2005

THE MING AN INSURANCE CO (HK) LTD v. CHAN MAN DUN AND ANOTHER

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56081-EN-2007-02-13

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CACV 96/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 96 OF 2005

(ON APPEAL FROM HCMP 2437 OF 2004)

______________________

BETWEEN

	The Ming An Insurance Co. (H.K.) Ltd.	Plaintiff
	（香港民安保險有限公司）	(1^st Respondent)
	and
	Chan Man Dun (陳文端)	1^st Defendant
		(Appellant)
	Chan Sze Lok (陳斯樂)	2^nd Defendant
	and
	Motor Insurers’ Bureau of Hong Kong	2^nd Respondent
	(香港汽車保險局)

______________________

Before : Hon Cheung JA, Hon Yuen JA and Hon A. Cheung J in Court

Date of Hearing : 19 January 2007

Date of Judgment : 13 February 2007

______________________

J U D G M E N T

______________________

Hon Cheung JA :

Facts

1. The 1^st defendant was the owner of a vehicle with registration mark JB 4251 (‘the vehicle’) for which the plaintiff had provided a private motor car insurance policy.

Proposal form

2. On 17 May 2002 with a view to obtaining insurance coverage on the vehicle with the plaintiff, the 1^stdefendant signed a Motor Vehicle Insurance Proposal Form (‘the form’). Under the ‘Particulars of Vehicle to be insured’, the following details were provided by the 1^st defendant :

(1) Registration mark : JB4251;
(2) Make & Chassis No. : Mitsubishi : CONV240NJ-00106;
(3) Type of Body : van;
(4) Cylinder Capacity (cc) : 2,477;
(5) Year of Manufacture : 1991;
(6) Seating Capacity including Driver : 7.

3. On this form the 1^st defendant also signed a declaration stating that ‘all the particulars of the proposals are true and I/We agree that this proposal shall be the basis of contact between myself/ourselves and The Ming An Insurance Company (H.K.) Limited’.

Vehicle Registration Document

4. The 1^st defendant also provided a ‘Vehicle Registration Document’ of the vehicle to the plaintiff which stated :

1) Registration mark : JB4251
2) Make : Mitsubishi;
3) Model : Pajero;
4) Chassis No./V.I. No. : CONV240NJ-00106;
5) Engine No. : 4D56-ED8179;
6) Cylinder Capacity (Diesel) : 2,477;
7) Colour : Purple/Silver
8) Type of Body : Van;
9) Year of Manufacture : 1991;
10) Seating capacity excluding driver : 6.

Schedule to the policy

5. The plaintiff duly effected insurance coverage for the 1^st defendant in respect of the vehicle.

6. In the schedule to the policy, the particulars of the vehicle were described as follows :

Registration Mark JB4251
Chassis No. CONV240NJ-00106
Engine No. 4D56-ED8179
Make MITSUBISHI
Model PAJERO
Type of Body VAN
Gross Vehicle Weight
Cylinder Capacity 2,477.00 cc
Seating Capacity (including driver) 7
Year of Manufacture 1991

The accident

7. On 19 August 2002, during the currency of the policy, the 1^st defendant authorised his son, the 2^nddefendant to drive the vehicle. The vehicle was involved in a collision with a motor cycle bearing registration number JF197. The driver of the motor cycle was killed in the accident.

The criminal trial

8. As a result of the accident the 1^stand 2^nddefendants were charged and convicted of the following offences. In respect of the 1^st defendant,

1) permitting an Unregistered/Unlicensed Vehicle to be Driven or Used on a Road contrary to Section 52(1)(b) of Road Traffic Ordinance (‘the RTO’);
2) permitting any Other Person to Use a Motor Vehicle on a Road Without Third Party Insurance contrary to Section 4 of the RTO; and in respect of the 2^nd defendant,
(i) driving an Unregistered/Unlicensed Vehicle contrary to Section 52(1)(a) of the RTO;
(ii) using a Vehicle Without Third Party Risks Insurance contrary to Section 4 of the RTO;

9. At the trial of the defendants, a M. V. E. Accident Report was produced in respect of the vehicle involved in the accident. The report stated that

‘ Vehicle chassis number, engine number and colour don’t match with TD record (Valid III print out) :
(i) chassis number stamped: V24-4020549
(ii) engine number stamped: 4D56-EK2099
(iii) body colour: grey’

10. The agreed facts between the prosecution and the defendants stated that according to records, in respect of vehicles that had been registered, none matched the chassis number and the engine number of the vehicle driven by the accused on the day of the accident.

11. The Motor Vehicle Examiner also gave evidence at the trial. He stated that Vehicle JB 4251 registered under the particulars of registration was a long wheel base vehicle which allowed six passengers to sit whereas the vehicle that was involved in the accident was a short wheel base vehicle.

12. The two defendants did not give evidence at the trial but relied on the records of interviews they had given to the police.

13. According to the Decision of the magistrate, the 1^st defendant claimed that he bought the vehicle from a second-hand car company; he noticed that the vehicle was a short wheel base vehicle but he also noticed there were seven seats in the vehicle; he did not know that the chassis number and the engine number of the vehicle were different from those set out the particulars of registration. The 2^nd defendant claimed that when the vehicle was bought there were six seats and two of them were removed subsequently.

The civil action

14. The administrators of the deceased driver of the motor cycle issued proceedings in the High Court (HCPI 724 of 2004) against the 1^st and 2^nddefendants. They also served notice on the plaintiff under the MotorVehiclesInsurance(ThirdPartyRisks) Ordinance, Cap. 272.

