant’s motorcycle registration No. AJW 5727 and the 3rd
respondent’s motorcycle registration No. AHW 5937 owned by the
72
2nd respondent. The 1st respondent was the insurer for the 2nd
respondent’s motorcycle.
[120] The 3rd respondent made 3 police reports on 3.3.2016, five

months before the appellant filed a writ action in the Teluk Intan
Sessions Court on 18.8.2016. In the first report, the 3rd respondent
admitted that he collided into the rear of the appellant’s
motorcycle. In other words, he admitted that he was involved in the
accident while riding motorcycle registration No. AHW 5937. He
then made 2 corrective reports, the first to change the location of
the accident and the second, to change the year of the accident.
There was however no change in the identity of the motorcycle
involved in the accident. It remained motorcycle registration No.
AHW 5937 belonging to the 2nd respondent.
[121] Almost a year later on 8.2.2017, the 3rd respondent made a

fourth police report. This time he changed the identity of the
motorcycle involved in the accident from motorcycle registration
No. AHW 5937 belonging to the 2nd respondent to motorcycle
registration No. WUW 9865 belonging to his wife, which had no
insurance coverage.
[122] The 3rd respondent also affirmed a statutory declaration

alleging that the three police reports that he lodged on 3.3.2016
were all false. In other words, he now admitted that he was
involved in the accident but not while riding motorcycle registration
No. AHW 5937 but while riding motorcycle registration No. WUW
9865. The 2nd respondent (the insured) and an alleged third party
73
witness supported the 3rd respondent’s statement by separate
statutory declarations.
[123] On 18.8.2016, the appellant commenced a writ action in the

Sessions Court at Teluk Intan against the 3rd respondent (rider of
the motorcycle) and the 2nd respondent (owner of the motorcycle
registration No. AHW 5937).
[124] At the trial in the Teluk Intan Sessions Court, the police
Investigation Officer (“I.O.”) testified that the 3rd respondent was
involved in the accident, directly contradicting the 3rd respondent’s
fourth police report that he and motorcycle registration No. AHW
5937 were not involved in the accident.
[125] On 9.3.2017, i.e. one month after the I.O.’s testimony was
given, the 1st respondent filed an originating summons in the Kuala
Lumpur High Court pursuant to section 96(3) of the RTA to apply
for a declaration that the insurance policy was void and
unenforceable, thus throwing a spanner in the works for the writ
action filed by the appellant in the Teluk Intan Sessions Court. The
application was made solely on the ground that the 3rd respondent
(defendant at the trial in the Teluk Intan Sessions Court) was not
involved in the accident.
[126] On 17.4.2017, the 1st respondent amended the section 96(3)

originating summons to include the appellant as a party. The 1st
respondent’s prayers in the originating summons action were:
74
(a) the insurance policy for the motorcycle bearing registration
No. AHW 5937 was void and unenforceable in respect of
the accident;
(b) the 1st respondent was not responsible for satisfying any
order or judgment arising from the civil action in the Teluk
Intan Sessions Court and/or any other claim arising from the
accident.
[127] It is obvious that prayer (b) above was a pre-emptive strike

at the impending judgment of the Teluk Intan Sessions Court. The
1st respondent’s basis for making the section 96(3) application was
that the 2nd respondent (the insured) knew of the false police report
lodged by the 3rd respondent (the rider), and because of that both
he and the 3rd respondents were in breach of the principle of
uberrimae fidei, thus rendering the insurance policy issued in
respect of motorcycle registration No. AHW 5937 null and void and
unenforceable against the 1st respondent.
[128] Learned counsel for the 1st respondent stressed the point
that the Loss Adjusters appointed by the 1st respondent had found
out that the 3rd respondent and the motorcycle registration No.
AHW 5937 were not involved in the accident. For some
unexplained reason however the Adjusters’ report was not
produced in the originating summons action. Nor was the maker of
the report called to testify.
[129] The 1st respondent alleged the following in the Adjusters’

investigation:
75
(a) the 3rd respondent made a statutory declaration on
8.2.2017, which was one day after the I.O.’s witness
statement was marked, stating that:
(i) the motorcycle that the 3rd respondent rode during the
accident was not AHW 5937 but instead motorcycle
registration No. WUW 9865 owned by his wife;
(ii) the insurance and the road tax for the motorcycle
WUW 9865 had expired; and
(iii) the 2nd respondent’s motorcycle registration No. AHW

5937 was allegedly never involved in the accident.
Instead, it was between the appellant and another
motorcycle. Only upon reaching close to the appellant,
who was lying on the road, did the 3rd respondent
collide into him.
[130] As we have already mentioned, the 3rd respondent on the

same day, i.e. on 8.2.2017 made a correction to his police report to
say that the motorcycle involved was WUW 9865 owned by his
wife and not motorcycle registration No. AHW 5937 owned by the
2nd respondent. The 2nd respondent had also made a statutory
declaration on 13.2.2015, i.e. 5 days after the 3rd respondent made
the corrective police report in support of the 3rd respondent’s new
version of the story.
[131] There was another twist to the 1st respondent’s narrative. An

alleged independent witness, one Nik Maharith, made a statutory
76
declaration on 22.2.2017, two weeks after the I.O. confirmed
during the trial at the Teluk Intan Sessions Court that there was no
independent witness to the accident, claiming that:
(i) he saw an accident after which a Malay man fell on the

road. Then the 3rd respondent, on a motorcycle bearing
registration No. WUW 9865, collided into the appellant;
(ii) he identified the 3rd respondent as his friend and took him
to the clinic using his friend’s RXZ motorcycle registration
No. WFN 3498; and
(iii) the accident involved Yamaha RXZ No. WUW 9865

ridden by the 3rd respondent and not Honda EX-5
registration No. AHW 5937.
[132] Based on this new version of the story, the 1st respondent
argued at the originating summons hearing that:
(a) the insurance policy became void and unenforceable

because the 3rd respondent made a false police report, with
the 2nd respondent’s knowledge, that the motorcycle
registration No. AHW 5937 (covered by the policy) was
involved in the accident; and
(b) the 2nd and 3rd respondents were bound by the principle of
uberrimae fide towards the 1st respondent to make a full and
accurate disclosure on all rights and obligations which could
make the 1st respondent liable pursuant to the insurance
77
coverage between the 1st respondent and the 2nd
respondent.
[133] At the risk of being repetitious, the thrust of the argument

was that since the 2nd and 3rd respondents breached their duty of
utmost good faith, the third party insurance policy was rendered
null and void and unenforceable against the 1st respondent, with
no regard to the fact that the appellant as the accident victim and
third party claimant had nothing to do with the alleged false police
report lodged by the 3rd respondent, who himself (3rd respondent)
had no contractual relationship with the 1st respondent. It is
surprising that the 1st respondent chose to accept as gospel truth
the 3rd respondent’s conflicting evidence on his involvement in the
accident as a basis for its application to repudiate liability under
section 96(3) of the RTA.
[134] Given the object and purpose of the statutory third party risks
insurance policy, which is to protect third parties against risks
arising out of the use of motor vehicles, we do not think the 1st
respondent can be allowed to exploit section 96(3) in the manner it
did in this case. The grant of the declaration under section 96(3) to
the 1st respondent was grossly unfair to the appellant who, as it
turned out, succeeded in proving his claim against the 2nd and 3rd
respondents after a full trial of the action in the Teluk Intan
Sessions Court, entitling him to be paid the judgment sum under
section 96(1). In any case, the declaratory order obtained by the
1st respondent from the High Court only binds itself and its insured
and not the appellant.
78
[135] There was in this case an obvious danger of a collusion
between the insurer and the insured (per Lord Scott LJ in Hunt &
Others (supra)) to deny the appellant of the fruits of his litigation.
The trial court’s finding after a full trial that the 3rd respondent and
motorcycle registration No. AHW 5937 were involved in the
accident proves that the 1st respondent (the insurer) had
unwittingly relied on false evidence at the section 96(3) originating
summons hearing.
[136] As for the 2nd and 3rd respondents, their opposition to the
appellant’s appeal was based on the following two grounds:
(i) The appellant failed to procure leave to cross-examine

them on their statutory declarations and affidavits in reply
filed in the High Court at the originating summons
application filed by the 1st respondent; and
(ii) The appellant failed to seek an order to convert the

originating summons filed by the 1st respondent to a writ
action so that the appellant had the opportunity to cross-
examine both of them.
[137] It was their contention that the issue before this court is not
whether the 3rd respondent was involved in the accident but
whether they had breached the duty of uberrimae fidei. This line of
argument is not only inconsistent with the 1st respondent’s case
that the 3rd respondent was not involved at all in the accident but is
without merit and must be rejected. The argument is as good as
saying that it is not this court’s concern if the 3rd respondent was
79
involved in the accident as the court’s concern is only to find out if
they (the 2nd and 3rd respondents) were in cahoots in breaching
their duty of uberrimae fidei to the detriment of the 1st respondent.
[138] With due respect, that cannot be right as the core issue to be
addressed by the court is whether the 3rd respondent was liable in
negligence and not whether the 2nd and 3rd respondents were in
breach of their duty of uberrimae fidei to render the insurance
policy null and void and unenforceable against the 1st respondent.
The issue before the trial court was one of tort and not of contract.
Even if there was a breach of the uberrimae fidei duty on the part
of the 2nd and 3rd respondents, it does not entitle the 1st respondent
to deny liability to the innocent third party claimant (the appellant)
for compensation in the face of sections 90, 91(b), 94, 95 and 109
of the RTA.
[139] As for the 2nd and 3rd respondents’ contention that the
appellant failed to procure leave to cross-examine them on their
statutory declarations and affidavits in reply at the originating
summons hearing, we do not see how the failure is fatal to the
appellant’s case given the serious contradictions in the 3rd
respondent’s evidence, which were never explained save for him
to say that his initial police reports were false. This casts grave
doubts on his credibility and reliability as a witness.
[140] The rule laid down in the oft-cited case of Ng Hee Thoong v
Public Bank Berhad [1995] 1 MLJ 281 CA, which followed Alloy
Automotive Sdn Bhd v Perusahaan Ironfield Sdn Bhd [1986] CLJ
Rep 45; [1986] 1 CLJ 2 FC and Overseas Investment Pte Ltd v
80
Anthony O’Brien & Anor [1988] 3 MLJ 332 HC that in a contest of
affidavits material allegations which are not contradicted are
deemed to be admitted could not have been intended to apply
where the material allegations are manifestly unreliable. Such
evidence is unworthy of credit and must be disregarded by the
court.
[141] Our attention was drawn to the following passage in the

judgment of the High Court in the present case where the learned
judge who heard the section 96(3) application said:
“The Court cannot be expected to accept the evidence of the Investigation

Officer in the Teluk Intan Sessions Court Trial as that was the versions of the
Investigation Officer. Even if the evidence of the Investigation Officer is true, it
is telling against the 2nd Defendant who had not given a full frank disclosure in
relation to the said accident.”
[142] With due respect, if the High Court was not expected to
accept the sworn evidence of the I.O. at the trial, the converse is
also true, that the court is not expected to accept the affidavit
evidence and statutory declaration of the 3rd respondent whose
evidence on his involvement in the accident is demonstrably
unreliable and highly doubtful. It is rather unfortunate that the
learned judge did not give any reason for rejecting the I.O.’s sworn
evidence.
[143] In opposing the 1st respondent’s section 96(3) application

before the High Court, the appellant on his part had raised the
following issues:
81
(i) The 1st respondent failed to state specifically which clause
of the insurance contract was breached by the 2nd and 3rd
respondents;
(ii) A writ action had been filed in the Teluk Intan Sessions
Court prior to the originating summons action;
(iii) The I.O. in the writ action had testified that:

- the 3rd respondent was the one who showed the
location of the accident and the motorcycle AHW 5937
to the I.O. and allowed photographs of the motorcycle
to be taken; and
- the 3rd respondent confirmed that the motorcycle No.

