YUNG HONG WAI v. NG KAM SHING & Others

S.C.T.A. NO.9/94

H E A D N O T E

Res Judicata - splitting of claim - Insured's car damaged - Insured claims for the uninsured loss (excess under the policy) - consent judgment - insurers bring a second claim for the insured loss by way of subrogation - Taylor v. O. Wray & Co. Ltd. [1971] 1 Lloyd's Law Reports 497 considered and distinguished and in any event not followed.

IN THE SUPREME COURT OF HONG KONG

SMALL CLAIMS TRIBUNAL APPEAL NO.9/94

(Claim No. 36423/93)

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JUDGMENT

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1. This is an appeal against the decision of the learned Adjudicator of the Small Claim Tribunal dismissing the Claimant's claim for $14,741.

2. The Claimant's claim arose out of a traffic accident on 4th of July 1992 involving 3 vehicles, EG3025, ES7288 and DH6812. The Ist and 2nd Defendants were the owner and driver of the first vehicle. The 3rd and 4th Defendants were the owner and driver of the second vehicle and the Claimant was the owner of vehicle DH6812.

3. As a result of the said accident, the Claimant's vehicle was damaged and a total repair cost of $27,301.00 was incurred.

4. At the material time, the Claimant's vehicle was insured by Anglo Starlite Insurance Company Ltd.(Anglo)

5. On 17th of July 1992, Anglo paid to the Claimant the sum of $14,301.00 to cover the repair cost of the Claimant's vehicle having deducted the excess amount under the policy of $13,000.00

6. On 24th Mach 1993, the Claimant filed a claim with the Small Claims Tribunal under Claim N0. 8423 of 1993 (the first claim) for the following amount:

(1) Policy Excess of DA6812	HK$13,000.00
(2) Loss of 7 days hiring fee at $450 a day	3,150.00
(3) Search fee	50.00

7. To enable his claim to fall within the jurisdiction of the Small Claims Tribunal, the claimant abandoned $1,200.00 and limited his claim to the sum $15,000.00. In the Claim Form, the Claimant also stated the following;

(This is only part of the loss, does not include the loss of Anglo Starlite Insurance Co. Ltd.)

8. On 24th of May 1993, the Small Claims Tribunal made an award in favour of the Claimant in the following terms;

9. By consent and in full and final settlement of the matter:-

1) Judgment for the Claimant against 1st defendant-2nd defendant in the sum of $3,750.

2) Judgment for the claimant against 3rd defendant-4thdefendant in the sum of $9,500.

10. The said sums shall be paid on or before 24.6.93

11. In the meantime, there was negotiation between Anglo and the Insurer of the 3rd and 4th defendants and without prejudice offers were made to Anglo by their letters dated 19.1.1993, 19.2.1993 and 16.4.1993. The parties had failed to reach any compromise.

12. Indeed, on 20th October 1992, Anglo had written to Associated Bankers Insurance Co. Ltd. (Associated Bankers)- the insurer of the 3rd and 4th defendants, setting out the nature of the Claimant's claim and enclosing the relevant documents. There was no doubt that Associated Bankers was fully aware that the repair cost of the Claimant's vehicle was in fact over $27,000.00

13. When Anglo failed to reach a compromise with Associated Bankers, a second claim was filed in the name of the Claimant against the 4 defendants in the Small Claims Tribunal under Claim No. 36423 of 1993 (the second claim) for the sum of $14,741.00. being repair cost of DH6812 plus $440.00 survey fee.

In his defence, the 3rd defendant dispute the Claimant's claim for the following reasons-

1. It is averred that the Claimant has already sued for his damage arising out of the same accident and the same cause of action in Claim No.8423 of 1993 in the Small Claims Tribunal and has obtained a Judgment by consent for the sum of $9,500.00 which was in full and final settlement of the said cause of action.

2. In the premises, it is averred that the Claimant is estopped from making any further claim against the present defendants and the defendants reserve the right to strike out the Claimant's claim.

