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HCAJ 95/2012
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ADMIRALTY JURISDICTION ACTION NO 95 OF 2012
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SEALEGEND HOLDINGS LTD |
Plaintiff |
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and
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CHINA TAIPING INSURANCE (HK) CO LTD |
1st Defendant |
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QBE HONGKONG & SHANGHAI INSURANCE LIMITED |
2nd Defendant |
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CATHAY CENTURY INSURANCE CO LTD |
3rd Defendant |
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BANK OF CHINA GROUP INSURANCE CO LTD |
4th Defendant |
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| Before: Hon G Lam J in Chambers |
| Date of Hearing: 11 September 2013 |
| Date of Decision: 11 September 2013 |
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D E C I S I O N
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1. This is the plaintiff’s application for leave to extend the validity of the amended writ of summons and the defendants’ application for an order that the plaintiff provide security for their costs.
2. The background to the application for extension of the validity of the writ is as follows. The plaintiff, a company incorporated in the British Virgin Islands, was the registered owner of a vessel called MV Princess Rowena, which I shall simply call the vessel. By a cover note dated 28 June 2005, the 1st defendant insured the plaintiff in respect of 50% of the value of the hull and machinery, equipment and everything connected with the vessel with a sum insured for US$8 million. By a second cover note dated 4 August 2005, the 1st, 2nd, 3rd and 4th defendants insured the plaintiff in respect of 50% of the vessel’s value. The 50% risk of the vessel’s value under the second cover note was taken up by the 1st, 2nd, 3rd and 4th defendants in the proportion of 20%: 15%: 10%: 5% respectively.
3. On about 1 July 2006, during the validity of the two insurance policies, the vessel sustained damage to her starboard main engine. The plaintiff lodged a claim with the defendants for reimbursement of the repair and replacement expenses under the policies.
4. It appears that before long, the plaintiff came to the view that the expenses would not exceed substantially the deductibles under the policies which in total stood at US$325,000. Thus, when the time came for renewal of cover in August 2006, and when the 1st defendant offered to renew the insurance “provided that the outstanding premium [was] cleared off prior to expiry and the claim on starboard main engine damage on 1/July/2006 [was] closed at Nil claim”, the insurance broker replied on behalf of the plaintiff as follows:
“Pleased to advise that quotation accepted by Assured. They’ve now settled all o/s premium and confirmed that M/E claim withdrawn. In this connection, please advise Peter Y.C. Ng & Associates to close their file.”
5. On 19 January 2007, in an email from the broker to the 1st defendant copied to, inter alios, the 3rd defendant, it was stated, however, that
“You may recall that the Assured withdrew their claim as they felt that the cost of repairs would be below or just marginally above the policy deductibles of USD250,000 (Cl. 12) and USD75,000 (AMD).
Repairs to the engine has not be carried out and the vessel was operating with her port main engine. The classification society recently advised the Assured that they would require the starboard main engine to be opened up and inspected by the engine maker so as to ascertain the extent of repairs required.
Accordingly, the Assured obtained quotations from (1) the engine maker MAN B & W (2) HUD and their quotations arc herewith attached.
In view of this development, the Assured has asked us to re-open the case. We shall therefore be very grateful if you will kindly request Peter Y.C. Ng & Associates Ltd. to re-attend.”
6. On 15 December 2009, the surveyors, Peter Y.C. Ng & Associates Ltd., sent a letter to the 1st defendant enclosing their Survey Reports and indicating that the damage to the starboard main engine was due to the negligence of crew, and that should the owners intend to establish their claim, they would be obliged to prove that they had exercised due diligence in maintaining the vessel.
7. On 20 July 2011, the plaintiff through its broker sent its comments on the surveyor’s report to the 1st defendant.
8. On 15 December 2011, the surveyors provided their response in turn on the comment of the plaintiff to the 1st defendant.
9. On 13 January 2012, the broker sent an email to the 1st defendant referring to the plaintiff’s comments on the surveyor’s report and stating that they were under heavy pressure from the plaintiff to make progress in settlement of the claim and asking for a response from the 1st defendant.
