Jesudas A/L Palanisamy v Pacific & Orient Insurance Co Berhad (02(f)-97-12/2019(W))

Appeal 02(F)-75-10/2019(W) between Amgeneral Insurance Berhad v. Sa’ Amran a/l Atan & 2 Ors;

Appeal No. 02(F)-90-11/2019(W) between Pacific & Orient Insurance Co Berhad v. Mohamad Rafiq Muiz bin Ahmad

Appeal No. 02(F)-97-12-2019(W) between Jesudas a/l Palanisamy v. Pacific & Orient Insurance Co Berhad;

Appeal 02(F)-05-01/2020(W) between Mohamad Zulkarnain bin Mustafa v. Allianz General Insurance

Appeal No. 02(F)-08-01/2020(B) between Malaysian Motor Insurance Pool v. Aqmal Dakhiruddin;

Appeal No. 02(F)-41-08/2020(W); between Pacific & Orient Insurance Co Berhad v. Yeap Tick In.

Appeal No. 02(F)-30-07/2020(K) between Pacific & Orient Insurance Co Berhad v. Arnandan a/l Soria Demadu; and

Appeal No. 02(F)-28-04/2021(W) between Pacific & Orient Insurance Co Berhad v. Navin Naicker & Anor. [2] Of the eight appeals, five involve Pacific & Orient Insurance Co Berhad, four as appellants and one as respondent and all five represented by the same counsel. The other three appeals involve Amgeneral Insurance Berhad, Allianz General Insurance Company (M) Bhd and Malaysian Motor Insurance Pool, each represented by different sets of counsel. Some of the appeals involve common issues of law but we shall deal with them separately as the facts and arguments are not exactly the same. APPEAL NO. 1 AMGENERAL INSURANCE BERHAD V. SA’ AMRAN A/L ATAN & 2 ORS [3] We shall begin with Appeal No.

The 2nd and 3rd respondents were not represented in this appeal and did not file any written submissions. There is only one leave question posed for our determination and the question is as follows: “Whether the registration imposes liability on the insurer notwithstanding the insured ceased to have insurable interest in the motor vehicle, at the time of the accident?” [4] Implicit in the question is the proposition that the insurer’s liability under the third party risks insurance policy lapses if the motor vehicle is sold to a third party by the insured without the insurer’s knowledge notwithstanding the fact that the insured is still the registered owner of the motor vehicle and notwithstanding the fact that the policy in respect of the motor vehicle has not expired at the time of the accident. The following submissions by learned counsel captures the pith and substance of the appellant’s argument: “There is a stark difference between the legal concept of “transfer of interest” and “transfer of ownership” in the law of insurance. The meaning of “transfer of interest” or in colloquial terms “sambung bayar” basically means the insured has sold the motor vehicle to a third party without the knowledge of the insurer the consequence of which is that the insured ceased to have any insurable interest, possession, care, custody and control of the motor vehicle. The issue of transfer of ownership on the other hand means removing the name of the previous owner from the register and substituting it with the name of the new owner.” [5] The contention was that the 2nd respondent’s (the insured) act of selling the motor vehicle (“the car”) to a third party rendered the third party risks insurance policy issued in her name null and void and unenforceable against the appellant. It was submitted that by selling the car to the third party without the appellant’s knowledge, the 2nd respondent had divested herself of her “insurable interest” in the car, thereby absolving the appellant of all liability to indemnify her for any claim of loss and damage suffered by the 1st respondent (the accident victim and third party claimant) arising from the road accident involving the car, effectively meaning that the 1st respondent had no cause of action against the appellant as the insurer of the car. [6] It is an argument that leans heavily in favour of protecting the insurer’s interest and ignoring the plight of the 1st respondent who suffered loss and damage as a result of the accident through no fault of his. This begs the question what Parliament’s intention was in enacting the law on third party risks insurance policy if, in a situation such as the one obtaining in the present appeal, the insurance policy is rendered void, thus depriving the innocent third party accident victim of the benefit of the statutory third party risks insurance policy, which is meant to protect him against risks arising out of the use of motor vehicles. [7] Considerable importance was placed by learned counsel for the appellant on the issue of insurable interest and the doctrine of uberrimae fidei or the duty of “utmost good faith”. The term “insurable interest” is not found in the Road Transport Act, 1987 (“the RTA”) and learned counsel relied on two textbook authorities as his reference material, the first of which is Halsbury’s Laws of Malaysia, Volume 4, Malayan Law Journal SB2000 which the High Court in Lonpac Insurance Berhad v Mohamad Hakim bin Zulkifli & Ors [2017] MLJU 1835 referred to, where the learned authors said at page 37: “With regards to an insurable interest in property, the general principle for Malaysia would be that an insurable interest should exist at the time the event causing the loss occurs. Thus, an owner of a car who has sold it, would not be able to recover from a motor policy which has not expired if the car is damaged in the hands of new owner.” [8] The second authority is The Law of Motor Insurance (2nd Edition, Thomson Reuters 2015) by Robert Merkin and Maggie Hemsworth where the following passages at pages 62-63 were reproduced by learned counsel in his written submissions: “Insurable interest rests upon two pillars. The first, which requires insurable interest at the date that a policy is taken out…is based on the need to stamp out wagering disguised as insurance… The same cannot be said of the second pillar, the principle of indemnity under which the assured can recover only what has been lost. If the assured has no insurable interest at the date of loss, then there can be no claim against the insurers. Insurable interest is, however, concerned with the existence of an interest and not its value… It is undoubtedly the case that the assured, by selling the insured subject matter of the policy and handing the subject matter to the purchaser deprives himself of any insurable interest in the subject matter…If the seller no longer has any interest in the vehicle, it follows that the seller cannot give any permission to the purchaser to use the vehicle: there is no right possessed by the seller in respect of which permission can be given. Accordingly, any use of the vehicle by the purchaser cannot be covered by the seller’s insurance, and the purchaser will be insured if at all under his own policy. This was held to be the case in Peters v General Fire and Life Assurance Corp Ltd. (1938) 60 Ll, L.R. 312 and Smith v Ralph [1963] 2 Lloyd’s Rep. 439.” [9] As for the doctrine of uberrimae fidei, eight authorities were cited in support and they were the following: Asia Insurance Co Ltd v Tat Hong Plant Leasing Pte Ltd [1992] 1 CLJ 330; United Malayan Insurance Co Ltd v Lee Yoon Heng [1964] MLJ 453; Peters v General Accident & Life Assurance Corpn Ltd [1937] 4 AER 628; Etiqa General Takaful Bhd v Habibah Bt Hashim & 3 Ors, KLHC OS No. WA-24NCC-388-08/2018 dated 25.1.2019 (unreported); Pacific & Orient Insurance Co Bhd v Hameed Jagubar Syed Ahmad [2018] 6 MLRA 85 FC; Goh Chooi Leong v Public Life Assurance Co Ltd [1964] 30 MLJ 5; Carter v Boehm [1766] 97 ER 1162 and Tan Jin Jeong v Allianz Life Insurance Malaysia [2012] 7 MLJ 179. [10] We were also referred to section 96(5) of the Road Transport Act, 1987 (“the RTA”) which is a codification of the requirement to make full and frank disclosure on the part of the insured. The section reads: “(5) In this section, the expression “material” means of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risks, and if so at what premium and on what conditions, and the expression “liability covered by the terms of the policy” means a liability but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy.” [11] We must say at the outset and with due respect to learned counsel that his reliance on the authorities and on section 96(5) of the RTA is misconceived as the doctrine of uberrimae fidei has no application to the factual matrix of the present case. This is not a case where the insured (2nd respondent) failed to make full and frank disclosure at the time of entering into the policy agreement with the appellant. Nor is this a case where, during the subsistence of the policy agreement, the insured (2nd respondent) committed fraud or dishonesty in submitting a claim for indemnity under the insurance policy. [12] In any case, the doctrine of uberrimae fidei is a common law doctrine that is only applicable between the insured and the insurer and does not affect the rights of third parties under the provisions of sections 94 and 95 of the RTA, which protect third parties against risks arising out of the use of motor vehicles. [13] The present appeal is simply a case of a claim by an innocent third party accident victim (1st respondent) against the driver (3rd respondent) and the insured (2nd respondent) for the loss and damage that he suffered as a result of the road accident involving the car. We have not been shown which clause of the third party risks insurance policy was the 2nd respondent in breach of that rendered the policy null and void. The policy does not even contain a clause that requires the 2nd respondent to notify the appellant of the sale of the car, not that the existence of such clause will absolve the appellant of liability in the event of an accident involving the car. [14] The background facts are these. On 6.9.2014, the 1st respondent Sa’ Amran a/l Atan was involved in a road accident with the car, which has registration No. JFS 3133 driven by the 3rd respondent Nakiuddin bin Ahmad. Pursuant to a search made by the 1st respondent at the Road Transport Department, the registered owner of the car was found to be the 2nd respondent Fazlina binti Mihad and the appellant as the insurer. The insurance policy was valid for the period from 8.11.13 to 7.11.2014, which therefore covered the date of the accident on 6.9.2014. [15] Having obtained the information, the 1st respondent filed an accident suit in the Sessions Court at Kuantan seeking for damages in respect of the accident by naming the 2nd and 3rd respondents as defendants. In the suit, the Kuantan Sessions Court found both the 2nd and 3rd respondents 100% liable for the accident. [16] While the Kuantan Sessions Court suit was ongoing, the appellant filed an originating summons in the High Court at Kuala Lumpur seeking for a declaration that the insurance policy was null and void pursuant to section 96(3) of the RTA, which provides as follows: “(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: Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not become entitled to the benefit of this subsection as respects any judgment 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 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.” [17] The basis for the application was the following affirmation by the 2nd respondent (the insured) in her statutory declaration which she provided to her insurer (the appellant):

In November 2007, she sold the car to a man by the name of “Zul” who was a salesman at Tetuan Dijadi Auto. She did so as part of a trade-in transaction to obtain a Honda Civic car.

She surrendered the car to Zul and gave him RM7,000.00 to settle the balance of the car loan for the car with CIMB Bank and signed a transfer form.

Until now the ownership of the car has not been transferred to the new owner. [18] It can thus be seen that the only reason why the appellant repudiated the insurance policy was because the 2nd respondent was no longer the owner of the car after selling it to Zul in November 2007. On 31.7.2017, the Kuala Lumpur High Court allowed the appellant’s application for the following reasons:

The application by the appellant to nullify the insurance policy was made before the date the liabilities of the 2nd and 3rd respondents were incurred, i.e. before judgment was delivered in the accident suit at the Kuantan Sessions Court;

The appellant’s application was not time barred;

There was a transfer of interest in the vehicle although there was no formal transfer of ownership of the car to the new owner in accordance with the procedure laid down in section 13 of the RTA. [19] The ratio of the decision is that the insurer ceased to be bound by the insurance policy once the insured ceased to have insurable interest in the motor vehicle after selling it to a third party. [20] Dissatisfied with the decision, the 1st respondent appealed to the Court of Appeal and succeeded. His appeal was allowed on 20.2.2018 on the following grounds:

There was insufficient evidence to show that property in the car had passed to the driver premised solely on the registered owner’s (2nd respondent) statutory declaration;

The Adjusters’ report conflicted with the genuine documentary evidence, i.e. the JPJ registration card and the insurance policy;

The transfer was not done pursuant to section 13 of the RTA;

The registered owner (2nd respondent) is deemed to be the owner and remains liable for any proceedings by virtue of section 109 (1) of the RTA;

The conditions in a policy of insurance are deemed to be of no effect in relation to the liability of the insurer to third parties pursuant to section 94 and section 95 of the RTA. [21] It was a rejection by the Court of Appeal of the appellant’s argument that it was not liable to the 1st respondent on the ground that the insured (2nd respondent) had no insurable interest in the car after selling it to Zul in November 2007. [22] Before us, learned counsel for the appellant advanced the following arguments in persuading us to answer the leave question in the negative, i.e. that the registration does not impose liability on the insurer if the insured ceased to have insurable interest in the car at the time of the accident:

The Court of Appeal was wrong in allowing itself to be influenced by its own decisions in Zainuddin Mat Isa & Anor v Pacific & Oriental Insurance [2017] 1 LNS 1979 and in Muhamad Haqimie Hasim & Another v Pacific & Oriental Insurance Co Berhad [2018] 1 LNS 627. It was argued that the Court of Appeal should not have followed Zainuddin Mat Isa as the Court of Appeal in that case misdirected itself in dealing with the issue of transfer of interest and the issue of transfer of ownership. It was contended that the issue at the forefront of the present appeal is whether there was a transfer of interest, pointing out that the statutory declaration affirmed by the registered owner (2nd respondent) was unequivocal and the Court of Appeal had no reason to doubt the veracity and authenticity of the statutory declaration;

