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Falcon Insurance Company (Hong Kong) Ltd v Bing Lee Crane-lorry Transportation Co Ltd And Another

Judgment Cited authorities 4 Cited in 1 Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date28 April 2023
Neutral Citation[2023] HKCFI 1129
Subject MatterMiscellaneous Proceedings
Judgement NumberHCMP1063/2022
Year2023
HCMP1063/2022 FALCON INSURANCE COMPANY (HONG KONG) LTD v. BING LEE CRANE-LORRY TRANSPORTATION CO LTD AND ANOTHER

HCMP 1063/2022

[2023] HKCFI 1129

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1063 OF 2022

_______________________

IN THE MATTER OF an accident at LOHAS Park Package Five at Tseung Kwan O Town Lot No 70, Area 86, New Territories on 14 September 2018 (“the Accident”) involving a Volvo lorry crane with vehicle registration mark TV4982 (“TV4982”)
and
IN THE MATTER OF a commercial vehicle insurance policy number 81A-P5036901-MCV17-NS issued by the Plaintiff covering the period from 19 November 2017 to 18 November 2018 (“the Policy”)
and
IN THE MATTER OF Section 10(3) of the Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap 272)

_______________________

BETWEEN
FALCON INSURANCE COMPANY Plaintiff
(HONG KONG) LIMITED
and
BING LEE CRANE-LORRY 1st Defendant
TRANSPORTATION CO, LIMITED
TUGU INSURANCE COMPANY LIMITED 2nd Defendant

_______________________

Before: Hon B Chu J in Court
Date of Hearing: 6 March 2023
Date of Decision: 28 April 2023

___________________

D E C I S I O N

___________________

INTRODUCTION

1. In the present proceedings, the plaintiff (“Falcon”) is seeking a declaration that it is entitled to avoid a commercial vehicle insurance policy (“Policy”) issued to the 1st defendant (“Bing Lee”) under section 10 (3) of the Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap 272 (“Ordinance”).

2. On 11 November 2022, Tugu Insurance Company Limited (“Tugu”) was granted leave to be added as the 2nd defendant in these proceedings. The amended originating summons was later filed on 22 November 2022 (“AOS”), and directions were given for the substantive hearing of the AOS to be fixed. The substantive hearing for Falcon’s AOS was eventually fixed before this Court on 6 March 2023.

3. In paragraph 1 of the AOS, Falcon seeks the following:

“A declaration that [Falcon] is entitled to avoid the Policy on the ground that the Policy was obtained by the non-disclosure of a material fact, and/or a presentation of the fact which was false in some material particular”. (“Declaration”)”

4. On 27 January 2023, Bing Lee issued a summons seeking an order for all further proceedings herein be stayed and that the parties to refer their disputes to arbitration in accordance with section 18(g) of the Policy (“Stay Summons”). The Stay Summons was issued under section 20(1) of the Arbitration Ordinance, Cap 609 (“AO”), Order 12 rule 8 and Order 73 rule 2 of the RHC, and inherent jurisdiction.

5. Both the AOS and the Stay Summons are now before this Court.

BACKGROUND

6. Falcon was the motor insurer of Bing Lee in relation to a lorry crane with registration number TV 4982 (“Vehicle”) for the period from 19 November 2017 to 18 November 2018, under the Policy, which is a commercial vehicle insurance policy numbered 81A-P5036901-MCV17-NS issued on 20 December 2017 by Falcon to Bing Lee.

7. The owner and director of Bing Lee is Mr Wong Tak Wing (“Mr Wong”) and the named driver of the Vehicle stated in the “Motor Insurance Proposal Form” (“Proposal Form”) submitted for subscribing the Policy was Mr Leung Siu Lung (“Mr Leung”).

8. On 14 September 2018, whilst driving the Vehicle, Mr Leung was involved in an accident at LOHAS Park Package Five in Tseung Kwan O, whereby part of the crane of the Vehicle fell and caused injuries to 3 persons including one Wong Kwai Tak (“Accident”).

