Allianz General Insurance Company (Malaysia) Berhad v Muhammad Najmuddin Bin Hassanuddin (WA-22NCC-305-07/2018)

This is a claim by the Plaintiff Allianz General Insurance Company (Malaysia) Berhad against its Insured, Wawasan GMV Trading (M) Sdn Bhd, its authorised driver Muhammad Najmuddin Bin Hasanuddin and his wife Siti Nur Ain Binti Khairuddin for a declaration that the insurance policy issued under the name of the 2nd Defendant is void and/or unenforceable on any action by the 3rd Defendant (the wife of the authorised driver) which was filed or may be filed following an alleged accident on 1.4.2016 2 between motor lorry No. WYY 5491 and No. CCE 9959 and that any such claim is not covered under the insurance policy issued by the Plaintiff as it is found that the 3rd Defendant at that time was not a passenger of motor lorry No. WYY 5491 travelling in pursuant to a contract of employment and/or travelling in the course of employment. The Plaintiff also sought a declaration that the Plaintiff has no obligation to comply with an order and/or judgment under section 96 of the Road Transport Act 1967 for any such claim arising from the said accident.

I have dismissed the Plaintiff’s claim. These are the full reasons for my decision.

The Plaintiff has issued an insurance policy in favour of the 2nd Defendant (“the Insured”) for the period covering the date of the accident.

At the time of the accident in question, the insured lorry was driven by the 1st Defendant who was employed by the Insured as a driver to transport goods from the client’s premises at Rawang to a vendor’s premises at Kawasan Perindustrian Plentong, to load goods from the said vendor and thereafter to return to Rawang. 3

The driver’s job was only to drive the lorry. He was not tasked to unload or load the goods from or onto the lorry.

At the time of the accident, the 3rd Defendant, the driver’s wife and an underaged daughter of theirs were in the lorry and the wife sustained serious injuries as a result of the accident.

The wife was not an employee of the Insured.

The Plaintiff relied on a clause in the terms and conditions of the policy wherein it was provided that the Plaintiff will not pay for death or bodily injury to any person being carried in the vehicle (unless he or she was required to be carried in or on the vehicle by reason of or in pursuance of his or her contract of employment with the Insured and/or the authorised driver and/or his employer).

The Plaintiff alleged that, in breach of the conditions of his contract of employment, the driver was giving his wife and child a lift to Johor Bahru to the wife’s grandfather’s house on the date of the accident and the wife 4 was not employed by the Insured and accordingly, she was not in the lorry by reason of or pursuant to any contract of employment. Accordingly, the Plaintiff was not obliged to indemnify the Insured in respect of the claim by the wife for her injuries. Summary Of The Case Of The 3rd Defendant Who Was The Injured

The authorised driver and his wife pleaded that the wife was employed by her husband to assist him on the day of the accident and accordingly, she was injured in the course of her employment or pursuant to her employment with the authorised driver. Accordingly, the Plaintiff is liable to indemnify the Insured in respect of the claim made by the wife.

However, after trial, the wife seemed to have abandoned that defence and now relies on another defence. She relied on the wording of the Insurance Policy wherein under “Limitations As to Use” it was stated “use in connection with the policyholder’s business whilst the vehicle is being so used, the carriage of passengers is permitted use for social, domestic and pleasure purposes.” She said this meant that use for social and pleasure purposes was permitted and therefore covered by the policy. 5

The authorised driver and his wife did not give evidence at the trial.

