Au Bik-yuk v. Wong Yuk-gun and Others

Case No.DCCJ 2557/1976

Court

District Court

Date—

Judge—

Case Document

100%Judiciary

DCCJ002557/1976

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT KOWLOON

CIVIL JURISDICTION

ACTION NO. 2557 OF 1976

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Between:-	AU Bik-yuk	Plaintiff
	and
	WONG Yuk-gun	1st Defendant
	YU Sau-cheung	2nd Defendant
	American Home Assurance Co.	3rd Defendant

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Coram: D.A. Davies, D.J.

Date of Judgment: 10th October, 1976.

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RULING

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1. This is an application made on behalf of the 3rd defendant for a review of a ruling made by me in open court on 7th October.

2. In the action, the plaintiff had sued the 1st and 2nd defendants as the owner and driver respectively of a motor vehicle, for damages arising out of an accident in which she was injured.

3. The writ was issued on 16th March, 1976.

4. On 9th April 1976, the American Home Assurance Company, the issurers of the 1st defendant's vehicle applied for and was granted, leave to be joined in the action as the 3rd defendant.

5. On the 28th April 1976, the 3rd defendant filed a defence putting the plaintiff to proof of the circumstances of the accident, and the negligence of the 2nd defendant, and also putting the plaintiff to proof of her damages.

6. On the 30th September 1976, the 1st defendant also filed a defence, in terms identical to that filed earlier by the 3rd defendant.

7. The 2nd defendant was not served with the writ until 14th September.

8. At the time the case came before me for hearing on 7th October, the 2nd defendant had not filed any defence, and did not appear at court. At the outset of the hearing, Mr. Gilman for the plaintiff applied for leave to enter interlocutory judgment in default as against the 2nd defendant.

9. That application was clearly formidable, and interlocutory judgment was duly entered as against the 2nd defendant, with costs, and an order made that the measure of damages was to be later assessed.

10. Next, Mr. Gilman raised the question of the 1st and 3rd defendants' position, submitting that as judgment was now entered against the 2nd defendant, no defence could be maintained by those other two defendants.

11. In relation to 1st defendant, I took the view that she was rendered vicariously liable by the judgment against the 2nd defendant unless she could escape it on some ground peculiar to her personal position - e.g. that the 2nd defendant was not her servant or agent or was not driving with her permission etc. Having established from the 1st defendant that she was not seeking to defend on any such grounds as those. I granted Mr. Gilman's application for leave to enter interlocutory judgment against her also.

12. Mr. Yeung for the 3rd defendant objected to Mr. Gilman's application in so far as it related to his client. He argued that the 3rd defendant, being liable as it was to satisfy any judgment entered in favour of the plaintiff, was entitled to defend, not only as to quantum of damages, but also as to liability on the merits.

13. The crux of Mr. Gilman's reply was that at no time had the plaintiff sought to sue the 3rd defendant, it had became a defendant of its own volition and if judgment went by default against the 2nd defendant leaving the 3rd defendant without a defence on the merits, it must take those consequences.

14. I held in the plaintiff's favour in this conflict, and ruled that the 3rd defendant was entitled to defend only as to quantum of damages.

15. Now, I am being invited by Mr. Yeung to review my previous ruling relative to the 3rd defendant. In support of his application, Mr. Yeung has relied entirely upon the leading case of Gurtner v. Circuit and Another⁽¹⁾.

16. This same case was quoted before Leathlean, D.J. at the hearing of 9th April when the insurance company made its application for joinder. The application was successful and the insurance company became the 3rd defendant.

17. Since that is a fait accompli, and it is not my function to go behind the order of my brother. I will comment on it only briefly. It is, however, necessary for me, in the light of what has happened subsequently, to say that I consider the application ill-conceived. Gurtner's case is in my view no authority whatever for the proposition that the insurance company should rank as a 3rd defendant in the present case.

18. Gurtner's case was decided on facts peculiar to itself, and does not give carte blanche for insurers to be joined as defendants.

