BRUCE PORTER BARON v. HARTFORD FIRE INSURANCE CO AND OTHERS

1993, No. A 9031

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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The death of Howard Baron

1. On the evening of the 31st December 1972, almost twenty five years ago, Mr. Howard Baron, a 59 years old American businessman, was found shot dead in the office of a business colleague, not far from where he then lived in the Peninsula Court. The single and fatal wound was caused by a bullet fired from a .38 revolver held probably against his chest. The bullet, when recovered, was found to be of a make unknown in Hong Kong. The weapon itself was not found. The office was unlocked when Mr. Baron's body was discovered.

2. An investigation was promptly started by the Police and was not curtailed until 1983. The file remains open. The medical evidence, the circumstances of the death to the extent that they could be ascertained, and what relevant background information existed, led the Coroner's jury to return a verdict of "Homicide by person or persons unknown". The Police's view was, and remains, that Mr. Baron was murdered. One of the issues I have to resolve in this case is whether he was murdered. I do not see how the jury could have come to a conclusion other than the one they reached. I am satisfied beyond reasonable doubt that he was murdered. By whom and for what reason remains a mystery. There was no evidence of any robbery or theft. No one has ever been arrested in connection with the murder. There is simply no evidence against any particular person. It is not however necessary to speculate as to any motivation or potential suspect.

The health and medical history

3. When an autopsy was carried out there was evidence of cancer of the liver. Mr. Baron had made no secret of his state of health over the previous years. He had undergone surgery of the colon in 1967. This seemed to have been successful but it was of course radical surgery. In 1969 he had had aorto-bilateral femoral by-pass graft to deal with occlusive disease of the aorto-iliac artery. Again this seems to have been successful. His doctor in Hong Kong performed the 1967 operation. The 1969 operation was carried out in the U.S.A. Dr. Carey-Hughes, his specialist in Hong Kong, told the Police, in January 1973 that he had diagnosed a lump in his liver about a year or so earlier. That would be late 1971 or early 1972. In July 1972 Dr. Carey-Hughes told Howard Baron that the cancer had developed to the extent that he had about 6 to 12 months to live. Mr. Baron noted this in his diary by entries on the 27th and 28th July 1972.

4. There is a statement in the Police file by a William Gayda, taken by Malaysian Police Officer, who was a friend or acquaintance of Howard Baron. He refers to his being hospitalized for a long time sometime in late 1970 and that he looked after him in the absence of his wife. I am not at all sure that Mr. Gayda is reliable on dates since there is some confusion in his timing of a number of events. However I do not think that that is of any consequence. In 1967 and 1969, he had undergone major surgery, had a history of cancer from 1967 and was in July 1972, five months before his death diagnosed as suffering from terminal cancer.

His business affairs and contacts

5. He appears over the years to have been involved in a wide variety of business activities in South-east Asia. His main aspects seems to have been involvement with the hotel construction and management. His colleagues were themselves involved in diverse enterprises. His source of income seems to have been derived from brokering deals of one form or another. He seems to have conducted his business from a table he customarily used in the lobby of the Peninsula Hotel.

6. It was there that he made contact for the first time with Mr. Ilet Henry Fredricks in late summer or early autumn of 1969. Mr. Fredricks had come to Hong Kong that same year having spent some years in South-east Asia in, predominantly, life assurance. He had also a sideline in Tax consultancy. He was a former practising American Lawyer having graduated in Law in 1950 and practised for the best part of the following decade.

7. Very shortly after their meeting Mr. Fredricks was able to sell him some household and personal effects insurance cover. He also arranged insurance for a boat which was in the course of construction for Mr. Baron. Mr. Fredricks was able to give the precise date of the former, no doubt because he had his file available when Inspector Carroll interviewed him in the former's offices on the 10th January 1973. He was not able to date the latter.

8. Although not referred to in the record of this interview or statement, Mr. Fredricks, in later statements prepared for the purpose of this litigation, and in the course of a telephone conversation with the Plaintiff in 1992, said that he tried to sell Mr. Howard Baron life assurance. Given Mr. Fredricks' experience over the previous decade had been in the life assurance industry, it would have been surprising if he had not done so. Mr. Howard Baron apparently told him he was uninsurable and made some reference to a surgical operation he had undergone. I will return to this aspect a little later because there are conflicting versions from Mr. Fredricks of this exchange and this is of some importance in determining Mr. Fredricks' reliability. What he was able to sell or arrange for him was personal accident insurance through a policy which is at the heart of this action.

P.A. Policy 1862/0037 - Hartford Insurance (AFIA)

9. This policy was taken out on the 25th March 1970 by Howard Baron through Mr. Fredricks. I am satisfied that the policy would not have been issued by Hartford or AFIA, unless it had received a completed and signed declaration or proposal form. For that time cover of US$100,000 was quite high; the premium was US$150. The documentation existing today is very spare. In January 1973 Mr. Fredricks says he had in his file a copy of the declaration form, the policy itself, and copies of all cheques, receipts and endorsements including the Policy schedule of 29th March 1971. I accept his evidence in this regard. He was able to talk from reference to such documents when he was interviewed by the Police. He has no documents at all now. Perhaps this is not surprising in view of the lapse of time between January 1973 and 1990. He had moved office premises at least once in that period.

10. The insurance company no longer has any of the original documents. The Police from their microfiche records have been able to supply some of the documents supplied to them by the insurance company. They certainly had a copy of the policy at some stage supplied by AFIA (see AFIA to Police - 5/1/73 "C" P.70). There is no indication that they were ever supplied with a copy of the declaration form, although in view of their interest in the matter of insurance generally I would have expected them to have asked for a copy. There is a possibility that when AFIA supplied a copy of the policy in response to their request, a copy of the declaration form was attached to it.

11. The declaration form, according to Mr. Fredricks' evidence was signed by Mr. Howard Baron, but he himself wrote in the information and answers required from what Mr. Baron told him. The only guide to what that information and answers were is to be derived from a document which came into existence in March 1971 on the first anniversary of the policy.

12. There is in existence a copy of what is described as a policy schedule of policy 0037 which renewed the original policy 1862. This is an "inhouse" document, i.e. it was prepared in AFIA's offices by its staff. Although its form suggests that it incorporates an application for a policy to be completed and signed by the applicant it is not such a document. It is now one of the few documents in respect of which there is a common understanding. It purports to repeat the information contained in the original declaration form, which is the basis of the policy.

