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A A

HCA 2228/2015
B [2018] HKCFI 122 B

IN THE HIGH COURT OF THE


C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
D COURT OF FIRST INSTANCE D

ACTION NO 2228 OF 2015


E E
______________________
F F
BETWEEN
G G
AXA GENERAL INSURANCE
H HONG KONG LIMITED Plaintiff H

and
I I

CHUN HING GEOTECHNICAL


J ENGINEERING LIMITED Defendant J

K K

______________________
L L

M Before: Deputy High Court Judge Kent Yee in Court M

Dates of Hearing: 10, 13 and 14 November 2017


N N
Date of Judgment: 24 January 2018
O O
________________
P P
JUDGMENT
_______________
Q Q

R R
Introduction
S 1. The plaintiff (“AXA”) brought this action to recover from the S

defendant (“the Company”) an aggregate sum of HK$1,338,561.21 with


T T
interest comprising the judgment debt, taxed costs and its own legal costs in
U U

V V
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A A
a personal injury action under HCPI 149/2013 (“the PI Action”)
B B
commenced by Mr Chan Siu Yerk (“the Injured”) against Mr Chan Kwan

C Pang (“the Driver”). C

D D
2. The Driver was involved in an accident on 8 March 2010 (“the

E Accident”). He drove a van with registration number NE 1718 (“the Van”) E


allegedly in the course of his employment with the Company collided with a
F F
private car driven by the Injured (“the Private Car”). The Injured suffered
G bodily harm as a result. G

H H
3. The Company is the registered owner of the Van. AXA and the
I Company entered into a motor vehicle insurance policy on 29 April 2009 I

(“the Policy”) in respect of the Van for a term of 1 year starting on 9 April
J J
2009. The Accident took place during the currency of the Policy.
K K

4. On account of the Accident, without the knowledge of AXA,


L L
the Driver was charged with an offence of careless driving by way of a traffic
M summons (“the Summons”) and eventually he was convicted of the charge M

on his own plea acting in person on 17 June 2010 (“the Offence”). The
N N
Injured further commenced the PI Action against the Driver for damages in
O March 2013. AXA defended the PI Action pursuant to section 10 of the O

Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap. 272 (“the
P P
Ordinance”) and eventually judgment was entered by consent against the
Q Driver on 7 August 2013. Q

R R
5. Pursuant to the judgment, damages payable by the Driver was
S agreed to be HK$780,000 and the costs payable was taxed at S

HK$404,979.26. Apart from these two sums plus interest thereon in the sum
T T

U U

V V
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A A
of HK$26,931.95, which AXA has paid to the Injured, AXA has also
B B
incurred its own legal expenses in the PI Action in the sum of HK$127,650.

C C
Overview of the parties’ respective cases
D D
AXA’s case

E 6. The primary case of AXA is based on Clause 15 of the Policy. E


Clause 15, entitled “Avoidance of Certain Terms and Rights of Recovery”,
F F
provides,
G G

“If AXA is obliged by the laws of any country within the


H Geographic Area or by virtue of any agreement between H
AXA and the Motor Insurers’ Bureau of Hong Kong to
I pay an amount for which AXA would not otherwise be I
liable under this Policy, the Company and any other
person on whose account the payment is made shall
J J
forthwith we pay such amount to AXA.”
K K

7. It is not pleaded that AXA and the Motor Insurers’ Bureau of


L L
Hong Kong have ever entered into any specific agreement. Nor has such an
M agreement ever been disclosed. No mention was made of such an agreement M

in the course of the opening submissions of Mr Cheung appearing for AXA.


N N
None of the witnesses of AXA referred to such an agreement. It was not until
O his closing submissions that Mr Cheung enclosed with his written O

submission a copy of a written agreement entitled “The Domestic


P P
Agreement” dated 1 February 1981 between Motor Insurers’ Bureau of Hong
Q Kong and authorised motor insurers. In the Domestic Agreement, I am Q

unable to find any reference to AXA though I have no doubt that AXA is one
R R
of the authorised motor insurers in Hong Kong. Mr Cheung submits that
S AXA relies on the Domestic Agreement in this action. S

T T

U U

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A A
8. Mr Cheung further submits that by reason of the Domestic
B B
Agreement, AXA was obliged to satisfy the judgment debt payable to the

C Injured regardless of whether the Driver was an employee of the Company C


or driving for the purpose of the Company at the time of the Accident. This
D D
position effectively disposes of the heated controversy about the actual status

E of the Driver at the time of the Accident. E

F F
9. Under the Domestic Agreement, AXA is an Insured Concerned,
G which is defined to be an insurer at the time of the accident giving rise to a G

bodily injury liability providing insurance against such liability in respect of


H H
their vehicle use of which gave rise to the liability in respect of which the
I judgement was given. I

J J
10. To make good its primary case, AXA relies on the alleged
K breach of the condition precedent in Clause 18(b). It provides, K

L L
“In the event of any occurrence which may give rise to a
claim under this Policy the Company shall immediately
M M
give notice thereof to AXA with full particulars. Every
letter claim writ summons and process shall be notified to
N or forwarded to AXA immediately on receipt by the N
Company. Notice shall also be given in writing to AXA
O immediately the insured or any person claiming to be O
indemnified shall have knowledge of any impending
P
prosecution inquest or fatal enquiry in respect of any P
occurrence which may give rise to a claim under this
Policy. In case of theft or other criminal act which may be
Q Q
the subject of a claim under this Policy the Company shall
give immediate notice to the police and shall cooperate
R with AXA in securing the conviction of the offender.” R

S S
11. The pleaded breach is that the Company failed to give notice of

T the Summons or any information relating to the Offence. Thus, AXA by its T

U U

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A A
letter dated 6 December 2010 to the Company (“the December Letter”)
B B
advised the Company that it had received a letter before action dated 18

C November 2010 (“the Letter before Action”) from Messrs Mandy Wan & C
Co. (“MWC”), the solicitors of the Injured and that AXA would not provide
D D
indemnity to the Company and the Driver under the Policy in respect of the

E Driver’s claim arising from the Accident on the ground that the Company E
had been in breach of the condition precedent.
F F

G 12. It should be noted that in the December Letter, AXA advised G

the Company that it might be obliged to pay the Driver damages according
H H
to section 10 of the Ordinance and/or the Domestic Agreement and that AXA
I reserved is rights to claim reimbursement from the Company and/or the I

Driver.
J J

K 13. Therefore, AXA contends that it was not liable under the Policy K

to pay the Injured but nevertheless it did so due to the Domestic Agreement.
L L
Clause 15 is engaged and the Company should repay AXA.
M M

14. The alternative case is that the Company was under an


N N
obligation implied by law to indemnify AXA which had performed an
O obligation imposed under section 10 of the Ordinance for which the O

Company was primarily responsible.


