HCA002496/1977
Headnote
Striking out for inordinate and inexcusable delay - whether delay arising from Legal Aid procedures excusable - insurance company controlling insured party's defence - locus standi of insurance company which has not been joined in as a party - solicitors ordered to pay costs personally for making an application to the court on behalf of someone essentially not before the court.
IN THE SUPREME COURT OF HONG KONG
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HIGH COURT
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| BETWEEN | | |
| | NG Wing-fai and FAN Chun (the Administrators of the Estate of CHONG Suet-wan, deceased) | Plaintiffs |
| | and | |
| | LAM Ming-kwan | 1st Defendant |
| | CHEUNG Wai-shing | 2nd Defendant |
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Coram: Rhind J. in Court
Date of Judgment: 23rd December 1981.
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JUDGMENT
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1. This is an appeal from a Registrar's decision, striking out the Plaintiffs' claims against the 2nd Defendant on the ground of inordinate and inexcusable delay. The limitation period in respect of the Plaintiffs' claims has expired since the issue of the writ.
2. The legal principles which the court should apply on such a summons to strike out have been authoritatively stated by the House of Lords in Birkett v. James(1). A comprehensive overview of the law on this topic appears in the 1979 edition of the White Book at pages 431 to 435. Recently in Mohan v. McElney & others(2), I had cause to expound on this area of the law and do not propose repeating what I said there.
3. This power to strike out, which has rightly been described as "Draconian" (Allen v. Sir Alfred McAlpine & Sons Ltd.(3)), should not be exercised unless the Court is satisfied that there has been delay since the issue of the writ which is (i) inordinate; (ii) inexcusable on the part of the plaintiff or his lawyers; and (iii) such as to give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants.
4. "Prejudice" of either of two varieties can ground an action to strike out, the first type being general prejudice which can give rise to a risk of a substantial likelihood that a fair trial is no longer possible in view of the long period which has elapsed since the events giving rise to the action, and the second being prejudice peculiar to a particular defendant, such as, for example, an important witness of his dying or disappearing.
5. The onus rests on the defendant to satisfy the court that the action should be struck out.
6. Having made those prefatory remarks on the law pertaining to the subject of striking out, I will now turn to the circumstances of the action before me.
7. Late on the evening of 6th November 1974, Mr. NG Wing-fai (one of the Plaintiffs) and his wife CHONG Suet-wah, were crossing the road known as Queensway near the Auxiliary Police Headquarters. She was carrying their daughter, NG Yat-ying who was then only ten months old.
8. As they crossed that road, they were struck by private car AW 5401, driven by LAM Ming-kwan who is the First Defendant in the present proceedings. The Plaintiffs contend that the Second Defendant was the owner of that car at the time of the accident, and that the First Defendant was driving as his servant or agent.
9. Mrs. CHONG Suet-wah was so seriously injured that she died the following day. The husband and the daughter also received serious injuries requiring long periods of hospitalisation, but they have survived.
10. The husband sought the assistance of the Legal Aid Department to see whether damages might be claimed for the calamity which had befallen his family. When she died, the wife was only twenty-four years old. The husband was ten years older.
11. Prior to her death, the wife had worked, but all her earnings had gone to support her parents, her father then being 66 and her mother 62.
12. Up till the time of the death, it had been the husband who supported the deceased and their children, NG Yat-ying who was the daughter already referred to, and NG Yat-shun, their son, who was 2½ years old at the time his mother met her death.
13. By a certificate dated the 23rd September 1975, Legal Aid was granted to the husband so that, besides claiming for the damages arising from his own injuries, he was also able to claim on behalf of his late wife's estate under the provisions of the Law Amendment and Reform (Consolidation) Ordinance, Cap. 23 (L.A.R.O.) and also on behalf of himself, their 2 children and the deceased's parents as "dependants" under the Fatal Accidents Ordinance (Cap. 22) F.A.O.
14. Needless to say, the husband required a grant of Letters of Administration before commencing the L.A.R.O. claim in respect of his late wife's estate.
15. What the husband did through his lawyers was to wait first of all till the Letters of Administration has been granted to him, and then brought just the one action which combined his claim for his own personal injuries, as well as the L.A.R.O. and the F.A.O. claims. That is the present action before me. At the same time, as his daughters' Next Friend, he launched a separate action on her behalf for the injuries she had suffered. That is High Court Action No. 2495 of 1977.