13. It is not clear why this document came into being but it may have been because there was some decision to re-number or re-organise existing policies or even to improve benefits. There was however no change to the policy itself. It is possible that there was some variation in the premium rate. I am satisfied that I can safely draw the inference, on the basis of Mr. George Yau's evidence, that a member of AFIA's staff accurately copied from the original declaration form the answers to questions 7 to 15. The material one for the purposes of this action is question 13 which consists of two parts. It is the health questionnaire. Part (a) is of no consequence. Part (b) asks

"To the best of your knowledge or belief ... during the past five years, been disabled or suffered from any disease or received medical or surgical treatment or advice?"

A cross was entered in the "No" box. By reason of the details of Mr. Howard Baron's health prior to 1970 this was a wholly inaccurate negative answer. Both operations were well-within the 5 year period. Mr. Fredricks himself knew something of Mr. Baron's health.

14. When he tried to sell him life insurance cover Mr. Baron had told him he was "uninsurable". Given the level of Mr. Fredricks' experience as a lawyer and in life assurance it would be na?ve to conclude that Mr. Fredricks did not understand that term to indicate very clearly that Mr. Baron's state of health or medical background would be such as to cause an insurance company to decline any proposal.

15. There was however more known to Mr. Fredricks. In the transcript of the telephone conversation in early 1992 Mr. Fredricks said the following in answer to Bruce Baron's question - "Did you ever try to (sell him any life insurance)?"

"I tried to .. and he told me he was uninsurable cause of a colectomy (sic)"

16. In October 1996, over four years later, and for the purpose of these proceedings, he signed a statement in which the following appeared :

"In 1969 I approached Mr. Baron to see if I could arrange a life insurance policy for him. He told me that he was uninsurable because he had had a cholestomy (sic)"

17. In his oral evidence in this case Mr. Fredricks said that Mr. Baron told him only of an operation on his legs, a femoral bypass. When I drew Mr. Fredricks' attention firstly to what had appeared in his 1996 statement he appeared to suggest that the reference to "cholestomy" (in fact a hemicolectomy) was a mistake and he blamed the person who prepared the statement, disclaiming any responsibility for such a reference, and said that it must have been taken from some statements or document made by the Plaintiff.

18. I then directed him to the transcript of the telephone conversation. He said that he must have misunderstood the position and could give no explanation for the use of the term "cholestomy". He did however, know then, in 1969, of the nature and significance of such an operation.

19. The first reference made by Mr. Fredricks to any question of Mr. Baron telling him of a femoral by-pass operation came in what was submitted as his "Supplemental Statement". It was in fact more of a substituted proof of evidence since it covered the same ground and denoted a certain shift of explanation. It is surprising, in the light of Mr. Fredricks' contention that he recalled, some years ago, Mr. Howard Baron's mention of his femoral by-pass operation, that he did not impart this recollection to his legal advisers before November 25th this year. Had he done so they would not have had to wait for the hospital notes from the hospital in Texas in order to become aware of the position; consequently they decided to amend their Defence to allege a material matter of non-disclosure on the first day of trial.

20. This aspect has no little significance. If Mr. Fredricks in fact knew of the previous colectomy when he tried to sell Mr. Baron life assurance in 1969, what importance did that have in the context of the Personal Accident Insurance taken out in 1970? And why is Mr. Fredricks now trying to change his story? That it should have been disclosed in the answer to question 13 (b) is clear enough. The operation was well within the 5 year period (having taken place in 1967) and the femoral by-pass had taken place only that summer (July 1969). I would have expected Mr. Fredricks, to have been particularly interested in Mr. Baron's answers to that question. If Mr. Baron in fact gave the answer "No" it must have raised alarm bells in Mr. Fredricks' mind if he was concerned on behalf of the insurance company to ensure that the declaration form was being truthfully completed.

21. I regret to have to say that I do not accept Mr. Fredricks' evidence. I find that in 1969 he did indeed know of the colectomy (from Mr. Howard Baron) - he may also have known of the femoral by-pass operation at the same time although, if he did, he kept it to himself for a long time after this litigation was initiated. Since the operation was successful and restored him to a degree of vitality according to his son, that may have been common knowledge too.

22. Mr. Fredricks accepts that the actual writing of the answers to the questions on the declaration was his or that of his employee. He says Mr. Baron actually gave oral answers to him, and that he read back the questions and answers to Mr. Baron.

23. Since Mr. Baron was so open about the state of his health and that he regarded himself as in uninsurable in terms of life assurance - a view which Mr. Fredricks was unable to alter - there is no reason why of his own volition he should have given an untruthful answer in the declaration form to a vital question unless he was encouraged to do so.

24. Whatever Mr. Fredricks may say about the running down of the insurance broker/agent aspect of his business he was certainly interested in selling insurance. Mr. Fredricks' knowledge of Mr. Baron's prior health record as including a colectomy was clearly embarrassing to Mr. Fredricks. I have to conclude that is why he tried to change his story and gave what I regard as unacceptable facile reasons for what he says was a mistake. When that declaration was completed in 1970 I am satisfied that he then well-knew of Mr. Baron's health history at the very least in that regard. He knew sufficient to have realised that it had to be disclosed. There are two possible explanations. Either Mr. Fredricks in conjunction with Mr. Baron decided to withhold the information from the insurance company and answer the question untruthfully, or, Mr. Fredricks having obtained Mr. Barons signature to the bottom of the document, decided to complete the questionnaire untruthfully so as to secure a policy for Mr. Baron. I reject the notion that Mr. Baron answered the question untruthfully of his own volition; I reject Mr. Fredricks' evidence on this topic as wholly unreliable save where there is reliable independent supportive evidence. I think it is more likely that the untruthful statements emanated from Mr. Fredricks himself. That is why he has tried to change his evidence and has given a spurious explanation. Although the benefit to him was tangibly a minor one - commission on the premium for as long or as often as the policy was renewed - he was still sufficiently interested in securing insurance business and establishing or maintaining a link with large insurance companies. After this lapse of time, and in the absence of records it is not possible to see the level of financial benefit for his insurance business. There are other aspects of Mr. Fredricks' evidence which are unsatisfactory to say the least, to which I will refer in due course.

The 1971 renewal

25. This resulted, as I referred to earlier, in the issue of a policy schedule, renumbering the policy as 0037. Mr. Fredricks said at an early stage to the Police that this was done because the premium was changed. Although I do not regard that as necessarily inaccurate, he said - "I think there was a new policy issued ..... because the insurance company lowered its premiums." If indeed he kept a complete file of copy documentation this would have told him quite clearly because he must have had that file available when he was interviewed in his office. He had prepared for the interview. The precise dates he gave in that interview must have come from some records available to him then and there. The re-insurance cession slip dated for the 1st quarter of 1971 and giving the policy inception date as March 25 1971, states the premium to be US$150, - there was therefore no change of premium. I think however the more likely explanation for the issue of a new policy number is that the benefits were changed as illustrated by the . . increased benefits section of the specimen policy at page 7 of bundle "C". This accounts for the fact that the first 10% increment did not attach until the 1972 renewal. Had the original policy contained such an increased benefit provision, then the capital sum would have increased by 10% on the first renewal in March 1971. This may also explain why the specimen policy was supplied to the police in addition to a copy of the actual policy. The other relevant information to be derived from the Policy Schedule dated 29th March 1971 is that the cover was only for death or disablement and loss of sight. There was no disability or medical indemnity cover. If the specimen policy provided for the same exclusions as the actual policy then it is clear that not only was death or dismemberment by murder or assault excluded but also such loss by any kind of disease. (see clause 1 (c) and (f) ) This would of course exclude death, dismemberment or any other loss occasioned by cancer. I will deal with the import of this later.