P P

Q 15. The further alternative case is that AXA is entitled to recover Q

from the Company the sum so paid to the Injured under a judgement by virtue
R R
of Section 10(4) of the Ordinance. Section 10(4) reads,
S S

“If the amount which an insurer becomes liable under this


T section to pay in respect of a liability of a person insured T

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A A
by a policy exceeds the amount for which he would, apart
B from the provisions of this section, be liable under the B
policy in respect of that liability, he shall be entitled to
C recover the excess from that person.” C

D The Company’s case D

16. The Company has adopted a shatter-gun approach and raised a


E E
number of issues in its Defence written in an essay format. The document
F drafted by the solicitors for the Company is not easily comprehensible. F

G G
17. The primary positive case of the Company is that the Driver was
H an employee of a garage by the name Chit Shing Engineering Company (“the H

Garage”), which was an independent contractor of the Company at the


I I
material time. The Driver was not driving the Van with its permission for its
J purpose or in connection with its business. It follows that the Driver was not J

an insured driver within the meaning of the Policy. Nor is the Company
K K
vicariously liable for any tort committed by the Driver.
L L

18. It is pertinent to take note of the definition of an insured driver


M M
in the Policy. In the Policy, M104 provides the definition of insured driver
N as follows, N

O O
(1) Whilst the vehicle is being used in connection with
P the Company’s business or … P

(I) Any person who is in the Company’s employ


Q Q
and is driving on the Company’s order or with its
R permission. R

(II) …
S S

T T

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A A
(2) Whilst the vehicle is being used for social, domestic
B B
or pleasure purposes – any person who is driving on the

C Company’s order or with his permission. C

D D
19. The omitted part including the proviso is irrelevant.

E E
20. The Company alleges that one week before the Accident, the
F F
Company handed over the Van to the Garage. About ten odd days, Mr Chin,
G the person-in-charge of the Garage, told Mr Lee, one of the directors of the G

Company, that it was not worthwhile to repair the Van and it should be
H H
scrapped instead. Thereafter the Van had never been returned to the
I Company and the Company genuinely believed that it had been scrapped. I

Mr Lee and Mr Chin have long been very close friends.


J J

K 21. The Company alleges that it had not been aware of the Accident K

until MWC sent it a letter dated 22 December 2011. It alleges that the Driver
L L
lodged a report with the police without its knowledge.
M M

22. The Company further alleges that it purchased the Policy from
N N
AXA through an agent/broker, namely, Gibson General Agency Ltd
O (“Gibson”) and Gibson merely faxed the cover note of the Policy to the O

Company. The Policy containing Clause 15 has never been sent to the
P P
Company. Mr Lee had purchased from AXA other insurance policies for his
Q Mercedes Benz private car and no similar provision could be found in such Q

policies. Therefore, the Company is estopped from denying the applicability


R R
of such policies to the present case. I pause to note that I cannot understand
S the legal basis and indeed the logic of this plea. S

T T

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A A
23. The Company even alleges that AXA has never issued the
B B
Policy.

C C
24. In the circumstances, the Company contends that it has not
D D
breached Clause 18(b), the condition precedent in that it was not in a position

E to make any report to AXA given its lack of any knowledge about the E
Accident.
F F

G 25. As to the allegation of the breach of the condition precedent, the G

Company’s further answer is that the Letter before Action contained all the
H H
information necessary for a follow-up investigation by AXA. Any
I notification by the Company would be superfluous. Ms Bu, for the Company, I

explained in her opening submissions that AXA received all the necessary
J J
information and it was unnecessary for the Company to provide the same
K information to AXA and AXA could not rely on the condition precedent in K

the Policy.
L L

M 26. On the other hand, the Company makes a number of allegations M

of negligence against AXA in its handling of the PI Action in breach of the


N N
express and/or implied terms of the Policy. It, however, does not plead any
O specific express terms allegedly breached by AXA. In respect of the alleged O

implied terms, it is alleged that, due to absolute necessity and to make the
P P
Policy commercially workable, there are implied terms that AXA must
Q provide reasonable standard of services to the Company and to mitigate the Q

losses of the Company if AXA intends to hold the Company liable for such
R R
losses.
S S

27. There was a counterclaim on the part of the Company but it has
T T
been abandoned by way of amendment to the Defence.
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A A
28. Notwithstanding the primary position of AXA, I am minded to
B B
approach this matter by first resolving the relevant factual disputes and then,

C based on my factual findings, proceed to consider their respective legal C


positions.
D D

E 29. The major factual issues calling for my resolution are: E

F F
(1) What the involvement of the Company in the Accident
G including the question as to whether the Driver was driving G

the Van with its permission was and whether or not the
H H
Company had all along been aware of the Accident;
I I

(2) What the status of the Driver at the time of the Accident
J J
was;
K K

(3) Whether or not the Company was in breach of


L L
Condition 18(b) of the Policy; and
M M

(4) Whether or not AXA was itself negligent.