16. Both the action before me and High Court Action No. 2495 of 1977 were commenced by writs filed on the 12th September 1977, and the two actions moved in lock step together up until the point where the Registrar dismissed the present action. An application in identical form to get Action No. 2495 of 1977 struck out on the same grounds was dismissed by consent with costs to the plaintiff, the Second Defendant's solicitors in effect conceding that it was pointless to pursue the application, as there was no prospect of a court striking out an action in the circumstances of that case where the plaintiff was suing as the Next Friend of an infant.
17. So long as an action has been commenced within the limitation period, a defendant is not entitled to have it struck out on account of any pre-writ delays. However, a late start makes it the more incumbent upon a plaintiff to proceed with reasonable diligence, and a pace which might have been excusable if the action had been started sooner may be inexcusable in the light of the time that has already passed before the writ was issued. In addition to some non-compliance with the provisions of the Supreme Court Rules, the defendant must show some additional prejudice to himself from the delay after action brought if he is to justify dismissal of the action after the expiration of the limitation period. All of the principles of law in this paragraph have been culled from Birkett v. James(1)
18. On behalf of the Second Defendant, it was urged before me that the Plaintiffs or their lawyers had displayed dilatoriness in the late issue of their writ only a couple of months before the expiration of the three years limitation period applying in personal injury cases, and that such dilatoriness should be borne in mind by the Court when considering any post writ delays.
19. My view is that neither the conduct of the Plaintiffs nor their lawyers prior to the issue of the writ is deserving of any censure. Having received serious injuries in the accident on the 6th November 1974, the Plaintiff, Mr. NG Wing-fai, had done very well to negotiate all the hurdles involved in getting Legal Aid by a date as early as the 25th September 1975. Thereafter, the conduct of his lawyers till the issue of the writ on 12th September 1977 cannot be faulted, in my opinion.
20. Before launching the present action, the Plaintiffs' solicitors decided that, first of all, they should obtain a grant of Letters of Administration to the deceased's estate for the purpose of securing her L.A.R.O. claim. They have described the steps involved: (i) a provisional Certificate of Exemption from Estate Duty on the 31st December 1975; (ii) the Probate Registry raised its first set of Requisitions in October 1976; (iii) the Probate Registry raised its sedond set of Requisitions in May 1977; (iv) Letters of Administration were granted on 17th June 1977. In the words of the Plaintiffs' solicitor in his affidavit of the 12th November 1981, "This period, although seemingly lengthy is, according to my experience and the experience of members of my firm, the normal period for obtaining a grant of Letters of Administration" Having myself been a Registrar with special responsibility in respect of Probate matters for a while in or about the era of which the affirmant writes, I know only too well that he does not exaggerate.
21. Counsel for the Second Defendant did not seriously question the length of time required to get a grant of Letters of Administration at that time, but contented himself by saying that if the delays were known to be such then, why did not the Plaintiff, Mr. NG Wing-fai, or his lawyers, at least get on with starting the parts of the action which did not require the issuance of Letters of Administration beforehand, namely the claim in respect of the injuries he had suffered personally and the claim for the "dependants" in accordance with S.5 of F.A.O. Theoretically, I suppose, a solicitor could have set about commencing a series of actions in the way the Second Defendant's Counsel has suggested, but frankly, I cannot imagine that one solicitor in a thousand would have done things in such a way. The objection to doing things that way is that it gives rise to a multiplicity of suits, and consolidation would almost certainly be ordered in due course, so that ultimately no action would get heard any earlier than by adopting the method in fact employed by the Plaintiffs' solicitors.
22. Perhaps the 2nd Defendant or his solicitors might have had some cause for complaint if they had been kept in the dark about the possibility of proceedings until the writ was issued on the 12th September 1977, but, in fact, the Plaintiffs' solicitors had corresponded with the 2nd Defendant's insurers about this accident as early as 17th November 1975, and those insurers instructed the 2nd Defendant's solicitors to act for him on the 27th November 1975. Thus, the 2nd Defendant's solicitors are in no position to say that they did not get the opportunity to have the accident investigated and its implications considered at a comparatively early stage. The Court's special disfavour is reserved for those plaintiffs who do not let a defendant know an action is going to be brought until the limitation period is near to expiring, but such is not the case here.
