REEBOK TRADING (FAR EAST) LTD. v. POKFULAM PROPERTY MANAGEMENT LTD.

1992,No.A5263

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. Mr Henry Ching's Toyota Lexus was stolen from his carpark on the night of 19 November 1991.

2. The first he knew of it was when an agitated caretaker rang his door bell about one o'clock in the morning.

3. Mr Ching hurriedly dressed and went down to his carpark. The Lexus was gone. Nearby was an elderly Honda abandoned with its engine still running.

4. The police arrived and quickly established that the Honda was also stolen. The caretaker's record showed that the Honda, No.DC846, had entered the carpark at 0.42 a.m. and that the Lexus, No.ET3940, had departed at1.02 a.m.

5. It appears that the thief or thieves entered the carpark in the stolen Honda, circumvented the sophisticated Lexus alarm system in less than 20 minutes, and departed in that vehicle. It has never been seen again.

6. The elderly caretaker has not been seen again either. Strenuous efforts by the defendant to locate him to give evidence have failed. Two signed statements which he made have been admitted in evidence by leave.

7. I hasten to say that no one suggests for a moment he is suspected of being implicated in the theft. He remained at his post until this year when heunaccountably disappeared just prior to this hearing. I note that the defendant, in its many undelivered letters to him, attempted to reassure him that he personally was not being sued for the cost of the Lexus.

8. Mr Henry Ching is employed by the plaintiff, the Reebok Company Limited, as its general manager. As a term of his employment he is provided with a car and an apartment. That apartment was then in a residential estate called Scenic Villas. Scenic Villas is managed by the defendant which is a property management company.

9. The plaintiff as owner of the car now claims its value, $540,000, from the defendant management company. It claims the defendant was negligent in its management of Scenic Villlas, that it failed to take reasonable care, in particular to guard against and prevent the theft of vehicles from the carpark.

10. Scenic Villas has one road access for vehicles. A night caretaker sits in one of those commonly seen "sentry-box" arrangements and operates barrier arms with a button.

11. The caretaker's two statements read to the court in his absence contain minor differences about what happened. I do not think they are significant. One statement was made to the police on the night of the theft, the second was to the defendant's solicitors a year or so later.

12. He says the Honda entered and passed his barrier probably closely following a vehicle and he was unable to stop it. He noticed it bore no resident's label and noted its registration number, DC846, in his record book.

13. He says the Lexus emerged later with a male driver and a passenger and stopped at his barrier. He asked the driver which flat he lived in and was told "K10", which is Mr Ching's flat number.

14. Pausing there, this was in some ways a rather facile question because both the Lexus' parking space and its windscreen label bore this number K10. But, one might say, what else could he ask? In any event he raised the barrier and let the Lexus drive away. He recorded its registration number,ET3940, and the time in his record book.

15. Then, for whatever reason we do not know, he quickly had second thoughts. Perhaps he checked some list, perhaps he had pangs of conscience. In any event he saw fit to leave his post and go up to Mr Ching's flat rousing him "to double check", Mr Ching said he put it.

16. Of course I have not seen the caretaker and he has not been cross-examined. His unusual visit at a late hour suggests to me some anxiety if not guilty conscience on his part.

17. Mr Ching was incensed. This was his second car stolen from Scenic Villas. His company had earlier provided him with a Toyota Crown and that had been stolen just over a year earlier.

18. He says the caretaker should have recognised him and realised that he was the only usual driver of that Lexus - apart from his wife that is, who had driven only occasionally in the day time. He was accustomed to pass the caretaker most days and exchange a wave.

19. This is not an unreasonable expectation by Mr Ching but it is still only an assumption. Mr Ching may well have recognised the caretaker who was one of only three or four usually at that post. It does not follow that those three or four gate caretakers would recognise all the two hundred or so residents, not to mention their families, who were accustomed to drive past every day.

20. Scenic Villas comprises seven blocks each with 30 flats, i.e. a total of 210 flats. There were 282 parking spaces. There are probably over 1,000 permanent residents when one includes family members. There are visitors, tradesmen etc. associated with all those people.

21. Furthermore, as will be seen later, there are even supermarket customers who are not associated with those people, who are complete strangers and who have a legitimate right to enter.