The 1972 renewal

26. There is a good deal of conflict, or confusion as to what actually occurred in respect of the renewal in this year.

27. According to Mr. Fredricks the policy cover lapsed initially because Mr. Baron failed to pay the premium. Mr. Fredricks said that he chased Mr. Baron seemingly without success but that eventually Mr. Baron paid the premium with a cheque dated on or about 31st July 1972 for which AFIA issued a receipt on 31st July 1972. The only tenuous support for Mr. Fredricks' version of events lies in the fact that a cheque for the H.K. dollars equivalent of US$150 was debited to Mr. Baron's bank account on or about 31 July 1972. However I would not be prepared to rely on this as making Mr. Fredricks' account acceptable. The date of 31st July 1972 is regarded with some significance because of the drastic news which Mr. Baron had received from his doctor and entered in his diary for the 27th and 28th July 1972. The inference suggested is that Mr. Baron's renewal of his accident cover was triggered by that knowledge. In view of the exclusions in the policy of which he must have been aware I doubt that he would have been so motivated. There is no entry in his diary "renew policy" or "pay insurance premium", or some such note which one might have expected in the circumstances.

28. There are however two documents which are consistent with each other but quite inconsistent with what Mr. Fredricks states. The first is the cancellation document dated May 22nd 1972 ("C" P.12). It cancels the policy "from inception" and states clearly on the face of it that 100% of the annual premium had been returned to the insured. Mr. Yau confirmed this and said that a cancellation of policy for non-payment of premium would have been in a simple straightforward form - not what this shows. The second document, dated October 10th 1972 is an "inter office endorsement" which cancels (or deletes) that of May 22nd 1972 ("C" P.16) and says "in view of the above a premium of US$150 is paid." Mr. Yau explained that the first did not have to mean a physical reimbursement of $150 but could be in the form of a credit note. The second endorsement could simply mean an accounting exercise - i.e. removal or cancellation of the credit note - Neither document can be taken to suggest a failure to pay the premium followed by a last minute, i.e. 4 month late, payment of the premium.

29. However, whatever the position, the policy was treated as in force from inception, a premium for 1972/73 having been paid. It would be unsafe to link the renewal with any realisation on the part of Mr. Howard Baron evidenced by his diary entries for late July 1972.

The Baron - Fredricks Meeting of November 1972

30. The only evidence as to this comes from Mr. Fredricks himself. In his interview on 10th January 1973 with Inspector Carroll he said that in late November 1972 Mr. Baron inquired about the "act of war" exclusion because of frequent visits to the Philippines and Indonesia where martial law was or might be in force. It is quite clear from the record of that interview, in the form of a statement, that the context of this conversation was "the policy" and "the clause". Mr. Fredricks' reply was that accidental death would be covered providing that it was unrelated to the "state of war". He also telephoned Myracle of AFIA, ascertained that Mr. Baron had written direct to AFIA, and called Baron by telephone, confirming what he had earlier said.

31. In his statement of October 1996 he put the conversations in the context of personal accident policies generally and in the most recent one, of 25th November 1997, he repeated this saying he thought that Mr. Baron was going to take out another personal accident policy. I do not accept Mr. Fredricks' evidence on this. If there were such a conversation, and I am prepared to accept that, - Mr. Fredricks' first reference to it was a little over a month after he alleged it took place and there seems no reason for him to imagine or fabricate it - I am satisfied that Mr. Fredricks must have known the policy was in force. Otherwise it makes no sense for him to have contacted AFIA, and if he genuinely thought otherwise he would have tried to sell him further personal accident insurance or at least have inquired what cover he had or required. Furthermore he would not have gone direct to AFIA unless he was satisfied the policy was in force. If he had doubts I am sure they would have formed part of his conversations with Mr. Baron and Myracle of AFIA. This knowledge is of course very important as background to the all-important later telephone conversation with the Plaintiff.

The telephone conversation of 2nd January 1973

32. Mr. Fredricks was aware of Mr. Baron's death before Mrs. Baron had unsuccessfully tried to contact him by telephone from the U.S.A. He knew that she was there. He also knew that the Plaintiff had tried to contact him before they were actually able to speak. He knew he was telephoning from within Hong Kong. It is common ground that the Plaintiff inquired as to the existence of any insurance policies. The general tenor of what followed is also agreed but there is disagreement as to the form. The Plaintiff contends that Mr. Fredricks said that the personal accident policy was not paid up and that murder was not an accident. Mr. Fredricks' version as told to Inspector Carroll was that he said he was not sure whether the policy was paid-up and that, even if it was, it would not cover murder. The difference between the two versions on the first point is a degree of certainty; on the second point the effect was the same i.e. murder was an exclusion either because the term "accident" did not include murder or because murder was specifically excluded. It is not necessary for me to deal with the position at law regarding the phrase "violent, accidental, external and visible means" encompassing death by murder. It is sufficient to note that the specific exclusion clause renders that consideration otiose. The very existence of such a clause reflects prevailing legal authority as to the ambit of the "violent, accidental" provision in the cover provided for by the policy.

33. The result of that conversation left the Plaintiff in the position he says of believing that there was no insurance cover. I can well understand that. He was 22 years of age, on his own more or less, and informed by the very man who was directly involved in the obtaining of the insurance, a man who held himself out as an insurance broker/agent and had had no minor acquaintance with the now deceased Mr. Baron, that there was no valid policy and even if it had been in force the circumstances of the death would preclude a claim.

34. In January of 1973 the Plaintiff instructed Johnson, Stokes & Master to deal with his father's estate. I have no doubt that the solicitors would have inquired of the Plaintiff as to insurance policies and that the Plaintiff conveyed to them what he had ascertained from Mr. Fredricks - i.e. the policy was probably not paid up and in any event murder was excluded. Johnson, Stokes & Master wrote to the Police inquiring as to assets and liabilities. They must have known that the Police had taken possession of all Mr. Baron's papers. They knew that the question of insurance monies interested the Police. The press had given vent to the idea of a "huge life insurance" policy taken out shortly before Mr. Baron's death. Insurance companies were helping the police. Nothing emerged to support the conjecture. The Police wrote back enclosing copies of the bank statements for the last month of Mr. Baron's life.

