Ravendran A/L Kalangiam v Allianz General Insurance Company (M) Berhad (PA-22NCvC-211-11/2020)

D (insurer), by the provision of section 96(3) of the Road Transport Act 1987 (RTA), applied for a section 96(3) declaratory order to declare that the contract (policy) of insurance between D and the rider and owner of the motorcycle was void and unenforceable. The Kuala Lumpur High Court granted the declaratory order. 13/05/2025 08:33:36 PA-22NCvC-211-11/2020 Kand. 138 S/N Xdcxm11HR0ih/m8udclBKg **Note : Serial number will be used to verify the originality of this document via eFILING portal

The effect of the section 96(3) Declaratory Order is that D (the insurer) does not have to pay the judgment sum, even if the rider and owner of the other motorcycle is found liable for tort against P.

P now, after the event, filed this suit, in the Penang High Court, to impeach (challenge) the validity of the section 96(3) Declaratory Order, on the ground of fraud (on the part of the D (insurer)).

Should the section 96(3) declaratory order be set aside or should it be sustained? CHRONOLOGY OF PERTINENT FACTS AND PROCEEDINGS [6] Foremost, I set out the pertinent facts and proceedings that are pertinent to this suit. [7]

9.2.2016—Mohd Fadzli Mohd Salleh (Fadzli) lodged his 1st police report, stating that he was in an accident on 7.2.2016. Fadzli was riding motorcycle PHF 2940 (Fadzli’s motorcycle) when he had an accident with P and his motorcycle PLS 4299 (P’s motorcycle). Fadzli did not fall, but P fell. [8]

9.6.2017—P filed the personal injury (tort) suit in Georgetown Magistrates Court (MC) Civil Suit PA-A73KJ-513-06/2017 (MC Suit 513). P sued the owner of Fadzli’s motorcycle: Normah Hashim (Normah), and the rider of the motorcycle: Fadzli. Fadzli’s motorcycle was insured with D. [9]

19.10.2017—D appointed the loss adjusters: Darmani Adjusters & Investigators (M) Sdn Bhd (Adjusters). S/N Xdcxm11HR0ih/m8udclBKg Page 3 of 20 [10]

21.10.2017 (one year and eight months after his 1st police report)— Fadzli lodged his 2nd police report (Corrective Report). In the Corrective Report, Fadzli stated that, actually, he was not involved in the accident that occurred on 7.2.2016 referred to in his 1st police report. He averred that a friend asked him to lodge the 1st police report to make a false insurance claim. [11] Note: Fadzli lodged this Corrective Report (dated 21.10.2017) about four and a half months after MC Suit 513 was filed (on 9.6.2017). It was likely that by this time (October 2017), he had known that he was made a defendant in MC Suit 513. [12]

13.11.2017—Normah lodged a police report stating that Fadzli’s motorcycle was not involved in the accident on 7.2.2016. [13]

24.11.2017—D (insurer) filed an application to intervene in MC Suit 513. [14]

12.12.2017—D filed an application for what I will call a section 96(3) Declaratory Order, through Kuala Lumpur High Court Originating Summons No. WA-24NCC-557-12/2017 (section 96(3) Declaration Suit). [15] A section 96(3) Declaratory Order effectively declares that the contract (policy) of insurance between D (the insurer) and its insured is void and unenforceable. This means that if a judgment is entered against the insured in the personal injury tort suit—D (the insurer) does not have S/N Xdcxm11HR0ih/m8udclBKg Page 4 of 20 to pay the judgment sum ordered to be paid by the insured in the personal injury tort suit. [16] P’s grounds in the section 96(3) Declaration Suit include the following averments, supported by the following documentary evidence—

Fadzli’s 1st police report dated 9.2.2016 stated that he was involved in the accident on 7.2.2016 with the plaintiff in MC Suit 513 i.e. P here;

