CHEA KAM WING VICTOR v. KWAN KIN TRAVEL SERVICES LTD

cacv 82/2007

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 82 of 2007

(on appeal from HCPI NO. 970 of 2005)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  I agree with the reasons given by Le Pichon JA.

Hon Le Pichon JA:

2.  This was an appeal from an order dated 21 February 2007 of Deputy High Court Judge Longley awarding the plaintiff damages in the sum of $814,089 against the defendant for personal injuries sustained by him in a traffic accident in Taiwan.  At the conclusion of the hearing the appeal was dismissed with written reasons to be handed down which we now do.

3.  The plaintiff was a member of a tour group travelling on a package tour to Taiwan organised by the defendant.  He, together with other members of the tour group, were passengers in a double decker tourist coach travelling down from the mountain town of Jioufen when the coach went out of control, crashed through the roadside barrier, fell down the hillside and overturned.  The plaintiff was one of a number of passengers who sustained injuries in the accident in which five of the tourist group were killed.  He brought an action for damages based on the defendant’s breach of contract and/or negligence.

The judgment below

4.  The plaintiff was a professional driver, both of goods vehicles and public light buses.  His evidence was that after the group had had lunch at Jioufen, they waited for the coach.  As it approached them, the rear of the coach struck a signboard in the street before moving on to the pickup point.  It was a foggy day and the road was wet and slippery.  Notwithstanding this and the narrowness of the road leading down the mountain which was very steep, the driver drove the coach at what the plaintiff described as an excessively high speed.  The coach swerved from side to side and failed to slow down before it crashed through a barrier on the corner and fell down the hillside.  The defendant called no evidence.

5.  The judge accepted the plaintiff’s account of the circumstances in which the accident occurred.  He considered the plaintiff well able to assess the appropriate speed for the road conditions that were encountered and in evaluating his evidence, the judge took into account a discrepancy between the facts related in the documents referred to below and the plaintiff’s evidence but was satisfied that the discrepancy was a minor one and concerned events before the tour group boarded the coach.

6.  Before the judge there were two documents namely, what had been described as the indictment of the Taiwan Keelung District Prosecutor’s Office and the judgment of the Taiwan Keelung District Court which stated that the driver had admitted “the facts”.  Although the judge did set out some of the facts appearing in the indictment and the judgment, including, inter alia, the fact that the driver had had two previous drink-driving convictions one of which had led to the temporary suspension of his driving licence, that on the fateful day during the lunch break, he had become intoxicated and a breath test after the accident had revealed that the alcohol content was more than six times over the legal limit, he appreciated that the evidence was hearsay and the relevance of this fact when considering the weight to be attached to such evidence, given the considerations referred to in the provisions of the Evidence Ordinance.  But as the judge made clear, he found the evidence of the plaintiff without more (i.e. disregarding the indictment and the judgment) sufficient to establish negligence on the part of the driver.

7.  The judge also found that on the true construction of the contract, the defendant was the organiser and provider of the package tour and not merely the plaintiff’s agent making bookings on the plaintiff’s behalf and that, on the facts, the defendant had failed to carry out its contractual duty to ensure that the elements of the package tour were provided with reasonable skill and care even if provided by others on its behalf.  The judge also considered the effect of the exemption clause contained in the contractual documents and concluded that it fell foul of section 7(1) of the Control of Exemption Clauses Ordinance, Cap. 71.

This appeal

8.  The only substantive point pursued in this appeal was whether the judge was correct in construing the contract between the plaintiff and the defendant as one where the defendant was the provider of the services rather than merely an agent of the plaintiff in arranging for those services.  In summary, Mr Kwok SC who appeared for the defendant contended the defendant was no more than an agent arranging for the services appearing in the itinerary on behalf of tour members and that the extent of that duty began and ended with engaging reputable and well-known Taiwanese providers for those services which, he submitted, Zhong Chun was.  It was said that as the case pleaded by the plaintiff was not put on the basis of agency, and as there was no allegation of negligence on the defendant’s part on the footing of agency, the action must be dismissed if the defendant was in truth an agent and not, as judge held, the provider of the services contracted for.