22. Around 1990/1991 there was a sudden and notorious dramatic upsurge of vehicle thefts in Hong Kong. Certain luxury model cars in particular were targeted by thieves and disappeared completely. It became common knowledge that sophisticated and daring gangs swiftly transported the stolen cars to China. The matter became the topic of widespread and outraged debate.

23. Scenic Villas carpark was no exception. In October 1990, twoToyota Crowns were stolen on the same night (one was Mr Ching's previouscompany car). In July 1991 another Crown, then in November a Lexus was stolen, the latter just one week prior to Mr Ching's Lexus. Thus there had beenfour cars stolen in just over one year.

24. What was the management company's legal responsibility? The general rule is that no one has a duty to prevent crimes committed by another -such acts are "novus actus interveniens". But there is such a duty if there is aspecial relationship, or a high degree of foreseeability that damage might occur :Clark & Lindsell on Torts (16th ed.) 1-121. Perl Limited v. Camden London B.C. [1984]1 QB 342.

25. In this case I accept the defendant owed a duty to the plaintiff to take such care as was reasonable in the circumstances.

26. How did the defendant respond? Two witnesses gave evidence. Mr Nelson Chiu is the manager and a director. The defendant manages severalother substantial residential estates apart from Scenic Villas. Mr K.K. Law wasthe on-site manager at Scenic Villas from 1974, when the estate was built, untillast year when he became an estate manager at the company's head office. Bothhave considerable experience in property management and impressed me as sensible.

27. I have been taken through the history of these gentlemen's meetings with the residents' committee and the owners' committee. The defendant has made full and voluminous disclosure of everything which might be relevant.

28. Mr Law instituted a patrolling system of the blocks and the carpark. Beatbooks had to be signed. Caretakers were given "walkie-talkies".

29. There was a meeting with the owners committee after the two Crowns were stolen in 1990. The feasibility of a special carpark access control system was discussed. The defendant recommended this and obtained aquotation from Chubb (HK) Limited. This is a system similar to that used atlarge public carparks and entails the use of a magnetic coded passcard. The defendant circulated all owners with an assessment and estimate of costs and a voting form. A majority vote favoured it (although a still greater majority did notbother to reply) and the defendant was prepared to install and run it. All thisfoundered apparently because it necessitated altering a wall at the side of thecarpark and one, and one only, owner objected to this being done.

30. Security was tightened generally and instructions to caretakers recorded. By November 1991 before the plaintiff's Lexus was stolen, thedefendant had instructed the caretakers to increase patrols, record registrationnumbers, and to look at drivers' faces and question them if appropriate.

31. In particular, it issued caretakers with a list of 10 cars, theirregistration numbers and the associated flat numbers, which were consideredhigh risk or luxury models. The plaintiff's car was on this list.

32. Mr Nelson Chiu impressed me as an eminently sensible witness. Hesaid the defendant was constantly balancing vocal minorities and less vocalmajorities. The 10 or so owners of expensive luxury cars were an example of avocal minority and they represented about 5% of residents. They hoped forspecial protection of their prized possessions.

33. The remaining residents drove modest cars and had a largely incompatible wish. They resented tight irksome gate controls which they saw asan infringement of their right to enter and exit their homes. They did not wantthemselves, their families and their visitors subjected to officiouscross-examination.

34. After the latest theft the defendant introduced a rule that driversproduce their identity cards. Mr Chiu says this does not work in practice. Mostresidents are expatriates who are not slow to stand on their rights and dignity.Many have pointed out that mere caretakers have no right to demand identitycards and they will certainly not yield to such requests. Mr Chiu said he was constantly dealing with angry confrontations on this point alone. Others wouldnot, or forgot to, display the windscreen label which the defendant had issued toall residents.

35. By and large, a majority of the residents were content with, or at least not dissatisfied with, the car security position. Some even felt that theirneighbours who chose ostentatious cars would have to find a better methodthemselves to safeguard them.

36. Everyone was concerned of course with personal safety - theprevention of robberies or burglaries and the like - where personal safety was in issue. But casual and non-violent thefts were overall a lesser concern.

37. A perusal of the minutes and correspondence shows that rarely wereowners or residents unanimous about what they wanted of the defendant. Moreoften than not these meetings became simply expressions of divergent andconflicting opinions. Nevertheless the defendant continued regularly to arrange and hold these meetings and act at best it could.

