Universal Dockyard Ltd v. Trinity General Insurance Co Ltd
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IN THE COURT OF APPEAL 1986 No. 164 BETWEEN
__________________ Coram: Sir Alan Huggins, V .-P., Fuad & Clough, JJ.A. Dates of Hearing: 10th, 11th, 12th & 13th March 1987 Date of Handing Down of Judgment: 3rd April 1987 __________________ JUDGMENT __________________ Sir Alan Huggins, V.-P. 1. The Appellant takes two points. The first is one of law and proceeds on the assumption that the judge's findings of fact were justified and the second is that the judge was wrong to make the findings he did. The action related to a policy of insurance which, as drawn up, covered the risk of injury to eleven men described as “ship building engineers”. The policy expressly excluded “accident occuring whilst the insurance is engaged in …. manual work in connection with the insured's occupation ….” Eight of the insured persons were not ship building engineers but were members of the crew of a new vessel which was being delivered by the ship builder to her owners at the time she suffered a casualty. It was common ground that all the crew members of a vessel of her type would be “engaged in manual work”. The case for the plaintiff was that the policy did not correctly reflect the agreement between the parties, that the Defendant had expressly undertaken to provide cover for “crewmen” and that there had been a breach of that undertaking. Jones, J. found that there had been such an express undertaking and gave judgment for the Plaintiff. 2. The vessel is a 400 ton dredger. She had been built by the Plaintiff for a port authority in China and the Plaintiff was under a contractual obligation to deliver her to China. It was, further, under an obligation to ensure the delivery crew against accidental injury. During the building some persons who could properly be described as “ship building engineers” came from China to supervise the construction. One of them was among the eleven men who sailed in the dredger when she left Hong Kong. The other ten were sailors who had been sent to Hong Kong for the sole purpose of working her to China and who could not properly be described as “ship building engineers”. The sailors died when the dredger capsized off the China coast. 3. The judge's conclusion was that
He went on to say that there was a clear breach by the Defendant of that contract. If there was such a contract, he was clearly right on the findings which he made. The first question is whether the Plaintiff's evidence, if believed, established that the parties had contracted for insurance of crewmen. There was no basis for implying such a contract: if it was made it was as a result of direct negotiation. Even if Mr. Tony Leung, husband of an executive director of the Plaintiff, initially asked for the insurance of crewmen, he and his wife subsequently agreed that the policy should be issued in respect of “ship building engineers”. They so agreed because it was, they say, indicated to them that the wording of the policy was unimportant. However, the reason they thought the wording was unimportant was not that the policy would cover crewmen in spite of the wrong description but that, however the insured were described, “nothing will happen”, i.e. the ship would not sink and the men would not be injured. Mr. Chang, the Defendant's Office Manager, is not alleged to have said that the wrong description would be unimportant even if the vessel did sink, and Mr. Leung did not say that he had so understood what Mr. Chang did tell him. Indeed, Mr. Leung specifically said that it was not the misdescription per se which was unimportant it was the unlikely coincidence of misdescription and casualty which made the misdescription unimportant. The Plaintiff was thus agreeing to accept a policy which it knew would not cover crewmen. It received what it had agreed to accept. 4. If that be a proper view of the contract between the parties, there has been no breach and the claim fails. Only if there was no agreement in those terms does it become material to consider whether the judge was justified in believing the evidence for the Plaintiff. On 26th October 1984 Mr. Leung approached Mr. Chang and said he might need personal accident cover for those who would be sailing aboard the dredger. It was the evidence of Mr. Leung that he described them as “crew members” and that he was given a. quotation. Mr.Chang said no quotation was given until later. The Defendant had underwritten substantial risks of various kinds for the Plaintiff and had in fact quoted for the whole insurance of this dredger for the delivery passage. That quotation had been declined as being uncompetitive, and the vessel was insured elsewhere. 