WING LUNG INSURANCE CO LTD v. KONG YAU CHOI

HCMP 967 / 2008

 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 967 OF 2008

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BETWEEN

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J U D G M E N T

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I.       Introduction

1.  By an Originating Summons, the Plaintiff (“Wing Lung”) seeks a declaration that it is entitled to avoid the private motor vehicle insurance policy (“the Policy”) numbered E31-094078 and E31-094078.1, issued by it to the Defendant (“Mr Kong”).

2. Wing Lung says it is entitled to the declaration under section 10(3) of Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap 272) (“the Ordinance”), as the Policy was obtained by Mr Kong by non-disclosure of a material fact, or by a material false representation of fact, or both.

3. Mr Kong in his acknowledgment of service of the Originating Summons indicated that he would not contest the application.    He does not appear today, notwithstanding that Wing Lung has served on him the relevant notice of hearing.  Given these circumstances, I am satisfied that Mr Kong is aware of this application and the hearing today, and I should proceed to hear the matter the substantively.

II.      Background

4. The following background facts are not challenged or disputed.

5. For the purpose of applying for a motor insurance policy from Wing Lung, Mr Kong put in a Motor Insurance Proposal Form dated 19 September 2006.  In the Proposal Form, Mr Kong declared, inter alia, that he:

(1) had not been convicted of any motoring offence (other than parking offence) during the last 5 years;

(2) had not been disqualified from driving;

(3) all the answers given the Proposal Form were true and complete in every aspect;

(4) all material particulars affecting the assessment of the risk had been disclosed; and

(5) agreed that the Proposal Form and the declaration thereto shall be the basis of and be deemed to be incorporated in the contract of insurance, including any renewal thereof.

6. Wing Lung then issued the Policy to Mr Kong covering the period from 19 September 2006 to 18 September 2007.  The Policy was further renewed to cover the period from 19 September 2007 to 18 September 2008.

7. Mr Kong’s vehicle was involved in two accidents which occurred respectively on 25 September 2007 (‘the 1^st Accident”) and 5 May 2008 (“the 2^nd Accident”).  He reported these two accidents to Wing Lung respectively on 3 October 2007 and 15 May 2008.

8. During the investigation of the 1^st Accident by Wing Lung, it was discovered that Mr Kong was in fact disqualified from holding or obtaining driving licence for all classes of vehicles for 3 months on 11 October 2004 under section 8 of the Road Traffic (Driving-Offence Points) Ordinance (Cap 375).  He had also been convicted of four motoring offences between March 2005 and March 2006.  These offences are (a) crossing continuous double white line or white line with a broken white line, (b) failing to give precedence to pedestrians on a zebra crossing, (c) driving in excess of speed limit by more than 15km/h but not more than 30 km/h, and (d) failing to comply with road markings.  These matters are supported by uncontroverted evidence before me.

9. Upon discovering the above motoring offences convictions and Mr Kong’s disqualification to hold a driving licence, on 13 May 2008, Wing Lung’s solicitors wrote to Mr Kong informing him that Wing Lung would avoid the Policy in light of the false declarations made by him when applying for it.  Wing Lung further sought Mr Kong’s consent to its intended application to seek a declaration to the same effect. 

10. Apparently, Mr Kong did not reply to this letter.  In fact, as mentioned above, he reported the 2^nd Accident to Wing Lung a few days later.

11. Wing Lung brought the present proceedings on 23 May 2008.

III.    The present application

12. Section 10(3) of Ordinance provides as follows:

“(3)     No sum shall be payable by an insurer under the foregoing provisions of this section, if, in an action commenced before, or within 3 months after, the commencement of the proceedings in which the judgment [of a third party claim against the insured] was given, he has obtained a declaration that, apart from any provision contained in the policy, he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it:

Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgement obtained in proceedings commenced before the commencement of that action, unless before or within 7 days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the non-disclosure or false representation on which he proposes to rely, and any person to whom notice of such an action is so given shall be entitled, if he thinks fit, to be made a party thereto.” (emphasis added)

13. In my view, the previous convictions of motor offences and disqualification from driving of the insured within the relevant material period are clearly material facts or material particulars relied on by Wing Lung in considering whether or not to issue the Policy to Mr Kong.

14. Given the above uncontested and uncontroverted evidence concerning Mr Kong’s declarations in the Proposal Form, his previous motoring offences convictions and disqualification from driving, I am satisfied that the Policy was obtained by the non-disclosure of material facts, or by a representation of fact which was false in some material particular, as provided under section 10(3) of the Ordinance.  See also:  Wing Lung Insurance Co Ltd v Lo Wai Fai (unrep., HCMP 1939/2007, 15 February 2008, Sakhrani J), paras 4 and 5.

15. Moreover, I am also satisfied that the declaration sought is not for academic or hypothetical purposes for the following reasons:

(1) Under 10(1) of the Ordinance, unless it has obtained a section 10(3) declaration as sought in the present form, Wing Lung is still liable to a third party claim against Mr Kong under the 1^st and/or 2^nd Accidents even if it could have avoided the Policy. 

(2) According to the summary of brief facts concerning the trial of Mr Kong in relation to the 1^st Accident, there was someone injured in the accident, and thus the possibility of a third party claim is not fanciful or hypothetical. 

(3) In the circumstances, there is a practical need for Wing Lung to seek the declaration as sought.

IV.    Conclusion

16. For the above reasons, and upon the undertaking by Wing Lung’s solicitors to file an affirmation by the end of today exhibiting the above-mentioned evidence of the summary of brief facts in relation to the trial of the 1^st Accident, I am satisfied that Wing Lung is entitled to judgment.

17. I therefore give judgment to Wing Lung for a declaration that Wing Lung is entitled to avoid the Policy on the ground that the Policy was obtained by the non-disclosure of a material fact and also on the ground that the Policy was obtained by a representation of fact which was false in some material particular.

18. The costs of these proceedings are to be costs of Wing Lung to be borne by Mr Kong, such costs to be taxed if not agreed.