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HCPI 390/2011
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
PERSONAL INJURIES ACTION NO. 390 OF 2011
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BETWEEN
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LEE SIU YUNG |
Plaintiff |
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and |
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GOODWELL PROPERTY
MANAGEMENT LIMITED |
1st Defendant |
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DUSSMANN SERVICE
HONG KONG LIMITED |
2nd Defendant |
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_________________________ |
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Coram : Before Master Marlene Ng in Chambers (open to the public)
Date of Hearing : 16 May 2012
Date of Decision : 16 May 2012
Date of Handing Down Reasons for Decision : 22 May 2012
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REASONS FOR DECISION
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I. 1st and 2nd Defendants
1. The 1st defendant was/is the management company having control, management and administration of Sceneway Garden (“Estate”) which had/has a residents’ clubhouse (“Clubhouse”) for use by the residents of the Estate. The 2nd defendant (formerly known as P Dussmann Hong Kong Limited) was the cleaning company engaged/employed under contract by the 1st defendant to carry out inter alia cleaning works (“Works”) at the Clubhouse.
2. Clause 5 of the Cleaning Service Contract dated 30 June 2008 made between the 1st and 2nd defendants (“Cleaning Contract”) provides as follows:
“The [2nd defendant] must effect adequate insurance cover, including but not limited to Employees’ Compensation and Third Parties Liabilities etc within the Contract Period. The insurance cover for Third Parties Liabilities should not be less than HK$20,000,000.00 for any single case. The Contractor is required to submit copies of these insurance polices to the [1st defendant] for record before the Contract commences.”
3. The Terms and Conditions of the Cleaning Contract (“T&C”) provide inter alia as follows:
“13.0 SAFETY & PROTECTION
The [1st defendant] undertakes to take all necessary precautionary measures to ensure safety and prevention of property damage and personal injury resulting from negligence.
All works carried out must strictly conform to the requirements of the Factories and Industrial Undertaking Ordinance (Chapter 59), the Occupational Safety and Health Ordinance (Chapter 509) and all other Ordinances laid down by the Government so as to provide a safe working environment to all workers and related parties involved [“Clause 13”].
14.0 INSURANCE AND LIABILITIES
It shall indemnify in full the [1st defendant] against all loss, damage, costs and expenses incurred by the [1st defendant] and/or demands, claims, suits or actions which may at any time (whether during the continuance of this Contract or at any time thereafter) be made against the [1st defendant] by reason or on account of any acts, deeds or things done or omitted to be done by the [2nd defendant] or its officers, employees, representatives or agents in pursuance of this Contract, or any breach, non-observance or non-performance by the [2nd defendant] of any terms and conditions herein contained and on the [2nd defendant’s] part to be observed and performed, or otherwise relating to any Contract Goods/Services supplied or provided by the [2nd defendant] pursuant to this Contract. The [2nd defendant] shall be fully responsible for arranging adequate insurance covering all risks arising out of performance of its duties under this Contract including but not limited to:
14.1 Conforming the Laws of Hong Kong and Industrial Safety
Liabilities from breaches of any Government Ordinances, Regulations or By-laws for the time being in force relating to the provision and performance of the Services; in particular, liabilities under the Construction Sites (Safety) Regulations under the Factories and Industrial Undertaking Ordinance (Chapter 59 of the Laws of Hong Kong).
14.2 Third Party Liability
All liabilities from Third Party claims arising out of performance of the Services as provided by the [2nd defendant], its servant or agent.
14.3 Employees’ Compensation
……
14.4 Other Insurance
Such other insurance as may from time to time reasonably be required and specified by the [1st defendant].
14.5 Other Liabilities
All liabilities, losses, claims, or proceedings in respect of any damages caused to the [1st defendant] and/or the Property, arising out of, or in the course of, performance of the Services.
14.6 ……
The [2nd defendant] shall produce documentary evidence before commencement of services from its insurers that the insurance required has been obtained and is being maintained. [“Clause 14”]” (my emphasis)
4. In the T&C, “Services” means “the maintenance of the services to ensure its continuous operation as specified in the [Cleaning Contract] and the Work Schedule or as modified by [the 1st defendant] from time to time”.
5. According to the affirmation by the solicitor for the 1st defendant Kwan Kit Ying (“Ms Kwan”) filed on 18 January 2012 (“Kwan 1st Affirmation”), on/about 13 February 2009 the 2nd defendant effected Comprehensive General Liability Insurance Policy no.XDE0000155LI08A dated 13 February 2008 with AXA Corporate Solutions (“ACS”) covering inter alia third party claims on the basis of legal liability provisions under private law with respect to any bodily injury and property damage occurring for the period from 1 January 2008 at noon to 1 January 2009 at noon (“AXA Policy”).
6. The Kwan 1st Affirmation further states that on/about 22 December 2008 the 2nd defendant gave a two-page Certificate of Insurance of the AXA Policy (“AXA Certificate”) to the 1st defendant. The terms of the AXA Certificate include the following:
“ 1. Policy holder/Named Insured
Dussmann AG & Co, KGaA ……
Additional Insured
P Dussmann Hong Kong Ltd ……
2. Insurer
[ASC] ……
3. Policy number
XDE0000155LI08A
4. Period of insurance
from 01.01.2008 noon, local time
to 01.01.2009 noon, local time
The insurance is automatically extended for a further period unless it is cancelled three months prior to the expiry date of the current period.
5. Type of insurance
Comprehensive General Liability Insurance
6. Scope of coverage
6.1 Within the limits defined by the terms and conditions of this insurance our Company grants the insured cover against third-party-claims on the basis of legal liability provisions under private law with respect to any bodily injury and property damage occurring during the validity of the said insurance.
6.2 This policy insures bodily injury and property damage worldwide.
7. Limits of Liability
……
8. Certificate of Insurance Coverage
This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the policy.
The German wording only is legally binding.
