LIBERTY INTERNATIONAL INSURANCE LTD v. YEUNG KAI CHUNG, STANLEY

DCCJ 2775/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.2775 OF 2015

____________

____________

-------------------------------------------

ASSESSMENT OF DAMAGES

-------------------------------------------

1.  This is assessment of damages payable from defendant insured to plaintiff insurer arising out of the breach of a private motor policy between the two (the policy) over the use of a private car bearing registration mark PM48 (the car).

2.  In gist, the plaintiff paid out to one Mdm Yu Lai Kwan injured in a traffic accident (the injured) caused by defendant’s driving of the car on 16 Feb 2013 (the accident) in DCPI No.256 of 2014 (the PI action) and sought to recover the same from the defendant.

3.  The plaintiff issued its Writ of Summons indorsed with Statement of Claim (SOC) on 19 Jun 2015. No notice of intention to defend being filed by defendant, it obtained interlocutory judgment against defendant for damages to be assessed and costs on 25 Aug 2015.

4.  Pursuant to Order of Registrar Lui dated 3 Jan 2017, leave was given to plaintiff to set down for assessment of damages to be heard on 5 Apr 2017, on which date Master M. Soong further adjourned it to be heard on 21 Aug 2017.

5.  On the date of hearing before me, Mr Wu Tung Wah, Steve (Mr Wu), solicitor of Messrs. Anthony Siu & Co., appeared for the plaintiff. The defendant did not turn up.

6.  However, I am satisfied that I should proceed with the hearing in the absence of defendant.

7.  It is because, pursuant to Order by Master M. Lam dated 27 June 2017, leave was given to plaintiff to effect service of above Order of Master M. Soong by advertising a notice in a local newspaper giving notice of this hearing for assessment of damages and also sending copy of such sealed order by ordinary post to defendant’s last known address given at the Writ of Summons.

8.  Looking at 2^nd affidavit of Mr Wu dated 21 July 2017 before me, I am satisfied that substituted service in paragraph 7 above has been complied with and service of above Order of Master M. Soong (and notification of this hearing) was deemed to have been effected on 13 Jul 2017, the date of publication of the required notice by way of advertisement in a local newspaper.

Plaintiff’s case

9.  The only witness called by the plaintiff is Mr Lam Tze Cheung Andy (Mr Lam), the Senior Manager of the Claims Department of the plaintiff. Mr Lam was given leave by me to adopt as his evidence-in-chief his witness statement dated 19 Sept 2016. He further answered a few questions from this court and Mr Wu was allowed to re-examine on his answers to court.

10.  Mr Lam gave evidence that the plaintiff issued the policy to defendant, the registered owner of the car, to provide cover of third party liabilities in respect of the driving of the car for the period from 12 Jul 2012 to 11 Jul 2013.

11.  Clause 14 of the policy, Mr Lam pointed out, provides that if the plaintiff is obliged by the laws of any country within the geographical area or by virtue of any agreement between the plaintiff and The Motor Insurer’s Bureau of HKSAR (MIB) to pay an amount for which it would not otherwise be liable under the policy, the defendant insured and any other person on whose account the payment is made shall forthwith repay such amount to the plaintiff.

12.  Clause 17(g)(ii) of the policy states that the plaintiff will not be liable under the policy in respect of any accident, loss, damage or liability caused, sustained or incurred while the car is being driven by the insured defendant when the proportion of alcohol in his breath, blood or urine exceeds the prescribed legal limit from time to time. And clause 18(b) thereof requires the defendant insured to give immediate notice to plaintiff with full particulars in the event of any occurrence which may give rise to a claim under the policy.

13.  On 31 Jul 2013, the plaintiff received a letter before action dated 4 Jul 2013 from Messrs. Yeong & Co. acting for the injured (solicitors for the injured) for injures she sustained as a passenger of the car in the accident. The plaintiff later learnt that the defendant had, as a result of the accident, been prosecuted and convicted of driving the car with alcohol concentration in excess of prescribed limit on 28 Mar 2013. However, the defendant had never reported the occurrence of the accident to plaintiff.