AHW 5937, which he was riding at the material time,
was damaged. The investigation revealed that the
damage to the appellant’s motorcycle was caused by
the “crash” in the rear from the motorcycle No. AHW
5937 ridden by the 3rd respondent at the time of the
accident. The I.O. confirmed this based on the 3rd
respondent’s statement.
(iv) The appellant would be prejudiced if the declaration was

granted as the trial was ongoing;
(v) The High Court’s declaration would deny the appellant a

fair trial. Truth could only be known through a full trial;
82
(vi) As the 1st respondent was the 3rd defendant in the Teluk
Intan Sessions Court trial by way of intervening, it had the
right to cross-examine all witnesses of the appellant and
so the 1st respondent would suffer no prejudice;
(vii) The contents of the 3rd respondent’s statutory declaration

were not incorporated in a formal police report. Thus,
there was no police investigation;
(viii) Who caused the 3rd respondent to change the entire

version in his earlier police report?;
(ix) It was an afterthought for the 3rd respondent to amend the

police report (to change the registration number of the
motorcycle) after more than a year since the accident took
place and after the I.O. had completed giving his evidence
in the writ action;
(x) Why did the 2nd and 3rd respondents and the independent
witness (Nik Maharith) wait for more than a year to reveal
their stories? This was after the Adjuster got involved and
is believed to have influenced the 2nd respondent to
change his mind;
(xi) The 2nd respondent and the independent witness merely

made statutory declarations without lodging police reports
to support their allegations to enable a police investigation
to take place;
83
(xii) Whether the Adjuster and all the respondents worked in
cahoots to defeat the appellant’s writ action;
(xiii) That the 1st respondent’s failure to produce the Adjuster’s

report raised suspicion as to whether something was
being hidden;
(xiv) The 3rd respondent failed to include the new version of the
accident (as in his statutory declaration) in his two
corrective police reports despite the fact that there was
ample opportunity to do so;
(xv) The principle of uberrimae fide was not applicable; and
(xvi) Based on the above reasons, there were many triable

issues which could only be properly decided in a full trial
and not by way of a contest of affidavits. Hence, all
witnesses had to give oral evidence and then tested in
cross-examination before a decision could be made.
[144] On 21.7.2017, the High Court hearing the section 96(3)

application by the 1st respondent ruled against the appellant by
declaring that the insurance policy for the motorcycle registration
No. AHW 5937 was void and unenforceable. The appellant’s
appeal to the Court of Appeal against the decision was dismissed
on 20.3.2019, principally on the ground that the proceedings in the
Teluk Intan Sessions Court had no bearing on the originating
summons proceedings and that at any rate the insured (2nd
84
respondent) and rider of the motorcycle (3rd respondent) were not
cross-examined on their statutory declarations and affidavits.
[145] Pausing here for a moment, here is a case where the

appellant was a victim of a road accident through no fault of his.
Before liability was determined by the Teluk Intan Sessions Court
where the appellant filed his writ action, the 1st respondent applied
for and obtained a section 96(3) declaration from the Kuala
Lumpur High Court on the basis that the 3rd respondent was not
involved in the accident. But the Teluk Intan Sessions Court after
hearing viva voce evidence in a full trial not only found the 3rd
respondent and the motorcycle registration No. AHW 5937 to be
involved in the accident but also found the 3rd respondent liable for
the accident and entered judgment against him.
[146] This irreconcilably conflicting finding of fact on such vital

issue as liability by two courts of competent jurisdiction is
unacceptable. It raises the specter of a breakdown in the law on
third party risks insurance policies. Which finding is to prevail, the
finding of the trial court after a full hearing or the finding of the High
Court in an application under section 96(3) of the RTA?
[147] If this court were to accede to the 1st respondent’s argument,

it will mean that the finding of the High Court in proceedings under
section 96(3) of the RTA must and will always prevail over the
finding of the trial court in a full trial. On the other hand, if we were
to accede to the appellant’s argument, it will mean that the finding
of the trial court must and will always prevail over the finding of the
High Court in a section 96(3) application.
85
[148] For the appellant, the contention was as follows:
(1) Section 96 of the RTA is not an automatic right. The 1st

respondent must satisfy its burden under the section and
under Schedule 9 of the Financial Services Act 2013,
which imposes the burden on the insurer to prove that
there was misrepresentation, and explain what steps were
taken by the insurer before and after the contract was
entered into, to enable the court to consider whether there
has been a waiver by the insurer;
(2) The issue of whether the defendant (3rd respondent) the

trial court was involved in the accident was a live issue
before the trial court when the High Court received the 1st
respondent’s application under section 96(3) of the RTA.
It was for the trial court to decide on the 3rd respondent’s
involvement in the accident and not for the High Court
hearing the section 96(3) application;
(3) The High Court ought to have dismissed the section 96(3)
application to prevent multiplicity of proceedings and to
uphold the appellant’s constitutional right to equal
treatment and protection under the law. The appellant
was victorious at the trial court but was unable to enforce
the judgment against the 1st respondent;
(4) Section 96 is part of a social legislation to enable the

victims to enforce the judgment against the insurer. It
ought not to be exploited to prejudice the appellant’s trial
86
and disrupt the enforcement of judgment. The trial court
found the 3rd respondent liable. The High Court has now
given a conflicting finding which prejudices the appellant;
(5) When the High Courts are faced with section 96(3)
applications premised on grounds relating to the
involvement of the driver or liability of the driver, the
courts ought to dismiss the application and allow the trial
judge to make a determination on the issue.
(6) A section 96(3) declaration must only be allowed in “clear

cut cases” as held in Chu Chu @ Moksin Amlih v AM
General Insurance (Malaysia) Berhad & 2 Ors [2017] 1
LNS 717 which made two points on the issue:
(a) the legislative intent of the RTA is to protect road

users. Therefore, insurers do not have an automatic
right to the declaration;
(b) the High Courts dealing with section 96(3)

declaration ought to refrain from granting such
orders where there is an ongoing suit to determine
whether the victim ought to be insured. The trial court
would assess the evidence to determine the liability.
[149] It was submitted that the present case is not a clear-cut case
for disposal under section 96(3) of the RTA for the following
reasons:
87
(a) there was a trial pending before the Sessions Court to
determine whether the defendant (driver) was involved in
the accident;
(b) the issue of liability in an accident cannot be determined

by affidavit evidence;
(c) there was serious conflict in the evidence as the 3rd

respondent made two corrective police reports altering his
initial police report where he admitted involvement in the
accident. The 2nd respondent also affirmed a statutory
declaration in favour of the 3rd respondent’s altered
version. These evidence were tested by the trial court and
the trial court found the 3rd respondent liable; and
(d) as the High Court prematurely found that the 3rd

respondent was not involved in the accident, the
declaration in favour of the insurer now deprives the
appellant from enforcing the judgment against the insurer
for damages. The appellant’s protection under the RTA
has been infringed.
[150] It was further submitted that issues relating to the tort of

negligence, and whether the 3rd respondent was involved in the
accident using the 2nd respondent’s vehicle is to be determined
during the trial in the Sessions Court and not by way of a section
96(3) application in the High Court.
88
[151] In Balamoney Asoriah v MMIP Services Sdn Bhd [2020] 1
CLJ 476, the insurance policy was renewed in the deceased’s
name after his demise. The accident occurred after his demise.
The insurer applied to declare the policy void on the basis of a
breach of uberrimae fidei duty for non-disclosure of his death. It
was held by the Court of Appeal that the deceased’s death does
not ipso facto invalidate the policy.
[152] In arriving at the conclusion, the court analysed the burden

imposed on the insurer by Schedule 9 of the Financial Services
Act 2013 (“the FSA”). It was held that where the insurer itself is in
breach either by not pursuing or safeguarding its own interest and
obligations, it will not be open to the insurer to approach the court
for a declaration under section 96(3) of the RTA to avoid the
insurance contract. The relevant paragraphs in Schedule 9 of the
FSA are as follows:
“5. Pre-contractual duty of disclosure for consumer insurance contracts
(1) Before a consumer insurance contract is entered into or varied, a licensed

insurer may request a proposer who is a consumer to answer any specific
questions that are relevant to the decision of the insurer whether to accept the
risk or not and the rates and terms to be applied.
…………………………………………..
(6) Where the consumer fails to answer or gives an incomplete or irrelevant

answer to any request by the licensed insurer under subparagraph (1) or
subsubparagraph (3)(a), or fails to confirm or amend any matter under
subsubparagraph (3)(a), or does so incompletely or provides irrelevant
information, as the case may be, and the answer or matter was not pursued
further by the insurer, compliance with the consumer’s duty of disclosure in
89
respect of the answer or matter shall be deemed to have been waived by the
insurer.
(7) A licensed insurer shall, before a consumer insurance contract is entered

into, varied or renewed, clearly inform the consumer in writing of the
consumer’s pre-contractual duty of disclosure under this paragraph, and that
this duty of disclosure shall continue until the time the contract is entered into,
varied or renewed.”
[153] The rationale for imposing the burden on the insurer was
debated in Parliament as set out in the following excerpts from the
Hansard:
“Keenam, rang undang-undang ini akan menyediakan rangka kerja yang

kukuh bagi perlindungan pengguna kewangan. Ini dicapai melalui:
……..
(iv) memperuntukkan tanggungjawab insurans untuk memberi panduan
kepada pengguna mengenai penzahiran yang diperlukan semasa peringkat
pra kontrak dalam hal salah nyata atau misrepresentation yang dibuat oleh
pengguna.
Pada masa sekarang, kontrak insurans boleh dielak, avoidable secara

langsung oleh penanggung insurans tidak kira sama ada salah nyata oleh
seorang pengguna tersebut dibuat secara sengaja atau melulu, cuai atau pun
tidak sengaja.
Ketujuh, rang undang-undang ini akan menyokong pendekatan penyeliaan

yang lebih bersifat pencegahan awal, prevention, ya.
Jadual 9 menyatakan kewajipan baru untuk penzahiran dan representasi bagi

pengguna yang perlu dipatuhi sebelum sesuatu kontrak insurans dibuat,
diubah atau diperbaharui dengan penanggung insurans. Jadual ini juga
menyatakan remedy berkadar proportionate remedy yang boleh digunakan
90
oleh penanggung insurans dalam hal salah nyata yang dibuat oleh pengguna
semasa peringkat pra kontrak bergantung kepada jenis salah nyata yang
dibuat.
Sama dengan syarikat-syarikat insurans, apakah kawal seliaan terhadap

syarikat-syarikat insurans mengikut Akta Insurans 1967? Pada masa ini,
semua syarikat insurans apabila berlaku satu tuntutan oleh pelanggan
mereka, pertama sekali dia tengok bagaimana nak tolak permohonan itu,
dengan izin, how to repudiate liability. Padahal, orang ambil insurans adalah
untuk perlindungan semasa kejadian kecurian atau rompakan.
……..
Sama macam Parlimen juga Tuan Yang di-Pertua, sebab kes-kes insurans
yang boleh diselesaikan tengok kepada polisi, mesti ada niat untuk
menyelesaikan kepada pencarum, kepada policy-holder dan proses claim itu,
tuntutan itu. Saya rasa syarikat-syarikat insurans sebagai kartel, mereka
menguasai indusri insurans ini. Sama macam dahulu.”
[154] It is clear that Parliament’s intention vide Schedule 9 of the

