XCHRX TSE NGAN HEUNGA v. THE RITZ-CARLTON LTD. AND ANOTHER

HCPI 658/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 658 OF 2000

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J U D G M E N T

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1. This is a relatively straightforward claim for damages for personal injuries by two Plaintiffs who were injured as a result of the negligent driving of a motor vehicle by the second Defendant, a chauffeur by occupation formerly employed by the first Defendant. It is in fact now a consolidated action, there originally having been separate actions by each Plaintiff. These were consolidated by me on 21 July this year.

2. The Plaintiffs were both pedestrians on the pavement of Queensway, when they were knocked down by the second Defendant who drove the vehicle on to the pavement. The accident happened in March 1998. Both Plaintiffs are bound to succeed against the second Defendant. There can be no question of contributory negligence.

3. The sole issue concerns the Defendants. Was the second Defendant driving as servant or agent of the first Defendant, or was he driving the vehicle outside the scope of his employment by the first Defendant? Was he on a frolic of his own? The action is fixed to be tried on the 6 December of this year.

4. In that idiosyncratic way which characterises much of Hong Kong's personal injury litigation, the second Plaintiff's action experienced a few bumps and ripples before it settled on a rational course.

5. Madam Tse started her action against both Defendants in May 1999. She was quicker off the mark than the first Plaintiff whose action was not commenced until one year later in May 2000.

6. For some reason which is not wholly clear, though it seems to have been based on a conviction of the second Defendant in the Magistrates Court of an offence of failing to have Third Party Insurance, the second Plaintiff, Madam Tse, discontinued her action against the first Defendant whose Defence pleaded that the second Defendant was not driving in the course of his employment. The second Defendant's Defence had however admitted that he was driving as servant or agent of the first Defendant. Here was clearly the issue between the two Defendants which justified the action being pursued against both. The two Defences were filed in late August and early September respectively. The Notice of Discontinuance was dated 16 November 1999. It appears to be in the form of a Consent Order involving the Plaintiff and the first Defendant only. The second Defendant was not apparently informed, a singularly unhappy aspect in the procedure adopted particularly since the second Defendant had served through his solicitors, a "Third Party Notice" claiming indemnity against the first Defendant.

7. That discontinuance was made on the basis of an agreement between the Plaintiff and the first Defendant which provided for the Plaintiff being able to reconstitute the action against the first Defendant in certain circumstances. I may be required to consider that agreement and its surrounding circumstances in due course.

8. However the Plaintiff did bring the first Defendant back into the picture by commencing another action against the first Defendant in May 2000 which is also consolidated. And so we have the first Defendants back in the picture subject to some ruling which I may have to give at some later stage.

9. The relatively straightforward personal injuries action, though marginally complicated by the meandering I have referred to, has become further complicated by this application by Ming An Insurance Company to be joined as a third Defendant. I say at the outset that I regard this further complication as quite unnecessary and I propose to consider the legal representation afforded to the second Defendant and the history of it to illustrate this.

10. Originally Fairbairns acted on behalf of both Defendants. On 18 August 1999 Fairbairn obtained an order that they be allowed to cease to act for the second Defendant, their prime reason being a conflict of interest. They contended that the second Defendant was not covered by the first Defendant's policy of insurance.

11. In action 565 of 1999 (the second Plaintiffs' first action) the Defence of the second Defendant (the driver) was served on 2 September 1999 by Ip Kwan & Co. who had taken over his representation. On the same day a Third Party Notice was served on the first Defendant by the second Defendant. There was then a flurry of activity between the two Defendants. Throughout this Ip Kwan & Co. acted for the second Defendant.

12. On the 16 November the second Plaintiff, as mentioned earlier, discontinued its action against the first Defendant by the Consent Order. The second Defendant was not a party to that step and seemed unaware of it. It was irregular. Despite this strange state of affairs the first Defendant continued to seek further and better particulars of the second Defendant's Third Party Notice (which was in fact a notice between Defendants) even though the first Defendant was no longer a party to the action. This was on 18 December 1999. These were nonetheless supplied by Ip Kwan & Co. on the 30 December 1999.

13. On the 20 December 1999 the second Defendant had obtained an order for discovery against the first Defendant again despite the fact that there was, then, no first Defendant. The second Defendant's solicitors were seemingly unaware of what the Plaintiff had agreed with the first Defendant i.e. the discontinuance.

14. Then, as if the first Defendant (now no longer a Defendant) suddenly realised the effect of its non-involvement, it took out an application to strike out the second Defendant's Notice, an unnecessary action in itself. The reality was that with the first Defendant no longer being involved in the action, all matters involving it had fallen away and yet it had persisted in relation to the second Defendant as if it remained in the action. What the second Defendant needed to do at this stage, if it had been fully aware of the strange 'goings-on', was to commence proceedings to join the former first Defendant as a Third Party. Nonetheless it was in my view misled by the conduct of the first Defendant in continuing to conduct matters as if no discontinuance had taken place.

