THE MING AN INSURANCE CO (HK) LTD v. CHAN MAN DUN AND ANOTHER

CACV 96/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 96 OF 2005

(ON APPEAL FROM HCMP 2437 OF 2004 )

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DECISION

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Hon.  Yuen JA:

1.  There were two summonses before me:

(1) the Motor Insurers Bureau ("MIB")'s application (issued on 7 June 2005) to join in the 1^st Defendant's appeal from a Judgment of Deputy Judge Fung given on 7 February 2005;

(2) the 1^st Defendant's application  (issued on 29 September 2005) for leave to adduce fresh evidence on appeal. 

Accident

2.  The matters arose in this way.  On 19 August 2002, there was an accident involving a vehicle bearing registration mark JB4251 which was owned by the 1^st Defendant ("the Owner") and which was being driven by his son the 2^nd Defendant.  Unfortunately the accident resulted in the death of Wong Wing Wah ("the Deceased").

3.  According to the Owner, he had bought the vehicle from a second-hand car dealer in May 2000.  His Vehicle Registration Document recorded amongst other things,  the following:

Class:  Private car

Make:   Mitsubishi

Model: Pajero

Body type:  Van 

Seating capacity (excluding driver):  6

Chassis number: CONV240NJ-00106

Engine number:  4D56-ED8179. 

4.  The Owner's case is that the vehicle was at the time of the accident insured by the Plaintiff ("the Insurance Company") under a Policy No. PMPG-02-00506-8.  The policy had been effected in May 2002 through Cheung Shui Ming of Mass Insurance Brokers Ltd, an agent of the Insurance Company.

The Personal Injuries action

5.  On 10 August 2004, the Deceased’s estate sued the Owner and his son in HCPI 734/2004 ("the Personal Injuries action") for damages for negligence.  I pause here to mention that there will be no further reference to the son in this decision as apparently it has been assumed by all concerned that he does not have any financial resources.

Motor Vehicle Examination

6.  Between the time of the accident and the Personal Injuries action, a Motor Vehicle Examiner of the Transport Department had reported certain findings, which I quote:

"He [the Motor Vehicle Examiner] testified that JB4251 had a different chassis no. V24-4020549 and different engine no. 4D56-EK2099.  He also said that the purportedly registered vehicle should be a long wheel based vehicle with seating capacity of seven, and JB4251 in question was a short wheel based vehicle with a seating capacity of four, and it was impossible for it to accommodate six seats".

(HCMP2437/2004 Reasons for Decision, §8).  

7.  This discovery about the vehicle involved in the accident leads to different scenarios arising in respect of liability to pay damages for the accident. 

Permutations regarding liability to pay damages for the accident

8.  The various scenarios can be summarized as follows:

(1)  if the Deceased’s personal representatives establish liability against the Owner in the Personal Injuries action, the Owner would ordinarily have been able to look to the Insurance Company for payment;

(2)  however, the Owner would not be able to do so if he had obtained the policy by material non-disclosure or misrepresentation;

(3)  nevertheless, the Insurance Company would still be liable under statute to the Deceased’s estate: s.10(1), Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap. 272;

(4)  however, the Insurance Company would not be so liable if it starts an action (within a certain time frame) and obtains a declaration that it is entitled to avoid the policy by reason of  material non-disclosure or misrepresentation: s.10(3), Cap. 272;

(5)  where such a declaration has been obtained, the Deceased’s personal representatives would then have to look to the Owner to pay damages for the accident;

(6)  if the Owner does not pay, the Deceased’s personal representatives could then claim payment from the MIB by virtue of an agreement between the MIB and the Government of Hong Kong: Clause 2, First Fund Agreement;

(7)  however, the MIB has a Domestic Agreement with insurance companies under which "the Insurer Concerned" would have to pay the damages if the Owner did not: Clause 3(a), Domestic Agreement.  An "Insurer Concerned" is defined in the Domestic Agreement as:

"the insurer who at the time of the accident ... was providing insurance ... in respect of the vehicle the use of which gave rise to the liability ... . 

An insurer is concerned ...

notwithstanding that ... the insurance has been obtained by ... misrepresentation, non-disclosure of material facts or mistake; ...

and only ceases so to be concerned:-

when before the date on which the ... liability was incurred the Insurer has obtained a declaration from a court ... that the insurance is void or unenforceable".  (Emphasis added).

The Declaration proceedings

9.  Returning to the narrative of relevant events, on 23 September 2004 (i.e. within the time frame required under s.10(3) of Cap. 272), the Insurance Company started proceedings in HCMP 2437/2004 against the Owner and his son for the following declarations:

"1. A declaration that the vehicle displaying a registration mark JB4251 (‘the Vehicle’) was not the insured vehicle under policy no.PMPG-02-00506-8 issued by the [Insurance Company] to the [Owner](‘the Policy’) at the time of the accident ... .