Initially, when trial commenced, the Insured had not filed any Defence and was not represented. In fact, the director of the Insured gave evidence for the Plaintiff and testified that the driver’s job was merely to drive the lorry; he did not have to load or unload goods, thereby implying that there was no reason for the driver to employ his wife to assist him to do anything. The Insured had since the accident terminated the employment of the driver. However, after he was cross examined by the other Defendants as to whether he knew the implications of his giving evidence on behalf of the Plaintiff, whether he knew that the Plaintiff was trying to negate liability to indemnify him in relation to the accident, the witness seemed to be confused. When questioned as to whether he had been served with a copy of the Statement of Claim, he said he had not been served. When re-examined on whether he had been served with the Statement of Claim, he said he had been. Then parties went into chambers and the other Defendants submitted that the claim of the Plaintiff should be dismissed on the ground that the Insured had not been served with the Statement of Claim. Another date was given to the parties to submit on the issue of service and in the meantime, the Insured entered 6 an appearance on or around 2.11.2018 and applied to strike out the claim against it for failure to serve the Statement of Claim.

Then, on the return date, the Insured withdrew its application and, instead of challenging service, the parties decided to proceed with the trial at its continuation.

The submission of the Insured was that the Plaintiff had not discharged the burden of proving that the 3rd Defendant was not employed by her husband or her own employer. They also relied on the Limitation as to Use stated in the Policy which permitted the carriage of passengers for social, domestic and pleasure purposes and the admission by the Assistant Manager of the Plaintiff who gave evidence wherein she admitted that the policy would cover passengers carried for social, domestic and pleasure purposes.

The authorised driver who did not give evidence at the trial, submitted that the Plaintiff had not proved its case. Findings Of The Court 7

This case turns very much on the burden of proof which is undoubtedly on the Plaintiff as the claimant. In order to come within the Exception in the policy which says “We will not pay for death or bodily injury to any person being carried in or upon the vehicle (unless he or she was required to be carried in or on the vehicle by reason of or in pursuance of his or her contract of employment with you and/or your authorised driver and/or his or her employer,” the Plaintiff will have to prove on a balance of probabilities that the 3rd Defendant was not employed by the Insured or by her husband or her own employer.

There is evidence from the director of the Insured that only the authorised driver was its employee and that his wife was not its employee. The only evidence that the 3rd Defendant was a voluntary passenger who was being given a lift by her husband was from the Adjuster who had interviewed the Insured and the authorised driver. His report set out the results of his investigations and interviews and he concluded that the authorised driver was giving his wife and their daughter a lift to the wife’s grandfather’s house in Johor, when the accident happened as a result of which the wife was flung out of the lorry and sustained serious injuries. She had filed a claim in the Sessions Court in Seremban claiming 8 damages in the sum of approximately RM700,000.00 against the Insured and the authorised driver.

In an attempt to prove its case, the Plaintiff called 4 witnesses and tendered many documents but only 4 documents were marked and accepted as evidence i.e.: a) The Adjustor’s Report dated 2.2.2018 (P2) without the appendices; b) The 2nd Defendant’s SSM search (P9); c) The letter of appointment of the 1st Defendant by the 2nd Defendant (P10); and d) The Insurance Policy (P11).

All the appendices to the Adjustor’s Report were not admitted as evidence because their makers were not called and there was a Statutory Declaration signed by the 1st Defendant (authorised driver) which was also not admitted as evidence because the 1st Defendant did not give evidence.

It is not in dispute that the burden of proof is on the Plaintiff. 9

His Lordship Augustine Paul JC (as he then was) in Tan Kim Khuan v Tan Kee Kiat (M) Sdn Bhd [1998] 1 MLJ 697 (HC) said: “It is settled law that the burden of proof rests throughout the trial on the party on whom the burden lies. Where a party on whom the burden of proof lies has discharged it, then the evidential burden shifts to the other party (see UN Pandey v Hotel Marco Polo Pte Ltd (1980) 1 MLJ 4; Wong Chong Chow v Pan Malaysian Cement Works Bhd (1980) 2 MLJ 75 and Johara Bi bte Abdul Kadir Marican v Lawrence Lam Kwok Fou & Anor (1981) 1 MLJ 139). What shifts is the responsibility of adducing evidence to discharge that burden (see International Times & Ors v Leong Ho Yuen (1980) 2 MLJ 86). When the burden shifts to the other party, it can be discharged (see International Times & Ors v Leong Ho Yuen (1980) 2 MLJ 86). When the burden shifts to the other party, it can be discharged by cross-examination of witnesses of the party on whom the burden of proof lies or by calling witnesses or by giving evidence himself or by a combination of the different methods. No adverse inference can be drawn against that party for failure to give evidence himself. If he does not adduce any evidence when the burden has shifted to him, he will fail. If the party on whom the burden lies fails to discharge it, the other party need not call any evidence. In that event, it will not avail him to turn round and say that the respondent has not established his. In such circumstances, as the Privy Council observed in Raja Chandrana th Roy v Ramjai Mazumdar 6 BLR 303, the respondent can say: “It is wholly immaterial whether I prove my case or not. You have not proved yours’ (see Selvaduray v Chinniah (1939) MLJ 253)”. 10

Her Ladyship Siti Norma Yaakob JCA (as she then was) affirming that the party who alleges must produce the necessary evidence in proof of it. In Juahir bin Sadikon v PKENJ [1996] 3 MLJ 627, Her Ladyship stated: “He who alleges must prove such allegation and the onus is on the appellant to do so. See section 103 of the Act. Thus, it is incumbent upon the appellant to produce Tan Sri Basir as his witness to prove allegation. The fact that the appellant was unable to secure the attendance of Tan Sri Basir as a witness does not shift the burden to the respondent to produce the witness and testify as to what he had uttered, as firstly, the respondent never raised such an allegation and, secondly, has denied even making one. For this very reason, the adverse inference under section 114(g) of the Act relied upon by the appellant cannot be accepted as establishing that if the witness had been produced, his evidence would work against the respondent. There is no obligation in law for the respondent to produce the witness as that obligation rests with the appellant, the party who alleges, and the fact that the appellant was unable to do so is fatal to his case. For this very reason too, the adverse inference under section 114(g) is invoked against the appellant”.

In the case of Yeohata Machineries Sdn Bhd v Quality Coils Sdn Bhd [2016] 6 CLJ 418, His Lordship Vernon Ong, JCA said that: 11 “In law, the party who desires the court to give judgment in its favour as to any legal right or liability bears the burden of proof (s 101(1) Evidence Act 1950). The burden of proof on that party is twofold: (i) the burden of establishing a case; and (ii) the burden of introducing evidence. The burden of proof lies on the party throughout the trial. The standard of proof required of the plaintiff is on the balance of probabilities. The evidential burden of proof is only shifted to the other party once that party has discharged its burden of proof. If that party fails to discharge the original burden of proof, then the adverse party does not need to adduce any evidence”.

Since the Adjustor was informed by the 1st Defendant that he was giving a lift to his wife and dropping her and their daughter off at her grandfather’s house at the material time, this implies that she was not employed by him nor was she employed by her own employer at the material time.

This evidence was not contradicted by the 1st Defendant or the 3rd Defendant who did not give evidence.

I also take into consideration that at the submission after trial, the 3rd Defendant no longer asserted that she was an employee of the husband but admitted that she was being carried as a passenger for social, domestic and/or pleasure purposes. That, together with the 12 Adjustor’s evidence that the authorised driver said that he was giving his wife and daughter a lift to her grandfather’s house (thereby implying that the carriage was for domestic purposes and not pursuant to any contract of employment) and the evidence of the Insured’s director that the job scope of the driver was just to drive from point A to point B and he is not required to unload the goods makes it very unlikely that the authorised driver will need to employ his wife to assist him. Taking all that evidence into consideration, I am of the view that the evidential burden has shifted to the 1st Defendant or the 3rd Defendant to prove that she is employed by her husband. As neither the 1st Defendant nor the 3rd Defendant had given any evidence during the trial, I am of the view that the Plaintiff has sufficiently discharged its burden of proof and would be entitled to the declarations sought unless there is a valid defence relied upon by the Defendants.

