Drink-Driving and Third Party Insurance

In HKSAR v Law Wing Fai (HCMA 476 of 2016) and HKSAR v Gilbert Henry Collins (HCMA 21 of 2017), the Court of Appeal answered the following question: whether a driver who drink-drives, and has a valid third party risks insurance policy which includes a clause to the effect that the insurer would refuse to indemnify in the event of the insured driving with alcohol above the prescribed limit, can be also charged with driving without third party insurance in consequence of the operation of this exclusion clause.

At trial, both defendants had been convicted of driving a motor vehicle with alcohol in his breath/blood/urine exceeding the limit prescribed by law, contrary to s. 39A of the Road Traffic Ordinance (Cap. 372) (“RTO”), together with using a motor vehicle without third party insurance, contrary to s. 4(1) and s. 4(2)(a) of the Motor Vehicle Insurance (Third Party Risks) Ordinance (Cap. 272) (“MVIO”). Both cases involved a clause in their third party insurance policies purporting to render the insurance company not liable for any liability when the car is being driven by a driver with alcohol in his breath/blood/urine exceeding the limit prescribed in s. 39A of the RTO (the “subject clause”). The main issue was whether the subject clause was valid under s. 12(1)(a) of the MVIO, where the clause will be of no effect if the clause restricts the insurance policy by reference to the driver’s physical or mental condition.

Ruling & Rationale

In delivering the unanimous judgement of the Court of Appeal, Hon. Yuen JA ruled that the subject clause had no effect and as a result, the third party risk was still covered by the insurance policy and hence the defendant would not be guilty under s. 4(1) of the MVIO.

The subject clause was clearly a restriction by reference to the driver’s physical condition, thus falling within s. 12(1)(a) of the MVIO, and as s. 12(1)(a) applied, drivers, in the circumstances faced by the Appellants, would still be protected by insurance policies. The Court in considering both a purposive and a literal interpretation of the MVIO, where the guiding principle of the Ordinance is to protect third parties against risks arising out of the use of motor vehicles, found that the “contamination of a person’s bloodstream by foreign substance” is a matter related to a person’s physical condition.

After construing the Ordinance as a whole, the Court reversed the Magistrates’ findings and allowed the appeals.

Impacts on the Industry

For many years the operation of exclusion clauses in insurance policies has often resulted in the coupling of a drink-driving charge to an additional charge of driving without third party insurance.  The effect on sentence for a first time drink-driver in Tier 1, meant, in the absence of special reasons, a minimum disqualification period of 12 months rather than the minimum of 6 months for a Tier 1 driving offence.  This judgement will mean certain drink-driving offenders will not face this additional jeopardy where they have valid third party insurance policies. 

In addition insurers cannot refuse to indemnify as a result of a clause purporting to refuse indemnity where the insured has been drink-driving. Where liability is established, third parties will be able to recover damages from the insurers of drink-drivers.

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