9. Mr Wong Kwai Tak (“WKT”) subsequently commenced a Personal Injuries Action No 280/2021 in the High Court on 27 August 2021, and claimed against 4 defendants, namely (1) WKT’s direct employer, (2) the subcontractor of the site, (3) the principal contractor of the site, and (4) Bing Lee, being the owner of the Vehicle and employer of Mr Leung (“PI Action”).

10. TS Tong & Co are solicitors acting for Bing Lee’s co-defendants (1), (2) and (3) in the PI Action (“PI Co-Defendants”) and for their insurers, namely Tugu. On 8 April 2022, TS Tong & Co issued a letter to Bing Lee giving notice that the PI Co-Defendants shall seek contribution and indemnity from Bing Lee. A copy of that letter was also sent to Falcon.

11. On 18 May 2022, TS Tong & Co served on Falcon a Notice Claiming Contribution and Indemnity by the PI Co-Defendants against Bing Lee, a copy of the Notice to Insurer and the Defence of the PI Co-Defendants in the PI Action (“Contribution Proceedings”).

12. Falcon took the view that the Policy was rendered void as a result of Bing Lee’s breach of the “Clean Claims Warranty”. This led to Falcon issuing the present proceedings on 5 August 2022 seeking the Declaration. Falcon notified TS Tong & Co of the present proceedings on 9 August 2022 whereupon Tugu applied to be joined in the present proceedings.

13. The Stay Summons was served also on Tugu. Tugu’s position is neutral in relation to the Stay Summons, and has indicated that if this Court were to grant a stay sought by Bing Lee, Tugu would agree to a case management stay of these proceedings pending the outcome of the arbitration between Falcon and Bing Lee.

14. At the hearing before this Court, counsel Mr Leon Ho appeared for Falcon, Mr Martin Ho appeared for Bing Lee and Mr Daniel KK Chan appeared for Tugu.

15. I shall consider the Stay Summons first.

THE STAY SUMMONS

General legal principles

16. In Chu Kong v Lau Wing Yan [2019] 1 HKLRD 589, the Court of Appeal noted at paragraph 10 thereof that the requirement to stay for arbitration under section 20(1) is mandatory and that in dealing with an application under section 20(1) of the AO, the Court asks the following questions[1] (collectively “4 Questions”):

(1) Is the arbitration clause an arbitration agreement? (“Question (1)”)

(2) Is the arbitration agreement null and void, inoperative or incapable of being performed? (“Question (2)”)

(3) Is there in reality a dispute or difference between the parties? (“Question (3)”)

(4) Is the dispute or difference between the parties within the ambit of the arbitration agreement? (“Question (4)”)

17. The onus is on the applicant for a stay to show that there is a prima facie case or it is plainly arguable, that the parties are bound by an arbitration clause and unless the point is clear, the Court should not resolve the issue, and the matter should be stayed in favour of arbitration for the arbitral tribunal to determine its own jurisdiction: Polytec Overseas Ltd v Grand Dragon International Holdings Co Ltd [2017] 3 HKLRD 258, at paragraph 24.

Question (1) – Is the arbitration clause an arbitration agreement

18. There is no dispute that Question (1) is satisfied. A copy of the Policy has been exhibited in the affirmation of Sin Man Hon, Vice President of the Claims Division of Falcon[2]. It consists of the “Specimen Terms” and “Other Terms”.

19. Section 18(g) in the “Specimen Terms” provides as follows:

“All differences arising out of this Policy shall be determined by arbitration in accordance with the prevailing Arbitration Ordinance. If the parties fail to agree upon the choice of arbitrators or umpires, then the choice shall be referred to the Chairman for the time being of the Hong Kong International Arbitration Centre. It is expressly stipulated that it shall be a condition precedent to any right of action or suit upon this Policy that an arbitration award shall be first obtained. If the Company shall disclaim liability to the Insured for any claim hereunder and such claim shall not within twelve calendar months from the date of such disclaimer have been referred to arbitration under the provisions herein contained then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.” (...

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