JAW SIU WAH t/a WILLIAM TRADING CO v. KOWLOON-CANTON RAILWAY CORPORATION

CACV 326/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 326 OF 2003

(ON APPEAL FROM DCCJ NO. 3054 OF 2002)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1. This is an appeal from a judgment of HH Judge Carlson given on 3 July 2003. The plaintiff's claim in the case was for $600,000 being the amount that he had paid to purchase 17 buses. The judge dismissed the plaintiff's claim and found in favour of the defendant on the counterclaim ordering payment of the sum of $69,106 with interest. At the conclusion of the hearing of this appeal this court dismissed the appeal with reasons to be handed down in writing which we now do.

The background

2. The matters giving rise to the claim in this action go back nearly 9 years. At an auction held on 5 December 1995 the defendant sold 17 double decker buses which were described as "Metrobuses". The plaintiff was the successful bidder for those buses and paid the sum of $600,000. Prior to bidding for the buses the plaintiff had had an opportunity to inspect, and had inspected, the buses. Photographs of those buses were produced in evidence. The buses had the defendant's logo painted very clearly on the sides. They were unmistakably buses which had been used by the defendant in the course of its business. The judge found that affixed to the windscreens of the buses were their respective Passenger Service Licence Certificates, Motor Vehicle Licences and Road Permits.

3. The difficulty giving rise to this case arose because when the plaintiff attempted to register the transfer of ownership he was informed by a counter clerk at the Transport Department that he could not do so because of the conditions which were attached to the licences of the vehicles. Although the judge accepted the plaintiff's evidence that the plaintiff was told at the Transport Department that the ownership could not be registered in his name, the judge concluded in paragraph 24 of his judgment that as a matter of law, on a true construction of the provisions of the Road Traffic Ordinance, Cap. 374 ("the Ordinance"), the plaintiff could be the new registered owner of the buses.

4. In my view, the judge was correct in his conclusion. The position appears to be that although the plaintiff could become the owner of the buses, unless and until he had obtained a licence which would have permitted use of those buses on the roads, those buses could not be used on the road by the plaintiff. It is noteworthy that there was no evidence demonstrating official communication from the Transport Department refusing the plaintiff's application.

5. As already noted, the judge found that the respective Passenger Service Licences had been on the windscreens of the buses: see paragraph 5 of the judgment. On that basis it was clear that the licences must have been granted in accordance with the provisions of sections 27, 28 and 29 of the Ordinance. As a matter of reality, the licences could thus only have been in respect of either a public bus service or a private bus service. [Clearly, the buses could only have come within section 27(3)(a) or (b).] The scheme of the Ordinance as set out in those Sections was that passenger service licences related to a specific use to which the buses could be put and, furthermore, were liable to be subject to a number of conditions which are set out in section 29(1)(b) of the Ordinance. Moreover, under section 27(7) a passenger service licence was not transferable. Thus, the plaintiff could not have made use of the defendant's licences; if the plaintiff wished to use the buses in any way he would have had to have obtained licences of his own.

6. At the trial the plaintiff put his case on the basis that the plaintiff did not and could not transfer ownership. Despite the fact there were specific conditions to which the auction was subject, a number of additional conditions relating to ownership were said to have been imported into the contract of sale. They were pleaded as follows:

"10. In the premises aforesaid, prior to the sale of the said buses, the Defendant expressly or impliedly warranted or represented to, inter alia, the intended bidders and the Plaintiff at the Public auction that:-

(a) The Defendant would be in a position to effect the transfer of ownership of the said buses to any successful bidder;

(b) The Defendant knew of no circumstances that would prevent, hinder or prohibit the transfer of ownership of the said buses with the Transport Department to any successful bidder;

(c) There was no circumstances which would prevent, hinder or prohibit the transfer of ownership of the said buses by registering ownership with any successful bidder."

7. On this appeal Mr Chan, who appeared on behalf of the plaintiff, placed stress on condition 1 of the conditions attached to the Public Service Licence. Although the conditions attaching to the various 17 buses were not identical it is evident that the use of the buses was restricted to use by the defendant in connection with its railway service. Mr Chan also relied on condition 1 of the Licensing Conditions for a Non-franchised Bus. That read as follows:

"A bus must be operated strictly in compliance with the Road Traffic Ordinance and its subsidiary legislation. Prior approval must be obtained from the Commissioner for Transport for transfer of ownership and replacement of bus."

It is evident that that is a condition which attaches to the licence. In reality it goes no further than section 27(7) of the Ordinance. It emphasises that a public service licence is specific to the licence holder and the purpose for which it was issued.

8. The defendant did not dispute that it was required to transfer ownership of the buses although reliance was also placed on condition 4 of the conditions of sale which reads as follows:

"The Vendor is selling as Registered Owner and the vehicle (sic) are being sold in the condition and location in which they are being found and no undertaking as to title and no warranties as to condition or fitness are given, save and except that no encumbrances have been created by the Vendor. The vehicle (sic) are to be sold in their present condition and at the Purchaser's risk immediately after the fall of the hammer."

Whatever else, it seems to me that there was no express or implied condition that the plaintiff would be in a position to license the buses for use on roads in Hong Kong. That was a matter which the plaintiff himself would have to arrange. Whether or not he could obtain the necessary passenger service licence was a matter which was clearly out of the defendant's control. Nor was there any implied condition which required the defendant to draw attention to the provision of the Ordinance relating to buses.

9. Likewise, whether or not the plaintiff could register his ownership with the Transport Department was immaterial. He became the owner of the buses. Those buses could have been transported, albeit with special equipment, and they could have been taken anywhere. The fact that they could not be used on Hong Kong roads until the plaintiff obtained the necessary licence is immaterial. In any event the judge analysed the provisions of the Ordinance relating to registration of vehicles which are contained in sections 22, 23 and 24 of the Ordinance: see paragraphs 13 to 16 of the judgment. In my view he was correct in his conclusion that the Commissioner could refuse to license or cancel the licence in respect of a bus where there was no passenger service licence in force in respect of the vehicle: see section 25(1)(vii). Furthermore as demonstrated in Regulation 17(2) of the Road Traffic (Registration and Licensing of Vehicles) regulations it is clearly envisaged that there can be a time when a person is an owner of a vehicle but that the ownership has not been registered with the Transport Department.

10. In summary, I would conclude that there was a condition that the defendant should transfer ownership of the buses to the plaintiff if he became the successful bidder. There was no condition whether express or implied that the plaintiff would be in a position to obtain a licence for the use of the buses. There was no obligation on the defendant to draw attention to the licensing provisions in the Ordinance relating to buses. The fact that the plaintiff could not register his ownership of the buses appears to have been simply that the licences could not in reality be transferred, as would have been obvious to any person looking at the buses and considering the provisions of the Ordinance; hence the licences fell to be cancelled.

Hon Le Pichon JA:

11. I agree.

Hon Hartmann J:

12. I agree.