MING AN INSURANCE CO (HK) LTD v. RITZ-CARLTON LTD

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J U D G M E N T

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Chief Justice Li :

1.  I agree with the judgment of Mr Justice Bokhary PJ and the judgment of Mr Justice Ribeiro PJ.

Mr Justice Bokhary PJ :

2.  This appeal involves the position of an insurer concerned who has made payment under the Motor Insurers Bureau (“MIB”) scheme.  It is the second appeal to this Court arising out of a motor accident which occurred on the night of 9 March 1998 when a motor car driven by Mr Lo Sin Tak mounted the pavement along Queensway and injured two pedestrians, Ms Tse Ngan Heung and Ms Chan Yuet Lui who were friends and were walking along that pavement together.  The first appeal to us, in which judgment was handed down on 4 December 2002, is reported as Ming An Insurance Co. (HK) Ltd v. Ritz-Carlton Ltd (2002) 5 HKCFAR 569.  It turned on the true test of when an employer is vicariously liable for his employee’s tort committed during an unauthorised course of conduct.

Background

3.  Shortly stated, the background to this case is as follows.  Mr Lo was employed as a doorman at The Ritz-Carlton, a nearby hotel operated by Ritz-Carlton Ltd (“the hotel company”) which is the respondent in this appeal and had been the respondent in the first appeal to us.  The car which Mr Lo was driving at the time of the accident did not belong to his employer, the hotel company.  It was a limousine which belonged to a limousine service company from which the hotel company hired limousines and their chauffeurs in order to provide a chauffeur-driven limousine service for its hotel guests.  Mr Lo was driving the car for an unauthorised purpose, namely taking a bellboy to collect food for certain members of the hotel’s staff..  If the hotel company was not vicariously liable for his negligent driving, its own insurers would not be responsible to satisfy the injured pedestrians’ judgments against him.  The impecunious Mr Lo would then be an uninsured driver.

4.  Ming An Insurance Co. (HK) Ltd (“Ming An”), which is the appellant in this appeal and had been the appellant in the first appeal to us, was at the time of the accident providing insurance against bodily injury liability in respect of the car involved.  That made Ming An the insurer concerned under the MIB scheme.  So if the hotel company was not vicariously liable and its own insurers were therefore not responsible to satisfy the injured pedestrians’ judgments against the impecunious Mr Lo, Ming An would, as the insurer concerned, have had to satisfy those judgments in that capacity.

5.  On 31 May 1999 Ms Tse commenced a High Court action, HCPI No.565 of 1999, against the hotel company and Mr Lo.  Then on 16 November that year, by consent and on terms, she discontinued that action as against the hotel company.  But on 15 May 2000 she commenced a fresh High Court action, HCPI No.570 of 2000, against the hotel company.  And on the 30th of that month Ms Chan commenced a High Court action, HCPI No.658 of 2000, against the hotel company and Mr Lo.  The three actions were consolidated by an order which Seagroatt J made on 21 July 2000.  This order also split the trial of liability from the assessment of damages.  On 31 October 2000 Seagroatt J turned down Ming An’s application to be joined as a defendant.  At that time he was of the view that Ming An could protect its position by representing Mr Lo.

6.  That turned out not to be so.  The trial of the consolidated actions on the issue of liability began before Seagroatt J on 6 December 2000.  By the second day of the trial it became apparent that Mr Lo was not cooperating with Ming An, and Seagroatt J then acceded to Ming An’s application to be joined as a defendant.  The trial went into a third day.  Judgment was reserved.  On 18 January 2001 Seagroatt J entered judgment for damages to be assessed in favour of the injured pedestrians against Mr Lo but not the hotel company.  He held that the hotel company was not vicariously liable.  His decision was upheld by the Court of Appeal on 23 November 2001.  But on 4 December 2002 this Court, applying the “close connection” test, held that the hotel company was vicariously liable.  Accordingly, what Seagroatt J had ordered in favour of the injured pedestrians was ordered against the hotel company too.  It can be seen therefore that although the presence of the injured pedestrians had been dispensed with in the first appeal to us, that appeal proceeded on the basis that they were parties to it.

7.  Until we handed down judgment on 4 December 2002 holding that the hotel company was vicariously liable, Ming An’s position as declared by the courts below was that of an insurer concerned obliged to make payment.  By the time when we held that the hotel company was vicariously liable, the injured pedestrians’ damages had been assessed by the High Court, and Ming An had paid them (i) those damages, (ii) interest thereon up to the time of final judgment and (iii) some post-judgment interest.  Thereafter there were further payments of post-judgment interest by Ming An to the injured pedestrians.  The details of these assessments, payments and further payments appear below.

8.  To the hotel company’s knowledge, Ming An applied for a stay of the assessments pending its i.e. Ming An’s appeal to the Court of Appeal against Seagroatt J’s decision that the hotel company was not vicariously liable.  On 26 March 2001 Seagroatt refused such a stay.  Then, on 11 September 2001, Ming An notified the hotel company of when the assessments would take place.  The hotel company chose not to take part in the assessments.

9.  Ms Tse’s damages were assessed by Master C B Chan who made an award on 10 January 2002.  This award was of $1,001,775 (made up of $974,954 damages, $18,315.07 interest on general damages and $8,505.93 interest on special damages).  Ms Chan’s damages were assessed by Jackson J who made an award on 7 January 2002 and then corrected it by a corrigendum dated the 30th of that month.  As corrected, this award was of $19,243,576 (made up of $18,888,887 damages, $51,935 interest on general damages and $302,754 interest on special damages).

10.  On 3 June 2002 Ming An paid the injured pedestrians the sums awarded by Master C B Chan and Jackson J in respect of damages and interest thereon up to the time of final judgment .  Between 4 June 2002 and 8 January 2003 Ming An made further payments to the injured pedestrians.  These further payments were in respect of post-judgment interest, and totalled $592,072.59.

