HUI KAY CHEONG HERMANN v. CHI WO PROPERTIES LTD.

HEADNOTE

Robbery at night in a domestic building - contract between owners of each unit and defendant (manager) obliged manager to take

" such security measures as necessary to protect the building and its occupants from all criminal activities."

Held: (i) manager in breach of contract because it's guards were absent from  duty or asleep at material time;

(ii) manager's duty not limited to taking such steps as were reasonably necessary;

(iii)     robberv not a novus actus interveniens.

Quare: whether manager liable in negligence in view of contractual relationship.

 

IN THE DISTRICT COURT OF HONG KONG
CIVIL JURISDICTION
ACTION NO. 11682 OF 1990

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JUDGMENT

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1. At approximately 4 a.m. on the 4th August 1989 a robbery took place at the plaintiff's flat at 2A Monticello, 48 Kennedy Road, Hong Kong. The plaintiff and his wife were blindfolded and tied up by the robbers, who stole $2,500 in cash, four watches, and the couple's platinum wedding rings. The robbers gained access to the flat and left by the balcony on the second floor of the building. In doing so they damaged the sliding doors to the balcony.

2. At all material times, the building was managed by the defendant under the terms of an agreement dated the 31st December 1985. By clause 5(3) of that agreement, the defendant was to be:-

"...responsible for and shall have full and unrestricted authority to do all such acts and things as may be necessary or requisite for or in connection with the proper management of the said building including but without in any way limiting the foregoing:-

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(u) To take such security measures as necessary to protect the building and its occupants from all criminal activities."

3. By a writ issued on the 20th September 1990, the plaintiff claimed that the defendant was in breach of that clause by failing to take such security measures as necessary to protect the plaintiff from the robbery in question. No other particulars were given; and none was sought by the defendant. But, the plaintiff also alleged that the robbery and his losses were caused by the negligence of the defendant; and numerous particulars of negligence are listed in the Particulars of Claim. The defendant denies the breach and negligence; avers that it took various security measures, but the robbery was an "inevitable accident"; and that the alleged robbery and losses were caused or contributed to by the plaintiff's own negligence. The existence of a duty of care, owed by the defendant to the plaintiff, is not disputed. But the scope of its contractual duty is disputed.

4. On behalf of the plaintiff, Mr. Ho submitted that the obligation created by clause 5(3)(u) went beyond doing what was reasonable. The defendant was obliged to take such steps as were needed to protect the occupants from robbery. Although expressed in strict terms, it was not so strict as to make the defendant an insurer. The happening of a robbery was a prima facie breach of the agreement, but the plaintiff could only recover substantial damages if he could show that his loss was caused by such breach.

5. On behalf of the defendant, Mr. Liu contended that clause 5(3)(u) merely obliged the defendant to take such measures as were reasonably required; and what was reasonably required must be considered in the light of all the circumstances, and the agreement as a whole. In particular, he submitted that the scope of the defendant's contractual duty should be read together with clause 7 of the agreement, the terms or effect whereof were not pleaded. I will return to this aspect of Mr. Liu's argument. I would merely remark at this point that I find it difficult to accept that the obligation, assumed by clause 5(3)(u) of the agreement, is to be qualified to require nothing more than what is "reasonably required" when other provisions of that clause expressly impose such qualification on obligations otherwise expressed in strict terms. I refer to paragraphs (f) [reasonably clear]; (h) and (i) [reasonably required]; (p) and (q) [use its best endeavours]; (s) [not unduly jeopardise]; and more particularly paragraph (t), where the defendant is obliged, inter alia, to employ and supervise such persons as shall be reasonably necessary to carry out its duties.

6. I decline Mr. Liu's invitation to read clause 5(3)(u) together with clauses 7(1)(a) and (e) of the agreement because they, in effect, completely exempt the defendant from any act done or omitted in pursuance or purported pursuance of the agreement. I do so because reliance on these clauses was not pleaded. Mr. Liu's application to amend his pleading in the course of his final speech was refused for a number of reasons given at the time, including the fact that, in all probability, the benefit of the clause had been waived by the defendant long before it sought to rely on it. At the time of my ruling on that application, and during counsel's final submissions, my attention was not drawn to clause 7(3) of the agreement. This provides that the exemption or protection given by clause 7(1) shall not extend:-

"to anything involving criminal liability or dishonesty or wilful misconduct or negligence by or on the part of the manager or its employees agents or sub-contractors."

