WING LUNG INSURANCE CO LTD v. WONG CHUN SING AND ANOTHER

DCCJ1743/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1743 OF 2008

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BETWEEN

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REASONS FOR DECISION

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I.     Introduction

1.  The hearing of the assessment of damages in the present proceedings came before me on 5^th November 2008 (“Second Hearing”). I declined to proceed with the assessment of damages and re-fixed the same for a directions hearing returnable on 8^th January 2009. These are the reasons for decision in relation to such order.

II.    Plaintiff’s claim

2.  The Plaintiff is an insurance company and was the motor vehicle insurer of a private vehicle bearing registration mark KU3906 under a private motor vehicle insurance policy (“Policy”) at the time of a traffic accident on 9^th August 2004 at chainage 26.8 on Tuen Mun Road, New Territories involving the Vehicle and a motorcycle bearing registration mark KT563 (“Motorcyle”) (“Accident”).

3.  The 1^st Defendant was the driver of the Vehicle at the time of the Accident. The 2^nd Defendant was the insured under the Policy.

4.  At the time of the Accident, the 2^nd Defendant did not know the Vehicle was used by the 1^st Defendant, and the 1^st Defendant did not have the 2^nd Defendant’s permission to use the Vehicle. In the circumstances, the 1^st Defendant did not fall within the definition of “Insured Driver” or “Authorized Driver” under the Policy, and was not covered by the Policy.

5.  Notwithstanding that the 2^nd Defendant gave a statement to the police in respect of the Accident on 10^th August 2004, the 1^st and 2^nd Defendants only submitted a motor accident report form to the Plaintiff and/or its general agent on 4^th September 2004 (ie 26 days later).

6.  Further, notwithstanding that the 1^st Defendant was convicted of (a) careless driving, (b) failing to stop after an accident whereby personal injury and damage were caused, and (iii) failing to report an accident whereby personal injury was caused in magistracy court proceedings on 7^th December 2004 as a result of the Accident, the Plaintiff and/or its general agent did not receive the relevant summonses or notice in writing in respect of the such prosecution.

7.  In the circumstances, the Plaintiff claimed that the 1^st and 2^nd Defendants were in breach of the provisions and/or conditions precedent of the Policy. Consequently, the Plaintiff by letters dated 13^th July and 17^th August 2005 from the solicitors of its general agent to the 1^st and 2^nd Defendants respectively declined and/or repudiated liability under the Policy.

8.  The Plaintiff claimed that :

(a)  As a result of the Accident, the driver of the Motorcycle commenced proceedings against the 1^st Defendant on 26^th October 2005 in DCPI1483/2005 to claim for loss and damages for negligence for personal injuries and consequential loss and damages (“PI Action”).

(b)  The Plaintiff joined as a defendant to the PI Action.

(c)  The 1^st Defendant did not defend or satisfy the claim in the PI Action.

(d)  In view of its statutory liability under section 10 of the Motor Vehicles Insurance (Third Party Risks) Ordinance Cap.272, the Plaintiff paid a sum of HK$450,000.00 (inclusive of interest) (“Settlement Sum”) together with costs in the sum of HK$167,076.00 (“Costs Sum”) in settlement of the PI Action pursuant to the Order of Deputy Judge E Yip dated 7^th August 2006.

(e)  The Plaintiff also paid a sum of HK$107,754.25 (“Own Costs Sum”) being its own legal costs in handling the PI Action.

9.  Clause (14) of the Policy provides inter alia that :

“If the [Plaintiff] is obliged by the laws of any country within the Geographical Area [ie Hong Kong] or by virtue of any agreement between the [Plaintiff] and The Motor Insurers’ Bureau of Hong Kong to pay an amount for which the [Plaintiff] would not otherwise be liable under this Policy the Insured and any other person on whose account the payment is made shall forthwith repay such amount to the [Plaintiff].”

10.  The Plaintiff therefore claimed against the 1^st and 2^nd Defendants for reimbursement of the Settlement Sum, Costs Sum and Own Costs Sum in the total sum of HK$724,830.95.

