Aqmal Bin Dakhirrudin v Azhar Bin Ahmad (B-02(A)-587-03/2018)

MALAYSIA MOTOR INSURANCE POOL … RESPONDENTS [In the Matter of the High Court of Malaya at Shah Alam In the State of Selangor Darul Ehsan, Malaysia Originating Summon No. BA-24-51-01/2017 Between Malaysian Motor Insurance Pool … Plaintiff And

Azhar Bin Ahmad

Aqmal Bin Dakhirrudin … Defendants] CORAM: HAMID SULTAN BIN ABU BACKER, JCA AHMADI BIN HAJI ASNAWI, JCA HANIPAH BINTI FARIKULLAH, JCA 2 GROUNDS OF JUDGMENT Introduction

This is an appeal by the appellant, the injured party against the judgment of the Shah Alam High Court given on 20.2.2018 whereby she allowed the Originating Summons (OS) by the 2nd respondent for a declaration that the insurance policy is null and avoid and unenforceable under section 96 (3) of the Road Transportation Act 1987 (RTA).

In this judgment, the parties are referred to as they were at the High Court, namely, the appellant as the 2nd defendant, the 1st respondent as the 1st defendant and the 2nd respondent as the plaintiff.

The plaintiff by way of an OS is seeking for a declaration that the insurance certificate policy issued by the plaintiff (the insurer) to the 1st defendant to cover motorcar registration no. BFU 2275 (insured car) under policy no. 213-081-B4-C-0006040 for the period of 30.4.2014 until 29.4.2015 is void and unenforceable.

The plaintiff obtained the said declaration to nullify the Insurance Policy issued to the 1st defendant’s motor vehicle No. BFU 2275, pursuant to which the plaintiff was obliged to satisfy any judgment that may be obtained by the 2nd defendant vide Sepang Sessions Court Civil Suit No. S2-A53KJ-82-03/2016 wherein the 2nd defendant in this OS is the plaintiff 3 in the aforesaid Civil Suit seeking damages arising from the injuries suffered in consequence of a motor vehicle accident involving the insured car which occurred on 6.9.2014.

We note that the declaration obtained by the plaintiff under section 96

Aggrieved by the said decision of the learned judge, the 2nd defendant appealed against the whole decision of the learned judge.

After having read the written submissions as well as hearing oral arguments on the issues raised, we informed the parties that we would refer our decision on a date to be informed. Having deliberated on the issues raised, this is now our unanimous decision which will form the judgment of this court. The Background Facts

The factual background is set out by the learned judge in great detail in her judgment dated 20.2.2019. The following is a summary of those matters necessary to understand the issues arising on this appeal. The 1st defendant is at all material times the registered owner of motorcar No. BFU 2275 (insured car). The insurance policy was issued by the plaintiff in the 4 name of the 1st defendant to insure the insured car for the period from 30.4.2014 until 29.4.2015.

An accident occurred on 6.9.2014 between the insured car driven by one Fevoz Ahmad and a motorcycle No. BLB 6002 driven by the 2nd defendant with his friend as pillion rider at Persiaran Tengku Ampuan Rahimah, Klang, Selangor Darul Ehsan (the accident).

Arising from the accident, the 2nd defendant instituted legal proceedings against the driver and the registered owner of the motorcar. The undisputed facts show that the 2nd defendant, through his solicitors, Messrs P.S Sohanpal & Sidhu made a search at the Road Transport Department (JPJ) on the motorcar No. BFU 2275 and the official search confirmed that the registered owner of the motorcar is Azhar bin Ahmad, the 1st defendant. The said search also revealed that at the material time of the accident, the motorcar was insured by Malaysian Motor Insurance Pool, the plaintiff.

Subsequently, the 2nd defendant’s solicitor then issued a notice under Section 96(2) of the RTA dated 8.10.2014 to the plaintiff.

The solicitors of the 2nd defendant then filed a Writ of Summons and Statement of Claim at the Sessions Court, Sepang vides no. S2-A53KJ-82- 03/2016 against the driver and owner of the motorcar. The plaintiff, through 5 their solicitor Messrs Murali B. Pillai & Associates, filed defence on behalf of the 1st defendant.

