Insurers have a statutory duty to intervene in negligence suits when fraud is alleged, ensuring all parties are heard before a judgment is made.

JUDGMENT

Wong Kian Kheong JCA:

A. Introduction

[1] The above two appeals (2 Appeals) are heard together and discuss the effect of s 96(1) and (3) of the Road Transport Act 1987 ( RTA ) [as interpreted by the recent Federal Court's judgment delivered by Abdul Rahman Sebli FCJ (as he then was) in AmGeneral Insurance Berhad v. Sa' Amran Atan & Ors And Other Appeals, [2022] 8 CLJ 175 (Sa'Amran)] on, among others, the following two suits:

(1) an action filed by a plaintiff (Claimant) for damages from a defendant (Insured) based on the Insured's negligence [Claimant's Suit (Insured's Liability)] regarding an incident involving a "motor vehicle" (defined in s 2 RTA ); and

(2) a suit instituted by an insurer of the Insured (Insurer) under s 96(3) RTA to invalidate the insurance policy (Policy) issued by the Insurer to the Insured [Insurer's Suit (Policy Invalidation)].

B. Background

[2] For ease of reference, we shall refer to parties as they were in the Sessions Court.

[3] The 2nd plaintiff (2nd Plaintiff) is the registered owner of a motorcycle bearing the registration No PER 6664 (Motorcycle).

[4] At about 2.20 am, 3 September 2014:

(1) the 1st plaintiff (1st Plaintiff) was riding the Motorcycle along Jalan Skudai Pantai Lido, Johor, when the 1st Plaintiff alleged that a motorcycle with the Registration No JQA 6107 and ridden by the defendant (Defendant) hit the rear side of the Plaintiff's Motorcycle (Incident); and

(2) the Incident had caused-

(a) the 1st Plaintiff to suffer severe injuries; and

(b) damage to the Motorcycle.

[5] The Defendant's motorcycle was insured by Pacific & Orient Insurance Co Bhd (Intervener).

C. Legal Proceedings

C(1). Negligence Suit

[6] With regard to the Incident, on 19 September 2016, the 1st and 2nd Plaintiffs (referred collectively in this judgment as the "Plaintiffs") filed a negligence suit against the Defendant in the Johor Bahru Sessions Court (Negligence Suit).

[7] In the Negligence Suit-

(1) the Intervener (as the Defendant's insurer) initially appointed Messrs SK Lee (Messrs SKL) to act for the Defendant; and

(2) Messrs SKL filed a defence for the Defendant which pleaded, among others, that the Defendant's motorcycle was not involved in the Incident.

[8] The Intervener carried out investigation regarding the Incident and discovered as follows, among others:

(1) the Defendant's motorcycle was not involved in the Incident; and

(2) the Defendant was paid by an unidentified man to make a false police report to support the Negligence Suit

(Intervener's Discovery).

[9] In view of the Intervener's Discovery:

(1) the Intervener filed Originating Summons No: WA-24NCC-537-12-2016 against the Defendant in the Kuala Lumpur High Court [Intervener's Suit (Policy Invalidation)]. In the Intervener's Suit (Policy Invalidation), on 25 January 2017 the High Court granted a declaration that the insurance policy issued by the Intervener in respect of the Defendant's motorcycle, was void (High Court's Policy Invalidation Order); and

(2) on 28 February 2017, Messrs SKL applied to the Sessions Court for an order that Messrs SKL would cease to act for the Defendant in the Negligence Suit (Messrs SKL's Application). The Sessions Court allowed Messrs SKL's Application on 14 March 2017 [Sessions Court's Order (Messrs SKL's Discharge)] and thereafter the Defendant was not legally represented in the Negligence Suit.

[10] On 28 September 2017, in the Negligence Suit:

(1) the Defendant was not present at the trial in the Sessions Court (Trial). The Plaintiffs did not however adduce any evidence to support the Negligence Suit at the Trial; and

(2) the Plaintiffs obtained a judgment in the Sessions Court against the Defendant (Sessions Court's Judgment). According to the Sessions Court's Judgment, among others:

(a) the Defendant was 100% liable to the Plaintiffs for the tort of negligence;

(b) the Defendant shall pay a total sum of RM998,503.00 as general damages;

(c) actual loss of earnings and future loss of earnings amounting to RM228,000.00 shall be