XCHRX Ng Ka Ho v. Kanic Property Management Ltd.

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 17055 OF 2000

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J U D G M E N T

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1. On 14 February 1994 the plaintiff, Mr Ng Ka-ho, purchased a brand new Honda motorcar. It cost him over $275,000. In common with many people in Hong Kong, he did not have a parking facility for it at his home in Tsuen Wan. Fortunately, he had a friend who worked at the Tung Wah Hospital in Tsuen Wan who had a car park space which he was able to let the plaintiff use as he had no car of his own, but sometime in the course of 1995 the hospital took back the parking space and so the plaintiff had to find somewhere else to leave his car.

2. He found the Panda Hotel car park in Tsuen Wan to meet his needs. It cost him $2,000 a month but it had wide parking stalls, was well patrolled, including close-circuit television surveillance and electric barriers. But then in August 1995, through oversight, he forgot to renew his monthly permit and so he had to give up his space there and find somewhere else. Parking space in Tsuen Wan was at a premium. He had some difficulty finding alternative parking. Eventually he found a car park attached to a residential block of flats known as Tsuen Wan Gardens ("TWG") which as the name suggests was also in Tsuen Wan. As I shall have to recount in more detail presently, its facilities were less elaborate than those at the Panda Hotel. TWG was walking distance from his own home and as a temporary measure he decided to park there for the asking fee of $1,700 a month. He proposed to use TWG until he could get back into the Panda Hotel. He had had to rejoin their waiting list once he had failed to renew his permit. He had also found another parking space for $1,700 but that would have entailed a bus journey from his home, so he opted for TWG.

3. On 8 October 1995, he drove the car to keep the battery and engine going and then he returned it to one of the designated parking spaces at TWG. He turned the engine off, activated the alarm system, engaged the gear lock and locked the doors. Three days later at 5 pm on 11 October, he returned to the car park to ensure that all was well. The car was as he had left it. This was the last time that he would see it.

4. At about 2.30 am on 12 October, three men, car thieves, drove up into the car park. Two of them alighted from their vehicle. They told Mr Law, the caretaker, that they were police officers and that he should go away and let them get on with their police duties. They went up to the plaintiff's motor car and within the space of two minutes they were able to break into it and drive it away.

5. The plaintiff now brings this action against the defendants who are the building management company, and the caretaker's employers, to recover the value of his car as at the time of its theft. The parties have agreed the value at $210,000. So, subject to liability, this is the amount that the plaintiff stands to obtain.

6. This matter has been very well argued by Mr Vaughan on behalf of the plaintiff and Mr Patrick Chong for the defendants. They have dealt with the facts expeditiously and both have addressed me most helpfully on the legal issues which have arisen and upon which I must come to a decision. The basis of the action appears in the amended Statement of Claim, pages 22 to 27. The defendants are sued in contract, alternatively in bailment and also in negligence.

7. The defence contend that there was no contract between these two parties. The contract, if any, was between the plaintiff and Peace View Company Limited ("Peace View") who were the owners of the car parking spaces to whom the plaintiff paid the monthly parking fee of $1,700. Next, they say that in the circumstances of this case, particularly having regard to the arrangements at this car park, that there was no relationship of bailor and bailee between the plaintiff and the defendant. This was merely a licence to park there. As to negligence, this is denied but in the event that the court were to find negligence, it is submitted that the defendant's terms and conditions excludes negligence and so for that reason the action would also fail.

8. These therefore, in summary, are the issues which I must determine. It is convenient to first decide whether a contractual relationship existed between the plaintiff and the defendant company.

9. Miss Ho Wing-yee, whose statement starts at page 57, is the General Manager of the defendant. She is also a senior executive of the Far Eastern Group of which Peace View is a part. The defendant, as I have already related, is the management company for TWG which comprises 464 residential units with communal gardens and a car park comprising 125 parking spaces. Peace View own a number of the parking spaces at TWG, including those in the area where the plaintiff was entitled to park. He rented the parking space, or perhaps more accurately the right to park within certain designated areas in the car park, from Peace View. The rent for the car parking facility would be and was collected by the defendants on behalf of Peace View. This is amply confirmed by the payments into Peace View's bank account starting at page 94 and the record of receipts starting at page 100. These payments would be collected by the defendants at the management office at TWG from the individual car owners, including, of course, the plaintiff.

