A study of Appeal No. 6 in AmGeneral Insurance Bhd v Sa’Amran Atan & Ors [2022] 8 CLJ 175 — Pacific & Orient Insurance Co Bhd v Yeap Tick In

There is a particular kind of litigation that turns the world upside down. An accident victim, having won his case, finds himself the defendant. The insurer, having declined to pay, asks a court to forbid him from asking. Appeal No. 6 of the Sa’Amran octet is that kind of case. It is a small masterpiece of procedural ingenuity, and the Federal Court took it apart in a little under thirty paragraphs.

The respondent was Yeap Tick In, a cyclist. The appellant was his opponent’s motor insurer, Pacific & Orient. Between them they staged a contest over a deceptively simple question: once a victim holds a judgment against the insured driver, must he go and win a second judgment, this time against the insurer, before he may collect a sen? The insurer said yes. The Federal Court said no. What makes the appeal worth retelling is not the answer, which was never seriously in doubt, but the route by which the insurer tried to avoid it.

I.  HOW AN INSURER COMES TO SUE THE PERSON IT SHOULD BE PAYING

A.  The Accident, and the Disappearing Rider

Yeap was knocked off his bicycle in June 2012 by a motorcycle that, on the pleadings, was being ridden solo by one Azman, a friend and colleague of the insured owner.¹Sa’Amran [2022] 8 CLJ 175 at [193]. The injuries were severe. Yeap sued the insured owner in the Shah Alam Sessions Court, and his solicitors did what the statute requires: they served notice of the proceedings on Pacific & Orient under section 96(2)(a) of the Road Transport Act 1987.²Sa’Amran [2022] 8 CLJ 175 at [194]. The report there reads “s 92(2)(a)”, evidently a slip for s.96(2)(a), the notice-of-proceedings provision. The insurer appointed adjusters and went to work.

What the adjusters produced was a problem. The insured told them he had not ridden the motorcycle on the day in question and had nothing to do with any accident, and he swore a statutory declaration to that effect.³Sa’Amran [2022] 8 CLJ 175 at [195]. Armed with that document, the insurer applied to the High Court for a declaration under section 96(3) of the RTA that the policy was void and unenforceable. It succeeded. On 7 January 2015 the order was granted — granted, it should be said, without the cause papers ever being served on Yeap or his solicitors.⁴Sa’Amran [2022] 8 CLJ 175 at [196]. The victim’s policy had been declared dead behind his back.

B.  The Default Judgment, and the Demand It Produced

The Sessions Court trial, meanwhile, had begun. Four of Yeap’s witnesses and one of the insured’s had given evidence; the case was at submissions when the declaratory order surfaced.⁵Sa’Amran [2022] 8 CLJ 175 at [200]. In March 2016 Yeap obtained a default judgment against the insured for RM177,657.50 with interest and costs. That judgment has never been set aside, and it has never been appealed.⁶Sa’Amran [2022] 8 CLJ 175 at [199]. It stands today, regular and enforceable, exactly as it stood then.

Yeap twice tried to undo the section 96(3) declaration. Both attempts failed — the first dismissed, the second struck out as res judicata.⁷Sa’Amran [2022] 8 CLJ 175 at [201]–[203]. So he changed tack. In February 2018 his solicitors served a notice on the insurer demanding payment of the judgment sum and warning that they would enforce it in whatever manner they thought fit.⁸Sa’Amran [2022] 8 CLJ 175 at [204].

And here the world turned over. The insurer’s response to a demand for payment was to sue the man demanding it. Pacific & Orient went to the High Court seeking an injunction to restrain Yeap from executing his Sessions Court judgment, together with damages for malicious prosecution and abuse of process.⁹Sa’Amran [2022] 8 CLJ 175 at [205]. The theory was that by threatening execution without first having obtained a judgment against the insurer, the victim was the wrongdoer.¹⁰Sa’Amran [2022] 8 CLJ 175 at [206].

C.  A Permanent Injunction Nobody Asked for

The High Court gave the insurer rather more than it had requested. It dismissed the claims for malicious prosecution and abuse of process, but granted a permanent injunction against the victim.¹¹Sa’Amran [2022] 8 CLJ 175 at [209]. The judge did not explain why — and could not have, because no one had sought a permanent injunction. What Pacific & Orient had asked for was an interlocutory injunction pending the disposal of the suit.¹²Sa’Amran [2022] 8 CLJ 175 at [210]. The Court of Appeal duly reversed, holding that the High Court had no jurisdiction to grant relief on a cause of action the insurer had failed to establish, and that a perpetual injunction had never been prayed for.¹³Sa’Amran [2022] 8 CLJ 175 at [211]. The insurer brought the matter to the Federal Court.

