Wong Siu Big v. Kyote Insurance Ltd

Case No.DCCJ 1055/1979

Court

District Court

Date12 Jul 1979

Judge—

Case Document

100%Judiciary

DCCJ001055/1979

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 1055 OF 1979

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BETWEEN:
	WONG SIU BIG otherwise spelt as WONG SIU BIK	Plaintiff
	AND
	KYOTO INSURANCE LTD., formerly trading as LONDON STAR INSURANCE CO. LTD.	Defendant

	and

	LAU FUK LOI	Third Party

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Application to Strike Out Defence and Enter Judgment

Coram: Judge Rhind in Chambers

Date of Judgment: 12 July 1979

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RULING

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1. This was an application by Plaintiff to strike out the defence and enter judgment against the Defendants under 0.18 r 19 and under the inherent jurisdiction of the court on the ground that:-

	(i)	it disclosed no reasonable defence;
	(ii)	it was frivolous and vexatious; and
	(iii)	it was an abuse of the process of the court.

2. From the pleadings and the affidavits which were filed, the following facts were established:-

	1.	The Defendants are authorised insurers within the meaning of s.3 of the Motor Vehicle Insurance (Third Party Risks) Ordinance, Cap. 272.
	2.	On 26th October 1976 the Defendants issued a policy to one Mui Kin Shing, agreeing to indemnify him for the period from 26th October 1976 to 25th October 1977 against liability to third parties caused by or arising out of the driving of the motor vehicle bearing registration number BB2804.
	3.	Included in the conditions of that policy were the following:

	a)	by condition 9 of the said policy it was (inter alia) provided that the due observance and fulfilment of the terms, conditions, and endorsements or it, insofar as they related to anything to be done or complied with by the insured, should be conditions precedent to any liability of the insurers to make any payment under it.
	b)	by condition 1 of the said policy it was provided that due notice should be given in writing to the insurers immediately upon the occurrence of any accident or loss or damage and in the event of any claim and every letter, claim writ summons and/or process should be forwarded to the insurers and notice should also be given in writing to the insurers immediately the insured had knowledge of any impending prosecution, inquest or fatal inquiry in respect of any occurrence which might give rise to a claim.
	c)	by condition 2 of the policy it was provided that no admission, offer, promise, payment or indemnity should be made or given by or on behalf of the insured without the written consent of the insurers which were entitled if so desiring to take over and conduct in the name of the insured the defence or settlement of any claim for indemnity or damages or otherwise and should have full discretion in the conduct of any proceedings or in the settlement of any claim and the insured should give such information and assistance as the insurers might require.

	4.	There were various transfers of interest in the policy, the last one being on the 25th August 1977 when the Defendants vested the interest in the policy in Lau Fuk Loi, the Third Party in the present proceedings.
	5.	On 16th October 1977 (i.e. during the currency of the policy) vehicle No. BB2804 driven by the Third Party (Lau Fuk Loi) negligently collided on Castle Peak Road, Tsuen Wan with a vehicle in which the Plaintiff was a passenger, causing her personal injuries.
	6.	Without informing the Defendants he was being prosecuted and without forwarding them a copy of the summons, the Third Party attended at Tsuen Wan Magistrates' Court on 10th January 1978 when, arising from the accident in which the Plaintiff was injured on 16th October 1977, he pleaded guilty to dangerous driving.
	7.	As the result of a letter dated 13th May 1978 from the Plaintiff's solicitors to the Third Party (and also copied to the Defendants), the Third Party wrote back to the Plaintiff's solicitors on 16th May 1978 admitting in effect that the accident in which the Plaintiff was injured on 16th October 1977 was due to the Third Party's careless driving, and telling them to claim directly from the Defendants under the policy.
	8.	As the Defendants declined to accept liability, the Plaintiff on 5th July, 1978 issued a writ in Kowloon District Court proceedings No. 4699 of 1978 against Lau Fuk Loi (the Third Party in the present proceedings) for damages for negligence in respect of her personal injuries and consequential loss and damage. On 29th September 1978 interlocutory judgment was entered for damages to be assessed. On 20th November 1978 final judgment was entered in the sum of $10,268 and interest on $1,268 at the rate of 8% from 30th November 1977 until the date thereof and interest on $1,000 at 4% from 16th October 1977 and costs to be taxed on the Upper Scale, such costs in due course being taxed at $1,961.40.
	9.	On the very day that writ No. 4699/78 was issued, the Plaintiff, pursuant to S.10(2)(a) of Cap. 272, issued a notice to the Defendants as insurers advising them of the bringing of those proceedings, that notice together with a copy of that writ being served on the Defendants the following day.
	10.	As neither the Third Party nor the Defendants have satisfied the Plaintiffs judgment in those proceedings, the Plaintiff, relying on S.10(1) of Cap. 272, has brought the present proceedings against the Defendants, who in turn, have joined in the Third Party.

3. Having set out my relevant findings of fact, I will now turn to consider the law.

4. From paragraphs 2 and 7 of the Defence and from paragraphs 4 and 6 of the Affirmation dated 6th April 1979 of Anthony Chan Wing Siu, the Defendants' manager, it appeared that the Defendants were disputing that the Third Party was ever their insured. If the Third Party was never their insured, the Defendant would have a cast-iron defence. However, such a contention was never pursued in the submissions before me, and the reason why the Defendants' solicitor forbore from pursuing it is readily apparent from other documents filed in the case. The endorsements of "Transfer of Interest" on Exh.W.S.B3, the policy of insurance exhibited with the Plaintiff's Affirmation of 4th June 1979, plainly establish that the Third Party was the Defendants' insured at the time of the accident. Moreover the letters Exh. "AC-3", "AC-4" and "AC-8" referred to in sub paragraph (2), (3) and (9) respectively of paragraph 7 of Anthony Chan Wing Siu's affirmation of 3rd July 1979 are clearly referable to the Defendants acknowledging the Third Party as its insured. Likewise sub para (11) of paragraph 7 of that same affirmation presupposes that the Third Party was the Defendants' insured. I regard it as significant that no one on behalf of the Defendants has made my any statement under affirmation in support of the denial in the Defendants' pleading that the Third Party was their insured.

