Judgment

Vincent KK Ng, J

1. Before me is an appeal in Civil Suit No D1-27-21-95 (first suit) by the defendant against the decision of the learned senior assistant registrar dated February 16, 2001, dismissing the defendant's application to strike out the plaintiffs' suit for the lack of authorisation of Messrs Shook Lin & Bok (the firm) to represent the plaintiffs. It must be noted that the plaintiffs had also initiated another civil suit based on the same cause of action against Kelang Container Terminal Bhd and Kontena Nasional Bhd vide Civil Suit No D1-21-1-95 (second suit). Both the actions were consolidated pursuant to a court order dated February 9, 1998.

2. Although it was only the defendant in the first suit who had filed an application challenging the authority of the firm to act for the plaintiffs, all parties agreed that the decision in this appeal would also bind the parties in the second suit.

   BACKGROUND FACTS

3. The plaintiffs were insured by Perdana Cigna Insurance Bhd (the insurer) under a marine open policy against any loss or damage arising from all shippings and sendings on or after a specified date (exh A, Encl.16B).

4. To the order of the secretary general of the first plaintiff, GEC-Marconi (Projects) Ltd of England loaded and shipped some equipment onboard the vessel MV 'Nedlloyd of Africa'. The plaintiffs alleged that during the course of unloading at North Port, Port Kelang, the equipment was damaged.

5. Subsequently, the plaintiffs submitted a claim to the insurer for pound sterling 176,987 for damage to their equipment. As directed by the plaintiffs, the insurer paid out the claim to GEC-Marconi Radar & Defence Systems, who in turn issued a letter of subrogation dated May 21, 1997 (exh C, Encl.16B).

6. Relying on the subrogation clause contained in the policy, the insurer then, at their own expense, instituted this action against the defendant, using the plaintiffs' names. In the present case there does not seem to be any formal or legal assignment of the legal chose in action to the insurer (the court is not privy to this) since the latter did not sue in their own name. See Employers' Liability Assurance Corpn v Skipper & East [1887] 4 TLR 55 and King v Victoria Insurance Co [1896] AC 250, PC. There are also instances of partial subrogation only, where the amount of loss exceeds the amount paid under the policy, in which case the assured may institute and conduct proceedings for the benefit of the insurers as well as of himself. See Page v Scottish Insurance Corpn [1929] 140 LT 571 at 576, CA and Commercial Union Assurance Co v Lister [1874] 9 Ch App 483.

7. The subrogation clause relied upon by the insurer reads as follows:

   Subrogation:

   The Assured shall, at the request of these Insurers or their agents, assign and subrogate to these Insurers at the time of payment and to an amount not exceeding the sum paid by these Insurers, all their rights and claims against others and permit suit to be brought in the Assurer's name but at these Insurers' expenses ...  [Emphasis added]

   THE APPEAL

8. The crux of the issues before me can be gleaned from the written submission (Encl.34B) of counsel for the plaintiffs, to wit:

   1. since the plaintiffs' suit is based on the doctrine of subrogation, whether the fact of subrogation must be pleaded in the pleadings; and hence,

   2. whether there was any necessity for the firm to be appointed by the plaintiffs.

9. At this juncture, I must observe that it was common ground that:

   1. although this suit was wholly based on the principle of subrogation, as asserted by the plaintiffs, this point was not pleaded nor was there any particulars pertaining to subrogation adverted to in the statement of claim; and

   2. aside from a letter issued by the federal counsel of the first plaintiff dated June 7, 1999 (exh D, Encl.16C), the firm failed to produce any letter from the attorney general's chambers confirming that it had been duly appointed to act for the second plaintiff, the Government of Malaysia.

   THE DECISION

10. Section 24(3) of the Government Proceedings Act 1956 (the Act) provides that:

    An advocate and solicitor of the High Court duly retained by the Attorney General in the case of civil proceedings by or against the Federal Government or Federal officer, or by the Legal Adviser, or, in the case of the States of Sabah and Sarawak, by the State Attorney General in the case of civil proceedings by or against the Government of a State officer, may appear as advocate on behalf of such Government or officer in such proceedings. [Emphasis added]

11. If, as contended by the plaintiffs, the aforementioned section of the Act was inapplicable, as the action was based on the principle of subrogation, I would hold that the fact of subrogation is a material fact, based on the principles enunciated in Bruce v Odham Press Ltd [1936] 1 KP 697, 712; [1936] 1 All ER 287, 294, CA.