15. The plaintiff denied liability under the insurance policy.

The present proceedings

16. By an originating summons the plaintiff in the present proceedings sought the following relief against the two defendants :

‘ 1. A declaration that the vehicle displaying a registration mark JB 4251 (“the Vehicle”) was not the insured vehicle under policy no. PMPG-02-00506-8 issued by the Plaintiff to the 1st Defendant (“the Policy”) at the time of the accident which occurred on or about 19th August 2002 at Tai Mong Tsai Road, Sai Kung, New Territories, Hong Kong involving the Vehicle driven by the 2nd Defendant and a motorcycle bearing registration mark JF 197 driven by Wong Wing Wah, deceased. (Order No. 1)
2. A declaration that the Plaintiff is and was at all material times entitled to avoid the Policy irrespective of any provisions contained therein on the ground that the Policy was obtained by non-disclosure and/or by misrepresentation of facts which were false in some material particular. (Order No. 2)
3. A declaration that the Plaintiff is not liable to indemnify the 1st and the 2nd Defendants under the Policy in respect of any liability which the Policy purports to cover or to satisfy any judgment which Woo Shui Oi and Wong Wing Choi, the Administrators of the estate of Wong Wing Wah, deceased may have against the 1st and the 2nd Defendants in HCPI 734 of 2004. (Order No. 3)
4. An order that the 1st and the 2nd Defendants or each of them do pay to the Plaintiff costs of and incidental to this application. (Order No. 4)’

17. The transcript of evidence of the trial was produced as supporting evidence for the plaintiff’s claim.

18. Deputy High Court Judge Barnabas Fung (as he then was) found for the plaintiff and granted the relief as sought.

The appeal

19. The 1^st defendant lodged an appeal against the judgment. He, however, failed to comply with an order to provide security for the costs of the appeal. As a result the 1^st defendant’s appeal was dismissed.

20. Before the appeal was dismissed, the Motor Insurers’ Bureau (‘MIB’) applied to be joined as a 2^nd respondent and asked for leave to cross appeal out of time against the judgment. It was allowed to be joined as a party to this appeal and to cross appeal out of time.

21. Although the appeal by the 1^stdefendant had been dismissed, this does not affect MIB’s cross appeal : see paragraph 59/1/13 of the Hong Kong Civil Procedure 2007. No issue was taken on this point. We are concerned solely with MIB’s cross appeal.

Sections 10(1) and (3)

22. The liability of the plaintiff to satisfy judgments against persons insured in respect of third party risks is covered by section 10(1) of theMotorVehiclesInsurance(ThirdParty Risks) Ordinance, Cap. 272 :

‘ (1) If, after a certificate of insurance has been issued under section 6(3) in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under section 6(1)(b) (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any law relating to interest on judgments.’

23. The exception to this obligation can be found in section 10(3) which provides that :

‘ (3) No sum shall be payable by an insurer under the foregoing provisions of this section, if, in an action commenced before, or within 3 months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration that, apart from any provision contained in the policy, he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it:
Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgement obtained in proceedings commenced before the commencement of that action, unless before or within 7 days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the non-disclosure or false representation on which he proposes to rely, and any person to whom notice of such an action is so given shall be entitled, if he thinks fit, to be made a party thereto.’ (emphasis added)

Argument of MIB

24. MIB in its Respondent’s Notice asked for the judgment to be set aside and the plaintiff’s application against the defendants be dismissed. It also asked for a declaration that in the event a judgment is obtained by the administrators against the defendants and if such judgment is not satisfied the plaintiff will be liable to satisfy it.

25. MIB, however, does not pursue these orders in this appeal. The argument of Mr. Burns, counsel for MIB, is that for the purpose of availing itself of section 10(3), it is sufficient for the plaintiff to obtain Order No. 2 and the first part of Order No. 3 from the judge. He submitted that it is not necessary for the judge to make a finding as he did in this case that the vehicle that was involved in the accident was not the insured vehicle under the insurance policy issued by the plaintiff to the 1^st defendant. Likewise it was not necessary for the judge to make a declaration in terms of Order No. 1 of his orders.

26. He further argued that the finding by the judge and the declarations he made would prejudice MIB’s case in respect of a dispute between MIB and the plaintiff under an agreement dated 1 February 1981 (‘the Domestic Agreement’) in which all motor insurers in Hong Kong (as members of the MIB) are bound. Under the Domestic Agreement all the insurers bound themselves to abide by the ‘Insurer Concerned’ principle which provides that ‘an Insurer Concerned will satisfy claims for bodily injury or death out of its own funds even in cases where there has been a breach of the insurance policy conditions and where otherwise the insurer would be entitled to avoid the policy’. An ‘Insurer Concerned’ is defined in the Domestic Agreement as ‘the insurer who at the time of the accident which gave rise to a bodily injury liability was providing insurance against such liability in respect of the vehicle the use of which gave rise to the liability in respect of which the judgment was given’.

Issue in this appeal

27. This appeal is not concerned with whether the plaintiff is an ‘Insurer Concerned’ within the meaning of the Domestic Agreement. Likewise, despite Mr. Burns’ submission, whether the finding by the judge that the vehicle involved in the accident was not the insured vehicle has any effect on the meaning of Insurer Concerned is also not an issue before us. This is because the judge was not seized with either of these two issues and no adjudication had been made on them. As far as the 1^st defendant was concerned, when he lodged the notice of appeal, he was not concerned with these two issues at all.

Academic concern

28. These two issues would only become relevant when the plaintiff and MIB arbitrate under the Domestic Agreement. Miss Mok S. C., counsel for the plaintiff, informed the Court that the plaintiff will not rely on any estoppel in the arbitration proceedings with MIB in relation to any finding by the judge.

29. This being the case the concern of MIB at this stage of the proceedings of any likely prejudice in the arbitration proceedings is entirely academic.