But Fadzli’s Corrective Report dated 21.10.2017 (which I reiterate—was lodged more than a year and eight months later) stated that “actually”, he was not involved in the accident on 7.2.2016 between Fadzli’s motorcycle and P’s motorcycle. He also admitted that he was asked by a friend to make the 1st police report “for the purpose of making a false insurance claim (bertujuan untuk membuat tuntutan insuran palsu)”. He admitted that “the entire content of that 1st police report was not true (segala kandungan di repot tersebut adalah tidak benar)”. He also stated that he made this Corrective Report “truthfully, and without any incitement (secara ikhlas tanpa apa-apa hasutan dan paksaan)”;

Normah’s police report dated 13.11.2017 also stated that Fadzli’s motorcycle was not involved in the accident concerned. She further stated that she made her police report “voluntarily and within her own knowledge without any other factor (atas kerelaan saya dan pengetahuan saya sendiri tanpa melibatkan sebarang unsur lain)”; S/N Xdcxm11HR0ih/m8udclBKg Page 5 of 20

Fadzli’s statutory declaration dated 23.10.2017 (also more than a year and eight months later) stated, among other things, that—

on 9.2.2016, Fadzli made his 1st police report that the motorcycle he was riding was in an accident with P’s motorcycle on 7.2.2016. But 7.2.2016 was a Sunday and he did not go to work on Sundays. Instead, he was at home, contrary to what he stated in his 1st police report;

(ii) he made that 1st police report on the advice of a friend and not from his personal knowledge;

(iii) the purpose of the 1st police report was to make an insurance claim on the insurer who insured Fadzli’s motorcycle i.e. to make a claim on D;

(iv) the entire content of his 1st police report was untrue;

as he had given false information in his 1st police report, he no longer wanted to be involved in any insurance claim made by P;

(vi) he voluntarily made the Corrective Report, and the contents are “true (benar dan betul)”; S/N Xdcxm11HR0ih/m8udclBKg Page 6 of 20

(vii) he made this admission voluntarily and it did not involve any element of incitement, force or any kind of compensation from anyone (secara rela hati dan tidak melibatkan apa-apa unsur hasutan, paksaan atau melibatkan sebarang jenis pampasan dari mana-mana pihak)”. [17]

11.1.2018—P obtained an order allowing him to intervene in the section 96(3) Declaration Suit. [18]

15.1.2018—D served the cause papers for the section 96(3) Declaration Suit on P. [19]

8.2.2018—D’s application to intervene in MC Suit 513 was dismissed i.e. D was not permitted to intervene to participate in MC Suit 513 (the personal injury tort suit). D appealed to the High Court (HC). [20]

23.2.2018—The section 96(3) Declaratory Order was granted by the Kuala Lumpur HC. It is pertinent to note that Fadzli and Normah— the defendants in the section 96(3) Declaration Suit—did not oppose D’s application for the section 96(3) Declaratory Order, even though they were served with the cause papers. But P, who got leave to intervene, participated in the section 96(3) Declaration Suit and oppose the grant of the section 96(3) Declaratory Order. Dissatisfied with the section 96(3) Declaratory Order, P appealed to the Court Of Appeal (CA). S/N Xdcxm11HR0ih/m8udclBKg Page 7 of 20 [21]

4.6.2018—The HC dismissed D’s appeal against the MC’s decision refusing to allow D to intervene in MC Suit 513. In other words, HC affirmed that D was not permitted to intervene in MC Suit 513. [22]

22.10.2018—P’s appeal to the CA against the section 96(3) Declaratory Order was dismissed i.e. the section 96(3) Declaratory Order was sustained. There was no further appeal. [23]

28.12.2018—Note: There was an assertion that Fadzli lodged another (his 3rd) police report on 28.12.2018 (one year and two months after his Corrective Report), alleging that the Adjuster assigned to the case forced him to go to the police station to lodge the Corrective Report, and paid him RM500.00 to do so. [24] Another note: Fadzli’s 3rd police report, containing the allegation that he was forced to lodge the Corrective Report and that the Adjuster paid him RM500.00 to lodge it—was not produced as evidence in this trial. [25] More importantly, Fadzli was not called to testify about all these facts concerning him. But the Adjuster was called to testify in this trial. He denied paying Fadzli the alleged RM500.00. [26]

