Grand Union Insurance Co Ltd v. Far East Mfty Hairgoods Co Ltd

CACV000034/1976

Coram: Briggs, C.J., Pickering, J.A. & McMullin, Acting J.A.

Date of Judgment: 25th November, 1976.

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JUDGMENT

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1. The plaintiff is a company and at the relevant time was engaged in the manufacture of plastics at two factories which are situated in the Kin Wan Factory Building at No. 54 Hung To Road, Kwun Tong, Kowloon. One factory was located on the second floor of Block C and the other was located on the fifth floor of Block B of that building.

2. The Plaintiff company took out two insurance Policies against fire with the defendant company, one in respect of each of the two factories.

3. On January 1st, 1975, while the two policies were in force, a fire broke out in the factory building at No. 54 Hung To Road and damaged the plaintiff company's stock and goods in both factories. Consequently, the plaintiff company Claimed a sum in respect of each of the two factories representing their loss. The amounts of damage were not in dispute. They are $33,758.50 in respect of the factory at Block C and $170,873.13 in respect of the factory at Block B.

4. The trial judge dismissed the claim of the plaintiff company as regards the factory at Block C but found in the plaintiff company's favour on their other claim. And he gave judgment to the plaintiff company for the sum of $170,873.13.

5. The defendant company appeals against this judgment. We are not here concerned with the other claim, the claim in respect of the factory at Block C.

6. There is only one point in the appeal. It is the contention of the defendant company that the judge was wrong to give judgment for the plaintiff company because at the time of the fire the plaintiff company was in breach of a warranty which formed part of the policy under which they sought to recover. This warranty reads as follows:-

7. A plan of the relevant part of the fifth floor of Block B was put in evidence. This shows the space outside the entrance of Flat B, the plaintiff company's factory. Flat B opens on to a space, which was referred to in court by the plaintiff company as the 'lift lobby'. The court was told that from the space there are doors entering each of four factory flats including that of the plaintiff company, a door leading to the staircase and the doors to two lifts.

8. A person wishing to pass from one of the four factories to another, or from a factory to a lift or the staircase must make use of this space.

9. It was in evidence that the plaintiff company used to leave their PVC waste materials in this space at the end of each day and that it would be removed by cleaners before the next morning.

10. On the date of the fire the plaintiff company had placed some PVC waste and some discarded iron machinery in this space ready for the cleaners to collect and remove. The PVC waste was not contained in metal receptacles, it was placed in gunny sacks.

11. The trial judge had the task of interpreting the warranty contained in the policy of insurance and which is set out above. He held that though the PVC waste and the machinery was 'stored' within the terms of the warranty, the space or place where that waste was stored was not a "staircase, landing or passageway" within the terms of the warranty and that therefore the plaintiff company was not in breach of the warranty to that extent. He also held that the reference in the warranty to the removal of the waste materials from 'the building' meant the removal of the waste materials from the plaintiff company's factory or leased premises and not from the factory building, i.e. The Kin Wan Factory Building, 54 Hung To Road. So, again, he held that the plaintiff company was not to this extent in breach of the warranty. He therefore gave judgment to the plaintiff company on this part of their claim. It should, perhaps, be mentioned that the insurance policy which covered the other premises, i.e. the second floor of Block C of the factory building, contained a further warranty which was not contained in the policy with which we are concerned in this appeal. And the trial judge found that the plaintiff company was in breach of that other warranty and on that account could not succeed in that claim.

12. In construing a document such as the insurance policy in the present appeal the golden rule is that the words used are to be given their natural and ordinary meaning in the absence of any evidence as to their secondary meaning. And it is proper, when construing an insurance policy, to pay regard to the object of such a policy. (See Leo Rapp Ltd v. McClure⁽¹⁾

13. The words used here are "on any staircase or landing or in any passageway within or in common use with the" policy premises. The trial judge thought that the place where the waste was 'stored' did not come within those words. He pondered whether the space could properly be described as a 'landing' but discarded this suggestion.

14. The trial judge had the plan of the space in question before him and, of course, that plan is before us in this appeal. Looking at the plan and giving the words of the warranty their natural and ordinary meaning we think that a proper description of the space in question is that it is a 'passageway'. It was called a 'lift lobby' by counsel for the plaintiff company. And we have no quarrel with such a description. But with respect to the judge and to counsel for the plaintiff company that does not matter. It is also a 'passageway'. A person who wishes to reach any of the four factory flats, the two lifts or the staircase must pass through this space or lift lobby and to that extent that person is using a passageway, a passageway which, in the words of the warranty, is "in common use with" the plaintiff company's factory.

15. It was suggested that the fact that the word 'any' does not appear before the word 'landing' was material. The suggestion was that the warranty should be read as meaning (1) any staircase or landing; and (2) any passageway, i.e. that the terms 'landing' and 'staircase' were bound up together and were quite exclusive of the term 'passageway' which must mean something in the nature of a corridor. We do not think that there is anything in this argument. The reason that the word 'any' appears before 'passageway' and not before 'landing' is grammatical. The storing of the waste refers to being 'on' any any staircase or landing and 'in' any passageway. To insert a third 'any' before the word 'landing' is quite unnecessary.

16. We think therefore that the space outside the entrance to the factory flat of the plaintiff company as shown in the plan was a 'passageway' and so within the terms of the warranty. It follows that by to use the judge's expression 'storing' the waste in the passageway, the plaintiff company was in breach of the warranty.

17. It was not disputed that the PVC waste material which was left in the passageway by the plaintiff company was not in the words of the warranty "kept in metal receptacles", it was in gunny sacks. It was argued that this only imposed a duty on the plaintiff company to keep their waste in metal receptacles when that waste remained in the plaintiff company's factory premises. Counsel for the plaintiff company put four alternative interpretations of this part of the warranty forward for the court's consideration, but urged the court to adopt the interpretation given above since that was the most favourable to the plaintiff company.

18. We think that these words in their ordinary meaning mean that the plaintiff company's waste which was left in the passageway should have been contained in metal receptacles. It was not. Therefore the plaintiff company was in breach of the warranty.

19. The trial judge held that the words "removed from the building" which are contained in the final sentence of the warranty mean to be removed from the factory premises of the plaintiff company.

20. With respect to the judge, we think he was wrong here. The word 'building' in its ordinary and normal meaning means in the context of this case, the Kin Wan Factory Building. We can find nothing in the terms of the insurance policy to restrict the meaning so as only to include the factory of the plaintiff company. If that had been the intention of the parties one would have expected that the phrase "insured's premises" or something similar would have been used; and not the word 'building'.

21. Again, it is proper to look at the object of the policy. The warranty is surely intended to reduce the risk of fire. This part of the warranty deals with the removal of waste and it is removal from the building and not from an individual factory, for example, on to a passageway or staircase within the building which is so important. Hence, all waste must be kept in metal containers and removed from the Kin Wan Building daily.

22. It follows from the above that the Plaintiff company was in breach of the warranty, and that this appeal must be allowed. The defendant company are to have their costs here and in the court below. The defendants are also to have the costs of the unsuccessful application of the plaintiff company for an order to extend the time for the filing of a Respondent's Notice.

Representation:

Ching, Q.C. & Bokhary (Vincent Lo & Co.) for Appellant.

K.H. Woo (Chan & Ho) for Respondent.

(1) (1955) 1 Lloyd's List R. 292.