APPROACH INDUSTRIES LTD v. S & P AUTO LTD

DCCJ 1638/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1638 OF 2008

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J U D G M E N T

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INTRODUCTION

1. This case concerns the role played by and the responsibility of the defendant in respect of the installation of a supercharger onto the vehicle of the plaintiff.

BACKGROUND

2. The plaintiff is the owner of a 4x4 motor vehicle, namely a Toyota Landcruiser Cynus, bearing registration number GX 3923 (“the Vehicle”).  Mr Mok Ping Leong (“Mr Mok”) is one of the directors of the plaintiff.

3. The defendant carried on car repairing business.  Mr Ma Tai Lap (“Mr Ma”) is one of the directors and shareholders of the defendant.

4. There is no dispute that throughout this matter, Mr Mok acted for and on behalf of the plaintiff and Mr Ma acted for and on behalf of the defendant.

5. Back in September 2006, with the view of enhancing the performance of the Vehicle, Mr Mok agreed to overhaul the Vehicle and to install a supercharger.  This work could be completed within 1 month and the estimated cost was $160,000.

6. The installation was not completed until March 2007.  However, before delivery of the Vehicle to Mr Mok, it was damaged in a traffic accident on 10 March 2007.  At the time of the accident, Mr Wong Siu Kwong (“Mr Wong”), the Third party herein, was the driver of the Vehicle.

7. The plaintiff claimed against the defendant for damages for breach of contract and/or bailment.

8. The defendant denied liability claiming that they merely acted as an agent.  Mr Wong, who was not an employee of the defendant, was the person engaged by the plaintiff to install the supercharger and thus he should be the one responsible for the damage.

9. The Third Party and Fourth Party proceedings were settled before the trial.  Therefore, this trial only concerns the dispute between the plaintiff and the defendant.

THE PLAINTIFF’S CASE

10. There are 3 witnesses for the plaintiff.  Mr Mok, Mr Kelvin Chui Kai Cheung (“Mr Chui”) and Mr Lee Kwok Cheung (“Mr Lee”).

Mr Mok

11. Mr Mok told the court that he came to know Mr Ma in 2005.

12. In his eyes, Mr Ma, and thus the defendant, is an expert specializing in safari and prestige automobile vehicle maintenance and repairs.

13. As from April 2006, there were discussions with Mr Ma as to how to enhance the performance of the Vehicle by installing a supercharger.

14. On one occasion in June 2006, Mr Ma told Mr Mok that he had already bought a supercharger for him.  Mr Mok then asked for further specifications and whether it came with a water mist injection system.  Mr Ma suggested Mr Mok to contact Mr Wong who was more knowledgeable about superchargers.

15. Mr Mok wrote an e-mail to Mr Wong on 27 June 2006 (Bundle p102) to seek advice.  However, there was no reply from Mr Wong.

16. Thereafter, Mr Mok and Mr Ma had a 43-day excursion to Tibet and Xinjiang with others in July 2006 (“the Excursion”).

17. After the excursion and on 2 September 2006, Mr Mok drove the Vehicle to the shop of the defendant situated at Fo Tan for checking and to repair the damage done after the Excursion.  Mr Mok engaged the defendant to install a supercharger (“the Supercharger”) and overhaul the Vehicle.  The estimated cost was $160,000 and all the works be completed within one month (“the Contract”).  The works to be done under the Contract is referred to as the Works while the installation of the Supercharger is referred to as the Installation Work.

18. On or about 15 February 2007, there was a test drive which was attended by Mr Chui and Mr Ma.  During the test.  Mr Chui found some problems and Mr Ma agreed to fix them.

19. On 10 March 2007, Mr Ma informed Mr Mok that the Works were completed and asked Mr Mok to go to his shop at Fo Tan to collect the Vehicle.  When Mr Mok was on his way to the shop, he was told that the Vehicle was damaged in an accident.

20. It was later found out that the Vehicle was involved in a 7-car traffic accident and Mr Wong was the driver (“the Accident”).

