Legal Update 19 of 2011

Whether an insurer of company is liable to compensate for the negligence of the company's employee.

 

CASE:

Letchumanan a/l Gopal (Wakil bagi harta pesaka Rajammah a/p Muthusamy (Si mati)) v Pacific

Orient & Co Sdn Bhd [2011] 4 AMR 780

 

ISSUE:

Whether an insurer of a company is liable to compensate for the negligence of the company’s

employee.

 

BRIEF FACTS:

• This appeal was originally filed by the mother of the deceased and has been replaced by the current appellant (Letchumanan) since the mother had died.

• The deceased died in an accident while he was a passenger in a lorry owned by Kumpulan Jagoh Angkut Sdn Bhd (Kumpulan Jagoh) and driven by its employee, Katurajah.

• Kumpulan Jagoh was found to be 100% liable for the negligence of its driver and was ordered to pay about RM53,000.00 to the estate of the deceased.

• The respondent (Pacific Orient) was the insurer of Kumpulan Jagoh and Letchumanan pursued a separate recovery action against Pacific Orient.

• Pursuant to section 96(1) of the Road Transport Act 1987 (‘the RTA’) (which essentially states that an insurer is liable to pay for any liability under any judgment of its insured),

• Letchumanan sought to claim the said judgment sum against Pacific Orient.

• Pacific Orient however, claims that it was not liable because a clause in the insurance policy stated that it was not liable in respect of death to any person other than passenger carried by reason of or in pursuant of a contract of employment.

DECISION: Letchumanan’s appeal dismissed with costs.

• The deceased was not in a contract of service of service with Kumpulan Jagoh but was only a freelance worker and paid on a freelance basis.

• Furthermore, Kumpulan Jagoh had no control over the deceased and his work. As such, Pacific Orient was not liable to compensate the said judgment sum.

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