XCHRX SHOREWELL INSURANCE BROKERS LTD. v. LEE KAM SHU t/a Kam Bok Shipping Agency Co.

HCCL 123/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 123 OF 1999

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J U D G M E N T

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1. There is before the Court an Order 14 application dated 6th August 1999, taken out by the Plaintiff herein. The Plaintiff, which is an insurance broker, wishes to recover, pursuant to this summary judgment application, the sum of US$27,312.50 which represents the second instalment of insurance premia paid to underwriters with regard to the vessel "Kam Hong".

2. The evidence is that "Kam Hong" is owned by Kam Hong Shipping and Trading Company, S.A., a Belize company. However, this company is not the Defendant in this action. The Defendant in this action is one Mr Lee Kam Shu, trading as Kam Bok Shipping Agency Company. Mr Lee appears today, but is unrepresented in this Court. However, he has put into the record two short affidavits in Chinese and has also, as I understand the position, filed a document in Chinese purporting to be a Defence to this action.

3. The point in the case is this. Mr Lee says, both in his affidavit evidence and orally in his submission to this Court, that it is very unfair to name him personally as he was not the insured and he has never signed anything to that effect. He says that it is Kam Hong Shipping and Trading Co., S.A., the Belize company and ship-owner, which is responsible for all liabilities, and any activity that he has undertaken with regard to this vessel has been simply qua agent. In this latter regard, it is common ground that through him, payment of the first premium instalment in the like amount, namely, US$27,312.30 was effected; and that also through him, upon the termination of this insurance caused by the sale of the vessel, a letter was written to the Plaintiff dated 20th February 1998 formally terminating the insurance, and arranging for payment of the sum then outstanding, namely, US$17,177.33. However, he says today in terms :

"I have never seen until today in Court the Cover Note which is put forward on behalf of the Plaintiff in this summary judgment application as representing evidence of my liability."

This Cover Note is issued under the letterhead of the Plaintiff, Shorewell Insurance Brokers Limited. It is dated 3rd July 1997, it is addressed to Kam Bok Shipping Agency Co., it refers to the relevant Cover Note number, and the Assured therein is described thus :-

"Kam Hong Shipping and Trading S.A. as Owners and Kam Bok Shipping Agency Co. as Managers."

4. As I have said, Mr Lee disavows this Cover Note as representing the true position, and it is this Cover Note which, so far as I can see, forms the central plank of the Plaintiff's case on this application for summary judgment. In passing, it is not clear to me in any event why Managers of a vessel necessarily should have an insurable interest in the marine hull insurance of that vessel, but be that as it may; it is possible they may have such an interest. Nevertheless I find it very difficult, absent further evidence put forward on behalf of the Plaintiff as to the provenance of this Cover Note and the way that it came into existence, to resolve this central issue upon an Order 14 basis. It may be, at trial and after discovery, that the matter will sort itself out and that the answer will be clear, but for present purposes that that is not the point.

5. I have considered carefully whether in all the circumstances of this case this is an appropriate case for conditional leave to defend, that is leave conditional on the payment into Court of the sum claimed. I have concluded, in light of what I regard as this central triable issue, together with the ostensible commercial rationale for the other acts of the Defendant which are relied upon by the Plaintiff, namely, the payment of the other premia and the content of certain correspondence (albeit in this respect I am quite unable to see the relevance of the Billion Source Investment Co., Ltd. letter), that I should not even go so far as to impose conditional leave. Perhaps that may be considered generous to the Defendant, but that is the view I have taken. His account has been consistent in both the affidavits that he has filed, and in truth I cannot classify that explanation as commercially improbable, notwithstanding that he obviously has some interest in the Belize shipowning company which he maintains is the true (and only) Assured. In any event, the result of this Order 14 is that the Defendant is to have unconditional leave to defend this action, and I so order.

6. I make the following directions :

(i) The Defendant is to have 21 days from today in which to file and serve a Defence to the Points of Claim herein;

(ii) The Plaintiff is to have 14 days thereafter in which to file and serve a Reply, if any;

(iii) Mutual discovery by list of documents is to take place within 14 days after close of pleadings, with inspection 7 days thereafter;

(iv) There is to be liberty to either party to apply for further directions.

7. I thank Counsel for his assistance.