SS MOTOR CENTURY SDN BHD v 1. ) WAWASAN SINAR GEMILANG SDN BHD 2. ) KUA JUINN ONN 3. ) KUA JIUNN YEE 4. ) KUA GUAN CHAI 5. ) PHUN BOOI MOOI

Case Significance

Illustrates the limits of vicarious liability as between a landlord and a tenant operating on the premises, and the striking out of a subrogated claim that sought to fix landowners with liability for a tenant's operations absent any employment or agency relationship.

This High Court decision at Kuala Lumpur concerns an application to strike out a subrogated insurer's claim against alleged landowners, on grounds of vicarious liability and locus standi, arising from a factory fire. The plaintiff, an insured business, had sued a company that operated machines on the relevant property together with several individuals, including two said to be the owners of the factory. The fourth and fifth defendants applied to strike out the writ and statement of claim against them under all limbs of Order 18 rule 19(1) of the Rules of Court 2012. Because the individual defendants are natural persons named only as parties, this analysis refers to them by role, while the corporate party is named.

Two arguments were decisive. The first was that the relationship between the operating company and the fourth and fifth defendants was one of landlord and tenant, not of employer and employee or principal and agent; the operation and maintenance of the machines on the property lay solely with the tenant company, which was not the servant or agent of the landlords, so that vicarious liability could not attach to the fourth and fifth defendants. The plaintiff's reliance on authority concerning the owner and driver of a vehicle — a materially different relationship — did not assist it, and no other authority was advanced to support the extension of vicarious liability to landowners. The second was that the plaintiff, having subrogated all its rights and remedies in respect of the fire to its insurers, faced a challenge to its locus standi to bring the claim.

The court accepted the striking-out arguments and allowed the fourth and fifth defendants' application under limbs (a), (b) and (d) of Order 18 rule 19(1), ordering the plaintiff to pay costs of RM3,000, subject to allocator. The judgment is a useful illustration of the limits of vicarious liability as between a landlord and a tenant operating on the demised premises, and of the readiness of the courts to strike out a claim that seeks to fix an owner with liability for a tenant's operations without any employment or agency relationship.