The Defendants contend that they have such a defence. Under the “Limitation as to Use” in the schedule to the policy, it is expressly stated that “use in connection with the policyholder’s business whilst the vehicle is being so used, the carriage of passengers is permitted use for social, domestic and pleasure purposes.” 13

The 2nd and 3rd Defendants pointed out that the Plaintiff’s Assistant Manager in her evidence had confirmed more than once that the policy would cover a passenger who was using the vehicle for social, domestic and pleasure purposes.

The said witness was referred to the Limitations as to Use and then asked whether this meant that the said insurance policy covered passengers for social, domestic and pleasure use. The relevant parts of the Notes of Evidence are produced here: “CCM : No, my question is your policy cover says is the policy that a passenger can be carried for a social, domestic and pleasure purposes. Correct? : Yes. : So what it says that this policy will cover when a passenger is even carried for pleasure purposes correct? In fact, Ms Sufaizah, I will take you further, to avoid any confusion. The policy will not cover in the case of racing, drawing trailer except for towing and use for the carriage of passenger or hire for reward. So, as long as passengers are being carried for the purpose of social, domestic and pleasure purposes, as long as they do not fall under exception 1, 2, 3, your insurance will cover? : There is exceptions as well... 14 : No, no, I don’t want to know about that. Your policy covers isn’t it. Yes or No. : Based on this, Yes. : In fact. If you were to look at your own answer, what is the outcome of the investigation (Question 7) “it was revealed in the investigation, that the third Defendant was travelling in the motor lorry as a volunteer passenger travelling for pleasure” If one were to read your answer and look at the policy schedule, it’s very clear right? That the claim here, that your policy covers the particular risk? : This one says commercial vehicle A-permit. : I don’t want but. This is what your policy is saying. Based on this reading. If this is not applicable in this case, it shouldn’t have been used. But you all use this document with no qualification. Based on this document, you have to cover a passenger who is travelling for pleasure purposes? : Agree.

Because of the permitted use for carrying passengers for social, domestic and pleasure purposes and the exception that excludes the Plaintiff’s liability unless the passenger was injured in the course of or pursuant to a contract of employment, the 2nd and 3rd Defendants submit that there is an ambiguity in the policy which should be construed contra proferentum i.e. construed against the insurance company and in favour of the insured. 15

They relied on the following cases.

In Central Lorry Service Co Sdn Bhd v The American Insurance Co [1981] 2 MCJ 40, Mohamed Azmi J (as he then was) said: “In construing insurance policies, the contra proferentum rule should apply if there is ambiguity or doubt as to the extent of the policy. Since the policy is prepared by the insurance company, the doubt and ambiguity should be construed in favour of the insured…”.

The case of Central Lorry Service Co was confirmed in the Court of Appeal in AmGeneral Insurance Berhad v Iskandar Bin Mohd Nuli [2016] 2 CLJ 1 where his Lordship Vernon Ong stated that: “...”Even if there is any doubt or ambiguity as to the extent of the policy, the contra proferentum rule apply so that the doubt or ambiguity should be construed in favour of the insured”.

In Mary Colete John v South East Asia Insurance Bhd [2010] 2 MLJ 222, His Lordship Abdul Malik Ishak JCA (as he then was) said: [51] The maxim verba charfarum fortius accipiuntur contra proferentum or what is commonly called the contra proferentum rule, is a rule which requires a 16 written document especially when there is an ambiguity to read it against the party that drafted the written document and to construe it in favour of the other contracting party. Translated to the facts of the present appeal, South East Asia Insurance Berhad as the insurer as well as the party that draws up the insurance coverage should not be allowed to create an ambiguity for the purpose of giving itself an advantage pertaining to the insurance coverage at the expense of the plaintiff”. His Lordship further said: [52] Another case in point would be the case of Houghton v Trafalgar Insurance Co. Ltd [1954] 1 Q.B. 247, C.A. Briefly, the facts in that case were these. A car insurance policy excluded liability for damage “caused or arising whilst the car is conveying any load in excess of that for which it was constructed”. At the time of an accident there were six people in a car with seating accommodation for five and the insurers denied liability claiming that this was a load in excess of that for which the car was constructed. It was held that the word “load” only covered cases where there was a specified weight which must not be exceeded, as in the case of lorries or vans. Romer L.J observed as follows at page 250: “I think that it would be most regrettable if a provision of this kind were held to have the force for which the defendants contend. It would be a serious thing for a motorist involved in a collision if he were told that the particular circumstances of the accident excluded him from the benefit 17 of the policy. I think that any clause or provision that purports to have that effect ought to be clear and unambiguous so that the motorist knows exactly where he stands. This provision is neither clear nor unambiguous. If applied to a private motor car I have not the least idea what it means”.

