Mohd Suhairi Bin Alias (Seorang Yang Kurang Upaya Dan Membawa Tindakan Ini Melalui Ibu Yang Sah Danwakil Litigasi Beliau Iaitu Pemohon/pencelah Kedua) v TUNE INSURANCE MALAYSIA BERHAD (W-02(NCC)(A)-1160-06/2021)

MOHD SUHAIRI BIN ALIAS (NO. K/P: 900722-03-5701) (SEORANG KURANG UPAYA DAN MEMBAWA TINDAKAN INI MELALUI IBU YANG SAH SERTA WAKIL LITIGASI BELIAU IAITU

RASMAWATI BINTI YAACOB (NO. K/P: 700305-03-5034) … PERAYU-PERAYU

TUNE INSURANCE MALAYSIA BERHAD (NO. SYARIKAT: 30686-K) … RESPONDEN PERTAMA

TUAN SOM BINTI TUAN KADIR (NO. K/P: 521114-03-5150) …

ZURINA BINTI OTHMAN (NO. K/P: 750803-02-5284) … RESPONDEN KETIGA Dalam Mahkamah Tinggi Malaya Di Kuala Lumpur Dalam Wilayah Persekutuan, Malaysia Saman Pemula No. WA-24NCC-193-05/2020 Dalam Perkara Seksyen 96(1) dan (3) Akta Pengangkutan Jalanraya 1987; Dan Dalam Perkara Seksyen 41 Akta Relif Spesifik 1950; Dan Dalam Perkara Sijil Polisi No. 0750119TMA067773 yang melindungi motorcar No. WEG 1591 bagi tempoh dari 20.3.2019 jam 11:04:55 pagi hingga 19.3.2020 Dan Dalam Perkara kemalangan jalanraya yang dilaporkan berlaku pada 20.3.2019 jam lebih kurang 10.00 pagi di atau berhampiran Simpang Masjid Batu Balai – Cucuh Puteri, Kuala Krai, Kelantan Darul Naim melibatkan m/sikal No. DBL 2506 dan motorcar No. WEG 1591 Dan Dalam Perkara Guaman Sivil Mahkamah Sesyen Kota Bharu No. DA-A53KJ-744-11/2019 ANTARA TUNE INSURANCE MALAYSIA BERHAD (No. Syarikat: 30686-K) … PLAINTIF

TUAN SOM BINTI TUAN KADIR (NO. K/P: 521114-03-5150) …

ZURINA BINTI OTHMAN (NO. K/P: 750803-02-5284) …

MOHD SUHAIRI BIN ALIAS (NO. K/P: 900722-03-5701) (SEORANG KURANG UPAYA DAN MEMBAWA TINDAKAN INI MELALUI IBU YANG SAH SERTA WAKIL LITIGASI BELIAU IAITU

RASMAWATI BINTI YAACOB (NO. K/P: 700305-03-5034) … DEFENDAN KEEMPAT CORAM RAVINTHRAN PARAMAGURU, JCA. MOHD NAZLAN BIN MOHD GHAZALI, JCA CHOO KAH SING, JCA

This is an appeal against the decision of the High Court that granted a declaration under section 96(3) of the Road Transport Act 1987 (RTA) in favour of the insurer in respect of an accident that allegedly occurred before the said policy was issued. The argument of the insurer was that the policy was purchased about an hour after the accident and therefore it is not enforceable under section 96 of the RTA. The declaration was obtained via an originating summons. Background facts

The parties in the appeal and the High Court are as follows. The first and second appellants were the third and fourth defendants respectively in the High Court. The first appellant is the rider of a motorcycle. He was seriously injured in the accident. The second appellant is his mother. She is acting as his litigation representative. The first defendant was the driver of a car that collided with the motorcycle. The second defendant is the registered owner of the car. The first and second defendants did not oppose the application in the High Court and hence did not appeal the High Court’s decision. The insurer of the car driven by the first defendant is the first respondent before us and was the plaintiff in the High Court.

