WONG MEE WAN also known as WONG SHI (otherwise spelt as SAI) NUI v. KWAN KIN TRAVEL SERVICES LIMITED AND OTHERS

1989, No. A4201

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. The Plaintiff's daughter HO Shui-yee was drowned in a tragic accident which occurred at Pak Tang Lake, Zhong Shan in the People's Republic of China in August 1988.

2. Miss Ho, together with 3 of her friends was taking a guided tour which was operated by the 1st Defendant. It is the Plaintiff's case that the 2nd Defendant who is also a tour operator was acting as the Agent of the 1st Defendant when providing services in China in relation to the Tour.

3. After arrival on the first day at the Shanghai Guesthouse near to Pak Tang Lake arrangements were made for the group to go to the Ethnic Village on the other side of the Lake.

4. A Speedboat owned and operated by the 3rd Defendant was to convey the group across the Lake to the Ethnic Village. There were 24 people in the group and the speedboat could only accommodate 8 passengers. It was therefore necessary for the speedboat to provide a shuttle service to transport all of the group across the Lake.

5. Miss Ho and her friends were in the speedboat when it made its third and last journey.

6. While the journey was being undertaken the speedboat came into collision with a fishing junk. As a consequence of this Miss Ho and another lady passenger were drowned.

7. The Plaintiff, who obtained Letters of Administration to her daughters estate brings the present action under the Fatal Accidents Ordinance Cap. 22 and the Law Amendment and Reform Consolidation Ordinance Cap. 23.

8. The action against the 1st Defendant is for both breach of contract and for negligence and for negligence against the 2nd and 3rd Defendants. Default judgments have been entered against both these Defendants.

9. The main issue in the action against the 1st Defendant is whether they can be held liable for the acts of the 2nd and 3rd Defendants.

10. The Plaintiff gave evidence herself and called as witnesses 2 of the 3 girls who had been with her daughter at the time of the accident. The 3rd girl Miss Sin was not available as a witness as she is presently studying in the U.S.A. She did, however, make a statement which was entirely consistent with the evidence of the other 2 girls and Mr. Chan for the 1st Defendant did not oppose in being introduced as evidence.

11. The first of the girls to give evidence was Miss Chan Yee Ling. In 1988 she was a school mate of Miss Ho. She gave evidence that the 4 girls had proceeded to the border by coach. The tour leader was Miss Chan Siu Yin, an employee of the 1st Defendant. There were altogether 24 persons in the group.

12. After clearing formalities at the border there had been some delay as they had not known which coach to board on the other side. Eventually, they did board a coach. Shortly thereafter a tour guide boarded the coach and introduced himself as Mr. Ho. He said that he would be their guide on the tour.

13. After luncheon at the Zhong Shan Hot Springs Hotel they had gone on by coach to the Shanghai Guesthouse. There had been some delay en route and this resulted in their late arrival at the Guesthouse.

14. Mr. Ho had then instructed them to quickly deposit their luggage at the Guesthouse as it was proposed that they should go on to the Ethnic Village as soon as possible. To get there they would be taken across the Lake on the Ferry.

15. They did as requested by Mr. Ho. On arrival at the Pak Tang Lake Pier Mr. Ho informed them that both the ferry and the tour coach had already departed for the Ethnic Village. This being the case there was no alternative but for them to proceed in 3 groups of 8 in a speedboat to cross the Lake.

16. Some of the other members of the Tour had objected to this. Their objections were over ruled by Mr. Ho.

17. The first two trips by the speedboat had gone ahead without any apparent problems. As the girls had wanted to stay together they waited for the third trip.

18. At the conclusion of the second trip the Driver of the speedboat said that he did not intend to take the third trip. A volunteer was found to take his place. This volunteer had claimed that he knew how to drive a speedboat.

19. The girls together with Mr. Ho and the remaining members of the Tour had got into the speedboat and it then started its journey across the Lake.

20. It was Miss Chan's impression that the speedboat was travelling at a very high speed. It seemed to be racing with another speedboat.

