AU KA YING AND OTHERS v. GUANGDONG (H.K.) TOURS CO. LTD.

HCPI 440/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES LIST NO. 440 OF 2002

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J U D G M E N T

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1. This is an appeal against the decision of Master Brian de Souza on the 12 December 2002, whereby he ordered interim payments of damages to the 2nd and 3rd Plaintiffs in the sums respectively of $1.3 million and $1.1 million.

2. In this action there are thirteen Plaintiffs. They were all passengers on a coach travelling from Wuzhou to Guilin on 12 July 2000. When it was in a mountainous region the driver lost control of the coach, struck the hillside and rolled down a slope. A number of passengers was killed. These two Plaintiffs suffered serious injuries.

3. They were all on a holiday tour, due to last about 5 days, provided by the Defendant company, which, I am informed is one of the leading companies organising tours on the Mainland and has been in the forefront of the development of this leisure and holiday business.

4. On the facts of this accident there is no doubting that the coach driver was negligent. As a consequence of his driving he was convicted on the Mainland of one or more offences arising from the accident and sentenced to five years imprisonment.

5. He was not employed by the Defendants directly but by CYTS, a Mainland Company which operates tours, or by a sub-contractor of CYTS. It is agreed that the Defendants engaged the services of CYTS. The Defendants contention, with which I will deal in detail shortly, is that they were not the providers of the tour but arranged for services to be provided by, inter alia CYTS. Accordingly their argument goes, they are not liable for the negligence of the coach-driver.

6. Under Order 29 rule 11(1) the court may make an order for interim payment of damages if the court is satisfied:

"...... c) that, if the action proceeded to trial, the Plaintiff would obtain judgment for substantial damages against the respondent ......"

7. The provisions go on to deal with the extent of such a payment - "a reasonable proportion of the damages which ...... are likely to be recovered." No point is taken on the amount of the interim payments decided upon. It is agreed that the amounts themselves are reasonable. The sole issue under this aspect is whether the Plaintiffs would succeed against the Defendant. They would be bound to succeed against the coach driver and his employers. Does the duty of care of the Defendants as organisers and providers of the tour, extend to liability for the negligence of the driver in the circumstances of this case? The prime document for consideration is the GD Guangdong (H.K.) Tours Company Limited travellers application form. The Tour route is described as the "Guilin Bus Tour." A number of details is included such as "Round trips included in the tour", "Accommodation according to the itinerary or the same grade." The Defendant company had the right to cancel the tours and where less than 15 persons were on the tour the Defendants had "the right not to assign any tour leader." There are a number of conditions or particulars in the document.

8. It is stated that all means of transportation and hotels "like .... coaches .... are not owned by our company." Then in general terms it states that various institutions, which are not identified, "will have set out their own regulations concerning the safety matters to the tour members and their luggage." "In case of accidental injury or death ..... any dispute arising ... shall be resolved in accordance with the regulations made by the respective institutions and nothing thereof shall concern our company." I have of course relied upon the translation of the Chinese document which is agreed by both parties. What is unequivocally clear in my judgment is that this terminology does not constitute a disclaimer of liability for negligence in respect of any of the services comprising the tour.

9. The control of the tour is exercised tightly with a provision that in the event of any special circumstances the Defendant company "shall be entitled to make arrangements according to relevant circumstances. No tour member shall have excuse to object the arrangements or withdraw from the trip." On the other hand if there was "any change in the tour programs due to transport delay or unexpected stoppage which are out of the control of the Defendants, or if costs were increased due to a change in itinerary, transport or accommodation" (over which the Defendants had control in any event as seen above), then the tour members "shall pay the relevant amount as prescribed by our company."

10. If tours had to be cancelled for adverse weather reasons or mechanical failures, the customers were not entitled to repayment but had to leave their payment as the deposit on another tour to be organised within three months.

11. At the end, condition 4, is a provision stating that the Defendants' "shall not be liable for any ..... accidental injury or death." This of course is not an exclusion from any liability whatsoever. It does not prevent any tour member from suing the Defendants if negligence can be established.

12. Mr Eric Shum on behalf of the Plaintiff contends that the Defendants were providers of services under the tour agreement and as such were liable for the negligence of the coach driver as an act of negligence in the provision of the transport services. In other words the Defendants were in the same position as the direct employer of the coach driver. Mr Shum relies upon the decision of the Privy Council in Wong Mee Wan -v- Kwan Kin Travel Services Limited [1995] 3 HKC 505.

13. There is a substantial similarity in the facts of that case to those in this action. A Hong Kong Travel Company, Kwan Kin Travel Services, had, with two Mainland companies (who were also Defendants in an action) arranged a package tour for a group of persons including the deceased and two friends. A tour leader employed by Kwan Kin accompanied the group. An employee of the 2nd Defendant became their tour guide at the border. Part of the tour included a visit to an Ethnic Village at a lake. By the time the tour party arrived at this accommodation for the first night, the coach and ferry which was due to take them on this lake trip had gone and so a speedboat was arranged to take them in small groups necessitating a number of journeys. It was held at first instance, as a fact, that these speedboat trips were "an integral part of the guided tour."

14. An employee of the 3rd Defendant drove the speedboat on the first two trips. He refused to take the third trip and another employee of the 3rd Defendant then volunteered to drive the speedboat. He drove it negligently, colliding with a junk, and causing two members of the tour party, including the Appellant's daughter, to drown. Negligence was found not only on the part of the driver and, vicariously, on the part of the employer, but the employer was held also to be negligent in failing to ensure that the speedboat was operated by someone of reasonable competence and experience.

15. In his speech at page 509 (G-I) Lord Slynn stated:

"This issue is thus whether in this particular contract the first defendant (the tour operator) undertook no more than that they would arrange for services to be provided by others as their agents (where the law would imply a term into the contract that they would use reasonable care and skill in selecting those other persons) or whether they themselves undertook to supply the services when, subject to any exemption clause, there would be implied into the contract a term that they would as suppliers carry out the services with reasonable care and skill."

16. At page 510 (B-C), Lord Slynn in considering British Wagon Co v Lea (1880) QBD 149 (Cockburn at pp. 153-4) added:

"The fact that the supplier of services may under the contract arrange for some or all of them to be performed by others does not absolve the supplier from his contractual obligation. He may be liable if the service is performed without the exercise of due care and skill on the part of the subcontractor just as he would be liable if the subcontractor failed to provide the service or failed to provide it in accordance with the terms of the contract."

He went on to consider a number of decisions including that of the Canadian Court of Appeal in Craven v Strand Holidays (Canada), Ltd. (1982) 4 OR (2d) 186; Stewart v Reavell's Garage [1952] 2 Q.B. 545; Rogers v Night Riders [1983] RTR 324, and Aiken v Stewart Wrightson Members Agency Ltd [1995] 1 WLR 1281.

17. In considering the Rogers' case Lord Slynn cited part of the judgment of Eveleigh L.J. at page 328 of the Rogers' case:

"This is not a case where we are concerned to consider vicarious liability or whether there is liability for the act of primary duty on the part of the defendants. It was never suggested, and it was not put to the plaintiff, that she knew that the defendants were simply a kind of postbox to put her in touch with someone else with whom she would be able to make an independent contract. On the facts of this case, in my opinion, the defendants undertook to provide a car and driver to take the plaintiff to her destination. They did not undertake, and neither did she request them, to put her in touch with someone else who would undertake this obligation. Now in those circumstances of undertaking to provide a car and its driver to take her to her destination the defendants ... owed a duty arising out of this relationship to take care to see that the vehicle was safe. They relied upon the driver to do this. Whether he was a servant or an independent contractor matters not, he was a third person upon whom they relied to perform their duty arising from their relationship with the plaintiff and it is well-established law that such a duty cannot be delegated. It is possible to treat this case as one of contract ... whereby the defendants should provide a car for reward for a purpose and an implied term that the vehicle would be reasonably fit for that purpose .... It is also said that breach of contract was not argued in the court below, but to my mind it does not matter on the facts of this case ... a person may be liable for a breach of primary duty when the act which causes that breach is the act of a person to whom he has delegated the performance of the duty."

18. Lord Slynn held that the Court of Appeal was entitled to find that the obligation undertaken was one which could be performed by another and where the Defendants remained liable for the performance of the service with reasonable skill and care.

19. The speech of Lord Slynn went on to consider a number of English cases concerned with the provision of package tours, the last being an unreported decision by Hodgson J. in November 1981 (Wall v Silver Wing - 18 November 1981). The judge in that case had held that it would be "wholly unreasonable to saddle a tour operator with an obligation to ensure the safety of all the components of a package over none of which he had any control at all." That case was not concerned with the matter, or service of transportation. It was concerned with whether there was an implied term that the Plaintiffs would be reasonably safe in using the hotel - the Plaintiffs had had to jump from a hotel bedroom because the means of escape had been barred by the locking of a gate normally open.

20. In order to see which category the contract in the case before me falls into it is necessary to look at parts of the brochure:

It describes a "creative tour";

A "Brand new idea to lead you searching the scenic places..."

"Follow Guangdong who will let you know."

1st Day tour -

"A professional tour leader from our company will accompany you to go to Shenzhen by a direct coach. ... transferring to another coach after arrival ... after lunch taking the coach for Deqing ..."

2nd Day

"After breakfast taking the coach ..."

3rd Day

"After breakfast taking the coach ..."

4th Day

"After breakfast taking the coach ..."

5th Day

"After the sightseeing, taking the coach to Shausui for lunch ...... coach to Shenzhen and returning to Hong Kong through Lo Wu. .... Return trip (Hong Kong railway fare is not included)."

21. For each day a full itinerary is set out, although, as in the Kwan Kin case, tour participants may have appreciated that someone other than the Defendant would carry out some parts of the tour, that does not conclude the matter.

22. The issue, as expressed by Lord Slynn was "whether the ... Defendant was in reality doing no more than 'arranging' the tour so that they undertook no liability for any default by those providing the goods and services, or at the most, a liability to take reasonable care in the selection of those who provided the services." In that case there were no clear terms in the brochure that the 1st Defendant was doing no more than arranging the tour as agent for the travellers.

23. Similarly, in the case with which I am concerned, there is no such term. The simple statement in the application form that "all means of transportation ... are not owned by our company" is not sufficient as a term to indicate unequivocally agency, and an exclusion from liability by defendant on the part of any person operating the transport. There are specific references to the "tour provided by our company". The company assigns the tour leader to lead the tour. In the tour brochure itinerary there is a single reference to "a professional tour leader from our company will accompany you to go to Shenzhen by coach." There is no statement that any other tour leader from any other source will take over on any of the days in the itinerary of the tour.

24. I have concluded that taking the contract as a whole the Defendant Guangdong (H.K.) Tours undertook to provide and not merely arrange all the services included in the programmes, even if some activities were to be carried out by others. The obligation therefore was to provide services with reasonable skill and care even if some of the services were rendered by others. The transport service was not provided with such skill and care in view of the coach driver's negligence.

25. Mr Michael Ozorio S.C. for the Defendant has argued that such a construction imposes upon the Defendant absolute liability. I do not with respect accept this argument. The Defendants have not an obligation to provide absolute safety. They had a non-delegable duty of care and are liable for those whose actions do not meet that standard of care.

26. As Lord Slynn pointed out, the tour operator can negotiate terms with its sub-contractors to protect itself against claims. Furthermore it can incorporate exemption clauses in the contract with the travellers. It was argued that if the tour operator spelt out the difficulties inherent in services provided on the Mainland so as to explain the exemption clause and advise specifically the need for insurance cover for such situations it would deter travellers from contracting with the tour operator. That may be so, but it is no reason to excuse a tour operator from providing what his contract, without such exemption clause, by express or implied terms stipulates.

27. In my judgment it follows that the Plaintiffs will succeed against the Defendants and the order for interim payments is soundly based.

28. The final point concerns whether the Defendant is a "person whose means and resources are such as to enable him to make an interim payment, see Order 29 Rule 11(2)(c)." I was informed that it is one of the leading Hong Kong companies involved in this travel trade. Although it appears that its liabilities exceed its assets that alone is an insufficient basis for relieving it of any such liability. Many companies are in such a position, and trading losses in past years are also not to be regarded as a good basis for such relief. The company's officers have not deposed to the effect that its means and resources are not such as to enable it to make the interim payment. Accordingly on this point it is not entitled to relief.

29. This appeal is therefore dismissed with costs.