HANSON INSURANCE SERVICES LTD v. LO WANG KIT

DCCJ 809/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 809 OF 2015

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DECISION

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Introduction

1.  This is the plaintiff’s application for summary judgment against the defendant.  The issue is whether the plaintiff insurer is entitled to be reimbursed the insurance compensation paid to its insured defendant when the latter subsequently received compensation from an insurance company of a third party tortfeasor. 

Background

2.  The plaintiff is an insurance company.  It issued a comprehensive insurance policy in favour of the defendant to indemnify him for loss and damage of a motor goods vehicle bearing registration number NL 1775 (“the Vehicle”) for the period from 14 September 2012 to 13 September 2013.

3.  On 11 September 2013, the Vehicle was damaged in a traffic accident in Guangzhou.  The Vehicle was towed back to Hong Kong for repair by a motor repairer, Hang Fai Auto Services Co. Ltd (“Hang Fai”). The defendant lodged a claim with the plaintiff for compensation. 

4.  On 10 December 2013, the plaintiff has duly paid compensation in sum of $100,000 (“the Insurance Sum”) being repair costs and expenses to Hang Fai.  The plaintiff paid the excess of $65,000 and  signed a satisfaction note to the defendant stating, inter alia,

“I/We also authorize you to use my/our name in any action or proceedings you may bring in relation to any of the matters hereby assigned and transferred to you, and I/We undertake for myself/ourselves to concur in any matters of proceedings which you may deem expedient or necessary in any such action or proceedings which you may bring in relation to any of the matters hereby assigned and transferred to you, and to execute all documents which may be necessary, and generally to assist therein by all means in my /our power.” (“the Clause”)

5.  On 10 November 2014, the defendant subsequently obtained compensation from the insurer of the tortfeaser of the traffic accident, PICC Property and Casualty Company Limited a sum of RMB 96,493.00 (“the PICC Compensation”).

6.  Pursuant to the Clause, the plaintiff claims the defendant for reimbursement of the Insurance Sum.

The defendant’s opposition

7.  The defendant resisted the plaintiff’s application for the following reasons,

(i)    he claimed he does not understand English, the satisfaction note has never been explained to him at time of signing and he was not aware of the Clause;

(ii)   the defendant complained the Vehicle was not properly repaired, it broke down again in or about late December 2013 which needed to further repair;

(iii)  he suffered loss of business; incurred expenses including paying salaries to his employees.

Legal principles

8.  The applicable legal principles in granting summary judgment are that the plaintiff should have a clear and crisp legal case. The defendant has no defence to the plaintiff’s claim.  The court shall not embark on a mini trial on affidavits.  In event the defendant is able to raise triable issues or should the defendant is able to provide believable evidence in affidavits, or there are other reasons for trial, summary judgment should not be granted.  (See Hong Kong Civil Procedure 2016, commentaries at paragraphs 14/4/1 – 14/4/3)

9.  The plaintiff’s claim against the defendant for recovery of the Insurance Sum is premised upon the subrogation rights flowing from the insurance contract.  The effect of the Clause renders the plaintiff be subrogated to the rights of the action of the insured against other tortfeasors. 

10.  The doctrine has well been established in Yorkshire Insurance Co. Ltd v Nisbet Shipping Co Ltd [1962] QB 330, per Diplock at p. 340 – 341,

“In my view, the doctrine of subrogation in insurance law requires one to imply in contracts of marine insurance only such terms as are necessary to ensure that, notwithstanding that the insurer has made a payment under the policy, the assured shall not be entitled to retain, as against the insurer, a greater sum that what it ultimately shown to be his actual loss….

Thus, if after payment by the insurer of a loss that loss, as a result of an act of a third party, is reduced, the insurer can recover from the assured the amount of the reduction because that is the amount which he, the insurer, has overpaid under the contract of insurance. This sum he can recover at common law without recourse to equity, as money had and received.”

11.  The defendant submitted he did not understand English, he has signed the satisfaction note without knowing what was contained in it.  He pleaded in his Defence that he was not aware of the Clause and should not be bound by it.  I do not accept a the plaintiff can resile from an agreement in this manner.

12.  In fact, at time of signing the satisfaction note, the plaintiff did pay the Insurance Sum to Hang Fai.  It is again no more than a bare assertion or attempt of the defendant to free himself from reimbursing the plaintiff the PICC Compensation.  No triable issues can be found.

13.  The defendant further submitted the actual loss as a result of the accident is more than the aggregate of the Insurance Sum and PICC Compensation.  He is entitled to retain both.  The reason being, the defendant complained the Vehicle was not properly repaired which caused him extra repair costs. The defendant exhibited a number of receipts evidencing the further losses.  As correctly pointed out by Mr Chow, counsel for the plaintiff, the receipts are merely expenses for maintenance of the Vehicle and no part of it was evidence of such allegation. Neither  payment of salary to the defendant’s staff could qualify was actual loss, those expenses have to be incurred in any event.  As a result, the actual loss arising from the traffic accident must be the repair costs of the Vehicle by Hang Fai.  I do not see there are triable issues.

14.  The defendant further complained the plaintiff has only shouldered the Insurance Sum instead of the entire repair costs.  He was unhappy because he has paid $65,000 in excess.  I am afraid this is what has been agreed in the insurance policy.  I fail to see it could amount to some reasons that this action should proceed to trial.

15.  The plaintiff, on the other hand, is able to demonstrate a clear legal case that summary judgment should be given.  The Clause, being a subrogation clause is well agreed by the plaintiff and the defendant at time of payment of the Insurance Sum and signing satisfaction note by the defendant.  The rights of making a claim against any tortfeasor are vested with the plaintiff thereafter.

16.  By way of a letter dated 29 January 2015, the plaintiff enquired from PICC, the tortfeasor’s insurance company of the progress of making compensation to the defendant.  PICC positively replied in its letter dated 11 February 2015 that they have duly done so in paying the PICC Compensation.  The PICC Compensation being a sum in greater amount than the Insurance Sum (taking into account the exchange rate as pleaded in paragraph 7 of the Statement of Claim as CNY/RMB 1 equivalent to HKD 1.2672), and where the defendant should not profit from the traffic accident by enjoying double compensation by both the plaintiff and the tortfeasor.  I am satisfied the defendant should reimburse the Insurance Sum to the plaintiff, summary judgment is justified.  

Conclusion

17.  I make the following orders,

(i)    Final judgment be entered for the plaintiff against the defendant in sum of $100,000.00.

(ii)   Interest be awarded at judgment rate from the date of Writ until satisfaction of this judgment.

(iii)  The costs of the plaintiff’s summons, including this action, be to the plaintiff, with certificate for counsel, to be taxed if not agreed.