The plaintiff then sought to institute OS vide no. BA-24-51-01/2017 and simultaneously filed a Notice of Application to intervene at the Sessions Court’s Suit through their newly appointed solicitors Messrs Silva Velu & Co. The 2nd defendant was initially not cited as a party to this OS. However, upon being notified by the plaintiff’s solicitor of this action, the 2nd defendant then successfully intervened in these proceedings pursuant to the Order of the Shah Alam High Court dated 25.7.2017 and was subsequently added as the 2nd defendant in the proceeding. The Plaintiff’s Case 14. As stated above, the OS is seeking for orders, inter alia, that the insurance certificate policy issued by the plaintiff to the 1st defendant to cover motorcar registration no. BFU 2275 under policy no. 213-081-B4-C- 0006040 for the period of 30.4.2014 until 29.4.2015 is void and unenforceable.

It is the plaintiff’s case that there was a transfer of interest and that the motorcar had apparently been sold by the 1st defendant to one ‘En. Din’ (an intermediary/agent of used car) in 2011 and subsequently En. Din had sold this car to one Sufiah Savsthri bin Abdullah (Sufiah) in June 2014 but 6 only registered the transfer to her on 15.1.2015 upon payment of the full purchase price. During the accident, relying on the statutory declarations by Sufiah, the motorcar was driven by Sufiah’s employee Fevoz Ahmad (Sufiah’s SD).

The plaintiff’s Adjuster concludes that by virtue of the statutory declarations by Sufiah and the 1st defendant, the insurance cover is void and unenforceable by reason of the sale from the 1st defendant to Sufiah and further there has been a breach of policy conditions as the 1st defendant had no insurable interest on the insured car by reason of the sale and therefore they are entitled for a declaration under Section 96(3) of the RTA. The 2nd Defendant’s Case

It is the 2nd defendant’s case that mere reliance of the statutory declarations is insufficient as the truth or otherwise has not been tested. The 2nd defendant disputes the assertion of sale on the following issues namely: i) That the so-called “En. Din” appears to be an afterthought as there are no further particulars of ‘En. Din’ nor are there any particulars of his registration card; ii) That the search at the JPJ confirmed that when the 1st defendant car was involved in the accident, it was still registered under the name of the 1st defendant; 7 iii) The allegation of sale as contended by the plaintiff is not in compliance with section 13 of the RTA; iv) That the 2nd defendant had requested for proof of the registration card vide their letter dated 20.1.2017 and 23.8.2017 which the plaintiff and their solicitor failed to produce thereby leading to an adverse inference under section 114(g) Evidence Act 1950 (EA) that there was indeed an endorsement on the registration card of the motor vehicle in question that bears endorsement which restricted the sale of the car i.e. “Hak Milik Di Tuntut” by the finance company. v) That the allegation of sale is further disputed as the purported sale was in 2011 and the registration to Sufiah was only done on 15.1.2015, i.e. 4 months after the date of accident; and vi) The statutory declarations leave many questions as to whether there was indeed a transfer. The purported sale appears to be a ‘sambung bayar’ transaction which sale is prohibited under the Hire Purchase Agreement/ Hire Purchase Act 1967. Decision Of The High Court

The learned Judge decision may be summarized as follows:

(i) Whilst insurance policy is founded on contractual principles, however, section 96 of the RTA is an exception to the doctrine of privity of contract whereby it provides the obligation of insurer to pay the persons entitled to the benefit of judgment any sum payable thereunder in respect of liability, costs and interest on judgments against the insured. 8

(v) The 2nd defendant did not have any knowledge to rebut the sale of the car to En. Din and, thereafter, to Sufiah.

