Topic 10 – Agent

Sec 135 Contract Act – agent is a person employed to do any act for another or to represent another in
dealing with third person
Sec 2 FSA - “insurance agent” means a person who does all or any of the following:
- solicits or obtains a proposal for insurance on behalf of an insurer;
- offers or assumes to act on behalf of an insurer in negotiating a policy;
- does any other act on behalf of an insurer in relation to the issuance, renewal, or continuance, of a
policy;
1. Soliciting and Negotiating
Principle of imputed knowledge – Since agent is considered as an extension of the insurer, anything
the agent knows will be considered as knowledge of the insurer as well (the law assumed that the
agent will inform the insurer)
Para 12 schedule 9 FSA - Disclosure to agent is deemed as disclosure to insurance company as long
as the agent was acting in his capacity as agent at the time the information was made known to him
Mazzarol v United Oriental Assurance Sdn Bhd (Kuantan)
Plf insured a vessel with Def. Before the policy was issued, the vessel had some problem and had to
be grounded. This fact was known to the agent who sold the policy, he also came to inspect the vessel.
The vessel then met with an accident. Def denied compensation on ground that Plf failed to disclosed
the fact that the vessel was grounded. The court held that there was no non-disclosure. The
information had been disclosed to the agent and this amount to disclosure to the insurer.
2. To fill in the proposal form
Common Law: Agent have no authority to fill in proposal form. Insurer did not give agent the power
to fill in proposal form on behalf of the insured. Agent who will in proposal form on behalf of insured
are actually acting as agent to the insured. As such, when an agent wrote in proposal form, he ceased
to be insurer’s agent. Therefore, the insurer cannot be made liable for any wrong or fraud committed
by the agent when he fill in the proposal form on behalf of the insured.
Newsholme Brothers v Road Transport & General Insurance Co (1929)
Pff were the owners of several busses. They submitted proposal forms for some bus policies through
the Def’s agent. The forms was filled by Def’s agent but signed by the Pff after the forms were
completed. When a claim was submitted, Def repudiated it on the ground that some of the information
in the forms were incorrect. The Pff argued that they had supplied the information to the agent but the
agent wrote down answers when he was filling the proposal form. The court allowed Def to repudiate
the claim on the ground that agent filling the proposal form was acting in excess of his authority, as
such, any knowledge obtained was obtained outside capacity as agent. That knowledge cannot be
imputed to the insurer. Further more there was a declaration signed by the Pff confirming that all
information were true
Wong Lang Hung v National Employee Mutual General Insurance Association (1972) 1 MLJ 191
Def’s agent filled in the proposal form for the pff. Pff took the form home and someone read it to her.
She signed the form eventhough there was some incorrect information stated. During the hearing, Pff
stated that she had provided the correct answer to the agent. The agent however failed to record it
properly. The court held that the agent was the agent of the insured and not acting for the company.
However, information known by the agent before filling the proposal form is info obtain when he was
still in capacity of agent to the insurer
Bawden v London, Edinburgh and Glasgow Assurance Co (1892)
Plf was blind on one eye. The agent assisted him to fill the proposal form. There was a declaration at
the end of the proposal form that the insured have no disabilities which may increase the risk of
accident. Plf acknowledged this by signing at the bottom. The court held that the knowledge of an
agent was also the knowledge of the insurer. Agent had known that Plf was blind before he help Plf to
fill the proposal form
United Malayan Insurance Co Ltd v Lee Yoon Heng (1964)
the insurer sought a declaration issued to the insured as void for non disclosure. Insured contended
that this fact was made known to the agent who had helped him fill in the proposal form. The court
granted the declaration. The judge also stressed out that insured had signed the declaration were true
and would be the basis of the contract
National Insurance Co v Joseph ( 1973)
insurer claim that the policy issued to insured was void for misrepresentation. Insured failed to
disclose that his previous policy was cancelled after he involved in accident. The insured had signed
a blank proposal form containing basis of contract clause. The form was actually filled in by the
agent. The court held in favor of the insurer since there was nothing to prove that the fact was
disclosed to the agent. Even if the info was disclosed to the agent when he was filling the proposal
form , the insurer would still be successful since by signing the form, insured would be taken as to
have read and acknowledge the truthfulness of the whole form
Leong Kum Whay v QBE Insurance (M) Sdn Bhd. (2006) 1 MLJ 710
The Court of Appeal held that section 44A (replaced by sec 151 IA) intends to depart form the
Common Law as stated in Newsholme. The section intends to reverse the Common Law
3. To grant temporary cover

Chop Eng Thye Co v MNI Sdn Bhd (1977) 1 MLJ

MNI employed a company (AGC) as their agent. The agent then Mr Lee to solicit policy. Insured
bought a fire policy from Mr Lee and was issued a cover note by AGC. Fire broke and destroyed
insured’s property. MNI refused to pay compensation on ground that the cover note was issued
without their authorization. The court held that the note was issued by AGC and Mr Lee, as such
binding on the insurer.

