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The problematic question above concerns with the two life insurance policies that
were undertaken by the insured, Sam Lee with ASIA Insurance Berhad as the Insurer.
The statement of facts clearly states that both of the life insurance policies worth a
total amount of RM30 000 each. Sam Lee named his father, Gary Lee, as the
beneficiary of the first life policy and Sally Tan, his foster mother as the beneficiary
of the second life insurance policy. Furthermore, the insured, Sam Lee took out
another life insurance policy for RM500, 000 with EURO Insurance and assigned it to
“his wife Jessie Koh and children”. On top of that, he bought a motor insurance policy
on his BMW with the insurer, MINI Insurance Bhd.
Having extracted all the material facts of the question, now, we proceed to the first
issue. The issue of whether Jessie Koh, the second wife of Sam Lee can successfully
claim an indemnity from MINI Insurance Bhd for her injuries and suffering need to
be determined first.
Based on the question, it can be safely assumed that the insured policyholder, Sam
Lee had given permission to his nephew, Joe Lee to drive his car and Joe Lee’s
position can be regarded as an authorized driver for the purpose of driving both Sam
Lee and Jessie Koh to work.
Based on the authority in Section 91(1)(b) of the Road Transport Act 1987,
specifically states that a policy of insurance must be a policy which insures a person
in respect of any liability which may be incurred in respect of death or bodily injury
caused by or arising out of the use of the vehicle. Section 91(1)(aa) of the same Act,
further states that a policy shall not be required to cover liability in respect of death
arising out of and in the course of his employment of a person in the employment of
person insured by policy. In other words, this particular section excludes the liability
to a person in the employment of the Insured when the death or accident occurred in
the course of employment. Section 91 (1) (bb) of the same act further provides
exception in cases of a motor vehicle in which passengers are carried for hire or
reward or in pursuance of a contract of employment. Indirectly, this section provides
coverage of an employee of Insured or employee of third party who is being carried as
To further understand this concept, the case of Sinnadorai V New Zealand
Insurance Company Ltd shall be discussed. In this case, the plaintiff was injured in
an accident while being a passenger in a car driven by the insured. Plaintiff obtained
judgment against the insured and now sought to enforce against the insurer. The court
held that the passenger could not claim because he was the passenger of the insured
based on Section 96 of Road Transport Act. In application, since Jessie Koh, was in
the car at the time of the accident happened and obviously she was the passenger of
the car driven by Joe Lee, therefore she does not have any claim whatsoever by virtue
of the above-mentioned case and section.
Now, moving on to the second issue of the problematic question at hand. The issue is
whether Renee, Sam Lee’s first wife may successfully claim the policy monies from
ASIA Insurance Berhad and EURO Insurance Berhad as being part of the estate.
In order to answer this issue, it is important to ascertain the legal standing or position
of Renee as Sam Lee’s first wife in the eyes of the Insurance Law. By virtue of
Section 163 of the Insurance Act 1996, it stipulates that a policy owner may
nominate a natural person to receive the policy moneys payable upon his death under
the policy and in the event of the nomination had been made in accordance with the
act, the insurer should by virtue of section 165 (1) of the Act pay the policy moneys
of the deceased policy owner according to the direction of the nomination upon
receipt of a claim by the nominee. Therefore, it can be safely concluded that, section
163 and 165 of the Act made it clear that the beneficiary of a policy of insurance was
not confined to a specific person who has legal standing such as a wife, child etc. The
word “natural person” in Section 163 denotes that the policyholder is free to nominate
To illustrate this point, reference has to be made to case Lee Heng Moy V John
Hancock Life Insurance Bhd & Anor whereby the facts of the case revolve around
the issue of the nomination of ‘second wife’ (mistress) as the beneficiary of the policy
and issue of the insurer faced with the competing claims by the first wife and ‘second
wife’ to the insured sum amounting RM352, 229.39. The court held that the ‘second
wife’ to be the lawful beneficiary of the policy as Section 163 and 165 of the
Insurance Act 1996 made it clear that the beneficiary of a policy was not confined to
a wife and that since the deceased policyholder had in fact nominated the ‘second
wife’, she was the lawful beneficiary of the policy. The court further commented that
under section 167 (1) of the Act, the position of the ‘second wife’ as the nominee
under the said policy is to be held and received the policy moneys as an executor and
not solely as a beneficiary.
In applying the relevant principle with the situation at hand, the fact that Sam Lee did
not nominate Renee as the beneficiary of the policy and named his foster mother,
Sally Tan as the beneficiary of the second life insurance policy indicates that the
policyholder in this case, Sam Lee clearly wanted his foster mother and not his first
wife to receive the policy monies payable upon the occurrence of his death under the
said policy. Besides, according to Lee Heng Moy case, Section 163 and 165 of the
Act do not expressly state that the scope of naming the beneficiary is restricted to a
wife only. Thus, the insurer, ASIA Insurance Berhad, shall pay the policy moneys of
the deceased policy owner according to the direction of the nomination upon the
receipt of a claim by the nominee, Sally Tan. Moreover, the position of Sally Tan as
the nominee under the said policy is to be held and received the policy moneys as an
executor and not solely as a beneficiary by virtue of Section167 of the Act and any
payment to her shall form part of the estate of Sam Lee and be subjected to his debts.
