Wing Lung Insurance Co Ltd and Another v. Victor Insurance Management Co Ltd

DCCJ4726/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4726 OF 2003

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BETWEEN

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Coram : Deputy District Judge C.P. Pang in Chambers (Open to Public)

Date of Hearing : 31^st January 2007

Date of Handing Down Judgment : 16^th February 2007

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Judgment

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1.This is the Defendant’s application for leave to appeal against my judgment dated 3 January 2007 (the Judgment) and for stay of execution of the judgment pending the appeal.  The 1^st Plaintiff has also taken out a summons asking for security for costs if leave is granted to the Defendant.

2.The Judgment arises from an appeal by the Defendant from the decision of a Master dated 20 October 2006.  In his decision, the Master entered summary judgment against the Defendant in favour of the 1^st  Plaintiff and dismissed the Defendant’s application for striking out the claim of the 2^nd Plaintiff.  In the judgment, I allowed the Defendant’s appeal against the Master’s decision to the extent that I affirmed the summary judgment in favour of the 1^st Plaintiff, but the order refusing to strike out the 2^nd Plaintiff’s claim was set aside.  I further ordered that the 2^nd Plaintiff’s claim be struck out.  The Defendant is now seeking leave to appeal against the judgment in respect of the summary judgment.

3.The action arises from a simple claim for unsettled premium of insurance policies undertaken by the 1^st Plaintiff as an insurer.

4.The 1^st Plaintiff appointed the 2^nd Plaintiff as its general agent and authorized the 2^nd Plaintiff, among other things, to collect premium on its behalf.

5.The Defendant was a company carrying on business as an insurance agent.  Mr. Li Wai Ming, the representative of the Defendant in this hearing, is the director of the Defendant.

The Plaintiffs' case

6.The 1^st Plaintiff’s case is that the Defendant, through the 2^nd Plaintiff, became an agent of the 1^st Plaintiff on 19 September 2002.  On or about 25 September 2002, the “Agent Agreement” signed by the 1^st Plaintiff was sent to Defendant.  Although the Defendant did not sign and return the Agent Agreement, it had agreed to act and acted as an agent of the 1^st Plaintiff by its conduct.

7.From November 2002 to April 2003, the Defendant had requested the 1^st Plaintiff through the 2^nd Plaintiff to issue various insurance policies which the 1^st Plaintiff did issue.  The Defendant only settled part of the premium it received and still owed the 1^st Plaintiff $153,949.65.

The Defences

8.The Defendant’s main defence is that, so far as the 1^st Plaintiff is concerned, the Defendant did not have any contractual relationship with the 1^st Plaintiff.  All the transactions in respect of the policies issued by the 1^st Plaintiff were transactions of Mr. Li in his personal capacity.  The transactions have nothing to do with the Defendant.  Moreover Mr. Li only dealt with Mr. Derek Tsang of the 2^nd Plaintiff in these transactions.  He did not deal with the 1^st Plaintiff.

9.In so far as the 2^nd Plaintiff is concerned, the Defendant’s case is that the 2^nd Plaintiff had no locus standi to sue the Defendant as it was only an agent of the 1^st Plaintiff, its disclosed principal.  I found that the 2^nd Plaintiff was only acting as an agent of the 1^st Plaintiff in dealing with the Defendant.  The contract was entered into between the 1^st Plaintiff and the Defendant.  The 2^nd Plaintiff had no right to institute proceedings against the Defendant for the outstanding premium due to the 1^st Plaintiff and therefore no locus standi to sue the Defendant.  On this basis, I struck out the 2^nd Plaintiff’s claim.

10.The major dispute of fact, so far as the 1^st Plaintiff’s claim is concerned, is whether the Agent Agreement was sent to the Defendant on or about 25 September 2002.  I found that this dispute of fact was immaterial.  What is important is whether it was the Defendant or Mr. Li who acted as agent of the 1^st Plaintiff when the relevant insurance policies were issued by the 1^st Plaintiff.

11.Based on the undisputed evidence of the case, which is overwhelming and cannot be disputed in my view, I found that the 1^st Plaintiff and the Defendant were in a contractual relationship and Defendant acted as agent of the 1^st Plaintiff in respect of the insurance policies in question.

12.The Defendant also pleaded illegality as defence and counter-claim for damages for alleged tort committed by the debt collectors instructed by the 2^nd Plaintiff.