11.  Also by the time when we held that the hotel company was vicariously liable, the injured pedestrians, having been paid by Ming An, had assigned their rights as judgment creditors of Mr Lo to Ming An.  They also agreed to assign to Ming An any judgment obtained against the hotel company. All of this took place on 25 September 2002, by which time Ming An had, as we have seen, paid the injured pedestrians (i) their damages, (ii) interest thereon up to the time of final judgment and (iii) some post-judgment interest.

12.  On 19 December 2002, in response to Ming An’s demand for payment following its success in its first appeal to us, the hotel company paid Ming An a total of $20,317,458 by a cheque of that date.  This total sum was made up of the principal sums of $19,243,576 and $1,001,775 (represented by the awards made by Jackson J and Master C B Chan respectively) plus a sum of $72,107 being interest on those principal sums from the date of our judgment in the first appeal to us (i.e. 4 December 2002) to the date of payment by the hotel company to Ming An (i.e. 19 December 2002).  This sum of $72,107 is made up of $3,568 in respect of Ms Tse and $68,539 in respect of Ms Chan.

13.  The hotel company has not paid any interest between the dates of the final judgments in favour of the injured pedestrians (i.e. 10 January 2002 in Ms Tse’s case and 30 January 2002 in Ms Chan’s case) and the date of our judgment in the first appeal to us (i.e. 4 December 2002).

14.  As appears by a letter dated 19 December 2002 from Ming An’s solicitors to the hotel company’s solicitors, Ming An accepted the payment of $20,317,458 under protest, expressly reserving the right to claim against the hotel company for more.

15.  On 12 June 2004 two things happened in the consolidated actions.  First, on Ming An’s ex parte application under Order 32 rule 10 of the Rules of the High Court, Master Lung ordered that our order in the first appeal to us be made an order of the High Court for the purpose of its record.  Secondly, interlocutory judgment was entered in the High Court for Ming An against the hotel company pursuant to our judgment in that appeal.

16.  The next step to mention is this.  On 17 November 2005 Ming An took out a summons for directions in the consolidated actions.  It was stated in this summons that Ming An’s application thereunder was made in exercise of its rights as assignee of the injured pedestrians’ rights against the hotel company.  Such application was for, among other relief, the assessment by a judge of “damages and interest as between” the injured pedestrians and the hotel company “pursuant to and/or in furtherance of” Master Lung’s order of 12 June 2004.

Issue of what if any further sums Ming An should recover

17.  A number of things happened in January 2007.  On the 13th, which was its return date, the summons for directions was adjourned.  Then on the 17th Ming An issued a third party notice against the hotel company.  And then on the 20th, at the resumed hearing of the summons for directions, Suffiad J ordered that the issue of what if any further sums (including interest) Ming An should recover from the hotel company be tried as a preliminary issue.  It was ordered that for the purposes of this issue the hotel company be bound by the assessments made by Jackson J and Master C B Chan in respect of Ms Chan and Ms Tse respectively.

Issue decided against Ming An at first instance

18.  The trial of the issue took place before Suffiad J on 13 April 2006.  He handed down his decision on 10 August that year.  By that decision he dismissed Ming An’s claim against the hotel company with costs nisi.  His reasons appear in paragraphs 31 to 38 of his decision.  Paragraphs 31 and 32 of that decision read :

“31. I do not see how Ming An can claim for post-judgment interests from [the hotel company] before there is a final judgment against [hotel company].

32. In this respect, the suggestion by counsel for Ming An for me to exercise the discretion provided for by section 48(3) of High Court Ordinance, by ordering that interests is to run from the date of the judgment given against [the doorman Mr Lo] is quite unreal.  If that is done, it will be done solely for the purpose of enabling Ming An to claim for post-judgment interests which otherwise it will not be able to.  I decline such suggestion.”

19.  Having said that, Suffiad J then said this :

 “33. Turning now to deal with the $592,072.59 which was interest paid by Ming An to [the injured pedestrians] but not repaid to it by [the hotel company].

34. In so far as this amount is concerned, it was post-judgment interest which Ming An had to pay by reason of having taken time to pay off [the injured pedestrians] for the assessed amount of damages.

35. I would have had the same sentiments as expressed by Jackson J in the penultimate paragraph of his written Reasons given in this matter on 5 May 2003, however, the stumbling block standing in that way of that is that Ming An has refused to bring a restitution action but insists on going about this matter in the way that it has, namely a claim for post-judgment interests.”

20.  The reasons mentioned were those given by Jackson J for dismissing a summons taken out by Ming An on 6 February 2003 for an order that the hotel company pay Ming An post-judgment interest.  This was what Jackson J said in the paragraph mentioned :

“ Whilst I might have liked to have adopted a broad brush approach to the summons and to have made amendments to it to meet such an approach and, in doing so, possibly to have made an order in the sum of $519,965.59 in favour of Ming An, I accepted Mr Bharwaney’s argument that for the reasons which he advanced it was not open to me to do so.  I found those reasons to be compelling and, apart from any other consideration, there was no application to amend before me.”

21.  Returning to what Suffiad J said, he continued as follows:

“36. In choosing to claim for post-judgment interests rather than to bring a claim for restitution, Ming An has put even this amount of $592,072.59 out of its reach.

37. Finally, I accept the suggestion of Mr Bharwaney, counsel appearing for [the hotel company], that Ming An, in pursuing the matter in the way that it has chosen, is effectively attempting to gain a windfall which it is not entitled to.  The simple reason for that is because as the assignee of [the injured pedestrians], Ming An could not have gotten more than what [the injured pedestrians] would have been entitled to.  What Ming An is now seeking is far beyond what [the injured pedestrians] would have been entitled to.

