POSSEHL ELECTRONICS HONG KONG LTD v. CHINA TAIPING INSURANCE (HK) CO LTD

CACV 9/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 9 OF 2014

(ON APPEAL FROM HCA 2354 OF 2012)

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D E C I S I O N

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1.  By a judgment dated 1 December 2014, we dismissed the plaintiff’s appeal against the judgment of Deputy High Court Judge Whitehead SC dated 19 December 2013, striking out its claims on the ground that the claims were frivolous or vexatious and otherwise an abuse of process and dismissing the action.  In upholding the learned Deputy Judge’s decision, we ruled that on a proper construction of the relevant conditions of the Property Policy and the Interruption Policy which imposed time limits for bringing the action, the plaintiffs’ claims were plainly time‑barred.

2.  By a notice of motion dated 29 December 2014, the plaintiff sought leave to appeal to the Court of Final Appeal on the ground that the two questions posed are ones which, by reason of their great, general or public importance or otherwise, ought to be submitted to the Court of Final Appeal for determination.  The two questions are :

“ 1. It is an abuse of the Court’s processes to advance, in respect of a contract of insurance incorporating utmost good faith obligations upon the parties, such as standard‑form insurer’s limitation of liability clauses, contractual construction arguments that:‑

(a) the limitation clauses should be construed in a manner that purposively reconciles their terms, rather than by literally construing each as if it was an independent stand‑alone covenant?

(b) a clause imposing a contractual time limitation period for the commencement of (arbitration or court) proceedings does not begin to run until the insured possesses an actual and lawful right of action?

2.   Which of the 2 conflicting decisions of the Hong Kong Court of Appeal correctly states the law of Hong Kong: Tai Hing Cotton Mill Ltdv.Glencore Grain Rotterdam BV [1996] 1 HKC 363, per Bokhary, J.A. at 372H‑373D or Possehl Electronics Hong Kong Ltdv. China Taiping Insurance (HK) Co. Ltd. (CACV 9/2014; 1 December 2014) per J. Poon, J. at para.s 25‑27?”

3.  The first question concerns the proper construction of the relevant conditions in the Property Policy and the Interruption Policy.  Such construction is case‑specific. It does not gives rise to any great, general or public importance or is otherwise fit to be submitted to the Court of Final Appeal for determination.

4.  The second question is misconceived.  There is no conflict between the two decisions of this Court as Mr Barlow SC for the plaintiff contends. As rightly submitted by Mr Manzoni SC for defendant, Tai Hing was not concerned with the construction of any arbitration clause specifying what disputes were to be referred to arbitration.  In that case, the Court held that where there is an arbitration clause, in particular, one that contains a Scott v Avery clause, any dispute which falls within the arbitration clause must be referred to arbitration.  This was so even if the Court were to take the view that the respondent had not real defence to the claimant’s claim.

5.  We also agree with Mr Manzoni’s submission that Super Chem Products Ltd v American Life and General Insurance Co Ltd & Others [2004] 2 All ER 358 (which was decided after Tai Hing) is more relevant to the point and militates against Mr Barlow’s construction : see §27 of our judgment.

6.  For the above reasons, we refuse to grant leave to the plaintiff to appeal to the Court of Final Appeal.  We further order the plaintiff to pay the defendant costs of the application, to be taxed if not agreed.