III.  Interlocutory judgment

11.  The 1^st and/or 2^nd Defendants did not file any notice of intention to defend. On 5^th June 2008, judgment on liability was entered in favour of the Plaintiff against the 1^st and 2^nd Defendants for damages to be assessed.

IV.  Progress of assessment of damages

12.  On 9^th July 2008, H H Judge Leung granted inter alia the following directions (“9/7/08 Order”) :

(a)  the parties do file and exchange witness statements as to fact within 42 days from the date thereof;

(b)  the parties do file and exchange list of documents within 28 days from the date thereof, and there be inspection within 7 days thereafter;

(c)  the hearing of the assessment of compensation be adjourned to 9:30am on 16^th September 2008 (“First Hearing”) at Court No.25 with half day reserved.

13.  The Plaintiff’s List of Documents was filed on 9^th August 2008, but no affidavit of service was filed prior to the First Hearing to show that such document was served on the 1^st and 2^nd Defendants.

14.  The Plaintiff filed the witness statement of Chan Shuk Yee on 20^th August 2008, but likewise no affidavit of service was filed prior to the First Hearing to show that such document was served on the 1^st and 2^nd Defendants.

15.  Indeed, no affidavit of service was filed before the First Hearing to show that the 9/7/08 Order was served on the 1^st and 2^nd Defendants.

16.  The relevant affirmation of service by the process server of the Plaintiff’s solicitors (“Affirmation”) was only filed on 4^th November 2008 (ie the day before the Second Hearing) after I caused my clerk to make enquiries with the Plaintiff’s solicitors on 3^rd November 2008.

17.  At the First Hearing, the 1^st and 2^nd Defendants were absent. Upon enquiry by H H Judge Lok, Mr Cheung, solicitor for the Plaintiff, informed the court that the 9/7/08 Order was served by registered post on 29^th July 2008. By then, it would have been baldly apparent to the Plaintiff’s solicitors that an affirmation of service was necessary. However, for reasons unknown to this court, the Affirmation was not filed until 4^th November 2008.

18.  According to the Affirmation, the 9/7/08 Order was served on the 1^st and 2^nd Defendants by registered post to their respective usual and/or last known address on 30^th July 2008.

19.  Even if such service on the 1^st Defendant was successful, according to Practice Direction 19.2, such service was deemed to have been effected only on the 4^th working day after posting (ie on 4^th August 2008). So by the time the 9/7/08 Order was deemed to be served on the 1^st Defendant, there were only 2 days and 14 days left before expiry of the respective deadlines imposed in the 9/7/08 Order for filing/exchange of list of documents and witness statements.

20.  The court would have been very much concerned to see whether any prejudice or unfairness was caused in leaving the 1^st Defendant with such shortened period for compliance with the court order. However, in this case, such concern did not arise because H H Judge Lok saw fit to adjourn the First Hearing, a subject to which I shall return below.

21.  According to the Affirmation, the letter enclosing the 9/7/08 Order addressed to the 2^nd Defendant was returned by the Post Office marked “Unclaimed – Returned to Sender”. Although not deposed to in the Affirmation, I was informed by Mr Cheung, who also appeared before me at the Second Hearing, that such letter was returned through the dead letter post on 2^nd September 2008.

22.  As conceded by Mr Cheung, there is no doubt that such attempt to serve the 9/7/08 Order on the 2^nd Defendant was bad. I am therefore surprised that the Plaintiff’s solicitors did not disclose such fact to H H Judge Lok at the First Hearing when they had known of the return of the relevant document by the Post Office for 2 weeks prior to the First Hearing. Mr Cheung conceded it was his error. Fortunately, as explained above, the learned judge did not proceed with the assessment of damages at the First Hearing.

23.  There is nothing in the Affirmation to show that the Plaintiff’s solicitors made any further effort thereafter to serve the 9/7/08 Order on the 2^nd Defendant, and Mr Cheung confirmed at the Second Hearing that no such step was taken.