38. For these reasons it is clear that Ming An would have been entitled to a claim for restitution and had that been brought, Ming An likely would have recovered the $592,072.59 or, if not that entire sum, at least a part of it depending on the defence raised to such a claim for restitution by [the hotel company].”

Court of Appeal’s reasons for dismissing Ming An’s appeal

22.  Ming An appealed to the Court of Appeal.  That appeal was heard on 21 June 2007.  On the 17th of the following month it was dismissed with costs nisi by the Court of Appeal (Rogers VP and Le Pichon JA).  The Court of Appeal’s reasons were given by Le Pichon JA with whose judgment Rogers VP agreed.

23.  In para.20 of her judgment, Le Pichon JA, referring to an offer made by the hotel company to Ming An at the hearing before the Court of Appeal, said

“... assuming Ming An were prepared to proceed on the basis of a restitutionary claim, Mr Bharwaney who appeared for [the hotel company] indicated that [the hotel company] would be content to reimburse the amount of post-judgment interest and to calculate interest on the judgment sums totalling $20 million odd at the commercial rate of interest which he submitted should be at say, 2.5% per annum, being Hibor plus 0.5% given the ready access to money markets by an insurer such as Ming An.  According to his calculations the total amount would come to $793,121.38.  There is in fact a typographical error in the amount of the post-judgment interest set out in Mr Bharwaney's calculations which, if corrected, would increase the amount to $794,121.38.  It would be fair to say that all along [the hotel company] had been willing to accede to a claim in restitution but Ming An has refused to proceed on that basis.”

At the hearing before us, Mr Mohan Bharwaney SC for the hotel company confirmed that he had indicated that his client would be willing to pay Ming An that sum, but said that he had never made it a condition of such payment that Ming An bring a claim in restitution.

24.  Why the Court of Appeal decided against Ming An may be taken from paras 22 to 26 of Le Pichon JA’s judgment.  Paragraphs 22 and 23 of that judgment read :

“22. At the hearing, this court urged Ming An time and again to consider [the hotel company's] offer seriously and highlighted the possibility of Ming An failing in its application altogether.  As Ming An has rejected [the hotel company's] settlement proposal, I will proceed to consider the merits of its application for directions to proceed to assess damages against [the hotel company].

23. It is important to bear in mind that the claim is brought by Ming An as assignee of [the injured pedestrians] and not a restitutionary claim.  It stands to reason that as assignee Ming An can only recover what [the injured pedestrians] themselves could recover.  An insurmountable obstacle in the way of the intended assessment is that [the injured pedestrians’] claim against [Mr Lo] has been fully satisfied.  [The injured pedestrians] were paid the judgment sums on 3 June 2002 and by 8 January 2003 had been paid all post-judgment interest to which they were entitled.  Although [the hotel company] became a joint tortfeasor with Lo on 4 December 2002, from [the injured pedestrians’] perspective as at the date of the summons issued in November_. 2005, that had little relevance because they had long since been paid what they were entitled to in respect of the damage they had suffered as a result of the accident and can have no further claim.  In other words, their claims have been fully satisfied and their causes of action extinguished.”

25.  As to those paragraphs, certain observations can conveniently be made at this stage.  In principle, payment by an insurer concerned does not constitute a discharge of a negligent driver’s liability as a judgment debtor.  So it is not correct to suggest that the injured pedestrians’ causes of action, including their causes of action against the hotel company, had been extinguished. 

26.  Nor is it correct to say that it was only on 4 December 2002 that the hotel company became a joint tortfeasor with Mr Lo.  It became a joint tortfeasor with him when the accident happened on 9 March 1998.  When an appellate court reverses a lower court and finds liability, it does not create liability as from the date of the judgment on appeal.  What the appellate court does is to declare the legal consequences of the events giving rise to that liability.  And such liability arises at the time of those events.  All of that is illustrated by what Mr Justice Ribeiro PJ said at para.54 and Mr Justice McHugh NPJ said at para.159 in Kensland Realty Limited (in compulsory liquidation) v. Tai, Tang & Chong FACV 11 of 2007 (7 March 2008). 

27.  Interest on claims for debt or damages is provided for by s.48 of the High Court Ordinance, Cap.4, while interest on judgments is provided for by s.49 of that Ordinance.  Section 48(1) reads :

“Subject to rules of court, in proceedings (whenever instituted) before the Court of First Instance for the recovery of a debt or damages there may be included in any sum for which judgment is given simple interest, at such rate as the Court thinks fit or as rules of court may provide, on all or any part of the debt or damages in respect of which judgment is given, or payment is made before judgment, for all or any part of the period between the date when the cause of action arose and –

(a) in the case of any sum paid before judgment, the date of the payment; and

(b) in the case of the sum for which judgment is given, the date of the judgment.”

In this case, the causes of action arose on 9 March 1998 when the accident happened.  And as far as the hotel company is concerned, the date of the judgment is 4 December 2002 when we reversed the courts below in the first appeal to us, there having been no judgment against the hotel company until we did that.

28.  I turn now to para.24 of Le Pichon JA’s judgment in which she said that “[t]he fact that there are concurrent tortfeasors makes no difference. Satisfaction of [an injured pedestrian’s] claim by any one of several^-tortfeasors extinguishes [the injured pedestrians’] cause of action for damages against all.”  She continued by saying that the rationale for that was to be found in the speech of Lord Hope of Craighead in Jameson v Central Electricity Generating Board [2000] 1 AC 455 at pp 471H-472B and at p.473E-G. 