14.  For breaches of clauses 17(g)(ii) & 18(b) of the policy, the plaintiff and its former solicitors, Messrs. W. K. To & Co. (plaintiff’s former solicitors) wrote to defendant to repudiate its liability under the policy in Jul and Nov 2013.

15.  On 6 Feb 2014, the plaintiff further received notice to insurer from solicitors for the injured on the bringing of the PI action by the injured against the defendant.

16.  On 24 Apr 2014, the plaintiff obtained leave in the PI action to join as 2^nd defendant and later filed its Defence in the PI action.

17.  On 29 Jul 2014, the solicitors for the injured, the defendant in person and plaintiff’s former solicitors appeared before Master D. Ho in the PI action with a consent summons signed by all 3 parties (the consent summons).

18.  After hearing all parties, Master D. Ho made an Order by consent in the PI action that (1) plaintiff shall, on behalf of defendant, pay the injured agreed damages in sum of $50,000 (inclusive of interest) plus her costs of the PI action in full and final settlement of the PI action; (2) plaintiff shall, on behalf of defendant, pay the injured her costs of the PI action to be taxed if not agreed; and (3) upon plaintiff’s payment of the agreed damages and the costs of the injured in the PI action, all liability of plaintiff and defendant towards the claim of the injured in the PI action or arising out of the accident shall be discharged.

19.  After negotiation between solicitors for the injured and plaintiff’s former solicitors, the costs of the injured in the PI action were finally agreed at $65,000.

20.  The plaintiff had, Mr Lam said, paid the injured the agreed damages of $50,000 plus the agreed costs of the injured in the PI action in the sum of $65,000 on the basis that it was the “insurer concerned” of the car at the time of the accident pursuant to the Domestic Agreement of MIB dated 1 Feb 1981.

21.  In addition, said Mr Lam, the plaintiff’s former solicitors had charged the plaintiff total legal costs in sum of $79,325 in respect of the PI action.

22.  On the basis of defendant’s aforesaid breaches of the policy, the defendant, said Mr Lam, is liable to repay the total sum of $194,325 (i.e. $50,000 + $65,000 + $79,325) to the plaintiff. And the plaintiff and another former solicitors of plaintiff had issued letters of demand to defendant in Jan, Mar and Apr 2015 seeking recovery of the said total sum from him.

My findings

23.  I have fully and carefully considered all evidence adduced before me and all submissions made by Mr Wu.

24.  I have also invited Mr Wu to address me on the unreported decision of Master R. Lai in Liberty International Insurance Ltd. v Yeung Chi Kong, DCCJ No.3385 of 2008, 14 Aug 2009 and he has kindly done so.

25.  First, subject to caveat below, I find Mr Lam an honest and reliable witness and accept his evidence. His evidence in his statement and in the box was inherently plausible and generally consistent with the documentary evidence before this court[1]. Due to lapse of time, he not surprisingly cannot recall some details of the events in, say, 2014 and, in these respects, I prefer the contents of the contemporaneous documents, whose contents I give full weight.

26.  In particular, notwithstanding the absence of production of record for paying the agreed damages of $50,000 to the injured and paying the legal bill of $79,325 charged by plaintiff’s former solicitors, I am satisfied with Mr Lam’s evidence that the plaintiff had indeed paid these 2 sums to the injured and the plaintiff’s former solicitors in 2014 and/or 2015.

Agreed damages of $50,000

27.  I also accept Mr Lam’s evidence that the total amount of damages sought by the injured in the PI action exceeded $50,000 but with his authority given to plaintiff’s former’s solicitors to negotiate with solicitors for the injured on the same, the amount of damages payable to the injured was at the end agreed at the figure of $50,000 stated in the consent summons.

28.  It is a pity that the Schedule of Damages in the PI action was not put before me to give me information of the various amounts claimed by the injured against the defendant.

29.  Nonetheless, under paragraph 6A of the SOC, it was pleaded that the injured sustained head injuries and lost her consciousness in the accident. She was admitted to neurosurgery ward for 2 days for observation and further examination. She also allegedly suffered from amnesia, neck and rib pain and multiple abrasions over hands and left forehead. It was further pleaded that she had to undergo both neurosurgical and orthopedic treatments for 6 months.