35. With the benefit of hindsight one can argue that perhaps the solicitors should have ferreted further in Mr. Fredricks' direction but this was an estate which was likely to have negligible assets. Solicitors were expensive in Hong Kong even in those days and there was no reason why information from the broker concerned should not have been accepted at face value.

36. The same solicitors came back into the picture in October 1990 when they wrote to AFIA and cited Mr. Fredricks, described as AFIA's agent, as having said "the policy so far as he was aware had not even been paid up and that in any event it would not cover murder." This was re-cited almost word for word in a letter from the solicitors to Lovells, acting for AFIA, dated 22 April 1991. Mr. Fredricks and his counsel rely upon those references to support their version of the conversation. In my view there is no material difference between these versions. At the very least Mr. Fredricks intimated strong doubts as to the status of the policy and categorically stated murder would not be covered. He was separated from AFIA by a short telephone conversation. On November 1972 and shortly before his interview with Inspector Carroll, he had availed himself of quick and ready contact with senior staff of AFIA - Myracle and Martin. He could so easily have said to Mr. Baron - "I'll check and call you back." He did not do so. He says that he did telephone Martin of AFIA within a day or so of his conversation with Mr. Baron and ascertained that the policy was paid up. (statement of October 1996 - § 7). In his more recent statement (25th November 1997 § 19) he says he immediately telephoned Martin after his conversation with the Plaintiff, Martin telling him that to the best of his knowledge the policy had lapsed. He then says he telephoned Martin again for "right information" shortly before he was due to see Inspector Carroll. If he did indeed make these telephone calls it is clear he was very concerned to find out what the position was but he says that he did not inquire as to the murder exclusion clause, nor did he do so after Inspector Carroll had told him that AFIA "allowed an endorsement on their policies" effectively removing the murder exclusion for "those policies so endorsed." The inspector had asked him a question concerning the lapse and revival of the policy in reply to which Mr. Fredricks had said - "the premium was due long before AFIA made this decision public, and in fact I have only learned of that innovation today myself."

37. In answer to questions put, he was firmly stating that he made no subsequent inquiry in any direction about whether or not the change would affect Mr. Baron's policy. He simply relied upon his own knowledge of the policy, which would not of course be relevant since that clearly pre-dated any change, and on the fact that there was no endorsement to that effect on his file. But he was contending that his file did not show that the policy had been renewed so why should he expect his file to contain any endorsement if one had been issued in respect of Mr. Baron's policy? I found his evidence most unsatisfactory. It is at the very least surprising that he made no attempt to contact the Plaintiff or his mother after this conversation on the 2nd January 1973 even though he had clear information that the policy was in force. It is difficult for me to accept that he made no inquiry at all after Inspector Carroll spoke to him about AFIA's change of policy in relation to the murder exclusion clause. But even before then he had such quick and easy access to authoritive personnel at AFIA, as he demonstrated, that he was in a position to know about this decision well before he saw Inspector Carroll.

38. Mr. Fredricks attitude to the matter of his failure to contact the Plaintiff appeared to be one of "could not care less" - complete indifference cloaked in his statement to the effect that the murder exclusion clause would have rendered any information from him nugatory; he did not want to "raise any hopes".

39. He said that in March 1973, ironically, the policy renewal papers came through with a notification to the effect that death by murder or assault was now covered. He may well be right about this. Yet still he did nothing; he did not even inquire then, when the cover extension had come into effect. In the light of my findings in relation to a number of matters this has some significance.

40. Setting aside the indifference Mr. Fredricks sought to indicate, I gained the distinct impression that he wanted to have nothing to do with this policy as far as the Plaintiff and any potential claim under it was concerned. I do not think he was na?ve. He was an experienced businessman in this area. He was concerned to discourage any thought of a claim. Only he knows what was said in various conversations with AFIA's senior staff. I do not think we have heard all that was of any consequence in them.

The change of policy - The murder exclusion clause

41. On the documents the first reference to it is in the record of the interview with/statement by Mr. Fredricks. I have indicated that I view any omission, if there was such, to raise it with the AFIA executives before that date as inexplicable. Failure to do so afterwards was bizarre. Did the exclusion remain in force on Mr. Howard Baron's policy, as Mr. Fredricks contended, or was it in fact removed?

42. Inspector Carroll dates the decision as May 1972, which, coincidentally, is the time of the cancellation endorsement on the policy itself. There is however no obvious logical link between the two.

43. There is no existing document from any source which deals with the cancellation of the clause. Evidence suggests that there ought to have been on every policy affected an endorsement slip to that effect, but it is not conclusive. The system of records within AFIA left something to be desired so I do not consider it safe to rely on suggestions of an endorsement on each policy affected.

44. It is possible that this was simply a general statement issued to cover certain types of policy (as opposed to the policy of certain individuals) with a formal endorsement (or replacement policy) at renewal. But there is one letter from AFIA which is of significance in this context.

45. On the 2nd January 1973, probably as a result of a telephone conversation with Mr. Fredricks (before or after he had spoken to the Plaintiff) Martin Lung, the Divisional Claims Manager of AFIA, wrote to the Police at T.S.T. Police Station. The letter is headed "Murder of Mr. Howard Baron." The relevant content is - "Mr. Baron had a Personal Accident Insurance Policy with our company. We wish to know whether his death was (sic) resulted from robbery or personal revenge." [My underlining.] If the murder exclusion clause was still in force in relation to that policy it was quite pointless writing in such terms. The heading was clear enough. The only reason for the particular inquiry must have been to clarify an aspect of the murder - in the course of robbery or as a result of some action, immediate or past, on the part of the victim himself. It suggests the latter circumstance would entitle the insurers to repudiate liability under the policy - the former circumstance would not. The specimen policy does not help in this regard. It contains the straightforward "murder/assault" exclusion clause. We have no document dealing with the change in 1972 which is contemporaneous. It may be that the insurance company was content to rely upon the exclusion clause "whilst committing or attempting to commit any unlawful act." Alternatively there may have been an exclusion clause referring to death or murder or assault as a consequence of some provocative act. That, regrettably, can now only be a matter of conjecture. I am satisfied however that Mr. Lung regarded his inquiry as being of some importance in relation to the policy. The alternative circumstances he referred to are entirely consistent with the murder/assault exclusion clause in the policy having been cancelled and/or replaced by some other provision which would allow for repudiation of a claim if the insured had done some act, probably unlawful, which had brought about his death through an act of revenge.

