Hang Fung Jewellery & Goldsmith Ltd v. Wurttembergische Versicherung Ag and Others

HCA 2009/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2009 OF 2005

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BETWEEN

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Before: Hon Chung J in Court

Dates of Hearing: 5, 6 and 9 December 2011

Date of Handing Down Judgment: 23 December 2011

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J U D G M E N T

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Introduction

1.The plaintiff commenced this action in October 2005 on the strength of an insurance policy.  The claim arises from an armed robbery inside the plaintiff’s goldsmith workshop in the Jordan area (“the Jordan office”).  It took place on 7 July 2003.  The goods stolen were worth about $4.8 million.

2.Although there are 3 defendants, no distinction has been made among them; they are treated as one in this judgment.  In short, they are the insurer of the said policy, and will be so described below for convenience.

Issues and Witnesses

3.The parties have helpfully identified the 3 main issues:-

(a) whether the armed robbery actually took place;

(b) whether the plaintiff was in breach of some of the terms of the policy;

(c) whether the plaintiff suffered the amount of loss now claimed.

4.The first issue (para. 3(a) above) is a credibility issue, the insurer not accepting the plaintiff’s witness as an honest witness.  The second issue (para. 3(b) above) involves a determination of:-

(1) the true meaning of the relevant terms of the policy;

(2) whether the plaintiff has adequately complied with those terms.

The third issue (para. 3(c) above) is an issue involving credibility and/or sufficiency of evidence.

5.The plaintiff’s goldsmith business has been run and controlled by a husband-and-wife team.  The plaintiff’s only witness is the husband, Mr Lau.  The 3 defence witnesses focus on the manner in which the plaintiff’s security system has been operated prior to the armed robbery.  Two of those witnesses (Mr Wong and Ms Leung) are the loss adjusters’ employees. The third witness (Mr Cheung) is an independent electrical engineer who specializes in electronic security hardware.

The Armed Robbery

6.As stated above, the plaintiff’s business has been a goldsmith workshop.  It occupied two units of a commercial building. The Jordan office employed about 3 office staff.  The actual goldsmith operation was located in Shenzhen.  From time to time, Mr Lau and his wife had to transfer the gold and/or platinum materials stored in the safes of the Jordan office to the Shenzhen plant.

7.One such transfer operation took place on 7 July 2003.  Early that morning, Mr Lau and his wife took a taxi from their home to somewhere near the Jordan office.  Mr Lau walked hurriedly in front.  After he arrived at the Jordan office, he found that his wife was not immediately behind him.  He then took out the materials (gold bars and platinum) for weighing and filling in documentation (required for transporting the materials to the Mainland).

8.His wife showed up at the doorway shortly later, being held hostage by 3 men, one of whom was armed with a sharp knife.  The robbers demanded him to open the door and threatened to kill his wife.  Out of panic, he pressed the door button to let the group in.

9.The robbers then pushed the couple into the store room, tied their hands and closed the room door.  Mr Lau heard what appeared to be ransacking sound in the Jordan office.  After the sound subsided, the couple managed to free themselves and Mr Lau pressed the distress button which was connected to the security centre.  By then the robbers were already gone.  The police later arrived.  Mr Lau found the materials he took out from the safe, and those in the safe, were missing.

Credibility and Findings of Fact

10.Mr Lau was thoroughly cross-examined (the cross‑examination lasted effectively for the whole of the first trial day).  In its closing submissions, the insurer contends his testimony should not be accepted as truthful as regards (among other things) the armed robbery.