N N

O Analysis O

General Observations about witnesses


P P
30. The parties have presented their respective cases which are
Q diametrically opposite to each other. Whilst the fact-finding exercise to be Q

undertaken by this court is substantially assisted by contemporaneous


R R
documents, credibility of witnesses has also to be assessed. In this
S connection, this court has regard to the following instructive guideline set S

out by DHCJ Au (as he then was) in Lee Fu Wing v Yau Po Ting Paul [2009]
T T
5 HKLRD 513 at §53,
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A A

B B
“In assessing the credibility of a party’s case on a particular issue, I
accept the submissions of [counsel] that the Court should take into
C considerations the following:- C

(1) Whether the party’s case is inherently plausible or


D implausible. D

(2) Whether the party’s case is, in a material way, contradicted by


E E
other evidence (documentary or otherwise) which is
undisputed or indisputable.
F F
(3) Where it is shown that a witness has been discredited over one
or more matters to which he has given evidence using the
G above tests. This is relevant to the assessment of his overall G
credibility.
H H
(4) The demeanour of the witnesses.”

I I

31. AXA has called two witnesses, namely, Mr Fung and Ms


J J
Cheng. Mr Fung is an administrative officer of Gibson. Gibson was
K appointed by Pacific Union Agency Ltd (“Pacific Union”) to be its agent in K

respect of general insurance products including the motor insurance policies


L L
of AXA. He was responsible to handle the Policy and liaise between the
M Company and Pacific Union. Pacific Union would pass the information to M

AXA.
N N

O 32. Ms Cheng is senior claims officer of AXA. She took over the O

claim relating to the Accident from her colleague Ms Yeung in around June
P P
2010 and she had access to all the relevant documents in the possession of
Q AXA. She further handled the PI Action with the assistance of the solicitors Q

of AXA, i.e. Messrs Winnie Leung & Co (“WL”).


R R

S 33. I find both Mr Fung and Ms Cheng to be honest and reliable S

witnesses. Their evidence, supported by documentary evidence, was not


T T
shaken at all under the vigourous cross-examination conducted by Ms Bu.
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A A
They readily accepted that they did not have personal knowledge of certain
B B
matters and that they had forgotten certain details. They tried their best to be

C truthful. Mr Fung has no reason to lie at all and what he told this court makes C
perfect sense. Ms Cheng was also impressive. I have no hesitation in
D D
accepting their evidence.

E E
34. The same cannot be said about the three witnesses of the
F F
Company. Each of Mr Chan who is clerical worker of the Company and Mr
G Lee who is the director of the Company filed a 2-page witness statement and G

told the minimal account in support of the purported defence.


H H

I 35. Mr Ng, the manager of the Company taking care of the day to I

day business of the Company, also testified for the defence. He was
J J
responsible for the insurance matters of the Company and he had previously
K made two claims to AXA under the Policy. K

L L
36. None of them impressed me as a truthful witness. Mr Chan
M made an obvious effort to say very little under cross-examination. Mr Lee M

and Mr Ng fared no better. I have a distinct feeling that all of them had not
N N
been frank with AXA and now made a concerted effort to conceal the true
O picture from this court. I have no confidence in their evidence at all, O

especially those not supported by any documentary evidence.


P P

Q Issue I: Involvement in and Knowledge of the Accident and the Claim Q

37. The lynchpin of the defence is their alleged ignorance of the


R R
Accident against a wealth of documentary evidence including a claim form
S submitted to AXA six days after the Accident (“the Claim Form”). They S

even sought to convince this court that the Claim Form was not sent by the
T T
Company at all. Mr Lee denied that it bore his signature though Kenny was
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A A
his English name. Mr Ng gave his observations about the allegedly
B B
suspicious features of the Claim Form. Mr Chan in his witness statement

C says that Mr Chin had access to the fax machine in the office of the Company C
and walked around the office of the Company where the chop could be easily
D D
accessible. Though not explicitly put forward, the defence case is that Mr

E Chin sent the Claim Form without the knowledge of the Company. On this E
importance issue, this court is not assisted by testimony of Mr Chin and any
F F
expert evidence on the authenticity of the Claim Form.
G G

38. Accepting the evidence of Mr Fung and Ms Cheng and the


H H
relevant documentary evidence, I make the following factual findings:
I I

(1) The Van was covered by the Policy April 2009 and Mr
J J
Fung was all along the agent handling the Policy.
K K

(2) Mr Fung sent the Certificate of Insurance and a jacket


L L
containing the Policy prepared by Pacific Union with a debit note
M issued by Gibson to the Company allotted with a number M

VCB/Z036240610/CLA4 (“the Policy Number”) to the


N N
Company by courier. The Company duly made payment by a
O cheque in favour of Gibson dated 27 May 2009. O

P P
(3) Prior to the Accident, Mr Ng on behalf of the Company
Q made two claims to AXA through Mr Fung pursuant to the Policy. Q

The two claim forms submitted were faxed to Gibson involving


R R
the same driver Mr Law. The claim relating to the Accident (“the
S 3rd Claim”) involved a different driver. S

T T

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A A
(4) For the Accident, Mr Fung received a phone call from a
B B
representative of the Company asking for a copy of claim form.

C Mr Fung was asked to fax the copy to Mr Chin and gave Mr Fung C
the fax number of Mr Chin. Mr Fung then faxed a copy of the
D D
claim form to Mr Chin and it was marked in the copy “Mr Chin to

E receive Fax: 2443XXXX. According to the header of the faxed E


copy, it was faxed on 24 March 2010 at 1227 hours.
F F

G (5) Mr Fung altogether received two copies of the completed G

Claim Form. First, on the same day at about 1607 hours, a copy
H H
was faxed to Gibson by the use of the fax machine of the Company
I (“the Faxed Copy”). The header of the Faxed Copy shows that it I

came from the same fax machine by which the two previous claim
J J
forms had been sent to Gibson.
K K

(6) On the following day, Mr Fung received a bundle of


L L
documents (“the Bundle”) from the Company. They included the
M original of the claim form (“the Delivered Copy”), a copy of the M

ID card of the Driver, a letter of consent signed by the Driver


N N
authorising the Police to release all the statements and documents
O relevant to his criminal prosecution to AXA and an interview O

record/cautioned statement of the Driver dated 22 March 2010


P P
(“the Cautioned Statement”).
Q Q

(7) The documents in the Bundle save one page were printed
R R
on recycled papers. They were tender documents relating to an
S engineering/construction project with a contract number S

DC/2007/06. Mr Ng accepted that in the course of the business of


T T
the Company, he dealt with this kind of tender documents though
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A A
he did not accept any involvement in the said
B B
engineering/construction project.

