Richfine Development Ltd t/a Keng Fai Jewellery v. Hugh Rupert Rivington

CACV 257/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 257 OF 2008

(ON APPEAL FROM HCCL NO. 18 OF 2006)

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

BETWEEN

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

Before: Hon Tang VP, Cheung JA and Yuen JA in Court

Date of Hearing: 17 June 2009

Date of Decision: 22 June 2009

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

D E C I S I O N

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

Hon Tang VP:

1.The plaintiff claimed against the defendant under a Lloyd’s Jewellers Block Policy.  The amount claimed was HK$5,958,098 after concessions made at trial.  Stone J found in favour of the plaintiff and ordered the defendant to pay the plaintiff HK$4,738,051.00.

2.On appeal, we set aside Stone J’s order.

3.The plaintiff now seeks leave to appeal. 

4.First, as of right under section 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance (Cap. 484), on the basis that the amount of the claim in dispute is of the value of $1,000,000 or more being an indemnity claim under the policy of insurance.

5.Mr Kenny C. P. Lin, for the plaintiff, referred to the dictum of Ribeiro PJ in China Field Ltd v Appeal Tribunal (Buildings) [2009] 2 HKLRD 135 where he said:

“24. Consistently with the strict approach adopted in relation to the first limb of s. 22(1)(a), it is only proper to ascribe a value which qualifies for leave as of right to the candidate claim or question if (i) on the evidence, such value is clearly quantifiable as a value of $1 million or more; and (ii) the court is satisfied that the Court’s order made upon disposing of the proposed appeal would take effect by immediately conferring or imposing on the relevant parties a financial benefit or detriment in the quantified amount.  It is not enough that one is able plausibly to say that such a financial impact is a likely  eventual result of the appeal.”

6.I do not believe the plaintiff’s claim satisfies this strict test.  The value of the claim was not clearly quantifiable as a value of $1,000,000 or more.

7.The plaintiff’s claim was a claim for breach of contract and an unliquidated claim.  As Sir John Donaldson MR said in Edmunds v Lloyd Italico S.p.A. (C.A.) [1986] 1 WLR 492 at 493:

“One might well think that a sum due under an insurance policy constituted a debt. On this assumption, the plaintiff’s solicitors were entitled to appropriate the drafts to the principal sums due, since otherwise they would have been deemed to have been appropriated to the payment of interest, the balance only being appropriated to the payment of the principal amounts: see Chitty on Contracts, 25th ed. (1983), para 1424. However, as a matter of law, a claim under a contract of insurance is a claim for damages for breach of contract: Luckie v. Bushby (1853) 13 C.B. 864, 879, per Jervis C.J., and Chandris v. Argo Insurance Co. Ltd. [1963] 2 Lloyd’s Rep. 65.”

8.Thus,

“… Claims for losses under an indemnity insurance policy are generally unliquidated claims and hence would not be eligible for independent set-off. This is so even if there is a total loss. …” See English and International Set-off by Philip Wood at para. 2-108.

9.Mr Lin referred to B + B Construction Co. Ltd. v Sun Alliance and London Insurance plc [2000] 3 HKCFAR 503, where the appeal committee regarded a claim for an indemnity as coming within section 22(1)(a).  There the plaintiff who had paid under judgment to an employee, both by way of employees’ compensation and common law damages, over HK$1,000,000, sought an indemnity from the defendant.  That was treated without argument as coming within section 22(1)(a).  I do not believe B + B Construction could be treated as an authority that all claims for indemnity under an indemnity policy must be regarded as a liquidated claim.  No doubt, some might be, example, sums due under life policies ought to be treated as liquidated.  See para. 2-111 in English and International Set-off.

10.I turn to the second basis upon which leave to appeal is sought namely on the “or otherwise” ground.  It is said leave should be granted because we were wrong.  In our judgment we relied on Shoot v Hill [1936] Lloyd's LLR 29 where Branson J said:

“… it is the essence of the matter that the underwriters should, if a claim arises, be able to look at the book and see whether the man who is claiming so much for his stock has got the stock and what he paid for the stock. …”

11.Mr Lin referred us to the case of In re Bradley v Essex and Suffolk Accident Indemnity Society [1912] 1 KB 415.  The headnotes read:

“The claimant effected a policy of insurance with an insurance society against liability under the Workmen's Compensation Act, 1906. He only employed one person, his son, who was paid 75l. a year. The son having been injured in the course of his employment, the claimant had to pay him compensation under the Act. The society refused to pay on the ground or non-compliance with the following condition in the policy (which declared it and other clauses to be conditions precedent to the society's liability under the policy):- ‘The first premium and all renewal premiums that may be accepted are to be regulated by the amount of wages and salaries and other earnings paid to employees by the insured during each period of insurance. The name of every employee and the amount of wages, salary, and other earnings paid to him shall be duly recorded in a proper wages book. The insured shall at all times allow the society to inspect such books, and shall supply the society with a correct account of all such wages, salaries, and other earnings paid during any period of insurance within one month from the expiry of such period of insurance, and, if the total amount so paid shall differ from the amount on which premium has been paid, the difference in premium shall be met by a further proportionate payment to the society or by a refund by the society, as the case may be.’ No wages book was kept by the claimant:-

Held by Cozens-Hardy M.R. and Farwell L.J. (Fletcher Moulton L.J. dissenting), affirming the decision or Bray J., that the claimant was entitled to indemnity by the society from liability to pay compensation, as the sole object or the condition was to provide for the adjustment of premiums, and that compliance with the clause was not a condition precedent to liability.

Per Fletcher Moulton L.J.: As the policy clearly and unmistakably pronounced the clause to be a condition precedent, there was no reason why it should be declared to be otherwise, and the society, therefore, was not liable.”

12.At 433 Farwell LJ said:

“… There is another ground on which also I think Bray J.'s judgment can be supported. The condition, if it be one, is to keep ‘a proper wages book’: that must mean, in my opinion, ‘proper under the circumstances of the case and for the business or trade of the insurer.’ Take the case of a lodging-house keeper with one maid. I think it would be absurd to lay it down as a matter of law without evidence that it is proper or usual for such a woman to keep a wages book; and I think the same observation applies to a small farmer (even although he adds a currier's business to his farming) who employs his son as his only servant. I think Bray J. was right, and this appeal should be dismissed with costs.”

13.I do not believe that this dictum throws any doubt on the correctness of Branson J’s approach in Shoot v Hill.  Farwell LJ was not stating a principle of general application.  His dictum has to be read in the context of that particular case. 

14.In our judgment allowing the appeal, we agreed with Mr Whitehead SC, leading counsel for the plaintiff, that “proper records” is not a legal term of art and that the words have to be construed in the context of the surrounding circumstances, the object of the contract, and the relative size and operation of the business in question.

15.We then concluded that because records kept would not enable one:

“… to look at the books and see whether the man who is claiming so much for his stock has got the stock and what he paid for the stock …”

they were not proper records within the meaning of the policy.

16.So although, In re Bradley was not cited to us in the appeal, I do not believe our decision was made per incuriam.

17.I would not grant leave to appeal on the “or otherwise” limb.  In any event, I believe leave to appeal on the “or otherwise” limb should rarely be granted by this court.

18.I refuse leave to appeal with costs of the application to the defendant, to be taxed if not agreed.

Hon Cheung JA:

19.I agree.

Hon Yuen JA:

20.I agree.

Mr. Kenny C. P. Lin, instructed by Messrs Simon Ho & Co., for the Plaintiff.

Mr. Robin McLeish, instructed by Messrs DLA Piper Hong Kong, for the Defendant.