11.The reasons put forth in support of the contention include:-

(a) the part of Mr Lau’s statement given to the loss adjusters about the usual operation of the security system materially contradicts the corresponding part of his testimony;

(b) his explanation that the statement does not reflect what he said cannot be truthful; it is contradicted by the testimony of Mr Wong;

(c) Mr Lau’s account of the armed robbery is “illogical, improbable and factually defective”; for example, there was no need for him to move the materials from the safe to a desk in the Jordan office; there was an unexplained time gap in the account given by him; it is incredible the robbers did not bring along a bag/case for carrying the loot, nor did they mask their faces; it is also incredible the robbers did not open the other safes in the Jordan office;

(d) the armed robbery was not independently verified; for example, the security guards on the ground floor did not see any strangers; there was no video recording about it;

(e) there was financial motive to lie: business was slack and running at a loss probably due to the SARS effect;

(f) an adverse inference should be drawn by the unexplained failure to call the wife to testify;

(g) other matters said to be relevant to credibility are also set out in the insurer’s closing submissions, especially at pp. 10 to 14.

12.I accept all 3 defence witnesses to be honest in relation to:-

(1) how Mr Wong took the statement from Mr Lau (and Ms Leung from his wife);

(2) how the door locks were operated during Mr Cheung’s visits to the Jordan office.

Mr Lau’s claim that he could not read traditional Chinese characters is inherently implausible in view he has been living in Hong Kong for a long time. The claim is also inconsistent with his police statement where he stated he could read and write Chinese (the police statement was largely written in traditional Chinese). The allegation that in effect Mr Wong made up the relevant parts of the plaintiff’s statement is inherently implausible. Mr Lau cannot explain why Mr Cheung’s account of the lock operation demonstration at the Jordan office is different from the related part of Mr Lau’s testimony.

13.I do not find the plaintiff’s behaviour of moving the materials to the office desk to be “illogical, improbable and factually defective” (para. 11(c) above).  First, he testified that it was his working method (or working habit).  Secondly, the plaintiff’s ledger shows that some of the platinum materials were purchased from various sellers (more about the ledger in the paragraphs below).  This can be consistent with Mr Lau’s testimony that the materials needed to be weighed.

14.I do not find Mr Lau’s description of the robbers’ behaviour (failure to bring along a bag or to wear masks) to be untruthful because the described conduct was “illogical or improbable” (para. 11(c) above).  Judicial notice can be taken of the fact some robbers chose not to wear masks for their own reasons.  I also agree with the plaintiff that criminals (and similarly ordinary people) sometimes act in a way which cannot be explained rationally.

15.That the robbers did not steal other things in the Jordan office (and apparently did not even attempt to do so) (para. 11(c) above) may have a simple explanation: they already managed to steal quite some valuable items: the gold bars and platinum which Mr Lau intended to transport to the Mainland.  This is thus a matter of little weight.

16.The so-called “unaccounted for” time period of about 20 odd minutes (para. 11(c) above) arises like this.  Mr Lau’s testimony gives the following time estimates:-

(a) his arrival at the Jordan office: 7:30am;

(b) time spent to move the items from the safe to the desk for weighing/calculation and the like: 10 minutes (that is, 7:40am);

(c) time when he noticed his wife and the males were at the mantrap: 7:43am;

(d) time when he and his wife were pushed into the store room: 7:45am;

(e) time when he and his wife were tied up in the store room: 7:45am to 7:50am;

(f) time spent by the robbers outside the store room before they left the Jordan office: 15 minutes (that is, 7:50am to 8:05am);

(g) time spent by him to untie himself and his wife and press the alarm button: 8:05am to 8:10am.

The alarm company’s (undisputed) record shows that the alarm button was pressed at 8:33am. Hence, there is a time gap of about 23 to 28 minutes which is “unaccounted for”.

17.I agree with the plaintiff that time perception is subjective and varies from person to person (and also varies with different situations); Mr Lau emphasized in his testimony the above were merely estimates given after the event.  Time estimate can be particularly difficult during stressful moments (which often is the case when an armed robbery is taking place).  For these reasons, I do not agree that there was an “unaccounted for” time period.

18.In relation to drawing adverse inference by reason of a litigant’s unexplained failure to call witness(es) (para. 11(f) above), the legal principle is in essence that the fact-finder may in appropriate circumstances draw such an inference: Li Sau Keung v. Maxcredit Engineering Ltd [2004] 1 HKC 434, 443; O’Donnell v. Reichard [1975] VR 916, 929; Cavendish Funding Ltd v. Henry Spencer & Sons Ltd [1998] 6 EG 146, 149.  For the avoidance of doubt, I have taken this into account when assessing Mr Lau’s testimony.

