A study of Appeal No. 5 in AmGeneral Insurance Bhd v Sa’Amran Atan & Ors [2022] 8 CLJ 175 (Malaysian Motor Insurance Pool v Aqmal Dakhirrudin)

There is a peculiarly Malaysian way of selling a car. The vehicle changes hands, the money changes hands, the keys change hands — and the registration stays exactly where it was. The buyer simply keeps paying whatever instalments remain, and everyone proceeds on trust. Sambung bayar, we call it: “continue paying.” It is cheap, informal, and ubiquitous. It is also a small time bomb, because when the car later injures someone on the road, the question of who insured it falls into a gap between the name on the register and the hand on the wheel.

Appeal No. 5 of Sa’Amran is the time bomb going off. It is usually grouped with the other “sold but not transferred” appeals, and on most of its questions it simply follows them. But it carries one question the others do not, and that question reaches back to a letter written by the Motor Insurance Bureau in January 1985 — a letter the insurer would dearly have liked the court to forget.

I.  A MOTORCYCLIST, A CAR THAT HAD CHANGED HANDS TWICE

A.  The Accident

On 6 September 2014, Aqmal Dakhirrudin was riding his motorcycle near Klang, a friend on the pillion, proceeding straight ahead. A car driven by one Fovez Ahmad swung across his path without warning or signal. The collision left the rider and his pillion seriously injured.¹Sa’Amran [2022] 8 CLJ 175 at [174]. So far, an ordinary running-down case. The complication lay entirely in the car’s paperwork.

B.  The Car’s Tangled History

The car was registered to Azhar bin Ahmad and insured by the appellant, the Malaysian Motor Insurance Pool, for the year spanning the accident. But Azhar had sold it long before — in September 2011, to a used-car dealer named Din, for RM11,000. Din had in turn sold it to one Sufiah in June 2014 for RM22,000. And Sufiah, the true beneficial owner by the time of the accident, did not register the car in her own name until 15 January 2015 — four months after the collision — once she had paid the full price.²Sa’Amran [2022] 8 CLJ 175 at [175], [178]. Classic sambung bayar: two sales, no transfer, and a register frozen three years out of date.

The arithmetic of the register is what matters. On the day of the accident the car was still registered to Azhar. He was therefore deemed its owner under section 109(1) of the Road Transport Act 1987, whatever the commercial reality.³Sa’Amran [2022] 8 CLJ 175 at [179]. The insurer, faced with a victim’s claim, reached for the familiar escape: it applied under section 96(3) for a declaration that the policy was void and unenforceable, on the footing that Azhar’s undisclosed sale back in 2011 had breached the utmost good faith the contract demanded.⁴Sa’Amran [2022] 8 CLJ 175 at [177]–[178].

C.  Two Courts, Two Answers

The Shah Alam High Court obliged the insurer. It accepted that the undisclosed sale breached uberrimae fidei, that the policy had lapsed on the sale, and it leaned on a line of older authority — Peters, Simirah, Roslan bin Abdullah, Kurnia Insurance — for the proposition that a sale extinguishes the cover.⁵Sa’Amran [2022] 8 CLJ 175 at [180]. The Court of Appeal reversed. It found the statutory-declaration evidence too thin and contradictory to establish the transfers; it held that the question of transfer had to be measured against section 13 of the RTA, which had not been complied with; it applied Nanyang Insurance v Salbiah to hold that the seller retained an interest until the price was fully paid — which did not happen until after the accident; and it held the insurer could not deny liability given the compulsory-insurance requirements of sections 91(1)(b), 94 and 95. It then added a further string to the victim’s bow: a 1985 letter from the Motor Insurance Bureau under which post-1984 “transfer of interest” claims fell on the insurer concerned.⁶Sa’Amran [2022] 8 CLJ 175 at [181].

II.  SIX QUESTIONS ALREADY ANSWERED, ONE LEFT STANDING

Seven leave questions came before the Federal Court. The honest course — and the one the Court took — was to recognise that most of them had already been decided elsewhere in the same consolidated judgment. Leave questions 1, 2, 4, 5, 6 and 7 — concerning transfer of interest under section 13, the continued authority of the Peters–Simirah line, the Nanyang v Salbiah retention-of-interest point, utmost good faith, the protective sweep of Part IV, and the propriety of originating-summons procedure — were in substance the same questions raised in Appeals No. 1, 2 and 4. Their answers followed accordingly, for the same reasons.⁷Sa’Amran [2022] 8 CLJ 175 at [182].

