HCA8217/1987 YOUNG CONQUEROR CO LTD v. COMMERCIAL UNION ASSURANCE CO PLC AND OTHERS - LawHero
HCA8217/1987
高等法院（民事訴訟）Deputy Judge G. Li, Q.C.29/9/1992
HCA8217/1987
-1-
HCA008217/1987
1987 No.A8217
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
_______________
BETWEEN
YOUNG CONQUEROR COMPANY LTD. Plaintiff
- and -
COMMERCIAL UNION ASSURANCE COMPANY PLC. 1st Defendant
HANG LOY FAT AH TO RESTAURANT (a firm) 2nd Defendant
SIU HON MAN 3rd Defendant
__________
Coram: Deputy Judge G. Li, Q.C. in Court
Dates of hearing: 10th-11th, 14th-15th September 1992
Date of delivery of judgment: 30th September 1992
________________
JUDGMENT
_________________
At about 9.20 p.m. on the 8th March 1987, the Plaintiffs motor car, a
BMW, was involved in a collision, in Canton Road, Kowloon immediately after it
emerged from the junction with Austin Road. At the time it was being driven by the
3rd Defendant and a girlfriend of his was in the car at the time of the collision. The
car was seriously damaged and the total cost of repairs amounted to
HK$150,000.00. The 3rd Defendant was later summonsed for careless driving
-2-
which he admitted and for which he was fined. The Plaintiff pleaded and relies on
the 3rd Defendant's conviction for careless driving as evidence of the 3rd
Defendant's negligence.
Earlier on in the evening the car and car keys had been left with the
parking service offered by the 2nd Defendant at the entrance to the 2nd
Defendant's restaurant. Mr. Chan Wu Cheong, a director of the Plaintiff, who was
the only witness called at the hearing, had driven to the 2nd Defendant's
restaurant, arriving there at about 6 p.m. or 7 p.m. He was unable to be more
precise about the time. This was the first time he had been to this restaurant. It was
his evidence, which I accept, that he had tried to find a parking space without
success so he had to use the restaurant's parking service. When he handed over the
car keys to the parking attendants, he was given a chit or a ticket which had
something printed on it, the contents of which he did not recall when giving
evidence and which he possibly had not read at the time.
The 3rd Defendant worked part-time as a parking attendant at the 2nd
Defendant's restaurant. It is not disputed by any of the parties that on the evening
in question he was given the keys to the Plaintiffs car for the purposes of parking
it.
The car was insured under a private motor car policy ("the policy") with
the 1st Defendant ("the Insurers"). The Plaintiff now claims against the Insurers to
be indemnified under the policy of insurance for the cost of repairs to the Plaintiffs
BMW. The amount claimed by the Plaintiff pursuant to the said indemnity is
HK$96,500.00 being the insured value of the motor car less HK$3,500.00 excess.
By their Amended Defence, the Insurers pleaded that it was an . express
condition of the policy that they would not be liable to indemnify the Plaintiff
against loss of or damage to the car unless it was driven by the Plaintiff or any
other person driving on the Plaintiffs order or with its permission and the car was
used exclusively for social and domestic and pleasure purposes or for the Plaintiffs
business or profession and that as the 3rd Defendant was wrongfully using the
car for purposes of his own at the time of the accident, it was not being driven
-3-
by a person on the Plaintiffs order or with the Plaintiffs permission. The
Insurers pleaded further or in the alternative t hat the car was being driven by
the 3rd Defendant for the purposes of parking the vehicle for and on behalf of
the 2nd Defendant which purpose was in connection with the business or
profession of the 2nd Defendant, or alternatively the journey in question was
for the dual social, domestic or pleasure purpose of the 2nd Defendant and for
the 2nd Defendant's purposes.
In the course of closing submissions by Counsel it became apparent
that the Plaintiff would still have an argument that it was entitled to be
indemnified under the policy if the Court were to find that at the time when
the collision occurred the 3rd Defendant was to use the expression well -
known to students of Tort, 'on a frolic of his own'. This led to yet further
amendments being made to the Re- Amended Statement of Claim and to the
Amended Defence for which I gave leave. The net result is that the Plaintiff
now pleads in paragraph 2 of the Re-Re- Amended Statement of Claim that at
the material time the 3rd Defendant was driving for the purpos e of parking the
Plaintiffs car or alternatively on a joyride for his own social, domestic or
pleasure purposes whereas the Insurers now put their case primarily on the
basis that the car was being driven by the 3rd Defendant for the purposes of
parking and therefore for the business purposes of the 2nd Defendant. They
now do not admit that the 3rd Defendant was driving on a joyride but plead
that if he was, the car was not at the material time being driven by a person on
the Plaintiffs order or with its permission.
The Plaintiff also claimed against the 3rd Defendant the full cost of
repairs to the car together with damages for loss of use whilst the vehicle was
being repaired as loss and damage suffered as a result of the 3rd Defendant's
negligent driving. Judgment in default of notice of intention to defend has
been entered against the 3rd Defendant for the full amount totalling
HK$251,000.00 together with interest and costs.
Initially, the Plaintiff claimed against the 2nd Defendant the full cost
of repairs totalling HK$150,000.00 and damages for loss of use whilst the car
-4-
was being repaired totalling $101,000.00 on the basis that the car was being
driven by the 3rd Defendant in the course of his employment with the 2nd
Defendant or alternatively the 3rd Defendant was the agent of the 2nd
Defendant and the 2nd Defendant was therefore vicariously liable to the
Plaintiff for the negligence of the 3rd Defendant. By a late re-amendment to
the Amended Statement of Claim, the Plaintiff put its case against the 2nd
Defendant also on the basis of a contract to park the car for a fee and breach
of an implied term of the contract that the 2nd Defendant would take all
necessary steps to ensure that the Plaintiffs motor vehicle was safely handled
while in the charge of the 2nd Defendant, its servants or agents. At the
hearing, the Plaintiff no longer sought damages for loss of use of the car
against the 2nd Defendant.
