Etiqa General Takaful Berhad v Mohd Khairukl Irman Bin Mohd Zin (WA-24NCC-611-11/2023)

MOHD KHAIRUL IRMAN BIN MOHD ZIN

NURUL AZERA BINTI AHMAD

MOHAMAD AFIQ BIN AHMAD (NRIC NO: 050426-10-1403) ... DEFENDANTS JUDGMENT [1] Before the court is an application by an insurance company under section 96(3) of the Road Transport Act 1987 for declarations that a motor insurance policy is void and unenforceable in relation to a road accident, and that the insurer bears no liability for claims arising from that accident. The core issue is whether the policy, which was purchased on the same day as the accident, had come into effect at the time the accident occurred, with the evidence suggesting the policy was issued at 3:49pm while the accident took place earlier that afternoon. Central to the court's determination are questions about when insurance coverage commences when both issuance and accident occur on the same day, whether the insurer waived its rights by not making specific inquiries before issuing the policy, and whether voiding the policy would undermine the protective purpose of the Road Transport Act 1987. Background facts [2] On 23.12.2022, a road traffic accident occurred involving a motor car bearing registration number WXE 6746 and a motorcycle bearing registration number BQU 1570. The motor car was owned by the 1st Defendant, Mohd Khairul Irman bin Mohd Zin, and was being driven by the 2nd Defendant, Nurul Azera binti Ahmad, at the material time. The motorcycle was being ridden by the 3rd Defendant, Mohamad Afiq bin Ahmad. [3] On the same day, 23.12.2022, the 1st Defendant obtained an insurance policy (Policy No. 85606544) from the Plaintiff, Etiqa General Takaful Berhad (“Etiqa”) for the motor car WXE 6746. The Certificate of Takaful and Schedule indicated the period of coverage as being from 23.12.2022 to 22.12.2023. The policy was issued at 3:49pm on 23.12.2022. [4] On 27.12.2022 at 12:52pm, the 3rd Defendant made a police report (Report No. Shah Alam/035235/22) stating that the accident had occurred on 23.12.2022 at approximately 3:45pm. [5] Later on the same day, 27.12.2022, at 5:32pm, the 2nd Defendant made her first police report (Report No. Shah Alam/035267/22) also stating that the accident had occurred on 23.12.2022 at approximately 3:45pm. [6] Subsequently, on 27.12.2022 at 6:11pm, the 2nd Defendant made a correction police report (Report No. Shah Alam/035269/22) amending the time of the accident to 2:47pm on 23.12.2022. [7] Etiqa appointed an adjuster to investigate the circumstances of the accident. During the investigation, the adjuster obtained photographs from both the 2nd and 3rd Defendants. Two photographs of motorcycle BQU 1570 shared via WhatsApp by the 2nd Defendant showed a timestamp of 2:45pm on 23.12.2022. Additionally, two photographs showing the 3rd Defendant’s injuries, shared via WhatsApp by the 3rd Defendant, displayed a timestamp of 3:32pm on 23.12.2022. [8] Subsequently, the 3rd Defendant filed a civil action against the 1st and 2nd Defendants under suit number BA-A73KJ- 672-07/2023. [9] Etiqa then filed an Originating Summons seeking declarations that Policy No. 85606544 was void and unenforceable in relation to the accident that occurred on 23.12.2022, and that Etiqa was not liable to satisfy any claims arising from the accident. [10] These proceedings were heard before the High Court, with Mr Sean Denis appearing for Etiqa and Mr S. Ganesh appearing for the 3rd Defendant. The 1st and 2nd Defendants did not appear at the hearing despite being served with notice. The Plaintiff’s application [11] Etiqa filed an Originating Summons seeking the following declarations: (a) an extension of time (if necessary) to file the Originating Summons; (b) that Policy No. 85606544 covering motor car WXE 6746 for the period 23.12.2022 to 22.12.2023 was void and unenforceable in relation to the accident that occurred on 23.12.2022 involving motor car WXE 6746 and motorcycle BQU 1570; (c) that Etiqa was not liable to bear any claims arising from the said accident;

