LAU PUI KEI AND ANOTHER v. LEUNG CHI WAI AND ANOTHER

HCPI 532/2006 and HCPI 708/2006 (Consolidated)

 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 532 AND 708 OF 2006

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Dates of Hearing: 7 and 8 July 2008

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R U L I N G

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1.  This is an application by an insurance company brought under O.15 r.6(2) of the Rules of High Court for joinder in these proceedings as a defendant.

2.  The applicant is the insurer of a motor vehicle involved in a serious motor accident which gave rise to these, two personal injury claims which have been joined.  The issue to be addressed is whether the applicant in the circumstances is liable to indemnify its insured from loss should there be an award in damages.

3.  The better to consider the merits of the application I begin by recounting how the actions came about.

Background

4.  Tragedy struck the Lau family just after noon on 9 October 2004.  At that time Mr Lau, the plaintiff in these proceedings, was driving his 7-seater along the Kwun Tong Bypass accompanied by members of his family and their maid.  One of these was his 12-year old son Titus Lau.

5.  During the course of the journey Mr Lau’s progress was interrupted by something which rolled into his path; it looked to him like a big reel of wire.  He had no alternative but to drive over it with the result that one of his tyres burst, and then no other option but to bring his car to a halt in the lane he was travelling in.

6.  Then it was that a light goods vehicle driven by the 1^st defendant (Mr Leung) and owned by the 2^nd defendant (Tung Sing Printing) traveling in the same lane and direction as Mr Lau’s now stationery car, struck the car with a force that spun it around and into another lane.

7.  All of the occupants were injured by the collision, but none more seriously than Titus, who suffered such serious head injuries that he lost consciousness from which he was never to awaken.  He was taken to Queen Elizabeth Hospital and put on life support.  But brain stem tests performed established he was brain dead, and on 19 October, 10 days after the accident, he was taken off the life support and certified dead.

8.  Mr Leung was tried and convicted in a Magistrates Court for the offence of dangerous driving causing death, and that conviction was upheld on appeal.

9.  Mr Lau, appointed administrator of Titus’ estate, in that capacity in June 2006 issued a writ against Mr Leung as driver and Tung Sing Printing as owner of the vehicle responsible for causing his son’s death, seeking damages resulting from Mr Leung’s negligence.  At the same time in his own name he sued the same parties for his own injuries, relatively minor, and for the much more serious mental distress and depression he now suffers from because of the loss of his son.

10.  Matters in both actions have proceeded to the extent that having been consolidated they have been set down for trial to begin on 6 August next.

11.  The defendants in the now consolidated proceedings being the driver of the goods vehicle Mr Leung and its owner his employer Tung Sing Printing are represented by the same solicitors Messrs Kong & Chang.  They have filed joint statements of defence as their pleading and at trial will be represented by the same counsel; I suppose Mr Cheung who was before me on this application.

The Lead Up to the Application for Joinder

12.  Whilst in the normal way in claims of negligence in road accident cases the insurer of the offending motor vehicle takes control of the defence case, in the circumstances of this case the insurer, Wing Lung Insurance Co. Limited declined liability.

13.  What gave rise to this disclaimer was revealed from findings of fact made by the investigator engaged by Wing Lung to report on the circumstances of the accident.  He found out from statements taken from Mr Leung, and from Ng Kam Shing, his supervisor at work at Tung Sing Printing, that arguably the employer was not liable vicariously for the acts of its employee.

14.  Mr Leung had told him that he was employed to drive the goods vehicle in question.  That was his full time job; he drove the truck up to six days per week.

15.  On the morning of the accident he began to drive the truck from just after 9 a.m. making deliveries for the company.  Work proceeded uneventfully.  Then it was at mid-morning his wife telephoned to report a family emergency which required immediate travel to Mainland China.  At once he collected his wife from her workplace at Hung Hom in order to drive her to their home in Tseung Kwan O to pick up their travel permits.  So, as is apparent, that journey was undertaken as having a private purpose, unrelated to the job Mr Leung was hired to perform.  And it was during this journey that the accident occurred.

16.  What excited the attention of the assessor was that Mr Leung had not prior to the accident sought permission to use the truck for a purpose which was private.  This was confirmed in the statements taken from Mr Leung and Ng Kam Shing.

17.  The view formed by Wing Lung, shared with and conveyed by its solicitors to both defendants, was that the vehicle was driven in circumstances at the time of the accident which rendered the insurer not liable in terms of the motor vehicle insurance policy to provide indemnity to the driver or its insured.

18.  This was not accepted by Tung Sing Printing, and notice to have the matter determined by arbitration in terms of the policy was sent out by letter of January 2006.  This was duly proceeded with.  An arbitrator was appointed.  A statement of claim was filed in November 2006.  Wing Lung filed a defence in January 2007.  In its defence it averred that the vehicle was being used for a domestic purpose without authority; thus it was entitled to disclaim liability.

19.  There the matter rested.  And so to the application for joinder, for reasons I now come to.

The Application for Joinder

20.  What prompted the application, which was filed on 23 May 2008 though not heard until 7 July, was that just prior to the filing date the parties to these actions received word that a trial date had been fixed; namely, 6 August 2008.

21.  It had all along been anticipated that the arbitration determining Wing Lung’s involvement or not would precede the date of trial.

22.  Kevin Cheung, a partner in the solicitors representing Wing Lung, made the affirmation in support, explaining why in the circumstances of the accident and the terms of the insurance policy his client should escape having to provide indemnity.  He attested that if after trial of the consolidated action Tung Sing Printing were to be found vicariously liable for Mr Leung’s negligent driving, then Wing Lung would be liable to satisfy the plaintiff’s judgment by virtue of section 10(1) of the Motor Vehicles Insurance (Third Party Risks) Ordinance, assuming that the defendants were unable to do so in a personal capacity.

23.  On that basis he deposed, Wing Lung had a compelling reason to join, to contest the issue of vicarious liability.  It was his belief that without Wing Lung having charge of this, that issue might not be properly defended.

24.  Ho Kwong Wing, the solicitor having conduct of the plaintiff’s case, filed an affirmation in opposition.  He noted that the defendants pleaded case was a denial of liability, including the vicarious liability of Tung Sing Printing.  A witness statement taken from Mr Leung indicated that he was going to be called.  Since both defendants were already defending the proceedings, the joining of Wing Lung would amount to “double legal representation in the same interest”, with all the duplication that goes with that.

25.  Moreover, Wing Lung had had ample notice and opportunity to apply to join, yet had chosen not to do so until less than three months before the trial date.  Mr Cheung in his affidavit gave no explanation why the application was so delayed.  He saw a real risk that the granting of the application might with all the procedural steps flowing from that mean that the trial date would have to be vacated.

26.  Further, and finally, he noted that all along both insured and insurer were looking to arbitrate the differences arising out of the policy; that should remain the proper and appropriate course.

27.  Mr Cheung in a reply to this affirmation confirmed what I have already recorded; that what gave rise to the application was the notice given that a trial date had been fixed, such that the trial would proceed before the arbitration rather than as was anticipated afterwards.  With the indemnity issue thus unresolved, the determination of the matter of vicarious liability in the trial would materially impact on the arbitration proceedings.

28.  He further deposed that Wing Lung’s participation at trial would be limited solely to the issue of Tung Sing Printing’s vicarious liability.  It would not contest Mr Leung’s liability nor participate in arguments on quantum.

29.  Thus, apart from evidence already adduced in witness statements filed, it is proposed that if allowed to be a party Wing Lung would call the investigator who has already made a statement for the arbitration proceedings, exhibiting the statements taken going directly to the issue of vicarious liability.

30.  There was no evidence put forward by the defendants in opposition to the application for a joinder, though through Mr Cheung they adopted the evidence put up by Mr Ho in opposing the application.

The Law

31.  O.15 r.6(2)(b) provides for joinder under two subsections; the pertinent parts follow:

“6(2) … the court may … on application:-

…

(b)     order any of the following persons 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.”

32.  There is no issue taken on my jurisdiction to join Wing Lung.  In any event I would have found in favour of the applicant on the jurisdictional point; see the Court of Appeal case Chu Yuen Wah v Lee Kwok Kee [1995] 3 HKC 629, at 636H; per Mortimer JA.

33.  That which remains to be determined is as to whether under one or other of the limbs it is a proper exercise of my discretion to order a joinder.

The Arguments

34.  What particularly concerns Mr Bharwaney SC who represented Wing Lung is that the defendants may pay lip service only to the issue of vicarious liability.  Although there is a denial of liability in the statements of defence, it is a bare denial unsupported by any evidence; Mr Leung’s witness statement is silent on the purpose of his journey.  He submitted that this important issue requires representation by the entity that may be called upon to satisfy any award that might be made in damages. Only then will vicarious liability be fairly, effectively and completely determined.

35.  Further, the issues of the purpose of the journey and of vicarious liability are issues that concern not only the parties presently participating but the insurers as well.

36.  Hence he submits it would be proper to join Wing Lung under either of the two alternatives at (i) and (ii) of rule 6(2)(b).

37.  Mr Ho for the plaintiffs echoed his own words in his affirmation in opposition.  He submitted that my discretion should be exercised to decline the application to avoid double legal representation and the prospect that the trial will go off because of lack of time to file pleadings and discovery and so on.

38.  Mr Cheung said he shared and adopted Mr Ho’s arguments.  He submitted that the issue of vicarious liability was a defence that Tung Sing Printing had pleaded and intended to run.  To allay the criticism that there was but a bare denial in the statements of defence, he made an application midway in the hearing to amend the defence by positive averment going to the circumstances giving rise to this plea.  That is an application I am now to deal with also.

39.  He also noted that the arbitration is on foot ready to deal with the issue of the repudiation by Wing Lung of liability under the policy.  That is where the interest of Wing Lung lies and where it should be focused.  That is not a matter for the trial judge in the action.

Analysis

40.  There are two separate proceedings in the shape of the actions and arbitration. 

41.  Had the arbitration gone first, as was anticipated, there would be no reason for Wing Lung to be concerned to join as a party to the actions.  That would have been dealt with as resolving the issue concerning Wing Lung.  The result would probably have been final, for there would have been no appeal from the arbitrator’s ruling except on a point of law.  But that that is not now going to happen, means that an adverse (to Wing Lung) finding on the issue of vicarious liability could deprive it of its defences in the arbitration.  That is a material factor to consider in determining whether it is just and appropriate for Wing Lung to be joined, so that it can look to protect its position at the trial, rather than rely on a defence that the defendants may not be motivated to pursue whole heartedly.

42.  I do not accept the proposition that if the joinder is permitted there will be double representation.  The vicarious liability point is separate and distinct from the defence whereby negligence by the driver is denied. 

43.  The proposed amendments to the statement of defence do not resolve this aspect. 

44.  There are four sub-paragraphs therein.  Curiously, the first two make reference to the existence of the Wing Lung insurance policy, which is hardly a matter for a pleading defending a negligence claim brought by a third party.  The 3^rd and 4^th sub-paragraphs deal with the purpose of the journey and the denial by Tung Sing Printing of vicarious liability.  More to the point certainly, but it is difficult to see how the defence could properly be advanced where, as is the case here, the defendants are both represented by the same solicitors and counsel.

45.  I accept that there has been delay in this application.  It is unfortunate that the effect of that is enhanced because the hearing of it was in the event not fixed earlier than within a month of the trial date.  That said, in giving consideration to this factor I take comfort from the assurances given on behalf of all parties that the trial must go ahead on due date if at all possible, and Mr Bharwaney’s belief with reasons given that the trial could and should proceed on schedule.  He told me the issues to be advanced in pleadings are short and to the point and well known, and so is the evidence that is to be adduced.  There will be no risk about not being ready for trial if all parties and their representatives respond appropriately.

46.  That is enough for me to find in the exercise of my discretion that Wing Lung should be joined.  In case it matters I note that I find it has achieved that end, applying both sub-rules (i) and (ii) of rule 6(2)(b).

47.  I need hardly add that if the reality is that the trial has to go off as a direct result of the granting of this application, then that will have to be recognized in costs.

48.  The application to join is granted.  The application to amend the statement of defence is dismissed.  Costs are nisi.  As to the application to join they are to the applicant to be shared by the plaintiff and jointly the 1^st and 2^nd defendants.  As to the application to amend the statement of defence, the plaintiff’s and applicant’s costs shall be borne by the 1^st and 2^nd defendants.

49.  There shall be liberty to apply for directions, on 24 hours notice, with the watchword being that the trial dates be preserved if humanly possible.