An insurer's statutory obligation to cover liability applies even if the insured's actions were criminal, as per Road Transport Act provisions.

Introduction

[1] This is an appeal against the decision of the High Court in affirming the judgment of the Sessions Court in allowing the respondent's recovery action against the appellant under s 90 of the Road Transport Act 1987 ( RTA 1987).

[2] We heard the appeal on 21 August 2014. After hearing the parties, we adjourned the matter for our consideration and decision. We now give our decision and the reasons for the same.

Background Facts

[3] The background facts of the case is well narrated by the learned High Court Judge, which are as follows. On 19 March 2009, the respondent, Kamacheh Karuppen was riding her motorcycle PHW 117 along a public road from Batu Ferringhi heading towards her house. While riding near Pantai Miami, out of a sudden, someone on another motorcycle PHT 7756 tried to snatch her handbag from behind. She tried to resist and as a result of which she fell off her motorcycle and sustained injuries.

[4] The person who tried to snatch her handbag was a pillion rider on the other motorcycle PHT 7756 that was ridden by the son of the insured. The son of the insured was authorised by the insured to ride the motorcycle no PHT 7756 which was covered by the Pacific & Orient Insurance Co Berhad (appellant).

[5] The pillion rider and the son of the insured were charged in the Criminal Court for an offence under s 391 of the Penal Code. They were convicted and sentenced accordingly.

[6] At the same time the respondent filed a civil claim against the pillion rider and the son of the insured in the Georgetown Sessions Court. A notice under s 96(2) of the RTA 1987 was served on the appellant as the insurer of motorcycle PHT 7756. The appellant acknowledged receipt of the same.

[7] Initially, the appellant as the insurer had appointed counsel to represent the pillion rider and the son of the insured in the civil claim. However after realising that the insured had breached the terms and conditions of the insurance policy, the appellant had repudiated the insurance policy vide Notice of Repudiation dated 2 June 2010 (exh D11). The appellant then withdrew its counsel from acting for the pillion rider and the son of the insured.

[8] On 15 March 2011, the respondent obtained a judgment in default against both the pillion rider and the son of the insured. Damages were assessed by the Sessions Courts in the sum of RM219,112.00.

[9] As no payment was made either by the pillion rider or the son of the insured, the respondent then sent the sealed copy of the judgment to the appellant. When no payment was forthcoming from the appellant, the respondent commenced with this recovery action against the appellant under s 90 of the RTA 1987.

[10] The recovery claim was for a sum of RM219,112.00 being the sum that was ordered by the Sessions Court to be paid to the respondent by the pillion rider and the son of the insured. It was the respondent's case that the appellant as the admitted insurer was liable to pay to the respondent being the third party that had suffered injuries as a result of the use of motorcycle PHT 7756 on the road which was insured by the appellant.

At The Sessions Court

[11] After hearing the evidence from the witnesses called by both parties, the learned Sessions Court Judge found that the appellant was liable to pay the sum RM219,112.00 that was awarded to the respondent. The learned Sessions Court Judge held as follows:

"Seksyen 96 APJ mengenakan ke atas penanggung insuran kewajipan membayar kepada orang yang telah memperolehi penghakiman terhadap yang diinsur (pembeli insuran), selepas sijil insuran disampaikan kepada orang yang berkenaan berka