MOTOR VEHICLES (THIRD PARTY RISKS AND COMPENSATION) (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Communications (Mr Mah Bow Tan): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Aim

Sir, the aim of this Bill is to amend the Motor Vehicles (Third-Party Risks and Compensation) Act to ensure that Singapore registered and insured vehicles travelling into West Malaysia are covered for third party liability insurance and that the benefits of third party victims of road accidents caused by the use of Singapore vehicles in West Malaysia are preserved.

Background

Under the Motor Vehicles (Third-Party Risks and Compensation) Act, victims of accidents have a right to look to the insured's insurers if the insured fails to satisfy a judgement entered against him. The Act also provides for the vesting of the insured's rights against his insurer in the third party if the insured is made a bankrupt.

Sir, in the recent Court of Appeal case, Nippon Fire & Marine Insurance Co Ltd v Sim Jin Hwee, the Court of Appeal ruled that a passenger in a Singapore registered and insured motor vehicle involved in an accident in West Malaysia has no right to claim against the insurers directly under the Motor Vehicles (Third-Party Risks and Compensation) Act (Cap 189).

The Court made this ruling on the premise that Singapore laws generally are not extra-territorial in scope unless it is expressly provided. Where a motor accident occurs in West Malaysia, the benefits provided for in the Act do not extend to victims of such accidents. The benefits in the Act only apply to motor accidents occurring in Singapore.

Implications of the Court's Ruling Recovery against insurers

Although the Court has ruled that the passenger has no right to sue the insurer under the Act, the Court's ruling does not affect the victim's right to recover indirectly from the insurer if the policy is valid as a contract at the date of judgement. This indirect recovery route means that the insured driver will have to sue the insurer on the contract of motor insurance and any monies recovered by the insured from the insurer will then become available for payment by the insured to the victim.

In Nippon's case, the policy that was issued covered the use of the Singapore-registered and insured vehicle in West Malaysia. However, as the insured driver is now a bankrupt, the passenger must rely on the Official Assignee to make a contractual claim against the insurer.

Mr Speaker, Sir, the Court of Appeal's ruling not only applies to passengers but also to every victim of a motor accident on a Malaysian road involving a car registered and insured in Singapore. Such victims would, as a consequence of the Court's ruling, have no right to sue the Singapore insurers directly.

Mr Speaker, Sir, the Court's ruling is not in the public interest as it means that victims of motor accidents have to resort to indirect means in order to claim against the insurers. This will cause victims and the estates of deceased victims unnecessary expense and delay. In Nippon's case, it would reduce the amount of damages payable to the injured passenger because the insurance monies will have to be shared with other creditors of the bankrupt insured.

Extraterritorial scope of the Motor Vehicles (Third-Party Risks and Compensation) Act (Cap. 189)

Mr Speaker, Sir, historically, when the Act was first enacted in 1938, it was intended to cover the use of motor vehicles in Singapore and Malaysia when both countries were treated as a single territory under the British administration.

To date, the scope of our Act has not changed even after the constitutional changes which occurred during the period 1959 to 1965. In fact, the Act still retains section 19(1)(f) which indicates that the legislative intent was to provide for compulsory third party liability insurance whenever Singapore registered motor vehicles are used in Malaysia.

The practice of Singapore insurers has always been to issue insurance policies which cover the use of Singapore registered vehicles in West Malaysia. The effect of such an insurance policy is to contractually extend the insurance coverage beyond Singapore in order to provide protection to third parties who might be injured or killed by the use of the insured vehicle. In this way, the practice is consistent with the legislative intent to provide the benefits of the Act to victims of road accidents occurring in West Malaysia.

Sir, it is clear that the spirit and intent of the Act was to cover the use of Singapore registered vehicles within West Malaysia. Any other interpretation would lead to undesirable consequences and subject innocent victims of road accidents occurring in West Malaysia to unnecessary expense and delay in obtaining compensation for the injuries caused to them.

It is therefore necessary for the law to be amended to restore to victims of road traffic accidents caused by the use of Singapore vehicles in West Malaysia, the right to make a direct claim against the insurers. Nothing is served by making an injured party or a deceased's estate go through unnecessary legal rigmarole just to get the insurers to pay what they contractually have to pay under their insurance policies.

Mr Speaker, Sir, we have therefore decided that these issues should be put right by amending the Motor Vehicles (Third-Party Risks and Compensation) (Amendment) Act. As Malaysia has similar legislation, we have sought the co-operation of the relevant authorities in Malaysia to similarly amend their legislation. I have written to the Malaysian Minister of Transport, Tan Sri Dr Ling Liong Sik, and he has agreed that our legislation should be harmonised to safeguard the interests of motorists and do not impede the movement of vehicles between Malaysia and Singapore. Our officials will be meeting soon to work out the details.

Provisions of the Motor Vehicles (Third-Party Risks and Compensation) (Amendment) Act 1998

Sir, let me now highlight the key provisions of the Motor Vehicles (Third-Party Risks and Compensation) (Amendment) Bill.

The Bill introduces new provisions and amends existing provisions to the Motor Vehicles (Third-Party Risks and Compensation) Act.

Clause 2 of the Bill amends section 3(1) to extend the extraterritorial effect to motor insurance policies issued by Singapore insurers to any territory specified in the Schedule.

Clause 2 also prohibits persons from using a motor vehicle which is registered in Singapore unless the person is covered for third-party risks which may be incurred by him when using the motor vehicle in any territory specified in the Schedule.

Clause 3 of the Bill introduces 2 new subsections, and these are (1A) and (1B).

Subsection (1A) deems any policy of insurance: issued on or before the commencement of the Bill by an insurer who was lawfully carrying on motor insurance business in Singapore; and which insures any person specified in the policy against third-party risks which may be incurred by him when using a motor vehicle in any territory specified in the Schedule, to have been a policy of insurance issued for the purposes of the Act and under which, third parties are conferred benefits by the Act.

Subsection (1A) reverses the Court of Appeal's ruling in Nippon Fire & Marine Insurance Co Ltd v. Sim Jin Hwee and retrospectively confers the right of all affected persons to sue Singapore insurers under the Act if a motor accident involving a Singapore registered and insured vehicle occurs in West Malaysia.

However, the new subsection (1B) provides that this benefit, or the retrospective effect, does not extend to any person whose claim has, prior to the passing of the Bill, been held by a Singapore Court not to give rise to an action against a Singapore insurer. What this does is that it preserves the decision of the Court of Appeal in Nippon's case and other cases that the Courts have decided since that decision.

Clause 9 of the Bill inserts a new Schedule which specifies the territory outside Singapore to which the new subsection (1A) and the amended section 3(1) apply. West Malaysia is the territory specified in the Schedule and this means that any person using a Singapore registered vehicle in West Malaysia must be covered by an insurance policy in respect of third party risks as complies with the Act.

Conclusion

Sir, the Bill restores the law governing motor insurance coverage and the rights of road accident victims to the way it was prior to the ruling of the Court of Appeal.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Mah Bow Tan].

Bill considered in Committee; reported without amendment; read a Third time and passed.