LIM Sze Way (Nric No: 801013-04-5284) v Allianz General Insurance Company (Malaysia) Berhad (Company No: 735426-V) (WA-22NCC-543-11/2018)

SUPREME POWER AUTO SDN BHD (Company No. 669443-U)

LIM CHAW TENG (NRIC No. 520818-04-5205)

LIM TECK BOON (NRIC No. 820710-04-5275) …THIRD PARTIES GROUNDS OF JUDGMENT Introduction [1] This judgment deals with an application to set aside a Third Party Notice (‘Enclosure 60’). The Defendant had issued Third Party proceedings against the Third Parties seeking indemnity and or contribution in the event the Defendant is found liable to 2 the Plaintiff for loss and damages. The Third Parties contended that there is no legal duty to indemnify and or contribute to merit the Third Part proceedings. Background Facts [2] The Plaintiff was the owner of a car parked at the premises belonging to one Supreme Power Auto Sdn Bhd (‘Supreme Power’). [3] On 5.8.2012, a fire incident broke out at the premises destroying the Plaintiff’s car. [4] The Plaintiff in this suit lodged a claim with the Defendant as the insurer of the car. [5] The claim was rejected by the Defendant. Two reports, namely, that of Forensic Services (M) Sdn Bhd (‘FSM’) dated 15.2.2013 and McLaren Saksama (M) Sdn Bhd (‘MSM’) dated 21.4.2014 (who are the Forensic Experts and Adjusters appointed to investigate the fire at premises by the insurer of Supreme Power) indicated that there were evidence that the fire on the premises had been intentionally set up. [6] The reports suggest that Supreme Power, Lim Chaw Teng and Lim Teck Boon i.e. the Third Parties herein, are jointly and severally believed and/or are suspected to be the ultimate tortfeasors or wrongdoers in respect of the cause of the said fire. 3 [7] Armed with the reports, the Defendant obtained an ex parte order granting leave to issue a Third Party Notice against the Third Parties for indemnity and or contribution in the event that the Defendant is held liable for the Plaintiff’s claim in the main suit (‘the Leave Order’). [8] The Third Parties filed this application to set aside the Third Party Notice on the grounds that: a. the Third Parties owes no duty and/or obligation to the Defendant; b. the Third Party Notice is untenable and unsustainable; and c. there is inordinate delay in commencing the Third Party proceedings and that it is mala fide. [9] After reading the written submissions and hearing counsel via a zoom hearing, I allowed the application to set aside the Third Party Notice with costs. Grounds for decision [10] I agreed with learned counsel for the Third Parties that there is no legal nexus for a claim of indemnity and or contribution by the Defendant against the Third Parties. [11] In Datin Paduka Phang Oi Choo @ Phang Ai Tu v Tan Sri Datuk G Gnanalingam [2017] 5 MLJ 800 (cited with approval in the case of BPI International Finance Ltd (formerly known as 4 Ayala Finance (HK) Ltd) v Tengku Abdullah Ibni Sultan Abu Bakar [2009] 4 MLJ 821, the Court of Appeal made the following observation: “[37] A distinction must be drawn between a claim for an indemnity and a claim for a contribution. The Sime Darby Bhd & Ors’s case, has clearly shown that:

a legal relationship need only be established in a claim for indemnity from a defendant towards a third party;