21. Mr Ma assured Mr Mok that he would take full responsibility for the repair of the Vehicle and compensate the plaintiff for all losses.  At that time, Mr Mok was of the view that if Mr Ma would take full responsibility for the repair of the Vehicle and compensate all losses the plaintiff may suffer, he would not pursue the matter further provided that Mr Ma would not make any claim against the insurer of the Vehicle.

22. Subsequently, Mr Ma sent to Mr Mok a bundle of documents concerning insurance claim including a form to authorize a Kwok Wah Hong Limited as representative of the plaintiff to pursue insurance claim.  Mr Mok felt that the matter was out of control and thus passed the matter to the legal advisers of the plaintiff.

23. Mr Mok told the court that he knew nothing about Mr Wong: his business, working place, experience and reputation in installation of supercharger.  Further, there was no discussion with Mr Ma that the installation of the Supercharger would be done by Mr Wong.  Even if Mr Ma had raised it, he would not have agreed.

Mr Chui

24. Mr Chui told the court something about the test drive in February 2007.  He accompanied Mr Mok to collect the Vehicle on 10 March 2007.

Mr Lee

25. Mr Lee is the accounting manager of the plaintiff.  Since Mr Mok was busy and out of Hong Kong frequently, he was responsible to contact Mr Ma and the insurer after the Accident.

THE DEFENDANT’S CASE

26. There are 2 witnesses: Mr Ma and Mr Wong.

Mr Ma

27. In April or May 2006, Mr Mok went to the shop of the defendant and enquired about the way to enhance the performance of the Vehicle.  Mr Ma suggested to install a TRD charger but was rejected by Mr Mok because he thought that was too common.  It was Mr Mok who searched for and instructed Mr Ma/the defendant to purchase the Supercharger.  The defendant did so.

28. Mr Mok also asked Mr Ma to follow up the specifications of the Supercharger including whether it came with a water mist system.  Since it was beyond his expertise, Mr Ma told Mr Mok to approach Mr Wong for assistance.  Mr Ma also provided the e-mail address of Mr Wong to Mr Mok.

29. After the Supercharger arrived at Hong Kong, Mr Ma, Mr Mok and Mr Wong examined the Supercharger together.  It was before the Excursion.

30. Thereafter, Mr Wong provided a quotation to Mr Ma for the Installation Work.  The estimated cost was around $17,600.  Shortly after that, Mr Ma also provided an oral quotation to Mr Mok for the Works.  The total estimated cost including the Installation Work was around $160,000.  However, Mr Ma could not recall when he provided such quotation.

31. Mr Ma stressed that he only acted as an agent for Mr Mok to liaise with or contact Mr Wong for the Installation Work.  Further, Mr Mok knew and agreed that the Installation Work was to be done by Mr Wong.

32. After the accident, Mr Ma agreed to repair the Vehicle and compensate the plaintiff for the loss of “No Claim Bonus” under the plaintiff’s insurance policy.  It should be noted that the Vehicle was covered by a comprehensive policy.  Mr Mok also agreed to let the defendant handle the insurance claim for the plaintiff and the compensation claimed from the insurer would be paid over to the defendant to cover their repair cost.  As a result, Mr Ma had ordered parts for the purpose of repairing the Vehicle.

33. Nevertheless, the plaintiff refused to sign the documents for the insurance claim and told the defendant not to do the repair work.

Mr Wong

34. Mr Wong told the court that Mr Ma introduced Mr Mok to him.

35. Mr Wong did provide an oral quotation to Mr Mok for the Installation Work.  It was around $10,000 odd but he could not recall the exact figure.  Further, he did not mention the exact time needed for the installation because he might need extra time to order parts.

DISCUSSION AND ANALYSIS

36. The main issues are:

(a)  Whether the plaintiff contracted with the defendant or Mr Wong to install the Supercharger?  If Mr Wong is the contracting party, the plaintiff’s claim against the defendant is bound to fail.

