Motor Insurers' Bureau of Singapore and another v AM General Insurance Bhd (formerly known as Kurnia Insurans (Malaysia) Bhd) (Liew Voon Fah, third party)

• Judge: Quentin Loh J
• Judgment Date: 23 February 2018
• Court: High Court (Singapore)
• Docket Number: Suit No 647 of 2016 (Summons No 4880 of 2016)
• Date: 23 February 2018

Motor Insurers' Bureau of Singapore and another

and

AM General Insurance Bhd (formerly known as Kurnia Insurans (Malaysia) Bhd) (Liew Voon Fah, third party)

[2018] SGHC 39

Quentin Loh J

Suit No 647 of 2016 (Summons No 4880 of 2016)

High Court

Contract Remedies — Damages — Whether Motor Insurers' Bureau entitled to substantial damages as trustee of contractual promisee for second plaintiff — Whether Motor Insurers' Bureau entitled to substantial damages on broad ground in Family Food Court v Seah Boon Lock[2008] 4 SLR(R) 272 —

Insurance — Motor vehicle insurance — Insurer concerned — ontract between Motor Insurers' Bureau and defendant requiring defendant to satisfy judgment in second plaintiff's favour — Whether second plaintiff had locus standi to sue defendant for satisfaction of judgment — Whether Motor Insurers' Bureau held contractual promise on implied trust for second plaintiff —

Insurance — Motor vehicle insurance — Motor Insurers' Bureau — Second plaintiff injured in traffic accident — Final judgment obtained by second plaintiff against third party — Judgment not satisfied — Suit commenced by second laintiff and Motor Insurers' Bureau against insurer of third party's motorcycle — Whether defendant liable to satisfy judgment or only to indemnify Motor Insurers' Bureau for so doing —

Held, allowing the claim:

(1) AM Gen did not dispute that it was the “Insurer Concerned” for the purposes of the Domestic Agreement. The real issues between the parties were therefore whether the plaintiffs had locus standi to sue in Suit 647; whether AM Gen was contractually obliged to satisfy the Judgment Debt; and if so, what relief the plaintiffs might obtain: at [34] and [38].

(2) It was appropriate to determine these issues under O 14 r 12 of the Rules of Court, as this would dispose of the suit in large part if not in whole. The facts were within a narrow compass and undisputed, and the questions of law were not specially related to the facts or dependent on the outcome of any factual dispute. A trial judge would not be in a better position to determine the questions posed purely by virtue of having heard the evidence of the witnesses. Nor were the questions such as would benefit from the insight of expert witnesses or witnesses intimately acquainted with the industry. There was also no merit in the defendant's submission that the matter should go to trial because the facts gave rise to an estoppel by convention: at [39], [41], [44], [46] and [47].

(3) Koo had no locus standi to sue AM Gen as she was not party to any of the agreements and the Domestic Agreement could not be characterised as giving rise to an implied trust in her favour. For the court to find that the promisee held the contractual promise on trust for a third party, the contractual promise must have been obtained for the benefit of the third party. While this might be true of cl 3 of the Principal Agreement, which was a contractual promise made by the MIB to the Minister for the benefit of traffic accident victims, the same could not be said of cl 3(1) of the Domestic Agreement. Since the victims would be protected by cl 3 of the Principal Agreement in any event, it was more accurate to say that cl 3(1) of the Domestic Agreement was entered into for the benefit of the MIB, which thereby transferred its obligation to satisfy unpaid judgments to the Insurer Concerned. Moreover, there must usually be some evidence that the contracting party intended to make himself a trustee of the benefit of the contract for the purported beneficiary, beyond the fact that the latter stood to benefit or was intended to benefit from the contract. The preamble to the Domestic Agreement, unlike the preamble to the Principal Agreement, did not suggest this. The principle in Lloyd'sENR therefore did not apply: at [54], [57] to [59], [116] and [151(a)].

(4) There was nothing in the Principal or Domestic Agreements which required the MIB to satisfy the judgment first before any liability arose between the MIB and the individual insurers. That interpretation of cl 3(1) of the Domestic Agreement was at odds with its wording and with other clauses in the two agreements. Clause 3(1) required the Insurer Concerned to satisfy the Judgment Debt in the first instance, not simply to wait for the MIB to do so and indemnify or reimburse it thereafter. AM Gen had breached cl 3(1) by failing to do so: at [70] to [77], [112] and [151(b)].

(5) The MIB was entitled to substantial damages under ordinary compensatory principles of contractual damages, without the need for recourse to the Broad Ground. Until AM Gen satisfied the Judgment Debt, the MIB was liable to do so under cl 3 of the Principal Agreement and could be sued on the same. Although the MIB had not yet been made to satisfy the Judgment Debt, damages could be recovered for prospective and contingent loss, including in the form of a legal liability towards a third party that had not been discharged due to the counterparty's failure to perform in the third party's favour. Though not every liability to a third party would support a claim for substantial damages (for example where it was clear and certain that liability would never be discharged by the claimant), it was clear on these facts that if AM Gen were not made to satisfy the Judgment Debt, the MIB would certainly do so. The Judgment Debt was the measure of the MIB's loss: at [118] to [121], [129] to [131] and [151(c)].