10. It is also plain that the plaintiff never made any payment to the defendants in respect of his rental of the parking space. The defendants would earn $120 from each of the owners of the car parking spaces, including presumably from Peace View, but this was a separate contractual arrangement between the owners of the spaces qua owners and the defendant as the manager of the estate, including their management of the car park.

11. Quite realistically in my view, Mr Vaughan did not press the case for the plaintiff on the basis of a contract between the plaintiff and the defendants. I am satisfied that the evidence is all one way, which is that the contract for the renting of the car parking facility was between the plaintiff and Peace View and not with the defendants. Accordingly, the claim based on contract must fail and is dismissed.

12. Next, I turn to the allegation that there was a bailment of this vehicle by the plaintiff as bailor to the defendants as bailees and that it is out of that relationship that the defendants, who are in breach of their duty to the plaintiff to take reasonable care of his vehicle, must now compensate him for his loss. This issue involves a mixed question of fact and law. The defendants contend that this was merely a licence whereunder the plaintiff was entitled upon payment of a monthly fee to park in one of the designated spaces. Bailment entails a parting of possession of the chattel usually on the bailee's land by the bailor. Ultimately, each individual case must be judged on its particular facts in order to decide whether what has been created is a true bailment or merely a licence. Inevitably, these are matters of fact and degree.

13. Mr Vaughan directed me to a helpful passage in a textbook by Professor Palmer of London University on bailment where at Chapter 5 starting at page 382 he considers the distinction between bailments and licences. This passage bears repeating here in its entirety because, in my judgment, it accurately sets out what the court's approach should be in determining an issue of this kind.

"Most bailments are created or discharged upon premises occupied by the bailee and this fact, whilst not an essential feature of bailment, is clearly a strong pointer to a change in the bailor's possession. However, the mere leaving or depositing of chattels upon land occupied by another, even with his knowledge or at his invitation, does not necessarily make the occupier a bailee. The law has repeatedly drawn a distinction between bailments and licences; the former requiring a transfer of possession and a voluntary acceptance of the common law duty of safekeeping, the latter amounting to no more than a grant of permission to the user of a chattel to leave it upon the licensor's land on the understanding that neither possession shall be transferred nor responsibility for guarding the chattel accepted. The distinction is easy to state but difficult to draw, or, rather, it is difficult to place specific cases on one side or the other. By far the most common manifestation of the problem occurs with car parking situations, where one party (usually but not necessarily the owner) will take advantage of the occupier's invitation to supply temporary accommodation for his car whilst he is elsewhere. Only rarely will this service be gratuitous; the occupier may charge a fee, or may offer parking space as an inducement to members of the public to frequent his restaurant or public house or other establishment, and much may depend upon such minutiae as whether, and at whose instigation, the car owner left the vehicle unlocked; the geography of the car park; the presence of attendants, and the time at which the charge for parking was payable. Another illustration concerns the deposit of coats in restaurant and here, too, much may revolve around questions such as the proximity of the customer to his garment and whether he or an employee of the defendant deposited it in the place from which it was stolen.

One of the most succinct statements of the overall distinction is that given by Sherburne J. in the Vermont case of Zweeres v Thibault in 1942:

"Where personal property is left upon another's premises under circumstances from which either relation might possibly be predicated, the test is whether or not the person leaving the property has made such a delivery as to amount to relinquishment for the duration of the relation of his exclusive possession, control and dominion over the property so that the person upon whose premises it is left can exclude within the limits of the agreement the possession of all others. If he has, the general rule is that the transaction is a bailment. On the other hand, if there is not such delivery and relinquishment of exclusive possession and his control and dominion over the goods is dependant in no degree upon the co-operation of the owner of the premises and his access thereto is in nowise subject to the latter's control, it is generally held that he is a tenant or lessee of the space upon where the goods are kept. In a doubtful case, consideration should be given to the manifested intention of the parties whether the care of personal property or only the rental of a place to put it was contemplated."

