David Shuai v. Chan Tim Wo and Another

HCA001544/1978

No. 1544/78

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Coram: Garcia J.

Date of Judgment: 9 May 1979

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JUDGMENT

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1. On 27th March 1979, I gave judgment for the plaintiff in this action against the defendant in the sum of $16,560.80 with interest at the rate of 8% per annum from 11th August, 1977 to the date of judgment with costs to be taxed, on the plaintiff's claim for damage done to his car, a Mercedes Benz 200D, registration no. AJ832. The damage was caused as a result of a collision between his car and that of the defendant on 22nd May 1977 at about 10.25 p.m. in Taipo Road near Yuen Chau Chai at the 16½ milestone. In my judgment I held that the defendant was 80% liable for the collision and the plaintiff 20%.

2. The present matter concerns the defendant and the third party, his insurers, the London Star Insurance Co. Ltd. The defendant's claim against the third party is for indemnity against all sums which the defendant is liable to pay under the plaintiff's claim. The claim for indemnity is grounded on a Policy of Motor Insurance (Comprehensive) bearing number HLX-30076-76 issued on 3rd December 1976, by the third party to the defendant in respect of a motor vehicle bearing registration no. BH1888, and which policy was current and valid at the time of the said collision. The third party has denied liability under the said Policy for reasons which appear hereafter.

3. In the said Policy, section II - Liability to Third Parties provides

Conditions 1 and 2 and 9 of the said Policy which are relevant to this action state:

4. In partial compliance with the provisions of Condition 1, the defendant, on 27th May 1977, completed a motor vehicle claim form issued by the third party, and which was later delivered to them. In the said form, the defendant, inter alia, made the following statement: "At 10.25 hours on 22.5.77 I was driving my car along Taipo Road N.T. towards Fanling. When I came to Un Chau Chai, I decided to go back to Kowloon. I then stopped my car at a taxi stand on the road side. After observing that the road was clear, I switched on the indicator. I turned my car back to Kowloon. I was driving at a speed about 15 m.p.h. I suddenly heard a "Bang" at the back of my car and my car was pushed forwards for about 20 yards. I got off and discovered that my car was hit on the back by a private car." In reply to the question which followed the statement: "In drivers opinion, who was at fault?", the defendant wrote on the form: "The other driver was at fault."

5. On 10th August 1977, the defendant was summonsed for careless driving and was required to attend at the Magistrates Court at Fanling on 14th September 1977 to answer to the summons. He appeared to the summons on the latter date and pleaded guilty to the said offence, and after admitting, inter alia, the following facts, was convicted and fined $100:

"At 22.25 hours on 22.5.77 the defendant was driving his private car BH1888 along Taipo Road in the direction of Sheung Shui. On arriving at the accident spot, he suddenly wanted to return to Kowloon, thus he drove into the passing place on his nearside then made a "U" turn without first take care and attention as to the traffic condition on the wrong side lane into which he was turning. As a result his private car was hit by this other private car on the nearside rear with its offside front."

What he admitted was substantially different in important respects, from what he had set out in the claim form which he delivered to the third party.

6. On 19th August 1977, the plaintiff's insurers, the San International Insurance Co. (Hong Kong) Ltd., wrote to the third party informing them that the defendant was being summonsed by the police for careless driving, as they had reason to believe that the defendant had driven his car negligently at the time of the collision. On 31st August 1977, before communicating with the defendant to ascertain whether this latter statement was correct, the third party replied to the plaintiff's insurers as follows: "We are not prepared to accept liability for the damage to your insured's vehicle since he ran into the back of our insured's vehicle due to driving at an excessive speed."

7. Following this letter, that is, on 1st September 1977, the third party addressed the defendant in the following terms:

"We have now received a claim from the insurers of AJ832, and have been informed that you are being prosecuted for careless driving. Please contact us immediately so that we may arrange for the case to be represented. In your claim form you stated that the accident was the fault of the driver of AJ832, and we therefore intend to defend any claim made by its insurers."

8. The defendant never contacted the third party as requested and pleaded guilty to the offence of careless driving on 14th September 1977, as stated earlier.

9. Subsequent correspondence between the plaintiff's insurers and the third party contained further information that the defendant was being prosecuted for careless driving, and the third party's refusal to indemnify the plaintiff's insurers against the claim brought by them for damage done to the plaintiff's car on the ground that the defendant had "not complied with the request to contact them and arrange for legal representation to defend his case."

10. In the statement of defence to these proceedings by the defendant, the third party pleaded that the defendant did not send them the summons for careless driving and therefore this was a breach of Condition 1. Moreover, they further plead that since the defendant admitted the offence of careless driving, he had made an admission contrary to Condition 2 of the said Policy, such admission having a prejudicial effect on the third party and also being a breach of Condition 2.

11. It is contended by the defendant that the third party had waived compliance with Condition 1 and cites as his authority for this proposition the following principle from the judgment of Lord Denning, M.R. in Lickiss v. Milestone Policies at Lloyds (1966) 2 All E.R. 975, also cited as Barrett Bros. (Taxis) Ltd. v. Davies (1966) 1 W.L.R. 1334: "... if one party by his conduct leads another to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that behalf, and he does act on it, then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for them so to do: see Plasticmoda Societ'c Per Azioni v. Davidsons (Manchester) Ltd. (1952) 1 Lloyd's Law Reports 527,539." The defendant complains that the only letter which the third party sent him was the one dated 1st September 1977, and since there was no further letter asking the defendant to produce the documents required by Condition 1, the third party had in fact led the defendant into thinking that the former did not require further compliance with Condition 1. The defendant relies on the above case, and that of Webster v. General Accident Fire and Life Assurance Corporation Ltd. (1953) 1 Q.B. 532 where in dealing with the question of waiver, Parker J., as he then was, stated:

"The question for me is: Are the facts as found capable in law of amounting to a waiver? That depends on the conduct of the respondents - and it is perhaps to be observed that no representative of the respondents gave evidence - and on whether in fact the claimant or his representative was lulled to sleep, as the arbitrator puts it, or was induced to act in a particular way in reliance on what the respondents had done. I have a finding that he did. It matters not whether the respondents intended to waive it. They may have intended not to waive it. If they led the claimant, however unintentionally, to think that it was unnecessary for him to comply formally with Condition 1, then that would amount to a waiver."

12. In Lickiss's case, a motorcyclist collided with a taxicab on 17th May 1964, and as a result of that collision was prosecuted for careless driving by a summons returnable on 2nd July 1964, after a notice of intended prosecution was sent to him. The insurers were informed of these proceedings by the police on 18th July 1964, and the insurers wrote the following letter to the motorcyclist: "We understand that proceedings are being taken against you on July 2...... It would be appreciated if you would let us know why you have not notified us of these proceedings since we will wish to arrange your defence. We await your comments." The motorcyclist pleaded guilty by letter to the summons and on 14th August 1964 the insurers repudiated liability and in a later action between the taxibab proprietor and the motorcyclist, the latter was held liable for damage to the taxicab and he failed to recover indemnity as against his insurers on the ground of his breach of Condition 1 by not having sent them the notice of intended prosecution and the summons. Condition 1 of the policy issued by the insurers to the motorcyclist provides that "the insured shall give full particulars in writing to the insurers as soon as possible after the occurrence of any accident and shall forward immediately any letter, notice of intended prosecution writ, summons or process relating thereto." On appeal, it was held that the motorcyclist's claim was not barred by Condition 1 of the Policy because firstly, the letter from the insurers of 23rd June 1964 was tantamount to them saying they did not want to see the notice of prosecution and the summons and the sending of the letter in the circumstances was a waiver of the terms of Condition 1 regarding the notice and summons, and secondly, since the insurers had received all the necessary information about the prosecution from the police, it was unnecessary for the motorcyclist to give the insurers the same information under Condition 1 of the Policy and the insurers could no longer rely on that Condition.

13. In his judgment, Lord Denning, M.R. when referring to the fact that the motorcyclist had not sent to the insurers the notice of intended prosecution or the summons, said: "First, it was unnecessary for the motorcyclist to send the documents to the insurers. They had all the relevant facts, and that absolved the motorcyclist from doing more. The police headquarters at Blackpool by their letter of June 18th 1964, gave to the insurers all the material information. The insurers would be entitled, if they so wished, to send their own representative to the Magistrates' Court and watch the proceedings or, indeed, to take such other steps, if any, as they were entitled to take. Seeing that they had received the information from the police, it would be a futile thing to require the motorcyclist himself to give them the self-same information. The law never compels a person to do that which is useless and unnecessary. Secondly the letter of June 23rd 1964 was a waiver of the Condition. When the insurers got the letter from the police on June 18th, lthey could have asked for the notice of prosecution and the summons if they had wanted them. Instead of doing so, they merely wrote to the motorcyclist on June 23rd saying: "It would be appreciated if you would let us know why you have not notified us of these proceedings.

