Minachi a/p Thuraisamy v Zurich Insurance Malaysia Berhad (22NCC-363-10/2016)

Schedule

Schedule 10 of the Financial Services Act 2013” in the Basic Policy P2 (page 23 of the CBD) which states a trust is created in favour of the nominee for the insurance monies to be paid upon the death of the insured. An applicant may complete the Trustee Nomination Form appointing trustee for the insurance monies payable under the insurance policy. Thus a trustee is an interested party. However in the instant case the Defendant did not receive any Trustee Nomination Form from the owner of the insurance or the insured. As such there is no trustee. 17 (j) during cross-examination learned counsel for the Plaintiff read out to DW1 the provision regarding “Payment of Indemnities” (at page 30 of the CBD). Although repeatedly asked by learned counsel for Plaintiff, DW1 maintain his position that if a nominee is named then the insurance monies is to be paid to the nominee but in the case where no nominee is named then the Defendant will consider to pay to the owner of the insurance policy and not the estate of the Deceased. However since the issue in the instant case is non-disclosure, the Defendant is not liable to pay as the insurance policy issued is void. (k) the Defendant received an application (D3 at pages 35 – 42 of the CBD) from Perniagaan Kathiravan on 11 December 2013 with supporting documents claiming for the insurance monies. The said application was not approved by the Defendant as the investigation conducted by the Defendant shows that the Deceased had been imprisoned before. Based on a letter dated 4 April 2016 (D16) from the Prison Department, the Defendant was informed that the Deceased was imprisoned on two occasions for drugs related offences, 18 that is, under s. 12(2) and s. 15(1)(a) of the Dangerous Drugs Act 1952. The Deceased was imprisoned for the period from 22 November 2005 to 24 March 2006 under s. 12(2) and from 15 November 2011 to 22 June 2012 under 12(2) and s. 15(1)(a) of the said Act. The Deceased had also been imprisoned for theft. (l) the Deceased or the owner of the insurance policy did not disclose in the Application Form D1 that the Deceased took drugs which is material facts. Based on the Application Form D1, the Deceased had answered ‘no’ to question 3a which inquire whether the Deceased have ever taken any drugs. This has caused the Defendant to issue the life insurance policy worth RM1.2 million. (m) according to the Defendant all facts and questions posed in the Application Form D1 are material because the answer given will determine the issuance of the insurance policy applied for. Had the Defendant knew at the time the application was made that the Deceased was involved with drugs, most probably the Defendant would not have issued the insurance policy. Also had the Deceased disclosed he 19 was involved with drugs, normally the Defendant will request for further information such as the Deceased’s history with drugs involvement, his current medical condition, require the Deceased to fill up drug questionnaire and would have asked the Deceased to go for a medical check-up. Based on his experience with the Defendant and the previous company, insurance policy would not be issued even if the Deceased was fit. (n) when the Defendant discovered Perniagaan Kathiravan or insured did not disclose the material facts, the Defendant sent a letter (D4) to Perniagaan Kathiravan informing that the Defendant repudiates the insurance policy. The Defendant had also returned the insurance premium (RM762.00) to Perniagaan Kathiravan by enclosing a cheque of such amount. As such the Defendant is not liable to pay the insurance monies. (o) based on the post mortem report, DW1 confirmed the Deceased’s cause of death was asphyxia secondary to drowning and not because of alcohol or drugs. To a question that there was no proof that the Deceased was 20 consuming drugs at the time applying for the insurance policy, DW1 disagreed and referred to the letter from Prison Department (D16) which states the Deceased’s three previous convictions. Based on the letter, the Deceased had served his imprisonment at the correctional facility Penjara Pra-bebas Dusun Dato Murad and was released on 22 June 2012. DW1 finally agreed that there was no document in the Bundle of Documents to show that at the time the application for life insurance was made by the Deceased, the Deceased was on drugs. However in re-examination DW1 said the question posed to the Deceased in the Application Form D1 (at page 11 of the CBD) was whether the Deceased has ever taken drugs. This means as long as the applicant has history of drug usage he has to declare and it is not confined to the time when the applicant applied for the insurance policy. (p) based on the provision “Legal Proceedings” in the Supplementary Contract P5, legal action in law or equity shall not be brought against the Defendant after two years from the date of proof of loss is required to be submitted to the Defendant under the Supplementary Contract P5. As to 21 the meaning of proof of loss, DW1 referred to the provision on “Proof of Loss” in the Basic Policy P2 at page 30 of the CBD. (q) the Defendant came to know about the death of the Deceased when Perniagaan Kathiravan submitted the Death Claim (D3) on 11 December 2013 claiming for the insurance monies. (r) the Defendant had also received, after two years of the death of the Deceased, a letter dated 1 August 2015 from the Plaintiff’s daughter asking for the insurance monies. (s) this writ action against the Defendant was filed on 25 October 2016 which is after the expiry of two year from the date the Defendant received proof of loss from Perniagaan Kathiravan who was the owner of the insurance policy. Issues [15] Based on the pleadings of the Plaintiff and Defendant the main issues which requires determination are as follows: 22 (a) whether the repudiation of the life insurance policy by the Defendant is unlawful. (b) whether there was non-disclosure of material facts on the part of the Deceased. (c) if the repudiation by the Defendant is unlawful whether (i) the Plaintiff is entitled to the insurance monies under the life insurance policy; and (ii) whether the life insurance policy is incontestable. (d) whether the provision in the Supplementary Contract (P5) which limits the time for the death claim to be made within two years from the date of proof of loss being filed is void for contravening the Contracts Act 1950 and Limitation Act 1953. 23 Findings of the court Whether the repudiation of the Life Insurance Policy by the Defendant is unlawful [16] It is not disputed that the Deceased’s employer, Perniagaan Kathiravan, has purchased a life insurance policy from the Defendant. It is also not disputed that the insured/assured named is the Deceased. The Plaintiff produced an insurance policy number M130647027 (Basic Policy P2) which commenced from 17 September 2013 and expires on 16 September 2033 and a Supplementary Contract (P5). Based on P2 and P5, the following provisions determines the documents that governs the contractual relationship between Perniagaan Kathiravan and the Defendant – (a) in the Basic Policy P2, the relevant provision reads – GENERAL PROVISION FORM NO: GEN 011 THE CONTRACT This contract is made in consideration of the payment of premiums as specified in the schedule of the Policy. This Policy together with the application form and any statements made by the Life Assured forms the entire contract. All statements made shall be representations and not warranties. 24 In the event it is evidenced that the statements made by the Life Assured are fraudulent, we can declare that the Contract is void. (b) in the Supplementary Contract (P5) the words of the relevant provisions are as follows – PROTECT ALL 110 EVO SUPPLEMENTARY CONTRACT FORM No. EVOB001 THIS SUPPLEMENTARY CONTRACT IS ISSUED in conjunction with but does not form part of the Basic Policy and is valid only if the above Supplementary Contract Form Number is stated on the Policy information Page of the Basic Policy or Endorsement. It is issued in consideration of the payment of premium applicable to this Supplementary Contract. WE HEREBY INSURE the Life Assured named on the Policy Information Page of the Policy (hereinafter called the Basic Policy) to which this Supplementary Contract is attached, subject to all the provisions hereinafter contained in this Supplementary Contract. It is noted that the form number of the Supplementary Contract which is FORM NO. EVOB001 is stated on the Policy information Page of the Basic Policy P2 (see page 21 of the CBD). Thus the provisions of the Supplementary Contract P5 is to be read together with the provisions of the Basic Policy P5. 