The Court of Appeal misdirected itself in holding the view that the register of title is paramount evidence of ownership;

The Court of Appeal’s reliance on Muhamad Haqimie was misconceived as the facts are distinguishable from the facts of the present appeal. It was argued that in the present appeal, the 2nd respondent as the insured had not allowed and could not possibly have allowed the 3rd respondent (de facto owner) to buy any policy under her name and to drive the car with her permission, consent, knowledge and approval. It was contended that the Court of Appeal in Muhamad Haqimie made the wrong deduction that since the previous owner remained as the registered owner, the insurer became liable by virtue of section 109 of the RTA;

Section 109 of the RTA only deals with some form of offence under the Act and as such the meaning ascribed to the word “proceedings” in the section must be read subject to the word “prosecution” as the Act has a penal and quasi-penal consequences for summons cases. As such, applying the ejusdem generis principle, the word “proceedings” must be read together with prosecution or species of prosecution, viz for summons cases. In other words, the word “proceedings” in section 109 refers only to criminal or quasi-criminal proceedings and not to proceedings such as a claim for damages arising from a road traffic accident. Reliance was placed on the High Court cases of Zulkiflee bin Mohamad v Mahmudin bin Arshad [1998] MLJU 180 and The Pacific Insurance Bhd (Dahulunya dikenali sebagai MCIS Zurich Insurance Bhd) lwn Ishak bin Md Hanafiah dan lain-lain [2017] MLJU 434;

The statutory declaration of the insured (2nd respondent) is the best evidence, and the insured and the buyer (de facto owner) had not come to challenge the originating summons and the admission in the statutory declaration, citing Habibah Bt Hashim;

The registration is not an issue document of title. The mere fact that there is no transfer recorded on the registration does not mean that the vehicle cannot be sold or transferred. Once the vehicle is sold, and the registered owner ceases to have possession of the vehicle, the policy automatically lapses unless there is novation as the insurance policy is concerned with transfer of interest in the motor vehicle and not with de facto transfer appearing on the record of registration;

Section 13 of the RTA imposes a duty on the registered owner and the new owner to effect registration. It also imposes a duty on the registered owner and the new owner not to use the vehicle until all the relevant processes are completed [section 13(1)(c)]. The act of not registering the transfer will be a breach of the Hire Purchase Act 1967 (Section 38). In the present case, there had been a clear and blatant breach of the law with penal consequences;

Section 13 of the RTA merely promulgates the procedure on how a transfer is effected and nowhere in the Act is it mentioned that it is the duty of the insurer to effect transfer. In fact, the insurer has no knowledge of the dealings until it is informed by the registered owner who intends to sell or has sold the motor vehicle;

It cannot be the intention of Parliament to hold innocent parties liable for an act of a third party that is not within their knowledge. It was submitted that the appellant is an innocent party;

The Road Transport Department registration is not a conclusive issue document of title and as such the court should look and deliberate on the statutory declaration deposed to by the insured: Mohamed Mydin v Ramiah [1965] 1 MLJ 33; MBF Finance Bhd v Low Ping Ming T/A Low Peng Enterprise [2005]; Muraly Varataa Raju v Allianz General Insurance Company [2019] MLRHU 1270. The court cannot overlook and underestimate the importance of the statutory declaration as it attracts criminal penalty if it is made fraudulently;

In Malaysia, a vehicle can be sold without the need to have it registered as the sale and purchase is governed by the Sale of Goods Act 1957 - that a sale of a motor vehicle is completed once possession is transferred to the new owner and there is no requirement that the sale is only completed once the name of the new owner is imprinted on the registration card, as the registration card is not an instrument of title: Mohamed Mydin (supra), a Federal Court decision which was applied in MBF Finance Berhad v Low Ping Ming T/A Low Peng Enterprise (supra);

Just because one is a registered owner, it does not make him liable and that in any event the appellant had rebutted the presumption of ownership based on the statutory declarations of both parties. Reference was made to Muraly Varataa Raju v Allianz General Insurance Company [2019] MLRHU 1270;

The Court of Appeal in Aqmal Dakhairuddin v Azahar Ahman & Anor [2019] 5 MLRA 510 was wrong in adopting the Zainuddin Mat Isa and Muhamad Haqimie approach;

The Court of Appeal’s reliance on this court’s decision in Nanyang Insurance v Salbiah & Anor [1967] 1 MLJ 94 was misconceived as the facts are distinguishable in that the insured in that case only intended to lend the car until the full amount was paid up, meaning the insured still retained care, custody, control and possession of the vehicle, unlike the present case where the insured had surrendered the care, custody, control and possession of the car in question to a third party;

The Court of Appeal was wrong in Zainuddin Mat Isa, Muhammad Haqimie and Aqmal in not discussing this court’s decision in Roslan bin Abdullah v New Zealand Insurance Company Ltd [1981] 1 MLRA 445. In that case the truck was sold and the insurance policy lapsed unless there was novation of the policy, of which there was none. Accordingly, it was held that the driver of the truck was not covered by the insurance policy. (Note: The case of Roslan bin Abdullah is irrelevant as there was no insurance policy in force at the material time as it had lapsed, unlike the present appeal where the policy was valid and subsisting at the time of the accident);

The law of insurance is concerned with transfer of interest as opposed to the fact of actual registration. Once the property that is insured has been transferred or where the insured has given up possession of the motor vehicle, then he is deemed to have no interest in the said vehicle the consequence of which is that the policy will lapse automatically: Peters v General Accident & Life Assurance Corpn Ltd [1937] 1 AER 628; Watkins v O’Shaughnessy [1939] 1 AER 385; Bibendum Sdn Bhd v Amanah Scott Properties (KL) Sdn Bhd [2011] AMCR 792: “With regards to an insurable interest in property, the general principle for Malaysia would be that an insurable interest should exist at the time of the event causing loss occurs. Thus, an owner of a car who has sold it, would not be able to recover from the policy which has not expired if the car is damaged in the hands of the new owner.” (Note: Bidendum is irrelevant as it involved a claim by the registered owner of the car himself, unlike the claimant (1st respondent) in the present appeal who is a third party accident victim and not the registered owner and insured of the motorcar)

Since the 2nd respondent had sold the car before the date of the accident, there was no insurable interest at the time of the accident, and the issued policy was void and unenforceable. [23] The last ground above sums up neatly the appellant’s argument that it should not be held liable for the loss and damage suffered by the 1st respondent even though the 2nd respondent (the insured) was the registered owner of the car at the time of the accident on 6.9.2014 and even though the third party risks insurance policy issued in her name had not expired at the time of the accident, which the appellant of course contended otherwise on the ground of lack of insurable interest. [24] The 1st respondent’s reply to the appellant’s submissions was that the Court of Appeal was correct in finding that the appellant failed to prove lawful transfer of ownership of the car and she therefore remains the registered owner. Reliance was placed on the following authorities:

Pengarah Jabatan Pengangkutan Jalan Negeri Selangor & Ors v Sin Yoong Min [2015] 1 MLJ 1 where this court in dealing with section 13 of the RTA observed as follows: “Under s. 13(1) of the Act the existing registered owner, on any change of possession of a motor, is required to forward to the director a statement in the prescribed form within seven days after such change of possession. The new owner is also required to forward to the director a statement in the prescribed form together with the registration certification and the prescribed fee within seven days. After they complied with the requirements the new owner is entitled to be registered as the new owner of the motor vehicle.”

The Court of Appeal case of Zainuddin Mat Isa (supra), which decided that the name that appears in the registration is evidence to show ownership. This is what the court said in that case: “[17] The critical evidence pertaining to title and ownership which is the JPJ registration card and the insurance policy are directly at odds or contrary to the two SDs provided in support of the 1st Respondent’s case. Weighing up the evidence, it is not possible to conclude, on a balance of probabilities, that the ownership of the vehicle had passed from R3 to R2’s brother and then R2. There is simply insufficient evidence to support that conclusion. If at all, weight ought to be accorded to the official documents which support the appellant’s case.”

Muhamad Haqimie (supra), where the Court of Appeal through the judgment of Tengku Maimun Tuan Mat JCA (as the Right Honourable the Chief Justice then was) explained the effect of a transfer of interest in the vehicle: “[11] We have given anxious consideration to the competing claims of the parties. Having done so we are of the unanimous view that the appeal ought to be allowed for the following reasons:

The central issue for consideration here is whether the alleged transfer of interest from Normala to Lalmiya had the effect of rendering the policy ineffective or causing it to lapse.

(ii) Section 13 of the RTA sets out the procedure to be adopted upon change of possession upon transfer pursuant to a sale. It requires that the new possessor or new owner register himself within seven days of such change of possession. This was not done in the present case.”

The Indian Supreme Court case of Pushpa @ Leela & Ors v Shakuntala & Ors [2011] 2 S C 240, which held as follows: “11. It is undeniable that notwithstanding the sale of the vehicle neither the transferor Jitender Gupta nor the transferee Salig Ram took any step for the change of the name of the owner in the certificate of registration of the vehicle. In view of this omission Jitender Gupta must be deemed to continue as the owner of the vehicle for the purposes of the Act, even though under the civil law he ceased to be its owner after its sale on February 2, 1993.”

Section 109(1) of the RTA deems the appellant to be the owner of the car. The subsection reads: “(1) For the purpose of any prosecution or proceedings under this Act, the registered owner of a motor vehicle shall be deemed to be the owner of that motor vehicle.”

Since the insured (2nd respondent) in her statutory declaration admitted that the car was still under hire purchase with CIMB Bank, any right, title and interest under the hire purchase agreement could only be done with the consent of CIMB Bank. Section 12(1) of the Hire Purchase Act 1967 is relevant and provides as follows: “(1) The right, title and interest of a hirer under a hire purchase agreement may be assigned with the consent of the owner, or if his consent is unreasonably withheld, without his consent.”

The Court of Appeal in Affin-ACF Finance Bhd v Phang Ngan Heong [2010] 7 CLJ 592 had decided as follows in dealing with the issue of hire purchase: “As such, the key issue to be determined by the court is whether the defendant could have and did pass a good and valid title to the plaintiff following the sale of the vehicle. The defendant has argued that it did pass a good title at that time as the vehicle was successfully registered in the name of the hirer by the Road Transport Department. With regret, the court does not find that the registration of the vehicle in the name of the hirer amounts to a passing on a good and valid title. To discharge that responsibility, the plaintiff should have continued to have a good and valid title so that at the end of the hire purchase period, when the hirer has completed paying all the installments under the hire purchase agreement, the plaintiff would be able, in turn, to pass a good and valid title to the hirer. The seizure of the vehicle by the Police and its subsequent return to the rightful owner meant that the plaintiff no longer had physical possession of the vehicle and would be in no position to pass on any title to the hirer.”

The principle governing a vehicle under hire purchase had also been set out by this court in Ong Siew Hwa v UMW Toyota Motor Sdn Bhd [2018] 5 MLJ 281, as follows: “Under this hire purchase agreement, the plaintiff is ‘the hirer’ of the car and the second defendant is ‘the owner’. Under the law what was obtained by the plaintiff under P5 was possession, not ownership of the car which remained with the second defendant… Applying Ahmad Ismail to the facts of this case, whatever contractual relationship between the plaintiff and the first defendant was superseded by the hire purchase agreement (exh.P5). The first defendant completely faded out of the picture, and the only contract that remained was the hire purchase agreement (exh.P5) entered into between the plaintiff and the second defendant.” [25] Having considered the rival arguments and the authorities carefully, we are inclined to agree with the 1st respondent that the Court of Appeal was right in finding that the appellant failed to prove transfer of ownership of the car. First of all, transfer of interest is not transfer of ownership. A valid transfer of ownership can only be effected by following strictly the procedure laid down by section 13(1) of the RTA and not merely by selling the car to a third party. Section 13(1) stipulates as follows: “13(1) On any change of possession of a motor vehicle upon a voluntary transfer made by the registered owner –

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 new 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;

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

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.” [26] The procedure is mandatory and is meant to ensure that there is a proper transfer of the motor vehicle from the registered owner to the purchaser. This in turn will ensure that if the new owner is involved in an accident with other road users, the victim will be able to identify who the registered owner of the motor vehicle is for the purpose of maintaining an action against the tortfeasor. [27] In Naveen Kumar v Vijay Kumar & Ors [Civil Appeal No. 1427 of 2018], the Supreme Court of 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 as to hold otherwise would be to defeat the statutory object and purpose of the relevant Indian Road Transport Act. Section 2 of the RTA defines “owner” as follows: “(a) in relation to a motor vehicle registered or deemed to be registered under this Act, means the registered owner of such vehicle; and

in relation to any other motor vehicle, means the person in possession of or using or having the use of the motor vehicle;” [28] In the present case, it is undisputed that there was non-compliance with the requirements of section 13(1) when the car was sold by the 2nd respondent to Zul in November 2007. The 2nd respondent therefore remained the registered owner of the car at the time of the accident and even to this day. [29] Being the registered owner of the car at the time of the accident, the 2nd respondent was deemed by section 109(2) of the RTA to be liable for the act or omission of the 3rd respondent (driver of the car) in causing the accident. She could only absolve herself of liability if she could satisfy the court that she had taken all reasonable steps and precautions to prevent such act or omission by the driver. There is no such evidence before the court. Therefore, the third party risks insurance policy, which was issued to indemnify her in the event of an accident involving the car, was in full force at the time of the accident. [30] It cannot be the intention behind the proviso to section 109(2) that the exemption from liability of the registered owner extends to tortious acts of the driver, such as negligent driving causing loss and damage to other road users. The fact that the proviso only refers to sections 41 to 49, which are penal in nature, dispels any notion that the exemption from liability extends to the civil liability of the registered owner. [31] Clearly the proviso is only intended to shield the registered owner from prosecution for the driver’s contravention of sections 41 to 49, and not for the driver's tortious acts such as negligent driving. The registered owner is still liable for the negligent act or omission of the driver. Section 109(2) of the RTA is reproduced in full below: “Liability of registered owner and others

For the purpose of any prosecution or proceedings under this Act, the registered owner of a motor vehicle shall be deemed to be the owner of that motor vehicle.