24.  Mr Cheung submitted that when the Plaintiff served its List of Documents on the 2^nd Defendant (see paragraph 26 below), the covering letter notified the 2^nd Defendant of the direction in the 9/7/08 Order requiring the parties to file/exchange list of documents. Unfortunately, such letter in stating that “根據[the 9/7/08 Order]，訴訟各方須於送達該命令後之28天內存檔及互相交換文件清單，並於其後7天內進行查閱” (my emphasis) misrepresented the terms of the perfected 9/7/08 Order which provides that “雙方須於本日起28天內存檔及互相交換其文件清單，並於其後7天內進行查閱” (my emphasis). Be that as it may, the Order was not served on the 2^nd Defendant, so even if the aforesaid letter were served on the 2^nd Defendant, as far as the 2^nd Defendant was concerned, the timeline for filing/exchange of list of documents had not even begun to run.

25.  There is, of course, nothing to show that the 2^nd Defendant was aware of the direction granted by H H Judge Leung requiring filing and exchange of witness statements. Quite simply, the assessment of compensation could not have proceeded even at the Second Hearing let alone at the First Hearing.

26.  As regards the Plaintiff’s List of Documents, the Affirmation showed that it was served on the 1^st and 2^nd Defendants by registered post on 11^th August 2008 (ie 5 days after the deadline imposed in the 9/7/08 Order but without seeking leave of the court for extension of time) to their usual and/or last known addresses, and they were not returned by the Post Office.

27.  As regards the Plaintiff’s witness statement, the Affirmation showed that it was served on the 1^st and 2^nd Defendants by registered post on 21^st August 2008 to their usual and/or last known addresses, but the letter addressed to the 1^st Defendant enclosing the Plaintiff’s witness statement was returned by the Post Office marked “Unclaimed – Returned to Sender”. Although not deposed to in the Affirmation, I was informed by Mr Cheung at the Second Hearing that it was returned to the Plaintiff’s solicitors on 10^th October 2008.

28.  As regards the assessment bundle, the Affirmation showed that the Plaintiff’s solicitors attempted to serve the same on the 1^st and 2^nd Defendants by registered post on 9^th September 2008 to their usual and/or last known addresses, but both assessment bundles were returned by the Post Office marked “Unclaimed – Returned to Sender”. Although not deposed to in the Affirmation, I was informed by Mr Cheung at the Second Hearing that they were returned to the Plaintiff’s solicitors on 8^th October 2008.

29.  There is no doubt that when the above-mentioned documents were returned to the Plaintiff’s solicitors, the relevant service was bad and ineffective. This meant that the Plaintiff’s witness statement was not served on the 1^st Defendant, and the assessment bundles were not served on the 1^st and 2^nd Defendants. Yet there is no affidavit evidence before me to show what further attempts the Plaintiff’s solicitors made to effect service of such documents on the 1^st and/or 2^nd Defendants. At the Second Hearing, Mr Cheung informed me that the Plaintiff’s solicitors did not take any such step.

30.  But an even more fundamental question arises. All along the Plaintiff attempted to effect service of letters/documents on the 1^st and 2^nd Defendants by posting to the same addresses for the 1^st and 2^nd Defendants. The return of some of such letters/documents immediately raised doubt as to whether such addresses could still be safely regarded as effective addresses for service for the 1^st and 2^nd Defendants. Yet there is no affidavit evidence before me to show that the Plaintiff’s solicitors made any effort to visit the relevant addresses or take any other steps to ascertain whether the 1^st and 2^nd Defendants could still be properly served at those addresses. Instead, as seen below, the Plaintiff’s solicitors ignored the returned letters/documents and continued to send correspondence/documents to the same addresses.

31.  Mr Cheung submitted that because some letters/documents sent to the same addresses of the 1^st and 2^nd Defendants were not returned, those addresses still remained as proper addresses for service. However, one cannot turn a blind eye to the reality that letters/documents posted to either of the 1^st and 2^nd Defendants’ addresses were returned by the dead letter post not once but twice. On such basis, it is not easy to see how, without further effort to clarify the status of those addresses, the Plaintiff could have assumed the 1^st and 2^nd Defendants were still at the relevant addresses. At the very least the return of the letters/documents through the dead letter post requires clarification before the court can readily accept the assertion by the deponent of the Affirmation that, in the opinion of the Plaintiff, letters/documents posted to the relevant addresses would have come to the knowledge of the 1^st and 2^nd Defendants.

