PROFIT HONOUR ELECTRONIC LIMITED v. KOO DING SHING AND LEE FU TSANG trading as SUN TAT TRADING TRANSPORTATION COMPANY

No.A2945 of 1991

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is a claim by the plaintiff against the defendant, a firm, for damages as a result of the loss of the plaintiff's goods entrusted to the defendant for transportation from Shenzhen, China to Hong Kong.

2. According to Mr Ku of the plaintiff, sometime around 6th October 1990, he discussed with Mr Koo of the defendant terms for a more permanent relationship. According to Mr Jimmy Ku of the plaintiff, the parties agreed to carriage of goods at certain rates per trip and at some other rates for occasional overnight stay. Mr Jimmy Ku told the court that the defendant agreed through Mr Koo that during the overnight stay before delivery, the defendant would cause the lorry to be parked either in a car park or in a warehouse or instruct their driver to sleep in the lorry.

3. At the trial, the defendant, through Mr Koo, confirmed the rates as discussed and agreed. Mr Koo said in evidence that the overnight stay levy was to compensate part of the lorry hire for the next day. It is common ground that the charges of the defendant were low. Mr Jimmy Ku of the plaintiff did in fact so concede in his cross-examination but with the rider that "one would expect a businessman to say (it) in that way". It is also not in dispute that the defendant and their driver would not know the nature or the value of the goods to be transported in advance. In fact, Mr Jimmy Ku of the plaintiff testified when he was occasionally asked by the defendant as to the nature and value of the goods, he declined to divulge any information. The charges being low and the defendant not being in a position to effect insurance for the goods agreed to be transported for their own protection even if their low charges would have enabled the defendant to retain a reasonable profit margin after insurance premium, it would seem improbable that the defendant could have in early October 1990 undertaken, by way of overnight arrangement, to either park the lorry in a car park or warehouse or instruct their driver to sleep in it. All would necessarily incur extra cost and expense.

4. On 7th November 1990, as evidenced by Document 3 and Document 6 in the Agreed Bundle, one of the defendant's lorries serving the plaintiff had to stay overnight before delivery of the goods the next day. Mr Koo of the defendant recalled that the defendant's driver was instructed to park the lorry near his residence. Mr Jimmy Ku of the plaintiff told the court that he had never bothered to ascertain from the defendant where the lorry was parked on that occasion. The incident on 7th November 1990 cannot be truly regarded as corroborative evidence for the defendant's version. But in conjunction with the improbability by way of special and extra expenditure in one of the alleged modes of overnight arrangement in the plaintiff's version, the conduct of the defendant on 7th November 1990 was at least consistent with what their Mr Koo said had been agreed between the parties in early October 1990.

5. To Mr Koo of the defendant, after the rates had been negotiated and fixed, the understanding was that the defendant would supply a lorry for the use of the plaintiff whenever one of their lorries was available. Mr Koo explained that it was the normal practice for the driver to take the lorry home for the night and park it near his residence so as to facilitate delivery the next morning. Mr Koo further testified that he specifically emphasized to Mr Jimmy Ku of the plaintiff that the charges were low and the defendant was not to be responsible for the safety of the goods as the charges were meant to be exclusively transportation charges. Mr Koo of the defendant also told Mr Jimmy Ku of the plaintiff that some overnight charges would be levied so as to compensate the loss of lorry hire for part of the time the next day and such overnight charges were not insurance charges.

6. I prefer and accept the version advanced by Mr Koo of the defendant.

7. It is also the allegation of the plaintiff that on 2nd February when the defendant was called upon to transport goods from Shenzhen, China to Hong Kong, Mr Koo of the defendant expressly undertook to waive the overnight charge and instruct their driver to sleep in the vehicle. I have endeavoured to explain why this court regards the allegations of Mr Jimmy Ku of the plaintiff as to the overnight arrangement made on 6th October 1990 as improbable. My critical analysis of the plaintiff's alleged terms for overnight arrangement would equally apply to the allegation of an express undertaking allegedly given by Mr Koo of the defendant on 2nd February 1991.