Except where otherwise required by this Act, any act or omission by whoever was the driver of a motor vehicle at the material time, shall for the purpose of any prosecution or proceedings under this Act, be deemed to be the act or omission of the registered owner unless he satisfies the court that he took all reasonable steps and precautions to prevent such act or omission. Provided that this subsection shall not apply to an act or omission of a person in driving a motor vehicle in contravention of sections 41 to 49.

In the event of any act or omission by whoever was the driver of a motor vehicle at the material time, which would have been an offence against this Act if committed by the registered owner, such driver will also be guilty of that offence.” [32] As can be seen, two things are deemed by section 109, namely: (1) the registered owner is the owner of the motor vehicle;

subject to the qualification mentioned in subsection (2), the act or omission of the driver of the motor vehicle is the act or omission of the registered owner of the motor vehicle for the purpose of any prosecution or proceedings under the Act. [33] It is interesting to note in passing that when the RTA repealed the Road Traffic Ordinance 1958 (“the RTO”), it retained the deeming provisions of section 138(1) of the RTO through section 109(1). There are however material differences in the wordings of subsections (2) of the two provisions. While section 109(2) of the RTA speaks of “the driver of a motor vehicle”, section 138(2) of the RTO speaks of “the servant, agent or partner of the registered owner”. [34] Thus, while under section 109(2) of the RTA it is the act or omission of the driver that is deemed to be the act or omission of the registered owner for the purpose of prosecution or proceedings under the Act, under section 138(2) of the repealed RTO, it is the act or omission of the servant, agent or partner of the registered owner that is deemed to be the act or omission of the registered owner. This is reflective of Parliament’s intention through section 109(2) of the RTA to widen the scope of the deeming provision by not confining it to the servant, agent or partner of the registered owner for the purpose of prosecution or proceedings under the Act. [35] Therefore, the law as it presently stands is that the act or omission of the man behind the wheels or behind the handle bars as the case may be is to be taken as the act or omission of the registered owner for the purpose of prosecution or proceedings under the Act. It needs to be mentioned that the repealed RTO provides for subsection (4) whereas section 109 of the RTA ends with subsection (3). We reproduce below section 138 of the RTO for purposes of comparison: “138. (1) For the purpose of any prosecution or proceedings under this Ordinance the registered owner of a motor vehicle shall be deemed to be the owner of that motor vehicle.

Except where otherwise required by this Ordinance any act or omission by the servant, agent or partner of the registered owner shall for the purpose of any prosecution or proceeding under this Ordinance be deemed to be the act or omission of the registered owner unless he shall satisfy the court that he took all reasonable steps and precautions to prevent such act or omission: Provided that this sub-section shall not apply to an act or omission of a person in driving a motor vehicle in contravention of sections 35 to 42 inclusive of this Ordinance.

In the event of any act or omission by a servant, agent or partner of the registered owner which would have been an offence under this Ordinance if committed by the registered owner, that servant, agent or partner shall also be guilty of that offence.

Where the registered owner is a body corporate, any person who at the time of the commission of such offence was a director, general manager, secretary or other similar officer of the body corporate, or who was purporting to act in any such capacity, shall be deemed to be guilty of that offence unless he proves that the offence was committed without his consent or connivance, and that he exercised such diligence to prevent the commission of the offence as he ought to have exercised having regard to the nature of his functions in that capacity and to all the circumstances.” [36] The effect of a deeming provision has been explained by the learned authors of N.S. Bindra’s Interpretation of Statutes (12th Edition) in the following terms: “Deeming provision The word ‘deemed’ is used a great deal in modern legislation. Sometimes, it is used to impose for the purpose of a statute an artificial construction of a word or phrase that would not otherwise prevail. Sometimes, it is used to put beyond doubt particular construction that might otherwise be uncertain or to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the ordinary sense, impossible. However, the mere use of the word ‘deemed’ is not in itself sufficient to set up a legal fiction. Legal fiction is treating something not done as done and this requires legislative authority. Courts cannot set up legal fictions without such authority. Where the legislature says that ‘something should be deemed to have been done’ which in truth has not been done, it creates a legal fiction and in that case, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion. In the words of Lord Asquith: “If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. The statute says that you must imagine a certain state of affairs, it does not say that having done so; you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.” (emphasis added) [37] In The Construction of Statutes (3rd Edition) the learned author Elmer A. Dreidger holds the following views at page 131: “There is only one rule in modern interpretation, namely courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretation, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its compliance with the legislative text; and (c) its acceptability, that is, the outcome is reasonable and just.” [38] We accept the 1st respondent’s argument that read as a whole and in the right context, the language of section 109(1), (2) and (3) leaves no room for doubt that it applies to civil and criminal proceedings alike and not only to criminal or quasi criminal prosecutions under the Act as contended by learned counsel for the appellant. In Black’s Law Dictionary (Ninth Edition) the word “proceeding” is defined in items 1 and 2 as follows: “1. The regular and orderly progression of a lawsuit, including all acts and events between the time of commencement and the entry of judgment. 2. Any procedural means for seeking redress from a tribunal or agency.” [39] The word “prosecution” on the other hand is given the following meaning: “2. A criminal proceeding in which an accused is tried.” [40] A claim for damages by a third party claimant arising from a road accident involving a motor vehicle covered by a third party risks insurance policy issued pursuant to section 90 of the RTA is a ‘lawsuit’ and not a prosecution under the Act. It is therefore a “proceedings” within the meaning of section 109(2) of the RTA. [41] There was no necessity for Parliament to use the word “proceedings” in section 109(2) if the intention was to restrict its application to criminal prosecutions under the Act and to exclude all forms of civil proceedings. Clearly, proceedings under section 96(3) is civil in nature, and so are proceedings contemplated by sections 96(1), 19(2), 22(7), 68(1), 77(8), 82(7), 84(5), 85(4) and

All these are “proceedings” under the Act. There is therefore no basis to interpret the word “proceedings” in section 109(2) to be synonymous with the word “prosecution” in same section based on the ejusdem generis rule as contended by learned counsel for the appellant. [42] Learned counsel’s submission on section 109 in so far as it relates to the appellant’s liability under the insurance policy was two-fold, namely:

the appellant had rebutted the deeming provision of subsection 109(1) through the statutory declaration affirmed by the insured (2nd respondent);

the provision only applies to criminal or quasi criminal proceedings and not to civil proceedings. [43] We have just dealt with ground (2) and we shall not repeat it. With regard to ground (1), we are unable to accede to learned counsel’s argument that the presumption under subsection 109(1) of the RTA had been rebutted by the appellant through the 2nd respondent's statutory declaration. Firstly, the presumption can only be rebutted by proof that the 2nd respondent was not the registered owner of the car at the time of the accident. There is no such proof. Secondly, the 2nd respondent’s statutory declaration merely proved that she had sold the car to a third party. It is not proof that legal ownership of the car had passed to the third party. As we said, a lawful transfer of ownership can only be established by proof of registration under section 13(1). [44] As for the issue of insurable interest which forms the basis for learned counsel’s argument that the insurance policy had been nullified by the sale of the car to the third party, we need only reiterate what we have just said a short while ago that liability for the negligent act of the 3rd respondent (the driver) is imputed to the registered owner of the car by section 109(2) of the RTA. [45] In any case, the fact that the 2nd respondent’s interest in the car had passed to a third party does not change anything as far as the appellant’s liability under the statutory third party risks insurance policy is concerned as the whole purpose of the policy is to indemnify the 2nd respondent (the insured) as “owner” in the event of a road accident involving the car and third parties. [46] The court in dealing with a claim for damages by a third party accident victim must not close its eyes to the fact that the insurer has received payment for issuing the third party risks insurance policy to the insured. Having received such payment, the insurer cannot look the other way and resile from its promise to indemnify the insured when indemnity became due by raising the technical ground that the insured had no insurable interest in the motor vehicle at the time of the accident, unless the insurance policy had expired or had been lawfully terminated. [47] The doctrine of “mutual benefit and burden” demands that a person cannot take the benefit of a deed without subscribing to the obligations under it: See Halsall v Brizell [1957] Ch. 169. The truth is, the real beneficiary of the statutory third party risks insurance policy is the third party accident victim and not the insured. The insured of course benefits by being indemnified by the insurer for any judgment sum obtained against him by the third party accident victim. [48] There is authority to say that the insured is not required to have insurable interest in the motor vehicle before he is covered by a third party risks insurance policy, and this renders the whole substratum of the appellant’s argument unsustainable in law: See Boss and Another v Kingston [1963] 1 All ER 177 where Lord Parker CJ expressed his views as follows: “The conclusion of the justices was based on the fact that, once the Triumph motorcycle was sold, the appellant Boss had no insurable interest in it. That being so, they were of opinion, following the reasoning in Rogerson v Scottish Automobile and General Insurance Co., Ltd. (1) and Tattersall v Drysdale that the whole policy lapsed, including the further cover provided in respect of other cycles not owned by or under hire to the assured. It is to observed, however, that, in the present case, unlike the cases referred to, the policy is in respect of third party risk only and, accordingly, that there is no necessity for the assured to have insurable interest in the vehicle. He could in law at any rate, and possibly in practice, be able to get cover against damage caused by his driving of any vehicle whether or not he had any insurable interest in them. Accordingly, as it seems to me, these cases are not, at any rate directly, relevant and the justices’ reasoning was wrong.” (emphasis added) [49] Similarly, the insurance policy that we are concerned with in the present appeal is in respect of third party risks only. We find nothing in the RTA that can be construed to mean that a third party risks insurance policy lapses upon sale of the motor vehicle to a third party if otherwise the policy is valid and subsisting, i.e. has not expired at the time of the sale. It needs to be borne in mind that insurance coverage for third party risks is compulsory under the RTA and failure by any person to comply with the requirement constitutes an offence punishable with fine or with imprisonment or with both, in addition to an order of disqualification from holding or obtaining a driving licence for a specified period. This is made clear by section 90(1) and (2) which read: “90. (1) Subject to this Part, 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.

