IN THE COURT OF APPEAL, MALAYSIA, AT PUTRAJAYA

CIVIL APPEAL NO. B-04(IM)-315-09/2016

BETWEEN

CHU CHU @ MOKSIN BIN AMLIH

(a person of unsound mind not so found by
inquisition) suing by his litigation representative,
Kalong bin Amlih … APPELLANT
AND

1. AM GENERAL INSURANCE (MALAYSIA) BERHAD

2. SAUFEE EFFENDY BIN MOHD ABIDIN
3. HARP SOON HARDWARE SDN BHD … RESPONDENTS

In the High Court in Malaya at Shah Alam

In the State of Selangor Darul Ehsan, Malaysia
Civil Appeal No. 12A -79-10/2015

BETWEEN

CHU CHU @ MOKSIN BIN AMLIH

(a person of unsound mind not so found by
inquisition) suing by his litigation representative,
Kalong bin Amlih … APPELLANT

AND

1.AM GENERAL INSURANCE (MALAYSIA) BERHAD

2.SAUFEE EFFENDY BIN MOHD ABIDIN
3.HARP SOON HARDWARE SDN BHD … RESPONDENTS

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 In The Sessions Court at Shah Alam
In The State of Selangor Darul Ehsan, Malaysia
Originating Summons No. A54-13-03/2015

BETWEEN

AM GENERAL INSURANCE (MALAYSIA) BERHAD … APPELLANT

AND

1.SAUFEE EFFENDY BIN MOHD ABIDIN

2. HARP SOON HARDWARE SDN BHD
3. CHU CHU @ MOKSIN BIN AMLIH
(a person of unsound mind not so found by
inquisition) suing by his ligitation representative,
Kalong bin Amlih … RESPONDENTS

JUDGMENT

CORAM

1. LIM YEE LAN, JCA

2. BADARIAH BINTI SAHAMID, JCA
3. YEOH WEE SIAM, J

INTRODUCTION

1. This Appeal is against the decision of the Shah Alam High Court
dismissing the Appellant’s appeal and affirming the decision of the
learned Sessions Court Judge (“SCJ”) which allowed the
Application of the 1st Respondent for a declaration that the
Appellant is not covered under the third party protection in the
insurance policy issued to the 3rd Respondent and that the policy is
null and void and unenforceable.

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BRIEF FACTS

2. Harp Soon Hardware Sdn Bhd (“3rd Respondent”) is the owner of a

lorry bearing registration no. WHX 2556 (“lorry”). Upon the
application of the 3rd Respondent, Am General Insurance
(Malaysian) Berhad (“1st Respondent”) issued an insurance policy
no. EVC3494091 for the lorry covering the protection for a third
party for the term from 12.12.2011 to 11.12.2012 (“insurance
policy”).

3. On 21.5.2012, the 2nd respondent drove the lorry from Rawang to

Sungai Buloh to deliver the 3rd Respondent’s goods. On that day,
Chu Chu @ Moksin Bin Amlih (“Appellant”) also hopped onto the
lorry. Half way through the journey, the lorry suddenly broke down.
The 2nd Respondent was forced to pull over to the side of the road.
In the course of checking the lorry’s condition, the 2nd Respondent
lifted the lorry using a jack. The Appellant went under the lorry to
check. He put his head into the gearbox area. The lorry suddenly
moved forward, and the jack went down and crushed the Appellant
underneath causing the Appellant to suffer injuries (“incident”).

4. The 1st Respondent was served by the Appellant’s Solicitors with a

Notice under s.96(2) of the Road Transport Act 1967 (“RTA”)
regarding the incident.

5. The Appellant instituted an action at the Selayang Sessions Court,

namely Summons No. A53kJ-288-06/2014, against the 2nd and 3rd
Respondents claiming for damages on the injuries suffered by him
(“Selayang Suit”).

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6. Following the filing of the Selayang Suit, the 1st Respondent filed an
Application by way of an Originating Summons in the Shah Alam
Sessions Court(“Shah Alam OS”) to declare that the protection for
the third party under the insurance policy subscribed by the 3rd
Respondent is null and void and unenforceable, and that the 1st
Respondent is not liable to indemnify any Judgement or Order
under s.96 of the RTA in relation to the Selayang Suit.

7. Upon hearing the parties on 9.9.2015, the Sessions Court allowed

the 1st Respondent’s Application in the Shah Alam OS. Dissatisfied
with the Order, the Appellant appealed to the High Court.

8. On 15.8.2016 the Shah Alam High Court dismissed the Appellant’s

appeal with cost of RM5,000.00.

9. The Appellant then appealed to the Court of Appeal against the

decision of the High Court.

10. The Court of Appeal heard the Appeal on 26.4.2017 and delivered
its Decision on the same day.

ISSUES

The Appellant raised the following issues before us:

(1)(a) Whether the procedure adopted by the 1st Respondent is the

correct procedure on the facts of the case;

(b) Whether the Order sought is proper on the facts of the case;
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 (2) Whether the Appellant is a stranger/pedestrian/rescuer, or a
lorry attendant of the 2nd and 3rd Respondents who is covered
under the insurance policy issued by the 1st Respondent.

ANALYSIS AND FINDINGS

11. In the Selayang OS, the 1st Respondent had applied for the
declaration under s.96(1) and (3) of the RTA.

12. S.96 of the RTA provides as follows:

“Duty of insurers to satisfy judgments against person insured in respect

of third party risks

96. (1) 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 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.

(2) No sum shall be payable by an insurer under subsection (1) –

(a) in respect of any judgement, unless before or within seven days

after the commencement of the proceedings in which the
judgement of the proceeding in which the judgment was given,
the insurer had notice of the proceedings;

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 (b) in respect of any judgement, so long as execution is stayed
pending an appeal; or

(c) in connection with any liability, if before the happening of the

event which was the cause of the death or bodily injury giving
rise to the liability the policy was cancelled by mutual consent or
by virtue of any provision contained therein and either-

(i) before the happening of the said event the certificate was
surrendered to the insurer or the person to whom the
certificate was delivered made a statutory declaration
stating that the certificate had been lost or destroyed;

(ii) after the happening of the said event, but before the
expiration of a period of fourteen days from the taking
effect of the cancellation of the policy, the certificate was
surrendered to the insurer or the person to whom the
certificate was delivered made such a statutory declaration
as aforesaid; or

(iii) either before or after the happening of the said event, but
within the said period of fourteen days, the insurer has
commenced proceedings under this Part in respect of the
failure to surrender the certificate.

(3) 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 court
that the insurance was void or unenforceable:

Provided that an insurer who has obtained such a declaration as aforesaid

in an action shall not 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 to the person who is the

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 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.”.

13. The 1st Respondent submitted that the Appellant did not have any
instructions from the 3rd Respondent to be in the lorry at the
material time. According to the 1st Respondent, they are not liable to
cover the Appellant under the insurance policy since the Appellant
falls under Clause (c) of the Exception to Section B of the insurance
policy, and s.91(1)(b)(bb) of the RTA which provide respectively as
follows:

“…EXCEPTION TO SECTION B
We will NOT pay for:
(c) death or bodily injury to any person being carried in or upon or
entering or getting on to alighting from Your vehicle (unless he/she is
required to be carried in or on Your Vehicle by reason of or in
pursuance of his/her contract of employment with You or Your
authorised driver and/or his/her employer)…”;

“Requirements in respect of policies

91.(1) In order to comply with the requirements of this Part, a policy of

insurance must be a policy which –
………………………

(b) insures such person, or class of persons as may be specified in the

policy in respect of any liability which may be incurred by him or them in
respect of the death of or bodily injuries to any person caused by or
arising out of the use of the motor vehicle or land implement drawn
thereby on a road:

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 Provided that such policy shall not be required to cover –
………………………
(bb) except in the case of a motor vehicle in which passengers are
carried for hire or reward or by reason of or in pursuance of a contract
of employment, liability in respect of death of or bodily injury to persons
being carried in or upon or entering or getting onto or alighting from the
motor vehicle at the time of the occurrence of the event out of which the
claims arise;”.

14. In the Shah Alam OS, the SCJ considered the Police report lodged
by the 2nd Respondent on 22.5.2012, and the Adjuster’s report
dated 15.8.2014 which stated that the Appellant is an employee of
the 3rd Respondent or attendant who assisted the 2nd Respondent
on the day of the incident.

15. However from the Affidavits before her, the SCJ was not able to
make a finding whether the Appellant was a passenger, or an
employee of the 3rd Respondent or an attendant who could be
covered under the insurance policy issued by the 1st Respondent.

16. Despite the above, the SCJ decided that pursuant to Clause (c) of
the Exception to Section B of the insurance policy, the Appellant
was not covered as a third party under such policy.

17. In our view, based on the evidence before it, since the SCJ could
not ascertain the status of the Appellant, the SCJ had therefore
erred to grant the 1st Respondent the declaration sought under
s.96(1) and (3) of the RTA.

18. When the appeal went before the High Court, the Appellant
submitted that even though at first he was a passenger, however, at

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 the time of the injury, he was outside the lorry and therefore could
not be a passenger.
19. The High Court went on the basis that the Appellant did not deny
that he was a passenger. In its opinion, therefore, the Appellant
continued being a passenger, irrespective of the fact that the lorry
had stopped, and whether the Appellant was inside or outside the
lorry.

20. We are of the considered view that the High Court had also erred in
its decision. Our reasons are as follows:

21. We observe that the long title of the RTA, inter alia, states that it is
an Act “to make provision for the protection of third parties against
risks arising out of the use of motor vehicles”.

