Ng Kai Hau v. The Oriental Fire & General Insurance Co Ltd
Read the full judgment text of HCA 3130/1975 on BabelCite. This High Court CFI judgment.
1. On the 18th January, 1973 the plaintiff was driving a car which was involved in an accident as a result of which his passenger, one Law Ngau, was seriously injured. She instituted proceedings against the plaintiff and Ha Chung-fong who was registered as owner of the car.
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HCA003130/1975 IN THE SUPREME COURT OF HONG KONG HIGH COURT ACTION NO. 3130 of 1975
----------------- Coram: Trainor, J. Date of Judgment: 13th January, 1977. ----------------- JUDGMENT ----------------- 1. On the 18th January, 1973 the plaintiff was driving a car which was involved in an accident as a result of which his passenger, one Law Ngau, was seriously injured. She instituted proceedings against the plaintiff and Ha Chung-fong who was registered as owner of the car. 2. A policy of insurance, issued by the defendant on the 20th November, 1973, covering third party risk, was in existence at the time in which Ha Chung-fong was named as the owner of the car. The defendant was duly notified of the claim of Law Ngau but refused to assume responsibility for the defence of the action, or to indemnify the driver. Judgment in default of appearance was entered against the plaintiff and Ha Chung-fong and very substantial damages were assessed and awarded to Law Ngau. The present proceedings were instituted by the plaintiff seeking a declaration that the defendant is liable to indemnify him in respect of the damages and costs. 3. The basis of the plaintiff's claim is Clause 3 (erroneously stated to be Clause 2 in the Statement of Claim) of Section II of the policy. It reads:
4. At the time of the accident the plaintiff was in the employment of a firm called the Globe Dyeing Factory (to which I shall refer as Globe) and he was driving Law Ngau, who was a cook employed by the firm, to buy provisions for that firm. Initially, the defendant repudiated liability on the ground that the use of the vehicle was otherwise than in accordance with the limitations as to use, stated in the policy to be: "Use only for ..... the Insured's business or profession". In its Defence the defendant alleged that the vehicle was being used for the purposes of Globe. 5. The Statement of Claim stated that Ha Chung-fong was the registered owner and that the plaintiff was driving with his permission, but liberty to amend was granted to enable the plaintiff to plead that the vehicle was at all material times, and to the knowledge of the defendant through its agent Yeung Chun Ping, the property of Globe. The defendant amended its Defence and denied that Yeung Chun Ping was its agent, and that it had knowledge of the ownership of Globe. It further pleaded that it was at all material times entitled to avoid the policy by reason of the non-disclosure of material facts and, or alternatively, representations of facts which were false in a material particular, i.e. that Ha Chung-fong applied for and accepted the policy issued to him in his name thereby representing that he was the owner and that the car would be used by him, whereas it was owned by Globe and to be used by it. The defendant counter-claimed for a declaration that it was at all material times entitled to avoid the policy, and a declaration that the plaintiff is not entitled to be indemnified by the defendant. 6. It was the evidence of Mr. Ha, who is a partner in Globe, that Globe required a car for the purpose of transporting provisions for the staff's meals. He said he approached his nephew, Yeung Chun-ping, who was employed by Metro-Dodwell Motos Ltd. He said he told Mr. Yeung what the requirements were; something easily appreciated by Mr. Yeung who previously had worked for Globe. Purchase was made in January, 1973, and payment was made by a cheque drawn by Globe and made payable to Mr. Yeung. Mr. Ha said as he understood the Motor Registration Department would not register "a factory" as owner, only an individual or an incorporated company, he instructed Mr. Yeung to register the car in his, Mr. Ha's, name and that was done. As for himself, Mr. Ha said he does not and never did hold a driving licence. Mr. Ha further said that at the time the car was bought it was covered by insurance. He did not know who the insurers were and he left all matters concerning insurance to Mr. Yeung. He said he gave a cheque drawn by Globe and payable to Mr. Yeung for a renewal premium but could not say when. 7. Mr. Yeung is a car salesman with Metro-Dodwell Motors Limited and also a part time insurance canvasser. He also has a side-line in that he buys and sells cars on his own behalf. He corroborated the evidence that Mr. Ha gave with regard to the instructions he gave as to the purchase of the car, the purpose for which it was bought, for whom and how it was paid for. 8. He identified a document produced as having been signed by him. It is addressed to:
The part of it which is of relevance reads:
The document is dated the 17th October, 1973. I shall refer to the Company as Mutual. 9. Mr. Yeung said that, generally, when a customer required him to effect insurance he would telephone a clerk in Mutual, supply the necessary details and arrange to collect "all relevant documents"; what they were I was never informed. He would then collect the premium from the car owner, deduct his commission and pay the balance to Mutual. 10. Mr. Yeung said he could not remember when the car was purchased but it was about 5/6 months before the date on the policy covering the car, the 20th November, 1973. He said at the time of the purchase there was a policy in existence and he had it transferred to the name of Mr. Ha. At that time, and I think this is of considerable importance, he said he had a conversation with a Mr. Pang, a section chief of Mutual, and suggested that the name of Globe be added, but Mr. Pang said it was not necessary, it was only necessary to insure according to the details as registered with the Registration Department. The witness said this was Mutual's policy. 