LAM YUK YAM v. TANG PING NUN AND ANOTHER

HCPI 972/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 972 OF 2004

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J U D G M E N T

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1.  In this proceeding the 2^nd Defendant is the third party insurer of the 1^st Defendant Mr Tang.

2.  Mr Tang was driving his car and was involved in a motor vehicle accident with a pedestrian Lam Yuk Yam and as a result this proceeding had followed.

3.  Mr Tang was charged with various charges in the Magistrate’s Court to which he pleaded guilty.  The charges included charges involving the vehicle being defective as a consequence his admission of the vehicle was defective.  National Insurance have the right to avoid the policy.  But whether they avoid the policy as between Mr Tang and themselves by being the third party insurer, they are still liable to the Plaintiff under section 10 of the Motor Vehicle Insurance (Third Party Risks) Ordinance.

4.  When Mr Tang was advised that National intended to avoid the policy, his sought his own independent legal advice.  The writ that we are concerned about was there an issue to Mr Tang took initial steps to defend the writ.  National and learnt of the writ and seek to takeover the defence.

5.  Mr Tang’s concern was that if they took over the defence, they may take steps which were not consistence with his interest and then ultimately as a result to an arbitration, he may not be covered by the policy and would have do indemnify National for the amount of any judgment that was entered.

6.  National and the costs of negotiation had said to Mr Tang that they are willing to waive the breach of the policy.  They say that undoubtedly because at the end of the day they are liable to the Plaintiff whether or not they must meet terms of the policy directly with Mr Tang himself, that Mr Tang imposes of further condition on and taking over.  That is the payment of $25,000 in legal costs, but he is incurred in obtaining his own independent legal advice.

7.  While I am sympathetic to Mr Tang on a personal level and that he has incurred these costs, he cannot impose the payment of those costs as a conditional, National becoming involved in the policy.

8.  In the proceeding, the law is quite clear and that follows from Chu Yuen Wah v Lee Kwok Kee and Another reported in 1995, 2 HKLR 280 that where the third party indemnifier is going to be the ultimate payer of any judgment that presented.  Then it is entitled to be involved in the proceeding and to defend the proceeding.

9.  Mr Tang argued that there might be duplicity of defence and the matter would become prolong, well that is as a result of his refusal to allow them to takeover his defence.  They being willing to waive the breach of the policy and takeover the defence, he need not be concerned about any further risks personally to himself.  If he has to pay his own legal costs, that is the consequence of him using at the defective vehicle which is contrary to the terms of the policy.

10.  I am satisfied that the Master was right and that the appeal must be dismissed.  Mr Yuen sensibly accepted that there was nothing that he can say and respect of costs, the costs must follow the event, the 1^st Defendant must pay the 2^nd Defendant costs on the appeal on a party-and-party basis.