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FEDERAL COURT PUTRAJAYA
MARY COLETE JOHN – Appellant
Versus
SOUTH EAST ASIA INSURANCE BHD – Respondent
[Civil Appeal No: 02(f)-3-2008(J)]
Certainly. Based on the provided legal document, the key points are as follows:
The term "contract of employment" in insurance policies is interpreted strictly, requiring a direct employer-employee relationship. Broader interpretations that include independent contractors or passengers carried for various business reasons are generally not accepted (!) (!) (!) .
The scope of liability under insurance policies is confined to the specific definitions and terms stated within the policy. Ambiguities should be resolved in favor of the insured, but a clear contractual relationship is necessary for liability to be enforced (!) (!) (!) .
The relevant statutory provisions specify that liability arises when persons are carried "by reason of or in pursuance of a contract of employment." However, this phrase is to be understood in its ordinary sense, requiring a genuine contractual relationship that directly relates to employment or business reasons (!) (!) (!) (!) (!) .
The interpretation of "contract of employment" involves examining the nature of the relationship, including factors such as control exercised by the employer, the interest in the relationship, the provision of equipment, and how the parties view their relationship. These factors help distinguish between employment and independent contractor arrangements (!) (!) (!) .
Passengers who are carried for reasons other than a contractual employment relationship—such as personal errands, casual travel, or independent arrangements—are generally not covered under liability provisions that specify "by reason of or in pursuance of a contract of employment" (!) (!) (!) .
The legislative intent and statutory definitions emphasize that the relationship must be between an employer and an employee, with the contract of employment serving as a key determinant in establishing liability coverage (!) (!) (!) .
The phrase "in pursuance of a contract of employment" is to be read disjunctively, meaning that liability can arise if the carriage is for business or practical reasons related to employment, not necessarily limited to formal employment relationships (!) (!) (!) .
The interpretation of these provisions aims to prevent broad, unwarranted liability coverage that could lead to unfair consequences for insurers and policyholders. The legal approach favors a narrow, precise understanding aligned with the actual relationship between parties (!) (!) (!) .
Overall, the legal framework underscores the importance of establishing a genuine contractual relationship of employment or business reasons before liability under insurance policies can be invoked, thereby limiting coverage to appropriate circumstances (!) (!) (!) .
Please let me know if further clarification or a different focus is required.
[1] In this appeal two questions have been posed upon leave being obtained by this court. The questions are:
(a) whether the words "contract of employment" in s 75(1)(b)(ii) Road Traffic Ordinance 1958 has been enacted by Parliament to cover only passengers who are being carried pursuant to a contract of service or do the words cover passengers who are carried pursuant to a variety of employment and business reasons such as the appellant was in when the accident occurred;
(b) whether it is necessary to read into s 91(1)(bb) Road Transport Act 1987 and s 75(1)(b)(ii) Road Traffic Ordinance 1958 and the insurance policy after the word "contract of employment" the words "under a contract of service" and thereby restrict the meaning of the words "contract of employment".
[2] The background leading to the appeal before us has been amply laid out in the majority judgment of the court of Appeal (see Mary Colete John v. South East Asia Insurance Bhd , [2010] 2 AMR 385 ). However for purposes of dealing with the two questions posed some details need to be elucidated.
[3] The appellant was a beautician and sometime in July 1985, she was engaged by one Angel Helen Puspam Pereira (Angel) to dress, make-up and beautify a bride for a wedding that is to take place in Kluang. It was agreed that the appellant would be paid RM100 by Angel and transport would be provided by Angel to enable her to travel to and fro from her home in Seremban to Kluang and back.
[4] On the appointed day the plaintiff travelled in car No BBU 8691 belonging to Angel but driven by her brother Edwin Nobel Pereira. On the way to Kluang the car skidded and overturned as a result of which the appellant suffered serious injuries.
[5] The respondent was served with the requisite notice under s 96(2) of the Road Transport Act 1987 ( RTA 1987) being the insurer of the car No BBU 8691. An action was lodged against Angel and her brother being the driver (Muar High court Civil Suit No:23(25)-15-1990). Angel and her brother were held liable resulting in general and special damages being awarded. The finding on liability was affirmed by the court of Appeal. However, the respondent in this appeal refused to pay the damages and costs awarded in Civil Suit No:23(25)-15-1990 resulting in the appellant commencing her action against the respondent under s 96 1987. The High court dismissed the appellant's claim and on appeal the court of Appeal by a majority decision dated 7 November 2007 also dismissed the appellant's claim.
[6] The respondent refuted liability to satisfy the judgment procured by the appellant pursuant to s 96 of the Road Transport Act 1987 . As explained in the majority judgment this Act repealed and replaced the Road Traffic Ordinance 1958 (the Ordinance). At the time of the incident the legislation in force was still the Ordinance but by the time the High court ordered the appellant the claimed general and special damages the Ordinance had been replaced by the RTA 1987. For the purpose of this appeal what is under consideration is s 75 of the Ordinance. Since the policy of insurance which is the subject of dispute was issued pursuant to and in compliance with s 75 of the Ordinance, essentially the complaint in this appeal pertains to the interpretation to be given to the relevant clause in the policy and the provision of law applicable.
[7] The relevant clause in the insurance policy reads:
Section II - Liability To Third Parties.
1. The company will subject to the limits of liability indemnify the insured in the event of accident caused by or arising out of the use of the motor vehicle against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of:
(a) death of or bodily injury to any person except where such death or injury arises out of and in the course of the employment of such person by the insured and excluding liability to any person being a member of the insured's household who is
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