FSA is to provide a check and balance as a way to supervise the
insurance companies, to prevent them from easily repudiating
liability without reasonable cause.
[155] Learned counsel for all three respondents pressed home the
point that the proceedings in the Teluk Intan Sessions Court was
separate and distinct from the proceedings in the High Court
pursuant to section 96(3) of the RTA and as such the Teluk Intan
Sessions Court proceedings had no bearing on the outcome of the
originating summons proceedings in the High Court.
[156] We find no merit in the argument. Although the proceedings

in the two courts were separate and distinct, the decision of the
91
High Court in the section 96(3) application, which stole a march
from the Teluk Intan Sessions Court trial, had a direct and adverse
effect on the appellant’s future recovery of damages that he
obtained from the Teluk Intan Sessions Court, where he came out
victorious after a full hearing.
[157] The only consolation for the appellant is that no committal or

other execution process may be issued to enforce the declaratory
order: See Takako Sakao v Ng Pek Yuen & Anor (No. 3) [2010] 1
CLJ 429. In Datuk Syed Kechik bin Syed Mohamed v Government
of Malaysia & Anor [1979] 2 MLJ 101, it was held by this court that
the declaration obtained by the appellant in that case was only
related to his legal status as a permanent resident of Sabah but
was still subject to the relevant immigration laws, i.e. the power of
the Director of Immigration Sabah to cancel the Entry Permit
issued to him in the circumstances under the Immigration Act,
1959/63 which could occur in the future. Per Lee Hun Hoe CJ
(Borneo):
“The basis of the jurisdiction (for declaratory orders) is O. 25 r. 5 of the Rules

of the Supreme Court. The prevailing view seems to be that the court’s
jurisdiction to make a declaratory order is unlimited subject only to its own
discretion. In Ibeneweka v Egbuna Viscount Radcliffe in giving the decision of
the Privy Council stated:-
“The general theme of judicial observations has been to the effect that
declarations are not lightly to be granted. The power should be exercised
‘sparingly’, with ‘great care and jealously,’ with ‘extreme caution,’ with ‘the
utmost caution.’ These are indeed counsels of moderation, even though as,
Lord Dunedin once observed, such expressions afford little guidance for
92
particular cases. Nevertheless, warnings of this character appear to their
Lordships to be not so much enunciations of legal principle as administrative
cautions issued by eminent and prudent judges to their possibly more
reckless, successors. After all, it is doubtful if there is more of principle
involved than the undoubted truth that the power to grant a declaration should
be exercised with a proper sense of responsibility and a full realization that
judicial pronouncements ought not to be issued unless there are
circumstances that call for their making. Beyond that there is no legal
restriction on the award of a declaration.”
……………………………..
In granting a declaration the court has to consider the utility of the declaration
claimed and the usefulness of the declaration on the one hand as against the
inconvenience and embarrassment that may result on the other hand. As to
the determination of future right its importance for certain purposes is not in
doubt, particularly when a mere declaration is usually the only remedy.”
[158] We are mindful that the issues of law raised in Datuk Syed
Kechik are not analogous to the issues of law raised in the present
appeal, but its relevance in particular is in adopting the principle
laid down by the Privy Council in Ibeneweka that declarations are
not lightly to be granted. This applies with greater force to the
present case where a declaration pursuant to section 96(3) of the
RTA was not the only remedy available to the 1st respondent.
[159] We agree with learned counsel for the appellant that the
High Court ought to have dismissed the section 96(3) application
as the 1st respondent relied on facts which formed the core points
of dispute between the parties in the trial court, such as whether
the rider of the motorcycle was involved in the accident. The
question whether the rider was involved in the accident was an
issue of tort and not of contract. The legislative intent behind
93
section 96(3) is clear, that the provision is only meant for
determining issues of voidness and unenforceability of an
insurance contract and cannot be exploited to determine core
factual issues in the tort of negligence such as the issues of liability
and damages.
[160] The facts and the evidence in the present case were so
highly contested, compounded as it were by the fact that the 3rd
respondent made a complete about turn in his evidence after the
I.O. had given evidence at the trial in the Teluk Intan Sessions
Court. Surely this required determination by viva voce evidence in
a single trial and not by two different courts as had happened in
this case. These highly contested factual issues cannot suitably be
resolved by way of a section 96(3) declaration as they form a
crucial point of contention between the parties.
[161] The point needs to be emphasised that the 3rd respondent

changed his evidence after the Insurance Adjusters came into the
picture. His fourth police report and the statutory declarations in
support of the 1st respondent’s section 96(3) application were all
made after the Adjusters had come up with their report. This was
confirmed by the 1st respondent’s Deputy Manager herself, one
Mona Shewandas in her affidavit in support.
[162] As the facts disclose, armed with the Adjusters’ report, the
1st respondent understandably argued fraud on the part of the
insured (2nd respondent) and the rider (3rd respondent) whom it
alleged were in breach of the duty of utmost good faith, thus
94
entitling it to a declaration under section 96(3) that the insurance
policy was void. But this clashes with:
(a) the appellant’s right to recovery of the judgment sum

awarded by the trial court; and
(b) the 1st respondent’s statutory duty to pay the judgment
sum.
[163] Learned counsel for the appellant was right in our view in
pointing out that the duty to act in good faith (uberrimae fidei)
applies equally to insurers throughout the policy period: See
Allianz General Insurance Company (M) Bhd v Mohd Fazdli bin
Mohd Salleh & Ors [2018] MLJU 900. It is hard to ignore the fact
that the total change in the 3rd respondent’s initial admission of his
involvement in the accident was procured by the Adjusters under
very suspicious circumstances, thus raising the question whether
the 1st respondent itself had breached its uberrimae fidei duty.
[164] Fairness to the appellant demands that the evidence relied

on by the 1st respondent in the section 96(3) application be tested
in the pending trial at the Teluk Intan Sessions Court. The
arbitrariness that had taken place has created uncertainty for the
appellant’s chances of recovery and this breaches his right to
equality under Article 8 of the Federal Constitution as the fate of
the entire case was decided not in a trial but on an originating
summons.
[165] What transpired in this case has resulted in the trial court’s
function being rendered useless and its judgment in favour of the
95
appellant nugatory as the section 96(3) declaration obtained by the
1st respondent from the High Court defeated the judgment
obtained by the appellant from the Sessions Court, thus leaving
him with only a paper judgment that may not even be worth the
paper it is printed on. That defeats the object of the RTA to protect
third parties against risks arising out of the use of motor vehicles
rather than to put its object into effect.
[166] The granting of the declaration under section 96(3) of the

RTA by the High Court was a serious error of law and fact. It
denied the appellant of the fruits of his litigation in the Teluk Intan
Sessions Court. This has unfairly left him without adequate remedy
and the point must again be emphasised that given the serious
doubts in the 3rd respondent’s evidence concerning his
involvement in the accident, the correct approach would have been
for the High Court to dismiss the section 96(3) application and to
allow the trial court to decide on the matter, which was the
approach correctly taken by Lim Chong Fong J in Malaysia Motor
Insurance Pool v Eastern Moon Enterprise & Anor [2019] 10 CLJ
230.
[167] In that case the first issue was whether the 1st respondent
had sold the bus to one Ramu a/l Karupiah. The learned judge
held that “since this point has already been pleaded in the suit, I
am therefore of the view that it is inappropriate that this point is
dealt with here.”
96
[168] In Ting Ling Kiew & Anor v Tang Eng Iron Works Co Ltd
[1992] 2 MLJ 217 the then Supreme Court made the following
pertinent observations on the issue of conflicts in evidence:
“(2) The conflicts in the evidence could only be properly and satisfactorily
resolved if oral evidence was adduced and witnesses cross-examined on their
evidence which, however, was not possible in proceedings begun by
originating summons. In any case, it was most inappropriate and iniquitous to
decide disputed facts summarily by relying simply on affidavit evidence.”
[169] Guidance may also be sought from the following two cases:
(1) Abdul Majid v Har Abdul Razak [1971] 2 MLJ 228 where it was
held, on the facts of the case:
“(1) Questions of jurisdiction apart, courts would refuse to decide questions

of fact on an originating summons as a matter of some inconvenience;
(2) In the circumstances of this case, the grantor’s subsequent change of

heart may have led to another consensual variation. If so, then it remained for
the court to find what was the actual agreement reached. If it did not, then the
question remained whether the grantor had so bound himself contractually
that he must be made to perform specifically any contract entered into validly
by him and as varied consensually. This meant, at least, that evidence would
have to be led, and therefore an originating summons was not suitable
medium or process for the determination of the issues raised.”
(2) Ong Yok Chu & Anor v Yang Teck Fong & Anor [1960] 26
MLJ 292 where it was held, inter alia, that it is contrary to all
decided authorities to try disputed issues of fact on an originating
summons.
97
[170] The 1st respondent however contended that the appellant
should have applied to convert the originating summons to a writ
action and that since he failed to do so, it was too late for him to
raise the matter now. We do not think that in all the circumstances
of this case, converting the originating summons to a writ action
was a viable option. There was to the 1st respondent’s knowledge
already an ongoing trial in the Teluk Intan Sessions Court when it
filed the application under section 96(3) of the RTA.
[171] The trial in the Teluk Intan Sessions Court was to determine,
amongst others, if the 3rd respondent was involved in the accident
and if so whether he was negligent in causing the accident. To
convert the originating summons to a writ action would
unnecessarily prolong the matter. In saying this, we must not be
understood to mean that in an application under section 96(3) the
insurer is at liberty to apply for the application to be converted to a
writ action if otherwise the action is well within the jurisdiction of
the subordinate courts, in this case the Teluk Intan Sessions
Court.
[172] For all the reasons aforesaid, leave question 1 is answered