Issue of identity of vehicle

30. In any event I am not convinced that it was not necessary for the judge to make a finding on whether the vehicle involved in the accident was the insured vehicle or to grant a declaration to that effect. This is because this issue had been squarely raised before him. Paragraph 9 of the supporting affirmation of the plaintiff expressly stated that

‘ 9. Contrary to the answers and representation of facts set out in paragraphs 4 and 5 above, JB4251 was not the insured vehicle under the Policy issued by the Plaintiff to the 1st Defendant.
Particulars
At the material time, JB4251 was having a different chassis of no.V24-4020549 and a different engine of no. 4D56-EK2099 and was a shorter vehicle with a seating capacity for only 4 passengers. With such particulars, there is no vehicle registered with a registration mark JB4251 and licensed in accordance with the Road Traffic (Registration and Licensing of Vehicles) Regulations.’ (emphasis added)

31. As can be seen from the judgment, counsel for the defendants refuted the plaintiff’s case that the vehicle involved in the accident was not the insured vehicle. This being the case the judge had to adjudicate on this issue. Having found that the vehicle involved in the accident was not the insured vehicle he was clearly entitled to make the declaration.

32. While for the purpose of avoiding the policy, section 10(3) of the Ordinance referred to misrepresentation and misstatement, it does not mean that the parties were somehow precluded from raising this particular issue.

Notice to MIB

33. When the plaintiff commenced the present proceedings to avoid the policy it had written to MIB to ascertain whether it was prepared to participate in the proceedings. MIB declined to do so. If MIB considered that the issue of the identity of the vehicle was unnecessary for the question of avoiding the policy and if it was concerned that the effect of a finding on this issue may prejudice its position under the arbitration in respect of the Domestic Agreement, it ought to have intervened at that stage of the proceedings so that the proper issues could be properly framed and adjudicated upon. I am not prepared to find that the judge was wrong to adjudicate on this issue or to make an order thereon.

Evidence before the judge

34. In this appeal MIB was, of course, entitled to challenge whether there was evidence to support the judge’s decision. Mr. Burns submitted that the judge should have heard evidence before he adjudicated on this issue. He submitted that the vehicle covered by the policy was the vehicle that was involved in the accident. But as pointed out earlier there were indeed evidence adduced before the judge upon which he could have made the adjudication and order. He held that,

‘ 31. I find that the chassis number and engine number are material particulars for the registration of a vehicle under the Road Traffic Ordinance, for it is by those particulars a vehicle is registered, and not by the registration mark, which is given only as a result of registration. Miss Sun's argument that we are looking at the same car is not sound, as the registration is liable to be cancelled for inaccurate particulars.
32. It is so obvious that it goes without saying that those particulars would be regarded by a prudent insurer as material in deciding upon the writing of a motor vehicle insurance, as the validity of the registration of the vehicle is liable to be impugned upon material discrepancies such as different chassis and engine number.’

35. As to the second part of Order No. 3, namely ‘or to satisfy any judgment which Woo Shui Oi and Wong Wing Choi, the administrators of the estate of Wong Wing Wah, the deceased may have against the 1^st and 2^nddefendants in High Court Personal Injuries Action No. 734 of 2004’, my view is that the plaintiff is entitled to this relief as well. Section 10(1) requires the plaintiff to satisfy that judgment unless the policy is avoided under section 10(3). The relief granted under Order No. 3 deals with the consequence of avoiding the policy. I cannot see why the plaintiff is not otherwise entitled to this order.

Conclusion

36. I would dismiss the appeal together with an order nisi for costs in favour of the plaintiff.

Hon Yuen JA :

37. When the MIB was invited by the Insurer to join as a party in the latter’s proceedings against the Owner (HCMP 2437/2004), the MIB had a choice whether to participate or not. (Of course the Domestic Agreement provides for arbitration in the event of disputes between the MIB and insurers, but since the Insurer was inviting the MIB to join as a party, the MIB would obviously have been entitled to avail itself of the opportunity to ask the court to resolve any related issues between them).

38. If the MIB had joined as a party at that stage, it could have participated fully in the proceedings in examining the issue of the identity of the insured vehicle. The MIB could have explored the evidence of the Owner to the extent it considered necessary, it could have subpoenaed witnesses and it could have made submissions to the judge. Of course the downside of participation at that stage was that the MIB would have had to incur costs. The option the MIB took was to adopt a ‘wait and see’ attitude and it declined to join as a party.

39. The Owner lost, but the declarations the judge made would not have been binding on the MIB because it was not a party.

40. The Owner then lodged an appeal. It was at that stage that the MIB applied to be joined as a party. If the Owner succeeded on appeal in overturning the judgment and setting aside the declarations, that would have benefited the MIB. But as events transpired the Owner could not proceed with his appeal as he failed to provide security for costs. That left the MIB with what might be described as the worst of both worlds. It had become a party to proceedings in which the judge had given declarations which (at least) might affect the Insurer’s obligations under the Domestic Agreement. In that scenario, one can understand the MIB’s attempts to persuade this court that certain parts of the declarations were superfluous to the dispute between the Insurer and the Owner and should be set aside because of reverberations on the Insurer’s obligations under the Domestic Agreement.

41. However once the Insurer stated through its leading counsel that it would not hold the declarations against the MIB by way of res judicata or estoppel, then the MIB’s appeal became academic and I can see no reason why this court should revisit the declarations at all when neither of the parties bound by them (the Owner and the Insurer) has asked us to do so. I would therefore dismiss the appeal with an order nisi that the costs of the appeal should be paid by the MIB.

Hon A. Cheung J :

42. I agree that MIB’s appeal should be dismissed for the reasons given by Cheung and Yuen JJA. I only wish to add a few words of my own.

43. MIB’s concerns about declaration (1) and the latter part of declaration (3) have become academic, and the necessity for its appeal gone, once the plaintiff by senior counsel confirmed during her submission that the plaintiff will not rely on issue estoppel or res judicata arising out of the judgment under appeal against MIB in any future arbitration proceedings between them pursuant to the domestic agreement, even though MIB has now become a party.

44. That is a sufficient reason for not entertaining the appeal further, particularly in light of the likely arbitration proceedings. The appeal should therefore be dismissed.