C C
(8) The Faxed Copy and the Delivered Copy are identical in
D D
their contents. I believe that they are originated from the same

E document. They merely differ from each other in two respects. E


First, the Faxed Copy was undated and the Delivered Copy was
F F
dated 24 March 2010. Second, the Faxed Copy bore a purported
G signature of the Company and its chop whereas the Delivered bore G

a signature in the form of an English name “Kenny” and a blurry


H H
chop.
I I

(9) On balance of probabilities, I am convinced that Gibson,


J J
and hence AXA, received both the Faxed Copy and the Delivered
K Copy from the Company. The Company should have endorsed K

their contents and caused the same to be sent to AXA. The


L L
Company throughout has had the knowledge of the Accident and
M the 3rd Claim and I reject the allegation that the Company only M

became aware of the Accident when it received the letter from


N N
MWC in December 2011. My conclusions are based on the
O following reasons: O

P P
(a) First, it is remarkable that the unchallenged
Q evidence is that Mr Fung mostly dealt with Mr Chan in Q

respect of the Policy. For the 3rd Claim, Mr Fung was


R R
adamant that he did contact Mr Chan to ask for supporting
S documents after receipt of the Faxed Copy. The S

knowledge of the Accident and the 3rd Claim on the part


T T
of the Company is clearly established.
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A A

B B
(b) I reject the evidence of the defence that Mr Chin

C took care of the insurance matters and vehicle licence C


renewal for the Company and hence knew the details
D D
including the Policy Number. This allegation was made

E for the first time under cross-examination and was not E


supported by any corroborative evidence. It is a contrived
F F
attempt to explain why the details of the Policy and the
G Van appeared in the Claim Form. Even if the Garage did G

assist the compulsory annual vehicle examination for the


H H
purpose of the licence renewal, there was no need for the
I Garage to get involved in any insurance matters. I

J J
(c) Though the Van might have been purchased from the
K Garage as alleged by Mr Ng, the vehicle registration K

document shows that the Company already became its


L L
registered owner in April 2008. The Policy, effective from
M 9 April 2009, was not a renewal of an earlier insurance M

policy relating to the Van. The proposed form for


N N
insurance was signed by Mr Law of the Company with the
O chop. No involvement of the Garage was discernible. I O

accept Mr Fung’s evidence that he dealt with Mr Chan in


P P
respect of the Policy. There is no allegation and evidence
Q to the effect that the Garage was in any way involved in Q

the two previous claims made under the Policy. It is


R R
indeed the evidence of Mr Ng and Mr Lee that those two
S previous claims were handled by Mr Ng personally and S

Mr Ng prepared the relevant claim forms to be dispatched


T T
by Mr Chan. There is no way the Garage had been aware
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A A
of the Policy Number but for the provision of the same by
B B
the Company for the purpose of the Claim Form. The

C Company must be involved in the making of the 3rd Claim. C

D D
(d) Mr Lee sought to explain the knowledge of the

E Policy Number of Mr Chin by saying that he assisted the E


renewal of vehicle licence and thus he came across the
F F
Policy. First, I have doubt whether he needed the Policy
G to renewal the licence of the Van. The cover note which G

did not have the Policy Number should suffice. In any


H H
event, even he had the Policy in his possession for the
I purpose of licence renewal, I am unable to accept that he I

was allowed to keep this important document as alleged


J J
by Mr Lee. After all, he was not a staff of the Company
K and could not have assumed any duties in respect of the K

insurance of the Van. The clear evidence is that Mr Ng


L L
handled insurance matters relating to the Van.
M M

(e) I can accept that the correspondence address stated


N N
in the Faxed Copy and the Delivered Copy is different
O from the business address of the Company stipulated in O

the Policy. The former is Flat B, 9/F, Hang Fat Mansion,


P P
8-18 Castle Peak Road, Kowloon (“the Hang Fat
Q Address”) whereas the latter is Room D5, 21/F, Gold Q

King Industrial Building, 35-41 Tai Lin Pai Road, Kwai


R R
Chung (“the Gold King Address”). I note the evidence
S of the defence that the residential property at the Hang Fat S

Address belonged to Mr Lee until 1995 and the Company


T T
used the Gold King Address to be its correspondence
U U

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A A
address since 2002. I cannot see how Mr Chin used the
B B
Hang Fat Address in the Claim Form for any ulterior

C motive. No doubt the whole point of sending out the C


rd
Claim Form was to make the 3 Claim. Mr Chin could not
D D
have intended to use an invalid address, which could only

E cause hindrance to the 3rd Claim. There is also no reason E


why he did not use the Gold King Address, of which he
F F
must be well aware given the business tie between the
G Company and the Garage. G

H H
(f) Moreover, it is noteworthy that Mr Ng accepted the
I contact number of 27XX X089 stated in both the Faxed I

Copy and the Delivered Copy did belong to the Company.


J J
I also note that this number appeared in the claim form for
K the first claim dated 1 February 2010. According to Mr K

Mr Ng, this number would appear in the phone of the


L L
recipient if the call was made by the Company. Though
M Mr Ng alleges that the Company did not use this number M

as the contact telephone number, whoever dials this


N N
number would inevitably reach the Company. It means
O that that the Company was expected to be contacted in O

respect of the Claim Form. It follows that Mr Chin could


P P
not have intended to conceal the 3rd Claim from the
Q Company when he actually used the telephone number of Q

the Company as the contact number.