4. To change scope of cover in policy

Re Hooley Rubber and Chemical Manufacturing Co (1920) 1 KB 255

A fire policy cover damage by explosion but not damage due to fire that happen after the explosion.
Insured asked the agent whether the policy cover damage by explosion which follows a fire. The
agent said that it would cover. The court held that the insurer was not bound by the agent
representation since it was representation of law and not fact. Therefore the insurer was not
estopped from denying the information given
5. Appointing sub agent

Chop Eng Thye Co v MNI Sdn Bhd (1977) 1 MLJ

A sub agent would be responsible to the agent. The agent will be responsible to the insurer for any
act or omission of the sub agent

6. Handling premium

Lee Cheng Oo v China Insurance Co (1962) MLJ 297

Payment of premium by insured to s/one not authorized to receive does not amount to payment to
the insurer. NO representation by the alleged agent can be considered as authorization, if no specific
authorization given.

7. Handling notice of Loss/Claim

Lee Seng Heng v Guardian Assurance Co ( 1932) MLJ 17

insured claim under fire policy was denied by the insurer on the ground that the a written notice was
not given to the insurer. Insured argued that he had verbally informed an employee of the agent.
The judge held that e/though notice to authorized agent is notice to insurer, the policy requires it to
be in writing.

Topic 11 – Claims

Notice – Time to give Notice

Sec 29 Contract Act – contract which limit / prohibit legal action is not valid as such, any contract
which contain a clause which limit the right to take legal action, the clause is not valid

Limitation Act – sec 6 – damages in tort – 6 years , damages in fatal accident – 3 years

Public Insurance Co Ltd v Lee Chau ( 1969) 2 MLJ 10

Insured involved in accident and insurer had to pay compensation to 3rd party. The insurer sought to
recover the money from insured on the ground that insured failed to comply with a condition which
requires him to notify the insurer of accident as soon as possible. Insured gave notice 5 months after
accident (4 days before trial). The court held that the notice was not given as soon as possible

Corporation Royal Exchange v Teck Guan (1921) 2 FMLSR 92

Insured claim for compensation under fire policy. His claim was rejected in January 1912. Insured
filed a suit in court against insurer’s rejection in Mei 1921. there was a clause in the policy which
stated that ‘if a claim be made and rejected and action or suit be not commence within 3 month of
the rejection… all benefit under this policy will be forfeited.” The insurer use this clause in court.
court rejected this argument on ground that the effect of the clause was to cut short the period
where insured may bring a suit for compensation. This being so, that condition is rendered void

Ong Choon Lin t/a Sykt Fed Motor Trading V The New Zealand Insurance Co Ltd (1991) 1 CLJ 601

It was held that a condition of the policy was void under section 29 of Contract Act 1950 as the
period allowed in the policy for making a claim was less than the period allowed by the law of
limitation.
Diff view:

Chop Eng Tye & Co v Malaysia National Insurance Sdn Bhd (1977) 1 MLJ

There was a clause in the policy which state ‘ in no case whatever shall the company be liable for any
loss or damages after expiration of 12 month unless the claim is subject of pending action or
arbitration” . The court allowed insurer to use this clause and did not take into consideration of
contract act

Notice – Need for Notice

Stoneham v Ocean Railway & General Accident Insurance Co (1887) 19 QBD

Deceased owned a life policy covering his death by accident within UK. A condition in the policy
stated that 7 days notice must be given to the insurer in even of fatal claim. Insured drawn and
notice was sent after the expiration of 7 days. Insurer denied liability on ground that there was a
breach of CP. The court consider another provision in the policy which stated that if the insured
engage in employment with bigger risk, insurer must be informed, failure of which, the policy would
be void. Court held that the condition was not CP. If it had been intended to , it too would be
expressly provided that failure to comply would enable the insurer to avoid the claim

Notice – Waiver

Chong Kok Hwa v Taisho Marine and Fire Insurance Co Ltd

A 3rd party was injured in an accident. He sued the insured for compensation. The insurer settled the
claim through consent judgment at $3250. the insurer later sought to recover the sum on ground
that he had breached the condition precedent regarding notice. The insured argued that by taking
defense of the claim, insurer had waived the requirement of notice. The judge commented that the
argument failed as in taking over the 3rd party action, the insurer was merely exercising its right
under the policy.

Who can claim under a policy?

1. The insured

- As a party to a contract, insured have the right to enforce it

2. The party whose interest and on whose behalf the policy was taken

- Recognize if at the inception of the policy that their interest is to be protected by the policy

Malaysian Australian Finance Co Ltd v The Law Union and Rock Insurance Co Ltd (1972) 2 MLJ 10

Applicant was the owner of a tractor. The tractor was hired to Choong. Choong took up an insurance
over the tractor. The policy contained that the applicant was the owner and money payable under
the policy would be payable to them so long as they remain owner. It was held that endorsement in
the policy made it clear that the insured and insurer regard the applicant to be a party to contract

3. 3rd party

- Where there is agreement by the insurer to pay direct to the 3rd party, in 3rd party motor claim,
where the insured is bankrupt
Proof of loss

In making a claim, insured must proof :

1. Insured event occurred

2. The occurrence of insured event had caused the loss

Insured need to proof actual loss.