45. As to the further question of whether the vehicle involved in the accident was the vehicle insured under the policy (the subject matter of declaration (1)), which is now academic for reasons just explained, it is a fact-sensitive one. I agree it was raised by the plaintiff in the proceedings below, and the Judge was quite right to deal with it. Indeed without making a finding on the question, it would be impossible to identify what non-disclosure or misrepresentation, if any, was involved in the obtaining of the policy, and determine whether the same entitled the insurer to avoid it (the subject matter of declaration (2)).

46. It was open to the Judge, on the evidence that was placed before him, to find as he did that the vehicle involved in the accident was not the one insured under the policy. Declaration (1) was therefore rightly made.

47. It may be that if some further or other evidence had been placed before the Court, the finding could or should have been different. But MIB, having chosen not to take part at the original hearing, cannot now complain about the suggested deficiency in evidence. The Judge’s role was simply to make findings on the evidence adduced by the parties appearing before the Court, according to the applicable burden and standard of proof. Once made, his findings cannot be challenged on appeal by reference to some other possible “evidence” that was never there at the hearing, in the absence of any (successful) application to adduce further evidence on appeal (of which there is none).

48. I am inclined to think, although no detailed argument was advanced along the lines and I am therefore reluctant to express a definite view on the point, that the Judge’s finding or declaration (that the vehicle involved in the accident was not the one insured under the policy) is sufficient to take the insurer’s case out of section 10(1) of the Motor Vehicles Insurance (Third Party Risks) Ordinance. For it seems to me that liability under section 10(1) only attaches to an insurer of the vehicle actually driven by the owner/driver in the accident: see section 6 and particularly section 6(1)(b) on what third party risks are compulsorily required to be covered by a policy issued by an authorised insurer. That being so, with or without obtaining a declaration mentioned in section 10(3) (ie declaration (2) in the present case), the insurer is not liable under section 10(1) for the simple reason that it was not the insurer of the vehicle involved in the accident.

49. In other words, I am inclined to think that declaration (1), which by itself would justify declaration (3), is quite sufficient for the purposes of the plaintiff. That said, it does not mean that the plaintiff was not entitled to seek declaration (2) as well. Indeed the Judge granted it and it does not form a subject matter of this appeal.

50. As to the latter part of declaration (3), once the plaintiff has clarified that it will not raise issue estoppel or res judicata against MIB, the concern that the latter part will spill over to affect MIB’s position under the domestic agreement is gone.

51. Read in context, the latter part of declaration (3) made by the Judge only means that as between the plaintiff and the defendants – they having been the only parties to the proceedings before the Judge, the plaintiff is not liable under section 10(1) to satisfy any judgment which the administrators of the estate of the victim may obtain against the defendants in the personal injuries action, putting to one side the position as between the plaintiff and the administrators, who have chosen not to join in the proceedings despite notice (see section 10(3) proviso). I see nothing objectionable about that. It does not affect the position of MIB or the insurer under the domestic agreement. As regards the position as between the plaintiff and the administrators, it is irrelevant to this appeal.

(Peter Cheung)
Justice of Appeal

(Maria Yuen)
Justice of Appeal

(A. Cheung)
Judge of the Court of First Instance

Ms Alice Mok, S.C., instructed by Messrs W. M. Lo & Company, for the Plaintiff (1^st Respondent)

1^st Defendant (Appellant), in person, absent

Mr. Ashley Burns, instructed by Messrs Deacons for the 2^nd Respondent

52446-CH-2006-05-11

香港民安保險有限公司訴陳文端及另一人

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CACV 96/2005

香港特別行政區

高等法院上訴法庭

民事司法管轄權

民事上訴

民事上訴案件2005年第96號

（原本案件編號：高等法院雜項案件2004年第2437號）

原告人	THE MING AN INSURANCE CO. (H.K.) LTD （香港民安保險有限公司）
	對
第一被告人	CHAN MAN DUN （陳文端）
第二被告人	CHAN SZE LOK （陳斯樂）

上訴人	陳文端
	對
第一答辯人	香港民安保險有限公司
第二答辯人	香港汽車保險局（MOTOR INSURERS’ BUREAU OF HONG KONG）

主審法官：高等法院上訴法庭法官袁家寧內庭聆訊

聆訊日期： 2006年5月4日

頒下判決書日期：2006年5月11日

判決書

1. 本訴訟的背景，本席已在2006年3月15日頒下的判決書中詳述，在此不再重複。

2. 2005年2月7日在HCMP 2437/2004一案中，高等法院原訟法庭暫委法官馮驊裁定該案原告人香港民安保險有限公司（“保險公司”）勝訴，第一被告人陳文端先生敗訴。

3. 本上訴（即CACV 96/2005）是陳先生就馮法官的命令所提出的上訴，保險公司是答辯人。

4. 陳先生提出上訴後，香港汽車保險局於2005年6月7日發出傳票，要求參與上訴，作為第二答辯人。本席已在2006年3月15日頒下的判決書中，批准香港汽車保險局的申請。

5. 就本上訴，第一答辯人（即保險公司）於2005年5月9日發出傳票，要求法庭命令上訴人（即陳先生）交付 $560,000作為上訴訟費保證金。

6. 本席已於2005年9月6日聆訊該申請的一部份，但申請須押後，因陳先生要求存檔新證據。其後，陳先生要求存檔新證據的申請被本席在2006年3月15日駁回。

7. 現在第一答辯人恢復其上訴訟費保證金的申請。

8. 關於上訴訟費保證金的原則，上訴法庭在鍾九對 香港房屋署與其他人（CACV 122/2003）已撮述如下。

“《香港民事程序》2004年版第1冊第59/10/28至59/10/29段已撮述了有關的原則，尤其視經濟困難為特別情況。然而，有關這一點，本席強調以下：

(1) 上訴人經濟困難並不是自動會令到法庭頒令，着他繳付訟費保證金。法庭有權考慮其他相關因素，如上訴理據的強弱，以決定命令繳付保證金是否公正。

(2) 然而，根據法庭慣例，一經申請保證金的一方證明對方的確經濟困難（或一些其他因素，如[申請一方]強制執行訟費命令時，會有困難或需花費）時，法庭雖仍有整體上的酌情權決定是否作出命令，但一般而言，需由反對繳付保證金的一方向法庭提出理由可抗衡經濟困難這因素，以說服法庭不要作出訟費保證金命令。用作抗衡保證金命令的一個常見理由，就是上訴的成功機會。