Once possession has been established as residing in the occupier of the land, the law imposes upon him the duties of safekeeping that are common to all bailees provided of course that the arrangement took place with his consent and subject to an exclusions of liability that he may have superimposed. Identifying this change of possession has however caused considerable difficulty for although the party's intentions should always be a material element, these will rarely be decisive and the courts have had to fall back on the physical facts and circumstances of each individual case. The result is a multiplicity of factors which may, either singly or in permutation, provide a pointer to future decisions. With increased urban congestion and restrictions upon parking in public places, car parking cases represent a recurrent legal difficulty which is likely to escalate before it abates altogether. The two leading English decisions on this question are now over 50 and 36 years old respectively. Although their authority cannot be questioned, changing circumstances have begun to give them a slightly antiquated look and in recent years they have been as often distinguished as directly applied. Nevertheless, they continue to be of value and any understanding of this subject is enhanced by consideration of their facts.

1) Ashby v Tolhurst: The plaintiff parked his car worth ￡37 on a triangular space open on two sides occupied and operated as a car park by the defendant. He paid a shilling to the attendant and was given a ticket which contained exclusionary provisions and was prefaced by the words 'Sea Way Car Park Car Park Ticket'. During his absence, the attendant allowed a stranger to take away the car and it was never recovered. The Court of Appeal held that the defendants were not liable for the loss, there had been no bailment, no delivery of possession and no implied agreement on the defendant's part to redeliver only on production of the ticket. All the defendant did was to leave his car on the car park paying the sum of one shilling for the privilege of doing so.

2) Tinsley v Dudley: The plaintiff called in for a drink at the defendant's public house leaving his motorcycle in the adjacent yard. The area was approached through double gates which were standing open at the time but which could be closed and locked. Across them were painted the words 'Wheatsheaf covered yard and garage". There was no fee to be paid and no attendant on duty. The plaintiff was separated from his motorcycle for nearly two hours and for some of that time was not drinking at the inn. The defendant was held not liable for the theft of the machine. The Court of Appeal found that it had never been delivered into his possession and pointed out that the mere fact that the plaintiff was an invitee and not a licensee did not necessarily mean that such delivery had taken place. The liability of the defendant here depends upon possession or custody and I cannot see the distinction between licensee on the one hand and invitee on the other can of itself be relevant to the question whether there existed some sort of bailment. Moreover, an occupier of premises was under no duty at common law to protect the personal property of his invitees from theft in the absence of the special agreement to that effect.

In both of these cases it was stressed that everything depends upon the immediate facts. Accordingly, it would appear that the most useful method of analysing the decisions in this area is to segregate the various facts or groups of facts that have been recognised as having some bearing on the question."

14. From this, I must now set out what I regard as the relevant facts in determining whether this is a bailment or a licence.

15. A convenient starting point is the management agreement between the owners of TWG and the managers of the building which starts at page 282(a). Clause (2) sets out the manager's duties. I do not propose to set these duties out here because it is plain that these largely relate to keeping the building and its surrounding gardens clean and in good order, to paint and repair, to obtain insurance and the like; the sort of obligations that one commonly finds management companies doing in blocks of flats in Hong Kong. They also have a duty to engage and remunerate staff to perform this work. They are therefore charged with the task of running the estate for the owners.

16. From that I turn to the car park itself. There is a series of colour photographs showing this which starts at page 118. The entrance is at street level. There is no electric barrier operated either by a card or manually by an attendant which one commonly finds at public multi-storey car parks. I was told that there is a pole which can be lowered but this was usually kept in a vertical position. Entry is up a ramp. Page 20 shows a cabin which would accommodate the watchmen or caretaker employed by the defendants. Page 132 shows notices at the entrance of the car park which advertises this as a place where monthly parking is available and another which says that there is no hourly parking and that there is no entry to vehicles without a parking label.

17. As will have already become apparent, this was not only a car park for residents of TWG but also for outsiders, such as the plaintiff, who might wish to park there. There are no security devices such as CCTV. Mr Law Chun-fu was the attendant on duty on the night of the theft. Sadly, he has passed away and so I have had regard to two statements given by him, one to the police after the theft was reported to them and another later one to Mr Lee Tze-ming who was engaged by the insurers of the Honda Accord to investigate the circumstances of the theft. I will need to make further reference to those statements in due course because Mr Law was the only person who saw this car being stolen.

18. For present purposes it is merely sufficient to observe that as the car park attendant, Mr Law was not required to patrol, although he did so on a "voluntary basis" just to see whether everything was all right. Having regard to the nature of the agreement between the tenants of these parking spaces, including the plaintiff and Peace View, and having regard to the layout of the car park and the services expected of the car park attendants who were employed by the defendants, I am absolutely certain that this cannot be described as a bailment of motor vehicles by the individual vehicle owners to the defendants, nor indeed to Peace View. These circumstances come nowhere near to a parting of possession of the vehicle by its owner. This was merely a parking facility upon payment of a monthly fee. Once the fee was paid and the label affixed to the windscreen, the car owner could come and go as he wished. He did not even have the inconvenience of having to wait at a barrier whilst the barrier was lifted for him to get out, or indeed to be let into the car park.

19. Whilst the nature of the parking facility is different and over 60 years have elapsed since Ashby v Tolhurst [1937] 2 KB 242 was decided, I can discover no material difference between that case and the present one. Accordingly, this limb of the claim must also fall away and stand dismissed.

20. That then brings me to the claim based on negligence. Mr Patrick Chong for the defendant rightly accepts that the law will impose a common duty of care on the defendants. It is a duty which comes about from the fact that the plaintiff had parked his vehicle at a car park managed by the defendants. It is a duty to take such care as was reasonable in all the circumstances. It comes about because it is reasonably foreseeable that loss or damage might occur to the plaintiff's property. Authority for this proposition is to be found in Clark and Linsell, 18th Edition, Chapter 7, paragraphs 60 and 61 and P Perl Exporters v Camden London Borough Council [1984] 1 QB 342.

21. What are the relevant circumstances here? It is important to realise that the defendants were not providing a security service at this car park, which would have put a different and higher onus of care on them in the performance of their duties. Their's was a car park attendant's function or as caretakers. Mr Law and his colleagues, when on duty, no doubt had a variety of tasks to perform at the car park. One of the most important, no doubt, was to ensure that only cars bearing the appropriate label parked there. Mr Law says he walked around to see that all was well and in good order. Their presence at the car park meant that they could raise an alarm in the event of any untoward incident, be it a theft, as in this case, or a fire or a disturbance. They could alert a car owner if he parked his car and had forgotten to turn his lights off or if a car alarm went off spontaneously.

22. What is clear is that the defendants were badly underfunded and this reflected itself in the nature of the service that they were able to provide. The owners of the residential units were often slow in paying their service charges. Additionally, they were not interested in having the equipment of the building upgraded because this would have meant an increase in their services charges. This in turn resulted in the defendants being unable to provide a better quality service. In the event, their management contract became so unprofitable that they withdrew from it.

23. Mr Vaughan has pleaded a number of perfectly proper particulars of negligence relating, amongst other things, to the quality of service that should have been provided. It would appear that Mr Law and his colleagues were not especially well trained, neither were they well-paid; about $5,400 a month. They were not well-equipped: they had no walkie-talkie to keep in touch with the management office which was located on the first floor; there was no CCTV system; there was no alarm and only one caretaker on night duty.

24. Against that, it also needs to be remembered that the plaintiff must have realised that he was getting a rather basic service. He would have looked at what was on offer at the car park prior to entering into his agreement with Peace View. He makes no suggestion that any particular representations had been made to him about the quality of service or level of security. He says that he used to pay Mr Law some "tea money" and told him to keep an eye on his car and to give it a dusting from time to time.