R R

S (g) Mr Ng says that the chop is different from that of S

the Company in that the rim is too thick. I do not know


T T
which chop he refers to. There is no complaint about the
U U

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A A
chop appearing in the Faxed Copy, which looked identical
B B
to that appearing in the two previous claim forms. As

C regards the blurry chop appearing in the Delivered Copy, C


it seems to me more likely than not that the thickness of
D D
the rim is due to the repeated stamping of the same chop.

E Mr Ng also accepts that the chop was applied more than E


once there. The design of the chop looks more or less the
F F
same. I should also point out that Ms Bu after reading the
G original copy of the Delivered Copy at trial accepts that G

the blurry chop should be the same chop of the Company


H H
being stamped twice such that the name of the Company
I inscribed therein is hardly legible. Indeed if Mr Chin I

could use the genuine chop for the Faxed Copy, there is
J J
no reason why he could not use the same chop for the
K Delivered Copy shortly afterwards when it was freely K

available to him and instead he had to resort to a


L L
counterfeit chop of poor quality and make a blurry stamp
M only. M

N N
(h) On the other hand, after trial, curiously enough, I
O discovered that on the reverse side of page 2 of the O

Delivered Copy about one third of page 2 appearing with


P P
a less blurry chop of the Company was printed. No
Q evidence was adduced about this and I do not wish to Q

surmise how this came about. I believe the Company


R R
should have an explanation for this.
S S

(i) The signature of “Kenny” may not belong to Mr


T T
Lee. This does not mean that the Delivered Copy did not
U U

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A A
come from the Company. Further, I note that in the two
B B
previous claim forms, they did not bear any signature of

C the Company in addition to the chop at all. C

D D
(j) The Faxed Copy came from the fax machine of the

E Company and the documents of the Bundle were printed E


on the recycled papers found in the Company. This
F F
strongly points to the conclusion that the Company agreed
G to the submission of the Claim Form. I am not impressed G

by the half- hearted effort of the defence to lead me to


H H
conclude that Mr Chin secretly sent the Claim Form and
I wished to be covered by the Policy without the knowledge I

of the Company. In addition to the reasons given above, it


J J
seems inexplicable to me that there is no evidence that the
K Company has ever made enquiries, let alone having any K

confrontation, with Mr Chin for his unauthorised


L L
submission of the Claim Form purportedly on its behalf.
M Mr Ng could not give any explanation for this inaction at M

all. If what the defence now alludes is true, Mr Chin no


N N
doubt had committed a serious wrong to the Company and
O it is hard to believe that the Company has not taken any O

legal action against him and/or the Garage.


P P

Q (k) As rightly pointed out by Mr Cheung, in the letter Q

of Messrs S.C. Chan & Co dated 1 December 2014 sent


R R
to WL on behalf of the Company, it was said that the
S Company had been advised to report the forged S

documents to the police. There is no evidence that the


T T
Company has paid heed to this advice and it speaks
U U

V V
- 20 -
A A
volume for its conviction (or lack of it) in its serious
B B
allegation of forgery. I should add that Mr Lee even

C asserted that the legal advisors of the Company had never C


advised to make a report to the police.
D D

E (l) The Company did not even call Mr Chin to testify. E


I do not accept Mr Ng’s causal suggestion that Mr Chin
F F
has gone missing and the Company could not locate him
G at all. Mr Lee even said Mr Chin was rumoured to be G

imprisoned in 2014 and the Garage has closed down but


H H
this did not mean Mr Chin could not be contacted. I
I believe an adverse inference should be drawn against the I

Company for its failure to do so without a sound


J J
explanation. The maxim omina prasesumuntur contra
K spoliatorem applies. In Telings International Hong Kong K

Limited v John Ho & Ors, unreported, CACV 10/2010,


L L
22.10.2010, Le Pichon JA gave an explanation of the
M maxim in the following terms at §79: M

“It is contrary to the well-established maxim, omnia


N N
praesumunter contra spoliatorem, sometimes referred to as
the principle in Armory v Delamirie (1722) 1 Str 505. In Hong
O Kong and Shanghai Banking Corporation v Chan Yiu Wah O
[1988] 1 HKLR 457, Fuad JA expounded that principle (at
467). That passage is quoted in full in my judgment in Tullett
P & Tokyo International Securities Ltd v APC Securities Co Ltd P
[2001] 2 HKC 713 at 723B-E:
Q “285. Failure to produce evidence, as indicating unfavorable Q
tenor of evidence: (1) In general. … The failure to bring before
R the tribunal some circumstance, document, or witness, when R
either the party himself or his opponent claims that the facts
would thereby be elucidated, serves to indicate, as the most
S natural inference, that the party fears to do so; and this fear is S
some evidence that the circumstance or document or witness,
if brought, would have exposed facts unfavorable to the party.
T T
These inferences, to be sure, cannot fairly be made except

U U

V V
- 21 -
A A
upon certain conditions; and they are also open always to
B
explanation by circumstances which make some other B
hypothesis a more natural one than the party’s fear of exposure.
But the propriety of such an inference in general is not doubted.
C C
The non-production of evidence that would naturally have
been produced by an honest and therefore fearless claimant
D permits the inference that its tenor is unfavorable to the party’s D
cause. Ever since the case of the Chimney Sweeper’s Jewel
[Armory v. Delamirie] this has been a recognised principle.”
E E

F F
See also Li Sau Keung v Maxcredit Engineering Ltd [2004] 1

G
HKC 434 at 443I-444B.” G

H H
(10) The knowledge of the 3rd Claim on the part of the

I
Company can further be evidenced by the following matters. I

J J
(a) Gibson faxed a copy of AXA’s written request for

K
the screening breath test result of the Driver dated 29 K
March 2010 to the Company at 1505 hours on the same
L L
date (“the 1st Fax”).