29.  This is what Lord Hope said in Jameson’s case at pp 471H-472B :

“ The basic rule is that a plaintiff cannot recover more by way of damages than the amount of his loss.  The object of an award of damages is to place the injured party as nearly as possible in the same financial position as he or she would have been in but for the accident.  The liability which is in issue in this case is that of concurrent tortfeasors, because the acts of negligence and breach of statutory duty which are alleged against Babcock and the defendant respectively are not the same.  So the plaintiff has a separate cause of action against each of them for the same loss.  But the existence of damage is an essential part of the cause of action in any claim for damages.  It would seem to follow, as a matter of principle, that once the plaintiff’s claim has been satisfied by any one of several tortfeasors, his cause of action for damages is extinguished against all of them.  As Lord Atkin said in Clark v. Urquhart [1930] A.C. 28, 66, ‘damage is an essential part of the cause of action and if already satisfied by one of the alleged tortfeasors the cause of action is destroyed.’”

30.  And this is what Lord Hope said in that case at p.473E-G :

“It cannot be doubted that, once the amount of the damages has been fixed by a judgment against any one of several concurrent tortfeasors, full satisfaction will have been achieved when the judgment is satisfied...  In the case of concurrent tortfeasors, a judgment recovered against one of them did not put an end to the cause of action against any of the other tortfeasors until it had been satisfied ...  As the law now stands, a plaintiff is barred from going on with a separate action against another tortfeasor if the judgment which he has obtained in the first action has been satisfied.”

31.  Having cited those passages from Lord Hope’s speech, Le Pichon JA went on to say this :

“25. For these reasons, after 8 January 2003, neither [the injured pedestrians] nor Ming An their assignee could continue with the action against [the hotel company].  There is no question of their being able to enter final judgment against [the hotel company].  Therefore, the present application for the intended assessment is misconceived.

26. As no restitutionary claim is being pursued, there is no question of granting any relief under that head.  I would add that, in any event, as regards the post-judgment interest of $592,072.59 Ming An has paid, there would not appear to be any valid excuse for the delay and, in my view, the extra liability of post judgment interest rate was self-induced.”

Leave to appeal

32.  By leave of the Appeal Committee granted on 16 July 2008, Ming An now appeals to this Court.  The Court of Appeal viewed the proceedings leading up to its judgment from which the present appeal to us is brought as satellite litigation.  But as I see it, the present litigation is directed to quantifying Ming An’s entitlement – no more and no less – consequent upon the judgment which we handed down on 4 December 2002.

MIB Fund and Domestic Agreements

33.  Mr Lo has been impecunious throughout.  Under the decisions of the lower courts extant at the time when Ming An made payments to the injured pedestrians, the hotel company was not vicariously liable and Mr Lo was therefore uninsured.  So in making those payments, Ming An was acting in the capacity of an insurer concerned.  It is therefore necessary to examine the position under two MIB agreements each dated 1 February 1981, namely (i) the Fund Agreement between the MIB and the Government and (ii) the Domestic Agreement between the MIB and authorised insurers.

34.  By clause 2 of the Fund Agreement, which clause is headed “Satisfaction of Claims by MIB”, it is provided as follows :

“If judgment is obtained against any person or persons at first instance in a court of competent jurisdiction in Hong Kong (or on appeal therefrom either to a superior court in Hong Kong or to [the Court of Final Appeal]) and either at the time of the accident giving rise to liability there is not in force a policy or such policy is ineffective for any reason other than the inability of the insurer to pay its debts by reason of its insolvency and any such judgment is not satisfied in full within 28 days from the date upon which the person or persons in whose favour such judgment was given became entitled to enforce it, then MIB will, subject to the provisions of this Agreement, pay or cause to be paid to the person or persons in whose favour such judgment was given any sum payable or remaining payable thereunder in respect of the relevant liability including any sum awarded by the court in respect of interest on that sum and any taxed costs (or such portion thereof as relates to the relevant liability) or satisfy or cause to be satisfied such judgment.”

35.  Under the heading “Recovery”, it is provided as follows by clause 7 of the Fund Agreement :

“Nothing in this Agreement shall prevent an insurer from providing by conditions in its contracts of insurance or by collateral agreement that all sums paid by it on behalf of MIB or by MIB by virtue of this Agreement in or towards the discharge of the liability of the insured shall be recoverable by the insurer or by MIB from the insured or any other person.”

36.  Clause 8 of the Fund Agreement, which clause is headed “Conditions Precedent”, lays down a number of conditions precedent to the MIB’s liability under clause 2.  As relevant, clause 8 provides as follows :

“MIB shall not incur any liability under Clause 2 of this Agreement unless or until the following conditions are met :

…

(c) if so required by MIB and subject to full indemnity from MIB as to reasonable costs, the plaintiff shall take all reasonable steps to obtain judgment against any person against whom he might have a remedy in respect of or arising out of the death or injury giving rise to the aforesaid proceedings;

…

(e) the judgment or judgments (including such judgments as may be obtained under paragraph (c) of this Clause) shall be assigned to MIB or its nominee, and the plaintiff as judgment creditor will lend his name and do everything necessary or conducive to the recovery of the judgment debt from the debtor,

…”

37.  Turning to the Domestic Agreement, there are two provisions thereof to be noted.  Clause 3 of the Domestic Agreement is headed “Insurer Concerned Principle” and provides as follows in sub-clause (a) :

“If a Judgment is obtained against any person, the Insurer Concerned shall satisfy the Original Judgment Creditor if and to the extent that the judgment has not been satisfied by the Judgment Debtor within twenty-eight days from the date upon which the person in whose favour it was given is entitled to enforce it.”

38.  Headed “Rights of Indemnity and Contribution”, clause 14 of the Domestic Agreement provides as follows :

“Nothing herein contained shall affect or be deemed to affect any right of an Insurer to indemnity or contribution from another Insurer whether such right arises at common law, by statute, from a claims sharing or other agreement, by subrogation or by assignment of the Original Judgment Creditor’s judgment and all such rights shall be determined according to the facts and circumstances of each particular case without reference to this Agreement.”

