Allianz General Insuranc Co v Vijindran A/L Kalaichelvan & Others (D3&D4) (WA-24NCC-85-03/2017)

Akta Pengangkutan Jalan 1987 Dan Dalam Perkara Aturan 15 Kaedah 16 Kaedah-Kaedah Mahkamah 2012 Dan Dalam Perkara Seksyen 41 Akta Relif Spesifik 1950 Dan Dalam perkara Polisi No.: 11VTH916219 yang melindungi motorkereta No. CCV 3084 bagi tempoh 4.7.2011 hingga 3.7.2012 Dan Dalam perkara kemalangan jalanraya yang berlaku pada 13.4.2012 yang melibatkan motorsikal No. CBG 8494 dan motorsikal No. CCV 3084 Dan Dalam perkara kes sivil di Mahkamah Sesyen Temerloh, Malaysia Writ No.: A53KJ-118- 05/2016 Page 2 of 25 ANTARA ALLIANZ GENERAL INSURANCE COMPANY (M) BHD ...PLAINTIF DAN

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REVATHY A/P DORAISAMY ...DEFENDAN-DEFENDAN DI HADAPAN YANG ARIF TUAN MOHD NAZLAN MOHD GHAZALI HAKIM JUDGMENT Introduction [1] The Plaintiff’s application, by way of an originating summons, is principally for a declaration pursuant to Section 96(3) of the Road Transport Act 1987 (“the RTA”) that Policy No. 11VTH916219 which sought to provide insurance coverage for motorcycle vehicle no. CCV 3084 (“the Vehicle”) for the period between 4 July 2011 and 3 July 2012 (“the Policy”) is void and unenforceable with respect to a road accident which allegedly occurred on 13 April 2012, involving the Vehicle and another motorcycle, no. CBG 8494 ("the Accident"). [2] At the end of the hearing of the originating summons, I allowed the application. This Judgment contains the full reasons for my decision. Page 3 of 25 Key Background Facts [3] The Second Defendant is the registered owner of the Vehicle which is covered by the Policy issued by the Plaintiff. The First Defendant rode the Vehicle at the time of the Accident. The other motorcycle was ridden by the Third Defendant, with the Fourth Defendant riding pillion. [4] The Plaintiff was served with a notice pursuant to Section 96(2) of the RTA in relation to the alleged Accident. The First and Second Defendants did not file any affidavit to oppose this application, which is instead resisted by the Third and Fourth Defendants. [5] The Third and Fourth Defendants, who claimed to have suffered injuries as a result of the Accident had instituted a civil action in Temerloh Sessions Court against the First and Second Defendants claiming for special and general damages as a result of the Accident (“the Writ Action”). [6] The Fourth Defendant had earlier, on the same day as the Accident (13 April 2012), lodged a police report, claiming that the motorcycle ridden by the Third Defendant was hit at the back by the Vehicle. [7] However, the First Defendant himself lodged a police report very much later, on 30 November 2013 some one and a half years after the Accident. In this report, the First Defendant stated that the Vehicle Page 4 of 25 he was riding on hit the motorcycle ridden by the Third Defendant. This seemed to confirm the Accident. [8] The Plaintiff, after having been served with the notice under section 96(2) of the RTA, as is standard, appointed loss adjusters (‘the Adjusters”) to investigate the circumstances of the Accident. In their investigations the Adjusters reported the conclusion that the Vehicle was not involved in the Accident. [9] This finding is now premised in what has been set out in a statutory declaration affirmed by the First Defendant dated 16 January 2017 (and exhibited to the Plaintiff's affidavit in support of this application) where the First Defendant categorically denied either himself or the Vehicle having been involved in the Accident. He now claimed that he was forced by the lawyers for the Third and Fourth Defendants to make the police report in 2013 to assist the latter make an insurance claim, and that the First Defendant had also lodged a second police report on 16 January 2017 to correct the first report and deny the contents in the latter. Contention of Parties [10] The Plaintiff in the main thus argued that the relief sought against the Second Defendant is based on the contract of insurance or the Policy entered into between the Plaintiff and