22. From the long title, and the provisions of Part IV of the RTA, it clear
that the legislative intent is for the RTA to be a social welfare
legislation to protect road users. In our view, s.91 of the RTA
merely lays down the statutory requirements in respect of insurance
policies. Thus, the exception in the proviso contained in paragraph
(bb) cannot be construed as a substantive provision for an insurer,
including the 1st Respondent, to invoke it and automatically apply it
to obtain the benefit of a declaration under s.96(3) of the RTA. It is
true that the 1st Respondent had adopted the provision of
s.91(1)(b), and the exception in the proviso in paragraph (bb) of
s.91(1) of the RTA and incorporated them into its Clause (c) to the
Exception to Section B in the insurance policy. However, the
compliance with, or incorporation of the provisions of s.91(1) of the
RTA does not confer any automatic right on the insurer, to obtain a

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 declaration under s.96(1) and (3) of the RTA to declare the
insurance policy to be void or unenforceable at this juncture.

23. It is noted that there are parallel proceedings arising from the
incident, namely:
(1) the Selayang Suit; and
(2) the Shah Alam OS.

23. The Selayang Suit is still an ongoing proceeding and the Suit, which
will determine the issue of liability, has not been disposed of at the
time when the 1st Respondent filed the Shah Alam OS for the
declaration. The 1st Respondent’s excuse for filing the OS is that if
it does not obtain the declaration before Judgment is delivered in
the Selayang Suit, then once Judgment is granted in favour of the
Appellant, the 1st Respondent would be liable under the Judgment,
and would be put at risk of being wound up under an Order of the
Court pursuant to a s.218 notice issued under the Companies Act
1965 (or s.465 under the new Companies Act 2016).

24. We take judicial notice of the fact that upon the coming into force of
the amendments to the Subordinate Courts Act 1948 which
conferred increased jurisdiction and power to make a declaration to
the Sessions Court, there has been an increase of actions instituted
by insurers, made by way of Originating Summons, for declarations
under s.96(1) and (3) of the RTA that insurance policies are void
and unenforceable even before any connected suit to determine
liability has been decided by the Court.

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25. We take note of other cases where insurers have often successfully
applied for a declaration under s.96(1) and (3) of the RTA to declare
the insurance policy to be void or unenforceable on grounds that
there was fraud or misrepresentation committed at the time when
the insured applies for the insurance policy to be issued by the
insurer, or makes a claim for payment under the insurance policy
(see Kurnia Insurans (Malaysia) Berhad v. Personal
Representative of Zenal Saad [2013] 1 LNS 239, and Pacific &
Orient Insurance Co Berhad v. Khor Teik Wan [2016] 1 LNS
152). In our opinion, those are clear cut cases where the Court can
exercise its discretion to grant the declaration under s.96(1) and (3)
of the RTA.

26. However, for cases such as the present one, we would caution that
the Courts below, in the exercise of their discretionary powers,
should refrain from granting prematurely the declaration sought
under s.96(1) and (3) of the RTA. This is because where there is an
ongoing suit to determine whether any injured person ought to be
covered by the insurance policy, in particular in respect of third party
risks, it is for the trial Judge to decide, based on the evidence before
him, on issues such as whether the injured person is a passenger, a
stranger/pedestrian/rescuer, or an employee under a contract of
employment with the insured party under the insurance policy. In a
situation such as in the present case, it is for the trial Judge in the
Selayang Suit to determine whether the Appellant is covered under
the insurance policy by virtue of the fact that he is carried on the
lorry by reason of a contract of employment with the 2nd and/or 3rd
Respondents, or even if he is not, whether his injuries sustained are

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 covered against the insured person in respect of third party risks
arising out of the use of the motor vehicle on a road.

27. In our view, for the present case, it tantamounts to an abuse of the
process of the Court for the 1st Respondent to institute the Shah
Alam OS for a declaration under s.96(1) and (3) of the RTA when
the Selayang Suit is still ongoing. Any declaration granted by the
Sessions Court in the Shah Alam OS would be highly prejudicial to
the Appellant should, at the end of the day, the Selayang Suit be
decided in the Appellant’s favour.

28. For the above reasons, it is our unanimous decision that we find
merits in the Appeal. Accordingly, the Appeal is allowed. The
Orders of the High Court and the Sessions Court are hereby set
aside. Costs of RM20,000.00 are to be paid by the 1st Respondent
to the Appellant, subject to payment of the Allocator fee. The
deposit is to be refunded.

Dated: 6 June 2017

(YEOH WEE SIAM)
JUDGE
HIGH COURT, MALAYA

Solicitors for the Appellant

Mr. G. Naidu
Messrs G. Dorai & Co.

Solicitors for the 1st Respondent

Mr. M. Ramachandran
Mr. Raymond S

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Messrs VP Nathan & Partners

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