19.That the building’s security guards did not see the robbers (para. 11(d) above) can have an innocent explanation: the armed robbery was well-planned such that the robbers were able to avoid the security guards.  Not much inference can be drawn out of this.

20.Having taken into account the matters set out in para. 12 to 19 above, and those set out in para. 16(d), (e) and (g) above, I find Mr Lau’s testimony concerning the armed robbery to be truthful and reliable.

21.I therefore find as a fact that the armed robbery summarized in para. 6 to 9 above did take place.

22.In its closing submissions, the insurer refers to various parts of the statements/witness statements of other individuals, such as Mrs Lau and the plaintiff’s staff (for the purpose of discrediting Mr Lau): see, for example, para. 31, 32(b), 32(c), 31(d), 33, 50(5) and 50(6)(b) thereof.  For the reasons set out below, I find this disturbing.

23.“[An] assertion other than one made by a person while giving oral evidence in the proceedings is inadmissible as evidence of any fact asserted”: Cross on Evidence (1985) 6^th ed., p. 38 quoted in R v. Sharp [1988] 1 WLR 7 and R v. Kearley [1992] 2 AC 228, 254, 259.  Further, Hong Kong Civil Procedure 2012, Vol. 1, para. 38/2A/11 states:-

“Notwithstanding the pre-trial exchange of the other statements of the witnesses between the parties … the trial itself remains an oral, public trial. The written statement of a witness is not in itself evidence of the case”.

See also RHC Ord. 38 r. 2A(8).

24.During one of the trial-preparation hearings, the plaintiff has queried the reason for the inclusion of the police statements into the trial bundles (the same must apply to the statements taken by the loss adjusters).  In reply, the insurer said that they were for cross-examination purpose.

25.Finally, I pause to note that parts of those statements are consistent with Mr Lau’s testimony.  The insurer probably will not accept they can be treated as admissible supportive evidence.

26.Because of the matters set out above, it is improper to take into account factual matters in the out-of-court statements except where they have been adopted by the testifying witness(es).

27.On the other hand, if somehow the factual contents of Mr Lau’s wife were in fact admissible evidence, they may provide an answer to the insurer’s criticism set out in para. 11(f) above (failure to call material witness): this can be a good reason for not calling her to testify.

Breach of the Policy

28.By reason of the above conclusions that:-

(1) the 3 defence witnesses are truthful to the extent set out in para. 12(1) and (2) above;

(2) Mr Lau has not been truthful in that regard,

and because Mr Lau was in effect making an admission to the effect that:-

(a) the duress switches and time locks of two of the four safes in the Jordan office have not been used;

(b) during business hours, the mechanical push buttons of the door locks of the outer metal gate and/or the mantrap (formed by an inter-locking wooden entrance door and metal entrance gate) were often not disabled (that is, they could be used to open those gates/door from the inside);

(c) at the time of the robbery, (i) the CCTV tape recording equipment was not yet switched on, and (ii) the door of the safe in the manager room was left open and unattended,

the admission should be given full weight.

29.Accordingly, I find as facts the matters set out in para. 28(a) to (c) above.

30.Based on those facts, the insurer asserts that the plaintiff has breached the following terms of the insurance policy:-

(1) clause 2(b) and 2(d) (being parts of “Alarm and Protections Clause”, special clauses and/or conditions);

(2) condition 2.

31.Clause 2(b) of the policy reads:-

“It is condition precedent to the liability of [the insurer] under this Insurance that … the burglar alarm system and all locks and padlocks shall have been put intofull and effective operation at all times when the [Jordan office is] closed for business, and at all other appropriate times” (emphasis supplied).

32.The phrase “all other appropriate times” requires some discussion.  First, it is used in contra-distinction to “closed for business”; when so read, it must have been intended to cover appropriate times “during business hours”.

