YIP SHEK WU t/a TAT LEE GARMENT FACTORY v. YUE TEI MAY t/a CHUNG WAH TRANSPORTATION CO.

1993, No.A1801

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an action by the plaintiff against the defendant for loss of goods which the defendant had agreed to deliver on behalf of the plaintiff from Hong Kong to China. The goods consisted of certain quantities of fabric, a Panasonic fax machine and a pair of Simpson electric scissors. The total value of the fabric was roughly about $454,000 and the two items of equipment amounted to about $11,698. These was a claim for loss of profit in the sum of about $75,000.

2. The plaintiff was a dealer and manufacturer of garments and materials. From time to time the plaintiff would send fabric to factories in China for processing and manufacturing. He had contracts with a company called Teng Chu Enterprise and another contract with Wah Hon Factory. Under the first contract, the profits for processing the fabric would be about $30,000 and the profits under the contract with Wah Hon would be about $19,500, so the loss of profit which appears from the documents appear to be $49,000 odd.

3. The causes of action relied upon by the plaintiff were firstly contract, i.e. breach of the express or implied term to take care of the goods and secondly bailment, i.e. the defendant had failed to take proper case of the bailed goods. The plaintiff's allegations were that on the 10th June, the defendant agreed to deliver the fabric and the goods from Hong Kong to China. The defendant sent an 8-ton lorry to Wah Tat Building where the goods were loaded and after the loading because it could not cross the border by 8:00 p.m. on that same day, the driver, with the consent of the plaintiff, drove the lorry away. The lorry was left in a public street somewhere in Tuen Mun and within a few hours it was found to have been stolen. The lorry was retrieved some time later, but of course the goods had disappeared.

4. The defendant put up as a defence the following matters:

(1) There was an exemption clause incorporated by a course of previous dealings in the contract between the plaintiff and the defendant and that clause exempted the defendant from liability for loss and damage.

(2) The plaintiff had delayed the loading of the goods, refused to remove the goods or re-load them the next day or to park the lorry in a car park, and therefore had agreed to the defendant parking the lorry in the public street at the plaintiff's own risk. In other words the plaintiff had accepted the risk.

(3) The defendant had taken all necessary precautions.

5. I think in the pleading the defendant also referred to some grounds of invalidity but Mr Miu in his final submission did not seek to rely on those other matters.

6. The evidence appeared to be as follows. It is not disputed that the plaintiff had previous dealings with the defendant since 1988. The defendant had delivered goods to China and back on behalf of the plaintiff on many occasions. The plaintiff had received some consignment notes. Since early 1991, the defendant had issued new consignment notes in respect of the goods to be delivered. However, the plaintiff said he never received those notes. It is not disputed that the new consignment notes contained the alleged exemption clause whereas the old ones did not consist any such exemption clause.

7. The evidence of the defendant consisted of the driver and Madam Yu, the defendant. They said that they had sent copies of the consignment notes to the plaintiff. However, none was produced relating to the consignment notes addressed to the plaintiff. The driver and Madam Yu told us how many copies there should be, and how many copies were supposed to have been sent to the plaintiff after delivery and/or payment. However, as I said there was no copy produced before me.

8. Having heard the evidence, I must say I must say I do not find the defendant's evidence on this aspect of the case to be impressive. I do not accept the evidence regarding the sending of these new consignment notes to the plaintiff. In the circumstance, I do not think there is sufficient evidence to show that the exemption clause in the new consignment note had been drawn to the plaintiff's attention. There is no evidence that the plaintiff knew of this drastic change in his responsibility. In any event, the exemption clause in the copy which had been produced in relation to other companies said that the consignor was responsible to take out insurance policy covering fire, accident etc. I do not think it is sufficient to cover negligence on the part of the defendant if there was any. In my view, first, the exemption clause did not have any effect in the present case, and second, it was not wide enough to cover negligence on the part of the defendant. I do not think it is binding on the plaintiff.

9. As to what happened on that day, I do not think it is disputed that prior to 1991 the plaintiff had used his own coolies and workers to do the loading and unloading work in Hong Kong, but later he asked the defendant to introduce someone to him and so a company called Hip Chun Enterprise was engaged. There is a dispute as to whether it was the plaintiff who had directly engaged Hip Chun, whether it was done through the defendant, or whether it was the defendant who had instructed Hip Chun. But I do not think I need to make any finding on this. This is not important to the issues in the present case. From the evidence before me, I think the plaintiff must have on various occasions given instructions to Ah Fei of Hip Chun as to what to carry, what goods to move and when, which lorry to use or things like that. Ah Fei gave evidence. He said he had been working for the plaintiff and had nothing to do with the defendant, no business at all, no dealings. Having heard the evidence, I have grave doubt as to whether he really had no connection with the defendant. But as I said, this is not relevant to the main issue.

10. On 10th June, the arrangement was that the driver would go to Wah Tat Building in Kwai Chung. The plan was that an 8-ton lorry instead of a 3-ton lorry would be used. The plaintiff's goods from Tokwawan would then be transported to Wah Tat, and those goods, together with the goods from Wah Tat Building would be loaded onto the 8-ton lorry and then driven from there to China. The appointment was about 1:00 p.m. A number of witnesses had been called to give the evidence on this aspect. The plaintiff had made two police statements, the driver had given three, and Madam Yu had given one. I would have thought that some of the statements were contemporaneous in the sense that they were given very shortly after the incident when the matter was fresh in their minds. Of course I am also aware that those statements were made to the police for the purpose of investigation on the theft, so whatever was omitted in those statements might not be conclusive. But as I mentioned during Counsel's arguments, the statements to the police could throw some light on the state of mind of these three witnesses.

11. The plaintiff in the first statement given to the police on the 12th June said the loading finished at about 6:00 p.m. He parted with the driver and agreed that the driver could drive the lorry away. Then several months later, in a second statement made on the 25th September, he said that the 8-ton lorry arrived at about 2:00 p.m. and it was until 2:00 p.m. or 3:00 p.m. that he waited for the Tokwawan goods to come. The 8-ton lorry had to be unloaded, and the loading of his goods, the Wah Tat goods finished at about 6:00 p.m. Then the driver drove the lorry to a side lane to load the Tokwawan goods. He said he could not find the driver and it was at about 6:30 p.m. that the driver called him on the pager and he got a message that it was alright.

12. The driver in his three statements to the police had these to say. In the first statement made on the same day as the incident, the 11th June, he said that he arrived at Wah Tat Building at 1:00 p.m; the loading finished at about 6:45 p.m. and he drove the lorry to see his boss and had dinner. On the following day, the 12th June, he gave another statement. He said he arrived at about 1:00 p.m.; Hip Chun was there to do the loading; the loading finished at about 6:45 p.m. and he told the plaintiff that it was too late to cross the border that day and the plaintiff agreed that he could drive the lorry away. In the last statement of 26th September, he said something slightly different. He said he arrived at about 1:00 p.m.; was waiting for space in the Wah Tat Building and also waiting for his own company's lorry so that the goods in the 8-ton lorry could be unloaded and transferred first and at about 3:00 p.m. loading of the plaintiff's goods started and it finished at sometime after 6:00 p.m. He had called the plaintiff because he feared that there would not be enough space. However he continued to see the loading and it was after 7:00 p.m. that he called the plaintiff and told him on the pager that it was alright: He then left. These were his statements.

13. Lee Hung Fai (Ah Fai) also gave evidence. He said on that day, the 10th June at about 9:30 a.m. he went with a lorry to Tokwawan to pick up the plaintiff's goods and that finished at about 11:30. He went with this lorry and two other lorries to Wah Tat. This was because the other two lorries were supposed to pick up the goods in the 8-ton lorry belonging to another company. He said, however, he arrived at Wah Tat at about 1:10 p.m. According to him, the plaintiff's goods were messy and it was 6:45 p.m. when the loading was finished. However, he also mentioned that the 8-ton lorry had discharged the goods at Wah Tat, in other words, discharge of those goods belonging to another company had finished at about 2:30 p.m. He also said that after the loading of the plaintiff's goods, it was about 7:30 p.m. already. He had already complained to the driver as well as to the defendant about the delay in loading. It is interesting to note that he did not give any statement to the police in June or September 1991. Yet he made this witness statement 3 years later and he was able to remember all these details. He said he never discussed this case with the defendant's witnesses. I am not sure his evidence could be very reliable.

14. So having heard and assessed the evidence, I make the following findings. I think the driver arrived at around 1:00 p.m. on that day. However, he could not start loading the plaintiff's goods immediately. This was because he had to wait for parking space and he had also other goods in the 8-ton lorry to unload. Furthermore, the Tokwawan lorry containing the plaintiff's goods had not arrived. So there was waiting at that time and unloading of the 8-ton lorry. It seems that the unloading finished at about 3:00 p.m. or there about. It was then that the loading of the plaintiff's goods began and that finished well after 6:00 p.m. Then, the lorry was driven to a side lane to load the Tokwawan goods So I should think that the complete loading would have been finished at about 7:00 p.m. or there about. I also accept for the purpose of this action that the goods were not in a very tidy state. They would be messy, requiring certain tidying up before loading. This was also due probably to the fact that the plaintiff was trying to load as much as possible in order not to waste any space in the 8-ton lorry. I would also accept that the plaintiff had also helped in loading and was anxious to do it. It was quite clear, I think, even at an early stage, probably 4:30 or 5:00 p.m., that the lorry could not beat the 8:00 p.m. deadline. I would accept that there were some discussions, some telephone calls here and there and finally it was agreed that it should be changed from a single trip to a round trip, that the trip should start at about 3:00 to 4:00 a.m. in the morning, so that they could start crossing as early as possible, may be the first one to cross the border the next morning; and that was probably the arrangement after the delay.

15. It was alleged that the plaintiff was at fault in the delay. Having heard all the evidence from the witnesses, I take the view that both parties were responsible for the delay. However, the plaintiff would be more at fault because he had more goods than expected and he wanted to move all of his goods. The goods lorry from Tokwawan was also not ready at an earlier stage. So I should think that if fault was to be laid, the plaintiff would be more to blame for the delay.

16. But as I have mentioned during the course of arguments, this is not the issue. The important issue is what was the arrangement as to the lorry on that night or whether there was any previous arrangement or course of dealing leading to this arrangement.

17. The plaintiff said that he did not see the driver on that day and he had only received a call. He said he never spoke to the defendant and the driver's statement in fact supported this in a way, although in evidence the driver said something different. I think on that afternoon, the witnesses might have seen each other for a number of times, coming up and down, checking and moving the goods, handling documents, anxious that they could not beat the deadline. So they must have spoken to each other either on the phone or face to face.

18. The driver and Madam Yu said that because the plaintiff had delayed, therefore they put a number of suggestions to him, either parking in Wah Tat or parking in a fee paying carpark or unloading and then reloading on the next morning, etc. Having heard such evidence and looking at the circumstances on that afternoon, I do not believe such discussion had taken place. There was a subsequent change of the agreement from a single trip to a round trip. They had done business before. This was not the first time there was a delay. I do not believe that they had at that time made those suggestions. It would be incredible in those circumstances, after so many hours of loading, to suggest that the goods could be unloaded and then reloaded the next morning particularly when it was agreed that it should be a round trip the next day. People simply do not do business in that way, particularly in the transportation business.

19. Both the driver and the plaintiff in their statements to the police said that the plaintiff had agreed for the driver to drive off the lorry. I would have thought that it never occurred to them or even to Madam Yu that there would be any theft. They probably never applied their minds to any risk bearing or something like that on that afternoon. There might be a discussion as to whether Wah Tat Building would be used for parking the lorry. It would probably be natural to ask this because it was there that the goods were being loaded. But I do not think it matters very much because it was not the plaintiff's place nor the defendant's place and so naturally the parking of the lorry would not be allowed there. The driver simply drove off and the plaintiff agreed. As I mentioned, this was not the first time they did business, not the first time that they were late and unable to cross the border in time. What happened was that there was an arrangement for a round trip, that the lorry was to start early next morning at 3-4 a.m., that the plaintiff would meet the driver somewhere in Shenzhen at about or 8 a.m. So nobody would apply his mind to any risk.

20. However, I accept from the evidence that there had been previous occasions that they had done business, that there were previous occasions that there was a delay so that they were unable to cross the border, and that there had been previous occasions when the plaintiff had allowed the driver to drive away the lorry so that it could be driven to China the next day. I also accept the evidence that the plaintiff was told on previous occasions that the lorry would be parked in the street and that the plaintiff knew about it. There were occasions that this was done as is clear of the driver's police statements. Furthermore, in the circumstances of this case, on that day as well as on previous occasions, I would have thought that the plaintiff should be well aware that the driver would be parking the lorry in the street for if this was not the case, then where else would it be parked? The driver was not able to park in the carpark at Wah Tat. He was not able to park anywhere. I would have thought that on previous occasions the plaintiff must have known that if the driver could not beat the deadline and had to drive the lorry away, it was likely that the lorry would be parked in the streets. I accept that there may be a difference between a 3-ton lorry and an 8-ton lorry, but in the circumstances, the plaintiff, the driver and the defendant all knew it was an 8-ton lorry fully packed with goods. I don't think the absence of knowledge of the actual value of the goods matters very much.

21. So in the circumstances, I find that on previous occasions both the plaintiff and the defendant, through the driver, had accepted the risk of parking the lorry in the streets. As this had happened before, they had agreed that this should be the arrangement for them. In other words, both had accepted the risk.

I also find that although there was no express agreement as to what the driver should do with the lorry, they had acted in accordance with the previous arrangement i.e. on the understanding that the driver would park the lorry in the street. They had as in the past accepted such a risk on that evening.

22. The bailment was for the goods to be delivered to China. There was a variation because both parties agreed they could not go to China immediately and the lorry should be driven away and parked elsewhere. The defendant as bailee had the duty of care looking after the goods. I must say that parking in the street was in fact quite risky. The parties should be well aware that in Hong Kong there were so many theft of cars and vehicles that to park a car in a public street would cause tremendous danger and risk. If there had been no assumption of risk on the part of both the plaintiff and the defendant. I should think that to do so amounted to negligence and breach of duty of care.

23. The driver told us in his statement and in evidence that after the loading, he went to Tokwawan for dinner, parked the lorry at a public place. After dinner, it was almost midnight and he then drove the lorry to Tuen Mun and parked his lorry there. In his three statements, he said he parked his lorry on the road side opposite the bus terminal. He produced certain photographs said to be taken sometime later in the night, and he also gave evidence of having the lorry parked somewhere near a taxi stand. He said there were taxis around, there were green light buses around and there were police cabs around. I think when he was giving statements to the police it was important for him to identify clearly where the place was so that the police could try to locate the vehicle. Yet he did not mention its exact location. Although it might be more or less the same place, but in the statements he said it was near the bus terminal, on the road side opposite the bus terminal. So I am not free from doubt whether in fact the photograph showed exactly the place where the lorry was parked and I find it doubtful whether in fact it was near the bus stand.

24. In his three statements, the driver mentioned that he locked the lorry, but there was no mention of releasing air. I think it would also be important in those circumstances when he was making a statement to the police to tell the police what he had done. This was certainly relevant to the police in their investigation. Yet this was omitted. He had omitted to mention to the police that there were police cars, taxis and public light bus around. He had omitted to mention to the police that he had released the air. I do not believe he had done so in the circumstances. I would have thought that it would be a breach of the duty to have parked the car like that simply having it locked.

25. However, as I have found, from a course of previous dealing, both the plaintiff and the defendant had accepted the risk of having the lorry parked in the street when they could not make the deadline on a particular day. The plaintiff had assumed the risk of having a lorry loaded with his goods parked in the street and had on this particular occasion, accepted a similar risk in allowing the driver to do the same. Faced with that conclusion, I must say that in the circumstances, I have to find that the plaintiff have failed to prove on the balance of probability that it was the defendant's negligence which had caused the loss of his goods. Unfortunately, this is not a case of tort where I can apportion liability. I think that the plaintiff had taken the risk that the goods might be lost and the defendant had taken the risk that the lorry might be lost. At the end both were lost. As this is an action by the plaintiff against the defendant for the loss of his goods, I do not think the plaintiff had succeeded in proving his case against the defendant. In the circumstances, I would dismiss this action.

26. I would also add finally that if I were asked to make any finding, I would say that the plaintiff had proved his loss. There were the two contracts which I have looked at. He had succeeded in proving to my satisfaction that he had lost that amount of goods in the region of $450,000 and he had also proved to me that according to the contract, he was entitled to bring the two items of instrument to China. I accept that he had manifested these items and the fabric in the documents. If I had come to a contrary conclusion above, I would have thought that he had proved the amount of damages claimed. But in view of the conclusion I have reached on liability, I would give judgment for the defendant. This is a very sad case. This is a case where we have two victims of theft and no one would wish to put the blame entirely on one party. As I have said, both parties had accepted a risk. However, I do not think it is proper or legitimate for me to make any apportionment. I have found for the defendant. I think it should follow that the plaintiff has to pay the costs of the defendant.