That is not an evasion; it is the discipline of a court refusing to pretend that a question is fresh merely because a new appellant has asked it. The substance of the “sold but not transferred” problem — registration fixes liability, a third-party policy needs no surviving insurable interest, the insurer who took the premium cannot resile on a technicality — was settled in Appeal No. 1 and need not be re-litigated here.

What remained genuinely distinctive was leave question 3, and it is the reason Appeal No. 5 has a character of its own: is the definition of “insurer concerned” bound by the Motor Insurance Bureau’s letter of 18 January 1985, given that the 1968 Principal Agreement had since been replaced by the 1992 Substituted Agreement?⁸Sa’Amran [2022] 8 CLJ 175 at [183]. The insurer’s hope was that the replacement of the old agreement had swept the old letter away with it. It had not.

III.  THE BUREAU, AND WHY IT EXISTS

A.  A Creature of Social Justice

To understand the 1985 letter, one must understand the body that wrote it. The Motor Insurers’ Bureau is not an ordinary commercial institution. It was established in 1968 as a form of social justice — a backstop for the victims of road accidents who would otherwise recover nothing because there was no insurance, or no effective insurance, behind the vehicle that hurt them. It was set up through an agreement between the Bureau and the Minister of Transport, funded by the insurance companies that write compulsory motor cover, each of which signed up to the scheme.⁹Sa’Amran [2022] 8 CLJ 175 at [186], quoting the Court of Appeal in Hameed Jagubar bin Syed Ahmad v Pacific & Orient Insurance Co Bhd [2017] 6 MLJ 618 at [38]–[41].

The Bureau’s lineage is borrowed. The Malaysian agreement was fashioned after the United Kingdom’s MIB Agreement of 1946 and, in turn, inspired Singapore’s of 1975.¹⁰Sa’Amran [2022] 8 CLJ 175 at [186], citing S Santhana Dass, The Law of Motor Insurance (Marsden Law Book, 2010), as reproduced in the Hameed Jagubar extract. The 1968 Principal Agreement was superseded by a new agreement with the Minister of Transport in January 1992, followed by a second agreement among the insurers operative from 1 January 1992. The architecture was renewed; the purpose was not.

B.  Written into the Statute

The most telling point is that the Bureau is not merely a private compact among insurers. It has been woven into the Act itself. Section 89 of the RTA defines an “authorised insurer” as a person lawfully carrying on motor-vehicle insurance business in Malaysia who is a member of the Motor Insurers’ Bureau, and defines the Bureau as the body that has executed an agreement with the Minister of Transport to secure compensation for third-party victims where they would otherwise be denied it by the absence of insurance or of effective insurance.¹¹Sa’Amran [2022] 8 CLJ 175 at [186], reproducing the observation on s 89 RTA. Membership of the Bureau is, in other words, a condition of being allowed to write motor insurance at all. An insurer cannot take the licence and disown the compact that comes with it.

IV.  THE LETTER THE REPLACEMENT DID NOT ERASE

A.  What the 1985 Letter Did

The MIB’s letter of 18 January 1985 laid down a simple allocation rule: all accidents occurring after 30 August 1984 involving a “transfer of interest” claim would become the liability of the insurance company concerned. The point of the rule was to close precisely the gap that sambung bayar opens. Where a vehicle has changed hands informally but the policy and registration remain with the original insurer, the victim should not be left chasing a phantom. The insurer on the register answers.

This was no novelty invented for the appeal. The same allocation had already been applied in Mohd Salleh Kasim v Taisho Marine & Fire Insurance, where the court held that on a transfer of ownership the insurer remained liable to the third party — for the plain reason that, under the memorandum to which it was a signatory, it had agreed to be liable for any claim arising from an accident after 30 August 1984 involving a vehicle it insured, even where that vehicle had since been transferred to someone else.¹²Sa’Amran [2022] 8 CLJ 175 at [185], citing Mohd Salleh Kasim v Taisho Marine & Fire Insurance Co Ltd [1999] 5 CLJ 302. The insurer had bound itself to bear exactly this risk.