5. On 29th October Mr. Leung, acting as agent for the Plaintiff, confirmed to Mr. Chang that the personal accident cover was required. He said t hat he again referred to the insured as “crewmen”. Mr. Chang' s original evidence was that he could not recall any conversation about this insurance on 26th October but he never withdrew his insistence that when Mr. Leung telephoned on 29th October he said the cover was for a group of Mainland China ship builders". Both men agreed that Mr. Chang then asked for names and ages. Mr. Leung obtained this information and telephoned back. According to Mr. Leung Mr. Chang then asked their “occupation”. (Assuming that to be true Mr. Chang could still have thought he was referring to their duties on board.) Mr. Leung consult ed his wife, who was close at hand, and she said “They are China crew members”, so he again told Mr. Chang “that they were crewmen”. At this Mr. Chang is alleged to have asked if there were any engineers amongst the eleven. Again the wife was consulted and said “I think so”. That answer was presumably relayed to Mr. Chang, who then asked “Shall I put down ‘ship building engineers’?” Again, if the Plaintiff's evidence is to be believed as to the conversation up to that point, it is remarkable that Mr. Leung should not have replied immediately “Certainly not”. Instead he asked his wife if this should be done. She is said to have been getting impatient and to have replied “All right”. That was a remarkable answer for someone who wanted to insure crewmen, but neither the husband nor the wife seems to have thought that it mattered. Indeed, Mr. Leung asserted that Mr. Chang said “that their occupation is not important nothing will happen it will not be so coincidental” (sic). Not unnaturally Mr. Leung was cross-examined at length upon this evidence. He explained “I think he meant that there would not be an accident” and the cross-examination continued:
Whatever the reason, the insured were described in the policy as “ship building engineers”. The policy was written in the Personal Accident Travel form, which is not generally appropriate for members of the crew of such a vessel. Indeed, Mr. Chang was well aware that his company did not insure crewmen. 6. Mr. Chang then gave instructions to a Mr. Liu to reinsure the risk beyond an existing treaty re-insurance and gave him a worksheet the material part of which reads:
The words and figure underlined did not originally appear in the worksheet, but were written by Mr. Chang with a different pen. There followed the names and dates of birth of the “insured persons”. Mr. Liu testified that the alterations had been made before the document was handed to him. He further said that he proceeded to telephone three reinsurance companies and sought 20% cover from each of them. Miss Chow, the agent of Pioneer Insurance & Surety Corporation, was apparently suspicious, for there is evidence that she asked “This group of people do not need to work on the vessel, is this correct ?” Mr. Liu said “This vessel is built by Universal Dockyard and this group of people are going back on this vessel”, but Miss Chow was not satisfied: according to Mr. Liu she asked him to confirm the position with the dockyard. Both agreed that subsequently - whether on the same day or on the following day – Mr. Liu telephoned back and said "that they were purely passengers”. With that assurance Miss Chow went to her superior and obtained approval to accept the risk, that approval being communicated to Mr. Liu. The confirmation of acceptance which she signed was timed “14.30” on 29th October (the time she was first approached), but I do not think that anything turns upon that. 7. The judge reviewed the evidence and said:
It is thus apparent that the judge did not find anything in the demeanour of the witnesses which enabled him to decide who was telling the truth: he was guided by what he believed to be the inherent likelihood of their two stories. That being so we are in as good a position as he to decide where the truth lies, and I must say that I do not consider it inherently unlikely in the circumstances that there should be eleven ship building workers travelling as passengers. The judge went on to say that in his opinion Mr. Chang “was disappointed not to receive instructions to write the Sea Transit Policy from Hong Kong to China and “accordingly, in order that he did not entirely lose Mr. Leung as a client, he arranged to negotiate the policy, in effect, as a favour”. With respect to him this was speculation, as was his finding that Mr. Chang decided to take a risk in describing ten of the insured as “crewmen”. As to his view that the Defendant did not formally deny liability until 20th May 1985 because “stalling tactics were employed”, this could only be formed if one assumes a sinister motive, for there could be several good reasons for the delay. 8. The culmination of the judge's reasoning vas contained in the following paragraph:
The implication in the first sentence is that Mr. Liu supported Mr. Chang dishonestly. If it were clear that the Plaintiff's evidence was true, no other inference could be drawn, but in my judgment it is not clear. I think the judge overlooked the fact that a heavy burden rested on the Plaintiff to displace the terms appearing in the policy. The second sentence appears to suggest that, if Mr. Liu had told Miss Chow what were the occupations of the, eleven persons to be insured, that information would have appearing in her worksheet. The judge is, therefore, disbelieving Miss Chow as well as Mr. Liu, for she said that Mr. Liu told her the eleven men had come from China to do supervision work” and “wanted to return to China”, which in the context clearly meant that they had come to supervise the ship building. She was not cross-examined about the information given to her by Mr. Liu. As to the necessity for Mr. Liu's obtaining information from Mr. Leung concerning the occupations of t he insured one must not forget the possibility of misunderstanding due to the ambiguity of the word “occupation”: it could relate to the general occupation of “sailor” or to the specific occupation of “master”, “mate”, “boatswain”, “engineer”, “carpenter” etc. The judge was incorrect, when he said there was no evidence from Miss Chow that Mr. Liu did in fact telephone back with regard to the occupations, although what she was told was merely “that they were purely passengers”. The finding that Mr. Chang was guilty of forgery was made without its having been put to him (or to Mr. Liu) in cross-examination that he had altered his worksheet (Ex.D8) after giving it to Mr. Liu and is an inference drawn from other facts inferred from questionable premisses. In all these circumstances I think that we cannot sustain the findings of the judge. Were it not that the Appellant succeeds on the point of law we would have had to consider what was .then the proper order to make. 9. In the event I would allow the appeal and enter judgment for the Defendant with cost. We are agreed that an order nisi as to costs should be made accordingly. Fuad, J.A. 10. Universal Dockyard Ltd. (“U.D.L.”) is a Hong Kong shipbuilding company. Trinity General Insurance Company Ltd. (“Trinity Insurance”) carries on insurance business in Hong Kong. After a hearing which lasted seven days, in a reserved judgment delivered on 5 November 1986, Jones J. found for U.D.L. on their Claim against Trinity Insurance for $1.6m. Trinity Insurance now appeal. 11. The background to the dispute between the parties was as follows. U.D.L. built a dredger in Hong Kong during 1983/1984 for a Port Authority in China at a cost of about $11m.. When the dredger was ready for delivery, the Port Authority sent a crew of 10 men from China to take the vessel over and sail her to Qin Dao. U.D.L. had agreed to be responsible for insuring the seamen on this voyage and so they took out a policy ostensibly for this purpose with Trinity Insurance. They had insured the vessel itself with another company because they thought that the rates quoted by Trinity Insurance were too high. 12. The insurance for the seamen was arranged between Mr. Tony Leung, who is the husband of U.D.L.'s executive director, and Trinity Insurance's office manager, Mr. I.M. Chang. This was done during a telephone conversation between these two m6n on 29 October 1984. What was said and agreed on this occasion is the central issue in this case. 13. The policy which was issued was a Personal Accident Travel policy in common form. The maximum benefit in respect of each person insured was to be $200,000 if death occurred. The policy is dated 29 October 1984 and the cover was expressed to begin on 31 October. Attached to, and forming part of the policy, was a list of the names and ages of 11 men, and their occupations are given as “Shipbuilding engineers”. 14. There was a clause in the policy which stipulated that it did "not insure against death or disablement caused by or resulting from .... manual work in connection with the Insured's occupation or profession …..” The premium was not stated. Instead' the words “as arranged” appear in the appropriate space in the policy. 15. When the dredger left: Hong Kong on 2 November 1984 there were 15 men on board. Four of these men were employees of U.D.L. who had been involved in building the vessel. Ten were the crewmen sent from China and there was one shipbuilding engineer, not employed by U.D.L., who had been in Hong Kong helping to supervise the construction of the dredger. 16. Tragically, two days later, off Qiwang Wan, the vessel capsized and 12 lives were lost at sea. Eight of the 10 sailors sent from China to sail the dredger home were among those who lost their lives. 17. U.D.L. later claimed $1.6m. from Trinity Insurance (8 x $200,000) under the policy. Trinity Insurance rejected the claim and this action was instituted. It was common ground that the eight sailors in respect of whom the claim was made were not covered by the policy in view of the exclusion clause to which I have referred. Before the action was brought, U.D.L. paid the $1.6m. to the Chinese Port Authority concerned. 18. It is necessary to say something about the Statement of Claim. It is pleaded (para. 6) that 6ef6re the 11 Chinese crewmen arrived in Hong Kong, U.D.L., acting by Mr. Tony Leung informed Trinity Insurance that they were minded to take out insurance to cover the personal safety of these men on their journey while steering the dredger to China and that since Trinity Insurance was familiar with the trade, business and practice of insurance, advice was sought from them as to what kind of policy was appropriate for the risk intended to be insured against. 19. I will now read paras. 7, 8 and 9 of the Statement of Claim:
20. After pleading the terms of the policy effected, the Statement of Claim (para. 11) goes on to state that U.D.L. entered into the contract believing in the truth of Mr. Chang's representation that the policy would be effective, and relying upon Mr. Chang's expertise. 21. It is pleaded (paras. 12 - 15) that Trinity Insurance were under a duty of care to U.D.L. in making the representation; that they were in breach of that duty in that they were guilty of negligence in making the representation. The following particulars of negligence are given in para. 13:
22. The statement of Claim continues by pleading that the representation was false (and particulars are set out) and that as a result, U.D.L. lost the benefit of the policy and suffered loss and damages by having to pay $1.6m. to the Chinese Port Authority named as the beneficiary under the policy. Section 3 of the Misrepresentation Ordinance is relied upon in the alternative. 23. Damages are claimed, alternatively, rectification of the policy followed by an order that U.D.L. be indemnified by Trinity Insurance in respect of the $1.6m.. 24. This was how U.D.L.'s case was pleaded up to the trial. At the trial, however, U.D.L. obtained leave to amend their Statement of Claim by the addition of two further paragraphs, and the case proceeded and was decided upon those averments to the exclusion of the earlier pleaded causes of action. The added paragraphs were as follows:
25. Regarding the crucial telephone conversation between Mr. Tony Leung on behalf of U.D.L. and Mr. I.M. Chang for Trinity Insurance there was a stark conflict of evidence. 26. As we know, Mr. Chang is the office manager of Trinity Insurance. He testified that on 29 October 1984 at about noon, Mr. Leung telephoned him in his office and said that he wanted to take out insurance for a group of Mainland China ship builders to cover them on their voyage home. He asked for their names and ages. Mr. Leung was not able to give this information immediately, but telephoned again a few minutes later to do so. He also said that the voyage would last five days. Mr. Chang then quoted a premium of just over $610. Mr. Leung accepted this and said that he needed the policy urgently because he wanted to present it to the Mainland Chinese shipbuilders at a dinner to celebrate the event (presumably the handing over of the vessel). 27. As he spoke to Mr. Leung, according to Mr. Chang's evidence, he took notes on apiece of paper. I will need to return to this document later. He then handed it over to a colleague, a Mr. Liu, so that the policy could be prepared, and reinsurance arranged. Shortly afterwards, Mr. Liu asked him if the men to be insured would be working on the vessel and Mr. Chang said that he responded by saying that according to what he had been told by Mr. Leung, the men would not be working on the dredger since they had completed their work and would be taking a free ride home. 28. Mr. Chang then said that Mr. Leung telephoned him again at about 3:00 p.m. and said that the voyage might take two days more and was told that the cover could be extended but that the premium would go up to slightly over $660. The original policy was prepared in a hurry and was ready by 5:00 p.m. Half an hour later Mr. Leung arrived. When the names were checked, it was found the names of two of the men were spelled, incorrectly and Mr. Leung said that he did not want the policy to show the amount of premium, and so it was crossed out. Mr. Chang said that he described the policy to Mr. Leung adding that it would be suitable since the men insured would not be working on the vessel. Mr. Leung raised no queries. 29. Mr. Chang's evidence was that on the following day Mr. Leung rang him again to extend the period of cover to 14 days and this was agreed, the premium being varied to $860. Mr. Leung came to collect the corrected policy later that day. 30. Mr. Leung's version of his telephone conversation with Mr. Chang on 29 October was, as I have already indicated, very different. Before I summarise his evidence, I would mention that at the material time he was working for Century Insurance which deals mainly in life insurance. He had had previous insurance dealings with Mr. Chang, acting on behalf of his wife's company U.D.L.. He explained why he had placed the insurance for the vessel itself with another company - because the premium quoted by Trinity Insurance was too high, and spoke of a general discussion with Mr. Chang about the proposed policy in respect of the crewmen on 26 October 1984. His own firm, Century, did not deal in the kind of insurance he wanted for the crew, and so he had earlier approached other insurance companies to discuss terms. One of them was Reid Stenhouse, which quoted $300 per man ($300 x 11 = $3,300) which he thought was too much. 31. Mr. Leung said that when he telephoned Mr. Chang on 29 October he asked him to place insurance for the 11 crewmen. He was not able to give the names and ages of the men concerned when this information was sought from him and so he asked his wife if she knew. They were at home together at the time. She said she would have to ring her office for the details and so Mr. Leung told Mr. Chang that he would come back to him later. When he did so, shortly afterwards, he read out the names and ages of the crew from a piece of paper upon which his wife had written the information she had been given by her office. Mr. Chang then asked him their occupations. He did not know but his wife, who was beside him, said, with some irritation, that they were “China crew members”. He passed this information on to Mr. Chang, who then asked him if there were any engineers among the 11 to be insured. Again he asked his wife who replied “I think so”. Mr. Chang then asked “Shall I put down shipbuilding engineers?”, using English for the last three words. Yet again he turned to his wife who impatiently said "Alright". He passed this on to Mr. Chang. 32. Still in examination-in-chief, Mr. Leung testified as follows: “I did not think that the matter of the men's jobs was important. I.M. Chang said to me that their occupation is not important nothing will happen it will not be that coincidental.” 33. Not surprisingly, Mr. Bokhary explored this part of his evidence in cross-examination. I will read the learned judge's careful note of what was said:
34. Mr. Leung was not asked anything more about this remarkable exchange in re-examination. 35. In the letter dated 6 May 1985 from U.D.L.'s solicitors to Trinity Insurance solicitors it is said that “Mr. Leung will say that the description of Shipbuilding Engineers put down on the policy as the occupation of the insureds were at your I.M. Chang's instigation on ground of convenience.” When cross-examined about this, Mr. Leung said that this had been his choice of words and when the judge intervened to ask him whose convenience was in point, he said it was Mr. Chang's. 36. The learned judge touched upon this matter three times in his judgment. Firstly, when he was summarising Mr. Leung's evidence, he said “As neither Mr. Leung nor his wife regarded the occupation to be a matter of importance, and Mr. Chang had given an assurance to this effect, that nothing would happen, and it was only a formality, they agreed”. Secondly, when assessing Mr. Chang's testimony he remarked that he was sure that despite Mr. Chang's knowledge that only one of the 11 men was a shipbuilding engineer he had decided to take a risk because in the words used by Mr. Leung “it was unlikely that anything would happen on the voyage”. The judge mentions the point once again when he reiterate his conclusion that Mr. Chang “did not anticipate anything would happen on the voyage and was therefore prepared to take a risk.” 37. The judge saw the Plaintiff's case in the following light: “It is the plaintiff's case that Mr. Chang, the defendant's office manager told Mr. Leung that the policy would effectively serve as effective insurance to cover them for the risks of personal injury to the insured during the voyage from Hong Kong to China.” At the conclusion of his judgment, after giving his reasons for his findings on the facts, the judge said:
38. Mr. Bokhary, for Trinity Insurance, seeks to challenge the judge's findings on the facts, based on his assessment of the credibility of the witnesses before him, but submits that on Mr. Leung's own evidence, if it had been rightly preferred to the evidence given by Mr. Chang, U.D.L.'s claim failed as a matter of law. 39. As Mr. Bokhary interpreted the pleadings after the late amendment at the trial, U.D.L.'s pleaded case was that Mr. Chang had represented to Mr. Leung that a Personal Accident Travel (“P.A.T.”) policy would sufficiently serve the purpose and cover the risk of injury to all the 11 men, and that this representation resulted in a collateral contract under which Trinity Insurance promised to write insurance which would effectively cover such risk. But, he contends, Mr. Leung did not give evidence that any such misrepresentation was made. He took us through the judge’s notes on the point about the unlikely coincidence which I have set out above and argued that it showed this, for if the policy really covered all the 11 men, then the question of coincidence would not have arisen - that the vessel would sink when the men were not covered by the policy. 