Munich, 13/02/2008
[ASC]
Niederlassung, Deutschland”
II. Plaintiff’s claim
7. The plaintiff, who was/is a co-owner and resident of the Estate, claims that on 15 November 2008 she slipped and fell on the wet/moist/ slippery substance on the floor whilst walking along the corridor of Level 4 of the Clubhouse (“Corridor”) on her way to the female toilet, and she thereby suffered personal injuries (“Accident”).
8. On 3 June 2011, the plaintiff commenced the present proceedings against the 1st and 2nd defendants for damages for personal injury and other loss and damages in respect of the Accident, which she claims was caused wholly and solely by the negligence and/or breach of the common duty of care on the part of the 1st and/or 2nd defendants. The plaintiff claims that the 1st and/or 2nd defendants are vicariously liable “for the negligent act and/or omission of its employees and/or servants and/or agents acting in the course of their employment” (my emphasis), and the plaintiff also relies on the doctrine of res ipsa loquitur.
9. There is no averment in the plaintiff’s Statement of Claim that the 2nd defendant was an employee of the 1st defendant or that the 1st defendant is vicariously liable for any negligence and/or breach of the common duty of care on the part of the 2nd defendant and their servants or agents. As seen in the above paragraph, the plaintiff’s plea of vicarious liability against the 1st defendant is premised on their liability for the acts/omissions of their own servants or agents as employees.
III. 1st Defendant’s defence
10. By their Defence filed on 18 July 2011, the 1st defendant avers that CCTV recordings made shortly before the Accident show (a) a female cleaning worker employed by the 2nd defendant (who was on duty on Level 4 of the Clubhouse) went in/out of the female changing room and collected rubbish from the rubbish bin placed on the Corridor, (b) she walked along the Corridor, (c) immediately after the Accident she placed a towel on the floor of the location where the plaintiff fell, and (d) thereafter such cleaning worker and another cleaning worker wiped the floor at the scene and vicinity of the Accident.
11. The 1st defendant denies liability, and claims they had:
(a) taken all reasonable steps to supervise the performance of the Works and used reasonable care to check that the Works had been properly done;
(b) acted reasonably in entrusting the Works in respect of the Clubhouse to the 2nd defendant and taken such steps as they reasonably ought to satisfy themselves that the 2nd defendant was competent and that the Works had been properly done.
12. The 1st defendant further avers that as regards the supervision of the 2nd defendant:
(a) they required two cleaning workers of the 2nd defendant to be stationed at the Clubhouse for every shift;
(b) their recreation assistants inspected the Works performed by the 2nd defendant at the Clubhouse’s changing rooms/toilets, and patrolled around the Clubhouse every hour to inspect the facilities and to check whether the place was clean;
(c) their security guard also conducted regular patrol at the Clubhouse;
(d) they had monthly meetings with the 2nd defendant for review of latter’s performance of the Works;
(e) there were regular meetings amongst the 1st defendant, the 2nd defendant and the incorporated owners of the Estate about every 6 weeks during which the Works for the Estate would be discussed;
(f) every morning their security staff patrolled some spots at the Estate together with the 2nd defendant’s cleaning foreman to point out to (and remind) the 2nd defendant what cleaning work needed to be done;
(g) they also had morning briefing with the 2nd defendant’s cleaning foreman;
(h) the 2nd defendant was required to submit daily checklist of cleaning works to them, and they would check and require the 2nd defendant to complete the works as scheduled in the checklist;
(i) they required the 2nd defendant’s cleaning workers to take an active role to clean up any dirt/water stains on the floor immediately upon noticing the same.
13. The 1st defendant claims inter alia that the Accident and/or the plaintiff’s injuries, loss and damages were caused by the negligence of the 2nd defendant and/or their servants or agents for which the 2nd defendant is vicariously liable. Further and/or the alternative, the 1st defendant pleads and relies on Clauses 13 and 14. The 1st defendant claims that by reason of 2nd defendant’s negligence and Clauses 13 and 14, they are entitled to a full indemnity by the 2nd defendant in respect of the plaintiff’s claim and their costs in defending the plaintiff’s claim pursuant to the terms of the Cleaning Contract.
14. Further or in the alternative, the 1st defendant claims that the Accident and/or the plaintiff’s injuries, loss and damages were caused wholly or contributed to by the negligence of the plaintiff.
IV. 2nd Defendant’s defence
15. By their Defence filed on 10 August 2011, the 2nd defendant denies the plaintiff’s claims and further claims they have complied with their contractual duty under the Cleaning Contract to clean the marble floor of the Corridor at 8:00 am every day (including 15 November 2008). The 2nd defendant further avers that they only contracted to mop, clean, wash and wax polish the marble floors of the Clubhouse at a minimum frequency of once a week, and to clean the floor of the Clubhouse according to the cleaning schedule set out in the Cleaning Contract. Such cleaning schedule and the management of the Estate (including the Clubhouse) were in the 1st defendant’s absolute control, and it was the 1st defendant’s duty to patrol the Estate (including the Clubhouse) to detect inter alia any wet/moist/slippery substance on the floor and to inform the 2nd defendant to clean the same upon detection. Further or in the alternative, the 2nd defendant claims that the Accident was caused wholly or in part or contributed to by the negligence of the plaintiff.
V. Contribution proceedings
16. On 18 July 2011, the 1st defendant filed a Notice Claiming Contribution and Indemnity against the 2nd defendant (“D1 Notice”) on the grounds set out in paragraphs 19-20 below. On 10 August 2011, the 2nd defendant filed a Notice to the 1st defendant Claiming Contribution and Indemnity (“D2 Notice”) on the ground that the Accident was caused solely or was materially contributed to by the negligence of the 1st defendant as appears in the plaintiff’s Statement of Claim and the 2nd defendant’s Defence.