7. In my view, clause 7, when viewed in its entirety, does not materially alter the scope of the duty imposed by clause 5(3)(u). I consider that the contractual duty assumed by the defendant is more onerous than the normal tortious duty to take reasonable care. I recognise the difficulty of defining the range of the difference between the two obligations. Indeed, having regard to the fact that there is privity of contract between the plaintiff and the defendant, I have reservations on the question whether the defendant can be held liable in tort in this case. But, having regard to my findings of fact in the case, I do not think that it is necessary to embark upon a detailed examination of their legal relationship. I respectfully agree with Mr. Ho that the essential question is whether the plaintiff has shown that his losses were caused by any or all of the alleged breaches by the defendant. I now turn to my findings of fact.

8. Once the robbers had left the plaintiff's flat, the plaintiff and his wife managed to release themselves. On discovering that their telephone had been rendered useless by the robbers, the plaintiff made his way to the management office of the building, where he telephoned the police. He was frustrated to discover that the guard or attendant in that office was fast asleep. Having notified the police he then went to a guardpost situated close to the driveway at the lower ground floor of the building, only to discover that no attendant was at that post. Having returned to his flat to ascertain the number to be called in the event of loss or theft of credit cards, the plaintiff returned to the management office, to find that the attendant was still asleep, and was only aroused by the noise of the eventual arrival of a police vehicle.

9. The aforesaid account of the relevant events is taken from the evidence of the plaintiff, which I accept. He was very much involved in the events in question. I confess that I find his reaction to the sleeping attendant somewhat odd. He made no attempt to rouse the delinquent attendant. Instead, he went in search of the attendant who should have been at the guardpost. The defendant has not called any evidence to contradict that of the plaintiff, or to explain its apparent failure to protect residents of the building from incursions by strangers. Its only witness, Mr. Albert Chiu Chen Ming had no real knowledge of the steps taken by the defendant to provide security for the residents of the building. The defendant did not call any of the attendants supposedly on duty at the material time. According to Mr. Chiu there should have been another guard whose duties were to make regular patrols of the floors of the building and the podium area. But that guard was not seen at the building. I am satisfied that the plaintiff did lock the sliding doors on the balcony before going to bed and that the robbers gained entry to the flat by prising open the doors with some instrument. I reject entirely the defendant's allegation of contributory negligences which it was failed to substantiate.

10. Mr. Chiu gave evidence that the defendant had installed a closed circuit TV system for monitoring the entrances to the flats and the podium area, as well as installing digital clocks on the floors. These were added to the particulars of the security measures taken by the defendant at a late stage of the proceedings and after the plaintiff's case had been closed. I am not satisfied that these devices were in place at the time of the robbery. Like the barbed wire on the drainpipe, which runs very close to the balcony of the plaintiff's flat, I think that they were probably installed after the robbery. But even if the TV monitoring system was in place at the time of the robbery, it would be of no use since the guard who should have been using it was fast asleep at the material time.

11. Although Mr. Chiu testified that there should have been 3 guards on duty between 11 p.m. and 8 a.m., I find that it is more probable that only one was on duty on the night in question, as was apparently pleaded by the particulars given under paragraph 3 of the Defence. If the other two were on duty, they were certainly not performing their duty properly or adequately at the time. The guardpost on the lower ground floor was not manned, with the result that any person could gain entry to the building without being stopped and questioned before being allowed to proceed further, either by turning right towards the management office or by ascending the driveway to the upper ground floor or podium. In other words, the first line of defence against trespassers for the occupants of the building was wholly ineffective because of the absence of the guard. The second line of defence was also rendered ineffective by reason of the fact that the guard was in a deep sleep. In my view, at the material time, this building was completely unprotected with the result that the robbers were free to come and go as they pleased. The only people likely to be on the premises lawfully at the time of the robbery were either absent from their posts or asleep. In my judgment, whatever other security measures had been carried out by the defendant, these features amounted to serious and fundamental breaches of the management agreement on the part of the defendant, as well as a breach of the duty to take reasonable care to protect the occupants from robbery in their homes.

