Siu Yin Kwan v Eastern Insurance Company Ltd [PC]
| Jurisdiction | UK Non-devolved |
| Judge | Lord Templeman,Lord Mustill,Lord Woolf,Lord Lloyd of Berwick,Sir Thomas Eichelbaum |
| Judgment Date | 09 December 1993 |
| Court | Privy Council |
| Date | 09 December 1993 |
Privy Council.
Lord Templeman, Lord Mustill, Lord Woolf, Lord Lloyd of Berwick and Sir Thomas Eichelbaum.
Christopher Clarke QC (instructed by Edwin Coe) for the appellants.
Neville Thomas QC and Mohan Bharwarney (Hong Kong bar) (instructed by Macfarlanes) for the respondents.
The following cases were referred to in the judgment:
Browning v Provincial Insurance Co of CanadaELR(1873) LR 5 PC 263.
Collins v Associated Greyhound Racecourses LtdELR[1930] 1 Ch 1.
Drughorn (Fred) Ltd v Rederiaktiebolaget TransatlanticELR[1919] AC 203.
Formby Brothers v Formby(1910) 102 LT 116.
Humble v HunterENR(1848) 12 QB 310.
King, Re. Robinson v GrayELR[1963] Ch 459.
Peters v General Accident and Life Assurance Corp LtdUNK[1937] 4 All ER 628; [1938] 2 All ER 267 (CA).
Rowlands (Mark) Ltd v Berni Inns Ltd & OrsELR[1986] QB 211
Teheran-Europe Co Ltd v S T Belton (Tractors) LtdELR[1968] 2 QB 545.
AgencyUndisclosed principalPolicy of insuranceShip insured by company acting as agent for ship ownerShip capsized; several crew members lost livesPersonal representatives of deceased crew members awarded damages for negligence against ownersCompany owning ship wound upJudgments not satisfiedWhether insurance company liable to pay damagesWhether undisclosed principal could claimBenefit of insurance policyWhether policy unlawfulLife Assurance Act 1774, s. 2.
This was an appeal by the personal representatives of two deceased seamen against the decision of the Court of Appeal of Hong Kong dismissing their appeal from a decision of Keith J holding that the ship owners as undisclosed principals had no right to sue on a policy of insurance taken out by their agents in respect of the vessel which capsized, causing the deaths of the crew members.
In September 1983 the Osprey capsized, with several crew members losing their lives. The personal representatives of two of the deceased brought proceedings against the ship owners, Axelson Co Ltd, who had employed the deceased. They were awarded compensation under the Employees Compensation Ordinance and damages for negligence. Meanwhile Axelson had been wound up. The judgments were not satisfied. In January 1988 the personal representatives began proceedings against the insurance company which had insured the Osprey, claiming payment under the Third Parties (Rights Against Insurers) Ordinance. The insurance company denied liability as the insurance was effected by Richstone Industries Ltd, not Axelson, without disclosing that they were acting as agents for Axelson. The insurance company also relied on the policy being unlawful, contrary to the Life Assurance Act 1774 if Axelson were undisclosed principals. Keith J held that Axelson had no right to claim under the policy and accordingly the personal representatives could not rely on the ordinance. On appeal, the Court of Appeal, by a majority, dismissed the appeal. The personal representatives appealed.
Held, allowing the appeals and making an order in favour of the personal representatives:
1. There was nothing in the terms of the proposal form or the insurance policy which expressly or by implication excluded Axelson's right to sue as undisclosed principal.
2. An indemnity insurance policy was not a personal contract of a kind which excluded the rights of an undisclosed principal. A contract of insurance was not an exception to the general rule that an undisclosed principal might sue on a contract made by an agent within his actual authority.
3. The insurance policy did not infringe s. 2 of the Life Assurance Act 1774 since the Act was not intended to apply to indemnity insurance.
(Delivered by Lord Lloyd of Berwick)
On 8 September 1983 the Barquentine Osprey was moored in Repulse Bay, Hong Kong, when she was hit by the typhoon Ellen. As a result, she became detached from her moorings, and capsized the following day. Several members of the crew lost their lives, including Chan Ying Lung, the cook, and Sae Heng Hai, an able seaman. They were employed by Axelson Co Ltd, the owners of the Osprey. In September 1984 their personal representatives brought proceedings in the District court of Hong Kong claiming compensation under the Employees Compensation Ordinance. They were awarded $242,000. On 27 May 1986 they brought further proceedings against Axelson claiming damages for negligence. On 20 November 1986 they were awarded $589,081 and $443,000 respectively. Meanwhile Axelson had been wound up by order of the Supreme Court of Hong Kong. The judgments in favour of the plaintiffs were never satisfied.
Accordingly on 19 January 1988 the plaintiffs commenced the current proceedings against the respondents, Eastern Insurance Co Ltd, claiming payment under the Third Parties (Rights Against Insurers) Ordinance. Section 2(1) provides:
Where under any contract of insurance a person (hereinafter referred to as the insured) is insured against liabilities to third parties which he may incur, thenin the case of the insured being a company, in the event of a winding-up order being made,ifany such liabilityis incurred by the insured, his rights against the insurer under the contract in respect of the liability shallbe transferred to and vest in the third party to whom the liability was so incurred.
By their defence, the respondents say that the persons named as insured were Messrs Richstone Industries Limited, and not Axelson. There was nothing in the proposal to indicate that Richstone were acting as agents for Axelson. Even if Axelson had been entitled to claim under the policy as undisclosed principals, the policy was unlawful by virtue of the Life Assurance Act 1774. Section 2 of the Act provides:
Andit shall not be lawful to make any policy or policies on the life or lives of any person or persons, or other event or events, without inserting in such policy or policies the person or persons' name or names interested therein, or for whose use, benefit, or on whose accounts such policy is so made or underwrote.
The case came before Keith J on 17 February 1992. He made a number of findings of fact which are favourable to the plaintiffs, and in particular that Richstone had actual authority to effect the insurance on behalf of Axelson. Nevertheless he held that Axelson had no right to claim under the policy. Accordingly the plaintiffs could derive no rights under the Third Parties (Rights Against Insurers) Ordinance. Had he been in favour of the plaintiffs on that point, he would not have regarded the Life Assurance Act 1774 as standing in their way. In his view, the Act is not applicable to indemnity insurance.
The plaintiffs appealed to the Court of Appeal. On 21 October 1992 the appeal was dismissed. The majority judgment was given by Kempster JA. He agreed with Keith J that the terms of the proposal were inconsistent with Axelson having the right to sue. He would also have decided against the plaintiffs on the Life Assurance Act point. In his view the Act applies to indemnity insurance as well as life insurance and, since Axelson was nowhere named in the policy, the insurance was unlawful and void. Sir Derek Cons V-P agreed with Kempster JA. Litton JA dissented on both points. The plaintiffs now appeal to Her Majesty in Council by leave of the Court of Appeal.
It is regrettable that a case which is comparatively simple, both...
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