23. After the issue of the writ, matters moved along swimmingly for a while. Initially, there was a slight problem about serving the Defendants, but the Plaintiffs' solicitors soon overcame that by getting orders for substituted service which resulted in both Defendants being served in December 1977.
24. The First Defendant never entered an appearance and interlocutory Judgment was entered against him on the 24th January 1978.
25. Perhaps it is worth mentioning at this point that the 1st Defendant was a policeman at the time of the accident, living in Police Married Quarters. On the 24th day of September 1976 he resigned from the Police, and, presumably, within a short time of that, he moved away from the Police Married Quarters which was the last address the plaintiffs have for him. In my record, I have made a note to the effect that the last time the 2nd Defendant's solicitors were able to contact the 1st Defendant was the 22nd November 1977, which was also the last date they contacted D2. I now half suspect that I have made a mistake in noting that D1 was last contacted that day - it was probably rather earlier - but, for the purposes of the present proceedings, I will assume that he was last contacted on the 22nd November 1977. That assumption is adverse to the Plaintiffs for the purposes of the present applications, but in practice makes no difference to the result.
26. To return now to the position of the 2nd Defendant, the next step of importance to note is that a Defence was filed for him on the 5th January 1978. That Defence put the Plaintiffs to proof of everything except the fact of there having been an accident on the 6th November 1974, and pleaded affirmatively that the 1st Defendant could not have been driving the car as the 2nd Defendant's servant, agent or permitted driver, the 2nd Defendant no longer being the owner of the vehicle at the time of the accident, having sold it to the 1st Defendant on or about the 5th November 1974.
27. It has been agreed between counsel on both sides before me that the only live issue in a trial between the Plaintiffs and the 2nd Defendant on liability would be whether the 2nd Defendant was vicariously liable in respect of the 1st Defendant's undisputed negligence in causing the action. That issue hinges on whether the 2nd Defendant was the owner of the car at the time of the accident.
28. Whether there has been prejudice to a defendant by delay is obviously not considered by a court in vacuo, but only in relation to the actual issues which would arise at the trial. In the application before me, the question for decision boils down to whether any inordinate and inexcusable delay on the part of the Plaintiffs or their lawyers since the issue of the writ might have created a risk of prejudice to the 2nd Defendant on the issue of whether the 2nd Defendant was vicariously liable for the 1st Defendant's negligence.
29. What the 2nd Defendant contends took place was that, on or about the 5th November 1974, he agreed to sell the car to the 1st Defendant for a price of $2,500. On the 6th November, a few hours before the accident, the 1st Defendant paid the 2nd Defendant $1,000 as deposit, and the 2nd Defendant thereupon handed the 1st Defendant a document of transfer, presumably a Registration Transfer form, signed in blank. The 2nd Defendant retained the vehicle's Registration Book pending payment of the balance of the purchase money, but, meanwhile, allowed the 1st Defendant to drive the car away. That balance was paid by the 1st Defendant to the 2nd Defendant a day or two after the accident. Thus runs the 2nd Defendant's version. Even accepting that version of the 2nd Defendant's as correct, it is highly questionable whether it affords him a basis for escaping liability to the Plaintiffs. That sort of conditional sale would not be likely to have divested the 2nd Defendant of ownership of his car. If a plaintiff has a strong case on its merits, the courts are less likely to strike his action out; the reverse also applies (See Mohan v. McElney & others(2)
30. At this point, it is convenient to return to the search for the Plaintiffs' post writ delay.
31. On the 31st March 1978, the Plaintiffs filed a summons seeking the conventional Directions for this type of action. No delay up to here, I would have thought. That summons resulted in an order in terms on 19th April 1978. Included in the Directions was one to the effect that the action should be set down within 42 days in the Running List. That Direction has not been complied with by the Plaintiffs and their lawyers, but the circumstances of that non-compliance will have to be examined.
32. The next step taken - and this was of a somewhat formal nature to implement one of the Directions - was that on the 26th April 1978, the Plaintiffs' lawyers filed an Order consolidating the present action with action No. 2495 of 1979 which, it will be remembered, was the action brought by Mr. NG Wing-fai as his infant daughter's Next Friend.