40. Mr. Bokhary argued that while Mr. Leung's evidence was that Mr. Chang had expressed the view that the dredger was not likely to sink, this was a view that was apparently shared by Mr. Leung and by his wife, a director of the company which built the vessel. Mr. Chang's views, if they were put forward, could not be regarded as an assurance of anything and they were certainly not the representation pleaded. 41. I must confess that, speaking for myself, I understood the amended Statement of Claim in the same way as did Mr. Bokhary. I did not appreciate, until Mr. Pritchard addressed us, that the new para. 14A was intended merely to refer to the fact of the telephone conversation without including the averments as to what was said during the exchange. However that may be, I am prepared to approach this issue on the appeal on the basis that the representation mentioned in para. 7 was no longer relied upon and that U. D. L. were now suing on an oral contract that was complete and therefore enforceable before the policy was issued. 42. I think it is important to appreciate at once what a heavy onus lay upon U.D.L. in prosecuting their claim. The policy, which is usually regarded as evidence of the agreement between the parties, was a P.A.T. insurance which was quite inappropariate for seamen unless they were mere passengers and not members of the crew of the vessel. Although Mr. Leung said he never saw the policy and Mrs. Leung said she never read it, there it was. It spoke for itself, and the occupation of each of the 11 insured was stated to be “shipbuilding engineer” which was plainly misleading and wrong in respect of all but one of the men. 43. Mr. Leung was in the insurance business and had been involved in many insurance transactions in the past. When one analyses what Mr. Leung said about the matter of coincidence it readily appears how extraordinary is the stand taken by U.D.L.. As we have seen, Mr. Leung was at pains to deny that Mr. Chang had said that it would not matter if the men’s occupations were wrongly stated; what he had said was that it was merely a formality for “it would not be that coincidental”. It is true that during his cross-examination Mr. Leung said that he had not quite understood what Mr. Chang meant, but he later acknowledged that the effect of what Mr. Chang was saying was that it was not likely that there would be an accident and that the ship would sink. 44. On their own case, both Mr. and Mrs. Leung agreed to the misdescription of the occupations of the men to be insured. Mrs. Leung clearly dealt with Mr. Chang through her husband who was U.D.L.’s agent. Mr. Leung must be taken to have shared Mr. Chang's view that it was unlikely that there would be an accident. It seems to me quite absurd to suggest (if indeed this was the suggestion) that this was an assurance of any kind and that it was a matter which only concerned Mr. Chang. Here, according to Mr. Leung, he was being told that the event insured against was not likely to happen, not that the men would be covered despite the misdescription of their occupations; this resulted in the wrong policy being issued, if his intention had been to insure working seamen. Even if his experience in this particular insurance field was limited, he could not have failed to appreciate the significance of what, on his own evidence, was being said to him. 45. It is not, I think, irrelevant in this context to bear in mind that Mr. Leung had been quoted $3,300 for 5 days by another company, whereas from Mr. Chang he obtained cover for 14 days for only $860. 46. With the utmost r-aspect to the learned judge, who tried the case with anxious care, it; cannot be said that he dealt with the difficulties presented to U.D.L.'s case by Mr. Leung's' evidence. In my view, the judgment in favour of U.D.L. cannot be allowed to stand, based as it was on an oral agreement whose term were not proved with sufficient certainty to found a claim in the face of the policy later issued. Moreover, the effect of Mr. Leung's evidence, assuming it to be true, was that he stood by and allowed his wife to go along with an arrangement, on U.D.L.'s behalf, under which he knew that the men's occupations were not correctly described, appreciating the risk U.D.L. were taking because he felt, like Mr. Chang, that the question of a claim was unlikely ever to arise. It might, therefore, be said that the policy in fact reflected the agreement he was making, on behalf of U.D.L., with Mr. Chang as Trinity Insurance's agent. 47. Although these conclusions would dispose of the appeal, since the judge's findings were attacked and supported by opposing counsel at such length, I think it is desirable to refer to some of the further matters raised. 