A party may be estopped from denying liability if its conduct creates an expectation of coverage in a third-party claim, even when the policy explicitly excludes such liability.

[1] This appeal is against the decision of the Kuala Lumpur High Court dismissing the appellant's claim for, inter alia, a declaration that the appellant is not liable to satisfy any judgment that may be entered by a Malaysian passenger who was injured in a road traffic accident in Singapore against the respondent in a Singapore suit (commenced as a result of a road traffic accident in Singapore), on the ground that the insurance policy for the car driven by the respondent, which was issued by the appellant, does not cover passenger liability.

[2] In this judgment, the appellant and the respondent shall be referred to as the plaintiff and the 2nd defendant respectively. Brief Account Of The Salient Facts

[3] On 26 November 2010, the owner ("Shahrul") of a Motorcar No: WTG 4225 ("the car") took out a motor insurance policy ("the policy") on the car with the plaintiff for the period from 26 November 2010 to 25 November 2011.

[4] On 13 December 2010, Shahrul loaned the car to the 2nd defendant to drive into Singapore with the 2nd defendant's wife ("Zuraini") as a passenger. The car was involved in a road traffic accident with a crane truck and Zuraini suffered injuries, loss and damage.

[5] On 31 January 2013, Zuraini instituted an action for negligence in the High Court of Singapore ("the Singapore Suit") against the 2nd defendant as the driver of the car and also the driver of the crane truck.

[6] The plaintiff was notified of the claim and instructed their Singapore solicitors, Global Alliance LLC ("GLA") to enter appearance for the 2nd defendant.

[7] On 27 September 2013, GLA wrote to the 2nd defendant denying liability under the policy on the grounds that the policy did not cover passenger liability. The plaintiff also gave the 2nd defendant the option of appointing his own solicitors to take over the defence or for GLA to continue to defend the Singapore suit with all rights reserved. This was followed by two reminders dated 17 December 2013 and 20 Decemeber 2013.

[8] On 31 December 2013, the 2nd defendant wrote to GLA asserting that by law and through contractual obligations with the plaintiff, he was covered under the policy and was entitled to legal representation.

[9] Meanwhile, GLA continued to represent the 2nd defendant in the Singapore suit until 5 May 2014 when the solicitors appointed by the 2nd defendant took over the conduct of the 2nd defendant's defence.

[10] The proceedings in the Singapore suit are still ongoing and no judgment on liability has yet been given.

Findings Of The High Court

[11] The findings of the learned judge may be summarised as follows:

(a) The plaintiff is bound by the laws in Singapore to meet the passenger liability claim notwithstanding the lack of premiums for passenger liability cover;

(b) The plaintiff has waived its right to deny liability on the policy due to the conduct of the plaintiff having appointed solicitors to defend the 2nd defendant in the Singapore suit. As such, the plaintiff is estopped from maintaining the action;

(c) On the facts, the plaintiff has assumed the liability against the 2nd defendant to satisfy any judgment that may be entered by Zuraini in the Singapore suit;

(d) The plaintiff is liable to satisfy any judgment for damages or part thereof obtained by Zuraini in the Singapore suit against the 2nd defendant;

(e) The 2nd defendant is not in breach of the contract of insurance represented by the policy and the plaintiff is not entitled to an indemnity from the 2nd defendant.

Plaintiff's Submission

[12] Notwithstanding that the learned judge dismissed the plaintiff 's claim for the four declarations sought, the learned counsel for the plaintiff confined the appeal to only two of the four declarations originally sought at the High Court. The two declarations in question are:

(B) A declaration