the Second Defendant. At all material times, the Third and Fourth Defendants were never a party to the contract of insurance with the Plaintiff. They are therefore not entitled in law to compel the Plaintiff to compensate for their alleged Page 5 of 25 loss and injuries under the contract of insurance. The Third and Fourth Defendants simply have nothing to do with the Policy. [11] The Plaintiff further asserted that the Second Defendant, as the insured, had breached the duty of utmost good faith for having allowed the First Defendant to get involved in assisting the Third and Fourth Defendants in their fraudulent attempt to make a false insurance claim, as evidenced by the lodging of the first police report by the First Defendant, which the First Defendant himself now declared to be false. The breach thus entitles the Plaintiff to avoid the contract of insurance under Section 96(3) of the RTA. [12] The Third and Fourth Defendants' opposition to the Plaintiff’s application is, on the other hand, premised on the key argument that as the allegation of fraud levelled against the First Defendant by the Plaintiff is disputed by the Third and Fourth Defendants who had also lodged police reports against the second and the corrective police reports by the First Defendant, the instant application ought to be heard together with or after the Writ Action. The Third and Fourth Defendants asserted that the proper forum to determine whether the Plaintiff ought to be allowed to repudiate liability in the face of contradicting evidence should be in the main suit of the Writ Action. Evaluation and Findings of this Court No dispute on breach by Second Defendant by making the first police report Page 6 of 25 [13] The First Defendant had made a second police report denying any involvement of road collision with the Third or Fourth Defendants, correcting the first report and even affirmed a statutory declaration to that effect. There is, significantly, no suggestion by the latter that any of these documents is not genuine or authentic. [14] The Plaintiff had filed the requisite affidavit of service of the cause papers pertaining to the instant application to the First and Second Defendants. Neither has responded to the application by the Plaintiff for the declaration. At the hearing, the counsel for the Plaintiff again confirmed that the First and Second Defendants had also been informed of the hearing date. Clearly, they chose not to attend Court to contest the application. They must be taken to admit of the averments of the Plaintiff as supported by the documents signed by the First Defendant. [15] In any event, their non-involvement in and non-contestation of the present application is entirely consistent with the essence and substance of the First Defendant's statutory declaration which quite categorically stated that the First Defendant and the Vehicle were not involved in the Accident. Nor is the refusal by the First Defendant to affirm and file an affidavit (instead of as presently exhibited by the Plaintiff in its supporting affidavit) to further confirm the statutory declaration or the second police report form a basis to deny the Plaintiff’s right to the declaration under Section 96(3) of the RTA. [16] It is true that the Third and Fourth Defendants strongly disputed the version now proffered by the First Defendant who denied Page 7 of 25 the Vehicle was involved in the Accident. The Third and Fourth Defendants referred to two recent decisions of the Court of Appeal which also dealt with Section 96 declaration. I should for completeness refer to them and the relevant passages quoted by the Third and Fourth Defendants. [17] The first is the case of Chu Chu @ Moksin bin Amlih (a person of unsound mind not so found by inquisition) suing by his litigation representative, Kalong bin Amlih v Am General Insurance (M) Bhd & Ors [2017] MLJU 779. The relevant passages from the judgment of Yeoh Wee Siam J (as she then was) for the Court of Appeal stated thus:- “23. It is noted that there are parallel proceedings arising from the incident, namely:

the Selayang Suit; and

the Shah Alam OS.

The Selayang Suit is still an ongoing proceeding and the Suit, which will determine the issue of liability, has not been disposed of at the time when the 1st Respondent filed the Shah Alam OS for the declaration. The 1st Respondent’s excuse for filing the OS is that if it does not obtain the declaration before Judgment is delivered in the Selayang Suit, then once Judgment is granted in favour of the Appellant, the 1st Respondent would be liable under the Judgment, and would be put at risk of being wound up under an Order of the Court pursuant to a s.218 notice issued under the Companies Act 1965 (or s.465 under the new Companies Act 2016).

We take judicial notice of the fact that upon the coming into force of the amendments to the Subordinate Courts Act 1948 which conferred increased jurisdiction and power to make a declaration to the Sessions Court, there has been an increase of actions instituted by insurers, made by way of Originating Summons, for declarations under s. 96(1) and (3) of the RTA that insurance policies are void and unenforceable even before any connected suit to determine liability has been decided by the Court.

We take note of other cases where insurers have often successfully applied for a declaration under s. 96(1) and (3) of the RTA to declare the insurance policy to be void or unenforceable on grounds that there was fraud or misrepresentation committed at the time when the insured applies for the insurance policy to be issued by the insurer, or makes a claim for payment under the insurance policy (see Kurnia Insurans (Malaysia) Berhad v. Personal Representative of Zenol Saad [2013] 1 LNS 239, and Pacific & Orient Insurance Co Berhad v. Khor Teik Wan [2016] 1 LNS 152). In our opinion, those are clear cut cases where the Court can exercise its discretion to grant the declaration under s. 96(1) and (3) of the RTA.

However, for cases such as the present one, we would caution that the Courts below, in the exercise of their discretionary powers, should refrain from granting prematurely the declaration sought under s. 96(1) and (3) of the RTA. This is because where there is an ongoing suit to determine whether any injured person ought to be covered by the insurance policy, in particular in respect of third party risks, it is for the trial Judge to decide, based on the evidence before him, on issues such as whether the injured person is a passenger, a stranger/ pedestrian/rescuer, or an employee under a contract of employment with the insured party under the insurance policy. In a situation such as in the present case, it is for the trial Judge in the Selayang Suit to determine whether the Appellant is covered under the insurance policy Page 9 of 25 by virtue of the fact that he is carried on the lorry by reason of a contract of employment with the 2nd and/or 3rd Respondents, or even if he is not, whether his injuries sustained are covered against the insure person in respect of third party risks arising out of the use of the motor vehicle on a road.

In our view, for the present case, it tantamount to an abuse of the process of the Court for the 1st Respondent to institute the Shah Alam OS for a declaration under s. 96(1) and (3) of the RTA when the Selayang Suit is still ongoing. Any declaration granted by the Sessions Court in the Shah Alam OS would be highly prejudicial to the Appellant should, at the end of the day, the Selayang Suit be decided in the Appellant’s favour”. [18] In my view, whilst the observations in the decisions are significant, they do not entirely advance the case of the Third and Fourth Defendants. First, as set out by Yeoh Wee Siam J (as she then was) for the Court of Appeal in Chu Chu, the Courts can exercise the discretion to grant the declaration in clear cut cases. As stated in the above passage, her Ladyship referred to among others her own High Court decision in Kurnia Insurans (Malaysia) Bhd v. Personal Representative of Zenol Saad & Ors [2013] 1 LNS 239, as an example of one such clear cut case. [19] The High Court in that case dealt with the issue of avoidance of liability by the insurer on the ground of loss of insurable interest in the vehicle on the part of the registered owner causing the policy to lapse. The Court granted the declaration avoiding the policy, holding that there was a transfer of interest when the car was sold even though the ownership was never formally transferred. Page 10 of 25 [20] The similarity in the background facts in that case with those in the instant application before me cannot be ignored. Her Ladyship in Zenol Saad held that:- “I am of the view that the documentary evidence or exhibits adduced by the Applicant are discovered as a result of the Applicant's investigations. They are all self-explanatory. R1 and R2 were served with the OS with all the exhibits but R1 and R2 did not file any Affidavit In Reply. Since there is no rebuttal evidence by R1 and R2, the Court accepts the documents exhibited by the Applicant in its Affidavits.” [21] In Chu Chu, in contradistinction, and as stated in the above passage, there was an ongoing suit to determine whether the injured third party was covered under the relevant insurance policy by deciding the true status of the third party - whether he was a passenger, stranger or employee. But in the instant case before me, the issue of the status of the Third and Fourth Defendants did not arise, here or in the Writ Action. The issue is principally whether the Vehicle was involved in the Accident. And as Zenol Saad stated, which is in any event trite law, the absence of any rebuttal evidence by the insured meant that the affidavits of the insurer that the Vehicle under the Policy in the instant case was not involved in the Accident, must be accepted. [22] The other case relied on by the Third and Fourth Defendants is Hameed Jagubar bin Syed Ahmad v Pacific Orient Insurance Co Berhad [2017] LNS 868 where the judgment of Harmindar Singh Dhaliwal JCA stated:- Page 11 of 25 “[42] One of the key aspects of the MIB Agreement is the provision for the insurer to satisfy any judgment in respect of liability insured undercompulsory insurance legislation. In this respect, Clause 3(a) of theMIB Agreement provides: “If a judgment is obtained in Malaysia against any person (hereinafter referred to as the “Judgement Debtor”) in respect of liability required to be insured by the Compulsory Insurance Legislation the Insurer Concerned will satisfy the Original Judgement Creditor if and to the extent that the Judgement has not been satisfied by the Judgement Debtor within twenty eight days is entitled to enforce it.” [43] So, who is the “insurer concerned”? The definition of “insurer concerned” can be found in Clause 1 of the Agreement which reads: “Insurer concerned” means that Insurer who at the time of the accident which gave rise to a liability required to be insured by the Compulsory Insurance Legislation was providing an insurance against such liability inrespect of the vehicle arising out of the use of which the liability of the Judgement Debtor was incurred. An Insurer is concerned within the meaning of this Agreement notwithstanding that –