The accident in question occurred on 20 March 2019 at about 10.00 a.m. in Kuala Krai, Kelantan when the car (No. WEG 1591) driven by the first defendant collided with the motorcycle ridden by the first appellant. The first appellant was seriously injured in the accident and filed a claim for damages through his litigation representative in the Sessions Court at Kota Bharu against the first and second defendants. When the first respondent as the insurer of the car was notified of the suit by the solicitors of the appellants in accordance with section 96(2) of the Road Transport Act 1987 (the RTA), they applied for a declaration under section 96(3) that the policy is void and, in the alternative, not enforceable in respect of the accident in question. The application was opposed by the appellants. However, as we said earlier, the first and second defendants did not oppose the application. The High Court granted the alternative remedy for a declaration that the policy is not enforceable with respect of the accident in question. Commencement of insurance policy

The documents procured during investigation by the adjuster indicated the car was not insured at the time of the incident. The Road Transport Department (Jabatan Pengangkutan Jalan or JPJ) search result on insurance cover for the car in question revealed it was last insured by The Pacific Insurance Berhad between 8 January 2018 and 7 January 2019. There was no renewal of the insurance policy after 7 January 2019 until the date of the accident.

We shall now turn to the material facts surrounding the issuance of the insurance policy in question on the day of the accident by the respondent. The cover note of the policy was issued on 20 March 2019, the very day the accident occurred. It is recorded in the cover note (JS-1 in the affidavit in support) that it was issued at 11:04:55 a.m. Similarly, the Confirmation of Purchase of Insurance also states that the policy was issued on 20 March 2019 at precisely 11:04:55 a.m. Application of first respondent before the High Court

Section 96(1) deals with avoidance of liability with regard to third-party road accident victims. It states that notwithstanding that the insurer may be entitled to avoid the policy with regard to the insured, he shall pay subject to the said section with respect to third-party risks coverage. However, subsection (3) allows the insurer to avoid the policy if it obtains a declaration from the court before the date of liability which is the date of judgment given in respect of the third-party claim. Section 96(3) reads as follows: 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:

The remedy sought by the first respondent in the instant originating summons before the High Court was for a declaration that the insurance policy is void or in the alternative for a declaration that it is not enforceable with respect to the accident in question. The main ground of the application was that the policy was purchased and issued after the accident occurred. The second ground raised in the affidavit in support was that the insured did not disclose a material fact, i.e. that the vehicle was involved in a collision just prior to the purchase of the policy and therefore breached the principle of utmost good faith or uberrima fides. However, this ground was abandoned during argument. The first respondent pursued its application on the ground that there was no insurance policy at the time of the accident and that the policy in question did not operate retroactively from 12 midnight the previous day.

Based on the affidavit evidence, the learned Judicial Commissioner at the High Court made a finding of fact that the insurance policy was purchased and issued after the accident in question. His Lordship relied on the date and time of issuance of the insurance policy stated in the cover note and the Confirmation of Purchase. His Lordship dismissed the contention of the appellants that this is a matter that is triable and not suitable to be determined on affidavit evidence. He also had regard to the JPJ search result that indicated that the insurance policy was previously insured between 8 January 2018 and 7 January 2019 and was not continuously insured thereafter. With respect to the argument of the appellant that the commencement date of the insurance coverage in the JPJ search result states “19.3.2019” and therefore it is a reference to the whole day as opposed to part of the day, the learned Judicial Commissioner referred to section 84 of the Financial Services Act 2013 (FSA) that says no risk is assumed by an insurer unless and until the premium payable is received in such manner and within such time as may be prescribed by Bank Negara. His Lordship further held that no weight can be accorded to the JPJ search result with respect to the “whole day argument”, as it merely indicates the commencement date of insurance coverage without specifying the exact time, given that its format does not accommodate such details.

