Lim Chai Hing v Liberty Insurance Pte Ltd

• Jurisdiction: Singapore
• Judge: Kow Keng Siong
• Judgment Date: 24 March 2023
• Neutral Citation: [2023] SGDC 53
• Court: District Court (Singapore)
• Docket Number: DC/DC 939 of 2022, DC/SUM 2630 of 2022, DC/RA 3 of 2023
• Hearing Date: 24 March 2023
• Citation: [2023] SGDC 53
• Year: 2023
• Plaintiff Counsel: Ramasamy Chettiar, Samuel Chong, Mark Ho (East Asia Law Corporation)
• Defendant Counsel: Anthony Wee, Fendrick Koh (Titanium Law Chambers LLC)
• Subject Matter: Insurance,Motor vehicle insurance,Insurer's liability,Vehicle sublet to driver in breach of term in insurance policy,Driver involved in an accident,Whether insurer's duty under s 9(1) Motor Vehicles (Third-Party Risks and Compensation) Act 1960 applies,Correct test for determining whether insurer is liable to pay under the legislation,How the phrase "avoid or cancel … the policy" in s 9(1) Motor Vehicles (Third-Party Risks and Compensation) Act 1960 is to be understood
• Published date: 20 April 2023

District Judge Kow Keng Siong: Introduction

Section 9(1) of the Motor Vehicles (Third-Party Risks and Compensation) Act 1960 (“MVA”) imposes a duty on an insurer to satisfy a judgment entered against a person insured under its policy in respect of third-party risks. This duty applies “even though the insurer may be entitled to avoid or cancel … the policy”. Would an insurer be liable under s 9(1) if, in breach of its policy, the insured vehicle is sublet to a driver who is later involved in an accident? This issue is raised in the present appeal.

Background

The facts in this case are undisputed. In 2015, Lim Chai Hing (“the Appellant”) was injured in a road traffic accident with a car SGQ 3788T (“Vehicle”) while riding his motorcycle. At the material time, the Vehicle was driven by one Pang Meng Hee Stephen (“Pang”). Pang had hired the Vehicle from Alpha Car Leasing Pte Ltd (“Alpha”).¹ Alpha, in turn, had hired the Vehicle from Elitez Car Rental Private Limited (“Elitez”). Elitez had insured the Vehicle in respect of third-party risks with Liberty Insurance Pte Ltd (“the Respondent”). The terms of this policy are in certificate of insurance no. SD15V04291/VPZ/R01 (“Policy”).² Elitez is the policy holder and insured party of the Policy. The Appellant sued Pang (vide DC/DC 938 of 2018) and subsequently obtained final judgment against him (vide DC/JUD1451/2019) (“Final Judgment”).

In 2022, the Appellant commenced action (vide DC/DC 939 of 2022) (“DC 939”) against the Respondent to satisfy the Final Judgment.

After pleadings had closed, the Appellant applied for summary judgment against the Respondent vide DC/SUM 2630/2022 (“Application”). The Application was heard by a Deputy Registrar (“DR”), who dismissed it and granted unconditional leave to defend.

This is the Appellant’s appeal against the DR’s decision.

Parties’ submissions

The Appellant’s case is straightforward. It is grounded solely on s 9(1) of the MVA.³ According to the Appellant, Pang was an insured driver under the Policy at the time of the accident. This is because he fell within Clause 6 of the Policy as a person “to whom the [Vehicle was] hired”. Pursuant to s 9(1), the Respondent (as the insurer) is obliged to satisfy the Final Judgment even if there are grounds for the Respondent to cancel or avoid the Policy.⁴

The Respondent opposes the Application on the following grounds. First, s 9(1) is not applicable as Pang is not an insured driver under the Policy. This is because the Policy expressly disallows Alpha from subletting the Vehicle to another party such as Pang.⁵ (The DR accepted this submission and dismissed the Application on this basis.) Second, the Statement of Claim at [3] alleges that the Respondent is obliged to satisfy the Full Judgment under s 9 of the MVA “and/or the agreement signed by the Motor Insurer’s Bureau” (“MIB Agreement”) (emphasis added). Given that the Appellant has framed his claim in the alternative, this shows that he is not confident of his case under s 9(1) and there are thus triable issues.⁶ Finally, the Appellant’s claim is vexatious, an abuse of process, and in breach of an implied forbearance to sue. This is because prior to DC 939, the Appellant had already sued the Respondent on the same cause of action vide DC/DC 3233 of 2019 (“DC 3233”). The Appellant withdrew DC 3233 at the trial stage after the Respondent had agreed to his request to waive costs. The Respondent submits that there are triable issues as the Appellant disputes (i) their evidence of how DC 3233 came to be withdrawn and (ii) whether their evidence precludes the Appellant from commencing DC 939.⁷

My Decision Applicable principles for summary judgment

The principles for entering summary judgement are well settled. Such a judgment may be entered if the facts and law needed to determine the claims are not in dispute. If the applicable law is in dispute, courts may still enter summary judgment if (a) the legal controversy can be easily resolved and (b) both the law and the facts are on the side of the plaintiff.

