MARQUIS TRADING CO (a firm) v. ASSOCIATED BANKERS INSURANCE
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HCCL000047/1980
No. CL-47 of 1980 |
Marine insurance claim - Defence of conspiracy to scuttle - Particulars to be pleaded - Late amendment to allow plea alleging fraud.
(Arguments 30th April, 3rd and 4th May 1982; result of decision announced orally 4th May 1982; written reasons for decision handed down 11th May 1982).
No. CL-47 of 1980
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
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No. 4664/79
BETWEEN | ||
| MARQUIS TRADING CO. (a firm) | Plaintiffs | |
AND | ||
| ASSOCIATED BANKERS INSURANCE CO. LTD. | Defendants |
____
No. 4665/79
BETWEEN | ||
| LAERTES CORPORATION (a firm) | Plaintiffs | |
AND | ||
| ASSOCIATED BANKERS INSURANCE CO. LTD. | Defendants |
____
No. 4666/79
BETWEEN | ||
| MARQUIS TRADING CO. (a firm) | Plaintiffs | |
AND | ||
OCEANIC UNDERWRITERS LTD. | Defendants |
____
Coram: Rhind, J.
Date: 11 May 1982
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REASONS FOR DECISION
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1. This is the defendants' summons, seeking leave to re-amend their Points of Defence to the three consolidated actions of the plaintiffs.
2. A firm, Marquis, is the plaintiff in the first and the third actions, whilst another firm, Laertes, is the plaintiff in the second I action. According to the defendants, Marquis and Laertes are essentially the same legal entity, being under the same beneficial ownership or control, or at the least, the two plaintiff firms are closely associated. For ease of exposition, I will continue referring to the "plaintiffs", having noted the defendants' contention that all three actions are really brought by the sane person, which, if correct, would mean there is only the one plaintiff for all the actions.
3. The defendant to the first and second actions can be referred to as "Associated", and in the third action, "Oceanic". Both Associated and Oceanic are underwriting companies.
4. Marquis and Laertes claim that they shipped electronic goods aboard a vessel called the "Amelia" which sailed from Singapore for Hong Kong on the 7th November 1978. They insured those goods with the defendants, against the perils of the sea for a combined total of about HK$5 million. Marquis had one consignment insured with Associated and the other with Oceanic, giving rise to the first and third actions respectively, while the goods Laertes claimed to own were insured with Associated, and give rise to .the second action.
5. According to the Statements of Claim, the "Amelia" was damaged by heavy weather on the 12th November 1978, causing it to sink with the resultant loss of the plaintiffs' cargoes.
6. The Points of Defence previously filed have put the plaintiffs to strict proof of their claim, denying, inter alia, that any of their goods were loaded on board the "Amelia", denying that the vessel sank, or, if it did, that the sinking was fortuitous, and disputing that there was any bona fide loss of the goods. However, the Points of Defence stopped short of saying that the plaintiffs were part of a scheme to defraud the defendant underwriters by scuttling the "Amelia", and then claiming the insurance money for non-existent cargo.
7. A different conspiracy was, however, alleged against the plaintiffs in the original Points of Defence. That conspiracy was alleged to take the form of the plaintiffs, under the title of Marquis, attempting to defraud Singaporean underwriters of approximately HK$6 million by being part of a scheme to ship non-existent electronic goods on board a vessel called the "Starter" which was to be scuttled on a voyage from Hong Kong to Singapore in August 1978.
8. Previously, it was not entirely clear what the purposes were the defendants had in mind when pleading that "Starter" conspiracy in their original Points of Defence. One relatively clear purpose though, was to lend support to a plea of non-disclosure by the plaintiffs of material facts to the defendant underwriters. Whilst he plea of non-disclosure in relation to the "Starter" in the original Points of Defence was certainly not spelt out as plainly as it might have been, one can, nonetheless, with a little effort, sufficiently discern that the defendants were trying to soy that the plaintiffs were guilty of non-disclosure in relation to the "Amelia" in November 1978 because they failed to tell the defendants that in August of that same year they had conspired to defraud other underwriters in relation to the allegedly non-existent goods aboard the "Starter" which was to be scuttled.
9. The time for the defendants to amend .their Points of Defence without leave is past, the defendants having already made one previous amendment (albeit of a minor nature), and pleadings having closed long ago.