As for the time of the accident, the learned Judicial Commissioner considered the time stated in the police reports of the first defendant and the sister of the first appellant. In the upshot, His Lordship made a finding that the accident occurred before the purchase of the insurance policy. For that principal reason, the learned Judicial Commissioner allowed the section 96(3) application and granted the alternative remedy for a declaration that the insurance policy was not enforceable with respect to the accident in question.

The main issue in this case is whether there was an enforceable policy at the time of the accident. The section 96(3) application by way of originating summons sought to void the policy and, in the alternative, sought a declaration that the policy did not cover the accident in question. The High Court granted the alternative relief that the policy did not cover the accident in question as it was purchased only after the accident occurred. We shall consider the sub-issues in the following order:

Whether originating summons is the proper mode of commencement of action?

Whether existence of triable issues render originating summons unsuitable?

Time of commencement of policy

Whether doctrine of waiver applies?

Whether constitutional right of appellants under article 8 was infringed? Proper mode of commencement of action?

We find no appealable error in the decision of the High Court that the originating summons was the proper mode of commencement of proceedings for a declaration under section 96(3) of the RTA. We also find no error in the finding of the High Court that there is no triable issue in this case in any event. Our reasons are as follows.

Section 96(3) read as follows in part: 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:

The foregoing provision clearly provides the avenue for an insurer to avoid payment under third-party risk coverage before the date of liability. In Ahmad Nazrin Abd Halim & Anor v Allianz General Insurance Company (M) [2015] 9 CLJ 821, this court held that the date of liability is the date of judgment. An application under section 96(3) of the RTA is an application pursuant to written law for relief and thus, ordinarily by virtue of Order 5 rule 3 of the Rules of Court 2012, originating summons is the proper mode of commencement of proceedings. Order 5 rule 3 reads as follows: Proceedings which shall be begun by originating summons (O 5 r 3) Proceedings by which an application is to be made to the Court or a Judge thereof under any written law shall be begun by originating summons. (emphasis ours)

For the above reason, the mode of commencement by way originating summons in entirely proper. Order 5 rule 4 rule also enacts where there is unlikely to be any substantial dispute of fact, the proper mode of commencement of proceedings is originating summons. It reads as follows:

Proceedings which may be begun by writ or originating summons (O 5 r 4) (1) Proceedings--

(a) in which the sole or principal question at issue is or is likely to be one of the construction of any written law or of any instrument made under any written law, or of any deed, will, contract or other document, or any other question of law; or

(b) in which there is unlikely to be any substantial dispute of fact, are appropriate to be begun by originating summons unless the plaintiff intends in those proceedings to apply for judgment under Order 14 or Order 81 or for any other reason considers the proceedings are more appropriate to be begun by writ. Whether any triable issue that merits matter be decided in a trial?

The argument of counsel for the appellants is that since there are triable issues, the section 96(3) application should not be determined by way of originating summons but should be left to the trial court which is the Sessions Court that is hearing the personal injury action.

We shall now examine whether there are triable issues in the first place with respect to the time of the accident and the time of commencement of the third-party insurance policy. In the petition of appeal, these are stated as triable issues. However, it is significant to note that in the affidavit in reply to the originating summons, the second appellant who is the litigation representative did not take issue with the time of accident. She only pleaded that the car in question was insured. We shall advert to her affidavit later. Time of accident

We find no error in the finding of the High Court that the accident occurred at about 10 a.m. on the day in question. The first defendant who was the driver of the car in question made a police report about 12 hours after the accident, i.e. at 10.22 p.m. However, he unequivocally stated that the accident occurred around 10 a.m. on the same day. The first defendant lodged a second police report more than a year later stating that his car was not covered by insurance at the time of the accident and that his road tax had also expired. He categorically stated in the police report that he purchased the insurance policy in question after the accident. He also signed a statutory declaration on 1 June 2020 before the Commissioner for Oaths at the Kuala Krai Magistrates Court to that effect. He also said in the statutory declaration that he was advised by the police to buy insurance for the car. The said police reports were attached to the affidavit in support of the first respondent and the statutory declaration was attached to the affidavit in reply of the respondent.

