LI KAI CHEONG v. LAM YING WAI t/a CHI SHING SOLDERING FACTORY AND OTHERS

CACV 140/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 140 OF 2002

(ON APPEAL FROM HCPI NO. 920 OF 2000)

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J U D G M E N T

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Hon Rogers VP:

1. This is an appeal from a judgment of Deputy High Court Judge Muttrie given on 4 December 2001. The action before the judge was a claim for personal injuries by a workman who had been injured in a fall when a scaffold fell from Level 3 to Level 1 of the building, Festival Walk, which was then under construction. Quantum in the case had been agreed at $2,700,000. The dispute between the parties was as to liability. The judge dismissed the plaintiff's action against the 1st and 2nd defendants and he entered judgment for the amount agreed together with interest against the 3rd and 4th defendants. He ordered the 3rd defendant to indemnify the 4th defendant. He also ordered that the 1st defendant's costs should be paid by the plaintiff and that the 3rd and 4th defendants should reimburse the plaintiff the 1st defendant's costs.

2. Only the 4th defendant appealed. The 3rd defendant is in liquidation. At the conclusion of the hearing judgment was reserved.

Background

3. The plaintiff was an independent contractor who had been engaged by the 1st defendant to make window frames on the construction site of Festival Walk. The 1st defendant was a sole proprietor who carried on business in metalwork fabrication. He had been a subcontractor to the 2nd defendant who in turn was a subcontractor to the 3rd defendant. The 3rd defendant was a subcontractor who had been engaged by the 4th defendant to fit out the interior of the building.

4. The accident occurred on 11 November 1997. At that stage the site was not ready for the plaintiff to commence work and he had been employed on a casual basis to do general work. At the time of the accident the plaintiff was on a movable scaffold. The scaffold was about 2.4 m by 1.2 m and about 3.8 m high. There was a guard rail about 1.07 m high. The scaffold was of tubular construction, the tubes were 50 mm and were formed into prefabricated frames. There was a working platform composed of two wooden boards which were 0.92 m in width and 1.8 m long. There were wheels fitted at the base of the scaffold. The wheels could be locked. The wheels had spindles which were about 10 cm long. The spindles fitted into the bottom of the tubular construction of the scaffold.

5. At the time of the accident the plaintiff had been assigned to work on the anti-burglary netting on Level 3. He was working with a Mr Chan Kai Tai. There is a question as to whether a Mr Lee was also present. Mr Lee was the supervisor who was responsible for supervising the plaintiff and Mr Chan. It became necessary for the scaffold to be moved to a new position. Whilst the scaffold was being pushed it became entangled at the top with wiring which was hanging down from the ceiling.

6. It is important to note that the two persons who gave evidence as to the way in which the accident happened were the plaintiff and Mr Chan. Owing to the injuries which the plaintiff suffered because of the accident, his memory of the circumstances surrounding the accident was not as full as it might have been. However, the judge accepted the evidence of both the plaintiff and Mr Chan. It was to the effect that the wheels of the scaffold were locked by Mr Chan and that thereafter the plaintiff climbed the scaffold to loosen it from the wiring with which it had become entangled. The evidence, which the judge accepted, was that the scaffold had been tested and it did not wobble when it had been shaken. The oral evidence was that the scaffold had simply toppled over and, as a result, it had fallen from Level 3 to Level 1. Naturally the plaintiff had been thrown down from the top of the scaffold and landed underneath the scaffold on Level 1. As a result he had suffered serious injuries. There was an accident report form which had been completed on the day of the accident on behalf of the 3rd defendant in which it is stated:

"The accident was occurred when Mr Lee was managing the wiring he probably lost his balance and falling off together with the platform from Level 3 to Level 1."

7. The judge recognised the difficulty presented by the evidence. He said in paragraph 30 of his judgment "It is difficult to see how the accident could have happened if what the witnesses say is true." Nevertheless, and appreciating the difficulties presented by that evidence, the judge concluded at paragraph 32 of his judgment "I am satisfied that the accident happened as the plaintiff and Mr Chan say." The judge went on to say in that the next sentence that "The only possible explanation for the accident is that there must have been some defect in the scaffold."

8. On this basis the judge came to the conclusion that the accident could not have happened without negligence and that there was some defect in the scaffold. He applied the doctrine of res ipsa loquitur. Having said that he went on at paragraph 45 to say:

"The only explanation for the accident is that there was some latent defect in the scaffold. The evidence is that it had been moved for some distance before the accident, and appeared to be sound or else the plaintiff would not have climbed it. The 1st defendant was entitled to have a scaffold supplied by the 2nd defendant but in fact it was supplied by the 3rd defendant directly. There was nothing to put the 1st defendant on notice of inquiry as to defects in the scaffold. In any event the scaffold had attached to it a Form 5 certificate. It is difficult to see what the 1st defendant or any of his employees could have been expected to do to discharge the duty of reasonable care owed to the plaintiff. It seems to me that the 1st defendant must escape liability on this basis."

9. What, it seems to me, the judge was saying at this stage is that the 1st defendant was provided with equipment which, in turn, was supplied to the plaintiff and that the 1st defendant was entitled to rely upon the supply of that equipment in the ordinary course of the 3rd defendant's business particularly in the light of the fact that it had a Form 5 certificate which was of recent origin. In using the term "latent defect" I do not consider that the judge was referring to a latent defect in the technical sense of the expression. He was referring to a defect which had been unidentified but which he inferred must have existed in the scaffold. In this respect some assistance is derived from the judgment of the Lord Justice-Clerk (Aitchison) in the case of John Marshall & Son and Others v Russian Oil Products Limited [1938] SC 773. At page 791, he said:

"Notwithstanding the assumed logical difficulty of saying that an accident is unavoidable where the cause of it cannot be ascertained, it is, in my opinion, too absolute a proposition to say that, where the cause is unascertained, the prima facie inference of negligence cannot be displaced. There may be cases in which the inference of a latent defect is so strong and certain that it may amount to a good defence, even though the defender fails to point out the exact nature of the defect. If the cause is ascertained and is proved to be latent, negligence is excluded, but where the cause is not ascertained the difficulty of excluding negligence is proportionately increased, and the defender may fail because he cannot give any account of the occurrence sufficient to exclude negligence."

10. The judge went on to hold that the 3rd and 4th defendants were liable for the accident.

11. Mr Strachan, on behalf of the 4th defendant, attempted to challenge the judge's finding that the evidence of the plaintiff and Mr Chan should be accepted. As has been noted, however, first of all the judge was well aware of and accepted that there were difficulties arising from that evidence. It would appear that the existence of Mr Lee, the supervisor, was something that became more apparent and definite as the case had progressed even during the oral evidence. That, however, is not that surprising given the injuries to the plaintiff and his amnesia as a result of it. I do not consider that there are sufficient grounds to disturb the judge's findings on the evidence given by the plaintiff and Mr Chan.

12. It was strongly argued on behalf of the 4th defendant that the judge should also have held that the 3rd and 4th defendants were not guilty of negligence because there was a latent defect. In my view, this is to misinterpret the judge's judgment. As the Lord Justice-Clerk said there could be cases where the inference would be drawn that there had been a latent defect. In my view, this is not such a case for the reasons set out below. When the judge used the word latent defect he was clearly using it in a loose sense to mean a defect which had not been determined, rather than a defect which would have been undiscoverable given appropriate care.

13. There had been no examination of the scaffold after the accident. There was therefore no evidence as to what the defect was and in those circumstances unless there was a compelling reason to do so, it would be wrong to hold that there had been a latent defect when the nature of the defect was unknown. Furthermore, where a defendant relies on there being a latent defect, he has to prove that he was not negligent. See Esso Petroleum Co. Ltd v Southport Corporation [1956] AC 218 at 242-3 and Charlesworth & Percy on Negligence 10th Ed. at 5-99. In the present case, the Form 5 certificate had been completed by an employee of the 3rd defendant. No evidence was called as to any inspection of the scaffold on the basis of which the certificate had been issued. Without calling any evidence relating to such an inspection the 3rd defendant could not place any reliance upon the certificate, whether with a view to establishing that no defect could have been detected or otherwise. The 4th defendant was in no better position in this regard than the 3rd defendant.