33.Secondly, the phrase implies that, during business hours, there may be times when it is inappropriate to require the “burglar alarm system, … locks and padlocks” to be in “full and effective operation”.  An obvious example (which the insurer fairly accepts) is when those items require maintenance, repair and/or replacement.

34.That being the case, whether it is “appropriate” for the burglar alarm system, locks and padlocks to be in a state of less than “full and effective operation” will depend on whether there is a legitimate reason for them to be in such a state.

35.The insurer argues that the legitimate reason can only mean when the “ordinary course of business” requires the burglar alarm system, locks and padlocks to be in such a state.  This argument has an apparent attraction.  But, businessmen being only human, what is an “ordinary course of business” can encompass a range of different manners of business operation.  For example, the most prudent businessman may close and lock the safe door almost immediately after opening it, but others may leave it open slightly longer (which can mean anything from a few minutes to much longer, depending on circumstances and personality).

36.Where a range of behaviour is in question, the proper test for determining what is an “ordinary course of business” will at the end have to depend on whether negligent, as opposed to reckless, business conduct should be chosen as the dividing line.

37.Here, authorities which dealt with what has come to be known as “reasonable precaution” clauses in insurance policies are relevant.  In dealing with such clauses, the courts have preferred the recklessness test.  Thus, Colinvaux’s Law of Insurance (2010) 9^th Ed. says:-

“A common feature of liability policies is the requirement on the assured to take reasonable precautions to avoid any loss. Taken literally, such clauses … would appear to deprive liability policies of much of their meaning … To overcome this difficulty, the courts have construed clauses of this nature as meaning that the assured must not act in reckless disregard of ordinary standards of reasonableness, but that he can recover if he has merely been negligent … ” (emphasis supplied) (para. 5‑049).

Colinvaux continues:-

“… the Insurance Ombudsman felt that it was appropriate to apply the recklessness test to reasonable care clauses in first‑party policies … This analysis gradually came to be accepted by the courts … ” (para. 5-049).

38.Similarly, MacGillivray on Insurance Law (2008) 11^th Ed. says:-

“It is an accepted canon of construction that a commercial document … should be construed in accordance with sound commercial principles and good business sense, so that its provisions receive a fair and sensible application …

It is probably by virtue of this maxim also that the court should be prepared to overlook obvious grammatical errors … and will interpret … inappropriate phrases in a standard printed policy … or else disregard them as matters of surplusage … a court may imply into the express words … an extended scope beyond their strictly literal meaning in order to give effect to the only sound interpretation of the contract … ” (para. 11-007);

“If a literal reading of the wording leads to an absurd result or one manifestly contrary to the real intention of the parties, it should be rejected in favour of a more reasonable alternative interpretation …” (para. 11-009);

“… even though the wording of a condition in a policy is apparently plain, the court will sometimes narrow its scope or place a gloss on its words in order to make it reasonable in application … ” (para. 11-010);

“Many indemnity policies contain a clause requiring the assured to take reasonable precautions …” (para. 28-057);

“In Woolfall and Rimmer v Moyle the insurer contended that a clause requiring the assured to take reasonable precautions … The Court of Appeal rejected this contention … [and] held that the effect of the clause was to impose a personal obligation on the assured to conduct his business in an ordinarily prudent manner and not in a way that invites accidents … ” (para. 28‑058);

39.I conclude that the recklessness test should also be used for determining what is “appropriate” in the context of clause 2(b).  In so concluding, I have taken into account the policy is a “Jewellers All Risks Insurance”.

40.Adopting such an approach, I conclude that there is no breach of clause 2(b) in relation to the failure to:-

(1) disable the mechanical push buttons of the door locks (para. 28(b) above);

(2) switch on the CCTV tape recording equipment (para. 28(c)(i) above);

(3) close and/or lock the door of the safe in the manager room (para. 28(c)(ii) above).