M M
(b) Gibson faxed a copy of AXA’s written reminder
N N
to the Company dated 27 April 2010 (“the 2nd Fax”) to

O comply with its obligations under the Policy to forward or O


summons, letters, prosecution or correspondence
P P
regarding the likely persecution of the Driver. It was

Q expressly stated that any non-compliance would Q


constitute a breach of the Policy and any rights of the
R R
Company under the Policy might be prejudiced.
S S

(c) Lastly Gibson faxed a copy of the December Letter


T T
to the Company on 8 December 2010 at 1101 hours.
U U

V V
- 22 -
A A
Actually, AXA first sent the December Letter to the
B B
Company at the Hang Fat Address and that might not

C reach the Company. C

D D
(d) The headers of the three faxes show the dispatch

E information including the fax number of the Company and E


that they reached the fax machine of the Company.
F F

G (e) Mr Chan, taking care of the incoming faxed G

documents of the Company, confirmed that these faxes


H H
were indeed received by the Company from Gibson. The
I allegation that AXA was negligent in that it had posted all I

these faxes to the Hang Fat Address does not assist the
J J
defence at all. To start with, AXA was entitled to rely on
K the correspondence address provided in the Claim Form K

and the correspondence address is not necessarily


L L
identical to the business address. For the purpose of the
M 3rd Claim, the Company should be at liberty to provide M

another address to AXA. I do not find the criticism to be


N N
valid. In any event, these faxes did reach the Company
O and I do not understand why considerable time was still O

spent on the allegation of negligence.


P P

Q (f) The Company did not respond to the 1st and 2nd Q

Faxes at all despite the likely legal liability arising from


R R
the Accident that the Company might have to shoulder.
S Nor had it raised any queries about the 3rd Claim with S

Gibson or AXA. These two faxes should be particularly


T T
alarming to the Company when it alleges that it has never
U U

V V
- 23 -
A A
rd
had any record of the 3 Claim, which I do not accept. Mr
B B
Ng explained that he did not pay any attention to these

C faxes because he was too busy. This is an obviously C


unacceptable excuse.
D D

E (g) Ms Cheng with the assistance of the record of AXA E


rd
relating to the 3 Claim told the court that on 16
F F
December 2010 she received a call purportedly from Mr
G Lee and his number was observed to be 6178 XXXX. G

He told Ms Cheng that he had faxed the Summons to the


H H
insurance agent before the hearing of the Summons. She
I then requested him to provide a detailed explanation with I

supporting documents for the consideration of AXA.


J J
However, the Company did not follow up. Ms Cheng
K made a contemporaneous record of this conversation. I K

accept her evidence.


L L

M (h) Mr Lee denied having made the phone call. Mr Lee M

says that the number belonged to Mr Chin. I am not sure


N N
whether it was Mr Lee or Mr Chin who actually made the
O call to Ms Cheng. If it was made by Mr Lee using the O

phone of Mr Chin, there can be no ignorance and/or


P P
disapproval of the 3rd Claim on the part of the Company.
Q If it was made by Mr Chin instead, it is clear that the Q

Company, after receiving the December Letter, turned to


R R
Mr Chin and asked him to deal with AXA. Mr Chin could
S not have been aware of the contents of the December S

Letter but for the disclosure of the same to him by the


T T
Company. The Company must be well aware of the 3rd
U U

V V
- 24 -
A A
rd
Claim and the 3 Claim must have been submitted by Mr
B B
Chin on its behalf with its permission.

C C
Issue II: the Status of the Driver
D D
39. As regards the occurrence of the Accident, AXA had no

E personal knowledge of the Accident and could only rely on the account given E
by the Company in the Claim Form. In the Claim Form, it was stated that the
F F
purpose of use of the Van at time of accident was “返工場” (returning to the
G work site). G

H H
40. For the details of the Driver, it was stated that the Driver’s
I occupation was a repair technician and his relationship with the owner of the I

J
Van was “伙記”(employee). J

K K
41. A brief account of the Accident was given. On 8 March 2010
L at 2111 hours, near the lamp-post FA 1400 on Long Ping Road, Yuen Long, L

the Private Car collided into the right side of the Van when it was just about
M M
to join the main road from an exit from Long Ping Village Road. A similar
N account was given in the Cautioned Statement. The Driver made no mention N

about the Company or the Garage at all. He merely said in the Cautioned
O O
Statement that he was on his way to Fuk Hi Street, Wang Chau, Yuen Long.
P Mr Lee said that it was the work site of the Garage. P

Q Q
42 This is all hearsay evidence. This court does not have the
R benefit of the testimony of the Driver and the accounts given in the Claim R

Form and the Cautioned Statement were untested. Prima facie, the defence
S S
is bound by the account in the Claim Form since the Company provided the
T T

U U

V V
- 25 -
A A
rd
Claim Form to make the 3 Claim and must be taken to accept the account
B B
given therein.

C C
43 The defence now asserts that the Driver was in fact an
D D
employee of the Garage and was never employed by the Company and that

E he drove the Van without its permission. This assertion only appeared for the E
first time in the reply letter of the Company to WL dated 7 January 2013. It
F F
had taken the Company more than two years after the December Letter to
G make this convenient assertion. I cannot lightly accept this. I also wish to G

point out that it is inexplicable that the Company did not complain that the
H H
3rd Claim had never been made by the Company if it had been made without
I the authorisation and knowledge of the Company. I

J J
44 To argue against the contents of its own documents, viz, the
K Claim Form, the Company should make its best endeavour to procure the K

attendance of the Driver. All the contact information of the Driver was set
L L
out in the Claim Form and the Cautioned Statement. There is no evidence
M that any effort has been made to call the Driver to testify and the Company M

did not find it necessary to issue a writ of subpoena against the Driver to
N N
secure his attendance at trial. Again the maxim applies and an adverse
O inference that the evidence of the Driver is unfavourable to its case can be O

drawn against the Company.


P P

Q 45 I cannot be convinced that the Driver was the employee of the Q

Garage just because of the involvement of Mr Chin in the making of the 3rd
R R
Claim in the absence of direct evidence of Mr Chin and the Driver.
S S

46 Ms Bu relies strongly on a remittance statement relating to the


T T
MPF scheme of the Company known as BCOM Joyful Retirement for the
U U

V V
- 26 -
A A
period from 1 March 2010 to 31 March 2010 (“the Statement”). The
B B
Statement contained the MPF information of the 12 employees of the

C Company and they did not include the Driver. On that basis, Ms Bu submits C
that the Driver could not be the employee of the Company at the material
D D
time.

