HCA003657/1985
1985, No. A3657
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
____________
BETWEEN
HUI TSUI CHING, the administratrix
1st Plaintiff
HUI CHI SANG, the co-administrator of the estate of LAU CHUN CHEUNG, deceased
2nd Plaintiff
SHUM LAI HING, the administratrix of the estate of MOK KAM WING, deceased
3rd Plaintiff
LAU YUEN YU
4th Plaintiff
CHAN KAM CHI
5th Plaintiff
CHAN BING NUEN
6th Plaintiff
AND
GRAND UNION MOTOR INSURANCE COMPANY LIMITED
Defendant
____________
Coram: Hon. Hunter, J. in Court
Date of hearing: 21 October 1986
Date of delivery of judgment: 6 November 1986
__________
JUDGMENT
__________
1. This action raises a question of some importance in relation to compulsory Third Party Motor Insurance. The material facts have all been agreed by the parties as follows :-
"
1.
At all material times, LAU CHUN CHEUNG ("the 1st deceased "), MOK KAM WING ("the 2nd deceased "), EAU YUEN YU ("the 4th Plaintiff "), CHAM KAM CHI ("the 5th Plaintiff ") and CH AN BING NUEN ("the 6th Plaintiff ") were employees of LAW CHUNG WING ("the Owne r").
2.
On 20.2.82, the 1st deceased, the 2nd deceased, the 4th, 5th and 6th Plaintiffs reported for work at the Owner's office at Reclamation Street, Kowloon before setting off to a work site at Gin Drinker's Bay, Kwai Chung, where the Owner was a sub-contractor engaged in plumbling installation work. They were obliged by the Owner to report for work first to his office and then to travel in his Mazda van registration number CJ542 ("the Vehicle ") to the said site.
3.
On that day, at the Owner's office, the 1st deceased, the 2nd deceased, the 4th and 5th Plaintiffs, under the supervision of the 6th Plaintiff (who was the foreman), loaded tools, spares and materials into the Vehicle to take to the said site and then travelled therein to the said site.
4.
While travelling to the said site in the Vehicle; which was driven by HUI TING HANG ("the Driver ") who was an employee of the owner and drove the vehicle with the owner's permission and in the course of his employment with the owner and who was an authorised driver within the terms of the Policy referred to in paragraph 12 herein, and accident occurred on Kwai Chung Road, when the Driver lost control and the Vehicle collided with the centre iron railings dividing the road. As a result of the accident, the 1st and 2nd deceased died, and injuries were sustained by the 4th, 5th and 6th Plaintiffs.
5.
The said deaths and injuries arose out of and in the course of the employment of the 1st deceased, the 2nd deceased, the 4th, 5th and 6th Plaintiffs with the Owner.
6.
The personal representatives of the let and 2nd deceased, and the 4th, 5th and 6th Plaintiffs all commenced proceedings against the Owner for employees' compensation under the Employees Compensation Ordinance, Chapter 282 in the following actions :-
Plaintiff
Case Number
(a)
(b)
(c)
(d)
(e)
1st deceased
2nd deceased
4th Plaintiff
5th Plaintiff
6th Plaintiff
ECC No. 50 of 1983 ECC No. 78 of 1983ECC No. 46 of 1983
ECC No. 47 of 1983
ECC No. 48 of 1983
7.
The basis of the said claims was the same, namely, that the deaths and personal injuries all arose out of and in the course of the employment of the 1st deceased, 2nd deceased, 4th, 5th and 6th Plaintiffs with the Owner. Similarly, the Owner resisted the actions also inter alia on the same basis, namely, that the said deaths and personal injuries did not arise out of nor in the course of the Plaintiffs' employment.
8.
BCC Nos. 46, 47 and 48 were consolidated and tried first. On 15.8.83, H.H. Judge Leong held that the injuries to the 4th, 5th and 6th Plaintiffs did arise out of and in the course of their employment with the Owner and duly made awards of employees' compensation. The Owner appealed against the finding that the said injuries did so arise, but the appeal was dismissed by the Court of Appeal on 14.2.84.
9.
On 7.3.84, Judgment on liability was given against the Owner in ECC No. 78 of 1983 and the award of employees' compensation was assessed on 16.7.84.
10.
ECC No. 50 of 1983 has been adjourned sine die.
11.
As detailed below, High Court actions for damages for negligence were commenced by the Plaintiffs against the Owner and the Driver. Judgments were obtained against the 2 said Defendants, damages were assessed, interest awarded on the judgment debts and costs were taxed.
Plaintiff
Action
Number
Damages
assessed
Taxed
costs
(a)
(b)
(c)
(d)
(e)
1st and 2nd Plaintiff
3rd Plaintiff
4th Plaintiff
5th Plaintiff
6th Plaintiff
HCA No. 1711 of 1984
HCA No. 3253 of 1984
HCA No. 1709 of 1984
HCA No. 1708 of 1984
,
HCA No. 1710 of 1984
$450,300.00
$200,231.00
$717,030.00
$576,878.00
$102,748.00
$33,788.90
$29,953.60
$23,816.00
$24,601.00
$26,327.90
The Defendant, on its own application, sought and was granted leave to join in the said actions. Counsel was instructed by the Defendant who took part in the assessment of damages in all the High Court actions (set out above) before a Master. The Defendant appealed against the assessment of damages in High Court Action No. 1708 of 1984 being Civil Appeal No. 170 of 1984. The said appeal was dismissed by the Court of Appeal on the 19th day of July 1985. Costs of the appeal were awarded to the Plaintiff Chan Kam Chi and have been taxed in the sum of $38,418.50. None of the aforesaid judgments has been satisfied.
12.
At all material times, there was in existence in respect of the Vehicle a policy of motor insurance numbered PC/79499/81 (certificate number 79499/81) and issued by the Defendant on 24.9.81 ("the Policy "). The Policy was effective for the period from 16.10.81 to 15.10.82. The Defendant is (and was at all material times) an authorized insurer.
13.
The Defendant admits that due notice of the said proceedings brought against the. Defendant Owner and Driver was given to it. "
2. In these circumstances, this action is brought by the personal representative of the 1st and 2nd deceased, and by the 4th, 5th and 6th Plaintiffs personally to recover the fruits of their earlier proceedings. The action is founded upon the Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap. 272, and specifically upon Section 10(1). The relevant parts of the material provisions of this Ordinance are :-
"
S.
4.(1) Subject to the provisions of this Ordinance it shall not be lawful for any person to use; or to cause or permit any other person to use, a motor vehicle on a road unless there is in force in relation to the user of the vehicle by that person or that other person, as the case may be, such a policy of insurance or such security in respect of third party risks as complies with the requirements of this Ordinance.
S.
6.(1) In order to comply with the requirements of this Ordinance, a policy of insurance must be a policy which -
(a)
is issued by an authorized insurer; and
(b)
insures such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle on a road
Provided that such a policy shall not be required to cover -
(i)
liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment.
(2) Notwithstanding anything in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of persons.
S.10.
(1) If, after a certificate of insurance has been issued under section 6(3) in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under section 6(1)(b) (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, ...... the insurer shall ...... pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability. "
3. These sections were taken verbatim from the English Statutes noted in the margin to the Ordinance. The relevant provisions subsist in England and are now to be found in Sections 143, 145 and 149 of the Road Traffic Act 1972. It follows that English authorities upon the construction of these sections are directly in point.
4. Upon the agreed facts, the two decisive questions which arise under Section 10(1), and which I will consider in turn are :-
I.
Was there a relevant liability "covered by the terms of the policy";
II.
If so, was it "required to be covered" by Section 6(1)(b).
I. The policy holder named in the policy was the owner, Mr. LAW. The relevant provisions of the cover in Section 2 - Liability to Third Parties - is in the following terms :-
1.
The company will ....... indemnify the Insured against all sums including claimant's costs and expenses which the Insured shall become legally liable to pay in respect of
(a) death of or bodily injury to any person;
Where such death or injury or damage arises out of an accident caused by or in connection with the Motor Vehicle.
2.
The company will ....... indemnify any Authorised Driver, or at the request of the insurer any person (other than the person driving) in or getting into or out of the Motor Vehicle, against all sums including claimant's cost and expenses which such authorised driver or person shall become legally liable to pay in respect of
(a) death of or bodily injury to any person;
Where such death or injury or damage arises out of an accident caused by or in connection with the Motor Vehicle.
Exceptions to Section 2
5. The company shall not be liable -
(a) under sub-sections (2) or (3) to indemnify any person -
(i)
unless such person shall observe, fulfil and be subject to the terms of this policy insofar as they can apply.
(ii)
If such person is entitled to indemnity under any other policy.
(b)
In respect to death of or bodily injury to any. person arising out of and in the course of such person's employment by the person claiming to be indemnified under this section.
6. The Plaintiffs do not seek to enforce the judgments they have obtained against Law, only those obtained against the Authorised Driver HUI. They argue thus. As an authorised driver Hui is entitled to a separate indemnity under sub-section (2). He is one of three classes of persons who may "claim to be indemnified under this section". The other two are the insured Law, and at his request, a passenger under ss.2. Exception (b) is only apt to exclude liability where the person claiming an indemnity is Law. It does not bite or except where the person claiming to be indemnified is HUI, because none of the travellers in this van were in his, HUI's employment. Much reliance is placed upon the decision of the Court of Appeal in Richards v. Cox (1) .
7. Insurers seek to meet this and to distinguish this case by resort first to the mischief of the legislation. The legislature, they argue, was drawing a clear distinction between motor vehicle and employer's liability insurance, and the policy should be construed in the light of the clear exception of the latter in the proviso to Section 6(1)(b). If a distinction is drawn between separate cover such was said to be the product of the language in Richards, and extended cover, the suggested result here, exception (b) properly construed, excludes all claim by persons in the insured Laws' employment.
8. I am prepared to assume that the defendant's intention in writing this policy was to go no further than section 6(1) required, and to exclude liability to any employee of Law acting in the course of such employment. But in the words of Goddard, L.J. in Richards, I "am concerned hot with what the company intended, but with what they untook by the policy" p. 144. A Court can only construe and give effect to the words used, regardless of whether such result might be said to be unexpected in favour of the insured as was perhaps the case in Richards and more particularly in Digby General Accident Fire and Life Assurance Corporation Limited (2) : or-against the insured as might be said perhaps of the decisions in Passmore v. Vulcan Boiler and General Insurance Co. Limited (3) and Wood v. General Accident Fire and Life Assurance Corporation Limited (4) .
9. First I cannot accept that there is any valid distinction to be drawn between what was called extended and separate cover, or between the effect of the authorised driver cover in Richards' case and here. Sub-section (2) entitles HUI to claim an indemnity in circumstances identical to the insured, so long as he observes the terms and condition of the policy, exception (a). By way of extension to the policy, he is afforded separate cover or treated as though he were the insured (the effect is the same), and section 6(2) gives teeth to this obligation by entitling him to sue although he is not party to the policy.
10. Secondly, it seems to me that like the insurer in Richards, the defendant has failed to use language apt to achieve the intention I am minded to assume. In Richards, the draughtsman failed to appreciate that the word "insured" in his equivalent to exception (b), could include both the company policy holder and by extension the driver. When applied to the driver, the exception only excluded a person employed by the driver and not the company, a very unlikely contingency. But a strong Court of Appeal rejected an argument seemingly based upon policy and intent, and held that the words had to be read literally with that result. In my judgment exception (b) gives rise to the same problem : and reveals the same failure to cover a sub-section (2) claimant. Both seem to me necessarily to lead to the same result, namely that in relation to the Insured's workmen, they are effective when the claimant under the policy is Law, but ineffective when the claimant is HUI.