14. On the day of the hearing on 28th of January 1994, the learned Adjudicator dismissed the second claim and an application by the Claimant to review the decision of dismissing the claim also failed and hence the present appeal.

15. The second claim was in fact instituted by Anglo, having subrogated the Claimant's right and it was Anglo's contention that they were not aware of the first claim until the defence to the second claim was filed.

16. Mr.Cheung on behalf of Anglo argues that the doctrine of Res Judicata/ Issue Estoppel must be applied sensibly and flexibly in order to do justice between the parties. It is suggested that in the first claim, it had been specifically stated that the loss of Anglo had not been included and that the defendant should not be allowed to take advantage of a procedural technicality to bar the whole claim by settling part of the claim. It is also pointed out that the defendant has suffered no prejudice and it is not inequitable nor unconscionable to allow the second claim to continue to enable Anglo to recover from the defendants the balance of the repair cost to the vehicle DH6812. Mr.Cheung suggests that the doctrine of Issue Estoppel/Res Judicata has no application when the first claim was concluded by way of a consent order. Alternatively, it is suggested that if the doctrine of Issue Estoppel/ Res Judicata has any application at all, it only has the effect of estopping Anglo through the Claimant from claiming the uninsured loss and Anglo should be entitled to proceed with the balance of the second claim after deducting the award by consent in the first claim of $9,500.00

17. The principle of Res Judicata to ensure that there must an end of litigation and that no one should be proceeded against twice for the same cause is well established. The principle clearly applies to situation involving motorists and their insurers where the insureds agree to bear certain initial amount of the costs of the repair to their vehicles.

18. In Buckland v. Palmer [1984] 1 W.L.R. 1109 Griffiths L.J.

stated in his judgment at P.1115;

"This appeal raises a point of general importance to motorists and their insurers. The majority of car drivers with comprehensive motor policies agree to bear the first ￡ of any accidental damage to their car and as a result they pay a significantly smaller premium. If as a result of an accident the cost of repairing the car is, say, ￡1,000.00 and the policy holder has agreed to bear the first ￡100 of the damage, can thepolicy holder recover ￡100 in one action and the insurers recover the ￡900 which they have paid to their policy holder in another action o r must both sums be claimed in one action ?

In my opinion the general rule should be that both sums must be claimed in the same action. I take it to be well settled law that, as Viscount Sumner said in Clark v. Urquart [1930] A.C.28 "A claimant....must prove and recover damages, arising from from one and the same cause of action, once and for all"..... An insurer who pays his insured under a comprehensive policy and then seeks under his right of subrogation to recover that sum in the name of his insured can have no greater rights against the tortfeasor than those of his insured. The insured could not bring successive actions to recover the first ￡100 of his damage and then ￡900 and, in my view, neither can the insurer.'

19. In Conquer v. Boot [ 1928] 2 K. B. 336Sankey L.J. made similar observation at P.340:

'With regard to the plea of res judicata a great number of cases have been cited to us, the most informative of which is that of Brunsden v. Humphrey. In that case there was one wrongful act-namely, negligent driving-but there were two distinct causes of action-namely, the injury to the cab and the injury to the man's person-and Bowen L.J. says this:"It is a well settled rule of law that damages resulting from one and the same cause of action must be assessed and recovered once for all." Pausing there for a moment, in my view it would have been impossible for the plaintiff in that case to bring several actions in respect of the damage to his cab. He could not have sued one day for a broken wheel and next month for a broken shaft and later for a broken window and so forth; and so too, with regard to the personal injuries, it would have been impossible for him to sue one day for the loss of a leg and another day for the loss of another leg and later to sue because he lost his fingers or had injured his head. One knows that in personal injury cases damages are assessed once for all.'

20. There can be no dispute that the cause of action and the nature of the claim involved in both the first and the second claim is identical. The parties involved in both claims are also the same although the second claim was brought by Anglo in the name of the Claimant for its insured loss by way of subrogation. There is no argument that the Small Claims Tribunal is a tribunal of competent jurisdiction. All the requirements for the operation of the doctrine of Res Judicata clearly exist.