Counsel for appellant submitted that since the police report made by the first defendant on the day of the accident was at 10.22 p.m. and insurance policy was purchased at 11.04 a.m. the same day, the police could not have advised him to purchase the policy after the accident. We see no merit in this argument. It assumes that the first defendant only encountered the police at 10.22 p.m. when he went to the police station to make a report. It also assumes that despite the involvement of the defendant in a serious accident, he did not encounter the police at the scene of the accident. Furthermore, the first defendant did not say in his statutory declaration that the police advised him to lodge a report only when he made a report at night.

The other police report that the High Court properly took into consideration is the police report of Norsuziani binti Alias. She is the sister of the first appellant. On 29 April 2019, which is a more than a month after the accident, she lodged a police report stating that she received a telephone call on 20 March 2019 at around 10.30 a.m. from an unknown person who told her about an accident involving her brother. Her police report was exhibited in the affidavit in support of the respondent.

However, apart from the police reports and the statutory declaration, it is also highly pertinent to note that the time of the accident, i.e. whether it occurred at 10 a.m. or after the issuance of the cover note at 11.04 a.m., was not an issue raised in the affidavit in reply of the second appellant who is the litigation representative of the seriously injured first appellant.

In the affidavit in reply of the second appellant filed in response to the affidavit in support of the originating summons, the issue that was contested was whether the car was insured at the time of the incident and not the time of the accident itself. In fact, she stated that the accident occurred at 10 a.m. on 20 March 2019. This is clear from paragraph 7 of the affidavit sworn by the second appellant which we reproduce below for ease of reference: Saya adalah ibu yang sah dan juga sahabat wakil kepada Defendan Pertama di mana beliau adalah penunggang motosikal No. DBL 2506 yang terlibat dalam kemalangan (selepas ini dirujuk sebagai “kemalangan tersebut”) pada 20.03.2019 jam lebih kurang 10.00 pagi di atau berhampiran Simpang Masjid Batu Balai – Cucuh Puteri, Kuala Krai, Kelantan Darul Naim dengan sebuah motorkereta No. WEG 1591 yang dipandu oleh Defendan Pertama dan dimiliki oleh Defendan Kedua dalam prosiding ini sebagaimana dalam maklumat yang terdapat dalam kad pendaftaran kenderaan No. WEG 1591 pada Tarikh dan masa kemalangan tersebut.

Again, in paragraph 25 of the same affidavit, the second appellant took issue only with the time of commencement of the insurance coverage. The said paragraph reads as follows: Selanjutnya juga, saya telah dinasihat oleh peguamcara saya dan sebagai membalas perenggan 7 Afidavit Sokongan JS tersebut, saya menyatakan bahawa tiada sebarang keterangan dikemukakan oleh Plaintif terhadap masa sebenar penguatkuasaan polisi insurans tersebut, jam yang tertera 11:04:55 pagi tersebut hanya menunjukkan tarikh polisi tersebut dikeluarkan dan dokumen tersebut adalah dokumen cetakan computer.

She did not aver that the accident occurred after the insurance policy was purchased. In the premises, the second appellant had accepted the fact that the accident occurred around 10 a.m. as stated in the affidavit in support of the respondent. Therefore, the High Court was not wrong in finding that the time of the accident is not a triable issue. Commencement of insurance policy

As for the time and date of purchase of the policy, the evidence is clear cut as found by the High Court. The cover note which under section 2 of the FSA is part of the insurance policy clearly states that it was issued only at 11.04 a.m. on the morning the accident. The Confirmation of Purchase of Insurance also states that the insurance cover note was issued at 11.04 a.m. The driver of the car himself later lodged a police report stating that he purchased the policy after the accident. In his statutory declaration, he affirmed the same thing and said he purchased the policy as he was advised by the police that his insurance policy and road tax had expired. The High Court also correctly took into consideration the fact that the previous policy had expired in January of the same year and there was a gap in third-party insurance coverage until the impugned policy was purchased at 11.04 am on the day of the accident. All these facts, though adduced through affidavits, unassailably points to the conclusion that in the instant case, the first defendant was driving the car owned by the second defendant without any third-party insurance coverage at the time of the accident. That is the plain and incontrovertible fact.

In the premises, the determinative issue is a straightforward one: whether the vehicle was insured under the policy in question at the time of the accident. This is purely a question of law that turns on the timing of the policy's purchase. In our view, for reasons given earlier, the High Court did not err in making a factual finding that the policy was only purchased at 11.04 a.m. on the day of the accident. Therefore, as we said, what remains is the question of law as to the enforceability of the insurance policy. We shall, as did the learned Judicial Commissioner, turn to the relevant statutory provision and precedents in order to answer this question.

The learned Judicial Commissioner correctly addressed this question by referring to section 84 of the FSA which is similar to section 141 of the repealed Insurance Act 1996. It reads as follows:

No licensed insurer shall assume any risk in respect of such description of policy as may be prescribed by the Bank unless and until the premium payable is received by the licensed insurer in such manner and within such time as may be prescribed by the Bank.

In this case, as the evidence is clear that the policy was purchased after the accident, in law, there could have been no assumption of risk with regard to the accident in question. Section 141 of the repealed Insurance Act 1996 was considered in Pacific & Orient Insurance Co Bhd v Hameed Jagubar bin Syed Ahmad [2018] 12 MLJ 1 by the Federal Court.

In that case, the policy was purchased some 12 hours after the accident. The accident occurred at 1.30 a.m. on 27 October 2011 whereas the insurance policy was purchased on the same day at 2.16 p.m. on the same day. The High Court held that the insurer cannot be liable for accident that occurred before the purchase of the insurance policy. The Court of Appeal allowed the appeal and held that the contract of insurance commenced from midnight on 27 October 2011. It must be noted that in the instant case as well, one of the arguments of counsel for the appellant is that the insurance policy commenced on midnight of 20 March 2019 although the policy was only issue at 11.04 a.m. on the same day. The reason for this argument is that, although the policy was issued at 11.04 a.m. as reflected in both the cover note and the Confirmation of Purchase of Policy, the cover note and the JPJ search result stated that the policy period spanned from 20 March 2019 to 19 March 2020.

The Federal Court, however, granted leave on the following two questions of law

when a motor policy holder obtains insurance cover from an insurer in respect of an accident that had already occurred, does that insurance policy take effect from the date of cover or from the time of issuance of cover? and

is the Court of Appeal correct in law to give a retrospective cover to the policy in breach of s 141 of the Insurance Act 1996 (Act 553) which states that there shall be payment before cover?

Adopting the approach of the Indian Supreme Court in National Insurance Company Ltd v Mrs, Chinto Devi And Ors (Civil Appeal No 1100 of 1992) and New India Assurance Co Ltd v Smt Sita Bai & Ors [2000] 1 MLJ 50 (SC), the Federal Court held where date and time of issue is stated in the cover note, it is a special contract and coverage commences from the time of issuance. In coming to this decision, the Federal Court had regard to section 141 of the repealed Insurance Act 1996 which states that there can be no assumption of risk unless premium is paid and the principle that “insurance is contract based upon speculation” (per Lord Mansfield in Carter v Boehm [1558–1774] All ER Rep 18; (1766) 3 Burr 1905). Therefore, the answer of the Federal Court to the first question was that the insurance policy takes effect from the time of issuance of the cover note. Consequently, the second question was answered in the negative which means that the Court of Appeal was wrong to decide that the policy in question gave retrospective coverage which was in breach of section 141 of the Insurance Act 1996.