17. On 18 November 2011, I ordered that the 1st defendant’s Defence in the main proceedings and the D1 Notice shall collectively stand as the 1st defendant’s Statement of Claim against the 2nd defendant in the contribution and indemnity proceedings pursuant to the D1 Notice.
18. According to the D1 Notice, the 1st defendant pleads the matters set out in paragraph 11 above, and claims the Accident was caused solely or contributed to by the negligence on the part of the 2nd defendant and/or their servants or agents for which the 2nd defendant is vicariously liable. In this respect, the 1st defendant adopts the particulars of negligence pleaded in paragraph 3 of the Statement of Claim insofar as they concern the 2nd defendant as their own averments against the 2nd defendant. Further or in the alternative, the 1st defendant relies on Clauses 13 and 14.
19. The 1st defendant claims that by reason of the above matters they are entitled to full indemnity by the 2nd defendant for the plaintiff’s claim in the main proceedings and for the 1st defendant’s costs in defending the plaintiff’s claim pursuant to the terms of the Cleaning Contract. Further or in the alternative, the 1st defendant claims they are entitled to claim indemnity/contribution under sections 3-4 of the Civil Liability (Contribution) Ordinance Cap.377 for any sum (including the plaintiff’s costs of this action) which may be found to be due to the plaintiff in the main proceedings to the extent of such amount as may be found by the court to be just and equitable together with the 1st defendant’s costs in defending the present proceedings.
20. Pursuant to the D1 and D2 Notices, on 24 February 2012 the 2nd defendant filed their Defence with Counterclaim in the contribution and indemnity proceedings (“D2 Contribution D&C”). The D2 Contribution D&C avers that if (which is denied) the Accident happened as alleged in the Statement of Claim, it was caused wholly or in part or contributed to by the 1st defendant, so Clause 14 is not applicable and the 2nd defendant claims contribution/indemnity against the 1st defendant as per the D2 Notice.
21. The 1st defendant’s Reply and Defence to Counterclaim in the contribution and indemnity proceedings filed on 26 March 2012 (“D1 Contribution R&DC”) denies the 2nd defendant’s allegations and goes on to aver that:
(a) Appendix X of the Cleaning Contract provides that the 2nd defendant was to (i) mop, clean, wash, wax and polish the marble floors of the Clubhouse and the changing rooms at a minimum frequency of once a week and three times a day respectively, and (ii) empty, clean and disinfect ashtrays and litter bins twice daily and as requested, but does not exhaustively set out the 2nd defendant’s duties under the Cleaning Contract;
(b) Clause 2.2 of the Cleaning Contract provides that the work schedule and/or services specified in the Cleaning Contract were not exhaustive and shall at the absolute discretion of the 1st defendant be modified from time to time during the term of the Cleaning Contract as and when required;
(c) in the monthly cleaning meetings between the 1st and 2nd defendants’ cleaning foreman and staff representatives, the 2nd defendant’s foreman was instructed to patrol and/or inspect the cleaning by the 2nd defendant’s staff, increase the frequency of the cleaning of the floors, and take an active duty in keeping the Clubhouse clean;
(d) the 1st defendant instructed the 2nd defendant to carry out ad hoc duties as required, and whenever the 2nd defendant detected any wet/moist/slippery substance on the floor it was their active duty to clean the same;
(e) the 1st defendant only had discretion as to the frequency of the cleaning schedules but not the exact time for performing the cleaning or how such duties were to be performed;
(f) the 2nd defendant cleaned the marble floor of the Corridor every day (including 15 November 2008);
(g) but the 2nd defendant had not duly complied with its contractual duty under the Cleaning Contract and their performance was not satisfactory;
(h) the 1st defendant had issued warning letters to the 2nd defendant and had terminated the Cleaning Contract on 15 November 2008 before the expiry of the contract term.
22. The 1st defendant avers that if the alleged Accident was caused wholly or in part or contributed by the 2nd defendant, Clause 14 is applicable and the 2nd defendant will be liable to indemnify the 1st defendant in full. Even if (which is denied) the alleged Accident is not found to be wholly or in part or contributed to by the 2nd defendant, Clause 14 is still applicable and the 2nd defendant has not disclosed any insurance policy or otherwise shown to the 1st defendant it has arranged adequate insurance covering all risks arising out of the performance of their duties under the Cleaning Contract as required by Clause 14 or otherwise.
23. In the D1 Contribution R&DC, the 1st defendant has not traversed paragraph 5 of the D2 Contribution D&C because “the 2nd Defendant has not set out any case against the 1st Defendant by merely adopting the particulars pleaded by the Plaintiff in paragraph 3 of the Statement of Claim, making a bare denial against the applicability of Clause 14 …… or otherwise pleaded in the [D2 Contribution D&C]”. Further or in the alternative, if (which is denied) paragraph 5 of the D2 Contribution D&C amounts to a counterclaim by the 2nd defendant against the 1st defendant for contribution and indemnity, the 1st defendant denies liability and repeats their Reply.
VI. Summons
24. On 18 January 2012, the 1st defendant issued a summons (“Summons”) to seek specific discovery of the following documents (collectively, “Policy Documents”) against the 2nd defendant:
(a) the AXA Policy;
(b) all other insurance policies (including certificate of insurance, policy schedule, terms and conditions and all other contents thereof) taken out by the 2nd defendant with insurance coverage covering third party claims on the basis of legal liability provisions under private law with respect to any bodily injury and property damage and/or claims by the plaintiff in the present proceedings and/or any contribution claims by any party arising from or consequential to the claims by the plaintiff or any matter relevant to the said claims in force at the time of the alleged Accident (“Other Policies”).
25. On 18 January and 19 March 2012, the plaintiff filed the Kwan 1st Affirmation and Ms Kwan’s 2nd Affirmation (“Kwan 2nd Affirmation”) in support of the Summons. On 27 February 2012, the 2nd defendant filed the affirmation of their solicitor Mr Kwong Wing Ho (“Mr Kwong”) to oppose the Summons (“Kwong Affirmation”).