By its Defence, the 2nd Defendant admitted that on the evening in
question the Plaintiffs car was left with the 3rd Defendant for the purpose of
parking and that an accident involving the Plaintiffs car took place but denied
that the 3rd Defendant was at the material time its servant or agent. It averred
that the 3rd Defendant was driving the Plaintiff s car on a journey of his own
without the authority, knowledge or consent of the 2nd Defendant and denied
liability for the 3rd Defendant's alleged negligence.
The 2nd Defendant's pleaded case was that it employed one Chan Chi
Wah trading as Racing Autocentre to provide the parking service for its
customers and that Chan in turn employed 2 persons to perform this service
neither of whom was the 3rd Defendant. The 2nd Defendant averred that the
Plaintiff, thinking that the 3rd Defendant was responsible for parking, handed
over the car to the 3rd Defendant who was a friend of one of Chan's
employees and that the 3rd Defendant drove the Plaintiffs car away without
the authority, knowledge or consent of either Chan or the 2 employees. The
2nd Defendant also pleaded an exemption clause which was alleged to have
been conspicuously displayed on the parking stand located outside the 2nd
Defendant's premises to the effect that the 2nd Defendant shall not be
responsible in the event of any damage caused to the custom ers vehicles left
for parking. In Further and Better Particulars of the Defence, it was pleaded
-5-
that the parking cards or tickets distributed to the 2nd Defendant's customers
also contained the same exemption clause.
Neither the 2nd Defendant nor the 3rd Defendant appeared at the
hearing.
The claim against the 2nd Defendant
It is convenient at this point to deal with the case against the 2nd
Defendant and certain issues of fact that arise on the 2nd Defendant's
Defence. The only evidence before me as to the relationship between the 2nd
Defendant and the 3rd Defendant consists of the contents of the 3rd
Defendant's statements, one made to the police in the early hours of the
morning following the collision and the other to the Loss Adjusters engaged
by the Insurers, both those statements being admitted in evidence under the
'hearsay' procedure and 2 Employer's Returns signed by a partner in the 2nd
Defendant showing that Chan Chi Wah was employed as a driver and that he
had been so employed from at least the 1st April 1986 to the 31st March
1988.
In the statement to the police, the 3rd Defendant said that he worked
as a clerk at a company and worked part-time at night in Fat To Hot Pot at
Chatham Court as a parking attendant. He also said in that stateme nt that on
the night of 8/3/1987, a customer asked him to park a private car, CP635.
There is no dispute that this was indeed the Plaintiffs car. In the other
statement, the 3rd Defendant said that he was employed by Chan Chi Wah as
a casual parking attendant in Ah To Restaurant and was not a permanent
employee, in other words that if Mr. Chan was short of workers, Mr. Chan
would ask the 3rd Defendant's friend, one Ah Hung to ring up the 3rd
Defendant and tell him to go to work.
Clearly on the 2nd Defendant's own admission made in the form of the
Employer's Return, Mr. Chan Chi Wah was not an independent contractor but an
employee employed as a driver. On the basis of the 3rd Defendant's statements,
-6-
although he was employed on a casual basis as a part-time parking attendant at the
2nd Defendant's, he was so employed upon Mr. Chan's authority and with his
knowledge and consent. In the circumstances, I hold that the 2nd Defendant will be
vicariously liable for the 3rd Defendant's negligent driving unless I find that the 3rd
Defendant was not driving in the course of his employment at the material time.
According to the 3rd Defendant's statement to the police, he was still
trying to find a parking space at the time when the collision occurred; although
he had spotted a girlfriend of his whilst driving along Austin Road, he said, he
asked her to get into the car to look for a parking space with him. The other
statement is less clear. However, it seems to me that it is implicit in that
statement too that the 3rd Defendant was still looking for a parking space at the
time when the collision occurred.
The 3rd Defendant was, as I have already found, employed to park cars
for the 2nd Defendant's customers. When the 3rd Defendant took charge of the
Plaintiffs car and the car keys, he was clearly doing so in the course of his
employment. That being so, the burden must lie on the 2nd Defendant to show
that at the material time when the collision occurred, the 3rd Defendant was no
longer driving in the course of his employment. In this case, the 2nd Defendant
must show that the 3rd Defendant was no longer driving to look for a parking
space but was on a joyride. The fact that he picked up a girlfriend may be some
evidence tending to disprove the 3rd Defendant's assertions but that fact alone
does not mean that the 3rd Defendant had ceased to be acting in the course of
his employment if as he says he asked her to help him look for a parking space
which is how I understand his statement. In that event, the situation would b e
similar to the facts in Rose v. Plenty [1976] 1 WLR 141 where the employer
was held to be liable to the 13 year old Plaintiff whom the employee had
contrary to the employer's express prohibition engaged to help him on his milk
rounds and who was injured through falling from the milkfloat as a result of the
employee's negligent driving.
The 2nd Defendant has in my view not discharged that burden.
-7-
Even if the 3rd Defendant was driving the car on a frolic of his own,
that does not excuse the 2nd Defendant of liability where as here the car was
handed to the custody of the 2nd Defendant's servant and the 2nd De fendant was
therefore the bailee. (See Aitchison v. Page Motors Ltd. (1935)154 L.T. 128).
So far as the allegation is concerned that there was a clause on the
parking stand and on the tickets distributed to customers exempting liability,
the onus of proof must be again on the 2nd Defendant. The 2nd Defendant
having called no evidence and in the light of the evidence of the Plaintiffs
witness, I cannot find that there was a clause exempting the 2nd Defendant's
liability which was displayed on the night in question either on the parking
stand or on the ticket handed to the customer.
In the circumstances, I hold that the 2nd Defendant is liable to the
Plaintiff for the total cost of repairs to the car damaged as a result of the 3rd
Defendant's negligent driving.
The claim against the 1st Defendant
This turns largely though not exclusively on the proper construction of
the policy. For the Insurers, it was contended that clauses 5 and 6 of the
Certificate of Insurance defined the risk that was covered by the policy so that it
was for the Plaintiff to show that the driver was at the material time within
Clause 5 and that the car was at the material time being used only for social
domestic and pleasure purposes or for the Policyholder's business or
profession. I should mention that the Insurers accepted that for the purposes of
this case, no distinction should be drawn between the Plaintiff which was the
policyholder and the director of the plaintiff, Mr Chan Wu Cheong. I am
grateful to be relieved of the knotty problem of deciding how a limited
company can have domestic or pleasure purposes although Clause 6 is not in
terms confined to the Policyholder's such purposes.
Clause 5 reads under "Persons or classes of persons entitled to drive", "Any
person who is driving on the Policyholder's order or with his permission. Provided
-8-
that the person driving holds a licence to drive the Motor Vehicle or has held and is
not disqualified for holding or obtaining such a licence" and clause 6, under the
heading "Limitations as to use", "Use only for social domestic and pleasure
purposes and for the Policyholder's business or profession. The Policy does
not cover use for hire or reward racing pacemaking reliability trial speed
testing nor use for any purpose in connection with the Motor Trade."
For the Plaintiff, it was contended that those clauses had no
independent effect and that they had to be read with the policy. Miss Lau for
the Insurers referred me to the case of Farr v. Motor Traders Mutual
Insurance Societv Ltd. [1920]3 K.B. 669 and Roberts v. Anglo-Saxon
Insurance Association (1927) 96 LJKB 590. In the former case, the issue was
whether a statement made in answer to a question in a proposal form was a
warranty or merely descriptive of the risk. The holding was that it was a
statement descriptive of the risk In the latter case, a declaration contained in a
proposal form which warranted that the specified motor car was to be used
only for commercial travelling was similarly held to be a statement
descriptive of the risk covered by the insurance. In both cases, the policy
incorporated the proposal and contained words to the effect that the
statements in the proposal were to be the basis of the contract.
Miss Pinto argues that these cases are distinguishable because the
statements made in the proposals were positive representations made by the
Insured that the vehicles concerned would only be used in a particular way or
for a particular purpose. That may well be so. However, what makes these
cases distinguishable in my view is that the statements in the proposal form
were expressly stated to form the basis of the contract of insurance.
There is nothing in the Certificate of Insurance which provides that it is to
form the basis of the contract of insurance. I do not read Clause 5 and 6 as having an
independent effect or as in themselves defining the scope of the risk undertaken by
the Insurers. In my view, Clause 5 and 6 in the Certificate are incorporated by
reference in the policy so that wherever the expression "Authorised Driver" occurs
in the policy, that expression is to be read as meaning those persons or classes of
-9-
persons entitled to drive specified in Clause 5 of the Certificate, and that wherever
the expression "Limitations as to Use" occurs in the policy, that expression is to
be read as meaning the Limitations as to use specified in Clause 6 of the
Certificate.
The consequence is that the damage to the insured car is prima facie
covered by the policy and it is for the Insurers to show that the car was not
covered at the time when the collision occurred by reason of some exception
under the policy.
I am fortified in that conclusion because to accept Miss Lau's argument
would have meant that if the car was damaged whilst being driven by a thief,
the accident would have been outside the scope of cover, the thief not being
within the description of a person who is driving on the Policyholder's order or
with his permission. When I raised this example, as it seemed to me to be one
of the principal risks car owners wished to be insured against, Miss Lau sought
to say that the word "Comprehensive" in the body of the policy would have an
overriding effect and by necessary implication it should be construed to cover
loss and damage to the vehicle arising out of theft. There is simply no warrant
for so construing this policy. "Comprehensive" in the context of this policy is
clearly intended to bring into operation Sections I, II and III of the policy
whereas Third Party, Fire and Theft brings into operation Section. I as
amended' by subsection 2 and Section II and Third Party only brings into
operation Section II. In the Schedule to the policy against the words "Te rms of
Cover", is written the word "Comprehensive". Thus, it is plain to me that the
word "Comprehensive" does not have the effect contended for by Miss Lau.
It is agreed that the applicable exception is that contained in General
Exception 1(b)(i) and (ii). Now that the Insurers no longer allege that the 3rd
Defendant was at the material time wrongly using the car for purposes of his
own and therefore not a person driving on the Policyholder's order or with the
Plaintiffs permission, it may not be strictly necessary for me to consider the
true construction of General Exception Clause 1(b)(ii). The burden of proof is
on the Insurers to show that the damage occurred through an event for which
- 10 -
they are not liable by virtue of the exception and they do not now seek to show
that the 3rd Defendant was not an authorised driver.
However, as the matter was argued at some length I should deal with the
construction argued for by the Insurers. Miss Lau submitted that Clause 1(b)(ii)
should be read as though the words "whilst on the Insured's order or with his
permission or to his knowledge" were not there as Clause 1(b)(ii) cannot make
sense otherwise. She argues that a car cannot at one and the same time be being
driven on the Insured's order or with his permission or to his knowledge and be
being driven by a person who is not an Authorised Driver.
The words are there and unless it is impossible to give them some effect I
should not ignore them.