in the affirmative. Leave question 2 is also answered in the
affirmative to prevent two courts of competent jurisdiction from
making conflicting findings of fact on the same issue. Evidence of
the alleged non-involvement of the 3rd respondent in the accident
must be adduced at the trial to prevent duplicity of proceedings. As
for leave question 3, the answer must likewise be in the affirmative
as a section 96(3) application is only for determining issues of
98
voidness and unenforceability of an insurance contract and not to
determine core issues in the tort of negligence.
APPEAL NO. 5
MALAYSIAN MOTOR INSURANCE POOL V. AQMAL BIN
DAKHIRRUDDIN
[173] There were seven leave questions posed for our
determination in this appeal and they are as follows:
Leave question 1
“Is the concept of transfer of interest under Insurance Law similar to
ownership being passed to the possessor/buyer under section 13 of the Road
Transport Act 1987 (RTA) notwithstanding the registration card remaining in
the name of the original owner?
Leave question 2
“Are the English Common Law cases, starting with Peters v General Accident
& Life Assurance Corpn. Ltd (1937) 4 AER 628 as applied in Simirah Roslan v
New Zealand (1966) 2 MLJ 1 FC still good law in the light of the interpretation
given by the Court of Appeal to the doctrine of Uberrimae Fidei under
Schedule 9 of the Financial Services Act (FSA) 2013?”
Leave question 3
“Is the definition of “insurer concerned” of a vehicle bound by the letter dated
18/1/1985 issued by the Motor Insurance Bureau given that the PRINCIPAL
AGREEMENT dated 1968 has been replaced by the SUBSTITUTED
AGREEMENT dated 1992?”
Leave question 4
“Whether the principle enunciated in the Federal Court case of Nanyang
Insurance Co Ltd v Salbiah & Anor (1976) 1 MLJ 94 FC, is good law in the
99
determination of transfer of interest in motor vehicle i.e. whether a transferor
of possession of a motor vehicle by sale retains an interest in a motor vehicle
until full purchase price has been effected by the transferee?”
Leave question 5
Whether breach of a policy condition by an insured/tortfeasor i.e.
misrepresentation, failure to inform change of ownership or that the contract
of insurance between the insurer and the insured based on the principle of
‘uberrimae fidei’ does not entitle the insurer to deny liability to an
innocent/third party (victim of bodily injury/death) by virtue of the statutory
compulsory requirement under section 91(b) read together with Section 94
and 95 Road Transport Act 1987 (“RTA”).”
Leave question 6
Whether the RTA in particular provisions under Part IV namely S.89, 90, 91,
94 and 95 to 107 of RTA provide statutory protection to road victims (who are
innocent parties) under the insurance policy terms?”
Leave question 7
“When facts are being disputed between the parties and contradicting to the
contemporaneous documents, whether the mode of Originating Summons is
proper to dispose an issue relating to the transfer on interest of a motor
vehicle?”
[174] Briefly the facts are these. On 6.9.2014, the respondent was
riding motorcycle registration No. BLB 6002 (“the motorcycle”) with
his friend Muhammad Arif bin Ahmad Azhar riding pillion from
Parkland heading towards Telok Panglima Garang. When they
reached Persiaran Tengku Ampuan Rahimah, Klang, they were
proceeding straight ahead when motorcar registration No. BFU
2275 (“the car”) driven by one Fovez Ahmad without any warning
and without any signal switched direction from left to right, causing
100
a collision between the car and the motorcycle, resulting in serious
injuries to the respondent and his friend Muhammad Arif bin
Ahmad Azhar.
[175] At the time of the accident, the car driven by Fovez was
registered in the name of one Azhar bin Ahmad (“the insured”) and
insured by the appellant for the period from 30.4.2014 to
29.4.2015. The insured had, in September 2011 sold the car to
one En. Din (“Din”), a used car dealer for RM11,000.00 who
subsequently sold the car to one Sufiah Savithri binti Abdullah
(“Sufiah”) sometime in June 2014 for RM22,000.00.
[176] Civil proceedings were instituted by the respondent in the

Sessions Court at Sepang against the driver and the insured for
causing the accident. The appellant through its solicitors Messrs
Murali B. Pillai & Associates filed its statement of defence dated
5.5.2016 on behalf of the insured. The proceedings at the Sepang
Sessions Court was fixed for trial on 23.11.2016 and subsequently
postponed to 25.11.2017 and 27.11.2017. The trial is now stayed
pending the outcome of the present appeal by the appellant.
[177] Subsequently the appellant appointed another firm of

solicitors, namely Messrs Silva Velu & Co to act for it, who then
served on the respondent the cause papers for the section 96(3)
application, seeking for a declaration that the insurance policy was
void and unenforceable against it. The appellant was also seeking
to avoid any liability to cover any judgment sum awarded to the
respondent by the Sepang Sessions Court.
101
[178] The appellant’s case was that the insurance policy has been
rendered void by reason of the sale of the car to Din by the insured
in September 2011. It was however not disputed by the appellant
that the second purchaser Sufiah only registered the car in her
name on 15.1.2015 upon paying the full purchase price.
[179] Going by the timeline, it is clear that the car was still
registered in the insured’s name at the time of the accident on
6.9.2014. He was therefore deemed to be the “owner” of the car at
the material time (Section 109(1) of the RTA).
[180] The appellant’s application under section 96(3) of the RTA

was allowed by the Shah Alam High Court inter alia on the
following grounds:
(1) that the insurance company was entitled to avoid or

cancel or may avoid or cancel a policy of insurance upon
such event arising as stated in the RTA;
(2) that since the originating summons was not opposed by

the insured and in fact admitted in the statutory
declaration pertaining to the sale of the motorcar without
notifying the appellant, there was a breach of the doctrine
of uberrimae fidei and that the failure to make such
disclosure entitled the appellant to obtain a declaration as
prayed for in the originating summons;
(3) that the Court of Appeal judgment in Zainudin Mat Isa &
Anor v The Pacific Insurance Bhd [2017] 1 LNS 1979 is
102
distinguishable on the ground that the declaration sought
for in that case was not consistent with the registration
card of the motorcar and hence there was insufficient
proof of the sale of the car;
(4) that the respondent himself had no knowledge of the sale

of the car to be able to refute the sale to Din and
subsequently to Sufiah;
(5) that despite the tortious action instituted in the Sessions

Court against the insured and Fovez, Sufiah had
proceeded to register the transfer to her name on
15.1.2015. This meant that Sufiah admitted that Fovez
had driven the car at the time of the accident and that the
appellant had no knowledge of the sale transaction nor
the loan of the car when the car was involved in the
accident;
(6) that since it was a case of “sambung bayar”, the fact of

the failure to disclose a copy of the registration card as
requested by the respondent’s solicitors was not fatal and
did not attract the adverse inference under section 114(g)
of the Evidence Act 1957;
(7) that the respondent ought to know that the registration

card should have been in the possession of the finance
company and not with the appellant;
103
(8) that Fovez was not authorized to drive the car by the
insured;
(9) that based on the cases of Peters v General Accident &

Life Insurance Corp.Ltd [1937] 4 AER 628; New India
Insurance Co. Ltd v Simirah [1966] 2 MLJ 1; Roslan bin
Abdullah v New Zealand Insurance Co. Ltd [1981]2 MLJ
324 and Kurnia Insurance (Malaysia) Berhad v Personal
Representative of Zenol Saad & Ors [2013 1 LNS 239,
the policy insurance had lapsed by reason of the sale of
the motorcar.
[181] The decision was reversed by the Court of Appeal inter alia
on the following grounds:
(1) that the evidence of statutory declarations relied on by the

appellant was insufficient as the facts were disputed and
contradictory to the contemporaneous documents. There
was no explanation of the circumstances and the reason as
to why the vehicle belonged to Sufiah but remains
registered in the name of the insured;
(2) that the determination of “transfer of interest” from the

insured to Din and subsequently to Sufiah ought to give
consideration to the compliance of section 13 of the RTA
and in this case there was a breach of the provision;
104
(3) that section 109 of the RTA provides that the registered
owner of a motor vehicle shall be deemed to be the owner
of the motor vehicle for the purpose of the present case;
(4) that applying Nanyang Insurance Co.Ltd v Salbiah & Anor

[1967] 1 MLJ 94 FC, the insured retained an interest in the
motor vehicle until the full purchase price was effected on
15.1.2015 by Sufiah after the accident on 6.9.2014;
(5) that the appellant cannot deny liability by virtue of the

statutory compulsory requirement under section 91(1)(b)
read with sections 94 and 95 of the RTA;
(6) that there is a letter dated 18.1.1985 from the Motor

Insurance Bureau (MIB) which lays down that all accidents
occurring after 30.8.1984 involving a “transfer of interest
claims” would become the liability of the insurance
companies concerned;
[182] Except for leave question 3, the issues raised in leave

questions 1, 2, 4, 5, 6 and 7 are in substance similar to the issues
raised in the corresponding leave questions in Appeal No. 1
(Amgeneral Insurance), Appeal No. 2 (Mohamad Rafiq), and
Appeal No. 4 (Mohamad Zulkarnain). Therefore the answers to
leave questions 1, 2, 4, 5, 6 and 7 must correspondingly be the
same as our answers to the corresponding leave questions in
those three appeals and for the same reasons.
[183] Leave question 3 is reproduced again below:
105
“Is the definition of “insurer concerned” of a vehicle bound by the letter dated
18/1/1985 issued by the Motor Insurance Bureau given that the PRINCIPAL
AGREEMENT dated 1968 has been replaced by the SUBSTITUTED
AGREEMENT dated 1992?”
[184] The respondent’s contention was that the appellant is bound

by the Motor Insurance Bureau (MIB) guidelines vide letter dated
18.1.1985 which makes insurers liable under the policy for motor
vehicles. According to the respondent the appellant is therefore
liable under the insurance policy for the car BFU 2275 as all
insurers for motor insurance are signatories to the Substituted
Domestic Agreement with the MIB guidelines. We agree.
[185] The effect of the MIB guidelines was considered in Mohd

Salleh Kasim v Taisho Marine & Fire Insurance Co Ltd & Anor
[1999] 5 CLJ 302 where it was held, on the facts of the case, that
in the event of a transfer of ownership of the motorcycle, the
insurer (1st defendant) was still liable to the plaintiff for the simple
reason that under the memorandum, to which the 1st defendant
was a signatory, the 1st defendant had agreed to be liable to third
parties for any claim arising out of a road accident after 30 August
1984 involving any vehicle insured by it even though the vehicle
may have been transferred from the insured to some other person.
[186] In Hameed Jagubar Syed Ahmad v Pacific & Orient