48. After a careful review of the evidence, the learned judge made it clear that he found it difficult to decide who to believe. He said "During the course of the trial it was difficult to determine where the truth lay." He then stated that the suggestion that Mr. Leung had deliberately misrepresented the occupations of the insured “appeared as a matter of commonsense to be without foundation for it was inherently unlikely that the men would be travelling as passengers.” He then expressed the opinion that it was difficult to understand that Mr. Chang would have insisted on misdescribing the insured as shipbuilding engineers when his company benefited only by $40 under the policy (after reinsurance expenses). He went on to say “However, having heard all the evidence and having ample time to reflect, I am now in no doubt where the truth lies.” 49. There then occurs a passage in which the judge infers that after a successful business relationship with Mr. Leung, Mr. Chang was disappointed not to receive instructions to write the Sea Transit Policy from Hong Kong to China. And so, in order not entirely to lose Mr. Leung as a client, he had arranged to negotiate the crewmen's policy, in effect, as a favour. The premium for that policy was considerably cheaper than the other quotation obtained by Mr. Leung. Trinity Insurance was not authorised to transact insurance for crewmen but only for passengers. This was why Mr. Chang had decided that the only way to negotiate the policy was to describe the insured as shipbuilding engineers. The judge felt sure that he was told that only one of the insured was a shipbuilding engineer, but despite his knowledge about the others, he decided to take a risk since it was unlikely that anything would happen on the voyage. 50. The fact that the judge said this where he did in his judgment is some indication that he used what must, with all due respect, be seen as conjecture to overcome the difficulty he found in the way of accepting the allegations made against Mr. Chang. 51. The judge then said that it was surprising that if Mr. Chang were telling the truth, after his visit to China (when he discovered the actual occupations of the insured) he did not contact Mr. Leung to find out why he had falsified the details for the policy. He found the evidence given by Trinity Insurance is witnesses, that a full investigation had to be made by the Salvage Association into the accident before repudiating liability, to be inexplicable. He inclined to the view that Trinity Insurance had employed stalling tactics to put off the evil day when a positive decision had to be made. 52. With respect, in my judgment, all this was no reason to cast doubt on Mr. Chang’s testimony. He was only the office manager. It has to be borne in mind that his managing director, Mr. Woo, had testified that after Mr. Chang had told him, on his return from China, that the men insured had turned out to be crewmen, he had thought it wise to require an independent report since "Mr. Chang's finding is only on our side" and that he had decided to accept Mr. Chang's suggestion that the Salvage Association should also look into their interests in the affair. This seems to me to be an entirely reasonable decision and I am unable to understand why the judge described this conduct as inexplicable. As to Mr. Chang, it seems to me, that on face of it, it could be regarded as sensible of him not to get involved in personal recriminations with Mr. Leung while the whole matter was under investigation and report. 53. The judge then goes on to discuss Mr. Leung's evidence, supported by that of his wife, and finds as a fact that Mr. Leung was telling the truth about what was said during the crucial telephone conversation on 29 October 1984; and he found Mrs. Leung to be an impressive witness. 54. Mr. Bokhary criticises the judge's findings on a number of other grounds. For reasons which will appear, I do not think it necessary to go into them all. 55. Before I read a passage from the learned judge's judgment which I intend next to address, I should mention that it was the Mr. Liu referred to therein (the underwriting supervisor employed by Trinity Insurance) who produced the document which was given the exhibit number “D8” and which he said had been handed to him by Mr. Chang when he was instructed to arrange the insurance. The relevant part of D8 for our purposes read, in Mr. Chang's handwriting:
56. The passage from the judgment I now propose to analyse is as follows:
57. It is clear that in the first sentence the judge was saying that Mr. Liu had falsely supported Mr. Chang's evidence. Since he thought that Mr. Liu' s testimony was flawed in the light of the evidence which had been given by Miss Chow, it is necessary to examine precisely what she did say, and what was written on her worksheet. 