8.2.2019—MC’s judgment that Fadzli and Normah (the insured) are 100% liable to P in MC Suit 513. SECTION 96(3) OF THE ROAD TRANSPORT ACT 1987 [27] Section 96(3) of the RTA provides that an insurer can get a declaration that the insurer is not liable for the judgment in a personal S/N Xdcxm11HR0ih/m8udclBKg Page 8 of 20 injury tort suit entered against the insured, on the ground that the insured had breached his or her duty of utmost good faith (uberimei fidei). Put differently, if the insurer can satisfy the Court that the insured has not exercised good faith (has not been honest) in an insurance claim, the insurer can get a declaratory order that the insured is not liable to pay the judgment sum that the insured may be ordered to pay in a road accident suit taken against the insured. [28] The pertinent portions of section 96 are set out below for reference (with my emphases added)— Section 96. Duty of insurers to satisfy judgements against persons insured in respect of third party risks.

If, after a certificate of insurance has been delivered under subsection 91(4) to the person by whom a policy has been effected, judgement in respect of any such liability as is required to be covered by a policy under paragraph 91(1)(b) (being a liability covered by the terms of the policy) is given against any person insured by the policy, then notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled the policy, the insurer shall, subject to this section, pay to the persons entitled to the benefit of the judgement any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any written law relating to interest on judgements. …

No sum shall be payable by an insurer under subsection (1) if before the date the liability was incurred, the insurer had obtained a declaration from a court that the insurance was void or unenforceable: S/N Xdcxm11HR0ih/m8udclBKg Page 9 of 20 Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgement obtained in proceedings commenced before the commencement of that action unless, before or within seven days after the commencement of that action, he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the grounds on which he proposes to rely, and any person to whom notice of such an action is so given shall be entitled if he thinks fit to be made a party thereto. WHAT IS THIS SUIT ABOUT? [29] This suit was filed to impeach the section 96(3) Declaratory Order made by the Kuala Lumpur HC in the section 96(3) Declaration Suit. The prayers in P’s Statement Of Claim in this suit are for—

a declaratory order that the D (insurer) “is not entitled to the benefit of” the section 96(3) Declaratory Order, which has “prevented P from enforcing the judgment” obtained against Fadzli and Normah, against D;

a declaratory order that D is “required to compensate P [with] the judgment sum” in MC Suit 513, in the sum of RM26,680.80, and the RM6,861.80 costs awarded, plus interest on the total judgment sum, with the costs of this suit. [30] This suit is effectively to nullify (extinguish) the section 96(3) Declaratory Order. [31] The material and critical facts that P pleaded (at paragraph 19 of the SOC), which P has the burden of proving, are that— S/N Xdcxm11HR0ih/m8udclBKg Page 10 of 20

at the MC Suit 513 trial, Fadzli testified that he was “approached” by an Adjuster in October 2017, who was suspected to have been appointed by D;

Fadzli testified that the Adjuster had “threatened and forced him to go to the police station” to make the Corrective Report;

Fadzli testified that the “Adjuster also gave RM500.00” to him “as a gift”.

