An insurer must notify third parties of declarations that affect their rights under statutory provisions, failure of which invalidates the declaration.

Introduction

[1] This is an action, by way of an originating summons, seeking to set aside a court declaration given to the 1st defendant insurer pursuant to s 96 of the Road Transport Act 1987 ("the Act"). At the conclusion of the hearing, I allowed the same and highlighted to the parties the principal reasons for the decision. This Judgment contains the full reasons for my decision, and

includes some discussions on the rights of third parties vis-a-vis an insurer under the Act.

Key Background Facts

[2] The plaintiff is an individual who claimed to have been involved in and suffered injuries from a road accident on 30 January 2014 when a motorcycle No WRP8601 ridden by him collided with another motorcycle No JMJ 5436 ("the Vehicle") ridden by the 2nd defendant ("the Accident").

[3] The Vehicle was at the material time registered under the name of the 3rd defendant, and insured with the 1st defendant, an insurance company, under Policy No 01-70-13-KS6-002331 for the coverage period between 17 June 2013 and 16 June 2014 issued by the latter ("the Policy").

[4] The plaintiff had, following the Accident, instituted a suit for special and general damages in September 2015 against the 2nd and 3rd defendants at the Magistrate's court in Bandar Baru Bangi ("the Writ Action").

[5] In the meantime, the 1st defendant, after having notice of the Accident under s 96(2) of the Act, as is standard, appointed loss adjusters ('the Adjusters') to investigate the circumstances of the Accident. The Adjusters prepared a final report dated 28 July 2016, which the key findings, relevant for present purposes are as follows:

(a) The 3rd defendant was previously the registered owner of the Vehicle.

(b) The 3rd defendant had, on 27 October 2011, sold the Vehicle to a colleague friend by the name of Nor Mohamad bin Mohd Yusof for a cash consideration of RM5,000.00. The former did not pursue the registration of the change in ownership of the Vehicle.

(c) The 3rd defendant had no further knowledge of the Vehicle, until told by the Adjusters that it got involved in the Accident on 30 January 2014.

(e) The 3rd defendant had also averred the aforesaid version in a statutory declaration dated 20 July 2016.

[6] As a result of the final report produced by the Adjusters which also included the statutory declaration affirmed by the 3rd defendant, and whilst the proceedings in the Writ Action in the Magistrate's court was still pending, the 1st defendant herein, in September 2016 filed an action by way of an originating summons in the High court in Kuala Lumpur (WA-24NCC-399-09-2016) ("Suit 399") in pursuance of s 96(3) of the Act to obtain a declaration that the Policy between the 1st defendant and the 3rd defendant to be void and unenforceable by reasons, among others, of the failure of the 3rd defendant to make disclosure of the sale, the resultant absence of insurable interest, and the 2nd defendant being a person who had ridden the Vehicle without the authorisation of the 3rd defendant.

[7] The Order in Suit 399 was granted by the High court to the 1st defendant on 26 October 2016.

[8] The 1st defendant then instructed its solicitors who were also defending the 2nd and 3rd defendants in the Writ Action at the Magistrate's court to discharge themselves by reason of Order in Suit 399, and given the transfer of interest in and the sale of the Vehicle.

[9] The plaintiff on the other hand claimed only to get to know of the declaration in the form of the Order obtained