V.    First Hearing

32.  As explained above, H H Judge Lok did not proceed with the assessment of damages at the First Hearing. He noted that the case was not ready for assessment of damages since the Plaintiff had not adduced any evidence (whether by way of witness statement or documents) as to the reasonableness of the settlement of the PI Action. In the circumstances, the learned judge granted the following order at the First Hearing (“16/9/08 Order”) :

(a)  the hearing of the assessment of damages be adjourned to 9:30am on 5^th November 2008 (“Second Hearing”) at Court No.9;

(b)  there be no order as to costs of the First Hearing.

VI.  16/9/08 Order

33.  Regrettably, even up until the Second Hearing, the Plaintiff’s solicitors have not drawn up, perfected or sealed the 16/9/08 Order, so quite naturally the 16/9/08 Order was not served on the 1^st and 2^nd Defendants. However, given the terms of the 16/9/08 Order, it must be implicit (if not explicit) that such order must be drawn up and served on the 1^st and 2^nd Defendants in good time prior to the Second Hearing. No satisfactory explanation was forthcoming from the Plaintiff’s solicitors as to why this was not done.

34.  Normally, a party having carriage of the claim calls upon the other party(ies) to attend an inter partes court hearing by service of the relevant court order. The reason for this is straightforward. Upon being served with the court order specifying a court hearing, failure by the other party(ies) to attend in compliance with the court order will lead to orders being made in his/their absence.

35.  The present situation is made worse by the lack of affidavit evidence before me that the Plaintiff informed the 1^st and 2^nd Defendants of the 16/9/08 Order at all. At best, the Plaintiff’s solicitors sent a letter dated 27^th October 2008 to each of the 1^st and 2^nd Defendants by ordinary and registered post enclosing inter alia the supplemental bundle for assessment of damages and (a) such letter referred to “the hearing of the Assessment of Damages scheduled for 5^th November 2008 at 9:30a.m.” and (b) the top margin of the index of the supplemental bundle for assessment of damages had an inscription of “For the hearing scheduled for 05.11.2008 at 9:30a.m. in Court no.9”. These documents made no mention of the 16/9/08 Order or how the scheduled Second Hearing came about. It is an exceptionally poor way to notify the other party(ies) of a court order, especially one that requires them to attend a court hearing at which the claimant intends to seek final judgment against them. I am not satisfied that the 1^st and 2^nd Defendants have been properly served with the 16/9/08 Order and notice of the Second Hearing scheduled pursuant to the 16/9/08 Order. This is, of course, a further reason why the assessment of damages could not properly proceed at the Second Hearing.

36.  Mr Cheung submitted that he relied the Notice of Hearing issued by the court to all parties. Mr Cheung accepted that such notice was merely a courtesy notice by the court registry, and not a court order. I have explained in paragraph 34 above why service of a court order is important. Further, there is no obligation on the court registry staff to file any affidavit of service to prove due service of the notice. Here, the Plaintiff has carriage of the assessment of damages and is obliged to draw up, file and serve the 16/9/08 Order. Order 42 rule 5(5) of the Rules of the District Court specifically provides that “[every] order made and required to be drawn up must be drawn up by the party initiating the application upon which the order was made ……”

37.  In this respect, I reiterate what I have said in my reasons for decision in Ng Cho Shing (the Administrator of the estate of Wu Heung Lin, deceased) v Chan Yung Chi & ors DCPI1323/2006 (unreported, 3^rd November 2008) at paragraph 42 as follows :

“I pause here to say that it is incumbent on the party having carriage of the claim or the application against the other party(ies) to satisfy the court that the relevant court orders have been properly drawn up, and that such orders have been duly served on and the relevant hearing date duly notified to the other party(ies) in good time for proper compliance. This is particularly important when the other party(ies) are absent at the hearing, and the court order expressly directs that the order be served and/or it is implicit from the nature of the court order that it must be served (eg an order requiring the other party(ies) to do certain things by a specified deadline). Normally, due service of a court order is proved by way of affidavit of service in the manner prescribed in Order 65 rule 8 of the RDC, and not by submissions from the Bar table at a subsequent hearing. Where there is a history of non-attendance of court hearings and/or non-compliance of court orders by the other party(ies), practitioners for the party having carriage of the claim/application should be astute in filing affidavit of service to prove due service of the relevant orders and/or other documents that are required to be served. Failure to do so may lead to abortion of the relevant hearing, which will inevitably cause delay and wastage of costs, and such delay/wastage may well be reflected in the relevant costs order.”