39.  From the foregoing provisions of the Fund Agreement and the Domestic Agreement, these points emerge.  Only those claims that have been pursued to judgment are satisfied under the MIB scheme.  The chances of recovering what has been paid under the MIB scheme lie in the judgment being assigned by the plaintiff to the MIB or its nominee for the purpose of pursuing the judgment debtor (if he may be good for the money) or his insurer (if he is insured).  In this connection, the right to pursue other insurers is expressly preserved.  Also in this connection, the MIB can require the plaintiff, as a condition of payment, to take all reasonable steps to obtain judgment against any person against whom he might have a remedy.  Thus, for example, if the assignment of the judgment against the 1st defendant does not enable the MIB or the insurer concerned to recover what it has paid the plaintiff, the plaintiff can be required to pursue the 2nd defendant to judgment.  Once that has been achieved, the plaintiff assigns the second judgment to the insurer concerned which may then, as assignee thereof, be able to recover from the 2nd defendant what had been paid to the plaintiff under the MIB scheme.

Proper analysis of the legal position

40.  Upon a proper analysis of the legal position, Ming An is not claiming as assignee of anyone.  It is not claiming as assignee of the judgments against Mr Lo.  The right of any such assignee would be limited to enforcement against Mr Lo, and that would be pointless since he is impecunious.  Nor is Ming An claiming as assignee of the judgments against the hotel company.  What Ming An seeks is interest.  And interest has not yet been quantified under the judgments against the hotel company, there having been no judgment against it until 4 December 2002 when we held it vicariously liable.  It is misconceived to think in terms of getting post-judgment interest from the hotel company as if the same were interest on the final judgments pronounced against Mr Lo.  Under s.49 of the High Court Ordinance, it is the judgment debt that carries interest.  It carries interest from the date of judgment until satisfaction.  And it is the judgment debtor who is liable to pay such interest, his liability to do so being an incentive for him to satisfy the judgment promptly.  So post-judgment interest accrued under s.49 on the judgments against Mr Lo which he had not satisfied, but there is no basis for holding the hotel company liable to pay any such interest under those judgments.

41.  It appears to have been suggested by the courts below that Ming An’s proper course might be to bring a claim in restitution for the sum of $592,072.59 which it paid to the injured pedestrians.  And that suggestion appears to be based on the notion that it was on behalf of the hotel company that Ming An paid that sum to the injured pedestrians.  But that notion is misconceived for these reasons.  Under s.49 of the High Court Ordinance, judgment debts carry interest.  The relevant judgments carrying such interest were the judgments in favour of the injured pedestrians against Mr Lo.  There was no judgment against the hotel company until 4 December 2002.  The $592,072.59 was paid in respect of judgments obtained before that date against Mr Lo and was paid between 4 June 2002 and 8 January 2003.  So any liability to pay that sum could not have been any liability of the hotel company’s, and Ming An’s payment of that sum could not have been on behalf the hotel company.  In paying that sum, Ming An was not doing so on anyone’s behalf.  It was doing so with a view to discharging its own obligations under the MIB scheme (even though no court had ordered payment of such interest as envisaged under clause 2 of the Fund Agreement).  The hotel company paid off Ming An on 19 December 2002.  That was fifteen days after we pronounced judgments against the hotel company on 4 December 2002.  The hotel company paid Ming An interest for those fifteen days.  Those fifteen days’ interest is wholly separate from the $592,072.59 in question.

42.  Ming An could relevantly bring a claim as assignee of the injured pedestrians’ judgments against the hotel company only after those judgments have been finalised in the sense of the sums payable thereunder, including sums awarded by way of pre-judgment interest and costs, having been finally assessed.  Ming An has not been assigned any such finalised judgment.  Ming An is not suing as an assignee.  The proper analysis of the substance and reality of the legal position is this.  Ming An, as the insurer concerned who has made payment under the MIB scheme to the injured pedestrians, is using their names to bring this matter to the stage where there are finalised judgments that could then be assigned and enforced to the extent that they have not been fully satisfied by the hotel company.  This is, in my view, a course which Ming An is entitled to pursue and has standing to pursue.  Since the sums paid by Ming An to the injured pedestrians were, as eventually established by our judgment of 4 December 2002, sums payable by the hotel company, this course does not involve any windfall to Ming An.  In pursuing it, Ming An has put forward a number of alternative computations.

Computations

43.  Of these alternative computations, the most realistic or least unrealistic is the one set out in a document headed “Appendix 5” which Mr Charles Sussex SC for Ming An handed up at the hearing of this appeal.  This appendix uses these abbreviations: SD for special damages; GD for general damages; and PSLA for pain and suffering and loss of amenities.

44.  In regard to Ms Chan, Mr Sussex’s Appendix 5 reads :

And in regard to Ms Tse, this appendix reads :

January-December 2002 interest on general damages other than for PSLA

45.  As to the claims for January-December 2002interest on general damages other than for PSLA, that is to say, damages for future losses, Mr Sussex says that they are arrived at by “tweaking” the awards of general damages.  In truth, these claims involve much more than anything of that nature.  Acceding to them would amount to awarding interest on the sort of damages that do not attract interest since they are damages awarded for future losses paid, subject to a suitable discount, in advance and without the plaintiff ever being kept out of any money.  The claims for January-December 2002interest on general damages other than for PSLA must therefore be rejected.

Figures for January-December 2002 interest on PSLA and special damages

46.  As noted above and as Mr Bharwaney accepts, the payment made by the hotel company did not include any element of interest relating to the period between the two January 2002 dates (when final judgments were obtained by each of the injured pedestrians) and 4 December 2002 (when we gave judgment in the first appeal to us).  Mr Bharwaney nevertheless resists the claims for January-December 2002interest on PSLA and special damages on the basis that the right to such interest was extinguished by the payments made by the hotel company. 

