KYE SYSTEMS (HK) CORP LTD v. WILMINK EXPRESS LTD AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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The appeal

1. The plaintiff appeal against the decision of the Master who granted unconditional leave to defend to the 1st Defendant in an O.14 application.

The claim

2. The Plaintiff's claim is a simple one. It was the owner of computer goods. It instructed the 1st Defendant to transport the goods from Dongguan, China to Hong Kong for onward delivery to U.S.A. The goods were transported in a container. When the container arrived in Hong Kong, it was left unattended in an open car park. The container was discovered to be stolen the following day. The Plaintiff claimed against the 1st Defendant for breach of contract of carriage, bailment and negligence.

3. In the same action, the Plaintiff also sued the 2nd Defendant. The Plaintiff said that the 1st Defendant retained and instructed the 2nd Defendant to transport the goods. Paragraph 9 of the Statement of Claim pleaded that the 2nd Defendant was the agent of the 1st Defendant. The Master gave judgment against the 2nd Defendant with damages to be assessed.

Several liability

4. The Plaintiff pleaded that the Defendants were jointly and severally liable. From the pleadings it appeared that the liabilities of the Defendants were several rather than joint. The 2nd Defendant was, first of all, sued as an agent of the 1st Defendant, Its liability must be several in nature. It was also sued on the Drayage Receipt. If so, it must be sued as a principal to a contract with the Plaintiff. If the Defendants' liability was several, the judgment against the 2nd Defendant must constitute an election which precluded the Plaintiff to proceed against the 1st Defendant.

5. Earl of Halsbury L.C. in Morel Brothers & Co. Ltd. v. Earl of Westmoreland [1904] AC 11 held that:

"My Lords, the plaintiffs might have sued either the agent or the principal ... The result was that the plaintiffs got judgment against the agent. They cannot get judgment against the principal also. It is an alternative remedy; it cannot be made available against the two."

In the Court of Appeal [1903]1 K.B. 64, Collins M.R. stated that:

"In such a case, if it is sought to render the agent liable, it must be by treating the agent as a principal, to the exclusion of the liability of the real principal. If it is sought to render the real principal liable, then the agent must be treated as such and not as principal. The plaintiffs cannot recover against both. It they choose to take judgment against the wife, they cannot consistently with that have judgment for the same amount against the husband."

6. The English case is followed in the Hong Kong Court of Appeal in Bonus Garment Co.(a firm) v. Karl Rieker Gmbh & Co. Ng & Anor. [1995] 3HKC 721.

7. The Principle applies if the 2nd Defendant was sued as an agent of 1st Defendant, Likewise, if the 2nd Defendant was sued on the Drayage Receipt, then it must be sued as a principal and having entered judgment against it, the Plaintiff cannot turn around and sue the 1st Defendant as the principal.

Joint liability

8. Mr. Coleman referred to O.14, r.8 which enables a plaintiff to pursue against a co-defendant who is jointly liable even when a judgment is obtained against another defendant.

9. If the Plaintiff's case is that the liabilities of the Defendants are joint, or as Mr Coleman put it, that there are different causes of action against the Defendants which may not be alternative in nature, then this is certainly an arguable issue that needs to be tried. It has not been pleaded why the Defendants' liabilities are joint. Under paras. 3 and 4 of the Statement of Claim the contract of carriage was entered between the Plaintiff and the 1st Defendant. The confirmation of 28th December 1995 was made between the Plaintiff and the 1st Defendant and not with the 2nd Defendant. Even if the Defendants are said to be joint tortfeasors or that there was a sub-bailment, a point which was raised but not elaborated by Mr Coleman, the fact is that the container was lost whilst in the possession of the 2nd Defendant. Regarding the Contribution Notice issued by the 1st Defendant against the 2nd Defendant, I would expect any competent lawyer to issue such a notice in situations such as these. The notice cannot be used as a conclusive proof that the liabilities of the Defendants are joint.

10. Mr Coleman also submitted that there was no election made by the Plaintiff. Whatever reason it may be for the Master to grant the 1st Defendant unconditional leave to defend, the reality of the situation is that by now a judgment has been obtained against the 2nd Defendant by the Plaintiff and one must approach the issue on that basis.

Appeal dismissed

11. Having ruled for the 1st Defendant on this ground, it is not necessary for me to deal with the issues of admission or ownership of the goods.

12. The appeal is therefore dismissed with costs to the 1st Defendant.