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CACV 255/2012
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO. 255 OF 2012
(ON APPEAL FROM DCCJ NO. 1467 OF 2008)
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BETWEEN
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DAH SING INSURANCE SERVICES LIMITED |
Plaintiff |
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and |
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GILL GURBUX SINGH |
Defendant |
| Before: Hon Cheung, Yuen and Kwan JJA in Court |
| Date of Hearing: 12 November 2013 |
| Date of Judgment: 23 December 2013 |
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Hon Cheung JA:
1. I agree with the judgment of Kwan JA.
Hon Yuen JA:
2. I agree with the judgment of Kwan JA.
Hon Kwan JA:
3. This is an appeal of the plaintiff, Dah Sing Insurance Services Ltd, against the judgment of Deputy District Judge K H Hui on 18 May 2012. Leave to appeal was granted by Chu JA on 9 November 2012. This appeal is solely in respect of the award of damages made by the judge on the counterclaim for negligence and breach of statutory duty. The plaintiff does not challenge the findings of fact made by the judge. The plaintiff’s contention is that the judge was wrong in law to find that the plaintiff was in breach of a duty of care in that the negligence as found by the judge was not a case as pleaded or otherwise advanced by the defendant at the trial. In any event, there was no viable action in negligence and the alleged breach of statutory duty did not give rise to a civil right of action in damages.
The background
4. The relevant background matters may first be stated as follows.
5. The defendant, Gill Gurbux Singh, is an experienced insurance agent and has been working in the insurance industry for over thirty years since the mid 1970s. He was appointed as the plaintiff’s insurance agent and a senior district manager in early 2007. The parties signed four agreements for that purpose: an Agreement for Appointment of Technical Representative[1] dated 23 January 2007 (“Agent’s Contract”); Commissions and Conditions of Compensation – Remuneration Agreement for Senior District Manager dated 23 January 2007; an Offer Letter dated 14 February 2007; and a Letter of Understanding dated 14 February 2007 (collectively referred to as “the Agreement”). His responsibility was to recruit down-line agents and managers and to set up an agency team for selling the plaintiff’s policies.
6. Under the Code of Practice for the Administration of Insurance Agents (“the Code”)[2], a principal (i.e. an insurer) must obtain the confirmation of the Insurance Agents Registration Board (“IARB”)[3] in accordance with the Code before confirming the appointment of any person as its insurance agent[4]. IARB, on behalf of the relevant principal, shall register an insurance agent as soon as practicable after receiving the application for registration of such agent by that principal, and shall issue a registration number to the agent once he is registered[5].
7. According to the Insurance Agents Registration History of the defendant, he was registered as a “technical representative of insurance agency” of the plaintiff on 19 January 2007.
8. The defendant’s appointment with the plaintiff was terminated on 23 August 2007. The reason why his appointment was terminated is immaterial for this appeal.
9. Under clause 17 of the Code, the registration of an insurance agent shall be cancelled upon the insurance agent ceasing to be an agent of the relevant principal. The principal shall notify IARB within seven days of such cessation and provide such details as IARB may require. Upon such notification by the principal, IARB, on behalf of the principal, shall immediately remove the insurance agent from that part of the register relating to the principal.
10. On 5 September 2007, the plaintiff issued a letter to the defendant demanding $250,000, of which $150,000 was for repayment of the sign-on fee and $100,000 was for repayment of the monthly allowance upon the termination of his appointment on 23 August 2007. No repayment was made by the defendant.
11. According to the Insurance Agents Registration History of the defendant, his registration as an insurance agent of the plaintiff was cancelled only on 14 November 2007 and it came about in this way for a totally different reason.
12. On 8 November 2007, The Hong Kong Federation of Insurers (“HKFI”) issued a letter to the defendant to notify him that IARB examined his case on 3 November 2007 and found that he had not complied with the requirements for Continuing Professional Development (“CPD”) in that he had not obtained sufficient CPD credits for the assessment year ended 31 July 2007. Pursuant to paragraph 7 of the Guidance Note on Compliance with the Requirements of the Continuing Professional Development Programme issued on 30 November 2004 and revised on 13 June 2005 (“the Note”), his confirmation of registration as an insurance agent of the plaintiff was revoked for three months from 14 November 2007 to 13 February 2008, during which period IARB shall not consider his application for re-registration.