11. When the witness gave this evidence the document whereby he agreed to solicit insurance for Mutual which I have quoted was not available. On becoming available and on it being pointed out to him by counsel for the plaintiff that the date on it was October 1973 he said his memory might have been at fault when he said earlier that he had commenced acting for Mutual sometime in 1972/73. When shown the insurance policy dated the 20th November he then said he could not remember whether the car was purchased before or after he signed the document quoted. He said he signed one or two similar documents, but no other was forthcoming. In his further examination-in-chief it was pointed out to him that Mr. Ha was the name in the policy of the 20th November and he was asked if he knew the name of the previous owner. That he could not remember, nor could he remember if he, himself, had first purchased the car and then sold it to Globe. 12. When this witness was cross-examined, he firmly maintained, initially, that when he had the policy of the previous owner transferred to Mr. Ha he informed Mr. Pang of the position of Globe. As to the policy produced, the one in existence at the time of the accident, he said he rang up a girl in Mutual and gave her details of the car to be insured and the name of the insured so that a new policy could be issued but agreed that Mr. Ha was already insured. The witness was then asked if in fact the new policy was to be a continuation of the transferred policy and he said he could not remember. Later it was pointed out to him that he had earlier referred to it as a re-newed policy to which he replied "Yes, I said that this morning but the more I say about it the less certain I am". In the meantime he had said he could not remember if the car had been purchased 5/6 months before the date of the policy despite his earlier assessment of that period. When it was put to him that there never was a transferred policy he replied "If that is not the case Mr. Ha must have paid to have a new one". His cross-examination continued:
Later he was asked:
to which he replied:
In a still later answer he said:
13. To put it very mildly indeed, I was not impressed by this witness or his evidence and less so when I heard Mr. Pang's evidence. He satisfied me that the policy produced was a new policy issued to replace a temporary cover which had been issued to Mr. Ha on the 19th November, 1973. Had Mr. Ha previously been covered by an expiring Policy of insurance it would not have been necessary to give him temporary cover. In addition, Mr. Pang produced a book showing the registration numbers of cars insured and the car in question was never insured by the defendant prior to November. He said he had nothing to do with the issue of the policy in question, and he had not been asked by Mr. Yeung if it was necessary to include the name of Globe in the insurance policy. Mr. Pang said that Mr. Yeung, like about 300 others, was a salesman but not an agent of Mutual, though at times he referred to him as such. 14. I am satisfied that Mr. Yeung did not at any time inform Mutual or the defendant of the interest of Globe in the motor-car. It is irrelevant to my conclusion but I believe that Mr. Yeung, in or about the month of November, did, as he said, telephone Mutual and speak to a lady named Christine; but that was the first time he contacted Mutual about this car. The details he gave her were those contained in the certificate of registration, and no more, and as a result a new policy, the one in question, was issued. I believe there was a previous policy of insurance on the motor-car, issued by a company other than the defendant and it was transferred at the time of the sale which was between the 1st February, 1973, when, according to the certificate of the Transport Department the car was registered in the name of Lee Chu King and the 1st June, 1973, when according to a similar certificate it was registered in the name of Mr. Ha. 15. The question then arises: assuming that Mr. Yeung was aware that Globe was in fact the real owner of the vehicle can that knowledge be attributed to the defendant? 16. Unlike the circumstances surrounding the many reported insurance cases no proposal form was ever signed by Mr. Ha. Moreover, according to Mr. Pang, insurance policies are often issued by the defendant simply on the details telephoned in by persons in the position of Mr. Yeung. He did say that signed proposal forms were preferred but it is clear they are not a sine qua non. It would seem therefore that Mr. Yeung's position was to solicit business and it was normal for him to telephone in details of the car and customer to the defendant. 17. Mr. Yeung's position in the matter has been twofold. Firstly he was the agent of Globe or Mr. Ha in acquiring the motor-car. He was still acting as such agent when he had the registration transferred into the name of Mr. Ha. At that time he similarly was an agent when he had the insurance transferred. Mr. Ha clearly and explicitly informed me that he instructed Mr. Yeung to look after the insurance of the vehicle and I am satisfied that it was as a result of that that he telephoned Mutual when the existing policy was about to expire and a new, and first, policy was issued by the defendant with respect to the car. It was his duty therefore pursuant to his obligation to Mr. Ha properly to inform Mutual of the details necessary to obtain insurance. It was also his duty to Mutual to pass on to them all the details essential for a policy to be prepared and issued. He did not do so but only gave the details under which the car had been registered. He stated Mr. Ha to be the registered owner and the policy was received by Mr. Ha in his name without objection. Mr. Ha might say that having told Mr. Yeung everything he assumed that everything was in order; but Mr. Yeung's position was as in the document of October, 1973: he had no authority under it to grant policies of insurance or to fix any terms or conditions of them. Neither was he authorised to introduce provisos or exceptions or to withhold relevant or material information. 