25 GENERAL PROVISIONS SUPPLEMENTARY CONTRACT AND APPLICATION CONSTITUTE ENTIRE CONTRACT This Supplementary Contract and the Application for it constitute the entire Contract. All statements in the Application shall, in the absence of fraud, be deemed representations and not warranties. No statement will be used by us to void this Supplementary Contract or in defence to a claim under it unless it is contained in the Application. No change in this Supplementary Contract shall be valid unless approved by us and such approval be endorsed hereon. [17] Thus the Application Form D1, the Basic Policy P2 and the Supplementary Contract P5 forms the entire insurance contract between Perniagaan Kathiravan and the Defendant. [18] In so far as the governing law is concerned it is noted that the life insurance policy which is the Basic Policy P2 was issued on 17 September 2013. The Financial Services Act 2013 (FSA 2013) which regulates among others, the insurance business, came into effect on 30 June 2013 and repealed, among others, the Insurance Act 1996 (IA 1996). Thus the FSA 2013 is applicable to the insurance contract between Perniagaan Kathiravan and the Defendant. Notwithstanding the repealed of the IA 1996, by virtue of s. 127 of the FSA 2013, subsections 147(4) and (5) which deals with non-avoidance of insurance policy, and sections 150 (duty of disclosure) and 151 (knowledge of and 26 statement by insurance agent) of the repealed IA 1996 continue to remain in full force and effect until such date to be appointed by the Minister for the coming into operation of section 129 and Schedule 9 of the FSA 2013. Pursuant to PU(B) 552/2014, the Minister had appointed 1 January 2015 as the date for s. 129 and Schedule 9 of the FSA 2013 to come into force. As such subsections 147(4) and (5), and sections 150 and 151 of the IA 1996 remain in force until 31 December 2014 and applicable to the instant case (Ammetlife Insurance Bhd v Nandakumar & Anor [2016] 5 CLJ 569). [19] For ease of reference the relevance statutory provisions under the IA 1996 are reproduced verbatim below – 147 Mis-statement of age and non-avoidance of policy (4) A licensed life insurer shall not dispute the validity of a life policy after the expiry of two years from the date on which it was effected on the ground that a statement made or omitted to be made in the proposal for insurance or in a report of a doctor, referee, or any other person, or in a document leading to the issue of the life policy, was inaccurate or false or misleading unless the licensed life insurer shows that the statement was on a material matter or suppressed a material fact and that it was fraudulently made or omitted to be made by the policy owner. (5) For the purpose of subsection (4), "material matter" or "material fact" means a matter or fact which, if known by the licensed life insurer, would have led to its refusal to issue a life policy to the policy owner or 27 would have led it to impose terms less favorable to the policy owner than those imposed in the life policy. 150 Duty of disclosure (1) Before a contract of insurance is entered into, a proposer shall disclose to the licensed insurer a matter that- (a) he knows to be relevant to the decision of the licensed insurer on whether to accept the risk or not and the rates and terms to be applied; or (b) a reasonable person in the circumstances could be expected to know to be relevant. (2) The duty of disclosure does not require the disclosure of a matter that- (a) diminishes the risk to the licensed insurer; (b) is of common knowledge; (c) the licensed insurer knows or in the ordinary course of his business ought to know; or (d) in respect of which the licensed insurer has waived any requirement for disclosure. (3) Where a proposer fails to answer or gives an incomplete or irrelevant answer to a question contained in the proposal form or asked by the licensed insurer and the matter was not pursued further by the licensed insurer, compliance with the duty of disclosure in respect of the matter shall be deemed to have been waived by the licensed insurer. (4) No licensed insurer, insurance agent, licensed financial adviser or financial adviser's representative in order to induce a person to enter into or offer to enter into a contract of insurance with it or through him- (a) shall make a statement which is misleading, false or deceptive, whether fraudulently or otherwise; (b) shall fraudulently conceal a material fact; or 28 (c) in the case of an insurance agent, a licensed financial adviser or a financial adviser's representative, use sales brochure or sales illustration not authorised by the licensed insurer. Penalty: One million ringgit. (5) Where a person is induced to enter into a contract of insurance in a manner described in subsection (4), the contract of insurance shall be voidable and the person shall be entitled to rescind it. 151 Knowledge of, and statement by, insurance agent (1) A person who is authorised by a licensed insurer to be its insurance agent and who solicits or negotiates a contract of insurance in that capacity shall be deemed, for the purpose of the formation of the contract of insurance, to be the agent of the licensed insurer and the knowledge of that insurance agent shall be deemed to be the knowledge of the licensed insurer. (2) A statement made, or an act done, by the insurance agent shall be deemed, for the purpose of the formation of the contract of insurance, to be a statement made, or act done, by the licensed insurer notwithstanding the insurance agent's contravention of subsection 150(4) or any other provision of this Act. (3) Subsection (1) shall not apply – (a) where there is collusion or connivance between the insurance agent and the proposer in the formation of the contract of insurance; or (b) where a person has ceased to be an insurance agent of a licensed insurer and it has taken all reasonable steps to inform, or bring to the knowledge of, potential policy owners and the public in general of the fact of such cessation. 29 [20] Coming back to the facts of the instant case, it is also not disputed that the Deceased passed away on 15 November 2013 (P6) while the insurance policy was still valid. As stated in the post mortem report (P7), the Deceased’s cause of death is drowning. [21] The Plaintiff was not aware that a life insurance policy was taken out on the Deceased. She only came to know about it when the Defendant’s investigator visited the Plaintiff/PW1 and PW2 in the course of the Defendant’s investigation into the insurance claim made by Perniagaan Kathiravan. Upon becoming aware of the existence of the insurance policy, the Plaintiff mounted a claim against the Defendant on the ground that the Plaintiff is the beneficiary of the Deceased. For purposes of the said claim the Plaintiff had applied for a Letter of Administration which was issued on 26 February 2016 (P11). [22] However the Plaintiff’s claim for the insurance monies was rejected by the Defendant as the Defendant had repudiated the said insurance policy via letter dated 7 September 2016 (D4) on the ground that the Deceased did not disclose material facts at the time when Perniagaan Kathiravan applied for the insurance policy. The material facts in question is the Deceased’s involvement with drugs. 30 [23] Through the Defendant’s only witness DW1, the Defendant referred to Part 2 of the Application Form D1 (page 11 of the CBD), which deals with the Health Details of the Proposed Insured. That particular Part 2 consists of questionnaire in relation to the insured health condition of the insured and one question of relevance was whether the insured have ever taken any habit forming drugs. The question and the Deceased’s answer is reproduced below – Yes No 3a. Adakah anda PERNAH mengambil sebarang dadah atau narkotik yang menyebabkan tabiat atau pernah diawat untuk tabiat dadah? x Have you EVER taken any habit forming drugs or narcotics or been treated for drug habits? [24] The Deceased had, in 2013, answered the question in the negative. As it turned out later from the Defendant’s investigation it was discovered in 2016 via D17 that the Deceased had been imprisoned under the Dangerous Drugs Act twice in 2005 and 2011. D17 is a letter dated 4 April 2016 from the Prison Department in respect of the Deceased previous convictions. The information provided by the Prison Department is reproduced verbatim – 31 BIL. TARIKH MASUK TARIKH BEBAS (EPD) KESALAHAN 2. INSTITUSI 1 22.11.2005 24.03.2006 Sek. 12(2) Akta Dadah Berbahaya Penjara Kajang, Selangor 2.2 04.01.2011 25.03.2011 Sek. 379 Kanun Keseksaan Penjara Kajang, Selangor 2.3 15.11.2011 22.06.2012 Sek. 12(2) Akta Dadah Berbahaya Sek. 15(1)(a) Akta Dadah Berbahaya Penjara Pra-Bebas Dusun Dato’ Murad, Melaka [25] Although it is not adduced in evidence, this court can take judicial notice that s. 12(2) of the Dangerous Drugs Act (DDA) is in respect of unauthorized possession, custody or control any dangerous drug as specified under the DDA whilst s. 15(1)(a) of the DDA deals with self-administration of the same. [26] The Plaintiff relied on the case Hew Soon Thai v Hong Leong Assurance Berhad [2015] 1 LNS 1479 which essentially ruled the principles of uberrimei fidei is also applicable to the insurer who has equal duty to disclose the information the insurer seeks plainly and clearly and that the burden of proof in respect of non-disclosure of material facts is on the insurer. The said case has also referred to the case Azizah binti Abdullah v Arab Malaysian Eagles Sdn Bhd [1996] 3 CLJ 426) where it was held the materiality of a fact which requires disclosure depends on the surrounding circumstances and also the nature of the information sought by the insurer. 