21. Mr. Cheung's submission on behalf of the Claimant that the doctrine of Res Judicata does not apply in a case where the earlier judgment was obtained by consent. Such argument cannot be sustained. One needs only to refer to the case of In re South American and Mexican Company Ex parte Bank of England [1985] 1 Ch. 37 Vaughan Williams J observed at first instance at P.45

'Under these circumstances I have only to consider, with reference to the second question, Mr. Moulton's suggestion, that a judgment by consent, upon which the Court has not exercised its mind, does not and cannot raise an estoppel inter partes. I can only say this is the first time I have ever heard such a proposition suggested. It has always been the law that a judgment by consent or by default raises an estoppel just in the same way as a judgment after the Court has exercised a judicial discretion in the matter. The basis of the estoppel is that when parties have once litigated a matter, it is in the interest of the estate that litigation should come to an end; and if they agree upon a result, or upon a verdict, or upon a judgment, or upon a verdict and judgment, as the case may be, an estoppel is raised as to all the matters in respect of which an estopel would have been raised by judgment if the case had been fought out to the bitter end.'

And on appeal to the Court of Appeal, Lord Herschell L.C. in confirming the judgment, made the following observation at P.50:

'The truth is, a judgment by consent is intended to put a stop to litigation between the parties just as much as is a judgment which results from the decision of the Court after the matter has been fought out to the end. And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments, and were to allow questions that were really involved in the action to be fought over again in a subsequent action. I think, therefore, the judgment should be affirmed, and the appeal dismissed with costs.'

22. The special features about the present case is that when making the first claim, the Claimant had clearly stated that his claim did not include the loss to Anglo and that the second claim was brought by Anglo in the name of the Claimant in ignorance of the first claim. Do these two matters affect the operation of the doctrine of Res Judicata ? I think not.

23. Anglo itself had no independent cause of action against the defendants. Anglos is only entitled to sue in the name of the Claimant in the exercise of its equitable right of subrogation against the defendants having paid the Claimant his loss or part of his loss under the policy between Anglo and the Claimant. Anglo vis-a-vis the defendants could not be in a better position than that of the Claimant. Lord Mansfield's decision in the leading case of Mason v.Sainsbury, 3 Doug. 61 established that the payment of the loss by the insurer to the assured did not affect the liability of the wrongdoer the action against him was to be considered "as if the insurers had not paid a farthing:"

24. In Castellain v. Preston, 11 Q.B.D. 380 Brett L.J. said at

P.388 that "the insurer must be placed in the position of the assured."

25. If the Claimant had split his claim arising out of the traffic accident in question into more than one actions in the Small Claims Tribunal, the subsequent actions were bound to be dismissed if judgment had been obtained in the first action. This is particular so when the jurisdiction of the Small Claims Tribunal is limited to $15,000.00 and the split action has the effect of extending the jurisdiction of the Tribunal artificially. It makes no different that the Claimant should state in the first action that it was only part of his claim and that subsequent claim may follow. I accept Mr. Chiu's

submission that the Claimant simply is not entitled to do so and the attempt to circumvent the operation of the doctrine of Res Judicata is invalid. That is so whether the Claimant is making the claim in his own right or whether it is Anglo making the claim in the name of the Claimant.

Mr. Cheung complains of the injustice of the matter when the

defendant were at the material time aware that the first claim in fact was just part of the Claimant's claim and that Anglo had no knowledge of such claim. Such 'injustice', if any was the result of the Claimant's failure to appreciate the significance of what he did in pursuing only part of his claim. He should of course pursue the entire claim and to hold the part covered by the insurance in trust for Anglo. Whether Anglo can redress such 'injustice' against the Claimant for prejudicing its position is a matter that can be dealt with elsewhere, suffice for the Court to say that the Doctrine of Res Judicata must be uphold otherwise there may be repeated actions between the same parties over the same cause of action for the same relieves with the possible result that different tribunal may come up with contradictory finding over the same issue.