15. By the 29 January 2000 the second Defendants solicitors had become aware of the Plaintiff's discontinuance against the first Defendant. Miss Kwan was sworn to an affirmation in support of an application (dated 31 January 2000) to join the American Home Assurance Company (through AIU) being the insurers of the first Defendant, as a Third Party. What they should in fact have done was to join the former first Defendant as Third Party, thereby re-involving the latter's insurers. What is clear is that although back in August 1999 Fairbairns were saying that they could not make contact with and obtain instructions from the second Defendant, Ip Kwan & Co. had had no difficulty whatsoever.

16. Ip Kwan & Co's application was made ex-parte. This was quite inappropriate and the Master rightly refused to deal with it on that basis. In the meantime however - on 17 February 2000 - Fairbairns took out their application to strike out the second Defendant's Third Party Notice which I have referred to earlier, thus adding further confusion. On the 21 February 2000 the Master adjourned Fairbairn's application because one or both parties indicated that counsel would become involved and that two hours would be required. Had the parties applied their minds to the position they would have realised the simplicity of the situation and that it was the first Defendant's solicitors who had created the confusion.

17. Following that, Ip Kwan & Co. took out an application for leave to cease to act for the second Defendant. It was adjourned from the 29 March 2000 to the 5 April when the order sought was made. The second Defendant did not attend on either occasion. By this time he must have been thoroughly confused as to what was going on and I have considerable sympathy for him in this regard. I have spent a considerable time going through the Court file and the mass of paperwork unnecessarily generated in order to see what has been going on.

18. Miss Kwan's affirmation in support of her application to go off the record, sworn on the 15 March, sets out that her instructions come from Ming An Insurance Co. (HK) Ltd who are the insurers of the vehicle concerned in the accident, which was leased to the former first Defendant (Ritz-Carlton) by the car hire company, Park Lane Limousine Service Limited,. Ming An insure Park Lane. Park Lane are not and never have been a party in this action (or any of the actions). The representation of the second Defendant hitherto had therefore been under the aegis of Ming An, although one assumes the second Defendant was happy for that to be so and I am told that there was some agreement to that end. It is quite clear that Ming An's interest is identical to that of the second Defendant i.e. he was driving as servant or agent of the former first Defendant and so it is the common contention that it is the employers' insurers who are liable to meet the claim under their policy of insurance.

19. The affirmation goes on to state that the conviction of the second Defendant in the Magistrates' Court for driving a vehicle whether Third Party Risk's Insurance is a finding of fact which binds a civil court in these proceedings. That is not correct. The conviction means that the driver was unable to satisfy the court that he had such insurance cover. It is not and cannot be "res judicata" of the issue of whether the driver was driving as servant or agent of the employer (Ritz-Carlton).

20. Furthermore, Ming An's interest in the proceedings remains as insurer concerned, as it is party to the MIB Agreement even though its contention is that it is not on risk directly, as Park Lane is not a party, and therefore it will not be called upon under the policy.

21. Because of the discontinuance by the second Plaintiff of her action against the first Defendant, she was then proceeding against an uninsured motorist. Accordingly Ming An has invited the Plaintiff to take proceedings against the first Defendant on the undertaking to indemnify her in respect of the costs of so doing. At that stage the Plaintiff had not responded. In that vacuum, Ming An (through its solicitors Ip Kwan & Co.) were acting on the advice of Counsel in seeking to cease to act for the second Defendant. I do not need to consider the correctness of such advice. Apparently such advice also suggested that Ming An or the MIB should in due course apply to be joined in the action as intervener.

22. Apparently the second Defendant had accepted representation by Ip Kwan & Co. (on behalf of Ming An) on a basis which was without prejudice to Ming An's right to refuse to indemnify. Since the driver's case was that he was driving as servant or agent of Ritz-Carlton, his then employers, Ming An could not at any stage be his insurers or on risk to indemnify him. They would only be on risk if Park Lane were being sued. They are now only concerned by virtue of the MIB Agreement. That comes into play if the Plaintiff obtains a judgment against the second Defendant, which is not satisfied by him, and she has complied with the MIB's requirement that she proceed against any other potential tortfeasor who is insured i.e. Ritz-Carlton. The apparent reason for Ip Kwan & Co. therefore ceasing to act is the non-pursuit of an action by the Plaintiff against Ritz-Carlton. No doubt the reason that Ming An were prepared to provide representation for the driver in the first instance, when Fairbairns ceased to act, was that its interest was identical to that of the driver i.e. establishing vicarious liability on the part of Ritz-Carlton. The only change was the Plaintiff's discontinuance, to me inexplicable.