46. At the very least there is a degree of uncertainty to this day. There was no satisfactory light shed on the question by Mr. Lung's statement of 27 February 1991. His attention was not directed to the specific inquiry he had made in his letter of 2nd January 1973. In his letter of 15 June 1992 to Johnson, Stokes & Master, his answer to the first question which required him to concentrate on that matter is entirely unconvincing. In my view there is no real attempt to deal with the matter although the way Johnson, Stokes & Master put it did not highlight the obvious significance of the inquiry and the question did not go to its heart.

47. The position is this. The circumstance of Mr. Baron's death probably allowed a claim to be made under the policy. At the very least, in the light of Mr. Fredricks' evidence as to the March 1973 renewal notice and reference to extended cover, there was a possibility that it was mere confirmation of an already existing cover. The insurance company may even have been willing to entertain a claim on a sympathetic basis in view of their policy change. All this Mr. Fredricks ignored, yet his experience and status should have made him well aware of the possibilities.

AFIA and Fredricks International as Agent

48. The Policy at inception - March 1970.

49. Mr. Fredricks was not employed by AFIA. He had his own business as, inter alia, a broker and insurance agent. He was paid a commission on policies which were accepted by the insurance company. He acted as a freelance agent with no responsibilities on behalf of the insurance company other than to ensure that the form was completed properly. It was a case, to put it in the vernacular, of putting business in the way of the insurance company. His agency was not a sole agency for AFIA. It was limited to the introduction of the business, the providing of the declaration form, the passing on of the premium, and the receiving of and passing to the assured of the policy itself. He was in fact also acting as the agent of the assured in the collecting of the premium, and future premiums, and the completion of the proposal form - see Newsholme Brothers v. Road Transport and General Insurance Limited - 1929. 2. K.B. 256. He was, as AFIA's Mr. Yau described him, an intermediary in which he acted in certain specific respects as agent for the insured and the insurer. The common sense and logic of the position is demonstrated by the fact that Fredricks had no authority to accept the proposal or issue policies. No applicant would expect him to have any such authority. He was acting clearly as an intermediary. However he had some duty toward the insurers and that was to ensure that he did not withhold from the insurer information in his possession which was to his knowledge, inconsistent with what was declared on the proposal form. He had a duty of care to the insurer in that regard by reason of his albeit limited agency.

The Renewals and the new policy 0037

50. He passed on renewal premiums as agent for the insured, although he also acted as agent of the insurers for the purpose of contacting the insured with the renewal notice. Once again he was acting as intermediary.

51. He had an obligation to the insured to forward the premium. In the event of his failing to pass it on to the insurer so as to secure continuation of the insurance cover, he was liable to the insured for such failure and could be sued for negligence/breach of duty of care.

52. He had nothing to do with the Policy Schedule in March 1971. He would have received a copy of it. It contained the name of his company as agent. That has no significance other than as confirmation of the position of the company in relation to AFIA, referred to in any previous section. He was obliged to pass it on to the insured. The same position related to any endorsement received by him. The evidence of Mr. Yau is to the effect that where brokers were involved they preferred to deal with them direct rather than the insured. But that was to regard them as the agents of the insured rather than as their own agents. If the insured was to contact the insurers direct and require direct contact thereafter, the agent ceased to function as agent for the insured. Mr. Fredricks said that he was not involved in the cancellation/lapse/renewal of the policy in 1972. He said he received no notice of renewal. Furthermore he said he received no commission in respect of the eventual renewal, although the Plaintiff says that Mr. Fredricks told him he was pursuing or seeking such commission. I accept the Plaintiff's evidence - I am sure Mr. Fredricks regarded his business as entitled to any commission from renewals. This is entirely consistent with what he says was his contact with AFIA in November 1972 and January 1973. The commission represented payment for continued business for the insurance company which he had initiated.

The Plaintiff's contact with Mr. Fredricks - 2nd January 1973

53. The purpose of the attempted contact by the deceased's widow and son was to ascertain whether there was any insurance cover. Although the Plaintiff suggested he believed he was contacting the insurer's agent that cannot have been the case and I am satisfied that there is some confused thinking on his part borne out of his understandable obsession with what he regards as a right denied. Mrs. Baron knew of Mr. Fredricks as an acquaintance and her husband's insurance broker. That was clearly right. She believed, as did her son, that by virtue of that position and his contact with her late husband that he was the obvious person to contact. He was not a family friend but in business relationships the description of "friend" becomes a loose and vague one. From Mr. Fredricks' description of his meticulous record of documents (if indeed it was such) only he was in a position to know the facts. He had benefited financially from the business which Mr. Baron had entrusted to him. He had easy access to AFIA and had been in touch with them only just over a month earlier in connection with the insurance cover, as I find, under the particular policy. He would have expected anyone inquiring as to the policy to contact him. I do not think that he was at all surprised, as he in fact, agreed, when Mrs. Baron, and then her son, made contact on that date. It was quite clear what they were asking about and why. He agreed that he was obliged to provide the information sought. I need not traverse again the conversation. However the emphasis he sought to put upon what he said to the Plaintiff was that although he was unsure whether the policy was paid up i.e. in force, that really did not matter because the murder exclusion existed, and that was an end to it as far as he was concerned. Yet he thought it necessary to telephone Ted Martin, he says, very shortly after the conversation with the Plaintiff, to inquire as to whether the policy was in force - not to inquire about the murder exclusion. He was given no categorical answer to this, Mr. Martin simply stating that his recollection was the same as his i.e. not paid up. That was not the end of it. He again telephoned Martin shortly after Inspector Carroll had made contact and ascertained that the policy was paid up. Yet despite his concern with the state of the policy and being in a position to have all the information for Inspector Carroll's benefit, he made no attempt to contact the Plaintiff or his mother to put them in the picture, though that was precisely what they wanted. His explanation, such as it is, is that he did not want to raise their hopes. He therefore withheld from them material information - that a policy was in force. It was not for him to judge whether a claim would fail. He agreed that the removal of the murder exclusion clause could be retrospective, retroactive, and benefit existing policies and yet he did not do what in my view any reasonable individual in his position would have done. What was his duty towards the Plaintiff and his mother as the surviving members of the family?

The position has been classically stated in Hedley Byne & Co Ltd v. Heller & Partners Ltd. [1964] A.C. 465.

There is no distinction between financial loss and physical loss in principle. Whenever a special relationship came into existence, there arose a duty to take care in the making of statements, a breach of which would found liability for either type of harm suffered, unless there was a disclaimer of responsibility

If in ordinary course of business, including professional affairs, a person seeks advice or information from another, who is not under any contractual or fiduciary obligation to give it, in circumstances in which a reasonable man so asked would know that he was being trusted or that his skill or judgment was being relied on and such person, without clearly disclaiming responsibility for it, proceeds to give the advice or information sought, he accepts a legal duty to exercise such care as the circumstances require in making his reply. For a failure to exercise that care, an action in negligence will lie, if foreseeable loss or damage is the result.

