CHAN CHI TONG v. WONG FUK CHUN

HCPI 741/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 741 OF 2013

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D E C I S I O N

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1. This is an application by the defendant to strike out the claim on the basis that the plaintiff has already signed a discharge form before the commencement of the current action.

I.  Background

2. This is a road traffic accident case involving the plaintiff’s and the defendant’s car on 22 April 2012.  In the subsequent police interview, the plaintiff had complained of damage to his vehicle as well as head and back pain.

3. The plaintiff in fact attended Tuen Mun Hospital on the day of the accident. Four days later, he also attended a private doctor, Dr Tsoi Chi-Wai, Danny.  He was referred to undergo, amongst others, physiotherapy sessions.

4. The defendant’s insurance company was Falcon Insurance (“Falcon”).  The loss adjuster acting for Falcon was Integrity Adjusters Limited (“Integrity”), Integrity wrote to the plaintiff on 22 August 2012. The letter stated, as translated:

“We are the loss adjuster instructed by the insurance company of vehicle KA3994 (i.e. the defendant’s vehicle), we understand that the above accident has caused injuries to your body, and we have authority from the relevant insurance company to handle the part of the claim that is related to your personal injury. Our company would emphasise that we handle the part of the claim of your injury, we do not handle the claim or compensation related to vehicle repair costs, and, at the same time, this does not affect the right to claim for lost in vehicle repair costs or other items.

…We invite you, after receiving this letter, to contact as soon as possible our company’s Mr. Cheung Wai Man….so assist us understand your extent of injury and handle your personal injury claim.”

5. The plaintiff did not reply to this letter nor contact Mr Cheung as suggested.

6. Falcon received a demand letter dated 20 September 2012 from Messrs Patrick Wong & Co (“PW”), which stated: -

“We have instructions to act for Royal & Sun Alliance Insurance plc, the insurer of vehicle no. RF3173 (ie the plaintiff’s vehicle)…

….the accident was caused solely by the negligence of your insured driver. As a result of the said accident, our client has suffered loss and damages in the sum of HK$120,700, particulars of which are set out hereinbelow: -

Repair costs to vehicle no. RF3173 HK$113,000.00

Surveyor fee HK$700.00

Excess HK$7,000.00

Total: HK$120,700.00

We now write to enquire if you would be prepared to admit liability…..”

7. Negotiation then commenced with communications between Falcon and PW.

8. In the meantime, the plaintiff had applied to Social Welfare Department for traffic accident victim assistance and had received allowances on 3 occasions (Notices of Approval of Application were dated 8 August 2012, 3 October 2012 and 5 November 2012) totally HK$109,440.

9. On 11 October 2012, Integrity sent another letter in form of a chaser to the plaintiff.  This stated, as translated: -

“….our company has previously sent you a letter on 22 August 2012 but up until now, we have not received any reply from you. As mentioned in our company’s last letter, our company is authorized to handle Mr. Chan’s claim in bodily injury caused by the road traffic accident at the abovementioned date and place. Our company would emphasise again that the part of the claim that we are handling that concern your person injury does not affect the claim or handling of the compensation for vehicle repair cost , and at the same time does not affect the right to claim for lost in vehicle repair costs or other items.

Our company has the goodwill to handle Mr. Chan’s claim in personal injury, so we write again to invite Mr. Chan, after receiving this letter, to contact our company’s Mr. Cheung Wai Man as soon as possible (telephone….) in order to assist us to understand your injury and at the same time deal with your claim in personal injury.”

10. The plaintiff again failed to reply to this letter or contact Mr Cheung as suggested.

11. The plaintiff has previously been notified by his own insurance company(ie Royal & Sun Alliance Insurance plc), in a letter dated 30 August 2012, that they have “assigned Thornton Consultants (“Thornton”) to pursue recovery of our incurred outlay and also the complimentary recovery service for your paid excess HK$7,000 on your behalf”.

12. The plaintiff then received a letter dated 26 October 2012 from Thornton enclosing, amongst others, a discharge form from Falcon and stating:

“…and enclosed please find a copy of the offering letter and discharge form for HK$108,630.00 from third party insurer for your attention. The details of the offer are follows: -

Our claims (Paid by your insurer)	Offer by third party insurer
Repair cost HK$113,000.00	HK$101,700.00 (90% offer)
Survey fee HK$700.00	HK$630.00 (90% offer)
(Paid by you)
Excess HK$7,000.00	HK$6,300.00 (90% offer)
	Total: HK$108,630.00

Please let us know whether accept the offer, if you accept HK$6,300 by the third party insurer.  Please sign the discharge form and return (by post) for our further action…..please be informed that your insurance is accept (has accepted) the said offer (90% of the repair costs, surveyor fee)…..”

