WONG MEE WAN v. KWAN KIN TRAVEL SERVICES LTD. AND OTHERS

IN THE COURT OF APPEAL

1993, No. 189
(Civil)

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J U D G M E N T

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Penlington, J.A.:

1. In this action the plaintiff, who is the mother and the administratrix of the late Miss Ho Shui Yee (the deceased), claimed against three defendants as a result of the tragic death of her daughter while on a holiday in the People's Republic of China (China). The appellant here is the first defendant and is a well-known travel service company in Hong Kong with its offices here.

2. Judgment by default has been entered against the 2nd and 3rd defendants who are however companies having their offices and business in China and the judgment presumably cannot therefore be enforced against them.

3. The background facts of the matter were not greatly in dispute. On the 4th August 1988, the deceased, together with three companions, joined a package tour organised by the appellant to go to various places in China including a tourist resort at Pak Tang Lake, Zhuhai. There were apparently three tour groups, each group comprising about 24 persons together with a tour leader from Hong Kong. The leader of the deceased's group was a Miss Chan Siu Yin, but on arrival in China another leader, a Mr. Ho, an employee of the second defendant, took charge of the group.

4. The brochure issued by the defendant setting out the conditions under which this particular tour operated said that on the first day of the three- day tour, their customers would go from Hong Kong to Pak Tang Lake in Zhuhai by "deluxe double jet hydrofoil" and on arrival in Zhuhai "our staff" would handle the customs formalities. The tour would then board a deluxe coach to Pak Tang Lake Holiday Village at Zhuhai city. The second day they would proceed to the Chong Shan Hot Springs for lunch and then onto the Pearl Amusement Park. The next stop would be the Memorial Hall of Dr. Sun Yat Sen. On the third day the party would return to Hong Kong via Macau.

5. The brochure provides that the price of $488 (mid-week) included transportation, meals, sightseeing and accommodation as specified in the itinerary and it sets out various terms and conditions regarding cancellations and refunds. It then goes on under the heading "liabilities" as follows:

"The questions and liabilities concerning the safety of travellers and their luggage in the restaurants and hotels and all means of transport taken during the course of the tours are dealt with according to the rules and regulations set down by local reception units or restaurants or hotels or transport companies concerned and our company is not held responsible."

6. There was an application during the trial before Mayo, J. to amend the defence to plead that clause as exempting the appellant from all liability. This application was refused and there is no appeal against that decision. The clause is however of some relevance in deciding other issues regarding the defendant's liability in particular as to whether the persons providing transport services in China were held out to be servants or agents of the appellant.

7. There was undisputed evidence that the 2nd defendant is a very large and well-known tourist organisation in China with branches in all the major tourist resorts. The 2nd defendant in turn contracted with various other organisations to provide transport and other services in particular locations, including, in this case, the 3rd defendant at Pak Tang Lake resort. There was no direct contractual relationship between the appellant and the 3rd defendant.

8. Evidence was given by two of the deceased's companions on the tour. The first was Miss Chan Yee Ling who confirmed a statement which she had made concerning the events leading up to the tragic accident. She said that her group passed through the customs office into China on the 4th August and after some delay were met by Mr. Ho. He introduced himself as "a guide of Zhong Shan China Travel Services Ltd", the 2nd defendant. They were late for lunch as a result of the delay and there was a further delay due to some group members buying and consuming fruit. Eventually they arrived at a "Shanghai Guesthouse" and were then told to go to Pak Tang Lake pier to board a big boat to go to the Pak Tang Ethnic Village Resort. However when they eventually assembled at the pier they were told that the large ferry boat with two other groups had already gone. Miss Chan said that a person who was in charge there told them that they would have to take a speedboat to go to the village and when asked why Mr. Ho told them that the tour bus had already gone and the big boat was not available.