21. She remembered seeing a Fishing Junk in front of them. The next thing she knew was that they had collided with the junk. The occupants of the speedboat were thrown into the water.

22. After much difficulty Miss Chan and 2 of her friends had managed to board the junk where Mr. Ho was. She then realised that Miss Ho and another lady were missing.

23. They had then attempted to get the men on the junk to take measures to rescue Miss Ho and the other lady. These efforts had been to little avail. She subsequently learnt that the bodies of Miss Ho and the other lady had been recovered and that they had drowned.

24. Miss Chan Wai Ying gave very similar evidence to Miss Chan Yee Ling. Although both ladies were subjected to extensive cross examination their evidence was not in any way shaken. Both of them resisted the suggestion made to them by Mr. Chan that Mr. Ho had been requested by members of the group to take them to the Lake to go on a speedboat. They were adamant that their version of events had been the correct one and that the journey by speedboat had been part of the tour and that they had had no practical alternative but to agree to go as directed by Mr. Ho.

25. They were both excellent witnesses and I accept their evidence as being truthful and reliable in all respects.

26. The Plaintiff also gave evidence. This mainly related to the amount of damages which would be payable if she succeeds in establishing liability on the part of the 1st Defendant. I propose dealing with this evidence later in this judgment.

27. Evidence for the 1st Defendant was limited to the oral evidence of Mr. Wong Shu Leung, now the Assistant General Manager of the 1st Defendant and to the statement of Mr. Ho, the guide which was admissible by virtue of a hearsay notice as he is beyond the jurisdiction of the Court as he resides in China.

28. The only significant variation in the evidence of Mr. Ho to the girls' evidence I have referred to is that Mr. Ho stated that some of the members of the Group proposed to him at the Shanghai Guesthouse that they should go on the speedboats at the Lake and that this was the reason they went. He was not prepared to state that going on the speedboat had been an integral part of the tour. Having heard the evidence of the 2 young ladies I have no hesitation in accepting that there evidence is to be preferred to the evidence of Mr. Ho.

29. The evidence given by Mr. Wong was of limited assistance. He had not been at Pak Tang Lake in August 1988 and could not even remember being debriefed by Miss Chan Siu Yin, the Tour leader. Indeed he could not remember anything much about her.

30. His evidence was therefore mainly confined to a description of the way in which tours were organised and the relationship subsisting between the 1st Defendant and the parties in China providing services to the Tours organised by the 1st Defendant.

31. Mr. Wong attempted to absolve the 1st Defendant from all responsibility for what had happened. He placed some reliance upon the Agreement which he claimed governed the relationship between the 1st and 2nd Defendants.

32. As the Agreement is a short one it is worth extracting it in full.

" CO-OPERATION AGREEMENT

China Travel Services Company (Zhong Shan) (hereinafter called Party A) and Kwan Kin Travel Services Limited (hereinabove called Party B) upon organising tours to Zhong Shan, Zhuhai for visiting proceed upon negotiation and came to the following agreement:

1. Co-operation item:

Party A is responsible for receiving and make arrangements for the tourists of the respective Zhong Shan, Zhuhai routes from arrival until departure. Party B is responsible for gathering clients for Zhong Shan, Zhuhai tours.

2. Fee of each route of tour:

Tour code: Zhong Zhu Pak Tang Lake two and a half days' tour

* Fees according to the price list

3. Method of payment:

Party A agrees with Party B that all payments will be made in HK Dollars. Party A will send a bill to Party B each month and Party B will remit payment to Party A's account within ten days after receiving the bill.

4. Booking and Confirmation:

The tour of Party B must present Party B's tour list to the relevant department of Party A. The tour of Party B must inform Party A one day in advance (4 p.m.) before entry to China.

5. Related matters:

a. If Party B encounters irresistible natural causes (such as the weather causing non- arrival of planes, trains and ferries) which leads to the withdrawal of the booking of rooms or meals, Party A will waive the damages, but Party B must announce and inform Party A in time and in advance.

b. If the withdrawal of the booking of rooms and meals is wholly caused by the fault of Party B. Party B is responsible for the loss.