Procedurally, the plaintiff must first show that he has a prima facie case for summary judgment. If he fails to do so, then his application will be dismissed with costs. If the plaintiff can show that he has a prima facie case, then the defendant must establish that there is a fair or reasonable possibility that he has a real or bona fide defence. If the court finds that the defence is not credible after having regard to its consistency with contemporaneous documents, its inherent plausibility, and other compelling evidence, then the plaintiff is entitlement to summary judgement: Goh Chok Tong v Chee Soon Juan [2003] 3 SLR(R) 32 at [25].

Section 9(1)

Applying these principles to the present case, the first step is to assess whether the Appellant has made out a prima facie case that s 9(1) of the MVA applies. This section stipulates the following:

Duty of insurers to satisfy judgments against persons insured in respect of third-party risks

9.—(1) Subject to this section, if after a certificate of insurance has been issued under section 4(9) to the person by whom a policy has been effected, judgment in respect of any liability required to be covered by a policy under section 4(1)(b) (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, even though the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the following apply to the insurer: …

[emphasis added]

The purpose and effect of s 9(1) has been helpfully summarised in Er Kee Jeng v Public Prosecutor [2006] 2 SLR(R) 485 as follows: 37 … Section 9 was enacted to confer upon the third party a direct cause of action against the insurer, a right which did not exist under common law: Nippon Fire and Marine Insurance Co Ltd v Sim Jin Hwee [1998] 2 SLR(R) 77 at [14]. It creates a statutory relationship between the insurer and the third party, which exists irrespective of the contractual position vis-à-vis the insurer and the insured. In order to be discharged from its liabilities under s 9, the insurer must adopt the procedures set out in ss 9(3) to 9(5), which were intended to give third parties adequate notice that the insurer had disclaimed not only its contractual obligations to the insured, but also its statutory obligations to the third party. Failure to follow these procedures only entails the insurer’s continued liability under statute and not contract. …

On a plain reading of s 9(1), the Appellant must satisfy four requirements before that provision is engaged.

Three requirements satisfied

First, the Appellant must show that a certificate of insurance under s 4(9) of the MVA has been issued vis-à-vis the Vehicle. It is not disputed that this requirement is satisfied in the present case, and that the certificate complies with the prescribed form as set out in Form A in the Schedule to the Motor Vehicles (Third-Party Risks and Compensation) Rules.⁸

Second, the Appellant must prove that there is a judgment against Pang in respect of liability required to be covered by a policy under s 4(1)(b) of the MVA. Section 4(1)(b) stipulates the following requirements:

Requirements in respect of policies and securities

4.—(1) In order to comply with the requirements of this Act, a policy of insurance must, subject to subsection (4), be a policy which — (a) … (b) insures the person, persons or classes of persons that may be specified in the policy in respect of any liability which may be incurred by him, her or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle in Singapore and in any territory specified in the Schedule.

…

[emphasis added]

Again, it is not disputed that the second requirement in s 9(1) has been satisfied – the Appellant had obtained the Final Judgment against Pang for personal injuries suffered due to the accident.

Third, the Appellant must also establish that the terms of the policy issued by the Respondent cover the liability set out in s 4(1)(b). This requirement is again satisfied in the present case. ⁹

Whether Pang is a “person insured by the policy”

Finally, under s 9(1), the Appellant must show that Pang is a person insured by the Policy.

This appeal and the Application hinge on whether the Appellant has satisfied this fourth requirement.¹⁰

Clause 6

The persons who are covered under the Policy in respect of third-party risks are set out in Clause 6 of the certificate of insurance (“Clause 6”). According to this clause,¹¹ the Policy covers –

Any person who is driving on the Policyholder’s order or with their permission or to whom the vehicle is hired.

[emphasis added]

Policy does not cover Pang

As stated earlier, the “Policyholder” in this case is Elitez. On a plain reading of Clause 6, the Policy covers three classes of drivers. The first are those who drive the Vehicle on Elitez’s order. The second are persons who drive the Vehicle with Elitez’s permission. These two classes are irrelevant in the present case – the Appellant has not adduced any evidence to prove that Pang comes within these two classes of drivers.

The third class of drivers covered by the Policy are “those to whom the vehicle is hired”. The Appellant submits that Pang falls within this class of drivers on the basis that he had hired the Vehicle from Alpha.¹²

I am unable to accept the Appellant’s submission. First, reading Clause 6 in context, the words “[a]ny person … to whom the vehicle is hired” (“the Words”) must refer to a person to whom the vehicle is hired from the Policyholder, i.e., Elitez. Second, it is unreasonable to interpret the Words so widely – as the Appellant has done – to include any person who happens to hire the Vehicle. On the Appellant’s interpretation...