12. On the topic of 'material facts' I need do no more than to quote the pertinent dicta from three cases, expressed as follows:

    The basic principle is that the pleading must contain 'a statement in a summary form for the material facts ... but not the evidence by which they are to be proved'. per Murray Aynsley CJ in Re Lee Siew Kow, deed [1951] MLJ 224; .. the pleading, not to be embarrassing to the defendants, should state those facts which will put the defendants on their guard and tell them what they have to meet when the case comes on for trial. per Cotton LJ in Philipps v Philipps [1878] 4 QBD 139; and The word 'material' means necessary for the purpose of formulating a complete cause of action, and if any one 'material' statement is omitted, the statement of claim is bad. per Scott LJ in Bruce v Odham Press Ltd [1936] 1 KB 697, 712; [1936] 1 All ER 287, 194, CA.

    See also Renofac Builder (M) Sdn Bhd v Chase Perdana Bhd [2000] MLJU 752.

13. It follows that, in the instant case, since it is a material fact, it has to be pleaded (see The Asia Life Assurance Society Ltd v Chan Theng Kiang [1995] MLJU 380; UMBC v Palm & Vegetable Oil (M) Sdn Bhd [1983] 1 MLJ 206; and S&F International Ltd v Trans-Con Engineering Sdn Bhd [1985] 1 MLJ 62), and the failure so to plead is fatal to the suit, as it stood. Here it is pertinent to note that, until hitherto, the plaintiff has not applied to amend the statement of claim to reflect this fact.

14. By analogy (though inapplicable here), Ord.6 r 3 of the Rules of the High Court 1980 imposes a mandatory requirement that where the plaintiff sues in a representative capacity, the writ issued must be endorsed with a statement of the capacity in which he sues.

15. Since the basis of this suit was subrogation and it was not pleaded, making it appear as though it is a straightforward and normal proceeding between two opposing parties, it is trite that a solicitor who has nor shown any authority to act for the party he purports to act (namely the Government of Malaysia here), the suit filed by him must be struck out (see Syawal Enterprise Sdn Bhd v Dayadiri Sdn Bhd [1990] 3 MLJ 239 and William Jacks (M) Sdn Bhd v Chemquip (M) Sdn Bhd [1991] 2 MLJ 555).

16. I am keenly conscious of trite law that a third party who is being sued by an insurer legitimately exercising his right of subrogation has no right to challenge a settlement entered into between the insurer and an insured. See King v Victoria Insurance Co [1896] AC 250; s 79 Marine Insurance Act 1906; Esso Petroleum Co Ltd v Hall Russel & Co Ltd [1988] 3 WLR 730, 746; and Yorkshire Insurance Co Ltd v Nisbet Shipping Co Ltd [1961] 2 All ER 487. The law notwithstanding, if indeed the plaintiffs' action was based on the doctrine of subrogation, a careful perusal of the letter of subrogation dated May 21,1997 (exh C, Encl.16B) showed that it was GEC-Marconi Radar & Defence Systems, rather than the plaintiffs, who issued the alleged letter of subrogation and who also received payment under the policy. Thus, as GEC-Marconi Radar was not an insured party the said letter dated May 21, 1997 is, in my view, not a proper letter of subrogation. See Re Miller Gibbet Co Ltd [1957] 2 All ER 266. Furthermore, no right of subrogation accrues to the insurer until they have paid under the policy and, in my view, this fact must be asserted in the pleadings. See City Tailors v Evans (1921) 91 LJKB 379, 385, and Edwards v Motor Union [1922] 2 KB 249, 254, 255. And, unless they have paid before issue of the writ the fact that they have paid before the trial of the action in which they claim to be subrogated will not avail them. See Page v Scottish Insurance (1929) 98 LJKB 308. See The Law of Insurance by Raol Colinvaux, 1979, 4th edn (Sweet & Maxwell Ltd). Unfortunately, in the present action, as it appears to be the contention that neither the court nor the defendant need to know from the pleadings the alleged subrogation basis of the action, the fact whether the insured or GEC-Marconi Ltd was paid before issue of the writ was not pleaded.

17. Aside from this, the said letter, giving the insurer the alleged right to sue in the plaintiffs' name, was dated May 21, 1997 whereas the suit by the insurer in the plaintiffs' names was instituted in 1995. The discrepancy in the dates seriously undermined the very foundation of the plaintiffs' suit as the action was premature.

18. Notwithstanding the above) there is the eventual question of the costs of this suit. Costs are normally awarded against the party or parties on record. This being so, should the costs in this suit be ordered against the Government of Malaysia without their participation in the proceedings through unequivocal authorization to act on their behalf, it would work injustice on them in the event the indemnity on costs (if any) turns out to be unenforceable.

    CONCLUSION

19. After having studied the pleadings, affidavits and written submissions from both sides and based on the aforesaid reasons, I allow the defendant's appeal with costs and order that the plaintiffs' Suit No D -27-21-95 be struck out. Consequently, as agreed earlier. Suit No D1-21-1-95 is accordingly struck out with no order as to costs.