I am however in agreement with the Plaintiff in its submission that a consideration of the case of Robertson v Central Fire & General Insurance Co Ltd [1978] 27 WIR 250, in which the facts are somewhat similar to those of the present case, shows that there is no ambiguity which would necessitate the application of the contra proferentum rule. In that case, the plaintiff sought to recover an unsatisfied judgment against the insurers of a mini bus in which she was a passenger.

The policy of insurance contained a clause permitting the use of the vehicle for social, domestic and pleasure purposes and also for the carriage of passengers in connection with the policy holder’s business but excluded liability ‘in respect of bodily injury to any person carried on the motor vehicle (other than a passenger carried by reason of or in pursuance to a contract of employment with the assured). At the time of the accident, the Plaintiff was not in the employment of the assured. The Plaintiff sought to show the existence of ambiguity in the policy. He 18 pointed to the limitation as to user appearing in the schedule to the policy and the exception clause in the policy (as stated above) and stated that there was an ambiguity that should be resolved in favour of the Plaintiff by construing the policy ‘contra proferentum’.

The court held that the plaintiff cannot claim against the insurers for the following reasons: “An ambiguity is defined as an expression capable of more than one meaning. Counsel for the Plaintiff did not attempt to show any clause in the policy which was capable of more than one meaning…contrary to the learned counsel’s contention regarding a conflict between the terms of the schedule and the policy is in my view in harmony with the policy and accurately reflects its tenor. The schedule shows that the assured could properly use his vehicle for three purposes in respect of such use he would be covered by the policy…The policy however, specifically dealt with passengers and showed that cover would extend only to passengers conveyed pursuant to a contract of employment with the assured…In so far as the schedule summarised the terms of the policy, this was reflected in the clause: ‘use for the carriage of passengers in connection with the policy holder’s business. 19 The rule of interpretation applicable in the circumstances is found in the latin maxim “expression unius est exclusio alterius”. The fact that the policy and the schedule expressly confers protection for passengers carried in pursuant to a contract of employment, implies the exclusion of all other passengers. Further the court went on to say that: The term use for social domestic and pleasure purposes does not assist the Plaintiff. I would agree that the use by Mr. Mighty of his motor vehicle to give a lift to Miss Robertson, would amount to a permitted user. But that cannot be construed as meaning that if Miss Robertson was injured, those words were apt to show that the policy covered her case. ... The policy provided protection for one category of passengers, namely, passengers carried pursuant to a contract of employment with the assured or as stated in the schedule ‘passengers carried in connection with the policy holder’s business’. ‘Expressiounius est exclusio alterius’. The Latin tongue may be dead but some expressions still rule us beyond the grave. That clause protected the assured if his vehicle, while being used for social, domestic or pleasure purpose, caused damage or injury to third parties for which liability attached to him and in respect of which the exception clause does not apply”.

I am of the view that using the vehicle for a permitted use does not necessarily mean that the passenger will be covered under the policy. No doubt, the Assistant Manager of the Plaintiff had admitted in evidence that 20 such passengers will be covered by the policy but the construction of a policy is a matter of law and the evidence of the Assistant Manager will not ipso facto make the Insurers liable under the policy.

