An insurer can declare a policy void under s 96(3) of the Road Transport Act before judgment in the underlying liability case, emphasizing statutory obligations towards third-party claimants.

Introduction

[1] The appellants/interveners' appeal is against the decision of the Kuala Lumpur High Court made on 7 August 2014 in which the learned Judicial Commissioner (JC) had allowed a declaration sought by the respondent ("the insurer") vide an Originating Summons (OS) pursuant to s 96(3) of the Road Transport Act 1987 that the policy No: 12 MVL074908, effective from the period November 2012 to November 2013, issued in respect of a motor vehicle bearing registration No: WHH 4039 ("insured vehicle") registered in the name of one Imtinan Muhammad Sultan ("the insured") was void and unenforceable in so far as the road accident which occurred on 22 January 2013 which involved motorcycle No: WUT 8370 and the insured vehicle and that the respondent was not liable for any order relating to the plaintiff's suit.

Brief Facts

[2] The interveners were the plaintiffs in suit No: A53KJ-379-12-2013 filed at the Bangi Sessions Court in which the plaintiffs, rider and pillion rider of motorcycle WUT 8370, claimed damages for injuries sustained in a road accident involving the said motorcycle and the insured vehicle. The suit was against one Danial as the driver of the insured vehicle and Imtinan Muhamad Sultan as the registered owner of the insured vehicle ("the defendants").

[3] Initially, the respondent had directed a solicitor to defend the defendants in the suit. During the course of the trial, the respondent discovered that the insured vehicle had been sold to another person by the name of Abdul Razak bin Yaacop ("new owner") and the driver ("Danial") was his son. The facts showed that although the sale of the insured vehicle took place before the date of the accident, the change in ownership was never registered with the Road Transport Department due to some spelling mistake in the name of the insured as it appears in his passport and in the record of the RTD and he remained the registered owner of the car. The new owner had been renewing the Policy in the name of the insured, Imtinan Muhamad Sultan.

[4] The respondent then discharged the solicitor and filed the present OS to declare the policy void and unenforceable in so far as the road accident which occurred on 22 January 2013 and that the respondent was not liable for any order relating to the plaintiff's suit.

[5] The respondent's application was premised on the ground that the failure of the insured (2nd defendant in the Bangi suit) to disclose the sale of the car to the new owner (Danial's father) was a nondisclosure of a material fact which entitled it to avoid the policy issued to the insured.

[6] The plaintiffs applied to intervene in the OS and were allowed by the Court.

[7] The plaintiffs/interveners opposed the OS on the ground that the respondent's application to cancel the policy under s 96(3) was out of time. It was argued that the phrase "the date the liability was incurred" in s 96(3) must be interpreted as requiring an application under that subsection to be made before the date of accident. It cannot be applied after the accident.

[8] Since the application in this case was made after the accident, it could not be maintained and must be dismissed.

[9] After hearing the parties, the learned JC dismissed the plaintiffs/interveners' objection and granted the declaration sought by the respondent.

[10] In her judgment, the learned JC gave the following reasons for her decision:

15. The issue for determination here is the meaning to be given to the phrase "the date the liability was incurred" in s 96(3):

...

16. The above phrase has been the subject of judicial considerat