Chan Chi Keung v. Yuen Kay Ming

Case No.HCA 3344/1977

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCA003344/1977

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO. 3344 OF 1977

-----------------

BETWEEN
	CHAN Chi Keung	Plaintiff
	and
	YUEN Kay Ming	Defendant

-----------------

Coram: Li, J. (In Court as Chambers)

Date of Judgment: 2nd March 1978 at 2.40 p.m.

-----------------

JUDGMENT

-----------------

1. This is an appeal from the Registrar's decision and an Order 14 summons giving the defendant unconditional leave to defend an action for the breach of statutory duty.

2. On the 9th September 1973 the plaintiff then a minor, was a passenger in a public light bus, No.9625 driven by one Chan Siu-wai (hereinafter referred to as "the driver") and owned by the defendant.

3. The plaintiff sustained injury due to the alleged negligence of the driver.

4. On the 17th December 1975, a writ was issued against the driver as the 1st defendant for negligence and the defendant as the 2nd defendant for vicarious liability in his capacity as owner. At that time the defendant in his capacity as the 2nd defendant in that action entered an appearance and filed a defence denying vicarious liability on the ground that he had let the aforesaid vehicle on hire to the driver on a daily basis.

5. The driver did not enter an appearance. Accordingly, judgment was entered against the driver in default on the 26th July 1976 - damages to be assessed.

6. On the 10th December 1976 the plaintiff obtained leave of this court to discontinue the proceedings against the defendant in his capacity as the 2nd defendant in that action. Damages were then assessed to the sum of $26,552 plus interest with costs at $8,417.75 in March 1977.

7. Both the effort to locate the driver and an attempt to levy execution against the driver were met without success.

8. In July 1977 the defendant gave notice to the plaintiff that he the plaintiff would pursue his claim against the defendant for breach of statutory duty. However, on the 30th June 1977 the defendant obtained from the Registrar a letter, for some reason best known to the Registrar, to the effect that he was not bound by the judgment against the driver. This is in Exhibit 2, exhibited to the defendant's affirmation dated the 21st of February 1978.

9. On the 19th November a writ of the present action was issued and on the 17th December 1977 an application was taken out under Order 14 for summary judgment. The order was heard on the 6th February this year before the Registrar, who granted the defendant unconditional leave to defend, hence this appeal.

10. The plaintiff's case is very simple. It is contended that here is a liquidated sum sought to be recovered from the defendant for the breach of statutory duty; this breach on the part of the defendant gives the plaintiff a right of action; thirdly, that the defendant had not applied to set aside the judgment against the driver and it is too late to do so now; and, furthermore, that there is no defence to this action.

11. The defence case is that the plaintiff has to prove his case because the defendant is only liable in the event that the driver cannot pay; secondly, the judgment is not binding on the defendant as it is a judgment in personam against the driver and that the plaintiff is only liable if the driver is unable to pay. Thirdly, the defendant would require a chance to challenge the quantum of damages.

12. Having heard counsel and having read the affidavits and affirmations filed, I come to the conclusion that the plaintiff certainly has a cause of action for a liquidated sum against the defendant. That is evident in view of the authority in Monk v. Warbey. (1935) 1 K.B.75. Secondly, there is prima facie evidence that the plaintiff could not recover from the driver since the driver could not be located and that attempt to levy execution met without success.

13. However, it does not follow that there is no defence to this action simply because the driver could not be located or that attempt to levy execution met with failure.

14. The defendant is liable only if it can be proved on the balance of probability to this court that the driver could not pay. The right to sue, however, does not mean that the plaintiff may use the judgment against the driver as a basis for the proof of a liquidated sum on an Order 14 summons. This is especially true when the plaintiff in 1976 in December discontinued his original action against the owner, the defendant, instead of amending the writ so as to enable the defendant to challenge not only the question of liability but also the question of quantum of damages.

15. I say this especially in view of the letter written by the Registrar of this court to which I have referred earlier. It reads as follows:

"I am directed by Mr. Registrar Stapp to write to acknowledge receipt of your letter of the 27th June and to confirm that the judgment was entered only against the 1st defendant CHAN Siu-wai and that you are not liable on the said judgment sum."

16. It is argued that the defendant has a chance to set aside the judgment on the authority of Windsor v. Chalcraft (1938) 2 A.E.R.751. However, reading the judgment of Lord Justice Greer, who said at page 753 as follows:

"Here there is a judgment which does injuriously affect the insurance company, in that they are made liable by the Act of 1930 and the Act of 1934 to pay the amount of that judgment. They are, therefore, injuriously affected by the judgment suffered by the defendant by default, and a tranger so affected, says Bowen, L.J., may, in the first place, obtain the defendant's leave to use his name, if the defendant has not already bound himself to allow such use of his name to be made. Looking at the policy, it seems to me quite clear (and I do not understand that it is denied) that the defendant had already, at the time that the application to set aside the judgment was made, bound himself to allow the insurance company to use his name. Thereupon, the applicant may:

in the defendant's name, apply to have the judgment set aside on such terms as the judge may think reasonable or just.'

Those last words were intended to protect the nominal defendant, who might come to the court and say to the master or the judge, as the case might be: 'This judgment is all right and I do not want it set aside. If it is set aside, the only result will be that the action will go on, and I may have to pay the costs of that action.' He will be entitled to ask the master or the judge to say that the setting aside of judgment shall be only on the terms that he is to be indemnified so far as the costs of the second action are concerned. Then Bowen, L.J. goes on, at page 168:

'Or he may, if he is not entitled without further proceedings to use the defendant's name, take out a summons in his own name at chambers to be served on both the defendant and plaintiff, asking leave to have the judgment set aside, and to be at liberty either to defend the action for the defendant on such terms of indemnifying the defendant as the judge may consider right, or, at all events, to be at liberty to intervene in the action in the manner pointed out by the Judicature Act, 1873, s.24(5).'"

At page 757 Lord Justice MacKinnon said this:

"	By Condition No.2 of the policy, the nominal defendant, Mr. Chalcraft, did bind himself to allow the strangers to this litigation, the underwriters, to use his name. Therefore, those strangers to this litigation may, in that defendant's name, apply to have the judgment set aside. The position might conceivably arise in many other aspects of insurance. The liability of a shipowner for damage done to his ship in a collision is commonly insured as to three-quarters by underwriters and as to a quarter by a protection club. If, in a collision action, a shipowner chose to be so foolish as to admit liability and to submit to a reference to the Admiralty Registry, the underwriters and the protection club, strangers to the litigation, and not nominal parties at all, might very likely - I am not sure that they could - within that rule of Bowen, L.J., apply to have that default judgment set aside, so as to have the action tried on its merits, but the right of the underwriters, the strangers spoken of by Bowen, L.J., in such a case, would arise only by virtue of the contractual relations with the named and nominal defendant.
	In this case, by virtue of the provisions of the Road Traffic Act, the underwriters, the strangers to the litigation, have much more than a contractual right with the nominal defendant. They have an actual interest by reason of the liability imposed upon them by statute to make good the amount of the judgment to the plaintiff, and for that reason it seems to me that they, of all people, are the sort of strangers interested in the judgment as being injuriously affected by it, who have a right, within the principle laid down by Bowen, L.J., to intervene, and to ask to have the judgment by default set aside."

17. In this instance there is certainly a material difference between an owner of a vehicle and an insurance company. Whereas an insurance company has not only the contractual duty as well as a statutory duty to indemnify the driver against whom the judgment is given but also have the contractual right to step into the driver's shoes to defend an action. The insurance company also has the duty to indemnify and pay the damages for the driver by virtue of a statutory right irrespective of the means available to the driver to pay for the judgment. Here the owner is only liable to pay for his breach of statutory duty in the event that the driver fails to pay. It is not exactly very clear whether such an owner in the circumstances can come forward and apply to this court to have the judgment set aside solely on the authority of Windsor v. Chalcraft. Even if the owner could have come forward and apply for the judgment to be set aside and failed to do so within a reasonable time it appears that he has been lured into complacency because the plaintiff, having the right to amend the writ to continue the action against the driver on a different cause of action in December 1976, chose to obtain leave to discontinue the proceedings. Furthermore there was a letter from the Registrar, for reasons best known to himself, to the defendant to the effect that the defendant was not liable to the judgment in the said sum.

18. In these circumstances I find that it will be quite inequitable to deny the defendant now a right to defend this action, when he alleges that he has been so prejudiced to have summary judgment entered against him and that he has a good defence to this action.

19. For this reason the appeal is dismissed and the Registrar's decision to give unconditional leave be affirmed.

20. I understand that now the matters being challenged are, whether the driver, against whom judgment had been entered, was negligent at the relevant time, the extent of injuries which would affect the quantum of damages and whether the driver was able to pay for the damages. These are subject matters of dispute and very much in issue between the plaintiff and the defendant in this action.

21. Having heard counsel and having considered the matter, I find that such issues may probably be just as conveniently determined at the trial as a preliminary issue. For this reason I will vary the Registrar's order to the extent that there shall be no preliminary is sue and all these matters will be tried at the trial.

22. I have already confirmed the Registrar's order to give unconditional leave to defend the action. The only variation is that instead of these matters being tried as a preliminary issue they are to be tried at trial. For this reason the position has not changed and I am not inclined to change it and ask the defendant to pay into court any money. Otherwise that would become a conditional leave.

23. I agree with Mr. Woo that although the Registrar invited an appeal but the final decision ultimately rests with the plaintiff. Costs normally follow the events. Despite the special position of the Director of Legal Aid, it doesn't change the matter because the plaintiff is the party to this action. Accordingly, I award costs to the defendant in respect of this appeal and this appeal only. I am not ordering the Registrar's order in the summons below. There will be certificate for counsel.

Representation: