Full disclosure of material facts in insurance proposals is mandatory; failure to disclose prior incidents allows insurers to repudiate contracts without needing to prove materiality.

Introduction

[1] This claim was brought by the Plaintiff who has under its stable of entities a hospital, Universiti Kebangsaan Malaysia Medical Centre ("UKMMC"), against the Defendant, an insurer, under a Takaful insurance policy. The Plaintiff had been found liable for medical negligence in an action brought by one of UKMMC's former patients. Having failing to reverse the decision on appeal, the Plaintiff then sought indemnity from the Defendant as their insurer under the Medical Malpractice Indemnity Takaful ("MMIT") policy. It is an insurance to indemnify the Plaintiff against any claim, inter alia, for actual or alleged breach of professional duty in provision of any medical service by reason of any act, error or omission committed or allegedly committed by the Plaintiff provided that the alleged act or omission occurs after the retroactive date stated in the Schedule. The Defendant refused to indemnify on the grounds that the Plaintiff breached the Basis Clause of the policy which entitled them to repudiate liability on the terms and condition of the Takaful policy.

[2] At the conclusion of the trial, I dismissed the claim on the basis that the Plaintiff failed to disclose a circumstance that might lead to a claim when the Plaintiff proposed to the Defendant for coverage.

Brief Background

[3] On 10 March 2015, the Plaintiff completed a Proposal Form for the MMIT coverage and handed to a representative of PNSB Insurance Brokers Sdn Bhd. ("PNSB"), an insurance broker, who in turn submitted the proposal to the Defendant for evaluation. The Plaintiff made no mention of any facts about the incident involving Henry Siang Len ("Henry Siang Len incident") in the Proposal Form despite having knowledge of that incident involved medical negligence and malpractice and the fact that there was an internal investigation meeting for the incident on 2 March 2011.

[4] Based on that Proposal Form, the Defendant then issued MMIT dated 22 December 2015 with Certificate No 011550009770-01 for the period from 8 December 2015 to 7 December 2016.

[5] On 21 December 2016, the Plaintiff was served with a Writ of Summons bearing No WA-22NCVC-795-12/2016 filed by Henry Siang Len who was represented by Messrs. P.S. Ranjan (hereinafter referred to as the "Suit 795").

[6] Upon receiving the said Writ of Summon and Statement of Claim, the Plaintiff then served PNSB a letter dated 21 December 2016 enclosed with a Notification of Claim Form dated 21 December 2016. In the Notification of Claim, it was stated that the date of work done out of which the claim arises was 21 December 2016.

[7] PNSB then informed the Defendant about the civil claim brought based on the Henry Siang Len incident. The Defendant appointed Messrs. Azim, Tunku Farik & Wong to represent the Plaintiff in the Suit 795 until 6 April 2018.

[8] On 12 March 2018, Messrs. Azim, Tunku Farik & Wong sent an e-mail asking the Plaintiff a series of question regarding to the Henry Siang Len incident. Via an e-mail dated 13 March 2018, the Plaintiff admitted that there was an internal investigation meeting for Henry Siang Len incident held on 2 March 2011 and the Plaintiff became aware that the Henry Siang Len incident is a circumstance that might give rise to a claim on 7 December 2015 ie when the Plaintiff received a letter from Messrs. P.S. Ranjan requesting for the medical records of Henry Siang Len.

[9] Upon finding out the true state of affairs about the Henry Siang Len incident, the Defendant then sent an e-mail dated 4 April 2018 to PNSB stating that the Suit 795 is not covered under the policy. PNSB forwarded the same e-mail to the Plaintiff on the same day. In effect, the Defenda