Insurance Co Bhd [2017] 10 CLJ 278 the Court of Appeal in a
unanimous decision observed as follows:
106
“[38] In this regard, it must be noted that although the insured was guilty of
breach of utmost good faith, the intervener was an innocent third party. As
motor insurance is compulsory by law, the intention of Parliament is to provide
compensation by insurance companies especially to innocent and blameless
third parties who suffer injury and damage. It is a statutory remedy and there
must be some assurance of payment as otherwise the whole purpose of such
insurance scheme will seem illusory.
[39] This was fortified further by the establishment of the Motor Insurer’s
Bureau of Malaysia (“MIB”) in 1968 as a form of social justice to victims of
road accidents who failed to obtain compensation. It was set up on 15
January 1968 through an agreement between MIB and the Minister of
Transport and followed by an agreement by each of the insurance companies
transacting compulsory vehicle insurance business who would fund the MIB.
[40] This was superseded by a new agreement between MIB and the
Minister of Transport on 9 January 1992 which was followed by a second
agreement between MIB and the insurance companies which became
operative on 1 January 1992. The Malaysian MIB Agreement, which was
inspired by and fashioned according to the UK MIB Agreement of 1946, later
spawned the Singapore MIB Agreement of 1975 (see S. Santhana Dass, The
Law of Motor Insurance, (2010), Marsden Law Book, Kuala Lumpur).
[41] Significantly, the MIB Agreement also found its way into the statute
books in the form of s. 89 of the RTA which defines “authorized insurer” as “a
person lawfully carrying on motor vehicle business in Malaysia who is a
member of the Motor Insurer’s Bureau”. In the same section it is also set out
that “Motor Insurer’s Bureau” means the Motor Insurers’ Bureau which has
executed an agreement with the Minister of Transport to secure compensation
to third party victims of road accidents in cases where such victims are denied
compensation by the absence of insurance or of effective insurance.”
107
[187] Thus, even assuming for a moment that there was a breach
of policy conditions by the insured for failing to inform the appellant
of the sale of the car, the appellant cannot deny liability by virtue of
the statutory requirement under section 91(1)(b) read with section
94 and 95 of the RTA. In any event, the appellant as insurer is
bound by the MIB guidelines vide letter dated 18.1.1985.
[188] The Court of Appeal was therefore not wrong in referring to

the MIB guidelines as an additional issue in determining the liability
of an insurer to a third party claim for bodily injury or death.
[189] Accordingly, our answer to leave question 3 is in the

affirmative, that is to say, the definition of “insurer concerned” of a
vehicle is bound by the letter dated 18.1.1985 issued by the MIB
given that the PRINCIPAL AGREEMENT dated 1968 has been
replaced by the SUBSTITUTED AGREEMENT dated 1992.
APPEAL NO. 6
PACIFIC & ORIENT INSURANCE CO BERHAD V. YEAP TICK
IN.
[190] For this appeal the leave questions are as follows:
Leave question 1
“When the High Court has found as a fact that the 3 rd party claimant (the
Respondent) had made 2 separate applications to set aside the declaratory
order obtained by the insurer against its insured and when both the said
applications had been dismissed by 2 different High Courts and when the
Defence filed by the 3rd party Claimant in the suit filed by the insurers for the
injunction relied on the same facts on which the 2 applications were dismissed
108
and when there was no further appeal against the dismissals of the 3 rd party’s
2 applications to the Court of Appeal, was the High Court entitled in law to
grant a permanent injunction against the 3rd party Claimant until he obtained
Judgment against the insurer;
Leave question 2
“Even though the High Court, having found that the insurer had not made out
a case for malicious prosecution and abuse of process, but based on the
imminent threat by the 3rd party Claimant to execute against the insurer a
public listed company, without first obtaining Judgment against the insurer,
was the High Court not entitled to grant the permanent injunction (quia timet)
against the 3rd party Claimant, until he obtained the Judgment against the
insurer.”
[191] The appeal is against the decision of the Court of Appeal

dated 11.9.2019 reversing the decision of the High Court dated
1.6.2017 to grant a permanent injunction against the respondent
by injuncting him from applying to enforce a judgment that he
obtained from the Shah Alam Sessions Court against the insured
without first obtaining judgment against the appellant as the insurer
by way of recovery proceedings.
[192] The appellant’s contention was that the respondent as a third

party claimant had no automatic right to issue a demand notice
against it just because he had obtained judgment against the
insured from the trial court. It was argued that the respondent must
also obtain judgment against the appellant as the insurer before he
could proceed with execution proceedings.
[193] The facts leading to the present appeal are as follows. The
respondent filed his personal injuries claim in the Shah Alam
109
Sessions Court against one Muhammad Salleh bin Abdullah (the
insured) following a road accident on 13.6.2012. The insured’s
motorcycle bearing registration No. BKU 1790 (“the motorcycle”)
which was ridden solo by his friend and colleague one Azman bin
Kamaruddin had hit the respondent’s bicycle, thereby causing him
severe injuries. At all material times the motorcycle was insured by
the appellant.
[194] Notice of proceedings pursuant to section 92(2)(a) of the

RTA was issued by the respondent’s solicitors to the appellant as
the insurer of the motorcycle. Upon receipt of the notice, the
appellant appointed Jaya Adjusters Sdn Bhd (“the Adjusters”) to
investigate the case.
[195] The insured informed the Adjusters that he did not ride the
motorcycle on the date of the accident, i.e. on 13.6.2012 and was
not involved in any accident with the respondent. The insured then
affirmed a statutory declaration dated 7.10.2014 to that effect
before a Commissioner for Oaths.
[196] On the basis of the statutory declaration, the appellant filed

an originating summons in the High Court at Kuala Lumpur against
its insured on 21.11.2014 to declare the policy void and
unenforceable under section 96(3) of the RTA and it succeeded.
On 7.1.2015, the High Court granted the order sought for by the
appellant, despite the fact that neither the cause papers nor the
notice of application were served on the respondent or his
solicitors.
110
[197] After obtaining the declaratory order, the appellant instructed
its solicitors defending the insured in the Shah Alam Sessions
Court action to discharge themselves from further acting for the
insured for the reason that any continued defence of the insured
after obtaining the declaratory order from the High Court would be
construed as a waiver by the insured whom it represented.
[198] The appellant only resumed its defence of the insured after
the decision of the Court of Appeal in Amgeneral Insurance Bhd v
Iskandar bin Mohd Nuli [2016] 1 MLJ 818, which held that
notwithstanding the fact that the insurer had obtained a declaratory
order under section 96(3) of the RTA, the insurer could continue
defending the insured since there is ‘a commonality in interest’ in
the insurer continuing with the defence to mitigate on both liability
and quantum.
[199] In the meantime, the trial in the Shah Alam Sessions Court
proceeded, and on 28.3.2016 the respondent obtained a default
judgment against the insured for general and special damages in
the sum of RM177,657.50 with interest and costs of RM14,633.00.
To date this judgment of the Shah Alam Sessions Court has not
been set aside nor appealed against.
[200] What transpired in the Shah Alam Sessions Court earlier

was that four witnesses for the respondent and one for the insured
had given evidence and the matter was at the submissions stage
when the insured’s solicitors forwarded the declaratory order dated
7.1.2015 obtained by the appellant from the Kuala Lumpur High
Court to the respondent’s solicitors.
111
[201] The respondent by Notice of Application to the Kuala Lumpur
High Court dated 10.3.2015 applied to intervene in the
proceedings and to set aside the declaratory order obtained by the
appellant dated 7.1.2015. The application was dismissed by the
High Court on 2.6.2015.
[202] The respondent did not appeal against the decision but filed
another application in the Kuala Lumpur High Court on 26.10.2017
in which the respondent again applied for an order to set aside the
section 96(3) declaratory order dated 7.1.2015 obtained by the
appellant against the insured.
[203] On being served with the application, the appellant filed an

application dated 9.11.2017 to strike off the respondent’s
application on the basis that the application was caught by the
principle of res judicata and issue estoppel because the reasons
set out in the supporting affidavits for both applications raised the
same issue. The High Court found favour with the appellant’s
argument and struck out the respondent’s application. The
respondent filed an appeal against the decision but subsequently
filed a notice of discontinuance.
[204] In the meantime, while the parties were waiting for the
decision of the High Court fixed on 20.3.2018, the respondent
through Messrs. Manikam Aviadar & Co issued a notice dated
26.2.2018 to the appellant demanding payment of the judgment
sum obtained by the respondent from the Shah Alam Sessions
Court two years earlier on 28.3.2016 and threatened to enforce the
judgment against the appellant through proceedings “deemed fit
112
and proper and in a manner or method and date, at our discretion
without further notice to you.” The appellant took this as a threat to
enforce execution of the Shah Alam Sessions Court judgment by
writ of seizure and sale.
[205] The appellant’s response to the notice of demand was to file

an application in the Kuala Lumpur High Court for the following
orders:
(i) An injunction to restrain the 1st respondent from executing

the Shah Alam Sessions Court judgment until the hearing
and disposal of the application for an interim injunction
and the writ;
(ii) Damages for malicious prosecution;
(iii) Damages for malicious prosecution;
(iv) Damages for abuse of process;
(v) Costs;
(vi) Other relief.
[206] It was the appellant’s contention that by threatening to

commence execution proceedings when no judgment had been
obtained against it, the respondent was abusing the court process,
and by threatening to execute the judgment obtained by the
respondent from the Shah Alam Sessions Court, the respondent
was maliciously prosecuting the appellant without first establishing
that the appellant as the insurer was liable to the respondent in
damages and this was a good enough reason for the High Court to
grant a quia timet injunction.
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[207] In answer to the argument, the respondent contended that
under section 96(1) of the RTA and the decisions of the Court of
Appeal in Rasip bin Hamsudi (supra), Pacific & Orient Insurance
Co Berhad v Kumari a/p Nadason and Anor (Mahkamah Rayuan
Civil No. W-02(IM)(NCVC)-2433-11/2013 and Muniammah
Muniandy (supra), he was entitled to claim payment from the
appellant.
[208] In its counter argument the appellant submitted that section

96(1) is not a blanket provision giving the respondent as the third
party claimant an absolute right to payment where judgment had
been entered against the insured and that payment of the
judgment sum by the insurer is subject to the exclusion of the
insurer’s liability under subsection (2) and (3). This according to
counsel had been endorsed by the Court of Appeal in Kamacheh
Karuppen (supra).
[209] The High Court decided in favour of the appellant (in part) by
making the following orders:
(a) The prayer for permanent injunction was allowed;

(b) Damages for malicious prosecution was dismissed;
(c) Damages for abuse of process was dismissed;
(d) Costs of RM5,000.00.
[210] However the learned judge in his grounds of judgment did

not explain why he ordered for a permanent injunction when no
prayer for a permanent injunction was sought for by the appellant.
114
What the appellant sought for was an interlocutory injunction until
the disposal of the suit.
[211] The respondent mounted a successful appeal to the Court of