8. Mr Koo of the defendant denied having so undertaken. He told the court that contrary to Mr Ku's assertion, he had no knowledge that delivery could not have been made on the 3rd February, the day on which his company could provide the services of a lorry. He agreed that Mr Jimmy Ku of the plaintiff did initially request for the services of a lorry on 4th February. He explained to Mr Jimmy Ku of the plaintiff his difficulties and the unlikelihood of other lorries being free that time of the year near Chinese New Year. According to Mr Koo of the defendant, Mr Jimmy Ku of the plaintiff readily agreed to accept services of a lorry provided by the defendant on 3rd February. Therefore, on all probabilities the defendant's lorry was, as envisaged by their Mr Koo, expected to be able to discharge goods on the same day upon its arrival in Hong Kong. On 3rd February, the defendant's driver Mr Tsang, after passing through customs, contacted Mr Koo. Mr Koo instructed the driver, as in the past, to take the lorry for parking near Mr Tsang's residence, having explained to Mr Tsang that he had himself just received instructions from Mr Jimmy Ku of the plaintiff that documents would not be available that day. On this aspect, I also prefer the evidence of Mr Koo of the defendant.

9. Mr Koo of the defendant, as corroborated by Mr Tsang, the driver, disclosed in evidence that they had no experience of such overnight loss. Mr Koo maintained that the practice of instructing the driver to park the lorry near his residence overnight was as practical as it was acceptable in the trade.

The driver Mr Tsang, after the February incident, would prefer to leave his lorry in the Customs compound in China whenever overnight stay would be necessary. According to Mr Tsang, both he and his present employer would do so rather than to risk parking his lorry in Hong Kong. Mr Tsang's preference and that of his present company's after the February incident as to where to park his lorry for overnight stay now would seem to be counsel of perfection, providing no doubt better security. But it does not follow, in the light of Mr Koo's evidence, that parking a locked lorry in the place near the driver's residence was or is a negligent. In the circumstances of this case, I am impressed in particular by the express intimation of Mr Koo of the defendant that the defendant was not to be responsible for the safety of the goods to be carried and also the absence of knowledge on the part of the defendant in advance of the nature and the value of the carried goods. In addition, it was the usual practice, according to Mr Koo of the defendant, universally accepted in the trade. Even after the loss of the lorry on 3rd/4th February, at no time had the driver Mr Tsang been ever confronted as to where he had himself spent the night, where the lorry was parked, or demanded any explanation for what he had done or now allegedly not done.

10. There was, I find, no oral agreement as alleged on 6th October 1990 in terms of the 3 alternatives suggested by Mr Jimmy Ku of the plaintiff; hence there could have been no beach. There was no oral undertaking, including waiving overnight extra charge or instructing the driver to stay overnight in the lorry. Again, therefore, there could not have been any beach.

11. There was certainly an implied contractual duty on behalf of the defendant to keep the load carried safely for delivery, but such implied contractual duty must be subject to the express reservation so clearly conveyed to Mr Jimmy Ku of the plaintiff by Mr Koo of the defendant. The emphasis was that the defendant was not to be responsible for the safety of the goods and that the overnight charges, if and when incurred, should not be regarded as insurance coverage.

12. Clause 2 of the Transportation Note reminds the plaintiff to take out insurance for the safety of his goods. Clause 2 has only peripheral bearing on the responsibility of the defendant contested in this case, and this Court has placed no or no significant reliance on the provision in clause 2 of the Transportation Note. In the circumstances, it cannot be said that there has been any beach of the implied contractual duty to keep these goods safe for their discharge at destination.

13. The question of negligence and the duty of a bailee are both likewise to be examined subject to the circumstances as related by Mr Koo of the defendant in this case. On the findings I have made, there was no negligence on the part of the defendant nor was there any beach of the duty of a bailee carrier committed by the defendant on the 3rd or 4th February 1991.

14. In due course, this court will reduce into writing with understandably refinements this ex tempore decision. As a result, the plaintiff's claims against the defendant all fail.

15. There is a counterclaim mounted by the defendant against the plaintiff. The past transportation charges left outstanding are admitted at $17,165. The transportation and overnight charges for the carriage on 3rd/4th February 1991 were $1,400 and $800 respectively. Those charges I find proved. To the conceded $17,165 should therefore be added an extra total sum of $2,200, comprising the $1,400 for transportation charges and $800 for overnight charges. The net claim as proved and accepted by the court against the plaintiff stands therefore at $19,365. In that sum, judgment would be awarded in favour of the defendant against the plaintiff on the counterclaim. The defendant obviously should have costs of the action and the counterclaim.

(Submissions on Costs)

16. There is no dispute as to the proposed order for costs. I am reminded by Mr Lo that in the counterclaim it is included a claim for interest. The proposed rate at 6% per annum is not a matter in dispute between counsel. Therefore, I give judgment in favour of the defendant against the plaintiff in the sum of $19,365 on the counterclaim, the plaintiff's action be dismissed, and the defendant do have costs against the plaintiff in the action and in the counterclaim. The defendant be awarded interests thereon from the date of the writ to today at 6% per annum.