P repeated these averments at paragraph 26(b) of the SOC. [32] Put differently, P pleaded, and therefore had the burden to prove, that a fraud was committed by the Adjuster, whose conduct is attributable to D (who appointed him). The fraud committed justifies nullifying the section 96(3) Declaratory Order. And consequently, the declaration prayed for—that the D is not entitled to the benefit of the section 96(3) Declaratory Order—should be given. Such that D is liable to pay P the judgment sum entered against the insured (Fadzli or Normah). THE AGREED ISSUE TO BE TRIED [33] The sole agreed issue to be tried is— The premise (principle of law): The Federal Court in Badiaddin Mohd Mahiddin & Anor v. Arab Malaysian Finance [1998] 1 MLJ 393 (FC); [1998] 1 AMR 909; [1998] 2 CLJ 75; [1998] 1 MLRA 183; propounded the legal principle that a judgment (such as the declaratory order in this suit) can be set aside (impeached) if it is S/N Xdcxm11HR0ih/m8udclBKg Page 11 of 20 proved that there are grounds which vitiate (invalidate) the judgment, such as fraud. The judgment can be set aside in a fresh action. The issue: Whether P has proven, on the balance of probabilities, that there was evidence of fraud on the part of D (the insurer) to impeach and hence set aside the section 96(3) Declaratory Order in favour of D. MY FINDINGS [34] The trial of this suit went for four days. Then there were several sessions of oral submissions. There were also case management sessions aimed at narrowing down the issues to be tried into a sole agreed-upon issue to be tried. And to narrow down the agreed applicable law (legal principle) for consideration in this suit. [35] Parties agreed (on 5.11.2024 and 25.2.2025, to be precise) that the fraud that impeaches the section 96(3) Declaratory Order must be a fraud committed by D (as D/insurer is the party who got the benefit of the section 96(3) Declaratory Order). [36] I find that the section 96(3) Declaratory Order should not be impeached and hence set aside for fraud. My reasons are as follows. [37] One—the alleged act of fraud concerned is the Adjuster’s act of giving RM500.00 to Fadzli to make his Corrective Report and statutory declaration. P must prove, on the balance of probabilities, that D committed this fraud. S/N Xdcxm11HR0ih/m8udclBKg Page 12 of 20 [38] P relies on the MC’s written Grounds Of Judgment, where the MC found that RM500.00 was given to Fadzli. [39] But this fact was denied by the Adjuster, through DW1: Mr. Shanmugavelu (Mr. Shan), who testified for the Adjuster. When Mr. Shan was cross-examined on this fact about giving the RM500.00 to Fadzli to change his police report, Mr. Shan denied it. [40] There is no contrary evidence or material produced to challenge the veracity of Mr. Shan’s denial. There is no evidence from Fadzli to say that Mr. Shan or someone from the Adjuster’s office gave Fadzli RM500.00 to change his statement in his 1st police report. [41] Fadzli did not testify. Fadzli was a crucial (critical) witness in this impeachment suit. P subpoenaed him but failed to serve the subpoena on him. At the end of the day, Fadzli did not appear to testify. Fadzli’s testimony would inevitably have had a decisive bearing on the veracity (truthfulness) of Mr. Shan’s testimony that he did not give RM500.00 to Fadzli. Fadzli’s testimony would have either affirmed or contradicted Mr. Shan’s testimony. [42] Without Fadzli’s testimony, what is before me is only Mr. Shan’s testimony—that he did not give RM500.00 to Fadzli to change the statements in his 1st police report. I have no contrary evidence or even material to find otherwise i.e. to find that he paid RM500.00 to Fadzli. [43] Also, Fadzli’s 1st police report and his Corrective Report were placed in Part B of the parties’ Common Bundle Of Documents. This means that the contents of Fadzli’s police report and his Corrective Report S/N Xdcxm11HR0ih/m8udclBKg Page 13 of 20 are not admitted. And Fadzli was not present at this trial to testify to the contents. Nor were the contents (the veracity of his testimony) tested by cross-examination. [44] Further, Fadzli’s Corrective Report and his statutory declaration (dated 23.10.2017) were exhibited to the Further Affidavit of Christy @Marcella Joseph, affirmed on 31.10.2017, and filed in the MC Suit 513 proceeding. Christy was D’s assistant claims manager. Christy too did not testify at this impeachment trial. [45] Furthermore, the investigating officer: Inspector Haris Safuan (PW2), when he was cross-examined in this impeachment suit, testified that he had never seen Fadzli’s statutory declaration. The contents of Fadzli’s statutory declaration were not proved as fact, particularly when Fadzli was not called to produce the statutory declaration and testify as to its contents. [46] Two—P relies on the MC’s Grounds Of Judgment to support this impeachment suit. P asserts that the MC’s Grounds Of Judgment contains a finding that the Adjuster paid Fadzli the RM500.00 to change his statements in his 1st police report. [47] The MC’s Grounds Of Judgment contains the reasoning and the findings expressed by the MC that led the MC to give judgment in favour of P against Fadzli and Normah, holding Fadzli and Normah liable to P. [48] But the Grounds Of Judgment constitutes the evidence of what the MC analysed, what the MC found (decided), and what the MC’s reasons were for the judgment that it made. I am mindful that the MC in MC Suit S/N Xdcxm11HR0ih/m8udclBKg Page 14 of 20 513 was not evaluating fraud, either on the part of the parties, or on the part of the D (the insurer). The MC was evaluating the merits of the personal injury tort suit. In other words, the issues to be tried in MC Suit 513 include whether the defendants in the suit (Fadzli and Normah) were liable to P; and if yes, what were the respective percentages of liability; and if the defendants were found liable, to assess how much the damages should be. It was not to find whether there was fraud. [49] The MC’s Grounds Of Judgment, in my view, cannot, on the balance of probabilities, constitute evidence of any fraud committed by the D (the insurer) in this impeachment suit. [50] Three—the MC Suit 513’s Notes Of Evidence are not produced at this trial. There is no evidence of the evidence that was presented by the parties in the MC Suit 513 trial. That evidence is not available for me to evaluate, to determine if D committed any fraud. [51] And it is precisely because of this difference in the MC’s perspective and purpose in MC Suit 513, as compared to mine here in this impeachment suit—that the pivotal evidence about the fraud alleged by P must be led directly here in this trial. This was not done. [52] Also, even if the Notes Of Evidence may, to some extent, be evaluated for whether fraud was committed by D, I reiterate that the Notes Of Evidence were not produced to be evaluated as evidence in this suit. [53] I must be mindful to note that even if the Notes Of Evidence were produced as evidence in this impeachment trial, they have limited veracity and utility, because— S/N Xdcxm11HR0ih/m8udclBKg Page 15 of 20