any further orders or directions deemed appropriate by the court; and (e) costs. [12] The aplication was grounded on the contention that the insurance policy was purchased after the accident had already occurred. Etiqa argued that the policy was issued at 3:49pm on 23.12.2022, whereas according to the police reports and photographic evidence, the accident had occurred earlier that day - either at 2:47pm according to the 2nd Defendant’s correction report, or at 3:45pm according to the original reports. Etiqa contended that the 1st Defendant had failed to disclose the accident when purchasing the policy, which amounted to non-disclosure of material facts and/or misrepresentation that vitiated the insurance contract. The application was made pursuant to Section 96(3) of the Road Transport Act 1987 (“RTA 1987”), which allows insurers to obtain declarations voiding insurance policies before any judgment is obtained against the insured. Parties’ submissions [13] The Plaintiff submitted that the insurance policy only took effect from the specific time it was issued at 3:49pm on 23.12.2022, and therefore did not cover the accident which occurred earlier that day. The Plaintiff argued that the principle of utmost good faith required the 1st Defendant to disclose the accident when purchasing the policy, and his failure to do so rendered the policy void. The Plaintiff contended that the timestamp on the issuance document created a “special contract” determining when coverage began, and that no insurance company would knowingly provide coverage for an accident that had already occurred. The Plaintiff also emphasised that under the Financial Services Act 2013 (“FSA”), insurers cannot assume risk until premium is paid. [14] The 3rd Defendant submitted that where no specific time is stated in the Certificate of Takaful or Schedule for commencement of coverage, the policy takes effect from midnight of the start date (23.12.2022) regardless of what time it was purchased. He argued that both the Certificate of Takaful and Schedule only specified dates without times, stating the period as “23/12/2022 to 22/12/2023”. The 3rd Defendant further contended that under the FSA, the burden was on the insurer to make proper enquiries when issuing a policy, and the Plaintiff’s failure to do so amounted to a waiver of its right to void the policy. He also argued that there were disputed facts which could not be properly resolved through affidavit evidence in Originating Summons proceedings, and that voiding the policy would prejudice an innocent third party contrary to the social protection aims of the RTA 1987. Analysis and findings of the court Whether the application can be properly decided based solely on affidavit evidence [15] Mr Ganesh submitted that the Originating Summons should be dismissed as the insurance contract was never exhibited, and there are disputed facts which cannot be resolved via affidavit evidence alone without oral testimony and cross-examination. [16] He relied heavily on Balamoney Asoriah v MMIP Services Sdn Bhd [2020] 1 CLJ 476 (CA), where Mary Lim JCA (as she then was) held that “given the nature of the issue, its determination by way of an exchange of affidavits and with the critical parties not before the court was not appropriate.” Her Ladyship emphasised that “the circumstances and conditions surrounding the renewal are clearly beyond the capacity and remit of the appellant to address let alone answer. Hence, such applications ought not to be dealt with in the manner done, especially where the relevant and necessary parties are not before the court.” [17] Mr Ganesh also cited Aqmal Dakhirrudin v Azhar Ahmad & Malaysian Motor Insurance Pool [2019] 1 LNS 492 (CA), where the Court of Appeal adopted the Supreme Court’s position in Ting Ling Kiew & Anor v Tang Eng Iron Works Co Ltd [1992] 2 MLJ 212 that “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.” [18] In response, learned counsel for Etiqa, Mr Sean Denis, submitted that the material before the court is sufficient to decide the Originating Summons. He pointed to the Certificate of Takaful and Schedule (Exhibit CSY-1) which are the operative documents evidencing the coverage period. [19] While I acknowledge the force of the principles in Balamoney Asoriah and Aqmal Dakhirrudin, I find those cases distinguishable on their facts. In Balamoney, the core issue was whether there was misrepresentation in the renewal of the policy after the insured’s death - a matter that clearly required input from the parties involved in that renewal. As Mary Lim JCA noted, this involved “questions of mixed fact and law” concerning “the circumstances as to how or when the insurance policy was actually renewed.” [20] Similarly, in Aqmal Dakhirrudin, the dispute centered on an alleged transfer of interest in the insured vehicle, which the Court of Appeal held “could only be properly and satisfactorily resolved if oral evidence was adduced.” The Court emphasised that where “the facts are disputed and contradicting to the contemporaneous documents,” the matter was unsuitable for determination by Originating Summons. [21] The present case is materially different. The key issue here is not about the circumstances of obtaining the policy or any disputed transfer of interest. Rather, it turns on two straightforward questions: a) When was the policy issued? This is conclusively answered by the Certificate of Takaful showing 3:49pm on 23.12.2022. b) When did the accident occur? Even taking the 3rd Defendant’s own version in his police report that it happened at 3:45pm, this precedes the policy issuance. [22] Unlike Balamoney and Aqmal Dakhirrudin where oral evidence was needed to resolve factual controversies about the parties’ conduct, here we have contemporaneous documentary evidence establishing the critical timeline. The 1st and 2nd Defendants’ testimony cannot alter these objective facts about timing. [23] Moreover, while in Balamoney the policy’s validity turned on the insurer’s own conduct in renewing it after the insured’s death, here the simple chronological sequence shows the policy was purchased after the accident occurred. This is not a matter requiring extensive factual inquiry - it is apparent from the documents themselves. [24] Therefore, while I fully accept the principles in Balamoney and Aqmal Dakhirrudin that disputed facts generally require oral evidence, I find this case exceptional. The documentary evidence conclusively establishes the sequence of events, making this suitable for determination by Originating Summons. To require a full trial would be an unnecessary formality where the essential facts are already irrefutably proven by contemporaneous records. Whether the insurance policy was in effect at the time of the accident [25] The central issue before this court is whether Policy No. 85606544 issued by Etiqa was in force at the time of the accident on 23.12.2022. While it is undisputed that both events occurred on the same day, there is significant controversy over the precise time at which the policy came into effect. [26] The starting point of analysis must be the Federal Court’s authoritative pronouncement in Pacific & Orient Insurance Co Bhd v Hameed Jagubar bin Syed Ahmad [2018] 12 MLJ