32 [27] In the instant case, the question posed to the Deceased on 16 September 2013 was “Have you EVER taken any habit forming drugs or narcotics or been treated for drug habits?” (see paragraph 23 above). The Deceased had answered in the negative, meaning he had never ever taken any drugs or being treated for drug habits. [28] As submitted by the Defendant’s counsel, the question posed is a straight forward question which do not require explanation and/or clarification. Surely the Deceased knew such question relate closely to his involvement with drugs for which he was imprisoned. The straight forward question posed in D1 is distinguished from the question posed in the case of Azizah binti Abdullah where the court said there was nothing in the proposal form defining the words 'penyakit yang berlarutan atau berulang', nor was there any explanation of what the term 'prolonged illnesses' meant and held the words were ambiguous, unspecific, and confusing. Based on the facts, the court said it was unfair to say that the deceased knew or ought to have known that diabetes is a prolonged illness. It was held that that the duty to disclose material facts cannot extend to disclose facts which the deceased did not know or which he could not reasonably be expected to know at the time when he signed the declaration form (see Toh Kim Lian & Anor. v. The Asia Insurance Company Ltd. [1995] 3 AMR 2304). 33 [29] In the instant case the Deceased was imprisoned twice under the Dangerous Drugs Act for possession and self-administering dangerous drugs. The imprisonment is directly and personally inflicted on the person of the Deceased. As such it would be absurd to say the Deceased did not know or he could not reasonably be expected to know of his own drug related offences at the time he answered the question in the negative, declared the information provided by him to be full, complete and true and eventually signed the Application Form D1. [30] Based on the letter from Prison Department (D17), it is proven that the Deceased has failed to give the full, complete and true answer in relation to his habit forming drugs or treatment for drug habits. The fact that DW2 has never seen the Deceased taking drugs, that at the time the insurance policy was issued the Deceased was not on drug or that the Deceased’s cause of death is not drug related is immaterial because the straight forward question requires the Deceased and he is bound to disclose the fact that he had at one point of time involved with drugs as evident by D17. [31] However the Plaintiff submits that the misrepresentation on the part of the Deceased was attributable to the Defendant or its employee and/or agent. This is because the Plaintiff alleges that the Defendant or 34 its employee and/or agent did not ask for or explain the questions properly to the Deceased when filling the proposal form. It is apparent that the Plaintiff’s took such a position due to the testimony of PW2 (the Deceased’s sister) that the Deceased does not know both the Bahasa Melayu and English language as he only attended Tamil school up to standard four – 1Q: Puan, nak tanya itu Lechumanan iaitu si mati, adakah dia boleh baca Bahasa Inggeris? Dia tidak tahu Bahasa Melayu dan Bahasa Inggeris, dia tak tahu baca sebab dia belajar sampai darjah 4. 2Q: Dia bersekolah Tamil ke atau Sekolah Kebangsaan? Dia dari sekolah Tamil. 3Q: So dia tak tahu Bahasa Inggeris dan Bahasa Melayu? Dia tidak tahu kedua-dua bahasa Yang Arif. [32] Based on PW2’s evidence the Plaintiff concludes that the Deceased must have relied on the agent appointed by the Defendant to go through, explained and helped the Deceased to fill the Application Form D1. And it is the Plaintiff’s position that the Defendant and/or its agent has failed to explain properly the questions to the Deceased which has caused the misrepresentation by the Deceased. 35 [33] With respect, I do not accept the Plaintiff’s submissions on this point. The Plaintiff’s allegation that the Defendant’s agent one B. Sharla failed to explain properly the questions to the Deceased is unfounded. The Plaintiff’s conclusion that the questions were not explained properly because the Deceased was illiterate is not supported by credible evidence. Such allegation is a fallacy. At best it is only a speculation and/or suspicion on the part of the Plaintiff. I say so for the following reasons – (a) PW2’s evidence in respect of the Deceased illiteracy was not supported with any other evidence and ought to be treated with caution, more so considering PW2 has a personal interest in the Plaintiff’s claim. Even the Deceased’s mother was not asked about the Deceased’s illiteracy. The Deceased’s employer at the time of the Deceased’s death, Perniagaan Kathiravan, was also not called to testify. The Deceased’s employer who is also the owner of the life insurance policy would be in a better position to testify as to the Deceased’s illiteracy. (b) assuming the Deceased was indeed illiterate, it does not mean the Defendant’s agent did not explain the questions to 36 the Deceased. In fact, there is no evidence to that effect. The Plaintiff failed to adduce evidence to support her allegation that B. Sharla did not explain the questions to the Deceased as B. Sharla did not appear in court to testify even though the court was informed that B. Sharla was served with a subpoena. The Plaintiff had also failed to apply for a warrant of arrest to be issued against B. Sharla to compel B Sharla to attend court and testify. As it was the Plaintiff who alleges no explanation given, it was therefore incumbent upon the Plaintiff to adduce evidence to show B. Sharla had failed to do so. [34] In this respect I accept the Plaintiff’s contentions that the Defendant’s only witness DW1 was unable to say for sure whether it was the Deceased who had filled up the Application Form D1 or whether the questions had been explained to the Deceased. This is because, as honestly admitted by DW1, at that particular time DW1 was not yet employed by the Defendant and his testimony that it was the Deceased who had filled up the Application Form D1 is based on normal practice. [35] However I am of the view the fact that DW1 was not able to confirm that the contents of the Application Form D1 was explained to 37 the Deceased does not necessarily mean the contents was not explained to the Deceased. As I have stated above it is incumbent upon the Plaintiff to provide evidence to support her allegations that the Defendant’s agent namely, B. Sharla, did not provide explanation to the Deceased which resulted in the Deceased’s non-disclosure of his conviction in relation to drug offences. After all the Plaintiff is fully aware, based on D1, that Perniagaan Karthiravan and the Deceased had dealt with B Sharla and not DW1 who is charged with investigating insurance claims including the documents which are in the Defendant’s possession such as the Application Form D1, the Basic Policy P2 and the letters issued by the Defendant to Perniagaan Karthiravan. The fact that the Plaintiff had applied for B. Sharla to be subpoenaed shows that the Plaintiff knew all along that B. Sharla is a crucial witness for the Plaintiff to prove her case. Unfortunately B. Sharla did not turned up and in her effort to cover her own failure/deficiency, the Plaintiff challenged DW1’s testimony, which to my mind is barking at the wrong tree. Under the circumstances pursuant to s. 114(g) Evidence Act 1950, this court is compelled to presume the evidence of B. Sharla (on the issue whether the questions had been properly explained to the deceased), who could be but was not produced, would be unfavorable to the Plaintiff if produced (Sang Lee Company Sdn Bhd v. Subramaniam Mayawan & Ors [2012] 6 MLRA 420). 38 [36] it is to be noted in the Application Form D1, the Deceased had made the following declaration – DECLARATION AND AUTHORISATION I declare and agree on behalf of myself and any person or persons, firm or corporation, who may have or claims any interest in the insurance being applied for:- (A) No statement, information or agreement made or given by or to the person soliciting or making this application, or by or to any other persons shall be binding on the Zurich Insurance Malaysia Berhad herein called “the Company”, unless in writing on the application attached thereto. (B) All the foregoing statements and answers in this application together with those in any required medical examination, questionnaire or amendments, are full, complete and true, and I understand that the Company, believing them to be such, will rely and act on them, otherwise any policy issued hereunder may be void (Section 149(4) of The Insurance Act 1995). (E) I have given to your sales advisor named below no other information, except those written in this application. (F) I confirm that the sales advisor has fully explained the Customer Fact Find Form to me and I have chosen the option as indicated in the said form. (G) I confirm that the main features of the products as indicated in the Summary Information Sheet have been fully and completely explained to me. 39 (H) I confirm that the important information on the purchase of Medical & Health Insurance (MHI) has been fully explained to me. (I) I confirm that the benefits of the products as indicated in the Sales Illustration have been fully and completely explained to me. [37] Having perused the Basic Policy P2 and the above paragraph (B) which evident the Deceased’s declaration that – (a) all the statements and answers he made are full, complete and true; and (b) that he understood and