Miss Pinto points out that if one substitutes for the word "Authorised
Driver" the full meaning given to those words by virtue of the incorporation of
Clause 5 of the Insurance Certificate into the policy, there is no absurdity. On her
construction, the Insurers escape liability for loss or damage or liability caused or
sustained where someone who is driving on the policyholder's order or with his
permission or to his knowledge is driving whilst not the holder of a valid licence.
This is a fair result and an entirely commercial construction as the policyholder
can verify whether the person driving holds a valid licence or not.
On this construction, as the 3rd Defendant was driving on the
Policyholder's order or with his permission, the Insurers do not escape liability on
this ground. I decline so to construe Clause 1(b)(ii) as to deprive the Policyholder
of cover in relation to damage to the insured car where the driver who begins a
journey driving on the Policyholder's order or with his permission at some point
uses the car for a purpose outside the terms of the Policyholders order or
permission. I bear in mind the case of Browning v. Phoenix Assurance Co. Ltd.
[1960] 2 Ll. L. Rep. 360. However that case is of persuasive authority only and is
distinguishable both because the clause there was different from Clause 1(b)(ii),
the issue being whether the driver was driving on the Insured's order or with his
permission and because on the facts it was held that the driver was from the
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commencement of his journey not a person driving on the Insured's order or with
his permission.
So far as the indemnity afforded against third party claims is concerned, the
Insurers here have already provided in Section II of the policy, the section dealing
with third party risks, that the indemnity only extends to an Authorised Driver of the
insured car. Thus if the claim here had been made under Section II, the 3rd Defendant
claiming to be indemnified against a claim made by the injured passenger, the 3rd
Defendant would have to show under clause 2 of Section II that he was an Authorised
Driver. In such a situation, the Insurers do not need to have resort to the General
Exception Clause 1(b)(ii).
I therefore turn to Clause 1(b)(i). 2 questions arise here.
1) What is the effect to be given to the words "whilst on the Insured's
order or with his permission or to his knowledge" in sub-clause (b)? Do those
words have a temporal effect or ought they to be given a purposive
construction as urged on me by Miss Pinto?
2) Was the car being used otherwise than in accordance with the
Limitations as to Use?
As to the 1st question, it seems to me that the clause is ambiguous; the
expression can be read as having either a temporal effect or as having a purposive
effect such that the Insured must have ordered or permitted or known that the car was
being used otherwise than in accordance with the Limitations as to Use.
It being ambiguous, I should construe it "contra proferentem" the Insurers. I
therefore hold that the purposive construction is to be preferred. Thus the Insured
must have ordered or permitted or known that the car was being driven otherwise than
in accordance with the Limitations as to Use.
On the 2nd question, Miss Lau for the Insurers, relying on the case of Tam
Hing Wah v. Mo Choi and others (Unrep.) argues that the car was being used for
- 12 -
the 2nd Defendant's business in that the 2nd Defendant offered a parking service as
part of its business in order to attract customers. In the case of Tam Hing Wah,
the facts were that persons were injured by the negligent manoeuvring of the
insured car whilst it was being driven by the restaurant staff. The manoeuvring
was done to enable the parking attendants to release the car of another customer
and it was the restaurant staff who were claiming to be indemnified under the
policy against the claims of the persons injured.
Miss Pinto urges that this is a case on its own narrow facts but it seems
to me that the learned (then) Deputy Judge took the view that any journey for
the purposes of parking the customers' cars would have been for the restaurant's
business purposes.
Insofar as it necessary for me to do so, I respectfully differ from the
view taken by the learned Deputy Judge in that case. It seems to me to be an
abuse of language to say that the car is being used for the business of the
restaurant when it is being driven for the purposes of parking the customer's car.
It may be that the parking attendants are driving in the course of their
employment but the car is not being used for the restaurant's business purposes.
To hold otherwise is to confuse 2 different concepts. The Plaintiffs witness here
said that he only used the 2nd Defendant's parking service because he could not
find a parking space himself. He gave the keys to the 3rd Defendant so that the
car could be parked. I bear in mind he also answered in cross-examination that
he didn't think that he had for one moment regarded the parking attendant as his
agent. However, it seems to me that he cannot be taken to have, understood the
legal concept of agency. Had the question been more simply pos ed as "Did you
regard the parking attendant as parking the car for you?" he would have
answered "Yes" consistently with his earlier evidence.
Thus I find that the purposes of the Plaintiff attached to the journey and
that it was being used for social, domestic or pleasure purposes or of the
Policyholder's business or professional purposes and not for the business
purposes of the 2nd Defendant.
- 13 -
Again the Insurers do not seek to assert that the 3rd Defendant was on a
joyride and it is unnecessary for me to make a finding. Of course, the burden would
have been upon them to show that at the material time the car was being used
otherwise than in accordance with the Limitations as to Use. In any event if the car
was being driver by the 3rd Defendant on a joyride, I find it was being used for social,
domestic or pleasure purposes and therefore not otherwise than in accordance with the
Limitations as to Use.
It is unnecessary on my findings to give consideration to the cases of
Passmore v. Vulcan Boiler and General Insurance Co. Ltd. (1936) 54 Ll. L. Rep.
92 and Seddon v. Binions (1978] 1 Ll. Rep. 381 as in my judgment, no question of
"dual use" arises. Even if I am wrong on the 1st question therefore, it is irrelevant to
the result of this case. I am indebted to both Counsel for their very careful and
thorough arguments. I have not dealt with those arguments unnecessary to this
judgment.
Accordingly I give judgment for the Plaintiff against the 1st Defendant in the
sum of HK$96,500.00 and against the 2nd Defendant damages in the sum of
HK$150,000.00.