(a) Sufiah admitted to Fovez driving her car when the alleged accident happened; and

(b) Plaintiff does not have any knowledge regarding the sale and lending of the car transactions at the material time. 9

The 2nd defendant has raised the following errors by the learned High Court Judge: i) The issue of the transfer of interest could only have taken effect on 15.1.2015 when the car was registered in the name of Sufiah i.e. after the accident. Until such time, the 1st defendant retained legal ownership of the car and was the insured concerned. 10 ii) She had failed to not invoke adverse inference against the plaintiff for not producing the grant to the said car; i) She had failed to follow the ratio in Zainudin’s case as binding precedent. ii) The OS procedure was unsuitable to resolve disputed facts via affidavit evidence. iii) The learned High Court’s Judge adopted the principles in the cases of Nanyang insurance and Peoples Insurance Co Ltd v Salbiah & Anor [1967] 1 MLJ 94 in refusing to hold that 1st defendant had retained an interest in the car as at 6.9.2014. She failed to consider the guidelines set out in Motor Insurance Bureau’s (MIB) letter of 18.1.1985 holding plaintiff liable under the policy. iv) She failed to apply the ratio in the Court of Appeal decision in Hameed Jagubar Syed Ahmad v Pacific & Orient Insurance Co Bhd (2017) 10 CLJ 278 in holding that the plaintiff was liable under the MIB agreements. v) She had failed to consider ss.13, 17, 94 and 95 of the RTA. The Appeal

The Plaintiff’s OS is premised on the fact that there was a transfer of interest that the motorcar had apparently been sold by the 1st defendant to one ‘En. Din’ (intermediary/agent of used car) in 2011 and subsequently 11 this ‘agent of used car’, one ‘En. Din’ had sold this car to one Sufiah Savathri Binti Abdullah in June 2014 but only registered the transfer to herself on 15th January 2015 upon payment of the full purchase price by Sufiah.

To support its case, the plaintiff relied on the two statutory declarations by the 1st defendant and Sufiah. The 1st defendant’s statutory declaration states as follows: “ SURAT AKUAN Saya, AZHAR BIN AHMAD (No.K/P: 670711-10-5005) yang beralamat di Lot 223, Jalan Aman, Batu Belah, 42100, Klang Selangor, dengan sesungguhnya dan sebenarnya mengaku bahawa: Saya pemilik kereta MPV bernombor BFU 2275 dan pada bulan September 2011 saya telah menjual kereta MPV tersebut kepada seorang agen used car yang dikenali sebagai EN. DIN dengan harga RM11,000. Pada ketika itu saya tidak membuat pertukaran hak milik kenderaan kerana En. Din tidak dapat seorang pembeli. Pada akhir tahun 2014 atau awal tahun 2015 saya telah dipanggil oleh En. Din dan saya telah pergi ke JPJ Padang Jawa dan membuat penukaran nama dengan pembeli baru. Saya juga tidak tahu tentang kemalangan pada 6.9.2014. Dan saya membuat surat akuan ini dengan kepercayaan bahawa apa-apa yang tersebut didalamnya adalah benar, serta menurut Undang-Undang Surat Akuan, 1960”

We note that Sufiah SD states that: “ SURAT AKUAN Saya, SUFIAH SAVATHRI BINTI ABDULLAH (No.K/P:690801-10-5162) yang beralamat di No. 40, Lorong Penghulu Kasim 1C, Taman Seri Mewah, Kampung Jawa, 41000, Klang Selangor, dengan sesungguhnya dan sebenarnya mengaku bahawa: 12 Saya telah membeli sebuah kereta MPV bernombor BFU 2275 pada bulan Jun 2014 dari seorang agen used car yang dikenali sebagai En. Din dengan harga RM22,000.00. Pada 6.9.2014, saya telah memberi kebenaran kepada pekerja saya bernama Fovez Ahmad untuk menggunakan kereta MPV saya. Dan pada tarikh tersebut kereta MPV saya telah kemalangan dengan sebuah motorsikal bernombor BLB 6002. Pada 15.1.2015 setelah membayar keseluruhan harga kereta MPV saya telah pergi ke JPJ Padang Jawa dan telah menukar hak milik kenderaan dari pemilik asal kereta tersebut iaitu Azhar bin Ahmad. Dan saya membuat surat akuan ini dengan kepercayaan bahawa apa-apa yang tersebut di dalamnya adalah benar, serta menurut Undang-Undang Surat Akuan, 1960.”

Learned counsel for the plaintiff submitted that by virtue of these statutory declarations, the insurance cover is void and unenforceable by reason of the sale of the car from the 1st defendant to Sufiah . In support of his submission, learned counsel argued that there has been a breach of policy conditions as the 1st defendant had no insurable interest on the motorcar by reason of the sale and therefore they are entitled to a declaration under section 96(3) of the RTA.

On the other hand, the 2nd defendant submitted that the alleged sale of the vehicle by the 1st defendant to Sufiah was not registered with JPJ as required by section 13 of the RTA. Therefore, the 1st defendant is deemed to be the owner and consequently, the insurer remains liable to compensate the 2nd defendant who is a third party. 13 The Law

For proper determination of the issues in the present appeal, it is necessary to first set out the law.

Section 90(1) of the RTA specifies that: It shall not be lawful for any person to use or to cause or permit any other person to use, a motor vehicle unless there is in force in relation to the user of the motor vehicle by that person or that other person, as the case may be, such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Part.

Section 91(1)(b) of the RTA provides that such a third party risks insurance policy must be a policy which: Insures such person, or class of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of use of the motor vehicle or land implement drawn thereby on a road.

Section 94 of the RTA states: Any condition in a policy or security issued or given for the purposes of this Part providing that no liability shall arise under the policy or security or that any liability so arising shall cease in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim 14 under the policy or security shall be of no effect in connection with such claims as are mentioned in paragraph 91(1)(b): Provided that nothing in this section shall be taken to render void any provision in a policy or security requiring the person insured or secured to repay to the insurer or the giver of the security any sums which the latter may have become liable to pay under the policy or security and which have been applied to the satisfaction of the claims of third parties.

Section 95 of the RTA specifies that: Where a certificate of insurance has been delivered under subsection 91(4) to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any of the following matters:

(a) at the age or physical or mental condition of persons driving the motor vehicle;

(b) the condition of the motor vehicle;

(c) the number of persons that the motor vehicle carries;

(d) the weight or physical characteristics of the goods that the motor vehicle carries;

(e) the times at which or the areas within which the motor vehicle is used; 15

(f) the horse-power or value of the motor vehicle;

(g) the carriage on the motor vehicle of any particular apparatus;

(h) the carriage on the motor vehicle of any particular means of identification other than any means of identification required to be carried under Part II;

(i) the driver of the motor vehicle at the time of the accident being under the influence of intoxicating liquor or of a drug;

(j) the driver of the motor vehicle at the time of the accident not holding a licence to drive or not holding a licence to drive the particular motor vehicle;

(k) the motor vehicle being used for a purpose other than the purpose stated in the policy. shall, as respects such liabilities as are required to be covered by a policy under paragraph 91(1)(b), be of no effect: Provided that nothing in this section shall require an insurer to pay any sum in respect of the liability of any person otherwise than in or towards the discharge of that liability, and any sum paid by an insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this section shall be recoverable by the insurer from that person. 16

Section 96 of the RTA provides:

(a) in respect of any judgment, unless before or within seven days after the commencement of the proceedings in which the judgment was given, the insurer had notice of the proceedings;

(b) in respect of any judgment, so long as execution thereon is stayed pending an appeal; or

(c) in connection with any liability, if before the happening of the event which was the cause of the death or bodily injury giving rise to the liability the policy was cancelled by mutual consent or by virtue of any provision contained therein and either- 17

(i) before the happening of the said event the certificate was surrendered to the insurer or the person to whom the certificate was delivered made a statutory declaration stating that the certificate had been lost or destroyed;

The first question which arises in this appeal is whether the alleged transfer of interest from the 1st defendant to En. Din and subsequently to Sufiah had the effect of rendering the policy ineffective or causing it to lapse.

