Yu Kam-chung v. Cheng Wai-hing and Another

HCA002181/1976

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Coram: McMullin J. in Chambers.

Date of Judgment: 15th February, 1978.

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DECISION

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1. The plaintiff's taxi, driven by his employee, HUI Kwok-hang, was involved in a collision with a private car owned by the first defendant and driven by the second defendant on 9th June 1973. Several persons including HUI Kwok-hang were injured in the accident. An award of compensation under the Workmen's Compensation Ordinance was made in favour of HUI Kwok-hang in 1974 and by this action the plaintiff, invoking the provisions of section 24 of that Ordinance, seeks, an indemnity against the present two defendants in respect of his liability to his driver under the award in the Workmen's Compensation Action (No. 73 of 1974).

2. The plaintiff in this action alleges that the accident was caused by the negligent driving of the second defendant and he seeks to make the first defendant also liable on the basis of his being the employer of the second defendant at the material date and time. The first defendant denies negligence on the part of the second defendant and further alleges that, in any event, the second defendant was, at the time when the accident occurred, not driving his vehicle with his consent. It is common ground that the basis of this contention is that, to use the time-honoured phrase familiar to lawyers, the second defendant was, on the occasion in question engaged upon "a frolic of his own".

3. The purpose of the present application is to compel discovery by the insurers of the first defendant, Messrs. Mutual Underwriters, of a notice of accident submitted to them by the first defendant shortly after the accident in 1973 as well as part of the consequential correspondence admitted to have ensued between the first defendant and the insurers thereafter. Discovery was sought informally against the first defendant herself in the first instance and after some delays and that can most charitably be described as temporizing and the filing of an incomplete list of documents an order was made by Mr. Registrar Mayo of 27th May 1977 obliging fuller disclosure of relevant documents. The first defendant thereupon disclosed that she had submitted a notice of accident to the insurers and had received certain letters from them and from their solicitors but she said that the former was no longer in her possession and all the letters had been lost. The plaintiff's solicitors then applied under 0.24 r.7A(2) for an order, directed to the insurers of first defendant, to produce and disclose those several documents. On 6th January 1978 Mr. Registrar Barnett ordered disclosure of the notice of accident but made no order as to the correspondence. It is from that order that the insurers - who were not parties to the action - now appeal. They oppose disclosing any of those documents on grounds of privilege their contention being that these are confidential documents passing between the first defendant and themselves and their solicitors in anticipation of litigation.