38. Four cars were stolen in one year prior to Mr Ching's. Obviously that was a cause for concern and comment. On the other hand I do not think itcan be termed scandalous or ipso facto evidence that the management must beflawed. One must remember there were 210 flats and 282 parking spaces. Thiswas during a period when car thefts generally in Hong Kong had become a matter of notorious widespread public concern.

39. It emerged near the end of the evidence (by chance, the defence wasnot going to make much of it) that there is a supermarket within Scenic Villas,and two other lesser shops. This supermarket is open to all the public to a latehour, Mr Law thought to 10 p.m.

40. About half the supermarket's customers come from outside ScenicVillas, mostly by vehicle, and through the same one and only vehicular entrance.Somehow they are accommodated in the nine visitors' parking spaces - if thereare any left - mostly they park at random anywhere they can. The onlysemblance of control left to the defendant over this ramshackle situation arisesfrom the fact that the supermarket customers are usually, as Mr Chin put it,shopping for a relatively short time.

41. This factor convinces me that it is simply not realistic for the defendant to have any perfect or real control, let alone vetting capacity, over allvehicles and their occupants. At the end of the day it all boils down to theinstinct and common sense of the gate caretaker.

42. All I have discussed so far refers only to the vehicular entrance to Scenic Villas. There are in fact other pedestrian routes used by residents wherean intruder on foot could pass unseen by the gate caretaker. It was neversuggested that it was feasible to monitor these.

43. Let me revert to the night of the 19th November 1991 when the plaintiff's Lexus disappeared. It seems probable, but not proved because therewere other routes, that the thieves entered Scenic Villas in the stolen Honda.

44. In any event it is at the point where the stolen Lexus was driven outthat things went wrong. The gate caretaker should not have raised his barrier. Ifhe had followed his strict instructions he would not have rasied it. Despite thedefendant's precautions and efforts he momentarily lapsed, he let down thesystem at that point. We do not know exactly why, but he did. We do know hewas not asleep or absent altogether because shortly afterwards he presentedhimself at Mr Ching's flat. Although this was "shutting the door after the horsehad bolted", it did at least mean the theft was reported immediately to the police- and the police did promptly set up road blocks at main roads leading away from Scenic Villas. This distinguishes this case from the "complete withdrawal ofservices" found to exist in Hui Kay-cheong v. Chi Wo Properties [1992] HKDCLR 51.

45. It may not be helpful but I speculate what might have happened ifthe caretaker had insisted the Lexus not depart before he checked further. Thethieves might have fled on foot, in which case the car would have been saved.But they were sophisticated and probably determined, they were reaching thefinal stage of their illegal enterprise. The 59 year old caretaker was alone andthere were two of them. I think it more probable they would have crashed thecar through the barrier or physically overcome the caretaker to get it open. Inthat case the car would still have been lost.

46. The point is this, the caretaker's lapse has not necessarily been shown to be the proximate cause of the loss of the car.

47. The defendant is a management company not a security company. It was constantly steering a middle course between conflicting needs anddemands. It would always have been criticised and no doubt it fell short in somerespects, e.g., it does seem to have been parsimonious in its salaries for its caretakers. But it was circumscribed by funds and the funds the owners were prepared to allocate.

48. Reading the voluminous minutes and other correspondence paints to me a picture of a responsive management company doing its reasonable best. Preventing vehicle theft was only one of those responsibilities and it rated a low priority compared with general maintenance and upkeep of the estate itself. Individual owners could still lock their cars and take any extra precautions they thought fit such as fitting alarms or security devices. (Mr Ching himself admitted that he had selected the Lexus model because the manufacturer claimed its security locking system was impenetrable - a claim the manufacturer later had to retract).

49. The management company was not an insurer of the cars parked at Scenic Villas, any more than is, for example, the manager of a parking building or of a sporting club which happens to have an adjacent carpark for the convenience of its patrons. It is still less of a custodian than say a parking service or a repair garage which takes control of both the car and its keys.

50. In all the circumstances I do not consider the plaintiff has shown the defendant to have been negligent. The plaintiff's claim is dismissed with costs. Leave to the parties to apply.