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2023 MarsdenLR 1870
HIGH COURT MALAYA SHAH ALAM
CHONG LAI KENG – Appellant
Versus
PRUDENTIAL ASSURANCE MALAYSIA BERHAD – Respondent
[Civil Suit No: BA-22NCC-21-02-2022]
The duty of utmost good faith in insurance contracts mandates full disclosure of all material facts; failure to do so can result in policy repudiation.
Headnote:(A) Financial Services Act 2013 - Schedule 9 - Life insurance policies - Claim repudiated due to alleged fraudulent non-disclosure by the Life Assured regarding existing policies - The court emphasized the duty of utmost good faith (uberrimae fidei) in insurance contracts (Paras 8, 29, 30) - The Life Assured failed to disclose three existing policies amounting to RM3.5 million, constituting a material fact (Paras 49, 64) - Court found that the Life Assured acted fraudulently by not disclosing these policies during the application for two new policies (Paras 84) - Plaintiff's claim dismissed with costs. (Paras 84, 85)
(B) Fraudulent non-disclosure - The court established that the Life Assured's failure to disclose material facts warranted the repudiation of the insurance policies (Paras 25, 84).
(C) Materiality of non-disclosure - The existence of other insurance policies was deemed a material fact that would have influenced the insurer's decision (Paras 64, 68).
(D) Burden of proof - The Defendant successfully proved fraudulent non-disclosure by the Life Assured on a balance of probabilities (Paras 84).
| Table of Content |
|---|
| 1. claim arises from life assured's death. (Para 1 , 2 , 3) |
| 2. details of life insurance policies. (Para 4 , 5 , 6 , 7 , 8 , 9) |
| 3. circumstances surrounding life assured's death. (Para 10 , 11 , 12 , 13 , 14) |
| 4. defendant's grounds for claim repudiation. (Para 15 , 16 , 17 , 18) |
| 5. plaintiff's appeal against claim denial. (Para 19 , 20) |
| 6. witnesses presented by parties. (Para 21 , 22) |
| 7. agreed issues for trial. (Para 23) |
| 8. court's initial observation on issues. (Para 24 , 25 , 26 , 27) |
| 9. legal framework governing insurance contracts. (Para 28 , 29 , 30 , 31) |
| 10. duty of disclosure in insurance. (Para 32 , 33) |
| 11. burden of proof on defendant. (Para 34 , 35 , 36) |
| 12. plaintiff's acknowledgment of policy details. (Para 37 , 38 , 39 , 40) |
| 13. defendant's underwriting process explained. (Para 41 , 42 , 43 , 44) |
| 14. defendant's request for supporting documentation. (Para 45 , 46 , 47) |
| 15. material facts and duty of disclosure. (Para 48 , 49) |
| 16. life assured's misrepresentation. (Para 50 , 51 , 52 , 53 , 54 , 55) |
| 17. court's evaluation of life assured's intent. (Para 56 , 57 , 58 , 59 , 60) |
| 18. court's conclusion on misrepresentation. (Para 61 , 62) |
| 19. materiality of non-disclosure defined. (Para 63 , 64 , 65) |
| 20. defendant's proof of fraudulent non-disclosure. (Para 66 , 67 , 68) |
| 21. legal standards for proving fraud. (Para 69 , 70 , 71) |
| 22. court's findings on fraudulent intent. (Para 72 , 73 , 74) |
| 23. implications of life assured's actions. (Para 75 , 76 , 77) |
| 24. court's view on duty of disclosure. (Para 78 , 79 , 80) |
| 25. conclusion on fraudulent misrepresentation. (Para 81 , 82 , 83) |
| 26. court's final ruling and order. (Para 84) |
Introduction
[1] The Plaintiff was the wife of Than Poo Ling, the Life Assured (referred to as "the Life Assured"). It was the Life Assured's unfortunate passing that had given rise to this suit.
[2] When the Plaintiff submitted her claim for the two (2) policies acquired from the Defendant by the Life Assured, the Defendant repudiated the claim and declared the policies null and void from their inception. The grounds for this were alleged fraudulent non-disclosure and/or suppression of material facts by the Life Assured at the time of purchasing the two (2) policies.
[3] Hence, the Plaintiff filed this action against the Defendant to reinstate the two (2) life policies valued at RM4 million, which were acquired by the Life Assured and for which she had been appointed as the nominee.
Brief Facts Leading To This Action
[4] On 8 September 2016, the Life Assured had applied and/or proposed a Proposal Form bearing No 104241190 to the Defendant for life insurance with a basic sum assured/death benefit of RM2 million (PAMB Proposal 1). Subsequently, on 27 September 2016, the Defendant issued the policy bearing no 35192844 to the Life Assured for the 1st Proposal Form (PAMB Policy 1).
[5] Through another Proposal Form bearing No 104222635 dated 29 September 2016, the Life Assured had applied and/or proposed to the Defendant for another life insurance with a basic sum assured/death benefit of RM2 million (PAMB Proposal 2). Thereafter, on 19 October 2016, the Defendant issued the policy bearing 35201115 to the Life Assured for the 2nd Proposal Form (PAMB Policy 2).
[6] The Plaintiff had been named as the nominee of the life insurance applied for in the 1st and 2nd PAMB Proposal Forms
[7] As per life policies, the insured event was the death of the Life Assured. The coverage provided by the two (2) Policies amounted to RM4 million in total.
[8] Under the 1st and 2nd PAMB Proposal Forms, the Defendant had expressly informed the Life Assured of his pre-contractual duty of disclosure. Notably, the PAMB Policies 1 and 2, characterised as uberrimae fidei contracts (as provided for in para 5(9) of Schedule 9 of the Financial Services Act 2013), had imposed upon the Life Assured a duty to act with the utmost good faith and to make full disclosure of all facts material to the contracts.
[9] In addition to the aforement
