Compass Travel Ltd v. Pacific & Orient Under-writers (Hong Kong) Ltd

HCA003188/1972

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

ACTION NO. 3188 OF 1972

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Coram: Cons J.

Date of Judgment: 19 December 1974

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JUDGMENT

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1. The plaintiff is a limited company carrying on the business of a travel agency. In October 1968, it purchased a brand new London taxi-cab for the purpose of providing free transport to its customers in this Colony. For some years the taxi proved satisfactory in this respect. Then unfortunately, in February 1972, it was involved in a motor accident and suffered very severe damage. Estimates for what was necessary to put it back into good condition amounted to $13,536.60. This was almost as high as its total value which the plaintiff then put at $17,000. The repairs would also have been delayed for some time because the replacement of the chassis, a major item in the work, could not be done until a new chassis was obtained from England. At that time too the English dock workers were apparently on strike.

2. Those repairs were not carried out and the taxi is still lying in the the service garage to which it was first sent, incurring storage charges at the rate of $7 a day. The reason for this is that the plaintiff had taken out a comprehensive policy of insurance with the defendant, which is a company dealing in business of that nature, and a dispute arose between the two as to whether the vehicle should be repaired according to the estimates or written off as a total loss. However, the total loss claim is now abandoned and it is agreed by both counsel that should the plaintiff succeed in this action then subject to two other matters, it is entitled to recover only the estimated cost of the repairs. The question is whether the plaintiff should succeed, for the defendant now claims to have acted solely as agent for other insurers in London and thereby to have incurred no personal liability.

3. The policy of insurance is entitled "Lloyd's Private Car Policy (Comprehensive)". It was issued and signed by the defendant. The defendant's authority to do so is set out near the foot of the first page. At the top of that page, just below the title but in much larger and bolder characters, is printed the full name of the defendant together with a large reproduction of its badge or crest. In smaller but still bold lettering is set out the defendant's address in Hong Kong and within smaller type the addresses of its branches in Singapore, Malaysia, Brunei and the fact of its having offices in many other towns in the Far East. There are words which import that the defendant deals in various types of insurance and reinsurance. The insurance is said to be effected at Lloyd's London. The outside or back of the policy contains matter on broadly similar lines but with much reduced detail.

4. The first page continues with a schedule wherein is set out, inter alia, the name and address of the plaintiff, details of the vehicle, and certain limitations of liability. Following the schedule is the signature part of the policy. It recites that it is based on particulars and statements contained in the proposal form made by the insured and then accepts liability on the part of certain underwriters at Lloyds. The signature appears at the very foot. It is in the printed name of the defendant and there is also a written signature which is quite illegible. Above the name of the defendant appear the words "for and on behalf of Lloyd's Underwriters". On the other hand immediately below the written signature appear the words "Manager/Underwriter" and beneath them "Authorized Insurers".

5. The two middle pages set out the terms of the indemnity provided and the conditions to which it is subject. I need refer to only two of the later at the moment. Condition 1 demands that the insurers shall give immediate notice to the underwriters of any accident, etc. and in the event of any claim. However, a particular note in the schedule of the first page provides that immediate notice should be given to the Hong Kong office of "the Company", which can only mean the defendant. Further were that page is over-stamped with a rubber chop to the effect that no claim will be recognized if not reported to "the insurance company" within the days.

6. The other condition is No.10, to which I was referred by defence counsel. This provides, inter alia, that process desired to be served upon the underwriters may be served upon Messrs. Gilman & Co., Ltd. Lloyd's Agent, Hong Kong who have authority to accept service on their behalf. However. I do not think this has any significance with regard to the question before me.

7. Where there are no other indications in a contract qualification of an agent's signature by words such as "for and on behalf of" have been held to remove the personal liability of that agent. But there are other indications in the present contract, to which I have already referred, namely the prominence given to the defendant at its head, the unqualified condition for notice to be given to the defendant whenever a claim was likely to arise or has made and above all by the words beneath its signature showing that it was itself an underwriter and an authorized insurer. To my mind these indicate an intention that the defendant should be bound in addition to the underwriters in London. And it is satisfying to note that letters written not long after the accident (Exhibits 2, 1 and 8) show that the defendant was at that time of the same mind as myself.

8. I must then refer to two other matters: Firstly, the middle pages of the policy contain a section headed "Compulsory Loss or Damage Excesses". This sets out certain circumstances in which the underwriters shall not be liable for the first $500 of any sum otherwise due. Two of those circumstances apply in the present instance, that is those relating to unnamed drivers and those relating to young and inexperienced drivers. It was submitted on the one hand that I should construe provisions as non-cumulative. Then on the other that I should construe them as cumulative. However it must have been overlooked by all at the trial that there is a clause at the end of that section which provides expressly that those particular excesses shall be cumulative.

9. Secondly there is a question of storage charges amounting now to several thousand dollars. I have come to the conclusion that the defendant is liable only for a small portion thereof. The question can be approached by two ways. The policy provides that the insured may authorize repairs of the damaged vehicle only if the estimate does not exceed $150. I infelt that if the estimate is more than this be must wait until authority is given. If this entails delay extra charges consequent upon that delay must fall upon the insurer. In the present instance there was delay, but it is difficult to say when exactly authority was given. From Exhibit 2 (paragraph 5) it would seem to have been before 14th April. Yet Exhibit 8 is an express authority dated 16th June. Then there is the possibility that the authority never reached the persons actually concerned with effecting the repairs. Exhibit 8 was not addressed to the correct section of Metro-Dodwell Ltd. and there was also a mistake in the vehicle number given. No trace of the original letter can be found now in the files of the service section. Finally the extent of that authority is not clear. It may not cover all that was necessary to be done. I prefer therefore to adopt the other approach, which is to say that by at least the end of June it must have been clear to the plaintiff that the defendant was not going to accede to the suggestion that the vehicle be written off. The only course then left would be an ultimate action for damages and the plaintiff should have taken reasonable steps immediately to mitigate its loss. It is not reasonable to keep a broken down vehicle idling expensively in a service garage. If the plaintiff had decided, as apparently it had, that in any event it would not ever use that taxi again there was not even need to keep it at all. It would not be needed for the purposes of the action; it had already been surveyed by at least two persons. It should have been disposed of. Expenses incurred after that time are thus not the responsibility of the defendant. The defendant is liable only for charges as from 28th March up to 30th June. I start from that first date as that is the date mentioned in the statement of claim. I do not know why it was chosen. I should also add incidentally that there is no evidence that the plaintiff has paid or even been billed for storage charges but counsel for the defence apparently accepts that it has.

10. For these reasons judgment is entered for the plaintiff in the total sum of $13,201.60 being made up of $13,536.60 repair costs and $665 storage charges less the $1,000 excess under the policy.

Representation:

Ronny Wong (Johnson, Stokes & Master) for plaintiff.

Patrick Fung (Hastings & Co.) for defendant.