If a person acts in contravention of this section he shall be guilty of an offence and shall on conviction be liable to a fine not exceeding one thousand ringgit or to imprisonment for a term not exceeding three months or to both and a person convicted of an offence under this section shall, unless the court for special reasons to be specified in the order thinks fit to order otherwise and without prejudice to the power of the court to order a longer period of disqualification, be disqualified from holding or obtaining a driving licence under Part II for a period of twelve months from the date of the conviction.” [50] The provision is in keeping with the second of five objects of the RTA as expressed in the preamble to the Act, which is: “to make provision for the protection of third parties against risk arising out of the use of motor vehicles;” [51] Where it concerns the liability of insurers, section 91(3) of the RTA which takes colour from the preamble is relevant and provides as follows: “(3) Notwithstanding anything in any written law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or class of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or class of persons.” [52] In the context of the present case, the person whom the appellant “shall be liable to indemnify” under section 91(3) is the 2nd respondent as the insured and registered owner of the car. It is a mandatory requirement of the law which parties to the insurance policy cannot contract out of. This is reflected in section 94 which provides as follows: “94. Certain conditions in policies or securities to be of no effect. 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 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.” [53] Section 95 further lists out factors that the insurer cannot use as excuses to avoid liability to pay. The section reads: “95. 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 by reference to any of the following matters:

the age or physical or mental condition of persons driving the motor vehicle;

the condition of the motor vehicle;

the number of persons that the motor vehicle carries;

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

the times at which or the areas within which the motor vehicle is used;

the horsepower or value of the motor vehicle;

the carriage on the motor vehicle of any particular apparatus;

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;

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

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;

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 recovered by a policy under paragraph 91(1)(b), to 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.” [54] S. Santana Dass in his book “The Law of Motor Insurance” reads section 95(k) of the RTA to mean: “Under section 95(k), any condition in the policy that excludes the liability of the insurer, if the vehicle is used for any purposes than for social, domestic, pleasure purposes e.g. racing, motor sports etc. will be ineffective and cannot be used by the insurer to exclude liability insofar as bodily injury or death claims are concerned. This should include use of the motor vehicle for unlawful purposes or acts as well. In any event, the law is that ‘criminal acts’ of the insured in the use of the motor vehicle are insured under section 91 and the insurers cannot have the liberty to exclude this statutory requirement to insure against unlawful or criminal acts or purposes of their insured to escape their statutory obligation to satisfy the judgments of third parties.” [55] In Malaysia National Insurance Sdn Bhd v Lim Tiok [1997] 2 CLJ 351, the then Supreme Court endorsed the view that the underlying purpose of compulsory motor insurance against third party risks was to ensure that innocent third parties who were injured in vehicular accidents were given full and effective protection, regardless of the private insurance arrangement between the insurer and the insured. [56] On section 91(3) of the RTA, this court in Malaysian Motor Insurance Pool v Tirumeniyar Singara Veloo [2019] 10 CLJ 731 made the following pertinent observations at paragraph 47: “The effect of the above provision is to bypass the requirement of privity of contract. Before the existence of such a provision, such an arrangement vis-à- vis an authorized driver would have been unenforceable for want of privity of contract. (See: Vanderpite v Preferred Accident Insurance Corporation of New York [1933] A.C. 70, at page 81-82). However, after the introduction of the above provision, an authorized driver gained the right to claim indemnity notwithstanding that he has paid no consideration towards the policy. See: Tattersall v Drysdale [1935] 2 KB 174, at page 182. That is the general rule.” [57] In Digby v General Accident Accident Fire and Life Assurance Corporation Ltd [1942] 2 All ER 319 this is what Lord Atkin said: “It will be noticed that there is no reference to policy holder or insured, but merely to “such person, persons or classes of persons as may be specified in the policy” and by sub-s (4) a person issuing a policy of insurance under this section shall be liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of persons.” [58] Lord Wright in the same case went further and elaborated: “It involves three parties, the insurer, the insured and the third party who is making the claim. The insured is not entitled under this section to an indemnity against direct loss or damage suffered by himself, but only against liability to pay compensation to a third party who is claiming against the insured.” [59] In Rikhi Ram and Anor v SMT Sukhrania & Ors [Case No: Appeal (Civil) 1578 of 1994] the Supreme Court of India interpreted sections 94 and 95 of the Indian Motor Vehicles Act, 1939 which are similar though not identical to sections 90(1) and 91(3) of the RTA as follows: “Whenever a vehicle which is covered by the insurance policy is transferred to a transferee, the liability of the insurer does not cease so far as the third party/victim is concerned, even if the owner or purchaser does not give any intimation of transfer to Insurance Company as required under the provisions of the Act. The reasons being as below:- Insurance against third party is compulsory, and once the insurance company had undertaken liability to third party incurred by the persons specified in the policy, the third party’s right to recover any amount is not affected by virtue of the provisions of the Act or by any condition in the policy. Further the liability of an insurer does not come to an end even if the owner of the vehicle does not give any intimation of transfer to the insurance company. A perusal of sections 94 and 95 would further show that the said provisions do not make compulsory insurance to the vehicle or to the owners. Thus, it is manifest that compulsory insurance is for the benefit of third parties. The scheme of the Act shows that an insurance policy can cover three kinds of risks, i.e. owner of the vehicle; property (vehicle) and third party. The liability of the owner to have compulsory insurance is only in regard to the third party and not to the property. Section 95(5) of the Act shows that it was intended to cover two legal objectives. Firstly, that no one who was not a party to a contract would bring an action on a contract, and secondly, that a person who has no interest in the subject matter of an insurance can claim the benefit of an insurance. Thus, once the vehicle is insured, the insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 94 does not provide that any person who will use the vehicle shall insure the vehicle in respect of his separate use. On analysis of Ss. 94 and 95, it is found that there are two third parties when a vehicle is transferred by the owner to a purchaser. The purchaser is one of the third parties to the contract and the other third party is for whose benefit the vehicle is insured. So far as the transferee who is the third party in the contract he cannot get any personal benefit under the policy unless there is a compliance of the provisions of the Act. However, so far as third party injured or victim is concerned, he can enforce liability undertaken by the insurer.” (emphasis added) [60] In United India Insurance Co Ltd v Santro Devi & Ors 2009 3 MLJ 130 (SC) the Supreme Court of India was again called upon to consider whether insurers were liable to indemnify the insured when the vehicle was sold but the insured remained as the registered owner when there was a claim for personal injury by a third party. This was how the Indian apex court dealt with the issue: “The provisions of compulsory insurance have been framed to advance a social object. It is in a way part of the social justice doctrine. When a certificate of insurance is issued, in law, the insurance company is bound to reimburse the owner. There cannot be any doubt whatsoever that a contract of insurance must fulfill the statutory requirements of formation of a valid contract but in case of a third party risk, the question has to be considered from a different angle.” (emphasis added) [61] The position in Australia can be discerned from the following views held by the learned authors of Kenneth Sutton in Insurance Law in Australia (2nd Edition) at page 371 paragraph 6.24 under the heading “Presumption of insurable interest”: “In Stock v Inglis [1884] 12 QBD 564 at 571 Brett M.R. sought to mitigate the arbitrariness and harshness of the common law by stating that it was the duty of a court always to lean in favour of an insurable interest, if possible, for after the insurer had received the premium the objection that there was no insurable interest was often a technical objection without any real merit as between insurer and assured. This dictum has been referred to in a number of subsequent decisions but it is submitted that there will be fewer occasions on which to invoke it in the future in the light of the expanded definition of insurable interest contained in s. 17 of the Insurance Contracts Act 1984.” [62] In Siu Yin Kwan & Anor v Eastern Insurance Company Limited [1993] 1 LNS 65, a case that emanated from Hong Kong, the Privy Council had occasion to consider whether insurable interest is a requirement for a valid indemnity policy. The Privy Council held that for indemnity insurance, there is no requirement for insurable interest. To better appreciate the context of the decision, we are taking the liberty to quote in extenso the following passages in the judgment of Lord Llyod: “They now turn to consider the second main defence, based on s. 2 of the Life Assurance Act 1774. It can be dealt with shortly. Mr. Thomas submits, and the majority of the Court of Appeal have held, that the policy is payable on the happening of an event, within the meaning of s. 2 of the Act, that event being the insured’s liability to pay compensation in respect of injury to his employees. Since the name of the person interested, that is to say Axelson, was not inserted in the policy, the insurance is unlawful and void.” The meaning of s. 2 of the Act was considered by the Court of Appeal in Mark Rowlands v Berni Inns Limited [1986] 1 QB 211, a case of fire insurance. The plaintiff was a freeholder of the premises. The defendant was a tenant of the basement. The question was whether the policy taken out by the plaintiff endured for the benefit of the defendant, although his name did not appear in the policy. It was held that the policy did not infringe s. 2 of the 1774 Act since the Act was not intended to apply to indemnity insurance. On the other hand, in Re King, Robinson v Gray [1963] Ch. 459 Lord Denning said at p. 485. You must remember that when you take out a policy of fire insurance of a building (as distinct from goods), you must insert in the policy the names of all the persons interested therein, or for whose benefit it is made. No person can recover thereon unless he is named therein, and then only to the extent of his interest. That is clear from the Life Assurance Act, 1774, ss. 2, 3 and 4, which by its very terms applies to any other event as well as life. If the tenant insures, therefore in his own name alone, it is only good to the extent of his interest. Faced with this conflict of authority their Lordships prefer the decision of the Court of Appeal in the former case. In Re King the point was not argued. The observation of Lord Denning was obiter and is not reflected in the judgments of the other two members of the Court. Some doubt as to the correctness of Mark Rowlands Limited v Berni Inns Limited is expressed in MacGillivray and Parkington (supra) at para. 154. But their Lordships do not share these doubts. There are two reasons why their Lordships prefer the decision in Mark Rowlands Limited v Berni Inns Limited. In the first place the words “event or events” in s. 2, while apt to describe the loss of the vessel, are hardly apt to describe Axelson’s liability arising under the Employees Compensation Ordinance, or at common law, as a consequence of the loss of the vessel. Secondly, s. 2 must take colour from the short title and preamble to s. 1. By no stretch of the imagination could indemnity insurance be described as a “mischievous kind of gaming”. Their Lordships are entitled to give s. 2 a meaning which corresponds with the obvious legislative intent.” [63] Another case beyond our jurisdiction which may shed some light on the issue is the case of Austin v Zurich General Accident And Liability Insurance Co Ltd [1945] 1 All ER 316 (“Zurich”). In that case, the appellant who was the driver of the car of the insured party with the latter’s permission sued the insurance company (respondent) for indemnity under the insurance policy. The English Court of Appeal comprising Lord Greene M.R., McKinnon LJ and Uthwatt J held that the appellant’s rights against the respondent company under the insurance policy arose out of section 36(4) the UK Road Traffic Act, 1930-34 (“the 1930 Act”) and not by reason of any contract. In other words, the right given by section 36(4) of the 1930 Act is a statutory right having no connection with contract. [64] The appellant’s claim against the insurer in that case was however dismissed on the basis that he failed to serve notice to the insurance company that he had been served with summonses for dangerous and careless driving as required by the policy. [65] The court in Zurich emphasised the point that section 36(4) of the 1930 Act deals with the liability of the insurer who issues the policy and not the terms of the policy which is covered by another section, namely section 10(1) of the 1930 Act which is in pari materia with section 96(1) of the RTA. Lord Greene M.R. made the following pertinent observations at page 318: “Here is a case where Austin, a stranger to the policy altogether, paying no part of the premium and not being a party in contractual relations with Zurich at all, seeks to take the benefit of a clause in Aldridge’s policy which he can only obtain by reason of a certain statutory provision. I do not think it can be suggested at this day that, apart from statute, any contract could be spelt out in circumstances such as this between Austin and Zurich. It is sufficient to refer to a passage in the judgment of GODDARD, J., as he then was, in Tattersall v Drysdale (1). The passage is at p. 181 and starts with a quotation from GREER, L.J., in an earlier case: But GREER, L.J., says: “I think it is quite clear that the section was intended to meet the difficulty that was patent: first, that nobody who was not a party to a contract could bring an action on the contract; and secondly, by reason of the statutory and well known law that a person who has no interest in the subject-matter of an insurance cannot claim the benefit of that insurance.” I read that passage as meaning that in his opinion the section was not only intended to effect but has effected a change in the law and gives a cause of action which hitherto did not exist to a person indicated in the policy but not a party to it, and I respectfully agree with that view.” [66] The appellant complained that the Court of Appeal in Zainuddin Mat Isa, Muhammad Haqimie and Aqmal was wrong in not discussing the decision of this court in Roslan bin Abdullah v New Zealand Insurance Company Ltd [1981] 1 LNS 40; [1981] 1 MLRA 445 which referred to Peters v General Fire and Life Assurance Corp Ltd. (1938) 60 Ll, L.R. 312 where it was held by the English Court of Appeal that any use of the vehicle by the purchaser cannot be covered by the seller’s insurance and that the purchaser will be insured if at all under his own policy. [67] First of all, as we have indicated earlier in this judgment, Roslan bin Abdullah is of no relevance as in that case there was no insurance policy in force at the time of the accident as the policy had lapsed, unlike the present appeal where the insurance policy had not expired at the time of the accident. Secondly, this court in Roslan bin Abdullah was not called upon to consider provisions like section 13 of the RTA which prescribes the procedure to effect change of ownership, and section 109(1) which deems the registered owner to be the “owner” of the motor vehicle. Thirdly, no judgment was entered against the insured in that case in order for section 9(1) of the Sarawak Motor Vehicles (Third Party Risks) Ordinance (Cap. 130) (“the Sarawak Ordinance”), which is similar to section 96(1) of the RTA, to take effect. Fourthly, Roslan bin Abdullah was decided in the context of the Sarawak Ordinance, which has been repealed by the RTO, which itself has been repealed by the RTA. [68] As for the case of Peters (supra) which the appellant relied heavily on, we do not find the case to be of any assistance to the appellant as it was a decision based on the 1930 Act which does not contain any provision similar to section 13(1) or section 109(1) and (2) of the RTA. The definition of “owner” in the 1930 Act (read together with the UK Road Traffic Act 1934) is also materially different from the definition of “owner” in the RTA. Furthermore, the court in that case was more concerned with section 10(1) of the 1930 Act which is the equivalent of section 96(1) of the RTA which reads: “96(1). If, after a certificate of insurance has been delivered under subsection 91(4) to the person to whom the policy has been effected, judgment in respect of 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 judgment any sum 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 judgments.” [69] For all the reasons aforesaid and on the authorities, our answer to the leave question is in the affirmative, that is to say, the registration does impose liability on the insurer notwithstanding the fact that the insured ceased to have insurable interest in the motor vehicle at the time of the accident. APPEAL NO. 2 PACIFIC & ORIENT INSURANCE CO. BERHAD & ANOR V. MOHAMAD RAFIQ MUIZ BIN AHMAD HANIPAH [70] Four leave questions were posed in relation to this appeal, and they are: Leave question 1 “Is an insurer bound to serve the cause papers relating to the application for a declaration pursuant to section 96(3) of the Road Transport Act 1987 upon the 3rd party claimant, every time that an insurer finds it necessary to make the said application or is the insurer only bound to serve the said cause paper relating to the application for a declaration pursuant to section 96(3) of the Transport Act 1987 upon the 3rd party claimant, only when the 3rd party claimant had already obtained judgment against the insured/rider since by obtaining the said judgment the 3rd party claimant has then obtained a legal interest as against the insurer?” Leave question 2 “Is the Court of Appeal correct in law in Pacific & Orient Insurance Co Berhad v Rasip Bin Hamsudi & Ors [2017] 2 MLRA 659 when it failed/refused to refer to the decision of another Court of Appeal in Letchumanan a/l Gopal (representative for the estate of Rajammah a/l Muthusamy; deceased) v Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788 (although referred to it) and which judgment in Letchumanan held that whilst an insurer has a right to disclaim liability as against the insured for breach of policy conditions, whether the 3rd party claimant’s right as against the said insurer are protected by the 3rd party claimant’s rights in filing proceedings for the damages awarded against the said insured based on the 3rd party claimant’s vested right pursuant to section 96(1) of the Road Transport Act 1987?” Leave question 3 “Whether registration imposes liability on an insurer notwithstanding the insured having ceased to have an insurable interest in the vehicle at the time of accident”? Leave question 4 “Is the Court of Appeal in Muhamad Haqimie Hasim & Ors v Pacific & Orient Insurance Co Berhad [2018] MLRAU 1 correct in law in applying section 13 and section 109 of the Road Transport Act 1987 to civil liability of an insurer pursuant to section 96(1) of the Road Transport Act when the said sections are applicable to criminal prosecutions pursuant to the Road Transport Act 1987?” [71] The facts are as follows. On 30.1.2014, the respondent as rider of motorcycle registration No. WRP 8601 was involved in an accident with motorcycle registration No. JMJ 5436 ridden by one Mohd Faiz bin Muhammad Nazri, the insured’s rider (not party to this action). JMJ 5436 was registered in the 2nd appellant’s name and was insured by the 1st appellant. The insurance policy for JMJ 5436 covered third party risks for the period between 17.6.2013 to 16.6.2014, which therefore covered the date of the accident on 30.1.2014. [72] The respondent commenced a tortious claim for special and general damages against the insured rider of JMJ 5436 and its registered owner (2nd appellant) at the Bandar Baru Bangi Magistrates Court. [73] Upon notification of the accident, the 1st appellant appointed Jaya Adjusters Sdn Bhd (“the Adjusters”) to investigate the accident. The Adjusters’ investigation report revealed the following:

on 27.10.2011 the registered owner of JMJ 5436 (2nd appellant) sold the motorcycle to one Nor Mohammed bin Mohd Yusof for a cash consideration of RM5,000.00 but failed to register the transfer of ownership to the new owner at the JPJ.

the registered owner of JMJ 5436 (2nd appellant) was not aware of the accident. [74] Based on the Adjusters’ report, the 1st appellant commenced an action under section 96(3) of the RTA at the Kuala Lumpur High Court naming the owner and insured of JMJ 5436 (2nd appellant) as parties to the proceedings. However, the respondent as the accident victim was not named as a party. Nor was he served with the cause papers of the action. [75] On 26.10.2016, the 1st appellant successfully obtained a declaratory order under section 96(3) of the RTA from the Kuala Lumpur High Court which declared the insurance policy to be void and unenforceable for the following reasons:

the registered owner of JMJ 5436 (2nd appellant) failed to disclose to the 1st appellant the sale of the motorcycle to Nor Mohammed bin Mohd Yusof;

there was absence of insurable interest at the time of the accident due to the sale of the motorcycle by the owner (2nd appellant) to Nor Mohammed bin Mohd Yusof;

at the time of the accident, the motorcycle was ridden by the insured’s rider (not party to this action) without the consent or authorization of the owner of JMJ 5436 (2nd appellant). [76] In the circumstances, it was held by the Kuala Lumpur High Court that the 1st appellant was not liable to satisfy the judgment sum obtained by the respondent against the insured from the Bandar Baru Bangi Magistrates Court. The 1st appellant relied on the decision of the High Court in Yeap Tick In v Pacific Orient & Insurance Co Bhd [2020] 3 MLJ 449 to submit that the High Court order under section 96(3) of the RTA operated as a complete defence to the respondent’s claim. [77] After obtaining the order, the 1st appellant then instructed its solicitors defending the insured (2nd appellant) and rider of JMJ 5436 at the Bandar Baru Magistrates Court to discharge themselves on the basis of a transfer of interest. [78] The respondent however proceeded with his claim in the Bandar Baru Bangi Magistrates Court, and on 17.7.2017 the Bandar Baru Bangi Magistrates Court allowed his claim and found liability to be 100% against the owner (2nd appellant) and the rider of the motorcycle involved in the accident. [79] Thereafter the respondent commenced proceedings in the Kuala Lumpur High Court for an order to quash the declaratory order obtained by the 1st appellant and to declare the policy issued by the 1st appellant to be valid and that the 1st appellant shall be liable to pay the judgment sum obtained by the respondent from the Bandar Baru Bangi Magistrates Court. [80] The High Court granted the order sought for by the respondent, relying on the decision of the Court of Appeal in Pacific & Orient Insurance Co Bhd v Rasip bin Hamsudi & Ors [2017] 4 CLJ 572; [2017] 2 MLRA 659. Being dissatisfied with the decision of the High Court, the 1st appellant then appealed to the Court of Appeal. Its appeal was dismissed with costs, hence the present appeal before us. [81] The 1st appellant’s argument in relation to leave question 1 was as follows:

The application by the respondent for a declaration that the policy issued by the 1st appellant to be valid and that the 1st appellant shall be liable for the judgment obtained by the respondent from the Bandar Baru Bangi Magistrates Court should not have been granted by the Kuala Lumpur High Court as it is a vested right of the 1st appellant pursuant to section 96(3) of the RTA to apply for and to obtain the order and only the insured (who was served with the application and who refused to attend) had the right to apply to set aside the order dated 26.10.2016 since the respondent had the remedy to file recovery proceedings;

The declaratory order was only effective between the insured (2nd appellant) and the 1st appellant and did not bind the respondent, relying on the unreported decision of the Court of Appeal in Pacific & Orient Insurance Co Berhad v Kumari a/p Nadason and Anor [Mahkamah Rayuan Civil No. W-02(IM)(NCVC)-2433-11/2013];

By asking for a general order that the policy be declared valid and enforceable against all persons at large, the prayer asked for was totally wrong as it applied even to bind the insured who himself did not apply to set aside the order, and by having granted the order prayed for by the respondent, the High Court had deprived the 1st appellant of the right to recover from its insured (2nd appellant) a claim to indemnity as provided for under the contract, citing Muhammad Zaihasri bin Hassan v Pacific Orient Insurance Co Berhad [2018] 8 MLJ 739;

The Court of Appeal was wrong in accepting the Court of Appeal’s decision in Rasip bin Hamsudi and rejecting the decision of the High Court in Pacific & Oriental Insurance Co Berhad v Azhar bin Azizan (Mohd Ashraf Yusoff, as Intervener) [2015] 10 MLJ 532 (“Azhar bin Azizan”) which was upheld by both the Court of Appeal and the Federal Court. It was submitted that this court should endorse Azhar bin Azizan which decided that since the insurer had obtained a declaratory order to declare the policy void, the defendant could not apply to set it aside;

The decision of the High Court in Azhar bin Azizan was accepted as correct by the Court of Appeal in Mohamad Asyraf bin Yusoff v Pacific & Orient Insurance Co Berhad and Azhar bin Azizan [Mahkamah Rayuan Civil Appeal No. W-02(IM)(NCVC)-2713-12/2013] when it dismissed the appeal against the decision. The 3rd parties’ applications for leave to the Federal Court in Mohamad Asyraf bin Yusoff v Pacific & Orient Insurance Co Berhad and in Azhar bin Azizan [Mahkamah Persekutuan Permohonan No. 08(i)-458- 09/2014(W)] were refused by the Federal Court;

Based on the decision in Scott & English (M) Sdn Bhd v Yung Chen Wood Industries Sdn Bhd [2018] 5 MLJ 204 the decision of the High Court in Azhar bin Azizan has now become the decision of the Federal Court and the Court of Appeal in Rasip bin Hamsudi ought not to have interfered and refused to follow the decision in Azhar bin Azizan;

Just as in Scott & English where the leave application to the Federal Court was dismissed, the Court of Appeal ought not to have rejected the decision of the Federal Court in Azhar bin Azizan on the basis that there was no written grounds of judgment which was what was held in Rasip bin Hamsudi;

Based on the binding authority of this court in Scott & English, the decision of the Court of Appeal in Rasip bin Hamsudi, which refused to follow Azhar bin Azizan and giving its own interpretation to the proviso to section 96(3) must, in the words of this court in Scott & English, be held to be decided without jurisdiction and therefore ought not to be followed;

Rasip bin Hamsudi ought not to be accepted by this court for the following reasons:

In breach of natural justice the Court of Appeal declined to consider the irregular judgment of the Sessions Court obtained against the insurer, but on the contrary considered the issue whether the declaratory order was regularly obtained and the Court of Appeal held that based on the fact that judgment had already been obtained against the insurer, the declaratory order was therefore not regularly obtained because the insurer had failed to comply with the proviso to section 96(3) of the RTA in failing to serve the declaratory papers on the claimants since the claimants had already obtained judgment against the rider and the insured;

(ii) The Court of Appeal misdirected itself in failing to consider that the initial judgment against the insured at the Sessions Court was irregular but instead held that since judgment had already been taken against the insured and rider, unless stayed or reversed, the claimants were entitled to immediately enforce the judgment;

