Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 MarsdenLR 1836

HIGH COURT MALAYA PULAU PINANG
LIBERTY INSURANCE BERHAD – Appellant
Versus
KOAY GHEE SEONG & ORS – Respondent
[Originating Summon No: PA-24NCC-5-01/2025]

Petitioner Advocates:V K Dasaratharaj Pillai Krishnasamy Pillai,Aniza Sultan ,Respondent Advocate: S Parameswaran Subramaniam,Thinagara Pothuval Gopalakrishnan

The insurance policy remains enforceable for claims by innocent third parties despite the owner's death, as insurer's imprudence and non-compliance with statutory duties waive defenses against claims.

Headnote:(A) Road Transport Act 1987 - Sections 91(1), 96(1), and 96(2) - Financial Services Act 2013 - Schedule 9 - Third party motor vehicle insurance - The plaintiff sought declarations that the insurance policy was void due to non-disclosure of the owner's death and lack of insurable interest. Court ruled that the innocent third party's right to compensation is unaffected by the insurer's failure to act prudently. (Paras 12, 16, 26, 50, 56)

(B) Insurance Contract - Doctrine of uberrimae fidei - The principle does not operate against innocent third parties and is limited to relationships between insurer and insured. (Paras 18, 24)

Facts of the case:
The plaintiff issued an insurance policy for a lorry registered to a deceased individual. After a road accident, the plaintiff denied liability citing non-disclosure of the owner's death and lack of insurable interest. The suffering third party sought compensation. (Paras 4-12)

Findings of Court:
The court found that the plaintiff had waived the right to assert non-disclosure due to imprudent practices in issuing the policy without verification. Innocent third parties are entitled to compensation under the law regardless of issues between insurer and insured. (Paras 50-56)

Issues: The key issues included the validity of the insurance policy in the context of the owner's death, the applicability of the principle of uberrimae fidei, and the rights of the injured third party to claim. (Paras 10, 14, 25)

Ratio Decidendi: The court highlighted that the insured's death does not void the insurance policy when innocent third parties are involved. The duty of utmost good faith does not bar claims by innocent parties when the insurer fails to act prudently. (Paras 26, 50)

Result: Originating summons dismissed; plaintiff ordered to pay costs.

Table of Content
1. judicial declaration sought by insurance company. (Para 1 , 2)
2. innocent third party severely injured. (Para 3)
3. court's conclusion and order issued. (Para 4)
4. insurance policy background and key events. (Para 5 , 6 , 7 , 10)
5. plaintiff's allegations on non-disclosure. (Para 11 , 12 , 13)
6. discussion on insurable interest and disclosure. (Para 14 , 15)
7. compulsory insurance as social protection. (Para 16 , 17)
8. preserving third-party rights in insurance. (Para 18 , 19 , 20)
9. case law supporting innocent third parties. (Para 21)
10. insurer cannot avoid liability for non-disclosure. (Para 22 , 23)
11. uberrimae fidei doctrine does not impact third parties. (Para 24 , 25)
12. courts recognize validity of policies despite non-disclosure. (Para 27 , 28 , 29)
13. insurer's duties before issuing policies. (Para 30 , 31 , 32)
14. prudent insurer must verify information. (Para 36)
15. new statutory disclosure requirements established. (Para 37 , 38 , 39)
16. insurer must comply with verification duties. (Para 40 , 41 , 42 , 43)
17. case law affirms duties for both insurers and insureds. (Para 44 , 45)
18. non-disclosure claims waived due to insurer fault. (Para 46 , 49 , 50 , 51)
19. insurer's verification failures lead to liability. (Para 52 , 53 , 54 , 55)
20. dismissal of plaintiff's summons upheld. (Para 56)

JUDGMENT

Quay Chew Soon J:

Introduction

[1] The Plaintiff ("P") is an insurance company who issued a third party motor vehicle insurance cover for motor lorry registration number KG 4897 ("lorry").

[2] Via this originating summons dated 9 January 2025, P seeks the following declarations:

(a) that the insurance policy no. HQM 429129 / 22 - 02 ("third party motor vehicle indemnity policy") issued by P in the name of Koay Kuan Liong ("deceased") to cover the lorry is void and unenforceable;

(b) that P is not liable to make any payment under the third party motor vehicle indemnity policy in relation to the road accident that occurred on 22 February 2023 ("road accident"), involving the lorry driven by the 2nd Defendant and motorcycle registration number KDD 690 ("motorcycle") ridden by the 3rd Defendant ("D3");

(c) that P is not liable under s 96(1) of the Road Transport Act 1987 (" RTA 1987") to pay up on any judgment which may be obtained by D3 against the 1st and 2nd Defendants in any action that may be filed in connection with the road accident; and

(d) that P is not the insurer concerned for the lorry at the time of the road accident.

[3] D3 was injured and became paralysed waist down as a result of the road accident. D3 contends that he is an innocent third party who was severely injured as a result of the road accident. The road accident occurred when the lorry (driven by the 2nd Defendant) emerged from a side road into the path of the motorcycle (ridden by D3) and collided with the motorcycle.

[4] On 19 June 2025, I dismissed this originating summons. Here are my reasons.

Background Facts

[5] P issued the third party motor vehicle indemnity policy pursuant to s 91(1) of the RTA 1987, providing third party cover for the lorry effective from 1 September 2022 to 31 August 2023. The third party motor vehicle indemnity policy was issued in the name of the deceased, who had passed away on 22 July 2018.

[6] The administrator of the estate of the deceased is the 2nd Defendant. He became the administrator pursuant to an order of court dated 24 June 2019. When the third party motor vehicle indemnity policy was issued, the 2nd Defendant was already the administrator of the estate of the deceased.

[7] On 22 February 2023, the lorry was involved in the road accident with the motorcycle ridden by D3. At the time of the road accident, the lorry was driven by the 2nd Defendant. He admitted emerging from a side road onto the path of D3 and colliding with the motorcycle. D3 suffered severe injuries that has left him paralysed waist down.

[8] D3, through his solicitors, issued a s 96(2) RTA 1987 notice dated 2 June 2023 addressed to

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2025 MarsdenLR 1836

HIGH COURT MALAYA PULAU PINANGLIBERTY INSURANCE BERHAD – AppellantVersusKOAY GHEE SEONG & ORS – Respondent[Originating Summon No: PA-24NCC-5-01/2025]

The insurance policy remains enforceable for claims by innocent third parties despite the owner's death, as insurer's imprudence and non-compliance with statutory duties waive defenses against claims.

Cases Referred (5)

HIGH COURT MALAYA PULAU PINANG
LIBERTY INSURANCE BERHAD – Appellant
Versus
KOAY GHEE SEONG & ORS – Respondent
[Originating Summon No: PA-24NCC-5-01/2025]