Lord Devlin, at page 530 said :

" .... Wherever there is a relationship equivalent to contract, there is a duty of care. Such a relationship may be either general or particular. Examples of a general relationship are those of solicitor and client and of banker and customer .... Where there is a general relationship of this sort, it is unnecessary to do more than prove its existence and the duty follows. Whereas in the present case what is relied on is a particular relationship created ad hoc, it will be necessary to examine the particular facts to see whether there is an express or implied undertaking of responsibility. I regard this proposition as an application of the general conception of proximity. Cases may arise in the future in which a new and wider proposition, quite independent of any notion of contract will be needed."

and Lord Moris at page 502 :

"It should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice ..... to another person, who, as he knows or should know, will place reliance upon it, then a duty of care will arise."

The over riding principle is that the existence of such a duty, independent of any question of carelessness and foreseeability, must still be established; indeed it will be an essential fact to be proved in any given case that the Defendant had assumed responsibility for giving his opinion, advice or even information.

The duty of care in giving gratuitous advice may arise only where the advisor carries on the business or profession of giving advice or information of the kind sought, for otherwise it is argued there is no accepted standard of skill and care, which the advisee can legitimately expect to be observed.

Where the defendant well knew the purpose of inquiries and that upon the strength of his recommendation or information, Plaintiff would probably rely and act; then he will be liable.

54. In the case of a careless omission where the defendants had held themselves out as competent to advise the Plaintiff knowing that he would rely upon their advice, his failure to do so was negligent.

55. Mr. Fredricks knew Plaintiff would rely and act upon his information and/or advice. That was the whole purpose of the inquiry made of him. The very fact that he sought to use as an excuse for not giving further information that he did not want to "raise hopes", is itself a sufficient indication both of the motivation behind the inquiry and the importance of the information sought. Only he was in a position to know. He had the policy reference number and the identity of the company concerned. The argument of Mr. Beaumont that the 1972 lapse and renewal may have terminated the agency relationship with the deceased, and his death certainly did, is quite irrelevant to this state of affairs.

56. Mr. Fredricks was not surprised by the contact by Mr. Baron. He agreed he was the person to whom any inquiry in respect of insurance held by Mr. Howard Baron would be made. He agreed he was obliged by nature of his position to provide such information, and assist.

57. Mr. Fredricks' position comes well within those envisaged by the House of Lords in Hedley Byne. There was, on Mr. Fredricks part, an express or implied assumption of responsibility to exercise reasonable care when tendering advice and/or providing information. The elements to establish the existence of the duty was that the inquiry concerned a business or professional transaction the nature of which made clear the "gravity of the inquiry and the importance and influence attached to the answer" (see Lord Pearce at p. 539 Hedley Byne & Co. Ltd v. Heller & Partners Ltd. 1964 A.C.) Mr. Fredricks as informant realised that he was being trusted as a matter of importance to give advice, or express an opinion or disclose the best information known to him, since his statement was likely to be the basis upon which the recipient intended to act; and in all the circumstances it was reasonable for the recipient to act on such advice, opinion or information.

58. The duty is not restricted to those who carry on a profession. It extends to everyone in trade or business such as insurance brokers whose occupation either involves or claims to involve the possession of competence, and skill in the subject-matter concerned. To enable the recipient to sue successfully, he must be able to establish the fact that he had relied on the advice, opinion or information to his detriment, thereby suffering economic loss.

59. The 2nd Defendant was clearly in breach of that duty of care in allowing the Plaintiff to continue in ignorance of the fact that the policy was paid up and therefore in force. In relation to the murder exclusion the 2nd Defendant knew, as he agreed, that it was not impossible for the change to benefit Mr. Baron's policy.

60. The consequence of this was that there was no claim under the policy, and no intimation to the insurance company of the estate's interest. Mr. Fredricks had effectively brought that situation about.

61. Although solicitors instructed by Mr. Bruce Baron contacted the Police for information on assets and liabilities no useful information came to hand. I am satisfied that Mr. Baron would have told them of his conversation to the effect that his father's broker had said that there was uncertainty as to whether the policy was paid up (the late Mr. Baron had a habit of paying bills late so this was not a matter of surprise to his family) and that murder was not covered. Some solicitors might have pursued an inquiry with Mr. Fredricks for their record - others would not, relying on what the client had told them. As I stated earlier, although Mr. Bruce Baron said that when he was in contact with Mr. Fredricks in 1973 he believed he was dealing with him as agent on behalf of the insurance company and intimating a claim, I believe he is mistaken. The years have caused him to be somewhat confused about this and his understandable obsession with what he regards as, at the very least a disservice, and at worst a fraudulent conspiracy, has accounted in part as well. He contacted him as a business associate of his father, at his mother's suggestion (and known to both of them), and as the broker who would know about his father insurance matters. There was much questioning and reference to statements about Mr. Bruce Baron's relationship with his father. In my view that had no conceivable relevance.

The insurance company's liability

62. The policy was paid up. I think it is probable that it was one of those policies which benefited from the dropping of the murder exclusion clause. I am reinforced in this view by Mr. Lung's letter of the 2nd January 1973 and Mr. Fredricks' own evidence about the renewal notice of March 1973 which indicated that murder would now be covered. I see no reason for Mr. Fredricks to have imagined this. He appreciated the irony of it. Although we have no documentation in respect of this it is unlikely that the insurers would suddenly have decided to cover Mr. Howard Baron from that renewal. He would, I find have benefited, before his death from the change - that would have been in line with their change and approach. The receipt of this renewal notice casts further serious doubt on Mr. Fredricks' evidence that he received no notice of the 1972 renewal of the policy after the premium had been paid or credited.

63. Therefore had Mr. Fredricks fulfilled his duty of care, the late Mr. Baron's estate would have intimated a claim under a paid up policy with a cancelled exclusion clause.

64. One obstacle however remains. That is the non-disclosure of Mr. Howard Baron's health history. The insurance company would, I am sure, have investigated his medical history once the result of the autopsy was known. I accept Mr. Geoffrey Ma's argument as to the non-disclosure. The policy was void ab initio - see Winter v. Irish Life Assurance Plc (1995) 2 Lloyds Law Reports 274 considering Bates v. Hewitt (1867) L.R. 2 Q.B. at p.p. 604-606 and Dawsons v. Bonnin (1922) 2. A.C. 413 The argument that the company might nonetheless have merely included an exclusion clause to allow for the illness contingency falls down. The insurers are entitled to say "we would not have considered cover". In 1972, in the light of medical knowledge then, over a quarter of a century ago, I am sure that no reasonable insurer would have accepted the risk. This is reinforced by the fact that if they known of the medical history in 1970 and if they had accepted the risk, there would have been a close inspection of the renewal disclosures if any. Had they been notified of the state of affairs in March 1972 or in July 1972 with an insured whose life expectancy was of the order of 6 to 12 months, no prudent underwriter would have accepted the risk of insuring a person for that sum (US$110,000) knowing that medical opinion was saying he would not survive the year of cover in any event.