26. The Summons came before me for argument on 16 May 2012 (“Hearing”). After hearing submissions from Mr Ng, solicitor for the plaintiff, and from Mr Kwong, I dismissed the Summons and granted costs of the Summons (including all costs reserved, if any) in favour of the 2nd defendant against the 1st defendant to be summarily assessed (“Order”), and I also granted other consequential case management directions. For such summary assessment of such costs, I granted the following directions:
(a) the 2nd defendant do within 7 days from the date of the Order lodge and serve their statement of costs for not more than one page pursuant to Practice Direction 14.3;
(b) the 1st defendant do within 7 days thereafter lodge and serve their summary of objections to such statement of costs for not more one page in bullet point format;
(c) the 2nd defendant do within 7 days from the date of the Order fix a date with the Listing Clerk for the hearing of the summary assessment of costs before me in chambers (open to the public) on a date not before 21 days from the date of the Order with 15 minutes reserved.
27. These are my Reasons for Decision which I have reserved for handing down after the Hearing.
VII. 1st Defendant’s affirmation evidence
28. The Kwan 1st Affirmation confirms that in compliance with their responsibility to arrange adequate insurance covering all risks under Clause 14 or otherwise, the 2nd defendant effected the AXA Policy on 13 February 2009. Based on the AXA Certificate, Ms Kwan believes the AXA Policy covered not only the 2nd defendant’s liability in respect of the alleged Accident towards the plaintiff, but also covered any alleged liability on the part of the 1st defendant (which is denied) in respect of the alleged Accident towards the plaintiff. But apart from AXA Certificate, the 2nd defendant never disclosed the AXA Policy or any other similar insurance policy as required under Clause 14.
29. Ms Kwan claims that the 1st defendant is entitled to discovery of the Policy Documents because they are relevant to inter alia the following issues in the present proceedings:
(a) whether the 1st defendant’s alleged liability (which is denied) towards the plaintiff is covered by the AXA Policy and/or the Other Policies;
(b) if such liability is so covered, “whether, apart from the obligation by the 2nd Defendant to indemnify the 1st Defendant pursuant to Clause 14 ……, the 1st Defendant is still liable (which is denied) for any loss and damage claimed by the Plaintiff in any event”;
(c) if such liability is so covered, “whether, apart from the obligation by the 2nd Defendant to indemnify the 1st Defendant pursuant to Clause 14 ……, the [D1 and D2 Notices] are still necessary in any event”.
30. The Kwan 1st Affirmation says that since the 2nd defendant gave the AXA Certificate (which according to the Kwan 2nd Affirmation covers inter alia the liabilities referred to in the above paragraph) to the 1st defendant on/about 22 December 2008, the Policy Documents (including the AXA Policy) are clearly in the possession, custody or power of the 2nd defendant.
31. Further, in a letter to the 1st defendant’s solicitors dated 15 May 2010, the loss adjusters McLarens Young International (“McLarens”) (who, according to the Kwan 2nd Affirmation, at all material times acted/acts for the insurer of the 2nd defendant) referred to the 2nd defendant as “Our Principals’ Insured”. In such letter, they expressed surprise that the plaintiff requested “our Principals and their Insured to take over conduct of the claim according to the terms and conditions of the [Cleaning Contract]”. They claim that “our Principals’ Insured had exercised their duty required under the [Cleaning Contract] …… As there is no evidence to demonstrate that our Principals’ Insured was at fault in this incident, our Principals and their Insured will not take over the conduct of the claim on behalf of [the 1st defendant] unless [the 1st defendant’s solicitors] can provide evidence to prove any acts, deeds or things omitted to be done by our Principals’ Insured or any breach, non-observance or non-performance by our Principals’ Insured of any terms and conditions pursuant to the [Cleaning Contract]. ……”
32. In a further letter to the 1st defendant’s solicitors dated 26 May 2010, McLarens reaffirm that “our Principals’ Insured was not at fault in this incident having fulfilled their obligation to perform their normal duty to keep the common area of the building in tidy required under the cleaning contract. We would like to inform you that our Principals and their Insured maintained their previous view that they will not take over conduct of the claim on behalf of [the 1st defendant].”
33. In both letters, McLarens state that if the 1st defendant insisted on taking “further action against our Principals’ Insured, our Principals will defend the case and seek recovery of all costs of investigation and defending the claim”.
34. The Kwan 2nd Affirmation says that even though in the above letters McLarens did not appear to deny that ACS was their “Principals”, McLarens in their letter to the 1st defendant’s solicitors dated 11 June 2010 says they were unable to provide the 1st defendant’s solicitors with the policy schedule and the policy terms and conditions of the AXA Policy with ASC “as they are not our Principals”, and they asked the 1st defendant’s solicitors to pursue their request to the appropriate party directly.
35. The Kwan 2nd Affirmation says that if as suggested by McLarens and contrary to what was shown in the AXA Certificate ACS was not the 2nd defendant’s insurer, there was reason to believe that if the AXA Policy did not exist the Other Policies should have been in existence and the 2nd defendant should clarify by affirmation what Other Policies they had taken out to comply with their contractual duties under inter alia Clause 14.
36. The Kwan 1st Affirmation claims that since April 2010 the 1st defendant had requested discovery of the Policy Documents through correspondence with the 2nd defendant’s solicitors and McLarens, but the 2nd Defendant all along refused to give any substantive reply. On 28 November 2011, the 2nd defendant served their List of Documents which failed to disclose the Policy Documents. Ms Kwan claims that the Summons was necessitated by the 2nd defendant’s avoidance and/or evasiveness in response to the 1st defendant’s request.