- Mere speculation that the insured event had caused the loss is unacceptable

Boon & Cheah Steel Pipes Sdn Bhd v Asia Insurance Co Ltd (1973) 1 MLJ 101

668 steel pipes were insured against total loss on voyage prom Prai to Brunei. As a resul of peril at
sea, all but 12 fell into the sea. Visual inspection indicate that the 12 pipes were damage. Insured
claim for total loss. The claim was denied on ground that there was no survey made to ascertain the
actual loss

Statement of claims

After a claim is received by the insurer one of these things can happened:

a. Insurer settle the claim without dispute to the quantum and liability

b. There is dispute on liability (who’s fault) or quantum (measurement of loss)

Holmes v Payne (1930) 2 QB 301

Insurer paid the claim for loss of necklace. Later on the necklace was found. It was held that once a
claim is settled, the agreement to settle cannot be set aside.

Magee v Pennine Insurance Co

M bought an insurance policy for his car declaring that he is the one who will be driving the car. In
actuality, his son who does not have driving license drove it. After the car involve in accident insurer
paid compensation. Insurer later demand to set aside the agreement to compensate. The court
allowed the application since the partied were under mistake

Insurer can recover the money paid if:

a. There is mistake of fact

b. There is fraud

Kelly v Solary 152 ER 24

After insurer made payment under life policy, they realized that the policy had lapse due to non-
payment of premium. This fact was not known to the insurer at the time of payment of claim. Court
allowed the insurer to claim back the money from the insured on the ground of mistake of fact

Arbitration Clause

Wong Lan Hung v National Employee Mutual General Insurance (1972) 2 MLJ 191

A fire policy was denied as the plaintiff conceded that they failed to comply with the arbitration
condition
Topic 12 – Refer whole slide

Topic 13 – Liability of insurer to satisfy judgment against the insured

Sec 96 RTA: If, after a certificate of insurance has been delivered under subsection (4) of section 91
to the person by whom a policy has been effected, judgment in respect of any such liability as is
required to be covered by a policy under paragraph (b) of subsection (1) of section 91 (being a
liability covered by the terms of the policy) is given against any person insured by the policy, then
notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or
cancelled the policy, the insurer shall, subject to this section, pay to the persons entitled to the
benefit of the judgment any sum payable thereunder in respect of the liability, including any amount
payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any
written law relating to interest on judgments.

Conditions:

1. There must be a judgment against the person insured

New India Insurance Co Ltd v Simirah (1966) 2 MLJ 1

A man was killed by a car driven by Chua. The car belong to Chong and insured with appellant
(insurer). The man’s wife (respondent) obtained a judgment against Chua and enforce it against the
Appellant. There was evidence that prior to the accident, the car was sold to Chua. The court held
that judgment against Chua is not judgment against insured, it could not be enforced against the
Appalent.

QBE Insurance Ltd v Hasyim b Abdul & Anor (1981) 2 MLJ 275

2 minors were collided by a van belonging to Gov of Malaysia. The parents sued the van driver and
Gov. There was an application to bring the insurer as third party. The application was allowed but
later on rejected on appeal on the ground that liability of insurer to a third party did not arise before
judgment had been obtained

2. Judgment must be in respect of liability which is required to be covered by compulsory insurance

Does not cover : insured driver, passenger, employee of insured , some insurer does not cover
property damage (s91(1) & s90 (3) RTA 1987)

QBE Insurance Ltd v Thuraisinggam (1982) 2 MLJ 62

A third party was damaged when it was hit by a car driven by insured. Third party obtained a
judgment and sought to enforce it against the insured insurer. On appeal, it was held that the third
party have no statutory right to sue insurer for a liability which was not required to be covered by
law (property damage).

3. The liability must be in fact covered by the terms of the policy

4. Certificate of insurance had been issued to the insured

- RTA 96 (1)

5. The execution of the judgment had not been stayed pending appeal

- Sec 96 (2)
6. The insurer had notice of proceeding by third party against insured.

RTA 96(2) – no sum is payable under sec 91 unless insurer had been notified of the proceeding at
least before or 7 days after the commencement of the proceeding.

Rohani bt Muda v Mohamed Rahim & Anor (1979) 1 MLJ 25

Abd Razak J: the purpose of this sec is to compel the insurance comp as long as they know of the
impending action to pay whenever judgment is entered against the insured. It does not concern with
how they come to know

Notice must be notice of proceeding to be instituted not notice advising that legal proceeding may
be resorted to or notice of claim

China Insurance Co Ltd v Ng Siak Yow (1963) MLJ 244

Respondent involved in accident with insured. Respondent solicitor wrote to appellant (insurer of
insured)‘we are instructed to claim damage from you in respect of our client’s injury, please let us
know whether liability is admitted’ after obtaining judgment against insured, respondent sought to
enforce it against the appellant. It was held that the letter ws only notice of claim and not notice of
action