13. The discharge form stated (in English and Chinese): -

“In consideration of the sum stated below as Claim Payment to me/us by Falcon Insurance Company (Hong Kong) Limited on behalf of the Concerned Parties mentioned below, I/we agree to absolutely and finally discharge and indemnify the Concerned Party and/or Falcon Insurance Company (Hong Kong) Limited and/or any other parties whatsoever from all further claims of every nature and kind whatsoever competent to me/us arising out of the Accident or Loss hereinafter mentioned…..

I/We further state that the foregoing has been carefully read by me/us or has been read to me/us and I/we fully understand the contents of this document and sign hereunder by my/our own free will…”

14. The plaintiff filled and signed the discharge form, dated it 31 October 2012 and returned it to Thornton.  Presumably, a Mr Shum Ka Yin from Thornton subsequently signed as a witness and this signature was also dated 31 October 2012.

15. Falcon received the discharge form on 5 November 2012 and payment was made to PW, which passed on the payment to the plaintiff.

16. On 19 February 2013, Messrs Cheung & Liu, acting for the plaintiff, wrote a pre-action letter to the defendant claiming damages for personal injuries, and the current action was initiated on 29 August 2013.

II.  The issues in dispute

17. The defendant’s case is that the current case is covered by the discharge form and the claim has been settled, thus the plaintiff has no reasonable cause of action and has no chance of success.

18. The plaintiff’s case is that there have always been 2 sets of negotiations: one between Falcon and PW regarding vehicle repair claims, and the second between Integrity with the plaintiff directly regarding the personal injury claim.  And the discharge agreement, now alleged by the defendant to cover settlements of both sets of negotiations, was either a common mistake by both parties which should be rectified, or a unilateral mistake which should be rectified or voided all together. In either case, this is not a “plain and obvious case” for striking out.

19. Mr Gidwani, counsel for the defendant, submitted that the discharge form should be construed as any other contractual document, that is, to objectively ascertain the parties’ intention and not their subjective state of mind (Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251).

20. Further, he submitted that the wordings were clear that the scope of the discharge covered “all further claims of whatever nature and kind whatsoever.” In Arrale v Costain Civil Engineering Ltd [1976] 1 Lloyd’s Rep 98, at page 102, Lord Denning held:

“If [the releaser] with full knowledge of his rights, freely and voluntarily agreed to accept the one sum in discharge of all his claims, then he would not be permitted to pursue a claim at common law.”

21. Perhaps to further bring home the point about the plaintiff’s knowledge of his rights, Mr Gidwani suggested that the plaintiff was legally represented by PW at the time the discharge form was signed and thus should have received legal advice from them.  His view was based upon the fact that PW negotiated with Falcon and had received the settlement money on behalf of the plaintiff.

22. I think here lies the problem.  On the evidence before me, I do not think that PW has acted for the plaintiff at any time at all.

23. Firstly, of course, the fact that a solicitor firm received a sum of money on behalf of a party does not necessarily mean that the firm was instructed by that party.

24. Secondly, the letter from PW to Falcon dated 20 September 2012 clearly stated “We have instructions to act for Royal & Sun Alliance Insurance plc, the insurer of vehicle no. RF3173 in respect of the captioned accident.”  There was no mentioned of PW acting for the plaintiff himself.

25. Thirdly, and more importantly, if it was the view of Falcon (and thus the defendant’s) that PW was acting for the plaintiff as well as the plaintiff’s insurer, this view must have been formed after receiving PW’s letter on 20 September 2012.  Therefore, it would have been entirely inappropriate for Falcon’s loss adjuster, Integrity, to communicate with the plaintiff in person on 11 October 2012 instead of writing to PW.

26. As such, I am not convinced, on the evidence before me, that Falcon (and thus the defendant) ever held the view that PW was acting for the plaintiff at any time, including the time he signed the discharge form.

27. This rather leads to the question of whether the plaintiff signed the discharge form “with full knowledge of his rights” or, as the plaintiff alleged, he was mistaken and, importantly, whether the defendant was aware of this and was taking advantage of it.

28. Mr Lee, counsel for the plaintiff, argued that for the court to decide “whether there was a clear mistake, the Court is not confined to just reading the document (i.e. the discharge form in this case) without regard to its background or context.  As the exercise is part of the single task of interpretation, the background and context must always be taken into consideration.” (Chartbrook Ltd v Persommon Homes Ltd [2009] UKHL 38, 125 ConLR1)

29. In Chartbrook, there was also discussion on the difficult task of distinguishing between what was factual background and what was prior negotiation.