II.  THE TWO QUESTIONS, AND WHY THEY WERE THE WRONG ONES

The leave questions were framed around the injunction. Could the High Court grant a permanent injunction restraining the victim from enforcing his judgment until he had sued and beaten the insurer? Could it grant a quia timet injunction to the same end, on the strength of the victim’s “imminent threat” to execute against a public-listed company?¹⁴Sa’Amran [2022] 8 CLJ 175 at [190].

The Federal Court declined to play. The questions, it observed, were built on an order that should never have been made. A court has no jurisdiction to grant relief the litigant never sought, and the High Court’s permanent injunction was exactly that.¹⁵Sa’Amran [2022] 8 CLJ 175 at [216]. The leave questions were, in the Court’s word, misconceived. One cannot ask an appellate court to bless the logic of an order that had no business existing.

That disposed of the form of the appeal. But it left the substance, and the substance was the only thing that ever mattered: was the insurer bound to pay?

III.  THE STATUTE ANSWERS PLAINLY

A.  The Text, and What It Actually Says

Section 96(1) of the RTA is not a model of brevity, but it is a model of clarity. Where a victim obtains judgment against an insured person for a liability the policy was required to cover, then — and the operative words repay attention — notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled the policy, the insurer shall pay the person entitled to the benefit of the judgment.¹⁶Sa’Amran [2022] 8 CLJ 175 at [68], reproducing s 96(1) RTA 1987. The obligation is mandatory. It survives even an insurer’s entitlement to walk away from the contract. That is the whole architecture of compulsory third-party insurance in a single sentence: the victim’s right does not rise and fall with the insurer’s quarrel with its own policyholder.

The Federal Court held what the text required. The default judgment was regular and enforceable; it had not been set aside or appealed; under section 96(1), the insurer was bound to pay it.¹⁷Sa’Amran [2022] 8 CLJ 175 at [217].

B.  The Four Narrow Exits

An obligation expressed as “shall pay” must still answer the question: pay always? Not quite. The Court identified the closed set of circumstances in which an insurer may refuse, and was careful to note that none assisted Pacific & Orient: where no notice of proceedings was given under section 96(2); where the policy had been cancelled before the accident; where the judgment was not served on the insurer; and where there was a stay pending appeal, or the judgment was irregular, set aside, or made without jurisdiction.¹⁸Sa’Amran [2022] 8 CLJ 175 at [217]. The list is exhaustive. It is also striking for what it omits. “The insurer would prefer to relitigate liability” is not on it.

C.  No Second Judgment, and Therefore No Injunction

The decisive point had already been settled, two appeals earlier in the same judgment. In Appeal No. 2 the Court had held that a victim who holds a judgment against the insured need not obtain a further judgment against the insurer before enforcing it.¹⁹Sa’Amran [2022] 8 CLJ 175 at [218], applying the Court’s conclusion in Appeal No. 2. That conclusion governs Appeal No. 6 entirely. If no second judgment is required, then the premise of the whole injunction collapses. There was nothing for the victim to be restrained from doing, and nothing for him to be made to do first. The Court answered both leave questions in the negative.²⁰Sa’Amran [2022] 8 CLJ 175 at [218].

The supposed “recovery action” against the insurer — the second lawsuit the insurer demanded — turns out to be a phantom. The statute does not require it. The judgment against the insured is the trigger; payment is the consequence; and the only way to interrupt that sequence is through one of the four exits above, none of which involves suing the victim into submission.

IV.  THE COMPARATIVE MIRROR

A.  The English Scheme, Almost Identical

A Malaysian lawyer reading section 151 of the United Kingdom’s Road Traffic Act 1988 may experience a flicker of recognition. The English provision obliges a motor insurer to satisfy a judgment obtained against the insured — and to do so even where the insurer is entitled to avoid or cancel the policy, or has already avoided or cancelled it.²¹Road Traffic Act 1988 (UK), s 151; see s 151(5). The escape routes under section 152 are correspondingly narrow: chiefly, that no notice of the proceedings was given, or that the insurer has obtained a declaration in separate proceedings (commenced before, or within three months of, the underlying action) that it was entitled to avoid the policy for material non-disclosure or misrepresentation.²²Road Traffic Act 1988 (UK), s 152; and see the Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019, which narrowed one such route.