9. The speedboat could take eight persons at a time so three trips were required, each one taking about 15 minutes. Miss Chan and the deceased being in the third group to travel. When the driver of the speedboat came back from the second trip, however, he came ashore for some reason and a member of the staff of the third defendant, who was providing the transport, asked if anyone else could drive the boat. One person said he could do so and he took over the speedboat. That person was an employee of the 3rd defendant. The deceased, Miss Chan and their other companions, plus Mr. Ho, boarded the speedboat which then proceeded towards the resort but it was followed by another speedboat which accelerated past them. Their own boat then also accelerated and Miss Chan then saw a fishing junk which appeared to be in their way. The driver tried to avoid it but was unsuccessful, the speedboat striking the fishing junk and all the occupants being thrown into the lake. Miss Chan and Mr. Ho swam and were eventually picked up by the fishing junk. However the deceased could not be found and she, together with one other passenger in the boat, were drowned as a result of the accident.

10. Similar evidence was given by a Miss Chan Wai-ying who was also with the deceased and a hearsay statement was admitted made by the third girl, who is in the U.S.A., which took the matter no further.

11. The only oral evidence given for the appellant was that of its Assistant General Manager, Mr. Wong Shu-leung. He had made a statement in which he said that his company had a contract with the second defendant, whom his company considered to be a large and reputable travel organisation handling tours in virtually every tourist centre in China and whom they realised in turn sub-contracted with hotel owners and transport operators. Mr. Ho was employed by the second defendant and the appellant had no control over him. The appellant had no contractual relations with the third defendant who was the operator of the Pak Tang Lake resort but the appellant considered was reputable. The appellant had no reason to believe that its services might be negligently operated. His company would have been very surprised if the third defendant had allowed an inexperienced driver to control one of its speedboats. The appellant thought it safe to leave to the second defendant the provision of safe, reliable transport within China. He said that the tour schedule did not provide for a crossing of Pak Tang lake at all. However if a tour group reached the resort early, the third defendant might take them out on the lake by boat. That however was a matter entirely for them. His company certainly did not employ the driver of the speedboat and had no control over him whatever. He did however say in his prepared statement that his company had carefully considered the question of use of speedboats on Pak Tang lake and thought it was safe. They could not anticipate the sort of negligence which occurred.

12. That was clearly evidence which would have been helpful to the appellant but when Mr. Wong was cross-examined he denied that any such consideration had been given to the use of speedboats at all. He said he had no idea that any members of the tour party would cross Pak Tang lake. He had read a translation of his statement and "there may be some discrepancies". He said that the appellant's understanding was that tour groups would go to Pak Tang resort by bus. Since the incident he had realised that boats may be used as a form of transport but on his visits to Pak Tang resort he had checked only on the standard of accommodation and general recreational facilities. He did not realise that the use of speedboats could form any part of the planned itinerary and made no checks as to their safety.

13. There was also a statement by Mr. Ho, introduced by means of a hearsay notice, he being resident in China, in which he said the speedboat trip was undertaken at the request of the tour group. That was contrary to the evidence of the survivors of the deceased's party and was rejected by Mayo, J who held that the speedboat trip had become an integral part of the tour. The party had no choice but to use the speedboat to get to the resort. That finding is not challenged.

14. Miss Chan Siu Yin, an employee of the defendant, was with the group. She was called a tour leader but it seems from the evidence that once the party entered China she played little part in supervising or organising their activities. She was present when the party arrived at Pak Tang Lake but it was not pleaded that she did or failed to do anything that caused or contributed to the deceased's death. She went on one of the first two speedboat trips and was not present when the new driver took over. She did not give evidence.

15. It was not in dispute that the cause of the deceased's death was the negligent driving of the speedboat by an employee of the third defendant. There was evidence that he was not a regular speedboat driver and in any event he should have avoided the collision with the fishing junk. It was also the case for the plaintiff that Mr. Ho was also negligent in that he did nothing to prevent the speedboat being driven by somebody who did not seem to be a properly qualified driver. That there was such negligence is not in dispute but what the trial judge had to decide was whether the defendant is liable for the actions of Mr. Ho, the employee of the second defendant, and the speedboat driver, the employee of the third defendant.