11. It follows in my judgment that HUI is entitled to claim indemnity under section 2 in respect of the sums he has been held legally liable to pay to the various plaintiffs. It follows that this is "a liability covered by the terms of the policy" within section 10(1).
II. Having regard to the proviso to section 6(1)(b) and to paragraph 5 of the agreed facts, insurers are here on firmer ground. They rely particularly upon the decision of Goddard, L.C.J. In Lees v. Motor Insurers' Bureau (5) . This authority they argue, is conclusive in their favour and I should follow both its reasoning and conclusion.
12. With the substitution of references to the sections in the Hong Kong Ordinance, the Lord Chief Justice's reasoning proceeded as follows :-
i)
Section 4(1) is directed to "use" : it prohibits "use ..... unless". What has to be covered by insurance is such use not any
particular user or driver. In Lee's case Lord Goddard applied two earlier decisions of the Divisional Court to this effect, to which he was party, namely, John T. Ellis Ltd. v. Hinds (6) and Marsh v. Moores (7) . In the case of negligent driving by a servant, this means that the section is satisfied if there exists a policy which covers the master's vicarious liability for such driving. Lord Goddard concluded : "I can find no provision in the Act which requires the servant to have a separate policy".
ii)
The proviso to section 6(1)(b) expressly excluded the insured's servant acting in the course of their employment from the benefits of compulsory third party cover under the statute. This was done, the Lord Chief Justice suggested, because it was thought that "those persons would be compensated under the Workmen's Compensation Act".
iii)
The inevitable conclusion was that the type of extended cover of the driver personally, provided by the policy in Richards and in my judgment by the policy here, was not "required" by the statute.
13. The plaintiffs invite me not to follow this decision and to prefer the reasoning of Lord Denning in his dissenting judgment in Romford Ice & Cold Storage Co. Ltd. v. Lister (8) . Here Lord Denning concluded that upon the true construction of our section 4, "There must be a policy in force in relation to the servant's use also" and that Lord Goddard's decision was wrong p. 195. He pointed out that the M.I.B. had "bought off" an appeal against that decision. The matter was again considered by the House of Lords in that case (8a) . Lord Morton dismissed it by observing that the statute "does not compel the employer to provide an indenmity for the driver personally" citing the cases of Hinds and Lees p. 582. Lord Tucker expressed the same opinion at p. 593 when he spoke of an "erroneous assumption". Viscount Simonds use of the phrase : "a policy which covers more than the act requires" p. 577, shows, I think, that he was of the same mind.
14. The view that the majority of the House of Lords reaffirmed the authority of Hinds and Lees, and rejected Lord Denning's construction has I believe, prevailed in England since 1956. I cannot detect any flaw in Lord Goddard's reasoning; ignore this weight of authority; or regard the decision in China Insurance Co. Ltd. v. Teh Lain Lee (9) as persuasive authority to the contrary.
15. My conclusion therefore, is that the defendant is obliged under the policy to indemnify HUI against his liability to the various plaintiffs, but that the provisions of section 10(1) do not enable the plaintiffs themselves to enforce such obligation directly against the defendant. It follows that the claims fail.
(D. S. Hunter)
(1) [ 1943] 1 K. B. 139[ 1943] A.C. 121[ 1936] 54 L1.L. Rep. 92[ 1948] 82 L1.L. Rep. 77[ 1952] 2 Lloyd's Rep. 210[ 1947] K.B. 475[ 1949] 2 K.B. 208[ 1956] 2 Q.B. 180[ 1957] A.C. 555[ 1977] Malayan L.J.p. 1
Representation:
Henry Litton, Q.C., Ramesh Sujanani inst'd by D.L.A. for Plaintiffs
Charles Ching, Q.C., Geoffrey Ma inst'd by M/S Peter K.P. Cheung & Co. for Defendant