25. I now turn to consider the circumstances of the theft. It was at about 2.30 am. Mr Law was alone at his post. The thieves' car drove up the ramp. Clearly, these were determined individuals who knew precisely what they were going to do and how to do it. They told Mr Law that they were police officers who were on police business and that he should stand aside. He realised that they were not because of their brusque manner and because they did not produce their warrant cards which bona fide officers had done on previous occasions. Within two minutes they had got into the Honda and driven off at high speed followed by the car that had brought them.

26. Mr Law says that he was concerned for his well-being and that is why he did not intervene in a physical way. He ran off to the management office to report the theft after they had driven off, but he did not have the presence of mind to make a note of the registration number of the car that they had come in. As a result, the culprits and the car have not been traced. It is frequently said that it is easy to be wise after the event and I suppose also to be courageous after the event. Mr Law might be criticised for at least not running away to report this whilst the two thieves were occupied trying to break into the Honda and the getaway driver was still seated in the other car but it seems to me that one must give considerable latitude to a person in Mr Law's situation when faced with three determined criminals. In the circumstances, his reactions were perfectly reasonable.

27. As to the other allegations of negligence, these need to be judged against the sort of service that was being provided by the defendants to the various users of the car park. This was not a security service, nor was it a service created out of a bailment where the duty of care might properly be said to be higher one. It is also right to observe that the general rule is that no one has a duty to prevent crimes committed by third parties.

28. Mr Vaughan has referred me to the case of Always Win Limited v Autofit Limited [1995] 2 HKC 48, a decision of Cheung J where a repairer was held to be liable in respect of the theft of a valuable Lexus motorcar that had been left for servicing. After servicing, the vehicle was parked in the car park of the building where the workshops were located. It was stolen from the car park by thieves who had convinced the caretaker that they did not require a permit to enter the car park because they would be there for a short period of time. Cheung J held that this being a bailment case, the repairer and the manager of the building who they had employed had been negligent in failing to take sufficient precautions to ensure that vehicles in their possession were not stolen, there having been several previous thefts from the car park earlier in the year, including the theft of a Mercedes-Benz.

29. The factual situation in that case is far removed from the matter that I have to decide. It was a case of bailment. This is a case of a license to park. There had never been any previous thefts in the case before me. Clearly, in Cheung J's case this was a professional, well-established arrangement where expensive cars were being entrusted for repair. The duty of care in such circumstances must be a higher one.

30. I was also referred to Reebok Trading Far East Limited v Pokfulam Management Limited [1994] 3 HKC, page 1, a decision of Judge Wilson, sitting as a Deputy High Court Judge, where a car had been stolen from a residential car park at a block of flats. The caretaker in a lapse of judgment, as the judge described it, raised the barrier to let the thief out of the car park. Judge Wilson, in considering the nature of the duty of care owed by the management company of a residential car park, held that in the circumstances the plaintiff had failed to show that this "lapse" by the caretaker in raising the barrier was negligent.

31. Both of these cases, although of course helpful because of the consideration given to the principles to be applied, turned on their facts, as this one must. In my judgment, the plaintiff has failed to demonstrate that this theft is the result of negligence by the defendant and its employees. The sentiments expressed by Judge Wilson in Reebok v Pokfulam Property Management Limited supra. which appear in the headnote to the report apply with equal force here. These defendants were a hard-pressed management company. They were short of funds. They had concentrated on giving the best possible service to the residents with particular regard to the residential units but even that was proving difficult due to the parsimony of the residents who were not disposed to spend money on staff or improvements. This, therefore, was a basic parking facility. It was adequate for the purpose. It came with an attendant who could do the sort of tasks that I have already drawn attention to. To expect a service, staff and equipment that would safeguard the parked vehicles against determined and well-prepared thieves is to place too onerous a duty on the defendants.

32. I am afraid that this case must fail. The plaintiff has come nowhere near showing any negligence on the part of the defendants. That being my view, it is unnecessary for me to decide whether the exemption clause would have been effective had I found the defendants guilty of negligence. There must therefore be judgment for the defendants.

33. I think, inevitably, it must be judgment with costs to the defendants to be taxed if not agreed, together with certificate for counsel.