2. A declaration that the [Insurance Company] is and was ... entitled to avoid the Policy ... on the ground that the Policy was obtained by non-disclosure and/or by misrepresentation ... .

3. A declaration that the [Insurance Company] is not liable to indemnify the [Owner and his son] under the policy in respect of any liability which the Policy purports to cover or to satisfy any judgment which [the Deceased’s personal representatives] may have against the [Owner and his son] in [the Personal Injuries action]".

10.  The MIB was informed but it did not seek to join as a party to those proceedings.  The Owner was represented by counsel instructed by Messrs Gary K.W. Tam & Co.

11.  The Declaration proceedings were heard by Deputy Judge Fung on 7 February 2005.  On the same day, he gave judgment, making declarations in the terms sought.

12.  The effect of that judgment was that as between the Owner and the Insurance Company, the scenarios which I have set out in para. 8 §(4) and §(5) would  occur if the Deceased’s personal representatives succeed in the Personal Injuries action.

Appeal

13.  The Owner lodged an appeal against Deputy Judge Fung’s judgment in the Declaration proceedings.  By this time however, he was no longer legally represented as he says he has no resources to meet legal costs for the appeal, let alone to meet costs of the Personal Injuries action or any damages that may be ordered.

MIB’s application to join in the appeal

14.  When the MIB became aware of the Owner’s situation, it issued a summons to join in the appeal.  The summons was supported by an affidavit of Michael Turnbull, a solicitor for the MIB.  In his affidavit, Mr Turnbull focussed on the 1^st declaration made by Deputy Judge Fung, that "the vehicle displaying registration mark JB4251 was not the insured vehicle under the ... Policy" issued by the Insurance Company.  If this declaration is correct, then the Insurance Company may fall outside the definition of "Insurer Concerned" in the Domestic Agreement (the definition being "the insurer who at the time of the accident ... was providing insurance ... in respect of the vehicle the use of which gave rise to the liability") .

15.  Mr Turnbull says in his affidavit that although the MIB was notified of the Declaration proceedings when they were commenced, the MIB did not seek to join as a party at the time for two reasons, the first being that the Owner was then represented by solicitors and counsel and the MIB thought they could argue the matter adequately.  It was only in late May 2005 that the MIB became aware that the Owner would no longer be legally represented on appeal.  

16.  The second reason given by Mr Turnbull was that it was not fully appreciated at the time that there was a likelihood that the Domestic Agreement provisions would not apply if the Insurance Company successfully obtained the 1^st declaration.  At the hearing before me, Mr Ashley Burns counsel for the MIB also made the same point in respect of the second limb of the 3^rd declaration, i.e. that the Insurance Company is not liable to satisfy any judgment which the Deceased’s personal representatives may have against the Owner and his son in the Personal Injuries action.

17.  The MIB seeks to challenge the correctness of the declarations made by Deputy Judge Fung and has lodged a draft Respondent’s Notice by way of cross-appeal which I have read.  Although as a non-party, it is not bound by the declarations, Mr Burns argued that it must be in the interests of the due administration of justice that the risks of inconsistency between a judgment of the court and an arbitration award should be avoided or at least minimised.

18.  By way of opposition to the MIB’s application, the Insurance Company has filed an affirmation of Raymond Lo, the solicitor acting for it.  In answer to Mr Turnbull’s second reason, Mr Lo makes the point that he had in a letter dated 18 January 2005 clearly informed the MIB’s solicitors that:

"As you are aware, one of the reliefs claimed by our client in [the Declaration proceedings] is that the vehicle JB4251 was not the insured vehicle at the material time and our client was not under insurance risk.  Our client will dispute that it is the ‘insurer concerned’ in this case and thereby the ‘insurer concerned principle’ under clause 3 of the Domestic Agreement is not applicable in this case.  Our client will therefore not satisfy any judgment debt as the ‘insurer concerned’ in the personal injuries action".

19.  At the hearing before me, Miss Alice Mok SC on behalf of the Insurance Company has emphasised that Deputy Judge Fung’s declarations were made under s.10(3) of Cap. 272 and there has been no determination by Deputy Judge Fung whether the Insurance Company is the "Insurer Concerned" under the Domestic Agreement.   Under clause 10 of the Domestic Agreement, any disputes between the MIB and an insurer concerning the provisions of that Agreement should be referred to arbitration and the arbitrator would not be bound by Deputy Judge Fung’s judgment. 

20.  Miss Mok also argued that although an appellate court may in the exercise of its discretion add a new party (cf Tetra Molectric Ltd v Japan Imports Ltd [1976] RPC 541), this discretion should only be sparingly used.

Discussion

21.  Essentially, the matter falls to be decided as a matter of the court’s discretion in applying Order 15 rule 6(2).  The relevant parts of this rule provide:

"(2) Subject to the provision of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either on its own motion or on application -

(b) order any of the following parties to be added as a party, namely -

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter".  (Emphasis added). 