(3) 考慮上訴的成功機會時，法庭並不需要，也不宜，作仔細的審視（即使席前有資料可供考慮）。不過，法庭對上訴應有初步的見解，甚或直覺。如果上訴的成功機會，不論勝負，都是明顯不過的話，這本身也可以是一個決定性的因素。因此，勝訴機會高的上訴，本身已足以使法庭不頒下保證金命令。相反亦然，勝訴無望的上訴，本身也足以支持法庭頒下保證金命令。但是，如果法庭認為上訴結果難料的時候，法庭一般會看是否有其他因素影響大局；沒有這類因素的話，法庭便會頒下保證金命令。當然，這是假定了如經濟困難這類因素已獲得證明”。（底線為本庭所加，以作強調）

9. 因此本席首先要考慮的議題是，以本席前的證據來說，第一答辯人是否已證明上訴人經濟有困難。

10. 本席已考慮到存檔的證據，而其實上訴人自己亦承認他經濟上有困難。在這情況下，本席認為第一答辯人已證明上訴人經濟有困難。

11. 如上文所述，案例指出，一經證實上訴人有經濟困難，則一般來說，便要由上訴人向法庭展示抗衡的理由，例如上訴成功的機會甚高，以說服法庭不頒下要上訴人繳存上訴保證金的命令。

12. 本席已考慮了上訴通知書所載的上訴理由，本席亦有閱讀過2006年3月17日存檔的第二答辯人的通知書。（雖然該通知書聲稱是根據《高等法院規則》第59號命令第6(2)(B)條規則，但其實《高等法院規則》第59號命令並沒有第6(2)(B)條規則。從通知書的內容中顯示，本席認為第二答辯人擬提述的應是該命令的第6(1)(c)條規則）。無論如何，考慮過第二答辯人通知書的內容後，本席認為上訴儘管是可容爭抝（arguable），但並不可說是明顯地成功機會甚高，因此本席認為上訴人仍須繳存上訴訟費保證金。

13. 至於保證金的數額，本席已考慮第一答辯人提供的訟費單綱要，考慮了各項目後，本席認為 $320,000是合理的估計。

14. 基於上述所有事項，本席命令上訴人須在今天（即2006年5月4日）後28天內，將 $320,000繳存於法院，作為上訴人就高等法院原訟法庭暫委法官馮驊2005年2月7日的判決而提出的上訴訟費保證金；本上訴被擱置，直至這筆保證金全數繳存法院為止。如在上述28天期限內，上訴人不能將上述款項全數繳存法院作為上訴訟費保證金，上訴將會自動駁回，無須法庭作出進一步命令或通知，而第一答辯人可得上訴及本傳票的訟費；如雙方就訟費金額不能達成協議，則由法庭評定。

15. 本席有見第二答辯人的立場，亦指示了第一答辯人承諾將今天的命令告知第二答辯人。

（袁家寧）
高等法院上訴法庭法官

原告人（答辯人）：由羅偉明律師事務所羅偉明律師代表。

第一被告人（上訴人）：無律代表，親自應訊。

51926-EN-2006-03-15

THE MING AN INSURANCE CO (HK) LTD v. CHAN MAN DUN AND ANOTHER

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CACV 96/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 96 OF 2005

(ON APPEAL FROM HCMP 2437 OF 2004 )

______________________

BETWEEN:

	THE MING AN INSURANCE CO. (H.K.) LTD	Plaintiff (Respondent)
	and
	CHAN MAN DUN	1^st Defendant (Appellant)
	CHAN SZE LOK	2^nd Defendant

Before: Hon. Yuen JA in Chambers (open to the public)

Date of hearing: 8 March 2006

Date of Decision: 15 March 2006

---------------

DECISION

----------------

Hon. Yuen JA:

1. There were two summonses before me:

(1) the Motor Insurers Bureau ("MIB")'s application (issued on 7 June 2005) to join in the 1^st Defendant's appeal from a Judgment of Deputy Judge Fung given on 7 February 2005;

(2) the 1^st Defendant's application (issued on 29 September 2005) for leave to adduce fresh evidence on appeal.

Accident

2. The matters arose in this way. On 19 August 2002, there was an accident involving a vehicle bearing registration mark JB4251 which was owned by the 1^st Defendant ("the Owner") and which was being driven by his son the 2^nd Defendant. Unfortunately the accident resulted in the death of Wong Wing Wah ("the Deceased").

3. According to the Owner, he had bought the vehicle from a second-hand car dealer in May 2000. His Vehicle Registration Document recorded amongst other things, the following:

Class: Private car

Make: Mitsubishi

Model: Pajero

Body type: Van

Seating capacity (excluding driver): 6

Chassis number: CONV240NJ-00106

Engine number: 4D56-ED8179.

4. The Owner's case is that the vehicle was at the time of the accident insured by the Plaintiff ("the Insurance Company") under a Policy No. PMPG-02-00506-8. The policy had been effected in May 2002 through Cheung Shui Ming of Mass Insurance Brokers Ltd, an agent of the Insurance Company.

The Personal Injuries action

5. On 10 August 2004, the Deceased’s estate sued the Owner and his son in HCPI 734/2004 ("the Personal Injuries action") for damages for negligence. I pause here to mention that there will be no further reference to the son in this decision as apparently it has been assumed by all concerned that he does not have any financial resources.

