2010 MarsdenLR 3743 ; 2010 MarsdenLR 1

HANIPAH FARIKULLAH
TAN MOOI SIM & ANOR – Appellant
Versus
UNITED OVERSEAS BANK (MALAYSIA) BHD & ANOR – Respondent

The insurer must prove non-disclosure of material facts and fraud beyond reasonable doubt; ambiguity in health questions must be resolved in favor of the insured.

Headnote:(A) Insurance Act - Section 147(4) - Contract of insurance - Non-disclosure of material fact and alleged fraud - Plaintiffs claimed damages for breach of insurance policy after defendant repudiated liability, citing non-disclosure of diabetes by deceased - Court held burden of proof on insurer to show material non-disclosure, and concluded deceased did not understand the policy due to lack of explanation and language barrier - Insurer failed to prove fraud on part of the deceased, ambiguity in health questions resolved in favor of plaintiffs. (Paras 30, 32, 46)

Facts of the case:
Plaintiffs, joint administrators of deceased's estate, claimed against defendants for damages under an insurance policy after denial of coverage citing material non-disclosure. Deceased had diabetes but was not able to fully comprehend the MRTA Policy form he signed. (Paras 1-6)

Findings of Court:
Court found that deceased was not aware of the specifics of the MRTA Policy due to language barriers and that the question posed was ambiguous; thus, insurer could not avoid policy. Second defendant liable for the insured amount. First defendant dismissed from liability. (Paras 46)

Issues: 1) Whether there was non-disclosure of material fact by the deceased; 2) Whether fraud was proven by the defendants. (Paras 17)

Ratio Decidendi: Court affirmed that the burden of proof rests on the insurer to prove non-disclosure and that vagueness in questions must benefit the insured. Lack of clear explanation regarding health conditions contributed to the conclusion that fraud was not established. (Paras 32, 45)

Result: Plaintiffs' claim allowed against the second defendant; claim against the first defendant dismissed.