the insurance was arranged after the accident but purported to be effective at the time of the accident;

(ii) the insurance has been obtained by fraud, misrepresentation, non-disclosure of material facts or mistake … (the rest of the definition excluded for being irrelevant to the present appeal)” …………………. [49] In the same context as well, eminent author S. Santhana Dass in his recent article entitled “Backdated Covernotes and the Insurers’Liability under Section 96 of the Road Transport Act 1987” [2017] 1 LNS (A) xi opined that the MIB Domestic Agreement dated 1 January 1992 has tied the hands of the insurers with the wide Page 12 of 25 encompassing definition of “insurer concerned”. In this respect, we are in agreement with the learned author that, in the circumstances, the issue of non-disclosure or breach of duty of utmost good faith cannot succeed and liability of the insurer is apparent. …………………. [52] In this aspect as well, it is pertinent that Part IV of the RTA, and in particular s. 96, was specifically enacted to protect and provide compensation to third party victims of road accidents. It is there foremost unfortunate that s. 96(3) of the RTA, and the way it has been interpreted in a number of cases, has taken away this protection thus defeating the whole purpose of the statute as a piece of social legislation. Needless to add, this further underscores the need for are view to avoid any further confusion or controversy and especially prejudice to third party victims of road accidents”. [23] Similarly, the case of Hameed Jagubar concerned the additional issue of the wide interpretation of 'insurer concerned' contained in the MIB Agreement relevant to that case, to the extent that it was held that the issue of breach of duty of utmost good faith cannot succeed. However, MIB Agreement (the Motor Insurers’ Bureau agreement) is not an issue in the instant application before me. [24] As such, it is quite clear that when the issue is simply one of whether the motor vehicle subject to the insurance policy and an affidavit with the requisite substantiation denying the collision and alleging breach of the duty of utmost good faith is unrebutted by the insured or his agent, the case for the insurer for a declaration to avoid the insurance coverage is nothing less than compelling. In that context, the affidavits by the Fourth Defendant, denying the contents of the statutory Page 13 of 25 declaration of the First Defendant on the Accident is less of an issue in the instant application and should not in any substantive manner be taken to render the unchallenged affidavit exhibiting the statutory declaration of the Second Defendant less than reliable. [25] In other words, in the instant case, the real issue in controversy is well and truly more on whether there are bases to justify the grant of the declaration as between the Plaintiff as the insurer and the First/Second Defendant as the insured, and very much less on whether the collision took place and who was liable. The latter is entirely within the remit of the Writ Action. The Second Defendant is not party to the insurance contract [26] This I think is most significant. And for this same basis, the resistance of the Third and Fourth Defendant will be shown to be plainly devoid of substance. It is as fundamental as the basic rule of the law of contract that the rights and obligations concerning the agreement do not concern a third party. A third party like the Third or Fourth Defendants cannot benefit from nor sue on the contract of insurance which only existed between the Plaintiff and the Second Defendant. This Court cannot countenance a departure from the well-entrenched rule in the law of contract that a third party can neither benefit nor suffer from a contract executed by other parties. A contract cannot be enforced against or by a third party pure and simple (see the leading common law authority of Tweddle v Atkinson [1861] 1 B & S 393 and the Privy Council decision in Kepong Prospecting Ltd & Ors v Schmidt [1968] 1 MLJ 170). Page 14 of 25 [27] As such, I agree that the cases cited by the Plaintiff on this point are of real support. Thus in Pacific & Orient Insurance Co Bhd v Vigneswaran a/l Rajarethinam & 2 Ors [2013] 2 AMCR 736, concerning facts not so dissimilar to the present case, it was stated by the High Court that:- “A contract of insurance is between an insured and his insurer. Now the insured is telling the insurer categorically that I'm NOT involved in this accident. It is a scam! Why the insurers should not act on his statement and avoid the policy? The second and third defendants are not privy to the contract between the plaintiff and first defendant and therefore cannot dictate whether the insurers should indemnify the first defendant or not. This is a simple law of contract. b) No evidence to show that the first defendant was not involved in the accident with second and third defendants. In this originating summons (OS) filed by the plaintiff we are not concerned with proving whether the accident occurred or not. That is for the Sessions Court to decide. In this OS, the plaintiff is asking this court to grant an order that the insurers may avoid liability under the policy where the insured himself is saying categorically by way of SD (exh RS5), police report (exh RS6) and testimony in court (exh RS10) that he was never involved in an accident. Between the insurers and the first defendant (insured) there is overwhelming evidence that there has been a breach of the duty of good faith and false declaration of involvement in an accident has been made which allows the plaintiff (insurers) to avoid the policy”. Page 15 of 25 [28] The same conclusion was arrived at by the High Court in Sun Life Malaysia Takaful Berhad (dahulunya dikenali sebagai CIMB Aviva Takaful Berhad) v Noorulsmiah binti Sulong @ Mohd Nasir & 7 Ors [2015] 3 AMR 703 where the declaration was granted and the arguments by third parties similarly rejected. [29] No less basic is the fact the insurance policy only covers the Policy holder or any other person who is driving on the Policyholder’s order or with his permission. It is not however in dispute that the First Defendant was driving the Vehicle with the Second Defendant’s permission. [30] As the contract of insurance governing the Policy between the Plaintiff and the First Defendant is so manifestly founded on a contract of an utmost good faith, the act of the Second Defendant permitting the First Defendant filed the first report to facilitate the making of a fraudulent claim against the Plaintiff, albeit corrected subsequently, constitutes a clear violation of the contract of insurance. The violation justifies the instant application and the granting of a declaration that the same be held to be void and unenforceable. Third party has right to oppose declaration under Section 96 of the RTA [31] This is not to say that a third party like the Third and Fourth Defendants is absolutely irrelevant to the proceedings before me on the application by the Plaintiff to declare the Policy to be void and enforceable under Section 96 of the RTA. This action by the Plaintiff Page 16 of 25 under Section 96 concerns, as mentioned, the contract of insurance to which neither the Third nor Fourth Defendant was privy. But the very scheme of Section 96, whilst enabling an insurer to seek a Court declaration to avoid the relevant policy, also confers on the third party who claimed to have been involved in an accident with a vehicle insured with the insurer under the relevant coverage to apply to be made a party and to oppose the granting of such declaration. [32] It is apposite that I reproduce the relevant parts of Section 96 of the RTA, as follows:-