10. If the defendants are now allowed to amend their Points of Defence in the way they want to, the result will be that the defence will, in effect, become four-pronged.
11. Firstly, the defendants still want to put the plaintiffs to strict proof of their case. The only amendment the defendants are proposing to this end is to add a denial in paragraph 5(a) of their Points of Defence that the "Amelia" even existed at the material times. To the best of my recollection, neither counsel addressed me on that particular amendment, and I presume it is unopposed. Off hand, I can see no basis on which that particular amendment could be resisted, and will allow it by default, as it were.
12. Jumping now to the fourth prong of the defence, this involves an amendment to the effect that the defendants are not liable because of the plaintiffs' defaults under the "Bailee Clause" of the policies which required the plaintiffs to take steps ensuring that all rights against the owners of the "Amelia", carriers, bailees and third parties were preserved, or exercised. Mr. Lane for the plaintiffs had no objection to that amendment which I allowed as paragraph 8(A) of the Points of Defence.
13. It is in relation to the amendments to the second and third prongs of the defence that objection is taken. As their second prong, the defendants now want to allege what amounts to conspiracy to defraud against the plaintiffs in relation to the "Amelia". That conspiracy is pleaded in a new paragraph 5(B).
14. The third prong of the defence is still non-disclosure, However, the defendants wanted paragraph 6 of the Points of Defence to be extensively amended so as to make it abundantly clear that the alleged conspiracy to defraud in relation to the "Starter" is one of the non-disclosed material facts on which the defendants, as underwriters, rely to avoid the policies relating to the "Amelia".
15. Under the proposed amendments to the Points of Defence, the defendants now make it clear they want the alleged "Starter" conspiracy to serve a dual role. Not only is it to be included as a particular instance of non-disclosure of a material fact, which is the third prong of the defence, but it is also prayed in aid as a "similar fact" in support of the second prong, which is the plaintiffs' alleged participation in the "Amelia" alleged conspiracy.
16. If the plaintiffs' objections before me had been sustained, the defendants would not have been allowed to plead either the "Amelia" alleged conspiracy or the "Starter" alleged conspiracy for any purpose. Apart from the defendants' allegations of those two conspiracies, the plaintiffs had no objections to any other proposed amendments.
17. Mr. Lane listed six objections to the proposed amendments in relation to the alleged conspiracies. Finding it more convenient to use my own classification of his objections, I have subsumed his objections under my own headings which appear hereafter.
I Adequacy of the Proposed Amendments as Pleadings.
| A. | Would the pleadings with the proposed amendments incorporate all the necessary ingredients of conspiracy? |
18. Here Mr. Lane relied on the following passage from Sullen and Leake (12th edition at page 341), which I accept as a generally correct statement of what a plea of conspiracy should contain:-
"The Statement of Claim should describe who the several parties are and their relationship with each other. It should allege the agreement between the defendants to conspire, and state precisely what was the purpose or what were the objects of the alleged conspiracy, and it must then proceed to set forth, with clarity and precision, the overt acts which are alleged to have been done by each of the alleged conspirators in pursuance and in furtherance of the conspiracy; and lastly, it must allege the injury and damage occasioned to the plaintiffs thereby."
19. The parties to the "Amelia" alleged conspiracy are alleged to be the plaintiffs, those in charge of the vessel and other persons unknown, whereas for the "Starter", it is the plaintiffs, persons in control of the vessel (including the Master and a number of officers and crew) and other persons whose identities are unknown to the defendants until after discovery and interrogatories.
20. On behalf of the plaintiffs it was argued to be a defect to refer to unknown co-conspirators. I disagree. It is common form to include a reference to conspiracy participants whose identity is unknown. The person pleading conspiracy only has to give the best particulars he can.
21. The relationship between the parties is sufficiontly particu-larised in my opinion. The Points of Defence show the plaintiffs as receivers of cargo from the "Amelia" and consignors on the "Starter". In both cases, the relations they are shown to have with the other known members of the conspiracy are in the latter's capacity as persons in charge of a ship which allegedly has cargo on board.