14. As regards the 1st defendant, the judge's approach was in my view correct. The 1st defendant was using equipment supplied to it from a proper source which it could be expected could be relied upon. The equipment had a certificate attached to it which indicated that the party supplying it vouched that it was in good condition and thus the 1st defendant was absolved from liability in negligence.

Costs

15. The 4th defendant also appealed on the basis that it should not have been ordered to pay the costs incurred as a result of joining the 1st defendant as a party to the action. In my view, this was a consequence of the injury. The plaintiff and his advisers were, in my view, correct to join the plaintiff's direct employer, particularly in the circumstances of this case. Had they failed to do so they would have taken a grave risk. It is easy with hindsight to suggest that the joinder was unnecessary but in my view it was a sensible course given the facts of the case. In this respect I would refer to the decision in Leung Lai Ha v Hon Sau Ling and Another [1992] 2 HKC 109 and in particular to the judgments of Kempster JA and Bokhary J (as he then was).

Hon Le Pichon JA:

16. I agree with the judgment of the Vice-President.

17. What is clear from a reading of the judgment below is that at the conclusion of the trial the cause of the accident remained unknown and unascertained. That being so, it could not have been the case that the judge considered that a latent defect had been established. For, in the ordinary case, latent defect is an explanation for the accident advanced by the defendant to rebut the presumption of negligence arising from the application of res ipsa loquitur and the burden is on the defendant to prove the latent defect and to show that the accident had occurred despite his having carried out all proper maintenance. See Pearce v Round Oak Steel Works Ltd [1969] 1 WLR 595 at 596F-H.

18. In the present case, not only did the 3rd defendant whose scaffold it was not call any evidence to establish the existence of a latent defect, it also did not call any evidence to establish that it had taken all reasonable care and that the accident had happened despite that fact. This would have entailed showing that all proper maintenance had been carried out. There was quite simply no attempt to make such a showing. Rather, the 3rd defendant, like the 1st defendant, sought to rely on the Form 5 certificate, but as pointed out by the Vice-President in paragraph 13 above, the 3rd defendant's position was quite different: it could not place any reliance on the certificate without calling evidence relating to the inspection of the scaffold its employee had carried out which formed the basis of the certificate.

19. Whilst it is true that in the John Marshall case Lord Justice-Clerk (Aitchison) did allude to the possibility of there being cases in which "the inference of a latent defect is so strong and certain ... even though the defender fails to point out the exact nature of the defect," such an inference cannot reasonably be drawn where, as here, the 3rd defendant's negligence as the cause of the accident had not been eliminated or excluded.

Hon Stone J:

20. I have the misfortune to disagree with the judgments of the Vice-President and Le Pichon JA. In my judgment this appeal should succeed, albeit I have some concern as to the consequential order.

21. The analytical difficulties arising in this case cannot lightly be overcome. Whilst purporting to apply the maxim 'res ipsa loquitur', the learned judge nevertheless concluded that the accident arose due to a 'latent defect', stating in terms (at paragraph 45): "The only explanation for the accident is that there was some latent defect in the scaffold."

22. For my own part I am less than unconvinced that the circumstances of this accident render this an appropriate case in which to apply 'res ipsa loquitur', given the possibility of outside interference, but this is nothing to the immediate point. As Mr Sarony for the plaintiff readily accepted, the concepts of 'res ipsa loquitur' and 'latent defect' do not happily co-exist; one or the other may be applicable, but not both. And it seems clear in this instance that 'latent defect' has ruled the day.

23. In light of his finding as to 'latent defect', it is not easy to see how the learned judge has felt able to decide that liability should be attributed to the 4th defendant for breach of statutory duty under Regulation 38D of the Construction Sites (Safety) Regulations (which refers to patent defects) and also under the Occupiers Liability Ordinance (which mandates the use of reasonable care in all the circumstances); somewhat curiously, and notwithstanding the apparent invocation of 'res ipsa loquitur', he has not expressly grounded liability in negligence.

24. The use of the term 'latent defect' has attracted some comment in this appeal. I do not think that this requires extensive debate. It is tolerably clear what the learned judge means - as he stated (at paragraph 44) "factually there was nothing which might have indicated to the 1st defendant or any of his employees that the scaffold was defective. It was a latent defect", emphasizing the point immediately thereafter: "There was nothing to put the 1st defendant on notice or inquiry as to defects...".

