HKSAR v. KWAN CHI WAH

English Translation
HCMA 1251/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 1251 OF 1999

(ON APPEAL FROM TWS 14368/1999)

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J U D G M E N T

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1. The appellant is the proprietor of a transport business owning a fleet of 30 goods vehicles. One of the vehicles, registration number EN8573, was involved in a traffic accident in Cheung Tsing Highway Slip Road, as a result of which the driver suffered fatal injury. After police inquiries, the appellant was prosecuted for permitting the driver to use the vehicle where there was not in force in relation to the user of the vehicle by that person a policy of insurance in respect of third party risks. He pleaded guilty and was fined $10,000 and disqualified from holding all forms of driving licence for 12 months. Against that sentence, he appeals.

2. Mr Mullick accused the special magistrate of taking into account matters which were neither relevant nor proven. In her reasons for sentence, the special magistrate implied criticism of the appellant for placing insurance with an insurance agent and not an insurance company. More importantly, she said that the appellant's failure to obtain third party insurance cover led to the driver's death and deprived the dependents of compensation. Mr Mullick's contention was not defended by counsel for the Respondent. The majority of insurance transactions are made through insurance brokers or agents. There was no impropriety in not dealing with an insurance company direct. Also as a matter of fact, it was not the failure to obtain insurance cover which led to the driver's death. I believe what was said by the special magistrate was an error of expression which was not what she actually meant. Most probably, the accident was caused by the driver's own negligence. There is no evidence to suggest the accident was caused by anything other than the driver's negligence. As a matter of law, lack of third party insurance cover as such does not deprive the dependents of compensation. In the present case, the dependants of the driver received compensation from the compulsory insurance scheme under the Employees' Compensation Ordinance. I agree with Mr Mullick that these matters which the special magistrate took into account were irrelevant.

3. Mr Mullick submitted that the special magistrate committed procedural impropriety in not permitting the appellant to call his employee, Miss Lee, who handled insurance matters to give evidence on a variety of matters including the appellant's relationship with insurance brokers, steps taken in renewing insurance, that brokers had been given the appropriate documents well before expiry of the insurance and had been reminded to obtain insurance cover. The special magistrate has heard all these from the appellant. Apparently, she accepted his account, though she did not give any indication at the time. Having read the transcript, I do not think there is anything the witness could add to the appellant's evidence.

4. In my opinion, a magistrate is not obliged to hear any witness a defendant wishes to call if she is satisfied that the witness evidence is not relevant. Apparently, there is nothing Miss Lee could add to the evidence of the appellant which the special magistrate accepted. At the time, appellant's counsel did not attempt to persuade the special magistrate of the relevance or usefulness of Miss Lee's evidence. Probably there was no grounds to as there was nothing Miss Lee could add to. Had he persisted, the special magistrate would have made it known that she accepted the evidence of the appellant. That would have removed any sense of grievance the appellant may have. In the circumstances, I am satisfied that the special magistrate was entitled to decline hearing from Miss Lee. I am also satisfied that the appellant did not suffer any prejudice.

5. Mr Mullick submitted that the special magistrate was wrong in saying that had the appellant kept the vehicle off the road until it was insured then the driver could have escaped the fatal accident. The special magistrate was factually incorrect in that it was not the lack of insurance which caused the death. As pointed out above, this is probably an error of expression. The more serious complaint, of course, is that the special magistrate did not seem to appreciate the appellant's case that he was not aware that the vehicle was not insured.

6. Mr Mullick submitted that the special magistrate was wrong in accusing the appellant of shifting the responsibility onto his employee Miss Lee. He also submitted that this is not a case for deterrence as the appellant had no previous conviction and that only one out of his fleet of 30 vehicles had not been insured.

7. I agree that Mr Mullick's criticism of the special magistrate are well founded and that the sentencing approach she adopted was incorrect. But that does not mean automatically the sentence shall be set aside or reduced. I shall therefore consider if despite the criticism the sentence is appropriate in all the circumstances.

8. According to its preamble, the purpose of the Motor Vehicles Insurance (Third Party Risks) Ordinance is to make provision for the protection of third parties against risks arising out of the use of motor vehicles. This very important objective is to be achieved by a system of compulsory insurance. In turn, the system of compulsory insurance is enforced by the relevant provisions of the Ordinance, especially section 4. The offence for not securing insurance cover is made a strict liability offence. Very heavy penalty is provided in order to secure the above objective. The sentence is imprisonment for 12 months and a fine $10,000 and, in addition, a mandatory disqualification of a minimum of 12 months and a maximum of 3 years, unless the defendant can show special reasons for not so disqualifying.

9. Given the nature of the offence and that it is a strict liability offence, in my view, a sentence of imprisonment should be confined to cases of deliberate breach of the law and not applicable to cases of inadvertence, for which a fine is appropriate. I have no doubt that the special magistrate accepted that this is not a case of deliberate flouting of the law. I am sure she is correct. A fine is therefore appropriate.

10. The maximum fine under section 4 is $10,000. It is difficult to set a tariff for this type of offence as the circumstances in which the offence could be committed could be innumerable. There are cases like the present one where the owner neglected to obtain insurance cover. There are other cases in which properly insured vehicles were permitted to be driven by persons who were not lawfully permitted to drive such vehicle, thereby rendering the insurance ineffective.