22. The agreement among the parties to the alleged conspiracies is interwoven with the purposes or objects of the conspiracies. The words "wrongfully and fraudulently conspired together" in paragraph 5B( ix)(a) of the Points of Defence can be isoldated as the agreement words in the "Starter" plea, and the word "conspiracy", in paragraph 5B implies agreement in relation to the "Amelia". By way of general comment, perhaps I may be forgiven for saying it would have made for simplicity if the pleader had used identical formulae for the formal parts of these parallel conspiracies, but he did not.
23. The purposes or objects of the "Starter" alleged conspiracy shine forth with clarity as follows:-
| "(i) | Purport to load goods on the board the "Starter when in fact no goods were loaded on board the "Starter". | |
| (ii) | Scuttle the vessel "Starter". | |
| (iii) | Defraud the Singapore Cargo Underwriters for alleged loss of "Starter" goods." |
24. All that is extracted directly from paragraph 5B(ix)(a).
25. Identical purposes or objects, mutatis mutandis, can be teased out from the proposed amended Points of Defence in relation to the "Amelia" alleged conspiracy, but a little more casting around has to be done. The non-loading of the goods aboard the "Amelia" is pleaded in paragraph 4(a); the scuttling is 5(B ), and the defrauding of the defendant underwriters is implicit as a matter of common-sense, besides being obliquely referred to in the second sentence of paragraph 5(B)(v):-
"The profits to be made from defrauding cargo underwriters were therefore so substantial as to justify the scuttling of the vessel
26. I will defer for a moment the element of clearly and precisely setting forth the overt acts alleged to have been done by each of the alleged conspirators.
27. Regarding the element of alleged injury and damage occasioned by the alleged conspiracy, I do not think it was necessary to burden the pleading with anything so obvious where the alleged victim is to be a defrauded insurance company. In any event, it must be questionable whether damage needs be included as an ingredinent when conspiracy is being pleaded as a defence, rather than as a cause of action.
28. The main thrust of the plaintiffs argument was directed towards trying to persuade the court of the imprecision, lack of clarity and genera inadequacy of the overt acts which the defendants wanted to plead. Another way of approaching what is essentially the same problem is to ask whether the overt acts were pleaded with the utmost particularity.
Overt Acts and Particulars
29. For a plea of a conspiracy to cast away, only the one overt act needs to be pleaded - the scuttling of the ship. That one overt act of scuttling will however, require to be supported by particulars to the extent laid down by the leading authority, Palamisto General Enterprises S. A. v.Ocean Marine Insurance Co. Ltd.,(1) a case commonly referred to as "The Dias". Sometimes such particulars are themselves loosely and somewhat confusingly referred to as overt acts, but I do not regard it as profitable to get ensnared in a semantic argument. All that really matters for present purposes is to know what The Dias requires to be pleaded in support of a scuttling conspiracy plea.
30. The Dias shows that there are two aspects, the first being the scuttling itself, and the second being the privity of plaintiffs to such scuttling.
31. Regarding the scuttling itself, defendants are required to furnish particulars of how it happened, provided they claim to know or have a theory on how it happened. In that case, while having to particularise the method whereby the scuttling was done, (e.g. that valves were left open thus flooding the ship), the defendants, nonetheless, do not have to disclose the evidence which they say supports their contention of how the scuttling was done. This is in effect an application of the usual rule that a party need not plead his evidence.
32. If defendants do not claim to know how the scuttling was done and are not advancing any hypothesis on the method employed, they need do no more than plead the fact of scuttling without any reference to how it was supposed to have been done. In such a case, there will be no particulars of the fact of scuttling to give, and, again, applying the normal rule, the defendants will not have to plead their evidence (which will almost inevitably be circumstantial in such a case) of why they say the ship was lost by scuttling.
33. Now I will deal with the second aspect - the privity of plaintiffs to the scuttling.
34. In all cases where defendants allege that plaintiffs were parties to a conspiracy to cast away, the defendants must particularise the facts on which they rely as to the evidence of the state of mind of the plaintiffs. To contend that someone is a party to a conspiracy to cast away inevitably involves an imputation of fraud against him, so that he must be supplied with the particulars required by Ord. 18 r 12(1)(b). That fraud is being alleged against the plaintiffs on the 'Starter" alleged conspiracy is explicitly pleaded by the use of the word "fraudulently" and exactly the same result is achieved by the use of the words "wilful misconduct" in the pleading of the "Amelia" alleged conspiracy.