10. On 9 March 2012, the 1st defendant sent an email to the broker enclosing the surveyor’s further comments and stating:
“Based upon the available information and documentary evidence, we, without prejudice, consider that the damage to starboard M/E caused by alleged crew negligence has resulted from want of due diligence by the insureds.”
11. It is therefore not in dispute that by mid March 2012, the 1st defendant had informed the plaintiff that it considered the damage to the starboard engine was caused by crew negligence due to want of due diligence on the plaintiff’s part and thus fell within the relevant exception under the Institute Time Clause.
12. On 18 May 2012, the plaintiff caused the writ in this action to be issued out of the High Court. The only defendant then named was the 1st defendant, who was sued in respect of the second policy. On 12 June 2012, the writ was amended without leave pursuant to RHC Order 20 rule 1 by the addition of the 2nd, 3rd and 4th defendants. It will be noted that the writ as amended thus still does not refer to the first policy. This is the subject matter of a separate application for leave to re-amend the writ to add a claim under the first policy as against the 1st defendant.
13. The amended writ, which was valid for service for a year, was not immediately served.
14. Almost a year after the writ was issued, on 13 May 2013, the plaintiff’s solicitors wrote by email to the 3rd defendant, which is a company incorporated in Taiwan, asking whether it would appoint solicitors in Hong Kong to accept service in these terms:
“We attach a sealed copy of the writ issued by our clients naming you as one of the Defendants. Please could you kindly confirm no later than 9am in Hong Kong time on Wednesday 15 May 2013 whether you will appoint a law firm in Hong Kong to accept service of this writ on your behalf? If so, we look forward to hearing details of your acting law firm.
Should we not hear from you by 9am of 15 May 2013, we are instructed to proceed with the application to the High Court for service of the writ on you without further notice which we hope will be unnecessary. In the interest of minimizing your exposure to our clients claim for legal costs, we kindly urge you to revert with details of your acting law firm in Hong Kong as soon as convenient.”
15. On 14 May 2013, the plaintiff served the amended writ on the 1st, 2nd and 4th defendants in Hong Kong. On the same day, an employee in the Claims Division of the 3rd defendant sent an email to the plaintiff’s solicitors, stating:
“As you are aware, we are one of the Co-insurers in this case and, as a matter of principle, we follow the decision of the leader in claims matters as well. Therefore, we would suggest that you check with M/S China Taiping Insurance for the identity and details of the lawyers whom they have appointed or would appoint to act on our behalf. We will join the leader in appointing the same lawyers since we are located overseas.”
16. The plaintiff’s solicitors replied to the 3rd defendant by email, stating:
“Since the writ is due to expire on 17 May 2013 which is a public holiday in HK, we are to either serve the writ or apply to renew it. It is our objectives to pursue our clients case in a most cost-effective manner. We shall contact Mr Franco Sze of the Leader reading in copy and hope to avoid any application to the Court.”
17. The email was followed by a telephone conversation between the solicitors and Mr Franco Sze of the 1st defendant, after which Mr Sze sent an email to the plaintiff’s solicitors (copied to Mr Patrick Yeung of the Hong Kong solicitors firm of Messrs Holman Fenwick Willan) stating:
“We as Claims Leaders are going to instruct Mr. Patrick Yeung of Holman Fenwick Willan to act on behalf of the Hull Underwriters concerned in respect of the above case.”
18. There was then an email by the plaintiff’s solicitors to Mr Yeung on the same day stating:
“We shall serve the writ on Cathay Century by leaving it at your firm tomorrow. Should you not have instructions to accept service, we should be grateful if you could let us know by return.”
19. It is unnecessary to go into the intervening correspondence until the next day, 15 May 2013, Wednesday, when at 10:21 am, Mr Yeung of Holman Fenwick Willan sent an email to the plaintiff’s solicitors as follows:
“For the other Defendants including Cathay Century Insurance Co., Ltd, we have explained to Thomas that we can only act for them if there is no conflict of interests and until we have receive the papers and take...
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