22.  In my view, the situation in Order 15 rule 6(2)(b)(ii) clearly applies.  As Miss Mok accepts fairly, there is an issue common to the Declaration proceedings and the Domestic Agreement: the issue whether the vehicle involved in the accident was the vehicle that was insured under the Policy.  This is an important issue, affecting the Insurance Company’s liability to pay damages to the Deceased’s estate under Cap.272, but also its liability to the MIB as the "Insurer Concerned" to pay those damages under the alternative route of the Domestic Agreement (although there are other factors affecting liability under each route).

23.  The commonality of this important issue (whether the vehicle involved in the accident was the vehicle that was insured under the Policy) was in fact spelt out by the Insurance Company in Mr Lo’s letter.  Although the MIB would not be bound by Deputy Judge Fung’s declarations if it was not a party, and it might seek to argue or re-argue it in an arbitration under the Domestic Agreement (a stage I have referred to at the hearing as "the second line of defence"), I think it would be in the interests of justice that the risks of inconsistency between a judgment of the court and an arbitration award should be avoided if that is achievable by a joinder order.

24.  I have taken into account the fact that the application to join is made only at the appellate stage.  I consider however that the 1^st reason given by Mr Turnbull (that the Owner had legal representatives at the hearing before Deputy Judge Fung) provides a satisfactory explanation for the MIB’s initial inaction.  The MIB’s position on the issue was the same as the Owner’s and it cannot be faulted for wishing to save on legal expenses.  The fact that the Owner is now unable to instruct legal representatives is in my view a sufficient change of circumstances that justifies leave to join being given.

25.  I have also taken into account the fact that the Insurance Company would not suffer any prejudice by a joinder order that cannot be met by an appropriate costs order, if necessary, though none has been suggested. 

Order on the MIB’s summons

26.  Accordingly, I would make an order in terms of paras. 1-4 of the MIB’s summons.  As for the costs of the summons, I would make an order nisi that the costs be in the cause of the appeal.

Owner’s application for leave to adduce fresh evidence

27.  I now turn to the Owner’s application for leave to adduce fresh evidence.  This consists of an affirmation made by the Owner himself in which he alleges that Mr Cheung (the agent from Mass Insurance Brokers) had in fact inspected the chassis number and engine number of the vehicle in question on 17 May 2002, before the policy of insurance was issued.  The Owner alleges in particular that:

(1) he met Mr Cheung for the first time on 17 May 2002;

(2) he, together with his employee Mr Cheng Chor Yim, were present when Mr Cheung inspected the chassis number and engine number of the vehicle and took photographs, and subsequently the Policy was issued; Mr Cheng was now living on the mainland and was not well;

(3) he had told his solicitor Mr Tam about this but he had not paid enough attention when his witness statement was read over or translated to him to realize that his statement did not include these instructions.

28.  The Insurance Company opposed the Owner’s application.  It filed an affirmation of Mr Cheung who said:

(1) he (Mr Cheung) had known the Owner for many years before 2002 as he had been a private tutor of the Owner’s children; however on the day in question, when he prepared the policy form at the Owner’s office, he did not meet the Owner; this allegation was supported by a document signed by the Owner which had to be faxed to him from the Owner’s office after his visit; it would not have been necessary to send it by fax if the Owner had been present during his visit;

(2) he (Mr Cheung) had not inspected the chassis number and engine number of the vehicle; further there was no reason why Mr Cheng could not make an affirmation as Mr Cheng was the Owner’s brother-in-law, and was well and living in Hong Kong.

29.  The Owner did not file any affirmations in reply to Mr Cheung’s affirmation. 

Discussion

30.  Whilst the Court of Appeal has power to allow fresh evidence to be adduced on appeal in the exercise of its discretion, this is not often or lightly done.  Where there has been a hearing on the merits, the exercise of discretion is governed by the principles set out in Ladd v Marshall [1954] 1 WLR 1489.

31.  Under this authority, three conditions have to be satisfied before fresh evidence can be admitted on appeal:

(1) the applicant would have to show that the evidence could not have been obtained even if he had used reasonable diligence at the hearing below;

(2) the evidence must be such that, if given below, it would probably have an important influence on the result of the case, though it need not be decisive;

(3) the evidence must be such that it is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.

32.  The Owner falls at the first hurdle.  The matter was within his own knowledge.  Even if (as his case seems to suggest) his solicitor failed to notice the significance of those instructions, that is a matter between him and his solicitor.

33.  I am inclined to think that the third condition is also not satisfied.  The Owner has not filed any affirmations in reply to Mr Cheung’s affirmation which discredited at least part of his affirmation.  Further he has not said on affirmation whether he has contacted Mr Cheng and Mr Tam in respect of his allegations concerning them and if so, what were their respective responses. 

Order on the Owner’s summons

34.  For these reasons, the Owner’s application is dismissed with an order nisi that he should pay the Insurance Company’s costs.