B.  The Replacement Argument Fails

The insurer’s argument turned on chronology: the 1968 Principal Agreement had been replaced by the 1992 Substituted Agreement, so — it contended — the 1985 letter, a creature of the old regime, had lapsed with it. The Federal Court did not accept the inference. All motor insurers are signatories to the Substituted Domestic Agreement together with the MIB guidelines, and the appellant, as insurer, remained bound by the letter of 18 January 1985.¹³Sa’Amran [2022] 8 CLJ 175 at [184], [187]. Replacing the umbrella agreement did not repudiate the guideline that allocated transfer-of-interest claims; the obligation survived the renewal.

The Court was careful about the letter’s status. It did not treat the 1985 guideline as the sole or decisive source of liability. The insurer’s liability rested first on the statute — sections 91(1)(b), 94 and 95 of the RTA, which compel cover and forbid contracting out — so that even assuming a breach of policy conditions by the insured in failing to disclose the sale, the insurer could not deny liability to the innocent third party.¹⁴Sa’Amran [2022] 8 CLJ 175 at [187]. The 1985 letter was “an additional issue” in determining the insurer’s liability, not a substitute for the statutory scheme.¹⁵Sa’Amran [2022] 8 CLJ 175 at [188]. On that footing the Court of Appeal had not erred in relying on it, and the answer to leave question 3 was yes: the “insurer concerned” is bound by the 18 January 1985 letter notwithstanding the substitution of the 1968 agreement.¹⁶Sa’Amran [2022] 8 CLJ 175 at [189].

V.  WHY TWO LAYERS OF PROTECTION, NOT ONE

It is worth pausing on the structure the Court left standing, because the relationship between statute and Bureau is easy to misstate. The victim of a sambung bayar accident is protected twice over, by two distinct mechanisms that happen to point the same way.

The first layer is the RTA itself. Registration fixes the deemed owner; compulsory third-party cover cannot be defeated by the insured’s private breaches; and the insurer who issued the policy must answer the judgment. That much Appeal No. 1 had already established, and Appeal No. 5 simply inherited it.

The second layer is the Bureau’s allocation rule. The 1985 letter does not create the insurer’s liability so much as direct it — settling, as between the insurers who fund the scheme, that transfer-of-interest claims rest with the company on the register rather than being shuffled off onto the Bureau’s central fund or left for the victim to puzzle out. It is a piece of housekeeping among insurers that incidentally guarantees the victim a defendant who can pay. The insurer wished to read the two layers as alternatives, hoping to slip between them. The Court read them as cumulative. The statute makes the insurer liable; the Bureau’s guideline confirms that it is this insurer, and not some other fund, that bears the loss.

That is why the replacement argument was always going to fail. It mistook a change of administrative furniture for a change of obligation. The insurers rewrote their agreement in 1992; they did not, in doing so, vote themselves out of the social-justice bargain that justified their licences in the first place.

VI.  THE SHAPE OF THE RULE

Strip away the dates and the agreements, and Appeal No. 5 says something simple and rather bracing. An insurer that writes compulsory motor cover in Malaysia is a member of a Bureau established to make sure victims are paid. It cannot accept the benefits of that membership — the right to transact the business at all — and then disclaim the guidelines that distribute the burden. When a car is sold on a handshake and the register is never updated, the loss does not vanish into the gap; it falls on the insurer whose name still stands behind the vehicle.

For the man whose motorcycle is struck by a car that has quietly changed hands twice, this is the difference between compensation and ruin. He has no way of knowing the car’s commercial history, and the law does not ask him to. The register tells him who insured it, the statute makes that insurer pay, and a letter from 1985 — older than many of the riders it protects — quietly ensures the insurer cannot pass the parcel. Sambung bayar may be a casual way to sell a car. The protection of those it endangers is not left nearly so casual.

∞§∞

This article is written for a general readership and does not constitute technical or legal advice. Readers with legal questions are encouraged to seek independent legal advice.

The author thanks KN Geetha, TP Vaani, JN Lheela, and Lydia Jaynthi at GK Legal. Our gratitude to Joachim Schnurle of Unsplash for the image.

Claude, Anthropic’s AI, smoothed the drafting; Perplexity Pro checked the facts. The argument, the views, and the errors remain the author’s.

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