Duty of insurers to satisfy judgements against persons insured in respect of third party risks

If, after a certificate of insurance has been delivered under subsection 91(4) to the person by whom a policy has been effected, judgement in respect of any 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 judgement any sum payable thereunder in respect of the liability, including any amount 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 judgements.

No sum shall be payable by an insurer under subsection (1) - ……… Page 17 of 25

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 thereby become entitled to the benefit of this subsection as respects any judgement 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 thereof 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. ..…….” [emphasis added] [33] Section 96(3) of the RTA plainly confers on the third party like the Third and Fourth Defendants herein such right to contest the declaration despite the patent absence of any contractual relationship between the Plaintiff as the insurer and the Third/Fourth Defendant as the third party. [34] No clearer judicial pronouncement on the right of the third party under Section 96(3) of the RTA has probably been made other than by the Court of Appeal in Pacific & Orient Insurance Co Berhad v Rasip bin Hamsudi & Ors [2017] 4 CLJ 572, as follows:- “[20] This interest of the first, second and third respondents was statutorily and expressly recognised by virtue of the terms of the Page 18 of 25 proviso to s. 96(3) of the RTA. Any third party (like in this instance, the first, second and third respondents as plaintiffs) bringing a claim in court involving a vehicle (the subject of the mandatory third party risk insurance under RTA) was a recognised party named in the proviso to s. 96(3) as being entitled to be notified by the insurer (in this case the appellant) before or within seven days of the commencement of any proceedings under s. 96(3) to declare the relevant insurance policy to be void and unenforceable”. [35] But in the circumstances of the case where the affidavit evidence of a patent breach by the Second Defendant is unrebutted, it is difficult to see in what manner the Third or Fourth Defendants, even if it is assumed that she was a genuine claimant, could succeed in his claim for indemnity against the Plaintiff. [36] Section 96(1) of the RTA clearly enables any insurer to avoid or cancel an insurance policy. The policy, which is a contract between the insurer and the insured only is voidable at the instance of the insurer. Section 96(3) entitles the insurer to avoid or cancel any policy for breach of its express terms. Since an insurance policy is a contract of personal indemnity, an insurer cannot in law be required to accept liability in relation to a third party, more so one who is unknown to the insurer, as demonstrated in many of the cases highlighted in this judgment, including in the instant application before me. [37] These third parties, like the Third/Fourth Defendants herein, not vested with the requisite contractual nexus, are therefore bereft of any basis in law to oppose the insurer's action, like the Plaintiff herein, for a declaration to avoid liability and cancel the Policy following the breaches entitling repudiation of the same. This is also true in the instant Page 19 of 25 proceedings since it is in the nature of a clear cut case as suggested in Chu Chu, where the affidavit of the Plaintiff is not denied by the insured. Without more, and sans other material issues of dispute and controversy, the defence of the Third and Fourth Defendants is insufficient to deny the application for declaration under Section 96 of the RTA. This is not a proper case to be ordered to be heard together or after the Writ Action. The Plaintiff’s case, I reiterate, is unchallenged. [38] Neither can this action by the Plaintiff be construed as being pre-mature in that the Writ Action should be heard first to determine whether the First/Second Defendants are indeed liable for the alleged Accident. This is because the law is settled that in the scheme of Section 96 of the RTA, any such declaration to avoid a policy based on the language of Section 96(3) must be obtained prior to any judgment is declared against the insured in the liability proceedings. [39] Thus, the Court of Appeal in Ahmad Nadzrin bin Abd Halim & Anor v Allianz General Insurance Co (M) Berhad [2015] 5 AMR 777, in the judgment of Lim Yee Lan JCA held instructively as follows:- “[27] In this regard, we agree with and cite with approval the following passage of the judgment in the case of Pacific & Orient Insurance Co Bhd v Goh Cheng Loong & 2 Ors [2014] 1 AMCR 322; [2013] 1 LNS 1002 , in which Vazeer Alam Mydin Meera JC (as he then was) sets out correctly the proper interpretation to be given to s 96(3) in the following manner: [16] A careful reading of s 96(3) of the Road Transport Act 1987 shows that the insurer can repudiate liability only if, before