41.In relation to the conclusion set out in para. 40(1) above, the part of clause 2(b) relating to the “full and effective operation” of “locks and padlocks” must have been intended to refer to them being “effective” in preventing intrusion into the Jordan office from outside.  Such being the case, the mere fact the mechanical push buttons can also be pressed to open the gates/doors from inside would not render them any less effective.

42.The insurer contends that allowing the mechanical push buttons to be operative would render the mantrap ineffective. Were it otherwise, it would be impossible for any robber(s) to leave Jordan office through the mantrap (they would be trapped inside the mantrap).

43.Again this contention has only an apparent attraction.  To understand why this is so, it is necessary to explain how the mantrap works.

44.As stated above, the mantrap is formed by a wooden door and a metal gate which can be opened by using an inter-locking electric switch.  In other words, when the wooden door (at one end of the mantrap) is open, the electric switch for opening the metal gate (at the other end of the mantrap) will be inoperative (and vice versa).  This design ensures that both ends of the mantrap cannot be opened by pressing the two electric switches at the same time.

45.The insurer’s contention is premised on the above design being effective in preventing robber(s) from leaving the Jordan office.  However, once the Jordan office has been breached, the robber(s) can gain exit from it by threat of force or other unlawful means (including means of violence).  In any event, even if the contention is plausible as a possible alternative interpretation of clause 2(b), this is a case where the contra proferentum doctrine is applicable against the insurer.  In this connection, it should be noted there is no need for a causal link between any breach of condition and the loss otherwise recoverable under the policy: see, for example, MacGillivray, para. 28-057 and n. 189 thereto.

46.In relation to the conclusion set out in para. 40(3) above, after Mr Lau arrived at the Jordan office, he moved the materials from the safe in question to the desk in the office for weighing and so on.  His plan was to leave the Jordan office almost immediately after doing so.  The time period when the safe door was left open and “unattended” for such purpose must have been quite short (but for the armed robbery).  I conclude that this falls far short of the requisite level of recklessness.

47.In relation to the conclusion set out in para. 40(2) above, the insurer fairly (and correctly) accepts that the CCTV tape recording equipment (para. 28(c)(i) above) is only useful for collecting and/or preserving evidence.  As such, it does not fall within the meaning of “burglar alarm system” or “locks and padlocks” in clause 2(b).

48.But the insurer claims that the CCTV tape recording equipment falls within clause 2(d).  It reads:-

“It is condition precedent to the liability of [the insurer] under this Insurance that … all protections provided for the safety of the insured property shall be … in full and effective operation at all appropriate times” (emphasis supplied).

49.I disagree.  As a means for collecting and/or preserving evidence, the CCTV tape recording equipment may be used as an aid for the subsequent recovery of the insured property.  Such being the case, it cannot properly be a part of the “protections … for the safety of the insured property”, but can be useful after the event.

50.In relation to the duress switches and time locks of the safes in the Jordan office (para. 28(a) above), these were in effect additional protections (the primary protection being the safe door and the mechanical combination lock, or locks (as the case may be)).  Below is a summary of their operation.

51.The so-called “duress switches” refer to a set of exposed magnetic door contacts connected to a digital keypad (which requires a correct numerical code).  If the code is not (or is incorrectly) keyed in, an alarm would be sent to the security centre when the safe door is opened.

52.The “time-locks”, as the name says, are in effect time-based disabling devices which would inhibit the safe door from being opened even when the correct combination has been dialed.

53.The duress switches and time locks therefore do not fall within the ambit of clause 2(b) but only clause 2(d) (“all protections … for the safety of the insured property”).  Taking into account the matters set out in para. 31 to 39 above, and that the Jordan office and the safes have other means of effective protection (such as the infrared sensors, the locks of the safe door and premises door and so on):-

(a) the protections were still in “full and effective operation” even without the duress switches and time locks;

(b) the plaintiff has not acted recklessly in this regard.

Insofar as it may be argued that clause 2(b) also covers these devices, for the same reason, sub-para. (a) and (b) above are also applicable.