" By not asking for the documents, they as good as said that they did not want them. So he did not send them. I do not think that they should be allowed now to complain of not receiving them. I think that they waived the condition. Apart from these two points, I would put the matter more broadly. Condition 1 was inserted in the policy so as to afford a protection to the insurers so that they should know in good time about the accident and any proceedings consequent on it. If they obtain all the material knowledge from another source so that they are not prejudiced at all by the failure of the insured himself to tell them, then they cannot rely on the condition to defeat the claim."

14. In the instant case, the third party were aware from the 19th August 1977 onwards that the defendant was being prosecuted for careless driving, and like the insurers in Lickiss's case, they could have, after replying to the plaintiff's insurers, asked the defendant to send them all the relevant documents regarding his prosecution for careless driving, since it was their intention, expressed in their letter to him, that they wished to defend the case. In this respect, I can find no distinction between the facts of the Lickiss case and the present one. The distinction has been drawn however by Counsel for the third party that the defendant had stated in his claim form that the blame for the accident was the plaintiff's whereas the defendant in his plea of guilty and the consequent admission of the facts outlined for the prosecution that it was he who was the guilty party. This was only known to the insurers long after the event, and if as it was their intention to defend the summons for careless driving, that was more the reason why they should have asked the defendant to send them the summons or at least draw the defendant's attention to Condition 1 of the Policy. This was not done and all that was requested of the defendant was that he contacts them immediately so that they "may arrange for the case to be represented." It might be argued also that the information which was supplied to the third party by the plaintiff's insurers was insufficient for them to, as was said by Lord Denning, M.R. in Lickiss's case, "send their own representative to the Magistrates' Court and watch the proceedings or, indeed, to take such steps, if any, as they were entitled to take." I think this is all the more reason why the third party in the absence of more specific information should have asked the defendant to send them the summons so that they could carry their intention into effect. Moreover, it has been held that a man who is accused is entitled to have a solicitor of his own choice: or to defend himself as he likes. The insurers cannot compel him to have their solicitor or one of their own choice, even though the conditions do so provide.

15. In the result, the letter of 1st September 1977 from the third party to the defendant and their subsequent conduct, have, in my opinion, led the defendant into thinking that there was nothing else he was required to do with regard to Condition 1 and the third party had by their conduct waived compliance with the requirements of that Condition. The distinction between this case and that of Australian & Eastern Insurance Co. Ltd. v. Luen Fat Hong, Action No. 1201 of 1972, would appear to lie in the fact that the plaintiff in that action had throughout the relevant period been pressing the defendant firm for an accident report without any success and the insurers had denied liability promptly upon the receipt of a claim. In the present case the letter of 1st September 1977 and the subsequent conduct of the third party, constitute in my opinion a waiver of Condition 1 of the Policy.

16. The third party's second ground for disclaiming liability under the Policy is that the defendant by pleading guilty to the offence of careless driving in connection with this matter, breached the provisions of Condition 2, since he is not, under those provisions, permitted to make any admission without the written consent of the third party. It has been submitted that there is moreover no evidence to show that the defendant had given all such information and assistance as the third party may require.

17. This submission can be easily disposed of. At no time has the third party ever required the furnishing of any information or assistance by the defendant, and the letter of 1st September 1977 certainly has not this effect.

18. The question falling for decision is whether the plea of guilty made by the defendant can be construed as an admission for the purposes of Condition 2, so as to deprive the defendant of an indemnity from the third party under the Policy. Aside from the construction of Condition 2, the defendant's right to defend himself, or conduct the proceedings in any way he wishes, in a criminal action, cannot be interfered with, as to do so would be against public policy. It follows therefore that any admission of guilt in criminal proceedings brought against the defendant could not be subject to the written consent or control of the third party and even thought the word "admission" in Condition 2 were to be construed as including a plea of guilty in criminal proceedings, the provisions of that Condition can have no application to that plea. It has been suggested that the word "prosecute" in Condition 2 would serve to indicate that the provisions do cover criminal proceedings. In my view, the meaning of that word when construed in the context of the sentence in which it appears would be "to follow up or pursue" and not "to institute legal proceedings against a person for some offence."

19. Whilst it is not necessary for the purposes of this judgment to give further consideration to the construction of the word "admission" in the said Condition 2, I would, on a general construction of the provisions as a whole, find that that word refers only to claims for damages or indemnity in civil proceedings and has no application whatsoever to criminal proceedings.

20. Accordingly, there will be judgment for defendant against the third party for the whole amount adjudged to be paid by the defendant to the plaintiff with costs to be taxed.