D (insurer) was not allowed to intervene and thus did not participate in the MC Suit 513 trial;

D (insurer) did not produce any evidence, through the insured defendants: Fadzli and Normah;

D did not have the opportunity to challenge or refute P’s evidence. Nor did the D get to put its case across to P’s witnesses in the process of cross-examination. [54] Four—P, however, was allowed to intervene and hence participated in the section 96(3) Declaration Suit in the Kuala Lumpur HC. The section 96(3) Declaratory Order was granted in D’s favour. P appealed. The CA dismissed P’s appeal and upheld the section 96(3) Declaratory Order. [55] Counsel for the parties informed me that in the CA proceeding, P raised the issue of fraud on D’s (insurer’s) part. P got to canvass this all-important issue. It was not accepted by the CA. I therefore should not, and I have no good reason to, impeach the section 96(3) Declaratory Order given by the Kuala Lumpur HC, which was affirmed by the CA. [56] Five—D’s (insurer’s) sole witness was Mr. Shan, the Adjuster. In his Witness Statement, he stated that—

He met Normah and then Fadzli on 21.10.2017.

He questioned Fadzli.

Fadzli told him that he was “asked by someone to lodge a police report”. S/N Xdcxm11HR0ih/m8udclBKg Page 16 of 20

He was unable to prove his presence at the scene of the accident.

Fadzli “finally relented and confessed that the involvement of the insured motorcycle [was] staged for claim purposes and that he was promised monetary gain”.

Mr. Shan “cautioned” Fadzli “on the consequences of colluding in a fraudulent insurance claim”, and then Fadzli “volunteered to withdraw his involvement in the accident”.

Since Fadzli volunteered to withdraw his involvement in the accident, Mr. Shan “accompanied him to the police station where he [Fadzli] proceeded to lodge a report to withdraw his involvement” in the subject accident.

Then, on 23.10.2017, he met Fadzli again and told Fadzli that Fadzli had to affirm a statutory declaration about “his non-involvement in the accident”.

Fadzli agreed to affirm the statutory declaration.

Mr. Shan took Fadzli to the commissioner for oaths (CO). The CO perused the statutory declaration and explained the contents to Fadzli. Fadzli signed the statutory declaration before the CO.

Fadzli signed the statutory declaration voluntarily.

Fadzli “was not threatened or promised any reward [for] signing the SD”.

