Pacific & Orient Insurance Co. Berhad v Chew Poh Hoon (PA-12BNCC-4-08/2023)

This involves an appeal against the decision of the learned Sessions Court Judge, which allowed a recovery action filed by the Respondent Plaintiff pursuant to a judgment dated 29.05.2013 in Civil Suit No. 53-862-2010 filed at the Butterworth Sessions Court.

On 29.08.2009, a road accident occurred involving two vehicles: a motorcar bearing registration number AAM 943 ("Motorcar AAM 943"), owned by Chin Fook Lam and driven by Gui Chong Siang, and another bearing registration number PHX 8859, owned and driven by Goh Soon Seng.

Goh Soon Seng succumbed to his injuries on 04.10.2009.

Chew Poh Hoon, the wife of Goh Soon Seng instituted a civil suit against both the owner ("2 $ ^{\mathrm{nd}} $ Defendant") and driver ("1 $ ^{\mathrm{st}} $ Defendant") of Motorcar AAM 943 in the Butterworth Sessions Court vide Summons No. 53-862-2010 ("Suit No. 53-862-2010").

Chew Poh Hoon is also the Respondent Plaintiff in the present appeal.

At the time of the said accident, the Appellant Defendant was the insurer of Motorcar AAM 943.

On 03.04.2013, following an application filed by the Appellant Defendant via Originating Summons No. 24NCvC-560-03/2013, the Kuala Lumpur High Court granted an order declaring the insurance policy for Motorcar AAM 943 void and unenforceable ("the said Declaratory Order").

In a decision dated 29.05.2013 under Suit No. 53-862-2010, the Butterworth Sessions Court held both the owner and driver of Motorcar AAM 943 fully liable for the accident, ordering them to pay the Respondent Plaintiff damages, interest and costs. No appeal was filed against the said decision.

Due to the non-payment of the sums ordered under the judgment dated 29.05.2013, the Respondent Plaintiff filed a recovery action against the Appellant Defendant via Summons No. PB-A52NCC-95 10/2017 in the Butterworth Sessions Court on 10.10.2017 ("Suit PB A52NCC-95-10/2017") .

On 31.07.2023, the learned Sessions Court Judge allowed the Respondent Plaintiff's recovery suit.

Dissatisfied with the decision, the Appellant Defendant filed the appeal herein.

In the Memorandum of Appeal, the Appellant Defendant contended that the learned Sessions Court Judge erred in law and/or fact in holding the Appellant Defendant fully liable to pay the sums ordered under the judgment dated 29.05.2013, based on the following grounds, inter alia-

the Respondent/Plaintiff failed to prove that the $ 1^{\mathrm{st}} $ Defendant drove Motorcar AAM 943 with the consent of the owner (i.e. $ 2^{\mathrm{nd}} $ Defendant).

(ii) the Respondent/Plaintiff failed to comply with statutory notice requirement under s.96 of the Road Transport Act 1987 ("RTA 1987").

(iii) the recovery action is barred by res judicata and issue estoppel due to the subsistence of the said Declaratory Order. ANALYSIS AND FINDINGS

In Suit No. 53-862-2010, paragraphs 3 and 4 of the Statement of Claim plead that the $ 1^{\mathrm{st}} $ Defendant was the driver of Motorcar AAM 943 and the employee and/or agent of the $ 2^{\mathrm{nd}} $ Defendant, who was both the registered owner of the said vehicle and employer and/or principal of the $ 1^{\mathrm{st}} $ Defendant.

Because the both the Defendants failed to deny these specific allegations, the facts are deemed admitted pursuant to O 18 r 13 of the Rules of Court 2012.

Furthermore, neither Defendant adduced any evidence to establish that the $ 1^{\mathrm{st}} $ Defendant drove the vehicle without the $ 2^{\mathrm{nd}} $ Defendant's authorization or consent.

Consequently, by relying upon the unchallenged judgment dated 29.05.2013 in Suit No. 53-862-2010, the principle of assumption of risk, and the statutory operations of ss.91, 96(1) and (2) of the RTA 1987, the learned Sessions Court Judge allowed the Plaintiff's recovery suit.

Ordinarily, this Court would find no reason to disturb the findings of the learned Sessions Court Judge, but for the crucial intervention of a declaratory order successfully obtained by the Appellant Defendant from the Kuala Lumpur High Court on 03.04.2013 vide Originating Summons No. 24NCvC-560-03/2013 ("the said Declaratory Order").

As such, the insurance policy for Motorcar AAM 943 having been declared void and unenforceable, the statutory consequences under s.96(3) of the RTA 1987 must now apply.

Thus, the learned Sessions Court Judge's findings have been entirely overtaken and superseded by the said Declaratory Order.

What then are the statutory consequences under s.96(3) of the RTA 1987?