Motor Vehicle Examination

6. Between the time of the accident and the Personal Injuries action, a Motor Vehicle Examiner of the Transport Department had reported certain findings, which I quote:

"He [the Motor Vehicle Examiner] testified that JB4251 had a different chassis no. V24-4020549 and different engine no. 4D56-EK2099. He also said that the purportedly registered vehicle should be a long wheel based vehicle with seating capacity of seven, and JB4251 in question was a short wheel based vehicle with a seating capacity of four, and it was impossible for it to accommodate six seats".

(HCMP2437/2004 Reasons for Decision, §8).

7. This discovery about the vehicle involved in the accident leads to different scenarios arising in respect of liability to pay damages for the accident.

Permutations regarding liability to pay damages for the accident

8. The various scenarios can be summarized as follows:

(1) if the Deceased’s personal representatives establish liability against the Owner in the Personal Injuries action, the Owner would ordinarily have been able to look to the Insurance Company for payment;

(2) however, the Owner would not be able to do so if he had obtained the policy by material non-disclosure or misrepresentation;

(3) nevertheless, the Insurance Company would still be liable under statute to the Deceased’s estate: s.10(1), Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap. 272;

(4) however, the Insurance Company would not be so liable if it starts an action (within a certain time frame) and obtains a declaration that it is entitled to avoid the policy by reason of material non-disclosure or misrepresentation: s.10(3), Cap. 272;

(5) where such a declaration has been obtained, the Deceased’s personal representatives would then have to look to the Owner to pay damages for the accident;

(6) if the Owner does not pay, the Deceased’s personal representatives could then claim payment from the MIB by virtue of an agreement between the MIB and the Government of Hong Kong: Clause 2, First Fund Agreement;

(7) however, the MIB has a Domestic Agreement with insurance companies under which "the Insurer Concerned" would have to pay the damages if the Owner did not: Clause 3(a), Domestic Agreement. An "Insurer Concerned" is defined in the Domestic Agreement as:

"the insurer who at the time of the accident ... was providing insurance ... in respect of the vehicle the use of which gave rise to the liability ... .

An insurer is concerned ...

notwithstanding that ... the insurance has been obtained by ... misrepresentation, non-disclosure of material facts or mistake; ...

and only ceases so to be concerned:-

when before the date on which the ... liability was incurred the Insurer has obtained a declaration from a court ... that the insurance is void or unenforceable". (Emphasis added).

The Declaration proceedings

9. Returning to the narrative of relevant events, on 23 September 2004 (i.e. within the time frame required under s.10(3) of Cap. 272), the Insurance Company started proceedings in HCMP 2437/2004 against the Owner and his son for the following declarations:

"1. A declaration that the vehicle displaying a registration mark JB4251 (‘the Vehicle’) was not the insured vehicle under policy no.PMPG-02-00506-8 issued by the [Insurance Company] to the [Owner](‘the Policy’) at the time of the accident ... .

2. A declaration that the [Insurance Company] is and was ... entitled to avoid the Policy ... on the ground that the Policy was obtained by non-disclosure and/or by misrepresentation ... .

3. A declaration that the [Insurance Company] is not liable to indemnify the [Owner and his son] under the policy in respect of any liability which the Policy purports to cover or to satisfy any judgment which [the Deceased’s personal representatives] may have against the [Owner and his son] in [the Personal Injuries action]".

10. The MIB was informed but it did not seek to join as a party to those proceedings. The Owner was represented by counsel instructed by Messrs Gary K.W. Tam & Co.

11. The Declaration proceedings were heard by Deputy Judge Fung on 7 February 2005. On the same day, he gave judgment, making declarations in the terms sought.

12. The effect of that judgment was that as between the Owner and the Insurance Company, the scenarios which I have set out in para. 8 §(4) and §(5) would occur if the Deceased’s personal representatives succeed in the Personal Injuries action.

Appeal

13. The Owner lodged an appeal against Deputy Judge Fung’s judgment in the Declaration proceedings. By this time however, he was no longer legally represented as he says he has no resources to meet legal costs for the appeal, let alone to meet costs of the Personal Injuries action or any damages that may be ordered.

MIB’s application to join in the appeal

14. When the MIB became aware of the Owner’s situation, it issued a summons to join in the appeal. The summons was supported by an affidavit of Michael Turnbull, a solicitor for the MIB. In his affidavit, Mr Turnbull focussed on the 1^st declaration made by Deputy Judge Fung, that "the vehicle displaying registration mark JB4251 was not the insured vehicle under the ... Policy" issued by the Insurance Company. If this declaration is correct, then the Insurance Company may fall outside the definition of "Insurer Concerned" in the Domestic Agreement (the definition being "the insurer who at the time of the accident ... was providing insurance ... in respect of the vehicle the use of which gave rise to the liability") .

15. Mr Turnbull says in his affidavit that although the MIB was notified of the Declaration proceedings when they were commenced, the MIB did not seek to join as a party at the time for two reasons, the first being that the Owner was then represented by solicitors and counsel and the MIB thought they could argue the matter adequately. It was only in late May 2005 that the MIB became aware that the Owner would no longer be legally represented on appeal.

16. The second reason given by Mr Turnbull was that it was not fully appreciated at the time that there was a likelihood that the Domestic Agreement provisions would not apply if the Insurance Company successfully obtained the 1^st declaration. At the hearing before me, Mr Ashley Burns counsel for the MIB also made the same point in respect of the second limb of the 3^rd declaration, i.e. that the Insurance Company is not liable to satisfy any judgment which the Deceased’s personal representatives may have against the Owner and his son in the Personal Injuries action.

17. The MIB seeks to challenge the correctness of the declarations made by Deputy Judge Fung and has lodged a draft Respondent’s Notice by way of cross-appeal which I have read. Although as a non-party, it is not bound by the declarations, Mr Burns argued that it must be in the interests of the due administration of justice that the risks of inconsistency between a judgment of the court and an arbitration award should be avoided or at least minimised.