16. Mayo, J rejected Mr. Wong's evidence that his company had taken reasonable steps to protect the safety of its tour members. He did not consider that adequate measures were taken by the appellant to ensure that a safe system of operation was provided for the operations of the speedboat on the lake which had become an integral part of the tour. He then found that the legal implication of that conclusion was that the appellant was in breach of a

"primary and contractual duty to take reasonable care for the deceased's safety which included taking satisfactory measures to ensure that if speedboats were used on the tour they would be operated by persons of reasonable competence and experience".

He did not consider it a matter of vicarious liability or the liability for the act of an independent contractor. It was a question of primary duty.

He referred to the 16th Edition of Clerk & Lindsell on Torts at para. 3-35.

"Exceptions to the general rule. To the general rule that an employer is not liable for the negligence of an independent contractor, there are certain apparent exceptions. It is submitted however that these are not true exceptions (at least so far as a theoretical nature of the employer's liability is concerned) for they are dependent upon a finding that the employer is himself in breach of some duty which he personally owes to the plaintiff. The liability is thus not truly a vicarious liability and is to be distinguished from a vicarious liability of a master for his servant.

"If the circumstances are such that the law imposes a strict or absolute duty upon the employer, then he cannot discharge his duty by delegating performance of the work in question to an independent contractor. If therefore the duty is not fulfilled, the employer is liable even though the immediate cause of the damage is the contractor's wrongful act or admission. Such strict or absolute duties are often described as 'non- delegable' and may arise either by statue or at common law". For the present purposes they are to be contrasted with the ordinary duty to take reasonable care which can be discharged by the employment of a contractor reasonably supposed by the employer to be competent. At the least, the non-delegable duty is 'a duty not merely to take care but a duty to provide that care is taken'".

17. Mayo J. also placed very considerable reliance on the decision of the Court of Appeal in Rogers v. Night Riders (1983) RTR 324. There the defendant operated a radio mini-cab service. Members of the public rang them and requested a cab be sent to a certain address. The plaintiff did so and when it arrived the driver was asked to take her and her father to Euston Station. However on the way to the station a door came open causing the plaintiff passenger to be injured. The door was found to be defective, which the cab-driver should have realised. The legal difficulty however was that the cab was owned by the driver himself and while the defendant had a contract with him and other owner-drivers, he was not its servant. It simply operated the telephone service and when calls came in, allocated them to individual drivers by radio. The drivers owned, maintained and controlled their own vehicles although the defendant ensured that they all had held a driving licence for at least two years and took out their own private hire insurance. The drivers paid a fixed monthly fee to the defendant but no portion of the hire charge for any particular journey. Judgment at first instance was given for the defendant on the basis that the driver was an independent contractor. The judge said that it seemed to him that all the defendant was doing was to put one member of the public in contact with another and he could not see that that spelled out a duty to properly maintain the vehicles on the part of the defendant. That decision was however reversed by the Court of Appeal who held that on those facts there was a primary contractual duty owed to the plaintiff to convey her safely to her destination and they could not evade consequences of a breach of that duty by having the work done by an independent contractor.

18. Mayo J. referred in particular to dicta of Eveleigh L.J. at 328 where he said

"In my opinion, this is not a case where we are concerned to consider vicarious liability or whether there is liability for the act of an independent contractor. We are concerned to consider a case 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 post box 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 could foresee that she might be injured if the vehicle were defective, and so they 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 and to say that the plaintiff and defendants entered into a contract whereby the defendants would provide a car for reward for a purpose and an implied term that the vehicle would be reasonably fit for that purpose. It is said that the vehicle would be reasonably fit for that purpose. It is said that the case has not been pleaded in contract. It is true the words 'breach of contract' were not used. 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. What was clearly set out in the pleadings was that the plaintiff had hired a minicab from a firm who were in the minicab business and that the defendants were in breach of a duty to take care that the vehicle provided was properly maintained."