(b)  If the defendant is the contracting party, is it entitled to engage Mr Wong to do the Installation Work?

Who is responsible to install the Supercharger?

37. I have carefully considered the evidence and submissions by Counsel.  It is my ruling that Mr Ma and Mr Wong are not credible and reliable witnesses.  My reasons are as follow.

38. Firstly, if Mr Wong was the contracting party and responsible to install the Supercharger, there is no reason for Mr Ma to include the service fee for the Installation Work (“the Service Fee”) in the invoice, bearing the letterhead of the defendant, dated 10 March 2007 (“the Invoice”) (Bundle p 142).  Even if Mr Ma is to collect the Service Fee on behalf of Mr Wong, he should state it clearly in the Invoice.  Without this, anyone being shown the Invoice would form the view that the Installation Work was done by the defendant.  Further, while Mr Ma stated that he had paid the Service Fee to Mr Wong who had also given him an invoice, such invoice is however not disclosed or produced.

39. Secondly, Mr Ma told the court that he had added $1,000 to the fee charged by Mr Wong. Under the Invoice, the Service Fee he charged was $18,600.  He only paid $17,600 to Mr Wong.  In my view, that is clearly a mark up and is not consistent with his allegation that Mr Wong was the contracting party.

40. Thirdly, it is totally meaningless for Mr Mok to engage Mr Ma as an agent or middleman to supervise the Installation Work and to liaise with Mr Wong.  Mr Mok and Mr Wong can directly contact each other and discuss about the Installation Work.  If they cannot find each other over the phone, they can simply leave a message or send the other an e-mail.  It is pointless to contact Mr Ma as he would not be in a better position to reach Mr Mok or Mr Wong.  Further, if Mr Ma is not that knowledgeable in relation to supercharger, it may be more troublesome to pass a message through him.

41. Fourthly, it is Mr Ma’s evidence that Mr Mok rejected the idea of installing a TRD supercharger because it was too common and not powerful enough.  Further, it was Mr Mok who conducted a search on the internet, found the Supercharger and instructed Mr Ma to buy it on his behalf.  If what Mr Ma had said were true, it means that Mr Mok must know the specifications of the Supercharger in order to form the view that it is better or more powerful than the TRD supercharger suggested by Mr Ma.  However, in his e-mail to Mr Ma dated 26 June 2006 (Bundle p101), Mr Mok asked Mr Ma if the Supercharger came with a water mist injection system.  He also asked about the boost pressure of the Supercharger.  There is simply no reason why Mr Mok had to ask Mr Ma for the information aforesaid if he was the one who found the Supercharger.

42. Fifthly, if Mr Mok and Mr Wong had a direct deal, they should have negotiated the installation fee themselves.  It is the evidence of Mr Wong that he provided a quotation to Mr Mok directly sometime in late July 2006.  However, Mr Ma said that Mr Wong provided a quotation to him first and he provided a total quotation to Mr Mok shortly thereafter.  If Mr Ma and Mr Wong are telling the truth, they would not have given such conflicting versions.

43. For the reasons aforesaid, I reject the evidence of Mr Ma and Mr Wong.  On the other hand, Mr Mok gave clear and cogent evidence.  It is my ruling that Mr Mok is an honest and credible witness.  I accept his evidence.  In particular, it is my finding that Mr Ma suggested Mr Mok to purchase the Supercharger.

44. It is my ruling that the defendant was the party engaged by the plaintiff to do the Installation Work.

Is the Defendant entitled to engage Mr Wong to install the Supercharger?

45. It should be noted that the defendant is a corporation.  The installation of the Supercharger can only be done by its employees.  The plaintiff’s case is that such work should be done by Mr Ma or the employees of the defendant.

