Neville Delmas Theaker v. Sun Hung Kai Insurance Co Ltd
Read the full judgment text of DCCJ 10354/1983 on BabelCite. This District Court judgment was delivered on 19 June 1984.
1. This Plaintiff arrived in Hong Kong in 1983 to work for the Mass Transit Railway. Before he left his previous place of employment in England he purchased through the agency of an English boat yard a brand new auxilliary engined sloop known as a "Friendship 26" for the sum of $17,564 to include the Free on Board price at Rotterdam docks and the cost of sea-freight and insurance to Hong Kong.
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DCCJ010354/1983 VDC Case No. 10354 of 1983 Insurance - Marine Insurance Ordinance (Cap.329) - requirements for admissibility of contract of Marine Insurance. Cover note can meet requirements of Ordinance. (No appeal) IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CIVIL JURISDICTION ACTION NO. 10354 OF 1983 _________________________ BETWEEN
____________________ Coram: H.H. Judge Scriven in Court. Date of Judgment: 19 June 1984 ----------------------- JUDGMENT ----------------------- 1. This Plaintiff arrived in Hong Kong in 1983 to work for the Mass Transit Railway. Before he left his previous place of employment in England he purchased through the agency of an English boat yard a brand new auxilliary engined sloop known as a "Friendship 26" for the sum of $17,564 to include the Free on Board price at Rotterdam docks and the cost of sea-freight and insurance to Hong Kong. 2. The yacht arrived in Hong Kong on the 6th June, 1983. 3. The Plaintiff had arranged for the yacht to be registered at Lloyds of London and paid the fees therefore to his English agents, but registration in the United Kingdom is dependant to some extent on the builders specification, and suffice it say that when the yacht, which was already named "Delmara" arrived in Hong Kong, registration had still not been completed in England. 4. The Hong Kong Merchant Shipping Ordinance, Cep.281 and the Pleasure Vessels Regulations made pursuant to the Ordinance and Cap.313 require pleasure craft such as Delmara to be registered and licenced in Hong Kong, but if the boat is only registered with a No. in Britain, that the Plaintiff says, can form the basis of registration in Hong Kong, but the yacht still has to be surveyed in Hong Kong. 5. The Plaintiff put in hand the steps to lead to registration of the boat in March 1983, and a Mr. D.M. Cauvin was appointed to measure the boat on arrival in Hong Kong, but registration in Britain could not be completed due to the lack of information from the builders and registration in Hong Kong could not proceed in the meantime. Registration was eventually effected in Whitby, in the United Kingdom, on 17.10.1983. 6. At all material times therefore the yacht was not registered and not licenced either in Hong Kong or the United Kingdom and S.5 of the Merchant Shipping (Pleasure Vessels) Regulations provides that no person shall possess or use a pleasure vessel (which the yacht Delmara is) unless there is a valid licence in respect of the vessel. 7. The boat arrived in Hong Kong on the 6th of June 1983 and when the insurance effected for the period of the voyage expired, the Plaintiff naturally wished to insure his craft again, and decided to do so locally. In the meantime he found a mooring at Tai Tam, but while the yacht was unlicenced the Plaintiff was risking a penalty under the Regulations, I have referred to, and he was then in a dilemma. He could not licence the boat in Hong Kong without particulars of the British licence, but he had embarked upon and committed himself to, course of initial registration in in Britain, which had not proceeded smoothly because of the missing builders document. I am satisfied and indeed there is no dispute that the Plaintiff was making every possible effort to get his new boat registered and licenced in Hong Kong. 8. Notwithstanding his licencing difficulties the Plaintiff looked around for insurance and of course Registration Particulars are the best form of identifying the subject matter of any such insurance policy - just like a policy for motor insurance - not essential, but almost universally adopted for describing with as much precision as possible the property insured. 9. And this was the position when the Plaintiff approached the Defendants for insurance at the suggestion of one Au Shing who ran the yard near to where the Plaintiff's yacht was moored. On or about the 1st or 2nd July, 1983, the Plaintiff spoke to one Innocent To, the Manager and 'Top' underwriter as he himself told me, at the Defendant's Kowloon Office about insurance; the Plaintiff asked for comprehensive cover and Mr. To asked for certain information - this was all done over the telephone - and worked out the cost. Mr. To asked about registration particulars and the Plaintiff explained his difficulty. He says and I accept his evidence that Mr. To merely asked him to let him have the British Registration document as soon as he received it. There was no suggestion then that the Defendants could not give cover for the boat because the registration particulars were not available. 