35. Having stated the general principles to be followed in particularising scuttling conspiracies, I will now proceed to apply them to the proposed amendments, in so far as they relate to the "Amelia" and "Starter" alleged conspiracies.
36. On the aspect of the actual scuttlings themselves, Mr. Waung for the defendants told me - and I, of course, unhesitatingly accepted counsel's word - that he has no theory on how the alleged scuttling of the ''Amelia" was achieved. Hence, all that the defendants needed to plead on this was that she was scuttled. However the defendants have gratuitously chosen to plead circumstances from which the casting away of the "Amelia" could be inferred. On this aspect, they have, therefore, given particulars which they need not have done, in my view. The particulars they gave of circumstances tending towards an inference of scuttling are the following:-
| (a) | the weather and the state of the sea were moderate in the days leading up to, and on the day of the alleged foundering;
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| (b) | there were no radio messages from the "Amelia" on the day preceding and on the day of the alleged foundering. This lack of reporting of her position and failure to ask for assistance made it impossible to attempt to rescue her or to attempt to raise her. | |
| (c) | a position and time given by the Master for where the ship sank were not consistent with where and when he and his crew came back ashore. | |
| (d) | the company owning the vessel never investigated its sinking, although it was the company's only asset and was uninsured. |
37. The "Starter" alleged scuttling conspiracy is of the other variety, namely, where defendants advance a contention of how the scuttling occurred. The method particularised in the defendants' proposed amended pleading was that:-
"7 manholes on the 6 Double Bottom Tank tops had their nuts deliberately loosened and/or removed in order that water could come in to flood the 'Starter' and sink it."
38. This came to light, according to the defendants, because, contrary to what the Starter's Master claimed, the vessel never sank on the day of the alleged foundering, namely 31st August, 1978, but was salved by Chinese fishermen two days later. Mr. Waung maintained this was an attempted scuttling which went wrong:-
39. Beyond asserting how the attempt to scuttle the "Starter" was made by loosening nuts, I do not think the defendants were obliged to disclose other circumstances from which the fact of attempted scuttling eras to be inferred, but they did. The circumstances they particularised were:
(a) | Differing versions by the Master on different occasions of where the "Starter" was supposed to have sunk. | |
| (b) | The officers and crew leaving the vessel when it was not in any danger of sinking and being able to take large quantities of their personal belongings with them. |
40. Having dealt with the pleading of the scuttling aspect, l will now move on to whether adequate particulars have been pleaded on the privity aspect in relation to each of the alleged scuttlings.
41. The particulars pleaded against the plaintiffs for the purpose of fraud in the sense of "wilful misconduct and conspiracy" and "procuring or conniving at the casting away" being inferred against them in relation to the "Amelia" are the following:-
| (a) | they had a motive to be nixed up in the scuttling of the "Amelia", in that they had high value cargo insurance (US$1,500,000) where there was a low value (US$200,000),uninsured ship. As the Romans would have said, "Cui bono?"
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| (b) | the plaintiffs lacked the financial ability to undertake the large sales and purchases of electronic goods alleged to be lost aboard the "Amelia" and the "Starter".
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| (c) | the goods alleged to be lost on board teh "Amelia" and the "Starter" were not part of the ordinary commercial transac-tions of the plaintiffs.
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| (d) | the non-disclosure by the plaintiffs to the defendants of how they had split the cargo into three lots, which had been insured under the different names Marquis and Laertes withdifferent defendants. | |
| (e) | the non-disclosure to the defendants by the plaintiffs of the goods which Marquis claims to have consigned aboard "Starter", resulting in a HK$6 million insurance claim when the vessel was supposed to have sank.
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| (f) | the "similar fact" evidence of the "Starter" alleged conspiracy. Whether it is a matter of being connected with brides allegedly going under the water in the bath in unusual circumstances, or being connected with ships going under the water of the high seas in unusual circum-stances, the courts can treat coincidences which do not seem reasonably explicable on the basis of chance as evidence of criminal involvement. "Similar fact" evidence can serve to negative accident, and one set of suspicious circumstances added to another obviously can have a logically probative value. The plaintiffs' alleged involvement in the "Starter" alleged conspiracy tends to link them with the "Amelia" alleged conspiracy and vice versa. |
42. This is a convenient point to move on to consider the aspect of the particulars relied on by the defendants in an endeavour to establish the plaintiffs' alleged fraudulent involvement in the "Starter" alleged conspiracy. Those particulars are:
| (a) | Marquis had no goods aboard the "Starter", instead of the 19 consignments it claimed to have; neither did any other alleged consignor have any aboard, although there were supposed to be a total of 70 consignments aboard.