18. By way of opposition to the MIB’s application, the Insurance Company has filed an affirmation of Raymond Lo, the solicitor acting for it. In answer to Mr Turnbull’s second reason, Mr Lo makes the point that he had in a letter dated 18 January 2005 clearly informed the MIB’s solicitors that:

"As you are aware, one of the reliefs claimed by our client in [the Declaration proceedings] is that the vehicle JB4251 was not the insured vehicle at the material time and our client was not under insurance risk. Our client will dispute that it is the ‘insurer concerned’ in this case and thereby the ‘insurer concerned principle’ under clause 3 of the Domestic Agreement is not applicable in this case. Our client will therefore not satisfy any judgment debt as the ‘insurer concerned’ in the personal injuries action".

19. At the hearing before me, Miss Alice Mok SC on behalf of the Insurance Company has emphasised that Deputy Judge Fung’s declarations were made under s.10(3) of Cap. 272 and there has been no determination by Deputy Judge Fung whether the Insurance Company is the "Insurer Concerned" under the Domestic Agreement. Under clause 10 of the Domestic Agreement, any disputes between the MIB and an insurer concerning the provisions of that Agreement should be referred to arbitration and the arbitrator would not be bound by Deputy Judge Fung’s judgment.

20. Miss Mok also argued that although an appellate court may in the exercise of its discretion add a new party (cf Tetra Molectric Ltd v Japan Imports Ltd [1976] RPC 541), this discretion should only be sparingly used.

Discussion

21. Essentially, the matter falls to be decided as a matter of the court’s discretion in applying Order 15 rule 6(2). The relevant parts of this rule provide:

"(2) Subject to the provision of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either on its own motion or on application -

(b) order any of the following parties to be added as a party, namely -

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter". (Emphasis added).

22. In my view, the situation in Order 15 rule 6(2)(b)(ii) clearly applies. As Miss Mok accepts fairly, there is an issue common to the Declaration proceedings and the Domestic Agreement: the issue whether the vehicle involved in the accident was the vehicle that was insured under the Policy. This is an important issue, affecting the Insurance Company’s liability to pay damages to the Deceased’s estate under Cap.272, but also its liability to the MIB as the "Insurer Concerned" to pay those damages under the alternative route of the Domestic Agreement (although there are other factors affecting liability under each route).

23. The commonality of this important issue (whether the vehicle involved in the accident was the vehicle that was insured under the Policy) was in fact spelt out by the Insurance Company in Mr Lo’s letter. Although the MIB would not be bound by Deputy Judge Fung’s declarations if it was not a party, and it might seek to argue or re-argue it in an arbitration under the Domestic Agreement (a stage I have referred to at the hearing as "the second line of defence"), I think it would be in the interests of justice that the risks of inconsistency between a judgment of the court and an arbitration award should be avoided if that is achievable by a joinder order.

24. I have taken into account the fact that the application to join is made only at the appellate stage. I consider however that the 1^st reason given by Mr Turnbull (that the Owner had legal representatives at the hearing before Deputy Judge Fung) provides a satisfactory explanation for the MIB’s initial inaction. The MIB’s position on the issue was the same as the Owner’s and it cannot be faulted for wishing to save on legal expenses. The fact that the Owner is now unable to instruct legal representatives is in my view a sufficient change of circumstances that justifies leave to join being given.

25. I have also taken into account the fact that the Insurance Company would not suffer any prejudice by a joinder order that cannot be met by an appropriate costs order, if necessary, though none has been suggested.

Order on the MIB’s summons

26. Accordingly, I would make an order in terms of paras. 1-4 of the MIB’s summons. As for the costs of the summons, I would make an order nisi that the costs be in the cause of the appeal.

Owner’s application for leave to adduce fresh evidence

27. I now turn to the Owner’s application for leave to adduce fresh evidence. This consists of an affirmation made by the Owner himself in which he alleges that Mr Cheung (the agent from Mass Insurance Brokers) had in fact inspected the chassis number and engine number of the vehicle in question on 17 May 2002, before the policy of insurance was issued. The Owner alleges in particular that:

(1) he met Mr Cheung for the first time on 17 May 2002;

(2) he, together with his employee Mr Cheng Chor Yim, were present when Mr Cheung inspected the chassis number and engine number of the vehicle and took photographs, and subsequently the Policy was issued; Mr Cheng was now living on the mainland and was not well;

(3) he had told his solicitor Mr Tam about this but he had not paid enough attention when his witness statement was read over or translated to him to realize that his statement did not include these instructions.

28. The Insurance Company opposed the Owner’s application. It filed an affirmation of Mr Cheung who said:

(1) he (Mr Cheung) had known the Owner for many years before 2002 as he had been a private tutor of the Owner’s children; however on the day in question, when he prepared the policy form at the Owner’s office, he did not meet the Owner; this allegation was supported by a document signed by the Owner which had to be faxed to him from the Owner’s office after his visit; it would not have been necessary to send it by fax if the Owner had been present during his visit;

(2) he (Mr Cheung) had not inspected the chassis number and engine number of the vehicle; further there was no reason why Mr Cheng could not make an affirmation as Mr Cheng was the Owner’s brother-in-law, and was well and living in Hong Kong.

29. The Owner did not file any affirmations in reply to Mr Cheung’s affirmation.

Discussion

30. Whilst the Court of Appeal has power to allow fresh evidence to be adduced on appeal in the exercise of its discretion, this is not often or lightly done. Where there has been a hearing on the merits, the exercise of discretion is governed by the principles set out in Ladd v Marshall [1954] 1 WLR 1489.

31. Under this authority, three conditions have to be satisfied before fresh evidence can be admitted on appeal:

(1) the applicant would have to show that the evidence could not have been obtained even if he had used reasonable diligence at the hearing below;

(2) the evidence must be such that, if given below, it would probably have an important influence on the result of the case, though it need not be decisive;

(3) the evidence must be such that it is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.