47.  I pause to note that, subject to deducting the sums of $3,568 and $68,539 representing interest for the period from 4 to 19 December 2002, Mr Bharwaney indicated that if such extinguishment of the right to claim interest did not occur, he would not quarrel with the figures put forward in Mr Sussex’s Appendix 5 in regard to the claims for January-December 2002 interest on PSLA and special damages.  Indeed, Mr Bharwaney is content that they be rounded up to the nearest dollar so that the figures of $30,087.67, $135,637.78, $6,578.08 and $3,947.94 become $30,088, $135,638, $6,579 and $3,948 respectively.  Accordingly, the claims for January-December 2002interest on PSLA and special damages would together come to ($30,088 + $135,638 - $68,539) $97,187 in respect of Ms Chan and to ($6,579 + $3,948 - $3,568) $6,959 in respect of Ms Tse.

Claims are not extinguished and are within s.48

48.  In resisting the claims for January-December 2002interest on PSLA and special damages, Mr Bharwaney, as noted above, contends that the payments made by the hotel company have extinguished the injured pedestrians’ causes of action and have therefore likewise extinguished the power to award interest.  This is based on his argument on the construction of s.48 of the High Court Ordinance, which argument runs thus.  Section 48 treats the judgment as the award of damages, to which it permits the addition of a sum of interest.  Such interest is not part of the judgment, but is an additional sum similar to an award of costs.  There can be no interest unless there is an extant judgment to which such interest can be annexed.  Accordingly, so the argument runs, when the hotel company paid Ming An the damages assessed, there no longer existed a judgment to which interest could be annexed.  No basis remains for proceeding to convert the interlocutory judgment against the hotel company into a final judgment to which interest under s.48 is added.  This conclusion is, Mr Bharwaney submits, buttressed by the rule that there can only be one assessment of damages. 

49.  That argument, and in particular that construction of s.48, cannot be accepted.  Section 48(1) of the High Court Ordinance provides for interest to be “included in” any sum for which judgment is given.  Thus interest is included in, not awarded in addition to, the sum for which judgment is given.  A similar point was made in regard to s.35A(1) of the Supreme Court Act 1981 by Sir John (later Lord) Donaldson MR in Edmunds v. Lloyds Italico SpA [1986] 1 WLR 492 at p.496B.  These claims for January-December 2002interest on PSLA and special damages do not involve any additional assessment.  They merely complete the assessments by the inclusion of interest properly to be included in the sums for which judgment is given.  Payment of the damages assessed without interest covering the periods between January and December 2002 did not amount to full payment of the judgments and therefore did not extinguish them.

50.  There is a gap in each assessment.  So each assessment remains be completed.  The assessment for Ms Chan should be completed by the inclusion of $97,187 for interest on PSLA and special damages for the period from 30 January to 19 December 2002.  And the assessment for Ms Tse should be completed by the inclusion of $6,959 for interest on such damages for the period from 10 January to 19 December 2002. 

Conclusion

51.  For the foregoing reasons, I would allow the appeal to the limited extent of (i) completing the award to Ms Chan by the inclusion of $97,187 and (ii) completing the award to Ms Tse by the inclusion of $6,959.  As to costs here and below, I would order that they be dealt with on written submissions as to which the parties should seek procedural directions from the Registrar of this Court.

Mr Justice Chan PJ :

52.  I agree with the judgment of Mr Justice Bokhary PJ and the judgment of Mr Justice Ribeiro PJ.

Mr Justice Ribeiro PJ :

53.  I am respectfully in general agreement with the judgment of Mr Justice Bokhary PJ and gratefully adopt the full account of the facts set out therein.  

The relevant events

54.  After the motor accident which occurred on 9 March 1998 causing them serious injury, the plaintiffs obtained interlocutory judgment against Mr Lo (but not against the hotel company) on 18 January 2001.

55.  Although the plaintiffs’ appeal against the hotel company was pending, the parties (at the court’s direction) proceeded to an assessment of damages on the basis of the Lo judgment.  Damages were assessed on 7 January 2002 in the sum of $19,243,576 in favour of Ms Chan; and on 10 January 2002 in the sum of $1,001,775 in favour of Ms Tse.  These amounts (totalling $20,245,351) included pre-judgment interest on the awards for pain, suffering and loss of amenities (“PSLA”), as well as on special damages, from the date of the accident up to the date of each assessment.  Although the hotel company was obviously not a party to the assessments, it is bound by those assessments, as ordered by Suffiad J when giving directions for trial of the issue which has led to this appeal.

56.  As Mr Lo was himself impecunious and not covered by any motor insurance, Ming An took up its MIB responsibilities as the insurer concerned and, on 3 June 2002, paid the sums of $19,243,576 and $974,954 to the plaintiffs.  Further sums, by way of interest, were paid in August 2002 and January 2003.  Those later sums included $592,072.59 which was evidently intended as post-judgment interest (although such payment appears to have fallen outside the scope of its MIB obligations).  The plaintiffs assigned their rights as judgment creditors of Mr Lo to Ming An, but these were of no value given Mr Lo’s impecuniosity.

57.  Meanwhile, as they were obliged to do under the MIB scheme, Ms Chan and Ms Tse continued to lend their names as plaintiffs for pursuit of the pending appeal against the hotel company.  On 4 December 2002, this Court held that the hotel company was vicariously liable for Mr Lo’s negligence and granted interlocutory judgment in favour of the plaintiffs. 

58.  The hotel company did not wait for the matter to proceed to final judgment.  On 19 December 2002, it paid to Ming An the sum of $20,317,458 which was made up of the abovementioned sum of $20,245,351 representing the total amount paid by Ming An to the plaintiffs anda further $72,107 representing interest to cover the 15 days between publication of the judgment on 4 December and payment on 19 December 2002. 

