Etiqa General Takaful Berhad v 1. ) AWIE ANAK KILAU 2. ) TAMRON AUTO SERVICE 3. ) HALIJAH BINTI ISMAIL 4. ) NUR IFFAH NADZIRAH BINTI MOHD HAFIZ

Case Significance

Applies section 96 of the Road Transport Act 1987 and AmGeneral Insurance Bhd v Sa'Amran Atan to hold that registration of ownership fixes the insurer with third-party liability even after a sale, and that an injured third party must be joined and heard before any declaration of non-enforceability is made.

This High Court decision concerns an insurer's application for a declaration that a motor policy is not enforceable under section 96 of the Road Transport Act 1987, and the protection that provision affords to innocent third-party accident victims. The recurring mischief the court described is that where a registered owner insures a vehicle, then sells it to a buyer who fails to register the transfer or take out insurance, and the buyer causes an accident during the policy period, the injured third party may be left without recovery if the insurer can disclaim liability on the ground that the insured had ceased to have an insurable interest. The applicant insurer sought a declaration under section 96(3) that would, if granted, provide a complete defence to any recovery by the injured third party under section 96(1). The court applied the Federal Court's decision in AmGeneral Insurance Bhd v Sa'Amran Atan, which endorsed the principle that the underlying purpose of compulsory third-party motor insurance is to ensure that innocent third parties injured in vehicular accidents receive full and effective protection, regardless of the private arrangements between insurer and insured. On that authority, if the insured remains the registered owner of the vehicle at the time of the accident, liability is imposed on the insurer notwithstanding that the insured had sold the vehicle and ceased to have an insurable interest. The court also emphasised that an injured third party must be joined and given every opportunity to defend his or her rights before such a declaration is made. Finding against the insurer on the facts, and noting the opposition of the injured third-party respondent, the court dismissed the originating summons with costs. The judgment is a useful application of section 96 and of the Sa'Amran Atan principle, confirming that registration of ownership fixes the insurer with liability for the protection of accident victims.