37. Further, the 1st defendant took out a public liability insurance policy dated 22 February 2008 with China Taiping Insurance (HK) Ltd (“Taiping Policy”) which also covered the alleged liability (which is denied) of the 1st defendant towards the plaintiff. The Taiping Policy contains inter alia a “non-contribution clause” and an “independent contractors liability clause” as follows:
“If at the time of any claim under this Policy there is any other insurance indemnifying any person or insured or insureds who are entitled to be indemnified under this policy, this Policy is not to be called upon in contribution and the Company, subject to the Limit of Indemnity, is only to pay any amount if and so far as not recoverable under such other insurance.” (Condition 7)
“This Policy is extended to cover the Insured’s legal liability for accidental bodily injury or property damage arising out of or caused by the alteration of and/or addition to any premises owned, occupied or managed by the Insured. Provided that the contract value shall not exceed HK$2,000,000.00 any one contract. Provided that if the claim so submitted is covered by any other purpose, then this Policy shall not insure the same except only as regards any excess beyond the Limit of Liability covered by such more specific performance.” (Conditions/Exclusions EL140-6).
38. The Kwan 1st Affirmation says that if the AXA Policy and/or the Other Policies did not contain similar provisions, then any alleged liability that the 1st defendant should bear (which is denied) should be indemnified first by the AXA Policy or any of the Other Policies, and the Taiping Policy would only be called upon if there is any excess claim not covered by the AXA Policy or otherwise. In the circumstances, the 1st defendant argues that the disclosure of the Policy Documents is clearly necessary for the fair disposal of the matters in the present proceedings and for saving costs.
VIII. 2nd Defendant’s affirmation evidence
39. The Kwong Affirmation claims that the AXA Policy is not relevant to any issue in the main proceedings and/or the contribution and indemnity proceedings. For the main proceedings, the issue in the plaintiff’s claim against the 1st defendant is whether the 1st defendant and/or the 2nd defendant was negligent and in breach of the Occupiers’ Liability Ordinance Cap.314. Quite apart from whether the 1st defendant will be covered by any insurance policy taken out by the 1st defendant or any other person, the 1st defendant will be found liable to the plaintiff if the latter can prove and establish liability in respect of such causes of action against the 1st defendant in the main proceedings. But the court will not determine such claim by ascertaining whether the 1st defendant is insured under their own or another’s insurance policy. Hence, the court will not be concerned with whether the 1st defendant is insured or not (since it is not an issue to be tried or disposed of in the main proceedings), and the Policy Documents are not relevant to any issue in the main proceedings.
40. For the contribution and indemnity proceedings, the contents of the D1 Notice are almost identical to the 1st defendant’s Defence in the main proceedings. The D1 Notice claims that (a) the 1st defendant had taken all reasonable steps to ensure the plaintiff’s safety, (b) the Accident was caused by the 2nd defendant’s negligence, (c) the 1st defendant was entitled to full indemnity by the 2nd defendant under the Cleaning Contract, and (d) the Accident was caused by contributory negligence on the part of the plaintiff. There is no allegation and/or claim for breach of contract on the part of the 2nd defendant in either the 1st defendant’s Defence in the main proceedings or in the D1 Notice, but there is no dispute between the 1st and 2nd defendants over the express terms and conditions of the Cleaning Contract. The determination of the issue under Clause 13 as to whether the 2nd defendant had undertaken all precautionary measures to ensure safety and to ensure prevention of personal injury resulting from negligence is a question of fact and does not depend on whether there is any insurance policy that covers the liability of the 1st defendant if any. Further, the provision for contractual indemnity by the 2nd defendant in favour of the 1st defendant under Clause 14 turns on the construction of the contractual term and not on whether there is any insurance cover for the 1st defendant. As regards the requirement to arrange insurance cover under Clause 14, Mr Kwong noted that the Kwan 1st Affirmation admits that (i) the 2nd defendant had complied with their responsibility to arrange adequate insurance cover for all risks under Clause 14 by effecting the AXA Policy, and (ii) the AXA Policy covered not only the liability of the 2nd defendant towards the plaintiff in the alleged Accident but also any alleged liability of the 1st defendant (which is denied) towards the plaintiff in the alleged Accident.
41. The Kwong Affirmation claims that the contents of the D2 Notice are simple and straightforward, and the 2nd defendant only relies on a claim of negligence on the part of the 1st defendant for claiming contribution and indemnity against them. The so-called issues referred to in paragraph 29 above are, at best, insurance issues between the 1st defendant and their insurer(s), which are not relevant to the main proceedings and/or the contribution and indemnity proceedings. There is no issue to be determined in such proceedings relating to the Policy Documents. Further, there is no or no sufficient evidence of the existence of the Other Policies, which policies are in any event not relevant to any issue in the main proceedings and/or the contribution and indemnity proceedings. The Kwong Affirmation claims that the request for discovery of the Other Policies is a fishing exercise.
IX. Legal principles
42. As to the legal principles for applications for specific discovery, I repeat and rely on my discussion in Part V of my decision in Wong Hoi Wai v The Secretary of Justice (for and on behalf of the Government of the Hong Kong SAR) HCPI 664/2009 (unreported, 24 February 2011) at paragraphs 23-43. I have carefully considered Mr Ng’s written submissions on the relevant legal principles, but they do not add further to what has been discussed in Wong Hoi Wai.
X. Discussion
43. For the purpose of the Summons, I am prepare to assume (but without deciding the point) that (a) it is not a prerequisite for the reliefs sought in the Summons that an allegation/claim for breach of contract must be made out in the D1 Notice, and (b) the AXA Policy is actually in the possession, custody or power of the 2nd defendant.