The above agreement will be effective from 1st April, 1988 to 31st March 1989. If there is any unsatisfactory areas, both Party A and Party B can negotiate and revise this agreement.

Representative of		Representative of
Party A	: Sdg.	Party B	: Sgd.
Co-ordinator of		Co-ordinator of
arty A	P: Sgd.	Party B	: (Chopped)
Date : March, 1988		Date : March, 1988"

33. The main thrust of Mr. Wong's evidence was that the 1st Defendant was not able to exercise any control over what transpired in China once a tour group had gone over the border. He claimed that the responsibility passed into the hands of the 2nd Defendant which was a well constituted and responsible organisation.

34. The role of the 1st Defendant was mainly confined to agreeing with the 2nd Defendant what attractions could be included in a tour and then negotiating an appropriate tariff. They also, of course, received remuneration from persons going on the Tours.

35. Mr. Wong also emphasised that as there was no reference in the Company's brochure describing this tour to trips on the Lake it could not be said that the trip on the speedboat formed part of the Tour. As I have already indicated I have accepted the evidence given by the 2 Miss Chans and I have no doubt that the trip on the speedboat was indeed part of the Tour package. It is not realistic to expect every single activity to be described in the brochure. A more meaningful test is to consider what actually happened. If the evidence of the girls is accepted, which is indeed the case, there can be no doubt in my mind that the journey on the speedboat was an integral part of the guided tour provided by the 1st Defendant.

36. This aspect of the matter led to what was in my opinion one of the least satisfactory parts of Mr. Wong's testimony.

37. On the one hand he insisted that the speedboat trip was not part of the tour. Indeed at one stage in his evidence he claimed that in August 1988 he had no knowledge that there were any speedboats at Pak Tang Lake for the use of customers.

38. On the other hand, he claimed that the 1st Defendant could not be liable as they had taken every reasonable precaution to satisfy themselves that the speedboats were operated safely.

39. The latter part of paragraph 8 of the written statement which Mr. Wong adopted as his evidence stated :-

"The navigator of the speedboat involved in the accident was employed by the 3rd Defendant and the 1st Defendant had no connection with him at all. However, the 1st Defendant could not see any thing inherently dangerous in touring Pak Tang Lake by speedboat and was quite satisfied after careful consideration by its management including myself that such would be safe unless there was any casual negligence by those running the service. Certainly the 1st Defendant's management could not foresee and did not foresee the navigator of the speedboat in question would be negligent in controlling the speedboat, if at all, which is not admitted."

40. I regret that it was definitely my impression that Mr. Wong's evidence was tailored to meet what he considered to be most advantageous to the 1st Defendant's case rather than attempting to give truthful and accurate testimony. As a consequence of this I was reluctant to accept the validity of much of his evidence.

41. To be more specific I do not believe that the 1st Defendant undertook sufficient measures to ensure that members of their guided tours were adequately protected while they were in China. I believe that so long as the 1st Defendants received their share of the payments made by members taking their tours, they did very little to safeguard their interests.

42. In this connection I do not consider that any adequate measures were taken to ensure that a safe system of operation was provided for the operation of the speedboat on the Lake which I have found to be an integral part of the Tour.

43. I will next consider whether this finding of fact has legal implications.

44. I accept the validity of the submission made by Miss Eu, Q.C. for the Plaintiff that the 1st Defendant did owe Miss Ho a primary and contractual duty to take reasonable care for her 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.

45. The principles relating to this are conveniently encapsulated in paragraph 3.35 of the 16th Edition of Clerk & Lindsell on Torts Sweet & Maxwell 1989.