liability was incurred, the insurer has obtained a declaration from the court to the Page 20 of 25 effect that the policy of insurance is void or unenforceable. Here, the statutory liability for the plaintiff to pay would arise from the operation of s 96(1) of the Road Transport Act 1987 which reads: If, after a certificate of insurance has been delivered under subsection 91(4) to the person by whom a policy has been affected, judgment in respect of any sub 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 thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any written law relating to interes t on judgments. [17] Therefore, it is abundantly clear that the insurer's statutory liability to pay would come about when judgment in respect of any 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 and the requisite notice under s 96(2) of the Road Transport Act 1987 has been given by the claimant, provided that the other provisos in s 96(2) did not apply. Once that liability has arisen the insurer cannot avail itself of the provisions of s 96(3) of the Road Transport Act 1987 to seek declaratory relief to repudiate liability. In this case, that judgment on liability pursuant to s 96(3) would be the judgment of the Sessions Court in the Sessions suit, which has been delivered. [39] This thus makes it clear that such declaratory relief under Section 96(3) can only be sought by an insurer before judgment on the liability proceedings is pronounced. [40] I cannot therefore but further agree that the Plaintiff would be prejudiced if this application for declaration is not allowed as the Plaintiff would otherwise be bound by Section 96(1) of the RTA to be liable for Page 21 of 25 any third party claim notwithstanding the violation of the contract of insurance by the Second Defendant. [41] Nor can there be any real duplicity in proceedings in between the Writ Action in the Sessions Court and the instant action for a declaration in this High Court. The former is a claim premised on a tort of negligence. The latter, on the other hand, is based on the allegation of a breach of the contract of insurance. [42] An insurer’s statutory liability arises when an insurer is legally bound under Section 96(1) of the RTA to pay a person who has died or who has suffered bodily injury in a motor accident, but such liability cannot arise if the insurer has obtained from the Court before liability is incurred (in the form of the judgment against the insurer) a declaration that the insurance was void or unenforceable. This was what the Plaintiff herein sought to and did achieve before this Court for the reasons I have stated earlier. [43] I emphasise that the challenge in the instant case by the third party on what in effect is a single issue of whether the Accident did happen and whether it involved the Vehicle is, without more, insufficient to render the instant proceedings unsuccessful or to direct that the matter be dealt with in the Writ Action. There are no material dispute of facts which justify such course of action in the face of the unchallenged affidavits of the Plaintiff containing the clear denial of the Accident by the First Defendant, and demonstrating a plain transgression of the duty of the utmost good faith on the part of an insured that was the Second Defendant for having permitted the First Defendant to do what he did. Page 22 of 25 The Third and Fourth Defendants have not demonstrated any fact (other than disputing the version of no-Accident by the First Defendant) or other evidence relevant to the question of prejudice that would render any declaration to be unjust. In my view, the ends of justice in the balance of competing interests to be determined in the context of Section 96 of the RTA is better served, given the circumstances of the instant case, with the granting of the declaration avoiding the contract of insurance between the Plaintiff and the Second Defendant. [44] I must add that in such a case where the insurance contract is declared void under Section 96(3), the third party who is successful in the liability proceedings against the insured is not entirely without remedy. A third party who obtains judgment against a driver without any policy coverage or with ineffective policy such as where the insurance is obtained fraudulently or through misrepresentation or non-disclosure of material fact may look to the Motor Insurers’ Bureau for some compensation payment under Section 91 of the RTA. In Ahmad Nadzrin bin Abd Halim & Anor v Allianz General Insurance Co (M) Berhad it was also stated by Lim Yee Lan JCA that:- [33] Reading s 91 together with the definition of "authorised insurer", it would necessarily mean that every insurance company carrying on a motor insurance business in Malaysia is a member of the motor insurers' bureau. [34] In this regard, the latest memorandum of agreement signed between the motor insurers' bureau and the Minister of Transport is the memorandum of agreement dated January 1, 1992 ("MOT-MOA").