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| (b) | as previously mentioned, the plaintiffs lacked the financial ability to undertake the large sales and purchases of electronic goods alleged to be lost aboard the "Amelia" and the "Starter" and those goods were not part of the ordinary commercial transactions of the plaintiffs.
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| (c) | about HK$6 million was claimed from Singaporean underwriters in respect of the goods Marquis had never loaded aboard the "Starter". |
43. The plaintiffs complain generally in relation to both of the alleged conspiracies that a high proportion of the particulars pleaded relate to the hulls which are no concern of the plaintiffs who are cargo owners. I do not regard that as a valid criticism, as your being a cargo owner is in no way inconsistent with your involvement in a conspiracy to scuttle a ship with your supposed cargo on board. A fairer comment to make on the particulars furnished in relation to the hulls is that the defendants need not have pleaded them in so far as they were evidence of the fact of the scuttling. I have already explained that. In pleading those excess particulars, the defendants have at worst erred on the side of helpfulness to the plaintiffs.
44. I am not concerned with the relative quantity of the particulars furnished for the purpose of establishing the plaintiffs' allegedly fraudulent state of mind; my sole concern is the quality. There would be no point in my allowing an amendment which I knew was doomed to be struck out.
45. On each of the "Amelia" and the "Starter" alleged conspiracies, the defendants have particularised circumstances which, if they can be proved, adequately could support the fraud element required for each alleged conspiracy. Whether the plaintiffs consider they are entitled to yet more particulars is a matter with which I need not concern myself.
46. Suffice it to say that, in my view, both conspiracies are adequately pleaded as they stand. The plaintiffs know exactly what it is they are alleged to have conspired to do, namely falsely claiming to have put non-existent goods on board ships which they knew were going to be scuttled so that fraudulent claims could be made against underwriters. Why they are said to have had knowledge of this fraud has already been set out in detail above.
47. To my mind, the plaintiffs are told everything by the amended pleading which would be, "fair to enable an honest shipowner" (and equally, an honest cargo owner) "to meet the charge". The words quoted are from The Dices at page 650B in the context of the test to be applied for determining whether particulars are desirable where scuttling is alleged.
48. Before leaving overt acts and particulars, I will make a quid; reference to a submission of Mr. Lane's to tire effect that the defendants allegation of an overt act by the plaintiffs in not loading goods on the "Starter" should be particularised by showing how (not why) the goods were not put on board. I regard the submission as misconceived, as, conceptually, I regard it as impossible to particularise a negative of that nature. Unlike a plea of scuttling which is demonstrated by The Dices to be a positive averment, I think the defendants' contention that the plaintiffs never put the goods aboard might well be a true example of an immaterial averment in an action where a plaintiff is claiming under an insurance policy for goods he says he put on board. However, I see no value in pursuing the argument further for the purpose of the present proceedings.
49. As I find nothing wrong with the re-amended pleadings as pleadings, I will now move on to consider whether there might exist other reasons why they should not be allowed.
II Lateness
50. Lateness can only be an objection to the proposed amendments alleging the "Amelia" conspiracy for, from the outset, the defendants' pleadings have always accused the plaintiffs of fraudulent involvement in the "Starter" alleged conspiracy.
51. There is no suggestion that the plaintiffs' will suffer any pre-judice which cannot be compensated in costs by having the "Amelia" conspiracy added to the pleadings at this stage. As already mentioned, pleadings have closed. However, a trial date is nowhere in sight.
52. The courts generally frown on attempts to add late pleas of fraud. The policy behind this, as I understand it, is to deter unsubstantiated pleas of fraud. Understandably, the courts look askance at pleas of fraud which in any way smack of recent invention.