18. I do not think I need expand on the obvious; and insurance company is entitled to know whom it is about to insure, and a person in the position of Mr. Yeung, if he has that knowledge is not authorised to withhold it. 19. A telephone call giving details to insurers, as in the present case, is analagous to the filling in of a proposal form on behalf of a person seeking insurance cover, and the case of Newsholme Brothers v. Road Transport and General Insurance Company, Limited(1) is in point. In that case a proposal for insurance was filled in at the request of the intended insured by the insurance company's agent. The duties of the agent were to procure persons to effect insurance and see, so far as he could, that proposal forms were correctly filled in. For some unknown reason the answers to questions in the proposal form were untrue in a material respect. A claim was made in respect of the policy issued and the insurance company disclaimed liability on the ground of the untrue answers. It was held that the agent of the insurance company in filling in the form was merely the amanuensis of the proposer, that the knowledge of the true facts could not be imputed to the insurance company and that the insurance company was entitled to repudiate. It seems to me that there is little, if any, difference between filling in the details in a proposal form which is to be passed to the insurers and passing on such details by telephone. If, as in this case, he passes on false information is not the observation of Scrutton, L.J. in the Nowsholme case, 375, apt: "If the answers (to questions in the proposal form) are untrue and he knows it, he (the agent) is committing a fraud which prevents his knowledge being the knowledge of the insurance company. If the answer is untrue, but he does not know it, I do not understand how he has any knowledge which can be imputed to the insurance company." 20. Another aspect of the case to be considered is assuming Mr. Yeung was aware that Globe, and not Mr. Ha, was the owner how, when and why did he acquire that knowledge? The answer to that question is not difficult and is provided by the evidence of Mr. Ha and Mr. Yeung. The information was given by Mr. Ha to Mr. Yeung in or about January 1973 to enable him, in pursuance of his business as a car dealer, to look for and buy a motor car suitable to the requirements of Globe. The information was provided to Mr. Yeung for no other purpose. I accept and find that the car purchased was already covered by insurance. I find that that insurance cover was transferred to Mr. Ha. But as to who then became the insured or the insurer, or what information as to the new owner was given to the insurer I do not know. Mr. Yeung said he gave information as to the real owner when the insurance was transferred. Maybe he did, but it was not to the defendant, as I find that they first insured the car in November and were not concerned at the time the insurance was transferred nor in the transferred policy. It follows then I think that the knowledge acquired by Mr. Yeung was not acquired in any way associated with insurance. 21. On such acquired knowledge the editors of the 6th Edition of MoGillrray and Parkington had this to say in paragraph 938:
and they noted the case of Williamson v. General Accident Fire and Life Assurance Corporation Ltd.(2) In that case Miss Commissioner Heilbron, as she then was, said: "I am satisfied, however, that when he obtained the knowledge of the sale of the car he in fact acquired such knowledge as a car dealer and not as agents of the defendants. Middleton was employed, as I have held, not as a general agent but for a limited purpose, namely to submit proposal forms and to issue short term notes. 22. In The Hayle (1929) P.275 ... it is stated that knowledge acquired by an agent otherwise than in the course of his employment on the principal's behalf is not imputed to the principal. I do not think that the knowledge acquired by Middleton can or ought be imputed to the defendant company." 23. I find that Mr. Yeung did not pass on his knowledge of the owner of the vehicle and his knowledge cannot be imputed to the defendant. 24. What he did pass on was false information as to the real owner and the question then is that a misrepresentation of a material fact? This is a matter for me to decide on the circumstances of this case. 25. That knowledge of the person to be insured is essential to the insurer, and a material fact on which to base a contract seems to me to be fundamental to the contract of insurance, or indeed any contract. But a knowledge of whom the owner of a vehicle is is, I should think, necessary for the insurers to decide will they insure the person at all or not. It must be an important factor in calculating the premium to be charged. Accepting the principal of common ownership, as in this case, had a proper disclosure been made there would have been four persons each with the right to drive and to permit others to drive. Surely the insurers ought to have the opportunity to consider whether or not to charge an increased premium. It occurs to me that the knowledge of how many owners there are in fact is something that any prudent insurer would take into consideration in determining whether to accept the risk, and the premium. I hold that there was in this case a misrepresentation or at least a non disclosure of a material fact by the agent of the person seeking to be insured; and although that agent was also the agent of the insurance company to pass on the details necessary to effect the policy of insurance his misrepresentation was a fraud on it, or his decision to withhold material fact from it was outside the scope of his agency and in either case his knowledge of the true position cannot be attributed to it. 26. I dismiss the plaintiff's claim and make the declaration sought by the defendant on its counterclaim with costs to the defendant on both.
Representation: Mr. Mills-Owens (Samuel Soo & Co.) for plaintiff. Mr. R. Tang (Chan & Ho) for Defendant. (1) 1929 2 K.B.D. 356 (2) 1967 2 L1.R 182. |