11. In my view, the primary considerations in sentencing this type of offence are as follow:

12. In the instant case, only the second consideration is relevant. On the fact, the uninsured vehicle has been on the road for six to seven months. Mr Mullick submitted that if failure to insure was due to inadvertence, then it makes no difference whether it was for one day or for six months. I cannot agree. The defendant should be punished for the extent of his inadvertence and also for the risk he has exposed the public to, both of which are a function of time. The current sentencing practice in the magistracies is that in a simple case with no aggravating features, on a plea of guilty a fine of $1,000 to $2,000 is imposed where a low risk vehicle has been uninsured for a couple of weeks and the longer the vehicle has been left uninsured, the greater is the fine. I think this is correct.

13. The vehicle involved is a medium goods vehicle with a trailer. I regard this type of vehicle as a very high risk vehicle. A medium goods vehicle, is usually fitted with a very powerful engine, and is likely to cause more extensive and serious damage and injury to other road users in case of accident. By contrast, a private car or motor scooter are lower risk vehicles in that order. Being a commercial vehicle, it has to be on the road more often and for longer hours than a private car which is being used for travel to and from work and on weekend pleasure trips.

14. Mr Mullick submitted that in view of the appellant's plea of guilty and clear record, the maximum penalty should not be imposed. The vehicle has been on the road uninsured for more than six months. The insurance premium saved is substantial. It is wrong in principle that a defendant should be allowed to pay his fine from the saving of his neglect. I consider that subject to risk considerations, the general rule of two and half times profit in the trade description cases a minimum. Considering these risks and the insurance premium saved, I think the appellant has gone beyond the cut off point and the maximum fine is appropriate.

15. The defendant has a clear record and this is the only out of his fleet of 30 vehicles which was not insured. However, it is the basic obligation of owner to insure before putting his vehicles on the road. The owner of a commercial fleet must take double steps to ensure that his vehicles are all insured. I do not think a plea of guilty and clear record weighs heavily for strict liability offences, where the burden of rebuttal is shifted to the defendant. There may perhaps be room for a minimum disqualification.

16. In addition to the fine, the appellant is subject to a mandatory disqualification of 12 months to 3 years. I consider it more appropriate for allowance for his good record and plea of guilty to be reflected in a minimal period of disqualification than in the amount of fine in the circumstances of the present offence. The issue then is whether the appellant has shown special reasons for not imposing or further reducing the period of disqualification.

17. The appellant's case for special reason is that he has delegated the responsibility to arrange for insurance to Miss Lee. He has authorised Ho Chit to renew the insurance for him when the insurance expires. In August or September, Miss Lee instructed Ho Chit to renew the insurance and Ho Chit agreed. He had also reminded Mr Yan of Ho Chit to renew the insurance. He knew the insurance would expire in September and that he had not received the policy. But he did not pay any regard to that as it was not unusual that the policy would be issued later. The special magistrate found he was indifferent. Mr Mullick submit that she was wrong.

18. In my view, because of the very important objective to be achieved by the Ordinance, the Ordinance imposes a strict liability on the owner to insure for third party risks. Because this is a strict liability, one cannot delegate responsibility without retaining residual supervision. If an owner may delegate responsibility and rely on that as a special reason then the second most powerful sanction under section 4 would be rendered nugatory. On his evidence despite he and Miss Lee were aware that the policy has not arrived, they did nothing about it. He had no system of reminding Ho Chit of the outstanding policy. Had there been one, the oversight would not have left undiscovered, not at least for seven months. Delegation without proper supervision cannot be a special reason.

19. Further, in my view, it is not enough just to place an order for renewal, he must check that the order is received and the renewal effected. This is not an unreasonable obligation. He may delegate that to his employee

20. The appellant said that circumstances relating to the vehicle is very peculiar in that the vehicle licence and insurance expire at different times. Be that as it may, this cannot amount to any mitigating circumstance or special reason because on his own evidence he was fully aware of the fact that the insurance expired in August or September. This difference in expiration time did not bring about his failure to insure.

21. The appellant said he need to drive his vehicles in connection with his business. Of course, the answer to that is he could leave that to his employee while serving his disqualification. His monthly business turn over was several hundred thousand dollars. He can certain afford another employee. In any event, even financial hardship is not a special reason for not disqualifying.

22. In the circumstances, I am not satisfied that the appellant has shown any special reason for not disqualifying or not reducing the period of disqualification to less than the statutory minimum. Thus for different reasons I come the conclusion that the sentence imposed by the special magistrate, despite the incorrectness of her approach, is nevertheless correct in quantum. I therefore affirm the fine and disqualification and dismiss the appeal.

23. I wish to add that the penalty of $10,000 was introduced in 1976 under Ordinance No. 22 of 1976. The fine has since remained the same despite revision of other fines and fixing fines by reference to Schedule 8 of the Criminal Procedure Ordinance. The fine under the section 4 is obviously out of date and leaves special magistrates with insufficient sentencing latitude in cases of high risk vehicles uninsured for long period of time. It may well be time for the authorities to consider a revision.