We also find it apposite to mention a High Court case that was decided before the judgment of the Federal Court in Insurance Co Bhd v Hameed Jagubar bin Syed Ahmad (supra) was made available. It was referred to by both counsel for the appellants and counsel for the first respondent. The case in question is Liberty Insurance Bhd v Marrison a/k Sidai & anor [2019] 12 MLJ 763. The facts are a very similar to the instant case. It involved the renewal of the insurance policy after the insurable risk materialised. Mohd Nazlan J (now JCA) also concluded that there is no retrospective coverage of the policy as it operates only from the time of issuance.

In Liberty Insurance Bhd v Marrison a/k Sidai & anor (supra), the accident in question occurred around noon time on 19 May

The cover note for the policy stated that the insurance coverage commenced at 2.51 p.m. the same day. The argument of the accident victim who resisted the section 96(3) application of the insurer was that the coverage commenced after midnight of the preceding day. Like in the present case, the policy owner did not resist the application of the insurer.

In paragraph 47 of the judgment, Mohd Nazlan J had regard to section 84 of the FSA and said as follows: [47] It bears emphasis that at the time of the accident at around noon on 19 May 2016, evidence is uncontroverted that premium payment had yet to be made. An insurer such as the plaintiff in the instant case is thus under the law in the FSA prohibited from assuming any such risk to provide insurance coverage based on the plain language of s 84 of the FSA.

His Lordship also considered the speculative nature of an insurance contract and the fact that the accident in question had occurred prior to renewal of the policy in the following paragraphs:

In the instant case, the specified event of a motor vehicle accident intended to be insured against was far from being uncertain. It had in actual fact become an absolute certainty because it had occurred before coverage became effective in terms of the timing of the application for coverage and payment of premium which was manifestly subsequent in time. I emphasise that when the first defendant applied for coverage, the accident had already happened. The contract of insurance could not have been validly created under such circumstances in the absence of the uncertainty of the specified event.

We agree with the above observations of his Lordship. With regard to section 84 of the FSA, we have also taken into account section 270 of the same legislation that reads as follows:

Except as otherwise provided in this Act, or in pursuance of any provision of this Act, no contract, agreement or arrangement, entered into in breach or contravention of any provision of this Act shall be void solely by reason of such breach or contravention. Provided that nothing contained in this section shall affect any liability of any person for any administrative, civil or criminal actions under this Act in respect of such breach or contravention.

As we noted earlier, section 84 prevents an insurer from assuming risks unless the premium payable is paid whereas the above-mentioned provision saves a contract from being voided solely by reason of breach any provision of the Act. However, in our respectful view section 270 is not relevant because nothing in the policy in question states that the insurer had agreed to assume risks or provide compensation for accidents that had occurred before purchase of the policy or payment of premium. In any event, the time of issuance of the policy is clearly stated in the cover note.

For the above reasons, the argument that there are triable issues and therefore a trial should be held to determine the enforceability of the insurance policy is without merit. Furthermore, section 96(3) allows the insurer to avoid the policy if it obtains a declaration from the court before the date of liability. In the case of Ahmad Nazrin Abd Halim & Anor v Allianz General Insurance Company (M) (supra), the Court of Appeal held that the date of liability refers to the date of judgment in the running down suit by the accident victim. Thus, the liability of the insurer only arises when judgment is entered against it. Therefore, an insurer who elects to seek a remedy under section 96(3) does not have to wait until the running down action is tried in the Sessions Court. Furthermore, as we said early there is no triable issue with respect to the critical question of fact which is the time of the accident compared to the time of purchase of the insurance policy.

The argument that the section 96(3) declaration should not have been granted is based on paragraph 5 of the Schedule 9 of the FSA. Sub-paragraphs (1) and (3) of paragraph 5 in