10. The Plaintiff agreed in cross-examination that he did not immediately accept the quotation, which was $5,333.80 for full comprehensive cover for 1 year. And he agreed that he might be mistaken as to whom he spoke on the first occasion as he was as he said "ringing around" for quotations. Even if the Plaintiff is mistaken about whom he actually spoke to at the Defendant's office, it is of little consequence, because Mr. To when giving evidence agreed that he had quoted on the telephone to the Plaintiff himself, and says that the Plaintiff called him on the day after their first conversation, to say that he accepted the quotation and asked to pay the premium in 2 parts. The Plaintiff says the agreement as to payment of the premium was that there should be two instalments of $2,667 each. The first to be payable immediately and the second to be in 4 months time. Mr. To said in evidence that the first payment was to be on issue of the cover note and the balance 3 months after the issue of the policy. He then said he meant 3 months after the issue of a cover note on condition that cover note was still valid. He then said he only issues a cover note when the insured's particulars are not sufficient. I have to say at this point that where the evidence of the Plaintiff is in conflict with that of Mr. To, I unhesitatingly accept that of the Plaintiff. I did not find Mr. To to be impressive or candid; he chose to give his evidence in Cantonese although he had negotiated the insurance in English, but I had To rebuke him for trying to correct the Court Interpreter's English in a whisper and without my hearing him. The agreement as to payment of one year's premium was therefore that it would be paid, as the Plaintiff said the Defendant requested that is half on acceptance and half 4 months later. 11. When the Plaintiff indicated to Mr. To on the telephone that he accepted the defendants terms, Mr. To arranged to call at the Plaintiff's Office to get the forms filled on. This was done on the 4th July, 1983. Mr. To could not come but sent a Mr. Leung instead with a covering note of introduction, and other documents. 12. Mr. Leung who gave evidence, went to the Plaintiff's Office with a proposal form and other documents to which I shall refer later. The proposal form was completed and signed by Mr. Theaker and a cheque handed over by him for $2,667. 13. As to the proposal form: this is completed in different coloured inks - some light and some dark - and bears various written additions: it is not in dispute that those particulars of the dimensions of the boat, the insurers name and the period of insurance and details of the mooring are not in the Plaintiff's writing and I find them to have been written in by the Defendant's servants or agents before the visit of the 4th July and almost certainly so at the time when Mr. To quoted to the Plaintiff. This is not of vital importance because Mr. To agreed that the words "Accepted (initials) 2.7.1983" are in his writing, and that he was accepting a proposal for a year's insurance. 14. Beside those words is another group of words and figures. "Rate 3.75% plus $65". Mr. To agreed that that was the premium calculation and so the visit to the Plaintiff of the 4th July was both a formality and to conclude the bargain - the terms of the bargain had been agreed orally, and it had to be recorded, in writing. 15. Mr. Leung had with him not only the proposal form but also a Cover Note and Debit Note for the full annual premium. The Plaintiff completed the Proposal Form with his personal details, handed over a cheque for $2,677 and received either then or next day, Cover Note, Debit Note and Receipt. 16. Now both the cover note and debit note bear a policy No.2 MF 1029, I cannot be sure when the cover note had the policy number added, but the debit note as handed to the Plaintiff, had already typed on it "2 MF 1029" and the words "period 02/07/83 to 01/07/84" so that on the face of it even at the stage there was a concluded contract of insurance - a proposal had been made and accepted, a premium calculated and accepted, and a part payment thereof made by the Plaintiff, but the proposal form omitted several details - details of the Licence No. and the Engine No., and it is from this omission that the Defendants seek to show that they were only giving cover for 30 days solely to enable the Plaintiff to licence the boat. The cover note was for 30 days from 11 a.m. on the 2nd July, 1983. 17. The Plaintiff heard no more from the Defendants either during the pendency of the cover note or upon expiry. He was in hospital in August, 1983 and his attempts to licence and obtain British Regulation isiration had got no further until Typhoon Ellen struck Hong Kong on the 9th September, 1983, when in Tai Tam Bay another ship bore down on the moored Delmara and she broke loose and was thrown on to the rocks at Tai Tam Bay and stranded, badly damaged. On the 10th September the Plaintiff notified the Defendants and went, on the 12th to the Plaintiff's Office to complete a claim form. He went to see a Mr. Johnson Kwok to whom he had spoken on the 10th but on the 12th Mr. Kwok was not there, although the proposal form records notification of the claim by the Plaintiff on the 10th September. 