Misrepresentation by insurance agents creates liability for the insurer, entitling the insured to rescind the insurance contract.

[1] The Respondents filed a claim against the Appellant and two others (hereinafter referred to as the 2nd Defendant and the 3rd Defendant) for a declaration that the Life insurance policies No 000350155 and 000350156 issued by the Appellant be declared null and void for misrepresentation and mistake. The Respondents also claimed for the return of the premiums paid amounting to RM110 000, damages and costs in the Sessions Court vide Civil Suit B5-NCVC-06-01-2014.

[2] After a full trial, the learned Sessions Judge ('SJ') allowed the Respondents application. This is the Appellant's appeal against the said decision.

Facts

[3] The Respondents are husband and wife. The Appellant is an insurance company, whilst the 2nd Defendant was an authorised agent of the Appellant and the 3rd Defendant was an authorised agent as well as a unit manager of the Appellant's company.

[4] In 2009, the 2nd Defendant approached the 1st Respondent and made representations to the 1st Respondent to invest in an investment scheme of the Appellant. The 1st Respondent was asked to pay a one-time payment and was told that he will get a 6% yearly interest on the sum invested. The 2nd Defendant also represented to the 1st Respondent that a 33% dividend will be obtained in the 1st year of investment with interest in the range of 6-15% yearly. The 1st Respondent was also told that the investment scheme further offered an insurance coverage of RM500 000 and that within 7 years the 1st Respondent will get double the amount invested.

[5] The 1st Respondent agreed to take up the investment scheme and signed empty proposal forms (P3 and P4) which were later filled up by the 2nd and 3rd Defendants. The 1st Respondent invested a sum of RM50 000 for himself and another RM50 000 for his wife, the 2nd Respondent, as premium. Both policies came into force on 30 June 2009.

[6] According to the 1st Respondent, a year later, after signing the proposal forms P3 and P4 which were dated 23 June 2009, the 2nd Defendant came to see him and asked him to top-up the amount of RM5,000 for each person to keep the policies alive. The 1st Respondent then began to have some doubts as to the above requirement made by the 2nd Defendant and decided to go to the Appellant's office to seek explanation. There, he met the 3rd Defendant who was then the Unit Manager of the Appellant and was told the same as what the 2nd Defendant had told him before.

[7] The 1st Respondent then told the 3rd Defendant that he could not afford to pay the top-up amount of RM5000 each as he was not told earlier that there would be a top-up payment that had to be made. The 3rd Defendant then said that the amount could be reduced to RM2500 for each policy. Thinking that it was still for the investment purposes and as he was assured as such, the 1st Respondent then paid the agreed amount of RM5000 for both policies.

[8] According to the 1st Respondent, he believed all the explanation given by the 2nd Defendant which was later confirmed by the 3rd Defendant. In evidence (witness statement at p 34 of the Rekod Rayuan Tambahan Ke-2) the 1st Respondent stated that even though he read the policies given to him, he was not able to understand the whole content. Therefore, he believed the representation made by the 2nd and 3rd Defendants. The 1st Respondent further stated in evidence that when he received copies of the policies, he saw the word "Whole Life". He later called the 2nd Defendant and inquired as to why it was stated as such. The 2nd Defendant then told him that it was a flexi plan which provided c