(6) Even if the MIB's continuing liability to Koo did not constitute substantial loss, the MIB would nonetheless be entitled to substantial damages under the Broad Ground for loss of its performance interest in cl 3(1) of the Domestic Agreement. Besides the MIB's obvious financial interest in the discharge of its liability under the Principal Agreement, the MIB had an interest in keeping its operational costs low as well as a social interest in the prompt compensation of traffic accident victims. These factors together gave the MIB a real and substantial interest in the performance of cl 3(1) of the Domestic Agreement and entitled it to substantial damages. Moreover, none of the aspects of the Broad Ground doctrine which remained controversial posed any difficulty in the present case: at [133], [134], [137], [139], [143] and [151(c)].

(7) Since the MIB was entitled to substantial damages, there was no need to consider its claim for specific performance. Final judgment was entered in the MIB's favour for damages in the sum of S$788,057.73, plus interest at 5.33% per annum on the same from 21 February 2011 to the date of judgment: at [150] and [152].

[Observation: The English case of Gurtner v CircuitELR[1968] 2 QB 587 was authority that a traffic accident victim had no action at common law against the MIB directly, but might compel the Public Trustee to sue the MIB on the principal agreement should the MIB fail to discharge its obligations thereunder. It was only if the Public Trustee refused to sue that the victim could commence proceedings against the Public Trustee and the MIB jointly: at [51] and [60].]

Even if an implied trust had arisen in the context of cl 3(1) of the Domestic Agreement, it would not have given Koo a direct action against the Insurer Concerned in her own right. Although the beneficiary might sue a third party directly under what had come to be known as the VandepitteENR procedure, that procedure applied to situations in which the trustee refused to sue. Since the MIB had commenced proceedings against the Insurer Concerned for Koo's benefit, her inclusion as co-plaintiff added nothing to the MIB's case against the Insurer Concerned: at [60], [61] and [64].

There was no obvious reason why the Broad Ground had to be confined to any particular genre of contract. It essentially reconceptualised the loss which the plaintiff/promisee was compensated for, and did not depend on an incident of a particular genre of contract. That said, many aspects of the doctrine remained untested or undecided. This called for some caution in expanding the Broad Ground beyond its original context of building contracts: at [142].]

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Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 (refd)

AmGeneral Insurance Bhd v Iskandar bin Mohd Nuli [2016] 1 MLJ 818 (refd)

Beswick v Beswick [1968] AC 58 (refd)

Biffa Waste Services Ltd v Maschinenfabrik Ernst Hese GmbH [2009] PNLR 5 (refd)

Chaplin v Hicks [1911] 2 KB 786 (refd)

Chia Kok Leong v Prosperland Pte Ltd [2005] 2 SLR(R) 484; [2005] 2 SLR 484 (folld)

Coulls v Bagot's Executor and Trustee Co (1967) 119 CLR 460 (refd)

Darlington Borough Council v Wiltshier Northern Ltd [1995] 1 WLR 68 (refd)

Dewan Undangan Negeri Kelantan v Nordin bin Salleh [1992] 1 MLJ 697 (refd)

Eh Riyid v Eh Tek [1976] 1 MLJ 262.1 (refd)

Family Food Court v Seah Boon Lock [2008] 4 SLR(R) 272; [2008] 4 SLR 272 (folld)

Gandy v Gandy (1884) 30 Ch D 57 (folld)

Gregory and Parker v Williams (1817) 3 Mer 582; 36 ER 224 (refd)

Gurtner v Circuit [1968] 2 QB 587 (folld)

Hameed Jagubar bin Syed Ahmad v Pacific & Orient Insurance Co Berhad [2017] MLJU 968 (refd)

Hardy v Motor Insurers' Bureau [1964] 2 QB 745; [1964] 2 All ER 742 (refd)

Harmer v Armstrong [1934] Ch 65 (refd)

Hong Leong Bank Bhd v Staghorn Sdn Bhd [2008] 2 MLJ 622 (refd)

Ikebife Ibeneweka v Peter Egbuna [1964] 1 WLR 219 (refd)

Indulge Food Pte Ltd v Torabi Marashi Bahram [2010] 2 SLR 540 (refd)

Iskandar bin Mohd Nuli v AmGeneral Insurance Bhd [2017] 5 MLJ 25 (not folld)

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Les Affr�teurs R�unis SA v Leopold Walford (London) Ltd [1919] AC 801 (refd)

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Lloyd's v Harper (1880) 16 Ch D 290 (refd)

MAE Engineering Ltd v Fire-Stop Marketing Services Pte Ltd [2005] 1 SLR(R) 379; [2005] 1 SLR 379 (folld)

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