59.  Ming An does not consider this adequate since it regards itself as entitled to interest covering the period between the two January 2002 dates when damages were assessed and 4 December 2002 when judgment was given against the hotel company (“the January-December 2002 period”).  It is common ground that the hotel company has not paid, and Ming An has not received, any interest covering that period.  The dispute is as to whether and to what extent Ming An is entitled to such interest. 

Irrelevant matters

60.  A number of issues which have been canvassed in respect of the disputed interest are not relevant and should be put aside.  First, there is the suggestion (taken up in the courts below) that the proper approach is for Ming An to bring an action in restitution against the hotel company to recover sums paid by Ming An on its behalf.  That suggestion is unsound.  Ming An made payments to the plaintiffs pursuant to its MIB obligations and not on behalf of the hotel company.  Indeed, when it made the payments, no liability had been established against the hotel company to be discharged by anyone on its behalf. 

61.  Secondly, it is incorrect to suggest that Ming An sues the hotel company as an assignee of the plaintiffs’ rights.  As noted above, the plaintiffs lent their names to the proceedings against the hotel company as they were contractually obliged to do under the MIB scheme.  The liability established on the part of the hotel company was its liability to the plaintiffs, with Ming An being entitled in due course to take an assignment of the judgment obtained.  The current analysis must therefore focus on the plaintiffs’ rights, if any, to interest under the High Court Ordinance.[1]  For present purposes, the MIB payments are not relevant and should be ignored.

62.  Thirdly, there is the suggestion in §23 of the judgment of Le Pichon JA that payment of the judgment amounts by Ming An to the plaintiffs extinguished the plaintiffs’ causes of actions against the hotel company.  That suggestion is, with respect, incorrect.  Payments made by an insurer under the MIB scheme do not affect the position regarding liability as between the plaintiff and the defendants involved.  An MIB insurer pays an injured plaintiff the amount of an unsatisfied judgment obtained against one defendant on the basis that the plaintiff will “take all reasonable steps to obtain judgment against any person against whom he might have a remedy” and will assign to the MIB any judgment eventually obtained against such person with a view to the MIB recouping the sums paid out.  Here, the plaintiffs sued Mr Lo to judgment which, being unsatisfied, led to them receiving payment under the MIB scheme.  Their causes of action against the hotel company were unaffected and were vindicated on appeal to this Court.  The proceedings might then have led to an assessment of damages, including an assessment of pre-judgment interest; entry of judgment against the hotel company in the assessed amounts; an assignment of that judgment to Ming An and a claim brought by Ming An as assignee of that judgment.  But, as we have seen, this proved unnecessary since the hotel company swiftly made payment to Ming An after the Court’s judgment, leaving merely the question of interest outstanding.

63.  Fourthly, I am also, with respect, unable to accept Le Pichon JA’s suggestion (again in §23 of her judgment) that the hotel company only became a joint tortfeasor with Mr Lo on 4 December 2002 (the date of this Court’s judgment) and that this was accordingly of “little relevance” to the plaintiffs “because they had long since been paid what they were entitled”.  I have already made the point that the MIB payment did not affect liability as between each plaintiff and the hotel company.  For the purpose of operating the statutory interest provisions, it is important to note that the cause of action arose against the hotel company at the date of the accident (on 9 March 1998) and that it became a joint tortfeasor as from that date.  As this Court pointed out in Kensland Realty Limited (in compulsory liquidation) v Tai, Tang Chong,[2] when an appellate court reverses a lower court and finds liability, it declares the legal consequences of the events giving rise to that liability as from the date of those events.  It does not merely create or impose liability as from the date of the appellate judgment. 

Entitlement to interest regarding the January-December 2002 period

64.  When these distractions which have hampered the analysis are removed, the position becomes relatively simple.  Taking the plaintiffs as having recovered nothing at all prior to payment by the hotel company on 19 December 2002, what, if anything, are they entitled to by way of interest covering the January-December 2002 period?  Ming An is of course the ultimate beneficiary of any interest recoverable as it would be entitled to an assignment of any judgment obtained in this context and therefore stands in the plaintiffs’ shoes so far as the hotel company’s liability is concerned.  Any recovery of such interest is of course not a windfall since Ming An has paid out sums which were ultimately shown to have been payable by the hotel company.  It is in principle entitled to be compensated for loss of the use of the monies disbursed to the plaintiffs.

65.  Any entitlement to such interest depends on sections 48 and 49 of the High Court Ordinance.  In personal injury cases, by the combined effect of sections 48(1) and 48(2), unless special reasons to the contrary exist, interest is to be “included in any sum for which judgment is given” at a rate determined by the court covering “all or any part of the period between the date when the cause of action arose and the date of the judgment”.  Section 48 is therefore concerned with pre-judgment interest.  Section 49, on the other hand, is concerned with interest which accrues on unsatisfied judgment debts, ie, post-judgment interest.   Post-judgment interest is charged at a rate determined periodically by the Chief Justice by order, being a rate which is significantly higher than commercial rates of interest, designed to encourage prompt satisfaction of judgment debts.

66.  Mr Charles Sussex SC, appearing with Mr Raymond Leung for Ming An, sought to advance three possible bases for determining Ming An’s entitlement to interest for the January-December 2002 period.  Two of them can immediately be rejected.  They involve the argument that the hotel company’s vicarious liability for the torts of Mr Lo renders it liable to pay the post-judgment interest which had been accruing on the judgment against Mr Lo pursuant to section 49.  That is untenable.  Interest under sections 48 and 49 crystallizes, becoming calculable and payable, only upon judgment being obtained.  Under section 48, the judgment marks the end of the pre-judgment interest period which started running at the date when the cause of action arose.  Under section 49, it marks the start of interest accruing on the judgment debt.  Until 4 December 2002, there was no judgment in existence against the hotel company to trigger either of those sections.  It cannot sustainably be argued that the hotel company should somehow be vicariously charged with higher interest for judgment debts under section 49 in respect of the Lo judgment before any liability had been established against it.