32. The Owner falls at the first hurdle. The matter was within his own knowledge. Even if (as his case seems to suggest) his solicitor failed to notice the significance of those instructions, that is a matter between him and his solicitor.

33. I am inclined to think that the third condition is also not satisfied. The Owner has not filed any affirmations in reply to Mr Cheung’s affirmation which discredited at least part of his affirmation. Further he has not said on affirmation whether he has contacted Mr Cheng and Mr Tam in respect of his allegations concerning them and if so, what were their respective responses.

Order on the Owner’s summons

34. For these reasons, the Owner’s application is dismissed with an order nisi that he should pay the Insurance Company’s costs.

(MARIA YUEN)
Justice of Appeal

Mr Ashley Burns instructed by Deacons for the MIB

Miss Alice Mok SC and Mr David Tang instructed by W.M. Lo & Co for the Plaintiff (Respondent)

The 1^st Defendant in person, present (Appellant)

(1)	Registration mark : JB4251;
(2)	Make & Chassis No. : Mitsubishi : CONV240NJ-00106;
(3)	Type of Body : van;
(4)	Cylinder Capacity (cc) : 2,477;
(5)	Year of Manufacture : 1991;
(6)	Seating Capacity including Driver : 7.

1)	Registration mark : JB4251
2)	Make : Mitsubishi;
3)	Model : Pajero;
4)	Chassis No./V.I. No. : CONV240NJ-00106;
5)	Engine No. : 4D56-ED8179;
6)	Cylinder Capacity (Diesel) : 2,477;
7)	Colour : Purple/Silver
8)	Type of Body : Van;
9)	Year of Manufacture : 1991;
10)	Seating capacity excluding driver : 6.

Registration Mark	JB4251
Chassis No.	CONV240NJ-00106
Engine No.	4D56-ED8179
Make	MITSUBISHI
Model	PAJERO
Type of Body	VAN
Gross Vehicle Weight
Cylinder Capacity	2,477.00 cc
Seating Capacity (including driver)	7
Year of Manufacture	1991

1)	permitting an Unregistered/Unlicensed Vehicle to be Driven or Used on a Road contrary to Section 52(1)(b) of Road Traffic Ordinance (‘the RTO’);
2)	permitting any Other Person to Use a Motor Vehicle on a Road Without Third Party Insurance contrary to Section 4 of the RTO; and in respect of the 2^nd defendant,
	(i)	driving an Unregistered/Unlicensed Vehicle contrary to Section 52(1)(a) of the RTO;
	(ii)	using a Vehicle Without Third Party Risks Insurance contrary to Section 4 of the RTO;

‘	Vehicle chassis number, engine number and colour don’t match with TD record (Valid III print out) :
	(i)	chassis number stamped:	V24-4020549
	(ii)	engine number stamped:	4D56-EK2099
	(iii)	body colour:	grey’

‘	1.	A declaration that the vehicle displaying a registration mark JB 4251 (“the Vehicle”) was not the insured vehicle under policy no. PMPG-02-00506-8 issued by the Plaintiff to the 1st Defendant (“the Policy”) at the time of the accident which occurred on or about 19th August 2002 at Tai Mong Tsai Road, Sai Kung, New Territories, Hong Kong involving the Vehicle driven by the 2nd Defendant and a motorcycle bearing registration mark JF 197 driven by Wong Wing Wah, deceased. (Order No. 1)
	2.	A declaration that the Plaintiff is and was at all material times entitled to avoid the Policy irrespective of any provisions contained therein on the ground that the Policy was obtained by non-disclosure and/or by misrepresentation of facts which were false in some material particular. (Order No. 2)
	3.	A declaration that the Plaintiff is not liable to indemnify the 1st and the 2nd Defendants under the Policy in respect of any liability which the Policy purports to cover or to satisfy any judgment which Woo Shui Oi and Wong Wing Choi, the Administrators of the estate of Wong Wing Wah, deceased may have against the 1st and the 2nd Defendants in HCPI 734 of 2004. (Order No. 3)
	4.	An order that the 1st and the 2nd Defendants or each of them do pay to the Plaintiff costs of and incidental to this application. (Order No. 4)’

‘	(3)	No sum shall be payable by an insurer under the foregoing provisions of this section, if, in an action commenced before, or within 3 months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration that, apart from any provision contained in the policy, he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it:
		Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgement obtained in proceedings commenced before the commencement of that action, unless before or within 7 days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the non-disclosure or false representation on which he proposes to rely, and any person to whom notice of such an action is so given shall be entitled, if he thinks fit, to be made a party thereto.’ (emphasis added)

‘	9.	Contrary to the answers and representation of facts set out in paragraphs 4 and 5 above, JB4251 was not the insured vehicle under the Policy issued by the Plaintiff to the 1st Defendant.
		Particulars
		At the material time, JB4251 was having a different chassis of no.V24-4020549 and a different engine of no. 4D56-EK2099 and was a shorter vehicle with a seating capacity for only 4 passengers. With such particulars, there is no vehicle registered with a registration mark JB4251 and licensed in accordance with the Road Traffic (Registration and Licensing of Vehicles) Regulations.’ (emphasis added)

‘	31.	I find that the chassis number and engine number are material particulars for the registration of a vehicle under the Road Traffic Ordinance, for it is by those particulars a vehicle is registered, and not by the registration mark, which is given only as a result of registration. Miss Sun's argument that we are looking at the same car is not sound, as the registration is liable to be cancelled for inaccurate particulars.
	32.	It is so obvious that it goes without saying that those particulars would be regarded by a prudent insurer as material in deciding upon the writing of a motor vehicle insurance, as the validity of the registration of the vehicle is liable to be impugned upon material discrepancies such as different chassis and engine number.’