18. On the 12th the Plaintiff was seen by a young lady at the Defendant's Office and told to contact a surveyor appointed by the Defendants a Mr. Gardner. The Plaintiff did this but Mr. Gardner was busy with other surveys and it was 7-10 days before the Plaintiff went with Mr. Gardner to inspect the damaged boat. The boat was damaged so badly that it had to be moved carefully and a Mr. Ring on the spot offered to lift and transport it by barge to a ship-yard for $35,000. The Plaintiff says that Mr. Gardner seemed to think this reasonable, but the Plaintiff himself thought it was a lot of money, so he made some more enquiries and found friends in the same predicament, including a Mr. Berk who had yet another friend and who could arrange to lift all three people's boats and transport them to a yard for $36,000 that is to say $12,000 for each boat, a considerable saving and then there occurred a conversation which I consider to be extremely important. The Plaintiff managed to contact Mr. Gardner that evening - told him of the better quotation for salvage and says that Mr. Gardner said "That's a very good price - Go ahead". Mr. Gardner was not called to dispute this and I accept that this is precisely what Mr. Gardner said to the extent that although hearsay, it is an admission by the Defendant's agent; an admission not only of agency but specifically that the Defendants were dealing with a claim Mr. Gardner was solely engaged by the Defendants. I am satisfied that at no stage prior to that had the Defendants or their agents given any indication that they were acting without prejudice to their contractual rights, or that Mr. Gardner became at any stage anything other than the Defendants' agents. 19. And so the Plaintiff had his yacht moved to Cheoy Lee's Shipyard at Sham Shui Po, and I was told from the Bar table that it was only when the yacht arrived at the shipyard that the Defendants wrote indicating that they were dealing with the claim - "without prejudice". I have not had the correspondence exhibited to me, and suffice it to say that up to this day the Defendants have not repudiated the policy nor the claim - their defence is the narrow one that beyond 30 days cover there was no contract of insurance, but this is coupled with an averment that the issuance of a policy and certificate of insurance was conditional upon the Plaintiff supplying the local licence number of the yacht. That second limb of the defence is barely worthy of reputable insurers. For the Defendants to say that the issue of a policy or a certificate of insurance was conditional upon the provision of a local licence number is shown to be quite specious by the wording of their documents especially of the cover note, which they issued for 30 days from the 2nd July, 1983 (Exhibit D2). This was completed without a registration number, and with no wording such as "Registration No. to be supplied". There was no qualification such as "for the purpose of registration only" and no reservation that the cover was subject to registration. And I accept the Plaintiff's oral testimony that there was no such qualification. 20. A cover note is a contract of interim insurance and Exhibit D2 is no exception - it makes clear reference to being subject to all the terms and conditions and clauses of the company's standard form of policy used for this class of business. 21. It does not lie in the Defendants' mouth therefore to say that the issue of any certificate was conditional upon the supply of a registration number. They issued an unqualified certificate in the shape of the Cover Note (Exhibit D2) and I reject their contention. The Defendants' other limb of their defence hinges upon the peculiar provisions of the Marine. Insurance Ordinance, Cap.329 which is based upon the United Kingdom Marine Insurance Act of 1906. The Hong Kong wording follows the English Act end S.22 reads as follows:-
22. No policy was issued by the Defendants to this Plaintiff, but having heard the oral evidence and having read the documents exhibited to the Court, I had little difficulty in coming to the conclusion that a contract for 1 year's insurance was created and evidenced in writing signed by the Defendant's agent on Exhibit D1. 23. Indeed I told Miss Remedios that she need only deal with the law as contained in and affected by Cap.329 when making her final submission in reply to Miss Kwan's extremely succinct and lucid exposition on Marine Insurance Law. 24. I have to decide if the Plaintiff is prevented from proving his contract because the documents creating the contract are inadmissible, not being in the form of a policy, in evidence. 25. I have referred previously to the relevant documents but I have perforce to evaluate each separately since there is no special wording for a policy - it is nothing more than a unilateral undertaking by insurers to pay the sum insured on the happening of the specified event(1)and so many documents may qualify as policies and be admissible in evidence - historically the slip, or proposal, or a cover note was capable of being a policy if it provided the requisite information that is to say, by Cap.329:-
26. In the present cases, the proposal which was initialled by To Chi Ming for the Defendant contains those particlars, and initialling has long been held to be adequate 'signing' of a slip or proposal(2). A proposal is not however signed, or not customarily, signed, as is a slip which is prepared for and customarily signed by the subscribing underwriters; and here it is interesting to compare the views of the authors of Halsbury's Laws of England and those of the Editors of Arnould on Marine Insurance. The former at paragraph 88 of Volume 25, "Insurance" and under the heading "The Insurance Slip" say:-