"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 the 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 the vicarious liability of a master for his servant. (Staveley Iron and Chemical Co. Ltd. v. Jones [1956] A.C. 627; Salsbury v. Woodland [1970] 1 Q.B. 324 at pp. 336-337, per Widgery L.J.; ibid. at p.347, per Sachs L.J. See ante, § 3-33; Barak, loc. cit., supra. n. 92. Cf. Atiyah, op. cit. p.338.) 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 omission. Such strict or absolute duties are often described as "non- delegable" and may arise either by statute or at common law. For 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," (Per Langton J. in The Pass of Ballater [1942] P.112, 117.) so that, if care is not taken, the duty is broken."

46. A good illustration of how the principles can be applied can be seen from the judgment of Eveleigh L.J. at p.328 of Rogers v. Night Riders 1983 RTR 324.

"The defence that is put forward in this case is this : the defendants contended, and the County Court judge acceped, that the driver in question was an owner-driver independent of the defendants in so far as the management and control of his vehicle was concerned. The judge called him an independent contractor and found that the defendants hired out radios to drivers at ￡ 27.50 a week and when they were asked to send a minicab they contacted one of the drivers on their list by radio and dispatched him to the customer to do it. The judge said:

They do make it their business to ensure drivers have had a driving licence for two years, private hire insurance and MOT from time to time to make sure they [the cars] are clean and tidy. That is their only interest. They are not concerned with what is charged except by laying down a general tariff. They take no cut, they have no control over what the driver does. They have a preferential agreement with a garage to deal with drivers' cars'.

So that there is a rather deeper involvement by the defendants in this case than that of being a mere post box, but I, for the purposes of my judgment, do not think that that factor has any great importance.

The judge continued:

The relationship between the defendants and the drivers is what is known to law as that of independent contractor. The employer is not in the normal way liable except when under a strict or absolute duty ... I am not able to find that the circumstances here are such that the law imposes strict liability to ensure that vehicles are safe or safely maintained ... It seems to me all the firm are doing is putting one member of the public in touch with another - that is all they do and I cannot spell out of that a duty to ensure vehicles are maintained at every time.'

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."

47. Adotping these principles I am satisfied that the 1st Defendant should be held liable for the consequences of this tragic accident.

48. In coming to this conclusion I have borne in mind that the 1st Defendant has clearly been in breach of its primary duty to provide satisfactorily the basic services they were obliged to supply. 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.

49. I was not prepared to grant leave to the 1st Defendant to amend its defence to enable it to plead what in Mr. Chan's submission amounted to an exemption clause. I gave reasons for this refusal during the trial.

50. However, I do not think that this ruling is likely to have much bearing on the outcome of the case as the clause is couched in vague and unsatisfactory terms.

51. At the conclusion of his submission and on the basis it was unsuccessful, Mr. Chan requested me to make an Order under the Civil Liability (Contribution) Ordinance Cap. 377 ordering that as between the Defendants, the 3rd Defendant who was most culpable of the Defendants should be required to contribute 100% towards damages which are awarded. The other Defendants were aware of the present hearing and had been informed that such an application may be made. Having regard to all the surrounding circumstances I am prepared to make an Order to this effect.

52. I will now consider what damages should be payable. Clearly damages have to be considered under both the Fatal Accident Ordinance Cap. 22 and the Law Amendment and Reform (Consolidation) Ordinance Cap. 23.

53. The Plaintiff gave helpful evidence in this connection. She described her daughter as having been filial. She believed that but for this tragic accident she would have been happy to contribute financially towards the well being of the family. Her 2 sons who were younger than the Deceased, both make financial contributions to the family. They are both Police Officers and they each contribute $3,000 per month.

54. I got the impression from the Plaintiff's testimony that she accepted that in all probability her daughter would have left school after Form 5 and gone out to work. She had been interested in advertising design work and had hoped to pursue a career in this field. I can see no reason whatever to doubt this.

55. The Plaintiff's solicitors in the Schedule of Damages which they prepared based their calculations on the assumption that Miss Ho's starting salary would have been $4,000 per month and that by this year her salary would have increased to $8,000 per month.