In that landmark decision, the Federal Court considered nearly identical circumstances where an accident and policy issuance occurred on the same day but at different times. The Federal Court’s analysis provides the governing principles for resolving such disputes. [27] First, the Federal Court established that where both date and time of issuance are specified in the insurance documentation, this constitutes what the court termed a “special contract”. As Aziah Ali FCJ explained at paragraph 40: “Adopting the approach taken by the Supreme Court of India, we find that the policy under consideration in this appeal where the date and time of issue are mentioned in the cover note is a ‘special contract’.” [28] This classification as a “special contract” is legally significant because it determines how policy commencement is to be interpreted. The Federal Court held unequivocally at paragraph 41: “Our answer to the first question is that an insurance policy will take effect from the time of issuance of cover.” [29] Mr Ganesh, appearing for the 3rd Defendant, contended that since neither the Certificate of Takaful nor the Schedule explicitly states a commencement time, the policy should be deemed to take effect from midnight of 23.12.2022 by default. He relied primarily on the Court of Appeal’s decision in Hameed Jagubar bin Syed Ahmad v Pacific & Orient Insurance Co Bhd [2017] 10 CLJ 278. [30] However, this argument faces two insurmountable difficulties. First, the Court of Appeal decision relied upon was explicitly overturned by the Federal Court in Pacific & Orient Insurance [2018]. The Federal Court rejected the very midnight default rule that Mr Ganesh seeks to invoke. [31] Second, and more fundamentally, the premise of Mr Ganesh’s argument - that no specific time is stated - is incorrect when the insurance documentation is read as a whole. The Certificate of Takaful clearly records issuance at 3:49pm on 23.12.2022. Following Pacific & Orient Insurance, this specification of both date and time creates a “special contract” where coverage commences at the stated time of issuance. [32] This interpretation is reinforced by the Federal Court’s emphasis in Pacific & Orient Insurance on the integral connection between premium payment and risk assumption. As Aziah Ali FCJ observed at paragraph 29: “Insurance is a contract based upon speculation... Like any contract, an insurance contract requires the elements of offer, acceptance and consideration... Under the contract, the insurer assumes his obligation to the insured in return for a money consideration, called the premium.” [33] The Federal Court further noted at paragraph 31 that “The cover note is in itself a contract of insurance, governing the rights and liabilities of the parties in the event of a loss taking place during its currency.” [34] The Federal Court’s approach has been consistently applied by the High Courts. In Allianz General Insurance Company (M) Bhd v Malim Shahrizal bin Abdul Wahab & Anor [2021] MLJU 1919, Liberty Insurance Bhd v Muhammad Qairul Jafnie bin Abdul Rani & Anor [2024] MLJU 482, and several other decisions, the courts have upheld the stated issuance time as determinative of when coverage begins, even where that time appears only in the certificate/cover note and not in the policy schedule. [35] In this case, the evidence establishes that: a) The Certificate of Takaful specifies issuance at 3:49pm on 23.12.2022 b) Photos submitted by the 2nd Defendant were time-stamped at 2:45pm c) The 3rd Defendant’s own police report states the accident occurred around 3:45pm d) The 2nd Defendant initially reported the accident time as 3:45pm before amending it to 2:47pm [36] Following the Federal Court decision in Pacific & Orient Insurance, the specification of both date and time (3:49pm on 23.12.2022) in the Certificate creates a “special contract” where coverage commenced at that precise time. Since all available evidence places the accident before 3:49pm, it necessarily occurred outside the period of coverage. [37] This conclusion aligns with both legal principle and commercial reality. As the Federal Court emphasised