67.  Mr Sussex’s third argument aims at an award of interest under section 48 covering the January-December 2002 period at conventional discretionary rates applied to (i) the PSLA awards, resulting in interest of $30,087.67 for Ms Chan and $6,578.08 for Ms Tse; (ii) the special damages, resulting in interest of $135,637.77 for Ms Chan and $3,947.94 for Ms Tse; and (iii) general damages other than for PSLA, resulting in interest of $610,756.00 for Ms Chan and $24,281.58 for Ms Tse.  I shall refer to these as items (i), (ii) and (iii) respectively.

68.  Mr Mohan Bharwaney SC, appearing for the hotel company, contends that this third argument should be rejected on the ground that the right to interest under section 48 was extinguished by the payment made by the hotel company to Ming An on 19 December 2002.  Alternatively, he argues that if Ming An is still able to pursue an award of interest under section 48, such interest must be confined to items (i) and (ii) (there being no dispute as to the figures under those heads), but that there is in principle no basis for awarding item (iii).

69.  Mr Bharwaney’s extinguishment argument is based on construing section 48(1) so as to identify the judgment as the sum of damages awarded, with statutory interest as an extraneous “add-on”.  There is, he argues, no entitlement under section 48 to interest unless a judgment is in existence to which can be added an item of interest.  It follows that since the hotel company’s payment made on 19 December 2002 satisfied the judgment, nothing remains upon which an element of interest can be annexed by operation of section 48.  Mr Bharwaney claims support for this argument from a passage in the judgment of Lord Denning MR in Jefford v Gee,[3] in which his Lordship stated in relation to interest :

“It is no part of the debt or damages claimed, but something apart on its own.  It is more like the award of costs than anything else.  It is an added benefit awarded to the plaintiff when he wins the case.”

70.  That was, however, a statement made in relation to payments into court with their consequences on costs.  Lord Denning held that since a claim for interest was not then a matter to be pleaded and not part of the cause of action, a defendant could not be expected to cater for interest when making a payment into court. 

71.  In my view, different considerations arise in the present case.  Here, the question is whether payment of the assessed damages without paying interest covering the pre-judgment period in full, operates to extinguish the entitlement to interest under section 48.  That section does not, on its face, treat interest as an extraneous “add-on”, but refers to it as something which is “included in any sum for which judgment is given”.   It uses language treating interest as part of the judgment.  That accords with the view taken by the English Court of Appeal in Edmunds v Lloyds Italico  l'Ancora Compagnia di Assicurazione e Riassicurazione SpA,[4] where it held that payment by the defendant of a sum equivalent to the full amount of the damages for which it was liable did not preclude the plaintiff from pursuing thereafter an award of statutory pre-judgment interest.  Sir John Donaldson MR stated:

“Payment in full of the amount of the damages still leaves the court with power to give judgment on liability and to assess the damages and interest taking account of the fact that there has been a payment and acceptance on account of an amount equal to the full amount of the damages.”

As his Lordship had earlier explained,[5] in pursuing outstanding interest, the plaintiff is not merely suing for interest but for damages and interest while giving credit for the amount of damages previously paid for the purposes of calculating unpaid interest. 

72.  Section 48 therefore treats interest as part and parcel of the judgment so that payment of the damages element without fully satisfying the entitlement to interest cannot be regarded as full payment which extinguishes the “judgment” and the attendant right to claim interest under section 48.  Mr Bharwaney’s extinguishment argument must therefore be rejected.

73.  However, I consider Mr Bharwaney’s objection to item (iii) to be unanswerable.  Mr Sussex endeavoured to argue that the court, having applied a discount rate of 4.5% on the damages to be awarded for future losses should somehow re-engineer the award and turn that discount rate into the interest rate applicable to the future loss award for the January-December 2002 period. 

74.  That argument is unsustainable.  First, it is not open to Ming An which is bound by the assessments carried out in January 2002.  The Court is impermissibly being invited to change the starting date for assessing future losses from January to December 2002.   Secondly, even if it were open to Ming An to seek such an adjustment, the proposed approach is unsupportable.  What would be required would be evidence to establish pecuniary losses actually incurred in the January-December 2002 period, not some mathematical adjustment applied to the discounted principal sum awarded for future losses.  Thirdly, in seeking interest on a sum assessed in respect of future loss, item (iii) is contrary to principle.  As Lord Denning MR stated in Jefford v Gee:

 “Where the loss or damage to the plaintiff is future pecuniary loss, eg, loss of future earnings, there should in principle be no interest.  The judges always give the present value at the date of trial, ie, the sum which, invested at interest, would be sufficient to compensate the plaintiff for his future loss, having regard to all contingencies.  There should be no interest awarded on this: because the plaintiff will not have been kept out of any money.  On the contrary, he will have received it in advance.”[6] (Italics in the original)

75.  It follows that the interest claimable by Ming An in right of the plaintiffs for the January-December 2002 period must be confined to the amounts in items (i) and (ii) set out above.

Lord Woolf NPJ :

76.  I agree with the judgment of Mr Justice Bokhary PJ and the judgment of Mr Justice Ribeiro PJ.

Chief Justice Li :

77.  The court unanimously allows the appeal to the limited extend set out in the concluding paragraph of the judgment of Mr Justice Bokhary PJ and makes the order concerning written submissions as to costs set out in that paragraph.

[1] Cap 4.

[2] FACV 11 of 2007 (7 March 2008) at §54 and §159.

[3] [1970] 2 QB 130 at 149.

[4] [1986] 1 WLR 492 at 495-496.

[5] Ibid at 495.

[6] [1970] 2 QB 130 at 147.