30.  Though I do not know the total amount claimed by the injured in the PI action, considering such allegations in SOC and having regard to the relatively small sum of $50,000 agreed upon, I think that the agreed damages of $50,000 is a reasonable amount to be recovered by plaintiff from defendant and I allow it.

31.  In any event, I agree with Mr Wu’s submissions that the defendant had acknowledged in words and signature on the consent summons that he understood and agreed with the settlement terms stated therein. As such, the defendant cannot, I think, now be heard to dispute the reasonableness of the amount of agreed damages of $50,000 stated in the consent summons.

Costs of the injured

32.  For this head, all the correspondences between solicitors for the injured and plaintiff’s former’s solicitors leading to the agreed costs of $65,000 was put before me, together with the bill of costs of the solicitors for the injured.

33.  It suffices for me to point out that solicitors for the injured charged as much as $211,346.20 on party to party basis in their bill of costs for the PI action and plaintiff’s former solicitors had done a great job in coming to final agreement on a figure of $65,000, starting from a counter-offer of $50,000.

34.  Having carefully considered the contents of the bill of costs of the solicitors for the injured, the contents of the above correspondences, the amount of damages agreed upon by the parties and the lack of complexity of the PI action, I am equally satisfied that the sum of $65,000 agreed for the costs of the injured in the PI action is also reasonable and I also allow it in full.

Own costs of plaintiff’s former solicitors

35.  The bill of costs dated 19 Dec 2014 issued by plaintiff’s former solicitors to plaintiff is before me to prove the total legal costs of $79,325 spent by plaintiff in the PI action.

36.  Mr Lam is, I think, fair to accept that there is no express clause in the policy to allow recovery of the aforesaid costs incurred by plaintiff from the defendant.

37.  Equally, Mr Wu in his closing address had to concede that the aforesaid costs were not amounts which the plaintiff was “obliged” by law (i.e. Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap.272) or by virtue of agreement with MIB “to pay for which it would not otherwise be liable under the policy”.

38.  Nevertheless, I think the said head of claim is recoverable by plaintiff on general principles of damages for breach of contract as reasonable costs incurred by plaintiff in mitigating its loss caused by defendant’s breaches of the policy or in otherwise dealing with the consequences of such breaches: paragraph 26-032 at p.1819 of Chitty on Contracts, Vol.1, 2015 Edition.

39.  I have no doubt that the plaintiff instructed, and paid, plaintiff’s former solicitors to apply to join in PI action to file Defence to raise, inter alia, voluntary assumption of risk and contributory negligence against the injured[2] and embarked on settlement negotiation with solicitors for the injured in order to mitigate its loss arising from defendant’s breaches of the policy.

40.  And I agree with Mr Wu’s submissions that it was reasonable for plaintiff to apply to join to the PI action as the defendant failed to instruct any lawyer to defend himself in the same.

41.  However, only reasonable costs are recoverable on this basis and not otherwise. Looking at the contents of the bill of costs of plaintiff’s former solicitors, the hourly rate of $3,500 charged by Mr Wu[3] and the time spent on some of the items therein are, I am afraid, excessive and deductions are called for.

42.  On a broad-brush approach, I take the view that $50,000 should be the reasonable amount of own legal costs for plaintiff to incur in the PI action to mitigate its loss arising from defendant’s breaches of the policy and this is the amount I allow.

Disposition

43.  Accordingly, I assess the amount of damages payable from the defendant to the plaintiff, and enter final judgment in plaintiff’s favour against the defendant, in the total sum of $165,000 i.e. ($50,000 + $65,000 + $50,000).

44.  And I further award pre-judgment interest on the above total award at HSBC best lending rate(s) from time to time from the date of the Writ of Summons i.e. 19 Jun 2015 until the date hereof. The said total award should, of course, carry post-judgment interest at judgment rate until payment.

Costs

45.  I also order that the costs of the assessment of damages, including the hearing before Master M. Soong on 5 Apr 2017, be paid by the defendant to the plaintiff.

46.  Having considered Statement of Costs dated 21 Aug 2017 prepared by Mr Wu, I summarily assess the same at $60,000.

47.  Finally, I thank Mr Wu for his assistance.