I am also minded of the wordings at the foot of the certificate of insurance wherein it is stated that “I/We certify that the policy to which the certificate is issued in accordance with the provisions of Part IV of the

By virtue of Part IV of the Road Transport Act 1987 (“RTA”), everyone who is using a vehicle on a road is compelled by law/Statute, under s 90(1) of the RTA, to insure against third party liability.

He is however, by law not compelled to insure against injury to passengers.

However, that being said, the proviso to S91 of the RTA compels insurance coverage for passengers carried for hire or reward in public service vehicles or by reason of or in pursuance to a contract of employment and excludes liability towards all other passengers.

The proviso to S91 of the RTA reads: 21 Provided that such policy does not require to cover (aa) liability in respect of death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of employment; or (bb) except in the case of a motor vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, liability in respect of the death of or bodily injury to persons being carried in or upon entering or getting onto or alighting from the motor vehicle to the time of occurrence of the event out of which the claims arise; or

(cc) any contractual terms. In this case, it would appear that the Plaintiff had, by virtue of statute, incorporated the above proviso in the terms of the policy to offer coverage for passengers travelling by reason of or in pursuant to a contract of employment. This is found in the exclusion clause under the terms and conditions of the policy, under section B - Liability to Third Parties, Exception to Section B (which is in pari material with the proviso to section 91 of the RTA) which reads: 22 “We will not pay for

death or bodily injury to any person where such death or injury arises out of and in the course of the employment of such person by you or by your authorised driver.

death or bodily injury to any person being carried in or upon entering or getting on to or alighting from your vehicle (unless he/she is required to be carried in your vehicle by reason of or in pursuance of his/her contract of employment with you and/or your authorised driver and/or his/her employer.”

The exclusion clause (b) in the Policy is in pari material with proviso (aa) of section 96 of the RTA and the exclusion clause (c) in the Policy is in pari material with proviso (bb) of section 96 of the RTA.

In accordance with the RTA, the Policy only confers protection for passengers travelling pursuant to a contract of employment and excludes all other passengers, even if they constitute a permitted use of the vehicle.

In other words, to be covered under the Policy, it is not sufficient that the carriage of passengers for social, domestic and pleasure purposes is a permitted use. They must not be caught by an exception clause under the Policy. Since the 3rd Defendant was not carried in pursuance to a 23 contract of employment, and therefore falls under Exclusion (c), I am of the view that she is not covered by the Policy in this case.

Accordingly, I would grant the orders sought by the Plaintiff, with costs of RM5,000.00 against each of the Defendants, subject to allocator. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Dated: 7th December 2018 Solicitors for the Plaintiff Kamaljeet Kaur A/P Bhupinder Singh, Adibah Binti Ishak & Tan Lee Kiat Messrs Othman Hashim & Co Advocates & Solicitors Tingkat 6, Wisma Kah Motor No. 566, Batu 3 ½, Jalan Ipoh 51200 Kuala Lumpur Tel: 03-6257 3399 Fax: 03-6257 3393 Solicitors for the 1st Defendant 24 Thanajayan A/L P Manickavasagam Messrs M Thanajayan & Co Advocates & Solicitors 2-6-1, 6th Floor, Menara KLH Business Center No. 2, Jalan Kasipillay, Off Jalan Ipoh 51200 Kuala Lumpur Tel: 03-2381 2490/2381 2493 Fax: 03-2381 2495 Solicitors for the 2nd Defendant S L Tan Messrs S L Tan & Associates Advocates & Solicitors No. 55 & 57, Jalan Ambong Dua (Jalan 4) Kepong Baru 52100 Kuala Lumpur Tel: 03-6251 8595 Fax: 03-6251 0388 25 Solicitors for the 3rd Defendant Dato’ SS Gill, CM Maran & Khairul Aiman Bin Kamar Rozaman Messrs G Dorai & Co Advocates & Solicitors No. 7, Jalan Mawar 1