Appeal against the decision of the High Court, hence the present
appeal by the appellant. In allowing the respondent’s appeal, the
Court of Appeal had held that:
(i) the learned High Court judge had no jurisdiction to

grant any relief to the appellant as it failed to
establish any cause of action whether in the form of
damages or other reliefs;
(ii) there was no prayer for a perpetual injunction as

what was sought was only an interim injunction
pending disposal of the suit.
[212] It was submitted by learned counsel for the appellant that the
Court of Appeal was wrong in not deciding on the issue of res
judicata and issue estoppel. Reliance was placed on Pernec Corp
Bhd v A & AT Advanced Powers System Sdn Bhd [2013] 4 MLJ
719 for the proposition that where the trial judge had decided on a
matter without judicial appreciation of the evidence, an appellate
court’s interference is warranted.
[213] The contention was that even though the appellant’s claim
for malicious prosecution and abuse of process was dismissed, the
High Court was correct in granting the quia timet injunction, citing
PPES Resorts Sdn Bhd v Keruntum Sdn Bhd [1990] 1 MLJ 436
115
and Redland Bricks Ltd v Morris And Another [1970] AC 652
where the House of Lords held that a quia timet injunction would
be given “to prevent an apprehended legal wrong, though none
has accrued at present, and the suppliant for such an injunction is
without any remedy at law”.
[214] For this reason it was submitted that the Court of Appeal
erred in failing to consider that this was an appropriate case for the
grant of a quia timet injunction until the respondent obtained
judgment against the appellant as the insurer. The appellant
however proffered no answer as to why a permanent injunction
was granted by the High Court instead of an interim injunction.
[215] As we see it, the issues raised in both leave questions boils
down to the question whether the appellant is bound by section
96(1) of the RTA to pay the judgment sum obtained by the
respondent against the insured from the Shah Alam Sessions
Court, and if so whether the respondent must first obtain another
judgment against the appellant in the absence of which the
appellant would be entitled to a permanent injunction to stop the
respondent from enforcing the judgment that he had obtained
against the insured from the Shah Alam Sessions Court.
[216] To put the matter in the right perspective, it needs to be

pointed out that the question of the appellant’s entitlement to a
permanent injunction in the manner it is raised in the two leave
questions does not arise as it was not even sought for by the
appellant. The two leave questions are therefore misconceived as
they are based on an order that was erroneously made by the High
116
Court. The court has no jurisdiction to make an order that is not
sought for by the litigant.
[217] There can be no dispute that the default judgment obtained

by the respondent from the Shah Alam Sessions Court was a
regular and enforceable judgment, which has not been set aside
nor appealed against. Under section 96(1) of the RTA the
appellant is bound to pay the judgment sum to the respondent.
The appellant can only refuse to pay the judgment sum in the
following circumstances, none of which applies in its favour:
(a) If no notice of proceedings under section 96(2) had

been given by the respondent;
(b) If policy for the vehicle had been cancelled prior to the
accident;
(c) If the judgment was not served on the appellant;
(d) If there was a stay pending appeal or if the judgment

had been set aside, irregular or that the trial court had
no jurisdiction to pass the judgment.
[218] We have in Appeal No. 2 decided that there is no necessity

for a third party claimant (in this case the respondent) who had
obtained judgment from the trial court against the insured to obtain
another judgment against the insurer (in this case the appellant)
before the third party claimant could enforce the trial court’s
judgment (in this case the Shah Alam Sessions Court judgment)
117
against the insured. Therefore the question of the appellant’s
entitlement to an injunction, quia timet or permanent against the
respondent does not arise. The two leave questions must therefore
be answered in the negative.
APPEAL NO. 7
PACIFIC & ORIENT INSURANCE CO BERHAD V. ARNANDAN
A/L SORIA DEMADU
[219] The leave questions for this appeal are as follows:
Leave question 1
“When an insurer proceeds to obtain a declaration pursuant to section 96(3)
of the Road Transport Act 1987 to declare the policy of insurance issued to its
insured void and unenforceable, is the proviso to section 96(3) to be given the
interpretation as expounded by the High Court in Pacific & Orient Insurance
Co Berhad v Azhar bin Azizan [2015] 10 MLJ 532 and upheld by the Court of
Appeal and the Federal Court, or is the interpretation to the said proviso is as
expounded by the Court of Appeal in Pacific & Orient Insurance Co Berhad v
Rasip bin Hamsudi & Ors [2017] 2 MLRA 659 CA which refused to follow the
decision in Pacific & Orient Insurance Co Berhad v Azhar bin Azizan [2015]
10 MLJ 532.”
Leave question 2
“Is an insurer bound to serve the cause papers relating to the application for a
declaration pursuant to section 96(3) of the Road Transport Act 1987 upon
the 3rd party claimant, every time that the insurer finds it necessary to make
the application, or is the insurer only bound to serve the said cause papers
relating to the application for a declaration pursuant to section 96(3) of the
Road Transport Act 1987 upon the 3rd party claimant, only when the 3rd party
claimant had already obtained judgment against the insured/rider in the
Magistrate/Sessions Court since by obtaining the said judgment against the
118
insured/rider, the 3rd party claimant has then obtained a legal interest as
against the insurer.”
Leave question 3
“If a 3rd party claimant only derives a legal interest against an insurer after he
had obtained a judgment for damages against an insured, therefore does the
insurer have a legal duty to serve its application for a declaration which is only
binding between the insurer and the insured, upon the 3 rd party claimant even
before the 3rd party claimant obtains judgment against the insured.”
Leave question 4
“Is the Court of Appeal correct in law in Pacific & Orient Insurance Co Berhad
v Rasip bin Hamsudi & Ors [2017] 2 MLRA 659 CA when it failed/refused to
refer to the decision of another Court of Appeal in Letchumanan a/l Gopal
(Representative for the estate of Rajammah a/p Muthusamy deceased) v
Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788 CA (although referred to it),
and which judgment in Letchumanan held that whilst an insurer has a right to
disclaim liability as against its insured for breach of policy considerations, the
3rd party claimant’s rights as against the said insurer is protected by the 3 rd
party claimant’s rights to file the recovery proceedings for the damages
awarded against the said insurer, based on the 3 rd party claimant’s vested
rights to section 96(1) of the Road Transport Act 1987.”
Leave question 5
“Is the Court of Appeal in Pacific & Orient Insurance Co Berhad v Rasip bin
Hamsudi & Ors [2017] 2 MLRA 659 CA correct in law in failing to accept and
adopt the decision of another Court of Appeal in Pacific & Orient Insurance Co
Berhad v Kumari a/p Nadason and Anor [2014] MLRAU 535 CA which held
that the declaratory order is only effective and binding between the insurer
and the insured and that since the cause papers relating to the application for
a declaration were not served on the 3rd party claimant, the declaratory order
was not binding on the 3rd party claimant.”
119
Leave question 6
“Is the Court of Appeal correct in law in accepting the decision of the High
Court which held that insurance companies cannot obtain a declaration
pursuant to section 96(3) RTA 1987 against their own insured without first
giving notice to the plaintiff since this would give the insurer the right to
contest their liability towards any 3rd party claim.”
[220] Although the six questions are not similar word for word with
the leave questions posed in Appeal No. 2 (which involves the
same insurance company), the issues of law raised are essentially
the same. The salient facts are as follows. The respondent
Arnandan a/l Soria Demadu filed a civil action in the Sessions
Court at Kulim, Kedah against one Kevin Raj a/l Neelakandan
(“Kevin Raj”) as the rider of motorcycle registration No. PGG 9569
and against his (respondent) own sister Sandhi a/p Soria Demadu
as the insured and owner of the motorcycle. The appellant was the
insurer of the motorcycle at the time of the accident.
[221] Upon receipt of the notice of commencement of proceedings,

the appellant retained the services of Jaya Adjusters Sdn Bhd (“the
Adjusters”) to investigate the case and to record a statement from
the insured to find out how the accident happened.
[222] The rider (Kevin Raj) informed the Adjusters that he was not
involved in the accident with the respondent and affirmed a
statutory declaration dated 15.10.2015 setting out the alleged
fraud committed by the respondent.
[223] Based on the Adjusters’ report and the statutory declaration

of Kevin Raj, the appellant applied by way of originating summons
120
under section 96(3) of the RTA to declare the policy issued to the
insured void and unenforceable on the ground of fraud. The
application was allowed by the High Court on 28.4.2016.
[224] After obtaining the declaratory order, the appellant instructed

its solicitors to discharge themselves from further defending the
rider and the insured in the Kulim Sessions Court for the reason
that having obtained the declaratory order against the insured, any
continued defence of the rider and the insured at the Sessions
Court trial would be construed as a waiver of the declaratory order.
[225] It was only after the decision of the Court of Appeal in

Iskandar bin Mohd Nuli (supra) that the appellant continued to
defend the insured, which proceedings in the Kulim Sessions
Court then proceeded with the participation of the solicitors
appointed by the appellant defending the rider and the insured.
[226] At the conclusion of the trial in the Kulim Sessions Court on

29.11.2016, which was exactly seven months after the appellant
obtained the declaratory order from the High Court on 28.4.2016,
judgment was entered in favour of the respondent, which means
liability was established against both the rider (Kevin Raj) and the
owner (the insured) of the motorcycle.
[227] The appellant refused to pay the judgment sum on the basis
of the declaratory order it had earlier obtained from the High Court
on 28.4.2016, which declared the insurance policy to be void and
unenforceable against it. Faced with the appellant’s refusal to pay,
121
the respondent applied to the Alor Setar High Court by way of an
originating summons for the following orders, amongst others:
(1) that pursuant to section 96(3) of the RTA the appellant

had no right to obtain any benefit from the declaratory
order dated 28.4.2016 which the appellant had obtained
from the High Court and following therefore the said order
be declared void and unenforceable and not binding on
the respondent;
(2) that based on section 96(1) of the RTA the appellant as

the insurer of the motorcycle ought to pay the respondent
the judgment sum obtained at the Kulim Sessions Court
on 29.11.2016 against the rider of the motorcycle.
[228] In opposing the application, the appellant in its reply through

the affidavit of Kevin Raj affirmed as follows:
(a) that the owner of the motorcycle, namely Sandhi is the

sister of the respondent;
(b) that on the night of the accident, i.e. on 21.3.2014, he was

approached by a lawyer’s tout to help him lodge a false
police report at the Kulim traffic police station to state in
the report that he was involved in a motor accident
involving motorcycle registration No. PDY 5179 ridden by
the respondent;
122
(c) the said lawyer’s tout requested him to lodge the false
report because his friend (the respondent) had in fact
fallen on his own (terbabas sendiri) and as a result had
injured himself and intended to make this claim against
the appellant and requested him to admit that he was
riding the motorcycle and that he was involved in the
accident with the respondent riding motorcycle No. PDY
5179;
(d) initialy he was not agreeable to the suggestion by the tout

but after being persuaded by and upon insistence
(dorongan dan desakan) of the tout and being
sympathethic towards the injured respondent, he agreed
to lodge the false police report on 22.3.2014 and
apologized to the appellant for the inconvenience caused.
[229] What is clear from Kevin Raj’s statutory declaration, if true, is

that the respondent’s motorcycle was not involved in the accident
on 21.3.2014 and therefore his claim for damages against the rider
(Kevin Raj) and the insured in the Kulim Sessions Court was false.
[230] Clearly therefore, the appellant’s refusal to pay the judgment

sum was grounded on its allegation that the respondent, who is the
insured’s brother, had made a false insurance claim. It was also
the appellant’s case that the insured herself had breached the
principle of uberrimae fidei by failing to tell the truth, relying on the
decision of this court in Hameed Jagubar bin Syed Ahmad (supra).
123
[231] It was argued that since the insured has to date failed to
lodge any police report to deny the involvement of her motorcycle
in the accident and to deny the false report lodged by her brother
and to withdraw the said false report, and also failing to notify the
appellant that this was a false claim based on the rider’s statutory
declaration, the insured was also deemed to have conspired with
her brother to lodge the false police report against her insurer, the
appellant.
[232] In our view, the issue of fraud raised by the appellant must
be considered in the light of the decision of the Kulim Sessions
Court which found liability to have been established against the
rider Kevin Raj.
[233] The decision of the Kulim Sessions Court to find Kevin Raj
liable for the accident means that fraud has not been established
against the respondent, contrary to the claim by the appellant
through Kevin Raj's statutory declaration. It is inconceivable that
the Kulim Sessions Court would have decided in favour of the
respondent on the issue of liability if the learned judge had found
the respondent to be lying on the involvement of Kevin Raj and the
motorcycle in the accident. This finding of fact must be accepted
as the truth as it was not appealed against.
[234] We have dealt with a similar situation when dealing with

Appeal No. 4. What we said there applies mutatis mutandis to the
facts of the present case. The same goes with the other leave
questions, which we have dealt with when dealing with Appeal No.
2. In fact leave questions 3 and 5 acknowledge that the declaration
124
under section 96(3) of the RTA is only binding between the insurer
and the insured and not on the respondent as a third party
claimant. We accept that as a correct proposition of law. The
answers to the six leave questions are therefore the same as our
answers to the corresponding leave questions in Appeals No. 2
and No. 4.
APPEAL NO. 8
PACIFIC & ORIENT INSURANCE CO BERHAD V. NAVIN
NAICKER A/L VIJAYAN & ANOR
[235] The leave questions are:
Leave question 1
“When the KL Trial Judge had found as a fact that based on the evidence led
a conspiracy to defraud the insurer had been made out as against the 2nd and
the 3rd Respondent being the insured and the insured rider, and that the
insurer possessed a defence on the merits of the fraud on the part of the
insured/rider, was the Court of Appeal correct in law in rejecting the insurer’s
application for a declaration to declare the policy void and unenforceable.”
Leave question 2
“When the KL Trial Judge had found as a fact that the version of events as put
forth by the insured rider as to how the accident occurred as being inherently
incredible and inconsistent even with the testimony of the 3 rd party claimant,
was the Court of Appeal correct in law in rejecting the insurer’s application for
a declaration to declare the policy void and unenforceable.”
Leave question 3
“Is it correct in law for the High Court to hold that once judgment had been
entered against its insurers for damages, an insurer is precluded, pursuant to
125
section 96(3) Road Transport Act 1987 from thereafter filing proceeding to
declare the policy issued to the insured void and unenforceable.”
Leave question 4
“Can a Court ignore the proviso to section 96(3) of the Road Transport Act
1987 which allowed the insurer the right to file an application to declare the
policy void and unenforceable by giving seven (7) days notice before
commencing the application to declare the policy void and unenforceable to
the 3rd party claimant, because having obtained judgment against the insured,
the 3rd party claimant has since obtained legal interest.”
Leave question 5
“When the insured makes a statutory declaration denying that he had lent his
motorcycle to the rider at the material time nor that he knew the rider at the
material time and subsequently makes a 2nd statutory declaration 1 month
later in which he denies the contents of the 1st statutory declaration and when
cogent evidence led by the Adjuster who took him before the Commissioner to
affirm the 1st SD, showed clearly that the 1st statutory declaration was made
willingly and voluntarily, and that the 2nd statutory declaration was affirmed to
defraud the insurer, was the Court of Appeal correct in law in refusing to grant
the declaratory order to declare the policy void and unenforceable on the
basis of fraud on the part of the insured rider.”
[236] All five questions, in particular questions 1, 2, and 5 are fact

centric while at the same time implying that the insurer is entitled
to a declaratory order under section 96(3) of the RTA irrespective
of the circumstances surrounding the grant of the order. As for
leave questions 3 and 4, we have dealt with similar issues when
dealing with Appeal No. 2 and as such we do not propose to
repeat what we have said there save to say that it applies to the
present appeal.
126
[237] Given the way the five questions are crafted, it is necessary
for us to set out the facts in some detail to provide context. On
13.4.2014, one Shahrul Iman bin Abdullah (1st respondent) was
riding motorcycle registration No. BLU 3306 when he was involved
in a road accident with one Yahya bin Yacob (3rd respondent)
along the Kepong-Sungai Buloh Road. The 3rd respondent was
riding motorcycle registration No. BLQ 1049 (“the motorcycle”)
belonging to Navin Naicker a/l Vijayan (2nd respondent) which was
insured by the appellant at the time of the accident.
[238] The 1st respondent (Shahrul Iman bin Abdullah) is no longer

a party to this appeal as an earlier panel of this court had, on
30.3.2021, refused leave to the appellant to bring this appeal
against him. Consequently, at the commencement of the hearing
before us, the appellant applied to withdraw its appeal against the
1st respondent and we allowed the application. We shall henceforth
refer to the 1st respondent as “the claimant”.
[239] The narrative began in 2015 when the claimant filed a claim
for loss and damages against the 2nd and 3rd respondents in the
Sessions Court at Shah Alam for the accident which caused him
grevious personal injuries. On receiving the notice of
commencement of the Shah Alam Sessions Court action, the
appellant engaged the services of Jaya Adjusters Sdn Bhd (“the
Adjusters”) to investigate the case and to ascertain how the
accident occurred.
[240] The Adjusters’ report was made available on 23.3.2016, two

years after the accident, in which the insured (2nd respondent)
127
informed the Adjusters that his motorcycle was not involved in the
accident with the claimant on 13.4.2014 and affirmed a statutory
declaration to that effect before a Commissioner for Oaths on
17.2.2016.
[241] Subsequently the 2nd respondent affirmed a second statutory

declaration on 25.3.2016 to deny the contents of his first statutory
declaration dated 17.2.2016. He now confirmed that his motorcycle
was involved in the accident with the claimant on 13.4.2014. Thus,
in less than two months after making his first statutory declaration,
the 2nd respondent had a different story to tell.
[242] Armed with the statutory declarations, the appellant applied

under section 96(3) of the RTA to the Kuala Lumpur High Court to
declare the insurance policy issued to the 2nd respondent void and
unenforceable. On 28.7.2016 the learned Judicial Commissioner of
the Kuala Lumpur High Court granted the declaratory order sought
for by the appellant.
[243] However, nothing was done by the appellant to stay the

proceedings in the Shah Alam Sessions Court. All it did was to
withdraw its legal representation of the insured in the Sessions
Court on the basis that any continued defence would have
constituted a waiver of the declaratory order it obtained against the
insured (2nd respondent).
[244] The 2nd respondent successfully appealed to the Court of

Appeal against the decision of the Kuala Lumpur High Court dated
28.7.2016. The declaratory order was set aside and the Court of
128
Appeal directed that a writ action be filed by the appellant as there
were many disputes of fact which made it improper for the action
to have gone by way of originating summons.
[245] By this time however, the Shah Alam Sessions Court had
entered judgment against the insured (2nd respondent) on
16.2.2017. A default judgment for recovery had also been
recorded against the appellant on 1.6.2017. These judgments
have not been set aside nor appealed against to this day. With
regard to the recovery proceedings, the Court of Appeal held that
there was nothing fraudulent about the default judgment obtained
by the respondent in the recovery action and reproduced the
following observations made by the High Court:
“Even if the Sessions Court judgment were to be assailed on the basis that it
had been obtained by fraud, no similar allegation can be leveled at the High
Court judgment in the recovery proceedings. The insurers sought to impeach
not the Sessions Court judgment in the liability action, but rather the High
Court judgment in the recovery action.”
[246] The appellant’s response to the setting aside of the

declaratory order it obtained from the Kuala Lumpur High Court on
28.7.2016 was to file two suits in the Kuala Lumpur High Court,
namely Suit 121 and Suit 332. Suit 121 was against the 2nd and 3rd
respondents on the basis that this was a fraudulent claim and
sought for a declaration that the policy issued to the 2nd
respondent was void and unenforceable.
129
[247] Suit 332 on the other hand was against the claimant to
impeach the default judgment obtained by him against the
appellant from the Shah Alam Sessions Court on 1.6.2017.
[248] Both Suit 121 and Suit 332 were consolidated and heard
together before the same High Court Judge. After hearing
witnesses but without the benefit of the testimony of the
Investigation Officer (“I.O.”) and the Commissioner for Oaths
before whom the first and second statutory declarations were
affirmed by the 2nd respondent, the learned trial judge decided as
follows on 16.8.2019:
(a) in respect of Suit 121, since judgment on liability had

been entered against the insured, the appellant was not
entitled to a declaration under section 96(3) of the RTA;
(b) the proper course was for the appellant to apply to set
aside the default judgment obtained by the claimant
against the 2nd and 3rd respondents from the Shah Alam
Sessions Court on 1.6.2017;
[249] However, contrary to his decision as reflected in (a) and (b)

above, the learned judge granted an injunction against the
claimant, which was to remain in place until either of the following
events took place, whichever came earlier:
(i) the dismissal of the application by the appellant to set

aside the judgment in default obtained by the claimant in
the Shah Alam Sessions Court;
130
(ii) judgment entered against the appellant on the merits of
the recovery action.
[250] The injunction issued against the claimant was in the

following terms:
“Perintah injunksi menghalang Defendan, samada melalui dirinya sendiri, atau

melalui peguamcaranya, pekerja-pekerjanya, agen-agennya daripada
memfailkan sebarang prosiding pelaksanaan melaui Writ Penyitaan dan
Penjualan, Petisyen Penggulungan atau sebarang bentuk perlaksanaan lain
untuk menguatkuasakan jumlah penghakiman yang diperolehi melalui
Mahkamah Tinggi Shah Alam No: BA-22NCvC-296-05/2017 bertarikh
1.6.2017).”
[251] The appellant’s Suit 332 was dismissed as the mode of

action adopted by the appellant was held to be wrong.
[252] The appellant appealed to the Court of Appeal against the

High Court decisions in both Suit 121 and Suit 332. The 2nd and 3rd
respondents on their part cross-appealed against the decision in
Suit 121 which ordered them to pay costs of RM15,000.00 to the
appellant. What needs to be kept in mind is that at this point in
time:
(a) there was a Sessions Court hearing that was concluded in

2017 and the judgment entered against the insured in that
action was never set aside to this day;
131
(b) the Court of Appeal had set aside the declaratory order
obtained by the appellant on 28.7.2016 and maintained
the decision on liability and quantum against the insured
(2nd respondent).
[253] The appeal and cross-appeal by the appellant and the 2nd
and 3rd respondents were dismissed by the Court of Appeal,
thereby affirming the following decisions of the High Court that:
(a) having regard to the provisions of section 96(3) of the

RTA, the insurer could no longer secure a declaration
after the claimant had obtained judgment against the
insured from the Shah Alam Sessions Court;
(b) the declaratory order ought to have been obtained before

judgment was obtained by the claimant against the
insured on 16.2.2017.
[254] It is clear that the appellant’s application to declare the policy

void under section 96(3) of the RTA was premised on the insured's
(2nd respondent) claim in his first statutory declaration that the
motorcycle was not involved in the accident with the claimant on
13.4.2014, but which he resiled from in his second statutory
declaration. The issue was therefore one of fraud allegedly
committed by the insured, which is purely a question of fact.
[255] Having given the matter our careful consideration, we are

inclined to agree with learned counsel for the 2nd and 3rd
respondents that the finding of fraud by the Kuala Lumpur High
132
Court must be viewed with caution as the evidence of the I.O. and
the Commissioner for Oaths before whom the 2nd respondent
affirmed the two statutory declarations were not before the learned
judge for him to make the right decision.
[256] It is clear that the learned judge was made to see only half
the evidence as the appellant did not call the other crucial
witnesses who gave evidence at the Shah Alam Sessions Court
trial, other than failing to call the I.O. and the Commissioner for
Oaths. The only evidence produced by the appellant before the
learned High Court judge was the testimony of the two
respondents, the Adjusters’ report and the statutory declarations.
[257] The evidence of fraud could and should have been produced
at the trial in the Kuala Lumpur High Court but was not made
available by the appellant. For this reason alone, we do not think
the finding of the High Court, delivered after the Shah Alam
Sessions Court had entered judgment against the insured, should
be allowed to stand in the way of the unappealed decision of the
Shah Alam Sessions Court, which was a decision on liability in the
tortious claim action.
[258] Further, there was no explanation given as to why this case

was heard in the Kuala Lumpur High Court and no attempt made
to revert to the Shah Alam Sessions Court to set aside the
judgment entered against the insured (2nd respondent).
[259] We have mentioned at the start of our deliberation that the

five leave questions, particularly questions 1, 2 and 5 are fact
133
centric. The answers to the questions would depend on proved
facts where all relevant evidence had been placed before the
court. There is absolutely nothing novel in any of the questions that
requires determination by this court. As such, we do not find it
necessary to answer leave questions 1, 2 and 5.
[260] Even if we were minded to answer the questions, our

answers will not be favourable to the appellant as there is a
subsisting judgment obtained by the respondent against the
insured (2nd respondent) from the Shah Alam Sessions Court,
which has not been set aside. In addition to that, the Court of
Appeal had set aside the declaratory order obtained by the
appellant from the High Court dated 28.7.2016 and maintained the
decision on liability and quantum against the insured (2nd
respondent).
[261] As for leave questions 3 and 4, we have indicated that the

answers to the questions are the same as our answers to the
corresponding leave questions in Appeal No. 2, which
coincidentally involved the same insurance company and
represented by the same counsel.
[262] To recapitulate and for the avoidance of doubt, our answers

to the leave questions for the eight appeals are as follows:
(1) Appeal No. 1 (Amgeneral Insurance Berhad v. Sa’ Amran a/l

Atan & 2 Ors)
As in paragraph [69] of this judgment.
134
(2) Appeal No. 2 (Pacific & Orient Insurance Co Berhad v
Mohamad Rafiq Muiz bin Ahmad Hanipah)
As in paragraphs [82], [90] and [107] of this judgment.
(3) Appeal No. 3 (Jesudas a/l Palanisamy v Pacific & Orient

Insurance Co Berhad)
(4) Appeal No. 4 (Mohamad Zulkarnain bin Mustafa v Allianz

General Insurance Company (M) Bhd & 2 Ors)
(5) Appeal No. 5 (Malaysian Motor Insurance Pool v. Aqmal

Dakhiruddin)
As in paragraphs [182] and [189] of this judgment.
(6) Appeal No. 6 (Pacific & Orient Insurance Co Berhad v. Yeap

Tick In)
135
(7) Appeal No. 7 (Pacific & Orient Insurance Co Berhad v.
Arnandan a/l Soria Demadu)
(8) Appeal No. 8 (Pacific & Orient Insurance Co Berhad v. Navin

Naicker & Anor)
As in paragraphs [236], [259] and [261] of this judgment.
[263] Before we conclude, perhaps it needs to be said that

insurers may complain about the circumstances that make them
liable to pay; third party accident victims may complain about being
uncompensated. There are two competing interests. Having regard
to the object and purpose of the RTA, which is to protect innocent
third parties against risks arising out of the use of motor vehicles,
we are inclined to the view that the conflicting interests must be
resolved in favour of the innocent third party accident victims. The
following observations by Justice Sarkar of the Supreme Court of
India delivering his judgment in British India General Insurance v
Captain Itbar Singh And Others on 11.5.1959, albeit in the context
of a claim against the insured himself who caused the injuries, are
worth pondering over:
“It was said that the assured might be a man of straw and the insurer might
not be able to recover anything from him. But the answer to that is that it is the
insurer’s bad luck. In such circumstances the injured person also would not
have been able to recover the damages suffered by him from the assured, the
136
person causing the injuries. The loss had to fall on someone and the statute
has thought fit that it shall be borne by the insurer. That also seems to us to
be equitable for the loss falls on the insurer in the course of his carrying on his
business, a business out of which he makes profit, and he could so arrange
his business that in the net result he would never suffer a loss. On the other
hand, if the loss fell on the injured person, it would be due to no fault of his; it
would have been a loss suffered by him arising out of an accident in the
happening of which he had no hand at all.”
[264] In the result, Appeals No. 1, No. 2, No. 5, No. 6, No. 7 and
No. 8 are dismissed with costs. Appeals No. 3 and No. 4 are
allowed with costs.
[265] My learned sisters Justice Hasnah Mohammed Hashim and

Justice Rhodzariah Bujang have read these judgments in draft and
have agreed with them.
ABDUL RAHMAN SEBLI

Judge
Federal Court of Malaysia
Dated: 5 August 2022.
137
Case No. 1 [02(f)75-10/2019(W)]
For the Appellant : Harjinder Singh, Melvin Selvam,
Samantha Sam and Gurmeet Singh
(Messrs. Sabarudin Othman & Ho)
For the 1st Respondent : R. Ganavathy Naidu, Dato’ Vignesh

Kumar Krishnasamy and Muhamad
Afiq bin Abu Bakar
(Messrs. Balendran Chong)
For the 2nd & 3rd : Unrepresented.

Respondents
Case No. 2 [02(f)-90-11/2019(W)]

For the Appellants : Dato’ Kamalanathan Ratnam and
Vinod a/l R. Kamalanathan
(Messrs. Vinod Kamalanathan &
Associates)
For the Respondent : Rajan a/l Ayappan, Adrian

Thambyrajah a/l Chandrasekaran
and Samidurai Thonatharai
(Messrs T Rajagopalu & Co.)
Case No. 3 [02(f)-97-12/2019(W)]

For the Appellant : Rajan a/l Ayappan and Siva
Subramaniam
(Messrs. Subramaniam & Shafiq)
For the Respondent : Dato’ Kamalanathan Ratnam and

Associates)
138
Case No. 4 [02(i)-5-01/2020(W)]
For the Appellant : GK Ganesan, BP Jayaprathap, KN
Geetha, GS Saran and JD Prabh
Singh
(Messrs. Jayaprathap & Rakan-
rakan)
For the 1st Respondent : Ratha Davi a/p Rada Krisnan

(Messrs. S G Lingam & Co.)
For the 2nd & 3rd : V.K. Dasaratharaj Pillai and

Respondents Aniza Sultan
(Messrs. V.K. Raj & Bavani)
Case No. 5 [02(f)-8-01/2020(B)]

For the Appellant : Rueben Netto, Silva Velu and
Monisha Pandey
(Messrs. Silva Velu & Co.)
For the Respondent : Harjeet Singh Sidhu and Jeganarth

Samikannu
(Messrs. P S Sohanpal & Sindhu)
Case No. 6 [02(f)-30-07/2020(K)]

For the Appellant : Dato’ Kamalanathan Ratnam and
Associates)
For the Respondent : Manoharan a/l Veerasamy, Prakash

a/l Ramadas, Nurul Farahusna Binti
Razak and Rajan a/l Ayappan
(Messrs. Manoveera & Co.).
139
Case No. 7 [02(f)-41-08/2020]
Associates)
For the Respondent : Kandiah Chelliah and

Kenneshawaran Kandiah
(Messrs. Manikam Avadiar & Co.)
Case No. 8 [02(f)-28-04/2021(W)]

Associates)
For the Respondent : GK Ganesan, G Ravi and Aida binti

Hassan
(Messrs. G Ravi)
140

AP Muktamad 5 - 8 - 2022 - Insurance Appeals

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IN THE FEDERAL COURT OF MALAYSIA

(APPELLATE CIVIL JURISDICTION)

AMGENERAL INSURANCE BERHAD … APPELLANT

SA’ AMRAN A/L ATAN & 2 ORS … RESPONDENTS

HEARD TOGETHER WITH

PACIFIC & ORIENT INSURANCE CO

MOHAMAD RAFIQ MUIZ

JESUDAS A/L PALANISAMY … APPELLANT

PACIFIC & ORIENT INSURANCE

HEARD TOGETHER WITH

ALLIANZ GENERAL INSURANCE

MALAYSIAN MOTOR INSURANCE

AQMAL BIN DAKHIRUDDIN … RESPONDENT

HEARD TOGETHER WITH

PACIFIC & ORIENT INSURANCE

ARNANDAN A/L SORIA DEMADU … RESPONDENT

PACIFIC & ORIENT INSURANCE

YEAP TICK IN … RESPONDENT

HEARD TOGETHER WITH

PACIFIC & ORIENT INSURANCE

SHAHRUL IMAN BIN ABDULLAH &

HASNAH MOHAMMED HASHIM, FCJ

RHODZARIAH BUJANG, FCJ

1. Appeal No. 02(F)-75-10/2019(W) between Amgeneral

2. Appeal No. 02(F)-90-11/2019(W) between Pacific & Orient

3. Appeal No. 02(F)-97-12-2019(W) between Jesudas a/l

4. Appeal No. 02(F)-05-01/2020(W) between Mohamad

5. Appeal No. 02(F)-08-01/2020(B) between Malaysian Motor

6. Appeal No. 02(F)-41-08/2020(W); between Pacific & Orient

8. Appeal No. 02(F)-28-04/2021(W) between Pacific & Orient

“Whether the registration imposes liability on the insurer notwithstanding the

“There is a stark difference between the legal concept of “transfer of interest”

[6] It is an argument that leans heavily in favour of protecting the

[7] Considerable importance was placed by learned counsel for

“With regards to an insurable interest in property, the general principle for

[8] The second authority is The Law of Motor Insurance (2nd

[9] As for the doctrine of uberrimae fidei, eight authorities were

[10] We were also referred to section 96(5) of the Road Transport

“(5) In this section, the expression “material” means of such a nature as to

[12] In any case, the doctrine of uberrimae fidei is a common law

[13] The present appeal is simply a case of a claim by an

[14] The background facts are these. On 6.9.2014, the 1st

[15] Having obtained the information, the 1st respondent filed an

Provided that an insurer who has obtained such a declaration as aforesaid in

(a) The application by the appellant to nullify the insurance

(b) The appellant’s application was not time barred;

[19] The ratio of the decision is that the insurer ceased to be

[20] Dissatisfied with the decision, the 1st respondent appealed to

(a) There was insufficient evidence to show that property in the

(b) The Adjusters’ report conflicted with the genuine

(c) The transfer was not done pursuant to section 13 of the

(d) The registered owner (2nd respondent) is deemed to be the

[21] It was a rejection by the Court of Appeal of the appellant’s

(1) The Court of Appeal was wrong in allowing itself to be

(2) The Court of Appeal misdirected itself in holding the view

(3) The Court of Appeal’s reliance on Muhamad Haqimie was

(5) The statutory declaration of the insured (2nd respondent) is

(6) The registration is not an issue document of title. The mere