First and foremost, s.96(3) of the RTA 1987 allows an insurer to avoid liability to pay, if before the date the liability was incurred, it had obtained a decision from court that the insurance was void and unenforceable.

The question that arises is what does the phrase "the date the liability was incurred" mean? Does it denote the date of the physical collision OR the date when judgment was entered in the underlying third-party action?

At what point of time can an insurance company commence an action under s. 96(3) of the RTA 1987 to declare a policy issued to an insured in respect of an insured vehicle void or unenforceable?

This very question was addressed and answered in Ahmad Nadzrin bin Abd Halim & Anor v Allianz General Insurance Co (M) Bhd [2015] 6 MLJ 223 where Lim Yee Lan JCA in delivering the judgment of the Court of Appeal held as follows-Based on the foregoing discussions and findings, our answer to the question raised in this appeal is that under s 96(3) of the Act, an insurer can commence an action to repudiate a policy issued in respect of an insured vehicle before any judgment is obtained in the proceeding commenced by a third party for damages for bodily injuries or death sustained in a road accident caused by or arising from the use of the insured vehicle. (emphasis added)

Consequently, it is well-settled law that the "date of liability" under s.96(3) of the RTA 1987 is not synonymous with the date of the physical road accident.

Statutory liability only crystallizes against the insurer upon the entry of a final judgment on liability against the insured in the underlying third-party action.

Applying these settled principles of law to the factual matrix of the present appeal, the position becomes entirely clear.

The Appellant Defendant's statutory liability to pay would only arise once judgment was obtained against the Defendants in Suit No. 53- 862-2010 provided that the requisite notice under s.96(2) of the RTA 1987 has been duly given by the Respondent Plaintiff.

On 03.04.2013, the insurance policy for Motorcar AAM 943 was declared void and unenforceable pursuant to the said Declaratory Order.

However, judgment in Suit No. 53-862-2010 was not entered by the Butterworth Sessions Court until 29.05.2013 - nearly two (2) months after the Kuala Lumpur High Court had already granted the said Declaratory Order.

Consequently, for the purposes of s.96(3) of the RTA 1987, the critical date on which statutory liability crystallized is determined solely by the judgment dated 29.05.2013.

Thus, pursuant to said Declaratory Order, the insurance policy between the insurer (the Appellant Defendant) and the insured (the $ ^{2^{nd}} $ Defendant - deceased owner) is void and unenforceable.

Further, notwithstanding the dismissal of their application to set aside the said Declaratory Order, the Respondent Plaintiff did not appeal against the dismissal order.

Consequently, the said Declaratory Order remains valid, binding and enforceable against the Respondent Plaintiff.

Thus, irrespective of whether the $ 1^{\mathrm{st}} $ Defendant in Suit No. 53-862- 2010 drove the vehicle with the consent of the $ 2^{\mathrm{nd}} $ Defendant (the deceased owner), or whether the requisite notice under s.96(2) of the RTA 1987 was given to the Appellant Defendant, the undisputed fact remains that the said Declaratory Order obtained on 03.04.2013 is a valid, binding and enforceable order against the Respondent Plaintiff.

By virtue of s.96(3) of the RTA 1987, the Appellant Defendant being the insurer herein is under no statutory liability to pay the judgment sum in Suit No. 53-862-2010 to the Respondent Plaintiff.

The arguments and submissions by the Respondent Plaintiff regarding the Appellant Defendant's alleged failure to give notice prior to filing the application for the said Declaratory Order at the Kuala Lumpur High Court are issues that ought to have been raised in the application to set aside the said Declaratory Order, or at the appellate stage therefrom.

Consequently, this appeal is not the proper forum to canvass or address such issues.

In any event, it is trite law that courts of coordinate jurisdiction connote parity; as such, they do not permit mutual overriding or overruling of each other's decisions. Accordingly, this Court cannot set aside a final judgment regularly obtained from the Kuala Lumpur High Court.

As such, the only avenue available to the aggrieved party (namely, the Respondent Plaintiff) is to appeal against the dismissal of the application to set aside the said Declaratory Order.

Since no appeal was filed by the Respondent / Plaintiff, the said Declaratory Order remains valid, binding and enforceable against them.

Based on the aforesaid reasons, the appeal is allowed with costs of RM5,000-00 subject to allocator fees. Dated 28th May, 2026. Penang High Court (4) Counsel(s): Mr. Vinod Kamalanathan from Messrs Vinod Kamalanathan & Associates for the Appellant. Ms. Shuroma Guha Thakurta from Messrs. Manjit & Co. for the Respondent. Case(s) referred to: Ahmad Nadzrin bin Abd Halim & Anor v Allianz General Insurance Co (M) Bhd [2015] 6 MLJ 223.