In the event the insurance is obtained fraudulently, or through misrepresentation, non-disclosure of material fact or mistake (clause 1(ii)).

in the event the vehicle is under the control of an "unauthorised driver" (clause 1(iv)) and

in the event the ownership and or interest in a vehicle had changed hands (clause 1(vi)). [36] Clause 2 of the MOT-MOA provides that the bureau will consider to make at its absolute discretion, compassionate payments or allowances to persons injured and to the dependents of persons killed in the accident through the use of motor vehicles which do not have in force any policy of insurance as required by Part IV of the Act or where such a policy is ineffective for any reason other than the inability of the insurer to make payment. [37] Clause 4 of the MOT-MOA allows the bureau or the insurer (who has paid on behalf of the bureau) to recover any sum paid under clause 2 of the MOT-MOA against the policy holder or any other person. [38] Based on the foregoing provisions in s 91, it is clear that a third party who obtains judgment against an uninsured driver and or Page 24 of 25 registered owner of a vehicle by virtue of its cancellation or repudiation by the insurer can look to the bureau for satisfaction of the judgment sum, although as we understood it, not to the full extent but in practice up to 75% of the judgment sum”. Conclusion [45] For the reasons that I have discussed in the foregoing, it is my judgment that the Plaintiff has successfully established its case for the declaration under Section 96(3) of the RTA that the Policy with the Second Defendant and concerning the Vehicle is void and unenforceable. I therefore allow enclosure 1, with no order as to costs. Dated: 21 November 2017 (MOHD NAZLAN BIN MOHD GHAZALI) Judge High Court NCC1 Kuala Lumpur Counsel Counsel for Plaintiff R Ratha Messrs S.G Lingam & Co Kuala Lumpur Page 25 of 25 Counsel for Defendant Dato Sri M Ramachelvam Messrs Rama-Rozi & Associates Temerloh, Pahang