46. There is no dispute that the Vehicle was left behind to Mr Ma for overhaul and installation of the Supercharger.  This form of bailment, known as locatio operis faciendi, contains two elements:

“a contract for services, coupled with a bailment of the article upon which those services are to be performed.” (Palmer on Bailment, 3^rd edition, Sweet and Maxwell, paragraph 15-001)

47. There is also no dispute that if the defendant is not entitled to engage Mr Wong to install the Supercharger, it becomes the insurer of the Vehicle and liable for the damages done in the Accident.  However, if the defendant is entitled to engage Mr Wong to install the Supercharger, the defendant will not be liable if it or Mr Wong had taken reasonable care of the Vehicle.

48. Mr Chan, Counsel for the plaintiff, submitted that the defendant is not entitled to delegate the Installation Work to Mr Wong. He relied on Halsbury’s Laws of England (5^th edition, Volume 4, paragraph 164),

“In general, the workman’s obligation to perform the work is personal to him. The hirer is presumed to have engaged the workman on the strength of his personal skill and reputation. The workman cannot, therefore, delegate the work to a third party and is prohibited from conferring possession on a third party for that purpose. This general rule applies irrespective of whether the contract expressly obliges the workman to perform in person or not and irrespective of whether the hirer has proved that he relied upon the workman’s personal skill and reputation in entrusting the work to him.”

49. I think Mr Chan must be right.  In Palmer on Bailment, the learned author stated that,

“Generally, the duty imposed by a bailment locatio operis faciendi is a personal one which the bailee delegates at his risk. The bailor will be deemed to have selected him for his personal skill and ability and, in the absence of agreement to the contrary, he is entitled to expect that the work will be performed by the defendant in person. Normally, this will include a duty to execute the work on his own premises and not on those of a third party, but will include permission to delegate to a servant.” (paragraph 15-032, p874)

50. This is of course the general rule only.  In the same paragraph 164 as cited by Mr Chan, the learned author went on to state that,

“The general rule may be displaced by the express terms of the contract, or by a course of dealing between the parties, or by the particular circumstances of the case. In some cases the nature of the work will be such that permission to delegate or sub-contract can be inferred.”

51. In Davies v Collins [1945] 1 All ER 247,Lord Greene, M.R. gave a clear explanation of the generally principles,

“There is a well-known division of contracts for work and labour into two broad classes. One class is where the work and labour can, on the true construction of the contract, only be performed by the contracting party himself or by some staff that he employs. The other class is where, from all the circumstances of the case, including of course the true construction of the contract, it is to be inferred that it is a matter of indifference whether the work should be performed by the contracting party or by some sub-contractor whom he employs. In many contracts all that is stipulated for is that the work shall be done and the actual hand to do it need not be that of the contracting party himself; the other party will be bound to accept performance carried out by somebody else.” (p249E)

52. Therefore, whether the installation of the Supercharger can be delegated depends on the proper inference to be drawn from the Contract itself, the subject matter of it and other material surrounding circumstances (Davies v Collins, p250B; Palmer on Bailment, paragraph 15-032, p875).

53. Like many other cases with similar dispute, there is no express agreement as to whether the defendant can delegate the Installation Work.  The Contract is an oral one and thus no document can be referred to.

54. According to Mr Mok, Mr Ma was reputable for his knowledge in 4x4 motor vehicles including maintenance and alteration.  It was Mr Ma who recommended Mr Mok to buy the Supercharger in question which had been shown in an exhibition and put in use before.  Mr Ma rated it an excellent one.  There were then discussions between Mr Mok and Mr Ma on this topic.

55. In late June, when Mr Mok was considering whether further accessories, for example, a water mist injection system, were necessary, he checked it with Mr Ma first and then Mr Wong.  It should be noted that the accessories mentioned by Mr Mok were not part of the Supercharger.  In any event, none of these accessories was installed.

56. After the Excursion and on 2 September 2006, Mr Mok engaged Mr Ma to do the overhaul and install the Supercharger.

57. It took several months from the time when installation of the Supercharger was first raised to the time when Mr Mok decided to do it.  Throughout this period, Mr Mok discussed with Mr Ma only.