Representation:
Miss Josephine Pinto (instructed by Messrs. Johnson Stokes & Master) for the
Plaintiff
Miss Selina Lau (instructed by Messrs. Robertson Double) for the 1st Defendant
2nd & 3rd Defendants – absent
YOUNG CONQUEROR CO LTD v. COMMERCIAL UNION ASSURANCE CO PLC AND OTHERS
-1-
HCA008217/1987
1987 No.A8217
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
_______________
BETWEEN
YOUNG CONQUEROR COMPANY LTD. Plaintiff
- and -
COMMERCIAL UNION ASSURANCE COMPANY PLC. 1st Defendant
HANG LOY FAT AH TO RESTAURANT (a firm) 2nd Defendant
SIU HON MAN 3rd Defendant
__________
Coram: Deputy Judge G. Li, Q.C. in Court
Dates of hearing: 10th-11th, 14th-15th September 1992
Date of delivery of judgment: 30th September 1992
________________
JUDGMENT
_________________
At about 9.20 p.m. on the 8th March 1987, the Plaintiffs motor car, a
BMW, was involved in a collision, in Canton Road, Kowloon immediately after it
emerged from the junction with Austin Road. At the time it was being driven by the
3rd Defendant and a girlfriend of his was in the car at the time of the collision. The
car was seriously damaged and the total cost of repairs amounted to
HK$150,000.00. The 3rd Defendant was later summonsed for careless driving
-2-
which he admitted and for which he was fined. The Plaintiff pleaded and relies on
the 3rd Defendant's conviction for careless driving as evidence of the 3rd
Defendant's negligence.
Earlier on in the evening the car and car keys had been left with the
parking service offered by the 2nd Defendant at the entrance to the 2nd
Defendant's restaurant. Mr. Chan Wu Cheong, a director of the Plaintiff, who was
the only witness called at the hearing, had driven to the 2nd Defendant's
restaurant, arriving there at about 6 p.m. or 7 p.m. He was unable to be more
precise about the time. This was the first time he had been to this restaurant. It was
his evidence, which I accept, that he had tried to find a parking space without
success so he had to use the restaurant's parking service. When he handed over the
car keys to the parking attendants, he was given a chit or a ticket which had
something printed on it, the contents of which he did not recall when giving
evidence and which he possibly had not read at the time.
The 3rd Defendant worked part-time as a parking attendant at the 2nd
Defendant's restaurant. It is not disputed by any of the parties that on the evening
in question he was given the keys to the Plaintiffs car for the purposes of parking
it.
The car was insured under a private motor car policy ("the policy") with
the 1st Defendant ("the Insurers"). The Plaintiff now claims against the Insurers to
be indemnified under the policy of insurance for the cost of repairs to the Plaintiffs
BMW. The amount claimed by the Plaintiff pursuant to the said indemnity is
HK$96,500.00 being the insured value of the motor car less HK$3,500.00 excess.
By their Amended Defence, the Insurers pleaded that it was an . express
condition of the policy that they would not be liable to indemnify the Plaintiff
against loss of or damage to the car unless it was driven by the Plaintiff or any
other person driving on the Plaintiffs order or with its permission and the car was
used exclusively for social and domestic and pleasure purposes or for the Plaintiffs
business or profession and that as the 3rd Defendant was wrongfully using the
car for purposes of his own at the time of the accident, it was not being driven
-3-
by a person on the Plaintiffs order or with the Plaintiffs permission. The
Insurers pleaded further or in the alternative t hat the car was being driven by
the 3rd Defendant for the purposes of parking the vehicle for and on behalf of
the 2nd Defendant which purpose was in connection with the business or
profession of the 2nd Defendant, or alternatively the journey in question was
for the dual social, domestic or pleasure purpose of the 2nd Defendant and for
the 2nd Defendant's purposes.
In the course of closing submissions by Counsel it became apparent
that the Plaintiff would still have an argument that it was entitled to be
indemnified under the policy if the Court were to find that at the time when
the collision occurred the 3rd Defendant was to use the expression well -
known to students of Tort, 'on a frolic of his own'. This led to yet further
amendments being made to the Re- Amended Statement of Claim and to the
Amended Defence for which I gave leave. The net result is that the Plaintiff
now pleads in paragraph 2 of the Re-Re- Amended Statement of Claim that at
the material time the 3rd Defendant was driving for the purpos e of parking the
Plaintiffs car or alternatively on a joyride for his own social, domestic or
pleasure purposes whereas the Insurers now put their case primarily on the
basis that the car was being driven by the 3rd Defendant for the purposes of
parking and therefore for the business purposes of the 2nd Defendant. They
now do not admit that the 3rd Defendant was driving on a joyride but plead
that if he was, the car was not at the material time being driven by a person on
the Plaintiffs order or with its permission.
The Plaintiff also claimed against the 3rd Defendant the full cost of
repairs to the car together with damages for loss of use whilst the vehicle was
being repaired as loss and damage suffered as a result of the 3rd Defendant's
negligent driving. Judgment in default of notice of intention to defend has
been entered against the 3rd Defendant for the full amount totalling
HK$251,000.00 together with interest and costs.
Initially, the Plaintiff claimed against the 2nd Defendant the full cost
of repairs totalling HK$150,000.00 and damages for loss of use whilst the car
-4-
was being repaired totalling $101,000.00 on the basis that the car was being
driven by the 3rd Defendant in the course of his employment with the 2nd
Defendant or alternatively the 3rd Defendant was the agent of the 2nd
Defendant and the 2nd Defendant was therefore vicariously liable to the
Plaintiff for the negligence of the 3rd Defendant. By a late re-amendment to
the Amended Statement of Claim, the Plaintiff put its case against the 2nd
Defendant also on the basis of a contract to park the car for a fee and breach
of an implied term of the contract that the 2nd Defendant would take all
necessary steps to ensure that the Plaintiffs motor vehicle was safely handled
while in the charge of the 2nd Defendant, its servants or agents. At the
hearing, the Plaintiff no longer sought damages for loss of use of the car
against the 2nd Defendant.
