Kwan on Furniture Co (Suing As a Firm) v. Mutual Underwriters Ltd

Case No.DCCJ 2068/1977

Court

District Court

Date—

Judge—

Case Document

100%Judiciary

DCCJ002068/1977

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 2068 OF 1977

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BETWEEN
	KWAN ON FURNITURE COMPANY (suing as a firm)	Plaintiff
	and
	MUTUAL UNDERWRITERS LIMITED	Defendant

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Coram: Judge Jones in Court.

Date of Judgment: 7th November 1977.

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JUDGMENT

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1. The plaintiffs claim against the defendant for the sum of $17,585 under a policy of marine insurance dated the 24th January 1976.

2. Acting as agents for the Oriental Fire & General Insurance Co. Ltd. the defendants insured for all risks 14 bales containing 3,104 yards of leather cloth (scrap leather) vinyl upholstery with fleece backing for $22,000. The goods were shipped from New York by the S.S. Oriental Lady which arrived in Hong Kong on the 18th March 1976.

3. Although the plaintiffs were aware of the arrival of the goods in Hong Kong they did not take delivery as they were not in a financial position to do so. The goods were therefore stored in the Kiu Fong Godown at Tsuen Wan.

4. It was not until about the 13th May 1976 that Mr. WONG Chi-keung from the plaintiff company went to the godown to take delivery. However, when he inspected the goods he discovered that they were stained with oil. Accordingly the plaintiffs refused to take possession of the goods.

5. Mr. WONG Chi-keung said that after he inspected the goods he contacted Miss Wong of the defendants on the 14th May 1976. She informed him to communicate with the shipping company, and to obtain a survey report from Able Marine Surveyors & Consultants Ltd.

6. The survey report dated the 28th June 1976 reveals that the 14 bales were stained by a mineral oil in varying degrees.

7. The plaintiffs' solicitor wrote to the shipping line on the 6th July 1976 claiming damages, but liability was denied on the grounds that the claim had not been made within 7 days of the delivery of the goods.

8. Mr. Hoosenally who appeared for the defendants conceded at the hearing that the damage to the goods was caused before they arrived in kHong Kong.

9. By their amended defence the defendants aver that the plaintiffs failed to give immediate notice of the claim thereby prejudicing any rights that they might have against third parties.

10. In particular the defendants rely upon the provision in the policy of insurance under the heading "Liability of Carriers, Bailees or Other Third Parties" which provides as follows :-

"It is the duty of the Assured and their Agents in all cases to take such measures as may be reasonable for the purpose of averting or minimising a loss and to ensure that all rights against Carriers, Bailees or other third parties are properly preserved and exercised. In particular the Assured or their Agents are required -

	1.	........
	2.	To apply immediately for survey by Carriers or other Bailees Representatives if any loss or damage be apparent and claim on the Carriers or other Bailees for any actual loos or damage found at such survey.
	3.	.......
	4.	To give notice in writing to the Carriers or other Bailees within 3 days of delivery if the loss or damage was not apparent at the time of taking delivery."

11. The defendants also reply upon the conditions set out in the Institute Cargo Clauses (All Risks).

12. Clause 9 provides:-

"It is the duty of the Assured and their Agents in all cases to take such measures as may be reasonable for the purpose of averting or minimising a loss and to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised."

13. Clause 14 provides:-

"It is a condition of this insurance that the Assured shall act with reasonable despatch in all circumstances within their control."

14. I accept the plaintiffs' evidence that notice of the claim was given by Mr. WONG Chi-keung to the defendant's representative Miss WONG on or about the 14th May 1976 and that the survey report was obtained at the defendant's request.

15. There is no doubt that as soon as they became aware of the position the plaintiffs acted with due expedition.

16. It is further clear that at the time the goods were damaged the plaintiffs were covered by the policy of insurance. However, was the plaintiffs' delay in taking delivery unreasonable? In spite of the plaintiffs' financial position a prudent person should have examine. The goods as soon as possible after their arrival. To allow the matter to remain in abeyance for two months in order that the plaintiffs be placed in sufficient funds is not a justifiable reason for not taking delivery.

17. The plaintiffs with full knowledge of the ship's arrival took no steps to ascertain whether in fact the goods had actually arrived. Any loos apparent at that time would be of vital importance to the defendants in preserving their rights against third parties.

18. I am quite satisfied that upon a construction of the policy the words under the heading "Liability of Carriers, Bailees or other Third Parties" form part of the conditions.

19. It is of paramount importance to an insurance company to investigate claims promptly so that their interests are not prejudiced.

20. In this case the plaintiffs did not comply with the conditions set out in the policy which was entirely through their own fault. The delay caused was unreasonable for the plaintiffs failed to act with reasonable despatch.

21. Under these circumstances the plaintiffs' claim must fail. There will therefore be judgment for the defendants with costs on the upper scale.

	(B.L. Jones)
	District Court
	7th November 1977.

Representation:

Mr. John Cheung instructed by T.Y. Lee & Co. for Plaintiff.

Mr. Hoosenally of Hoosenally & Co. for Defendant.