4. It is noted by the learned authors of the commentary to 0.24 r.5 (p.406 of the White Book) that : "the law is neither clear nor settled as to the circumstances in which documents embodying reports from communications with, a non-professional servant, agent or third party are privileged." (the comma in that sentence leads me to suppose that it was intended to read", or communications with," etc.) A prolonged consideration of the several most recent authorities cited by the learned authors in this connection - authorities to which counsel have exhaustively resorted before me - has done little more than to confirm the justice of that somewhat gloomy observation. It is true of course but none of these cases and none of the many authorities covered by Havers J. in his comprehensive judgment in Seabrook v. British Transport Commission⁽¹⁾ were concerned with the precise situation now in question. In each of these cases the body or person claiming privilege was a party to the action and was resisting the opponent's demand for discovery. I have been referred to no decisions arising under the new procedural provisions of r.7A cased on sections 31 and 32 of the Administration of Justice Act 1970 in England and by section 41 of the Supreme Court Ordinance in Hong Kong. The effect of these provisions is to give parties to litigation powers to exact discovery before trial, from third parties not involved in the litigation, of documents which can be shown to have relevance to the issues between the litigants. It is clear from the wording of r.7A(6) (and the commentary thereon p. 416) that where a stranger to litigation is thus approached the extent of his claim to resist on the ground of privilege is exactly co-terminous with the grounds on which, prior to the act, a stranger might refuse to produce a document under a subpoena duces tecum. It might be thought that this makes a radical distinction between cases where privilege is claimed by a party and those in which it is claimed by a stranger such that the many cases dealing with the former situation would be of little or no authority in considering the latter. In the absence of very much in the way of useful authority on the matter I feel however that I must conclude that, notwithstanding that the appellant is not a party to the action, the same principles will apply to his claim of privilege as would apply were the first defendant herself the claimant. Now it appears to me that the arguments of counsel on both sides in this matter - concerned principally with exploring the competing merits of the two opposed lines of authority represented by Seabrook⁽¹⁾ and its preferred authorities on the one hand and on the other by Jones v. Great Central Ry. Co.⁽²⁾ and Alfred Crompton Amusement Machines Ltd. v. Commissioners of Customs and Excise⁽³⁾ - moved equally upon the presupposition that the privilege if claimable at all would be claimable on the ground that these documents in dispute had come into existence for the purpose of seeking advice from or briefing the first defendant's solicitors and putting them in a position to take or defend an action on her behalf. Mr. Yung following Seabrook⁽¹⁾ was concerned to argue that even if that was not the primary purpose of these documents yet if it was clearly a substantial purpose that was enough to attract the privilege. Mr. Lane, relying on Crompton⁽³⁾ and Jones⁽²⁾ contended that if the insurance company had first to consider on the basis of the accident notice and the correspondence whether or not to fight any claim then these materials could not be said to have as their dominant purpose the supplying of materials to their solicitors for the brief. Leaving aside for the moment the merits of these opposed arguments it seems to me to be wrong to suggest that the insurers (appellants) would be entitled to claim privilege to these documents on precisely the same footing as might the first defendant if they are still in her possession. The insurers are not parties to her action at all. Admittedly they are likely to be concerned in the results of her litigation since she may look to them to be indemnified against any loss causing through the success of the plaintiff's claim. Whatever the financial realities may be in the background of the parties to such actions as this it is nevertheless the parties and not their insurers who are the actual contestants in the lists. It is they and not the insurers who fight the action. It is by no means necessarily or invariably the case that the solicitors for the insurers are the solicitors for the parties. In the present case it is true that at the present time the solicitors for Messrs. Mutual Underwriters are now also acting for the first defendant. No doubt in many cases such will be the arrangement. But it does not have to be so. A litigant might be separately represented and might decide on his own adviser's opinion not to fight the case and to look to his insurers for an indemnity under the terms of the policy. In that event so far from the litigant and his insurers and his insurers' solicitors finding themselves in the same camp they might find themselves in conflict with each other. I mention these possibilities merely to underline the fact that where a non-party to the litigation in which discovery is sought wishes to resist production of a document he must show some good ground of privilege in his own account and in his own rights. What the present appellant must show is that at the time when these documents passed to it from the first defendant - a time at which, incidentally, it seems very unlikely that the appellant's solicitors were acting for the first defendant - the intention of using them as materials to brief the company's solicitors was at least an appreciable part of the purpose of their being called into existence. When one keeps in mind the separate and possibly conflicting interests which may arise between insurer and insured on the submission of such a notice of accident it seems to me fanciful to suggest either that the insured has supplied it with a view to providing materials for his solicitor to defend him or that the insurer has called for it as part of the body of evidence which he proposes to lay before his solicitors for the same purpose. This was a comprehensive policy of insurance; the notice of accident is a routine document which the insured is under obligation to submit as a pre-requisite for claiming any indemnity under the policy. On receipt of such a notice there may well be a number of factors to be considered and determined by the insurer before it decides (a) that it is, in the circumstances disclosed, bound or not bound in liability to the insured and, (b), if so bound whether it wishes to seek legal advice on behalf of the insured on the advisability of making or resisting claim or, (c), (possibly) whether, in the event of being advised that a claim is sustainable (or resistible) to suggest that its own legal advisers should represent the insured or (d) if holding itself not so bound, whether it anticipates litigation arising from such a refusal such as to oblige early legal advice in its own interests. If the first defendant were now claiming the right to refuse discovery of the notice of accident I would think it very difficult to conclude that she had submitted it to her insurers as agents for the procuring of legal advice or for the transmission of evidence to help in the making up of the solicitor's brief. I would think that the ratio of the most recent and weightiest authority - the majority opinion in the Crompton Case⁽³⁾ - adopting as it does the principle applied in Jones v. Great Central Railway Co.⁽²⁾ was conclusive against such a claim. A fortiori, as it seems to me, is the present claim of the insurance company to privilege in respect of that document covered by the reasoning of Lord Cross of Chelsea emphatically endorsed as it is by Lord Kilbrandon in the House of Lords decision. I note that the latter, indeed, goes so far as to cite with approval the decision of the Scottish Court in Whitehill v. Glasgow Corporation⁽⁴⁾ while noting that the practice in Scotland is somewhat different. In that case disclosure was compelled of a report of an accident produced by the defenders notwithstanding that it was headed "for the use of the Corporation solicitors to enable them to defend should litigation ensue". The reason given by the learned Lord President in that case was that : "These words cannot alter the character of the report which is made by the employee for the purpose of informing his employers of the accident, and made at the time." That was of course a case in which the claimant was a party to the action but I think that the decision of Lord Cross and its indorsement in this way by Lord Kilbrandon is, in general, a surer guide to contemporary attitudes in the courts in England on this aspect of discovery than can be found in the earlier case and I think it should be followed. Approaching from the same angle, the quite different situation of a claimant who is not a party I am satisfied that a notice of accident submitted in the usual way to an insurance company by its client is not a fit subject for a claim to privilege from production by the company either on the ground that it must be considered materials for the brief of the company's solicitors in relation to anticipated litigation involving the company or on the ground that any such report must invariably occasion the need to resort to professional advice. I conclude that the notice of accident in this case must be disclosed.

5. I do not however propose to make any ruling in relation to the correspondence. I think the plaintiff stands upon weaker ground, so far as this is concerned, in seeking to enlist the Jones⁽²⁾ and Crompton⁽³⁾ line of authority. The first defendant admits merely that some letters have passed between herself and her insurers and her insurers' advisers. Her affidavit states that these concerned requests to her to attend conferences at her insurer's or possibly the solicitor's offices. By the time this correspondence developed it may well be that a degree of confidentiality had developed between the three parties to it which would justify the contention that by then common cause was being made to prepare against litigation. Without now enquiring into the nature of each letter and the date and occasion of its production I am not in a position to decide upon its relevance or upon the justice of a claim to its protection. Mr. Lane acknowledges that he is himself in something of a quandary as to what part of this correspondence I should order to be disclosed. I have considered whether I should call for and examine the letter myself up to the date of the writ but I do not think this would be justified. That covers a period of some three years and it is very likely that part at least of the exchanges should not be disclosed. On the whole it seems to me better not rule at all upon the correspondence at this stage. It may be that at a later stage the plaintiff may feel justified in renewing an application for discovery in respect of some specified communication, possibly even by subpoena duces tecum, should it have become clear that such a document stood on no better footing in relation to privilege than does, presently, the notice of accident.

6. Costs of application to respondents.

7. Certificate for counsel.

Representation:

W. Yeung (Gallant Y.T. Ho & Co.) for Appellant.

W. Lane (Deacons) for Respondent.

(1) (1959) 1 W.L.R. 509.

(2) (1910) A.C. 4.

(3) (1974) A.C. 405.

(4) (1915) S.C. 1915.