The parallel with section 96 is close enough to be uncanny. Mandatory payment of the judgment against the insured; immunity for the insurer’s private contractual grievances; and a short list of statutory exits, one of which is precisely the declaration route Malaysia houses in section 96(3). The English courts have long taken the duty at its word: section 151 fixes the insurer with liability to satisfy a judgment even where, as a matter of ordinary contract law, it would have a watertight answer to its own policyholder.²³On the breadth of the s 151 duty, see Churchill Insurance Co Ltd v Wilkinson [2010] EWCA Civ 556. The point of the scheme, in both jurisdictions, is to place the victim beyond the reach of the contract between insurer and insured.

B.  The Indian Voice the Federal Court Chose

When the Federal Court reached for a comparative authority, it did not range across continents. It chose one passage, and chose it well. In British India General Insurance Co Ltd v Captain Itbar Singh AIR 1959 SC 1331, Sarkar J of the Supreme Court of India confronted the objection that an insured “man of straw” might leave the insurer unable to recover its outlay. His answer is the moral spine of the entire compulsory-insurance idea, and it is worth quoting in full:

“It was said that the assured might be a man of straw and the insurer might not be able to recover anything from him. But the answer to that is that it is the insurer’s bad luck. In such circumstances the injured person also would not have been able to recover the damages suffered by him from the assured, the person causing the injuries. The loss had to fall on someone and the statute has thought fit that it shall be borne by the insurer. That also seems to us to be equitable for the loss falls on the insurer in the course of his carrying on his business, a business out of which he makes profit, and he could so arrange his business that in the net result he would never suffer a loss. On the other hand, if the loss fell on the injured person, it would be due to no fault of his.”²⁴British India General Insurance Co Ltd v Captain Itbar Singh AIR 1959 SC 1331, per Sarkar J, quoted by the Federal Court in Sa’Amran [2022] 8 CLJ 175 at [263].

The reasoning is unsentimental and the better for it. The loss must rest somewhere. The insurer can price for it, spread it, and profit from carrying it; the victim can do none of these things and did nothing to invite the harm. Between a party who chose the business of risk and a party who chose nothing, the statute prefers the latter. Sarkar J was speaking of a claim against the insured himself, but the principle travels — and the Federal Court let it carry the weight of the whole consolidated decision.²⁵Sa’Amran [2022] 8 CLJ 175 at [263].

V.  WHAT CAME AFTER: CHEN BOON KWEE AND THE REFINEMENT OF THE RULE

A rule is only as good as its second outing. In November 2024 the Federal Court returned to the recovery-action question in Chen Boon Kwee v Berjaya Sompo Insurance Bhd, and the result is instructive — not because it disturbed Appeal No. 6, but because it tested the rule against a harder set of facts and left it standing, sharper than before.

A.  A Judgment After Full Trial, Resisted on a Coverage Exception

The facts were stronger for the victim than in Yeap Tick In, and the insurer’s resistance more respectable. Chen was a passenger injured when the car he was travelling in — owned by his wife, the policyholder, and driven by an authorised driver — collided with a lorry. After a full trial the Sessions Court found the driver wholly liable and the owner vicariously so; the judgment was affirmed up to the Court of Appeal.²⁶Chen Boon Kwee v Berjaya Sompo Insurance Bhd (Federal Court, 14 November 2024) at [3]–[4]. This was no default judgment slipped through on an absent defendant. Liability had been fought and lost.

The insurer did not say the policy was void. It said something narrower: that Chen, as the policyholder’s husband and a member of her household, fell within an exception to passenger cover, so the risk was simply not one the policy answered for. On that footing it demanded the now-familiar second lawsuit — a recovery action in which the policy’s construction could be argued — and obtained from the High Court a stay of the victim’s judgment until he brought one.²⁷Chen Boon Kwee (FC) at [5]–[10]. The Court of Appeal agreed. Both courts leaned on Letchumanan Gopal, the authority that had long been read as requiring a recovery action wherever an insurer relied on a policy exception.²⁸Chen Boon Kwee (FC) at [26]–[28]; and see Letchumanan a/l Gopal v Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788 (CA).