VII.  Plaintiff’s further documents and witness statement

38.  I now turn to another matter. Without leave of the court, the Plaintiff filed a Supplemental List of Documents and a supplemental witness statement of Chan Shuk Yee on 23^rd and 27^th October 2008 (ie 11 days and 8 days before the Second Hearing) respectively.

39.  There is no dispute that leave of the court was required if the Plaintiff wished to rely on any further documents and/or supplemental witness statement. Since the assessment of damages is an inter partes matter, any application for such leave should be made inter partes.

40.  However, the Plaintiff did not issue any inter partes summons for such purpose even up to the 2^nd Hearing. According to the Affirmation, the Plaintiff’s solicitors attempted to serve the aforesaid Supplemental List of Documents, the aforesaid supplemental witness statement, the Plaintiff’s hearsay notice dated 23^rd October 2008 and the supplemental bundle for assessment of damages on the 1^st and 2^nd Defendants by ordinary and registered post on 27^th October 2008. The covering letter stated that the aforesaid documents were sent to the 1^st and 2^nd Defendants by way of service without any intimation that (a) no leave has been granted by the court for the Plaintiff to rely on the documents in the Supplemental List of Documents and the supplemental witness statement, and/or (b) the Plaintiff intended to seek leave at the Second Hearing to rely on them as evidence at the assessment of damages.

41.  Mr Cheung submitted that he intended to apply orally at the Second Hearing for leave to file and serve the Supplemental List of Documents and supplemental witness statement because he thought it would have been sufficient to simply raise this at the inter partes Second Hearing. It is unclear why the Plaintiff’s solicitors were under such impression since normally an inter partes application for leave to adduce further evidence is made by inter partes summons which, under Order 32 rule 3 of the Rules of the District Court, has to be served not less than 2 clear days before the return date.

42.  Further, the supplemental documents and supplemental witness statement dealt with matters raised by H H Judge Lok at the First Hearing, so it was plain that the Plaintiff (being well aware of the date scheduled for the Second Hearing) was alerted to the need of such additional evidence as early as in mid-September 2008. In my view, no satisfactory explanation was given as to why such application for leave could not have been made or intimation of such intention to seek leave could not have been given much earlier. In making a conscious decision to delay the application to an oral one to be made at the Second Hearing, it was incumbent on the Plaintiff to justify the lateness of the application. However, no affidavit evidence was filed, as is the usual practice (see Hong Lok School Limited & anor v Chow Sai Yiu & anor HCA17139/1999 and HCA19001/1999, Lam J  (unreported, 7^th July 2003), Guangzhou Green-Enhan Bio-Engineering Co Ltd & anor v Green Power Health Products International Co Limited & ors HCA4651/2002, HCA2802/2003 and HCMP74/2004, Lam J (unreported, 21^st August 2004) and my ruling in Headwin Engineering Limited v United Soundfair Engineering Co Ltd DCCJ5034/2006 (unreported, 26^th November 2007)), to explain the lateness of the application.

43.  In the absence of any satisfactory explanation for the lateness, the Plaintiff’s considered choice to defer the application to seek leave until the Second Hearing raised a more fundamental concern. Procedural fairness sets its face against the court entertaining such conscious decision to wait until the Second Hearing to spring such application on the 1^st and 2^nd Defendants without prior intimation and leaving them with no opportunity to respond if so desired.

44.  What the Plaintiff should have done as soon as it realised the need for further documents and/or supplemental witness evidence was to apply to the court at the first opportunity by way of inter partes summons to seek leave to file/serve such additional evidence, request a reasonable timeline to do so, and afford an opportunity to the other parties to respond if so desired.

VIII.     Order made at the Second Hearing

45.  In light of the above, there was no hope of the assessment of damages proceeding at the Second Hearing. Therefore, at the Second Hearing, I directed that the assessment of damages be adjourned to 8^th January 2009 at 9:30am before myself in chambers (open to the public) with half an hour reserved for directions hearing. All inter partes interlocutory applications should be made returnable at the same time as the aforesaid directions hearing unless they are of such urgency that requires them to be made returnable before any judge upon showing good grounds of urgency. The Plaintiff should satisfy the court at the aforesaid directions hearing that all previous orders as well as the order I made at the Second Hearing and all documents that are required to be served have been duly served on the 1^st and 2^nd Defendants, and that the addresses adopted by the Plaintiff for service of documents on the 1^st and 2^nd Defendants are proper and effective addresses for service.

46.  On the matter of costs of the Second Hearing, since the reason for abortion of the Second Hearing fell squarely within the Plaintiff’s court, I therefore directed there be no order as to costs of the Second Hearing.

47.  For the avoidance of doubt, I also directed that the Order made at the Second Hearing be drawn up in Chinese and served.

IX.  Postscript

48.  Mr Cheung raised one matter at the Second Hearing that deserves particular mention. Whilst he fairly acknowledged that the procedural handling of the assessment of damages in the present proceedings could have been bettered, he offered as explanation (though not as excuse) the Plaintiff’s “proportionate” efforts in approaching a claim against unrepresented parties who had not appeared in the proceedings.

49.  I trust that by such submission Mr Cheung did not mean that a plaintiff faced with such a case had free rein for shoddy management and conduct of the case. We are now at the eve of the Civil Justice Reform with emphasis on cost-effectiveness, reasonable proportion and procedural economy. But notwithstanding such laudable objectives, the primary function of the justice system is the fair adjudication of cases. In the administration of justice, apart from substantive fairness, fairness and justice of the litigation procedures is one of the necessary components that shape the public’s overall perception of fairness of (and a cornerstone of the legitimacy of) the legal system. In the circumstances, whilst bearing in mind the aforesaid case management objectives, the court must remain vigilant to ensure procedural fairness.

50.  In respect of the assessment of damages herein, the Plaintiff is seeking final judgment for not insubstantial amount of damages against the 1^st and 2^nd Defendants. Order 37 rule 1 of the Rules of the District Court requires such hearing to be an inter partes open court hearing with the attendance of witnesses and the production of documents. Irrespective of the non-appearance of the 1^st and 2^nd Defendants to date, the Plaintiff carries the burden to prove its case on quantum up to the requisite standard of proof. If the 1^st and 2^nd Defendants do not appear at the assessment of damages, then the Plaintiff will not have to contend with defence arguments. But it does not in any way lessen the Plaintiff’s duty in proving its case on the balance of probabilities nor does it lessen the Plaintiff’s obligation to abide by procedural fairness as prescribed in the court rules and court orders. After all, if the Plaintiff is able to sufficiently prove its case (which is as yet unknown), any final judgment obtained will be as potent, weighty and enforceable as one obtained after a contested hearing with defence put up by the other parties.

51.  Every case and every client demand conscientious attention and effort from the handling practitioners. Practitioners should remember that delivery of good and efficient professional services is required for all cases, and not just for cases that are contested. In the present case, due and proper service of court orders and other documents that are required to be served, and timely preparation of the Plaintiff’s case before the scheduled hearing, which are matters requisite for any civil litigation, would have ensured procedural fairness and efficient disposal of the case.

52.  After implementation of the Civil Justice Reform, the trial or assessment hearing will be an immovable date, and the court will have more wide-ranging case management powers including self-executing orders that specify the consequence of non-compliance, directions for payment of sum of money into court upon non-compliance of court directions as security for any sum payable by the paying party to any other party in the proceedings, and/or refusal to vary case management timetable or trial/assessment hearing to accommodate the defaulting party. It is hoped that practitioners will ready themselves for the new age of civil litigation under the Civil Justice Reform.