44. Mr Ng submits that the Policy Documents are relevant to the issues in the present proceedings set out in paragraph 29(a)-(c) above, and that pursuant to Clauses 13 and 14 the respective alleged liability (if any) of the 1st and 2nd defendants “(ie the alleged liability of the respective insurers of the 1st and 2nd defendants) would have to be resolved sooner or later by reference to the terms of the [Policy Documents]”. He further claims that the alleged liability between the 1st and 2nd defendants’ respective insurers “is an issue in this matter”, and if such issue is not resolved in the present proceedings such insurers may have to pursue their claims against each other in a separate action which will be a waste of court resources and costs, and which will subvert the underlying objectives in Order 1A of the Rules of the High Court (“RHC”). Further, without discovery of the Policy Documents, it will not be easy for the parties to achieve any fruitful result in any mediation attempt in the near future. Mr Ng argues that the discovery sought is justified by the underlying objective to facilitate settlement of disputes. After all, it will be easy for the 2nd defendant to discover the Policy Documents with no or minimal costs.
45. In my view, Mr Ng’s above submissions and the matters raised in the Kwan 1st and 2nd Affirmations reflect a fundamental misconception of the interplay amongst a legal claim between the victim and the alleged tortfeasors, a legal claim between the alleged co-tortfeasors, and the insurance position.
46. Generally speaking, a liability insurance policy covers against the risk of the assured incurring liability to third parties from, say, the use of goods and/or the provision of services, and is a contract of indemnity. Where the insuring clause of a liability insurance policy covers the assured’s liability to the victim (ie a third party) in respect of a relevant incident, the victim is most unlikely to have a direct claim against the insurer since such action is precluded by the doctrine of privity of contract. If the liability insurance policy reserves the insurer’s right to conduct negotiations with the third party, to defend any proceedings that may be brought by the third party, and to approve any settlement with the third party, the insurer can only exercise such contractual rights on the assured’s behalf and in the assured’s name (see Murfin v Ashbridge & Martin [1941] 1 All ER 231). Quite simply, the insurer is not a party to the action between the third party claimant and the alleged tortfeasor defendant (who is the assured), and no application or appeal should be made in the insurer’s name (see MacGillivray on Insurance Law 11th ed (2008) para.28-056 at p.911).
47. The strict separation between the action in tort between the third party claimant and the alleged tortfeasor on the one hand and the insurance position is highlighted by Colinvaux & Merkin’s Insurance Contract Law para.B-0912 at pp.20730/7-20730/8:
“The fact that the defence is conducted in the assured’s name is critical, for if there is a dispute between two liability insurers as to which of them is liable to meet the claim – as where it is unclear in which year the events giving rise to liability occurred – the insurers will not be permitted to raise competing defences against the claimant: the claimant’s concern is only to establish the assured’s liability.”
48. Since the concern of the third party claimant is only to establish the liability of the alleged tortfeasor irrespective whether such alleged tortfeasor may also be the assured, the question of insurance coverage and the rights/obligations of the assured and his insurer under any liability insurance policy are irrelevant to the legal claim between the claimant and the alleged tortfeasor. If the claimant fails to establish liability against the alleged tortfeasor in the course of such legal claim, there will be no call upon the liability insurance policy. If the claimant obtains judgment against the tortfeasor, the insurer will be liable for the judgment debt (if it is within the scope of the insuring clause and the overall financial limits imposed by the policy) vis-à-vis the tortfeasor as the assured. However, should the insurer fail to satisfy such “damages”, the liability insurance policy not being compulsory insurance and there being no privity of contract between the third party claimant and the insurer, the third party claimant will have to apply for execution against the tortfeasor as judgment debtor (and not against the insurer) to recover the judgment debt.
49. In the circumstances, I agree with Mr Kwong that the Policy Documents (ie the AXA Policy and/or the Other Policies) are not relevant to any matter in question in the main proceedings in this action. Whether the 1st defendant’s liability (if any) towards the plaintiff in respect of the Accident is within the scope of the insuring clause under the AXA Policy and/or the Other Policies (ie the issue raised in paragraph 29(a) above) is wholly irrelevant. Even if the 1st defendant’s liability to the plaintiff in respect of the Accident is covered by the Policy Documents (but see discussion in paragraphs 61-70 below), it will not directly or indirectly advance the 1st defendant’s defence against the plaintiff’s claim or damage the plaintiff’s case. The plaintiff still has to establish and the 1st defendant still has to refute the allegations of negligence and/or breach of the common duty of care as pleaded in the Statement of Claim.
50. As regards the contribution proceedings in which the 2nd defendant claims contribution or indemnity against the 1st defendant pursuant to the D2 Notice, the 1st defendant cannot avoid liability (if any) on the ground that the 2nd defendant has been or will be fully indemnified for the loss. The cause of action under the D2 Notice remains in the name of the 2nd defendant as the assured.
51. Any insurer who may be subrogated to the assured’s rights can require the assured to bring an action (including any contribution and indemnity proceedings) against a person against whom the assured has a cause of action, but the strict separation between the assured and the insurer is still maintained. Macgillivray on Insurance Law 11th ed (2008) para.22-044 at p.629 explains as follows:
“…… the assured, as the plaintiff on the record, is liable to comply with the court’s rules of procedure and must, for instance, make proper discovery in the action. The insurer is under no obligation …… to give discovery of documents in his possession, custody or power to a defendant but only to procure the discovery of documents in the possession, custody or power of the assured. An insurer, who is the defendant in proceedings brought by a person against whom the assured has a cause of action, cannot counterclaim in those proceedings even though he is subrogated to the rights of the assured. Judgment must be entered in the name of the nominal plaintiff, the assured, and the defendant will obtain a good discharge only if he pays the assured, not if he pays the insurer.”
52. Given the segregation of the tortious claim between the third party claimant and the alleged tortfeasors and between the co-tortfeasors on one hand and the insurance position on the other, the nature and extent of the 1st defendant’s insurance cover is not itself a “matter in dispute” in the contribution and indemnity proceedings by the 2nd defendant against the 1st defendant. In my view, the issue as to whether the 1st defendant is liable to indemnify the 2nd defendant in respect of the Accident can be decided without determining whether the 2nd defendant’s insurer is liable to indemnify and pay the 1st defendant if the 2nd defendant’s liability towards the plaintiff in respect of the Accident were established.
