XCHRX MARCUS ARNOLD LEHMANN v. THE INSURANCE COMPANY OF NORTH AMERICA

HCA 15802/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 15802 OF 1999

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REASONS FOR JUDGMENT

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1. On 13 March 2000, the plaintiff issued a summons asking for:-

(1) Determination whether the cause or causes of action are statute barred.

(2) An interim payment.

2. The summons came before me on 19 April 2000. In the course of the hearing, the parties agreed that paragraph 1 of the summons be withdrawn with no order as to costs. After hearing the submission of Mr Gilbert Collins, solicitor for the plaintiff, I decided not to call on Mr Raymond Leung, counsel for the defendant. After hearing the parties on costs, I made the following order:-

(1) By consent, paragraph 1 of the summons issued on 13 March 2000 be withdrawn with no order as to costs.

(2) The plaintiff's application for interim payment in paragraph 2 of the same summons be dismissed with costs to be taxed and paid forthwith.

3. I told the parties that reasons for my judgment would be handed down in open Court on 28 April 2000. These are my reasons.

4. On 5 October 1999 the plaintiff issued the writ against the defendant claiming amounts payable by the defendant in respect of 3 insurance policies and for damages in consequence of the defendant's failure to honour the terms of such policies arising out of claims made on or about 6 October 1993 in respect of injuries suffered by the plaintiff from a fall occurring in Victoria Park on 9 August 1993. The plaintiff claimed $1,596,000 under the first policy, $250,000 under the second policy and an amount to be assessed under the third policy. About 3 months after the service of the defence on about 9 December 1999, the plaintiff issued the summons. It appeared from Mr Collins' very helpful submission that the plaintiff was seeking interim payment of the total sum of $946,000, all under the first policy, comprising of $96,000 for temporary total disability per month payments for 2 years, $500,000 for permanent total disability and $350,000 for permanent disability. $946,000 is 59% of the claim for $1,596,000 under the first policy.

5. Mr Collins made the application under Rule 11(1)(c) and 12(c) of Order 29. Mr Collins had to persuade me that "if the action proceeded to trial, the plaintiff would obtain judgment" for substantial damages or a substantial sum of money apart from any damages or costs, before the question whether I would think fit to order interim payment would arise.

6. Part I of the first policy under the heading of "Schedule of Benefits" provided that:-

"If while this insurance is in force an Insured Person sustains Bodily Injury which, independently of any other cause, and within one hundred and eighty days of the accident results in accidental injuries, death or disablement of the Insured Person, the Company will pay the Benefit specified below."

7. Clause 2 & 4 of Part II under the heading of "Description of Coverage" provided that:-

"2. Family Monthly Income (Temporary Total Disability) This benefit will be payable when after 30 days from the date of accident, an injury shall wholly and continuously disable and prevent the Insured Person from performing his or her usual gainful occupation, the Company will pay 80% of the Insured Person's net earnings or the specified benefit whichever is the lesser of the two but payment in any event shall not continue beyond two years, during which the Insured Person is under the regular care and attendance of a legally qualified physician or surgeon, other then himself or a family member.

4. Permanent Total Disability
If Bodily Injury results within 1 year of the date of the accident in the Permanent Total Disability of the Insured Person, the Company will pay the annual benefit stated in the Policy Schedule up to a maximum of 10 annual payments."

8. Clauses 3, 4 and 10 of Part III under the heading of "Definitions" provided that:-

"3. 'Accidental Injury' means accidental bodily injury occurring while this Policy is in force, resulting solely and directly from an accident caused by external, violent and visible means.

4. 'Permanent Total Disablement' means disablement which, having lasted for at least 12 consecutive months, will, in all probability, entirely prevent the Insured Cardmember from engaging in his or her usual occupation or any other occupation for which he or she is fitted or can reasonably become fitted by reason of education, training or experience for the remainder of his or her life.

10. 'Temporary Total Disablement' means temporary disablement as a result of Bodily Injury which entirely prevents the Insured Cardmember from engaging in his or her usual occupation or, if the Insured Cardmember has no permanent gainful occupation, confines him or her to home or hospital or medical advice."

9. Clause 9 of Part VIII under the heading of "Exclusions" provided that:-

"The Company shall not be liable in respect of Bodily Injury directly or indirectly consequent upon or contributed by the following:

...

9. Illness, disease, bacterial or viral infection even if contracted by accident. This does not exclude bacterial infection that is the direct result of an accidental cut or wound or accidental food poisoning."

10. Clause 9 of Part IX under the heading of "General policy provisions" provided that:-

"9. Legal Action
No action shall be brought to recover on this Policy prior to the expiration of sixty days after written proof of claim has been filed in accordance with the requirements of this Policy, nor shall such action be brought at all unless commenced within one hundred and eighty days from the expiration of the time within which proof of claim is required."

11. Clauses 1 and 5 of Part X under the heading of "Claim provisions" provided that:-

"1. Claims Procedure
On the happening of any occurrence likely to give rise to a claim under this Policy, written notice shall be given to the Company's Claims Department 29/F, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong. as soon as possible and, in any event, within 60 days after the date of the occurrence. The Company will then provide the Insured Cardmember with forms for filing proof of claim.

Any documents or evidence required by the Company to verify the claim shall be provided by the Insured Cardmember at his or her own expense. Any medical examination required by the Company to verify the claim will be at the Company's expense. The Company shall, in the event of the death of an Insured Person, be entitled to have a postmortem examination performed at its own expense where it is not prohibited by law.

Failure to notify the Company within the time limit prescribed shall not invalidate the claim if it can be shown, to the Company's satisfaction that it was not reasonably possible to give such proof within the prescribed time limit for an otherwise legitimate claim.

5. Terms and Conditions
The due observance and fulfilment of the terms, provisions and conditions of this Policy in so far as they relate to anything to be done or complied with by the Insured Cardmember shall be conditions precedent to the liability of the Company to make any payment under this Policy."

12. By paragraph 6(2)(b) of the Defence, the defendant denied liability on the ground that the plaintiff's "hospitalisation related to the sudden syncopy and left wrist drop he suffered which related to his own illness rather than accidental injury". By paragraph 17(3), the defendant denied liability on the ground that any total disability was caused or contributed to by 2 earlier incidents on about 13 December 1986 and 3 October 1990 respectively and not caused by the incident on 9 August 1993. Mr Collins contended that the 2 earlier incidents were too remote. He cited Halsbury's Laws of England, volume 25, paragraphs 584, 585, 569 and 573, Winspear v Accident Insurance Company Limited (1880) 6 QBD 42, and Lawrence v Accidental Insurance Company (1881) 7 QBD 216; conceded that Jason v Batten [1969] 1 Lloyd's Rep 281 was an authority to the contrary; but sought to distinguish it on the ground that the policy in that case contained an express exclusion.

13. Under Part I, the insured had to sustain Bodily Injury which "independently of any other cause ... results in accidental injuries" before the defendant's liability could arise. By Part III Clause 3, "accidental injury" meant accidental bodily injury "resulting solely and directly from an accident caused by external, violent and visible means". Part VIII Clause 9 expressly excluded "Bodily Injury directly or indirectly consequent upon or contributed by ... illness, disease".

14. In my judgment, whether the injuries which the plaintiff said he sustained on 9 August 1993 resulted solely and directly from an accident caused by external, violent and visible means and not caused by or contributed to by illness or disease such as sudden syncopy could only be determined at trial. The application of principles such as those discussed in the authorities cited by Mr Collins and those discussed in, by way of example, paragraphs 25-1, 25-13, 25-20, 25-36 - 25-45 of MacGillivray on Insurance Law, 9th edition, was clearly fact sensitive. I was satisfied that the defendant had raised clearly "triable" issues of fact which meant that I was not persuaded that the plaintiff would succeed if the action proceeded to trial.

15. By paragraph 17(1) of the Defence, the defendant denied liability on the ground that the plaintiff failed to give written notice as soon as possible. Part X Clause 1 provided that written notice should be given as soon as possible and in any event within 60 days after the date of the occurrence. Part X Clause 5 provided that the due observance and fulfilment of the terms should be conditions precedent to the defendant's liability. The incident occurred on 9 August 1993 and the plaintiff's case was that notice was given on 13 October 1993. Thus, on the plaintiff's case, notice was given more than 60 days after the date of the occurrence. Mr Collins contended that the defendant was estopped by reason of the defendant's payment of part of the plaintiff's claims, referring me to paragraph 6(2)(b) & (c) of the Defence. Whether the defendant was estopped by a payment made by the defendant notwithstanding a letter from the defendant declining the plaintiff's claim was another issue which depended on the facts to be determined at trial. I was not persuaded that the defendant's reliance on Part X Clauses 1 and 5 was bound to fail.

16. By paragraph 16(7) of the Defence, the defendant pleaded the 180 days time limit under Part IX Clause 9 to commence action. The limitation period for actions might be shorted by clear terms of the contract, The Law of Insurance Contracts by Malcolm A Clarke,3rd edition, paragraph 26-5. Mr Collins contended that the 180 days time limit was not applicable because the defendant never required the plaintiff to prove claim. The defendant rejected the plaintiff's claim right from the start. I was not persuaded that the contention that the 180 days time limit ran from the rejection or communication of the rejection was bound to fail.

17. By paragraph 21 of the Defence, the defendant relied on the Limitation Ordinance, Cap. 347. Mr Collins told me that it was arguable that the cause of action accrued on the date of accident. If the cause of action arguably accrued on 9 August 1993, the Writ was not issued within 6 years. In view of Mr Collins' concession, I did not think the defendant should be shut out from the limitation defence. There is support for the view that in insurance contracts, or at any rate, indemnity insurance contracts, the right of recovery against the insurer accrued on the happening of the loss rather than at any later stage, Limitation Periods by McGee, 3rd edition, paragraphs 10.026 - 10.028 and The Law of Insurance Contracts by Malcolm A Clarke, 3rd edition, paragraph 26-5B.

18. By paragraph 17(2) of the Defence, the defendant did not admit that there was total disability within the meaning of the first policy. The defendant relied on the defendant's own medical report that while it would not be possible for the plaintiff to be reemployed as a professional concert violinist, he was physically able to tutor violin at a lower level (50%) of normal, although the defendant's own doctor could not say whether tutoring required any teaching qualification. While the plaintiff might have no academic or teaching qualification, the plaintiff, as the former lead violinist in the Hong Kong Philharmonic Orchestra, arguably had professional qualification. Whether teaching or tutoring was "any other occupation for which he or she is fitted or can reasonably become fitted by reason of education, training or experience" within the meaning of Part III Clause 4 was an issue to be determined at trial.

19. For the reasons which I have given, the plaintiff's application for interim payment failed and I dismissed it.

20. In my judgment, the plaintiff's application for interim payment was an application for summary judgment in disguise. As the plaintiff knew the defendant's contentions before issuing the summons for interim payment, and by analogy with Order 14 Rule 7, I ordered the defendant's costs to be taxed and paid forthwith by the plaintiff.