53. Accusing anyone of fraud is no light matter. A prime ethical duty of counsel is to refrain from pleading fraud unless confident his instructions warrant it. Mr. Waung has acquitted himself well in this regard, in my opinion.
54. The plaintiffs have never been left in doubt that the defendants suspected them of fraud on the "Amelia" transaction. The affidavit material brought to my attention made this clear. However, in his original Points of Defence, while going as close as he could, consistent with his ethical duties, by indicating his non-acceptance of the plaintiffs' bona fides, Mr Waung, nevertheless, stopped short at an outright accusation of fraud. His precise words were "Further and/or in the alternative the defendants say that there was no bona fide loss of the goods".
55. Since that pleading, there is no new relevant material, as far as I am aware, which has come to Mr. Waung's attention. What is new is that Mr. Waung has now had the benefit of guidance from leading counsel in London who takes the view that, all along, Mr. Waung has had sufficient material which would have justified him ethically in pleading that the plaintiffs were guilty of conspiracy to drfraud in the scuttling of the "Amelia".
56. Mr. Waung explained the previous thought processes which had formerly inclined him to the view it would be improper to plead fraud in relation to the "Amelia''. Naturally, I accepted the truthfulness of what fell from counsel's lips on such a matter. Previously, Mr. Waung had con-sidered the circumstances of the "Amelia" alleged conspiracy in isolation from those of the "Starter" alleged conspiracy. Even standing alone, the circumstances of which he was aware in relation to the "Starter" had always justified a fraud plea in his view, but the same had not been so with regard to the "Amelia" circumstances. What leading counsel from London had pointed out to Mr. Waung was the fallacy of considering the circumstances of the "Amelia" in isolation. If the circumstances of the "Amelia'' were married up with the circumstances of the "Starter," the over-all picture which emerged was one of fraud, not only in relation to the "Starter" but also in relation to the "Amelia". Circumstantial evidence derives its effective-ness from its cumulative effect.
57. Mr. Waung is convinced of the correctness of the viewpoint pro-pounded by leading counsel, and feels that, in good conscience, he can now lend iris own name to a plea of fraudulent conduct against the plaintiffs in relation to the "Amelia".
58. I was sympathetic to an argument from Mr. Waung that the client should not be prejudiced by the dilemma which ethical rules create for counsel: if counsel puts forward a plea of fraud at an early stage when the material in his possession does not fully warrant it, he wily be accused of recklessness, whereas if he allows the moment to pass because of his doubts, he will be met with arguments of lateness.
59. Whether counsel should be allowed to change his mind must depend on all of the circumstances of the case, in my view. In the present case I will allow it.
60. I see no policy reason for disallowing the amendment here. A plea of fraud in relation to the "Amelia" is really only a recent formula-tion, not a recent invention.
61. Moreover, it is not as if the defendants were suddenly accusing the plaintiffs of any type of fraudulent conduct for the very first time. The defendants have all along accused the plaintiffs of being fraudulent by virtue of their involvement with the "Starter". Now they are accusing the plaintiffs of being even that bit more fraudulent because of their alleged involvement in two episodes instead of just the one.
62. Perhaps the defendants' position would not be quite so strong in the lateness context if the two alleged frauds were not linked for evidential purposes, but, as I have already indicated, "similar fact" principles will mean that the "Amelia" incident is evidence of the "Starter" incident, and the "Starter" incident will be evidence of the "Amelia" incident, in the same way that the death of bride No. 1 was evidence of the death of bride No. 2 and vice versa in the famous "Brides in the Bath" case.
63. It would not strike me as good sense to refuse to allow "the Amelia" incident to be pleaded as a substantive defence of conspiracy in its own right when it will have to feature .in the case as part of the evidence, on "similar fact" principles, in the "Starter" alleged conspiracy, which suffers no problem of lateness.
64. There is an additional reason why I consider a late amendment should be allowed in the present case - the public's interests.
65. As Edmund Davies L, J. said in Associated Leisure Ltd. (Phonographic Equipment Co. Ltd.) v. Associated Newspapers Ltd. (2) at page 457:-
"These courts are here to administer justice. The concept of justice is not confined to the interests of particular litigants; it embraces and extends to the protection of the public weal. The issues involved in this litigation have an importance of direct concern to the community".
66. Those observations of Edmund Davies L.J. apply equally to the issues which the defendants wish to raise through the present application.
