Falcon Insurance Co (Hong Kong) Ltd v. Ho Kuen Fai t/a Sun Hing Electrical Engineering

DCCJ1865/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1865 OF 2008

----------------------

----------------------

Coram :  H.H. Judge Chow

Date of Hearing :  14^th November 2008

Date of Handing Down Decision :  23^rd December 2008

----------------------

DECISION

----------------------

1.This is the Plaintiff’s application to enter judgment against the Defendant, pursuant to Order 14 of the Rules of the District Court Ordinance.

2.The Defendant was a contractor for electrical works at a public housing project at Tin Shui Wai Town Lot No. 28, Area 111 (“the Construction Site”), undertaken by Chun Wo Construction and Engineering Co. Ltd. (“Chun Wo”) as the main contractor for the Housing Authority.  Chun Wo’s insurer was Allienz Insurance (Hong Kong) Limited (“Allienz”).  By a Policy of Insurance No. 10B-3002069-FCR01-NS (“the Insurance Policy”), the Plaintiff agreed to insure the Defendant and Yew Sang Hong Ltd. (“YSH”) against contractor’s all risks.

3.On or about 7.9.2002 a theft or burglary occurred at the Construction Site and a quantity of the Defendant’s materials and equipment at the Construction Site were stolen.  The Defendant submitted his claim under the Insurance Policy.  Upon receipt of the Defendant’s insurance claim for its loss at the site, the Plaintiff assessed the Defendant’s loss and damages at $267,699. 

4.On 1.12.2003, the Defendant signed a “Form of Acceptance” prepared by the Plaintiff.  The material part of this “Form of Acceptance” is reproduced as follows:-

“We, the undersigned, Sun Hing Electrical Engineering Co, subject to the approval of Falcon Insurance Co (HK) Ltd, hereby agree to accept the sum of HK$155,654 (Hong Kong Dollars One Hundred Fifty Five Thousand Six Hundred Any Fifty Four only) in full satisfaction and discharge of all claims under Policy No. 10B-P3002069-FCR01-NS in respect of all loss or damage arising out of burglary which occurred at the above location on or about 7 September 2002.

We understand that this settlement is a result of the contribution of the loss between two Policies as follow:-

Insurers	Amount
Falcon Insurance Co (HK) Ltd	HK$155,654
Allianz Insurance (Hong Kong) Ltd	HK$112,045

Whilst awaiting Allianz Insurance (Hong Kong) Ltd’s payment for HK$112,045 via the main contractor Chun Wo Construction and Engineering Co Ltd, we understand that Falcon Insurance Co (HK) Ltd will advance this sum of HK$112,045 to us.  However, as soon as we receive the payment of HK$112,045 under the other Policy, we will reimburse the same to Falcon Insurance Co (HK) Ltd.  We further confirm that for whatever reasons the payment from Allianz Insurance (Hong Kong) Ltd is delayed to make or even not made to us, we have to reimburse Flacon Insurance Co (HK) Ltd for the full advanced payment of HK$112,045 not later than two months form the signing of this Form of Acceptance.”

(Underlines provided)

5.By a letter of dated 15.7.2008, Allianz confirmed to the Plaintiff’s solicitors that the sum of $112,045 was paid to Chun Wo on or about 9.2.2008.  By a letter dated 5.9.2005, Chun Wo confirmed that the sum of $112,045 was paid to YSH on or about 19.7.2004.  By a letter of Messrs. Wat & Co. dated 14.8.2008, YSH through its former solicitors, confirmed that the sum of $112,045 was included in its cheque drawn payable to the Defendant dated 26.8.2004 for a sum of $292,835.59.  By a letter of Messrs. Hong Lee & Co., the Defendant, through his former solicitors, admitted that the Defendant did receive the sum of $292,835.59 in 2004.

6.The Defence Counsel submits that the Plaintiff was contractually bound under the Insurance Policy to indemnify and pay the entire sum of $267,699 to the Defendant.  This is not correct.  The named insured include two parties, namely, Sun Hing Electrical Engineering (“Sun Hing”) and YSH.  As at 14.10.2003, YSH would not cooperate to confirm the settlement amount, and they would not be willing to sign on the form of acceptance.  United Adjusters were not able to confirm if YSH had any interest on a share or the whole of the settlement amount.  This is made clear by the following letter (dated 14.10.2003) by United Adjusters to Sun Hing, which the Defendant signed on 31.10.2003: -

“We refer to earlier correspondence and recall that our proposed settlement involves:-  

Falcon Insurance Co (HK) Ltd (“Falcon”)	HK$155,654
Allianz Insurance (HK) Ltd (“Allianz”)	HK$112,045
	HK$267,699

In considering the payment of HK$155,654, Falcon would require all named Insured to sign on the Form of Acceptance.  Such named Insured include two parties, namely Sun Hing Electrical Engineering Co (“Sun Hing”) and Yew Sang Hang Ltd (“YSH”).  As discussed we understand that YSH will not cooperate to confirm the settlement amount nor will they be willing to sign on the Form of Acceptance.  We are also unable to confirm if YSH have any interest on a share or the whole of the above settlement amount.  Though you have advised that you are the only interested party for the above settlement, we would require you to agree on the following undertaking before the consideration of Policy Liability or the release of any payment:-”

7.The above letter clearly reflects that the Defendant may not be entitled to the whole sum of $267,699.  The Plaintiff was unable to confirm if YSH had any interest on a share or the whole of the settlement amount of $267,699.  The Defendant may only be entitled to nothing or a sum smaller than $155,654.  But the Plaintiff was willing to make a payment of $155,654 to the Defendant in discharge of all claims under the Insurance Policy of the burglary.  Secondly the proposed sum of $267,699 comprised $155,654 from the Plaintiff, and $112,045 from Allianz.  The Defendant certainly is not entitled to $112,045, as made abundantly clear by the above letter.

8.The crucial question is: did the Defendant receive the sum of $112,045 under this settlement agreement.  The Defendant denied that it had received this sum.  The evidence relied on by Mr. Chiu Tuen Ting Henry, the Plaintiff’s solicitor who made the affirmation for the Plaintiff to support this order application, is that YSH informed the Plaintiff that YSH had already made payment of the insurance claims of HK$112,045 to the Defendant and that the said sum was included in YSH’s cheque drawn payable to the Defendant dated 26.8.2004 for the sum of $292,835.59.  But The Defendant contends that it there is a contemporaneous record in August 2004 to show that this sum of $112,045 received from YSH was part of the contract sum of variation works carried out by the Defendant for the construction project, as shown at p. 86 of the bundle of the Plaintiff ‘s document, under Summary for variation works confirmed by CWEM.  Another document faxed out by YSH (at p. 76 of the Plaintiff’s bundle of documents) shows that the sum of $112,045 is for insurance claims – theft from site on 7/9 and 8/9.  YSH produced two different documents (similar in contents) showing different purposes for the payment of $112,045.  One of such a document must be a fabricated document.  There is clearly an issue of fact to be tried which goes to the crux of the case, namely, whether the Defendant did receive $112,045 as part of the payment of the insurance claim.  The issue of fact cannot be resolved without a trial.  This is not a suitable case for summary judgment.  I therefore dismiss the Plaintiff’s application.

Costs

9.I make an order nisi, to be made absolute in 14 days’ time, that the Plaintiff do pay costs of this action to the Defendant, to be taxed if not agreed, with certificate for Counsel.

The Plaintiff:   represented by Mr. Jerry Chung, instructed by Henry Chiu & Partners, Solicitors.

The Defendant:   represented by Mr. Allen Lam, instructed by Joseph Mok & Co., Solicitors.