The Adjusters then prepared their report and forwarded it to D (insurer), together with Fadzli’s Corrective Report and statutory declaration. S/N Xdcxm11HR0ih/m8udclBKg Page 17 of 20

The contents of the Adjuster’s report were based on the investigation done by Mr. Shan. [57] Mr. Shan was asked additional questions. In answering the additional questions, Mr. Shan testified to these facts—

He was informed by counsel that P pleads in this impeachment suit that Fadzli testified in the MC Suit 513 trial that the Adjuster had forced him to lodge his Corrective Report and paid him RM500.00 for doing so. He was asked if he forced Fadzli to lodge his Corrective Report. He answered No.

He was asked if he had paid RM500.00 to Fadzli. He answered No.

He was asked if he was called to testify in the MC Suit 513 trial. He answered No. [58] Six—Mr. Shan was cross-examined extensively by P’s counsel for many hours. But I find that P’s counsel did not damage Mr. Shan’s testimony, or obtain any admission on facts that favour P in this impeachment suit. Nor did Mr. Shan give any factually contradictory answers. [59] I reiterate that Fadzli was not called to produce documentary evidence, nor to give oral evidence that refuted or contradicted Mr. Shan’s testimony. [60] What is available for me to evaluate is Mr. Shan’s undamaged testimony. S/N Xdcxm11HR0ih/m8udclBKg Page 18 of 20 [61] Seven—a word about the evidence of the video of Fadzli’s purported confession, referred to in the Adjuster’s report—

the video was not produced in this trial and therefore was not a part of the body of evidence in this trial;

P could have subpoenaed it (the Adjuster’s report), but P did not. On the contrary, P argues that if the Adjusters are relying so heavily on this video, the Adjusters should have produced it. I find that the issue of whose burden it is to produce the video is answered by legal principle in the law of evidence— he who asserts must prove. And, the burden is on he who asserts, not on he who denies (Ei incumbit probatio qui dicit, non qui negat). [62] In any event, this is inconsequential. I asked P whether the evidence about this video containing Fadzli’s confession is evidence of fraud on the part of D (insurer). P’s answer, through his counsel, was No. [63] In the end, P has not satisfied the burden of proving that there was fraud on the part of D (insurer) that justifies the setting aside of the section 96(3) Declaratory Order given by the Kuala Lumpur HC—see section 101 of the Evidence Act 1950. [64] Section 101 is set out here for reference (with my emphases added)— Section 101. Burden of proof.

Whoever desires any court to give judgment as to any legal right or liability, dependent on the existence of facts which he asserts, must prove that those facts exist. S/N Xdcxm11HR0ih/m8udclBKg Page 19 of 20

When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. ILLUSTRATIONS

A desires a court to give judgment that B shall be punished for a crime which A says B has committed. A must prove that B has committed the crime.

A desires a court to give judgment that he is entitled to certain land in the possession of B by reason of facts which he asserts and which B denies to be true. A must prove the existence of those facts. CONCLUSION [65] For these reasons, my answer to the sole agreed issue to be tried—whether P has proven, on the balance of probabilities, that there was evidence of fraud on the part of D (the insurer) to impeach and hence set aside the section 96(3) Declaratory Order—is No. [66] As such, I dismiss P’s claim with costs of RM40K to be paid by P to the D. Costs are subject to the allocatur. Dated: 11 May 2025 KENNETH ST JAMES Judge Penang High Court Counsel/Solicitors: For the Plaintiff— Siva Subramaniam and Thanaletchimi [Messrs. Subramaniam & Shafiq (Georgetown)] S/N Xdcxm11HR0ih/m8udclBKg Page 20 of 20 For the Defendant— P. R. Ratha Devi [Messrs. S G Lingam & Co. (Kuala Lumpur)] Legislation referred to:

Section 96(1) and 96(3) of the Road Transport Act 1987.

Section 101 of the Evidence Act 1950. Cases referred to:

Badiaddin Mohd Mahiddin & Anor v. Arab Malaysian Finance [1998] 1 MLJ 393 (FC); [1998] 1 AMR 909; [1998] 2 CLJ 75; [1998] 1 MLRA

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