CHAN PING KUEN v. NGO WAI KWONG AND ANOTHER

DCCJ 3016/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3016 OF 2002

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ASSESSMENT OF DAMAGES

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1. This claim arose out of a road collision on 22 August 1998 between the Plaintiff's vehicle and the Defendants' vehicle on Tai Po Road, Shatin. Judgment on liability has been entered against the Defendants on 5 July 2002. The hearing before me was for assessment of damages.

2. The claim for survey fee, storage fee, vehicle removal charges and towing fee were agreed at $2,140.50. The only issue in this assessment hearing was the market value of the Plaintiff's vehicle, which was a Mitsubishi pick-up 2.48 ton light goods vehicle manufactured in 1994 damaged beyond economic repair.

3. The Plaintiff gave evidence. He said that he purchased the vehicle for $130,000 and had used it for transporting poultry to various restaurants for about four years before the accident. He took it to a garage every month for regular maintenance which included lubrication and change of filter and engine oil. The vehicle was parked in the open parking space at his place of residence and in the covered car park in the market. The vehicle was used for delivering one hundred to two hundred poultries everyday. $7,000 was spent for a steel structure erected on the vehicle. He instructed Best Surveying & Recovering Services Co. to prepare a motor vehicle survey report.

4. The Plaintiff called Ngai Chu Sing to give evidence. He is the manager of Best Surveying & Recovering Services Co and produced the report dated 4 September 1998. The nine photographs attached to the report showed that the vehicle was severely damaged. He found that the vehicle had a fair body condition before the accident and was well maintained. He assessed the pre-accident market value to be $64,500 net of the estimated scrap value of $500. He said that the assessment method of market search is preferred to the assessment method of depreciation. Nevertheless, he applied both methods of assessment in reaching that figure. First, the medium depreciation rate according to the USA guidelines is 20% for the first year, and for the years thereafter at 17.5%, 15% and 15%, giving the equation $137,000 x 0.8 x 0.825 x 0.85 x 0.85 = $65,328. He applied the medium depreciation rate on the basis of reasonable mileage, good maintenance including regular change of engine oil and filter and good parking condition (i.e. covered car park). He also made enquires with second hand car dealers and garages in Yuen Long. Their estimates were between $50,000 to $70,000. The magazine suggested an asking price of $80,000. He emphasized that it was a farmer's car and only a few existed in the market.

5. The Defendants called Andy Ho to give evidence. Between 1988 and 1995 he was a salesman of Universal Cars Limited, the dealer of Mitsubishi cars. He was promoted to assistant administrative manager in 1995. He referred to his letters dated 5 September 2001 and 7 June 2002 addressed to Lau Ming Motor Survey Co which stated his company's "unbiased estimate on the current market value...$28,000.... based on.... perfect condition". He said the depreciation rate for private car is 30% for the first year and for commercial car 35%. Using $135,000 as the new price in 1994, the equation is $135,000 x 0.65 x 0.65 x 0.65 x 0.65 = $24,098. After some touching up work the market estimate is $28,000. When working as a salesman he handled trade-in transactions and consulted second hand car dealers on second hand car prices. He gave the present estimate after making reference to second hand car prices. Since $6,500 was required for dismantling the steel structure and consequential touching up work his net estimate was $28,000 - $6,500 = $21,500. He did not have formal training on valuation work but he relied on the information coming from the maintenance department about parts and repair prices and also market prices. He also made reference to body condition and low market demand for this model.

6. The Defendants called Lau Chi Ming to give evidence. He is the proprietor of Lau Ming Motor Survey Co. He prepared a motor vehicle assessment report dated 12 September 2001 based on primarily the information contained in the report from Best Surveying Recovering Services Co. After enquires he assessed the market value to be about $17,000 to $18,000 on the basis that the vehicle carried dry goods. He accepted the scrap value was $500. In arriving at the assessment he made enquires from four salespersons. Their collective opinion on the market value was $17,000 to $18,000. He said that the life span of this vehicle, which was used for transporting wet goods, was about three to four years because contaminated water produced serious corrosion. The most important factor is under-frame of the vehicle. Strictly speaking it had no value in 1998. His "reluctant valuation" was $7,000 to $8,000. The three year depreciation rate for vehicles used for carrying wet goods is 40%, 30% and 30%, and for carrying dry goods 30%, 25% and 25%. The equation was $137,000 x 0.6 x 0.7 x 0.7 x 0.7 = $28,194.