33. Now there was a lull in taking any other formal step till 4th November 1978, which was the date the Plaintiffs' lawyers filed their List of Documents pursuant to the Summons for Directions. Whether any informal steps were being taken to bring the action along in the interval between the 26th April 1978 and the 4th November 1978 is not made clear on the affidavit evidence before me, but in any event, even if it should turn out that the Plaintiffs' solicitors had done nothing between those dates, it could not count as a period of relevant delay because of the steps taken by the 2nd Defendant's solicitors subsequently which amounted to an acquiescence in or a waiver of that delay. (How acquiescence and waiver operate on this branch of the law can be discerned from Allen v. McAlpine(3)).
34. Moreover, bearing in mind what is the live issue in the present case, and taking into account all the circumstances, I do not think I would be justified in classifying delay from the 26th April to the 4th November 1978 as "inordinate".
35. Anyway, on account of the step taken by the 2nd Defendant's solicitors on the 6th November 1978 in asking the Plaintiffs' solicitors for copies of some of the documents disclosed on Discovery, the 2nd Defendant acquiesced in or waived the delay. That one step taken by the 2nd Defendant's solicitors on the 6th November 1978 would by itself have amounted to acquiescence or waiver, in my opinion, but were there any doubt on this, all the subsequent steps taken by the 2nd Defendant's solicitors on the basis that the litigation was still on foot could be prayed in aid to establish acquiescence or waiver for the period April - November 1978.
36. Between November 9th 1978, when the Plaintiffs' solicitors supplied the copies of documents requested of them by the 2nd Defendant's solicitors and the 11th May 1979, when the Plaintiffs' solicitors wrote to the 2nd Defendant's solicitors seeking Further and Better Particulars relating to the ownership of the vehicle, no further formal step occurred in the litigation. The 2nd Defendant's lawyers ask the Court to find delay there.
37. However, during that time, the Plaintiffs' lawyers were engaging upon activities which rendered delay excusable. On the 8th November 1978, the Plaintiffs' solicitors received Counsel's Advice on the implications of the sale on which the defence relied. Then followed correspondence with the Director of Legal Aid which culminated in the Director of Legal Aid writing to the Plaintiffs' lawyers on the 25th April 1979 to the effect that Interrogatories should be administered to the 2nd Defendant. Time spent by solicitors in liaising with the Director of Legal Aid over taking a somwehat uncommon step in litigation which might result in an additional demand being made on the public purse cannot be treated as time wasted, in my view. Support for the view that time spent on conforming with Legal Aid procedures does not fall within the category of inexcusable delay is to be found in Allen v. McAlpine(3) and Birkett v. James(1). Needless to say, if the solicitor communicating with the Director of Legal Aid on the propriety of taking a particular step entailing the expenditure of public funds were to act dilatorily in the course of such communicating, the time unnecessarily spent would count towards inexcusable delay, but there is not the shadow of a suggestion that the Plaintiffs' solicitors wasted any time here.
38. Meanwhile, during that same period of November 1978 to May 1979, the Plaintiffs' solicitors were also seeking information from the Commissioner of Transport about the entries on the Register of Motor Vehicles in relation to the car in the present case as at 6th November 1974.
39. To that the 2nd Defendant's lawyers retort, "Why did you not do all this earlier?". The appropriate answer to that by the Plaintiffs' solicitors would be, I suppose, "Because we are not perfect".
40. No doubt, ideally, the Plaintiffs' solicitors could have attended to those matters earlier, but I do not think they are open to criticism for attending to them at the stage when they did. As is well known, there is more than one way to skin a cat, and the methods adopted by the Plaintiffs' solicitors up to this point (i.e. May 1979) and for a good way beyond, were legitimate. A perusal of the leading cases on striking out for inordinate delay such as e.g. Allen v. McAlpine(3) and Birkett v. James(1) shows that the courts do not expect perfection of solicitors, and do not count as delay periods when the plaintiffs' solicitors are keeping the case moving. In the reported cases, the Judges never adopt the approach "Why did you do that then, instead of earlier?", and I am not tempted to adopt such an approach in the present case.
41. In any event, complaining about delay for the period just considered is a futile exercise for the 2nd Defendant in view of the steps subsequently taken on his behalf amounting, yet again, to acquiescence and waiver.