53. The same goes for the contribution and indemnity proceedings by the 1st defendant against the 2nd defendant pursuant to the D1 Notice. In order to succeed in such contribution and indemnity proceedings, the 1st defendant has to bring themselves within the scope of the contractual right to indemnity under Clause 14 and/or within sections 3-4 of the Civil Liability (Contribution) Ordinance Cap.377, and further establish that the Accident was caused solely or contributed to by the negligence on the part of the 2nd defendant (not their insurer) and/or their servants or agents for which the 2nd defendant is vicariously liable. It will be noted that the contractual and/or statutory right of contribution and indemnity is between the 1st and 2nd defendants and not between (a) the 1st defendant and the 2nd defendant’s insurer and/or (b) the respective insurers of the 1st and 2nd defendants. After all, Clause 14 states that “[the 2nd defendant] shall indemnify in full the [1st defendant] against all loss, damage, costs and expenses ……” (see paragraph 3 above). This again reflects the strict separation between the assured and the insurer for the purpose of the contribution and indemnity proceedings as between the 1st and 2nd defendants.
54. I agree with Mr Kwong that it is not arguable that the existence and scope of any insurance cover can be material to the contribution and indemnity proceedings. Even assuming there is some form of insurance cover for the 2nd defendant (and/or even for the 1st defendant) in respect of the Accident and of the Plaintiff’s injuries, loss and damages, it has no connection with the alleged causative conduct for assessing blameworthiness for the Accident. I further agree with Mr Kwong that the Policy Documents (ie the AXA Policy and/or the Other Policies) will not lead to a useful chain of inquiry that will directly or indirectly enable the 1st defendant to advance their own claim for contribution and indemnity against the 2nd defendant or to damage the similar claim by the 2nd defendant against the 1st Defendant for contribution and indemnity. Further, the trial judge will not be handicapped in assessing blameworthiness for the Accident by the absence of the Policy Documents.
55. This leads to the consideration of Mr Ng’s submission that the Policy Documents have to be disclosed in the interests of sound case management. He argues that the purpose of the specific discovery application is to ensure that the 1st and 2nd defendants have all the information they need to deal efficiently and justly with “the matters which are in dispute” between them or between their respective insurers.
56. For the reasons discussed above, given that the existence and scope of any insurance cover are not material issues in the main proceedings and/or in the contribution and indemnity proceedings in the present action, they are not “matters which are in dispute” between the 1st and 2nd defendants or between the plaintiff and the 1st and 2nd defendants. In such context, the above submission is tantamount to saying that for the purpose of the Summons there is no need for there to be a live disagreement between the parties on a relevant issue, and it is sufficient that the application is merely to find out whether there is or is not a live disagreement between the 1st and 2nd defendants or between their respective insurers on a given point, eg whether there is insurance cover for the 1st and 2nd defendants in respect of the Accident and if so the scope thereof, and whether the continuance of the litigation serves a useful purpose for the parties and/or the court (see paragraph 29 above).
57. However, as I have found, the insurance position does not impact on the ability to prepare the claim or defence in the present proceedings. Discovery of the insurance position do not support or adversely affect any party’s case, and it is not relevant to the issues or matters which are in dispute in the present proceedings between the parties nor does it constitute documents which may lead to a train of inquiry enabling a party to advance their own case or damage their opponent’s. That being the case, even though the new approach under the Civil Justice Reform is to ensure expeditious, economical and proportionate litigation, I find that specific discovery of documents evidencing the insurance position would require such a broad and liberal interpretation of the underlying objectives and of the particular requirements of Order 24 rule 7 of the RHC that is unjustifiably excessive in all the circumstances. This is especially so in light of Order 24 rule 8(1) of the RHC whereby the court should decline granting specific discovery “if it is of the opinion that discovery is not necessary either for disposing fairly of the cause or matter or for saving costs”.
58. The 1st and 2nd defendants’ respective insurers are not parties to the present proceedings. If the 1st defendant’s request for specific discovery of the insurance position is granted, it may lead to time-consuming, undesirable and/or even wasteful satellite forays into insurance matters extraneous to the present proceedings when (as Mr Kwong submits and I agree) any dispute as to the liability of the 1st and 2nd defendants’ respective insurers can only be resolved in separate proceedings or even in a different forum and certainly not in the present proceedings. To seek discovery of the Policy Documents in the present proceedings for the purpose of resolution of potential dispute that can only be resolved elsewhere will not save costs but will unnecessarily add to costs in the present litigation.
59. In my view, the aforesaid analysis and my conclusions are sufficient to dispose of the Summons for they lead inexorably to the conclusion that it must be dismissed.
60. But Mr Ng argues that in light of the provisions of Clause 14 the insurance details are not a mere private matter between the insurer and the assured which normally cannot be made available unless they are volunteered. He claims that Clause 14 in fact supports the 1st defendant’s application for specific discovery of the Policy Documents.
61. Clause 14 has two aspects. First, there is the indemnity provision which requires the 2nd defendant to indemnify the 1st defendant against all loss, damage, costs and expenses incurred by the 1st defendant and/or demands, claims, suits or actions made against the 1st defendant by reason or on account of (a) any acts or omissions by the 2nd defendant, (b) any breach, non-observance or non-performance of the Cleaning Contract by the 2nd defendant or (c) otherwise relating to any Services (see paragraph 4 above) provided by the 2nd defendant pursuant to the Cleaning Contract.
62. It is plain from the clear wording of Clause 14 that the 2nd defendant’s contractual indemnity in favour of the 1st defendant is grounded upon conduct, omission and/or default of the 2nd defendant and not upon any non-delegable duty or independent liability (if any) to the plaintiff on the part of the 1st defendant themselves.
63. According to the Statement of Claim, there is no plea that the 1st defendant is vicariously liable for the 2nd defendant’s negligence and/or breach of the common duty of care.
64. In my view, it is doubtful whether the indemnity provision under Clause 14 (as understood in paragraphs 3 and 61-63 above) extends to cover the 1st defendant’s liability for their own negligence and/or own breach of the common duty of care (if any) to support the 1st defendant’s application for specific discovery as to the insurance position relating to such indemnity.
65. The other aspect of Clause 14 concerns the 2nd defendant’s responsibility for arranging adequate insurance “covering all risks arising out of performance of [the 2nd defendant’s] duties under [the Cleaning Contract]” (my emphasis) including (a) all liabilities from third party claims arising out of performance of the Services (see paragraph 4 above) as provided by the 2nd defendant and (b) all liabilities, losses, claims or proceedings in respect of any damages caused to the 1st defendant arising out of or in the course of performance of the Services (see paragraph 4 above).
66. Quite plainly, the insurance coverage envisaged in Clause 14 covers risks arising from the 2nd defendant’s conduct and/or default in performing the Works and not in respect of risks arising from any alleged breach of the 1st defendant’s own non-delegable duty and/or any alleged independent liability on their part (which is in fact the subject matter of the plaintiff’s Statement of Claim against the 1st defendant). In short, the insurance cover required under Clause 14 is liability insurance (ie liabilities to third parties arising from bodily injury, property damage or other wrongs due to the action or inaction of the assured) and not contractor all risks insurance which typically provide that both the contractor and the employer are the insured and that the insurance will operate as regards their respective rights and interests. I am unable to read into Clause 14 any obligation on the part of the 2nd defendant to ensure insurance coverage for the 1st defendant’s liability to third parties for the 1st defendant’s own negligence and/or breach of the common duty of care.
67. Such construction of the indemnity and/or insurance provisions in Clause 14 is consistent with the AXA Certificate which (a) does not name the 1st defendant as the “Named Insured” or the “Additional Insured” but (b) specifies the insurance coverage as the insurer granting “the insured” (ie Dussman AG & Co, KGaA and the 2nd defendant) cover against third party claims (see paragraph 6 above).
68. This is also echoed in McLarens’ letter to the 1st defendant’s solicitors dated 11 October 2010 which states as follows:
“In respect of your request for specific discovery of the insurance policy taken out by our Principal’s Insured, there are no provisions in the [Cleaning Contract] requiring our Principal’s Insured to take out an insurance policy covering the liability of your client. We therefore fail to see any legal basis for your request. Should your client insist taking out any application for such specific discovery, our Principal’s Insured will strongly oppose the action with costs against your client.”
It is said that the Kwan 1st Affirmation admits the AXA Certificate shows that the 2nd defendant has already arranged adequate insurance in compliance with Clause 14, but I do not agree that the AXA Certificate shows the AXA Policy also covers the 1st defendant’s own liability (if any) in respect of the Accident towards the plaintiff (notwithstanding Ms Kwan’s admission to the contrary in the Kwan 1st Affirmation). If the court does not find the alleged Accident to be wholly or in part or contributed to by the 2nd defendant’s negligence, I cannot see how Clause 14 is still applicable as suggested by the 1st defendant (see paragraph 22 above).
69. Given that the plaintiff’s Statement of Claim claims against the 1st and 2nd defendants for their respective negligence and/or breach of the common duty of care, the above analysis of the provisions of Clause 14 and the AXA Certificate does not support the present application for specific discovery of the Policy Documents.
70. I agree with Mr Kwong that the issue under Clause 14 as to whether the 2nd defendant is contractually liable to indemnify the 1st defendant turns on findings of fact by the court and on whether the facts as found by the court fall within the indemnity provision in the contractual term as construed by the court. I am unable to see how the Policy Documents can be relevant to any issue of liability and/or indemnity under Clauses 13 and 14.
71. Mr Kwong further submits that even if the Policy Documents cover the 1st defendant’s liability to the plaintiff, they cannot resolve the plaintiff’s claim against the 1st defendant. There must be a judgment on liability against the 1st defendant before the AXA Policy (even if it covers the 1st defendant) can be called upon to indemnify the 1st defendant. In light of the above discussion and my conclusion, it is unnecessary to address such submission. In any event, the main proceedings and/or the contribution and indemnity proceedings in the present action are not concerned with any call upon the benefit of the insurance cover against the relevant insurer. Further, the correspondence from McLarens (see paragraphs 31-32 above) shows clearly that the 2nd defendant’s insurer has refused to take over the conduct of the claim on behalf of the 1st defendant. Even if such decision is wrongful (which matter I do not have to decide), any challenge to such wrongful repudiation must be pursued elsewhere and not in the present proceedings, and hence the insurance position remains irrelevant.
72. In respect of the Taiping Policy, I agree with Mr Kwong that whether the 1st defendant can call upon such policy to satisfy any liability by the 1st defendant towards the plaintiff according to the terms and conditions of such policy is not a matter in dispute in the present proceedings that needs to exercise the trial judge. The trial judge will not adjudicate on the plaintiff’s claim against the 1st defendant based on the insurance position, and as explained above, the respective blameworthiness of the 1st and 2nd defendants for the Accident also do not turn on the insurance position. The liability of the 1st and 2nd defendants’ respective insurers is not a matter in dispute in either the main proceedings or in the contribution and indemnity proceedings in the present action. The Policy Documents (even if they do exist) are not necessary and have no evidential materiality as to any matter in question in the present proceedings. There is no sufficient justification for the 1st defendant to ask the 2nd defendant to clarify by affirmation what the Other Policies are.
73. For all of the above reasons, the Summons should be dismissed, and I so ordered at the Hearing.
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(Marlene Ng)
Master of the High Court |
Representation:
Mr Draco C H Ng of Messrs Fairbairn Catley Low & Kong for the 1st defendant.
Mr Kwong Wing Ho of Messrs Winnie Leung & Co for the 2nd defendant.
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