5. In short, the up-shot is that it emerges as completely plain that the Third Party was the Defendants' insured; there is nothing wrong with the policy or the manner of issuing it that anyone on the Defendants' behalf has seen fit to swear or affirm to; and if the Defendants are to avoid liability they will have to try to rely on events subsequent to the accident.

6. Two categories of events subsequent to the accident are prayed in aid by the Defendants in their endeavours to be excused from liability under the policy.

7. Firstly, by paragraph 6 of the Defence, it claims that its insured, the Third Party, was in breach of the terms of the policy by failing to give notice of the accident within a reasonable time. This line of complaint is amplified in the Defendants Third Party Notice and Anthony Chan Wing Siu's affirmations where reference is made to various breaches of the policy committed by the Third Party subsequent to the accident, including failure to respond to the Defendants' requests for information; failure to inform the Defendants about the summons for dangerous driving and breach of the policy by pleading guilty to that summons and admitting the facts alleged by the prosecution; and lastly making an admission of liability to the Plaintiff's solicitors.

8. Whatever the effect might be between the Defendants and the Third Party of breaches by the Third Party of any terms of the policy, the Plaintiff's rights against the Defendants remain unaffected. Such is the effect of the provision in S.10(1) of Cap. 272:

"........ notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability .........".

9. The second category of happenings subsequent to the accident which the Defendants contend exempt them from liability amount to allegations of fraud on the part the Plaintiff and the Third Party.

10. In this connection paragraph 7 of the Defence is in point. There the Defendants aver that an agreement was made in or about January 1978 mala fide to the detriment of the Defendants between the Plaintiff and the Third Party whereby the Third Party admitted liability to the Plaintiff. That assertion is repeated in paragraph 6(d) of Anthony Chan Wing Siu's affirmation of 6th April 1979. Echoes of this allegation are to be found in the second sentence in paragraph 7(8) of his affirmation of 3rd July:

"Indeed, I verily believe that the said letter dated 16th May 1978 (from the Third Party to the Plaintiff's Solicitors) was deliberately written to defeat and prevent any effort or attempt by the Defendant to raise any defence ......"

11. Para 7 (10) of that same affirmation indicates that the Defendants are treating the Plaintiff and Third Party as having conspired together. Exh. "Ac-9" referred to in that sub-paragraph needs to be looked at too. It is a copy of a letter dated 9th June 1979 from the Defendants to the Plaintiff's solicitors, the relevant extract reading "...... and indeed, in cases where we find that the insured has got together with the third party claimant with the intention of assisting with the latter to claim against his insurers, we invariably treat the case as one of conspiracy."

12. Lastly, paragraph 9 of that affirmation comes back to the refrain of mala fides:

"Having regard to the admissions and conduct of the Third Party and the aforesaid circumstances, I verily believe that there is reason to believe that neither the Plaintiff nor the Third Party have acted in good faith in this matter."

13. To make an allegation of fraud against someone is no light matter, and the courts require those making that type of allegation to be able to substantiate what they say. There are even special rules of pleading for fraud, the relevant Passages in the White Book being 18/8/4 and 18/12/11.

14. It is clear that the Defendants do not have a shred of evidence to support their allegations in the nature of fraud against the Plaintiff. No doubt the Defendants do not like it when one of their insured plead guilty to a criminal charge or admit a civil claim, but there is no prospect of any court inferring anything fraudulent or improper from such acts. On the contrary, the courts favour admissions of liability, both criminal and civil, if the circumstances merit such an admission. For anyone to plead not guilty or to deny a claim when he knows the reverse to be true is in effect dishonest, and for the courts to encourage such dishonesty would be contrary to public policy. That any interference with a person's right to plead guilty in criminal proceedings would be contrary to public policy was recently declared by Mr. Justice Garcia in David Shuai v. Chan Tim Wo and London Star Insurance Co. Ltd., H.C. 1544/78, and I see no reason why this principle should not be extended to admissions of liability in civil proceedings.

15. At this stage, it is clear that the Defendants cannot even begin to substantiate their allegations amounting to fraud against the Plaintiff, and I can imagine few abuses of the process of the court greater than requiring the Plaintiff's case to go to trial so that the Defendants can in effect conduct a "fishing expedition" directed towards producing some evidence to substantiate their assertions of bad faith and conspiracy.

16. From the foregoing I was satisfied the Defendants' are doomed to fail against the Plaintiff's claim.

17. Whether one characterises a hopeless defence as "vexatious" or "an abuse of the process of the court" (0.18 r 19(ii) and (iii),) or as failing" to disclose any reasonable ground of defence" (District Court Civil Procedure (General) Rule 27(1)(b)) or as offending the inherent jurisdiction of the court (White Book 18/19/10) is of academic interest only. All those concepts are designed to ensure that unmeritorious defences are still-born, and one or more of those concepts undoubtedly serves to give the present Defence its quietus.

18. I accordingly struck out the Defence out the entered judgment for the Plaintiff as claimed.

	(J. J. Rhind)
	Judge of the District Court
	12 JUL 1979