B.  No Recovery Action — Even When the Insurer Relies on an Exception

The Federal Court reversed. A recovery action is not necessary, it held, and the principle is not confined to cases where the insurer attacks the policy’s validity; it holds equally where the insurer pleads a coverage exception.²⁹Chen Boon Kwee (FC) at [27], [42], [45]. Letchumanan Gopal had already been overtaken by Appeal No. 2 of Sa’Amran, where the Court observed that an exception clause excluding employment-related passengers looked like an attempt to contract out of the statute, contrary to section 94, and to that extent Letchumanan Gopal was no longer good law on the recovery-action point.³⁰Chen Boon Kwee (FC) at [29], [32], citing Sa’Amran [2022] 8 CLJ 175 at [89]. The reasoning is the same austere logic that governed Yeap Tick In: nothing in section 96(1) requires a second judgment, and “the judgment debt of the insured becomes the judgment debt of the insurer.”³¹Chen Boon Kwee (FC) at [29], quoting Appeal No. 2 of Sa’Amran; and see Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2011] 1 CLJ 947 (CA) at [21].

To import a two-tier process the statute never mentions, the Court added, would defeat the legislative intent. Running-down cases fill the subordinate courts; bolting on a second adjudication would squander finite judicial resources for no statutory reason.³²Chen Boon Kwee (FC) at [38]–[39], [44].

C.  Two Refinements Worth Keeping

Two points emerge from Chen Boon Kwee that Yeap Tick In did not need to decide, and they round out the doctrine.

The first concerns the insurer’s options. Section 96(3) — the declaration that the policy is void — is not the insurer’s only escape from liability.³³Chen Boon Kwee (FC) at [48]–[51]. An insurer who wishes to dispute coverage may instead apply to intervene in the liability suit itself and have the policy question decided there, alongside the question of negligence.³⁴Chen Boon Kwee (FC) at [22], [49], approving Jiwaneswary Raman v Etiqa General Takaful Bhd [2023] 2 MLJ 437 (CA) and Tang Loon Pau v Mohd Salihin Kotni [2023] 8 CLJ 105 (CA). What it may not do is sit out the trial and then manufacture a fresh action to relitigate what it could have raised at the proper time. The timing is the discipline; the forum is the trial that is already happening.

The second concerns the substantive point on which the insurer staked everything — the passenger exception. The Court held that the phrase “carried by reason of or in pursuance of a contract of employment” is not confined to employment with the insured. A passenger travelling for work — even for an unrelated employer — falls within the protected class, exactly as the House of Lords held in Izzard v Universal Insurance nearly ninety years ago.³⁵Chen Boon Kwee (FC) at [66]–[67], applying Izzard v Universal Insurance Co Ltd [1937] AC 733; and see Malaysian Motor Insurance Pool v Tirumeniyar a/l Singara Veloo [2019] 10 CLJ 731 (FC). Chen was travelling to conduct an audit for his employer when the accident happened. He was therefore a third party the Act protects, and the exception did not bite.³⁶Chen Boon Kwee (FC) at [70]–[71]. The insurer, having actively run that very argument at the trial through the solicitors it had appointed for the insured, was bound by the finding it lost.³⁷Chen Boon Kwee (FC) at [61], [69].

The wheel, in other words, came full circle. The insurer in Chen Boon Kwee tried the recovery-action manoeuvre on better facts than Pacific & Orient had managed in Yeap Tick In, and lost more comprehensively — on the procedure, on the forum, and on the merits of the very exception it had hoped would carry the day.

VI.  WHY THE LONG WAY ROUND WAS ALWAYS A DEAD END

Strip away the injunction, the malicious-prosecution claim, the quia timet flourish, and the ex parte declaration obtained without telling the victim, and Appeal No. 6 reduces to a single insistence: that the victim should be made to litigate twice for one entitlement. The statute contemplates one judgment, against the insured, and one consequence, payment by the insurer. The insurer’s project was to insert a second lawsuit into that scheme and then to enforce its absence with an injunction — to manufacture a hurdle and then punish the victim for not having cleared it.

It is tempting to call this a loophole. It was never even that. A loophole is a gap the drafters failed to close; the recovery-action requirement was simply not in the Act, and a thing that is absent cannot be exploited. What the insurer offered was not a reading of section 96 but a rewriting of it, and the Federal Court declined the invitation in the only terms the text permits.

The result restores the natural order of things. The victim who has won need not win again. The insurer that wishes to resist has its proper moments — a declaration before liability is fixed, or intervention in the trial itself — but not a licence to turn plaintiff against the very person the policy exists to protect. Chen Boon Kwee has since confirmed that this holds even where the insurer’s objection is a genuine coverage point rather than mere obstruction.

Yeap Tick In was knocked off his bicycle in 2012. It took until 2022 for the Federal Court to confirm that he could collect what a court had awarded him six years earlier. The law arrived at the right place. One only wishes it had not taken the long way round — the same long way round the insurer had hoped to impose on him.

∞§∞

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 Getty Images 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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