acknowledged that the Defendant believes the statements and answers he made are full, complete and true such and will be relied upon and acted on by the Defendant I am of the view that the above provision is a basis clause. The explanation of what a basis clause is and its effect was eloquently discussed in the Court of Appeal case ING Insurance Bhd v. Rathinasamy Kasinathan [2017] 1 LNS 725. In that case the plaintiff who was named as a nominee in an insurance policy taken out by the deceased who died within two months after the enforcement of the policy made a claim for the insured sum. However the defendant rejected the plaintiff’s claim on the ground the insurance policy is null 40 and void due to, among others, the deceased’s false or incorrect answers to questions in the proposed form which breached the basis clause. The High Court allowed the Plaintiff’s claim and the defendant appealed. Lim Yee Lan CAJ (as she then was) delivering the judgment of the court said this – Basis clause and its effect in law [17] In this case it is not disputed that the Proposal Form, which subsequently formed part of the polices issued to the deceased, contained a clause in Clause Part 10(a)(i) of the Proposal Form which reads as follows: We warrant that all statements and answers in this application AND those stated/disclosed in any required medical examination, questionnaire or amendments are full, complete and true and shall constitute the entire contract between the parties hereto. I/We understand that the Company will rely on all statements and answers given. I/We warrant that I/we have not withheld any information which might influence the acceptance of this proposal. This warranty shall be the basis of contract with the company. [18] Before us, learned counsel for the Defendant ("Defendant's counsel") contended that the said clause in Part 10(a)(i) of the Proposal Form is what is known in insurance law as a basis clause, ie, where all the answers given in the Proposal Form formed the basis of the contract between the insurer and the insured and if any of the answers are false or untrue, the basis of the contract fails and the insurer is entitled to repudiate the insured's claim, reliance being placed, inter alia, on the decisions in the cases of China Insurance Co Ltd v. Ngau Ah Kau [1971] 41 1 LNS 171; [1972] 1 MLJ 52, (FC), American International Assurance Company Ltd v. Nadarajan Subramaniam [2013] 5 CLJ 697 CA. [19] In the case of China Insurance Co Ltd v. Ngau Ah Kau (supra), the Federal Court held that in every case the issue whether there was a non-disclosure or incorrect disclosure or misrepresentation in an answer in the proposal form is a question of fact to be determined by the Court and where the policy contains a basis clause, it was not the court's function to inquire into the materiality of the answer. The answer to the question in the proposal form will be deemed material as the truth of the answer had been made a condition of the policy. [20] It was submitted that this position of the law on a basis clause was reaffirmed by this Court in the recent decision of this Court in American International Assurance Company Ltd v. Nadarajan Subramaniam (supra) in which the facts are strikingly similar to the facts in this case. [21] In that case, the insured purchased three personal accident insurance policies and in all three proposal forms, the insured stated that his estimated annual income to be RM150,000 and described himself as 'a self-employed managing proprietor of a business selling and buying oil palm bunches'. Subsequent to the insured's death, the respondent's claim under the policies, as the beneficiary, was declined by the appellant on the ground that the cause of death of the insured was due to an illness whilst the purported personal accident policies only covered accidental death sustained as a result of "bodily injury effected directly and independently of all other causes by accident". The respondent therefore commenced an action in the High Court which decided in favour of the respondent and hence this appeal by the appellant. The issues for determination in the appeal were: (i) whether there was material non-disclosure by the insured; and (ii) whether the insured's demise was an accidental death or due to illness. 42 [22] Mah Weng Kwai JCA delivering the judgment of the court held as follows: (1) While there was no incorrect disclosure or misrepresentation of an actual fact when the insured described himself as being 'self-employed (Managing Proprietor) in the selling and buying of oil palm bunches', there was a material non-disclosure or incorrect disclosure when the insured stated in the proposal forms that his estimated annual income was RM150,000 when in fact, he was only earning an annual income of about RM50,000. (paras 20 & 22) (2) Part IV of the insurance policies clearly stated that the proposal forms shall be the basis of the insurance policies. The insured was therefore bound by the warranty in each of the three proposal forms that the answers given were true and that the answers would form the basis of the contract between the insured and the appellant. In the case of Pacific & Orient Insurance Co Sdn Bhd v. VR Kathirvelu, the court was not concerned with the 'basis clause' when concluding that the non-disclosure was not material, whereas in the instant case, the 'basis clause' was applicable to the contract of insurance entered into between the insured and the appellant (China Insurance Co Ltd v. Ngau Ah Kau; foll). (paras 23 & 28) (3) The issue of whether there was a non-disclosure or incorrect disclosure or misrepresentation in an answer in the proposal form is a question of fact to be determined by the court. In light of the decision in China Insurance Co Ltd v. Ngau Ah Kau, it was not the court's function to inquire into the materiality of the answer. The answer to the question in the proposal form will be deemed material as the truth of the answer had been made a condition of the policy. In the 43 circumstances, the appellant had discharged its burden of proving the allegation of non-disclosure or incorrect disclosure of a material fact in the proposal form. (paras 28 & 30). [23] Reference was also made to the English case of Anderson v. Fitz'erald [1853] 4 HLC 484 in which it was held that where there is a basis of contract clause, the insurer is entitled to avoid the contract ab initio if there was any inaccurate or incorrect statement in the proposal form that was material to the policy. [24] In another English case of Ducket v. Williams 2 C&M [1834] 347, the Court went even further to hold that an insurer is entitled to avoid the policy if the statement is factually untrue even if the insured is not aware that the statement is untrue. [25] Having considered the aforesaid authorities referred to by Defendant's counsel, we accept the proposition of law laid down therein concerning a basis clause found in contracts of insurance. [26] In this connection, we would also refer to the book entitled "Principles of Insurance Law" 6th Edition, published by Lexis Nexis, in which the learned author Poh Chu Chai had also explained at p.237 what is a basis clause and how it operates in an insurance contract: A proposer who applies for an insurance policy is under a duty to disclose to an insurer all information considered to be material by a prudent insurer. In addition to an insured's duty to disclose material information, an insurer may also elicit material information from an insured through the questions in a proposal form. In a proposal form, an insured is required to make statements of fact and sometimes also statements of opinion pertaining to the risk to be insured. An insured is invariably made to warrant the truth of the statements given in the 44 proposal form. This is done by incorporating what is popularly known as the basis clause. A typical basis clause reads as follows: (See Lee v. British Law Insurance Co. Ltd [1972] 2 Llyod's rep.49) I warrant that the above statements made by me or on my behalf are true and complete and I agree that this proposal shall be the basis of the contract between me and the company The use of a basis clause is by far the most common way warranties are created in an insurance contract. When an insured warrants the truth or accuracy of the statements given in a proposal form, the insurer is entitled to avoid the contract ab initio if the statements are inaccurate even though they have no effect on the insured risk. The insurer is not obliged to show any causal link between the misstatement and the loss which takes place. Equally, if there is a misstatement in a proposal form containing a basis clause, the insurer is also not obliged to show that the misstatement constitutes a fact material to the risk insured, namely, that the information would have influenced a prudent insurer in his decision whether to take on the risk or the amount of premium to be charged for undertaking the risk. (See Dawsons Ltd. v Bonnin & Ors. [1922] 2 A.C.414 and Mackay v. London General Insurance Co. Ltd [1935] 51 L1.L.Rep.201). [38] Even though paragraph (B) in the Declaration and Authorisation part of the Application Form D1 did not specifically provide that such provision form the basis of the contract between the Deceased and the Defendant, I am of the view the said provision is