42. When the Plaintiffs' solicitors wrote to the 2nd Defendant's solicitors on the 11th May 1979, seeking Further and Better Particulars of the ownership of the car, they did so on Counsel's advice as a means of saving the costs which would otherwise inevitably have been incurred if they had embarked immediately on a formal exercise of seeking to administer Interrogatories by court process.
43. The 2nd Defendant's solicitors, who are now the ones complaining of delay, did not even see fit to reply to that letter. The Plaintiffs' solicitors tried again on the 11th July 1979 with another letter asking for all the documents relating to the alleged sale of the car. Once more, no reply.
44. Next, on the 9th November 1979 the Plaintiffs lodged a formal Notice with the Court, returnable for the 14th November 1979, seeking liberty to serve Interrogatories on the 2nd Defendant. That led to the 23rd April 1980 being fixed as the date for the 2nd Defendant answering the Interrogatories before a Registrar.
45. Next, on the 13th February 1980, the 2nd Defendant's solicitors filed an Affidavit to the effect that the 2nd Defendant was untraceable, so that the Interrogatories could not be answered by him. Following on that, a Consent Summons was filed with the Court on the 22nd March 1980, resulting in an Order dated the 24th March 1980 but filed on the 26th March 1980, vacating the Interrogatories hearing date of the 23rd April 1980.
46. Meanwhile, on the 18th March 1980 the Plaintiffs' solicitors sent the 2nd Defendant's solicitors a letter (Exhibit P1) making a "Without Prejudice" offer to settle the action along lines proposed in that letter. This time the Plaintiffs' solicitors got a reply, the 2nd Defendant's solicitors writing on the 20th March 1980 to acknowledge receipt of the Plaintiffs' solicitors letter of two days earlier, and asking for copies of certain documents tending to substantiate the Plaintiffs' claim.
47. On the 12th April 1980, the Plaintiffs' solicitors wrote back with those documents. Silence ensued.
48. The Plaintiffs' solicitors, apparently ever mindful of saving costs, as solicitors acting for Legally Aided clients should be, wrote to the 2nd Defendant's solicitors again on the 7th July 1980, asking whether their client was agreeable to the settlement offer, but threatening to take steps to bring the action on for trial if no reply was received within 14 days.
49. Perhaps the Plaintiffs' solicitors were a little too nice in not going to court immediately at the expiration of 14 days, as threatened. Their earlier experience of the 2nd Defendant's solicitors habit of simply not answering letters should have taught them that they needed to take a tough line if results were to be achieved.
50. From their letter of 7th July 1980 till the 28th August 1981, the Plaintiffs' solicitors took no steps in the action. On 28th August 1981 they filed and served a Notice of Intent to proceed, a period of over 12 months having elapsed without any step having been taken in the action.
51. On 20th October 1981, the 2nd Defendant's solicitors riposted with the Notice to Strike Out which has given rise to the present appeal.
52. Was the thirteen month period of delay between July 1980 and August 1981 inordinate, and if so, was it inexcusable? Frequently a delay of that order will be treated as inordinate, but I tend to doubt whether it should be in the present action. By asking for documents in their letter of 20th March 1980, the 2nd Defendant's solicitors gave rise to the impression that they were nibbling at the bait of settlement contained in the Plaintiffs' solicitors' letter of 18th March 1980. For quite a few months after that I do not think it was unreasonable for the Plaintiffs' solicitors to refrain from taking any further step in the action in the hope that the 2nd Defendant's solicitors would in due course see their way to accepting the settlement offer. From their earlier dealings with the 2nd Defendant's solicitors, the Plaintiffs' solicitors had had cause to observe that a long period of silence from the 2nd Defendant's solicitors did not necessarily preclude the 2nd Defendant's solicitors from voluntary cooperation with the Plaintiffs' solicitors in due course, so that the action could be kept moving along.
53. I think that for a period of at least six months after their letter of 7th July 1980, the Plaintiffs' solicitors were entitled to hold out hope that the 2nd Defendant's solicitors would do the decent thing by at least replying to the Plaintiffs' solicitors' letter of 7th July 1980, so that the Plaintiffs' solicitors would know whether it was necessasry to spend more Legal Aid money by going to court or whether the whole matter could be settled without further recourse to the court.
54. Once a period of about six months had passed, I think the Plaintiffs' solicitors could no longer be justified in still expecting a reply, and the Plaintiffs' solicitors should have concluded that only the sanction of court process would lead to any progress in disposing of the Plaintiffs' claims.
