MSIG INSURANCE (MALAYSIA) BHD v 1. ) SUPPIAH A/L MARIAPPEN (Berniaga atas nama SVE Enterprise) (WA-11BNCC-6-08/2024)

SUPPIAH A/L MARIAPPEN (Trading under the name SVE Enterprise) [Business Registration No.: SA 0204249-P]

ECNISVARAN A/L SUKUMARAN [Identity Card No.: 900829106063] … RESPONDENTS

This judgment deals with the claims by the insured against the insurer for the loss arising from the theft of the insured’s car. At the time of the loss, the car was in the possession of a third party who had agreed to purchase the Car from the insured. However, the legal ownership of the Car remained with the insured until the full payment of the purchase price. The Car was stolen before full payment was made.

In rejecting the insured’s claims under the insurance policy, the insurer claimed that the insured no longer had any insurable interest once he agreed to sell the Car to the third party, notwithstanding the fact that legal ownership continued with the insured. Further, the insurer claimed that the insured had a duty to disclose the sale of the car when the assured made the claim for the loss under the policy. Finally, the insurer claimed that the insured failed to produce any evidence as to the market value of the car at the time of the loss.

The learned magistrate allowed the claims by the insured against the insurer. Dissatisfied, the insurer appealed and after hearing submissions this Court also dismissed the appeal with costs.

The Appellant issued an insurance policy to SVE Enterprise, where the 2nd Respondent was the sole proprietor, for the subject Car for the period 8.8.2014 to 7.8.2015 (“the Policy”) where the insured sum was stated as RM 90,000.00.

On 10.7 2014, the 2nd Respondent agreed to sell the Car (“the Agreement”) to the 1st Respondent for the sum of RM 160,000.00 (“the Purchase Price”)

Under the Agreement, physical possession of the Car was given to the 1st Respondent even though full payment of the Purchase Price had not been made. Significantly, the Car remained registered in the name of SVE Enterprise.

Whilst the Car was with the 1st Respondent, the Car was stolen.

The 2nd Respondent lodged a claim under the Policy. He did not disclose the Agreement in the Claim Form.

The Appellant contended that the 2nd Respondent had no insurable interest because of the Agreement. It was also claimed that the duty of utmost good faith was breached because the 2nd Respondent failed to disclose the Agreement in the Claim Form. The Appellant also contended that there was no report on the market value of the Car produced by the 2nd Respondent.

The Magistrate allowed the Respondents’ claims, and being dissatisfied, the Appellant appealed to this Court.

This Court, after hearing submissions from counsel dismissed the Appellant’s appeal with costs.

It is the judgment of this Court that notwithstanding the Agreement, the 2nd Respondent continued to have insurable interest as the legal title to the Car was never transferred to the 1st Respondent. This was because the terms of the Agreement stipulate that the legal ownership would only be transferred upon full payment of the purchase price.

The aforesaid is supported by the Federal Court in Nanyang Insurance Co Ltd v. Salbiah & Anor [1967] 1 MLJ 94 where it was held: “It is therefore quite clear in my view from the evidence, that the company intended to retain the property in the car until Abdul Karim has paid in full the initial payment of $1,000 under D6 when he could execute a hire-purchase agreement with a financial company. For the above reason, I would therefore with respect, agree with the finding of the trial Judge that the appellants had an insurable interest in the car on the date of the accident and the car was being driven by Abdul Karim with the permission of the insured. I would therefore dismiss the appeal with costs”. [emphasis added]

More specifically, the relevant terms of the Agreement provide: a) PIHAK PERTAMA akan bertanggungjawab untuk mengambil dan untuk urusan pertukaran nama daripada penama PIHAK PERTAMA kepada nama PIHAK KEDUA dimana-mana cawangan Jabatan Pengangkutan Jalan Malaysia selepas kesemua bayaran dijelaskan. b) Sekiranya terdapat sebarang masalah terhadap pembayaranselama 2 bulan berturut-turut, PIHAK PERTAMA berhak untuk mengambil semula KENDERAAN TERSEBUT dan ianya hanya akan diserahkan Kembali kepada PIHAK KEDUA setelah bayaran kesemua tunggakan dijelaskan. c) PIHAK PERTAMA akan memegang Geran Asal kenderaan tersebut dan ianya HANYA akan diserahkan kepada PIHAK KEDUA sebaik sahaja selesai kesemua bayaran. [emphasis added]

Quite clearly, from the terms above, the legal ownership of the Car was with the 2nd Respondent and as the legal owner, the 2nd Respondent retained the insurable interest in the Car.

As regards the claim that the non-disclosure of the Agreement in the Claim Form amounts to a breach of the duty of utmost good faith, this again is without any merit.

In the first place, the Appellant has not been able to demonstrate that the Claim Form required the 2nd Respondent to declare the existence of the Agreement at all.

Further, the duty of disclosure is only applicable at the time of the formation of the contract of insurance and the continuing duty post formation of the contract is only applicable in respect of any changes and or inaccuracies as regards the information disclosed at the time of formation.

Finally, this Court also found no merit in the Appellant’s contention that the 2nd Respondent had failed to produce any evidence on the market value of the Car.

More specifically, clause 2 (b) of Section A of the Policy issued by the Appellant provides: “The maximum amount we will pay is the market value of Your Vehicle at the time of the loss or the sum insured in the Policy whichever is the lower figure”. [emphasis added]

It is not in dispute that the 2nd Respondent did not produce any report on the market value of the Car at the time of the loss.

However, the 2nd Respondent was entitled to base its claim on the stated insured sum in the Policy, i.e. RM 90,000.00. If the Appellant was of the position that the market value of the car at the time of loss was more than RM 90,000.00, the burden was on the Appellant to show the market value and not the 2nd Respondent.

In any case, the fact that the Purchase Price of the Car was stated as RM 160,000.00 in the Agreement dated 10.7.2014 and the Car was stolen soon after the Agreement on 22.12.2014, about less than 5 months thereafter, suggests that the market value of the car at the time of the loss was more than RM 90,000.00.

In the circumstances, I found no merit to the Appeal and for the reasons above dismissed the Appeal with costs. Dated the 29th day of September 2025 ONG CHEE KWAN JUDGE OF THE HIGH COURT HIGH COURT (COMMERCIAL DIVISION NCC2 & ADMIRALTY) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA Counsel for Applicant: Mr. Samreet Singh Sagoo together with Ms. Theebadarshini Retrakumar (Messrs. Lovelace & Hastings) Counsel for Respondents: Mr. Manoharan together with Ms. Anis Salihah binti Abdul Malek (Messrs. M Manoharan & Co.)