For a proper determination of this issue, it is important to have in mind that section 13 of the RTA deals with the procedure for transfer of ownership, and provides as follows:

(a) the registered owner shall, within seven days after such change of possession, forward to the Director of a registration area a statement in the prescribed form, and shall deliver to the possessor or the new owner the registration certificate relating to the motor vehicle and, unless he is surrendering the licence under section 19, the licence;

(b) the new possessor or new owner shall, within seven days after such change of possession, forward to such Director a statement in the prescribed form together with the registration certificate and the prescribed fee; and 19

(c) the motor vehicle shall not be used for more than seven days after such change of possession unless the new possessor or the new owner is registered as the owner thereof and if the licence has been surrendered by the registered owner, it shall not be used until the new owner or new possessor has taken out a new licence. Provided that this subsection shall not apply in any case where the change of possession is consequent on a contract of hiring and the period of hiring does not exceed one month.

(a) the registered owner of the motor vehicle shall, within seven days after the change of possession, deliver the registration certificate relating to the motor vehicle to the person into whose possession the vehicle has passed, and shall, in writing, inform the Director of a registration area of the change of possession;

(b) where the registration certificated is so delivered, the person into whose possession the motor vehicle has passed shall, within seven days after the change of possession, forward to the Director the registration certificate relating to the motor vehicle, and shall apply to such Director to be registered as the new owner in place of the registered owner; 20

(c) where a Director is satisfied that the registration certificate relating to the motor vehicle has not been delivered under paragraph (a) to the person into whose possession the motor vehicle has passed, and that such person is entitled to the possession of the motor vehicle, the Directory may, upon application made by such person and on payment of the prescribed fee, issue to such person a duplicate of the registration certificate; and

(d) the person into whose possession a motor vehicle has passed shall, upon making the prescribed application and upon payment of the prescribed fee and upon production to the Director of the registration certificate or a duplicate thereof, be entitled to be registered as the new owner of such motor vehicle.

Section 13 of the RTA requires that the new possessor or new owner to register himself within seven days of such change of possession (See also Muhamad Haqimie Hasim & Anor V Pacific & Orient Insurance Co 21 Berhad [2018] 1 LNS 627). It is not disputed between the parties that it was not done in the present case. Therefore, we are of the view that the alleged sale by the 1st defendant to Sufiah is not in compliance with section 13 of the RTA.

In this regard, it is necessary to consider section 109 of the RTA, whereby the registered owner of a motor vehicle shall be deemed to be the owner of that motor vehicle for the purpose of in this present case, inter alia, proceedings under the RTA. There is no doubt that the proceeding is under section 96(3) of the RTA.

In the circumstances, as the alleged sale of the motor car by the 1st defendant to Sufiah was not registered as required under section 13 of the RTA, we are of the view that the 1st defendant is deemed to be the registered owner of the said motorcar and not Sufiah. Accordingly, there is no transfer of interest from the 1st defendant to Sufiah by operation of law. Therefore, we think the learned judge was wrong to hold otherwise.

In the recent Indian Supreme Court case of Naveen Kumar v Vijay Kumar & Ors. Civil Appeal No. 1427 OF 2018 referred to by the learned counsel for the 2nd defendant, the Supreme Court of India held that the expression of ‘owner’ for the purpose of Motor Vehicle Act is the person in whose name the motor vehicle stands registered. The Supreme Court of 22 India held that ‘a claimant for compensation ought not to be burdened with following a trail of successive transfers, which are not registered with the registering authority to hold otherwise would be to defect the statutory object and purpose of the Act’.

The Federal Court in Nanyang Insurances Co Ltd v Salbiah & Anor (supra) held that since it is clear from the evidence that the company (vendor) intended to retain the property in the car until Abdul Karim (the purchaser) has paid in full the initial payment, the Court found that the appellants (the insurer) had an insurable interest in the car on the date of the accident.

In the light of the principles in the above authorities, we agreed with the 2nd defendant’s submission that the 1st defendant had retained an interest in the motor vehicle until full purchase price was effected on 15.1.2015 by Sufiah after the accident on 6.9.2014. Hence, the plaintiff is liable to cover the risk to the third party (the 2nd defendant) when he occasioned bodily injury arising from the aforesaid collision.

