Gopal Sri Ram JCA:

[1] We heard and dismissed this appeal on 4 December 1995, without calling upon Counsel for the respondent to address us. The reasons for our decision now follow.

[2] The respondent carries on the business of an insurance agent. Its case in the Court below rested on the fact that it had appointed the appellant as its subagent to sell policies of Mercantile Insurance Sdn Bhd to members of the public generally. The respondent claimed that under the aforesaid appointment, the appellant, as sub-agent, was authorised to receive proposal forms and to issue cover notes to vehicle owners who wished to purchase insurance cover.

[3] It was also part of the respondent's pleaded case that under the terms of the sub-agency, the appellant was to effect sales of cover notes on a "cash before cover" basis. By that expression is meant that the ultimate consumer will not have his vehicle covered by insurance until and unless he paid for it in advance. The respondent also claimed that the appellant was, under the terms of its appointment as sub-agent, authorised to receive premiums in respect of the cover notes it had sold. From these sums, the appellant was entitled to deduct