30. However, in the current case, I do not even need to look into “prior negotiation” (that is, the negotiation between Falcon and PW). Indeed, I need not consider whether the settlement sum accepted by the plaintiff was a “bad bargain” or not, or whether this reflected that the plaintiff must have entered the agreement by mistake.

31. The wordings used by Integrity in its two letters provided the court with the factual background of how the plaintiff and Falcon (and the defendant) entered this agreement: -

i) Integrity (thus Falcon and the defendant) was aware that the plaintiff had suffered injury caused by the accident (“we understand that the above accident has caused injuries to your body”) as early as its first letter of 22 August 2012.

ii) Integrity stated in both letters that it was dealing with the plaintiff’s personal injury claim only, and this would not affect the plaintiff’s right to claim for vehicle damage loss.

iii) Therefore, right from the beginning, Falcon (and thus the defendant) intended to hold two sets of negotiations: one with PW regarding vehicle repair and one with the plaintiff via Integrity regarding personal injury.

iv) As discussed above, as deduced from available evidence, Falcon and Integrity could not have held the view that the plaintiff was being represented by PW (or any legal advisers).

v) Having heard no reply from the plaintiff after its initial letter dated 22 August 2012, Integrity wrote a chaser on 11 October 2012 to the plaintiff in person.

vi) Crucially, Integrity only urged the plaintiff to contact its staff “as soon as possible”.  It did not warn the plaintiff of a rather onerous “deadline” after which the discharge agreement would proceed on the assumption that the plaintiff was not suffering from any personal injury (or at least that he was abandoning any personal injury claim).

vii) Yet this was precisely the “assumption” that the defendant was now advancing in the current application: that “Falcon Insurance…was perfectly entitled to assume that the Plaintiff did not suffer any personal injuries by reason of the lack of response to the two Integrity letters”. (defendant’s skeleton submission , paragraph 53)

viii) In fact, Falcon sent out the discharge form to PW on 19 October 2012.  In other words, the “deadline” for reply, which the plaintiff was not informed of, was 8 days or less.

III.  Conclusion

32. To be perfectly fair, the plaintiff himself must take some blame for failing to reply to Integrity at all. There was no excuse that just because he was still receiving medical treatment that he could not give a “holding” reply to Integrity.

33. Nevertheless, I am not convinced that Falcon could reasonably entitled to make the “assumption”, within 8 days of the Integrity chaser, that the plaintiff did not suffer any personal injury (or has abandoned his claim in such), given that it (and Integrity) was aware of the injury in the first place.

34. Against this factual background, I find that the plaintiff has, at the very least, a good arguable case for unilateral mistake: that he has mistakenly entered the discharge agreement thinking that this was only for the vehicle repair claim, and that Integrity would continue to handle his personal injury claim separately, as it appeared to repeatedly emphasise in its letters.

35. I would think that a layperson would easily be mistaken when receiving such messages from Integrity, especially when he has also received the letters from his own insurer and Thornton which only dealt with the claim for vehicle repair.  Of course, it was Thornton which sent him the discharge form. It would be reasonably understandable how the plaintiff would not, under the circumstances, suddenly realised that this discharge form should now cover both sets of negotiations.

36. Further, the speed which Falcon Insurance proceeded with the discharge form, the lack of warning from Integrity, together with the awareness that the plaintiff was acting without legal advice, would raise suspicion whether the defendant was actually (or should reasonably be) aware of this mistake and was taking advantage of it.

37. The least Falcon might have done, given the knowledge of the circumstances, was to put on inquiry to seek confirmation of its “assumption” which an honest and reasonable man would (George Wimpey UK Ltd v V I Construction Ltd [2005] EWCA Civ 77, at para 42).

38. Mr Gidwani submitted that Falcon was complying with the spirit of the CJR for speedy settlement of disputes.  However, I do not think that the spirit of CJR values speed over fairness of any settlement.

39. This is the defendant’s application to strike out the claim.  There is no application before me to void or rectify the discharge agreement so I need not deal with this.

40. Applying the well-established principle in striking out application, this is clearly not a “plain and obvious” case for the court to exercise such power.

41. I would therefore order that: -

i) The defendant’s application be dismissed.

ii) Costs of this application be to the plaintiff with certificate for counsel: -

a. The plaintiff shall file and serve a summary statement of costs within 14 days;

b. The defendant shall file and serve a summary list of objections within 14 days thereafter; and

c. Costs be summarily assessed.