Chow Chiu Cheung v. Hans Joachim Bernick and Another

HCA000371A/1969

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 371 OF 1969

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Coram: Mr. B.L. Jones, Assistant Registrar, in Chambers.

Date of Judgment: 4th day of November, 1971.

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DECISION

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1. This is an application by the American Home Assurance Company through its local agents, American International Underwriters Ltd. For an order that the judgment entered against the 1st defendant in default of appearance on the 16th July 1969 and the assessment of damages on the 18th January 1971 be set aside and that the Assurance Company be joined as a party to the action.

2. The application was made under Order 13 rule 9 and Order 15 rule 6(2) of the Rules of the Supreme Court.

3. Order 13 rule 9 provides that 'The Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order'.

4. Order 15 rule 6(2) provides that:-

5. The writ of summons was issued on the 28th March 1969 claiming damages for personal injuries and loss suffered by the plaintiff as a result of a road traffic accident that occurred on the 5th May, 1968. A Statement of Claim was filed on the 12th September 1969 for the purpose of the assessment of damages but was not served. It is alleged that the 1st defendant was the owner of the motor car that knocked down the plaintiff on the date of the accident and was driven by the 2nd defendant as the 1st defendant's agent.

6. An Order for substituted service of the writ of summons upon the 1st defendant was made on the 11th June, 1969. No appearance was entered by the 1st defendant and interlocutory judgment was entered against the 1st defendant for damages to be assessed and costs to be taxed on the 16th July, 1969. The writ of summons was not served upon the 2nd defendant and at the hearing of the assessment of damages on the 27th May 1970 the plaintiff through her counsel undertook not to proceed against the 2nd defendant having regard to the provisions of Order 37 rule 3 of the Rules of the Supreme Court. Damages were assessed on the 18th January 1971 at the sum of $14,810.

7. The 1st defendant was insured under a policy with the American Home Assurance Company and on the 7th May 1968 the 2nd defendant sent a report to them dealing with the facts of the accident. On the 20th November 1968 the company received a copy of a letter from the plaintiff's solicitors addressed to the 1st defendant giving notice of a claim arising from the accident. On the 17th December 1968 the company wrote to the plaintiff's solicitors denying liability. The company was served with a copy of the writ and a notice of commencement of proceedings pursuant to section 10 of the Motor Vehicles Insurance (Third Party Risks) Ordinance Cap. 272 on the 28th March 1969 and on the 11th April 1969 the Assurance Company wrote to the plaintiff's solicitors informing them that they would look into the matter once the writ had been served on their insured. On the 16th April, 1969 the Assurance Company received a letter from the plaintiff's solicitors requesting information as to the 1st defendant's address. On the 24th April, 1969 a letter was written by the Company to the plaintiff's solicitors stating that the vehicle was no longer insured with their Principals and they were not in a position to give them the 1st defendant's address. Subsequent to this letter the Assurance Company received no further communication nor were they informed whether the writ had been served. On the 25th January 1971 the Assurance Company received a letter from the plaintiff's solicitors informing them of the judgment and enquiring whether they were prepared to satisfy the damages assessed.

8. It was contended for the Assurance Company that the plaintiff could have issued her writ immediately after liability had been denied on the 17th December 1968 when personal service of the writ could have been effected. The Assurance Company said that they were prepared to act in the defence of the defendants but only if the writ was served and they were authorised to appoint solicitors to act for them. The Assurance Company considered that it was incumbent upon the plaintiff to inform them when the writ was served and when the order for substituted service had been made.

9. Mr. Ching for the Assurance Company said that there was a judgment against the owner but no judgment against the driver and there was no evidence to show that the 2nd defendant was a servant or agent of the 1st defendant.

10. The position with regard to an application by a third party is set out on page 117 of the Supreme Court Practice 1970 Volume 1 which states as follows:-

'A third party who desires to apply to set aside a judgment must show that he had a direct interest in so doing and must either do so in the name of the defendant with his leave, or he must make both the plaintiff and the defendant parties to the application and ask for leave to intervene. But such an order does not make them parties to the proceedings so as to enable them (e.g.) to apply to set aside an order for substituted service (Murfin v. Ashridge and Martin, [1941] 1 All E.R. 231).'

11. Mr. Ching cited Windsor v. Chalcraft 1939 1 K.B. page 279 where the facts are similar to those in this case. The headnote reads as follows:-

'A policy of insurance effected in September, 1936, provided that the underwriters should indemnify the defendant in respect of death of death or bodily injury to third parties caused by or in connection with the use of his motor-car. The policy contained conditions that the insured should, immediately any occurrence which might give rise to a claim under the policy came to his knowledge, notify the underwriters thereof; and that "The underwriters shall be entitled to take absolute control of all proceedings and negotiations and have full discretion to settle prosecute or defend any claim in the name of the insured."

12. Held, by the Court of Appeal (Greer and MacKinnon L.JJ., Slesser L.J. dissenting), rescinding the order of the judge and restoring that of the Master, that inasmuch as the underwriters, although not parties to the action, were liable under the provisions of the Road Traffic Acts, 1930 and 1934, to pay the amount of the judgment to the plaintiff, and under the policy to pay it to the defendant, they were persons aggrieved by the judgment, and as such were entitled to an order setting aside the judgment and giving them leave to enter an appearance in the action in the name of the defendant or in their own name, and to deliver a defence.

13. In a more recent case cited by Mr. Ching that concerned the Motor Insurers' Bureau, Gurtner v. Circuit and Another 1968 2QB Page 587, it was held by the Court of Appeal 'that, where the determination of an action between two parties would directly affect a third person's legal rights or his pecuniary interest, the courts had a discretion, under R.S.C. Ord. 15, r.6(2), to order the third person to be added as a party to the action on such terms as the court considered desirable so that all matters in dispute could be "effectually and completely determined and adjudicated upon"; that, as the bureau had an obligation to the Minister of Transport to satisfy all unpaid damages awarded to a plaintiff in an action against an insured motorist, which obligation the Minister could enforce by an action for specific performance, the bureau had a legal and pecuniary interest in ensuring that all proper defences were raised in the plaintiff's action. Accordingly, justice required that the bureau be added as defendants to the plaintiff's action and the court would exercise its discretion, under R.S.C. Ord. 15, r.6(2), and add the bureau as defendants to the action on their undertaking to pay all damages awarded to the plaintiff.

14. Mr. Ching said that the application was in no way an attempt by the Assurance Company to avoid the risk covered by the policy but nevertheless it should be proved how the 1st defendant is made liable.

15. Miss Lee for the plaintiff said that there was no law that the Assurance Company should be served with a notice of any of the proceedings other than under section 10 of Cap. 272.

16. It is abundantly clear that the Assurance Company is a directly interested and directly affected third party having a legal and pecuniary interest in ensuring that all proper defences are raised in the action. The Assurance Company has a locus standi and upon the authorities I am satisfied that they should be added as a defendant under Order 15 rule 6(2) of the Rules of the Supreme Court. Accordingly I shall make an order setting aside the judgment against the 1st defendant dated the 16th July 1969 and the assessment of damages on the 18th January 1971 but on the condition that the Assurance Company will undertake to pay any damages awarded to the plaintiff. Leave is therefore granted for the Assurance Company to enter an appearance in the name of the 1st defendant or in their own name and to deliver a defence.

17. Costs will be reserved.

18. Certificate for Counsel for each party.

19. Dated this the 4th day of November, 1971.

Representation: