MODERN (INTERNATIONAL) ACCESS & SCAFFOLDING LTD v. HANGSON SIGN PRODUCTION LTD

DCCJ821/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 821 OF 2006

J U D G M E N T

1.  The Plaintiff carries on the business of providing scaffolding equipments, including aerial platforms, for rental purpose.  In July 2005, the Plaintiff rented an aerial platform (“the Platform”) to the Defendant for the construction work at the Hong Kong Disneyland Main Street in Hong Kong Disneyland.  However, the Platform was lost in the said construction site in August 2005 and could not be found, and the Plaintiff therefore claims against the Defendant for outstanding rental charges and the loss of replacing the Platform.  The Defendant has issued third party proceedings against the operator of the Hong Kong Disneyland, but the third party proceedings had been settled prior to the commencement of this trial.

2.  At the outset, Mr Stephen Yeung, counsel for the Defendant, has indicated to this court that the Defendant would not contest liability in the present case.  The Defendant also concedes the Plaintiff’s claim for outstanding rental charges, and so the only remaining issue is the appropriate quantum for the loss of replacing the Platform.  In this regard, the Plaintiff relies on a quotation given by the supplier of the Platform in the United States, Jenny Industries, with the listed price of US$16,130.

3.  Very little evidence has been produced by the Plaintiff to substantiate the claim for the loss of replacing the Platform.  According to the evidence of the Administration Manager of the Plaintiff, Madam Wong Miu-yin, I only know the following:

                   (1)      the Plaintiff was the authorised dealer of Jenny Industries in Hong Kong;

                   (2)      the Plaintiff purchased 14 sets of aerial platforms in 2004 with a unit price of US$7,607.50, and one of them was lost by the Defendant in the present case;

                   (3)      the dealer price charged by Jenny Industries to the Plaintiff for the Platform would be lower than the official listed retail price;

                   (4)      US$16,130 was the official listed retail price of the same aerial platform in 2005;

                   (5)      there was no second-hand market for the supply of the aerial platform; and

                   (6)      the normal lifespan for the use of the Platform was about 10 years.

4.  Unfortunately, no surveyor report has been produced by the Plaintiff to substantiate its claim.

5.  Using the quotation price of US$16,130, the Plaintiff is actually claiming for a sum which is more than double than the cost of acquiring the Platform 1 year ago.  When Madam Wong was asked about such issue, she offered 3 reasons to justify the huge difference: firstly, the dealer price obtained by the Plaintiff would be less than the official retail price; secondly, the Plaintiff was able to obtain a discount for the bulk purchase made in 2004; and thirdly, the price of aerial platform increased in 2005.

6.  Since there was no second-hand market for the supply of aerial platform, the task of this court is to assess the reasonable cost of the Plaintiff in acquiring the same aerial platform in December 2005, which was the end of the rental period as alleged by the Plaintiff.  I agree that the cost in 2005 might be higher than the cost of the bulk purchase in 2004.  However, I am quite sure that the replacement cost of the Plaintiff would be less than the listed price of US$16,130.  Firstly, this was only the official listed retail price, and the Plaintiff, being the authorised dealer, was able to obtain a lower price from Jenny Industries for the supply of the aerial platform.  Secondly, being able to obtain a discount for the bulk purchase in 2004, it shows that the price for the supply of the aerial platform could be subject to negotiation.  Without an independent surveyor or evidence from Jenny Industries to show that US$16,130 was the lowest price available, the Plaintiff has simply failed to discharge the burden that the price shown in the 2005 quotation was the lowest or the reasonable cost of replacing the aerial platform by that time.

7.  The only fallback position is to allow the Plaintiff to claim for the cost of acquiring the Platform in 2004.  I appreciate that the replacement cost in 2005 might be higher.  However, as I am not satisfied that the replacement cost claimed by the Plaintiff is a reasonable or the lowest one, I have no option but to assess the Plaintiff’s loss in such manner.

8.  Mr Tim Wong, counsel for the Plaintiff, urges the court to adopt the market retail price for the supply of the aerial platform in 2005, i.e. the higher sum of US$16,130, in assessing the Plaintiff’s loss.  He submits that if the court were to adopt the lower dealer price that can be obtained by the Plaintiff in assessing the loss, there would be a danger that a hirer would simply steal the aerial platform for his own use, as the hirer only needs to compensate the loss based on the dealer price which would be much less than the rental price if the hirer wants to purchase one aerial platform for himself.  However, I doubt very much that without knowing the dealer price, whether the hirer would be so foolish as to steal or obtain the aerial platform in such manner.  Further, the only basis for the assessment exercise is to ascertain the true loss of the Plaintiff arising from the wrongful act of the Defendant.  If the Plaintiff was able to replace the aerial platform with a lower dealer price, then such price should be used as the basis for assessing the Plaintiff’s loss.  Otherwise, the Plaintiff would be overcompensated for his actual loss.

9.  I therefore assess the Plaintiff’s loss as follows: US$7,607.50 (the actual purchase price by the Plaintiff in 2004) plus US$113.30 (the unit cost of acquiring the Platform as shown in the invoices in 2004, including shipping handling charges, freight insurance and ocean freight), which amounts to US$7,720.80.  As the Platform had been used for about 1 year before it was lost and the normal lifespan for such equipment is about 10 years, I adopt a simple discount of 10 % to reflect the depreciation factor.  The sum is therefore reduced to US$6,948.70 which is equivalent to HK$54,200.  Coupled with the outstanding rental charges in the sum of $47,062.87, the total quantum of the Plaintiff’s claim is $101,262.87.  I therefore grant judgment in favour of the Plaintiff accordingly.

10.  Finally, I must express my dissatisfaction about the preparation of this case.  To claim for the replacement cost, the Plaintiff just produced a quotation issued by Jenny Industries without any additional evidence to justify the reasonableness of the replacement cost.  All the relevant evidence for the assessment exercise, such as the purchase price of the Platform in 2004 and the supporting documents, the dealer relationship between the Plaintiff and the Defendant, the availability of the second-hand market and the normal lifespan of the equipment, are only revealed in the supplemental witness statement of the Madam Wong which was filed only after the inquiries made by the court at the first day of the trial.  In a case of this sort, the Plaintiff should have produced relevant documents and evidence to justify the reasonableness of the amount claimed, and without the evidence in the supporting supplemental witness statement, the Plaintiff’s claim for the replacement cost might have failed altogether due to the lack of supporting evidence.  Hence, the Plaintiff’s legal advisers should properly reflect on the way that the present case was being prepared.

11.  I now listen to the parties’ submissions on the issues of interest and costs.