65. The 2nd/3rd Defendants had no ostensible authority to act as agent for the 1st (or 4th) Defendant. Lord Keith of Kinkel in Armagas Ltd v. Mundagas S.S. [1986] A.C. 717 reiterated the position at page 777 :

"Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance upon that representation."

- and at page 782 :

"The question is whether the circumstances under which a servant has made the fraudulent misrepresentation which has caused loss to an innocent party contracting with him are such as to make it just for the employer to bear the loss."

I am satisfied that the 2nd/3rd Defendants did not hold themselves out as having such authority and certainly the insurers did nothing by word or deed to represent them as having such authority. Moreover the simple practice of the insurers as attested to by Mr. Yau, of dealing with the broker rather than the insured cannot be construed as indicating other than that the brokers were contacted as agents of the insured.

66. The pleaded case - in the alternative and perhaps not very sensible (see ”9 of their Defence.) - by the 2nd/3rd Defendants, that they were agents of the insurers, is, as Mr. Ma contends, an attempt to avoid liability to the insured. I accept Mr. Peter McTavish's evidence, as a matter of common sense, that the 2nd/3rd Defendants were acting as agents for the insured. Webster, J. considered the position of the independent agent or broker in Winter - v - Irish Life Assurance Plc at p. 282. The intermediary's position as agent of assured or insurer is dependent upon the circumstances and the correct inference to be drawn from the facts. The proper inference to be drawn from these circumstances and facts is that the 2nd/3rd Defendants were not agents for the insurers, but for the assured.

67. It is now clear that there is no evidence of any conspiracy between the 2nd/3rd Defendants and the 1st/4th Defendants nor any fraud on the part of the 1st/4th Defendants. They were not in fact faced with a claim under the policy until October 1990. The knowledge of the 2nd/3rd Defendants cannot be imputed to them. As I have set out already, the actions of Mr. Fredricks were entirely inconsistent with any idea of his being the agent of the 1st/4th Defendants, but were consistent with his having been the agent of the deceased, and, for the purposes of inquiries in respect of the policy by the personal representatives of the deceased, with a duty towards them.

The likely state of affairs in 1973

68. With the benefit of the knowledge which Mr. Fredricks ought to have imparted to him, the Plaintiff would have made a claim under the policy. Consideration of the claim would, eventually, have led, inevitably to liability being declined for non-disclosure. If that had been disputed by the Plaintiff, the necessary documents would have been in existence for scrutiny, in particular the original declaration or proposal form. How that non-disclosure came about would have been far easier to ascertain then than it is now. Although the estate, through the personal representatives, would not have been able to obtain the sum assured they may well have been able to obtain a return of premium. To do that it would have been necessary to show that Mr. Fredricks was solely responsible for that non-disclosure. There would have been a good argument to that effect.

The Limitation Argument

69. The second Defendant misled the Plaintiff. He was in breach of his duty of care. Once aware of the fact of the paid up policy and the possibility of the murder exclusion no longer being applicable, his duty extended to contacting the Plaintiff to inform him of the correct position. He says he deliberately did not do so. He should have done so on or shortly after the 10th January 1973 on his own evidence, or, at the latest, when the renewal certificate came through. But the Plaintiff did not know that there had been non-disclosure and that the Insurance company probably would repudiate liability under the policy. Mr. Fredricks, in my judgment did know that there had been non-disclosure. Any reasonably competent broker with some experience of insurer's rights, and the stipulations of policies would have known that the insurers would probably repudiate. Mr. Fredricks knew without any doubt. He also knew up-to-date disclosure was required on renewal. Mr. Fredricks made no mention at any time of the question of non-disclosure to the Plaintiff. Not until the Plaintiff commenced these proceedings did he find out.

70. What more could the Plaintiff have done? As a reasonably inexperienced recent graduate, only 22 years of age, there was no reason why he should challenge what I expect were the confidently asserted statements of a mature businessman in his 40's. He instructed solicitors to make inquiries and deal with what estate there was. I have already considered their position earlier. I do not think that they lacked diligence - with the benefit of hindsight we know they should not have accepted at face value what Mr. Fredricks said but they had made additional inquiries and knew from general press coverage that the Police were interested in any insurance cover that might emerge. None did. The Plaintiff did not lack diligence.

71. Mr. Fredricks was, as I have found, not acting as agent for the Insurance Company, therefore the misleading statement to the Plaintiff and the deliberate concealment of material information cannot be attributed to the 1st/4th Defendants. However section 26 of the Limitation Ordinance (Cap. 347) provides that where the "action is based upon the fraud of the defendant," "the period of limitation shall not begin to run until the Plaintiff has discovered the fraud, concealment or mistake ... or could with reasonable diligence have discovered it." Although I find that no fraud has actually been perpetrated by the 1st/4th Defendants, the action against them was certainly based upon it, and the alleged fraud, as an allegation, inextricably involved the 1st/4th Defendant. The whole claim was that the 2nd/3rd Defendants had deliberately concealed information and misled the Plaintiff so as to defeat a claim under the policy, and had done so as agent for the 1st/4th Defendants.

72. I am satisfied that the Plaintiff is not, barred by the Limitation Ordinance against any Defendant.

73. I need to consider the position under clause 15 of the "Policy" (note my inverted commas). If the clause applies then the Plaintiff is outside that period. He discovered the relevant facts on or about the 30 October 1990. The writ was issued almost three years later. However the Ordinance does not except from the provisions of section 15, any clause in a contract which seeks to restrict the extension to section 4. I would not in any event be prepared to hold that, by reason of the existence of clause 15 in the specimen policy that in the actual policy issued in 1970 of which there is no surviving copy, there was an identical clause. Finally that clause is not so drafted as to override any statutory right in relation to limitation of actions.