E E
47 I cannot accept her submission. The Statement was not covered
F F
by the evidence of the defence save that Mr Lee acknowledged his signature
G appended thereto. There is no evidence to the effect that the MPF scheme is G

the only scheme available to all the employees of the Company. The Driver
H H
might have joined another MPF scheme or the Company simply omitted him
I in that month. Further, the Driver might not yet be qualified for MPF even if I

he was an employee of the Company. Whether he could have MPF also


J J
depends on the nature of his employment with the Company, for example,
K he might only be employed on a part-time basis. K

L L
48 I cannot accept the allegation that the Company had instructed
M the Garage to dispose of the Van by scrapping prior to the Accident. To begin M

with, there is a significant discrepancy between the evidence of Mr Lee and


N N
that of Mr Ng in regard to the circumstances under which the Van reached
O the Garage. Mr Ng said that in early March 2010, the Van broke down O

completely and was towed to the Garage.


P P

Q 49 Mr Lee, on the other hand, was positive that Mr Law found the Q

engine of the Van making too much noise, drove the Van to the Garage for
R R
inspection with his permission and no towing was required. A few days later,
S the Garage reported to him that the repair costs were not justified given its S

purchase price was only ten odd thousand dollars (HK$18,000 according to
T T
Mr Lee) and suggested scrapping. Mr Lee agreed and so he believed that the
U U

V V
- 27 -
A A
Van had already been scrapped by 8 March 2010. I have no confidence in
B B
either of their versions.

C C
50 Mr Lee said in court that it was agreed between the Company
D D
and the Garage that the Company would receive HK$6,000 as a result of

E scrapping. Mr Lee, however, said that the Garage failed to pay such a sum E
to the Company and in fact Mr Chin had all along been heavily in debt. I do
F F
not believe that there was such an agreement. This was not even mentioned
G in the witness statement. It also surprised me that an old van purchased at the G

price of HK$18,000 could yield a net profit of HK$6,000 out of scrapping.


H H

I 51 Moreover, the Company has done nothing to comply with the I

statutory requirements for scrapping the Van so as to obtain a scrapping


J J
certificate from the Transport Department and to apply for a cancellation of
K registration of the Van. K

L L
52 Taking into account all the evidence in the round, I believe that
M the alleged scrapping is a mendacity. The Company merely attempted to M

distance itself from the use of the Van on the day of the Accident as much as
N N
possible and avoid liability.
O O

53 I am alive to the allegation in the Cautioned Statement that the


P P
Driver had just finished his hotpot dinner before the Accident. I do not think
Q I can attach any weight to this untested evidence. Nor can it sufficiently Q

negative the fact that the Driver was driving the Van for the purpose of the
R R
Company at the time of the Accident.
S S

54 Hence, on the evidence, I conclude that the Driver, being in the


T T
employ of the Company, drove the Van to the work site of the Garage. He
U U

V V
- 28 -
A A
did so in connection with the business of the Company for the Garage to
B B
work on the same on the order of the Company and with its permission as

C stated in the Claim Form endorsed by the chop of the Company. In other C
words, the Driver was an insured driver under the Policy at the time of the
D D
Accident.

E E
Issue III: Any breach of Condition 18(b) of the Policy
F F
55. The obligations under Clause 18(b) are clear. They amount to a
G condition precedent to any liability of AXA. Given my finding that the G
rd
Company had all along been aware of the Accident and made the 3 Claim
H H
to AXA, its failure to provide the Summons to the Company despite the 1 st
I Fax and its failure to provide full particulars of the Accident constituted a I

breach of the condition precedent.


J J

K 56. On the other hand, before the settlement of the PI Action, the K

Company was totally unhelpful despite the repeated request for clarification
L L
of the position of the Company by AXA. The Company had made no
M allegation that the Claim Form was a forgery and Mr Chin was the true M

culprit as now it would like this court to believe. It provided no particulars


N N
about the Accident to AXA at all. This constituted a further breach of the
O condition precedent. O

P P
57. In the circumstances, AXA should not be held liable to the
Q Company under the Policy by reason of its breaches of the condition Q

precedent pursuant to Clause 1(d).


R R

S 58. Ms Bu relies on Barrett Bros (Taxis) Ltd v Davies [1966] 1 S

WLR 1334. The holding of the report summarised the dictum of Lord
T T
Denning MR in the following terms:
U U

V V
- 29 -
A A

B B
“The law never compels a person to do that which is useless and
unnecessary. If insurers obtain all material knowledge from another
C source so that they are not prejudiced at all by the failure of the C
insured to tell them, they cannot rely on a condition to defeat the
claim.”
D D

E 59. In that case, the insurer was found to have obtained all the E
relevant information form the police and this absolved the motor-cyclist from
F F
sending the same information to the insurer.
G G

60. However, as helpfully pointed out by Mr Cheung, the Barrett


H H
Bros (Taxis) Ltd case was not followed by Ryan J in Chan Yiu Sun v Yip Kim
I Cheung & Ors. [1990] 2 HKC 524. The learned judge noted the disapproval I

of the majority decision in the Barrett Bros (Taxis) Ltd case by the Court of
J J
Appeal in Anglo Starlite Insurance Co Ltd v Wong Ping Fai, unreported, CA
K 162/83, 14 February 1984. The learned judge preferred the approach adopted K

by Salmon LJ in his dissenting judgment in the Barrett Bros (Taxis) Ltd case
L L
and accepted as the guiding principle that where there is a breach of a
M condition precedent in an insurance policy, the insurer is, in the absence of M

waiver, entitled to succeed. I too agree with the approach of Salmon LJ and
N N
the learned judge.
O O

61. In any event, the facts in the present case are very different.
P P
There is simply no evidence that AXA had, prior to the conviction of the
Q Driver of the Offence, obtained all the information about the Offence. The Q

Letter before Action relied on by Ms Bu in her opening submissions came


R R
after the conviction and in fact did not contain all the necessary information.
S Nor is there evidence that AXA had, prior to the consent order made in the S

PI Action, obtained all the information about the Accident. AXA did nothing
T T

U U

V V
- 30 -
A A
to lead the Company to believe that it no longer insisted on the provisions of
B B
information under Clause 18(b) either.

