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SCMP Reporter

THE families of two men who died when the barquentine Osprey sank during a typhoon more than 10 years ago can claim compensation direct from its insurers following a Privy Council judgment.

  The council overturned a High Court ruling and a majority Court of Appeal decision that the families of crewmen Chan Ying-lung, 27, and Sae Heng-hai, 24, could not claim from insurer Eastern Insurance Company Ltd.

   The 52-metre Osprey dragged its moorings in Repulse Bay and sank at sea in September 1983 during Typhoon Ellen. Eight of her nine crew died.

  The families of Chan and Sai were each awarded employees' compensation of $242,000 in 1984 against Osprey owner Axelson Company Ltd. This money was not paid.

   When in November 1986 the families were awarded $589,000 and $443,000 respectively for negligence against Axelson, the company had been wound up and this award also went unpaid.

  In 1988, the plaintiffs sued the insurers, Eastern Insurance Company Ltd, directly for compensation and claimed $1.3 million each.

  Eastern refused to pay because, it said, the company named on the insurance policy was not Axelson, but Richstone Industries Ltd.

   Mr Justice Keith in 1992 held that Axelson could not claim against Eastern and therefore neither could the plaintiffs.

    The families' appeal was dismissed in October 1992 by Sir Derek Cons and Mr Justice Kempster, with Mr Justice Litton dissenting.

  The families then took their case to the Privy Council. Lord Lloyd, giving the Law Lords' ruling, said it was regrettable that a comparatively simple case should have taken more than 10 years to resolve.

 He said the insurance company's defence arguments were ''wholly without merit'' and dismissed them with costs. The case now returns to Mr Justice Keith in the High Court for arguments on the amount of damages to be awarded.

  The Privy Council heard that Axelson had appointed Richstone, whose managing director was Pak Chung-king, as its agent to look after the Osprey and to take out insurance, which it duly did from Eastern.

   The High Court had held that only Richstone could claim on the insurance as it had filled in the form as though it was the crew's employer.

  However, Mr Justice Litton held that the language on the form did not exclude the ship's owners from suing, and the Law Lords agreed, holding that Eastern was not entitled to assume that Richstone were employers. The plaintiffs could therefore sue the insurance company direct.



Osprey case decision by Law Lords