23. On the 16 May this year the first Defendant's application to strike out the second Defendants Third Party Notice came back before the Master for argument. The second Defendant did not attend. He was by now unrepresented, but Miss Kwan, who did attend, was asked to wait outside whilst this issue was put, without opposition before the Master. Why Miss Kwan should have been excluded by the first Defendant's Counsel I cannot understand. It may well be if she had been present (and been able to assist the Master with the full picture) the whole of the subsequent events would have taken a different and more sensible course. However the first Defendant (who had not been a party to the action since mid-November 1999 of the previous year) obtained the order sought, for what it is worth.

24. On the day before this hearing, the second Plaintiff again commenced proceedings against Ritz-Carlton. Its case was the same as that originally commenced almost exactly one year earlier which had been discontinued in November of the same year. If the Plaintiff's solicitors had been notified of the hearing of the first Defendant's summons on the 16 May I anticipate that they would have attended and everyone would have been in the know. As it was the futility of that exercise went unrealised to that extent.

25. As a footnote to this aspect the second Plaintiff's solicitors had also taken out an application to rejoin the first Defendant in its existing action (565 0f 1999). This was served only on the first Defendants. Unaccountably the second Defendant was left in ignorance of this too. It came before Master Poon on 3 May who adjourned it to 16 May to be heard by the same Master, who was to hear the first Defendant's application against the second Defendant to which I have referred a little earlier.

26. Somehow it came before a different Master. So the situation resulted with one Master due to hear an application in the action in which the applicant (Ritz-Carlton) had ceased to be a party, and another Master was due to hear in the same action, an application by the Plaintiff to rejoin Ritz-Carlton as a Defendant. In the second application the same counsel appeared for Ritz-Carlton to vacate by consent that hearing, as appeared before the other Master to pursue its application. He ought to have ensured that both matters came before the same Master as indeed the solicitors concerned - Fairbairn's - should have. That however was not the end of this progressively bizarre and unjustifiably convoluted matter. Also on the same date was another application by the second Plaintiff (565 of 1999) to be heard by the Master before whom its earlier summons had been vacated by consent. This was an application to withdraw an affirmation filed by the Plaintiff's solicitor in support of the application to rejoin Ritz-Carlton. That set out the solicitors understanding of certain matters which led to the original discontinuance of the action against Ritz-Carlton and then the later decision to bring Ritz-Carlton back into the proceedings. It is not necessary to go into the detail but one aspect concerned the MIB's requirement that the Plaintiff should proceed against the employer of the driver, on the basis of vicarious liability. The implication of failure to comply with this was obvious - the MIB could decline to meet any judgment obtained against the second Defendant if the action did not proceed against Ritz-Carlton as well. I mention in passing, if only to indicate that it was not a complication, that the limitation period had not expired and does not expire until a date in March 2001.

27. This application was opposed by Counsel for the first Defendant who told the learned Master that it was "more complicated than it may look". It had indeed become complicated by reason of the fog generated by the lawyers acting for Ritz-Carlton and the second Plaintiff. It was in fact startlingly simple. The Affirmation had been filed. It had to stay there. It had been served on the solicitors for Ritz-Carlton. They had obviously read it. There was no sound conceivable reason to remove it. Moreover the Plaintiff's solicitors had commenced a new action against Ritz-Carlton. The Master was persuaded to adjourn it with an estimate of an hour for argument. Miss Kwan of Ip Kwan & Co., who had taken out her own application to join Ming An as intervener almost a month earlier, was present as she clearly had an interest in what was going on. This makes it even more astonishing that Counsel for Ritz-Carlton should have objected to her presence on that same day when he was arguing, without opposition, without locus, that the second Defendant's Third Party Notice should be struck out (i.e. the notice between Defendants in the same action).

28. The position by the end of May of this year was this:

29. The first Plaintiff had started her action against both Defendants. The second Plaintiff had started a second action against Ritz-Carlton and had agreed to adjourn its application to re-join Ritz-Carlton as the first Defendant in its first action. The second Defendant was now unrepresented. Ip Kwan, his most recent solicitors, now had an application to obtain an order for Ming An, who was happy enough to instruct them to represent the second Defendant until it was realised that the first Defendants had dropped out of the picture, to be joined as a third Defendant.

30. I have heard this application spread out over two days. Ming An's interest in this litigation is no different now than it was at the outset. It is the same interest as that of the second Defendant, namely that Ritz-Carlton should bear vicarious liability. Whilst the first Defendant was in the action it was content to represent the second Defendant through the solicitors nominated by it. This is no reasonable argument against it so doing both as a matter of sensible practice and on the authorities, which do not call for consideration at this stage. In any event the first Plaintiff's action, properly constituted, continues against both Defendants. There has been no waywardness in its progress. Furthermore this is now a consolidated action. Therefore Ming An, through Ip Kwan & Co., can participate by representing the second Defendant. It is also with a sense of relief that the solicitors for the first Plaintiff, who have not been embroiled hitherto in these matters, have since June, taken over representation of the second Plaintiff.