intended to have such an effect. This is clear from the severe consequences that ensued in the 45 event the statements and information made by the Deceased in the Application Form D1 is found to be incomplete and not true, that is, the life insurance policy issued will be void. [39] Besides that, the said declaration was made by the Deceased after being notified of the Deceased’s duty of disclosing fully and faithfully all facts. The notification which appears the top most of the first page of the Application Form D1 (page 7 of the CBD) read as follows – IMPORTANT NOTICE: Pursuant to Section 149(4) of The Insurance Act 1995 – You are to disclose in this proposal form, fully and faithfully all the facts, which you know or ought to know, otherwise the policy issued here under may be void. [40] Thus the basis of the entire insurance contract is the truth or accuracy of the statements or answers given by the Deceased in the Application Form D1. Accordingly non-disclosure or misstatement would entitle the Defendant to repudiate the life insurance policy issued. [41] In this respect it is interesting to note that s. 150(4) of the IA 1996 stipulates certain circumstances under which an insurance agent can be fined for inducing a person to enter into a contract of insurance. The circumstances includes where the insurance agent make a statement 46 which is misleading, false or deceptive, whether fraudulently or otherwise, fraudulently conceal a material fact or use sales brochure or sales illustration not authorised by the licensed insurer. The allegations that the Defendant’s agent B Sharla did not explain properly the question to the Deceased appears not to be one of the circumstances but it may possibly be construed as making misleading, false or deceptive statement fraudulently or otherwise or fraudulently concealing material fact. In any event the Plaintiff is estopped from raising the issue of fraud as it was not pleaded. [42] Having considered the contemporaneous evidence and the oral evidence of the witnesses it is my finding there is no credible evidence to support the Plaintiff’s allegations that the Defendant and/or its agent had failed to explain the question to the Deceased or that the answer was obtained from the Deceased by means of fraud or misrepresentation. Thus the Defendant has discharged its burden of proving its defence of non-disclosure or incorrect disclosure in the Application Form D1 (China Insurance Co Ltd v. Ngau Ah Kau [1971] 1 LNS 171; [1972] 1 MLJ 52, (FC), American International Assurance Company Ltd v. Nadarajan Subramaniam [2013] 5 CLJ 697 CA). Thus it is my considered opinion that the repudiation of liability under the life insurance policy by the Defendant is lawful. 47 Whether there was non-disclosure of material facts on the part of the Deceased Whether the life insurance policy is incontestable [43] As both the above issues are inter-related, I will discuss the said issues together. DW1 had testified that had the Deceased disclosed that he was involved with drugs, the Defendant would have inquired further into the Deceased’s history with drugs and would have required the Deceased to undergo further medical check up to determine the Deceased’s current medical situation. In his evidence in chief, DW1 testified as follows – 25. S: Sekiranya Lechumanan telah menyatakan dalam permohonannya bahawa beliau pernah mengambil dadah adakah tindakan lain yang akan diambil oleh Defendan dalam pengeluaran polisi tersebut? J: Sekiranya Lechumanan ada menyatakan bahawa beliau pernah mengambil dadah, maka pada kebiasaannya Defendan akan meminta maklumat lanjutan seperti sejarah pengambilan dadah dan juga akan minta Lechumanan membuat pemeriksaan perubatan. Selepas meneliti maklumat selanjutnya Defendan akan membuat keputusan samada untuk mengeluarkan polisi. Sekiranya maklumat lanjutan adalah tidak memuaskan Defendan akan menolak permohonan tersebut. 48 [44] When cross-examined on the above answer, DW1 testified – 53Q: Refer to your Question 25, here you have said that in case the fact that a person is taking dadah was disclosed, and you have a previous record of dadah, then the company will send him for medical examination? Polisi itu akan reunderwritten, so if he declare dia akan go through medical examination, you have to fill up drug questionnaire, basically the underwriter would have asked a lot of questions about his history of drug addiction if any or also about his current medical stage at the point of time. 54Q: If he is fit insurance policy will be insured? I don’t think so because I have not seen a case drug addict which has been accepted as standard, never in this company and never in the previous company also. 55Q: In this case, the death is due by drowning, so I put it to you that is not relevant whether the deceased even consume drugs. I disagree. [45] Thus, had the Deceased disclosed his previous involvement with drugs, it would have prompted the Defendant to make further inquiries on the Deceased and would even subject the Deceased to medical check up in order to determine whether the Defendant would agree to provide life insurance coverage to the Deceased and the premium that is 49 required to be paid in the event an insurance policy is issued. In response to the Plaintiff’s counsel during cross-examination, DW1 said based on his previous experience and also in the Defendant company, it is unlikely that the Deceased who has a history with drugs will be provided with insurance protection due to the high risk involved. [46] The issue posted by both the parties is whether the facts that the Deceased had failed to disclose are material facts. It is the Plaintiff’s position that the non-disclosure about the Deceased involvement with drugs is not material as the Deceased’s cause of death was due to drowning and not drug related. In this respect s. 47(5) of the IA 1996 (see paragraph 19 above) provides that an insurer shall not dispute the validity of a life policy after the expiry of two years from the date on which it was effected on the ground that a statement made or omitted to be made in the proposal for insurance or in a document leading to the issue of the life policy, was inaccurate or false or misleading. However if the two year period has yet to lapse the insurer is entitle to contest the validity of the insurance policy issued on the ground of non-disclosure without having to prove element of fraud. [47] In Tan Guat Lan v Aetna Universal Insurance Sdn Bhd [2003] 1 MLJ 430, Ramli Ali J (as then was) dealt with the issue of incontestability 50 under s. 15C(4) of the Insurance Act 1963 which is in pari materia with s. 147(4) of the IA 1996. His lordship said as follows – Having perused both the present s 147(4) in the 1996 Act and s 15C(4) of the 1963 Act, I am convinced that both the sections are in pari materia and having the same effect on the issue in question -- relating to when the two years period should start. Section 15C(4) of the 1963 Act reads: No life policy effected before the commencement of this section shall, after the expiry of two years from such commencement, and no life policy effected after the commencement of this section shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in a report of a doctor, referee, or any person, or in a document leading to the issue of the policy, was inaccurate or false unless the insurer shows that such statement was on a material matter or suppressed a material fact and that it was fraudulently made by the policy holder with the knowledge that the statement was false or that it suppressed a material fact. The two years period under s 15C(4) of the 1963 Act should run from the date on which the said policy was affected. The question is: when is a policy said to be affected? In the case of reinstatement of the policy as in the present case, when is the policy said to be affected? Is it from the time of the original issuance of the policy on 2 May 1990, or at the time it was last reinstated on 14 February 1993. If it starts from the time of the original issuance of the policy on 2 May 1990, then the two years period clearly had lapsed when LHH died on 28 August 1993 and s 15C(4) is applicable, ie the policy is incontestable unless the defendant as an insurer shows that the alleged non-disclosure relates to material facts 51 and it was fraudulently made by LHH as the insured. If, on the other hand, the two years year period starts from the date when the policy was last reinstated on 14 February 1993 then the two years period had not lapsed when LHH died on 28 August 1993, therefore, the incontestability provisions under s 15C(4) of the 1963 Act is not applicable and the policy may be contested by the defendant on the ground of non-disclosure, without having to prove any element of fraud. Having perused all the materials before me and having considered the respective contentions by both parties as well as all the relevant authorities cited, I am of the view that the computation of the two years period as stipulate in s 15C(4) of the 1963 Act (as well as s 147(4) of the 1996 Act) should start from the original date the policy was first issued and affected, ie 2 May 1990 in the present case, and not from the date of the last reinstatement on 14 February 1993. The decision of the Indian Supreme Court in Mithoolal v Life Insurance Corporation of India AIR 