Next comes the question whether, supposing there is a breach of policy condition by the 1st defendant i.e. misrepresentation, failure to inform change of ownership or that the contract of insurance between the plaintiff and 1st defendant is based on the principle of ‘Uberima Fides’, we are of 23 the view that the plaintiff cannot deny its liability by virtue of the statutory compulsory requirement under section 91(1)(b) read with section 94 and 95 of the RTA (see Pacific & Orient Insurance Co Bhd V Kamacheh a/p Karuppen (2015) 4 MLJ 218).

We are of the considered view that the 2nd defendant is an innocent third party and the RTA to some extent is a social legislation, in particular, the provisions under Part IV namely section 89, 90, 91, 94 and 95 – 107 of the RTA is attempting to provide statutory protection to road victims (who are innocent parties) under the insurance policy terms.

We have also carefully considered the other complaint that the 2nd defendant makes about the learned Judge’s approach to the evidence. We recognize that the learned Judge’s approach in accepting the statutory declarations relied on by the plaintiff has affected the ultimate conclusion to which she came.

In the present case, the statutory declarations did not explained the circumstances or reasons why the vehicle alleged to belong to Sufiah but remains registered in the name of the 1st defendant. In a case of this sort, where the facts are disputed and contradicting to the contemporaneous documents, we are of the view that this case is not suitable to be decided by way of an originating summons. 24

Reference should be made to the Supreme Court case of Ting Ling Kiew & Anor V Tang Eng Iran Works Co Ltd (1992) 2 MLJ 212 where the Court held as follows: “(2) The conflicts in the evidence could only be properly and satisfactorily resolved if oral evidence was adduced and witnesses cross-examined on their evidence which, however, was not possible in proceedings begun by originating summons. In any case, it was most inappropriate and iniquitous to decide disputed facts summarily by relying simply on affidavit evidence.” (See also: Yebet bt Saman & Ors (sued on behalf of himself and 76 other people of Semaq Beri as listed in Appendix A) v Foong Kwai Long & Ors [2015] 2 MLJ 498; Husli @ Husly bin Mok v Jundar Realty Development Sdn Bhd & Anor[2014] 3 MLJ 496; )

Based on the above reasons, we think in the present case, the plaintiff has not discharged the burden of proof on the balance of probabilities. In “The Law of Motor Insurance” (2010) at page 395 to 396 by S.Santhana Dass, the learned author has taken a similar view stating that the insurer of a motor vehicle will be liable even if the vehicle has been sold before the accident and there was a transfer of interest in the vehicle which the insurance purports to cover unless subsequent insurance has been effected or the insurance was canceled prior to the accident. There is in effect a letter dated 18th January 1985 from MIB which lays down that for all accidents occurring after 30 August 1984 involving a transfer of interest 25 the claims would become the liability of the insurance companies concerned. That would include the present respondent (see Muhamad Haqimie Hasim & Anor (supra).

In our view, there can be a transfer of title by payment of consideration and delivery of the car. But for the purpose of the RTA, the person whose name is registered in the records of the registering authority shall deem to be the owner.

For these reasons, we are of the view that the learned judge is plainly wrong in relying on the two statutory declarations to avoid liability for a third party claim. Conclusion 47. For the reasons stated above, we are of the considered view that the learned Judge was plainly wrong in allowing the declarations sought by the plaintiff. Accordingly, we allow the appeal by the 2nd defendant with costs to the 2nd defendant here and below. The orders of the High Court is set aside. Parties to submit on the issue of costs. Dated 30th April 2019 signed HANIPAH BINTI FARIKULLAH Judge Court of Appeal Malaysia PUTRAJAYA 26 Solicitors for the Appellant : Messrs. P.S. Sohanpal & Sidhu Tingkat 6, No. 742-6 Wisma NAC, Jalan Sentul 51000 Kuala Lumpur Solicitors for the Respondent : Messrs. Silva Velu & Co Room 109, 1st Floor Loke Yew Building Jalan Mahkamah Persekutuan 50050 Kuala Lumpur