THE HONG KONG AND CHINA GAS CO LTD v. THE OWNERS OF THE SHIP OR VESSEL "TONG HOI" AND ANOTHER

1988, No. AJ32

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ADMIRALTY JURISDICTION

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Admiralty action in rem against : The Ships or vessels "Tong  Hoi" and "Shun Hop No.2" (Lx "Tat On")

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ASSESSMENT OF DAMAGES

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1. The Plaintiff's claim arises out of an incident which took place in the evening of 26 January 1987.

2. A launch owned and operated by the 1st Defendant was towing a lighter owned and operated by the 2nd Defendant underneath the bridge, then the only one, between the Kowloon Peninsula and Tsing Yi Island.

3. The lighter's boom was in a vertical position. It struck and fractured the Plaintiff's gas pipeline which ran alongside and underneath the bridge. It was the only gas pipeline serving the island.

4. The Plaintiff claimed the accident was caused by the negligence of the Defendants and issued the Writ herein on 8 March 1988. On 19 September 1988, by consent, Interlocutory Judgment was entered by Mayo, J. against both Defendants with damages to be assessed together with interest and costs.

5. The Plaintiff's Claim on Reference to Registrar was filed on 17 May 1989 and contains 4 main heads of damage. They are the cost and expenses of emergency repairs, the cost and expenses of permanent repairs, loss of revenue and administrative costs and overheads.

6. Two Hearsay Notices were filed by the Plaintiff on 2 June 1990 and a Counter-Notice requiring the makers of certain documents to be called as witnesses was filed on 4 June 1990.

7. Mr. LAW Wai-kin, the Transmission and Distribution Manager employed by the Plaintiff, gave evidence, which I accept, of the work which resulted from the incident.

8. Gas supply to the island had to be cut off and a section of about 5m of pipe was cut out and replaced as a temporary repair. Part of the work was contracted out and part done by the Plaintiff's own staff.

9. This was, however, not all that was required. Mr. Law explained that air getting into the system as a result of the fracture would mix with the gas and form an explosive mixture. To prevent this, the whole system had to be purged by the introduction of nitrogen. The island was divided into 9 sections and first the medium pressure system was purged. Then the low pressure system to each building was purged. Finally, each individual customer, of which there were more than 90,000, had to be dealt with by service department fitters.

10. All this was accomplished in just over 2 days with work going on round the clock.

11. The Plaintiff assessed the cost of all this by adding together actual payments made, in total, to staff and labour employed by it, the cost of a contractor, the cost of materials which included such items as cylinders of nitrogen and also items from the Plaintiff's own store. In addition, $13,058 20 was claimed as other expenses which oovered such matters as food boxes for staff who were required to stay working rather than take the usual meal breaks.

12. It also includes a payment of $7,860:00 to the Water Authority for the repair of damage done to a water pipe which occurred when the Plaintiff's workmen dug a necessary hole in the road.

13. I hold that the damage to the water pipe is too remote but otherwise find the expenses reasonable and necessary. Under this head, therefore, I award $13,058:20 - $7,860:00 = $5,198:20.

14. Evidence for payment of the contractor was straightforward and not seriously challenged on behalf of the Defendants. I awarded in full the claimed sum of $57,431:00.

15. Materials were claimed at $33,716:75 and, again, the evidence was clear and I accept as reasonable the method used by the Plaintiff to cost out materials supplied from its own store. That claim, also, I allow in full.

16. The Plaintiff distinguished in its claim between the costs of staff, $48,901:80, and labour at $71,740:49. In respect of this part of the claim, two matters required to be dealt with.

17. The first is the argument put forward on behalf of the Defendants that, so far as the Plaintiff's employees are concerned, a claim only lies in respect of overtime (by whatever name is used for different levels of employee). Mr. Bell urges that all these employees would have been paid their salaries anyway and that, therefore, no additional cost, other than overtime, has been occasioned to the Plaintiff. I do not see any substance in this argument at all. Had it not been for the admitted negligence of the Defendants, all these employees would, no doubt, have been engaged on other duties.

18. The second question which arises is the nature of the evidence adduced by the Plaintiff to support the total figures. I was told that it is not the policy of the Plaintiff to disclose individual salaries and what I was presented with was a computer printout showing, by name and job title, everybody involved and the total amount due to him as normal salary and due to him as what I have described as overtime during the period he was engaged on these emergency repairs.

19. I heard evidence of how these records are dealt with and am satisfied that, on balance of probabilities, the final record produced by the computer accurately records the sums involved.

20. Mr. Bell also objected that the records adduced did not comply with Section 50 of the Evidence Ordinance and should not be admitted in evidence. I am satisfied that the  certificate incorporated in the Plaintiff's Hearsay Notice is sufficient and that this objection could not be sustained. Both claims are allowed in full.

21. Permanent repair to the pipeline was not carried out until September when, I was told, demand is low. The bulk of the work was carried out by a contractor and I am satisfied that the amount of $81,500:00 claimed by the Plaintiff is proved and, accordingly, I allow it. The Plaintiff's own labour costs, mainly expended in the purging operaion, which had to be carried out again, is $11,000:00 and established in exactly the same way as for the temporary repair. There is, however, an error in computation which reduces this item to $9,463:50, which I allow. I also allow $12,350:21 being the cost of the steel piping used.

22. The third main head of claim is for loss of revenue and is put at the sum of $130,646:98.

23. On this part of the claim, the Plaintiff has chosen to place itself in a particular difficulty as, again as a matter of policy, it is not prepared to disclose what its actual loss of profit was. Calculations were produced which, if a claim for loss of revenue were allowable, would, in my judgment, establish the figure asked. Mr. Lewis did not produce any authority to support a claim for loss of revenue but was, at one stage, inclined to accept Mr. Bell's suggestion that were I minded to award something for loss of profits I could make an assessment based on the total loss of revenue. That was not an invitation I find in any way attractive, particularly as the loss of profit, if any, must be perfectly well known to the Plaintiff who could very easily have produced evidence of it to me. In summary, I know of no principle which enables a claim for loss of revenue of this sort to be sustained and, as the Plaintiff has chosen not to put forward any evidence of loss of profit, I disallow it entirely.

24. The final claim is for $92,069:09 for administrative costs and overheads. This is based on the usual practice of the Plaintiff and, indeed others, of adding 20% to costs to cover such matters as clerical work, petrol, use of vehicles and so on. It is a crude but generally effective device and I consider 20% to be a reasonable level. I allow it on the total of the figures I have awarded in this assessment as set out in the summary below.

Summary

25. I will hear submissions on interest and costs.