in so far as a claim for contribution is concerned, all that needs to be shown is this: Under the Malaysian position the first and second defendants would only be entitled to a contribution if the third parties or any of them are in law, joint tortfeasors with the first and second defendants.” Claim based on indemnity [12] The Court of Appeal’s further observations in Datin Paduka Phang (supra) below is pertinent: “[20] Rights of indemnity may arise from contract, express or implied, from an obligation resulting from the relation of the parties or by statue. Whether in any particular case any right of indemnity arises, and the extent of any such indemnity, will depend upon the terms of the contract or statue in question, or the nature of the relationship (see Halsbury's Laws of Malaysia Vol 16, at paras 270.190 and 270.191). … 5 [22] On the right to an implied indemnity, in JH Rayner (Mincing Lane) Ltd v Department of Trade And Industry & Ors and related appeals [1990] 2 AC 418, Lord Oliver said at p 520: It is quite clear from the authorities which have been drawn to Your Lordship's attention as establishing or supporting the general principle of indemnity which the appellants rely that indemnity is not an automatic consequence of a request to do an act. Such a right of indemnity arises only where the circumstances justify the implication of a contract to indemnify… [23] From the authorities aforesaid, it can be seen that there are many ways in which a right of indemnity may arise. As such, in our view, in order to maintain a claim for indemnity as in the present case, the respondent not only has to plead that the appellant was in breach of its contractual duty or its duty of care to him but also the cause or causes of action for such an indemnity, ie whether founded on an express or implied contract, or on an implied indemnity arising from the relationship between the parties.” [13] The English Supreme Court Practice 1976, Vol 1 also sheds some light on the circumstances in which the right to indemnity may arise: ‘[35] …

from express contract;

from some statute…; or

implied from some principles of law’ 6 [14] I agree with learned counsel for the Third Parties that the Defendant’s claim for indemnity against the Third Parties cannot arise because:

the Third Parties have neither contractual relationship nor owe any duty and/or obligation to the Defendant;

the Third Parties are not party to the Policy between the Plaintiff and Defendant. [15] The Third Party Notice is wholly devoid of any particulars as to how its claim of indemnity against the Third Parties could arise in this case. There is no reference to any statute giving rise to an indemnity. [16] Learned counsel for the Defendant had relied on the FSM and MSM reports as the basis to support a relationship giving rise to a duty of indemnity citing Syarikat Duasama Son Bhd v Abdul Aziz bin Ibrahim (t/a Radiant Star Enterprise) (Tiong Sing Trading Co Sdn Bhd & Anor, third parties) [2018] MLJU 5 where the High Court held: [48] The court has a wide power to order a third party to indemnify a defendant regarding the defendant’s liability to a plaintiff (Defendant’s Liability). Suffices it for me to cite the following judgment of Lee Swee Seng JC (as he then was) in the High Court in Malayan Banking Bhd v Sepakat Computer Consultant Sdn Bhd & Ors (Intercontinental Nominees Sdn Bhd & Anor, third party) [2012] 8 MLJ 660, at paragraph 35: “[35] Here by the third parties proceeding the third defendant is seeking a contribution and/or indemnity 7 from the third parties. There are many and a myriad of circumstances under which a right of indemnity may arise. As stated by Lord Atkinson in Eastern Shipping Co Ltd v Quah Beng Kee [1924] AC 177 at pp 182-183: A right to indemnity generally arises from contract express or implied, but it is not confined to cases of contract. A right to indemnity exists where the relation between the parties is such that either in law or in equity there is an obligation upon the one party to indemnify the other. There are, for instance, cases in which the state of circumstances is such that the law attaches a legal or equitable duty to indemnify arising from an assumed promise by a person to do that which, under the circumstances, he ought to do ... The right of indemnity need not arise by contract; ... it may arise (to use Lord Eldon’s words in Warring v Ward 7 Ves 332, at p 336; a case of vendor and purchaser) in cases in which the court will ’independent of contract raise upon his (the purchaser’s) conscience an obligation to indemnify the vendor against the personal obligation’ of the vendor. These considerations were all dealt with by the Lords Justices in Birmingham and District Land Co v London and North Western Ry Co [1901} AC 118.” 