The effect of my findings

74. The Plaintiff cannot succeed in his claim for payment under the policy by reason of non-disclosure. Therefore his action against the 1st/4th Defendants fails. However his action against the 2nd/3rd Defendants was well-founded. There was a clear breach of the duty of care. I have had cause to think long and hard as to whether this was simple carelessness or something more. In my view the 2nd Defendant well knew the serious aspect of the deceased's medical history and that the latter believed himself to be uninsurable. Mr. Fredricks knew what this meant. He knew too that even for personal accident insurance cover, disclosure of medical history was important. He told me that if the deceased had told him that he had had a cholectomy, and I am sure that the deceased did so - I just do not accept Mr. Fredricks' bizarre change of story on this vital aspect - then he, Mr. Fredricks would have inquired about it, particularly as he had been told by the deceased that he was uninsurable. This is what he said in evidence :

Q. Of course, if he had told you he'd had a colectomy, that would have struck you as being a more serious operation ...

A. Yes, it would.

Q. ... for the purpose of disclosure.

A. Yes.

Q. It's right, isn't it?

A. Yes, .....

Q. And you would probably understand, would you - don't necessarily accept it from me- that, if he had told you it was colectomy, and that would indicate to you the possibility of cancer, he might well be uninsurable? He might well be uninsurable?

A. He might very well be. Yes.

Q. Would you have enquired further, if it was colectomy that he had told you about, which made him uninsurable?

A. I think I would have, yes.

75. Mr. Baron made no secret of his medical history, and certainly not to Mr. Fredricks. Somehow the 'No' box was ticked on the proposal form. I do not think that the deceased gave that negative information. If he had, Mr. Fredricks knew well enough that if he passed that form on with that answer, he would be conniving at the insurance company being misled. He said himself that, in completing the form as he did, assisting the deceased, that he was acting as agent for the insurance company. He was not and, in my view, knew that he was not. He was very experienced in the insurance business. He was acting as agent for the insured. Moreover the only explanation on the evidence I have heard, is that Mr. Fredricks either colluded with the deceased in putting a negative indication in the 13(b) box, or he did it of his own volition to secure cover for Mr. Baron. That in my view explains why the Plaintiff was never told anything about the non-disclosure and why Mr. Fredricks purported to suggest that the policy may not have been paid up. He well knew from contact with the deceased and AFIA in November 1972 that the policy was paid up. As for his contacts with AFIA in early January 1973, if they took place, they were with a view to clarifying the position for his own benefit and certainly not for the benefit of the deceased's representatives. It follows that he was concerned lest a claim be made under the policy. If the murder exclusion clause could prevail that would obviate any examination of the claim to see it there had been any non-disclosure. As he himself said, he made a deliberate decision not to contact Mr. Bruce Baron. I accept that aspect of his evidence. The alternative explanation is that he was simply incompetent, both in the completing of the proposal form, in checking his records, in his information to Mr. Bruce Baron and in his deliberate decision not to correct his information and fulfil an obvious duty, which he acknowledged existed. I regret to have to say that I find that alternative explanation unlikely.

76. If Mr. Fredricks had acted on his own in forwarding a proposal form with incorrect information - i.e. he had been given the actual medical history but simply said to the deceased in effect, "Leave is to me I will get you cover" or went ahead without even that indication, then the Plaintiff would be entitled to recover from the 2nd/3rd Defendants the premiums paid for the three years. If the deceased colluded with Mr. Fredricks then the Plaintiff would not be entitled to recover that sum. Because I cannot be satisfied on the balance of probabilities, that the former situation obtained, the Plaintiff cannot prove any loss.

Costs

The 2nd/3rd Defendants.

77. I accept that 2nd Defendant was for the purposes of this action, the servant or agent of the 3rd Defendants.

78. They were responsible for this action being brought and for the delay since 1973. It would not have been necessary had Mr. Fredricks done what was required of him. It is a matter of great regret that I have had to make the findings I have, in respect of a 70 year old businessman, who is a qualified lawyer with considerable experience in the insurance world, and has spent nearly 30 years in business in Hong Kong. It has taken this expensive action to enable the Plaintiff to ascertain what he was entitled to know, and could so easily have been told within a few days, all that long time ago. It has brought him no tangible benefit but it is small wonder that over that period of time notions of fraud and conspiracy have loomed in his mind. That delay has deprived him of a contemporaneous judgment as to whether the estate was entitled to a return of premiums.

79. Order 62 r. 3(3) stipulates that the successful party in litigation is in normal circumstances entitled to an order for costs. But I also have a discretion under this rule which I can exercise where I feel justice requires it. These Defendants brought this action upon themselves. It reflects the lengths to which the Plaintiff has had to go to try and establish the truth. As a consequence of the Defendants' negligence and actions, time has removed from consideration all the vital documents. That has been an enormous handicap for him. In my view the 2nd/3rd Defendants should pay their own costs. It would be wholly unjust for them to recover costs where they have been so clearly at fault.

The 1st/4th Defendants.

80. It was the acts and omissions of the 2nd/3rd Defendants which effectively brought these Defendants into this action. They contended that they acted as agents for the 1st/4th Defendants. (see paragraph 9 of the Defence) That also kept them in the action. Had the 2nd/3rd Defendants wished, they could have pleaded a case and/or come to an agreement which would have released the 1st/4th Defendants from the action. The proposal form was at the heart of the question of liability under the policy. Its existence would have released the insurance company from any involvement. The 2nd/3rd Defendants unarguable breach of duty had prevented that from being the case. The 1st/4th Defendants are entitled to have their costs. They have succeeded in this action. Their involvement is entirely attributable to the failures of the 2nd/3rd Defendant and to the case pleaded by the 2nd/3rd Defendants. It would be unjust for the Plaintiff to have to bear their costs. It is just in my view that the 2nd/3rd Defendants should pay the costs of the 1st/4th Defendants.

The Plaintiffs costs

81. Although the Plaintiff has not established any loss, his action was eventually necessitated by the breach of duty of the 2nd/3rd Defendants. The loss and/or destruction of vital documents was not his fault. It was the fault of the 2nd/3rd Defendants in that they created the environment in which that occurred. He was deliberately misled in that the 2nd Defendant made a positive decision not to give correct information. He has had to pursue this action in order to ascertain whether the estate had a valid claim under the policy. He had a duty in that regard. He certainly was not able to achieve this without this litigation. Although it has not brought him a judgment for damages, it has called the 2nd and 3rd Defendants to account. Once again I have to state that had the 2nd and 3rd Defendants acted properly in 1973, no litigation would have been necessary. It is just and fair that the 2nd and 3rd Defendants should pay the Plaintiff's costs.

82. This is an unusual case. The discretion vested in the court is there to ensure that the usual provisions as to costs do not cause injustice. By reason of the foregoing I am satisfied that injustice would flow if I were to fail to make the orders as to costs which I have made.

83. Having said that, it is open to any party who wishes to dispute my judgment in respect of costs, which I make as a nisi judgment, to do so on an occasion on which they can give notice, if they feel they have an argument which ought to be taken into account and which they

think I have not taken into account in reaching the decision on the orders for costs that I have.