31. It is unarguable that Ming An, and Ip Kwan & Co., withdrew representation from the second Defendant because it was felt that, once the second Plaintiff had discontinued its action against the first Defendant (Ritz-Carlton), Ming An would be prejudiced if it continued to represent him. In my view that is a fallacy. The first Defendant could have been brought back into the picture by Third Party proceedings. However I accept that Ming An and its solicitors may have been confused by the fact that the discontinuance was quite inexcusably kept from them and then the first Defendant continued as if it were still a party in the action. Now that the first Defendant is back in the proceedings there is no reason why Ming An, through Ip Kwan & Co., should not take up representation of the second Defendant. It would be entirely proper for them to do so and also a practical aid to the trial judge since it will ensure that the second Defendant's interest and that of Ming An (and the MIB) will be fully provided for. There is therefore no need for Ming An to be joined as a Defendant, with the consequent need for pleadings, extra representation and a degree of unnecessary cost.

32. I have taken full account of the contents of Miss Kwan's affirmations, the latest being that sworn on 18 April 2000 in support of this application. They make it quite clear what is the interest of Ming An. I have no hesitation in saying, as I have earlier, that Ming An's interest must be properly represented. It was provided for fully when it arranged representation for the second Defendant when Fairbairns ceased to act for him. Now that the first Defendant is a party in the consolidated proceedings, Ming An's interest will be fully provided for if it resumes, through its solicitors, representation for the second Defendant.

33. In support of Ming An's application to be joined as a Third Defendant, I have been referred to a number of cases relating essentially to the representation of the interests of insurance companies and the MIB. They include principally:

Gurtner v. Circuit & Anor [1968] 2 QB 587.

White v. London Transport [1971] 2 QB 721.

Chu Yuen Wah v. Lee Kwok-kee [1995] 2HKLR 280

Gaston v. Hui Wing-kuen & Anor (Mortimer, J 21 July 1993)

34. I have considered all those cases and others. The case before me is of striking simplicity. I have already indicated how the insurers interest (and that of the MIB) can properly be provided for. A detailed exposition of these cases is quite unnecessary. The application is therefore dismissed.

35. In considering the question of costs I have taken into account all those matters to which I have referred earlier and which have generated inordinate costs and continued to complicate matters. Ming An however could have resolved this matter simply by taking up representation of the second Defendant again, as the first Defendant's and Plaintiff's counsel had argued. This hearing would not have been necessary. There is no doubt that Ming An, and Ip Kwan & Co. were quite pointlessly and wrongly, kept out of the picture by the second Plaintiff's and the first Defendant's solicitors for a number of months, but once they were in the picture the proper course was in my view obvious. Therefore they will have to bear the costs of and occasioned by this application. Although I cannot see any argument against such an order for costs, I will nonetheless make this a nisi order at this stage.

36. The first Defendant has an outstanding application to stay the proceedings against it on the basis that the second Plaintiff is estopped from further proceedings against it by the agreement reached in respect of the discontinuance on 16 November 1999. This is now a consolidated action. The first Defendant's application relates only to the second Plaintiff. It cannot affect the first Plaintiff's claim. Its argument is on a narrow issue which can be dealt with, without any prejudice to the first Defendant, at the trial of the consolidated action. There will be no savings by an earlier decision. The second Plaintiff still has to prove the claim on quantum against the second Defendant in any event. If the first Defendant's application were to be dealt with as a discrete issue before trial of the main action, it would involve unnecessary and excessive cost. Furthermore in the context of the question of cost, about which I am to say a little more, I think these parties have wasted enough costs so far, that any Court would feel itself obliged to take steps to prevent further wastage.

37. On that latter topic this seems readily apparent to me. There have been wasteful applications to the Court involving the second Plaintiff, and more particularly, the first Defendant which have involved a significant degree of expenditure. I do not know at present whether that has arisen through inexperience and/or ignorance, or some other factor. I do know that much use of court resources has been unnecessary. It has shown an unrestrained, unthinking recourse to interlocutory proceedings. I am concerned that the lay clients should be expected to pay for what seem to me to be ill-judged forays in the adversarial system. Accordingly, the parties concerned will be required to justify their past actions if they seek to recover their costs from any other party, in spite of existing orders, and the lay clients should be given the opportunity to attend. I shall be particularly concerned to know what parties seek to charge in respect of Counsel's fees for the hearings on 16 May 2000 and whether separate briefs were delivered in respect of the these hearings scheduled for that day. The taxing Master will in any event need to know such matters but there is a public interest in the matter of the use of Court resources and the costs of such litigation.