7. Mr. Thong acting for the Plaintiff submitted that the first issue for the Court was which approach was to be preferred. He asked me to accept the valuation of the Plaintiff's expert. Ms. Wong acting for the Defendants submitted that I should act on Mr. Ho's and Mr. Lau's valuation. She further submitted that the assessment should be between $8,000 and $21,500.

8. Mr. Ngai has been working in the field of motor repair and survey since 1991. His qualification and training included degrees of Bachelor of Science and Masters in Business Administration (Chinese University of Hong Kong) and various courses in motor repair and adjusting. He is a member of the Hong Kong Institute of the Motor Industry and the Hong Kong Vehicle Repair Merchants Association Ltd. Mr. Ho obtained his experience when working as a salesman and administrative manager in Universal Cars Limited. Mr. Lau completed Form 2 education in 1975. He then started working as a garage apprentice for two years and thereafter as a car mechanic until 1988 when he changed to work with a firm of motor surveyors. In 1990 he set up his own firm of motor surveyors. His working experience included inspection of damaged vehicles, assessment of costs of repair and parts and market valuation of damaged vehicles.

9. Although the conclusions on the market price differed the experts' methods of assessment were not dissimilar. They all made reference to price information from second hand car dealers, depreciation rate, vehicle condition, usage, mileage and market demand. Mr. Ngai referred to the prices coming from two second hand car dealers, one garage and magazine. Mr. Lau referred to price information from four second hand car dealers. Mr. Ho referred to his company records and prices quoted from some second hand car dealers.

10. I am satisfied that all of these witnesses were equipped with the relevant and adequate working experience to give evidence on market valuation of second hand vehicles. In the case Mr. Ngai he also possessed academic qualifications and training. They are all entitled to their own conclusions on the market price. There was no issue of credibility. I accordingly treat the evidence as they were. Obviously, it does not mean that I am bound to accept their conclusions on the market price.

11. Mr. Ngai offered depreciation rate based on the USA guidelines. There was no evidence to suggest why the USA guidelines should be applicable in Hong Kong. Mr. Ho and Mr. Lau did not give the basis for their depreciation rates. There was no evidence on the identity, the size and the reputation of the second hand car dealers or garages. Mr. Ngai did not say what magazine that suggested an asking price of $80,000. Although Mr. Ngai possessed academic qualifications and training, he did not tell whether or not those qualifications and training assisted him arriving at his conclusion. For my part, I wonder if the way he, Mr. Ho and Mr. Lau carried out the assessment would ever require such academic qualifications and training. The principal methods of assessment were the straightforward collection of second hand price quotations and the application of depreciation rate. In the end, one has to resolve the issue objectively and in so far as the evidence may assist.

12. In assessing market value I take into account of the following matters:

(1) The new purchase price was $130,000 (as agreed by the parties);

(2) The vehicle was four years old;

(3) The mileage was 81,598 km;

(4) It was a Mitsubishi L200 2.5 two wheel drive pick-up goods vehicle;

(5) The vehicle was used to carry wet goods everyday;

(6) The vehicle had a fair body condition but there was probably insidious corrosion on the body and possibly the under frame;

(7) The market demand for this type of vehicle whether new or second hand as at the time of the accident was not high, but it was possible that since there was only a few available in the second hand market prices could be firm;

(8) The quotations from second hand car dealers/garages varied between $17,500 and $60,000;

(9) Commercial vehicles have a higher depreciation rate;

(10) If put on the market the steel housing had to be dismantled and it would cost about a few thousand dollars;

(11) The Plaintiff carried on a business which involved supply of fresh poultry to the catering sector. He did not produce any materials from his business books to indicate the asset value;

(12) I am unable to accept the submission that the fact that the vehicle was parked in a covered car park for part of a day was a favourable factor;

(13) The vehicle was regularly maintained.

13. Doing the best I can, I assess the market value at the time of the accident to be $25,000. Accordingly the Plaintiff is entitled to judgment in the sum of $27,140.50 ($25,000 + $2,140.50).

14. I shall award interest on $27,140.50 at the present judgment rate from 22nd August 1998 (the date of the accident) until date of judgment and thereafter at judgment rate.

15. I shall also make an order nisi that the Plaintiff is to have costs of the action up to and including the costs of the assessment proceedings.