1962 SC 814 and the decision of our High Court in Leong Kum Whay & Anor v American International Assurance Ltd [1999] 1 MLJ 24 and Malaysian Assurance Alliance Bhd v Chong Nyuk Lan (Administrator of the Estate of Liew Kin On, deceased) [2002] 6 MLJ 648, clearly support my view… [48] In the case of Rathinasamy Kasinathan, the Court of Appeal also referred to a passage in the book entitled "Principles of Insurance Law" which commented on s. 147(4) of the IA 1996 as follows – In Malaysia, the right of a life insurer to rely on a misstatement in a proposal is restricted two years after the policy is effected. After a lapse of two years, a life insurer can only rely on a misstatement if he is able to show that it related to a material matter and the proposer made the statement fraudulently with the knowledge that the statement was false 52 or intended to suppress a material fact. Section 147(4) and (5) of the Insurance Act 1996 read as follows: (4) A licensed life insurer shall not dispute the validity of a life policy after the expiry of two years from the date on which it was effected on the ground that a statement made or omitted to be made in the proposal for insurance or in a report of a doctor, referee, or any other person, or in a document leading to the issue of the life policy, was inaccurate or false or misleading unless the licensed life insurer shows that the statement was on a material matter or suppressed a material fact and that it was fraudulently made or omitted to be made by the policy owner. (5) For the purpose of subsection (4), "material matter" or "material fact" means a matter or fact which, if known by the licensed life insurer, would have led to its refusal to issue a life policy to the policy owner or would have led it to impose terms less favourable to the policy owner than those I mposed in the life policy. [49] The Court of Appeal thereafter made the following observation in respect of the applicability of s.147(4) of the IA 1996 to the facts in Rathinasamy Kasinathan’s case – [27] We noted that in the present case, the deceased died within two months after the enforcement of the policies. Therefore section 147(4) of the insurance Act (which was the statute in force on the date of the issuance of the policies) has no relevance. [50] In the instant case, based on the Basic Policy P2 the life insurance policy commenced or was effected from 17 September 2013. As such the two year period stipulated in subsection 147 (4) of the IA 1996 runs 53 from 17 September 2013 and expired on 16 September 2015. The Deceased died on 11 November 2013. DW1 testified the owner of the life insurance policy, Perniagaan Kathiravan, had submitted a death claim under the said insurance policy to the Defendant via letter dated 25 November 2013 (D3) which was received by the Defendant on 9 December 2013. Since the claim was made within two years from the date of the Life Insurance Policy was issued, the incontestability under 147(4) of the IA 1996 is not applicable. Therefore it is open to the Defendant to contest the policy on the ground of misrepresentation or non-disclosure without having to prove fraud. [51] As stated above, the Defendant has discharged its burden of proving non-disclosure of facts on the part of the Defendant. Since the Death Claim was made within two years from the date the life insurance policy was effected, and there was a breach of the basis clause as a result of the non-disclosure, it is not for this court to inquire into the materiality of the answer given by the Deceased (China Insurance Co Ltd v. Ngau Ah Kau [1971] 1 LNS 171; [1972] 1 MLJ 52, (FC), American International Assurance Company Ltd v. Nadarajan Subramaniam [2013] 5 CLJ 697 CA). The insurer is not obliged to show any causal link between the misstatement and the loss which takes place and also not obliged to show that the misstatement constitutes a fact material to 54 the risk insured, namely, that the information would have influenced a prudent insurer in his decision whether to take on the risk or the amount of premium to be charged for undertaking the risk. [52] The Plaintiff submits that the life insurance policy has been in forced for two years and it is incontestable and therefore the Defendant’s repudiation of the policy unlawful. The relevant provision cited by the Plaintiff is found in the Basic Policy P2 (see page 23 of the CBD) which reads as follows – INCONTESTABILITY If this Policy has been inforce for two (2) years from the Issue Date or Reinstatement Date, whichever is later, this Policy will not be contestable except for non-payment of premiums or fraud. (This clause shall not apply to any supplementary contract granting disability, accident, dread disease or hospital benefits attached to the Policy). In so far as the law is concerned the relevant provision is s. 147(4) of the IA 1996 (see paragraph 19 above). [53] It is apparent the Plaintiff’s stand that the two year period stipulated in subsection 147(4) of the IA 1996 had expired is premised on the fact that the letter issued by the Defendant to Perniagaan Kathiravan declaring the life insurance policy null and void was made 55 two years after the issuance of the life insurance policy. The evidence shows it took the Defendant almost 3 years (after the claim made by Perniagaan Kathiravan) to investigate the claim and determine the validity of the claim. In this respect DW1 explained after receiving the claim made by Perniagaan Kathiravan, the Defendant conducted an investigation and also wrote to the Prison Department via letters dated 30 December 2015, 27 January 2016 and 29 January 2016 (D14, D15 and D 16 respectively). In April 2016 the Defendant received a reply from the Prison Department (D17) in respect of the Deceased’s imprisonment for drug related offences. Thus the reply by the Defendant to Perniagaan Kathiravan on 7 September 2016. [54] The evidence shows the repudiation of the life insurance policy was made two years after the said policy was effected. However the pertinent issue here, as provided under subsection 147(4) of the IA 1996, is the claim for the insured sum was made after the death of the Deceased which is well before the expiry of two years from the date of issuance of the life insurance policy. Accordingly the Defendant is entitle to contest the validity of the said policy on the ground that the statement (the answer to question 3a in Part 2 of the Application Form D1) made by the Deceased was inaccurate or false or misleading. The 56 said statutory provision did not impose a timeline within which the insurer must determine the validity of an insurance policy which is contested. [55] It must also be mentioned that that the Plaintiff had, upon discovering that the Deceased was insured, written to the Defendant twice to claim the insured sum. The first was a letter dated 1 August 2015 (P9) signed by both the Plaintiff and DW2. The second was a letter from the Plaintiff’s solicitor dated 4 September 2015 (P10). On both occasions two years (from date of the life insurance policy effected) has not yet lapsed. Thus the issue of incontestability does not arise. Whether the Defendant is liable to pay the monies under the Life Insurance Policy to the Plaintiff being the administratrix of the Deceased’s estate [56] As it is my finding that the repudiation of the insurance policy for non-disclosure of material fact is lawful, the above issue does not arise. However for completeness, the said issue is discussed below. [57] The Plaintiff relies on paragraph 8 of Schedule 10 of the FSA 2013 to support her contentions that she is entitled to the insurance money. Pursuant to s. 130 of the FSA 2013, Schedule 10 sets out provisions for the payment of policy moneys upon death of a policy owner under a life 57 policy including a life policy under section 23 of the Civil Law Act 1956 and a personal accident policy effected by him upon his own life. [58] Paragraph 8 of the said Schedule10 reads as follows – 8. Payment of policy moneys where there is no nomination (1) Where a policy owner dies without having made a nomination, subject to paragraph 7, the licensed insurer shall pay the policy moneys of the deceased policy owner to the lawful executor or administrator of his estate. (2) Where the licensed insurer is satisfied that there is no lawful executor or administrator of the estate of the deceased policy owner at the time of payment of policy moneys, the insurer may pay the policy moneys to the deceased policy owner's spouse, child or parent in accordance with section 6 of the Distribution Act 1958 [Act 300] and where there is no spouse, child or parent … [59] The term “policy owner” is defined under s. 2 of the FSA 2013 as follows – “policy owner” means the person who has legal title to a policy and includes- (a) where a policy has been assigned, the assignee; (b) where a personal representative of a deceased policy owner is entitled as against the insurer to the benefit of a policy, the personal representative; 58 (c) in relation to a policy providing for the payment of annuity, an annuitant; and (d) where under a policy, moneys are due or payable, whether periodically or otherwise, the person to whom the moneys are due or payable; (emphasis added) [60] The Plaintiff relies on paragraph (d) of the above definition and claim the insured sum is due and payable to her. The issue here is whether the Plaintiff is the policy owner. The Plaintiff cited two cases – Poominathan a/l Kuppusamy v Besprin Stationers Sdn Bhd [2003] 3 MLJ 249 (HC) and Bank Bumiputra Malaysia Bhd v Mohamed bin Salleh [2002] 2 MLJ 412 (CA) to support her position. My perusal of the two cases shows no reference was made to the law governing insurance which was enforced at the material time – (a) in the case of Poominathan a/l Kuppusamy, the court held the question as to who was entitled to the benefits under the insurance policy depended on the terms of the policy and that the fact that the respondent/employer was named as the policy holder, expressly referred to as ‘beneficiary’ and the person who had the paid the premium for the insurance policy was not conclusive. 