C 62. In the premises, AXA could still pray in aid the breach of the C
condition precedent by the Company.
D D

E Issue IV: Negligence of AXA E


63. In light of the foregoing factual findings, the allegations of
F F
negligence are wholly unmeritorious and unsustainable.
G G

64. As observed above, AXA’s use of the Hang Fat Address cannot
H H
be faulted and it led to no real consequence at all. The Company in any event
I received the key documents by fax. I

J J
65. AXA was entitled to expect full compliance of the conditions
K precedent by the Company. It was under no duty to make its own K

investigation particularly given the total lack of support by the Company.


L L

M Liability of the Company M

66. In light of the foregoing factual findings and conclusions


N N
reached by this court, I now turn to consider the pleaded claims of AXA.
O O

67. I first examine the alternative case under section 10 of the


P P
Ordinance. I am satisfied that the Driver was an insured driver under the
Q Policy and that AXA was obliged to pay the Injured damages plus interest Q

thereon and costs for which the Company was primarily liable though AXA
R R
was entitled to avoid or cancel and have avoided and cancelled the Policy.
S S

68. I accept that in law AXA could seek an indemnity from the
T T
Company. AXA is entitled to recover from all the payments made to the
U U

V V
- 31 -
A A
Injured and its own costs from the Company: Australian & Eastern
B B
Insurance Co Ltd v Luen Fat Hong (a firm) [1973-1976] HKC 47. AXA

C should succeed in the alternative case. C

D D
69. Now I turn to the primary case based on Clause 15. Clause 1 of

E the Domestic Agreement provides the definition of the Insured Concerned E


which includes an insurer who at the time of the accident which gave rise to
F F
a bodily injury liability was providing insurance against such liability in
G respect of the vehicle the use of which gave rise to the liability in respect of G

which the judgement was given.


H H

I 70. I accept Mr Cheung’s submission that under the Domestic I

Agreement, irrespective of whether the Driver was an employee of the


J J
Company or an insured driver under the Policy, AXA was the Insured
K Concerned within the meaning of the Domestic Agreement. K

L L
71. Therefore, under the Domestic Agreement, AXA was obliged
M to satisfy the judgement in favour of the Injured. This is so notwithstanding M

the fact that AXA would not otherwise be liable under the Policy by reason
N N
of the breaches of the condition precedent by the Company. Clause 15 of the
O Policy is triggered. O

P P
72. I conclude that the primary case is made out. The Company
Q should repay such amount that AXA paid to the Injured in the PI Action (but Q

not including AXA’s own legal costs) to AXA.


R R

S 73. I am mindful of the unsatisfactory way that this primary case S

was presented as observed in §7 above. I have seriously reflected whether


T T
the Company was prejudiced in its defence to this primary case as a result.
U U

V V
- 32 -
A A
AXA indicated its reliance of the Domestic Agreement in the December
B B
Letter long before the commencement of this action. The Company cannot

C not be heard to have been taken by surprise. Ms Bu has also been given an C
adequate chance to deal with the submissions of Mr Cheung in relation to
D D
AXA’s obligations under the Domestic Agreement. In the circumstances, I

E cannot see why AXA should not be allowed to succeed in its primary case E
as well.
F F

G 74. For completeness, I should point out that I am unable to see G

how section 10(4) of the Ordinance can be engaged in the present case. There
H H
is no evidence that AXA paid the Injured any amount exceeding its liability
I under the Policy. Mr Cheung does not make any submission on this further I

alternative case at all. I reject this further alternative case.


J J

K Conclusion and orders K

L L
75. For the reasons given and in light of the analysis above, I come
M to the conclusion that AXA should be entitled to recover from the Company M

all the payments made to the Injured and its own costs incurred in the PI
N N
Action. Accordingly, I enter judgement against the Company in favour of
O AXA. Interest on the judgement debt in the sum of HK$780,000 should start O

to accrue from the date of the completion of the payment to the Injured by
P P
AXA at the judgement rate.
Q Q

76. Mr Ng repeatedly in his testimony impressed this court that Mr


R R
Chin was the forger and he felt aggrieved by his betrayal. I must say I have
S no sympathy with him. Clearly, the Claim Form could not have been S

submitted to AXA without the cooperation and knowledge of the Company.


T T
AXA was misled into thinking that the 3rd Claim was a bona fide claim made
U U

V V
- 33 -
A A
by the Company. The subsequent nonresponse and indifference of the
B B
Company were cynical and irresponsible.

C C
77. It was not until the eleventh hour that, to evade liability, the
D D
Company sought to lay all the blame on the doorstep of Mr Chin and claimed

E that the Driver used the Van without its authorisation. If this court accepts E
the version of events put forth by the Company, which I do not, it would be
F F
a clear case of fraud jointly perpetrated by Mr Chin and the Company on
G AXA and may attract criminal liability. A fortiori it should indemnify AXA G

against all losses.


H H

I 78. Costs should follow the event. I make an order nisi that the I

Company should pay AXA costs of this action including all costs previously
J J
reserved, to be taxed if not agreed.
K K

79. It remains for me to thank both Mr Cheung and Ms Bu for their


L L
assistance rendered to this court in this matter. In particular, I am
M appreciative of the admirable effort of Ms Bu despite the poor state of the M

pleading and quality of the defence evidence.


N N

O O

P P
(Kent Yee)
Deputy High Court Judge
Q Q

R R
Mr Kam Cheung instructed by Winnie Leung & Co for the plaintiff
S S
Ms Annie Bu instructed by S. C. Chan & Co for the defendant
T T

U U

V V