58. Mr Mok still engaged Mr Ma to do the Installation Work notwithstanding Mr Ma had referred Mr Mok to Mr Wong in relation to the accessories or specifications.

59. Further, Mr Mok knew nothing about Mr Wong: his business, working place, experience and reputation in installation of supercharger.

60. All the above point to the fact that Mr Mok was relying on Mr Ma and he engaged the defendant to do the Installation Work by reason of Mr Ma: reputation, skill and ability.  If otherwise, Mr Mok would have engaged Mr Wong to do the Installation Work.

61. For the reasons aforesaid, it is my ruling that the defendant is not entitled to delegate the Installation Work to Mr Wong.  Further, by reason of such delegation, the defendant became the insurer of the Vehicle in that the defendant is now responsible for the damage done in the Accident although the same was not caused by the negligence of Mr Wong or the defendant.

Any implied term under common law?

62. For completeness sake, I think it is better for me to deal with the implied terms as raised by the plaintiff.

63. It is the plaintiff’s case that there is an implied term of the Contract that the defendant would return the Vehicle to the plaintiff in the same cosmetic and/or driving condition as at the time when the Vehicle was entrusted to the care of the defendant.

64. On first reading, it sounds reasonable to have this term implied.  However, on closer look of the position, one would at once find that if this term is to be implied, it implied something more than necessary to give business efficacy to the Contract.  It further imposes a heavier burden on the defendant than that they have to shoulder under the law of bailment.

65. In all the circumstances, it is my ruling that there is no such implied term as claimed by the plaintiff.

Any breach of other implied terms?

66. The plaintiff also complained that the defendant was in breach of the implied terms by failing to complete the work with reasonable diligence and/or reasonable skill and care.

67. On this, while I accept that there is such an implied term either under common law or the Supply of Services (Implied Terms) Ordinance, Cap 457 (“the Ordinance”), I am afraid there is no evidence to support that there was any breach.

68. There is another complaint: the defendant failed to complete the work within reasonable time.  There is such an implied term by reason of s6 of the Ordinance.

69. Again, there is no evidence before the court as to what is regarded as reasonable time from the plaintiff.  On the other hand, there is evidence from Mr Wong that there were missing or unfit parts and thus it took much more time to complete the Installation Work.

70. For the reasons aforesaid, it is my ruling that the plaintiff has failed to establish that there is any breach of any implied term as complained.

71. In any event, the damages sought has nothing to do with the implied terms under this heading.

Quantum of Damages

72. The plaintiff claimed a number of items in the pleadings:

(a) Cost of repair of the Vehicle ($70,112.50)

(b) Cost of survey of the Vehicle ($800)

(c) Cost of collection of the Vehicle ($1,200)

(d) Alternative transport cost ($1,000 x 26 months)

(e) Vehicle licence fee ($1,888.17, April 2007 to June 2007)

(f) Insurance premium ($11,341, June 2007 to June 2008)

(g) Vehicle depreciation ($110,500, April 2007 to May 2009)

73. At the commencement of this trial, Mr Chan told the court that the plaintiff was not pursuing the depreciation loss.

COST OF REPAIR ETC

74. There is no dispute as to the quantum of the cost of repair, survey and collection of the Vehicle.  As I found that the defendant is responsible for the damage done in the Accident, it is my ruling that the defendant has to pay for items (a) to (c).

ALTERNATIVE TRANSPORT COST

75. Mr Lam, Counsel for the defendant, complained that this head is not supported by receipts.

76. Further, the plaintiff has failed to mitigate the loss by failing to collect the Vehicle from the defendant. Thus, the plaintiff is, at the most, only entitled to the alternative transport cost for the months from October 2007 to February 2008.

77. The Accident took place in March 2007.  Thereafter, there were negotiations between the plaintiff and the defendant in relation to the repair work.  While there are now differences between the parties over the terms of the agreement to repair the Vehicle, there can be no dispute that the plaintiff, by an email dated 9 May 2007,  instructed the defendant to start the repair work as soon as possible (the E-mail”) (Bundle p162).

78. Before I go on to discuss this matter further, I should point out that Mr Lam has informed the court that the defendant would not rely on any set-off as claimed or at all.  Therefore, strictly speaking, there is no need for me to decide whether there is any agreement to repair the Vehicle.

79. Mr Lam submitted that with the E-mail, it is clear that the Vehicle was left with the defendant with the consent of the plaintiff.

80. There then came the letter from the solicitors for plaintiff on 10 May 2007, the very next day after instruction was given to the defendant to do the repair work (“the Letter”) (Bundle p164).  In the Letter, the solicitors just sought to spell out the terms allegedly agreed by the parties.

81. The defendant’s solicitor wrote back on 13 June 2007, almost a month after the Letter, refuting the terms as stated in the Letter.  There was no reply from the plaintiff’s side and thus the defendant’s solicitors wrote again on 18 October 2007.

82. It was not until 29 October 2007 that the plaintiff first demanded for the return of the Vehicle (Bundle p169).  This time, it was the defendant who was slow in reply.  Thus, the plaintiff wrote again on 8 November 2007.

83. By their letter dated 4 February 2008, the defendant requested the plaintiff to dispose of the Vehicle by 28 January 2008.  I believe that “January” must be a typing mistake. There was a reply from the plaintiff dated 6 February 2008 but nothing about the return of the Vehicle was mentioned.

84. The plaintiff eventually got back the possession of the Vehicle on 7 May 2009.

85. The Vehicle was left in the possession of the defendant with consent of the plaintiff until 29 October 2007.  In the light of the demand, the defendant should return the Vehicle to the plaintiff within a reasonable period of time thereafter.  On the other hand, the defendant had told the plaintiff to take possession in February 2008 but the plaintiff had failed to do so.  There is no plausible explanation for this before the court.  I am of the view that the plaintiff has failed to mitigate their loss.

86. Mr Lam also submitted that the defendant was entitled to keep the Vehicle because of lien for the unpaid repair fee.  The submission cannot stand.  No repair work has been carried out and the defendant has claimed nothing for that.

87. While I note that Mr Lam also complained that the plaintiff has failed to produce taxi receipts to support the claim, I accept the evidence of Mr Mok that the plaintiff incurred the transportation cost as claimed.  I award damages in the sum of $1,000 for 4 months from November 2007 to February 2008.  The total is $4,000.

Licence Fee and Insurance Premium

88. I do not think that the plaintiff is entitled to damages under these heads.  The Vehicle was damaged and thus the plaintiff was deprived of the right to use the Vehicle.  The damages would be the extra transportation cost I discussed above and maybe the loss of enjoyment of using the Vehicle.  The latter head, however, is not claimed.

89. The loss of licence fee and insurance premium has nothing to do with the use of the Vehicle and is not directly related to the Accident.  The plaintiff has to pay for the licence fee and insurance premium in any event whether the plaintiff actually use the Vehicle or not.  For these reasons, I make no award for these heads.

Conclusion

90. The defendant is the contracting party for the over haul and the Installation Work.  The defendant is not entitled to delegate the Installation work to Mr Wong.  By doing so, the defendant is responsible for the damage done in the Accident.

91. The defendant has to pay damages to the plaintiff in the sum of $76,112.50:

(a) Cost of repair of the Vehicle ($70,112.50)

(b) Cost of survey of the Vehicle ($800)

(c) Cost of collection of the Vehicle ($1,200)

(d) Alternative transport cost ($4,000, from November 2007 to February 2008)

92. I enter judgment in favour of the plaintiff in the sum of $76,112.50 together with interest at 8 % from date of writ to date of judgment and thereafter at judgment rate until full payment.

93. I also make an order nisi that the defendant to pay the plaintiff’s costs of this action together with all costs reserved to be taxed if not agreed with certificate for Counsel. This order nisi shall become absolute unless there is application to the otherwise within 14 days after handing down of this Judgment.