(iii) The law allows an insurer, when dissatisfied with the conduct of its insured either for fraud or transfer of interest or for whatever reason the insurer decides as giving grounds, to obtain the declaratory order pursuant to section 96(3) of the RTA. [82] We have dealt with the issues raised in leave questions 3 and 4 when dealing with the sole leave question in Appeal No. 1 and we shall not repeat what we have said there save to say that it applies to the instant appeal. There is therefore only leave questions 1 and 2 left to be considered. [83] Before dealing with the two leave questions, we shall first deal with the 1st appellant’s contention that Rasip bin Hamsudi was decided without jurisdiction on the ground that it did not follow Azhar bin Azizan (leave question 2) which according to learned counsel has now become the decision of this court since the 3rd party’s application for leave to appeal against the decision of the Court of Appeal in that case was refused by this court. [84] With due respect, we do not think that is a correct statement of the law. First of all, the Court of Appeal in Azhar bin Azizan did not provide any grounds for affirming the decision of the High Court and dismissing the intended intervener’s appeal. A decision without the grounds of judgment cannot be regarded as authoritative and binding: See Tirumeniyar a/l Singara Veloo (supra at paragraph 56 above). [85] Secondly, the refusal of leave by this court does not mean approval of the decision of the Court of Appeal. For this proposition, suffice it if we refer to the decision of this court in Datuk Syed Kechik bin Syed Mohamed & Anor v The Board of Trustees of The Sabah Foundation & Others and another application [1999] 1 CLJ 325; [1999] 1 MLJ 257 where Edgar Joseph Jr FCJ delivering the judgment of the court said: “Having said that, we hasten to add, in the words of Lord Diplock speaking in the House of Lords in Modern Engineering v Gilbert-Ash [1974] AC 689 at pp 715-716: ‘Refusal of leave to appeal does not imply approval by this House of a judgment sought to be appealed against. That judgment carries the same authority as any other unappealed judgment of the Court of Appeal – neither more or less’. With this statement of principle we respectfully agree. The natural tendency, therefore, to claim that a judgment of the Court of Appeal which has been the subject of an unsuccessful application for leave carries greater authority than one which has gone unchallenged, must be resisted.” [86] As for the two leave questions, we shall deal with leave question 2 first before dealing with leave question 1 as it can be dealt with quite shortly. The answer to question 2 is in the judgment of this court in Dhalip Bhagwan Singh v Public Prosecutor [1997] 4 CLJ 645 where the Peh Swee Chin FCJ delivering the unanimous decision of the court made the following observations: “The doctrine of stare decisis or the rule of judicial precedent dictates that a court other than the highest court is obliged generally to follow the decisions of the courts at a higher or the same level in the court structure subject to certain exceptions affecting especially the Court of Appeal. The said exceptions are as decided in Young v Bristol Aeroplane Co. Ltd [1944] KB 718. The part of the decision in Young v Bristol Aeroplane in regard to the said exceptions to the rule of judicial precedent ought to be accepted by us as part of the common law applicable by virtue of Civil Law Act 1956, vide its s.3. To recap, the relevant ratio decidendi in Young v Bristol Aeroplane’s case is that there are 3 exceptions to the general rule that the Court of Appeal is bound by its own decisions or by decision of courts of co-ordinate jurisdiction such as the Court of Exchequer Chamber. The three exceptions are first, a decision of Court of Appeal given per incuriam need not be followed, secondly, when faced with a conflict of past decisions of Court of Appeal, or a court of co-ordinate jurisdiction, it may choose which to follow irrespective of whether either of the conflicting decisions is an earlier case or a later one, thirdly, it ought not to follow its own previous decision when it is expressly or by necessary implication, overruled by the House of Lords, or it cannot stand with a decision of the House of Lords. There are of course further possible exceptions in addition to the three exceptions in Young v Bristol Aeroplane when there may be cases the circumstances of which cry out for such new exceptions so long as they are not inconsistent with the 3 exceptions in Young v Bristol Aeroplane. A few words need to be said about a decision of Court of Appeal made per incuriam as mentioned above. The words “per incuriam” are to be interpreted narrowly to mean as per Sir Raymond Evershed, MR in Morelle v Wakeling [1955] 2 QB 379, 406 as a “decision given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding in the court concerned so that in such cases, some part of the decision or some step in the reasoning on which it is based, is found on that account to be demonstrably wrong”. It should be borne in mind that the year of Morelle’s case is 1955 whereas s. 3 of the Civil Law Act was enacted in 1956. The ration in Morelle’s case is also part of the common law applicable to us.” [87] There was therefore nothing wrong for the Court of Appeal in Rasip bin Hamsudi to refuse to follow or to omit to refer to the decision of another Court of Appeal in Letchumanan a/l Gopal (representative for the estate of Rajammah a/l Muthusamy; deceased) v Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788 although referred to it by learned counsel in his submissions. [88] In any event, we are inclined to agree with the reasoning in Rasip bin Hamsudi rather than the reasoning in Letchumanan a/l Gopal. In the first place, the issue in Letchumanan a/l Gopal is markedly different from the issue in Rasip bin Hamsudi. In Letchumanan a/l Gopal, the focus of the Court of Appeal's attention was on the issue of whether the victim of the road accident was in the employment of the company which owned the lorry involved in the accident. Since he was not, it was held that the insurance company was not liable for the negligent act of the lorry driver. [89] It will be noted that the insurer in Letchumanan a/l Gopal relied on an exception to a liability clause in its insurance policy which stipulated that the insurer would not be liable for the death of or bodily injury to any person “other than a passenger carried by reason of or in pursuance of a contract of employment”. This, with respect, appears to be an attempt to contract out of statute, which is prohibited by section 94 of the RTA. Further, there was no mention, let alone a discussion on section 96(3) of the RTA. Rasip bin Hamsudi on the other hand dealt extensively with both section 96(1) and section 96(3) which are precisely the issues that we are concerned with in the present appeal. [90] Letchumanan a/l Gopal is therefore of no assistance to the appellant. The answer to leave question 2 is therefore in the affirmative, that is to say, the Court of Appeal in Rasip bin Hamsudi was correct in not referring to Letchumanan a/l Gopal although referred to it in submissions. At any rate we are not aware of any law that requires the court to refer to every authority cited by counsel in submissions. [91] As for leave question 1, it starts off on a wrong footing by asking the question whether an insurer is bound to serve the cause papers relating to the application for a declaration pursuant to section 96(3) of the RTA upon the third party claimant “every time that an insurer finds it necessary to make the said application”, implying that it is up to the insurer to decide whether and when to serve the cause papers, either before or after judgment had been obtained against the insured by the 3rd party claimant. [92] Section 96(3) is reproduced again below for ease of reference: “(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: Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not become entitled to the benefit of this subsection as respects any judgment 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 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.” [93] Perhaps a good starting point in dealing with this issue is the case of Merchants’ and Manufacturers, Insurance Co., Ltd. v Hunt and Others [1941] 1 All ER 123 where the English Court of Appeal was called upon to consider section 10(3) of the 1930 Act which is substantially similar in purport to section 96(3) of the RTA. This is how Scott LJ expressed his views in that case: “This legislation was obviously intended to effect, inter alia, a fair compromise between the two desirable but conflicting objects – namely on the one hand that of protecting the public from danger of impecunious tortfeasors on the roads, and on the other hand, that of avoiding the injustice of putting on a wholly innocent and misled insurer the whole pecuniary burden of a policy which, neither in law nor in equity, is his policy. However, it would have been unfair to confer this relief unconditionally. There was an obvious danger of the injured party being deprived of the pecuniary safeguard which was the subject of subsect. (1) through the possibility of the policy being avoided in the proceedings under the first part of subsect. (3) without his knowledge, and even by collusion between the insurer and the insured. It was essential that he should be given the right to appear in it and there defend his rights. Both the requisites are met by the proviso to subsect. (3) which in effect creates two condition precedents to the existence of the insurer’s right to get this declaration under the first part of the subsect. (3). The third party gets full notice of the grounds of the insurer’s claim and given unqualified right to become a party in all the rights of a party to an action without any qualification upon them.” [94] Section 96(3) of the RTA speaks of a declaration obtained by the insurer “before the date the liability was incurred”, meaning to say before judgment in the tortious claim by the 3rd party claimant is obtained against the insured and the tortfeasor. To that extent the provision is clear and unambiguous, which explains why the 1st appellant proceeded with the application under section 96(3) after the respondent had commenced the tortious claim against the insured rider and owner of the motorcycle (2nd appellant) in the Bandar Baru Bangi Magistrates Court and before judgment was obtained by the respondent as the third party claimant. [95] The point to note is that while section 96(3) gives the insurer the right to obtain a declaration that the insurance policy is void and unenforceable, section 96(1) makes it mandatory for the insurer to make payment after judgment had been obtained against the insured by the third party claimant. Judgment here means judgment in an action for negligence filed by the third party claimant and not judgment in any other cause of action. [96] What section 96(3) mandates is that where the insurer intends to repudiate liability under the policy, it must comply with the following procedural requirements:

notice must be given to the plaintiff in the tortious claim action before liability is incurred;

the notice must state the grounds relied on by the insurer to obtain a declaration;

the notice must be served on the plaintiff in the tortious claim within 7 days after the commencement of the claim;