54.As state above, the insurer also relies on condition 2.  This provides that:-

“… such protections and/or safeguards as may be referred to in the written proposal and declaration as being in force shall not be withdrawn or varied to the detriment of the interests of [the insurer] … ”.

55.The “written proposal and declaration” must mean the proposal form (which, according to the schedule to the cover note (which itself appears to be a printed pro forma document), formed the basis of the policy).  This is a 10-page document filled in and signed by the plaintiff.  Under the heading “Protections”, the security hardware has been set out by the plaintiff.

56.I conclude that condition 2 was intended to refer to the hardware aspect of the plaintiff’s security system.  It was not intended to confer to the insurer benefits further to and above the other terms of the policy (in the present context, benefits further to and above clause 2(b) and 2(d)).

57.Finally, the insurer concedes that the clauses were suspensory provisions (and not warranties), referring in this connection to Pratt v. Aigaion Insurance Co. SA [2009] 1 Lloyd’s Rep. J.R. 149.  Colinvaux says this about suspensory provisions:-

“Insurance policies on occasion contain suspensory provisions … A clause of this nature merely delimits the risk and is not a warranty … the insurer is simply not to be liable should a loss occur while the circumstances specified in the clause remain in being …

The distinction between a warranty and a clause delimiting the insurer’s risk is necessarily fine … It is perhaps not unreasonable to comment that the courts, in most cases, have construed clauses as risk delimitation provisions in order to protect the assured against the frequently harsh consequences of a continuing warranty” (para. 7-034).

The same textbook also says in a footnote:-

“In order to avoid the strict approach to the construction of warranties adopted by the courts, some insurers have been willing to accept at trial that their ‘warranties’ were merely suspensory clauses … The courts have maintained their strict approach to construction even where such concessions have been made … ” (para. 7-034, n. 171).

58.There is no need to discuss the above distinction in detail save to say I have taken it into account when considering this aspect.

59.The insurer also alleges that the plaintiff has breached the proposal form by mis-stating that its stock did not include goods on consignment.  The facts said to support such allegations are:-

(1) the goldsmith and jewellery trade commonly has consignment stock;

(2) the plaintiff’s documents include invoices from Johnson Matthey Hong Kong Ltd. (“Johnson Matthey”)(a gold bullion/platinum supplier) which refers to the plaintiff’s “Consignment Metal Account”;

(3) the plaintiff’s audited accounts show a huge sum of “accounts payable” relative to its turnover.

60.I find that none of the above (singly or cumulatively) can amount to sufficient evidence of consignment goods.

61.The insurer has not pleaded a trade custom or practice concerning consignment stock (cf. para. 59(1) above).  In any event, the evidence falls far short of establishing this.

62.The Johnson Matthey invoices (para. 59(2) above) have to be considered together with the totality of the related evidence:-

(a) the gist of Mr Lau’s testimony is that the plaintiff has a bullion trading account with Johnson Matthey. It was in the nature of a margin trading account although there was also the actual delivery of physical gold;

(b) the testimony summarized in sub-para. (a) above is supported by (or at least consistent with) a Johnson Matthey letter dated 22 November 2011 which states:-

“Johnson Matthey … offer defer pricing facilities to [the plaintiff] which means [the plaintiff] received platinum ingots from us supported by equivalent amount as collateral … ”.

63.Finally, a huge amount of “accounts payable” (para. 59(3) above) is also consistent with sales on credit, and not necessarily stock on consignment.

64.The insurer also describes in its closing submissions the Jordan office was a robbery “black spot”, pointing out there were two robberies of the plaintiff immediately outside.  However, these took place in 1995/96 and 1996/97 (some 6 to 8 years before July 2003).  The description is thus an over-statement.

65.To conclude, I am not satisfied there has been any breach of the terms of the policy by the plaintiff.

Loss

66.The insurer has indicated it will put the plaintiff to strict proof of its loss in:-

(1) the pleading (para. 5, 9 and 16 thereof);

(2) the written opening (para. 2(1) and 19 to 21 thereof);

(3) the closing submissions (para. 51 to 55 thereof).