19. The distinction between the Motor Insurers' Bureau and an ordinary insurance company is clearly made by Diplock L.J. at page 602 paragraphs D - G inclusive and page 603, paragraphs A & B.

	"I do not think that either test should be treated as comprehensive. Both illustrate the undesirability of propounding general propositions wider than are strictly necessary for the determination of the particular case. The legal position of the Motor Insurers' Bureau, which Devlin J. did not have in mind in Amon's case, is unique. It will be bound by the judgment in this plaintiff's action against the defendant, in that it will be under a legal obligation to satisfy it. But its legal obligation to satisfy the judgment will not be owed directly to this plaintiff. It will not be enforceable by him. But it will be enforceable by the Minister by an order for specific performance in favour of the plaintiff and if the Minister seeks and obtains such an order, the order will be enforceable by the plaintiff himself. See Beswick v. Beswick, which was decided after the decision of John Stephenson J. in the Fire Auto & Marine case. The bureau's legal obligation differs from the statutory obligation of an ordinary insurer under section 207 of the Road Traffic Act, 1960, owed to a judgment creditor in a running-down action to satisfy the judgment obtained against the assured, in that the insurer's legal obligation is directly enforceable by the plaintiff in the running-down action, whereas the bureau's legal obligation is not enforceable by the plaintiff himself but is enforceable for his benefit by the Minister, who is not a party to the action.
	Clearly the rules of natural justice require that a person who is to be bound by a judgment in an action brought against another party and directly liable to the plaintiff upon the judgment should be entitled to be heard in the proceedings in which the judgment is sought to be obtained. A matter in dispute is not, in my view, effectually and completely "adjudicated upon" unless the rules of natural justice are observed and all those who will be liable to satisfy the judgment are given an opportunity to be heard. In the case of an ordinary insurer, this does not arise in practice, since the standard terms of a third-party liability policy give to the insurer a contractual right to conduct the defence of the running-down action in the name of the assured. But as I read his judgment in the Fire Auto & Marine case, John Stephenson J. would have allowed an ordinary insurer to be added as a party to a running-down action if the policy of insurance did not contain such a term. And this, I think, would be right."

20. In the present case, the 3rd defendant has a contractual right to conduct the defence of the 1st and 2nd defendants. In my view, there were two courses only open to it : A) To exercise that right or B) To come into the action as third parties.

21. Had they adopted course A), they would not now be faced with a judgment in default entered against the 2nd defendant.

22. This brings me to the next point, which is a further and important distinction between Gurtner's case and the present one. In the former, judgment in default had not yet been obtained, whereas in the present case, it has, and there was nothing the 3rd defendants could do to prevent it.

23. Much was said in Gurtner's case about natural justice to any person who might become liable to satisfy a judgment. In the context of that case, the comments are quite understandable.

24. But it should not be overlooked that the plaintiff also is entitled to seek natural justice, and in the present case, is it in the interests of natural justice to oblige the plaintiff to prove the negligence of a man against whom she has already obtained judgment? I think not, and neither do I believe that the law contemplates such a proceeding.

25. In the present case, the 3rd defendant has had ample opportunity to protect its interests, had it acted in good faith and exercised its options.

26. How then can I now place it in a privileged position merely because it has succeeded in getting on record as a party in its own right?

27. To sum up, I am not persuaded that my ruling of 7th October should be set aside.

28. I would hold that unless or until the interlocutory judgment against the 2nd defendant is set aside, the 3rd defendant is bound by it in terms of liability.

29. Though it may be stating the obvious, all three defendants have the right to appear and join issue with the plaintiff over the quantum of damages.

30. The application for review is accordingly dismissed, with costs against the 3rd defendant in favour of the plaintiff, on a scale to be determined after assessment of damages.

31. In open court, this 10th October, 1976.

	Sd. D.A. Davies
	District Judge

Certified true copy:-

(I. Tang)
S.A.T./K.D.C.8.11.76.

Representation:

(1) (C.A., 1968) 2 Q.B.D. 587.