59 (b) in the case of Mohamed bin Salleh, it was held pursuant to the terms of the contract of employment, the appellant/employer is obliged to compensate the respondent/employee once the respondent/employee suffered a permanent total disablement. While the court noted that the insurance policy cover harms and injury suffered by the respondent’s employee, it did not decide the case based on the terms of the insurance policy or the law governing insurance. The court held it was a straightforward case of breach of contract (of employment) on the part of the appellant/employer. [61] In the instant case, it is not disputed that based on the Application Form D1, Basic Policy P2 and Supplementary Contract P5, Perniagaan Kathiravan is the owner of the life insurance policy while the insured/assured is the Deceased. On the front page of P2 (see page 20 of the CBD) the following statement appears – We will pay upon surrender of this Policy and subject to the provision, the Death Benefit to the Beneficiary upon the death of the Life Assured prior to the Expiry/Maturity Date provided that due proof of such death is furnished in the form specified by us. 60 [62] While the Death Benefit is provided for in P2 (see page 22 of the CBD) and P5 (see page 27 of the CBD) there is no provision relating to the definition of ‘Beneficiary’ in P2 and P5 for the purpose of payment of the Death Benefits. However there is a provision in P2 pertaining to the nomination referred to in Schedule 10 of the FSA 2013. The said provision in the Basic Policy P2 read as follows – NOMINATION UNDER SCHEDULE 10 OF THE FINANCIAL SERVICES ACT 2013 Where the nominee of the Policy is the spouse, child or parent (where there is no spouse or child living at the time of nomination) of the Life Assured/Applicant Owner, other than a Muslim Life Assured/Applicant Owner, a trust is created in favour of the nominee for the policy moneys payable upon death of the Life Assured/Owner, The Life Assured/Applicant Owner may by completing the Trustee Nomination Form appoint trustee(s) of the policy moneys payable under this Policy. Notwithstanding the provisions contained in the Ownership Provisions to the contrary, the Life Assured/Applicant Owner shall not deal with the Policy by revoking a nomination, by varying or surrendering the Policy or by assigning or pledging this Policy as security, without written consent of the trustee(s). [63] DW1 in his evidence in chief had made reference to the above provision and testified as follows - 17. S: Adakah pihak-pihak lain yang terlibat dalam polisi insurans yang dikeluarkan oleh Defendan kepada perniagaan Kathiravan. 61 J: Jika dirujuk kepada Klausa ‘Nomination Under Schedule 10 of the Financial Services Act 2013’ dalam polisi insuran tersebut, ia menyatakan bahawa suatu amanah (trust) akan wujud atas penama untuk wang polisi yang perlu dibayar atas kematian Pemilik polisi dan/atau Si diinsuran. Borang Pelantikan Pemegang Amanah boleh dilengkapkan bagi melantik pemegang amanah bagi wang polisi yang harus dibayar di bawah polisi tersebut. Maka, pemegang amanah juga adalah pihak yang terlibat dalam Polisi tersebut. Defendan tidak menerima sebarang dokumen bagi Borang Pelantikan Pemegang Amanah dari pemilik insuran dan Si diinsuran. Oleh itu, tiada pemegang amanah terlibat dalam polisi insurans tersebut. [64] It is not disputed by the Plaintiff that there was no nominee appointed. However it is the Plaintiff’s position that under such circumstances, the insurance monies ought to be paid to the estate of the Deceased. This was posted to DW1 who disagreed – 27Q: Adakah anda bersetuju bahawa jika tidak ada nomination, wang akan harus dibayar kepada harta pusaka si mati? Tidak. As such I am of the view the said provision in the Basic Policy P2 does not support the Plaintiff’s contention that she is entitled to the insured sum. 62 [65] Thus the relevant provision is paragraph 8 of the FSA 2013 and importantly whether the Plaintiff is a policy owner within the context of the FSA 2013. Based on the definition of “policy owner”, the issue is whether the Plaintiff has legal interest over the Life Insurance Policy and whether under the said policy the insured sum is due and payable to the Plaintiff. [66] The Plaintiff initiated this action against the Defendant in her capacity as the administratrix and the sole beneficiary of the estate of the Deceased. So, does such a capacity gives the Plaintiff the legal interest over the life insurance policy. In this respect it must be noted that the Plaintiff was not a party to the insurance contract and crucially the Plaintiff was never named or appointed by the Deceased as a nominee to receive the policy monies upon his death in accordance with paragraph 2 of Schedule 10 of the FSA 2013. No doubt, the life insurance policy was intended to provide compensation upon the death of the Deceased but payment of the compensation is subject to the provisions as stated in the Application Form D1, the Basic Policy P2 and the Supplementary Contract P5 which forms the entire contract between Perniagaan Karthiravan and the Defendant. 63 [67] Taking into account the contractual provisions and the FSA 2013, I am of the view even though the Plaintiff is the administratrix and the sole beneficiary of the estate of the Deceased, the Plaintiff does not has legal interest over the life insurance policy as the Plaintiff is not the nominee to whom the insured sum is intended to be paid under the said insurance. As such even if the insurance had crystallized upon the death of the Deceased, there is no monies due and payable to the Plaintiff under the life insurance policy. [68] To further support her claim, the Plaintiff also relies on the General Provision stated in the Supplementary Contract P5 which provides as follows – PAYMENT OF INDEMNITIES Indemnity for loss of life of the Life Assured is payable to the nominee/trustee under the Basic Policy if surviving the Life Assured or otherwise to the estate of the Life Assured. All other indemnities are payable to the Owner. [69] The Plaintiff contends since there is no nominee appointed by the Deceased, based on the above provision where payment of indemnities is payable to the estate of the Deceased, the insured sum is also and/or justifiably payable to the Plaintiff as the administratrix of the Deceased’s estate. However this line of reasoning is objected by DW1 – 64 28Q: Sila merujuk kepada mukasurat 30, di mana Ikatan Dokumen Bersama, di perenggan ‘payment of indemnities’, sini ada tulis ‘Indemnity for loss of life of the life assured is payable to the nominee/trustee under the basic policy if surviving the life assured or otherwise to the estate of the life assured.’ Betulkah? Tidak, this clause in reference to if there is a nomination, there is no nomination. No, it says if there is nominee than to be paid to the nominee or otherwise. What is the meaning of otherwise? It is to be paid to the estate of the deceased. If there is a nomination. If there is a nomination, it is to be paid to the nominee? Ya but there is no nomination under this policy. But there is no nomination, it says ‘or otherwise’. ‘or otherwise’ doesn’t mean there is no nomination. To the estate of the life assured, that mean if there is nomination, can you please read this properly and answer properly? This is as per my understanding, nomination if there is we will pay to the nominee, but if there is no nomination, if the nominee has already passed away, only then we consider to be given to the estate, in this case there is no nomination, but the most important thing here is that kes ini is non disclosure, kita tidak bayar pun dia punya claim, so on this about payment claim 65 [70] Subsequently in re-examination DW1 was asked to explain further – 1Q: Encik Jeyandran, tadi Encik Jeyandran telah dirujuk oleh peguamcara bijaksana saya pihak Plaintif pada mukasurat 30, dan peguamcara Plaintif telah membuat cadangan bahawa sekiranya tidak ada sebarang nominee, sorry. Dia telah merujuk kepada payment of indemnities clause, then soalan yang dicadangkan, peguamcara Plaintif membuat cadangan bahawa kalau tidak ada seorang nominee, sekiranya da bayaran, bayaran tersebut harus diberikan kepada harta pusaka si mati. Encik Jeyandran tidak bersetuju. Sekarang, Encik Jeyandran diberi peluang untuk menerangkan kepada Mahkamah kenapa Encik Jeyandran tidak bersetuju? Sebab disebabkan actual owner of the polisi adalah Perniagaan Kathiravan, Perniagaan Kathiravan is the owner of the policy, payment of the claim is always to the owner of the policy, if there is a