8 [17] With respect, I fail to see how the Third Parties who are identified in the reports as being possibly responsible for the fire can be said to owe a duty to indemnify the Defendant. The circumstances in this case does not present any assumed promise by the Third Parties for the Court to attach any duty of indemnify on the Third Parties to the Defendant. Whilst the circumstances where a right of indemnity can arise may be ‘many and myriad’, the present is not such a case. [18] If at all, it is the Plaintiff, being the party aggrieved and or had sustained actual harm, loss and damage by the fire, who has the necessary locus standi to commence an action against the ultimate tortfeasors, (if any) and not Defendant. [19] What the Defendant has under the Policy, is a right of subrogation, that is, a right to sue the actual tortfeasor in the name of the Plaintiff. However, such right arises only upon it accepting liability under the Plaintiff’s claim under the Policy [see: para 12 of Kementerian Pertahanan Malaysia & Anor v Malaysian International Shipping Corp Bhd & Ors [2007] 5 MLJ 393]. [20] Therefore, unless the Plaintiff has subrogated his rights to the Defendant, the Defendant has no cause of action of its own. The Federal Court in the case Dr Kok Choong Seng & Anor v Soo Cheng Lin and Another Appeal [2018] 1 MLJ 685 made the following salient observations: “[126] … Chang Min Tat FCJ held that: 9 This case clearly is concerned with the doctrine of subrogation under which an insured must bring an action against the wrong-doer if he is called upon by his insurers to do so and is indemnified against the costs, but it is his own cause of action , not that of his insurer that he sues on; as against the wrong-doer the insurer has no cause of action of his own: per Lord Diplock in Hobbs v Marlowe [1978] AC 16 37 at page 37 . If the damages suffered by the insured himself either to his person or to his car had been settled and paid to him by the insurer under the policy of comprehensive insurance, the doctrine of subrogation still applies and the insurer may require the insured to take an action against the wrong-doer for the recovery of all the damages flowing from the latter’s negligence. (Emphasis added.)” [21] The Court of Appeal’s observations in the case of Kementerian Pertahanan Malaysia (supra) are also instructive: “[8] The cause of action in such cases at all times lies with the assured. Other than the assured, no one else can institute any remedy. As against the wrongdoer the insurer has no cause of action of his own (Hobbs v Marlowe [1978] AC 16 at p 37). The assured must bring an action against the wrongdoer if he is called upon by his insurer to do so and is indemnified against the costs, but it is the assured's cause of action, not that of the insurer, that he sues on.” [22] It is not in dispute that the Third Party Notice is not based on a subrogation claim. Claim based on Contribution 10 [23] There is also no legal right for the Defendant to look to the Third Parties for contribution since a claim for contribution can only arise in situation of “joint tortfeasors”. [24] It is not the Defendant’s case that the Defendant is a joint tortfeasor for the damage loss arising from the fire to the premises. [25] But learned counsel for the Defendant referred to section 10(1)(c) of the Civil Law Act 1956 as support for her proposition that the Third Parties are required by statute to contribute to the Defendant’s damages, if any. [26] With respect, this section does not assist the Defendant at all as the said section only applies to a tortfeasor seeking contribution from other fellow joint tortfeasors. The precise wordings of section 10(1)(c) states: ’10. (1) Where damage is suffered by any person as a result of a tort (whether crime or not) –