in Pacific & Orient Insurance at paragraph 29, insurance is fundamentally a contract of speculation regarding future uncertainties. It would be commercially nonsensical, and legally problematic, to interpret an insurance contract as covering an accident that had already occurred before the contract’s formation. [38] The evidence of photography timestamps and police reports showing the accident’s earlier occurrence serves to reinforce this legal analysis, though it is not strictly necessary to the outcome. The specification of 3:49pm as the issuance time is itself sufficient under Pacific & Orient Insurance to establish that as the commencement of coverage. [39] Based on the Federal Court’s binding authority in Pacific & Orient Insurance and the clear evidence before this court, I find that Policy No. 85606544 took effect at 3:49pm on 23.12.2022, after the accident had already occurred. Whether Etiqa (insurer) has waived its right to void the policy [40] Mr Ganesh argued that pursuant to Schedule 9 of the FSA, Etiqa had a duty to inquire with the 1st Defendant about any accidents that had occurred on the inception date of the policy i.e. 23.12.2022. The relevant provisions of Schedule 9 state: “5(1) Before a consumer insurance contract is entered into or varied, a licensed insurer may request a proposer who is a consumer to answer any specific questions that are relevant to the decision of the insurer whether to accept the risk or not and the rates and terms to be applied.” “5(5) If the licensed insurer does not make a request in accordance with subparagraph (1) or (3) as the case may be, compliance with the consumer’s duty of disclosure in respect of those subparagraphs, shall be deemed to have been waived by the insurer.” [41] Based on these provisions, Mr Ganesh submitted that by failing to pose specific questions about accidents on the inception date, Etiqa is deemed to have waived its right to complain about non-disclosure by the 1st Defendant. [42] Mr Ganesh further relied on sub-paragraph 5(9) of Schedule 9 which provides: “Nothing in this Schedule shall affect the duty of utmost good faith to be exercised by a consumer and licensed insurer in their dealings with each other, including the making and paying of a claim, after a contract of insurance has been entered into, varied or renewed.” [43] He submitted that this provision has modified the traditional common law duty of utmost good faith, which is no longer solely imposed on the insured. Instead, the insurer is also obligated to take proactive steps to obtain all material information before underwriting the risk. Failure to do so would prevent the insurer from seeking a declaration to void the policy under Section 96(3) of the RTA 1987. Section 96(3) reads: “(3) No sum shall be payable by an insurer under subsection (1) if before the date the liability was incurred, the insurer had obtained a declaration from a court that the insurance was void or unenforceable:” [44] In response, Mr Denis contended that there is nothing in the pleaded case to show that Etiqa was aware of a potential accident and neglected to investigate further. The duty to disclose still lay with the 1st Defendant, who should have informed Etiqa of the accident before procuring the policy on the same day. Without such disclosure, Etiqa should not be faulted for issuing the policy in ignorance of the accident. [45] Mr Denis relied on the case of Pacific & Orient Insurance Co Bhd v Hameed Jagubar bin Syed Ahmad where the Federal Court held at [35]: “The duty of disclosure is provided under s 150(1) of Act 553 which states as follows: 150(1) Before a contract of insurance is entered into, a proposer shall disclose to the licensed insurer a matter that —

he knows to be relevant to the decision of the licensed insurer on whether to accept the risk or not and the rates and terms to be applied; or

a reasonable person in the circumstances could be expected to know to be relevant.” [46] I have considered the relevant provisions in the FSA and find that they do not go so far as to impose a strict liability on the insurer for failing to ask specific questions. While