9.  The relevant contractual documents consisted of (1) the itinerary, (2) the application form on the back of which were set out the “Issues of Detailed Rules of Travel and Responsibility” (“the Detailed Rules”), and (3) the receipt with 19 “Remarks” on its back.  These documents were in Chinese but certified translations were before the judge.

10.  Relevant to this appeal is clause (I) of the Detailed Rules under the heading “Issue of Responsibility” which the judge set out in § 30 of his judgment:

“The transport, accommodation, places for meal, sightseeing or entertainment programmes arranged by our company for the tour members are not owned, managed or operated by our company.  Tour members if met with transport delays, loss or damage of luggage, injuries or death in an accident, or loss or damage to property which does not involve our company staff’s negligence or dereliction of duty; or if tour members during the journey met with any eventualities (for example, met with an accident when participating in any entertainment or game item) resulting in injuries or death; or loss or damage to property, our company will not be responsible for such injuries or death or loss or damage.”

Mr Kwok SC took issue with the English translation of “for” for the character “代”appearing in the second line in the sense that the translation only could be said to be correct if it were understood as meaning “on behalf of”.  It was said that the judge did not appear to have been aware that it had to be so understood.  This was surmised from the fact that (at § 33) the judge said that there was no reference anywhere to the defendant “being the agent of the plaintiff”.  The judge was also criticised for taking into consideration, in the construction exercise, “the evidence of what actually occurred and of the agreement between the defendant and Zhong Chun”.

11.  Zhong Chun (referred to as “Spring Travel Services Ltd” in the witness statement of Chu Ping Fai Gary, the supervisor of the defendant) was a Taiwan company and the other contracting party to the “Tourist Reception Agreement” with the defendant.  That was an agreement between them to co-operate in marketing and providing package tours, with the defendant being responsible for designing and marketing the package tours and Zhong Chun being responsible for implementing the itinerary.  At the appeal hearing, although Mr Kwok SC had initially stated that Zhong Chun was considered a “grade A” transport provider by the Taiwanese authorities, that statement was later retracted.  Zhong Chun appears to have a tourism licence from the Traffic Department and a Business Registration Certificate by the Taipei Government, neither of which made any reference to “A”.  It is relevant to note that the scope and type of business Zhong Chun was authorised to carry on by the authorities as stated in the licence and the certificate did not appear to include, at any rate, expressly, the provision of transport.  Zhong Chun also possessed a membership certificate issued by the Travel Quality Assurance Association ROC where the following appears:

“type of business: A”

It was accepted that “A” was not and should not be read as a quality grading.

12.  Assuming, for the sake of argument, that the defendant was merely an agent for the plaintiff, it would still have contractual obligations to discharge.  The defendant would have the burden of showing that it had exercised due care in the selection of a competent contractor.  See Craven v Strand Holidays (Canada) Ltd (1982) 40 OR 186 at 190.  The relevant passage of the judgment of Lacourciere JA is set out in Wong Mee Wan (Administratrix of the Estate of Ho Shui Yee, deceased) v Kwan Kin Travel Services Ltd [1995] 3 HKC 505, 510H.  This is not controversial but Mr Kwok’s case was that the defendant had discharged that duty.

13.  As appears from § 38 of the judgment, the facts in the Taiwan judgment disclosed that the coach driver was not a direct employee of Zhong Chun.  In fact Zhong Chun had contracted the provision of transport to another company Joi Hing Transportation Company Ltd which, having insufficient vehicles itself, had entrusted its obligation to provide transportation to the driver.  It is unclear, to say the least,(1) whether the driver himself was an employee of the subcontractor Joi Hing and (2) who the owner of the coach involved in the accident was.

14.  Having regard to these facts, the judge came to the conclusion that the defendant was in breach of its contractual obligations to the plaintiff because it had entrusted the provision of transportation to Zhong Chun with no stipulation as to those to whom the driving of the coach should be entrusted and no prohibition against subcontracting the work.

15.  I agree with that conclusion.  The danger posed by not prohibiting subcontracting is so obvious that it does not require further elaboration.  It relates not only to the competence and suitability of the person driving the coach but also to the suitability and soundness of the coach itself.  In appropriate circumstances, its condition could be inferred from the reputation of the entity or person owning or exercising control over it who would be in a position to vouch for its condition.  Here, it resulted in the ‘provenance’ of the coach being unknown, hardly a reassuring fact, not to mention the unsuitability of the driver who had had two previous drink-driving convictions.  In fact I would go further.  It would not appear that there was even sufficient evidence to show that Zhong Chun itself was qualified to provide transportation.  See § 11 above.

16.  As to the pleading point taken by Mr Kwok, I do not consider that it has any merit.  Paragraph 15 of the statement of claim reads:

“15.   The Accident was caused by the Defendant’s breach of Contract and/or negligence.

Particulars of Negligence of the Defendant

(a)    Failing to ensure the reasonable safety of the members of the Package Tour when providing the services;

(b)    Failing to ensure that members of the Package Tour would only be driven by prudent and careful tour bus drivers;

…”

In order to meet the plaintiff’s case for breach of contract, it was incumbent on the defendant to demonstrate that it had “exercised due care in the selection of a competent contractor”.  That it singularly failed to do.  In those circumstances, even if one were to accept the defendant’s contention that it was merely an agent for the plaintiff, (which I do not, for reasons which will become apparent) it was nevertheless in breach of its contractual duties to the plaintiff.

17.  I have earlier alluded to the reasons why it was said that the judge erred in concluding (at § 26) the evidence to be “overwhelming”, both from the contractual documents and “the other evidence”, that:

“the defendant was not simply arranging on behalf of the plaintiff for services to be supplied by others but was itself the organiser and provider of the tour, albeit that it had engaged others to perform part of the services it had contracted to supply.”

18.  Assuming (without deciding) that the judge did not understand the word “for” in the second line as meaning “on behalf of” (which I doubt), I do not accept for one moment the proposition that had the judge so understood that word, it would not have been open to him to reach the conclusion that he did.  In other words, I do not accept that it would have been decisive of the appeal which would then have gone the other way.  It is well settled that the words used by the parties are not decisive of whether an agency relationship exists.

19.  Although in § 28 of the judgment, the judge made reference to events that actually happened at the time of the tour, the basis for his conclusion appears at §§ 33-35 of the judgment and was plainly founded on the contractual documentation:

“33.      It is significant, in my view, that there is no reference anywhere to the defendant being the agent of the plaintiff in contracting with these third parties, nor is there any mention of the names of the third parties.

34.       I am satisfied that it is clear from the documents as a whole that the tour was organized and arranged by the defendant using third parties to carry it out.  Clause (I) says as much.  There is no dispute that the defendant arranged the itinerary which it filed with the Travel Industry Council.  It was the defendant which decided which airline to use.  In so far as the plaintiff was concerned, it was the defendant company which decided upon the hotels, restaurants and transportation companies.  All that the itinerary was stating was that the defendant’s arranged itinerary was subject to alternative arrangements by the airline chosen by the defendant and the receiving units used by the defendant.  The references “our company or our appointed organisation” are references to the defendant and the organisation which the defendant had arranged should provide the services on its behalf.

35.       Other terms in the contractual documents are also consistent with the defendant being the organiser and provider of the tour rather than simply the plaintiff’s agent making a booking or bookings on the plaintiff’s behalf.  They include its right to refuse to accept any application, to adjust the price before departure, to change the accommodation, meals or sightseeing programmes and even to cancel the tour if there were insufficient participants.”

20.  It is true that in reaching that conclusion the judge took into account the “Tourist Reception Agreement”.  However, I cannot see how that fact could invalidate his conclusion since it could only have been of marginal relevance, if at all, in any event.

21.  The other grounds of appeal sought to challenge the finding on negligence.  At the hearing, this was all but abandoned.  It was plainly unmeritorious and I do not purpose to say any more about it.

Hon Stone J:

22.  I respectfully agree with the reasons given by Le Pichon JA.