…

…

any tortfeasor liable in respect of that damage may recover contribution from other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.’ 11 [27] Since the Defendant is not a tortfeasor for the damage suffered by the Plaintiff in this case, the claim for contribution by the Defendant from the Third Parties is clearly unsustainable. [28] As there is no legal relationship and/or nexus whatsoever between the Defendant and the Third Parties to justify the claim for indemnity or contribution from the Third Parties, the Third Party Notice must be set aside. Delay in Third Party Notice [29] There is yet another ground for allowing the Third Parties’ setting aside application. [30] The FSM and MSM reports had been available to the Defendant as early as 2013 and arguably, time-barred by the time the Third Party Notice was issued in 2020. [31] Despite having the reports for at least 5 years when the action here was commenced, the Defendant did not seek to issue a Third Party Notice promptly but only 7 years after it had sight of these reports. This is even after the Plaintiff’s action herein had been set down for trial. [32] One cannot help but wonder if the Third Party Notice is an attempt on the Defendant’s part to circumvent the lapse in its subrogation rights given that by now, more than 8 years have passed since the Incident. In Sime Darby Auto Bavaria Sdn Bhd & Anor v Multi Purpose Insurans Bhd [2014] 1 LNS 982 12 the Court had held the insurer was time-barred in bringing a subrogation claim more than 6 years after the cause of action had accrued. [33] There is no satisfactory reasons proffered for the delay by the Defendant. [34] Finally, for completeness, learned counsel for the Defendant had also contended that because the validity of the Leave Order which is final and regularly obtained has not been challenged or set aside by the Third Parties herein, the Third Parties have no valid basis to set aside the Third Party Notice. [35] However learned counsel for the Defendant is unable to adduce any authority to support her contention that the Leave Order must be set aside where an application is made by a third party to strike out or set aside the Third Party Notice issued. [36] A challenge to the Ex Parte Leave Order is entirely different from a challenge to a third party notice. The observations made by the Singapore High Court in the case of Lee Kuan Yew v Devan Nair (Straits Times Press (1875) Ltd & Anor, Third Parties) [1998] 1 SLR 723 explains this: “At this stage, I am only concerned with whether there is a question proper to be tried as to the liability of STP for a contribution or indemnity claimed. In my opinion, in the present case, there is certainly a question proper to be tried as to the liability of STP to make contribution under s 11 of the Civil Law Act (Cap 43, 1988 Ed). In the old case of Pontifex v 13 Foord (1884) 12 QBD 152 the defendant, a lessee of certain premises, was sued by the lessor for breach of covenant to repair and he obtained leave to issue a third party notice claiming contribution or indemnity from a sub-lessee. At the hearing for third party directions Field J refused to give directions, and on appeal his decision was affirmed. Pollock B at p 156 said: … It seems to me that this is no case of contribution or indemnity, and therefore that the learned judge was right in refusing to give directions, and that this appeal must be dismissed. In coming to this conclusion, I do not think we are in any way overruling the decision of the divisional court which gave leave to serve the third party notice. It may be that there was a prima facie case made out for allowing the defendant to serve the notice, but when it comes to be a question of directions, we must then be satisfied that there is a question proper to be tried as to the liability of the third party to make the contribution or indemnity claimed.” [37] Accordingly, I hold that there is no basis for the learned counsel for the Defendant’s contention that the Leave Order has to be challenged when an application to set aside the Third Party Notice is made. Conclusion [38] In the premises and for the reasons stated above, the Third Parties’ application under Enclosure 60 with costs. 14 Dated: 11 November 2020 ......................................... (ONG CHEE KWAN) Judicial Commissioner High Court of Malaya, Kuala Lumpur, Commercial Division, NCC2. COUNSEL:

Mr. Tharminder Singh together with Mr. Johan Taing Chee Fae and Ms. Alexia Lo, Ms. Ung Zhee Laine, Mr. Ahmad Izzuddin and Mr. Prabjit Dev Singh for Third Parties / Applicant in Enclosure 60 (Messrs. Shu Yin, Teh & Taing (Subang Jaya))

Ms. Jolene Loh Li Ling together with Ms Avril Lim Siak Ying for Defendant (Messrs. Othman Hashim & Co. (Kuala Lumpur))

Datin Paduka Phang Oi Choo @ Phang Ai Tu v Tan Sri Datuk G Gnanalingam [2017] 5 MLJ 800.

BPI International Finance Ltd (formerly known as Ayala Finance (HK) Ltd) v Tengku Abdullah Ibni Sultan Abu Bakar [2009] 4 MLJ

821.

Syarikat Duasama Son Bhd v Abdul Aziz bin Ibrahim (t/a Radiant Star Enterprise) (Tiong Sing Trading Co Sdn Bhd & Anor, third parties) [2018] MLJU 5. 15

Kementerian Pertahanan Malaysia & Anor v Malaysian International Shipping Corp Bhd & Ors [2007] 5 MLJ 393].

Dr Kok Choong Seng & Anor v Soo Cheng Lin and Another Appeal [2018] 1 MLJ 685.

Sime Darby Auto Bavaria Sdn Bhd & Anor v Multi Purpose Insurans Bhd [2014] 1 LNS 982.

Lee Kuan Yew v Devan Nair (Straits Times Press (1875) Ltd & Anor, Third Parties) [1998] 1 SLR 723.

English Supreme Court Practice 1976, Vol 1.

Section 10(1)(c) of the Civil Law Act 1956.