26. Mr. Cheung had placed considerable reliance on the case Taylor v. O. Wray & Co. Ltd. [1971] 1 Lloyd's Law Reports 497

The facts of the case from the head-note is as follow:

"The plaintiff, while driving his car, came into collision with a driven by the defendants' servant. The plaintiff brought an action in the County Court in respect of his personal injuries. The special damage alleged included 10 excess, payable under his motor policy. The defendants paid 30 and scale costs into Court. That action was settled, the plaintiff's own solicitors writing to the defendants' insurers: "the plaintiff accepts the sum of 30 paid into court in full settlement of his claims in this action."

The defendants contended that as that settlement included the 10 uninsured loss the plaintiff was barred from claiming in respect of his insured loss.

It was held on appeal that the defendants' plea was a mere technicality of no merit or substance; the parties to thesettlement intended to exclude the insured claim.

Edmund Davies, L.J. said at P. 500:

"This in my judgment is a mere technicality of no merit or substance. What are the facts? They are that long before the settlement of this claim the plaintiff's insurance company had written to the defendants' insurers informing them that the cost of repairs would be in the region of 185 and that they would look for reimbursement of that sum, and that an offer to settle that claim on a 75/25 basis had already been made and negotiations were still afoot when the letter of June 28 was written; they did not come to a head until July 6, when the plaintiff's insurers, having paid their own insured, demanded reimbursement of the defendants' insurers.

In these circumstances neither party to the agreement made on June 28 could have been in any doubt that the settlement then negotiated intended to exclude what I may called the insured claim and to be confined to the uninsured claim. It was perfectly open to the parties' advisers to act in this way, and in my opinion when the letter of June 28 mentions "in full settle- ment of his claims in this action' that refers and was intended by both parties to refer to the uninsured portion of the plaintiff's claim. If this be right, no further question of law arises. The learned Judge was right, and the appeal should be dismissed."

27. The decision in Taylor v. O. Wray & Co. Ltd was a case decided on it very special facts. As Sir John Donaldson M.R. observed in Buckland v. Palmer (supra) at p.1114: 'Thus far the stream of authority is clear and unruffled. The joker in the pack is the decision of this court in Taylor v. O. Wray & Co. Ltd............................(4) in any event, the court was not concerned with a judgment or payment into court in that case, but with a contractual settlement which clearly excluded the insured claims from its ambit.

28. Taylor v. O. Wray & Co. Ltd. is thus clearly distinguishable and the matter has to be approached on the basis of principle and other authority. Indeed I think that it was a very special case.'

29. Griffiths L.J. made similar observation at p.1117:

'The judge thought that he was bound by the decision in Taylor v. O. Wray & Co. Ltd. to allow the second action to proceed. The decision appears to be out of line with the general stream of authority, and it would appear that Derrick v. Williams [1939] 2 All E.R. 559 was not cited to the court. The decision is, however, distinguishable on the ground that the sum accepted by way of settlement for the uninsured damage could never have been intended by the parties to be either paid or accepted in settlement of the claim for the insured damage, and that the settlement did not bar an action to recover the insured damage. I agree with Sir John Donaldson M.R. that it was a case decided on the very special facts to do justice on that particular occasion, and that it does not govern a case which is apparently settled by way of acceptance of the money in court.'

30. It is therefore clear that Taylor's case was decided on the basis that the case was concluded by way of a contractual settlement and I accept Mr. Chiu's submission that this aspect of the case renders it inapplicable to the case before the Court which concerns a judgment by consent.

31. Even if I am wrong in concluding that there was such a distinguishable feature in Taylor's case, I am of the view that it should not be followed in view of the subsequent decisions along the line as that in Buckland v. Palmer (supra).

32. I have considered carefully the helpful submission of Counsel and I am of the view that the learned Adjudicator had come to a correct decision in dismissing the second claim.

33. In the circumstance, the appeal has to be dismissed with costs in favour of the Respondents (Defendants). The order for costs is to be made absolute 7 days after the handing down of this judgment.