By its Defence, the 2nd Defendant admitted that on the evening in
question the Plaintiffs car was left with the 3rd Defendant for the purpose of
parking and that an accident involving the Plaintiffs car took place but denied
that the 3rd Defendant was at the material time its servant or agent. It averred
that the 3rd Defendant was driving the Plaintiff s car on a journey of his own
without the authority, knowledge or consent of the 2nd Defendant and denied
liability for the 3rd Defendant's alleged negligence.
The 2nd Defendant's pleaded case was that it employed one Chan Chi
Wah trading as Racing Autocentre to provide the parking service for its
customers and that Chan in turn employed 2 persons to perform this service
neither of whom was the 3rd Defendant. The 2nd Defendant averred that the
Plaintiff, thinking that the 3rd Defendant was responsible for parking, handed
over the car to the 3rd Defendant who was a friend of one of Chan's
employees and that the 3rd Defendant drove the Plaintiffs car away without
the authority, knowledge or consent of either Chan or the 2 employees. The
2nd Defendant also pleaded an exemption clause which was alleged to have
been conspicuously displayed on the parking stand located outside the 2nd
Defendant's premises to the effect that the 2nd Defendant shall not be
responsible in the event of any damage caused to the custom ers vehicles left
for parking. In Further and Better Particulars of the Defence, it was pleaded
-5-
that the parking cards or tickets distributed to the 2nd Defendant's customers
also contained the same exemption clause.
Neither the 2nd Defendant nor the 3rd Defendant appeared at the
hearing.
The claim against the 2nd Defendant
It is convenient at this point to deal with the case against the 2nd
Defendant and certain issues of fact that arise on the 2nd Defendant's
Defence. The only evidence before me as to the relationship between the 2nd
Defendant and the 3rd Defendant consists of the contents of the 3rd
Defendant's statements, one made to the police in the early hours of the
morning following the collision and the other to the Loss Adjusters engaged
by the Insurers, both those statements being admitted in evidence under the
'hearsay' procedure and 2 Employer's Returns signed by a partner in the 2nd
Defendant showing that Chan Chi Wah was employed as a driver and that he
had been so employed from at least the 1st April 1986 to the 31st March
1988.
In the statement to the police, the 3rd Defendant said that he worked
as a clerk at a company and worked part-time at night in Fat To Hot Pot at
Chatham Court as a parking attendant. He also said in that stateme nt that on
the night of 8/3/1987, a customer asked him to park a private car, CP635.
There is no dispute that this was indeed the Plaintiffs car. In the other
statement, the 3rd Defendant said that he was employed by Chan Chi Wah as
a casual parking attendant in Ah To Restaurant and was not a permanent
employee, in other words that if Mr. Chan was short of workers, Mr. Chan
would ask the 3rd Defendant's friend, one Ah Hung to ring up the 3rd
Defendant and tell him to go to work.
Clearly on the 2nd Defendant's own admission made in the form of the
Employer's Return, Mr. Chan Chi Wah was not an independent contractor but an
employee employed as a driver. On the basis of the 3rd Defendant's statements,
-6-
although he was employed on a casual basis as a part-time parking attendant at the
2nd Defendant's, he was so employed upon Mr. Chan's authority and with his
knowledge and consent. In the circumstances, I hold that the 2nd Defendant will be
vicariously liable for the 3rd Defendant's negligent driving unless I find that the 3rd
Defendant was not driving in the course of his employment at the material time.
According to the 3rd Defendant's statement to the police, he was still
trying to find a parking space at the time when the collision occurred; although
he had spotted a girlfriend of his whilst driving along Austin Road, he said, he
asked her to get into the car to look for a parking space with him. The other
statement is less clear. However, it seems to me that it is implicit in that
statement too that the 3rd Defendant was still looking for a parking space at the
time when the collision occurred.
The 3rd Defendant was, as I have already found, employed to park cars
for the 2nd Defendant's customers. When the 3rd Defendant took charge of the
Plaintiffs car and the car keys, he was clearly doing so in the course of his
employment. That being so, the burden must lie on the 2nd Defendant to show
that at the material time when the collision occurred, the 3rd Defendant was no
longer driving in the course of his employment. In this case, the 2nd Defendant
must show that the 3rd Defendant was no longer driving to look for a parking
space but was on a joyride. The fact that he picked up a girlfriend may be some
evidence tending to disprove the 3rd Defendant's assertions but that fact alone
does not mean that the 3rd Defendant had ceased to be acting in the course of
his employment if as he says he asked her to help him look for a parking space
which is how I understand his statement. In that event, the situation would b e
similar to the facts in Rose v. Plenty [1976] 1 WLR 141 where the employer
was held to be liable to the 13 year old Plaintiff whom the employee had
contrary to the employer's express prohibition engaged to help him on his milk
rounds and who was injured through falling from the milkfloat as a result of the
employee's negligent driving.
The 2nd Defendant has in my view not discharged that burden.
-7-
Even if the 3rd Defendant was driving the car on a frolic of his own,
that does not excuse the 2nd Defendant of liability where as here the car was
handed to the custody of the 2nd Defendant's servant and the 2nd De fendant was
therefore the bailee. (See Aitchison v. Page Motors Ltd. (1935)154 L.T. 128).
So far as the allegation is concerned that there was a clause on the
parking stand and on the tickets distributed to customers exempting liability,
the onus of proof must be again on the 2nd Defendant. The 2nd Defendant
having called no evidence and in the light of the evidence of the Plaintiffs
witness, I cannot find that there was a clause exempting the 2nd Defendant's
liability which was displayed on the night in question either on the parking
stand or on the ticket handed to the customer.
In the circumstances, I hold that the 2nd Defendant is liable to the
Plaintiff for the total cost of repairs to the car damaged as a result of the 3rd
Defendant's negligent driving.
The claim against the 1st Defendant
This turns largely though not exclusively on the proper construction of
the policy. For the Insurers, it was contended that clauses 5 and 6 of the
Certificate of Insurance defined the risk that was covered by the policy so that it
was for the Plaintiff to show that the driver was at the material time within
Clause 5 and that the car was at the material time being used only for social
domestic and pleasure purposes or for the Policyholder's business or
profession. I should mention that the Insurers accepted that for the purposes of
this case, no distinction should be drawn between the Plaintiff which was the
policyholder and the director of the plaintiff, Mr Chan Wu Cheong. I am
grateful to be relieved of the knotty problem of deciding how a limited
company can have domestic or pleasure purposes although Clause 6 is not in
terms confined to the Policyholder's such purposes.
Clause 5 reads under "Persons or classes of persons entitled to drive", "Any
person who is driving on the Policyholder's order or with his permission. Provided
-8-
that the person driving holds a licence to drive the Motor Vehicle or has held and is
not disqualified for holding or obtaining such a licence" and clause 6, under the
heading "Limitations as to use", "Use only for social domestic and pleasure
purposes and for the Policyholder's business or profession. The Policy does
not cover use for hire or reward racing pacemaking reliability trial speed
testing nor use for any purpose in connection with the Motor Trade."
For the Plaintiff, it was contended that those clauses had no
independent effect and that they had to be read with the policy. Miss Lau for
the Insurers referred me to the case of Farr v. Motor Traders Mutual
Insurance Societv Ltd. [1920]3 K.B. 669 and Roberts v. Anglo-Saxon
Insurance Association (1927) 96 LJKB 590. In the former case, the issue was
whether a statement made in answer to a question in a proposal form was a
warranty or merely descriptive of the risk. The holding was that it was a
statement descriptive of the risk In the latter case, a declaration contained in a
proposal form which warranted that the specified motor car was to be used
only for commercial travelling was similarly held to be a statement
descriptive of the risk covered by the insurance. In both cases, the policy
incorporated the proposal and contained words to the effect that the
statements in the proposal were to be the basis of the contract.
Miss Pinto argues that these cases are distinguishable because the
statements made in the proposals were positive representations made by the
Insured that the vehicles concerned would only be used in a particular way or
for a particular purpose. That may well be so. However, what makes these
cases distinguishable in my view is that the statements in the proposal form
were expressly stated to form the basis of the contract of insurance.
There is nothing in the Certificate of Insurance which provides that it is to
form the basis of the contract of insurance. I do not read Clause 5 and 6 as having an
independent effect or as in themselves defining the scope of the risk undertaken by
the Insurers. In my view, Clause 5 and 6 in the Certificate are incorporated by
reference in the policy so that wherever the expression "Authorised Driver" occurs
in the policy, that expression is to be read as meaning those persons or classes of
-9-
persons entitled to drive specified in Clause 5 of the Certificate, and that wherever
the expression "Limitations as to Use" occurs in the policy, that expression is to
be read as meaning the Limitations as to use specified in Clause 6 of the
Certificate.
The consequence is that the damage to the insured car is prima facie
covered by the policy and it is for the Insurers to show that the car was not
covered at the time when the collision occurred by reason of some exception
under the policy.
I am fortified in that conclusion because to accept Miss Lau's argument
would have meant that if the car was damaged whilst being driven by a thief,
the accident would have been outside the scope of cover, the thief not being
within the description of a person who is driving on the Policyholder's order or
with his permission. When I raised this example, as it seemed to me to be one
of the principal risks car owners wished to be insured against, Miss Lau sought
to say that the word "Comprehensive" in the body of the policy would have an
overriding effect and by necessary implication it should be construed to cover
loss and damage to the vehicle arising out of theft. There is simply no warrant
for so construing this policy. "Comprehensive" in the context of this policy is
clearly intended to bring into operation Sections I, II and III of the policy
whereas Third Party, Fire and Theft brings into operation Section. I as
amended' by subsection 2 and Section II and Third Party only brings into
operation Section II. In the Schedule to the policy against the words "Te rms of
Cover", is written the word "Comprehensive". Thus, it is plain to me that the
word "Comprehensive" does not have the effect contended for by Miss Lau.
It is agreed that the applicable exception is that contained in General
Exception 1(b)(i) and (ii). Now that the Insurers no longer allege that the 3rd
Defendant was at the material time wrongly using the car for purposes of his
own and therefore not a person driving on the Policyholder's order or with the
Plaintiffs permission, it may not be strictly necessary for me to consider the
true construction of General Exception Clause 1(b)(ii). The burden of proof is
on the Insurers to show that the damage occurred through an event for which
- 10 -
they are not liable by virtue of the exception and they do not now seek to show
that the 3rd Defendant was not an authorised driver.
However, as the matter was argued at some length I should deal with the
construction argued for by the Insurers. Miss Lau submitted that Clause 1(b)(ii)
should be read as though the words "whilst on the Insured's order or with his
permission or to his knowledge" were not there as Clause 1(b)(ii) cannot make
sense otherwise. She argues that a car cannot at one and the same time be being
driven on the Insured's order or with his permission or to his knowledge and be
being driven by a person who is not an Authorised Driver.
The words are there and unless it is impossible to give them some effect I
should not ignore them.
Miss Pinto points out that if one substitutes for the word "Authorised
Driver" the full meaning given to those words by virtue of the incorporation of
Clause 5 of the Insurance Certificate into the policy, there is no absurdity. On her
construction, the Insurers escape liability for loss or damage or liability caused or
sustained where someone who is driving on the policyholder's order or with his
permission or to his knowledge is driving whilst not the holder of a valid licence.
This is a fair result and an entirely commercial construction as the policyholder
can verify whether the person driving holds a valid licence or not.
On this construction, as the 3rd Defendant was driving on the
Policyholder's order or with his permission, the Insurers do not escape liability on
this ground. I decline so to construe Clause 1(b)(ii) as to deprive the Policyholder
of cover in relation to damage to the insured car where the driver who begins a
journey driving on the Policyholder's order or with his permission at some point
uses the car for a purpose outside the terms of the Policyholders order or
permission. I bear in mind the case of Browning v. Phoenix Assurance Co. Ltd.
[1960] 2 Ll. L. Rep. 360. However that case is of persuasive authority only and is
distinguishable both because the clause there was different from Clause 1(b)(ii),
the issue being whether the driver was driving on the Insured's order or with his
permission and because on the facts it was held that the driver was from the
- 11 -
commencement of his journey not a person driving on the Insured's order or with
his permission.
So far as the indemnity afforded against third party claims is concerned, the
Insurers here have already provided in Section II of the policy, the section dealing
with third party risks, that the indemnity only extends to an Authorised Driver of the
insured car. Thus if the claim here had been made under Section II, the 3rd Defendant
claiming to be indemnified against a claim made by the injured passenger, the 3rd
Defendant would have to show under clause 2 of Section II that he was an Authorised
Driver. In such a situation, the Insurers do not need to have resort to the General
Exception Clause 1(b)(ii).
I therefore turn to Clause 1(b)(i). 2 questions arise here.
1) What is the effect to be given to the words "whilst on the Insured's
order or with his permission or to his knowledge" in sub-clause (b)? Do those
words have a temporal effect or ought they to be given a purposive
construction as urged on me by Miss Pinto?
2) Was the car being used otherwise than in accordance with the
Limitations as to Use?
As to the 1st question, it seems to me that the clause is ambiguous; the
expression can be read as having either a temporal effect or as having a purposive
effect such that the Insured must have ordered or permitted or known that the car was
being used otherwise than in accordance with the Limitations as to Use.
It being ambiguous, I should construe it "contra proferentem" the Insurers. I
therefore hold that the purposive construction is to be preferred. Thus the Insured
must have ordered or permitted or known that the car was being driven otherwise than
in accordance with the Limitations as to Use.
On the 2nd question, Miss Lau for the Insurers, relying on the case of Tam
Hing Wah v. Mo Choi and others (Unrep.) argues that the car was being used for
- 12 -
the 2nd Defendant's business in that the 2nd Defendant offered a parking service as
part of its business in order to attract customers. In the case of Tam Hing Wah,
the facts were that persons were injured by the negligent manoeuvring of the
insured car whilst it was being driven by the restaurant staff. The manoeuvring
was done to enable the parking attendants to release the car of another customer
and it was the restaurant staff who were claiming to be indemnified under the
policy against the claims of the persons injured.
Miss Pinto urges that this is a case on its own narrow facts but it seems
to me that the learned (then) Deputy Judge took the view that any journey for
the purposes of parking the customers' cars would have been for the restaurant's
business purposes.
Insofar as it necessary for me to do so, I respectfully differ from the
view taken by the learned Deputy Judge in that case. It seems to me to be an
abuse of language to say that the car is being used for the business of the
restaurant when it is being driven for the purposes of parking the customer's car.
It may be that the parking attendants are driving in the course of their
employment but the car is not being used for the restaurant's business purposes.
To hold otherwise is to confuse 2 different concepts. The Plaintiffs witness here
said that he only used the 2nd Defendant's parking service because he could not
find a parking space himself. He gave the keys to the 3rd Defendant so that the
car could be parked. I bear in mind he also answered in cross-examination that
he didn't think that he had for one moment regarded the parking attendant as his
agent. However, it seems to me that he cannot be taken to have, understood the
legal concept of agency. Had the question been more simply pos ed as "Did you
regard the parking attendant as parking the car for you?" he would have
answered "Yes" consistently with his earlier evidence.
Thus I find that the purposes of the Plaintiff attached to the journey and
that it was being used for social, domestic or pleasure purposes or of the
Policyholder's business or professional purposes and not for the business
purposes of the 2nd Defendant.
- 13 -
Again the Insurers do not seek to assert that the 3rd Defendant was on a
joyride and it is unnecessary for me to make a finding. Of course, the burden would
have been upon them to show that at the material time the car was being used
otherwise than in accordance with the Limitations as to Use. In any event if the car
was being driver by the 3rd Defendant on a joyride, I find it was being used for social,
domestic or pleasure purposes and therefore not otherwise than in accordance with the
Limitations as to Use.
It is unnecessary on my findings to give consideration to the cases of
Passmore v. Vulcan Boiler and General Insurance Co. Ltd. (1936) 54 Ll. L. Rep.
92 and Seddon v. Binions (1978] 1 Ll. Rep. 381 as in my judgment, no question of
"dual use" arises. Even if I am wrong on the 1st question therefore, it is irrelevant to
the result of this case. I am indebted to both Counsel for their very careful and
thorough arguments. I have not dealt with those arguments unnecessary to this
judgment.
Accordingly I give judgment for the Plaintiff against the 1st Defendant in the
sum of HK$96,500.00 and against the 2nd Defendant damages in the sum of
HK$150,000.00.
Representation:
Miss Josephine Pinto (instructed by Messrs. Johnson Stokes & Master) for the
Plaintiff
Miss Selina Lau (instructed by Messrs. Robertson Double) for the 1st Defendant
2nd & 3rd Defendants – absent