19. Dunn L.J. agreed with that and said at 331

"The firm Night Riders or A1 Cars hold themselves out to the general public as a car hire firm and they undertook to provide a hire-car to take the plaintiff to Euston Station. In those circumstances, they owed the plaintiff a duty to take reasonable steps to ensure that the car was reasonably fit for that purpose. It matters not whether the duty is put in contract or in tort, either way it is a duty they could not delegate to a third person so as to evade responsibility if the car was not fit for that purpose. There was no suggestion in the evidence in the court below, and it was never put to the plaintiff, that she was told of the true position of the firm, that is to say, the car did not belong to them and that the firm was no more than a booking agent for owner-driver cars over which they had no control. If there had been such evidence and if the true nature of the defendants' business had been known to the plaintiff, then the situation would have been different. But so far as the plaintiff was concerned, she was dealing with a car-hire firm not a mere booking agency and, accordingly, the defendants were under a primary duty to her."

20. There is considerable further authority that a person who is in breach of his primary responsibility to exercise care cannot find excuse by saying he used an independent contractor. Denning L.J. said in Cassidy v. Ministry of Health [1951] 2 KB 343 at 343

"I take it to be clear law, as well as good sense, that where a person is under a duty to use care, he cannot get rid of his responsibility by delegating the performance of it to somebody else no matter whether the delegation be to a servant or to an independent contractor under a contract for services.

Lord Blackburn laid that down on many occasions: see Tarry v. Ashton (1876) 1 Q.B.D. 314. Dalton v. Angus (1881) 6 App. Cas. 740 and Hughes v. Percival (1883) 8 App. Cas. 443, and so have other great judges."

21. Adopting those principles Mayo, J said that he was satisfied that the defendant was in breach of its primary duty to supply the services they had contracted to do.

"There was no evidence that any attempt was made to ensure that the speedboat which was being used as part of the transportation was operated in a safe manner or that a safe system of operation was adhered to".

22. In my opinion the facts here are very different from Rogers v. Night Riders. Although there was some evidence from Miss Chan that she thought the appellant itself was providing services in China it seems clear from the evidence that she could not reasonably have come to that conclusion. She agreed that Mr. Ho introduced himself as an employee of the second defendant. There was no suggestion that the coaches or other forms of transport carried the appellant's name. I have already set out the clause in the brochure relating to liability of the appellant.

23. That must make it clear that the transport used in China was not provided directly by the appellant but by other organisations in China. It is also clear that the appellant was doing more than just introducing its clients to other companies for them to make their own arrangements. They did provide their own tour guide to accompany the party and all fees, apart from minor individual expenses, were paid to the appellant but on the facts here I am satisfied that the appellant did not hold out the second or third defendants or their employees, as being the appellant's employees. Rogers v. Night Riders however goes further. It states that if a defendant says it will convey a customer from point A to point B by use of a vehicle it is an implied term of that contract that a safe, well maintained vehicle will be used and it matters not if the defendant uses its own employees to do that or employs an independent contractor. There is a primary contractual duty owed to the customer. Here the case for the respondent is that the appellant owed the deceased such a duty and failed to provide a safely operated speedboat. It cannot be heard to say that it had no control over the manner in which the speedboat was driven. It did not even bother to check out the way the third defendant's speedboats were operated.

24. Did the appellant owe the deceased such a primary contractual duty on the facts here? In my opinion the answer must be no. The essential feature of the cases such as Rogers v. Night Riders was that the duty of care owed must be non-delegable before the defendant is liable for the negligence of his independent contractor. We have been referred to other categories where the duty is non-delegable such as providing support for land, conducting operations on a highway, breach of statutory duty or where the duty arises from something inherently dangerous - a Rylands v. Fletcher situation.

25. Here the appellant had contracted to provide certain hotel and transportation services. It must have been clear to all members of the tours that it could not provide all those services itself but would delegate to other companies in China its duty to provide the bulk of them. There was not a primary duty on the appellant to provide safe transport as there was in Rogers v. Night Riders. A tourist package holiday is much more than a taxi ride to a railway station. It often involves many different forms of transportation carried out by contractors in many different countries. It would, in my view, impose an intolerable burden if the firm which put the tour package together was to be held liable for the negligence of a transport operator in another country on the basis of a breach of a non-delegable primary contractual duty. Here the evidence, which was not challenged, was that the appellant thought that its customers would reach the resort by coach - there was no reason whatever for it to check out the safe operation of speedboats. For the third defendant to use a speedboat driven by an inexperienced and negligent employee was not something the appellant could have reasonably anticipated but, even if it was, on the facts here the members of the tour group must have realised that this was not a service being provided by the appellant itself. It was argued for the respondent that the members of the tour group when they saw that a speedboat was to be used to get them to the resort, would have expected and relied on the appellant to make sure it was safe. I cannot agree with that submission.

26. I consider that Rogers v. Night Riders can and should be distinguished from the facts here in two ways. Eveleigh L.J. said "now in those circumstances of undertaking to provide a car and its driver to take her to her destination the defendants could foresee that she might be injured if the vehicle were defective and so they owed a duty arising out of this relationship to take care to see that the vehicle was safe". Here the evidence was that the normal schedule for the tour did not provide for the use of a boat at all. Mr. Wong was found not to have taken any steps to check out the safety of the third defendant's speedboat operations but it does not seem to have been challenged that he had no idea that the members of his tour parties would be using speedboats as a part of their scheduled travel. In Rogers v. Night Riders Dun L.J. said "if the true nature of the defendants business had been known to the plaintiff then the situation would have been different." Here I am satisfied that the deceased must have realised what the true nature of the appellants business was and that it was a Hong Kong company which organised other companies in China so as to put together very attractively priced package tours. The appellant was more than a mere booking agent to put customers in touch with other travel contractors but was not in the same position as the defendant in Rogers v. Night Riders who contracted to supply a safe minicab and failed to do so. Here the appellant contracted to provide a reasonable package tour and that would include seeing that the transportation which it was aware would be used was supplied by reputable organisations. That in my opinion does not make them liable for the irresponsible action of the second and third defendants in allowing a speedboat to be driven by an apparently unqualified and, as it turned out, negligent driver when the appellant was not aware that speedboats might be used at all during the tour.

27. It was also argued that Miss Chan Siu Yin, the appellant's own employee, was a joint tour leader and should have taken steps to prevent the tragedy. It is not clear what those steps should have been. It is not suggested that providing transport by means of a speedboat was in itself dangerous and Miss Chan was not present when the substitute driver took control but in any event the respondent's case was simply not pleaded or conducted on that basis before Mayo, J.

28. I would allow this appeal and set aside the judgment and enter judgment for the appellant dismissing the respondent's claim against the appellant.

Godfrey, J.A.:

29. I agree that this appeal should be allowed.

Barnett, J.:

30. I agree that this appeal must be allowed.

31. The first issue that needed to be addressed was whether the appellant was under a non-delegable duty to take reasonable care for the safety of its package-tour customers.

32. For the reasons given by my Lord Penlington, it is plain to me that the facts of this case are far-removed from Rogers v. Night Riders, the thrust of which appears to be that the defendant was estopped from denying that it undertook to provide the service itself. Having regard to the nature of a package tour and to the particular brochure used by the appellant, I find it difficult to believe that any customer would expect the appellant to be providing anything other than a coordinating service.

33. The further issue then to be addressed was whether the appellant had discharged its delegable duty. In my view plainly it had by engaging the 2nd defendant, an independent contractor apparently competent, and indeed uniquely placed, to provide transport, accommodation and sightseeing services for tourists. There was no evidence to suggest that the 2nd defendant was other than competent either to provide services directly or to appoint its own contractors, for example, the operator of a hotel that would provide accommodation. There was no evidence to suggest that the appellant should have been put on enquiry, for example by reports from its own escort or by complaints from other tourists, as to the competence of the 2nd defendant or the quality of the services it was providing.

34. I am satisfied that, in the circumstances, the appellant cannot be made vicariously liable either for the 2nd or 3rd defendants.

35. Penlington, J.A. :

36. The appeal is accordingly allowed and the judgment below set aside. There will be an order nisi that the appellant have its costs here and below.