27. That is a pure statement of the law but as the authors of Arnould point out, historically no slip or cover note could be tendered as the "policy" within the meaning of the Marine Insurance Acts, because they were not stamped and could not be so because neither was a policy of sea insurance(3) but that decision was to the somewhat strange and obverse effect of a decision that in a non-marine policy, the slip could not be stamped because it was not a policy of marine insurance; it was thus a direct decision in favour of the contention that a slip can be a contract. 28. As the authors of Arnould point out, the second barrier to proving marine insurance by means of documents other than, "policies" so entitled, namely the requirement that they bear stamp duty before being admissible in evidence, has in the United Kingdom disappeared and both counsel before me agreed that all stamp duties have likewise been abolished is Hong Kong, so that there was at all material times no obligation to stamp any policy or any restriction on admitting the same in evidence pursuant to Cap.117. 29. In my judgment therefore if any or any combination of documents recording what was agreed between the parties hereto does contain sufficient particulars to comply with the statutory requisites of a marine policy then the Plaintiff is entitled to his indemnity. The proposal form (Exhibit D1) contains all the particulars. The only particulars missing are the Licence No. and the Engine No. but the Defendants who happily issued a 30 day cover note without those particulars cannot be heard to say the omission is such that it obscures the subject matter of the insurance. 30. The debit note dated 05.07.83 No.11568 (Exhibit P1 page 603 and Exhibit D3) provides adequate information, including the Policy No.2 MF 1029, to comply with the statutory requirements but is not signed. The receipt for a half year premium dated 5th July, 1983 is signed by Mr. Innocent To "for and on behalf of Sun Hung Kai Insurance Co. Ltd." and acknowledges receipt of $2,667 as it says:-
and then the Cover Note (Exhibit D2) giving 30 days cover from the 2nd July 1983 under the heading "Particulars (sic) of Risk" sets out the following:-
31. The English Act and our Ordinance do not require the policy to be in any particular form nor contain the definition of a policy but again the authors of Arnould have found a definition in the English Stamp Act 1981 section 91 as including:-
now that definition would embrace the documents I have enumerated. 32. In my judgment the Proposal Form, Debit Note, and Receipt clearly evidence a contract within the meaning of the Ordinance and bound or read together could consituted a "policy", but even if all the terms and conditions were not to be found therein, then the cover note which I have set out provides admissible extraneous evidence of the precise risk agreed to be covered for the full term referred to in the Proposal Form, Debit Note, and Receipt. And I find support for this view in the Privy Council Case of Bhagwandass(4) cited to me by Miss Remedios. 33. A considerable amount of argument centred on the Defendant's reference right from the date of the debit note, to the Policy No. - 2 MF 1029, and Miss Remedios had urged on me that it must be evidence that a formal policy is lurking in the Defendant's possession waiting to be issued. Miss Kwan for the Defendants says, as did her witnesses, that it is reasonable for the Defendants to allocate a policy number on proposal, simply to reserve it for the time when all the information required to complete it is available. I accept the Defendants' contention; in the absence of interrogation, or amendment after discovery, to probe the matter, I think the Plaintiffs must be bound accept the Defendants' assertion that no "policy" has been prepared in the sense of one all embracing document recording the contract. To this extent I find it probable that the Defendants were awaiting the United Kingdom Registration No. before issuing the formal policy. That would be reasonable but I held that the provision of that information was not a condition precedent to the engagement of the Defendants’liability and the absence of the information did not prevent the contract being concluded. Provision of the information was merely a matter of good order and record before preparing a formal policy document. 34. I therefore hold and declare that the Plaintiff is entitled to be indemnified in respect of the loss or damage to his yacht Delmara as set out in his particulars of loss and damage, since it has been agreed that should the Defendants be liable to indemnify, then the loss is such as properly falls within the scope of the indemnity. 35. In all these circumstances I find the Plaintiff's claim to be proved in the terms contended for and as damage is agreed at $40,000 there will be a declaration that the Plaintiff is entitled to an indemnity in this sum together with interest thereon at the rate of 14% per annum from 8th December 1983 when he settled the accounts to the date of payment, and for costs - to be taxed on the Upper Scale with a certificate for counsel - if not agreed. Delivered this 19th day of June 1984.
(1) Halsbury 4th Edition Volume 25 para.406. (2) Armould Marine Insurance 16th Edition, para.17. (3) Home Marine Insurance Co. v. Smith 1898 1 Q.B. 829. (4) Bhagwandass v. Netherlands India Sea and Fire Insurance Co. of Batavia 1888 A.C. Vol. XIV p.83. |