No supporting reasons have been put forth in the pleading, and the written opening has been economical on this aspect: apart from contending the burden of proof lies with the plaintiff, the insurer says there is insufficient evidence.

67.The plaintiff’s evidence concerning the amount of loss consists of:-

(a) Mr Lau’s testimony (confirming his supplemental witness statement);

(b) a ledger for the gold and platinum materials and used materials for 1 April 2002 to 7 July 2003;

(c) over 3,000 pages of supporting source documents, such as sales invoices, collection notes and bank slips.

68.The criticisms levied by the insurer in its closing submissions against the above are:-

(1) Mr Lau is not a credible witness;

(2) the stock shown in the ledger and the supporting source documents was stored in the other safes in the Jordan office, and not the safe which has been robbed;

(3) the plaintiff’s audited accounts do not show the amount of loss arising from the armed robbery.

69.In relation to the criticism set out in para. 68(1) above, I find this part of Mr Lau’s testimony to be supported by the ledger and the supporting source documents.  I accept the testimony as truthful and reliable.  Para. 10 to 19 above have also been considered.

70.In relation to the criticism set out in para. 68(2) above, reliance has been placed by the insurer on some of the contents of the statement given by Mr Lau’s wife to the loss adjusters.

71.I disagree with the insurer for two reasons. One, as stated in para. 22 to 26 above, there is no proper basis for admitting the statement as evidence.  In fact, it would probably be unfair to do so, proper notice not having been given to the plaintiff that the statement would be used for such purpose.  Two, I agree with the plaintiff that a proper reading of the statement shows that the ledger and the supporting source documents in fact refer to the stock robbed.

72.The failure of the audited accounts to show the loss arising from the robbery (para. 68(3) above) may not be a matter properly attributable to the plaintiff.  It is inherently implausible for the plaintiff not to inform the auditors about the armed robbery (Mr Lau testified they had been notified of it) when it has already reported it to the police and the insurer.

Conclusion

73.By reason of the matters set out above, judgment should be entered in the plaintiff’s favour against the insurer in the sum claimed.

74.The insurer’s counterclaim is dismissed.

Other Matters

75.The number of trial bundles is substantial in view that the trial was scheduled to last for 5 days (it in fact lasted for about two days: one and a half days for witness testimony and half day for closing submissions).

76.Of the 6,000 pages or so documents in the trial bundles, over 3,000 pages were the plaintiff’s supporting source documents (para. 67(c) above).  Another substantial portion was taken up by the pre-action correspondence and the like.

77.Ord. 1A r. 1 provides two of the underlying objectives are (1) to increase the cost-effectiveness of any practice and procedure to be followed and (2) to ensure that a case is dealt with as expeditiously as is reasonably practicable.  Procedural economy in the conduct of proceedings is also among those objectives.

78.Ord. 1A r. 3 imposes a statutory duty on the part of the litigants and their legal representatives to assist the court to achieve the objectives.

79.With the above matters in mind, it is unfortunate that, despite the pre-trial case management conference and pre-trial review, no effort has been made to economize on the preparation of the trial bundles (for example, the amounts shown in the source documents could have been verified (and perhaps agreed) and a few sample documents be inserted into the trial bundles for illustration if necessary).  The quantity of source documents which would be inserted into the trial bundles was never mentioned on those occasions.

80.As can be seen from the issues summarized in para. 67 to 68 above in relation to the quantum of the plaintiff’s loss, there is no apparent reason why so many copy documents have to be included in the trial bundles.

81.Similarly, little (if anything at all) has been said of the pre‑action correspondence during the trial.

Costs Order

82.The parties agree that costs should follow the event.  There will accordingly be a costs order that the costs of this action be paid by the insurer to the plaintiff to be taxed if not agreed.

Ms Karen Ma, instructed by Messrs Simon Ho & Co., for the Plaintiff

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