55. On that approach, there remains a balance of about seven months unjustifiable delay. I do not think a delay of that magnitude qualifies as inordinate in the circumstances of the present case, bearing in mind what the live issue will be at the trial and taking into account the whole history of this action.
56. Even if I were wrong in holding that there was no delay which was both inordinate and inexcusable during the period from July 1980 to August 1981, it would make no difference to the result, in my view, because the 2nd Defendant or his lawyers have failed to show any prejudice to the 2nd Defendant as the result of an operative period of delay.
57. According to the Affidavit filed by the 2nd Defendant's solicitors on the 20th October 1981, the prejudice consists in the circumstance that the 2nd Defendant can no longer be located and will not be available at the trial. This is a Gilbertian situation: a lawyer claiming indulgence from the court on behalf of a party whose witness has disappeared when that witness turns out to be the very party himself. If there is one principle of law that stands out above all others it is the proposition that the courts will never allow a party to profit from his own defaults. If a party chooses to make himself scarce at the time his case comes on for trial, the courts will see to it that he derives no advantage from such conduct.
58. For prejudice due to his own disappearance to be advanced as a ground for striking out on the 2nd Defendant's behalf is misconceived, and no striking out order should have been made in his favour.
59. No submission was made to the effect that the 2nd Defendant was prejudiced by the 1st Defendant's disappearance. That might have made somewhat more sense than the submission made on the 2nd Defendant's behalf, but would still in fact not have afforded the 2nd Defendant a ground for having the action struck out. On the evidence before me, D1 was last heard of on 22nd November 1977 at the latest, (and, as I have already explained, the date might well have been even earlier). The onus being on the 2nd Defendant to establish prejudice, it is up to him to show on a balance of probability that the 1st Defendant would have been available as a witness during a period of operative post writ delay and that because of that delay he is now no longer available. Not a scintilla of evidence has been adduced on the 2nd Defendant's behalf to that effect. Moreover, the extent to to which D1 would have been of value as a witness to the 2nd Defendant on the live issue at the trial is open to question, but I do not regard it as necessary to elaborate on that beyond saying that whether there was a sale transferring property by the time of the accident is a mixed question of law and fact, and the type of evidence D1 might have been expected to give in view of his statement to the police on the 13th day of December 1974 might not necessarily have been of any assistance at all to the 2nd Defendant.
60. Of the 2nd Defendant's position in the present case, it can be said that, "The voice was the voice of the 2nd Defendant, but the hand was the hand of an insurance company". The 2nd Defendant's lawyers are operating in that twilight zone where the reality is that their primary function is to represent an insurance company's interests rather than the nominal client's. The 2nd Defendant's lawyers are, in effect, inviting me to look behind the veil, and treat the insurance company as if it, rather than D2, were the real defendant. What the submission made in D2's name really amount to is that his insurance company is contending that it will be prejudiced by D2's disappearance. On the same day that the Plaintiffs' lawyers issued the writ in the present proceedings, they also served the 2nd Defendant's Third Party insurers with the usual Notice under S.10 of the Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap. 272.
61. Should I allow the 2nd Defendant to speak with two tongues as it were, and permit the insurance company to advance its cause through him?
62. The answer to that is a clear "No", in my opinion. The interests of the 2nd Defendant and his Third Party insurance company are not necessarily coterminous by any means, and certainly the Plaintiffs should not be deprived of a judgment to which they would otherwise be entitled against the 2nd Defendant merely because it would cut across some separate interest of the insurance company which the insurance company wants to see protected. The injustice which could arise by treating the 2nd Defendant and the insurance company as one composite defendant can easily be illustrated by considering the not unknown situation in Hong Kong where an insurance company seeks to escape liability on indemnifying its insured because the insured has been in breach of a condition of the policy.
63. If the insurance company succeeds in repudiating its liability under the policy, the only hope for a plaintiff suing the insured is to enforce his judgment against the insured personally. Although a judgment against an individual without insurance backing will frequently turn out to be an empty one, it will not always be so.