Next, the issue of Jessie Koh’s rights over the monies has to be addressed
accordingly. As per statement of fact, Sam Lee had assigned the rights to his wife
Jessie Koh and the children when he took a life insurance policy for RM500, 000 with
EURO Insurance. This particular issue concerns with the issue of the rights of an
assignee in which assignee shall have the priority over the claim of the nominee. If
balance of money remains after the payment to the assignee, then the insurer shall pay
the remaining sum to the nominee according to Section 168 of the Insurance Act
1996. In application, since Sam Lee had assigned Jessie Koh and children with the
policy moneys therefore, priority is given to her over the claim of the nominee and
subject to the rights under the security or the assignment being preserved, EURO
Insurance shall pay the balance of the policy moneys to the nominee.
Another minor issue that needs to be addressed here would be whether Renee would
succeed in her claim against MINI Insurance Berhad under the motor insurance
The general coverage in motor insurance policy would be it covers the personal
injuries or death of the insured, authorized driver and third party as well as the
damage to property of the insured and others. These general principles are laid down
in Section 90 (1) of the Road Transport Act 1987 and the effect of contravention is
highlighted in Section 90 (2) of the same Act whereby fine, or imprisonment and
disqualification from holding or obtaining a driving license may be imposed.
In order for the insured to successfully recover his claim, it must be proven that Joe
Lee is the authorized driver. Here, it can be safely deduced that Joe Lee had obtained
permission to drive the said car from Sam Lee as he was driving both the insured and
Jessie Koh to work in Kuala Lumpur. In the case of Chan Tian Hock V PP,
policyholder may give either expressly or impliedly the said consent.
In application, the insured, Sam Lee may recover his claim against MINI Insurance
Berhad under the motor insurance policy as it has been proven that the tortfeasor, Joe
Lee was in fact the authorized driver of the said car. Thus, there is a compliance with
the statutory duty to insure as the situation at hand is of a tort case when Joe Lee had
negligently drove the car at a speed of 130 kmph and thereby causing the car to
collide with a bus carrying factory workers home.
In conclusion, MINI Insurance Policy must indemnified the losses that the insured,
Sam Lee suffered and referring to the statement of facts of the question, Sam Lee
eventually died from the internal bleeding and obviously, this incident fall within the
risk insured between Sam Lee and MINI Insurance Berhad. Since, Sam Lee died in
the tragic accident, therefore, his wife is able to recover the sum insured as she is in
the right legal standing to do so.
The third major issue of the question is whether MINI Insurance can exercise its
rights under the subrogation laws against Sam Lee’s estate.
Subrogation is the right of the Insurer, having indemnified the insured (under the legal
obligation to do so) to stand in place of the insured and avail him of all the rights and
remedies of the insured. This principle is exemplified in the case of Burnand V
Rodocanachi. Besides, subrogation rights can only arise out of indemnity as per case
Scottish Union and National Insurance V Davies. Since the above problematic
question concerns with the issue of indemnity, therefore, the doctrine of subrogation
is applicable in this matter.
Having said this, it has to be noted that the subrogation rights arise in torts cases
where the insured has sustained some damage, lost rights or incurred liability due to
the tortuous acts of some other person then the insurer, having indemnified him for
his loss is entitled to take action to recover the outlay from the wrongdoer. The effect
of the subrogation rights would be the insured would have a right in tort against the
individuals involved. The insurers on the other hand, will assume these rights and
make an attempt to recover their outlays from the tortfeasor. In the event of the
insurers decided to initiate an action, they will have to use the name of the insured by
virtue of the case Lister V Ramford Ice.
Applying all the ahove-mentioned principles to the situation at hand, subrogation
rights arise in the above case whereby the tortious act was done by the authorized
driver, Joe Lee who was driving the insured, Sam Lee and Jessie Koh to work in
Kuala Lumpur at the speed of 130 kmph. As far as the law in Malaysia is concerned,
the speed limit of driving via highway would be 110 kmph and clearly, here, Joe Lee
had disobeyed the rule, which led them to the incident of colliding with a bus-
carrying factory workers home. Thus, MINI Insurance having indemnified the insured
(under the obligation to do so) to stand in the place of Sam Lee and indirectly, making
MINI Insurance entitled to all the rights and remedies of Sam Lee in mitigation of the
loss. In addition, MINI Insurance may initiate an action against the tortfeasor, in
which in this case would be Joe Lee and enforce its rights and remedies in the name
of Sam Lee relying on the authority of the case Lister V Romford Ice.
To conclude this, MINI Insurance cannot enforce its rights under subrogation laws
against Sam Lee’s estate instead MINI Insurance may enforce its claims and remedies
under subrogation laws against the wrongdoer, Joe Lee.