13. On 10 April 2008, the plaintiff issued the writ in the District Court against the defendant claiming $250,000 for repayment of the sign-on fee and the monthly allowance.
14. The defendant acted in person as he did not obtain legal aid until a week before the trial. He filed a homemade defence and counterclaim denying liability to make any repayment and counterclaimed for outstanding monthly allowance and office allowance, as well as damages in that “the plaintiff had breached the Agency Agreement”. The claim for damages was premised on these allegations:
(1) the plaintiff failed to report to IARB of the termination of the defendant’s appointment as an insurance agent within seven days of the termination, contrary to clause 17 of the Code[6]; and
(2) the plaintiff failed to report the defendant’s CPD credits to HKFI, contrary to paragraph 6(c) of the Note[7].
15. He contended that as a result of the plaintiff’s breaches, he was prevented from working as an insurance agent between 31 August 2007 and 13 February 2008 for five and a half months, and claimed loss of income for this period[8].
The judgment below
16. At the trial, the defendant accepted he had to repay the sign-on fee but contested the rest of the plaintiff’s claim.
17. The judge dismissed the plaintiff’s claim for repayment of the monthly allowance. He found in favour of the defendant that he was entitled to be paid the outstanding monthly allowance and office allowance ($50,000 and $25,950). There is no appeal in respect of the claim and these parts of the counterclaim.
18. In respect of the counterclaim for damages, it was not argued by the plaintiff’s former counsel that the plaintiff owed no duty of care to the defendant or that there was no statutory duty. The only dispute raised by the plaintiff was that as a matter of fact, there was no breach of the duties[9]. The judge made these findings of fact (from which there is also no appeal):
(1) Contrary to clause 17 of the Code, the plaintiff had failed to report the termination of the defendant’s appointment to IARB. No record of such notification to IARB by fax or by post can be found in the personal file of the defendant kept by the plaintiff[10].
(2) The plaintiff had failed to check the Movement Record issued by IARB to insurance companies from time to time setting out who were registered successfully as insurance agents and who had their registration cancelled. If the plaintiff had checked the Movement Record or checked it properly, it would have found out that the defendant’s registration had not been cancelled notwithstanding his appointment was terminated on 23 August 2007 and could have rectified its mistake or omission promptly[11].
(3) In July 2007, the defendant had submitted to his superior Thomas Li a certificate issued by the Hong Kong Federation of Trade Unions Occupational Retraining Centre as proof of having obtained the required CPD credits, but the plaintiff failed to submit the certificate to IARB[12].
(4) Mr Li did not provide the defendant with a declaration form for completion required to be submitted by the insurer in reporting the CPD credits of insurance agents under paragraph 6(c)(i) of the Note and the defendant had no knowledge at the time he had to fill in such a declaration form[13].
(5) The plaintiff had failed collect from the defendant the signed declaration form and to report the CPD credits of the defendant within time, contrary to paragraph 6(c)(vi)[14] of the Note.
(6) The defendant had failed to take all reasonable steps to mitigate his loss in that he had failed to complain to HKFI about the plaintiff’s failure to cancel his registration when he discovered in September 2007 he was still registered as the plaintiff’s insurance agent[15].
19. The judge accepted the defendant’s evidence regarding his average monthly income between 1 April 2005 and 23 August 2007, which was $73,616. He awarded damages to the defendant for the plaintiff’s failure to report the termination of his appointment to IARB in the amount equivalent to one month’s loss of income ($73,616), and damages for the plaintiff’s failure to report the CPD credits in the amount equivalent to three months’ loss of income ($220,848), being the period the defendant was suspended for registration. After giving credit for the sign-on fee which the defendant admitted he had to repay, the net sum awarded to the defendant in respect of all heads of his counterclaim was $220,414 ($370,414 - $150,000). The judge ordered the defendant to pay the plaintiff’s costs of the action up to and including the first day of the trial and the plaintiff to pay the defendant’s costs of the counterclaim.
The pleading points
20. I will first deal with the...
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