FUNG CHOI KUM AND ANOTHER v. LIU CHI WAI

HCPI 937/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 937 OF 1997

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JUDGMENT

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1. This is an appeal by the plaintiffs against the order of Master Kwan made on 30  March 2007 ordering the plaintiffs to comply with paragraphs 1 and 2 of her order dated 26 May 2006 by 4 p.m. on 11 May 2007.

Background

2. This is a fatal accident claim.

3. The 1^st plaintiff is the widow of Franck Philippe Daigneau, deceased (“the Deceased”), who died as a result of a traffic accident which occurred on 5 June 1996 when the motor cycle which the Deceased was driving collided head-on with a light goods vehicle driven by the defendant on Shek O Road.

4. The Deceased’s estate (the 2^nd plaintiff) and his widow issued the present proceedings claiming damages under various heads for negligence under the Fatal Accident Ordinance and the Law Amendment and Reform (Consolidation) Ordinance.

5. At the time of his death the Deceased was 30 years old, and left as his dependants his widow and a daughter aged 2 at the time of the death of the Deceased.

6. Liability not having been challenged by the defendant, judgment had been entered for the plaintiffs with damages to be assessed.

7. The plaintiffs filed a Revised Statement of Damages on 8 July 2004.

8. One of the heads of damages claimed was for loss of accumulation of wealth.

9. In respect of that head of claim, one of the basis of which was pleaded in paragraphs 14 and 15 of the Revised Statement of Damages as follows :

“	14.	In or about April 1996, the Deceased made inquiries of savings insurance plans from insurance companies.  Proposals had been made to the Deceased in March and April 1996 and discussions on them were made thereafter.  But for the accident, the Deceased would have selected and entered into an insurance contract with Old Mutual International (an insurance company) with a plan which will pay :
		(1)	the Deceased HK$9,745,000 when the Deceased reached the age of 55; and
		(2)	the wife and daughter of the Deceased HK$5,000,000 on the death of the Deceased or HK$2,467,688 when the Deceased reached the age of 55, whichever happened earlier.
			...
	15.	The Plaintiffs claim loss of accumulation of wealth as follows :-
		…
		(2)	Post-trial :
			(i)	The present value of the savings plan of the insurance contract as at the time it matures (HK$9,745,000) (17 years later @ 2.5% discount rate).	HK$6,404,365
			(ii)	The present value of the amount payable to the wife and daughter of the Deceased (HK$2,467,688) when the Deceased is 55 years of age (17 years later @ 2.5% discount rate).”	HK$1,621,752

10. That part of the pleaded case on loss of accumulation of wealth was supported in evidence by the witness statement of one Phil Simmonds, an insurance broker and a good friend of the Deceased.

11. In summary, the witness statement of Mr Simmonds was to the effect that before his death, the Deceased had been discussing with him future plans in respect of the Deceased’s aims and protection for the Deceased and his family.  Mr Simmonds then put together his recommendation to the Deceased into a proposal which he discussed with the Deceased on 23 April 1996.  According to Mr Simmonds, the main priorities of the Deceased were to set up a retirement plan to ensure security in the future and a life insurance policy.

12. Mr Simmonds had recommended the Deceased to start his retirement plan at HK$7,500 per month and also to take out a life insurance policy for the benefit of the wife of the Deceased and the daughter for HK$1,250 per month which would provide life insurance of HK$2.5 million for them.

13. The Deceased told Mr Simmonds that he would need to talk to his wife and then come back to Mr Simmonds.

14. The last meeting Mr Simmonds had with the Deceased was on the day before the Deceased met with the accident.  At that meeting, the Deceased agreed to be the “best man” at Mr Simmonds wedding and also agreed to go ahead with the life insurance proposal and the retirement plan after the wedding.

15. The only concern the Deceased had, according to Mr Simmonds, was whether to increase the life insurance protection to HK$5 million from the initial recommendation of HK$2.5 million.

16. The next scheduled meeting between them was for August, after Mr Simmonds’ wedding, but that, of course, was overtaken by the accident to the Deceased resulting in his death.

17. The written recommendation and proposal for both the retirement plan and the life insurance plan prepared by Mr Simmonds has also been discovered and forms part of the evidence of the plaintiffs.

18. The defendant’s solicitors, by its letter dated 12 July 2004 raised a number of queries (inter alia) concerning this part of the plaintiffs’ claim being questions numbered 37 to 50 inclusive.

19. In the absence of any replies from the plaintiffs’ solicitors to the queries raised, the matter was raised before Master Kwan at a Check List Review hearing on 26 May 2006 whereupon the Master ordered, in paragraph 1 of her order of the same date, the plaintiffs to answer the outstanding queries of the defendant’s within 56 days.  At the same time, the Master also ordered the plaintiffs, in paragraph 2 of her order of the same date, to provide answers to the defendant’s further requests.

20. By letter dated 21  July 2006, the plaintiffs’ solicitors answered the queries raised in numbers 37 to 50.

21. Not being satisfied with the answers provided by the plaintiffs, this matter was again raised before the Master Kwan at a Check List Review hearing on 30 March 2007 whereupon Master Kwan gave an additional 42 days to the plaintiffs to comply with paragraphs 1 and 2 of her order dated 26 May 2006 and that the Check List Review hearing be adjourned to 1 June 2007 for her to check on compliance.  Costs of that hearing assessed at $8,000 was also ordered against the plaintiffs.

22. It is this order of Master  Kwan that the plaintiffs appeal against now.

Questions 37 to 50

23. For convenience, I set out hereunder in full the questions asked, being the subject matter of this appeal :

“	37.	Is the alleged plan an equity linked plan/fund issued by Old Mutual International?
	38.	Is the alleged plan a conventional life insurance plan/fund issued by Old Mutual International with no linkage to up and down of chosen market?
	39.	Is there a market value adjuster clause in the said plan/fund issued by Old Mutual International?  If so, what is the declared rate of market value adjuster from 1996 to present?
	40.	Upon a simple mathematical calculation, a monthly contribution of HK$7,000 for 25 years could give rise to a total premium contribution of HK$2,100,000.  State the breakdown of projection from HK$2,100,000 to HK$9,745,000.
	41.	Out of the projection from HK$2,100,000 to HK$9,745,000, how much projection represented a ‘guaranteed bonus/dividend’ given by issued by Old Mutual International to policyholder of the alleged plan/fund?
	42.	Out of the projection from HK$2,100,000 to HK$9,745,000, how much projection represented an ‘assumed/projected’ profit given by issued by Old Mutual International to policyholder of the alleged plan/fund.
	43.	Performance of the said plan/fund issued by Old Mutual International from 1996 up to present including the declared valuation of unit price of the plan/fund in 1996 up to present.
	44.	The declared dividend/bonus given by Old Mutual International in the said plan/fund from 1996 up to present.
	45.	State all the administrative charges, assurance charges, management fee charged by Old Mutual International the said plan/fund from 1996 up to present.
	46.	Will such administrative charges, assurance charges, management fee be levied irrespective of the performance of the said plan/fund.
	47.	Account for the nature and breakdown of the stated figure of HK$5,000,000 in the said plan/fund?
	48.	Is it the Plaintiffs’ case that HK$5,000,000 was the death insurance benefit in the said plan/fund?  If not, state otherwise.
	49.	Account for the nature and breakdown of the stated figure of HK$2,467,688 in the said plan/fund?
	50.	Is it the Plaintiffs’ case that HK$2,467,688 was the guaranteed sum that the deceased is assured to get in the said plan/fund?  If not, state otherwise.”

Answers given by the plaintiffs to questions 37 to 50

24. The answers given by the plaintiffs are as follows :

“	37.	The plan to be issued by Old Mutual International but for the death of the Deceased would have been an equity linked plan.  However, the Deceased intended to include a guaranteed amount of life insurance which would have become payable upon his death for the protection of his wife and the infant daughter.
	38.	Please refer to our answer to question 37 above.
	39.	The plan to be issued by Old Mutual International would not have a market value adjuster clause.
	40.	The plan is a savings insurance plan based on a certain rate of return and to be paid out at some later date.  At the time of the accident, the rate of return was projected at 12%.  The insurers do not use simple arithmetic to work out the amount payable at a later date.  It is an actuarial calculation which would have taken into account the mortality rates, the state of health, own charges projected investment linked returns and can only be supplied by the insurers.
	41.	Please refer to our answer to question 40 above.
	42.	Please refer to our answer to question 40 above.
	43.	Please refer to item 73 of Part 1, Schedule I of the Plaintiff’s 5th Supplemental List of Documents.
	44.	Please refer to item 73 of Part 1, Schedule I of the Plaintiff’s 5th Supplemental List of Documents
	45.	The administrative charges or management fees involved in the plan would not have affected the death benefit, expect of course that the premium would reflect how much life insurance will be provided.  It is fair to say that the Deceased was not so much driven by the cost of the insurance, but more by the amount he wanted to insure himself to protect his wife and the infant daughter.
	46.	Please refer to our answer to question 45 above.
	47.	The amount of HK$5,000,000 is a team life policy.  It would be paid out as contract lump sum.
	48.	It is the Plaintiff’s case that HK$5,000,000 was the death insurance benefit in the said plan.
	49.	As for the figure of HK$2,467,688, its nature is similar to the sum of HK$9,745,000.  These sums are projected returns at maturity at 5% per annum and 12% per annum growth rates respectively.
	50.	Please refer to our answers to questions 40 and 49 above.”

Plaintiffs’ proposed amendment to Revised Statement of Damages

25. Shortly before the hearing of this appeal, the plaintiffs had proposed to the defendant’s solicitors under cover of a letter dated 7 June 2007 amendments to be made to the Revised Statement of Damages by the inclusion of a new paragraph 14A which, would contain sufficient material as to the claim for accumulation of wealth.  That was to meet the further requests raised by the defendant and incorporated into paragraph 2 of the Master’s order dated 26 May 2006.  In that covering letter, the plaintiffs’ solicitors sought the views of the defendant’s solicitors as to whether the appeal may thereby be short-circuited.

26. Nothing constructive came of such proposals.

27. For completeness sake I also set out the proposed paragraph 14A to the Revised Statement of Damages.

“	14A.	The particulars of the said intended insurance contracts are as follows :
		(1)	There are two intended insurance contracts.  For the first intended contract, the insurance plan would have been an equity linked plan.  The premium payable to maintain the insurance police was HK$7,500 per month.  The plan was to be issued by Old Mutual International (an insurance company).  It would not have a market value adjuster clause.
		(2)	The plan is a savings insurance plan based on a certain rate of return and to be paid out at a later date.  At the time of the accident, the rate of return was projected at 12% p.a.  At maturity, that is, when the Deceased reached the age of 55, the insurance company would pay the Deceased the sum of HK$9,745,000 if the actual rate of return was 12% p.a., or a sum more or less than the projected sum depending on the actual return rate.  There would have been management charges involved in the plan but they would not have affected the benefit.
		(3)	For the second intended contract, the insurance plan would have been in two parts.  The first part is a term plan in which HK$5m would be payable to the Deceased’s wife on his death.  With this part of the insurance contract, the payment does not depend on the return rate.  The second part of the insurance plan was a sum of HK$2,467,688 payable to the Deceased’s wife when he reached the age of 55.  This was a savings plan and was based on 12% p.a. return rate and would be equity linked.  The insurance company would only pay one of the two said sums, depending on which event occurred earlier.  The premium payable under this plan was HK$2,500 per month.”

The appeal

28. The short point taken by the plaintiffs on this appeal is that he had already answered those questions 37 to 50 to the best of her ability.

29. In those circumstances, the plaintiffs say that the Master should not have taken the view that those questions had not been answered fully and to have ordered the plaintiffs to further comply with paragraphs 1 and 2 of her order of 26 May 2006.

30. In reply the defendant’s stance is that the answers already given by the plaintiffs do not provide enough material on that part of the plaintiffs’ claim to allow the defendant to meet such claim.

Decision

31. Questions 37 to 50 were originally posed by the defendant in their letter of 12 July 2004.

32. In that letter, it was never indicated whether those questions were posed by way of a request for further or better particulars or by way of interrogatories.

33. At the hearing before me, counsel for the defendant, when confronted with this question whether it was by way of further and better particulars or by way of interrogatories, not surprisingly was at pains to give a satisfactory answer.

34. One of the difficulties was that Questions 37 to 50 was posed in such a way as though what were being asked were based on factual matters when in fact, what was sought by the defendant cannot, given the background, be factual matters since the Deceased had never actually bought the insurance before his death.

35. In my view, what was asked by Questions 37 to 50 ought to have been asked of Mr Simmonds in cross-examination as and when he took the witness stand.  Even then the answers which Mr Simmonds could give can be no more than a firm belief by him as to what would have happened had the Deceased gone ahead and did what the Deceased had intended to do as regards the insurance.

36. As such they were not matters which the plaintiffs could have properly answered as though they were factual matters in the manner that Questions 37 to 50 had been posed.  In that respect alone, Questions 37 to 50 could not properly have been posed either by way of further and better particulars nor by way of interrogatories.

37. For the same reason given above relating to Questions 37 to 50, I am of the view that the plaintiffs should never have been made to answer the further questions posed by the defendant and referred to in paragraph 2 of the Master’s order dated 26 May 2006.

38. I am fully aware that there was no appeal against the order of the Master dated 26  May 2006 ordering the plaintiffs to answer Questions 37 to 50 as well as the defendant’s further requests.  Nor is this appeal directed at that order of the Master.

39. However, given all the circumstances of this case, and in view of the fact that the plaintiffs had at least attempted to answer Questions 37 to 50 in their letter dated 21 July 2006, as well as making a proposal to amend the Revised Statement of Damages by the inclusion of a paragraph 14A thereto, I am of the view that it would be wrong to allow the Master’s order dated 30 March 2007 to stand.

40. Accordingly, this appeal is allowed and the order of the Master dated 30 March 2007 is set aside.

Costs

41. In dealing with the costs, I am of the view, as indicated above, that both parties are to blame for this appeal having been brought, even though the plaintiffs had succeeded in this appeal.

42. It was wrong of the defendant to have posed those questions and to press the plaintiffs into providing the answers.

43. The plaintiffs were also wrong not to have appeal against the order of the Master dated 26 May 2006 and leaving it late to appeal the further order of the Master.

44. This type of satellite litigation does not help anyone and is wholly unnecessary in so far as the proceedings are concerned.

45. There will accordingly be a costs order nisi that each party is to bear its own costs both for the appeal as well as for the hearing before the Master on 30 March 2007.