58. Miss Chow is an underwriting executive working for Pioneer Insurance and Surety Corporation. She said that Mr. Liu telephoned her in the afternoon of 29 October 1984 wishing to place travel reinsurance with her company. Mr. Liu told her that there were 11 persons who had come from China to Hong Kong to do supervision work and that they wanted to go back to China. She asked him whether it was correct to assume that the men did not need to work on the vessel. Mr. Liu replied to the effect that the dredger had been built by U.D.L. and that the men would be going back on it. 59. Since her company did not insure members of ships' crews, and this seemed to her to be a special case, differing from their usual P.A.T. insurance, she wondered if the men would in fact be working during the journey. In response to that enquiry, Mr. Liu said he would ring back later. When he did so, he told her that the men would be purely passengers. She still thought this was a rather special case and so she had to ask her superior whether it was alright to accept the reinsurance. She was later able to tell Mr. Liu by telephone that all was well. 60. In my judgment, this evidence make it clear that right from the start, Mr. Liu was asking her to accept P.A.T. reinsurance for the men and that Miss Chow was not concerned so much with the description of their occupations but with the question whether the men, however styled, would in fact be working on the dredger. That was the point upon which she wished to have reassurance. 61. Miss Chow's worksheet, which was produced in evidence, was headed “P.A.T.” and therefore, all along, that was the type of insurance she had in mind as a result of her first conversation with Mr. Liu. She had been told the men had come from China “to do supervision work” which is hardly the language one would use for ordinary seamen. It would have added nothing to the information Mr. Liu gave Miss Chow if instead of saying what he did, he had described them to her as shipbuilding engineers. She would still have required confirmation that P.A.T. insurance was appropriate in the circumstances. Miss Chow was not asked whether, after writing "P.A.T." on her worksheet, she would have added the description "shipbuilding engineers” after the words "11 persons" which appear there, had Mr. Liu used that expression to her; and it is to be noted that there is no mention of the occupations of the insured in the “closing memo” she issued. 62. I do not think that it could fairly be said that there would have been no necessity for Mr. Liu to obtain the information Miss Chow wanted from Mr. Leung, once it is appreciated precisely what Miss Chow was really concerned about. 63. When the judge said that there was no evidence from Miss Chow that Mr. Liu had telephoned again with the information she needed, he could not have meant that there was no evidence to support Mr. Liu when he said that he had spoken to her after she had raised her query. She said that he had done so. In referring to “this information” the judge must have meant information that they were shipbuilding engineers. As I have suggested earlier, Miss Chow's evidence shows that this is not what was the subject of her anxiety. 64. As to the trial judge's finding that the document exhibit D8 had been altered by Mr. Chang "at a later date", it is not clear whether he had concluded that Mr. Chang had done this for a dishonest purpose, but Mr. Bokhary is surely right when he submits that this damaging implication is there. It must be noted that even though the document should have been discovered, it was not relied upon by Trinity Insurance to lend support to their case. It only came to he produced during Mr. Liu's cross-examination when he was asked if it was still in his possession. With every respect to counsel for U.D.L., he should not have made the suggestion which prompted the judge to reach his conclusion about exhibit D8 without asking Mr. Chang to be recalled so that he could be cross-examined on it. 65. Be all that as it may, when one looks at the document, it is difficult to see why the amendments, whenever they might have been made, had any real significance. Before the amendments, what Mr. Chang had first written was “P.A.T. cover for the working group returning to China .....” P.A.T. cover was not appropriate for crewmen, and no one would use the expression “working group” when it was contemplated that crewmen were to be insured. 66. With very great respect to the judge, his misapprehension of this evidence vitiated his conclusion that Mr. Liu's testimony was “flawed”, and his erroneous approach to it must, in turn, have affected his assessment of Mr. Chang's credibility. Mr. Pritchard frankly conceded that the judgment could not stand if Mr. Bokhary's contentions about the judge's processes of reasoning in the paragraph I have read were well founded. 67. If I had not held in favour of Mr. Bokhary on his first point (which he described as “a matter of law”) I would have been for allowing the appeal for the reasons I have attempted to give, bearing in mind the principles upon which an appellate court acts in relation to a trial judge's decision on questions of fact. There are, if I may say so, very clearly set out in para. 59/1/18 of the White Book and I will not rehearse them. 68. I would, therefore, allow the appeal and order, that judgment be entered for Trinity Insurance dismissing U.D.L.’s action against them. Clough, J.A.: 69. I agree with both the judgments which have been delivered and there is nothing I can usefully add. 3rd April 1987 K. Bokhary, Q.C. & Miss Cheng for Appellant. R. Pritchard for Respondent. |