JANWAY INDUSTRIAL CO LTD v. ASIAN EAGLE INSURANCE CO LTD

Insurance Law - indemnity against burglary and housebreaking.

Thieves were let into factory premises by an accomplice who had obtained employment at the factory for that purpose. Once inside the thieves used knives to subdue the staff and made away with valuable property. The factory owner claimed against its insurer under a policy by which the insurer undertook to indemnify against loss caused by burglary and housebreaking. Burglary was defined in the policy as "theft ..... involving entering to or exit from insured premises by forcible and violent means."  The insurer was exempted from liability if the loss was due to theft on the part of any person in the employment of the insured.

Held

Not following Saqui and Lawrence v. Stearns⁽¹⁾ that as the employee was not alone in carrying out the theft the exemption clause was not effective to relieve the insurer from liability but that since no forcible and violent means were used against the premises or any person in order to gain entry to or exit from the premises what happened was not burglary as defined in the policy and the insurer was not liable.

(1)    [1911] 1 K.B. 426

IN THE HIGH COURT OF JUSTICE

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JUDGMENT

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1. The plaintiff makes clocks and watches. Its premises are on the 8th floor of the Ngai Wong Commercial Building in Mongkok Road.  At about 8 in the morning of 7th September 1983, thieves armed with knives came to those premises and were let in by an accomplice who had been hired by the plaintiff only one or two days previously. They threatened members of staff, tied them up, gagged and blind-folded them, and made away with goods worth over $200,000. Now, the plaintiff seeks an indemnity from the defendant, its insurer. The defendant refuses to accept liability on the ground that the policy was in respect of burglary and house-breaking, which this was not, and because they claim to be exempted from liability under the terms of the policy in consequence of an employee of the plaintiff having taken part in the theft. It is admitted and agreed that if the defendant is liable to indemnify the plaintiff, it would be in the amount of $180,000.

2. There is common ground between the parties that, under the Criminal Law of Hong Kong, what happened at the plaintiff premises was burglary. Section 11 of the Theft Ordinance defines burglary as being, amongst other things, the entering of a building as a trespasser with intent to steal from the building. But the policy of insurance defines burglary and house-breaking as:-

"Theft or any attempt thereat involving entering to or exit from insured premises by Forcible and violent means."

and it is the terms of the policy which must govern the matter.⁽¹⁾  I construe the policy contra proferentem and would have been prepared to hold that had entry been effected at knife point that what happened here was within the policy: likewise, if the thieves had only got away by "forcible and violent means" employed against persons rather than the fabric of the building. The old decisions of George v. The Goldsmiths and General Burglary Insurance Association⁽¹⁾ and Calf v. The Sun Insurance Office⁽²⁾ referred to in Halsbury were cited to me as authorities for the proposition that the use of the words "forcible and violent entry" in a policy designed to protect against burglary and house-breaking necessarily means force and violence used against the premises as where, for example, a window or lock has been broken. In the case of George v. The Goldsmiths and General Burglary Insurance Association, the words to be construed were:

"If, at any time after the date hereof, and during the continuance of this policy, the property above described or any part thereof, should be lost by theft following upon actual forcible and violent entry upon the premises wherein the same is herein stated to be situated,"

and in the case of Calf v. The Sun Insurance office:

"Theft following upon an actual forcible and violent entry of the said premises by the person or persons committing such theft."

Apart from the differences of wording, it has to be remembered that at the time both cases were decided, an essential ingredient under the Criminal Law of both burglary and house-breaking was the breaking and entering and a body of case law had developed over the years with regard to what acts were sufficient to amount to breaking. The law had become highly technical. The policies in question were being construed in the light of what was understood by the terms of "burglary and house-breaking" at that time and I do not think that those words would necessarily be construed in the same way today. But I also think that there is a distinction to be drawn between them and the words in the present case. There, the courts were concerned with an entry governed by the words "actual forcible and violent", here, it is enough if entering is effected by forcible and violent means, which I believe to be wide enough to cover the hypothesis raised earlier. But it is not this case. It cannot be said on the most generous construction that the entry or exit was effected by violent or forcible means directed either at the premises themselves or to any person, and the claim falls down at the first hurdle.

3. In any event, it is said that the defendant is exempted from liability by virtue of clause 4(b) of the policy which is to the effect that the policy does not extend to cover any loss or damage due to theft or any attempted theft on the part of any person in the employ or service of the insured or on the part of any person lawfully entering the premises. Here, there was an inside man - someone in the employ of the plaintiff albeit someone who sought engagement simply to facilitate the crime. I have been referred to the decision of tile English Court of Appeal in Saqui and Lawrence v. Stearns⁽³⁾ which is said to be directly in point and which upholds an exemption in similar terms even though others not in employment with the insured were also involved in the theft. Had it arisen for decision, I believe that I would not have followed the English Court of Appeal as it seems to me to ignore the rule that exemption or exclusion clauses are to be construed strictly against the parties seeking to take advantage of them. So had what happened in this case come within the definition of burglary in the policy, the plaintiff would have succeeded.

4. I decline to offer an opinion on the intensely interesting question as to whether or not the accomplice was in the employ of the plaintiff which in turn depends upon whether the contract between them was void or voidable.

5. I dismiss the claim with an order nisi for costs.

(1) In re George v. The Goldsmiths and General Burglary Insurance Association Limited [1899] I Q.B. 595 per Lord Russell C.J. at 601

(2) In re an arbitration between Calf v. The Sun Insurance Office [1920] 2 K.B. C.A. 366

(3) [1911] 1 K.B. 426