56. While it is impossible to be precise in calculations of this nature I do not think that these figures are seriously flawed. I have borne in mind the evidence of both of Miss Ho's friends who could fairly be said to have had very similar financial expectations to her. Miss Chan Yee Ling who is in marketing had a starting salary of $3,500 in 1989 and earns $8,500 at the present time. Miss Chan Wai Ying is earning rather more than this as she is a Police Officer. I accept, however, that Police Officers receive some recompense for the unsociable hours they have serve and also for the hazardous and onerous nature of their duties. I would not be disposed to interfere with the calculations made by the Plaintiff's solicitors in this respect.

57. They go on to contend that Miss Ho would have contributed $1,500 to $3,000 every month of which not more than $500 would have been attributable to her own needs.

58. Having regard to the financial needs of the parents and the contributions made by the sons, I also consider this assumption to be reasonable.

59. So far as Pre trial dependency is concerned the median figure for dependency is therefore $1,750 and 51 months would elapse from the date she would have started work to the date of trial.

60. This leads to an award of $1,750 x 51 = $89,250.

61. As to Post trial dependency the solicitors proposed adopting a multiplier of 12 years. This was based upon her father being aged 51 and the Plaintiff being 45.

62. My initial impression was that this multiplier was too high on account of the fact that in all probability Miss Ho was likely to have married and perhaps had children well within this time frame had she lived.

63. However, on further reflection I do not think that this is a factor which should weigh heavily in the scales.

64. There is no reason to suppose that Miss Ho would have married a poor man and having regard to the fact that the parents needs would continue notwithstanding any such contingency, it is probable that financial contributions would have continued after her marriage. It is also likely that she would continue working after marriage as most girls do now.

65. I have now come to the conclusion that a multiplier of 12 is fair in all the circumstances.

66. I agree with the solicitors that an appropriate multiplicand would be $2,500.

67. My calculation under this head would therefore be,

12 x 12 - 51 x 2500 = $232,500.00.

68. The claim for bereavement of $70,000 is not contested by Mr. Chan. I also consider it is reasonable and would allow it as claimed.

69. A claim is made for $30,000 for pain and suffering. Adopting the reasoning in Chim Kwan Tai v. Li Fung Electronic Factory & Others 1987 HKLR 1, it is difficult to see how this claim can succeed. There is no evidence that Miss Ho survived the initial impact between the speedboat and the junk and I do not believe that a claim under this head can succeed. It is accordingly dismissed.

70. The next head for me to consider is the Claim for Accumulation of Wealth.

71. In the schedule of damages it is proposed that it should be calculated on the basis that Miss Ho would have been able to save 15% of her earnings.

72. While I accept the Plaintiff's evidence that her daughter was of a frugal disposition, I do not think that it is right to base this calculation on 15%.

73. My reason for this conclusion is that the financial contributions I have allowed for are more generous than would normally be the case. If Miss Ho was making such generous provision for her parents it is unlikely that she would be able to achieve more than average savings. As the customary figure adopted under this head is usually of the order of 10%, I do not see any justification for basing the calculation at a higher level. I propose basing it on 10%. The median income pre trial is $6,000 per month and therefore the calculation is,

600 x 51 = $30,600.00.

74. As to post trial accumulation it was proposed that the multiplier should be either 16 or 17 years. I have considered the more recent authorities on this and have come to the conclusion that 17 is more appropriate. The calculation is therefore,

800 x 153 = $122,400.00.

75. Although no receipts were produced a claim for $30,000 is made for funeral expenses. The Plaintiff gave evidence that this expenditure was incurred.

76. I believe her evidence and make an award for this sum under this head.

77. The claim for $300 for the lost watch is not disputed and I allow it as claimed.

78. Both Miss Eu and Mr. Chan agree that an appropriate rate of interest is 10% which should be halved leaving 5% on pre trial dependency and accumulation awards and the special damages and that 2% should be payable on any general damages from the date of the issue of the writ.

79. I also order that these damages are to be payable by the 2nd and 3rd Defendants thus obviating the necessity for any separate assessments of damages.

80. I make an order nisi that the Plaintiff is to have her costs and that costs shall be taxed in accordance with the Legal Aid Regulations.