CHONG NGAN SENG v. CHINA HARBOUR ENGINEERING CO LTD AND OTHERS

CACV 54/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 54 OF 2012

(ON APPEAL FROM DCPI NO. 2078 OF 2009)

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BETWEEN

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J U D G M E N T

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Hon Fok JA

Introduction

1.  The plaintiff sustained personal injuries in a traffic accident caused by a light goods vehicle driven by the 2^nd defendant. By her judgment dated 19 December 2011, Deputy District Judge Rebecca Lee held that the 1^st defendant was vicariously liable to the plaintiff for the 2^nd defendant’s admitted negligence.  With leave granted by Tang VP (as he then was) on 15 March 2012, the 1^st defendant appeals against the Deputy Judge’s judgment on liability.

2.  The issue raised in this appeal is whether the Deputy Judge was correct in concluding that the 2^nd defendant, although not an employee of the 1^st defendant, was nevertheless driving the light goods vehicle as its agent so that the 1^st defendant was vicariously liable for his negligence.

3.  By respondent’s notice, the plaintiff challenges the Deputy Judge’s finding that the 2^nd defendant was not an employee of the 1^st defendant and seeks to support the holding of vicarious liability on the basis the 2^nd defendant was driving the light goods vehicle in the course of his employment by the 1^st defendant.

The accident

4.  In the afternoon of 26 November 2008, the plaintiff was a passenger travelling on the upper deck of a double-decker bus along Sha Tsui Road, Tsuen Wan.  A light goods vehicle with the registration number FH2696 (“the LGV”) was being driven by the 2^nd defendant in the same direction along Sha Tsui Road in the adjoining lane.  The accident occurred when the LGV suddenly cut into the bus’s lane.  The plaintiff had just left her seat and was proceeding to the stairs leading to the lower deck of the bus.  To avoid a collision with the LGV, the bus braked suddenly, as a result of which the plaintiff lost her balance, was thrown into the front part of the bus and sustained injuries to her head, shoulder and wrists.

5.  Following the accident, the 2^nd defendant was charged with and pleaded guilty to careless driving.

The defendants

6.  The 1^st defendant was the registered owner of the LGV.  It was the main contractor employed by the Highways Department under a main contract (Contract No. 19/HY/2004) to carry out maintenance works in the New Territories.

7.  The 3^rd defendant was a subcontractor of the 1^st defendant under the main contract.  The formal sub-contract (Sub-Contract No. SC-038) was dated 31 March 2007 but a probationary sub-contract arrangement was in place from 31 October 2006.[1]

8.  The 4^th defendant was, in turn, the subcontractor of the 3^rd defendant under the sub-contract.

9.  On the day of the accident, the 2^nd defendant was driving the LGV to a site at Tai Lin Pei owned by the 1^st defendant (Judgment §3).  There was an issue at trial as to whether the 2^nd defendant was the employee of the 1^st defendant (as contended by the plaintiff) or the 4^th defendant (as contended by the 1^st defendant).  The Deputy Judge found that it was more probable than not that the 4^th defendant was the 2^nd defendant’s employer at the time of the accident and that the 1^st defendant was not the 2^nd defendant’s employer at that time (Judgment §§65 & 66).  As I have already indicated, that finding is challenged by way of respondent’s notice.

10.  Although the 1^st defendant was the registered owner of the LGV at the time of the accident, it had sold the LGV to the 3^rd defendant and had, on 7 November 2006, delivered the LGV to the 3^rd defendant.  However, the 1^st defendant remained the registered owner of the LGV pending full payment for it by the 3^rd defendant and the transfer of registered ownership did not take place until 8 months after the accident (Judgment §68(b)).  Pending the transfer of ownership, all expenses incurred in connection with the LGV such as insurance, licensing, annual examination, fuel and maintenance would be arranged by the 1^st defendant and charged back to the 3^rd defendant.

The action below

11.  The plaintiff first sued the 1^st and 2^nd defendants as the registered owner and driver of the LGV respectively.  The 2^nd defendant admitted liability prior to the trial of the action.  The 3^rd and 4^th defendants were joined after the 1^st defendant issued third party proceedings against them.  The 4^th defendant also admitted liability to the plaintiff prior to the trial.

12.  As noted above, the Deputy Judge held the 1^st defendant vicariously liable for the 2^nd defendant’s negligence (Judgment §91).  The Deputy Judge also held the 3^rd defendant vicariously liable for the 2^nd defendant’s negligence (Judgment §99).

13.  Accordingly, each of the 1^st, 3^rd and 4^th defendants being vicariously liable for the 2^nd defendant’s negligence (Judgment §116), judgment was entered against them as joint tortfeasors (Judgment §117) for damages in the amount of $305,115.55, being the quantum of damages assessed by the Deputy Judge (and not challenged on appeal).

The basis of liability in the Judgment

14.  The Deputy Judge’s conclusion that the 1^st defendant was vicariously liable for the 2^nd defendant’s negligence was based on the following reasoning:

(1)   The Deputy Judge acknowledged that, for vicarious liability for negligent driving to attach, it must normally be established that the driver of the vehicle was driving it as the servant or agent of the owner (Judgment §21).

(2)   Although she rejected the contention that the 2^nd defendant was employed by the 1^st defendant and held him to be employed by the 4^th defendant instead, the Deputy Judge found it more probable than not that the 1^st defendant must have permitted its sub-contractor, the 3^rd defendant, to arrange its own employees and/or its sub-contractors (and their employees) to use the LGV for the purpose of the sub-contract and that it was within the 1^st defendant’s knowledge or expectation that the LGV would be so used (Judgment §85).

(3)   The Deputy Judge was therefore satisfied that the 1^st defendant had authorised the 2^nd defendant to drive the LGV or that the 2^nd defendant was carrying out a task or duty delegated from the 1^st defendant (Judgment §89).

(4)   Hence, she concluded, it was more probable than not that the 2^nd defendant was driving the LGV as the 1^st defendant’s agent at the time of the accident (Judgment §90).

15.  The Deputy Judge’s reasoning leading to her conclusion that the 3^rd defendant was also vicariously liable for the 2^nd defendant’s negligence was as follows:

(1)   The Deputy Judge found that it was more probable than not that the 3^rd defendant had authorised or knowingly permitted the 4^th defendant, its sub-contractor, to use the LGV for the purpose of performing the sub-contract (Judgment §96).

(2)   She also held that, while the 2^nd defendant was driving the LGV in the course of employment with the 4^th defendant, the 2^nd defendant was also performing the 4^th defendant’s duty under the sub-contract as delegated by the 3^rd defendant (Judgment §97).

The 1^st defendant’s appeal

16.  The 1^st defendant relies on the proposition that, although masters are vicariously liable for torts committed by their servants, a person who procures work to be done for him by an independent contractor is in general, subject to certain exceptions (which it was contended did not apply here), not liable for the negligence or torts committed by the contractor in the course of the execution of the work under the contract.[2]

17.  Mr Patrick Lim, counsel for the 1^st defendant, pointed to the Deputy Judge’s finding that the 2^nd defendant was employed by the 4^th defendant and not the 1^st defendant and submitted that it therefore follows that the tort for which the plaintiff was claiming damages was committed by the employee of an independent contractor of the 1^st defendant.

18.  Mr Lim also submitted that the Deputy Judge’s conclusion that the 1^st defendant was vicariously liable for the negligence of the 2^nd defendant is inconsistent with her finding that it was more probable than not that the 1^st defendant had permitted its sub-contractor, the 3^rd defendant, to arrange its own employees and/or its sub-contractors (and their employees) to use the LGV for the purpose of the sub-contract (Judgment §85).  He pointed out that, following from that finding, the Deputy Judge also found that it was more probable than not that the 3^rd defendant had authorised or knowingly permitted the 4^th defendant, its sub-contractor, to use the LGV for the purpose of performing the sub-contract (Judgment §96).

19.  The crux of the 1^st defendant’s appeal was therefore that it was not open to the Deputy Judge to find that the 2^nd defendant was driving as the 1^st defendant’s agent, since this would be logically inconsistent with the findings that (i) the 2^nd defendant was the 4^th defendant’s employee and not the 1^st defendant’s, and (ii) the 2^nd defendant was driving the LGV in performance of the sub-contract.

20.  Hence, it was contended, the 1^st defendant should not have been held vicariously liable for the 2^nd defendant’s negligence.

Whether general principle regarding vicarious liability of employer for acts of independent contractor applicable

21.  In answer to the 1^st defendant’s contentions on appeal, Mr Charles Wong, counsel for the plaintiff, first contended that this was not an orthodox case of employer and independent contractor since the employer for the project was the Highways Department for whom the 1^st defendant was acting as main contractor.   He submitted that, under the sub-contract, the 3^rd defendant as sub-contractor was to comply with all instructions and directions of “the 1^st defendant’s Engineer or Engineer’s representatives” on the works and progress of the works and the 1^st defendant had power to direct the sub-contractor to alter or change the mode, manner and sequence of performance of the sub-contract works.  Thus, he argued, the 1^st defendant retained overall control and management of the project and he submitted that the 1^st defendant was not an employer, nor was the 3^rd defendant truly an independent contractor, in the sense of the legal principle that an employer is not vicariously liable for torts committed by its independent contractors.

22.  I do not think this argument assists the plaintiff.  The relevant provision of the sub-contract, clause 9(1), requires the sub-contractor, in relation to the sub-contract works, to “comply with all instructions and decisions of the Engineer and of the Engineer’s Representative which are notified and confirmed in writing to him by the Contractor”.  The Engineer is defined as the Chief Highway Engineer/New Territories West and it is therefore not accurate to describe the engineer as the 1^st defendant’s engineer.  The thrust of clause 9(1) of the sub-contract is to oblige the 3^rd defendant as sub-contractor to comply with instructions from the Highways Department.  Insofar as the 1^st defendant was empowered to give instructions to the 3^rd defendant to alter or change the mode, manner and sequence of performance of the sub-contract works, this was as an adjunct to the 1^st defendant’s “like powers in relation to the Sub-Contract Works to give instructions and decisions as the Engineer has in relation to the Main Works and the progress of the Main Works under the Main Contract” (see clause 9(2)).  Insofar as the 3^rd defendant was required to take orders from the 1^st defendant, this was in relation to variations of the sub-contract works (clause 10(1)(c)).

23.  I therefore see no reason not to regard the 1^st defendant in the position of employer vis à vis the 3^rd defendant for the purposes of the legal principle that an employer is not vicariously liable for torts committed by its independent contractors and no reason not to apply that principle to the question of whether the 1^st defendant is vicariously liable for the 2^nd defendant’s negligence.

24.  In any event, the contention that the 3^rd defendant was not truly an independent contractor was not a basis relied on by the Deputy Judge in support of her conclusion that the 1^st defendant was vicariously liable for the 2^nd defendant’s negligence and there was no respondent’s notice seeking to raise this point.

The law relating to vicarious liability based on agency

25.  In refusing leave to appeal, the Deputy Judge acknowledged (as she had in the Judgment) the general principle that an employer is not liable for the negligence of an independent contractor except when the employer has failed to discharge a non-delegable duty.  However, she considered that the 1^st defendant’s reliance on that principle failed to take into account the fact that the 1^st defendant, being the owner of the LGV, had permitted the 2^nd defendant to drive the LGV as its agent.  In her Decision dated 3 February 2012 (by which she refused leave to appeal), the Deputy Judge said:

“41. The fact that D2 was an employee of D1’s independent contractor does not mean that D2 could not be D1’s agent in driving the LGV. I see no contradiction to the general principle relied on by Mr. Lim. Any legal principle has to be considered in context with the factual background of the case.”

26.  Mr Charles Wong, counsel for the plaintiff, supported the Deputy Judge’s conclusion in this regard by reference to the 1^st defendant’s ownership of the LGV and the fact that the 2^nd defendant was driving it as the agent of the owner.

27.  It is clear that vicarious liability on the part of the owner of a vehicle may attach by reason of the driver being the agent of the owner.  As Lord Wilberforce observed, in Launchbury v Morgans [1973] AC 127 at p. 135B and D-E:

“… I regard it as clear that in order to fix vicarious liability upon the owner of a car in such a case as the present it must be shown that the driver was using it for the owner’s purposes, under delegation of a task or duty.

…

I accept entirely that ‘agency’ in contexts such as these is merely a concept, the meaning and purpose of which is to say ‘is vicariously liable,’ and that either expression reflects a judgment of value – respondeat superior is the law saying that the owner ought to pay. It is this imperative which the common law has endeavoured to work out through the cases. The owner ought to pay, it says, because he has authorised the act, or requested it, or because the actor is carrying out a task or duty delegated, or because he is in control of the actor’s conduct.”

And Viscount Dilhorne in the same case said (at p. 139E-G) with reference to the case of Hewitt v Bonvin [1940] 1 KB 188:

“Du Parcq L.J. thought that the better way of putting the respondent’s case was on the basis of agency, and said, at pp.194-195:

‘The driver of a car may not be the owner’s servant, and the owner will be nevertheless liable for his negligent driving if it be proved that at the material time he had authority, express or implied, to drive on the owner’s behalf. Such liability depends not on ownership, but on the delegation of a task or duty.’

 Thus, it was held that, whether it be alleged that the driver was the servant or the agent, to establish liability on the part of the employer or the principal it must be shown that the driver was acting for the owner and that it does not suffice to show that the driving was permitted.

 Just as the inference may be drawn, from proof that the vehicle was owned by another, that the driver was driving as servant or agent of the owner (Barnard v. Sully (1931) 47 T.L.R. 557), so may a presumption arise, where it is proved that the driver at the time of the negligence was doing something which was in the interest of the owner or for his benefit, that the driver was then acting as a servant or agent of the owner.”

28.  The question of agency is one of fact.  In Rambarran v Gurrucharran [1970] 1 All ER 749, the Privy Council (on an appeal from Guyana) established the principle that, although ownership of a motor vehicle (which at the time of an accident is being driven by another for his own purposes and without the knowledge of the owner) is prima facie evidence that the driver was the agent or servant of the owner and that the owner is therefore liable for the negligence of the driver, that inference may be displaced by evidence that the driver had the general permission of the owner to use the vehicle for his own purposes, the question of service or agency on the part of the driver being ultimately a question of fact.  I shall return to that question of fact below.

29.  Mr Wong submitted that, as a matter of law, the 2^nd defendant could be an employee of a sub-sub-contractor (the 4^th defendant) but at the same time be a permitted driver, i.e. agent, of the main contractor (the 1^st defendant).  In support of this proposition, Mr Wong relied on the decision of Deputy High Court Judge Wright (as he then was) in Kwong Kwan Hing, Administratrix of the estate of Leung Tak Kwong, deceased v Centre Mark Engineering Ltd, unrep., HCPI 320/2000, 8 November 2002.  In that case, the plaintiff had died in the course of employment as a passenger on board a car owned by the defendant.  The negligent driver was not employed by the defendant but was an employee of a third company.  The court did not consider that this constituted a bar to a finding of vicarious liability.  Deputy Judge Wright held:

“15. But the simple fact that KO [the driver] was employed by other than the Defendant does not prevent him, of itself, from being also the agent, or servant, of the Defendant. There is no reason why he should not have acted in more than one capacity at any particular stage. Whether he did so at the time of the occurrence is a matter of fact to be decided on the evidence.

…

31. The fact that the vehicle may have been being used in pursuance of the interests of New Decoration [the driver’s employer] is no bar to it having been used simultaneously in pursuance of the interests of the Defendant, for which the driver was the Defendant’s agent. Support for this appears from the judgment of Mayo, J, as he then was, in KUNG Kit-shing v Star Synthetic Flower Factory (a firm) and Others [1987] HKLR 749 when, referring to Ormrod v Crosville Motor Services and Another [1953] 1 WLR 409, he said:

‘... there can be a duality of interests.  It may well be the case that the van was being used partly for the first defendant’s purposes and partly for the third defendant’s.’ ”

30.  In principle, the possibility of a duality of interests cannot be gainsaid.  The question, however, remains whether it is:

“… established that the driver is driving in a genuine representative capacity, that is as an agent for and on behalf of the principal and as one to whom there has been a delegation of a task or duty.”

See Nottingham v Aldridge & Anor (The Prudential Assurance Co Ltd, third party)[1971] 2 QB 739 per Eveleigh J at p.752, applied by Deputy High Court Judge Longley in So Wing Kwong v Cheng Chi Kwong & Ors [1999] 3 HKLRD 689 at pp. 691J-692C.

31.  A key consideration is whether the vehicle is being driven for the owner’s purposes.  Thus, in Ormrod v Crosville Motor Services Ltd and Another [1953] 1 WLR 409, a friend drove the owner’s car from Birkenhead to Monte Carlo, carrying with him a suitcase belonging to the car owner, so that the two of them could go on holiday with the car in Switzerland.  The basis of the finding of vicarious liability on the part of the car owner for the friend’s negligent driving was that the friend was driving the car partly for the owner’s purposes.

32.  So too, in Chan Hung-wing & Anor v Lam Kam-ching & Anor [1977] HKLR 505, where the owner of the lorry had left the lorry with a garage proprietor for servicing.  The plaintiff was injured when the lorry was being moved by the garage proprietor to his new premises with the permission and at the instruction of the lorry owner so that the lorry could remain at the new garage until the owner was ready to collect it.  It was held that the lorry owner was vicariously liable for the garage proprietor’s negligent driving.  The lorry was driven to the new garage for the owner’s benefit.

33.  In Kung Kit-shing v Star Synthetic Flower Factory (a firm) and Others [1987] HKLR 749, Mayo J (as he then was) found that the use of the van in question would have been for the benefit of both the defendant van owner and the defendant employer, whose negligent employee had driven the van.  Hence, the van owner was vicariously liable for the driver’s negligence.

34.  In So Wing Kwong v Cheng Chi Kwong & Ors (supra), the person in the position of the owner of a car had delegated to a restaurant’s car parking service the task of parking the car.  The plaintiff was injured while the car was being negligently driven by an employee of the car parking service.  The car owner was held vicariously liable on the basis that he had delegated the task of parking the vehicle to the restaurant’s car parking service.  The parking was for his benefit.

Was the agency of the 2^nd defendant for the 1^st defendant established?

35.  This is the critical issue in the appeal.  Mr Lim submitted that the Deputy Judge’s finding that the 2^nd defendant was the employee of the 4^th defendant, taken together with her finding that the 2^nd defendant was, while driving the LGV in the course of his employment, performing the 4^th defendant’s duty under the sub-contract as delegated by the 3^rd defendant precluded a finding that the 2^nd defendant was also the agent of the 1^st defendant when driving the LGV.

36.  In support of his submissions, Mr Lim cited two cases involving car repairers, in which it was sought to make the owner of a car liable for the negligent driving of the car repairer’s employee.

37.  In Ng Loy Yau v Wong Tin Sang & Ors, unrep., HCA 524/1978, 18 April 1980, Liu J (as he then was) considered the question of liability of the 2^nd defendant car owner for the negligence of the 1^st defendant driver who was (it would appear) an employee of the 3^rd defendant garage proprietor.  On the facts of that case, Liu J held that the car owner only left the car with the garage for the purpose of patching up a hole at the rear of the car and no test drive was required for that purpose and he therefore concluded (at §20) that the negligent driver:

“… was not, at the time of the accident, driving for the purposes of the [car owner] or with his permission. He was plainly no agent of the owner.”

38.  The other case was Ching Kin Sang v Galluck International Ltd & Ors, unrep., HCA 8225/1994, 22 May 1997, in which Mr Recorder Edward Chan QC considered the question of whether the 1^st defendant car owner was vicariously liable for the negligent driving of the 2^nd defendant, who was driving the car in the course of his employment by the 3^rd defendant garage proprietor.  Mr Lim relied in particular on the following passage in the judgment in that case:

“21. The question that I have to decide was whether the arrangement between the 1^st and the 2^nd defendants was such that at the time of the accident the 2^nd defendant was driving the vehicle as the servant or agent of the 1st defendant or whether the 1^st defendant had delivered its vehicle to an independent contractor so that at the time of the accident, the vehicle was being under the charge of the independent contractor for whom the 1^st defendant was not vicariously liable. I am of the view that it was the latter. I am of the view that although there was not yet any express agreement on the amount to be paid to the 2^nd defendant (or his garage employer), plainly the 2^nd defendant whether for himself or for his employer, had agreed to render certain services for the 1^st defendant. The 1^st defendant had no means of controlling how the services was to be rendered. The arrangement was such that the 2^nd defendant would use his own skill and equipment to inspect the car at a place to be decided at his sole discretion. The 2^nd defendant could choose which authorised garage to go to for the inspection certificate. Furthermore, the 2^nd defendant can choose which route he was going to take when driving the vehicle back to his house or garage. Although it was suggested that if the cost of the repair could not be agreed between the 1^st and 2^nd defendants then, there would be ‘no deal’ yet it was obvious that the parties never contemplate that such event would happen and in any case, I accept the evidence of Mr Ma of the 1^st defendant that he would expect that the 1^st defendant would be liable for the reasonable cost of the inspection of the vehicle carried out in order to determine what repair was needed. Certainly I do not consider that the arrangement between the parties was such that the vehicle was being handed over to the 2^nd defendant for him to shop around for various quotations to be approved by the 1^st defendant and I do not consider that the 1^st defendant had intended to appoint the 2^nd defendant to be its agent to find a suitable car repairer to carry out repair or inspection of the vehicle.”

39.  It is noteworthy that in Ching Kin Sang v Galluck International Ltd & Ors, Mr Recorder Chan QC considered Chan Hung-wing & Anor v Lam Kam-ching & Anor but said (at §22):

“I would consider that the decision was distinguishable from the factual situation in the present case as in that case, there was an express request by the owner to the repairer to take the car to the new premises after the repairer had already completed his work. Hence it would be possible to say that when the car was being driven to the new premises, the driver did so at the express request of the owner and so was the agent of the owner.”

40.  I have not derived any particular assistance from the above cases cited by Mr Lim, which I regard as decisions on their own particular facts.  Moreover, the particular factual context of those cases, namely a car being left with a garage proprietor, is not particularly relevant to the present case.

41.  Insofar as the 1^st defendant’s appeal is premised on the contention that there is a logical inconsistency between, on the one hand, the findings that the 2^nd defendant was the employee of the 4^th defendant and the 2^nd defendant was driving the LGV in performance on the sub-contract and, on the other hand, the finding that the 2^nd defendant was driving the LGV as the 1^st defendant’s agent, it is clear from the authorities discussed above that a duality of interests is possible so that performance of a task as an employee of an employer does not preclude a finding that the performance is also undertaken on behalf of another party.

42.  The Deputy Judge noted that the 2^nd defendant’s evidence was that the LGV was carrying road signs, cones and fences etc. provided by the 1^st defendant at the material time and they were to be transported from one site of the 1^st defendant to another site of the 1^st defendant (Judgment §80(g)).  The Deputy Judge made a finding of fact based on that evidence:

“84. The fact that D2 (who had been working at D1’s site for over 10 years) were transporting D1’s road signs and fences etc. between different sites of D1 should not be ignored.”

43.  That finding of fact was clearly a factor leading to the Deputy Judge’s conclusions that:

“89. In the light of the evidence, I am satisfied D1 has authorised D2 to drive the LGV, or that D2 was carrying out task or duty delegated from D1.

90. I find it is more probable than not that D2 was driving the LGV as D1’s agent at the time of the Accident.”

44.  The 1^st defendant challenges the Deputy Judge’s holding that the 2^nd defendant was driving the LGV as the 1^st defendant’s agent based on that finding of fact (regarding the transportation of the 1^st defendant’s road signs and fences etc. between different sites of the 1^st defendant).  It was contended that, because that transportation constituted work done under the sub-sub-contract between the 3^rd defendant and the 4^th defendant, the task was one undertaken for or on behalf of the 4^th defendant independent contractor and not the 1^st defendant as employer (via the 3^rd defendant sub-contractor).

45.  Relying on the cases of Ng Loy Yau and Ching Kin Sang cited above, Mr Lim submitted that, since the 1^st defendant had relinquished control over the performance of the work covered by the sub-contract, it could not be vicariously liable for the negligence of an employee of the sub-contractor.

46.  I do not think that the absence of control alone is a sufficient factor to overturn the Deputy Judge’s finding of agency. Although it may be a relevant factor in determining whether the driver is driving in a genuine representative capacity, control is not itself an essential feature of vicarious liability on the part of a vehicle owner.  As the passage from Lord Wilberforce’s speech in Launchbury v Morgans quoted above shows, vicarious liability may arise because the vehicle owner has authorised the act or requested it or because the driver is carrying out a task or duty delegated by the owner or because he is in control of the driver’s conduct.  Control is but one basis of fixing the vehicle owner with vicarious liability: see, in this context, So Wing Kwong (supra) at p. 693E.

47.  However, in my opinion, the 1^st defendant’s challenge to this finding of fact succeeds on a different basis.

48.  The fact that the road signs and fences belonged to the 1^st defendant and were being transported between sites belonging to the 1^st defendant is not inconsistent with the work being undertaken under the sub-contract arrangements which involved the 3^rd defendant as sub-contractor and the 4^th defendant as sub-sub-contractor.  On the contrary, there is nothing surprising in the fact of plant or equipment of the 1^st defendant being deployed for the purposes of executing the sub-contract works and it was accepted by Mr Wong on behalf of the plaintiff that the transportation of the signs and fences in the LGV at the time of the accident was work within the sub-contract.

49.  That being so, on the facts of this case where the 1^st defendant had sold the LGV to the 3^rd defendant for the purposes of its being used in the execution of the sub-contract works and where the LGV was being driven by an employee of a sub-sub-contractor for the purposes of executing the sub-contract works, the journey was not being undertaken for the purposes of the 1^st defendant.  There was no evidence that the 1^st defendant knew that the 2^nd defendant would be driving the LGV that day for that particular purpose, so there is no basis for holding that the journey was one authorised by the 1^st defendant.  Nor was there any evidence that the 1^st defendant requested it.  This was not a task or duty of the 1^st defendant delegated to the 2^nd defendant and, as already discussed, the 1^st defendant exercised no control over the 2^nd defendant in his driving the LGV.

50.  Given that there was no evidence of the sort alluded to in the preceding paragraph, I do not, with respect, consider that it was open to the Deputy Judge to conclude that the 1^st defendant had authorised the 2^nd defendant to drive the LGV or that the 2^nd defendant was carrying out a task or duty delegated from the 1^st defendant (Judgment §89) or that the 2^nd defendant was driving the LGV as its agent (Judgment §90).

51.  It would seem to be clear that the 1^st defendant was joined in the action because of the fact it was the registered owner of the LGV at the time of the accident.  However, it is clear from the Sub-Contract that the 1^st defendant sold the LGV to the 3^rd defendant for the purposes of the latter carrying out the sub-contract works and that ownership was retained by way of security for the payment of the purchase price of the vehicle: the Deputy Judge found that the 1^st defendant had parted with possession of the LGV (Judgment §86).  Insurance and other expenses were charged back to the 3^rd defendant because it was being used exclusively by the 3^rd defendant and its sub-sub-contractor, the 4^th defendant.  As a matter of law, mere ownership of a vehicle is not enough to fix the owner with vicarious liability for the negligence of the person driving that vehicle.  There must be something more along the lines set out in Lord Wilberforce’s speech in Launchbury v Morgans and, in my opinion, that is missing in the present case.

52.  Mr Wong sought to uphold the Deputy Judge’s finding of agency by submitting that, as main contractor for the works, the 1^st defendant retained an interest in the sub-contract work being performed and therefore the 2^nd defendant was driving the LGV for its benefit and purposes sufficient to give rise to vicarious liability.  He relied on the judgment of Denning LJ (as he then was) in Ormrod v Crosville Motor Services (supra) at p. 755B where he said:

“The owner only escapes liability when he lends it or hires it to a third person to be used for purposes in which the owner has no interest or concern”.

53.  I do not accept this submission.  As Lord Wilberforce observed at p. 135B-C:

“The substitution for this clear conception of a vague test based on ‘interest’ or ‘concern’ has nothing in reason or authority to commend it. Every man who gives permission for the use of his chattel may be said to have an interest or concern in its being carefully used, and, in most cases if it is a car, to have an interest or concern in the safety of the driver, but it has never been held that mere permission is enough to establish vicarious liability. And the appearance of the words in certain judgments (Ormrod v. Crosville Motor Services Ltd. [1953] 1 W.L.R. 409, per Devlin J.; [1953] 1 W.L.R. 1120, per Denning L.J.) in a negative context (no interest or concern, therefore no agency) is no warrant whatever for transferring them into a positive test.”

54.  In my opinion, even if the vehicle is owned by the main contractor, its interest in the completion of sub-contract works and the benefit it derives therefrom is not on its own sufficient to give rise to vicarious liability for the negligent driving of an employee of an independent contractor.  That interest and benefit to the vehicle-owning main contractor is, in my opinion, too far removed from the sort of interest or benefit which the cases have established as being required in order for vicarious liability to attach to the owner of a vehicle.

55.  Mr Wong also submitted that the categories of exception to the rule that an employer is not vicariously liable for torts committed by his independent contractor are not closed: see Tort Law in Hong Kong (3^rd Ed.) by Rick Glofcheski at p. 552.  He submitted that the present situation was one which should be included in the list of exceptions.

56.  I do not accept this submission either. Although the categories of exception to the rule are not closed, I do not consider that mere ownership of a vehicle by a main contractor who does not authorise the act of driving, or request it, or for whom the journey is not a delegated task or duty, or who does not control the driver’s conduct, is a category of case which should be added to the list of exceptions.

57.  For the above reasons, in the circumstances of this case, I do not consider that the Deputy Judge’s conclusion that the 2^nd defendant was driving the LGV as the agent of the 1^st defendant is one which can be supported.  Given the particular facts here, there is no basis for holding that the LGV was being driven for the purposes of its owner, the 1^st defendant, and accordingly, no basis for imposing vicarious liability on the 1^st defendant for the 2^nd defendant’s negligence.

The respondent’s notice

58.  In light of the conclusion on the issue of agency above, it is necessary to consider the point raised in the respondent’s notice since, if that is made out, the finding of vicarious liability would be correct, albeit on a different basis.

59.  The plaintiff contends that the Deputy Judge was wrong to find that the 2^nd defendant was an employee of the 4^th defendant at the time of the accident and should have instead found that he was an employee of the 1^st defendant at that time so that vicarious liability attaches on the basis that the 2^nd defendant was driving the LGV in the course of his employment at the time of the accident.

60.  The main basis of the contention that the 2^nd defendant was employed by the 1^st defendant rests on the plaintiff’s construction of clause 13(c) of the special conditions of the sub-contract (at Appendix A to the Sub-Contract).  The material parts of that clause read as follows:

“13. Site Organization

(a) [The 3^rd defendant] is aware that all the Contractor’s Superintendence as listed in Annex [this is presumably a typographical error and should refer to Appendix] I are directly employed and paid by [the 1^st defendant]. …

(b) [The 1^st defendant] may continue to employ all staff and workers for [the 3^rd defendant] in April and May 2007 to ensure smooth handover in the gearing up period. [The 3^rd defendant] shall bear the actual costs of these staff and workers accordingly and [the 1^st defendant] shall deduct such costs as contra charge from the monthly payments due to [the 3^rd defendant].

(c) After the gearing up period, i.e. from June 2007 onwards, [the 3^rd defendant] shall employ its own staff and workers except the following staff for the execution of the Sub-Contract Works:

(i) Contractor’s management staff as listed on Appendix J:

…

(ii) Site staff required to be directly employed by [the 1^st defendant] as listed on Appendix K:

…

(iii) Site staff provided for the Employer as listed in Appendix L:

…

(iv) For those staff in items 13(c)(ii) and (iii), [the 3^rd defendant] shall have an option to replace the existing staff with prior approval from [the 1^st defendant] and the Employer. For items 13(c)(iii), [the 3^rd defendant] is entitled to employ its own staff to replace existing staff.

(v) For staff working in [the 1^st defendant]’s head office or other site offices but whose names are shown in the site organization chart a listed in Appendix M:

…

(vi)   All staff as shown on Appendix I, Appendix J, Appendix K and Appendix L are indicative and exhaustive. [The 3^rd defendant] shall be fully aware of the numbers and details of staff members provided by [the 1^st defendant] and shall have an obligation to provide and maintain all necessary staff and workers in accordance with the requirements of the Main Contract.”

61.  It was common ground below that the “Contractor’s Superintendence” meant the 1^st defendant’s staff and that, at the time of the Sub-Contract, the 2^nd defendant was employed by the 1^st defendant.  He is listed in Appendix I to the Sub-Contract as Staff No. CWF470, having the position “Daily-Labour”.

62.  Mr Wong submitted that on a proper construction of clause 13(c), read together with clause 13(a), the 3^rd defendant was obliged to continue to use or employ the staff listed in Appendix I after the gearing up period and those staff would be considered as directly employed, and paid, by the 1^st defendant.  He contended that Appendix I fell within one of the exceptions under clause 13(c), so that the 3^rd defendant did not have an option not to employ the 2^nd defendant after the gearing up period.

63.  With respect, I do not agree with Mr Wong’s construction of clause 13.

64.  In my view, the proper construction of that clause is that the 3^rd defendant as sub-contractor was obliged to employ its own staff after the gearing up period save and except for the classes of staff listed in the various sub-paragraphs under clause 13(c).

65.  Those exceptions were: the 1^st defendant’s management staff listed in Appendix J which the 1^st defendant would continue to employ; the site staff required to be directly employed by the 1^st defendant as listed in Appendix K; the site staff provided for the Highways Department (as Employer) listed in Appendix L which the 1^st defendant could continue to employ; and staff working in the 1^st defendant’s head office or other site offices listed in Appendix M.

66.  Clause 13(c)(vi) did not create another exception and the reference to Appendix I in that sub-paragraph is simply a statement that the staff shown in that appendix “are indicative and exhaustive”.  The sub-paragraph goes on to make it clear that it is the 3^rd defendant’s obligation to provide and maintain all necessary staff and workers in accordance with the requirements of the Main Contract.

67.  So the 2^nd defendant was not one of the employees who was obliged to be retained by the 1^st defendant after the gearing up period.  Instead, the 3^rd defendant could employ him directly or he could be retained through being employed by a sub-contractor of the 3^rd defendant, i.e. the 4^th defendant.

68.  Mr Wong advanced a further argument in support of the respondent’s notice, namely that there was other evidence supporting the conclusion that the 1^st defendant was the 2^nd defendant’s employer at the time of the accident.  This evidence was: the fact that the 2^nd defendant worked on the Tai Lin Pai site for 10 odd years before 2008/2009; the 2^nd defendant worked as a labourer driving vehicles at the site; the 1^st defendant was the principal contractor at the site; the 2^nd defendant worked for the 1^st defendant in the past (in his words “all along”); there had been a change of sub-contractor who paid the 2^nd defendant but there was no change of job or post on his part; and the 1^st defendant had filled in an insurance claim form stating the 2^nd defendant’s relationship as “Employee”.

69.  I do not consider that any of that evidence is sufficient to displace the Deputy Judge’s finding of fact that the 2^nd defendant was employed by the 4^th defendant and not the 1^st defendant.  There was clear evidence showing that the 4^th defendant paid the 2^nd defendant’s salary and MPF contributions.  The fact the 2^nd defendant had been employed by the 1^st defendant before the sub-contract arrangement with the 3^rd defendant does not require a conclusion that that state of affairs should continue; on the contrary, the change in the contracting arrangements is a reason why there might have been a change from the previous employment arrangements.  In that context, it is more likely than not that the 1^st defendant would cease to be the 2^nd defendant’s employer.  The whole commercial purpose of the sub-contracting arrangement was presumably for the 1^st defendant to give up primary responsibility for fulfilling part of the main contract works and to leave that to the 3^rd defendant or a sub-sub-contractor employed by the 3^rd defendant.  Reducing its staffing levels would have been part and parcel of that process.

70.  I would therefore dismiss the respondent’s notice.

Conclusion

71.  For the above reasons, I would allow the appeal and dismiss the respondent’s notice.

72.  I would make an order nisi that the costs of the appeal be paid by the plaintiff to the 1^st defendant to be taxed if not agreed.  The plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.

Hon Lam JA:

73.  I agree with the Judgment of Fok JA.  For my part, I am concerned about the possibility (without pre-empting what may ultimately be the incidence of costs) that the damages awarded in favour of the plaintiff (in the sum of $305,115.55) may completely or substantially be absorbed by the costs liability towards the 1^st defendant through the Legal Aid charge.  I do not know whether this is a case for a Sanderson or Bullock order and we have not been addressed on the same.  If such an application is made, we would have to afford the other defendants an opportunity to be heard.  But this case does underscore the important but sometimes overlooked duty on the part of those advising a plaintiff to review the practical implications of prosecuting an action against many defendants before proceeding to trial.  I should also make it clear that I am not saying this by way of criticism, least of all as criticism of Mr Wong, who (as we were told) was only instructed to conduct the case on behalf of the plaintiff at a very late stage.

Hon Barma JA:

74.  I agree with the Judgment of Fok JA.