67. At the risk of stating the obvious, I will spell out the public interest in having the defendants' allegations of fraud against the plaintiffs explored in a court of law. Fraudulent claims against insurance companies inevitably put up the price of insurance, an increase which ultimately gets passed on to the ordinary man in the street, thus adding an unnecessary twist to the inflationary spiral. If insurance companies do have defences on the merits to claims being made against them, they should be allowed to plead them, unless there is some good reason to the contrary. That way, in the event of such defences ultimately succeeding, the prospect of dearer insurance is forestalled. Moreover, the exposure of fraud is also likely to have a deterrent effect.
III The Effect of the Striking Out Order of Zimmern J.
68. On the 10th June 1981, Zimmern J. (as he then was) ordered that t the following parts from paragraph 7 of the original Points of Defence should be struck out:-
"Further and/or in the alternative, the defendants say that there was no bona fide loss of the goods.
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| (b) Marquis was the consignor of similar electronic goods insured for HK$6,039,824 for carriage from Hong Kong to Singapore on board the vessel 'Starter' which was alleged by her owners to be lost at sea but was later discovered to be in Whampoa, China and to be part of a conspiracy to defraud underwriters". |
69. That sub-paragraph (b) was supported by particulars which Zimmern J. had ordered the defendants to 'supply on the 20th May 1981. Many of those particulars are identical to the particulars which the defendants now want to plead in relation to the proposed amended Points of Defence with regard to the "Starter" alleged conspiracy.
70. Why Zimmern J. struck out the original paragraph 7(b) of the Points of Defence is not clear as no reasons were given. The striking out was done under a summons which alleged not only that the allegation of conspiracy had not been pleaded with the utmost particularity, but that it disclosed no reasonable cause of defence and was scandalous, frivolous or vexatious or an abuse of the process of-the court.
71. It was suggested that if I were to allow the proposed amendment in relation to the "Starter" alleged conspiracy, it would be tantamount to my overruling Zimmern J. 'S Order, and would give encouragement to a practice of hawking amendments around before judges till one could be found who would allow it.
72. Were the amendments sought before me nothing more than a repetition of what Zimmern J. had struck out I would not give leave, for reasons of judicial comity. I would regard myself as ill-fitted to question one of the orders of Zimmern J. who has far more judicial experience of all sorts, and in particular of commercial matters, than I. Were I confronted with a situation where I was asked to make an order in effect cancelling out an order made by a brother judge, I would decline, leaving the dissatisfied party to go to the Court of Appeal, if he so wished.
73. However, the amendments I was asked to make were not for the purpose of restoring the Status quo as at the moment immediately prier to Zimmern J. making his Order.
74. When Zimmern, J, made his Order, it was far from clear why the "Starter" alleged conspiracy was being alleged at all. Its connection with the plea of non-disclosure of material facts was even somewhat obscure. Certainly, there was no suggestion that the "Starter" alleged conspiracy might be relevant for "similar fact" purposes.
75. It might well have been that Zimmern J struck out the "Starter" alleged conspiracy because he was not satisfied as to its relevance to the pleadings as they then stood. In that event, his striking out would have been under the part of the summons alleging no reasonable cause of defence.
76. By the time the application came before me, the situation was transformed. It was now crystal clear that the "Starter" alleged conspiracy was an integral part of the non-disclosure line of defence.
77. Further, it was only on the summons before me that for the first time the defence showed that they wanted to plead the "Starter" for "similar fact" purposes in relation to the "Amelia".
78. Thus, I found myself facing a very different pleading situation from that obtaining when the matter was before Zimmern J. In this entirely new situation, I did not see how Zimmern J's previous Order could have any inhibiting effect on what the defendants were now asking me to do.
Conclusion
79. For the reasons set out above, I allowed the defendants to amend their Points of Defence as prayed.
80. In accordance with Order 42 rule 5A(6) I make an order nisi in the defendants' favour for the costs of this application.
(J.J. Rhind) |
(1) (1972) 2 Q.B. 625
(2) (1970) Z Q.B. B. 450
Representation:
Mr. William Lane instructed by (Robert W.H. Wang & Co.) for plaintiffs
Mr. William Waung instructed by (Ince & Co.) for defendants