nomination we can make payment to the nominee, but in this case there is no nomination and most important thing is kes ini kes nondisclosure, di mana kita tidak dikehendaki membuat pembayaran at all. YA: Kalau ada nominee pun sebab nondisclosure Nondisclosure we void and we refunded the premiums, any premiums paid from day one we refunded. [71] It is the Defendant’s position that the provision on Payment of Indemnities found in the Supplementary Contract P5 deals with a 66 situation where there is a nominee appointed by the assured. In a situation where the assured passed away and the nominee survives the assured, the indemnities is paid to the nominee but if the nominee passed away earlier than the assured, then the indemnities will be paid to the estate of the assured. However the Plaintiff construed the word “or otherwise” in the said provision to mean “or if there is no nominee”. [72] Having considered the said provision as a whole I am of the view that the said provision is applicable to a situation where a nominee is being appointed by the life assured, namely the Deceased. The words “or otherwise” in the said provision envisage a situation where the nominee appointed did not survive the life assured, meaning the nominee dies before the life assured. The said provision is not applicable to a situation where a nominee is not appointed. As such if the nominee appointed survives the Deceased, indemnity is payable to the nominee. However if the nominee appointed does not survive the Deceased, indemnity is payable to the estate of the life assured. In this respect I agree with the Defendant’s argument that in both the situation (namely whether nominee survives the Deceased or otherwise) there must be a nomination made by the Deceased). Since the Deceased who is the life assured did not appoint any nominee, the said provision is not applicable. 67 Whether the provision in the Supplementary Contract (P5) which limits the time for the death claim to be made within two years from the date of proof of loss being filed is void for contravening the Contracts Act 1950 and Limitation Act 1953 [73] The Plaintiff filed this action on 25 October 2016. The Deceased passed away on 15 November 2013. Perniagaan Kathiravan, the owner of the life insurance policy filed its claim on 11 December 2013. The Defendant therefore contends the period for the Plaintiff to file her claim against the Defendant expired on 10 December 2015, namely two years after 11 December 2013 the date the proof of loss was filed. The Defendant’s contentions is premised on the following provisions stated in the Supplementary Contract P5 – LEGAL PROCEEDINGS No action at law or in equity shall be brought to recover on this Supplementary Contract prior to the expiration of sixty (60) days after proof of loss has been filed in accordance with the requirements of this Supplementary Contract, nor shall such action be brought at all unless brought within two (2) years from the expiration of the time within which proof of loss is required by this Supplementary Contract. NOTICE OF CLAIM Written notice of Injury on which claim may be based must be given to us within twenty (20) days after the date of the accident causing such injury, in 68 the event of death, immediate notice thereof must be given to us. Such notice given to us with particulars sufficient to identify the Life Assured, shall be deemed to be notice to us. Failure to give notice within twenty (20) days from the date of accident shall invalidate any claims. PROOF OF LOSS We, upon receipt of such notice, will furnish to the Claimant forms for filling proof of loss. If the forms are not furnished within fifteen (15) days, the Claimant by submitting written proof covering the occurrence, the character and the extent of the loss for which claim is made shall be deemed to have complied with the requirement of this provision. [74] The Plaintiff contends the provision which limits the time for the death claim to be made within two years from the date of proof of loss being filed is void for contravening the Contracts Act 1950 and Limitation Act 1953. (a) S. 29 of the Contracts Act 1950 reads as follows – 29 Agreements in restraint of legal proceedings void Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent. 69 (b) S. 6(1)(a) of the Limitation Act 1953 provides as follows – 6 Limitation of actions of contract and tort and certain other actions (1) Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say- (a) actions founded on a contract or on tort; (b) actions to enforce a recognisance; (c) actions to enforce an award; (d) actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or of a sum by way of penalty or forfeiture. [75] The Plaintiff cited two cases to support her contentions, Ayob Salleh v Amgenaral Insurance Bhd & Anor [2015] 6 CLJ 1070 (HC) and Tan Boon Yen & Yang Lain lwn Mayban General Assurance Sdn Bhd [2003] 2 CLJ 268 (HC) where both cases dealt with claims made under an insurance policy. In the said two cases the court held that the cause of action accrued from the date the insurer repudiated its liability under the insurance policy and as provided in s. 6 of the Limitation Act the claimant has six years from the date the insurer repudiated liability to commence legal action against the insurer. On the facts of both cases, the courts held the claim was made beyond the said six year period. Thus both the claimants/plaintiffs was time barred. 70 [76] It is noted that in so far as limitation is concerned the defence of the insurer in both Ayob Salleh and Tan Boon Yen cases was not premised on a provision of the insurance contract, like in the instant case. Rather it was premised on the statutory provision in the Limitation Act. As such I am of the view both cases cited by the Plaintiff is not really of relevance. [77] The case on point cited by the Plaintiff is New Zealand Insurance Co. Ltd v Ong Choon Lin [1992] 1 CLJ (Rep) 230 (SC) which, among others, concerned a condition in the insurance contract which limited the time for a claimant to file a claim. The impugned provision (which the insurer relied on as a defence to the claimant’s legal action) is Condition 19 which was in the following words – In no case whatever shall the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration. [78] The Supreme Court was referred to and considered Indian authorities where it was held that conditions similar to Condition 19 of the fire policy do not infringe or contravene s. 28 of the Indian Contract Act the provisions of which are identical to our s. 29 of the Contracts Act. It was observed by the Supreme Court that such decision was 71 made principally on the distinction that has been made between rights on the one hand and remedies on the other. The Supreme Court however was of the view that based on Hock Hua Bank Bhd. v. Leong Yew Chin [1987] CLJ 126 (Rep) such distinction does not exist in our jurisprudence and held – It is clear therefore that the legal distinction that obtains in the relevant Indian decisions that have been referred to between a right and its remedy in the context of the consequences that flow therefrom does not exist in Malaysian law in the eyes of which the distinction is merely semantic. We do not think that a right can be dissociated from its remedy. We are therefore of the opinion that Condition 19 of the fire policy contravenes s. 29 of the Contracts Act. The learned Judge was therefore correct in holding that Condition 19 of the fire policy is void by virtue of the imperative words of s. 29 of the Contracts Act as it clearly limits the time within which the respondent can enforce his right under Limitation Act 1953, s. 6. [79] Premised on the stare decisis principle I am bound by the Supreme Court decision in the case Ong Choon Lin. Thus the provision in the Supplementary Contract P5 which limit the time for a claimant to file legal action against the Defendant is void and unenforceable. As such this action filed by the Plaintiff on 25 October 2016 is well within the six year period from the date the Defendant repudiated its liability via letter dated 7 September 2016 (D4) being the date on which the cause of action had accrued. 72 Conclusion [80] In so far as the Plaintiff’s claim for a copy of the life insurance policy is to be provided by the Defendant to her, such prayer is academic as the Plaintiff has managed to produce among others the Basic Policy P2 and the Supplementary Contract P5. [81] The term of the Basic Policy D1 which limits the time within which the Plaintiff is to file legal action against the Defendant is null and void for contravening the Contracts Act 1950 and Limitation Act 1953. As such the Plaintiff is not barred under the Limitation Act 1953 in filing this writ. However, premised on the reasons stated above it is my considered opinion that the Plaintiff has failed to prove, on balance of probabilities, the repudiation of the life insurance policy by the Defendant is unlawful. As the repudiation of the Defendant’s liability under the life insurance policy is lawful the Defendant is not liable to pay the insured sum. The Plaintiff’s claim was therefore dismissed with costs. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 23 JULY 2018 73 Counsel: Plaintiff : Ranee Sreedharan of Messrs Ranee Sree & Associates Defendant : Freda Santiago of Messrs S N Fam & Co.