13.I ruled that the contract between the 1^st Plaintiff and the Defendant was not illegal.  I further ruled that the alleged tort, arising out of a totally separate and distinct transaction, has no connection whatsoever with the present claim by the 1^st Plaintiff.  It cannot be relied upon as an excuse to impeach the 1^st Plaintiff’s claim for the premium of the policies it had issued.

The Test

14.The proper test in considering whether to grant leave to appeal is set out in Smith v Cosworth Casting Processes Ltd [1997] 1 WLR 1539, that is, whether the applicant has a realistic prospect of success.

15.In the 9^th affirmation of Li Wai Ming, the Defendant advances 4 grounds of appeal. 

16.In the 1^st ground, the Defendant says the communications between Derek Tsang and Mr. Li would support the Defendant’s case that the transactions in questions were only dealt with by Mr. Li personally.

17.In the 2^nd ground and 3^rd ground of appeal, the Defendant criticises that the 1^st Plaintiff has never sworn any affidavit in support of the claim and has never produced any accounting records and tax return concerning the transactions with the Defendant.

18.The 4^th ground of appeal is that the 2^nd Plaintiff has made “instant” evidence at different stages of the proceedings.

19.In its written submission and further submission in court, the Defendant has also suggested I have misunderstood the Defendant's defence on ground of illegality.  I will not repeat here the reasons I have given in my judgment.  Suffice it for me to say that this ground has been considered and I disagree with the Defendant.  In its submission in court, the Defendant appears to add one more ground, namely, the 1^st Plaintiff's solicitor had no instruction to represent the 1^st Plaintiff on previous hearing and that Ms. Susan Liang, solicitor representing the 1^st Plaintiff, is acting in champerty and has no proper authority to act for 1^st Plaintiff.  However there is no evidence before the court to support this serious allegation against Ms. Liang.

20.On the other grounds of appeal, the Defendant is only arguing again on the weight of evidence which I had considered before I reached the judgment.

21.I need to repeat here that Order 14 places the threshold onus on the Defendant to show that there is a triable issue.  The Court will test the credibility of an affidavit asserting a triable issue against the conduct of the Defendant and contemporary documents.  The Court should not be asked to embark on a mini trial on affidavit evidence.  The issue is not whether the Defendant’s assertions are to be believed, it is whether those assertions are believable. 

22.In my judgment I found there was no triable issue in the relationship between the 1^st Plaintiff and the Defendant on the undisputed evidence and contemporary documents which are overwhelmingly against the Defendant.  The Defendant made registration with IARB as agent of the 1^st Plaintiff.  Mr. Li did not register as agent of the 1^st Plaintiff or the 2^nd Plaintiff.  The instructions for application for the relevant insurance policies were faxed by the Defendant’s staff without indication at the instructions that the requests for policies were made by Mr. Li personally.  The insured were given receipts which bore the stamp of the Defendant’s company chop.  Some of the payments of premium were deposited into the bank account of the Defendant. 

23.On these undisputed evidence, I found the assertions of the Defendant that the transactions were Mr. Li's personal dealings and that there was no contractual relationship between the 1^st Plaintiff and the Defendant totally unbelievable.  The Defendant, by its conduct issuing the relevant policies for the 1^st Plaintiff and collecting premium from the insured, must be acting as the agent of the 1^st Plaintiff with an implied term that the premium must be accounted for the 1^st Plaintiff.  I cannot see any reasons that the case should go to trial.

24.To conclude, I am of the view that there is no merit in the Defendant's application.  I find that the Defendant has no realistic prospect of success in its appeal which is bound to fail.  Accordingly, I refuse to give leave to appeal.

25.The Defendant has been liable to pay back the premium to the 1^st Plaintiff for 3 ½ years.  To date, the outstanding premium is still unpaid.  There is no good reason to delay the 1^st Plaintiff from enjoying the fruits of his success in the litigation.  I therefore also refuse to stay the execution of the judgment.  For this reason, I do not need to make any order in respect of the 1^st Plaintiff’s summons for security for costs. 

26.Costs should follow the event.  I make a costs order nisi that the Defendant do pay the 1^st Plaintiff’s costs of the application for leave to appeal.  The order nisi shall be made absolute after 14 days.

Representation:

Ms Susan Liang, of Messrs. Susan Liang and Co., for the 1^st Plaintiff.

Mr Li Wai Ming, representing the Defendant, acting in person.

Defendant's Appeal to Court of Appeal dismissed. Please refer to HCMP1893/2007 dated 3 December 2007