Pacific & Orient Insurance Company Bhd v Motor Insurers Bureau of Singapore

CourtHigh Court (Singapore)
Judgment Date04 October 2012
Date04 October 2012
Docket NumberOriginating Summonses Nos 808 of 2011 and 580 of 2011

High Court

Quentin Loh J

Originating Summonses Nos 808 of 2011 and 580 of 2011

Pacific & Orient Insurance Co Bhd (formerly known as Pacific & Orient Insurance Co Sdn Bhd)
Motor Insurers' Bureau of Singapore

Harry Elias SC, Francis Goh Siong Pheck and Tan Huilin Bernice (Harry Elias Partnership) for the plaintiff;

Andre Yeap SC, Lai Yew Fei and Sharmila Jit Chandran (Rajah & Tann) for the defendant.

Cosmic Insurance Corp Ltd v Ong Kah Hoe [1996] 1 SLR (R) 469; [1996] 2 SLR 356 (distd)

Cosmic Insurance Corp Ltd v Ong Kah Hoe [1997] 3 SLR (R) 1; [1998] 1 SLR 1044 (refd)

Kurnia Insurance (Malaysia) Bhd v Koo Siew Tai Originating Summons No 383 of 2010 (refd)

Motor Vehicles (Third-Party Risks and Compensation) Act (Cap 88, 1970 Rev Ed) ss 3, 4

Motor Vehicles (Third-Party Risks and Compensation) Act (Cap 189,1985 Rev Ed) s 4

Motor Vehicles (Third-Party Risks and Compensation) Act (Cap 189,2000 Rev Ed) s 4

Road Traffic Act 1930 (c 43) (UK)

Road Traffic Ordinance 1958 (No 49 of 1958) (Malaya) s 75 (1)

Road Transport Act 1987 (Act 333 of 1987) (M'sia) s 91 (1)

Insurance—Motor vehicle insurance—Compulsory—Signing of special agreement which placed insurance company under same obligations as local members to Motor Insurers' Bureau of Singapore—Whether Malaysian insurance company was contractually obliged to make payment for injury or death to passengers or pillion riders

Insurance—Companies—Regulation—Interpreting agreement between Motor Insurers' Bureau and its members—Whether Motor Insurers' Bureau scheme operated to provide safety net for those who were not covered by Motor Vehicles (Third Party Risks and Compensation) Act (Cap 189, 2000 Rev Ed)—Whether ‘Insurer Concerned’ had to have been providing insurance cover for relevant liability at time of incident—Motor Vehicles (Third Party Risks and Compensation) Act (Cap 189, 2000 Rev Ed)

The plaintiff, Pacific & Orient Insurance Co Bhd (‘P&O Insurance’), in Originating Summons No 808 of 2011 carried on business as an insurance company in Malaysia. The defendant, the Motor Insurers' Bureau of Singapore (‘MIB’), was an independent company incorporated on 25 January 1975 comprised of all general insurance companies and Lloyd's underwriters providing motor vehicle insurance and operating in Singapore. P&O Insurance sought a declaration that it would not be liable to satisfy a Singapore judgment obtained by injured passengers and pillion riders (or their estates in the event of death) against the driver of a Malaysia-registered motor vehicle who had a motor vehicle insurance policy with the company. In Originating Summons No 580 of 2011, MIB took out a mirror application for a declaration to the contrary effect. The dispute principally arose due to the divergence in the motor vehicle insurance regimes of Malaysia and Singapore following our introduction of compulsory insurance cover for passenger liability in 1980. Such insurance cover was not required in Malaysia. P&O Insurance warned its policyholders that it was their responsibility to comply with the requirements of Singapore law, and provided such extended cover for an additional premium.

At its inception on 22 February 1975, MIB entered into an agreement (‘the Principal Agreement’) with the Minister of Finance which set out the obligations of the Bureau to compensate victims of road traffic accidents under certain conditions. MIB also entered an agreement (‘the Domestic Agreement’) with all motor insurance businesses operating in Singapore specifying the situations and conditions under which these insurers would have to compensate victims of road traffic accidents. Subsequently, special agreements with Malaysian insurance companies were also entered into so that MIB would not be left to shoulder the entire financial burden where a Malaysia-registered vehicle was involved in a road traffic accident in Singapore. On 15 September 1975, P&O Insurance entered into such a special agreement (‘Special Agreement’) with MIB. Under cl 2 of the Special Agreement, P&O Insurance covenanted with the MIB to comply with every obligation imposed upon members of the MIB by the Domestic Agreement as if P&O Insurance was a party thereto. The Domestic Agreement was also annexed to this Special Agreement. It was stipulated in clear and unambiguous language under cl 3 (1) of the Domestic Agreement that if a judgment was obtained in Singapore against any person in respect of liability which was required to be insured by the ‘Compulsory Insurance Legislation’, which included the Motor Vehicles (Third-Party Risks and Compensation) Act (Cap 88, 1970 Rev Ed) (‘MVA’) and any statutory modifications thereupon, the ‘Insurer Concerned’ must satisfy that judgment within a stipulated period.

At this time, the compulsory motor vehicle legislation in Singapore and Malaysia was similar if not in pari materia, and required the owners and/or drivers of motor vehicles to take out insurance for injury and death to third-parties but not passengers or pillion riders. It was a contested issue whether P&O Insurance's obligations under the Special Agreement had expanded to include satisfying judgment debts for passenger liability following the changes to the MVA introduced in 1980.

Held, dismissing OS 808/2011 and allowing OS 580/2012:

(1) The whole purpose and rationale for the motor insurance bureau scheme was that, where there was no effective insurance cover, the victim would still be assured of compensation. The pre-amble of the Principal Agreement stated that the raison-d'etre of the scheme was ‘to secure compensation to third party victims of road accidents in cases where, notwithstanding the provisions of the MVA relating to compulsory insurance, the victim was deprived of compensation by the absence of insurance, or of effective insurance’. The definition of ‘Insurer Concerned’ under cl 1 of the Domestic Agreement also made clear by elaboration that the insurance company which issued the policy to the judgment debtor remained an ‘Insurer Concerned’ notwithstanding some term or condition of the policy or proposal form which excluded the insurer's liability, whether generally or in the particular circumstances in which the judgment was obtained. As such, it cannot have mattered that the ‘Insurer Concerned’ did not cover passenger liability: at [30], [34], [35] and [39]

(2) Within the definition of ‘Insurer Concerned’ there was a reference to ‘the liability of the Judgment Debtor’, which suggested that an internal distinction was drawn between the specific liability incurred by the judgment debtor and the general class of liability covered by Compulsory Insurance Legislation. The ‘Insurer Concerned’ therefore referred to an insurer which covered any form of liability which was also the subject of the MVA. It followed from this that cl 3 (1) operated to place an obligation on such insurers to satisfy judgment debts arising from other forms of liability covered by the MVA but not expressly included in the insurance policy, such as passenger liability in the present case: at [36], [37].

(3) On a true and proper construction of the Principal Agreement, the Domestic Agreement, the Special Agreement, and the terms of P&O's motor insurance policy, if a driver of a Malaysian registered motor vehicle insured by P&O Insurance was involved in an accident in Singapore, and personal injury was caused to a passenger of the said vehicle, liability for such personal injury being excluded or not covered by the terms of P&O Insurance's policy of motor insurance, and judgment was obtained in Singapore by the said passenger against the said driver but such judgment was not satisfied in full within 28 days, and all other pre-conditions to liability under cl 3 of the Principal Agreement being either satisfied or inapplicable as the case might be, then P&O Insurance was obliged to satisfy the said judgment obtained by the said passenger to the extent that it remained unsatisfied. If MIB had to satisfy the said judgment obtained by that passenger to the extent that it remained unsatisfied in the situation referred to above, MIB would be entitled to recover this amount from P&O Insurance, which shall indemnify MIB for all amounts, costs and/or interest paid by MIB in connection with the judgment: at [60].

[Observation: The concept of the ‘Insurer Concerned’ was meant to cut down the administrative costs of a bureau, which would have been borne at the end of the day by all general insurers issuing motor insurance policies. Moreover, the reciprocal registration of insurance companies between the motor insurance bureaus of Singapore and West Malaysia facilitated the convenience of the motoring public and protected the potential victims of road traffic accidents in both countries. P&O Insurance's refusal to accept that it was an ‘Insurer Concerned’ in relation to passenger liability claims detracted from both schemes: at [41] and [42].]

Judgment reserved.

Quentin Loh J

1 There are two Originating Summonses before me, one being Originating Summons No 808 of 2011 (‘OS 808’) and the other, Originating Summons No 580 of 2011 (‘OS 580’). In OS 808, Pacific & Orient Insurance Company Berhad (‘P&O Insurance’) is the plaintiff while the Motor Insurers' Bureau of Singapore (‘MIB’) is the defendant. P&O Insurance was formerly known as the Pacific & Orient Insurance Company Sendirian Berhard. In OS 580, the positions are reversed where MIB is the plaintiff while P&O Insurance is the defendant.

2 These proceedings are mirror applications which revolve around the essential question of whether P&O Insurance, which carries on business as an insurance company in Malaysia with no office in Singapore, is liable to satisfy a Singapore judgement obtained by an injured pillion rider (or by his estate in the event of his death), against its policyholder who is the rider of the motorcycle, in a traffic...

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