64. Suppose in the present case, for example, that the insurance company were no longer standing behind the 2nd Defendant. The 2nd Defendant could not have been entirely devoid of assets as he was contemplating the purchase of a new car, so he claimed, when he agreed to sell AW 5401 to the 1st Defendant. Moreover, in the Third Party insurance policy, the 2nd Defendant was described as "a merchant." Not infrequently, merchants belong to the more affluent ranks of society. Who can say that a judgment against the 2nd Defendant must inevitably be an empty one, whether now, or at some future time when wealth comes his way? Why should the Plaintiffs be denied at least the opportunity of a judgment against the 2nd Defendant, so that some other purpose of his insurers can be served?
65. Put simply, the insurance company has no locus standi before me. I am not being technical here. I think it could in practice lead to grave injustices if third party insurance interests were taken into account other than by such insurer getting joined in as a party to the litigation, if and when, appropriate.
66. In England, the Court of Appeal in Murfin v. Ashbridge and Martin(4) voiced disapproval of an insurer of a defendant participating in proceedings in the insurer's own name purportedly on behalf of the insured. In the proceedings before me, it is strongly arguable that the insurance company has crossed the boundary line between controlling the representation of the 2nd Defendant, its insured, and acting on its own account in the litigation. The failure to recognize the distinction between controlling proceedings on behalf of an insured, and participating in proceedings on its own account is inherent in the nature of these bizarre proceedings for the insurer's benefit where the 2nd Defendant is made to complain of his own disappearance.
67. How far the insurance company has strayed over the permitted boundary can be discerned from the Affidavit dated 13th February 1980 of Pat Bobby Y Ho of the firm of solicitors on the record as acting for the 2nd Defendant.
68. I quote:
| | "1. I am an assistant solicitor in the employ of Messrs. Gallant Y.T. Ho. & Co., solicitors for the Pacific Insurance Company Limited (hereafter called "the insurer") the insurers of the abovenamed 2nd Defendant, and as such I have the conduct of these proceedings. I have been duly authorised by the said Pacific Insurance Company Limited to make this affidavit on their behalf and the facts herein deposed are within my knowledge .......................... | |
| | 4. Since the insurers are merely defending this action on behalf of the 2nd Defendant, in the absence of the 2nd Defendant, I verrily believe that the interrogatories to the 2nd Defendant cannot be answered ............................. | |
| | This Affidavit is filed on behalf of Pacific Insurance Company Limited." | |
69. In another Affidavit, dated the 20th October 1971, by the same solicitor - it was in fact the affidavit in support of the summons to strike out - the following material appears:
| | "1. I have the conduct of this action on behalf of the 2nd Defendant as instructed by .... the insurers of the 2nd Defendant ....... | |
| | 4. As a result of the prolonged and inexcusable delay by the Plaintiff, the 2nd Defendant can no longer be located, hence my clients are seriously prejudiced in that, the 2nd Defendant will not be available as a witness at the trial". | |
70. It is clear that "my clients", means the insurers, with the result that the court's assistance was in effect being prayed in aid for someone not a party to the proceedings.
71. In view of the foregoing, this appeal must be allowed and the Registrar's order set aside.
| | (J.J. Rhind) |
| | Judge of the High Court |
Representation:
Mr. A. Neoh (K.M. Lai & Li) for Plaintiff/Appellant.
Mr. R. Tang (Gallant Y.T. Ho & Co) for Defendant/Respondent
(1) (1978) A.C. 297
(1) at 254G
(2) H.C.A. No. 4611 of 1978
(3) (1968) 2 Q.B. 229 at 259
(3) at 230E; 247G to 248A; 260B to D; 262B and C; 265D; 272D to E; and 273F.
(3) at 254G
(4) (1941) 1 ALL E.R. 231
Costs
72. The Lord Justices of Appeal in England showed by their action in ordering the insurer's solicitors personally to pay the costs in Murfin v Ashbridge and Martin (4) that they were not prepared to countenance applications to the court other than by actual parties. I think the Judges in Hong Kong should take an equally robust line, for I see no reason why the Judges here should allow the courts to be vexed by applications which are essentially on behalf of a party not before the court.
73. My Order is that the solicitors on the record for the 2nd Defendant should bear the costs here and below personally.
| | (J.J. Rhind) |
| | Judge of the High Court |
Representation:
Mr. A. Neoh (K.M. Lai & Li) for Plaintiff/Appellant.
Mr. R. Tang (Gallant Y.T. Ho & Co) for Defendant/Respondent