the notice must be served on the parties who have interest in the proceedings. [97] In the present case, the 1st appellant knew of the pending Bandar Baru Bangi Magistrates Court proceedings against the rider and registered owner of the motorcycle (2nd appellant), yet it chose not to comply with the statutory requirements laid down by the proviso to section 96(3). The cause papers which ought to have been served on the respondent who was the plaintiff in the Bandar Baru Bangi Magistrates Court proceedings were not served on him. This was an outright contravention of section 96(3), rendering the declaration order issued by the High Court irregular, defective and unenforceable. The 1st appellant had no discretion not to comply with the proviso to section 96(3). Nor does the court have the discretion to allow any such application which suffers from such fundamental defect. [98] In Pacific & Orient Insurance Co. Bhd v Arnanda a/l Soria Demadu [2021] 1 MLJ 303 Her Ladyship Mary Lim Thiam Suan JCA (now FCJ) delivering the judgment of the Court of Appeal had this to say on section 96(3) at paragraph 68-69: “[68] The appellant was well aware of the procedure in section 96(3) and the obligation to serve together with the grounds relied on for avoiding its obligations to satisfy a judgment obtained by a third party. In fact, at no time did the appellant plead ignorance of that duty; it just takes the position that its action was valid. Furthermore, this is not a case of timing of such applications, that is, when such orders ought to be sought. And yet, the appellant failed and/or ignored that obligation. It has only itself to blame. [69] Thus, we unanimously conclude that the mandatory requirements in the proviso to section 96(3) have clearly not been met by the appellant. As a result of that non-compliance, and in relation to the respondent, the appellant cannot avail itself to the benefit of section 96(3). The appellant is not entitled to the benefit of section 96(3) of the Road Transport Act 1987.” [99] Thus, the 1st appellant’s failure to comply with the proviso to section 96(3) disentitled it to the benefit of the provision. It was however urged upon us that the High Court case of Azhar bin Azizan should be accepted as good law, which decided that since the insurer had obtained a declaratory order to declare the policy void, the defendant could not apply to set it aside. [100] With due respect, we do not see how Azhar bin Azizan is relevant to the issue before us as the facts are poles apart from the facts of the present case. In the first place, no judgment had been obtained against the insured in that case to entitle the intended intervener to enforce payment of the judgment sum pursuant to section 96(1) of the RTA. The predominant issue in that case was whether the claimant or the plaintiff in the tortious claim proceedings was entitled to intervene and set aside the declaratory order obtained by the insurer after the declaration proceedings had ended. [101] Of more significance to note is that the learned judge in that case failed to direct his mind to the mandatory requirements laid down by the proviso to section 96(3). The judgment was therefore made per incuriam. It is trite law that a judgment that is made per incuriam has no binding effect and need not be followed: See Young v Bristol Aeroplane Co. Ltd [1944] KB 718 cited with approval by this court in Dhalip Bhagwan Singh (supra). The proviso to section 96(3) must be read having regard to the section itself: See Chor Phaik Har v Farlim Property Sdn Bhd [1994] 3 MLJ 345 FC. [102] The 1st appellant had another argument. It was contended that the respondent as the 3rd party claimant could not apply to set aside the order pursuant to Order 35 Rule 1(2) of the Rules of Court 2012 because he had a specific remedy provided by section 96(1) of the RTA to file for recovery against the insurer. The argument must fail. There is nothing in section 96(1) to say that the third party claimant must first obtain another judgment against the insurer before he could proceed to enforce the judgment that he had earlier obtained against the insured. After all, the judgment debt of the insured becomes the judgment debt of the insurer: See Pacific & Orient Insurance Co Bhd v Kamacheh Karuppen [2015] 4 CLJ 54. The insurer is bound to settle the judgment sum without the need for another action by the third party claimant, i.e. recovery action against the insurer once the conditions in section 96(2) and (3) are fulfilled. [103] Therefore, the question of the respondent having to file for recovery proceedings under section 96(1) against the 1st appellant as contended by learned counsel does not arise at all: See also the decisions of the Court of Appeal in Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2011] 1 CLJ 947 and Yeap Tick In (supra) which decisions on this point we are in agreement with. In Muniammah Muniandy, this is what Ramly Ali JCA (as he then was) said: “[21] Nowhere does s. 96(1) of the Road Transport Act 1987 say that the respondent must first obtain another judgment against the appellant before she can proceed to enforce the judgment earlier obtained by the respondent against the insured. Therefore, the question of the respondent having to file a recovery proceedings under s. 96(1) against the appellant, as contended by the appellant in its memorandum of appeal, does not arise at all. In short, the respondent, who had obtained a monetary judgment against the insured which has not been stayed, has the right under s. 96(1) to enforce the said judgment against the insurer without having to first file a recovery proceedings against the insurer.” [104] In an application for a declaratory order under section 96(3), the insurer must confine itself to the particulars it sets out in the notice served on the plaintiff in the tortious claim proceedings. The reason for this according Lord Greene in Zurich is this: “True it is that the proviso to sub-s. 3 does not in terms say that, as against the third party, the insurer is to be confined to the particulars set out in the notice. The reason for this is that it was quite unnecessary for it to do so. If the insurer could as against the third party, bring forward matters not specified in the notice the protection which the proviso gives could be rendered completely abortive.. If I am right in thinking that only matters referred to in the notice can be relied on, it seems to me to follow that the question whether such matters are material and whether the policy was obtained by them must be examined on the artificial basis that, as between the insurer and the third party, all other material facts as having been disclosed. The result is to prevent the insurer from relying either directly or indirectly on any other matter not specified in the notice as a ground or part of a ground for avoiding the policy as against the third party.” [105] Goddard LJ in the same case emphasised the importance of time within which the notice must be served other than the content of the notice, and he went on to say: “It seems to me that what the legislature had in mind was that, if an insurer was intending to repudiate a policy, it was only fair that the injured party should know the grounds on which reputation was sought before he went to the expense of endeavouring to establish his claim against the insured, who, if not entitled to indemnity, might be unable to satisfy a judgment. It was to prevent an injured party incurring further useless expense. Hence, the necessity of the notice prescribed by the proviso to the subsection. The protection afforded is little enough.” [106] In the present case, neither the notice nor the cause papers for the section 96(3) application were served on the respondent by the 1st appellant, in breach of the proviso to section 96(3), which as we said makes the 1st appellant’s repudiation of the insurance policy based on the declaration order it obtained from the High Court unsustainable in law. [107] In the premises, the answer to leave question 1 is this: The insurer is bound to serve the cause papers relating to the application for a declaration pursuant to section 96(3) of the RTA on the 3rd party claimant before the 3rd party claimant obtains judgment against the insured and the tortfeasor. APPEAL NO. 3 JESUDAS A/L PALANISAMY V. PACIFIC & ORIENT INSURANCE CO BERHAD. [108] For this appeal, the question for determination is as follows: “Whether the insurer is entitled to derive the benefit of their declaration obtained by them pursuant to section 96(3) of the Road Transport Act 1987 against the 3rd party when they failed to comply with the proviso of section 96(3) of the Transport Act 1987?” [109] The answer to the leave question is obvious from our answer to leave question 1 in Appeal No. 2. It follows that the answer to the leave question is in the negative, that is to say, the insurer is not entitled to the benefit of the declaration order it obtained under section 96(3) when it failed to comply with the proviso to the section. [110] That disposes of the appeal, but for context it is necessary to set out the facts of the case. They are as follows. On 3.6.2016, the respondent insurer obtained an order in terms for its application by way of originating summons filed at the Kuala Lumpur High Court to declare the policy of insurance issued to the insured as null and void. The application was to state that being the insurer to motorcycle bearing registration No. PFK 1477 it would not provide any coverage for the road accident which occurred on 14.1.2015. [111] The respondent’s solicitors Messrs K Suganthi & Co who was appointed by the respondent to defend the defendants in the tort action to act as defence counsel on 1.9.2016 obtained an order to withdraw itself from acting for the defendants in the tort action. This would mean that the owner and rider of the motorcycle bearing registration No. PFK 1477 were left in the lurch so to speak and told to fend for themselves, despite the existence of a valid insurance policy issued by the respondent. [112] The tort action however proceeded on the issue of liability and quantum, at the conclusion of which the Jawi Magistrates Court found liability to be 100% against both the owner and rider of motorcycle registration No. PKF 1477. The learned magistrate awarded a sum of RM54,000.00 for general damages and a sum of RM21,921.00 for special damages. [113] Since the judgment could not be enforced against the respondent, the appellant filed for a declaration order at the Kuala Lumpur High Court but the High Court held that the appellant should file recovery proceedings so that the respondent could re-ventilate the allegation of fraud. [114] Dissatisfied with the outcome of the declaration application, the appellant filed an appeal to the Court of Appeal on the ground that the respondent failed to comply with the mandatory procedural requirements of section 96(3) of the RTA and because of that failure, the respondent could not derive the benefit of section 96(3) of the RTA. [115] The appellant’s appeal was dismissed by the Court of Appeal. No grounds were given by the Court of Appeal. It was against that decision of the Court of Appeal that the appellant filed the present appeal to this court. [116] There were other issues of law raised by learned counsel for the respondent in opposing the appellant’s appeal, including the issue of fraud, the doctrine of uberrimae fidei and whether the question of law raised is premature both in his written submissions and in his oral argument, but given the respondent's breach of section 96(3) for failing to comply with the proviso to the section, which is fatal, we do not find it necessary to deal with any of those questions. [117] In any event, the questions do not come within the ambit of the single leave question. It is true that this court being the court of last resort has a discretion to permit the respondent to argue grounds which fall outside the scope of the leave question in order to avoid a miscarriage of justice but the discretion must be exercised judiciously and sparingly and in very limited circumstances in order to achieve the ends of justice: See Melawangi Sdn Bhd v Tiow Weng Theong [2020] 4 CLJ 1; [2020] 3 MLJ 677 FC. We do not find this to be a fit and proper case for us to exercise the discretion in favour of the respondent. What needs to be appreciated is that it is not a right for a party to the appeal to pursue its case on questions of law for which no leave had been granted by this court. APPEAL NO. 4 MOHAMAD ZULKARNAIN BIN MUSTAFA V. ALLIANZ GENERAL INSURANCE COMPANY (M) BHD & 2 ORS. [118] There were three leave questions posed for our determination in this appeal. They are as follows: Leave question 1 “Whether in allowing the section 96(3) application dependent on core issues for negligence which was yet to be determined by another forum (a trial court), the High Court breached the victim-Appellant’s right to equality enshrined in Article 8 of the Federal Constitution?” Leave question 2 “Where an insurer’s section 96(3) RTA application turns on whether an insured (Defendant) was ever involved in an accident (in tort complained of) as “a matter of policy-or-law-should” the High Court dismiss the application on the grounds that a separate tribunal is about to determine the issue by way of viva voce evidence?” Leave question 3 “Whether a section 96(3) application is only to determining the issue of “voidness and unenforceability” of an insurance contract on the grounds of established contractual principles and are not to be exploited to determine core factual issues in the tort of negligence which is a matter entirely outside the grounds contemplated by section 96(3) RTA?” [119] The facts are bizarre we must say. Thirty minutes past midnight on 21.12.2015, a road accident occurred between the appellant’s motorcycle registration No. AJW 5727 and the 3rd respondent’s motorcycle registration No. AHW 5937 owned by the 73 2nd respondent. The 1st respondent was the insurer for the 2nd respondent’s motorcycle. [120] The 3rd respondent made 3 police reports on 3.3.2016, five months before the appellant filed a writ action in the Teluk Intan Sessions Court on 18.8.2016. In the first report, the 3rd respondent admitted that he collided into the rear of the appellant’s motorcycle. In other words, he admitted that he was involved in the accident while riding motorcycle registration No. AHW 5937. He then made 2 corrective reports, the first to change the location of the accident and the second, to change the year of the accident. There was however no change in the identity of the motorcycle involved in the accident. It remained motorcycle registration No. AHW 5937 belonging to the 2nd respondent. [121] Almost a year later on 8.2.2017, the 3rd respondent made a fourth police report. This time he changed the identity of the motorcycle involved in the accident from motorcycle registration No. AHW 5937 belonging to the 2nd respondent to motorcycle registration No. WUW 9865 belonging to his wife, which had no insurance coverage. [122] The 3rd respondent also affirmed a statutory declaration alleging that the three police reports that he lodged on 3.3.2016 were all false. In other words, he now admitted that he was involved in the accident but not while riding motorcycle registration No. AHW 5937 but while riding motorcycle registration No. WUW

The 2nd respondent (the insured) and an alleged third party witness supported the 3rd respondent’s statement by separate statutory declarations. [123] On 18.8.2016, the appellant commenced a writ action in the Sessions Court at Teluk Intan against the 3rd respondent (rider of the motorcycle) and the 2nd respondent (owner of the motorcycle registration No. AHW 5937). [124] At the trial in the Teluk Intan Sessions Court, the police Investigation Officer (“I.O.”) testified that the 3rd respondent was involved in the accident, directly contradicting the 3rd respondent’s fourth police report that he and motorcycle registration No. AHW 5937 were not involved in the accident. [125] On 9.3.2017, i.e. one month after the I.O.’s testimony was given, the 1st respondent filed an originating summons in the Kuala Lumpur High Court pursuant to section 96(3) of the RTA to apply for a declaration that the insurance policy was void and unenforceable, thus throwing a spanner in the works for the writ action filed by the appellant in the Teluk Intan Sessions Court. The application was made solely on the ground that the 3rd respondent (defendant at the trial in the Teluk Intan Sessions Court) was not involved in the accident. [126] On 17.4.2017, the 1st respondent amended the section 96(3) originating summons to include the appellant as a party. The 1st respondent’s prayers in the originating summons action were:

the insurance policy for the motorcycle bearing registration No. AHW 5937 was void and unenforceable in respect of the accident;

the 1st respondent was not responsible for satisfying any order or judgment arising from the civil action in the Teluk Intan Sessions Court and/or any other claim arising from the accident. [127] It is obvious that prayer (b) above was a pre-emptive strike at the impending judgment of the Teluk Intan Sessions Court. The 1st respondent’s basis for making the section 96(3) application was that the 2nd respondent (the insured) knew of the false police report lodged by the 3rd respondent (the rider), and because of that both he and the 3rd respondents were in breach of the principle of uberrimae fidei, thus rendering the insurance policy issued in respect of motorcycle registration No. AHW 5937 null and void and unenforceable against the 1st respondent. [128] Learned counsel for the 1st respondent stressed the point that the Loss Adjusters appointed by the 1st respondent had found out that the 3rd respondent and the motorcycle registration No. AHW 5937 were not involved in the accident. For some unexplained reason however the Adjusters’ report was not produced in the originating summons action. Nor was the maker of the report called to testify. [129] The 1st respondent alleged the following in the Adjusters’ investigation:

the 3rd respondent made a statutory declaration on 8.2.2017, which was one day after the I.O.’s witness statement was marked, stating that:

the motorcycle that the 3rd respondent rode during the accident was not AHW 5937 but instead motorcycle registration No. WUW 9865 owned by his wife;

(ii) the insurance and the road tax for the motorcycle WUW 9865 had expired; and

(iii) the 2nd respondent’s motorcycle registration No. AHW 5937 was allegedly never involved in the accident. Instead, it was between the appellant and another motorcycle. Only upon reaching close to the appellant, who was lying on the road, did the 3rd respondent collide into him. [130] As we have already mentioned, the 3rd respondent on the same day, i.e. on 8.2.2017 made a correction to his police report to say that the motorcycle involved was WUW 9865 owned by his wife and not motorcycle registration No. AHW 5937 owned by the 2nd respondent. The 2nd respondent had also made a statutory declaration on 13.2.2015, i.e. 5 days after the 3rd respondent made the corrective police report in support of the 3rd respondent’s new version of the story. [131] There was another twist to the 1st respondent’s narrative. An alleged independent witness, one Nik Maharith, made a statutory declaration on 22.2.2017, two weeks after the I.O. confirmed during the trial at the Teluk Intan Sessions Court that there was no independent witness to the accident, claiming that:

he saw an accident after which a Malay man fell on the road. Then the 3rd respondent, on a motorcycle bearing registration No. WUW 9865, collided into the appellant;

(ii) he identified the 3rd respondent as his friend and took him to the clinic using his friend’s RXZ motorcycle registration No. WFN 3498; and

(iii) the accident involved Yamaha RXZ No. WUW 9865 ridden by the 3rd respondent and not Honda EX-5 registration No. AHW 5937. [132] Based on this new version of the story, the 1st respondent argued at the originating summons hearing that:

the insurance policy became void and unenforceable because the 3rd respondent made a false police report, with the 2nd respondent’s knowledge, that the motorcycle registration No. AHW 5937 (covered by the policy) was involved in the accident; and

the 2nd and 3rd respondents were bound by the principle of uberrimae fide towards the 1st respondent to make a full and accurate disclosure on all rights and obligations which could make the 1st respondent liable pursuant to the insurance coverage between the 1st respondent and the 2nd respondent. [133] At the risk of being repetitious, the thrust of the argument was that since the 2nd and 3rd respondents breached their duty of utmost good faith, the third party insurance policy was rendered null and void and unenforceable against the 1st respondent, with no regard to the fact that the appellant as the accident victim and third party claimant had nothing to do with the alleged false police report lodged by the 3rd respondent, who himself (3rd respondent) had no contractual relationship with the 1st respondent. It is surprising that the 1st respondent chose to accept as gospel truth the 3rd respondent’s conflicting evidence on his involvement in the accident as a basis for its application to repudiate liability under section 96(3) of the RTA. [134] Given the object and purpose of the statutory third party risks insurance policy, which is to protect third parties against risks arising out of the use of motor vehicles, we do not think the 1st respondent can be allowed to exploit section 96(3) in the manner it did in this case. The grant of the declaration under section 96(3) to the 1st respondent was grossly unfair to the appellant who, as it turned out, succeeded in proving his claim against the 2nd and 3rd respondents after a full trial of the action in the Teluk Intan Sessions Court, entitling him to be paid the judgment sum under section 96(1). In any case, the declaratory order obtained by the 1st respondent from the High Court only binds itself and its insured and not the appellant. [135] There was in this case an obvious danger of a collusion between the insurer and the insured (per Lord Scott LJ in Hunt & Others (supra)) to deny the appellant of the fruits of his litigation. The trial court’s finding after a full trial that the 3rd respondent and motorcycle registration No. AHW 5937 were involved in the accident proves that the 1st respondent (the insurer) had unwittingly relied on false evidence at the section 96(3) originating summons hearing. [136] As for the 2nd and 3rd respondents, their opposition to the appellant’s appeal was based on the following two grounds:

The appellant failed to procure leave to cross-examine them on their statutory declarations and affidavits in reply filed in the High Court at the originating summons application filed by the 1st respondent; and

(ii) The appellant failed to seek an order to convert the originating summons filed by the 1st respondent to a writ action so that the appellant had the opportunity to cross-examine both of them. [137] It was their contention that the issue before this court is not whether the 3rd respondent was involved in the accident but whether they had breached the duty of uberrimae fidei. This line of argument is not only inconsistent with the 1st respondent’s case that the 3rd respondent was not involved at all in the accident but is without merit and must be rejected. The argument is as good as saying that it is not this court’s concern if the 3rd respondent was involved in the accident as the court’s concern is only to find out if they (the 2nd and 3rd respondents) were in cahoots in breaching their duty of uberrimae fidei to the detriment of the 1st respondent. [138] With due respect, that cannot be right as the core issue to be addressed by the court is whether the 3rd respondent was liable in negligence and not whether the 2nd and 3rd respondents were in breach of their duty of uberrimae fidei to render the insurance policy null and void and unenforceable against the 1st respondent. The issue before the trial court was one of tort and not of contract. Even if there was a breach of the uberrimae fidei duty on the part of the 2nd and 3rd respondents, it does not entitle the 1st respondent to deny liability to the innocent third party claimant (the appellant) for compensation in the face of sections 90, 91(b), 94, 95 and 109 of the RTA. [139] As for the 2nd and 3rd respondents’ contention that the appellant failed to procure leave to cross-examine them on their statutory declarations and affidavits in reply at the originating summons hearing, we do not see how the failure is fatal to the appellant’s case given the serious contradictions in the 3rd respondent’s evidence, which were never explained save for him to say that his initial police reports were false. This casts grave doubts on his credibility and reliability as a witness. [140] The rule laid down in the oft-cited case of Ng Hee Thoong v Public Bank Berhad [1995] 1 MLJ 281 CA, which followed Alloy Automotive Sdn Bhd v Perusahaan Ironfield Sdn Bhd [1986] CLJ Rep 45; [1986] 1 CLJ 2 FC and Overseas Investment Pte Ltd v Anthony O’Brien & Anor [1988] 3 MLJ 332 HC that in a contest of affidavits material allegations which are not contradicted are deemed to be admitted could not have been intended to apply where the material allegations are manifestly unreliable. Such evidence is unworthy of credit and must be disregarded by the court. [141] Our attention was drawn to the following passage in the judgment of the High Court in the present case where the learned judge who heard the section 96(3) application said: “The Court cannot be expected to accept the evidence of the Investigation Officer in the Teluk Intan Sessions Court Trial as that was the versions of the Investigation Officer. Even if the evidence of the Investigation Officer is true, it is telling against the 2nd Defendant who had not given a full frank disclosure in relation to the said accident.” [142] With due respect, if the High Court was not expected to accept the sworn evidence of the I.O. at the trial, the converse is also true, that the court is not expected to accept the affidavit evidence and statutory declaration of the 3rd respondent whose evidence on his involvement in the accident is demonstrably unreliable and highly doubtful. It is rather unfortunate that the learned judge did not give any reason for rejecting the I.O.’s sworn evidence. [143] In opposing the 1st respondent’s section 96(3) application before the High Court, the appellant on his part had raised the following issues:

The 1st respondent failed to state specifically which clause of the insurance contract was breached by the 2nd and 3rd respondents;

(ii) A writ action had been filed in the Teluk Intan Sessions Court prior to the originating summons action;

(iii) The I.O. in the writ action had testified that: - the 3rd respondent was the one who showed the location of the accident and the motorcycle AHW 5937 to the I.O. and allowed photographs of the motorcycle to be taken; and - the 3rd respondent confirmed that the motorcycle No. AHW 5937, which he was riding at the material time, was damaged. The investigation revealed that the damage to the appellant’s motorcycle was caused by the “crash” in the rear from the motorcycle No. AHW 5937 ridden by the 3rd respondent at the time of the accident. The I.O. confirmed this based on the 3rd respondent’s statement.

(iv) The appellant would be prejudiced if the declaration was granted as the trial was ongoing;

The High Court’s declaration would deny the appellant a fair trial. Truth could only be known through a full trial;

(vi) As the 1st respondent was the 3rd defendant in the Teluk Intan Sessions Court trial by way of intervening, it had the right to cross-examine all witnesses of the appellant and so the 1st respondent would suffer no prejudice;

(vii) The contents of the 3rd respondent’s statutory declaration were not incorporated in a formal police report. Thus, there was no police investigation;

(viii) Who caused the 3rd respondent to change the entire version in his earlier police report?;

(ix) It was an afterthought for the 3rd respondent to amend the police report (to change the registration number of the motorcycle) after more than a year since the accident took place and after the I.O. had completed giving his evidence in the writ action;

Why did the 2nd and 3rd respondents and the independent witness (Nik Maharith) wait for more than a year to reveal their stories? This was after the Adjuster got involved and is believed to have influenced the 2nd respondent to change his mind;

(xi) The 2nd respondent and the independent witness merely made statutory declarations without lodging police reports to support their allegations to enable a police investigation to take place;

(xii) Whether the Adjuster and all the respondents worked in cahoots to defeat the appellant’s writ action;

(xiii) That the 1st respondent’s failure to produce the Adjuster’s report raised suspicion as to whether something was being hidden;

(xiv) The 3rd respondent failed to include the new version of the accident (as in his statutory declaration) in his two corrective police reports despite the fact that there was ample opportunity to do so;

(xv) The principle of uberrimae fide was not applicable; and

(xvi) Based on the above reasons, there were many triable issues which could only be properly decided in a full trial and not by way of a contest of affidavits. Hence, all witnesses had to give oral evidence and then tested in cross-examination before a decision could be made. [144] On 21.7.2017, the High Court hearing the section 96(3) application by the 1st respondent ruled against the appellant by declaring that the insurance policy for the motorcycle registration No. AHW 5937 was void and unenforceable. The appellant’s appeal to the Court of Appeal against the decision was dismissed on 20.3.2019, principally on the ground that the proceedings in the Teluk Intan Sessions Court had no bearing on the originating summons proceedings and that at any rate the insured (2nd respondent) and rider of the motorcycle (3rd respondent) were not cross-examined on their statutory declarations and affidavits. [145] Pausing here for a moment, here is a case where the appellant was a victim of a road accident through no fault of his. Before liability was determined by the Teluk Intan Sessions Court where the appellant filed his writ action, the 1st respondent applied for and obtained a section 96(3) declaration from the Kuala Lumpur High Court on the basis that the 3rd respondent was not involved in the accident. But the Teluk Intan Sessions Court after hearing viva voce evidence in a full trial not only found the 3rd respondent and the motorcycle registration No. AHW 5937 to be involved in the accident but also found the 3rd respondent liable for the accident and entered judgment against him. [146] This irreconcilably conflicting finding of fact on such vital issue as liability by two courts of competent jurisdiction is unacceptable. It raises the specter of a breakdown in the law on third party risks insurance policies. Which finding is to prevail, the finding of the trial court after a full hearing or the finding of the High Court in an application under section 96(3) of the RTA? [147] If this court were to accede to the 1st respondent’s argument, it will mean that the finding of the High Court in proceedings under section 96(3) of the RTA must and will always prevail over the finding of the trial court in a full trial. On the other hand, if we were to accede to the appellant’s argument, it will mean that the finding of the trial court must and will always prevail over the finding of the High Court in a section 96(3) application. [148] For the appellant, the contention was as follows:

Section 96 of the RTA is not an automatic right. The 1st respondent must satisfy its burden under the section and under Schedule 9 of the Financial Services Act 2013, which imposes the burden on the insurer to prove that there was misrepresentation, and explain what steps were taken by the insurer before and after the contract was entered into, to enable the court to consider whether there has been a waiver by the insurer;

The issue of whether the defendant (3rd respondent) the trial court was involved in the accident was a live issue before the trial court when the High Court received the 1st respondent’s application under section 96(3) of the RTA. It was for the trial court to decide on the 3rd respondent’s involvement in the accident and not for the High Court hearing the section 96(3) application;

The High Court ought to have dismissed the section 96(3) application to prevent multiplicity of proceedings and to uphold the appellant’s constitutional right to equal treatment and protection under the law. The appellant was victorious at the trial court but was unable to enforce the judgment against the 1st respondent;

Section 96 is part of a social legislation to enable the victims to enforce the judgment against the insurer. It ought not to be exploited to prejudice the appellant’s trial and disrupt the enforcement of judgment. The trial court found the 3rd respondent liable. The High Court has now given a conflicting finding which prejudices the appellant;

When the High Courts are faced with section 96(3) applications premised on grounds relating to the involvement of the driver or liability of the driver, the courts ought to dismiss the application and allow the trial judge to make a determination on the issue.

A section 96(3) declaration must only be allowed in “clear cut cases” as held in Chu Chu @ Moksin Amlih v AM General Insurance (Malaysia) Berhad & 2 Ors [2017] 1 LNS 717 which made two points on the issue:

the legislative intent of the RTA is to protect road users. Therefore, insurers do not have an automatic right to the declaration;

the High Courts dealing with section 96(3) declaration ought to refrain from granting such orders where there is an ongoing suit to determine whether the victim ought to be insured. The trial court would assess the evidence to determine the liability. [149] It was submitted that the present case is not a clear-cut case for disposal under section 96(3) of the RTA for the following reasons:

there was a trial pending before the Sessions Court to determine whether the defendant (driver) was involved in the accident;

the issue of liability in an accident cannot be determined by affidavit evidence;

there was serious conflict in the evidence as the 3rd respondent made two corrective police reports altering his initial police report where he admitted involvement in the accident. The 2nd respondent also affirmed a statutory declaration in favour of the 3rd respondent’s altered version. These evidence were tested by the trial court and the trial court found the 3rd respondent liable; and

as the High Court prematurely found that the 3rd respondent was not involved in the accident, the declaration in favour of the insurer now deprives the appellant from enforcing the judgment against the insurer for damages. The appellant’s protection under the RTA has been infringed. [150] It was further submitted that issues relating to the tort of negligence, and whether the 3rd respondent was involved in the accident using the 2nd respondent’s vehicle is to be determined during the trial in the Sessions Court and not by way of a section 96(3) application in the High Court. [151] In Balamoney Asoriah v MMIP Services Sdn Bhd [2020] 1 CLJ 476, the insurance policy was renewed in the deceased’s name after his demise. The accident occurred after his demise. The insurer applied to declare the policy void on the basis of a breach of uberrimae fidei duty for non-disclosure of his death. It was held by the Court of Appeal that the deceased’s death does not ipso facto invalidate the policy. [152] In arriving at the conclusion, the court analysed the burden imposed on the insurer by Schedule 9 of the Financial Services Act 2013 (“the FSA”). It was held that where the insurer itself is in breach either by not pursuing or safeguarding its own interest and obligations, it will not be open to the insurer to approach the court for a declaration under section 96(3) of the RTA to avoid the insurance contract. The relevant paragraphs in Schedule 9 of the FSA are as follows: “5. Pre-contractual duty of disclosure for consumer insurance contracts

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. …………………………………………..

Where the consumer fails to answer or gives an incomplete or irrelevant answer to any request by the licensed insurer under subparagraph (1) or subsubparagraph (3)(a), or fails to confirm or amend any matter under subsubparagraph (3)(a), or does so incompletely or provides irrelevant information, as the case may be, and the answer or matter was not pursued further by the insurer, compliance with the consumer’s duty of disclosure in respect of the answer or matter shall be deemed to have been waived by the insurer.

A licensed insurer shall, before a consumer insurance contract is entered into, varied or renewed, clearly inform the consumer in writing of the consumer’s pre-contractual duty of disclosure under this paragraph, and that this duty of disclosure shall continue until the time the contract is entered into, varied or renewed.” [153] The rationale for imposing the burden on the insurer was debated in Parliament as set out in the following excerpts from the Hansard: “Keenam, rang undang-undang ini akan menyediakan rangka kerja yang kukuh bagi perlindungan pengguna kewangan. Ini dicapai melalui: ……..

(iv) memperuntukkan tanggungjawab insurans untuk memberi panduan kepada pengguna mengenai penzahiran yang diperlukan semasa peringkat pra kontrak dalam hal salah nyata atau misrepresentation yang dibuat oleh pengguna. Pada masa sekarang, kontrak insurans boleh dielak, avoidable secara langsung oleh penanggung insurans tidak kira sama ada salah nyata oleh seorang pengguna tersebut dibuat secara sengaja atau melulu, cuai atau pun tidak sengaja. Ketujuh, rang undang-undang ini akan menyokong pendekatan penyeliaan yang lebih bersifat pencegahan awal, prevention, ya.