12. In his endeavour to persuade me that the defendant's breach or breaches did not cause the plaintiff's loss because the robbery was a novus actus interveniens, Mr. Liu invited me to infer that the robbers gained access to the podium level by climbing over a part of the perimeter wall which was out of sight of the guard post and the management office. This was a possibility, but I reject it as being speculative and highly unlikely. The robbers would have had to scale the wall, which at that point was more than 10 feet from the ground level of the blind alley between Monticello and the neighbouring building. They would have run the risk of being observed by watchmen or other persons in the neighbouring building. I think that at the material time it is more probable that the robbers approached the building by the access road and were able to get to the building because there was no guard at the post to challenge or deter them from proceeding further. Although that guard, if he had been at his post, would have been outnumbered he could have summoned assistance by using the walkie-talkie issued to all guards.

13. In Howells v On Kui Development Co. Ltd. [1987] DCLR 47 it was held that a very high degree of foreseeability was required in order to impose liability for the acts of an independent third party. In my judgment such foreseeability was present in this case. Robberies in domestic premises at night are regrettably not uncommon. That is why most domestic buildings have security guards and systems. In the present case, the defendant's breaches of contract, and acts of negligence, consisted in the failure to take care to guard against the very thing that happened. (Cf Stansbie v Troman [1945] 2KB45 at 52.) It may be that the robbers were well-equipped and armed, and that the robbery could not have been prevented if the guards had been on duty and alert. But the contract entitled the plaintiff to receive protection from all criminal activities, and I find that the protection normally provided by the defendant was effectively and completely withdrawn at the material time. In my judgment, on the facts of this particular case, the robbery was not a novus actus interveniens. It was a very probable consequence of the complete withdrawal of services designed to deter such criminal activity. Accordingly I find the defendant liable for breach of contract and negligence.

14. I now turn to the quantification of the plaintiff's loss. The defendant questions two items, viz. (1) the cost of replacing two Rolex Oyster Perpetual watches and a pair of platinum wedding rings; and (2) the cost of repairing the aluminium door on the balcony. The sum of $15,000 is claimed for the second item. I find that this is the cost of replacing the sliding door with a new one. The plaintiff's witness said that the door was beyond repair. That may be a slight exaggeration, but in the absence of any evidence called by the defendant to show that the damaged door could easily be repaired, and the cost of such reapir, I consider that it is reasonable to allow the cost of replacement.

15. Although there was evidence regarding the price of platinum, there really wasn't sufficient material before the court to reject the value placed on the wedding rings by the plaintiff. In the absence of more reliable evidence, I consider that the opinion of the wearers of such rings, if not obviously or outrageously inflated, is the best evidence of their value. I hold that the amount claimed, i.e. $5,000 is the replacement cost.

16. The more difficult question is the cost of replacing the two Rolex watches. The plaintiff called his brother, Kenneth Hui, to give evidence of value. I do not think that Kenneth has much experience of dealing in watches. I accept his evidence that there is very little difference between the current market price of such watches produced in 1986 and those in 1991. But, he did not really give any clear guidance on current market prices. He merely stated the list prices. That for a gentleman's watch is $26,020; that for a lady's watch is $21,620. It is, I think, fairly common ground that these figures must be reduced to take account of the discount commonly obtained by purchasers. This will vary from shop to shop and depend upon the relationship between the shop and the customer. The receipt for the original purchase of the Lady's Rolex in December 1986 (p. 24PB) shows that the plaintiff paid $12,400. Whether he was given a discount and, if so, the amount is not known. But, I consider that the plaintiff should be able to obtain a discount of more than 10 per cent, particularly on the basis that he will be replacing a pair of watches. In the circumstances I will discount the list price by approximately 25 per cent. The amounts allowed for claims (b) and (c) in the Particulars of Loss and Damage are respectively $19,415 and $16,115. There is no claim for general damages. Accordingly I assess the total of the plaintiff's loss at $61,030. I have found that there was no contributory negligence or fault on the plaintiff's part. Therefore, there will be judgment for the plaintiff against the defendant in the sum of $61,030.