25. Accordingly, given that no question of strict liability arises, it seems clear that this bedrock finding of 'latent defect' in the scaffold as causative of the accident suffices to negate the liability which in fact was found to exist. As Mr Strachan submitted,"none of the bases of liability have been engaged", a proposition that continues to hold good even if (which I doubt) a finding of negligence may also be discerned within the learned judge's reasoning.

26. I am unpersuaded that the term 'latent defect' requires semantic massage or that it should be understood at other than face-value. Not only was it specifically recognized that there was nothing to indicate that the scaffold was defective, it was recognized also that the scaffold had attached to it a 'Form 5 certificate' of inspection, thus buttressing the conclusion that "it is difficult to see" what else the 1st defendant could have been expected to do in order to discharge his duty of care to the plaintiff.

27. Employed thus, reasoning based on 'latent defect' permeates the attribution of liability within the judgment. The 1st defendant is exculpated on this basis, and the 2nd defendant contingently also: "I do not think that any liability could attach to the 2nd defendant, but if it did the 2nd defendant would also be entitled to rely on the latent defect".

28. This is not a case of the 4th defendant (or indeed any other defendant) placing reliance upon latent defect as an element of its defence, thereby raising a corresponding evidential burden to demonstrate all reasonable care. To the contrary. In his attempt to reconcile the irreconcilable - as the learned judge himself observes "It is difficult to see how the accident could have happened if what the witnesses say is true" - he has hit upon an explanation of events reflective of no-one's case, with the result that this action has been decided upon a basis neither pleaded nor relied upon at the trial.

29. It may have been this fact, or perhaps one of the other difficulties he perceived within the judgment below, that caused Mr Sarony at the end of his submissions to countenance the possibility of a retrial as the appropriate order for the court to make on this appeal. For his part Mr Strachan resisted this idea, submitting by parity of reasoning that his client ought to be permitted to succeed upon the argument that had succeeded for the 1st and 2nd defendants - who, of course, were not present before the court.

30. I have some sympathy with this latter submission, but at the end of the day I do not accept it. The fact that other defendants may possibly have been fortunate in terms of exoneration from liability and themselves not have been subject to appeal may constitute a regrettable aspect of this case, but at bottom this does not, I think, assist Mr Strachan.

31. In my judgment in the circumstances of the present case a retrial would be the appropriate order for this court to make. The difficulty arising in this case strikes me as not dissimilar to that confronting the English Court of Appeal in Lloyde v West Midlands Gas Board [1971] 1 WLR 749, wherein the defendants successfully appealed on the ground that a case of defective gas installation found by the trial judge to be the cause of the accident had neither been pleaded nor proved. And whilst obviously very different on its facts, see also in this connection the judgment of the Hong Kong Court of Appeal in Nathan Kaner and Another v John Michael Jerwood and Others [1986] HKLR 571 in which the trial judge made a finding of fact inconsistent with the pleaded and argued case of each of the parties below and had entered judgment accordingly, wherein the appeal against such judgment was allowed (the court therein citing Lloyde, op cit) and a new trial ordered.

32. In Kaner v Jerwood, op cit, the appellate court declined to become entangled with the facts, nor to substitute its own assessment of the evidence for that of the 'seeing and hearing' judge, and in my judgment this court should adopt a like stance, notwithstanding Mr Strachan's tempting alternative submission that it was inherently unlikely that the accident had occurred as described by the plaintiff and his witnesses. With regard to 'latent defect', however, he has that which in my view is a cogent and convincing argument.

33. I would allow this appeal and order that there be a new trial of this action as between the plaintiff and the 4th defendant. I would further make an order nisi that the 4th defendant is to have the costs of this appeal, and that the costs below are to be costs in the cause of the new trial.

34. The conclusion that I have reached upon the 4th defendant's appeal necessarily encompasses the discrete costs appeal. Had I concluded otherwise, however, I would have agreed with the judgment of the Vice President in relation to costs. In the circumstances of this case, the plaintiff would have been ill-advised not to proceed to join the 1st defendant.

Hon Rogers VP:

35. The appeal will therefore be dismissed and there will be an order nisi of costs in favour of the plaintiff.

Remarks: